-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ED3/EWWFr427u7Za26HRh70JfdLix2Hz1XT6s4PDeNkV0X61PaHMideYv6+yQZiN stuTk64tRNBa5w6IjeELoQ== 0000912057-96-005041.txt : 19960326 0000912057-96-005041.hdr.sgml : 19960326 ACCESSION NUMBER: 0000912057-96-005041 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960325 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CABLEVISION SYSTEMS CORP CENTRAL INDEX KEY: 0000784681 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 112776686 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09046 FILM NUMBER: 96537837 BUSINESS ADDRESS: STREET 1: ONE MEDIA CROSSWAYS CITY: WOODBURY STATE: NY ZIP: 11797 BUSINESS PHONE: 5163648450 10-K 1 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - --------- EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended DECEMBER 31, 1995 ----------------- OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE - ---------- SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from _________________to _________________. Commission File Number: 1-9046 ------ Cablevision Systems Corporation --------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 11-2776686 - -------------------------------------- ----------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Media Crossways, Woodbury, New York 11797 - --------------------------------------- ------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (516) 364-8450 -------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class: Class A Common Stock Name of each exchange on which registered: American Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ------- Aggregate market value of voting stock held by nonaffiliates of the registrant based on the closing price at which such stock was sold on the American Stock Exchange on March 15, 1996: $745,341,699 Number of shares of common stock outstanding as of March 15, 1996: Class A Common Stock - 14,340,782 Class B Common Stock - 11,572,709 Documents incorporated by reference - The Company intends to file with the Securities and Exchange Commission, not later than 120 days after the close of its fiscal year, a definitive proxy statement or an amendment on Form 8 to this report containing the information required to be disclosed under Part III of Form 10-K. TABLE OF CONTENTS Page ---- PART I Item 1. Business. 3 2. Properties. 28 3. Legal Proceedings. 28 4. Submission of Matters to a Vote of Security Holders. 28 PART II 5. Market for the Registrant's Common Equity and Related Stockholder Matters. 29 6. Selected Financial Data. 31 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. 33 8. Consolidated Financial Statements. 48 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 89 PART III 10. Directors and Executive Officers of the * Registrant. 11. Executive Compensation. * 12. Security Ownership of Certain Beneficial Owners and Management. * 13. Certain Relationships and Related Transactions. * PART IV 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. 89 * These items are omitted because the registrant intends to file with the Securities and Exchange Commission, not later than 120 days after the close of its fiscal year, a definitive proxy statement or an amendment on Form 8 to this report containing the information required to be disclosed under Part III of Form 10-K. (2) PART I ITEM 1. BUSINESS THE COMPANY Cablevision Systems Corporation, a Delaware corporation and its majority owned subsidiaries (the "Company") own and operate cable television systems in six states with approximately 2,061,000 subscribers at December 31, 1995. The Company also has ownership interests in and/or manages other cable television systems which served an aggregate of approximately 662,000 subscribers at December 31, 1995 and has interests in companies that produce and distribute national and regional programming services and that provide advertising sales services for the cable television industry. The Company was formed in 1985 to effect a reorganization of its predecessors. Cable television is a service that delivers multiple channels of television programming to subscribers who pay a monthly fee for the services they receive. Television and radio signals are received over-the-air or via satellite delivery by antennas, microwave relay stations and satellite earth stations and are modulated, amplified and distributed over a network of coaxial and fiber optic cable to the subscribers' television sets. Cable television systems typically are constructed and operated pursuant to non-exclusive franchises awarded by local governmental authorities for specified periods of time. The Company's cable television systems offer varying levels of service which may include, among other programming, local broadcast network affiliates and independent television stations, satellite-delivered "superstations" such as WTBS (Atlanta), certain other news, information and entertainment channels such as CNN, CNBC, ESPN, MTV, and certain premium services such as HBO, Showtime, The Movie Channel and Cinemax. The Company's cable television revenues are derived principally from monthly fees paid by subscribers. In addition to recurring subscriber revenues, the Company derives revenues from installation charges, from the sales of pay-per-view movies and events, and from the sale of advertising time on advertiser supported programming. Certain services and equipment provided by substantially all of the Company's cable television systems are subject to regulation. See "Business - Cable Television Operations - Regulation - 1992 Cable Act." For financing purposes, the Company is structured as a restricted group and an unrestricted group of subsidiaries. The restricted group consists of Cablevision Systems Corporation and certain of its subsidiaries, including Cablevision of New York City ("CNYC") and, as of December 15, 1995, a subsidiary holding the cable television assets previously a part of Cablevision of Boston Limited Partnership ("Cablevision of Boston") (the "Restricted Group"). The unrestricted group of subsidiaries consists primarily of V Cable, Inc. ("V Cable"), Cablevision MFR, Inc. ("Cablevision MFR"), and Rainbow Programming Holdings, Inc. (including Rainbow Advertising Sales Corporation ("Rainbow (3) Advertising"), American Movie Classics Company ("AMCC") and SportsChannel Associates (New York) ("SportsChannel New York")) (collectively, "Rainbow Programming"). In addition, the Company has an unrestricted group of investments, consisting of investments in A-R Cable Services, Inc. ("A-R Cable"), U.S. Cable Television Group, L.P. ("U.S. Cable"), Cablevision of Framingham Holdings, Inc. ("CFHI"), A-R Cable Partners and Cablevision of Newark. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" for a discussion of the financing of the Company including a discussion of restrictions on investments by the Restricted Group. The Company's consolidated cable television systems are concentrated in the New York City greater metropolitan area (74.6% of the Company's total subscribers) and the greater Cleveland metropolitan area (14.8% of total subscribers). The Company believes that its cable systems on Long Island comprise the largest group of contiguous cable television systems under common ownership in the United States (measured by number of subscribers). RECENT DEVELOPMENTS V CABLE TRANSACTIONS On February 2, 1996, the Company entered into an agreement, as amended, (the "GECC Agreement") with General Electric Capital Corporation ("GECC"), pursuant to which the Company plans to effect a reorganization and recapitalization relating to its V Cable subsidiary. As of December 31, 1995, V Cable served approximately 378,000 subscribers, principally in the suburbs of Cleveland, Ohio and on Long Island. As part of this reorganization and recapitalization, (i) On March 18, 1996 the Company paid $500 million of V Cable debt and $70 million of U.S. Cable debt, together with accrued interest, with proceeds from the Company's issuance in February 1996 of $650 million aggregate liquidation preference of 11-1/8% Series L Redeemable Exchangeable Preferred Stock (the "Series L Preferred Stock"); (ii) all remaining indebtedness of V Cable (which would have amounted to $399 million at December 31, 1995 after giving effect to the March 18, 1996 repayment of $500 million) will be paid with the remainder of the proceeds of the Series L Preferred Stock, additional borrowings under the Restricted Group's credit agreement and from funds available under a new Cablevision of Ohio credit facility, referred to below; (iii) the Company will contribute its North Coast Cable television system (which served approximately 88,000 subscribers in the Cleveland metropolitan area as of December 31, 1995), which is currently part of the Company's Restricted Group, to a new unrestricted subsidiary, Cablevision of Ohio which will also hold V Cable's Ohio cable television systems and Cablevision of Ohio will enter into a new $450 million credit facility with a group of banks; (iv) the Long Island cable television systems of V Cable (161,000 subscribers as of December 31, 1995) will be designated as part of the Company's Restricted Group and the balance of the debt owed to GECC associated with those systems will be repaid with the proceeds of Restricted Group borrowings under the Company's credit agreement; and (v) the 80% interest in U.S. Cable (which served (4) approximately 242,000 subscribers as of December 31, 1995), including U.S. Cable's 19% interest in VC Holdings, will be acquired for an aggregate additional cost of $151 million which will be raised through a separate bank facility (U.S. Cable will be part of the Company's Unrestricted Group). NEW CABLEVISION OF OHIO CREDIT FACILITY As part of the V Cable reorganization and recapitalization, the Company will combine its existing North Coast Cable television system and the Ohio cable television systems of V Cable into Cablevision of Ohio, which will be a wholly-owned subsidiary of the Company and a member of the Unrestricted Group. A group of banks has committed to provide a $450 million credit facility to Cablevision of Ohio, consisting of a $375 million nine-year reducing revolving credit facility and a $75 million 9-1/2 year term loan. In connection with the consummation of the reorganization and recapitalization of V Cable, Cablevision of Ohio expects to draw approximately $289 million under the $450 million credit facility which will be used to repay outstanding V Cable debt to GECC and to repay Restricted Group debt assumed by Cablevision of Ohio in connection with the contribution of North Coast Cable. U.S. CABLE ACQUISITION On March 18, 1996, the Company contributed $70 million of proceeds of the Series L Preferred Stock mentioned above to U.S. Cable. U.S. Cable applied the $70 million to the prepayment to GECC of a portion of the indebtedness under its credit facility. The GECC Agreement contemplates that following the receipt of any required franchise and regulatory approvals, the U.S. Cable partnership will (i) redeem the 80% of U.S. Cable's partnership interests not already owned by V Cable for approximately $4 million, (ii) refinance the remaining $151 million of U.S. Cable indebtedness payable to GECC. The funds to redeem the partnership interest and to repay indebtedness owed to GECC will be provided by a drawdown under a $175 million credit facility arranged with a new group of banks. As part of the acquisition of the 80% interest in U.S. Cable which the Company does not already own, the Company will acquire the 19% interest in VC Holdings currently held by U.S. Cable. There can be no assurance that the V Cable reorganization, including the acquisition of U.S. Cable partners' interests, will be consummated or will be consummated in the form presently contemplated. OFFERINGS AND ACQUISITION In February 1996, the Company issued 6,500,000 depositary shares, representing 65,000 shares of 11-1/8% Series L Preferred Stock with an aggregate liquidation preference of $650 million. The depository shares are exchangeable, in whole but not in part, at the option of the Company, on or after April 1, 1996, for the Company's 11-1/8% Senior Subordinated Debentures due 2008. The Company is required to redeem the Series L (5) Preferred Stock on April 1, 2008 at a redemption price equal to the liquidation preference of $10,000 per share plus accumulated and unpaid dividends. The Series L Preferred Stock is redeemable at various redemption prices beginning at 105.563% at any time on or after April 1, 2003, at the option of the Company, with accumulated and unpaid dividends thereon to the date of redemption. The net proceeds of approximately $626 million was used to repay $570 million of V Cable and U.S. Cable indebtedness in connection with the V Cable Transactions, as discussed above, with the balance of approximately $56 million initially used to repay borrowings under the Company's Credit Agreement. Such amount is expected to be reborrowed at the time of consummation of the V Cable Transactions, which is expected to occur during the third quarter of 1996. On December 15, 1995, the Company acquired the interests in Cablevision of Boston that it did not previously own. Cablevision of Boston served approximately 146,300 subscribers on the date of acquisition. In connection with the acquisition, Cablevision of Boston became a member of the Restricted Group, all outstanding subordinated advances made by the Company to Cablevision of Boston became intercompany indebtedness and, effective December 15, 1995, the results of operations of Cablevision of Boston are consolidated with those of the Company. See "Consolidated Cable Affiliates - Cablevision of Boston". In November 1995, the Company issued 13,800,000 depositary shares representing 1,380,000 shares of 8-1/2% Series I Cumulative Convertible Exchangeable Preferred Stock with an aggregate liquidation preference of $345 million (the "Series I Preferred Stock"). The depositary shares are convertible into shares of the Company's Class A Common Stock at an initial conversion price of $67.44 per share of Class A Common Stock. The Company applied the net proceeds of approximately $334 million to the repayment of Restricted Group bank indebtedness. Also in November 1995, the Company issued $300 million aggregate principal amount of 9-1/4% Senior Subordinated Notes due 2005 (the "2005 Notes"). The Company applied the net proceeds of approximately $292 million of the 2005 Notes to the repayment of Restricted Group bank indebtedness. In September 1995, the Company issued 2,500,000 shares of its 11-3/4% Series G Redeemable Exchangeable Preferred Stock with an aggregate liquidation preference of $250 million (the "Series G Preferred Stock"). The net proceeds of approximately $239 million were initially used to repay bank borrowings. (6) CABLE TELEVISION OPERATIONS GENERAL. As of December 31, 1995, the Company's consolidated cable television systems served approximately 2,061,000 subscribers in New York, Ohio, Connecticut, New Jersey, Michigan, and Massachusetts. The following table sets forth certain statistical data regarding the Company's cable television operations (1). During 1995 Cablevision of Boston, formerly an unconsolidated affiliate, became part of the Restricted Group and Cablevision of Chicago was sold. During 1994 CNYC and North Coast Cable became part of the Restricted Group.
As of December 31, ------------------------------ 1995 1994 1993 ---- ---- ---- Homes passed (2): Restricted group. . . . . . . . 2,549,000 2,139,000 1,086,000 Unrestricted group. . . . . . . 779,000 760,000 509,000 --------- --------- --------- Company consolidated. . . . . . 3,328,000 2,899,000 1,595,000 --------- --------- --------- --------- --------- --------- Managed unconsolidated cable affiliates. . . . . . . . . . 988,000 1,427,000 2,181,000 --------- --------- --------- --------- --------- --------- Basic service subscribers: . . . . . . . . Restricted group. . . . . . . . 1,512,000 1,243,000 815,000 Unrestricted group. . . . . . . 549,000 525,000 350,000 --------- --------- --------- Company consolidated. . . . . . 2,061,000 1,768,000 1,165,000 --------- --------- --------- --------- --------- --------- Managed unconsolidated cable affiliates. . . . . . . . . . 662,000 861,000 1,067,000 --------- --------- --------- --------- --------- --------- Average number of premium units per. . . . basic subscriber:. . . . . . . . . . . . Restricted group. . . . . . . . 2.2 2.2 1.8 Unrestricted group. . . . . . . 1.1 1.0 1.3 Company consolidated. . . . . . 1.9 1.8 2.2 Managed unconsolidated cable affiliates . . . . . . . . . . 1.1 1.2 2.0 Average revenue per basic subscriber (3):. Restricted group. . . . . . . . $38.82 $38.29 $38.01 Unrestricted group. . . . . . . $32.45 $31.72 $30.56 Company consolidated. . . . . . $37.07 $36.33 $36.59 Managed unconsolidated cable affiliates. . . . . . . . . . $28.68 $29.71 $32.50
- -------------- (1) No information is provided in this table for any period in which an entity was not a consolidated subsidiary of the Company. (2) Homes passed is based upon homes actually marketed and does not include multiple dwelling units passed by the cable plant that are not connected to it. (3) Based on recurring service revenues for the last month of the period, excluding installation charges and certain other non-recurring revenues such as pay-per-view, advertising and home shopping revenues. See "Business - Cable Television Operations - Subscriber Rates and Services; Marketing and Sales". (7) SUBSCRIBER RATES AND SERVICES; MARKETING AND SALES. The Company's cable television systems offer a package of services, generally marketed as "Family Cable", which includes, among other programming, broadcast network local affiliates and independent television stations, satellite-delivered "superstations" and certain other news, information and entertainment channels such as CNN, CNBC, ESPN and MTV. For additional charges, the Company's cable television systems provide certain premium services such as HBO, Showtime, The Movie Channel and Cinemax, which may be purchased either individually (in conjunction with Family Cable) or in combinations or in tiers. In addition, the Company's cable television systems offer a basic package which includes broadcast network local affiliates and public, educational or governmental channels and certain public leased access channels. The Company offers premium services on an individual basis and as components of different "tiers". Successive tiers include additional premium services for additional charges that reflect discounts from the charges for such services if purchased individually. For example, in most of the Company's cable systems, subscribers may elect to purchase Family Cable plus one, two or three premium services with declining incremental costs for each successive tier. In addition, most systems offer a "Rainbow" package consisting of between five and seven premium services, and a "Rainbow Gold" package consisting of between eight and ten premium services. In certain areas with sufficient system capacity, the Company has branded a new product offering called OptimumTV. OptimumTV, which includes a minimum of 77 analog channels, offers the Basic and Family packages noted above, as well as premium services, and a group of three new packages containing premium networks and ad-supported news, information and entertainment channels. Depending upon the market, OptimumTV offers customers anywhere from 20 to 30 new cable channels, including additional pay-per-view channels that offer new films and sporting events on a transactional basis. Since its existing cable television systems are substantially fully built, the Company's sales efforts are primarily directed toward increasing penetration and revenues in its franchise areas. The Company sells its cable television services through door-to-door selling supported by telemarketing, direct mail advertising, promotional campaigns and local media and newspaper advertising. Certain services and equipment (converters which are leased to subscribers) provided by substantially all of the Company's cable television systems are subject to regulation. See "Business - Cable Television Operations - Regulation - 1992 Cable Act." SYSTEM CAPACITY. The Company is engaged in an ongoing effort to upgrade the technical capabilities of its cable plant and to increase channel capacity for the delivery of additional programming (8) and new services. The Company's cable television systems have a minimum capacity of 35 channels and 85% of its subscribers are currently served by systems having a capacity of at least 52 channels. As a result of currently ongoing upgrades, the Company expects that by December 1996 approximately 70% of its subscribers will be served by systems having a capacity of at least 77 channels. A substantial portion of the system upgrades either completed or underway will utilize fiber optic cable. PROGRAMMING. Adequate programming is available to the Company from a variety of sources. Program suppliers' compensation is typically a fixed, per subscriber monthly fee based, in most cases, either on the total number of subscribers of the cable systems of the Company and certain of its affiliates, or on the number of subscribers subscribing to the particular service. The Company's programming contracts are generally for a fixed period of time and are subject to negotiated renewal. The Company's cable programming costs have increased in recent years and are expected to continue to increase due to additional programming being provided to most subscribers, increased costs to produce or purchase cable programming and other factors. Management believes that the Company will continue to have access to programming services at reasonable price levels. FRANCHISES. The Company's cable television systems are operated primarily under nonexclusive franchise agreements with local governmental franchising authorities, in some cases with the approval of state cable television authorities. Franchising authorities generally charge a fee of up to 5% based on a percentage of certain revenues of the franchisee. In 1995 franchise fee payments made by the Company aggregated approximately 4% of total revenues. The Company's franchise agreements are generally for a term of ten to fifteen years from the date of grant, although recently renewals have often been for five to ten year terms. Some of the franchises grant the Company an option to renew. Except for the Company's franchise for the Town of Brookhaven, New York which expired in 1991, the expiration dates for the Company's ten largest franchises range from 1995 to 2001. In certain cases, including the Town of Brookhaven, the Company is operating under temporary licenses while negotiating renewal terms with the franchising authorities. Franchises usually require the consent of the franchising authority prior to the sale, assignment, transfer or change in ownership or operating control of the franchisee. The Cable Communications Policy Act of 1984 (the "1984 Cable Act") and the Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act") provide significant procedural protections for cable operators seeking renewal of their franchises. See "Business - Cable Television Operations -Regulation". In connection with a renewal, a franchising authority may impose different and more stringent terms. The Company has never lost a franchise as a result of a failure to obtain a renewal. (9) COMPETITION. The Company's cable television systems generally compete with the direct reception of broadcast television signals by antenna and with other methods of delivering television signals to the home for a fee. The extent of such competition depends upon the number and quality of the signals available by direct antenna reception as compared to the number and quality of signals distributed by the cable system. The Company's cable television systems also compete to varying degrees with other communications and entertainment media, including movies, theater and other entertainment activities. The recently adopted Telecommunications Act of 1996 ("1996 Telecom Act") signed into law on February 8, 1996, repeals the 1984 Act prohibition against telco-cable cross-ownership and provides that a local exchange telephone company may provide video programming directly to subscribers through a variety of means, including (1) as a radio-based (MMDS or DBS) multichannel video programming distributor; (2) as a cable operator, fully subject to the franchising, rate regulation and other provisions of the 1984 and 1992 Cable Acts; and (3) through an "open video system" that is certified by the FCC to be offering nondiscriminatory access to a portion of its channel capacity for unaffiliated program distributors, subject only to selected portions of the regulations applicable to cable operators. A local telephone company also may provide the "transmission of video programming" on a common carrier basis. Telephone companies in several of the Company's franchise areas have applied for franchises to offer cable service fully subject to the 1984 and 1992 Cable Acts. The 1996 Telecom Act also prohibits a telephone company or a cable system operator in the same market from acquiring each other, except in limited circumstances, such as areas of smaller population. Cable television also competes with the home video industry. Owners of videocassette recorders are able to rent many of the same movies, special events and music videos that are available on certain premium services. The availability of videocassettes has affected the degree to which the Company is able to sell premium service units and pay-per-view offerings to some of its subscribers. Multipoint distribution services ("MDS"), which deliver premium television programming over microwave superhigh frequency channels received by subscribers with a special antenna, and multichannel multipoint distribution service ("MMDS"), which is capable of carrying four channels of television programming, also compete with certain services provided by the Company's cable television systems. By acquiring several MMDS licenses or subleasing from several MMDS operators and holders of other types of microwave licenses, a single entity can increase channel capacity to a level more competitive with cable systems. MDS and MMDS systems are not required to obtain a municipal franchise, are less capital intensive, require lower up-front capital expenditures and are subject to fewer local and FCC regulatory requirements than cable systems. The ability of MDS and MMDS systems to serve homes and to appeal to consumers is affected by their less extensive channel capacity and the need for unobstructed line of sight (10) over-the-air transmission. The Company competes with MDS and MMDS operators generally in its metropolitan service areas. Satellite master antenna systems ("SMATV") generally serve large multiple dwelling units. The FCC has preempted all state and local regulation of SMATV operations. SMATV is limited to the buildings within which the operator has received permission from the building owner to provide service. The FCC has recently streamlined its MDS regulations and opened substantially more microwave channels to MDS and SMATV operators, which could increase the strength of their competition with cable television systems. The Company competes with SMATV operators primarily in the New York City metropolitan service area. The 1996 Telecom Act amends the definition of cable system to exclude facilities that do not use public rights-of-way (e.g., SMATV operators serving multiple buildings not under common ownership or control), thus exempting such facilities from franchise and other requirements applicable to cable operators. In January 1993, the FCC proposed establishing a new local multipoint distribution service ("LMDS", sometimes referred to as "cellular cable") in the virtually unused 28 GHz band of the electromagnetic spectrum that could be used to offer multichannel video in competition with cable systems, as well as two-way communications services. The FCC has proposed issuing two LMDS licenses per market, using auctions or lotteries to select licensees. Suite 12 Group, the originator of this service, currently holds an experimental license and has constructed a video transmission service using the 28 Ghz band in a portion of the Company's New York City service area. The 1984 Cable Act specifically legalized, under certain circumstances, reception by private home earth stations of satellite-delivered cable programming services. By law, dish owners have the right to receive broadcast superstations and network affiliate transmissions in return for a compulsory copyright fee. Cable programmers have developed new marketing efforts to reach these viewers. Direct broadcast satellite ("DBS") systems currently permit satellite transmissions from the low-power C-Band to be received by antennae approximately 60 to 72 inches in diameter at the viewer's home. New higher power DBS systems providing transmissions over the Ku-Band permit the use of smaller receiver antennae and thus may be more appealing to customers. Four DBS systems are now operational in the United States. Both C-Band and Ku-Band DBS delivery of television signals are competitive alternatives to cable television. Other technologies supply services that may compete with certain services provided by cable television. These technologies include translator stations (which rebroadcast signals at different frequencies at lower power to improve reception) and low-power television stations (which operate on a single channel at power levels substantially below those of most conventional broadcasters and, therefore, reach a smaller service area). The full extent to which developing media will compete with cable television systems may not be known for several years. There can be no assurance that existing, proposed or as yet undeveloped technologies will not become dominant in the future and render cable television systems less profitable or even obsolete. In particular, certain major telephone (11) companies have demonstrated an interest in acquiring cable television systems or providing video services to the home through fiber optic technology. Changes in the laws and regulations mentioned above governing telephone companies could allow these companies in the future to provide information and entertainment services to the home. Although substantially all the Company's cable television franchises are non-exclusive, most franchising authorities have granted only one franchise in an area. Other cable television operators could receive franchises for areas in which the Company operates or a municipality could build a competing cable system. One company has applied for and obtained a franchise to build and operate a competing cable television system in several communities in Connecticut in which the Company currently holds a cable franchise. This franchise is subject to cancellation if the holders do not provide by August 1996, evidence of their ability to finance the construction of the cable system. The Company has challenged the grant of this franchise in state court. As mentioned above, telephone companies in several of the Company's franchise areas have applied for franchises to offer cable service. The 1992 Cable Act described below prohibits municipalities from unreasonably refusing to grant competitive franchises and facilitates the franchising of second cable systems or municipally-owned cable systems. See "Regulation - 1992 Cable Act," below. REGULATION. 1984 CABLE ACT. In 1984, Congress enacted the 1984 Cable Act, which set uniform national guidelines for cable regulation under the Communications Act of 1934. While several of the provisions of the 1984 Cable Act have been amended or superseded by the 1992 Cable Act and/or the 1996 Telecom Act, each described below, other provisions of the 1984 Act, including the principal provisions relating to the franchising of cable television systems, remain in place. The 1984 Cable Act authorizes states or localities to franchise cable television systems but sets limits on their franchising powers. It sets a ceiling on cable franchise fees of 5% of gross revenues and prohibits localities from requiring cable operators to carry specific programming services. The 1984 Cable Act protects cable operators seeking franchise renewals by limiting the factors a locality may consider and requiring a due process hearing before denial. The 1984 Cable Act does not, however, prevent another cable operator from being authorized to build a competing system. The 1992 Cable Act prohibits franchising authorities from granting exclusive cable franchises and from unreasonably refusing to award an additional competitive franchise. The 1984 Cable Act allows localities to require free access to public, educational or governmental channels, but sets limits on the number of commercial leased access channels cable television operators must make available for potentially competitive services. The 1984 Cable Act prohibits obscene programming and requires the sale or lease of devices to block programming considered offensive. (12) 1992 CABLE ACT. On October 5, 1992, Congress enacted the 1992 Cable Act which represents a significant change in the regulatory framework under which cable television systems operate. After the effective date of the 1984 Cable Act, and prior to the enactment of the 1992 Cable Act, rates for cable services were unregulated for substantially all of the Company's systems. The 1992 Cable Act reintroduced rate regulation for certain services and equipment provided by most cable systems in the United States, including substantially all of the Company's systems. On April 1, 1993, the FCC adopted rules implementing the rate regulation provisions of the 1992 Cable Act. While several of the provisions of the 1992 Cable Act have been amended or superseded by the 1996 Telecom Act, other provisions remain in place. The 1992 Cable Act requires each cable system to establish a basic service package consisting, at a minimum, of all local broadcast signals and all non-satellite delivered distant broadcast signals that the cable system wishes to carry, and all public, educational and governmental access programming. The rates for the basic service package are subject to regulation by local franchising authorities. Under the FCC's April 1, 1993 rate regulation rules, a cable operator whose per channel rates as of September 30, 1992 exceeded an FCC established benchmark was required to reduce its per channel rates for the basic service package by up to 10% unless it could justify higher rates on the basis of its costs. On February 22, 1994, after reconsideration, the FCC ordered a further reduction of 7% in rates for the basic service tier in effect on September 30, 1992, for an overall reduction of 17% from those rates. The amount of this 17% decrease that is below a new per channel benchmark need not be implemented pending completion of FCC studies of the costs of below-benchmark cable systems. In the interim, however, the amount of the 17% decrease that is below this benchmark must be computed by the cable system and must be offset against otherwise allowable rate increases by these systems. Franchise authorities (local municipalities or state cable television regulators) are also empowered to regulate the rates charged for the installation and lease of the equipment used by subscribers to receive the basic service package (including a converter box, a remote control unit and, if requested by a subscriber, an addressable converter box or other equipment required to access programming offered on a per channel or per program basis), including equipment that may also be used to receive other packages of programming, and the installation and monthly use of connections for additional television sets. The FCC's rules require franchise authorities to regulate rates for equipment and connections for additional television sets on the basis of an actual cost formula developed by the FCC, plus a return of 11.25%. No additional charge is permitted for the delivery of regulated services to additional sets unless the operator incurs additional programming costs in connection with the delivery of such services to multiple sets. The FCC may, in response to complaints by a subscriber, municipality or other governmental entity, reduce the rates for service packages other than the basic service package if it finds that such rates are unreasonable. The FCC will in response to complaints also regulate, on the basis of actual cost, the rates for equipment used only to receive these higher packages. Services offered on a per channel or per program basis or (13) packages comprised only of services that are also available on a per channel or per program basis are not subject to rate regulation by either municipalities or the FCC. The FCC on February 22, 1994 adopted criteria to assess whether certain discounted packages of "a la carte" or per channel offerings should be regulated as a tier of services by the FCC or should be treated as unregulated per channel offerings. The regulations adopted by the FCC on April 1, 1993, including the original rate benchmarks, became effective on September 1, 1993. The new rate regulations adopted by the FCC on February 22, 1994, including the new benchmarks, became effective in May, 1994. The FCC's rules provide that, unless a cable operator can justify higher rates on the basis of its costs, increases in the rates charged by the operator for the basic service package or any other regulated package of service may not exceed an inflation indexed amount, plus increases in certain costs beyond the cable operator's control, such as taxes, franchise fees and increased programming costs that exceed the inflation index. A cable operator may not pass through to subscribers any amounts paid by the operator on or before October 6, 1994, to broadcast stations for the retransmission of their signals. Increases in retransmission fees above those in effect on that day may be passed through to subscribers. As part of the implementation of its rate regulations, the FCC froze all cable service rates until May 15, 1994 and provided cable operators with the option to defer refund liabilities by continuing rates in effect until July 15, 1994. The Company elected to defer its refund liabilities. On February 22, 1994, the FCC adopted guidelines for cost-of-service showings that establish a regulatory framework pursuant to which a cable television operator may attempt to justify rates in excess of the benchmarks. Such justification would be based upon (i) the operator's costs in operating a cable television system (including certain operating expenses, depreciation and taxes) and (ii) a return on the investment the operator has made to provide regulated cable television services in such system (such investment being referred to as its "ratebase", which includes working capital and certain costs associated with the construction of such system). The guidelines (1) create a rebuttable presumption that excludes from a cable television operator's ratebase any "excess acquisition costs" (equal to the excess of the purchase price for a cable television system over the original construction cost of such system, or its book value at the time of acquisition), (2) include in the rate base the costs associated with certain intangibles such as franchise rights and customer lists, and (3) set a uniform rate of return for regulated cable television service of 11.25% after taxes. The interim guidelines originally included a "productivity offset feature" that could reduce otherwise justifiable rate increases based on a claimed increase in a cable television system's operational efficiencies. The FCC dropped this proposal in September, 1994. On November 10, 1994, the FCC reversed its policy regarding rate regulation of packages of a la carte services. A la carte services that are offered in a package will now be subject to rate regulation by the FCC. In light of the uncertainty created by the various criteria that the FCC previously applied to a la carte packages, the FCC, in those cases in which (14) it was not clear how the FCC's previous criteria should have been applied to the package at issue, and where only a "small number" of channels were moved from a previously regulated tier to the package, will allow cable operators to treat existing packages as new product tiers ("NPT") as discussed below. The FCC, in addition to revising its rules governing a la carte channels, also on November 10, 1994 revised its regulations governing the manner in which cable operators may charge subscribers for new cable programming services. The FCC instituted a three-year flat fee mark-up plan for charges relating to new channels of cable programming services in addition to the present formula for calculating the permissible rate for new services. Commencing on January 1, 1995, operators may charge for new channels of cable programming services added after May 14, 1994 at a markup of up to 20 cents per channel over actual programming costs, but may not make adjustments to monthly rates for these new services totaling more than $1.20, plus an additional 30 cents solely for programming license fees, per subscriber over the first two years of the three-year period. Cable operators may charge an additional 20 cents in the third year only for channels added in that year. Cable operators electing to use the 20 cent per channel adjustment may not take a 7.5% mark-up on programming cost increases, which is permitted under the FCC's current rate regulations. The FCC requested further comment on whether cable operators should continue to receive the 7.5% mark-up on increases in license fees on existing programming services. Additionally, the FCC will permit cable operators to offer NPTs at rates which they elect so long as, among other conditions, other service tiers that are subject to rate regulation are priced in conformity with applicable FCC regulations and cable operators do not remove programming services from existing service tiers and offer them on the NPT. Under the 1992 Cable Act, systems may not require subscribers to purchase any service package other than the basic service package as a condition of access to video programming offered on a per channel or per program basis. Cable systems are allowed up to ten years to the extent necessary to implement the necessary technology to facilitate this access. Substantially all of the Company's systems are currently capable of implementing the technology mandated by the 1992 Cable Act. In addition, the 1992 Cable Act (i) requires cable programmers under certain circumstances to offer their programming to present and future competitors of cable television such as MMDS, SMATV and DBS, and prohibits new exclusive contracts with program suppliers without FCC approval, (ii) directs the FCC to set standards for limiting the number of channels that a cable television system operator could program with programming services controlled by such operator, (iii) bars municipalities from unreasonably refusing to grant additional competitive franchises, (iv) requires cable television operators to carry ("Must Carry") all local broadcast stations (including home shopping broadcast stations), or, at the option of a local broadcaster, to obtain the broadcaster's prior consent for retransmission of its signal ("Retransmission Consent"), (v) requires cable television operators to obtain the consent of any non-local broadcast station prior to retransmitting its signal, and (vi) regulates the ownership by cable operators of (15) other media such as MMDS and SMATV. In connection with clause (ii) above concerning limitations on affiliated programming, the FCC has established a 40% limit on the number of channels of a cable television system that can be occupied by programming services in which the system operator has an attributable interest and a national limit of 30% on the number of households that any cable company can serve. In connection with clause (iv) above concerning retransmission of a local broadcaster's signals, a substantial number of local broadcast stations are currently carried by the Company's cable television systems and have elected to negotiate with the Company for Retransmission Consent. Although the Company has obtained Retransmission Consent agreements with all broadcast stations it currently carries, a number of these agreements are temporary in nature and the potential remains for discontinuation of carriage if an agreement is not renewed following their expiration. Renewal periods for several of these agreements expire in October 1996. The FCC has imposed new regulations under the 1992 Cable Act in the areas of customer service, technical standards, equal employment opportunity, privacy, rates for leased access channels, obscenity and indecency, disposition of a customer's home wiring and compatibility between cable systems and other consumer electronic equipment such as "cable ready" television sets and videocassette recorders. A number of lawsuits have been filed in federal court challenging the constitutionality of various provisions of the 1992 Cable Act. A challenge to the constitutionality of the 1992 Cable Act's Must Carry rules was denied by a federal court in April 1993. On appeal, the United States Supreme Court returned this decision to the lower court for further proceedings. The lower court again upheld the Must Carry rules, but this decision is on appeal to the Supreme Court. Most other challenged provisions of the 1992 Cable Act have been upheld at the federal district court level, including provisions governing rate regulation and retransmission consent, and appeal of the rate regulation decision was unsuccessful. The Company cannot predict the outcome of any of the foregoing litigation affecting the 1992 Cable Act. 1996 TELECOM ACT. The 1996 Telecom Act deregulates the rates for non-basic tiers of service provided by all cable operators after March 31, 1999 and immediately deregulates the upper tier rates of entities that operate small cable systems as defined under the statute. It permits regulated equipment rates to be computed by aggregating costs of broad categories of equipment at the franchise, system, regional or company level. The 1996 Telecom act eliminates the right of individual subscribers to file rate complaints with the FCC concerning certain nonbasic cable programming service tiers. The 1992 Cable Act provided that all rate regulation, for both the upper tiers and for basic service, is eliminated when a cable system is subject to "effective competition" from another multichannel video programming provider such as MMDS, DBS, a telephone company, or a combination of all of these. The 1996 Telecom Act expanded the definition of "effective competition" to include instances in which a local telephone company or its affiliate (or a multichannel video programming distributor using the facilities of a telephone company or its affiliates) offers comparable video programming (16) directly to subscribers by any means (other than DBS) in the cable operator's franchise area. Since telephone companies are providing or planning to provide video services in several of the Company's franchise areas, this provision will allow the Company greater flexibility in packaging and pricing its product in those markets. The 1996 Telecom Act also eliminates the uniform rate structure requirements of the 1992 Cable Act for cable operators in areas subject to effective competition or to video programming offered on a per channel or per program basis, and allows non-uniform bulk discount rates to be offered to multiple dwelling units. OTHER FCC REGULATION. In addition to the rules and regulations promulgated by the FCC under the 1984 Cable Act, the 1992 Cable Act and the 1996 Telecom Act, the FCC has promulgated other rules affecting the Company. FCC rules require that cable systems black out certain network and sports programming on imported distant broadcast signals upon request. The FCC also requires that cable systems delete syndicated programming carried on distant signals upon the request of any local station holding the exclusive right to broadcast the same program within the local television market and, in certain cases, upon the request of the copyright owner of such programs. These rules affect the diversity and cost of the Company's programming options for its cable systems. FCC regulation also includes matters regarding restrictions on origination and cablecasting by cable system operators; application of the rules governing political broadcasts; customer service; home wiring and limitations on advertising contained in nonbroadcast children's programming. Implementing provisions of the 1993 Budget Act, the FCC has adopted requirements for payment of annual "regulatory fees". For 1994, cable television systems were required to pay regulatory fees of $0.37 per subscriber, which may be passed on to subscribers as "external cost" adjustments to basic cable service. This fee was increased to $0.51 per subscriber for 1995, and may be further increased in 1996. Fees are also assessed for other licenses, including licenses for business radio, cable television relay systems (CARS) and earth stations, which, however, may not be collected directly from subscribers. The FCC has the authority to regulate utility company rates for cable rental of pole and conduit space. States can establish preemptive regulations in this area, and the states in which the Company's cable television systems operate have done so. The 1996 Telecom Act modifies the current pole attachment provisions of the Communications Act by requiring that utilities provide cable systems and telecommunications carriers with nondiscriminatory access to any pole, conduit or right-of-way controlled by the utility. The FCC is required to adopt new regulations to govern the charges for pole attachments used by companies providing telecommunications services, including cable operators. These regulations are likely to increase the rates charged to cable companies providing voice and data, in addition to video services. These new pole attachment regulations will not become effective, however, until five years after enactment of the 1996 Telecom Act, and any increase in attachment rates resulting from the FCC's new regulations will be phased in equal annual increments over a period of five years. (17) The FCC's technical guidelines for signal leakage became substantially more stringent in 1990, requiring upgrading expenditures by the Company. Two-way radio stations, microwave-relay stations and satellite earth stations used by the Company's cable television systems are licensed by the FCC. FEDERAL COPYRIGHT REGULATION. There are no restrictions on the number of distant broadcast television signals that cable television systems can import, but cable systems are required to pay copyright royalty fees to receive a compulsory license to carry them. The United States Copyright Office has increased the royalty fee from time to time. The FCC has recommended to Congress the abolition of the compulsory licenses for cable television carriage of broadcast signals. Any such action by Congress could adversely affect the Company's ability to obtain such programming and could increase the cost of such programming. CABLE TELEVISION CROSS-MEDIA OWNERSHIP LIMITATIONS. In addition to the prohibition on telephone company-cable cross-ownership, now removed by the 1996 Telecom Act, the 1984 Cable Act prohibited any person or entity from owning broadcast television and cable properties in the same market. The 1992 Cable Act imposed limits on new acquisitions of SMATV or MMDS systems by cable operators in their franchise areas. The 1996 Telecom Act repeals the statutory ban on cable-broadcast station cross-ownership to permit common ownership or control of a television station and a cable system with overlapping service areas. The 1996 Telecom Act leaves in place, however, the cable system-television station cross-ownership restriction contained in the FCC's rules and does not prejudge the Commission's review of the regulation, which will occur this year. The 1996 Telecom Act also directs the FCC to revise its existing regulations concerning broadcast network-cable cross-ownership to permit common control of both a television network and a cable system. The 1996 Telecom Act removes the statutory ban on cable-MMDS cross-ownership on any cable operator in a franchise area where one cable operator is subject to effective competition. STATE AND MUNICIPAL REGULATION OF CABLE TELEVISION. Regulatory responsibility for essentially local aspects of the cable business such as franchisee selection, system design and construction, safety, and consumer services remains with either state or local officials and, in some jurisdictions, with both. The 1992 Cable Act expanded the factors that a franchising authority can consider in deciding whether to renew a franchise and limits the damages for certain constitutional claims against franchising authorities for their franchising activities. New York law provides for comprehensive state-wide regulation, including approval of transfers of cable franchises and consumer protection legislation. State and local franchising jurisdiction is not unlimited, however, and must be exercised consistently with the provisions of the 1984 Cable Act and the 1992 Cable Act. Among the more significant restrictions that the Cable Act imposes on the regulatory jurisdiction of local franchising authorities is a 5% ceiling on franchise fees and mandatory renegotiation of certain franchise requirements if warranted by changed circumstances. TELECOMMUNICATIONS REGULATION. The 1996 Telecom Act removes barriers to entry in the local telephone market that is now monopolized by the BOCs and other local exchange (18) carriers by preempting state and local laws that restrict competition and by requiring incumbent local exchange telephone companies to provide nondiscriminatory access and interconnection to potential competitors, such as cable operators and long distance companies. At the same time, the new law eliminates the Modified Final Judgment and permits the BOCs to enter the market for long distance service (through a separate subsidiary) after they satisfy a "competitive checklist." The 1996 Telecom Act also permits interstate utility companies to enter the telecommunications market for the first time. The 1996 Telecom Act also eliminates or streamlines many of the requirements applicable to local exchange carriers, and requires the FCC and states to review universal service programs and encourage access to advanced telecommunications services provided by all entities, including cable companies, by schools, libraries and other public institutions. The FCC and, in some cases, states are required to conduct numerous rulemaking proceedings to implement these provisions. CONSOLIDATED CABLE AFFILIATES V CABLE. In February 1996, the Company entered into the GECC Agreement pursuant to which the Company plans to effect a reorganization and recapitalization relating to V Cable and U.S. Cable. For a description see "Recent Developments - V Cable Transactions" above and Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources". For a description of V Cable's debt at December 31, 1995 see Note 4 of Notes to Financial Statements. CABLEVISION OF BOSTON. On December 15, 1995, the Company acquired the interests in Cablevision of Boston that it did not previously own pursuant to an agreement entered into by the Company and Cablevision of Boston. In connection with the acquisition, the limited partners (other than the Company) of Cablevision of Boston received 682,454 shares (of which 680,266 shares were issued by December 31, 1995) of the Company's Class A Common Stock and the Company paid approximately $83 million, (including fees and expenses) primarily with funds borrowed under the Company's Credit Agreement, to repay existing Cablevision of Boston indebtedness and to make certain payments to Charles F. Dolan, ("Mr. Dolan") referred to below. Upon consummation of the acquisition, Cablevision of Boston became a member of the Restricted Group and all outstanding subordinated advances made by the Company to Cablevision of Boston became intercompany indebtedness. Mr. Dolan, a former general partner of Cablevision of Boston and the Chairman of the Board of the Company, received 7,357 shares of the Company's Class A Common Stock and approximately $20.8 million in cash to repay a portion of Cablevision of Boston's indebtedness to him in connection with the acquisition. The Company and its affiliates (other than Cablevision of Boston's former general partners and their affiliates) received 1,041,553 shares of the Company's Class A Common Stock (such shares are reflected as treasury shares at December 31, 1995) and assumed approximately $42.9 million of intercompany indebtedness referred to above. As part of the acquisition of Cablevision of Boston, the Company entered into an agreement with Mr. Dolan with respect to his 0.5% general partnership interest in Cablevision of Brookline (19) Limited Partnership ("Cablevision of Brookline"), a partnership affiliated with Cablevision of Boston. The Company acquired the remaining 99.5% of the partnership interests in Cablevision of Brookline in the acquisition of Cablevision of Boston. Under the agreement, the Company has a right of first refusal to acquire Mr. Dolan's general partnership interest and a right to acquire such interest on the earlier to occur of Mr. Dolan's death or January 1, 2002 at the greater of $10,000 or the book value of such interest. Mr. Dolan's estate has the right to put the interest to the Company at the same price. Additionally, in the event of a change of control of the Company or Cablevision of Brookline, Mr. Dolan will have the right to put his general partnership interest in Cablevision of Brookline to the Company at the greater of (i) prices declining from $3.9 million for the year ended December 15, 1996 to $10,000 for the year ended December 15, 2002 and (ii) the book value of such interest. CABLEVISION MFR. In August 1994, Cablevision MFR, Inc. ("Cablevision MFR"), a wholly-owned subsidiary of the Company, acquired substantially all of the assets of Monmouth Cablevision Associates, L.P. ("Monmouth Cablevision") and Riverview Cablevision Associates, L.P. ("Riverview Cablevision") (collectively, "Monmouth/Riverview") consisting of cable television systems in New Jersey. The operations of Monmouth Cablevision and Riverview Cablevision are consolidated with those of the Company as of the date of acquisition. The aggregate purchase price for the two New Jersey systems was $391.2 million. Approximately $237.8 million of such purchase price was financed by a senior credit facility of newly formed subsidiaries of Cablevision MFR secured solely by the assets of the systems. The remaining $153.4 million of such purchase price was paid with cash of approximately $12.1 million and the issuance, by Cablevision MFR, of subordinated promissory notes (the "MFR Notes") totalling $141.3 million due in 1998 and bearing interest at 6% until the third anniversary and 8% thereafter increasing to 8% and 10%, respectively, if the Company exercises its option to pay interest in shares of the Company's Class A common stock. Principal and interest on the Cablevision MFR promissory notes, which may be paid in cash or, under certain circumstances at the Company's option, in shares of the Company's Class A common stock, are guaranteed by the Company. The Company's obligations under the guarantees rank pari passu with the Company's public subordinated debt. In certain circumstances, Cablevision MFR may extend the maturity date of the promissory notes until 2003 for certain additional consideration. In the event the maturity is so extended, the interest and principal of such notes may thereafter be paid only in cash. CABLEVISION CLEVELAND. In March, 1994, Cablevision of Cleveland, L.P. ("Cablevision Cleveland"), a partnership comprised of subsidiaries of the Company, purchased substantially all of the assets and assumed certain liabilities of North Coast Cable Limited Partnership, which operates a cable television system in Cleveland, Ohio (the "North Coast Cable Acquisition"). The net cash purchase price for interests not previously owned by the Company (and excluding excess liabilities assumed by the Company) aggregated approximately $103.4 million including expenses. The cost of the acquisition was financed principally by borrowings under the Company's Credit Agreement. Cablevision Cleveland was part of the Restricted Group at December 31, 1995. (20) CABLEVISION OF NEW YORK CITY. In July 1992, the Company acquired (the "CNYC Acquisition") substantially all of the remaining interests in Cablevision of New York City - Phase I through Phase V ("CNYC"), the operator of a cable television system that is under development in The Bronx and parts of Brooklyn, New York. Prior to the CNYC Acquisition, the Company had a 15% interest in CNYC and Mr. Dolan owned the remaining interests. Mr. Dolan remains a partner in CNYC, with a 1% interest and the right to certain preferential payments. CNYC holds franchises that permit construction of the franchised areas in specified phases. Construction of the systems in the Brooklyn and The Bronx franchises has been substantially completed. Under the agreement between the Company and Mr. Dolan, a new limited partnership ("CNYC LP") was formed and holds 99% of the partnership interests in CNYC. The remaining 1% interest in CNYC is owned by the existing corporate general partner, Cablevision Systems New York City Corporation, which is a wholly-owned subsidiary of the Company. Subsidiaries of the Company own a 1% general partnership interest and a 98% limited partnership interest in CNYC LP and Mr. Dolan retains a 1% limited partnership interest in CNYC LP plus certain preferential rights. Mr. Dolan's preferential rights entitle him to an annual cash payment (the "Annual Payment") of 14% multiplied by the outstanding balance of his "Minimum Payment". The Minimum Payment is $40.0 million and is to be paid to Mr. Dolan prior to any distributions from CNYC LP to partners other than Mr. Dolan. In addition, Mr. Dolan has the right, exercisable on December 31, 1997, and as of the earlier of (1) December 31, 2000 and (2) December 31 of the first year after 1997 during which CNYC achieves an aggregate of 400,000 subscribers, to require the Company to purchase (Mr. Dolan's "put") his interest in CNYC LP. The Company has the right to require Mr. Dolan to sell his interest in CNYC LP to the Company (the Company's "call") during the three-year period commencing one year after the expiration of Mr. Dolan's second put. In the event of a put, Mr. Dolan will be entitled to receive from the Company the Minimum Payment, any accrued but unpaid Annual Payments, a guaranteed return on certain of his investments in CNYC LP and a Preferred Payment defined as a payment (not exceeding $150.0 million) equal to 40% of the Appraised Equity Value (as defined) of CNYC LP after making certain deductions including a deduction of a 25% compound annual return on approximately 85% of the Company's investments with respect to the construction of Phases III, IV and V of CNYC and 100% of certain of the Company's other investments in CNYC, including Mr. Dolan's Annual Payment. In the event the Company exercises its call, the purchase price will be computed on the same basis as for a put except that there will be no payment in respect of the Appraised Equity Value amount. The Company has the right to make payment of the put or call exercise price in the form of shares of the Company's Class B Common Stock or, if Mr. Dolan so elects, Class A Common Stock, except that all Annual Payments must be paid in cash to the extent permitted under the Company's Credit Agreement (as defined below). Under the Credit Agreement, the Company is currently prohibited from paying the Preferred Payment in (21) cash and, accordingly, without the consent of the bank lenders, would be required to pay it in shares of the Company's Common Stock. The Company has agreed to invest in CNYC LP sufficient funds to permit CNYC LP to make the required Annual Payments to Mr. Dolan. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Restricted Group." OTHER CABLE AFFILIATES A-R CABLE. In May 1992, the Company and A-R Cable consummated a restructuring and refinancing transaction that had the effect of retiring a substantial portion of A-R Cable's subordinated debt and reducing the Company's economic and voting interest in A-R Cable. See Note 2 of Notes to Consolidated Financial Statements. CABLEVISION OF NEWARK. Cablevision of Newark is a partnership 25% owned and managed by the Company and 75% owned by an affiliate of Warburg Pincus, operating cable television systems located in Newark and South Orange, New Jersey. The Company manages the operations of Cablevision of Newark for a fee equal to 3-1/2% of gross receipts, as defined, plus reimbursement of certain costs and an allocation of certain selling, general and administrative expenses. U.S. CABLE. In connection with the V Cable Reorganization, V Cable acquired for $20.0 million a 20% interest in U.S. Cable. See Note 2 of Notes to Financial Statements. The Company manages the properties of U.S. Cable under management agreements that provide for cost reimbursement, including an allocation of overhead charges. In February 1996, the Company entered into the GECC Agreement, as amended, pursuant to which the Company plans to effect a reorganization and recapitalization relating to V Cable and U.S. Cable. For a further description see "Business - Recent Developments - V Cable Transactions". A-R CABLE PARTNERS. In June 1994, A-R Cable Partners, a partnership comprised of subsidiaries of the Company and E.M. Warburg, Pincus & Co., Inc. completed the purchase of certain assets of Nashoba Communications, a group of three limited partnerships, for a purchase price of approximately $90.5 million of which $46.7 million was provided by a senior credit facility secured by the assets of such systems. The remainder of the purchase price was provided by equity contributions and subordinated loans from the partners in A-R Cable Partners. The Company provided $11.9 million for its 30% interest in A-R Cable Partners and $1.5 million in loans. The Company manages the operations of A-R Cable Partners pursuant to a management agreement which provides for a fee equal to 3-1/2% of gross receipts, as defined, plus reimbursement of certain costs and an allocation of certain selling, general and administrative expenses. CABLEVISION OF FRAMINGHAM. In August 1994, Cablevision of Framingham Holdings, Inc. ("CFHI"), a corporation owned by the Company and E.M. Warburg, Pincus Investors, (22) L.P., acquired substantially all of the assets of Framingham Cablevision Associates, L.P. ("Framingham Cablevision") consisting of cable television systems in Massachusetts. The aggregate purchase price, including fees and expenses, for Framingham Cablevision's assets was $37.5 million. Approximately $22.7 million of such purchase price was financed by a senior credit facility of a wholly-owned subsidiary of CFHI secured by the assets of such system. Approximately $9.7 million of such purchase price was paid by the issuance by CFHI of a promissory note, guaranteed by the Company, (the "CFHI Note") due in 1998 and bearing interest at 6% until the third anniversary and 8% thereafter (increasing to 8% and 10%, respectively, if interest is paid in shares of the Company's Class A Common Stock). The remaining amount was financed by loans and capital contributions from its stockholders, of which the Company provided approximately $1.3 million as a capital contribution and $0.3 million as a loan for its 30% interest in CFHI. The Company manages the operations of CFHI pursuant to a management agreement which provides for a fee equal to 3-1/2% of gross receipts, as defined, plus reimbursement of certain costs and an allocation of certain selling, general and administrative expenses. CABLEVISION OF CHICAGO. Cablevision of Chicago owned cable television systems operating in the suburban Chicago area. The Company did not have a material ownership interest in Cablevision of Chicago but had loans and advances outstanding to Cablevision of Chicago in the amount of $12.3 million (plus accrued interest which the Company had fully reserved). In August 1995, Cablevision of Chicago sold its cable television systems to Continental Cablevision, Inc. and the loans from the Company to Cablevision of Chicago, together with accrued interest reserved by the Company, were repaid in full. Accordingly, the Company recognized a net gain of approximately $15.3 million representing the accrued interest which the Company had reserved. PROGRAMMING OPERATIONS GENERAL. The Company conducts its programming activities through Rainbow Programming, its wholly owned subsidiary, and through subsidiaries of Rainbow Programming in partnership with certain unaffiliated entities, including National Broadcasting Company, Inc. ("NBC") and Liberty Media Corporation. Rainbow Programming's businesses include eight regional SportsChannel services, four national entertainment services (American Movie Classics Company ("AMCC"), Bravo Network ("Bravo") Much Music ("MM") and the Independent Film Channel ("IFC")), Rainbow News 12 (regional news services serving the suburban areas surrounding New York City) and the sports services of Prime SportsChannel Networks (Prime Network and NewSport). Rainbow Programming also owns an interest in Madison Square Garden Corporation ("MSG") (discussed below). Rainbow Programming acts as managing partner for each of these programming businesses, other than MSG (which is managed jointly with ITT) and SportsChannel Florida Associates (which is managed by Front Row Communications, Inc.), and reflects its share of the profits or losses in these businesses using the equity method of accounting (23) except for AMCC, SportsChannel New York and News 12 Long Island, whose operations are consolidated with those of the Company. Certain of Rainbow Programming's programming interests are held through Rainbow Program Enterprises ("RPE"), which is substantially wholly owned by Rainbow Programming. In March 1995, MSG Holdings, L.P. ("MSG Holdings"), a partnership among subsidiaries of Rainbow Programming and subsidiaries of ITT Corporation, a Delaware corporation ("ITT"), acquired the business and assets of MSG in a transaction in which MSG merged with and into MSG Holdings. MSG owns the Madison Square Garden Arena and the adjoining Paramount Theater, the New York Rangers professional hockey team, the New York Knicks professional basketball team and the Madison Square Garden Network, a sports programming network with over five million subscribers. The purchase price paid by MSG Holdings for MSG was $1,009.1 million. The name of MSG Holdings has been changed to Madison Square Garden, L.P. MSG Holdings funded the purchase price of the acquisition through (i) borrowings of $289.1 million under a $450 million credit agreement among MSG Holdings, various lending institutions and Chemical Bank as administrative agent, (ii) an equity contribution from Rainbow Programming of $110 million, and (iii) an equity contribution from ITT of $610 million. ITT, Rainbow Programming and the Company are parties to an agreement made as of August 15, 1994 as amended, (the "Bid Agreement") that, as amended, provides Rainbow Programming the right to acquire interests in MSG Holdings from ITT sufficient to equalize the interests of ITT and Rainbow Programming in MSG Holdings by making certain scheduled payments totalling $250 million (plus interest on any unpaid portion thereof) on specified dates up to and including March 17, 1997. Rainbow Programming may acquire all or part of such interests in MSG Holdings through (i) the payment of cash to ITT, (ii) the delivery to ITT, at the option of the Company, of common or preferred stock of the Company (together with the commitment of a nationally recognized underwriter to promptly purchase such common or preferred stock for cash), or a combination of cash and common or preferred stock (with such a commitment), or (iii) the delivery to ITT, at the option of ITT, subject to certain conditions and in lieu of payment of a limited amount of the required cash or common or preferred stock for the purchase of a portion of such interests, of certain designated programming interests of Rainbow Programming. If any scheduled payment is not made on the applicable due date, then Rainbow Programming will forfeit (a) its right to equalize the interests in MSG Holdings and (b) certain minority rights. The Company and Rainbow Programming may fund the interest payments on the unpaid portion of the $250 million amount required to equalize the interests of ITT and Rainbow Programming in MSG Holdings from available cash balances or from funds available from the Restricted Group's principal bank credit agreement. Accordingly, the Company funded an approximate $29 million interest payment on March 11, 1996 from funds available under the Restricted Group's principal bank credit agreement. If certain conditions are met and Rainbow Programming has forfeited its right to equalize the interests in MSG Holdings, then Rainbow Programming will also have the right to require ITT to purchase all of Rainbow Programming's interest in MSG Holdings for an amount equal to (i) the price paid by Rainbow Programming for (24) such interest plus (ii) all interest paid by Rainbow Programming on the unpaid portion of the $250 million of scheduled payments (as described above). Initially MSG Holdings will be managed on a 50-50 basis by Rainbow Programming and ITT. If, as discussed above, Rainbow Programming does not equalize its ownership interest in MSG Holdings, its management role will be effectively eliminated. Rainbow Programming also has the right to voluntarily relinquish any power to direct the management and policies of MSG Holdings. In connection with obtaining the consent of the National Hockey League (the "NHL") and the National Basketball Association ("NBA") to the indirect transfers of the New York Rangers and the New York Knickerbockers, respectively, resulting from the merger, the Company and Rainbow Programming entered into agreements with the NHL and the NBA, agreeing, among other things, to conduct themselves in accordance with the relevant rules of each league. In July 1995 Rainbow Programming consummated the purchase of NBC's interests in SportsChannel New York and Rainbow News 12 Company for approximately $95.5 million, giving Rainbow Programming a 100% interest in SportsChannel New York and Rainbow News 12 Company. The purchase was financed by an additional drawdown of $94 million under Rainbow Programming's $202 million amended and restated credit facility and by a $2.5 million equity contribution from the Company for the balance of the purchase price and related fees. In July 1994, the proceeds of the initial $105 million loan under the original Rainbow Programming facility plus $76 million of equity from the Company were used to purchase Liberty Media Corporation's 50% interest in AMCC giving Rainbow Programming a 75% ownership interest in AMCC. Rainbow Programming's financing needs have been funded by the Restricted Group's investments in and advances to Rainbow Programming, by sales of equity interests in the programming businesses and, through separate, external debt financing. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources". COMPETITION. There are numerous programming services with which Rainbow Programming competes for cable television system distribution and for subscribers, including network television, other national and regional cable services, independent broadcast television stations, television superstations, the home videocassette industry, and developing pay-per-view (25) services. Rainbow Programming and the other programming services are competing for limited channel capacity and for inclusion in the basic service tier of the systems offering their programming services. Many of these program distributors are large, publicly-held companies which have greater financial resources than Rainbow Programming. Rainbow Programming also competes for the availability of programming, through competition for telecast rights to films and competition for rights agreements with sports teams. The Company anticipates that such competition will increase as the number of programming distributors increases. In general, the programming services offered by Rainbow Programming compete with other forms of television-related services and entertainment media on the basis of the price of services, the variety and quality of programming offered and the effectiveness of Rainbow Programming's marketing efforts. REGULATION. Cable television program distributors such as Rainbow Programming are not regulated by the FCC under the Communications Act of 1934. To the extent that regulations and laws, either presently in force or proposed, hinder or stimulate the growth of the cable television and satellite industries, the business of Rainbow Programming will be directly affected. As discussed above under "Business - Cable Television Operations - Regulation", the 1992 Cable Act limits in certain ways the Company's ability to freely manage the Rainbow Programming services or carry the Rainbow Programming services on their affiliates' systems and imposes or could impose other regulations on the Rainbow Programming companies. The "program access" provisions of the 1992 Cable Act require that Rainbow Programming services be sold, under certain circumstances, to multichannel video programming providers that compete with the Company's local cable systems. The 1996 Telecom Act extends the program access requirements of the 1992 Cable Act to a telephone company that provides video programming by any means directly to subscribers, and to programming in which such a company holds an attributable ownership interest, thus allowing the Company's cable systems similar access to programming developed by their telephone company competitors. The 1984 Cable Act prohibits localities from requiring carriage of specific programming services, providing a more open market for Rainbow Programming and other cable program distributors. The 1984 Cable Act limits the number of commercial leased access channels that a cable television operator must make available for potentially competitive services but the 1992 Cable Act empowers the FCC to set the rates and conditions for such leased access channels. The reimposition of the FCC's rules requiring blackout of syndicated programming on distant broadcast signals for which a local broadcasting station has an exclusive contract opened new channels for Rainbow Programming's services. Satellite common carriers, from whom Rainbow Programming and its affiliates obtain transponder channel time to distribute their programming, are directly regulated by the FCC. All common carriers must obtain from the FCC a certificate for the construction (26) and operation of their interstate communications facilities. Satellite common carriers must also obtain FCC authorization to utilize satellite orbital slots assigned to the United States by the World Administrative Radio Conference. Such slots are finite in number, thus limiting the number of carriers that can provide satellite service and the number of channels available for program producers and distributors such as Rainbow Programming and its affiliates. Nevertheless, there are at present numerous competing satellite services that provide transponders for video services to the cable industry. All common carriers must offer their communications service to Rainbow Programming and others on a nondiscriminatory basis (including by means of a lottery). A satellite carrier cannot unreasonably discriminate against any customer in its charges or conditions of carriage. ADVERTISING SERVICES Rainbow Advertising sells advertising time to national, regional and local advertisers on behalf of the Company's cable television systems and SportsChannel and Rainbow News 12 programming services, as well as on behalf of unaffiliated cable television systems. OTHER AFFILIATES ATLANTIC PUBLISHING. Atlantic Cable Television Publishing Corporation ("Atlantic Publishing") holds a minority equity interest and a debt interest in a company that publishes a weekly cable television guide which is offered to the Company's subscribers and to other unaffiliated cable television operators. As of December 31, 1995, the Company had advanced an aggregate of approximately $16.7 million to Atlantic Publishing, reflecting approximately $1.0 million, $0.6 million and $0.5 million, net, paid back during 1995, 1994 and 1993, respectively. The Company has written off all of its advances to Atlantic Publishing other than $2.4 million. Atlantic Publishing is owned by a trust for certain Dolan family members; however, the Company has the option to purchase Atlantic Publishing for an amount equal to the owner's net investment therein plus interest. The current owner has made only a nominal investment in Atlantic Publishing to date. RADIO STATION WKNR. The Company is the owner of Cleveland Radio Associates ("WKNR"), an AM radio station serving the Cleveland metropolitan area with an all-sports format. EMPLOYEES AND LABOR RELATIONS As of December 31, 1995, the Company had 4,934 full-time, 567 part-time and 300 temporary employees. There are no collective bargaining agreements with employees of the Company. The Company believes that its relations with its employees are satisfactory. (27) ITEM 2. PROPERTIES The Company generally leases the real estate where its business offices, microwave receiving antennae, earth stations, transponders, microwave towers, warehouses, headend equipment, hub sites, program production studios and access studios are located. Significant leasehold properties include fourteen business offices, comprising the Company's headquarters located in Woodbury, New York with approximately 291,000 square feet of space, and the headend sites. The Company believes its properties are adequate for its use. The Company generally owns all assets (other than real property) related to the cable television operations of the Restricted Group, including its program production equipment, headend equipment (towers, antennae, electronic equipment and satellite earth stations), cable system plant (distribution equipment, amplifiers, subscriber drops and hardware), converters, test equipment, tools and maintenance equipment. Similarly, the unconsolidated entities managed by the Company generally own such assets related to their cable television operations. The Company generally leases its service and other vehicles. Substantially all of the assets of the Restricted Group, V Cable, VC Holding and Cablevision MFR are pledged to secure borrowings under their respective credit agreements. ITEM 3. LEGAL PROCEEDINGS The Company is party to various lawsuits, some involving substantial amounts. Management does not believe that such lawsuits will have a material adverse impact on the financial position of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. (28) PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's Class A Common Stock, par value $.01 per share ("Class A Common Stock"), is traded on the American Stock Exchange under the symbol "CVC". The following table sets forth the high and low sales prices for the last two years of Class A Common Stock as reported by the American Stock Exchange for the periods indicated.
1995 1994 ------------- ------------- Quarter High Low High Low ------- ---- --- ---- --- First 58-3/4 48-7/8 67-7/8 52-3/8 Second 63-3/4 52-1/4 52-7/8 39 Third 69-3/4 58 61-3/8 45-7/8 Fourth 61 49-3/4 59-7/8 45-7/8
As of March 15, 1996, there were 915 holders of record of Class A Common Stock. There is no public trading market for the Company's Class B Common Stock, par value $.01 per share ("Class B Common Stock"). As of March 15, 1996, there were 25 holders of record of Class B Common Stock. DIVIDENDS. The Company has not paid any dividends on shares of Class A or Class B Common Stock. The Company intends to retain earnings to fund the growth of its business and does not anticipate paying any cash dividends on shares of Class A or Class B Common Stock in the foreseeable future. The Company may pay cash dividends on its capital stock only from surplus as determined under Delaware law. Holders of Class A and Class B Common Stock are entitled to receive dividends equally on a per share basis if and when such dividends are declared by the Board of Directors of the Company from funds legally available therefor. No dividend may be declared or paid in cash or property on shares of either Class A or Class B Common Stock unless the same dividend is paid simultaneously on each share of the other class of common stock. In the case of any stock dividend, holders of Class A Common Stock are entitled to receive the same percentage dividend (payable in shares of Class A Common Stock) as the holders of Class B Common Stock receive (payable in shares of Class B Common Stock). The Company paid $4.4 million of cash dividends on the Series I Preferred Stock and $7.8 million of dividends in additional shares of Series G Preferred Stock. The Company is restricted from paying dividends on its preferred stock (other than on the Company's 8% Series C Cumulative Preferred Stock) under the provisions of its senior credit agreement if a default has occurred and is continuing under such agreement. Additionally, the Company's senior subordinated debt instruments may restrict the payment of dividends in respect of any shares of capital stock in certain circumstances. (29) Dividends may not be paid in respect of shares of Class A or Class B Common Stock unless all dividends due and payable in respect of the preferred stock of the Company have been paid or provided for. Further, dividends may not be paid in respect of shares of Class A or Class B Common Stock under the Company's senior credit agreement. See Item 7.-"Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources- Restricted Group." (30) ITEM 6. SELECTED FINANCIAL DATA SELECTED FINANCIAL AND STATISTICAL DATA The operating and balance sheet data included in the following selected financial data have been derived from the consolidated financial statements of the Company. Acquisitions made by the Company were accounted for under the purchase method of accounting and, accordingly, the acquisition costs were allocated to the net assets acquired based on their fair value, except for assets previously owned by Mr. Dolan or affiliates of Mr. Dolan which were recorded at historical cost. Acquisitions are reflected in operating, balance sheet and statistical data from the time of acquisition. The operating data for 1992 reflects the deconsolidation of the Company's A-R Cable subsidiary for reporting purposes, effective January 1, 1992. The selected financial data presented below should be read in conjunction with the financial statements of the Company and notes thereto included in Item 8 of this Report.
Cablevision Systems Corporation ------------------------------------------------------------- December 31, ------------------------------------------------------------- 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- (Dollars in thousands, except per share data) OPERATING DATA: Revenues....................................... $1,078,060 $ 837,169 $ 666,724 $ 572,487 $ 603,272 Operating expenses Technical.................................... 412,479 302,885 241,877 204,449 213,059 Selling, general and administrative.......... 266,209 195,942 172,687 120,356 121,527 Restructuring charge......................... - 4,306 - - - Depreciation and amortization................ 319,929 271,343 194,904 168,538 215,326 ---------- --------- --------- --------- -------- Operating profit............................... 79,443 62,693 57,256 79,144 53,360 Other income (expense): Interest expense, net........................ (311,887) (261,781) (230,327) (193,379) (257,189) Share of affiliates' net loss................ (93,024) (82,864) (61,017) (47,278) (23,780) Gain (loss) on sale of programming and affiliate interests, net.................... 35,989 - (330) 7,053 15,505 Gain on sale of marketable securities, net... - - - 733 5,806 Provision for loss on Olympics venture....... - - - (50,000) - Loss on sale of preferred stock.............. - - - (20,000) - Write off of deferred financing costs........ (5,517) (9,884) (1,044) (12,284) - Loss on redemption of debentures............. - (7,088) - - - Settlement of litigation and related matters............................. - - - (5,655) (9,677) Provision for preferential payment to related party............................ (5,600) (5,600) (5,600) (2,662) - Minority interest.....................,,,.... (8,637) (3,429) 3,000 - - Miscellaneous, net........................... (8,225) (7,198) (8,720) (6,175) (11,224) ---------- --------- --------- --------- -------- Net loss....................................... (317,458) (315,151) (246,782) (250,503) (227,199) Preferred dividend requirement................. (20,249) (6,385) (885) (885) (4,464) ---------- --------- --------- --------- -------- Net loss applicable to common shareholders..... $ (337,707) $(321,536) $(247,667) $(251,388) $(231,663) ---------- --------- --------- --------- -------- ---------- --------- --------- --------- -------- Net loss per common share...................... $ (14.17) $ (13.72) $ (10.83) $ (11.17) $ (10.32) ---------- --------- --------- --------- -------- ---------- --------- --------- --------- -------- Average number of common shares outstanding (in thousands)................................ 23,826 23,444 22,859 22,512 22,446 ---------- --------- --------- --------- -------- ---------- --------- --------- --------- -------- Cash dividends declared per common share....... $ - $ - $ - $ - $ - ---------- --------- --------- --------- -------- ---------- --------- --------- --------- --------
(31)
Cablevision Systems Corporation ------------------------------------------------------------- December 31, ------------------------------------------------------------- 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- (Dollars in thousands, except per share data) BALANCE SHEET DATA: Total assets................................ $2,502,305 $2,176,413 $1,327,418 $1,251,157 $1,475,672 Total debt.................................. 3,157,107 3,169,236 2,235,499 2,004,452 2,211,056 Deficit investment in affiliates............ 453,935 393,637 325,732 251,679 - Redeemable preferred stock.................. 257,751 - - - 32,094 Stockholders' deficiency.................... (1,891,676) (1,818,535) (1,503,244) (1,250,248) (932,428) STATISTICAL DATA: Homes passed by cable....................... 3,328,000 2,899,000 2,240,000 2,019,000 2,005,000 Basic service subscribers................... 2,061,000 1,768,000 1,379,000 1,262,000 1,372,000 Basic service subscribers as a percentage of homes passed............................... 61.9% 61.0% 61.6% 62.5% 68.4% Number of premium television units.......... 3,990,000 3,208,000 3,003,000 2,802,000 2,326,000 Average number of premium units per basic subscriber at period end................... 1.9 1.8 2.2 2.2 1.7 Average monthly revenue per basic subscriber (1).............................. $37.07 $36.33 $36.59 $37.64 $34.43
- ------------------------ (1) Based on recurring service revenues divided by average subscribers for the month of December. (32) ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RECENT ACQUISITIONS AND RESTRUCTURINGS The Company's high levels of interest expense and depreciation and amortization, largely associated with acquisitions made by the Company in the past, have had and will continue to have a negative impact on the reported results of the Company. Consequently, the Company expects to report substantial net losses for at least the next several years. 1995 ACQUISITIONS In July 1995, the Company, through its wholly-owned subsidiary Rainbow Programming, purchased NBC's interests in SportsChannel New York and Rainbow News 12 Company, giving Rainbow Programming a 100% interest in these companies. In December 1995, the Company acquired the interests in Cablevision of Boston that it did not previously own and upon consummation of the acquisition, Cablevision of Boston became a member of the Restricted Group. The foregoing acquisitions will be referred to as the "1995 Acquisitions". 1994 ACQUISITIONS In March 1994, the Company completed the North Coast Cable Acquisition. In July 1994, the Company through Rainbow Programming, purchased an additional 50% interest in AMCC giving Rainbow Programming a 75% ownership interest in AMCC and in August 1994, the Company consummated the acquisition of Monmouth Cablevision and Riverview Cablevision. The foregoing acquisitions will collectively be referred to as the "1994 Acquisitions". The 1995 Acquisitions and the 1994 Acquisitions will collectively be referred to as the "Acquisitions". For a description of the Company's recent acquisitions and restructurings, see Item 1 - "Business - Recent Developments, - Consolidated Cable Affiliates" and - "Other Cable Affiliates" and Note 2 of Notes to Consolidated Financial Statements. (33) RESULTS OF OPERATIONS The following table sets forth on a historical basis certain items related to operations as a percentage of net revenues for the periods indicated.
STATEMENT OF OPERATIONS DATA Years Ended December 31, ------------------------------------- 1995 1994 ------------------ ------------------ (Increase) % of Net % of Net Decrease Amount Revenues Amount Revenues in Net loss ------ -------- ------ -------- ----------- (Dollars in thousands) Revenues................................................ $1,078,060 100% $ 837,169 100% $ 240,891 Operating expenses: Technical.............................................. 412,479 38 302,885 36 (109,594) Selling, general & administrative...................... 266,209 25 195,942 23 (70,267) Restructuring charge................................... - - 4,306 1 4,306 Depreciation and amortization.......................... 319,929 30 271,343 32 (48,586) --------- --------- -------- Operating profit........................................ 79,443 7 62,693 8 16,750 Other income (expense): Interest expense, net.................................. (311,887) (29) (261,781) (31) (50,106) Share of affiliates' net loss.......................... (93,024) (9) (82,864) (10) (10,160) Gain on sale of affiliate interests, net............... 35,98 3 - - 35,989 Write off of deferred financing costs.................. (5,517) - (9,884) (1) 4,367 Loss on redemption of debt............................. - - (7,088) (1) 7,088 Provision for preferential payment to related party.... (5,600) - (5,600) (1) - Minority interest...................................... (8,637) (1) (3,429) - (5,208) Miscellaneous.......................................... (8,225) (1) (7,198) (1) (1,027) --------- --------- -------- Net loss................................................ $(317,458) (29)% $(315,151) (38)% $ (2,307) --------- --------- -------- --------- --------- -------- OTHER OPERATING DATA: Operating profit before depreciation and amortization (1)................................... $399,372 $334,036 Currently payable interest expense, net................. 254,930 208,685 Net cash provided by operating activities (2)........... 154,715 126,625 Net cash used in investing activities (2)............... 551,234 953,870 Net cash provided by financing activities (2)........... 400,501 825,651
(1) Operating profit before depreciation and amortization is presented here to provide additional information about the Company's ability to meet future debt service, capital expenditures and working capital requirements. Operating profit before depreciation and amortization should be considered in addition to and not as a substitute for net income and cash flows as indicators of financial performance and liquidity as reported in accordance with generally accepted accounting principles. (2) See Item 8. - "Consolidated Statements of Cash Flows". (34) COMPARISON OF YEAR ENDED DECEMBER 31, 1995 VERSUS YEAR ENDED DECEMBER 31, 1994. REVENUES for the year ended December 31, 1995 increased $240.9 million (29%) as compared to net revenues for the prior year. Approximately $148.0 million (18%) of the increase was attributable to the Acquisitions; approximately $64.3 million (8%) to internal growth of over 145,800 in the average number of subscribers during the year; and approximately $28.6 million (3%) resulted from higher revenue per subscriber as a result of rate increases and to increases in other revenue sources such as advertising and pay per view. TECHNICAL EXPENSES for 1995 increased $109.6 million (36%) over the 1994 amount. Approximately 19% was attributable to the Acquisitions with the remaining 17% attributable to increased costs directly associated with the growth in subscribers and revenues discussed above, as well as to increases in programming rates for certain of the Company's cable television services. As a percentage of revenues, technical expenses increased 2% during 1995 as compared to 1994. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES increased $70.3 million (36%) for 1995 as compared to the 1994 level. Approximately 18% was directly attributable to the Acquisitions. The remaining 18% increase resulted from higher customer service, administrative and sales and marketing costs. As a percentage of revenues, selling, general and administrative expenses increased 1% in 1995 compared to 1994. OPERATING PROFIT BEFORE DEPRECIATION AND AMORTIZATION increased $65.3 million (20%) to $399.4 million for 1995 from $334.0 million (including a $4.3 million restructuring charge) for 1994. The 1995 increases were primarily the result of the Acquisitions. Operating profit before depreciation and amortization is presented here to provide additional information about the Company's ability to meet future debt service, capital expenditures and working capital requirements. Operating profit before depreciation and amortization should be considered in addition to and not as a substitute for net income and cash flows as indicators of financial performance and liquidity as reported in accordance with generally accepted accounting principles. DEPRECIATION AND AMORTIZATION EXPENSE increased $48.6 million (18%) during 1995 as compared to 1994 primarily as a result of the Acquisitions. Increased depreciation charges on capital expenditures made during 1995 and 1994 were completely offset by decreased amortization expense, primarily the result of certain intangible assets which became fully amortized during the periods. NET INTEREST EXPENSE increased $50.1 million (19%) during 1995 compared to 1994. Approximately $29.8 million (11%) of the increase was attributable to the Acquisitions. The remaining increase of 8% was due to higher average debt balances (including borrowings of $110 million in March 1995 to acquire an interest in MSG) and higher interest rates in 1995 compared to 1994, and to the increasing accretion of interest on certain components of V Cable's debt which require no current cash outlays. (35) SHARE OF AFFILIATES' NET LOSSES of $93.0 million for 1995 and $82.9 million for 1994 consist primarily of the Company's share of net losses in certain cable affiliates, primarily A-R Cable ($83.1 million in 1995 and $81.9 million in 1994), and the Company's net share of the profits and losses in certain programming businesses in which the Company has varying ownership interests, whose net losses amounted to $9.9 million in 1995 and $1.0 million in 1994. GAIN ON SALE OF AFFILIATE INTERESTS in 1995 resulted from the collection of previously reserved interest, net of certain expenses, of $15.3 million on advances to Cablevision of Chicago, a cable television affiliate which was sold during 1995, and to a gain of $20.7 million on the sale of the Company's interests in a programming partnership. WRITE OFF OF DEFERRED FINANCING COSTS in 1995 relates primarily to costs associated with former credit facilities of subsidiaries of the Company which are now members of the Restricted Group's Credit Agreement and to costs associated with Rainbow Programming's original $105 million credit facility which was replaced in January 1995 with a new $202 million facility. PROVISION FOR PREFERENTIAL PAYMENT TO RELATED PARTY in 1995 consists of the expensing of $5.6 million representing the amount due with respect to an annual payment made in connection with the CNYC Acquisition in 1992. MINORITY INTEREST in 1995 represents NBC's share of the net income of AMCC. (36) RESULTS OF OPERATIONS The following table sets forth on a historical basis certain items related to operations as a percentage of net revenues for the periods indicated.
STATEMENT OF OPERATIONS DATA Years Ended December 31, ------------------------------------- 1994 1993 ------------------ ------------------ (Increase) % of Net % of Net Decrease Amount Revenues Amount Revenues in Net loss ------ -------- ------ -------- ----------- (Dollars in thousands) Revenues.............................................. $ 837,169 100% $ 666,724 100% $ 170,445 Operating expenses: Technical............................................ 302,885 36 241,877 36 (61,008) Selling, general & administrative.................... 195,942 23 172,687 26 (23,255) Restructuring charge................................. 4,306 1 - - (4,306) Depreciation and amortization........................ 271,343 32 194,904 29 (76,439) --------- --------- -------- Operating profit...................................... 62,693 8 57,256 9 5,437 Other income (expense): Interest expense, net................................ (261,781) (31) (230,327) (35) (31,454) Share of affiliates' net loss........................ (82,864) (10) (61,017) (9) (21,847) Gain (loss) on sale of programming interests, net.... - - (330) - 330 Write off of deferred financing costs................ (9,884) (1) (1,044) - (8,840) Loss on redemption of debt........................... (7,088) (1) - - (7,088) Provision for preferential payment to related party....................................... (5,600) (1) (5,600) (1) - Minority interest.................................... (3,429) - 3,000 - (6,429) Miscellaneous........................................ (7,198) (1) (8,720) (1) 1,522 --------- --------- -------- Net loss.............................................. $(315,151) (38)% $(246,782) (37)% $(68,369) --------- --------- -------- --------- --------- -------- OTHER OPERATING DATA: Operating profit before depreciation and amortization (1)................................. $334,036 $252,160 Currently payable interest expense, net............... 208,685 182,225 Net cash provided by operating activities (2)......... 126,625 85,822 Net cash used in investing activities (2)............. 953,870 243,022 Net cash provided by financing activities (2)......... 825,651 167,423
(1) Operating profit before depreciation and amortization is presented here to provide additional information about the Company's ability to meet future debt service, capital expenditures and working capital requirements. Operating profit before depreciation and amortization should be considered in addition to and not as a substitute for net income and cash flows as indicators of financial performance and liquidity as reported in accordance with generally accepted accounting principles. (2) See Item 8. - "Consolidated Statements of Cash Flows". (37) COMPARISON OF YEAR ENDED DECEMBER 31, 1994 VERSUS YEAR ENDED DECEMBER 31, 1993. REVENUES for the year ended December 31, 1994 increased $170.4 million (26%) as compared to net revenues for the prior year. Approximately $105.0 million (16%) of the increase was attributable to the 1994 Acquisitions; approximately $58.4 million (9%) to internal growth of 129,200 in the average number of subscribers during the year; and approximately $23.6 million (4%) resulted from an increase in other revenue sources such as advertising. These increases were partially offset by a decrease of approximately $16.6 million (3%) attributable to lower revenue per subscriber resulting primarily from rate reductions effected in compliance with FCC regulations and to subscribers purchasing, on average, lower levels of service. TECHNICAL EXPENSES for 1994 increased $61.0 million (25%) over 1993. Approximately 16% was attributable to 1994 Acquisitions; the remaining 9% was attributable to increased costs directly associated with the growth in subscribers and revenues discussed above. As a percentage of net revenues, technical expenses remained relatively constant during 1994 as compared to 1993. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES increased $23.3 million (13%) in 1994 as compared to the 1993 level. Increases of $27.3 million (15%) directly attributable to the 1994 Acquisitions, $11.8 million (7%) relating to the Company's growing New York City operations and $5.6 million (3%) resulting from other general cost increases were partially offset by a $21.4 million (12%) decrease in net expenses incurred in connection with incentive stock plans, primarily due to a decrease in the market price of the Company's Class A Common stock at December 31, 1994 compared to its market price at December 31, 1993. The net decrease in such stock plan expenses reflects a charge of $13.2 million made in the fourth quarter of 1994 attributable to the Company's cash settlement of executive stock options granted under the Company's Employee Stock Plan. See Note 10 of Notes to Consolidated Financial Statements. RESTRUCTURING CHARGE The Company recorded a one time charge in the first quarter of 1994 to provide for employee severance and related costs, resulting from a restructuring of its operations. This restructuring was undertaken in response to recent FCC mandated rate reductions in substantially all of the Company's cable television systems. OPERATING PROFIT BEFORE DEPRECIATION AND AMORTIZATION increased $81.9 million (32%) to $334.0 million in 1994 from $252.2 million in 1993. The increase was comprised of $39.8 million (16%) attributable to the 1994 Acquisitions, with the remaining increase resulting from the combined effect of the revenue and expense changes discussed above. Operating profit before depreciation and amortization is presented here to provide additional information about the Company's ability to meet future debt service, capital expenditures and working capital requirements. Operating profit before depreciation and amortization should be considered in addition to and not as a substitute for net income and cash flows as indicators of financial performance and liquidity as reported in accordance with generally accepted accounting principles. (38) DEPRECIATION AND AMORTIZATION EXPENSE increased $76.4 million (39%) during 1994 as compared to 1993. Approximately $53.3 million (27%) of this increase was a direct result of the 1994 Acquisitions. The remaining $23.1 million (12%) increase consisted of increased depreciation charges (including $12.6 million (6%) for CNYC) relating to capital expenditures made throughout 1994 and 1993 offset partially by a decrease in amortization expense due to certain intangible assets becoming fully amortized. NET INTEREST EXPENSE increased $31.5 million (14%) during 1994 compared to 1993. Approximately $26.0 million (11%) of the increase is attributable to the 1994 Acquisitions. The remaining increase of $5.5 million was the combined result of the increasing accretion of interest on certain components of V Cable's debt and the net effect of the Company's issuances of senior subordinated debentures during 1993, the proceeds of which bore generally higher average interest rates than the bank debt they replaced. SHARE OF AFFILIATES' NET LOSSES increased $21.8 million (36%) in 1994 compared to 1993. Such amounts consist primarily of the Company's share in the net losses of certain cable affiliates which, for the years ended December 31, 1994 and 1993, amounted to $81.9 million and $69.8 million, respectively, and in the net (income) or losses of certain programming businesses (in which the Company has varying ownership interests) which aggregated $1.0 million and $(8.8) million for the respective 1994 and 1993 years. MINORITY INTEREST in 1994 represents NBC's 25% share in the net income of AMCC from the date that the Company purchased its additional 50% interest in AMCC and therefore began consolidating AMCC's results of operations. See Note 4 of Notes to Consolidated Financial Statements. In 1993 minority interest represents U.S. Cable's share of losses in a subsidiary of V Cable, limited to its $3.0 million investment. OTHER ITEMS During 1994, the Company wrote off net deferred financing charges of approximately $9.9 million associated with the Company's former credit facility. The Company entered into a new $1.5 billion Restricted Group Credit facility on October 14, 1994. See "Liquidity and Capital Resources", below, and Note 4 of Notes to Consolidated Financial Statements. In November 1994, the Company incurred a loss of $7.1 million related to the redemption of its $200 million Senior Subordinated Reset Debentures (the "Reset Debentures"). The loss reflects the payment of a $2.0 million premium over the face amount; the write off of $4.5 million in unamortized deferred finance costs incurred in connection with their issuance in November, 1988; and $0.6 million representing the unamortized portion of their original issue discount. In connection with the CNYC Acquisition, the Company expensed $5.6 million in 1994 representing the amount due with respect to the Annual Payment. For the year ended December 31, 1994, the Company has provided for an additional $100.3 million due Mr. Dolan in respect of the Preferred Payment that would be due him as further described under "Business - Cable Television Operations - - Consolidated Cable Affiliates - (39) Cablevision of New York City". The additional provision is based on management's estimate of the Appraised Equity Value of the system at December 31, 1994 and has been charged to par value in excess of capital contributed in the accompanying consolidated financial statements. The total amount due Mr. Dolan as of December 31, 1994 in respect of the Preferred Payment amounted to $150 million. See Note 8 of Notes to Consolidated Financial Statements. EXPECTED IMPACT OF ACCOUNTING STANDARDS NOT YET ADOPTED In March and October 1995 the Financial Accounting Standards Board issued its Statements No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and 123, "Accounting for Stock-Based Compensation," respectively. Statement 121 establishes accounting standards for the impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets to be held and used and for long-lived assets and certain identifiable intangibles to be disposed of. Management does not expect that the adoption of Statement 121, effective January 1, 1996, will have a significant impact on the Company's financial position or results of operations. Statement 123 establishes financial accounting and reporting standards for stock-based employee compensation plans and transactions in which an entity issues its equity instruments to acquire goods and services from nonemployees. Management currently intends to continue accounting for stock-based compensation awarded to employees using the intrinsic value based method of accounting prescribed by APB Opinion 25, "Accounting for Stock Issued to Employees" and to present, beginning in 1996, the pro forma net income and earnings per share disclosures as if the fair value method defined in Statement 123 had been applied. INFLATION. The effects of inflation on the Company's costs have generally been offset by increases in subscriber rates. LIQUIDITY AND CAPITAL RESOURCES For financing purposes, the Company is structured as the Restricted Group, consisting of Cablevision Systems Corporation and certain of its subsidiaries (including Cablevision of Boston as of December 15, 1995) and an unrestricted group of certain subsidiaries which includes V Cable, Rainbow Programming and Cablevision MFR. The Restricted Group has executed limited recourse guarantees with respect to A-R Cable and V Cable, as described below, and has guaranteed the MFR Notes and the CFHI Note. Otherwise, the Restricted Group does not guarantee the indebtedness of any unrestricted subsidiary nor does any unrestricted subsidiary guarantee the indebtedness of the Restricted Group. (40) The following table presents selected unaudited historical results of operations and other financial information related to the captioned groups or entities for the year ended December 31, 1995. Unrestricted Cable consists of V Cable and Cablevision MFR. Rainbow Programming (including Rainbow Advertising, SportsChannel New York and AMCC) is included in "Other Unrestricted Subsidiaries".
Other Restricted Unrestricted Unrestricted Total Group Cable Subsidiaries Company ----------- ------------ ------------ ------- (Dollars in thousands) Revenues $ 679,025 $ 226,130 $ 172,905 $1,078,060 Operating expenses: Technical 267,929 85,927 58,623 412,479 Selling, general and administrative 125,773 33,110 107,326 266,209 Depreciation and amortization 168,067 124,488 27,374 319,929 ---------- ---------- --------- ---------- Operating profit (loss) $117,256 $ (17,395) $ (20,418) $ 79,443 ---------- ---------- --------- ---------- ---------- ---------- --------- ---------- Currently payable interest expense $159,302 $ 78,362 $ 17,266 $ 254,930 ---------- ---------- --------- ---------- ---------- ---------- --------- ---------- Total interest expense $162,340 $ 132,264 $ 19,246 $ 313,850 ---------- ---------- --------- ---------- ---------- ---------- --------- ---------- Senior debt $567,249 $1,094,003 $ 238,034 $1,899,286 ---------- ---------- --------- ---------- ---------- ---------- --------- ---------- Subordinated debt $923,608 $ 141,268(2) $ - $1,064,876 ---------- ---------- --------- ---------- ---------- ---------- --------- ---------- Obligation to related party $192,945(1) $ - $ - $ 192,945 ---------- ---------- --------- ---------- ---------- ---------- --------- ---------- Deficit investment in affiliates $451,933 $ - $ 2,002 $ 453,935 ---------- ---------- --------- ---------- ---------- ---------- --------- ---------- Redeemable Exchangeable Preferred Stock $257,751 $ - $ - $ 257,751 ---------- ---------- --------- ---------- ---------- ---------- --------- ---------- Capital expenditures $234,516 $ 43,707 $ 9,095 $ 287,138(3) ---------- ---------- --------- ---------- ---------- ---------- --------- ---------- Ending Cable subscribers 1,512,000 549,000 - 2,061,000 ---------- ---------- --------- ---------- ---------- ---------- --------- ----------
- ----------------- (1) Obligation of NYC LP Corp., a wholly-owned Restricted Group subsidiary, relating to the CNYC Acquisition. (2) Guaranteed by the Restricted Group. (3) Includes intercompany elimination of $180. (41) RESTRICTED GROUP In February 1996, the Company issued 6,500,000 depositary shares, representing 65,000 shares of 11-1/8% Series L Preferred Stock with an aggregate liquidation preference of $650 million. The net proceeds of approximately $626 million was used to repay $570 million of V Cable and U.S. Cable indebtedness in connection with the V Cable Transactions, (see Item 1. "Business - Recent Developments - V Cable Transactions") with the balance of $56 million initially used to repay borrowings under the Company's Credit Agreement. Such amount is expected to be reborrowed at the time of consummation of the V Cable Transactions, which is expected to occur during the third quarter of 1996. In December 1995, the Company acquired the interests in Cablevision of Boston that it did not previously own. In connection with the acquisition of Cablevision of Boston, the Company paid approximately $83 million primarily with funds borrowed under the Credit Agreement and upon consummation of the acquisition of Cablevision of Boston, Cablevision of Boston became a member of the Restricted Group and all outstanding subordinated advances made by the Company to Cablevision of Boston became intercompany indebtedness. See "Consolidated Cable Affiliates - Cablevision of Boston". In November 1995, the Company issued 13,800,000 depositary shares representing 1,380,000 shares of 8-1/2% Series I Preferred Stock with an aggregate liquidation preference of $345 million. The depositary shares are convertible into shares of the Company's Class A Common Stock at an initial conversion price of $67.44 per share of Class A Common Stock. The Company applied the net proceeds of approximately $334 million to the repayment of bank indebtedness. Also in November 1995, the Company issued $300 million aggregate principal amount of 9-1/4% Senior Subordinated Notes due 2005 (the "2005 Notes"). The Company applied the net proceeds of approximately $292 million to the repayment of bank indebtedness. In September 1995, the Company issued 2,500,000 shares of its 11-3/4% Series G Redeemable Exchangeable Preferred Stock with an aggregate liquidation preference of $100 per share (the "Series G Preferred Stock"). The net proceeds of approximately $239 million were initially used to repay bank debt. The Company reborrowed $103 million on October 26, 1995 to redeem its outstanding Series E Preferred Stock. On March 18, 1996, the Restricted Group had total usage under its $1.5 billion credit agreement (including the credit facility for Cablevision of New Jersey, collectively the "Credit Agreement") of $573 million and letters of credit of $17 million issued on behalf of the Company. Unrestricted and undrawn funds available to the Restricted Group under the Credit Agreement amounted to approximately $910 million at March 18, 1996. The Credit Agreement consists of a $250 million Term Loan and $1.250 billion Reducing Revolver facilities aggregating $1.5 billion. The Term Loan has a final maturity of June 30, 2003 and begins amortizing on a scheduled quarterly basis on June 30, 1997 with 24% being amortized by December 31, 1998. The Reducing Revolver facilities have final maturities on June 30, 2003 and the facilities begin to reduce on December 31, 1996. The (42) Credit Agreement contains certain financial covenants that may limit the Restricted Group's ability to utilize all of the undrawn funds available thereunder, including covenants requiring the Restricted Group to maintain certain financial ratios and restricting the permitted uses of borrowed funds. As of March 18, 1996 the Company had entered into interest exchange (swap and interest rate cap) agreements with several of their banks on a notional amount of $120 million, on which the Company pays a fixed rate of interest and receives a variable rate of interest for specified periods, with an average maturity of two and one half years. The average effective annual interest rate on all bank debt outstanding as of February 29, 1996 was approximately 8.1%. The Restricted Group, excluding CNYC, made capital expenditures of approximately $150.2 million in 1995 and $147.5 million in 1994, primarily in connection with system rebuilds and upgrades, the expansion of existing cable plant to pass additional homes and other general capital needs. CNYC made capital expenditures of $84.3 million in 1995 and $103.5 million in 1994. The cable systems located in New York State that are owned by the Restricted Group are subject to agreements, as amended, (the "New York Upgrade Agreements") with the New York State Commission on Cable Television (the "New York Cable Commission"). The New York Upgrade Agreements applicable to the Restricted Group requires the substantial upgrade of its systems to a 750 MHz capacity by the end of 1998 subject to certain minor exceptions. As part of this planned upgrade of the Restricted Group's New York systems, the Company expects to use fiber optic cable extensively in its trunk and distribution networks. The Company believes that the remaining portion of the upgrade, as of December 31, 1995, will cost up to an additional $195 million. The Company intends to upgrade certain other of its Restricted Group systems as well as certain systems in the unrestricted group. The Company anticipates that the capital costs of these additional upgrades may be substantial. Under the CNYC purchase agreement, the Restricted Group has guaranteed certain payments to Mr. Dolan, consisting of an annual payment of $5.6 million (the "Annual Payment") a $40 million minimum payment (the "Minimum Payment") and a preferred payment (not to exceed $150 million) based upon an appraised value of CNYC (the "Preferred Payment"). The Minimum Payment and the Preferred Payment are each payable in cash or common stock at the Company's election. Under the Credit Agreement, the Company is currently prohibited from paying amounts in respect of the Preferred Payment in cash. During 1995 the Restricted Group contributed $26 million to Monmouth/Riverview which was used by Monmouth/Riverview to reduce bank debt. In addition, the Restricted Group contributed $8.7 million to Cablevision MFR in order for Cablevision MFR to make cash interest payments on its promissory notes. (43) The Company believes that, for the Restricted Group, internally generated funds together with funds available under its existing Credit Agreement will be sufficient through 1997 to meet its debt service and preferred stock dividend requirements including amortization requirements under the Credit Agreement, and to fund its planned capital expenditures. The Company intends to incur additional expenditures to sufficiently upgrade its plant to significantly increase its analog channel capacity and add new digital channel capacity that will facilitate the startup of such adjunct businesses as information services, video on demand and near video on demand, and residential telephony. To successfully roll out these adjunct new businesses significantly beyond the initial development phases, the Company will require additional capital from the sale of equity in the capital markets or to a strategic investor. Any further acquisitions and/or other investments by the Company will be funded by undrawn borrowing capacity and by possible increases in the amount available under the Credit Agreement, additional borrowings from other sources, and/or possible future sales of debt, equity or equity related securities. The senior secured indebtedness incurred by A-R Cable and V Cable is guaranteed by the Restricted Group, but recourse against the Restricted Group is limited solely to the common stock of A-R Cable and of V Cable pledged to A-R Cable's and V Cable's senior secured lenders, respectively. The Cablevision MFR and CFHI promissory notes are guaranteed by the Company and the obligations under the guarantees rank pari passu with the Company's public subordinated debt. The promissory notes are payable in cash or, at the Company's option through the first anniversary of the notes, in shares of the Company's Class A Common Stock. Under the terms of its Credit Agreement, as amended, the Company is permitted to make unspecified investments of up to $250 million, subject to increase at the Company's election arising from issuance of preferred stock, which includes any future investment in Rainbow Programming and in any other unrestricted subsidiaries or affiliates. The terms of the instruments governing A-R Cable's, V Cable's, and Cablevision MFR's indebtedness prohibit transfer of funds (except for certain payments, related to corporate overhead allocations, by A-R Cable, V Cable and Cablevision MFR and payments pursuant to income tax allocation agreements with respect to V Cable and Cablevision MFR) from A-R Cable, V Cable, Cablevision MFR and CFHI to the Restricted Group and are expected to prohibit such transfer of funds for the foreseeable future. The Restricted Group does not expect that such limitations on transfer of funds or payments will have an adverse effect on the ability of the Company to meet its obligations. V CABLE In connection with the V Cable Transactions (see "Business-Recent Developments-V Cable Transactions"), on March 18, 1996 the Company made a $570 million capital contribution to V Cable which was used to repay $570 million of debt and accrued interest owed to (44) GECC under the V Cable, VC Holding and US Cable credit facilities. The Company obtained the $570 capital contribution from the net proceeds (approximately $626 million) of the Series L Preferred Stock issued in February 1996. The contributions made by the Company were applied as follows: 1) approximately $500 million was used to repay a portion of V Cable and VC Holding debt (including certain U.S. Cable debt assumed by V Cable) leaving a balance outstanding of $415.1 million and, 2) approximately $70 million was contributed by V Cable and VC Holding to repay a portion of US Cable's debt and accrued interest leaving a balance outstanding of approximately $151 million of U.S. Cable debt. Upon the repayment of V Cable's, VC Holding's and US Cable's debt referenced above, each Company's credit agreement was amended to reflect such prepayments and the cross-guarantees, cross-collateralization and cross-default provisions previously in each agreement were amended and/or terminated. The amended credit agreements expire on December 31, 2001. The amended VC Holding credit agreement provides for a $409 million term loan and a $125 million revolving loan. The term loan requires principal repayments commencing in 1999. On March 18, 1996, VC Holding had approximately $6 million outstanding under its revolving line and had letters of credit issued for approximately $1 million. Accordingly, unrestricted and undrawn funds under the VC Holding revolving line amounted to approximately $118 million. The amended VC Holding credit agreement contains certain financial covenants that may limit VC Holding's ability to utilize all of the undrawn funds available thereunder, including covenants requiring VC Holding to maintain certain financial ratios and restricting the permitted uses of borrowed funds. V Cable made capital expenditures of approximately $27.3 million during 1995 and $20.0 million during 1994, primarily in connection with the expansion of existing cable plant to pass additional homes and for system upgrades and other general capital needs. The New York Upgrade Agreement applicable to V Cable required that by the end of 1995, the substantial upgrade of its systems in New York State to 77 channel capacity be completed. This requirement was met and certified by the State of New York in 1995. V Cable plans to make significant capital expenditures for its Ohio properties over the next several years in order to upgrade or rebuild its plant and increase capacity. VC Holding believes that internally generated funds together with funds available under the amended credit agreements will be sufficient through June 30, 1997 to meet its debt service requirements and to fund its capital expenditures through such date. MONMOUTH AND RIVERVIEW Monmouth/Riverview are party to a credit facility, as amended on May 12, 1995, with a group of banks led by Nations Bank of Texas, N.A., as agent (the "Monmouth/Riverview Credit Facility"). The maximum amount available to Monmouth/Riverview under the Monmouth/Riverview Credit Facility is $285 million with a final maturity at June 30, 2003. The facility is a reducing revolving loan, with scheduled facility reductions beginning on March 31, 1996 resulting in a 15% reduction by December 31, 1998. As (45) of March 18, 1996, Monmouth/Riverview had outstanding bank borrowings of $194.7 million. Unrestricted and undrawn funds available to Monmouth/Riverview under the Monmouth/Riverview Credit Facility amounted to approximately $90.3 million at March 18, 1996. The Monmouth/Riverview Credit Facility contains certain financial covenants that may limit Monmouth/Riverview's ability to utilize all of the undrawn funds available thereunder, including covenants requiring Monmouth/Riverview to maintain certain financial ratios. Under the terms of the Monmouth/Riverview Credit Facility, Monmouth/Riverview is prohibited from transferring funds to Cablevision MFR. The weighted average interest rate on all bank indebtedness as of December 31, 1995 was approximately 8.1%. As of March 18, 1996, Monmouth Cablevision and Riverview Cablevision have entered into interest rate swap and cap agreements with several banks on a notional amount of $130 million on which the Company pays a fixed rate of interest and receives a variable rate of interest for specified period,with an average maturity of approximately one year. The Company believes that for Monmouth/Riverview, internally generated funds together with funds available under its existing credit agreement, will be sufficient to meet its debt service requirements including its amortization requirements and to fund its capital expenditures through 1997. On August 8, 1994, Cablevision MFR issued promissory notes totalling $141.3 million, due in 1998 and bearing interest at 6% until the third anniversary and 8% thereafter (increasing to 8% and 10%, respectively, if interest is paid in shares of the Company's Class A Common Stock). Principal and interest on the notes is payable at Cablevision MFR's election, in cash or in shares of the Company's Class A Common Stock. The promissory notes are guaranteed by the Company and the obligations under the guarantee rank pari passu with the Company's public subordinated debt. In certain circumstances, Cablevision MFR may extend the maturity date of the promissory notes until 2003 for certain additional consideration. RAINBOW PROGRAMMING On January 27, 1995, Rainbow entered into an amended and restated credit facility with Toronto-Dominion (Texas), Inc., and Canadian Imperial Bank of Commerce, as co-agents, and a group of banks for $202 million of which $108 million was drawn on such date to refinance Rainbow Programming's original $105 million credit facility. On July 12, 1995 Rainbow Programming consummated the purchase of NBC's interests in SportsChannel New York and Rainbow News 12 Company for approximately $95.5 million, giving Rainbow Programming a 100% interest in SportsChannel New York and Rainbow News 12 Company. The purchase was financed by an additional drawdown of $94 million under Rainbow Programming's $202 million amended and restated credit facility and by a $2.5 million equity contribution from the Company for the balance of the purchase price and related fees. (46) In July 1994, the proceeds of the initial $105 million loan under the original facility plus $76 million of equity from the Company were used to purchase Liberty Media Corporation's 50% interest in AMCC giving Rainbow Programming a 75% ownership interest in AMCC. The credit facility is payable in full at maturity on December 31, 1996 and bears interest at varying rates based upon the banks' Base Rate or Eurodollar Rate, as defined in the credit agreement. Repayment of the loan is anticipated to be made by Rainbow Programming from one or a combination of the following: (i) internally generated funds; (ii) refinancing the existing Rainbow Programming $202 million credit facility; (iii) refinancing the existing $51 million credit agreement of AMCC ($36 million outstanding as of December 31, 1995); (iv) the sale of equity interests in, or assets of, the programming businesses; and (v) investments or advances from the Restricted Group. The loan is secured by a pledge of the Company's stock in Rainbow Programming and is guaranteed by the subsidiaries of Rainbow Programming as permitted. Rainbow Programming's financing needs have been funded by the Restricted Group's investments in and advances to Rainbow Programming, by sales of equity interests in the programming businesses and through separate external debt financing. The Company expects that the future cash needs of Rainbow Programming's current programming partnerships will increasingly be met by internally generated funds, although certain of such partnerships will at least in the near future rely to some extent upon their partners (including Rainbow Programming) for certain cash needs. The partners' contributions may be supplemented through the sale of additional equity interests in, or through the incurrence of indebtedness by, such programming businesses. On March 10, 1995, MSG Holdings, L.P. ("Holdings"), a partnership between a subsidiary of Rainbow Programming and a subsidiary of ITT Corporation, a Delaware corporation ("ITT"), acquired Madison Square Garden Corporation ("MSG") in a transaction in which MSG merged with and into Holdings. The purchase price paid by Holdings for MSG was $1,009.1 million. See Item 1.-"Business -Programming Operations". (47) ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS. CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page ---- Independent Auditors' Report . . . . . . . . . . . . . . . . 49 Consolidated Balance Sheets - December 31, 1995 and 1994 . . 50 Consolidated Statements of Operations - years ended December 31, 1995, 1994 and 1993. . . . . . . . . . 52 Consolidated Statements of Stockholders' Deficiency - years ended December 31, 1995, 1994 and 1993 . . . . . . . 53 Consolidated Statements of Cash Flows - years ended December 31, 1995, 1994 and 1993. . . . . . . . . . . . . 54 Notes to Consolidated Financial Statements . . . . . . . . . 56 (48) INDEPENDENT AUDITORS' REPORT The Board of Directors Cablevision Systems Corporation We have audited the accompanying consolidated balance sheets of Cablevision Systems Corporation and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of operations, stockholders' deficiency and cash flows for each of the years in the three-year period ended December 31, 1995. In connection with our audits of the consolidated financial statements, we also audited the financial statement schedule listed in Item 14(a)(2). These consolidated financial statements and the financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Cablevision Systems Corporation and subsidiaries at December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. /s/ KPMG Peat Marwick LLP ------------------------- KPMG Peat Marwick LLP Jericho, New York March 18, 1996 (49) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 1995 and 1994 (Dollars in thousands)
ASSETS 1995 1994 ---- ---- Cash and cash equivalents. . . . . . . . . . . . . . . $ 15,332 $ 11,350 Accounts receivable trade (less allowance for doubtful accounts of $12,678 and $10,087) . . . . . . 100,506 72,881 Notes receivable affiliates. . . . . . . . . . . . . . - 2,143 Notes and other receivables. . . . . . . . . . . . . . 16,762 14,280 Prepaid expenses and other assets. . . . . . . . . . . 19,353 20,794 Property, plant and equipment, net . . . . . . . . . . 1,026,355 886,028 Investments in affiliates. . . . . . . . . . . . . . . 141,345 42,954 Advances to affiliates . . . . . . . . . . . . . . . . 6,909 36,681 Feature film inventory . . . . . . . . . . . . . . . . 143,916 129,496 Franchises, net of accumulated amortization of $314,218 and $240,609 . . . . . . . . . . . . . . . . 363,077 436,686 Affiliation agreements, net of accumulated amortization of $20,598 and $6,053. . . . . . . . . . 124,848 139,097 Excess costs over fair value of net assets acquired and other intangible assets, net of accumulated amortization of $518,178 and $469,620 . . 468,133 290,931 Deferred financing, acquisition and other costs, net of accumulated amortization of $23,899 and $18,422. . . . . . . . . . . . . . . . . . 47,673 50,949 Deferred interest expense, net of accumulated amortization of $42,142 and $28,095. . . . . . . . . . 28,096 42,143 ---------- ---------- $2,502,305 $2,176,413 ---------- ---------- ---------- ----------
See accompanying notes to consolidated financial statements. (50) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 1995 and 1994 (Dollars in thousands, except per share amounts)
1995 1994 ---- ---- LIABILITIES AND STOCKHOLDERS' DEFICIENCY Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . $ 156,470 $ 120,627 Accrued liabilities: Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,908 39,322 Payroll and related benefits. . . . . . . . . . . . . . . . . . 47,997 34,085 Franchise fees. . . . . . . . . . . . . . . . . . . . . . . . . 21,980 19,179 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116,125 86,047 Accounts payable to affiliates. . . . . . . . . . . . . . . . . . 12,708 22,273 Feature film rights payable . . . . . . . . . . . . . . . . . . . 128,000 110,542 Bank debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 992,469 1,335,419 Senior debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 898,803 862,440 Subordinated debentures . . . . . . . . . . . . . . . . . . . . . 923,608 623,534 Subordinated notes payable. . . . . . . . . . . . . . . . . . . . 141,268 141,268 Obligation to related party . . . . . . . . . . . . . . . . . . . 192,945 193,079 Capital lease obligations and other debt. . . . . . . . . . . . . 8,014 13,496 ----------- ---------- Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 3,682,295 3,601,311 ----------- ---------- Deficit investment in affiliates. . . . . . . . . . . . . . . . . 453,935 393,637 ----------- ---------- Series G Redeemable Exchangeable Preferred Stock . . . . . . . . . 257,751 - ----------- ---------- Commitments and contingencies Stockholders' deficiency: 8% Series C Cumulative Preferred Stock, $.01 par value, 112,500 shares authorized, 110,622 shares issued ($100 per share liquidation preference). . . . . . . . . . . . 1 1 8% Series D Cumulative Preferred Stock, $.01 par value, 112,500 shares authorized, none issued ($100 per share liquidation preference). . . . . . . . . . . . . . . . . - - Series E Redeemable Exchangeable Convertible Preferred Stock, $.01 par value, 100,000 shares authorized, 100,000 shares issued at December 31, 1994 ($1,000 per share liquidation preference). . . . . . . . . . . . . . . . . . . . - 1 8-1/2% Series I Cumulative Convertible Exchangeable Preferred Stock, $.01 par value, 1,380,000 shares authorized, 1,380,000 shares issued at December 31, 1995 ($250 per share liquidation preference). . . . . . . . . . . . . . . 14 - Class A Common Stock, $.01 par value, 50,000,000 shares authorized, 14,210,599 and 11,850,242 shares issued. . . . . . 142 119 Class B Common Stock, $.01 par value, 20,000,000 shares authorized, 11,572,709 and 11,787,622 shares issued . . . . . . . . . . . . . . . . . . . 116 118 Paid-in capital (par value in excess of capital contributed) . . . . . . . . . . . . . . . . . . . . . 247,671 (74,016) Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . (2,079,228) (1,741,521) ----------- ---------- (1,831,284) (1,815,298) Less treasury stock, at cost (1,091,553 and 50,000 shares) . . . . . . . . . . . . . . . . . . . . . . . . (60,392) (3,237) ----------- ---------- Total stockholders' deficiency . . . . . . . . . . . . . . . . . (1,891,676) (1,818,535) ----------- ---------- $ 2,502,305 $2,176,413 ----------- ---------- ----------- ----------
See accompanying notes to consolidated financial statements. (51) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 (Dollars in thousands, except per share amounts)
1995 1994 1993 ---- ---- ---- Revenues (including affiliate amounts of $7,087, $8,290 and $7,558). . . . . . . . . $1,078,060 $ 837,169 $ 666,724 ---------- --------- --------- Operating expenses:. . . . . . . . . . . . . . Technical (including affiliate amounts of $37,756, $20,232 and $26,732). . . . . . . 412,479 302,885 241,877 Selling, general and administrative (including affiliate amounts of $0, $(1,003) and $(1,479)) . . . . . . . . . . . 266,209 195,942 172,687 Restructuring charge. . . . . . . . . . . . . - 4,306 - Depreciation and amortization . . . . . . . . 319,929 271,343 194,904 ---------- --------- --------- 998,617 774,476 609,468 ---------- --------- --------- Operating profit. . . . . . . . . . . . . . . 79,443 62,693 57,256 ---------- --------- --------- Other income (expense):. . . . . . . . . . . . Interest expense. . . . . . . . . . . . . . . (313,850) (263,299) (232,434) Interest income (including affiliate amounts of $468, $493 and $567) . . . . . . . . . . 1,963 1,518 2,107 Share of affiliates' net loss . . . . . . . . (93,024) (82,864) (61,017) Gain (loss) on sale of programming and affiliate interests, net. . . . . . . . . . 35,989 - (330) Write off of deferred financing costs . . . . (5,517) (9,884) (1,044) Loss on redemption of debentures. . . . . . . - (7,088) - Provision for preferential payment to related party . . . . . . . . . . . . . . . (5,600) (5,600) (5,600) Minority interest . . . . . . . . . . . . . . (8,637) (3,429) 3,000 Miscellaneous, net. . . . . . . . . . . . . . (8,225) (7,198) (8,720) ---------- --------- --------- (396,901) (377,844) (304,038) ---------- --------- --------- Net loss . . . . . . . . . . . . . . . . . . . (317,458) (315,151) (246,782) Dividend requirements applicable to preferred stock. . . . . . . . . . . . . . . (20,249) (6,385) (885) ---------- --------- --------- Net loss applicable to common shareholders . . $ (337,707) $(321,536) $(247,667) ---------- --------- --------- ---------- --------- --------- Net loss per common share. . . . . . . . . . . $ (14.17) $ (13.72) $ (10.83) ---------- --------- --------- ---------- --------- --------- Average number of common shares outstanding (in thousands) . . . . . . . . . . . . . . . 23,826 23,444 22,859 ---------- --------- --------- ---------- --------- ---------
See accompanying notes to consolidated financial statements. (52) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY Years Ended December 31, 1995, 1994 and 1993 (Dollars in thousands)
Paid-in Capital (Par Value Series C Series E Series I Class A Class B in Excess Preferred Preferred Preferred Common Common of Capital Accumulated Treasury Stock Stock Stock Stock Stock Contributed) Deficit Stock Total --------- --------- --------- ------- ------- ------------- ----------- --------- ----- Balance December 31, 1992 . . $ 1 $ - $ - $ 102 $ 124 $ (78,157) $(1,172,318) $ - $(1,250,248) Net loss. . . . . . . . . . - - - - - - (246,782) - (246,782) Cost of acquisitions. . . . - - - 2 - (11,977) - - (11,975) Employee stock transactions . . . . . . . - - - 2 2 9,879 - - 9,883 Purchase of treasury stock. . . . . . . . . . . - - - - - - - (3,237) (3,237) Conversion of Class B to Class A. . . . . . . . . . - - - 2 (2) - - - - Preferred dividend requirement. . . . . . . . - - - - - - (885) - (885) ----- ----- ---- ---- ---- -------- ----------- -------- ---------- Balance December 31, 1993. . 1 - - 108 124 (80,255) (1,419,985) (3,237) (1,503,244) Net loss . . . . . . . . . - - - - - - (315,151) - (315,151) Issuance of Series E preferred stock . . . . . - 1 - - - 98,406 - - 98,407 Cost of acquisition. . . . - - - - - (101,600) - - (101,600) Employee stock transactions. . . . . . . - - - 5 - 9,433 - - 9,438 Conversion of Class B to Class A . . . . . . . . . - - - 6 (6) - - - - Preferred dividend requirements. . . . . . . - - - - - - (6,385) - (6,385) ----- ----- ---- ---- ---- -------- ----------- -------- ---------- Balance December 31, 1994. . 1 1 - 119 118 (74,016) (1,741,521) (3,237) (1,818,535) Net loss . . . . . . . . . - - - - - - (317,458) - (317,458) Issuances of preferred stock . . . . . . . . . . - - 14 - - 323,317 - - 323,331 Redemption of Series E preferred stock . . . . . - (1) - - - (103,002) - - (103,003) Employee stock transactions. . . . . . . - - - 5 - 7,715 - - 7,720 Payment for acquisition, net . . . . . . . . . . . - - - 16 - 93,657 - (57,155) 36,518 Conversion of Class B to Class A . . . . . . . . . - - - 2 (2) - - - - Preferred dividend requirements. . . . . . . - - - - - - (20,249) - (20,249) ----- ----- ---- ---- ---- -------- ----------- -------- ---------- Balance December 31, 1995. . $ 1 $ - $ 14 $142 $116 $247,671 $(2,079,228) $(60,392) $(1,891,676) ----- ----- ---- ---- ---- -------- ----------- -------- ---------- ----- ----- ---- ---- ---- -------- ----------- -------- ----------
See accompanying notes to consolidated financial statements. (53) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1995, 1994 and 1993 (Dollars in thousands)
1995 1994 1993 ---- ---- ---- Cash flows from operating activities: Net loss . . . . . . . . . . . . . . . . . $(317,458) $(315,151) $(246,782) --------- --------- --------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization. . . . . . 319,929 271,343 194,904 Share of affiliates' net loss. . . . . . 93,024 82,864 61,017 Minority interest. . . . . . . . . . . . 8,637 3,429 (3,000) (Gain) loss on sale of programming and affiliates interests, net. . . . . (35,989) - 330 Write off of deferred financing costs. . . . . . . . . . . . . . . . . 5,517 9,884 1,044 Loss on redemption of debentures . . . . - 7,088 - Loss on sale of equipment, net . . . . . 4,077 3,844 2,106 Amortization of deferred financing . . . 5,320 4,844 3,950 Amortization of deferred interest expense. . . . . . . . . . . . . . . . 14,047 14,048 14,047 Amortization of debenture discount . . . 74 148 138 Accretion of interest on debt. . . . . . 39,479 35,574 32,074 Change in assets and liabilities, net of effects of acquisitions: Increase in accounts receivable trade. . . . . . . . . . . . . . . . (17,200) (3,923) (6,888) Decrease in notes receivable affiliates . . . . . . . . . . . . . 357 715 812 (Increase) decrease in notes and other receivables. . . . . . . . . . (2,421) (3,076) 753 (Increase) decrease in prepaid expenses and other assets. . . . . . (3,189) (8,675) 1,058 Decrease in advances to affiliates . . . . . . . . . . . . . 3,994 1,326 3,275 Increase (decrease) in feature film inventory . . . . . . . . . . . (14,420) 7,760 - Increase in accounts payable . . . . . 24,685 19,069 27,070 Increase (decrease) in accrued liabilities. . . . . . . . . . . . . 22,412 (2,126) 48,463 Decrease in accrued obligation, Olympics venture . . . . . . . . . . - - (50,000) Increase (decrease) in accounts payable to affiliates. . . . . . . . (2,746) 6,037 1,451 Increase (decrease) in feature film rights payable 6,586 (8,397) - --------- --------- --------- Total adjustments. . . . . . . . . . . . . 472,173 441,776 332,604 --------- --------- --------- Net cash provided by operating activities . . . . . . . . . . . . . . . 154,715 126,625 85,822 --------- --------- --------- Cash flows from investing activities: Capital expenditures. . . . . . . . . . . . (287,138) (284,858) (214,604) Payments for acquisitions, net of cash acquired. . . . . . . . . . . . . . (293,902) (673,611) (31,201) Proceeds from sale of programming and affiliate interests . . . . . . . . . . . 32,850 - 543 Proceeds from sale of equipment . . . . . . 1,873 1,515 3,643 (Increase) decrease in investments in affiliates, net. . . . . . . . . . . . (3,901) 3,457 (425) Additions to intangible assets, net . . . . (1,016) (373) (978) --------- --------- --------- Net cash used in investing activities. . . (551,234) (953,870) (243,022) --------- --------- ---------
See accompanying notes to consolidated financial statements. (54) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1995, 1994 and 1993 (Dollars in thousands) (continued)
1995 1994 1993 ---- ---- ---- Cash flows from financing activities: Issuance of bank debt to finance acquisitions . . . . . . . . . . . . . . . $ 293,902 $ 542,608 $ - Proceeds from bank debt . . . . . . . . . . . . . . . . . . . . . . . . . . 425,916 965,654 197,286 Repayment of bank debt. . . . . . . . . . . . . . . . . . . . . . . . . . . (1,062,768) (698,435) (373,479) Proceeds from senior debt . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 2,500 25,750 Repayment of senior debt. . . . . . . . . . . . . . . . . . . . . . . . . . (13,116) (8,500) (23,750) Redemption of debentures. . . . . . . . . . . . . . . . . . . . . . . . . . - (202,000) - Issuance of subordinated notes payable and other debt. . . . . . . . . . . - 145,268 - Issuance of subordinated debentures . . . . . . . . . . . . . . . . . . . . 300,000 - 348,396 Net proceeds from issuances of redeemable exchangeable convertible preferred stock . . . . . . . . . . . . . . . . . 573,331 98,407 - Redemption of redeemable exchangeable convertible preferred stock. . . . . . . . . . . . . . . . . . . . . . . . (103,003) - - Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . (12,498) (6,385) (885) Issuance of common stock. . . . . . . . . . . . . . . . . . . . . . . . . . 7,720 9,438 9,883 Purchase of treasury stock. . . . . . . . . . . . . . . . . . . . . . . . . - - (3,237) Obligation to related party . . . . . . . . . . . . . . . . . . . . . . . . (134) - 5,600 Payments on capital lease obligations and other debt . . . . . . . . . . . (6,583) (2,678) (2,682) Additions to deferred financing and other . . . . . . . . . . . . . . . . . (12,266) (20,226) (15,459) ----------- --------- --------- Net cash provided by financing activities. . . . . . . . . . . . . . . . . 400,501 825,651 167,423 ----------- --------- --------- Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . 3,982 (1,594) 10,223 Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . 11,350 12,944 2,721 ----------- --------- --------- Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . $ 15,332 $ 11,350 $ 12,944 ----------- --------- --------- ----------- --------- ---------
See accompanying notes to consolidated financial statements. (55) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per amounts) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES THE COMPANY AND RELATED MATTERS Cablevision Systems Corporation and its majority-owned subsidiaries (the "Company") own and operate cable television systems. The Company also has ownership interests in and manages other cable television systems and has interests in companies that produce and distribute national and regional programming services and that provide advertising sales services for the cable television industry. The Company's revenues are derived principally from the provision of cable television services, which include recurring monthly fees paid by subscribers. For financing purposes, Cablevision Systems Corporation and certain of its subsidiaries are structured as a restricted group and an unrestricted group (see Note 4). PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Cablevision Systems Corporation and its majority-owned subsidiaries. The Company's interests in less than majority-owned entities and its 100% common stock interest in A-R Cable Services, Inc. (see Note 2) are carried on the equity method. Advances to affiliates are recorded at cost, adjusted when recoverability is doubtful. All significant intercompany transactions and balances are eliminated in consolidation. REVENUE RECOGNITION The Company recognizes cable television and programming revenues as services are provided to subscribers. Advertising revenues are recognized when commercials are telecast. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, including construction materials, are carried at cost, which includes all direct costs and certain indirect costs associated with the construction of cable television transmission and distribution systems, and the costs of new subscriber installations. FEATURE FILM INVENTORY Rights to feature film inventory acquired under license agreements along with the related obligations are recorded at the contract value. Costs are amortized on the straight-line (56) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) method over either the contract period or the intended number of days to be aired. Amounts payable during the five years subsequent to December 31, 1995 related to feature film telecast rights amount to $20,994 in 1996, $23,126 in 1997, $16,505 in 1998, $15,320 in 1999 and $13,790 in 2000. DEFERRED FINANCING COSTS Costs incurred to obtain debt are deferred and amortized, on the straight-line basis, over the life of the related debt. FRANCHISES, AFFILIATION AGREEMENTS AND OTHER INTANGIBLE ASSETS Franchises are amortized on the straight-line basis over the average remaining terms (7 to 11 years) of the franchises at the time of acquisition. Affiliation agreements are amortized on a straight-line basis over an average life of approximately 10 years. Other intangible assets are amortized on the straight-line basis over the periods benefited (2 to 10 years), except that excess costs over fair value of net assets acquired are being amortized on the straight line basis over periods ranging from 5 to 20 years. The Company assesses the recoverability of such excess costs based upon undiscounted anticipated future cash flows of the businesses acquired. INCOME TAXES Income taxes are provided based upon the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes", which requires the liability method of accounting for deferred income taxes and permits the recognition of deferred tax assets, subject to an ongoing assessment of realizability. LOSS PER SHARE Net loss per common share is computed based on the average number of common shares outstanding after giving effect to dividend requirements on the Company's preferred stock. Common stock equivalents were not included in the computation as their effect would be to decrease net loss per share. (57) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) CASH FLOWS For purposes of the consolidated statements of cash flows, the Company considers short-term investments with a maturity at date of purchase of three months or less to be cash equivalents. The Company paid cash interest expense of approximately $252,344, $198,535 and $173,073 during 1995, 1994 and 1993, respectively. During 1995, 1994 and 1993, the Company's noncash investing and financing activities included capital lease obligations of $1,086, $4,020 and $2,695, respectively, incurred when the Company entered into leases for new equipment; obligations to related party of $101,460 and $19,019 during 1994 and 1993 (see Note 8), respectively; Series G preferred stock dividend requirements in 1995 of $7,751 (See Note 5); the issuance in 1995 of 687,623 shares of the Company's Class A Common Stock (fair value of $37,733) for the acquisition of Cablevision of Boston (See Note 2); and the issuance in 1993 of 164,051 shares of the Company's Class A Common Stock (fair value of $10,725) for the remaining interests in Cablevision of Connecticut (see Note 2). USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. RECLASSIFICATIONS Certain reclassifications have been made to the 1994 consolidated financial statements to conform to the 1995 presentation. (58) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) NOTE 2. ACQUISITIONS, DISPOSITIONS AND RESTRUCTURINGS ACQUISITIONS 1995 ACQUISITIONS: In March 1995, MSG Holdings, L.P. ("MSG Holdings"), a partnership among subsidiaries of Rainbow Programming Holdings, Inc., a wholly-owned subsidiary of the Company, ("Rainbow Programming") and subsidiaries of ITT Corporation, a Delaware corporation ("ITT"), acquired the business and assets of Madison Square Garden Corporation ("MSG") in a transaction in which MSG merged with and into MSG Holdings. The purchase price paid by MSG Holdings for MSG was $1,009,100. MSG Holdings funded the purchase price of the acquisition through (i) borrowings of $289,100 under a $450,000 credit agreement among MSG Holdings, various lending institutions and Chemical Bank as administrative agent, (ii) an equity contribution from Rainbow Programming of $110,000, and (iii) an equity contribution from ITT of $610,000. ITT, Rainbow Programming and the Company are parties to an agreement made as of August 15, 1994, as amended, (the "Bid Agreement") that provides Rainbow Programming the right to acquire interests in MSG Holdings from ITT sufficient to equalize the interests of ITT and Rainbow Programming in MSG Holdings by making certain scheduled payments totalling $250,000 (plus interest on any unpaid portion thereof) on specified dates up to and including March 17, 1997. Rainbow Programming may acquire all or part of such interests in MSG Holdings through (i) the payment of cash to ITT, (ii) the delivery to ITT, at the option of the Company, of common or preferred stock of the Company (together with the commitment of a nationally recognized underwriter to promptly purchase such common or preferred stock for cash), or a combination of cash and common or preferred stock (with such a commitment), or (iii) the delivery to ITT, at the option of ITT, subject to certain conditions and in lieu of payment of a limited amount of the required cash or common or preferred stock for the purchase of a portion of such interests, of certain designated programming interests of Rainbow Programming. If any scheduled payment is not made on the applicable due date, then Rainbow Programming will forfeit (a) its right to equalize the interests in MSG Holdings and (b) certain minority rights. The Company funded an approximate $29,000 interest payment on March 11, 1996 from funds available under the Restricted Group's principal bank credit agreement. If certain conditions are met and Rainbow Programming has forfeited its right to equalize the interests in MSG Holdings, then Rainbow Programming will also have the right to require ITT to purchase all of Rainbow Programming's interest in MSG Holdings for an amount equal to (i) the price paid by Rainbow Programming for such interest plus (ii) all interest (59) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) paid by Rainbow Programming on the unpaid portion of the $250,000 of scheduled payments (as described above). In July 1995, Rainbow Programming consummated the purchase from National Broadcasting Company ("NBC") of the approximate 50% interests in each of SportsChannel Associates (New York) ("SportsChannel New York") and Rainbow News 12 Company ("Rainbow News 12") that NBC owned for approximately $95,500, giving Rainbow Programming a 100% interest in SportsChannel New York and Rainbow News 12. The purchase was financed by an additional drawdown of $94,000 under Rainbow Programming's $202,000 amended and restated credit facility and by a $2,500 equity contribution from the Company for the balance of the purchase price and related fees. In December 1995, the Company acquired the interests in Cablevision of Boston Limited Partnership ("Cablevision of Boston") that it did not previously own pursuant to an agreement entered into by the Company and Cablevision of Boston. In connection with the acquisition, the limited partners (other than the Company) of Cablevision of Boston received approximately 680,266 shares of the Company's Class A Common Stock valued at $37,329 and the Company paid approximately $83,456 for the repayment of bank debt, fees and expenses and to fund payments to Charles F. Dolan ("Mr. Dolan"), as described below, primarily with funds borrowed under the Company's Credit Agreement. Upon consummation of the acquisition, Cablevision of Boston became a member of the Restricted Group (see Note 4). Mr. Dolan, a former general partner of Cablevision of Boston and the Chairman of the Board of the Company, received 7,357 shares of the Company's Class A Common Stock valued at $404 and approximately $20,782 in cash to repay a portion of Cablevision of Boston's indebtedness to him. In connection with the acquisition, the Company received 1,041,553 shares of its Class A Common Stock valued at $57,155 (such shares are reflected as treasury shares at December 31, 1995). As part of the acquisition of Cablevision of Boston, the Company acquired 99.5% of the partnership interests in Cablevision of Brookline Limited Partnership ("Cablevision of Brookline"), a partnership affiliated with Cablevision of Boston, and entered into an agreement with Mr. Dolan with respect to his remaining 0.5% general partnership interest in Cablevision of Brookline, whereby the Company has a right of first refusal to acquire such interest through January 1, 2002. (60) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) The acquisition of Cablevision of Boston and the purchase of interests in SportsChannel New York and Rainbow News 12 were accounted for as purchases with the operations of these companies being consolidated with those of the Company as of the acquisition dates. The excess of the purchase price over the book value of assets acquired approximates $210,976 ($115,759 for the acquisition of Cablevision of Boston and $95,217 for the acquisition of SportsChannel New York and Rainbow News 12) and will be allocated to the specific assets acquired when independent appraisals are completed. For purposes of the 1995 consolidated financial statements, the excess purchase price has been recorded as excess costs over fair value of net assets acquired and is being amortized over an average period of approximately 10 years. 1994 ACQUISITIONS: In March 1994, Cablevision of Cleveland, L.P. ("Cablevision Cleveland"), a partnership whose partners are subsidiaries of the Company, purchased substantially all of the assets and assumed certain liabilities of North Coast Cable Limited Partnership, which operates a cable television system in Cleveland, Ohio (the "North Coast Cable Acquisition"). The operations of North Coast Cable are consolidated with those of the Company as of the date of acquisition. The net cash purchase price for interests not previously owned by the Company (and excluding excess liabilities assumed by the Company) aggregated approximately $103,359 including expenses. The cost of the acquisition was financed principally by borrowings under the Company's credit agreement. In June 1994, A-R Cable Partners, a partnership comprised of subsidiaries of the Company and E.M. Warburg, Pincus & Co., Inc. completed the purchase of certain assets of Nashoba Communications, a group of three limited partnerships, for a purchase price of approximately $90,500, of which approximately $47,000 was provided by a senior credit facility secured by the assets of such systems. The remainder of the purchase price was provided by equity contributions and subordinated loans from the partners in A-R Cable Partners. The Company provided approximately $12,000 for its 30% interest in A-R Cable Partners and $1,500 in loans. In July 1994, Rainbow Programming purchased an additional 50% interest in American Movie Classics Company ("AMCC") for a purchase price of approximately $181,000, increasing Rainbow Programming's interest in AMCC to approximately 75%. The results of AMCC's operations are consolidated with those of the Company as of the date of acquisition. The acquisition was financed with a separate $105,000 credit facility entered into by Rainbow Programming and by borrowings under the Company's credit agreement of approximately $76,000 which was contributed to Rainbow Programming. (61) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) In August 1994, Cablevision MFR, Inc. ("Cablevision MFR"), a wholly-owned subsidiary of the Company, acquired substantially all of the assets of Monmouth Cablevision Associates, L.P. ("Monmouth Cablevision") and Riverview Cablevision Associates, L.P. ("Riverview Cablevision") consisting of cable television systems in New Jersey. The operations of Monmouth Cablevision and Riverview Cablevision are consolidated with those of the Company as of the date of acquisition. The aggregate purchase price for the two New Jersey systems was $391,215. Approximately $237,800 of such purchase price was financed by a senior credit facility of newly formed subsidiaries of Cablevision MFR secured solely by the assets of the systems. The remaining $153,415 of such purchase price was paid with cash of approximately $12,147 and the issuance, by Cablevision MFR, of subordinated promissory notes (the "MFR Notes") totalling $141,268 due in 1998. Also in August 1994, Cablevision of Framingham Holdings, Inc. ("CFHI"), a corporation owned 30% by the Company and 70% by E.M. Warburg, Pincus Investors, L.P., acquired substantially all of the assets of Framingham Cablevision Associates, L.P. ("Framingham Cablevision") consisting of cable television systems in Massachusetts. The aggregate purchase price, including fees and expenses, for Framingham Cablevision's assets was $37,517. Approximately $22,700 of the purchase price was financed by a senior credit facility of a wholly-owned subsidiary of CFHI secured by the assets of Framingham Cablevision; approximately $9,732 was paid by the issuance by CFHI of a promissory note, guaranteed by the Company, due in 1998 and the remaining amount was financed by capital contributions and loans to CFHI from its stockholders. The Company provided a capital contribution of approximately $1,320 and $300 as a loan for its 30% interest in CFHI. The acquisitions of North Coast Cable, AMCC, Monmouth Cablevision and Riverview Cablevision were accounted for as purchases whereby the acquisition costs were allocated to the various assets acquired and liabilities assumed based upon their respective fair values. The excess of the purchase price over the book value of net assets acquired of these entities, aggregating $625,946, has been allocated to the specific assets acquired based on independent appraisals as follows: Plant and equipment $ 31,200 Affiliation agreements 145,150 Franchises 362,301 Excess cost over fair value of net assets acquired 87,295 --------- $ 625,946 --------- --------- (62) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) 1993 ACQUISITIONS: In December 1986, the Company had purchased substantially all the limited partnership interests in Cablevision of Connecticut. In November 1993, the Company purchased the remaining interests in exchange for 164,051 shares of the Company's Class A Common Stock which had a fair market value of approximately $10,725. Such amount was charged to excess cost over fair value of net assets acquired and is being amortized over the remaining original amortization period. In November 1993, the Company purchased the business of CATV Enterprises, Inc. ("CATV") in Riverdale, The Bronx, New York following the expiration of CATV's temporary permit to operate its cable television system in Riverdale. The cost of $8,500 is included in excess cost over fair value of net assets acquired. PRO FORMA RESULTS OF OPERATIONS The following unaudited pro forma condensed results of operations are presented for the years ended December 31, 1995 and 1994 as if the acquisition of Cablevision of Boston had occurred on January 1, 1995 and 1994, respectively, and as if the acquisitions of Monmouth Cablevision and Riverview Cablevision; the purchase of the 50% interest in AMCC; and the North Coast Cable Acquisition had occurred on January 1, 1994. Years Ended December 31, ------------------------ 1995 1994 ---- ---- Net revenues $1,137,878 $1,001,187 ---------- ---------- ---------- ---------- Net loss $ (327,312) $ (369,137) ---------- ---------- ---------- ---------- Net loss per common share $ (14.20) $ (15.56) ---------- ---------- ---------- ---------- The proforma information presented above gives effect to certain adjustments, including the amortization of acquired intangible assets and increased interest expense on acquisition debt. The proforma information has been prepared for comparative purposes only and does not purport to indicate the results of operations which would actually have occurred had the acquisitions been made at the beginning of the periods indicated, or which may occur in the future. (63) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) DISPOSITIONS In July 1995, Rainbow Programming sold a minority general partnership interest in Courtroom Television Network to NBC for cash totalling $5,000. The Company recognized a net gain of $20,662 on the sale. In August 1995, Cablevision of Chicago ("Cablevision of Chicago"), an affiliate of the Company, sold its cable television systems to Continental Cablevision, Inc. The Company did not have a material ownership interest in Cablevision of Chicago but had loans and advances outstanding to Cablevision of Chicago in the amount of $12,346 (plus accrued interest which the Company had fully reserved). The Company recognized a net gain of approximately $15,327 on the sale, representing the accrued interest which the Company had reserved. RESTRUCTURINGS V CABLE, INC. On December 31, 1992, the Company consummated a significant restructuring and reorganization (the "V Cable Reorganization") involving its subsidiary, V Cable, Inc. ("V Cable"), U.S. Cable Television Group, L.P. ("U.S. Cable") and General Electric Capital Corporation ("GECC"), V Cable's principal creditor. In the V Cable Reorganization, V Cable acquired a 20% interest in U.S. Cable for $20,000 and U.S. Cable acquired a 19% non-voting interest in a newly incorporated subsidiary of V Cable that holds substantially all of V Cable's assets ("VC Holding") for $3,000. As a result, V Cable owns an effective 84.8% interest in VC Holding. GECC has provided long-term credit facilities to each of V Cable, VC Holding and U.S. Cable, secured in each case by the assets of the borrower and in most cases cross-collateralized by the assets of the other two entities. The credit facilities are non-recourse to the Company other than with respect to the common stock of V Cable owned by the Company (see Note 4). The Company accounts for its investment in U.S. Cable using the equity method of accounting and, accordingly, recorded its share of losses in U.S. Cable for 1995, 1994 and 1993 amounting to $2,840, $8,594 and $8,566, respectively. Also in 1993, included in the accompanying consolidated statements of operations is U.S. Cable's share of losses in VC Holding, limited to its $3,000 investment described above. In February 1996, the Company entered into an agreement with GECC (the "GECC Agreement"), as amended in March 1996, pursuant to which the Company plans to effect a reorganization and recapitalization relating to V Cable and U.S. Cable (See Note 14). (64) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) A-R CABLE. In 1992 the Company and A-R Cable Services, Inc. ("A-R Cable") consummated a restructuring and refinancing transaction (the "A-R Cable Restructuring"). Among other things, this transaction involved an additional $45,000 investment in A-R Cable by the Company to purchase a new Series B Preferred Stock and the purchase of a new Series A Preferred Stock in A-R Cable by Warburg Pincus Investors, L.P. ("Warburg Pincus") for $105,000. After the receipt of certain regulatory approvals, the Company will have a 40% economic and voting interest in A-R Cable. As a result of the A-R Cable Restructuring, the Company no longer has financial or voting control over A-R Cable's operations. For reporting purposes, the Company accounts for its investment in A-R Cable using the equity method of accounting whereby the Company records 100% of the net losses of A-R Cable since it continues to own 100% of A-R Cable's outstanding common stock. Included in share of affiliates' net loss in the accompanying consolidated statements of operations for the years ended December 31, 1995, 1994 and 1993 is $72,257, $67,092 and $56,420, respectively, representing A-R Cable's net loss plus dividend requirements for the Series A Preferred Stock of A-R Cable, which is not owned by the Company. Included in deficit investment in affiliates is $442,940 and $374,423 at December 31, 1995 and 1994, respectively, representing A-R Cable losses and external dividend requirements recorded by the Company in excess of amounts invested by the Company therein. At December 31, 1995 and 1994 and for the years then ended, A-R Cable's total assets, liabilities (including preferred stock) and net revenues amounted to $222,831 and $246,125; $738,581 and $681,717; $113,292 and $107,026, respectively. The Company continues to guarantee the debt of A-R Cable to GECC under a limited recourse guarantee wherein recourse to the Company is limited solely to the common and Series B Preferred Stock of A-R Cable owned by the Company. The Company manages A-R Cable under a management agreement that provides for cost reimbursement, an allocation of overhead charges and a management fee of 3-1/2% of gross receipts, as defined, with interest on unpaid amounts thereon at a rate of 10% per annum. The 3-1/2% fee and interest thereon is payable by A-R Cable only after repayment in full of its senior debt and certain other obligations. Under certain circumstances, the fee is subject to reduction to 2-1/2% of gross receipts. During 1995 and 1994, Warburg Pincus purchased additional shares of Series A Preferred Stock for a cash investment of $210 and $998, respectively, and CSC purchased additional shares of Series B Preferred Stock for a cash investment of $3,740 and $427, respectively. (65) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) After May 11, 1997, either Warburg Pincus or the Company may irrevocably cause the sale of A-R Cable, subject to certain conditions. In certain circumstances, Warburg Pincus may cause the sale of A-R Cable prior to that date. Upon the sale of A-R Cable, the net sales proceeds, after repayment of all outstanding indebtedness and other liabilities, will be used as follows: first, to repay Warburg Pincus' investment in the Series A Preferred Stock; second, to repay the Company's investment in the Series B Preferred Stock; third, to repay the accumulated unpaid dividends on the Series A Preferred Stock (19% annual rate); fourth, to repay the accumulated unpaid dividends on the Series B Preferred Stock (12% annual rate); fifth, to pay the Company for all accrued and unpaid management fees together with accrued but unpaid interest thereon; sixth, pro rata 60% to the Series A Preferred Stockholders, 4% to the Series B Preferred Stockholders and 36% to the common stockholder(s). NOTE 3. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following items, which are depreciated or amortized primarily on a straight-line basis over the estimated useful lives shown below:
December 31, ---------------------- Estimated 1995 1994 Useful Lives ---- ---- ------------- Cable television transmission and distribution systems: Converters . . . . . . . . . . . . . . . . $ 329,091 $ 270,660 3 to 5 years Headends . . . . . . . . . . . . . . . . . 85,763 66,583 6 to 9 years Distribution systems . . . . . . . . . . . 1,127,836 963,545 10 to 15 years Program, service and test equipment . . . . . . . . . . . . . . . . 105,759 80,384 4 to 7 years Microwave equipment. . . . . . . . . . . . 5,442 5,082 7 1/2 years Construction in progress (including materials and supplies) . . . . . . . . . 74,499 54,709 - Furniture and fixtures . . . . . . . . . . . 26,038 20,758 5 to 12 years Transportation equipment . . . . . . . . . . 41,352 33,508 2 to 12 years Building and building improvements . . . . . 23,033 19,446 22 to 39 years Leasehold improvements . . . . . . . . . . . 41,939 34,627 Term of lease Land and land improvements . . . . . . . . . 9,118 8,995 - 1,869,870 1,558,297 ---------- ---------- Less accumulated depreciation and amortization . . . . . . . . . . . . . . . 843,515 672,269 ---------- ---------- $1,026,355 $ 886,028 ---------- ---------- ---------- ----------
(66) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) NOTE 4. DEBT BANK DEBT RESTRICTED GROUP For financing purposes, Cablevision Systems Corporation and certain of its subsidiaries (including Cablevision of Boston as of December 15, 1995) are collectively referred to as the "Restricted Group". On October 14, 1994, the Restricted Group entered into new $1.5 billion credit facilities (the "Credit Agreement") with a group of banks led by Toronto-Dominion (Texas), as agent. The Credit Agreement consists of a $400,000 Term Loan and Reducing Revolver facilities aggregating $1,100,000. The Term Loan has a final maturity of June 30, 2003 and begins amortizing on a scheduled quarterly basis on June 30, 1997. The Reducing Revolver facilities begin to reduce on December 31, 1996 and have a final maturity of June 30, 2003. The total amount of bank debt outstanding at December 31, 1995 and 1994 was $559,244 and $956,419, respectively. As of December 31, 1995, approximately $20,400 was restricted for certain letters of credit issued for the Company. Unrestricted and undrawn funds available to the Restricted Group under the Credit Agreement amounted to approximately $929,600 at December 31, 1995. The Credit Agreement contains certain financial covenants that may limit the Restricted Group's ability to utilize all of the undrawn funds available thereunder. The Credit Agreement contains various restrictive covenants, among which are limitations on the amount of investments that may be made in affiliated entities and certain other subsidiaries, the maintenance of various financial ratios and tests, and limitations on various payments, including preferred dividends. The Company is restricted from paying any dividends on its common stock. The Company was in compliance with the covenants of its Credit Agreements at December 31, 1995. Interest on outstanding amounts may be paid, at the option of the Company, based on various formulas which relate to the prime rate, rates for certificates of deposit or other prescribed rates. In addition, the Company has entered into interest rate swap agreements with several banks on a notional amount of $270,000 as of December 31, 1995 whereby the Company pays a fixed rate of interest and receives a variable rate. Interest rates and terms vary in accordance with each of the agreements. The Company enters into interest (67) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) rate swap agreements to hedge against interest rate risk, as required by its credit agreements, and therefore accounts for these agreements as hedges of floating rate debt, whereby interest expense is recorded using the revised rate, with any fees or other payments amortized as yield adjustments. As of December 31, 1995, the interest rate agreements expire at various times through the year 2000 and have a weighted average life of approximately two years. The Company is exposed to credit loss in the event of nonperformance by the other parties to the interest rate swap agreements; however, the Company does not anticipate nonperformance by the counterparties. The weighted average interest rate on all bank indebtedness was 8.6% and 8.2% on December 31, 1995 and 1994, respectively. The Company is also obligated to pay fees of 3/8 of 1% per annum on the unused loan commitment and from 1-3/8% to 1-5/8% per annum on letters of credit issued under the Credit Agreement. Substantially all of the assets of the Restricted Group (excluding the assets of CNYC), amounting to approximately $1,356,100 at December 31, 1995, have been pledged to secure the borrowings under the Credit Agreement. CABLEVISION MFR Cablevision MFR and its subsidiaries, Monmouth Cablevision and Riverview Cablevision, are party to a credit facility with a group of banks led by Nations Bank of Texas, N.A., as agent (the "MFR Credit Facility"). The maximum amount available to Cablevision MFR under the MFR Credit Facility is $285,000 with a final maturity at June 30, 2003. The facility is a reducing revolving loan, with scheduled facility reductions beginning on March 31, 1996 resulting in a 15% reduction by December 31, 1998. As of December 31, 1995, Cablevision MFR had outstanding bank borrowings of $195,200. Unrestricted and undrawn funds available to Cablevision MFR under the MFR Credit Facility amounted to approximately $89,800 at December 31, 1995. The MFR Credit Facility contains certain financial covenants that may limit Cablevision MFR's ability to utilize all of the undrawn funds available thereunder, including covenants requiring Cablevision MFR to maintain certain financial ratios. Under the terms of the MFR Credit Facility, Monmouth Cablevision and Riverview Cablevision are prohibited from transferring funds to the Company. The loan is secured by a pledge of the Company's stock in Cablevision MFR and substantially all of Cablevision MFR's assets which amounted to approximately $324,800 at December 31, 1995. Monmouth Cablevision and Riverview Cablevision have entered into interest rate swap and cap agreements with several banks on a notional amount of $130,000 as of December 31, 1995, whereby Monmouth Cablevision and (68) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) Riverview Cablevision pay a fixed rate of interest and receive a variable rate. Monmouth Cablevision and Riverview Cablevision account for their interest rate swap and cap agreements as hedging of floating rate debt, as may be required under the MFR Credit Facility whereby interest expense is recorded using the revised rate, with any fees or other payments amortized as yield adjustments. Cablevision MFR is exposed to credit loss in the event of nonperformance by the other parties to the agreements; however, Cablevision MFR does not anticipate nonperformance by the counterparties. The interest rate agreements expire in 1997. The weighted average interest rate on all bank indebtedness was approximately 8.1% and 8.3%, on December 31, 1995 and 1994, respectively. The MFR Credit Facility contains various restrictive covenants with which Cablevision MFR was in compliance or had obtained waivers of compliance at December 31, 1995. RAINBOW PROGRAMMING In July 1994, Rainbow Programming entered into a $105,000 credit facility with a group of banks. At December 31, 1994, $105,000 was outstanding under this facility. On January 27, 1995 Rainbow Programming entered into an amended and restated credit facility for $202,000, the entire amount of which was outstanding on December 31, 1995. The credit facility is payable on December 31, 1996 and bears interest at varying rates based upon the banks' Base Rate or LIBOR Rate, as defined in the credit agreement. The loan is secured by a pledge of the Company's stock in Rainbow Programming and is guaranteed by the subsidiaries of Rainbow Programming as permitted. The weighted average interest rate during 1995 and 1994 was 8.7% and 7.8%, respectively. The credit agreement contains various restrictive covenants with which Rainbow Programming was in compliance at December 31, 1995. AMERICAN MOVIE CLASSICS COMPANY AMCC is party to a loan agreement (the "AMCC Loan Agreement") with a group of banks (with the Toronto Dominion Bank as Lead Bank). The AMCC Loan Agreement, which permits maximum borrowings of $51,025 and matures on June 30, 1998, is comprised of a $36,025 term loan and a $15,000 revolver. At December 31, 1995 and 1994, there were no borrowings under the revolver and an outstanding balance of $36,025 and $44,000, respectively under the term loan. Borrowings under the AMCC Loan Agreement bear interest at varying rates above the Lead Bank's Base, CD or LIBOR rate depending on the ratio of debt to cash flow, as defined in the Loan Agreement. AMCC has entered into an interest rate swap agreement on a notional amount of $20,000 under which AMCC pays a fixed rate and receives a variable rate. The interest rate swap agreement expires on October 6, 1997. AMCC is exposed to credit loss in the event of (69) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) nonperformance by the other parties to the interest rate swap agreement; however, it does not anticipate nonperformance by the counterparties. At December 31, 1995 and 1994 the weighted average interest rate on bank indebtedness approximated 6.8% and 7.3%, respectively. Substantially all of the assets of AMCC, amounting to $165,576 at December 31, 1995, have been pledged to secure the borrowings under the AMCC Loan Agreement. The AMCC Loan Agreement contains various restrictive covenants with which AMCC was in compliance at December 31, 1995. SENIOR DEBT Under the credit agreement between V Cable and GECC (the "V Cable Credit Agreement"), GECC has provided a term loan (the "V Cable Term Loan") in the amount of $20,000 to V Cable, which accretes interest at a rate of 10.62% compounded semi-annually until December 31, 1997 (the reset date). In addition, GECC has extended to VC Holding a $505,000 term loan (the "Series A Term Loan), a $25,000 revolving line of credit (the "Revolving Line") and a $202,554 term loan (the "Series B Term Loan"), all of which comprise the VC Holding Credit Agreement. Interest on the Series A Term Loan and on any amounts drawn under the Revolving Line of credit is payable currently. Interest on the Series B Term Loan accretes at a rate of 10.62% compounded semi-annually until December 31, 1997 (the reset date) and is payable in full on December 31, 2001. At December 31, 1995 and 1994, amounts outstanding under the V Cable Term Loan, the Series A Term Loan and the Series B Term Loan were $27,288 and $24,606; $501,884 and $505,000; and 272,272 and $245,507, respectively. There were no amounts outstanding under the Revolving Line at December 31, 1995 and 1994. Unrestricted and undrawn funds available to VC Holding at December 31, 1995 amounted to $24,105. Interest rates on $254,000 of the Series A Term Loan are fixed at 10.12% through December 31, 1997. The remaining $247,884 bears interest at rates based on either GECC's Index Rate (as defined) or LIBOR plus applicable percentages. Interest on any borrowings under the Revolving Line is paid based on either GECC's Index Rate (as defined) or LIBOR plus applicable percentages which vary depending upon certain prescribed financial ratios. Scheduled quarterly principal payments on the Series A Term Loan commence June 30, 1997 and continue through December 31, 2001. V Cable has agreed to assume, on December 31, 1997, approximately $121,000 of debt of U.S. Cable, which amount is subject to adjustment, upward or downward, depending on U.S. Cable's ratio of debt to cash flow (as defined) in 1997 and thereafter. Included in Senior Debt at December 31, 1995 and 1994 is $97,359 and $87,327, respectively, (70) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) representing the present value of debt of U.S. Cable to be assumed in 1997. The difference at December 31, 1995 of approximately $23,641 will be charged to interest expense during the period from January 1, 1996 to December 31, 1997. The effective interest rate on this debt is approximately 11%. This debt matures on December 31, 2001. Amortization of deferred interest expense in connection with the assumption of U.S. Cable's debt, which is being amortized on a straight line basis through December 31, 1997, amounted to $14,047, $14,048 and $14,047 in 1995, 1994 and 1993, respectively. The debt of V Cable and VC Holding is guaranteed by, and secured by a pledge of all of the assets of, V Cable, VC Holding and each of their subsidiaries, including a pledge of all direct and indirect ownership interests in such subsidiaries. U.S. Cable's debt is also guaranteed and cross-collateralized by each of V Cable, VC Holding and each of their subsidiaries. All of the V Cable, VC Holding and U.S. Cable credit facilities are non-recourse to the Company other than with respect to the common stock of V Cable owned by the Company. Substantially all of the assets of V Cable, amounting to approximately $391,600 at December 31, 1995, have been pledged to secure borrowings under the V Cable and VC Holding Credit Agreements. At December 31, 1995 V Cable's liabilities exceeded its assets by approximately $551,800. The V Cable and VC Holding Credit Agreements contain various restrictive covenants, among which are the maintenance of certain financial ratios, limitations regarding certain transactions, prohibitions against the transfer of funds to the parent company (except for reimbursement of certain expenses), and limitations on levels of permitted capital expenditures. V Cable and VC Holding were in compliance or had obtained waivers of compliance with all of the covenants of their loan agreements at December 31, 1995. (71) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) SUBORDINATED DEBENTURES In November 1995, the Company issued $300,000 principal amount of 9-1/4% Senior Subordinated Notes due 2005 (the "2005 Notes"). The 2005 Notes are redeemable at the Company's option, in whole or in part, on November 1, 2000, November 1, 2001 and November 1, 2002 at the redemption price of 104.625%, 103.1% and 101.5%, respectively, of the principal amount and thereafter at 100% of the principal amount, in each case together with accrued interest to the redemption date. The indenture under which the 2005 Notes were issued contains various covenants, which are generally less restrictive than those contained in the Company's Credit Agreement, with which the Company was in compliance at December 31, 1995. The net proceeds of approximately $292,200 were used to reduce bank borrowings. In October 1994, the Company redeemed its $200,000 face amount 12-1/4% Senior Subordinated Reset Debentures due November 15, 2003, (the "Reset Debentures"). In connection with the redemption, the Company paid a premium over face amounting to $2,000, incurred a loss of $605 representing the unamortized portion of the original issue discount and wrote off $4,483 of deferred finance costs. The total loss incurred related to the redemption of the Reset Debentures amounted to $7,088. In February 1993, the Company issued $200,000 face amount ($198,930 and $198,867 amortized amounts at December 31, 1995 and 1994, respectively) of its 9-7/8% Senior Subordinated Debentures due 2013 (the "2013 Debentures"). The 2013 Debentures are redeemable, at the Company's option, on February 15, 2003, February 15, 2004, February 15, 2005 and February 15, 2006 at the redemption price of 104.80%, 103.60%, 102.40% and 101.20%, respectively, of the principal amount and thereafter at the redemption price of 100% of the principal amount, in each case together with accrued interest to the redemption date. The indenture under which the 2013 Debentures were issued contains various covenants, which are generally less restrictive than those contained in the Company's Credit Agreement, with which the Company was in compliance at December 31, 1995. Also in 1993, the Company issued $150,000 face amount ($149,678 and $149,667 amortized amounts at December 31, 1995 and 1994, respectively) of its 9-7/8% Senior Subordinated Debentures due 2023 (the "2023 Debentures"). The 2023 Debentures are redeemable, at the Company's option, on and after April 1, 2003 at the redemption price of 104.938% reducing ratably to 100% of the principal amount on and after April 1, 2010, in each case together with accrued interest to the redemption date. The indenture under (72) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) which the 2023 Debentures were issued contains various covenants, which are generally less restrictive than those contained in the Company's Credit Agreement, with which the Company was in compliance at December 31, 1995. In April 1992, the Company issued $275,000 of its 10-3/4% Senior Subordinated Debentures due 2004 (the "2004 Debentures"). The 2004 Debentures are redeemable, at the Company's option, on April 1, 1997 and April 1, 1998 at the redemption price of 103.071% and 101.536%, respectively, of the principal amount, and on April 1, 1999 and thereafter at the redemption price of 100% of the principal amount, in each case together with accrued interest to the redemption date. The Indenture under which the 2004 Debentures were issued contains various covenants, which are generally less restrictive than those contained in the Company's Credit Agreement, with which the Company was in compliance at December 31, 1995. The Indenture requires a sinking fund providing for the redemption on April 1, 2002 and April 1, 2003 of $68,750 principal amount of the 2004 Debentures, at a redemption price equal to 100% of the principal amount, plus accrued interest to the redemption date. SUBORDINATED NOTES PAYABLE In connection with the acquisition of Monmouth Cablevision and Riverview Cablevision, in August 1994, Cablevision MFR issued promissory notes totalling $141,268, due in 1998 and bearing interest at 6% until the third anniversary and 8% thereafter (increasing to 8%and 10% respectively, if interest is paid in shares of the Company's Class A Common Stock). Principal and interest on the notes is payable, at Cablevision MFR's election, in cash or in shares of the Company's Class A Common Stock. The promissory notes are guaranteed by the Company and the obligations under the guarantee rank pari passu with the Company's subordinated debentures. In certain circumstances, Cablevision MFR may extend the maturity date of the promissory notes until 2003 for certain additional consideration. (73) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) SUMMARY OF FIVE YEAR DEBT MATURITIES Total amounts payable by the Company and its subsidiaries under its various debt obligations, including capital leases, during the five years subsequent to December 31, 1995 are as follows:
Restricted Cablevision Rainbow Group V Cable MFR Programming AMCC Total ---------- ------- ----------- ----------- ---- ----- 1996 $ 2,810 $ - $ - $202,000 $16,995 $221,805 1997 38,796 18,000 - - 12,980 69,776 1998 61,953 20,000 141,268 - 6,050 229,271 1999 84,455 30,000 - - - 114,455 2000 92,000 40,000 41,300 - - 173,300
NOTE 5. PREFERRED STOCK In November 1995, the Company issued 13,800,000 depositary shares representing 1,380,000 shares of 8-1/2% Series I Cumulative Convertible Exchangeable Preferred Stock (the "Series I Preferred Stock") with an aggregate liquidation preference of $345,000. The depositary shares are convertible into shares of the Company's Class A Common Stock, at any time after January 8, 1996 at the option of the holder, at an initial conversion price of $67.44 per share of Class A Common Stock subject to adjustment under certain conditions. The Series I Preferred Stock is exchangeable into 8-1/2% Convertible Subordinated Debentures due 2007, at the option of the Company, in whole but not in part, on or after January 1, 1998 at a rate of $25.00 principal amount of exchange debentures for each depositary share. The Series I Preferred Stock is redeemable at the option of the Company, in whole or in part, on November 1, 1999, November 1, 2000, and November 1, 2001 and thereafter at 102.8%, 101.4% and 100.0%, respectively, of the principal amount plus accrued and unpaid dividends thereon. The net proceeds of the Series I Preferred Stock of approximately $334,200 were used to repay bank borrowings. The Company paid a cash dividend of approximately $4,399 in 1995. (74) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) In September 1995, the Company issued 2,500,000 shares of its $.01 par value 11-3/4% Series G Redeemable Exchangeable Preferred Stock (the "Series G Preferred Stock") with an aggregate liquidation preference of $100 per share. The Company is required to redeem the Series G Preferred Stock on October 1, 2007 at a redemption price per share equal to the liquidation preference of $100 per share, plus accrued and unpaid dividends thereon. Before October 1, 2000, dividends may, at the option of the Company, be paid in cash or by issuing fully paid and nonassessable shares of Series G Preferred Stock with an aggregate liquidation preference equal to the amount of such dividends. On and after October 1, 2000, dividends must be paid in cash. The terms of the Series G Preferred Stock permit the Company, at its option, after January 1, 1996, to exchange the Series G Preferred Stock for the Company's 11-3/4% Senior Subordinated Debentures due 2007 in an aggregate principal amount equal to the aggregate liquidation preference of the shares of Series G Preferred Stock. The net proceeds of approximately $239,300 were initially used to repay bank debt. In 1995, the Company satisfied its dividend requirements by issuing 77,510 additional shares of Series G Preferred Stock. In October, 1995, the Company borrowed approximately $103,000 under its Credit Agreement to redeem its outstanding Series E Redeemable Exchangeable Convertible Preferred Stock (the "Series E Preferred Stock") in the principal amount of $100,000 along with accrued dividends. The Company paid cash dividends on the Series E Preferred Stock during 1995 and 1994 of approximately $7,213 and $5,500, respectively. The holders of the Company's 8% Series C Cumulative Preferred Stock ("Series C Preferred Stock") may require the Company to redeem for cash at any time commencing December 31, 1997 all or a portion of the outstanding shares of the Series C Preferred Stock. The Company has the right, upon notice to the holders requesting redemption, to convert all or a part of such shares into shares of Class B Common Stock. If, in the future, holders require the Company to redeem their Series C Preferred Stock, it is the Company's intention to convert such shares into Class B Common Stock. The Company paid cash dividends on the Series C Preferred Stock during each of 1995 and 1994 of $885. (75) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) NOTE 6. INCOME TAXES The Company and its majority-owned subsidiaries file consolidated federal income tax returns. At December 31, 1995 the Company had consolidated net operating loss carry forwards for tax purposes of approximately $1,023,586, which expire between 2001 and 2010. The tax effects of temporary differences which give rise to significant portions of deferred tax assets or liabilities and the corresponding valuation allowance at December 31, 1995 and 1994 are as follows:
1995 1994 ---- ---- DEFERRED ASSET (LIABILITY) Depreciation and amortization......... $ (45,358) $ (74,833) Receivables from affiliates........... 19,179 19,312 Benefit plans......................... 11,025 15,046 Allowance for doubtful accounts....... 5,202 3,192 Deficit investment in affiliate....... 226,662 200,111 Benefits of tax loss carry forwards... 429,906 364,522 Other................................. 2,180 8,643 --------- --------- Net deferred tax assets............. 648,796 535,993 Valuation allowance................... (648,796) (535,993) --------- --------- $ - $ - --------- --------- --------- ---------
The Company has provided a valuation allowance for the total amount of net deferred tax assets since realization of these assets was not assured due principally to the Company's history of operating losses. (76) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) NOTE 7. OPERATING LEASES The Company leases certain office, production and transmission facilities under terms of leases expiring at various dates through 2004. The leases generally provide for fixed annual rentals plus certain real estate taxes and other costs. Rent expense for the years ended December 31, 1995, 1994 and 1993 amounted to $16,823, $12,036 and $10,849, respectively. In addition, the Company rents space on utility poles for its operations. The Company's pole rental agreements are for varying terms, and management anticipates renewals as they expire. Pole rental expense for the years ended December 31, 1995, 1994 and 1993 amounted to approximately $7,790, $6,947 and $6,177, respectively. The minimum future annual rentals for all operating leases during the next five years, including pole rentals from January 1, 1996 through December 31, 2000, and thereafter, at rates now in force are approximately: 1996, $20,480; 1997, $18,377; 1998, $16,315; 1999, $14,386; 2000, $12,677; thereafter, $8,800. NOTE 8. AFFILIATE TRANSACTIONS The Company has affiliation agreements with certain cable television programming companies, including MSG Holdings, varying ownership interests in which were held, directly or indirectly, by Rainbow Programming during the three years ended December 31, 1995. Rainbow Programming's investment in these programming companies is accounted for on the equity method of accounting. Accordingly, the Company recorded income (losses) of approximately $(9,930), $(1,007) and $8,828 in 1995, 1994 and 1993, respectively, representing its percentage interests in the results of operations of these programming companies. Such amounts include $4,304 and $5,656 for 1994 and 1993, respectively, of the Company's share of the net income of AMCC prior to its consolidation with the Company in July 1994. In addition, such amounts include $(3,293), $(175) and $5,240 for 1995, 1994 and 1993, respectively, of the Company's share of net income (losses) in SportsChannel New York and Rainbow News 12 prior to their consolidation with the Company in July 1995. At December 31, 1995 and 1994, the Company's investment in these programming companies amounted to approximately $134,969 and $30,096, respectively. Costs incurred by the Company for programming services provided by these non-consolidated affiliates and included in technical expense for the years ended December 31, 1995, 1994 and 1993 amounted to approximately $37,756, $20,232 and $26,732, respectively. At December 31, 1995 and 1994, amounts due from certain of these programming affiliates aggregated $584 and $62, respectively, and are included in advances to affiliates. Also, at December 31, 1995 and 1994 amounts (77) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) due to certain of these affiliates, primarily for programming services provided to the Company, aggregated $12,607 and $13,731, respectively, and are included in accounts payable to affiliates. Summarized combined financial information relating to these programming companies at December 31, 1995, 1994 and 1993 and for the years then ended is as follows:
1995 1994 1993 -------- -------- -------- Current assets.......... $ 73,232 $ 97,184 $133,060 -------- -------- -------- -------- -------- -------- Noncurrent assets....... $ 47,357 $ 33,815 $126,826 -------- -------- -------- -------- -------- -------- Current liabilities..... $ 60,286 $ 64,000 $ 93,071 -------- -------- -------- -------- -------- -------- Noncurrent liabilities.. $ 16,490 $ 6,257 $123,184 -------- -------- -------- -------- -------- -------- Net revenues............ $240,518 $270,676 $363,727 -------- -------- -------- -------- -------- -------- Net income (loss)....... $ (5,490) $ 3,473 $ 39,423 -------- -------- -------- -------- -------- --------
In 1992 the Company acquired from Mr. Dolan substantially all of the interests in Cablevision of New York City ("CNYC") that it did not previously own. Mr. Dolan remains a 1% partner in CNYC and is entitled to certain preferential payments. Mr. Dolan's preferential rights entitle him to an annual cash payment (the "Annual Payment") of 14% multiplied by the outstanding balance of his "Minimum Payment". The Minimum Payment is $40,000 and is to be paid to Mr. Dolan prior to any distributions to partners other than Mr. Dolan. In addition, Mr. Dolan has the right, exercisable beginning on December 31, 1997, to require the Company to purchase his interest. Mr. Dolan would be entitled to receive from the Company the Minimum Payment, any accrued but unpaid Annual Payments, a guaranteed return on certain of his investments in CNYC and a Preferred Payment defined as a payment (not exceeding $150,000) equal to 40% of the Appraised Equity Value (as defined) of CNYC after making certain deductions. Based upon estimates for accounting purposes of the Appraised Equity Value of CNYC made by the Company, the maximum amount of the Preferred Payment was accrued during 1992 through 1994 as an additional obligation to Mr. Dolan relating to the Company's purchase of CNYC, which has also been charged to par value in excess of capital contributed. The total amount owed to Mr. Dolan at December 31, 1995 of approximately $192,945 in respect of the Preferred Payment, the Minimum Payment and the Annual Payment reflects a reduction of approximately $3,955 at December 31, 1995 representing Mr. Dolan's obligation to reimburse the Company in connection with certain claims paid or owed by CNYC. (78) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) During 1995, 1994 and 1993, the Company made advances to or incurred costs on behalf of other affiliates engaged in providing cable television, cable television programming, and related services. Amounts due from these affiliates amounted to $6,325 and $6,591 at December 31, 1995 and 1994, respectively and are included in advances to affiliates. Cablevision of Newark, a partnership 25% owned and managed by the Company and 75% owned by an affiliate of Warburg Pincus, owns cable television systems located in Newark and South Orange, New Jersey. The Company's share of the net losses of Cablevision of Newark amounted to $2,957, $3,631 and $4,206 in 1995, 1994 and 1993, respectively. In connection with its 30% interest in A-R Cable Partners (see note 2), the Company recorded its share of the losses of A-R Cable Partners amounting to $3,505 for 1995 and $1,886 for the period from acquisition through December 31, 1994. Also, in connection with its 30% interest in CFHI (see note 2), the Company recorded its share of the losses of CFHI amounting to $1,535 for 1995 and $654 from the date of acquisition through December 31, 1994. The Company manages the operations of Cablevision of Newark, A-R Cable, A-R Cable Partners and CFHI for a fee equal to 3-1/2% of gross receipts, as defined, plus reimbursement of certain costs and an allocation of certain selling, general and administrative expenses. In certain cases, interest is charged on unpaid amounts. For 1995, 1994 and 1993, such management fees, expenses and interest amounted to approximately $8,816, $6,576 and $5,677, respectively, of which $6,918, $5,536 and $4,845, respectively, were reserved by the Company. In connection with the V Cable Reorganization (see Note 2), V Cable acquired for $20,000, a 20% interest in U.S. Cable. The Company manages the properties of U.S. Cable under management agreements that provide for cost reimbursement, including an allocation of overhead charges. For 1995, 1994 and 1993, such cost reimbursement amounted to $5,621, $5,803 and $4,894, respectively, which included an allocation of overhead charges of $2,881, $2,720 and $2,604, respectively. (79) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) NOTE 9. BENEFIT PLANS The Company maintains the CSSC Supplemental Benefit Plan (the "Benefit Plan") for the benefit of certain officers and employees of the Company. As part of the Benefit Plan, the Company established a nonqualified defined benefit pension plan, which provides that, upon attaining normal retirement age, a participant will receive a benefit equal to a specified percentage of the participant's average compensation, as defined. All participants are 100% vested in the Benefit Plan. Net periodic pension cost for the years ended December 31, 1995, 1994 and 1993 amounted to $(9), $103 and $368, respectively. At December 31, 1995 and 1994, the fair value of Benefit Plan assets exceeded the projected benefit obligation by approximately $2,119 and $1,772, respectively. In addition, the Company accrues a liability in the amount of 7% of certain officers' and employees' compensation, as defined. Each year the Company also accrues for the benefit of these officers and employees interest on such amounts. The officer or employee will receive such amounts upon termination of employment. All participants are 100% vested in this plan. The cost associated with this plan for the years ended December 31, 1995, 1994 and 1993 was approximately $495, $337 and $497, respectively. The Company maintains a Pension and 401(K) Savings Plan (the "Plan"), to permit employees of the Company and its affiliates to make contributions to the Plan on a pre-tax salary reduction basis in accordance with the provisions of Section 401(K) of the Internal Revenue Code. The Company contributes 1-1/2% of eligible employees' annual compensation, as defined, to the defined contribution portion of the Plan (the "Pension Plan") and an equivalent amount to the Section 401(K) portion of the Plan (the "Savings Plan"). Employees may voluntarily contribute up to 15% of eligible compensation, subject to certain restrictions, to the Savings Plan, with an additional matching contribution by the Company of 1/4 of 1% for each 1% contributed by the employee, up to a maximum contribution by the Company of 1/2 of 1% of eligible base pay. Employee contributions are fully vested as are employer base contributions to the Savings Plan. Employer contributions to the Pension Plan and matching contributions to the Savings Plan become vested in years three through seven. The cost associated with these plans was approximately $4,287, $3,125 and $2,905 for the years ended December 31, 1995, 1994 and 1993, respectively. (80) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) NOTE 10. STOCK BENEFIT PLANS The Company maintains an Employee Stock Plan (the "Stock Plan") under which the Company is authorized to issue a maximum of 3,500,000 shares. Pursuant to its terms, no awards may be granted under the Stock Plan after December 5, 1995. The Company granted under the Stock Plan incentive stock options, nonqualified stock options, restricted stock, conjunctive stock appreciation rights, stock grants and stock bonus awards. The exercise price of stock options could not be less than the fair market value per share of class A common stock on the date the option is granted and the options expire no longer than ten years from date of grant. Conjunctive stock appreciation rights permit the employee to elect to receive payment in cash, either in lieu of the right to exercise such option or in addition to the stock received upon the exercise of such option, equal to the difference between the fair market value of the stock as of the date the right is exercised, and the exercise price. Under the Stock Plan, during 1995 the Company issued options to purchase 43,600 shares of Class A common stock, stock appreciation rights related to 43,600 shares under option and stock awards of 7,100 common shares. The options and related conjunctive stock appreciation rights are exercisable at $52.125 per share and vest in 33-1/3% annual increments beginning from the date of grant. The stock awards vest 100% in May 1998. Under the Stock Plan, during 1994 the Company issued options to purchase 525,400 shares of Class A common stock, stock appreciation rights related to 525,400 shares under option and stock awards of 68,400 common shares. Of the options and related conjunctive stock appreciation rights, 95,400 are exercisable at $42.00 per share and vest in 25% annual increments beginning from the date of grant and 430,000 options and conjunctive rights are exercisable at $56.50 per share and are currently vested. The stock awards vest 100% in May 1998. (81) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) In November 1994, the Company entered into agreements with three employees to pay the value, as of that date, of options exercised with respect to 405,000 shares of the Company's Class A Common Stock, and to replace those options with a combination of stock appreciation rights and newly issued options, with the exercise price set at the market price of such stock on that date. In accordance with the agreement, one-third of the value of the exercised options was paid in cash with the remaining portion payable in equal installments on November 18, 1995 and November 18, 1996. Accordingly, the Company recorded expense related to the purchase of these options amounting to $13,215 in 1994, representing the cash payment of approximately $4,673 and a liability for future payments, included in accounts payable to affiliates in the accompanying consolidated financial statements, amounting to approximately $8,542 at December 31, 1994. In November 1995, at the Company's option, final payments relating to these agreements were made. Under the Stock Plan, during 1993 the Company issued options to purchase 15,225 shares of class A common stock, stock appreciation rights related to 15,225 shares under option and stock awards of 10,225 common shares. The options and related conjunctive stock appreciation rights are exercisable at various prices ranging from $27.625 to $38.25 per share in 25% and 33% annual increments beginning from the date of grant. The stock awards vest 100% by May 1996. On February 13, 1996 the Company's Board of Directors adopted, subject to the approval of the Company's stockholders, the 1996 Employee Stock Plan (the "1996 Plan") under which, the Company would be authorized to issue a maximum of 2,500,000 shares. Under the 1996 Plan, the Company would be able to grant incentive stock options, nonqualified stock options, restricted stock, conjunctive stock appreciation rights, stock grants and stock bonus awards. The other terms of the 1996 Plan are substantially identical to those of the Stock Plan except that under the 1996 Plan the Compensation Committee would have the authority, in its discretion, to add performance criteria as a condition to any employee's exercise of an award granted under the 1996 Plan. (82) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) Stock transactions under the Stock Plan are as follows:
Shares Stock Under Appreciation Stock Available Option Option Rights Awards For Grant Price Range -------- ------------ ------- --------- ------------- Balance, December 31, 1992 2,322,126 943,726 358,475 24,669 $14.50-$37.13 Granted 15,225 15,225 10,225 (25,450) $27.63-$38.25 Exercised/issued (478,582) (84,017) (15,000) $14.50-$36.00 Cancelled (124,074) (19,989) (28,050) 152,124 $16.63-$37.13 --------- -------- ------- -------- Balance, December 31, 1993 1,734,695 854,945 325,650 151,343 $14.50-$38.25 Granted 525,400 525,400 68,400 (593,800) $42.00-$56.50 Exercised/issued (358,528) (161,952) (48,430) - $14.50-$36.00 Cancelled (434,390) (59,866) (109,241) 543,631 $16.63-$42.00 --------- --------- ------- -------- Balance, December 31, 1994 1,467,177 1,158,527 236,379 101,174 $14.50-$56.50 Granted 43,600 43,600 7,100 (50,700) $52.13 Exercised/issued (418,102) (55,764) 17,302 - $14.50-$42.00 Cancelled (40,343) (32,026) (115,231) 155,574 $16.63-$42.00 --------- --------- -------- -------- Balance, December 31, 1995 1,052,332 1,114,337 145,550 206,048 $14.50-$56.50 --------- --------- -------- -------- --------- --------- -------- --------
At December 31, 1995, options for approximately 749,000 shares were exercisable. As a result of the stock awards, bonus awards, stock appreciation rights and the expensing of the cash payment made for certain executive stock options, the Company expensed approximately $7,757, $6,814 and $28,234 in 1995, 1994 and 1993, respectively. The 1994 amount reflects a credit of approximately $6,401 primarily resulting from a decline in the market price of the Company's Class A Common Stock. (83) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) NOTE 11. COMMITMENTS AND CONTINGENCIES The Company, through Rainbow Programming, has entered into several contracts with professional and other sports teams relating to cable television programming including rights agreements. Amounts payable under these contracts during the five years subsequent to December 31, 1995 amount to $36,767 in 1996, $32,098 in 1997, $33,122 in 1998, $31,568 in 1999 and $23,790 in 2000. In addition, Rainbow Programming has guaranteed rights payments to several professional sports teams relating to certain affiliated sports programming companies. Amounts guaranteed on behalf of such affiliated sports programming companies during the five years subsequent to December 31, 1995 amount to $10,126 in 1996, $9,133 in 1997, $3,681 in 1998, $2,578 in 1999 and $340 in 2000. The Company and its cable television affiliates have an affiliation agreement with a program supplier whereby the Company is obligated to make Base Rate Annual Payments, as defined and subject to certain adjustments pursuant to the agreement, through 2004. The Company would be contingently liable for its proportionate share of Base Rate Annual Payments, based on subscriber usage, of approximately $10,848 in 1996; $11,241 in 1997; $11,646 in 1998; 12,065 in 1999 and for the years 2000 through 2004, such payments would increase by percentage increases in the Consumer Price Index, or five percent, whichever is less, over the prior year's Base Rate Annual Payment. The Company has employment agreements with certain of its executive officers expiring at various dates through December 31, 1997. The agreements provide for minimum annual salaries and, in certain cases, additional amounts and acceleration of certain stock options, stock appreciation rights and stock awards in the event of a change in control of the Company, as defined in the agreements. Aggregate minimum payments under the salary portion of these agreements amount to $1,230 in 1996 and $2,130 in 1997. The Company does not provide post-retirement benefits to any of its employees. (84) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) NOTE 12. OTHER MATTERS The Company is party to various lawsuits, some involving substantial amounts. Management does not believe that the resolution of these lawsuits will have a material adverse impact on the financial position of the Company. The Company recorded a one time charge of $4,306 during 1994 to provide for severance and related costs, attributable entirely to terminated employees, resulting from a restructuring of its operations. Substantially all of such amounts were paid during 1994. NOTE 13. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS CASH AND CASH EQUIVALENTS, TRADE ACCOUNTS RECEIVABLE, NOTES AND OTHER RECEIVABLES, ACCOUNTS PAYABLE, ACCRUED LIABILITIES, ACCOUNTS PAYABLE TO AFFILIATES, FEATURE FILM RIGHTS PAYABLE AND OBLIGATION TO RELATED PARTY The carrying amount approximates fair value due to the short maturity of these instruments. BANK DEBT, SENIOR DEBT, SUBORDINATED DEBENTURES, SUBORDINATED NOTES PAYABLE AND REDEEMABLE EXCHANGEABLE PREFERRED STOCK The fair values of each of the Company's long-term debt instruments and redeemable preferred stock are based on quoted market prices for the same or similar issues or on the current rates offered to the Company for instruments of the same remaining maturities. INTEREST RATE SWAP AGREEMENTS The fair values of interest rate swap agreements are obtained from dealer quotes. These values represent the estimated amount the Company would receive or pay to terminate agreements, taking into consideration current interest rates and the current creditworthiness of the counterparties. (85) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) The fair value of the Company's financial instruments are summarized as follows:
December 31, 1995 --------------------------- Carrying Estimated Amount Fair Value ---------- ----------- Long term debt instruments: Bank debt $ 992,469 $ 992,469 Senior debt 898,803 898,803 Subordinated debentures 923,608 972,125 Subordinated notes payable 141,268 135,400 Redeemable exchangeable preferred stock 257,751 266,772 ---------- ---------- $3,213,899 $3,265,569 ---------- ---------- ---------- ---------- Interest rate swap and cap agreements: In a net payable position $ - $ 11,055 ---------- ---------- ---------- ----------
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. NOTE 14. SUBSEQUENT EVENTS In February 1996, the Company entered into the GECC Agreement, as amended, pursuant to which the Company plans to effect a reorganization and recapitalization relating to V Cable and U.S. Cable (the "V Cable Transactions"). The terms of the V Cable transactions provide for, among other things, (i) the payment of all existing indebtedness of V Cable (amounting to $899,000 at December 31, 1995); (ii) the formation of a new unrestricted subsidiary ("Cablevision of Ohio") which will enter into a separate $450,000 credit facility with a group of banks; and (iii) the outside interests in U.S. Cable which the Company does not already own will be acquired, facilitated by another separate bank credit facility of $151,000. On March 18, 1996, approximately $500,000 of V Cable indebtedness and $70,000 of U.S. Cable indebtedness (which includes accrued interest in both cases) was paid with funds made available from the proceeds of the Company's issuance of Series L Preferred Stock, described below. The remaining indebtedness of V Cable and U.S. Cable will be paid from borrowings under the Credit Agreement and from funds available under the new credit facilities mentioned above. The new credit facilities contain certain financial covenants that may limit the utilization of undrawn funds (86) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) available thereunder, including requirements to maintain certain financial ratios and restrictions on permitted uses of borrowed funds. It is expected that the V Cable Transactions will be consummated during the third quarter of 1996. Also in February 1996, the Company issued 6,500,000 depositary shares, representing 65,000 shares of 11-1/8% Series L Redeemable Exchangeable Preferred Stock (the "Series L Preferred Stock"). The depositary shares are exchangeable, in whole but not in part, at the option of the Company, on or after April 1, 1996, for the Company's 11-1/8% Senior Subordinated Debentures due 2008. The Company is required to redeem the Series L Preferred Stock on April 1, 2008 at a redemption price equal to the liquidation preference of $10,000 per share plus accumulated and unpaid dividends. The Series L Preferred Stock is redeemable at various redemption prices beginning at 105.563% at any time on or after April 1, 2003, at the option of the Company, with accumulated and unpaid dividends thereon to the date of redemption. (87) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (continued) NOTE 15. INTERIM FINANCIAL INFORMATION (UNAUDITED) The following is a summary of selected quarterly financial data for the years ended December 31, 1995 and 1994.
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, TOTAL ------------------ ------------------ ------------------ ------------------- --------------------- 1995 1994 1995 1994 1995 1994 1995 1994 1995 1994 -------- -------- -------- -------- -------- --------- -------- -------- ---------- --------- Revenues............... $ 245,401 $176,087 $263,734 $192,090 $278,158 $ 223,468 $290,767 $ 245,524 $1,078,060 $ 837,169 Operating expenses..... 231,696 154,934 252,695 166,511 249,603 195,818 264,623 257,213 998,617 774,476 --------- -------- -------- -------- -------- --------- -------- --------- ---------- --------- Operating profit (loss)................ $ 13,705 $ 21,153 $ 11,039 $ 25,579 $ 28,555 $ 27,650 $ 26,144 $ (11,689) $ 79,443 $ 62,693 --------- -------- -------- -------- -------- --------- -------- --------- ---------- --------- --------- -------- -------- -------- -------- --------- -------- --------- ---------- --------- Net loss applicable to common shareholders... $(100,973) $(57,348) $(99,384) $(56,557) $(44,033) $ (68,925) $(93,317) $(138,706) $ (337,707) $(321,536) --------- -------- -------- -------- -------- --------- -------- --------- ---------- --------- --------- -------- -------- -------- -------- --------- -------- --------- ---------- --------- Net loss per common share................. $ (4.27) $ (2.46) $ (4.18) $ (2.42) $ (1.85) $ (2.93) $ (3.88) $ (5.87) $ (14.17) $ (13.72) --------- -------- -------- -------- -------- --------- -------- --------- ---------- --------- --------- -------- -------- -------- -------- --------- -------- --------- ---------- ---------
(88) ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III The information called for by Item 10, Directors and Executive Officers of the Registrant, Item 11, Executive Compensation, Item 12, Security Ownership of Certain Beneficial Owners and Management and Item 13, Certain Relationships and Related Transactions, is hereby incorporated by reference to the Company's definitive proxy statement for its Annual Meeting of Shareholders anticipated to be held in June, 1996 or if such definitive proxy statement is not filed with the Commission prior to April 30, 1996, to an amendment to this report on Form 10-K filed under cover of Form 10-K/A. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K. (a) The following documents are filed as part of this report: 1. The financial statements as indicated in the index is set forth on page 48. 2. Financial Statement schedule: Page No. ----- Schedule supporting consolidated financial statements: Schedule II - Valuation and Qualifying Accounts.......... 90 Schedules other than that listed above have been omitted, since they are either not applicable, not required or the information is included elsewhere herein. 3. Independent auditors report and accompanying financial statements of A-R Cable Services, Inc. are filed as part of this report on page 91. 4. The Index to Exhibits is on page 110. (b) Reports on Form 8-K: The Company filed reports on Form 8-K during the last quarter of the fiscal period covered by this report on October 16, 1995 and November 7, 1995. (89) CABLEVISION SYSTEMS CORPORATION SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Dollars in thousands)
Balance at Beginning Charged to Costs Charged to Deductions- Balance at of Period and Expenses Other Accounts Write-Offs End of Period ----------- ---------------- -------------- ----------- ------------- YEAR ENDED DECEMBER 31, 1995 Allowance for doubtful accounts.................... $10,087 $14,551 $ - $(11,960) $12,678 ------- ------- ----- --------- ------- ------- ------- ----- --------- ------- YEAR ENDED DECEMBER 31, 1994 Allowance for doubtful accounts.................... $ 5,055 $11,849 $ - $ (6,817) $10,087 ------- ------- ----- --------- ------- ------- ------- ----- --------- ------- YEAR ENDED DECEMBER 31, 1993 Allowance for doubtful accounts.................... $ 3,232 $ 9,138 $ - $ (7,315) $ 5,055 ------- ------- ----- --------- ------- ------- ------- ----- --------- -------
(90) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) Consolidated Financial Statements December 31, 1995 and 1994 (With Independent Auditors' Report Thereon) (91) INDEPENDENT AUDITORS' REPORT The Board of Directors A-R Cable Services, Inc. We have audited the accompanying consolidated balance sheets of A-R Cable Services, Inc. (a wholly-owned subsidiary of Cablevision Systems Corporation) and subsidiaries as of December 31, 1995 and 1994 and the related consolidated statements of operations, stockholder's deficiency and cash flows for each of the years in the three-year period ended December 31, 1995. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of A-R Cable Services, Inc. and subsidiaries at December 31, 1995 and 1994 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1995, in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP ------------------------- KPMG Peat Marwick LLP Jericho, New York March 18, 1996 (92) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1995 AND 1994 (in thousands)
1995 1994 -------- -------- ASSETS Cash and cash equivalents............................... $ 25 $ 41 Accounts receivable trade (less allowance for doubtful accounts of $376 and $321).................... 2,089 1,345 Notes and other receivables............................. 1,179 1,616 Prepaid expenses........................................ 661 621 Property, plant and equipment, net...................... 113,787 107,004 Subscriber lists, net of accumulated amortization of $60,800 and $53,760.................................... - 7,040 Franchises, net of accumulated amortization of $240,200 and $226,707.................................. - 13,493 Excess costs over fair value of net assets acquired, net of accumulated amortization of $69,290 and $60,683. 103,226 111,833 Deferred financing and other costs, net of accumulated amortization of $7,563 and $6,295...................... 1,864 3,132 -------- -------- $222,831 $246,125 -------- -------- -------- --------
See accompanying notes to consolidated financial statements. (93) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1995 AND 1994 (in thousands)
1995 1994 --------- --------- LIABILITIES AND STOCKHOLDER'S DEFICIENCY Accounts payable............................... $ 15,714 $ 14,175 Accrued liabilities: Interest...................................... 5,316 6,475 Payroll and related benefits.................. 2,167 1,677 Franchise fees................................ 1,607 1,424 Insurance..................................... 1,262 942 Other......................................... 5,338 5,461 Amounts payable to affiliates, net............. 293 238 Due to parent.................................. 17,799 11,325 Senior term loan............................... 410,000 400,575 Capital lease obligations...................... 10 71 Subscriber deposits............................ 705 782 Deferred income taxes.......................... - 6,082 --------- --------- Total liabilities............................. 460,211 449,227 --------- --------- Commitments and contingencies Preferred Stock - Series A..................... 205,051 170,812 --------- --------- Preferred Stock - Series B..................... 73,319 61,678 --------- --------- Stockholder's deficiency: Common stock $.50 par value, 20,000 shares authorized, 19,000 shares issued and outstanding................................. 9,500 9,500 Paid-in capital............................... 41,350 41,350 Accumulated deficit........................... (566,600) (486,442) --------- --------- Total stockholder's deficiency.............. (515,750) (435,592) --------- --------- $ 222,831 $246,125 --------- --------- --------- ---------
See accompanying notes to consolidated financial statements. (94) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 (in thousands)
1995 1994 1993 -------- -------- -------- Revenues (including affiliate amounts of $1,268, $1,306 and $1,090)................. $113,292 $107,026 $108,711 -------- -------- -------- Operating expenses: Technical expenses (including affiliate amounts of $3,260, $2,246 and $2,787)..... 43,808 38,269 38,316 Selling, general and administrative expenses (including affiliate amounts of $7,628, $7,262 and $7,174)............. 26,104 22,592 24,664 Depreciation and amortization.............. 46,100 64,695 63,731 -------- -------- -------- 116,012 125,556 126,711 -------- -------- -------- Operating loss........................... (2,720) (18,530) (18,000) Other income (expense): Interest expense, net (including affiliate amounts of $1,110, $659 and $244)......... (41,408) (33,572) (27,894) Loss on retirement of debt................. - - (390) Miscellaneous, net......................... (182) (799) (792) -------- -------- -------- Net loss before income tax benefit.......... (44,310) (52,901) (47,076) Income tax benefit.......................... 6,082 14,045 14,168 -------- -------- -------- Net loss.................................... (38,228) (38,856) (32,908) -------- -------- -------- Dividend requirements applicable to: Series A Preferred Stock................... (34,029) (28,236) (23,512) Series B Preferred Stock................... (7,901) (6,749) (5,998) -------- -------- -------- (41,930) (34,985) (29,510) -------- -------- -------- Net loss applicable to common stockholder... $(80,158) $(73,841) $(62,418) -------- -------- -------- -------- -------- --------
See accompanying notes to consolidated financial statements. (95) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIENCY YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 (in thousands)
Common Stock -------------- Paid-In Accumulated Shares Amount Capital Deficit Total ------ ------ ------- ----------- --------- Balance December 31, 1992......... 19,000 9,500 40,500 (350,183) (300,183) Preferred dividend requirements.. - - - (29,510) (29,510) Net loss......................... - - - (32,908) (32,908) Capital contributions............ - - 850 - 850 ------ ------ ------- ----------- --------- Balance December 31, 1993......... 19,000 9,500 41,350 (412,601) (361,751) Preferred dividend requirements.. - - - (34,985) (34,985) Net loss......................... - - - (38,856) (38,856) ------ ------ ------- ----------- --------- Balance December 31, 1994......... 19,000 9,500 41,350 (486,442) (435,592) Preferred dividend requirements.. - - - (41,930) (41,930) Net loss......................... - - - (38,228) (38,228) ------ ------ ------- ----------- --------- Balance December 31, 1995......... 19,000 $9,500 $41,350 $(566,600) $(515,750) ------ ------ ------- ----------- --------- ------ ------ ------- ----------- ---------
See accompanying notes to consolidated financial statements. (96) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 (in thousands)
1995 1994 1993 -------- -------- -------- Cash flows from operating activities: Net loss............................................ $(38,228) $(38,856) $(32,908) Adjustments to reconcile net loss to net cash provided by operating activities: Income tax benefit................................ (6,082) (14,045) (14,168) Depreciation and amortization..................... 46,100 64,695 63,731 Amortization of deferred financing costs.......... 1,268 1,630 1,577 Loss on retirement of debt........................ - - 390 (Gain) loss on sale of equipment.................. (29) 165 (104) Change in assets and liabilities: Decrease (increase) in accounts receivable trade.. (744) 24 24 Decrease (increase) in notes and other receivables...................................... 437 (92) (463) Decrease (increase) in prepaid expenses........... (40) 26 (32) Increase (decrease) in accounts payable........... 1,539 (391) 5,298 Increase (decrease) in accrued liabilities........ (289) 3,051 3,800 Increase (decrease) in amounts payable to affiliates, net.................................. 55 (364) (192) Increase in due to parent......................... 6,474 4,134 4,292 Decrease in subscriber deposits................... (77) (91) (77) -------- -------- -------- Total adjustments................................ 48,612 58,742 64,076 -------- -------- -------- Net cash provided by operating activities........ 10,384 19,886 31,168 -------- -------- -------- Cash flows from investing activities: Capital expenditures................................ (24,635) (24,404) (25,220) Proceeds from sale of equipment..................... 921 322 242 -------- -------- -------- Net cash used in investing activities.............. $(23,714) $(24,082) $(24,978) -------- -------- --------
See accompanying notes to consolidated financial statements. (97) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 (in thousands) (continued)
1995 1994 1993 -------- ------- -------- Cash flows from financing activities: Proceeds from senior debt......................... $ 23,000 $ 9,500 $ 39,639 Repayments of senior debt......................... (13,575) (6,425) (17,500) Redemption of subordinated notes payable.......... - - (28,793) Proceeds from issuance of Series A Preferred Stock............................................ 210 998 - Proceeds from issuance of Series B Preferred Stock............................................ 3,740 427 - Capital contributions............................. - - 850 Repayment of capital lease obligations............ (61) (161) (299) Additions to deferred financing and other costs... - (500) (206) -------- ------- ------- Net cash provided by (used in) financing activities...................................... 13,314 3,839 (6,309) -------- ------- ------- Net decrease in cash and cash equivalents.......... (16) (357) (119) Cash and cash equivalents at beginning of year..... 41 398 517 -------- ------- ------- Cash and cash equivalents at end of year........... $ 25 $ 41 $ 398 -------- ------- ------- -------- ------- -------
See accompanying notes to consolidated financial statements. (98) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 1995, 1994 and 1993 (Dollars in thousands) NOTE 1. SIGNIFICANT ACCOUNTING POLICIES THE COMPANY AND RELATED MATTERS A-R Cable Services, Inc. ("A-R Cable" or the "Company"), a wholly-owned subsidiary of Cablevision Systems Corporation ("CSC") or ("Parent"), was organized for the purpose of constructing and operating cable television systems. The Company's revenues are derived principally from its cable television operations which include recurring monthly fees paid by subscribers. In May 1992, the Company and CSC consummated a restructuring and refinancing transaction. In connection with this restructuring, Warburg, Pincus Investors, L.P. ("Warburg Pincus") purchased a new Series A Preferred Stock of the Company for a cash investment of $105,000, and CSC purchased a new Series B Preferred Stock of the Company for a cash investment of $45,000. In addition, General Electric Capital Corporation ("GECC") provided the Company with an additional $70,000 under a secured revolving credit line. In connection with Warburg Pincus' investment in the Company, upon the receipt of certain franchise approvals, Warburg Pincus will be permitted to elect three of the six members of the Company's board of directors, will have approval rights over certain major corporate decisions of the Company and will be entitled to 60% of the vote on all matters on which holders of capital stock are entitled to vote (other than the election of directors). CSC (through a wholly-owned subsidiary) continues to own the common stock, as well as the Series B Preferred Stock, and CSC continues to manage the Company under a management agreement that provides for cost reimbursement, an allocation of overhead charges and a management fee of 3-1/2% of gross receipts, as defined, with interest on unpaid annual amounts thereon at a rate of 10% per annum. The 3-1/2% fee is payable by the Company only after repayment in full of its senior debt and certain other obligations. Under certain circumstances, the fee is subject to reduction to 2-1/2% of gross receipts. After May 11, 1997, either Warburg Pincus or CSC may irrevocably cause the sale of the Company, subject to certain conditions. In certain circumstances, Warburg Pincus may cause the sale of the Company prior to that date. If Warburg Pincus initiates the sale, CSC will have the right to purchase the Company through an appraisal procedure. CSC's purchase right may be forfeited in certain circumstances. Upon the sale of the Company, the net sales proceeds, after repayment of all outstanding indebtedness and other liabilities, will be used as follows: first, to repay Warburg Pincus' investment in (99) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (continued) the Series A Preferred Stock; second, to repay CSC's investment in the Series B Preferred Stock; third, to repay the accumulated unpaid dividends on the Series A Preferred Stock (19% annual rate); fourth, to repay the accumulated unpaid dividends on the Series B Preferred Stock (12% annual rate); fifth, to pay CSC for all accrued and unpaid management fees together with accrued but unpaid interest thereon; sixth, pro rata 60% to the Series A Preferred Stockholders, 4% to the Series B Preferred Stockholders and 36% to the common stockholder(s). During 1995 and 1994, Warburg Pincus purchased additional shares of the new Series A Preferred Stock for a cash investment of $210 and $998, respectively, and CSC purchased additional shares of the new Series B Preferred Stock for a cash investment of $3,740 and $427, respectively. The Series A Preferred Stock is entitled to a 19% annual dividend. The Series B Preferred Stock is entitled to a 12% annual dividend. Dividends on the Series A and Series B Preferred Stock are not payable until the repayment in full of all outstanding indebtedness to GECC (see Note 3). PRINCIPLES OF CONSOLIDATION The consolidated financial statements of the Company include the accounts of the Company and its subsidiaries, all of which are wholly owned. All significant intercompany balances and transactions have been eliminated in consolidation. REVENUE RECOGNITION The Company recognizes revenues as cable television services are provided to subscribers. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, including construction materials, are recorded at cost, which includes all direct costs and certain indirect costs associated with the construction of cable television transmission and distribution systems, and the costs of new subscriber installations. Property, plant and equipment are being depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are amortized over the shorter of their useful lives or the term of the related leases. (100) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (continued) DEFERRED FINANCING COSTS Costs incurred to obtain debt are deferred and amortized on the straight-line basis over the life of the related debt. SUBSCRIBER LISTS, FRANCHISES, AND EXCESS COSTS OVER FAIR VALUE OF NET ASSETS ACQUIRED Subscriber lists were amortized on the straight-line basis over varying periods during which subscribers were expected to remain connected to the system (averaging approximately 8 years). Franchises are amortized on the straight-line basis over the original average remaining term of the franchises (approximately 7 years). Excess costs over fair value of net assets acquired are being amortized over 20 years on the straight-line basis. The Company assesses the recoverability of such excess costs based upon undiscounted anticipated future cash flows of the businesses acquired. INCOME TAXES The Company is not a member of the CSC consolidated group for federal tax purposes and, accordingly, files a separate federal income tax return on behalf of itself and its consolidated subsidiaries. Income taxes are provided based upon the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), which requires the liability method of accounting for deferred income taxes and permits the recognition of deferred tax assets, subject to an ongoing assessment of realizability. CASH FLOWS For purposes of the consolidated statements of cash flows, the Company considers short-term investments with a maturity at date of purchase of three months or less to be cash equivalents. The Company paid cash interest expense of approximately $40,300, $26,672 and $25,030 during the years ended December 31, 1995, 1994 and 1993, respectively. The Company's noncash investing and financing activities included preferred stock dividend requirements of $41,930, $34,985 and $29,510 in 1995, 1994 and 1993, respectively. (101) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (continued) USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following items which are depreciated over the estimated useful lives shown below:
December 31, ------------------ Estimated 1995 1994 Useful Lives -------- -------- ------------- Distribution systems.............. $220,728 $199,702 5-15 years Machinery and equipment........... 6,654 6,038 5-7 years Furniture and fixtures............ 1,472 1,327 7 years Vehicles.......................... 7,816 7,256 4 years Buildings......................... 2,137 2,047 25 years Leasehold improvements............ 1,326 1,273 Life of lease Land.............................. 920 920 - -------- -------- 241,053 218,563 Less accumulated depreciation and amortization................. 127,266 111,559 -------- -------- $113,787 $107,004 -------- -------- -------- --------
NOTE 3. SENIOR TERM LOAN The Company's outstanding borrowings under its senior term loan and revolving lines of credit (the "Senior Term Loan") with GECC amounted to $410,000 and $400,575 at December 31, 1995 and 1994, respectively. The facility consists of a $285,000 senior term loan, $95,000 in special funding advances and a $45,000 revolving line of credit. The senior term loan and revolving line of credit are non-amortizing and mature on December 30, 1997. The special funding advances require amortization, amounting to $3,750 per quarter, commencing January 1, 1997, with the balance due on December 31, 1997. Aggregate undrawn funds available under the revolving line of credit at December 31, 1995 amounted to approximately $15,000 of which $200 was restricted for certain letters of credit issued on behalf of the Company. (102) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (continued) Interest rates on $410,000 of the Senior Term Loan are at floating rates based on either GECC's LIBOR (as defined in the agreement) or Index Rate plus applicable percentages, which vary depending upon certain prescribed financial ratios. The weighted average interest rate approximated 9.2% at December 31, 1995. Substantially all of the assets of the Company have been pledged to secure the borrowings under the Senior Term Loan agreement. The Senior Term Loan agreement contains various restrictive covenants, among which are the maintenance of certain financial ratios, limitations regarding certain transactions by the Company, prohibitions against the transfer of funds to the parent company (except for reimbursement of certain expenses) and limitations on levels of permitted capital expenditures. The Company was in compliance with all of the covenants of its Senior Term Loan agreement at December 31, 1995. NOTE 4. INCOME TAXES The Company's tax returns for the years 1984 to 1989 have been examined by the Internal Revenue Service and certain issues related to the amortization of intangible assets are being appealed by the Company. Management believes that any settlement arising out of this examination will not have a material adverse effect on the financial position of the Company. At December 31, 1995, the Company had a net operating loss carry forward of approximately $231,087, which expires in varying amounts from 2003 to 2010. Due to the 1992 transaction (Note 1), the Company underwent an ownership change within the meaning of Internal Revenue Code Section 382 which limits the amount of net operating loss carry forward from the period prior to the transaction that can be utilized to offset any taxable income in periods subsequent to the transaction. Therefore, of the $231,087 of net operating loss carry forwards for tax purposes, $201,588 is restricted and $29,499 is currently available. Usage of the $201,588 net operating loss carry forward is limited to a fixed annual amount, calculated using the Federal long-term tax-exempt rate times the value of the Company prior to the ownership change. This amount is increased in any year in which the Company recognizes any built in gain from the sale of assets owned prior to the ownership change. Based on this formula, none of the $201,588 restricted net operating loss carry forward would currently be available to the Company. (103) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (continued) The tax effects of temporary differences which give rise to significant portions of deferred tax assets or liabilities and the corresponding valuation allowance at December 31, 1995 and 1994 are as follows:
Deferred Asset (Liability) 1995 1994 - -------------------------- -------- -------- Depreciation and amortization........... $(15,534) $(23,760) Benefit plans........................... 340 674 Allowance for doubtful accounts......... 169 148 Benefits of tax loss carry forwards..... 87,813 82,705 Other................................... (338) (701) -------- -------- Net deferred tax assets............... 72,450 59,066 Valuation allowance..................... (72,450) (65,148) -------- -------- Net deferred tax liabilities.......... $ - $ (6,082) -------- -------- -------- --------
The Company has provided a valuation allowance of $72,450 for deferred tax assets since realization of these assets was not assured due to the Company's history of operating losses. Also, in connection with the acquisition of the Company by CSC in January 1988, the Company recorded certain fair value adjustments net of their tax effects. In accordance with SFAS 109, these assets have been adjusted to their remaining pre tax amounts at January 1, 1993, the date the Company adopted SFAS 109. Amortization of these amounts in 1995, 1994 and 1993 resulted in the recognition of income tax benefits of $6,082, $14,045 and $14,168, respectively. NOTE 5. AFFILIATE TRANSACTIONS The Company has an agreement with CSC whereby the Company is managed by CSC in exchange for a management fee of 3-1/2% of gross receipts, as defined. Interest on unpaid amounts accumulates at a rate of 10% per annum. Such management fees amounted to $3,963, $3,738 and $3,801 in 1995, 1994 and 1993, respectively, and interest thereon amounted to $1,110, $659 and $244 in 1995, 1994 and 1993, respectively. The Company is also charged for cost reimbursement and an allocation of certain selling, general and administrative expenses by CSC. For the years ended December 31, 1995, 1994 and 1993 these cost reimbursements and expense allocations approximated $3,665, $3,524 and $3,373, respectively. In accordance with certain restrictive covenants contained in its Senior Term Loan agreement, the Company may not pay in excess of (104) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (continued) specified amounts, subject to certain escalation provisions, of allocated corporate overhead expenses charged by CSC in any fiscal year. In addition, CSC also provided certain programming services to the Company during 1995. At December 31, 1995 and 1994, the total balance due CSC for management fees, interest, cost reimbursement, allocated expenses and certain programming services amounted to $17,799 and $11,325, respectively. CSC has interests in several companies engaged in providing cable television services and programming services to the cable television industry, including the Company. During 1995, 1994 and 1993, the Company was charged approximately $3,260, $2,246 and $2,787, respectively, by these companies for these services and the total amount due these companies as of December 31, 1995 and 1994 was $293 and $238, respectively. NOTE 6. BENEFIT PLANS CSC maintains a Pension and 401(K) Savings Plan (the "Plan"), to permit employees of CSC and its affiliates to make contributions to the Plan on a pre-tax salary reduction basis in accordance with the provisions of Section 401(K) of the Internal Revenue Code. The Company contributes 1-1/2% of eligible employees' annual compensation, as defined, to the defined contribution portion of the Plan (the "Pension Plan") and an equivalent amount to the section 401(K) portion of the Plan (the "Savings Plan"). Employees may voluntarily contribute up to 15% of eligible compensation, subject to certain restrictions, to the Savings Plan, with an additional matching contribution by the Company of 1/4 of 1% for each 1% contributed by the employee, up to a maximum contribution by the Company of 1/2 of 1%. Employee contributions are fully vested as are employer base contributions to the Savings Plan. Employer contributions to the Pension Plan and matching contributions to the Savings Plan become vested in years three through seven. Total expense related to these plans for the years ended December 31, 1995, 1994 and 1993 was approximately $375, $334 and $339, respectively. The Company does not provide any postretirement benefits to its employees. (105) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (continued) NOTE 7. OPERATING LEASES The Company leases certain office, production, satellite transponder, and transmission facilities under terms of operating leases expiring at various dates. The leases generally provide for fixed annual rentals plus certain real estate taxes and other costs. Rent expense for the years ended December 31, 1995, 1994 and 1993 was approximately $1,110, $1,240 and $842, respectively. In addition, the Company rents space on utility poles for its operations. The Company's pole rental agreements are for varying terms, and management anticipates renewals as they expire. Pole rental expense for the years ended December 31, 1995, 1994 and 1993 was approximately $2,311, $1,745 and $1,507, respectively. The minimum future annual rentals for all operating leases, including pole rentals, from January 1, 1996 through December 31, 2000 at rates now in force are approximately: 1996, $3,124; 1997, $2,694; 1998, $2,448; 1999, $2,322; 2000, $2,320. NOTE 8. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS CASH AND CASH EQUIVALENTS, TRADE ACCOUNTS RECEIVABLE, NOTES AND OTHER RECEIVABLES, ACCOUNTS PAYABLE, ACCRUED LIABILITIES, ACCOUNTS PAYABLE TO AFFILIATES AND DUE TO PARENT The carrying amount approximates fair value because of the short maturity of these instruments. SENIOR TERM LOAN The fair values of the Company's long-term debt instruments are based on quoted market prices for the same or similar issues or on the current rates offered to the Company for instruments of the same remaining maturities. (106) A-R CABLE SERVICES, INC. AND SUBSIDIARIES (a wholly-owned subsidiary of Cablevision Systems Corporation) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (continued) The fair value of the Company's financial instruments are summarized as follows:
December 31, 1995 -------------------- Carrying Estimated Amount Fair Value -------- ---------- Long term debt instruments: Senior term loans.................... $410,000 $410,000 -------- -------- -------- --------
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. NOTE 9. COMMITMENTS AND CONTINGENCIES CSC and its cable television affiliates, including the Company, have an affiliation agreement with a program supplier whereby CSC and its cable television affiliates are obligated to make Base Rate Annual Payments, as defined and subject to certain adjustments pursuant to the agreement, through 2004. The Company would be contingently liable for its proportionate share of Base Rate Annual Payments, based on subscriber usage, of approximately $1,059 in 1996; $1,097 in 1997; $1,137 in 1998; $1,178 in 1999 and for the years 2000 through 2004, such payments would increase by percentage increases in the Consumer Price Index, or five percent, whichever is less, over the prior year's Base Annual Payment. The Company is party to various lawsuits, some involving substantial amounts. Management does not believe that the resolution of these lawsuits will have a material adverse impact on the financial position of the Company. (107) SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 19th day of March, 1996. Cablevision Systems Corporation By: /s/ William J. Bell ----------------------- Name: William J. Bell Title: Vice Chairman POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Francis F. Randolph, Jr., Marc A. Lustgarten and Robert S. Lemle, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him in his name, place and stead, in any and all capacities, to sign this report, and file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons in the capacities and on the dates indicated. Name Title Date ---- ----- ----- /s/ James L. Dolan Chief Executive Officer and Director March 19, 1996 - --------------------- (Principal Executive Officer) James L. Dolan /s/ Barry J. O'Leary Senior Vice President-Finance and March 19, 1996 - --------------------- Treasurer (Principal Financial Barry J. O'Leary Officer) /s/ William J. Bell Vice Chairman and Director March 19, 1996 - --------------------- (Principal Accounting Officer) William J. Bell (108) SIGNATURES (continued) /s/ Charles F. Dolan Chairman of the Board of Directors March 19, 1996 - ----------------------------- Charles F. Dolan /s/ Marc A. Lustgarten Vice Chairman and Director March 19, 1996 - ----------------------------- Marc A. Lustgarten /s/ Robert S. Lemle Executive Vice President, General March 19, 1996 - ----------------------------- Counsel, Secretary and Director Robert S. Lemle /s/ Sheila A. Mahony Senior Vice President and Director March 19, 1996 - ----------------------------- Sheila A. Mahony /s/ John Tatta Director and Chairman of the March 19, 1996 - ----------------------------- Executive Committee John Tatta /s/ Patrick F. Dolan Director March 19, 1996 - ----------------------------- Patrick F. Dolan /s/ Francis F. Randolph, Jr. Director March 19, 1996 - ----------------------------- Francis F. Randolph, Jr. /s/ Daniel T. Sweeney Director March 19, 1996 - ----------------------------- Daniel T. Sweeney /s/ Charles D. Ferris Director March 19, 1996 - ----------------------------- Charles D. Ferris /s/ Richard H. Hochman Director March 19, 1996 - ----------------------------- Richard H. Hochman /s/ Victor Oristano Director March 19, 1996 - ----------------------------- Victor Oristano
(109) INDEX TO EXHIBITS EXHIBIT PAGE NO. DESCRIPTION NO. - ------- ----------- ----- 3.1 --Certificate of Incorporation of the Registrant (incorporated herein by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 dated January 17, 1986, File No. 33-1936 (the "S-1")). 3.1A --Amendment to Certificate of Incorporation and complete copy of amended and restated Certificate of Incorporation (incorporated herein by reference to Exhibits 3.1A(i) and 3.1A(ii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 (the "1989 10-K")). 3.1B --Certificate of Designations for the Series E Redeemable Exchangeable Convertible Preferred Stock (incorporated herein by reference to the Company's Report on form 10-K/A for the year ended December 31, 1993, filed on April 13, 1994). 3.1C --Certificate of Designations for the Series F Redeemable Preferred Stock (incorporated herein by reference to the Company's Report on Form 10-K/A for the year ended December 31, 1993, filed on April 13, 1994). 3.1D --Certificate of Designations for the Series G Redeemable Exchangeable Preferred Stock (incorporated herein by reference to Exhibit 3.1D to the Company's Registration Statement on Form S-4, File No. 33-62717). 3.1E Certificate of Designations for the Series H Redeemable Exchangeable Preferred Stock (incorporated by reference to Exhibit 4.1E to the Company's Registration Statement on Form S-4, File No. 33-63691). 3.1F --Certificate of Designations for the Series I Cumulative Convertible Exchangeable Preferred Stock (incorporated by reference to Exhibit 99.3 to the Company's Current Report on Form 8-K filed November 7, 1995). 3.1G --Certificate of Designations for the Series L Redeemable Exchangeable Preferred Stock. 3.2 --By-laws of the Registrant (incorporated herein by reference to Exhibit 3.2 to the S-1). (110) INDEX TO EXHIBITS (continued) EXHIBIT PAGE NO. DESCRIPTION NO. - ------- ----------- ----- 3.2A --Amendment to By-laws and complete copy of amended and restated By-laws (incorporated herein by reference to Exhibit 3.2 to the 1989 10-K). 3.2B --Amendment to By-laws and complete copy of amended and restated By-laws (incorporated herein by reference to Exhibit 3.2B to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992 (the "1992 10-K"). 3.2C --Amendment to By-laws and complete copy of amended and restated By-laws (incorporated herein by reference to Exhibit 3.2C to the Company's Annual Report on Form 10-K405 for the fiscal year ended December 31, 1994). 3.2D --Amendment to By-laws of the Registrant and complete copy of amended and restated By-laws (incorporated herein by reference to Exhibit 3.2D to the Company's Registration Statement on Form S-4, File No. 33-62717). 4.1 --Indenture dated as of April 1, 1992 relating to the Registrant's $275,000,000 10 3/4% Senior Subordinated Debentures due April 1, 2004 (incorporated herein by reference to Exhibit 4.2 to the 1992 10-K). 4.2 --Indenture dated as of February 15, 1993 relating to the Registrant's $200,000,000 9 7/8% Senior Subordinated Debentures due February 15, 2013 (incorporated herein by reference to Exhibit 4.3 to the 1992 10-K). 4.3 --Indenture dated as of April 1, 1993 relating to the Registrant's $150,000,000 9 7/8% Senior Subordinated Debentures due 2023 (incorporated by reference to the Conpany's Registration Statement on Form S-4, File No. 33-61814). 4.4 --Supplemental indenture dated as of November 1, 1995 between the Company and the Bank of New York, Trustee, to the indenture dated November 1, 1995 (incorporated by reference to Exhibit 99.6 to the Company's Current Report on Form 8-K filed November 1, 1995). (111) INDEX TO EXHIBITS (continued) EXHIBIT PAGE NO. DESCRIPTION NO. - ------- ----------- ----- 4.5 --Registration Rights Agreement, dated September 26, 1995, between the Registrant and Bear, Stearns & Co., Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Morgan Stanley & Co., Incorporated (incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-4, Registration No. 33-63691). 4.6 --Registration Rights Agreement, dated February 15, 1996 between the Registrant and Bear, Stearns & Co., Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Morgan Stanley & Co., Incorporated 10.1 --Registration Rights Agreement between Cablevision Systems Company and the Registrant (incorporated herein by reference to Exhibit 10.1 of the S-1). 10.2 --Registration Rights Agreement between CSC Holdings Company and the Registrant (incorporated herein by reference to Exhibit 10.2 to the S-1). 10.3 --Form of Right of First Refusal Agreement between Dolan and the Registrant (incorporated herein by reference to Exhibit 10.4 to the S-1). 10.4 --Supplemental Benefit Plan of the Registrant (incorporated herein by reference to Exhibit 10.7 to the S-1) 10.5 --Cablevision Money Purchase Pension Plan, and Trust Agreement dated as of December 1, 1983 between Cablevision Systems Development Company and Dolan and Tatta, as Trustees (incorporated herein by reference to Exhibit 10.8 to the S-1) 10.6 --Amendment to the Cablevision Money Purchase Pension Plan adopted November 6, 1992 (incorporated herein by reference to Exhibit 10.6A to the 1992 10-K). (112) INDEX TO EXHIBITS (continued) EXHIBIT PAGE NO. DESCRIPTION NO. - ------- ----------- ---- 10.7 --Employment Agreement between Charles F. Dolan and the Registrant dated January 27, 1986 (incorporated herein by reference to Exhibit 10.9 to the S-1) 10.8 --Amended and Restated Agreement dated as of June 1, 1983 between SportsChannel Associates and Cablevision Systems Holdings Company (incorporated herein by reference to Exhibit 10.11 to the S-1) 10.9 --Lease Agreement dated as of October 9, 1978 between Cablevision Systems Development Company and Industrial and Research Associates Co. and amendment dated June 21, 1985 between Industrial and Research Associates Co. and Cablevision Company (incorporated herein by reference to Exhibit 10.18 to the S-1) 10.10 --Lease Agreement dated May 1, 1982 between Industrial and Research Associates Co. and Cablevision Systems Development Company (incorporated herein by reference to Exhibit 10.19 to the S-1) 10.11 --Agreement of Sublease dated as of July 9, 1982 between Cablevision Systems Development Company and Ontel Corporation (incorporated herein by reference to Exhibit 10.20 to the S-1) (113) INDEX TO EXHIBITS (continued) EXHIBIT PAGE NO. DESCRIPTION NO. - ------- ----------- ----- 10.12 --Agreement of Sublease dated as of June 21, 1985 between Grumman Data Systems Corporation and Cablevision Company (incorporated herein by reference to Exhibit 10.21 to the S-1) 10.13 --Agreement dated as of June 21, 1985 between Industrial and Research Associates Co., Grumman Data Systems Corporation and Cablevision Company (incorporated herein by reference to Exhibit 10.22 to the S-1) 10.14 --Lease Agreement dated as of June 21, 1985 between Industrial and Research Associates Co. and Cablevision Company (incorporated herein by reference to Exhibit 10.23 to the S-1) 10.15 --Lease Agreement dated as of February 1, 1985 between Cablevision Company and County of Nassau (incorporated herein by reference to Exhibit 10.24 to the S-1) 10.16 --Lease Agreement dated as of January 1, 1981 between Cablevision Systems Development Company and Precision Dynamics Corporation and amendment dated January 15, 1985 between Cablevision Company and Nineteen New York Properties Limited Partnership (incorporated herein by reference to Exhibit 10.25 to the S-1) 10.17 --Option Certificate for 840,000 Shares Issued Pursuant to the 1986 Nonqualified Stock Option Plan of the Registrant (incorporated herein by reference to Exhibit 10.29 to the S-1) 10.18 --New Ventures Agreement, dated as of April 20, 1989, among the Registrant and certain of its subsidiaries, and National Broadcasting Company, Inc. and certain of its subsidiaries (incorporated herein by reference to Exhibit 2.3 to the April 1989 8-K) 10.19 --Purchase and Reorganization Agreement dated as of December 20, 1991 between the Registrant and Charles F. Dolan (incorporated herein by reference to Exhibit 2(c) to the January 1992 8-K). (114) INDEX TO EXHIBITS (continued) EXHIBIT PAGE NO. DESCRIPTION NO. - ------- ----------- ---- 10.20 --Amendment No. 1 dated as of March 28, 1992 to Purchase and Reorganization Agreement dated as of December 20, 1991 between the Registrant and Charles F. Dolan (incorporated herein by reference to Exhibit 2(g) to the March 1992 Form 8). 10.21 --Letter Agreement dated February 12, 1992, among the Registrant, A-R Cable Services, Inc. and Warburg Pincus Investors, L.P. (incorporated herein by reference to Exhibit 28(a) to the Registrant's Current Report on Form 8-K under the Securities Exchange Act of 1934 dated February 21, 1992 (the "February 1992 8-K")). 10.22 --Letter Agreement dated February 12, 1992 among the Registrant, A-R Cable Services, Inc. and General Electric Capital Corporation (incorporated herein by reference to Exhibit 28(b) to the February 1992 8-K). 10.23 --Letter Agreement dated February 12, 1992 among the Registrant and A-R Cable Services, Inc. (incorporated herein by reference to Exhibit 28(b) to the February 1992 8-K). 10.24 --Non-Competition Agreement, dated as of December 31, 1992, among V Cable, Inc., VC Holding, Inc. and the Registrant, for the benefit of V Cable, Inc., VC Holding, Inc. and General Electric Capital Corporation (incorporated herein by reference to Exhibit 10.37 to the 1992 10-K). 10.25 --Non-Competition Agreement, dated as of December 31, 1992, between U.S. Cable Television Group, L.P. and the Registrant, for the benefit of U.S. Cable Television Group, L.P. and General Electric Capital Corporation (incorporated herein by reference to Exhibit 10.38 to the 1992 10-K). 10.26 --CSC Nonrecourse Guaranty and Pledge Agreement, dated as of December 31, 1992, between the Registrant and General Electric Capital Corporation, as Agent for the Lenders (incorporated herein by reference to Exhibit 10.39 to the 1992 10-K). (115) INDEX TO EXHIBITS (continued) EXHIBIT PAGE NO. DESCRIPTION NO. - ------- ----------- ---- 10.27 --U.S. Cable Investment Agreement, dated as of June 30, 1992, among V Cable, Inc., V Cable GP, Inc., U.S. Cable Television Group, L.P. and U.S. Cable Partners (incorporated herein by reference to Exhibit 10.40 to the 1992 10-K). 10.28 --Newco Investment Agreement, dated as of December 31, 1992, among VC Holding, Inc., V Cable, Inc. and U.S. Cable Television Group (incorporated herein by reference to Exhibit 10.41 to the 1992 10-K). 10.29 --Senior Loan Agreement, dated as of December 31, 1992, among V Cable, Inc., the Lenders named therein and General Electric Capital Corporation, as Agent for the Lenders and as Lender (incorporated herein by reference to Exhibit 10.42 to the 1992 10-K). 10.30 --Cablevision Systems Corporation Amended and Restated Employee Stock Plan (incorporated herein by reference to Exhibit 10.46 to the 1992 10-K). 10.31 --Cablevision Systems Corporation 401(K) Savings Plan (incorporated herein by reference to Exhibit 10.47 to the 1992 10-K). 10.32 --Fourth Amended and Restated Credit Agreement, dated as of June 18, 1993, among Cablevision of New York City - Phase I L.P., Cablevision Systems New York City Corporation, Cablevision of New York City- Master L.P., each of the Banks signatory thereto, The Chase Manhattan Bank (National Association) as Agent and The First National Bank of Chicago and CIBC, Inc. each as Co-Agent (incorporated herein by reference to Exhibit 10.49 of the Company's Annual Report on Form 10-K for the year ended December 31, 1993). (116) INDEX TO EXHIBITS (continued) EXHIBIT PAGE NO. DESCRIPTION NO. - ------- ----------- ---- 10.33 --Asset Purchase Agreement, dated as of July 23, 1993, by and between Cablevision of Cleveland, L.P. and North Coast Cable Limited Partnership (incorporated herein by reference to Exhibit 10.50 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1993). 10.34 --Master Agreement, dated as of October 26, 1993, between Cablevision MFR, Inc., Monmouth Cablevision Associates, Framingham Cablevision Associates and Riverview Cablevision Associates, L.P. (incorporated herein by reference to Exhibit 10.51 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1993 (the "September 1993 10-Q"). 10.35 --Asset Purchase Agreement, dated as of October 26, 1993, between Monmouth Cablevision Associates and Cablevision MFR, Inc. (incorporated herein by reference to Exhibit 10.52 to the September 1993 10-Q). 10.36 --Asset Purchase Agreement, dated as of October 26, 1993, between Framingham Cablevision Associates, Limited Partnership and Cablevision MFR, Inc. (incorporated herein by reference to Exhibit 10.53 to the September 1993 10-Q). 10.37 --Asset Purchase Agreement, dated as of October 26, 1993 between Riverview Cablevision Associates, L.P. and Cablevision MFR, Inc. (incorporated herein by reference to Exhibit 10.54 to the September 1993 10-Q). 10.38 --Asset Purchase Agreement among A-R Cable Partners, Nashoba Communications Limited Partnership, Nashoba Communications Limited Partnership No. 7 and Nashoba Communications of Belmont Limited Partnership dated as of November 5, 1993 (incorporated herein by reference to Exhibit 10.55 to the September 1993 10-Q). 10.39 --Loan Agreement, dated as of June 30, 1994 among Rainbow Programming Holdings, Inc., the Guarantors as defined therein, Toronto-Dominion Bank, the other banks party thereto and Toronto-Dominion (Texas), Inc., as Agent (incorporated herein by reference to Exhibit 10.58 to the Company's June 30, 1994 10-Q). (117) INDEX TO EXHIBITS (continued) EXHIBIT PAGE NO. DESCRIPTION NO. - ------- ----------- ---- 10.40 --Acquisition Agreement and Plan of Merger and Reorganization, dated as of June 14, 1994, among Cablevision of Boston Limited Partnership, Cablevision of Boston, Inc., Charles F. Dolan, Cablevision Systems Boston Corporation, Cablevision Systems Corporation, COB, Inc., Cablevision Systems Services Corporation and Cablevision Finance Limited Partnership (incorporated herein by reference to Exhibit 10.59 to the Company's June 30, 1994 10-Q). 10.41 --Credit Agreement, dated as of June 15, 1994, among Cablevision of Framingham, Inc., the several lenders parties thereto, The Chase Manhattan Bank, N.A., as Agent and CIBC Inc., as Co-Agent (incorporated herein by reference to Exhibit 10.60 to the Company's June 30, 1994 10-Q). 10.42 --Amendment No. 1, dated as of August 8, 1994, to the Credit Agreement, dated as of June 15, 1994, among Cablevision of Framingham, Inc., the several lenders parties thereto, the Chase Manhattan Bank, N.A., as Agent and CIBC, Inc., as Co-Agent (incorporated herein by reference to Exhibit 10.61 to the Company's June 30, 1994 10-Q). 10.43 --Asset Purchase Agreement, dated as of October 26, 1993, between Monmouth Cablevision Associates and Cablevision MFR, Inc. as amended by Amendment No. 1 thereto, dated as of April 6, 1994 and Amendment No. 2 thereto, dated as of June 3, 1994 (restated) (incorporated herein by reference to Exhibit 10.62 to the Company's June 30, 1994 10-Q). 10.44 --Asset Purchase Agreement, dated as of October 26, 1993, between Riverview Cablevision Associates, Limited Partnership, and Cablevision MFR, Inc., as amended by Amendment No. 1 thereto, dated as of April 6, 1994 and Amendment No. 2 thereto, dated as of June 3, 1994 (restated) (incorporated herein by reference to Exhibit 10.63 to the Company's June 30, 1994 10-Q). (118) INDEX TO EXHIBITS (continued) EXHIBIT PAGE NO. DESCRIPTION NO. - ------- ----------- ---- 10.45 --Asset Purchase Agreement, dated as of October 26, 1993, between Framingham Cablevision Associates, Limited Partnership, and Cablevision MFR, Inc., as amended and assigned to Cablevision Framingham Holdings, Inc. by Amendment No. 1 thereto, dated as of April 6, 1994, and as further amended by Amendment No. 2 thereto, dated as of June 3, 1994 (restated) (incorporated herein by reference to Exhibit 10.64 to the Company's June 30, 1994 10-Q). 10.46 --Credit Agreement, dated as of June 15, 1994 (the "Credit Agreement"), by and among Cablevision MFR, Inc., Cablevision of Riverview, Inc. and Cablevision of Monmouth, Inc., the Lenders from time to time party thereto and NationsBank of Texas, N.A., as Administrative Lender (incorporated herein by reference to Exhibit 10.65 to the Company's June 30, 1994 10-Q). 10.47 --Agreement, dated as of August 15, 1994 among ITT Corporation, the Registrant and Rainbow Programming Holdings, Inc. (incorporated herein by reference to Exhibit 10.65 of the Registrants report on Form 8-K dated September 21, 1994). 10.48 --Amendment Agreement, dated as of September 12, 1994 among ITT Corporation, the Registrant and Rainbow Programming Holdings, Inc. (incorporated herein by reference to Exhibit 10.66 of the Registrants report on Form 8-K dated September 21, 1994). 10.49 --Agreement and Plan of Merger, (the "MSG Merger Agreement") dated as of August 27, 1994 among Viacom Inc., Paramount Communications Realty Corporation, ITT Corporation, Rainbow Garden Corporation and MSG Holdings, Inc. (incorporated herein by reference to Exhibit 10.67 of the Registrants report on Form 8-K dated September 21, 1994). (119) INDEX TO EXHIBITS (continued) EXHIBIT PAGE NO. DESCRIPTION NO. - ------- ----------- ---- 10.50 --Fourth Amended and Restated Credit Agreement, dated as of October 14, 1994 (the "Credit Agreement"), among Cablevision Systems Corporation, the Restricted Subsidiaries (as defined therein) banks party thereto, Toronto Dominion (Texas), Inc., as Agent, and Bank of Montreal, Chicago Branch, The Bank of New York, The Bank of Nova Scotia, The Canadian Imperial Bank of Commerce and NationsBank of Texas, N.A., as Co-Agents (incorporated herein by reference to Exhibit 10.68 to the Company's September 30, 1994 10-Q). 10.51 --First Amended and Restated Credit Agreement, dated as of October 14, 1994, among Cablevision of New Jersey, Inc., Cablevision Systems Corporation, the banks party thereto, Toronto Dominion (Texas), Inc., as Agent and Bank of Montreal, Chicago Branch, The Bank of New York, The Bank of Nova Scotia, The Canadian Imperial Bank of Commerce and NationsBank of Texas, N.A., as Co-Agents (incorporated herein by reference to Exhibit 10.69 to the Company's September 30, 1994 10-Q). 10.52 --Amendment No. 1 to the Credit Agreement (incorporated herein by reference to Exhibit 10.61 to the Company's Annual Report on Form 10-K405 for the fiscal year ended December 31, 1994). 10.53 --Amendment No. 1 to First Amended and Restated Credit Agreement, dated as of October 14, 1994, among Cablevision of New Jersey, Inc., Cablevision Systems Corporation, the banks party thereto, Toronto Dominion (Texas), Inc., as Agent and Bank of Montreal, Chicago Branch, The Bank of New York, The Bank of Nova Scotia, The Canadian Imperial Bank of Commerce and NationsBank of Texas, N.A., as Co-Agents (incorporated herein by reference to Exhibit 10.62 to the Company's Annual Report on Form 10-K405 for the fiscal year ended December 31, 1994). (120) INDEX TO EXHIBITS (continued) EXHIBIT PAGE NO. DESCRIPTION NO. - ------- ----------- ---- 10.54 --Amended and Restated Loan Agreement, dated as of January 27, 1995 among Rainbow Programming Holdings, Inc., the guarantors (as defined therein), Toronto Dominion (Texas) Inc. and Canadian Imperial Bank of Commerce, as co-agents and Toronto Dominion (Texas), Inc., as administrative agent (incorporated herein by reference to Exhibit 10.63 to the Company's Annual Report on Form 10-K405 for the fiscal year ended December 31, 1994). 10.55 --Amendment No. 1 dated as of March 10, 1995 to the MSG Merger Agreement (incorporated herein by reference to Exhibit 10.64 to the Company's Annual Report on Form 10-K405 for the fiscal year ended December 31, 1994). 10.56 --Amendment No. 2 dated as of March 10, 1995 to the MSG Merger Agreement (incorporated herein by reference to Exhibit 10.65 to the Company's Annual Report on Form 10-K405 for the fiscal year ended December 31, 1994). 10.57 --Agreement and undertaking, dated as of March 10, 1995 from MSG Holdings, LP, MSG Eden Corporation, the Registrant, Rainbow Programming Holdings, Inc., Rainbow Garden Corporation, Garden L.P. Holdings Corp., ITT Corporation, ITT Eden Corp. in favor of the National Basketball Association (the "NBA"), the member terms of the NBA, NBA Properties, Inc., the NBA Market Extension Partnership and Planet Insurance, Ltd. (incorporated herein by reference to Exhibit 10.66 to the Company's Annual Report on Form 10-K405 for the fiscal year ended December 31, 1994). 10.58 --Consent Agreement, dated as of March 10, 1995 by and among the National Hockey League, MSG Holdings, L.P., MSG Eden Corporation, ITT Eden Corporation, ITT MSG Inc., ITT Corporation, Garden L.P. Holdings Corp., Rainbow Garden Corporation, Rainbow Programming Holdings Inc. and the Registrant (incorporated herein by reference to Exhibit 10.67 to the Company's Annual Report on Form 10-K405 for the fiscal year ended December 31, 1994). (121) INDEX TO EXHIBITS (continued) EXHIBIT PAGE NO. DESCRIPTION NO. - ------- ----------- ----- 10.59 --Amendment to consulting agreement dated as of November 28, 1994 between the Company and John Tatta (incorporated herein by reference to Exhibit 10.68 to the Company's Annual Report on Form 10-K405 for the fiscal year ended December 31, 1994). 10.60 --Employment Agreement, dated as of November 30, 1994, between the Registrant and William J. Bell (incorporated herein by reference to Exhibit 10.69 to the Company's Annual Report on Form 10-K405 for the fiscal year ended December 31, 1994). 10.61 --Employment Agreement, dated as of November 30, 1994, between the Registrant and Marc A. Lustgarten (incorporated herein by reference to Exhibit 10.70 to the Company's Annual Report on Form 10-K405 for the fiscal year ended December 31, 1994). 10.62 --Employment Agreement, dated as of November 30, 1994, between the Registrant and Robert S. Lemle (incorporated herein by reference to Exhibit 10.71 to the Company's Annual Report on Form 10-K405 for the fiscal year ended December 31, 1994). 10.63 --Amendment No. 2 and Waiver, dated as of September 28, 1995 to the Credit Agreement. 10.64 --Amendment No. 3 and Waiver, dated as of November 7, 1995, to the Credit Agreement. 10.65 --Amendment No. 4 and Waiver, dated as of March 4, 1996, to the Credit Agreement. 10.66 --Amended and Restated Senior Loan Agreement, dated as of March 15, 1996, among U.S. Cable Television Group, L.P., the Lenders named therein and General Electric Capital Corporation, as Agent and Lender. (122) INDEX TO EXHIBITS (continued) EXHIBIT PAGE NO. DESCRIPTION NO. - ------- ----------- ---- 10.67 --Amended and Restated Loan Agreement, dated as of March 15, 1996, among VC Holding, Inc., the Lenders named therein and General Electric Capital Corporation, as Agent and Lender. 10.68 Partnership interests Redemption Agreement, dated as of March 15, 1996, among U.S. Cable Television Group, L.P., U.S. Cable Partners, Pompadur Trust No. 1, The Rule Trust, dated June 11, 1987, Elliot H. Stein, I. Martin Pompadur and General Electric Capital Corporation. 10.69 Second Amended and Restated Agreement of Limited Partnership of U.S. Cable Television Group, L.P., dated as of March 15, 1996. 10.70 --Cablevision Systems Corporation 1996 Employee Stock Plan. 22 --Subsidiaries of the Registrant 23.1 --Consent of Independent Auditors 27 --Financial Data Schedule 28.1 --Form of Guarantee and Indemnification Agreement among Dolan, the Registrant and directors and officers of the Registrant (incorporated herein by reference to Exhibit 28 to the S-1) (123) EX-3.1(G) 2 EXHIBIT 3.1(G) CERTIFICATE OF VOTING POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF OF THE 11 1/8% SERIES L REDEEMABLE EXCHANGEABLE PREFERRED STOCK OF CABLEVISION SYSTEMS CORPORATION __________________________ Pursuant to Section 151 of the General Corporation Law of the State of Delaware __________________________ I, William J. Bell, Vice Chairman of Cablevision Systems Corporation (the "corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware, DO HEREBY CERTIFY: That, pursuant to authority conferred upon the Board of Directors by the Certificate of Incorporation as amended of said corporation, said Board of Directors, at a meeting duly called and held on February 13, 1996, adopted a resolution providing for the issuance of One Hundred Fifteen Thousand (115,000) authorized shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock, which resolution is as follows: WHEREAS, the Board of Directors of the corporation (the "Board of Directors") is authorized, within the limitations and restrictions stated in the Certificate of Incorporation, as amended, to fix by resolution or resolutions the designation of each series of preferred stock and the powers, designations, preferences and relative participating, optional or other rights, if any, or the qualifications, limitations or restrictions thereof, including, without limiting the generality of the foregoing, such provisions as may be desired concerning voting, redemption, dividends, dissolution or the distribution of assets, conversion or exchange, and such other subjects or matters as may be fixed by resolution or resolutions of the Board of Directors under the General Corporation Law of Delaware; and 2 WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to authorize and fix the terms of a series of preferred stock and the number of shares constituting such series; NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized such series of preferred stock on the terms and with the provisions herein set forth: I. CERTAIN DEFINITIONS. As used herein, the following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and vice versa), unless the context otherwise requires: "Additional Preferred Stock" has the meaning specified in Article Fourth of the corporation's Certificate of Incorporation. "Board of Directors" means the Board of Directors of the corporation. "Business Day" means a day other than a Saturday, Sunday, national or New York State holiday or other day on which commercial banks in New York City are authorized or required by law to close. "Capital Stock" means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock. "Change of Control" means any transaction or series of transactions (including, without limitation, a tender offer, merger or consolidation) the result of which is that Dolan ceases (i) to elect a majority of the Board of Directors of the Corporation or (ii) to be the "beneficial owner" (as defined in Rule 13(d)(3) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of at least 50% of the aggregate voting power of the voting stock of the corporation. "Change of Control Redemption Price" has the meaning specified in Section VI(A)(iii) hereof. "Class A Common Stock" means the Class A Common Stock, par value $.01 per share, of the corporation. "Class B Common Stock" means the Class B Common Stock, par value $.01 per share, of the corporation. 3 "Common Stock" means the Class A Common Stock and the Class B Common Stock and any other class of common stock hereafter authorized by the corporation from time to time. "Contingent Redemption Price" has the meaning specified in Section VI(A)(ii) hereof. "Corporation" or "corporation" means Cablevision Systems Corporation. "Dividend Default" has the meaning specified in Section VII(G)(i)(a) hereof. "Dividend Payment Date" means each January 1, April 1, July 1 and October 1 of each year on which dividends shall be paid or are payable, any Redemption Date and any other date on which dividends in arrears may be paid. "Dividend Period" means the Initial Dividend Period and, thereafter, each Quarterly Dividend Period. "Dividend Record Date" means, with respect to the dividend payable on each Dividend Payment Date, the close of business on the fifteenth day immediately preceding such Dividend Payment Date, or such other record date as may be designated by the Board of Directors with respect to the dividend payable on such Dividend Payment Date; PROVIDED, HOWEVER, that such record date may not be more than 60 days or less than ten days prior to such Dividend Payment Date. "Dolan" shall mean Mr. Charles F. Dolan, his spouse, his descendants or any spouse of any such descendants, and trusts for the benefit of, inter alia, him, his spouse, his descendants or any spouse of any such descendants, and any estate, testamentary trust, or executor, administrator, conservator or legal or personal representative of any of the foregoing, or any partnership, limited liability company, corporation or similar entity all the owners of which are comprised of one or more of the foregoing. "Exchange Date" has the meaning specified in Section VIII(A) hereof. "Exchange Debentures" shall mean the 11 1/8% Senior Subordinated Debentures due 2008 of the corporation into which the 11 1/8% Series L Redeemable Exchangeable Preferred Stock are exchangeable at the option of the corporation. "Exchange Indenture" has the meaning specified in Section VII(D) hereof. "Exchange Notice" has the meaning specified in Section VIII(A) hereof. 4 "Holder" means a registered holder of shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock. "Initial Dividend Period" means the dividend period commencing on and including the Original Issue Date and ending on and including March 31, 1996. "Junior Securities" has the meaning specified in Section III(A)(i) hereof. "Liquidation Preference" means the Original Liquidation Preference, plus an amount equal to all accumulated and unpaid dividends from and after the Dividend Payment Date on which such dividends were to be paid. The Liquidation Preference of a share of 11 1/8% Series L Redeemable Exchangeable Preferred Stock will increase by the amount of dividends that accumulate on such share on a Dividend Payment Date and will decrease only to the extent such dividends are actually paid, all as provided in Section IV hereof. Notwithstanding the foregoing, in determining the amount to be paid on a Redemption Date or Exchange Date or the amount of shares to be issued in payment of a dividend on a Dividend Payment Date, Liquidation Preference shall not be deemed to include any dividends to the extent such dividends are to be paid on such date in accordance with the requirements of this Certificate of Designations. "Make-Whole Premium" means, with respect to a share of 11 1/8% Series L Redeemable Exchangeable Preferred Stock, (a) the present value of (i) all dividends unpaid and accumulating until April 1, 2003 (assuming payment thereof in cash on the applicable Dividend Payment Date for purposes of this calculation) and (ii) the Liquidation Preference and any applicable optional redemption premium therefor payable on such date for such share (in each case assuming payment thereof on April 1, 2003), computed using a discount rate equal to the Treasury Rate plus 50 basis points, less (b) the Original Liquidation Preference. "Mandatory Redemption Date" means April 1, 2008. "Mandatory Redemption Price" has the meaning specified in Section VI(B) hereof. "Optional Redemption Price" has the meaning specified in Section VI(A)(i) hereof. "Original Issue Date" means the date on which shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock were first issued by the corporation. 5 "Original Liquidation Preference" means $10,000 per share of 11 1/8% Series L Redeemable Exchangeable Preferred Stock. "Parity Securities" has the meaning specified in Section III(A)(ii) hereof. "Person" means any individual, partnership, corporation, business trust, joint stock company, limited liability company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature. "Quarterly Dividend Period" means the quarterly period commencing on and including a Dividend Payment Date and ending on and including the day immediately preceding the next subsequent Dividend Payment Date. "Rainbow Spin-off" means the payment of any dividend by the corporation or the making by the corporation of any other distribution or the consummation of an exchange offer, or any combination of the foregoing, which results in all or a portion of the capital stock of Rainbow Programming Holdings, Inc. or any successor to the assets or equity interests thereof, or of another entity, holding only assets that were held by Rainbow Programming Holdings, Inc. immediately prior to the acquisition thereof by such entity, being held by all or any portion of the shareholders of the corporation. "Redemption Date" has the meaning specified in Section VI(C)(i)(e) hereof. "Redemption Default" has the meaning specified in Section VII(G)(i)(b) hereof. "Redemption Notice" has the meaning specified in Section VI(C)(i) hereof. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Senior Securities" has the meaning specified in Section III(A)(iii) hereof. "Series C Preferred Stock" means the 8% Series C Cumulative Preferred Stock of the corporation. "Series D Preferred Stock" means the 8% Series D Cumulative Preferred Stock of the corporation. 6 "Series G Preferred Stock" means the 11 3/4% Series G Redeemable Exchangeable Preferred Stock of the corporation. "Series H Preferred Stock" means the 11 3/4% Series H Redeemable Exchangeable Preferred Stock of the corporation to be established and issued in exchange for shares of the Series G Preferred Stock. "Series I Preferred Stock" means the 8 1/2% Series I Cumulative Convertible Exchangeable Preferred Stock of the Corporation. "Series M Preferred Stock" means the 11 1/8% Series M Redeemable Exchangeable Preferred Stock of the corporation to be established and issued in exchange for shares of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock. "Strategic Equity Investor" means a corporation or entity with an equity market capitalization, a net asset value or annual revenues of at least $1.0 billion that owns and operates businesses in the telecommunications, information systems, entertainment, cable or similar or related industries. "Subsidiary" means, with respect to any Person, any corporation, association or other business entity of which more than fifty percent (50%) of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof. "Transfer Agent" means The First National Bank of Boston or any successor transfer agent. "Treasury Rate" means the yield to maturity at the time of computation of United States Treasury securities (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) which has become publicly available at least two business days prior to the date fixed for redemption of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock or, if such Statistical Release is no longer published, any publicly available source of similar market data with a constant maturity most nearly equal to the then remaining period to the Mandatory Redemption Date of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock; PROVIDED, HOWEVER, that if such period of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from 7 the weekly average yields of United States Treasury securities for which such yields are given. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. "Trustee" means The Bank of New York, as Trustee under the Exchange Indenture, or any successor Trustee appointed in accordance with the terms of the Exchange Indenture. "Voting Rights Triggering Event" has the meaning specified in Section VII(G)(i) hereof. II. DESIGNATION. The series of preferred stock authorized hereunder shall be designated as the "11 1/8% Series L Redeemable Exchangeable Preferred Stock". The number of shares constituting such series shall be 115,000. The par value of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock shall be $.01 per share of 11 1/8% Series L Redeemable Exchangeable Preferred Stock, and the initial liquidation preference of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock shall be $10,000 per share. III. RANKING. (A) The 11 1/8% Series L Redeemable Exchangeable Preferred Stock shall rank, with respect to dividends and distributions upon the liquidation, dissolution or winding-up of the corporation: (i) senior to all classes or series of Common Stock of the corporation and any Capital Stock, including any series of Additional Preferred Stock hereafter created by the Board of Directors, the terms of which Capital Stock or Additional Preferred Stock do not expressly provide that it ranks senior to or on a parity with the 11 1/8% Series L Redeemable Exchangeable Preferred Stock as to dividends and distributions upon liquidation, dissolution or winding-up of the corporation (collectively referred to as "Junior Securities"); (ii) on a parity with the Series C Preferred Stock, the Series D Preferred Stock, the Series G Preferred Stock, the Series H Preferred Stock, the Series I Preferred Stock and any Capital Stock, including any series of Additional Preferred Stock hereafter created by the Board of Directors, the terms of which expressly provide that it ranks on a parity with the 11 1/8% Series L Redeemable Exchangeable 8 Preferred Stock as to dividends and distributions upon the liquidation, dissolution or winding-up of the corporation (collectively referred to as "Parity Securities"); and (iii) junior to any Capital Stock, including any series of Additional Preferred Stock hereafter created by the Board of Directors, the terms of which expressly provide that it ranks senior to the 11 1/8% Series L Redeemable Exchangeable Preferred Stock as to dividends and distributions upon the liquidation, dissolution or winding-up of the corporation ("Senior Securities"). IV. DIVIDENDS. (A) Beginning on the Original Issue Date, Holders shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available for the payment of dividends, dividends on each outstanding share of 11 1/8% Series L Redeemable Exchangeable Preferred Stock, at a rate per annum equal to 11 1/8% of the Liquidation Preference per share of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock, payable with respect to each Dividend Period. All dividends shall be cumulative and shall be payable in arrears for each Dividend Period on each Dividend Payment Date, commencing on April 1, 1996. Dividends with respect to a share of 11 1/8% Series L Redeemable Exchangeable Preferred Stock shall only cumulate from the date of their issuance, or, if later, the last Dividend Payment Date in respect of which dividends on such share of 11 1/8% Series L Redeemable Exchangeable Preferred Stock were paid. Prior to the Dividend Payment Date occurring on April 1, 2001, dividends may, at the option of the corporation, be paid either in cash or fully paid and non-assessable shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock with an aggregate Liquidation Preference equal to the amount of such dividend (or in any combination of cash and such shares). On or after the Dividend Payment Date occurring on April 1, 2001, dividends shall be paid only in cash. (B) Each dividend paid on the 11 1/8% Series L Redeemable Exchangeable Preferred Stock shall be payable to Holders of record as their names shall appear in the stock ledger of the corporation on the Dividend Record Date for such dividend, except that dividends in arrears for any past Dividend Payment Date may be declared and paid at any time without reference to such regular Dividend Payment Date to Holders of record on a later dividend record date determined by the Board of Directors. (C) Dividends shall cease to accumulate in respect of shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock on the day prior to the Exchange Date or on the day prior to their earlier redemption, unless the corporation shall have failed to issue the appropriate aggregate principal amount of Exchange Debentures in respect of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock on the Exchange Date or shall have failed to pay the relevant redemption price on the date fixed for redemption. 9 (D) All dividends paid with respect to shares of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock shall be paid PRO RATA to the Holders entitled thereto based upon the number of shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock held by each such Holder on the relevant Dividend Record Date. (E) No full dividends shall be declared by the Board of Directors or paid or funds set apart for payment by the corporation on the 11 1/8% Series L Redeemable Exchangeable Preferred Stock or any Parity Securities for any period unless full cumulative dividends have been or contemporaneously are declared and paid, or declared and (in the case of dividends payable in cash) a sum set apart sufficient for such payment, on the 11 1/8% Series L Redeemable Exchangeable Preferred Stock and any Parity Securities for all Dividend Periods terminating on or prior to the date of payment of such full dividends on the 11 1/8% Series L Redeemable Exchangeable Preferred Stock or such Parity Securities. If any dividends are not paid in full, as aforesaid, upon the shares of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock and any Parity Securities, all dividends declared upon shares of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock and any other Parity Securities shall be declared PRO RATA so that the amount of dividends declared per share on the 11 1/8% Series L Redeemable Exchangeable Preferred Stock and such Parity Securities shall in all cases bear to each other the same ratio that accumulated and unpaid dividends per share on the 11 1/8% Series L Redeemable Exchangeable Preferred Stock and such Parity Securities bear to each other. Except as contemplated herein, no interest or additional dividends, or sum of money in lieu of interest or additional dividends, shall be payable in respect of any dividend payment or payments on the 11 1/8% Series L Redeemable Exchangeable Preferred Stock or any Parity Securities which may be in arrears. (F) So long as any shares of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock are outstanding, except with respect to (i) any conversion of Class B Common Stock into Class A Common Stock, (ii) prior to April 1, 2001, the occurrence of the Rainbow Spin-off, (iii) repurchases of Common Stock, or warrants, rights, calls or options exercisable for or convertible into Common Stock, issued under the corporation's stock incentive programs, and (iv) dividends or distributions payable in kind in additional shares of, or warrants, rights, calls or options exercisable for or convertible into additional shares of, Junior Securities, the corporation shall not declare, pay or set apart for payment any dividend on any Junior Securities (except dividends on Junior Securities payable in additional shares of Junior Securities), or make any payment on account of, or set apart for payment money for a sinking or other similar fund for, the purchase, redemption or other retirement of, any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities, and shall not permit any corporation or other entity directly or indirectly controlled by the corporation to purchase or redeem any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities, unless prior to or concurrently with such declaration, payment, setting apart for payment, purchase, redemption or distribution, as the 10 case may be, all accumulated and unpaid dividends on shares of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock not paid on the dates provided for in Section IV(A) hereof (and, to the extent previously due but not yet paid, any and all redemption payments on the 11 1/8% Series L Redeemable Exchangeable Preferred Stock) shall have been or are concurrently being paid. (G) Dividends payable on shares of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock for any period less than a year shall be computed on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed in the period for which payable. If any Dividend Payment Date occurs on a day that is not a Business Day, any accumulated and unpaid dividends otherwise payable on such Dividend Payment Date shall be paid on the next succeeding Business Day. V. PAYMENT ON LIQUIDATION. (A) Upon any voluntary or involuntary liquidation, dissolution or winding-up of the corporation, Holders will be entitled to receive out of the assets of the corporation available for distribution to the holders of its Capital Stock, whether such assets are capital, surplus or earnings, an amount in cash equal to the Liquidation Preference, before any payment shall be made or any assets distributed to the holders of any of the Junior Securities. Except as set forth in the preceding sentence, Holders shall not be entitled to any distribution in the event of voluntary or involuntary liquidation, dissolution or winding-up of the corporation. If upon any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the corporation, the assets of the corporation are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock and all Parity Securities, then the holders of all such shares shall share equally and ratably in any distribution of assets in proportion to the full liquidation preferences, determined as of the date of such voluntary or involuntary liquidation, dissolution or winding- up, to which they are entitled. (B) For the purposes of this Section V only, neither the sale, lease, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the corporation nor the consolidation or merger of the corporation with or into one or more corporations shall be deemed to be a liquidation, dissolution or winding-up of the corporation. 11 VI. REDEMPTION. (A) OPTIONAL REDEMPTION. (i) The corporation may, at its option, redeem (subject to contractual and other restrictions with respect thereto and the legal availability of funds therefor), at any time on or after April 1, 2003, from any source of funds legally available therefor, in whole or in part, in the manner provided in Section VI(C) hereof, any or all of the shares of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock, at the redemption prices (expressed as a percentage of the Liquidation Preference thereof) set forth below plus an amount in cash equal to all accumulated and unpaid dividends per share for the period from the Dividend Payment Date immediately prior to the Redemption Date to the day prior to the Redemption Date (the "Optional Redemption Price"), if redeemed during the 12-month period beginning April 1, of the years indicated: Year Percentage ---- ---------- 2003 105.563% 2004 103.708% 2005 101.854% 2006 and thereafter 100.000% (ii) In addition, on or prior to April 1, 1999, the corporation may redeem, in the manner provided in Section VI(C) hereof, shares of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock having an aggregate Liquidation Preference of up to 50% of the aggregate Liquidation Preference of all 11 1/8% Series L Redeemable Exchangeable Preferred Stock then outstanding, at a redemption price equal to 100.00% of the Liquidation Preference thereof, plus an amount in cash equal to all accumulated and unpaid dividends per share for the period from the Dividend Payment Date immediately prior to the Redemption Date to the day prior to the Redemption Date) plus a premium of $1,000 per share (the "Contingent Redemption Price"), out of the proceeds of the sale of Junior Securities to a Strategic Equity Investor or a public offering of Class A Common Stock; PROVIDED that following such redemption, at least 32,500 shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock shall remain outstanding thereafter. (iii) In addition, the corporation may, at its option, prior to April 1, 2003, redeem the 11 1/8% Series L Redeemable Exchangeable Preferred Stock, in whole but not in part, at any time within 180 days after a Change of Control at a redemption price (the "Change of Control Redemption Price") per share equal to the sum of (i) the Original Liquidation Preference plus (ii) accumulated and unpaid dividends for the period from the Dividend Payment Date immediately prior to the Redemption Date to the day prior to the Redemption Date plus (iii) the Make-Whole Premium. 12 (iv) In the event of a redemption pursuant to this Section VI(A) of only a portion of the then outstanding shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock, the corporation shall effect such redemption PRO RATA according to the number of shares held by each Holder of such 11 1/8% Series L Redeemable Exchangeable Preferred Stock or by lot, as determined by the corporation, except that the corporation may redeem such shares held by any Holders of fewer than 100 shares (or shares held by Holders who would hold less than 100 shares as a result of such redemption), as determined by the corporation in its sole discretion. (B) MANDATORY REDEMPTION. On the Mandatory Redemption Date, the corporation shall redeem from any source of funds legally available therefor, in the manner provided in Section VI(C) below, all of the shares of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock then outstanding at a redemption price equal to the Liquidation Preference thereof, plus an amount of cash equal to all accumulated and unpaid dividends per share for the period from the Dividend Payment Date immediately prior to the Redemption Date to the day prior to the Redemption Date (the "Mandatory Redemption Price"). (C) PROCEDURE FOR REDEMPTION. (i) Not more than sixty (60) and not less than thirty (30) days prior to the date fixed for any redemption of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock, written notice (the "Redemption Notice") shall be given by first-class mail, postage prepaid, to each Holder of record of shares to be redeemed on the record date fixed for such redemption of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock at such Holder's address as the same appears on the stock ledger of the corporation, PROVIDED, HOWEVER, that no failure to give such notice nor any deficiency therein shall affect the validity of the procedure for the redemption of any shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock to be redeemed except as to the Holder or Holders to whom the corporation has failed to give such notice or except as to the Holder or Holders whose notice was defective. The Redemption Notice shall state: (a) whether the redemption is pursuant to Section VI(A)(i), VI(A)(ii), VI(A)(iii) or VI(B) hereof; (b) the Optional Redemption Price, Contingent Redemption Price, Change of Control Redemption Price or Mandatory Redemption Price, as the case may be; (c) whether all or less than all the outstanding shares of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock are to be redeemed and the total number of shares of such 11 1/8% Series L Redeemable Exchangeable Preferred Stock being redeemed; (d) the number of shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock held by the Holder that the corporation intends to redeem; 13 (e) the date fixed for redemption (the "Redemption Date"); (f) that the Holder is to surrender to the corporation, at the place or places, which shall be designated in such Redemption Notice, its certificates representing the shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock to be redeemed; (g) that dividends on the shares of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock to be redeemed shall cease to accumulate on the day prior to such Redemption Date unless the corporation defaults in the payment of the Optional Redemption Price, Contingent Redemption Price, Change of Control Redemption Price or Mandatory Redemption Price, as the case may be; and (h) the name of any bank or trust company performing the duties referred to in Section VI(C)(v) below. (ii) On or before the Redemption Date, each Holder of 11 1/8% Series L Redeemable Exchangeable Preferred Stock to be redeemed shall surrender the certificate or certificates representing such shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock to the corporation, in the manner and at the place designated in the Redemption Notice, and on the Redemption Date the full Optional Redemption Price, Contingent Redemption Price, Change of Control Redemption Price or Mandatory Redemption Price, as the case may be, for such shares shall be payable in cash to the Person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be returned to authorized but unissued shares. In the event that less than all of the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares. (iii) Unless the corporation defaults in the payment in full of the applicable redemption price, dividends on the 11 1/8% Series L Redeemable Exchangeable Preferred Stock called for redemption shall cease to accumulate on the day prior to the Redemption Date, and the Holders of such shares shall cease to have any further rights with respect thereto on the Redemption Date, other than the right to receive the Optional Redemption Price, Contingent Redemption Price, Change of Control Redemption Price or Mandatory Redemption Price, as the case may be, without interest. (iv) If a Redemption Notice shall have been duly given, and if, on or before the Redemption Date specified therein, all funds necessary for such redemption shall have been set aside by the corporation, separate and apart from its other funds, in trust for the PRO RATA benefit of the Holders of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock called for redemption so as to be and continue to be available therefor, then, notwithstanding that any certificate for shares so called for redemption shall not have been surrendered for 14 cancellation, all shares so called for redemption shall no longer be deemed outstanding, and all rights with respect to such shares shall forthwith on such Redemption Date cease and terminate, except only the right of the Holders thereof to receive the amount payable on redemption thereof, without interest. (v) If a Redemption Notice shall have been duly given or if the corporation shall have given to the bank or trust company hereinafter referred to irrevocable authorization promptly to give such notice, and if on or before the Redemption Date specified therein the funds necessary for such redemption shall have been deposited by the corporation with such bank or trust company in trust for the PRO RATA benefit of the Holders of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock called for redemption, then, notwithstanding that any certificate for shares so called for redemption shall not have been surrendered for cancellation, from and after the time of such deposit, all shares so called, or to be so called pursuant to such irrevocable authorization, for redemption shall no longer be deemed to be outstanding and all rights with respect of such shares shall forthwith cease and terminate, except only the right of the Holders thereof to receive from such bank or trust company at any time after the time of such deposit the funds so deposited, without interest. The aforesaid bank or trust company shall be organized and in good standing under the laws of the United States of America or of the State of New York, shall be doing business in the Borough of Manhattan, The City of New York, shall have capital, surplus and undivided profits aggregating at least $100,000,000 according to its last published statement of condition, and shall be identified in the Redemption Notice. Any interest accrued on such funds shall be paid to the corporation from time to time. Any funds so set aside or deposited, as the case may be, and unclaimed at the end of three years from such Redemption Date shall, to the extent permitted by law, be released or repaid to the corporation, after which repayment the Holders of the shares so called for redemption shall look only to the corporation for payment thereof. VII. VOTING RIGHTS. (A) Holders, except as otherwise required under Delaware law and as set forth in paragraphs (B) and (C) below, shall not be entitled or permitted to vote on any matter required or permitted to be voted upon by the stockholders of the corporation. (B) Without the approval of holders of at least a majority of the shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock then outstanding, voting or consenting, as the case may be, separately as a single class, given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting called for the purpose, the corporation will not (i) create, authorize or issue any Senior Securities or any warrants, rights, calls or options exercisable or exchangeable for or convertible into, or any obligations evidencing the right to purchase or acquire, any Senior 15 Securities, including in connection with a merger, consolidation or other reorganization or (ii) reclassify any Junior Securities, Parity Securities or other outstanding Capital Stock of the corporation into any Senior Securities or any warrants, rights, calls or options exercisable or exchangeable for or convertible into, or any obligations evidencing the right to purchase or acquire, any Senior Securities. (C) Without the approval of holders of at least a majority of the shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock then outstanding, voting or consenting, as the case may be, separately as a single class, given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting called for the purpose, the corporation will not amend, modify or repeal the Certificate of Designations so as to adversely affect the specified designations, rights, preferences, privileges or voting rights of the 11 1/8% L Redeemable Exchangeable Preferred Stock or Series M Preferred Stock. The authorization or consummation of a transaction that results in the 11 1/8% Series L Redeemable Exchangeable Preferred Stock being converted or exchanged for or becoming shares of a resulting entity (as such term is defined in Section X) shall not constitute an amendment, modification or repeal of this Certificate of Designations for purposes of this Section VII. (D) Prior to the exchange of 11 1/8% Series L Redeemable Exchangeable Preferred Stock for Exchange Debentures, the corporation shall not amend or modify the indenture dated February 15, 1996, between the corporation and the Trustee for the Exchange Debentures (the "Exchange Indenture"), a copy of which is on file at the principal executive offices of the corporation, without the affirmative vote or consent of holders of at least a majority of the shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock then outstanding, voting or consenting, as the case may be, separately as a single class, given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting called for the purpose; PROVIDED that the corporation and the Trustee shall be permitted, without any vote or consent of the Holders, to effect any amendments to the Exchange Indenture that could have been effected under the Exchange Indenture without the consent of holders of Exchange Debentures if any Exchange Debentures were then outstanding. (E) The holders of at least a majority of the shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock then outstanding, voting or consenting, as the case may be, separately as a single class, whether voting in person or by proxy, either in writing or by resolution adopted at an annual or special meeting called for the purpose, may waive compliance with any provision of this Certificate of Designations. (F) Notwithstanding anything herein to the contrary, (i) the creation, authorization or issuance of any shares of any Parity Securities or Junior Securities or (ii) the 16 increase or decrease in the amount of authorized Capital Stock of any class, including any preferred stock, shall not require the consent of the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock or Series M Preferred Stock and shall not be deemed to affect adversely the rights, preferences, privileges or voting rights of Holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock or Series M Preferred Stock. (G) (i) In the event that (a) dividends on the 11 1/8% Series L Redeemable Exchangeable Preferred Stock or Series M Preferred Stock are in arrears and unpaid for six Quarterly Dividend Periods (whether or not consecutive) (a "Dividend Default") or (b) the corporation shall fail to discharge its obligation to redeem the 11 1/8% Series L Redeemable Exchangeable Preferred Stock or Series M Preferred Stock on the Mandatory Redemption Date (a "Redemption Default"), then the number of directors constituting the Board of Directors shall be adjusted to permit the holders of a majority of the shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock then outstanding, voting or consenting, as the case may be, separately as a single class, to elect one member of the Board of Directors of the corporation. Each such event described in clause (a) or (b) is a "Voting Rights Triggering Event". Holders of a majority of the issued and outstanding shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock then outstanding, voting or consenting, as the case may be, separately as a single class, shall thereupon have the exclusive right to elect one member of the Board of Directors at any annual or special meeting of stockholders or at a special meeting of the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock called as hereinafter provided. (ii) The right of the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock to vote pursuant to Section VII(G)(i) to elect one member of the Board of Directors as aforesaid shall continue until such time as (a) in the event such right arises due to a Dividend Default, all accumulated dividends that are in arrears on the 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock are paid in full and (ii) in the event such right arises due to a Redemption Default, the corporation remedies any such failure, at which time the special right of the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock to vote for the election of a director and the term of office of the director elected by the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock shall terminate, and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after voting power to elect a director shall have become vested and be continuing in the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock pursuant to Section VII(G)(i) hereof, or if a vacancy shall exist in the office of a director elected by the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock, a proper officer of the corporation may, and upon the written request of the holders of record of at least twenty percent (20%) of the shares of 11 1/8% Series L Redeemable Exchangeable 17 Preferred Stock and Series M Preferred Stock then outstanding addressed to the Secretary of the corporation shall, call a special meeting of the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock, for the purpose of electing the one director which such holders are entitled to elect as herein provided. If such meeting shall not be called by a proper officer of the corporation within 20 days after personal service of such written request upon the Secretary of the corporation, or within 20 days after mailing the same within the United States by certified mail, addressed to the Secretary of the corporation at its principal executive offices, then the holders of record of at least twenty percent (20%) of the outstanding shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock may designate in writing one of their number to call such meeting at the expense of the corporation, and such meeting may be called by the Person so designated upon the notice required for annual meetings of stockholders of the corporation and shall be held at the place for holding annual meetings of stockholders. Notwithstanding the provisions of this Section VII(G)(ii), no such special meeting shall be called if any such request is received less than 60 days before the date fixed for the next ensuing annual or special meeting of stockholders of the corporation. Any holder of 11 1/8% Series L Redeemable Exchangeable Preferred Stock or Series M Preferred Stock so designated shall have access to the list of holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock entitled to attend the meeting pursuant to the provisions hereof. (iii) At any meeting held for the purpose of electing directors at which the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock then outstanding shall have the right, voting or consenting, as the case may be, separately as a single class, to elect a director as aforesaid, the presence in person or by proxy of the holders of at least a majority of the outstanding 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock shall be required to constitute a quorum. (H) (i) Any vacancy occurring in the office of a director elected by the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock may be filled by the departing director unless and until such vacancy shall be filled by the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock. (ii) In any case in which the holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock shall be entitled to vote pursuant to this Section VII or pursuant to Delaware law, each holder of shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock or Series M Preferred Stock, as the case may be, shall be entitled to one vote for each share of 11 1/8% Series L Redeemable Exchangeable Preferred Stock or Series M Preferred Stock held. 18 VIII. EXCHANGE. (A) The corporation may, at its option, on any Dividend Payment Date on or after April 1, 1996, exchange the shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock, in whole but not in part, for the Exchange Debentures issued pursuant to the Exchange Indenture (such date, the "Exchange Date"). Notwithstanding the foregoing, the corporation may not exercise such exchange option unless all accumulated and unpaid dividends in respect of shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock surrendered to the corporation upon exchange shall have been paid either in cash or, in respect of accumulated and unpaid dividends relating to any Dividend Payment Date prior to April 1, 2001, at the option of the corporation, in cash or a principal amount of Exchange Debentures equal to such amount in lieu of a payment in cash; PROVIDED, THAT, the corporation may elect to set aside Exchange Debentures (in respect of accumulated and unpaid dividends relating to any Dividend Payment Date prior to April 1, 2001) or funds to provide for the payment in full of such dividends. At least thirty (30) and not more than sixty (60) days prior to the date fixed for exchange, the corporation shall send a written notice (the "Exchange Notice") of exchange by mail to each Holder, which notice shall state: (a) that the corporation has elected to exchange the 11 1/8% Series L Redeemable Exchangeable Preferred Stock into Exchange Debentures pursuant to this Certificate of Designations; (b) the Exchange Date; (c) that the Holder is to surrender to the corporation, at the place or places and in the manner designated in the Exchange Notice, its certificate or certificates representing the shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock; (d) that dividends on the shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock to be exchanged shall cease to accumulate at the close of business on the day prior to the Exchange Date, whether or not certificates for shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock are surrendered for exchange on the Exchange Date, unless the corporation shall default in the delivery of Exchange Debentures; and (e) that interest on the Exchange Debentures shall accrue from the Exchange Date whether or not certificates for shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock are surrendered for exchange on the Exchange Date. On the Exchange Date, if the conditions set forth in clauses (i) through (iv) below are satisfied and if the exchange is then permitted under the Exchange Indenture, the corporation shall issue Exchange Debentures in exchange for the 11 1/8% Series L Redeemable Exchangeable Preferred Stock as provided in the next paragraph, PROVIDED that on the Exchange Date: (i) there shall be legally available funds sufficient for the exchange to occur (including, without limitation, legally available funds sufficient therefor under Sections 160 and 170 (or any successor provisions), to the extent applicable, of the General Corporation Law of the State of Delaware); (ii) either (a) a registration statement relating to the Exchange Debentures shall have been declared effective under the Securities Act prior to such exchange and shall continue to be in effect on the Exchange Date or (b)(1) the corporation shall have obtained a written opinion of counsel acceptable to the corporation that an exemption from the registration requirements of the Securities Act is available for such exchange and (2) such exemption is relied upon by the 19 corporation for such exchange; (iii) the Exchange Indenture and the Trustee shall have been qualified under the Trust Indenture Act or the corporation shall have obtained a written opinion of counsel that such qualification is not required; and (iv) immediately after giving effect to such exchange, no Default or Event of Default (each as defined in the Exchange Indenture) would exist under the Exchange Indenture. In the event that any of the conditions set forth in clauses (i) through (iv) of the preceding sentence are not satisfied on the Exchange Date, then no shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock shall be exchanged, and in order to effect an exchange as provided for in this Section VIII, the corporation shall be required to fix another date for the exchange and issue a new Exchange Notice. (B) Upon any exchange pursuant to Section VIII(A), Holders shall be entitled to receive a principal amount of Exchange Debentures equal to the Liquidation Preference of 11 1/8% Series L Redeemable Exchangeable Preferred Stock, plus an amount in cash equal to all accumulated and unpaid dividends thereon for the period from the immediately preceding Dividend Payment Date to the day prior to the Exchange Date; PROVIDED that the corporation shall pay cash in lieu of issuing an Exchange Debenture in a principal amount of less than $1,000 and PROVIDED FURTHER that the Exchange Debentures will be issuable only in denominations of $1,000 and integral multiples thereof. If any amount is owed by the corporation in respect of accumulated and unpaid dividends relating to any Dividend Payment Date prior to April 1, 2001, such amount may, at the option of the corporation, be paid in a principal amount of Exchange Debentures equal to such amount in lieu of a payment in cash. (C) On or before the Exchange Date, each Holder shall surrender the certificate or certificates representing such shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock, in the manner and at the place designated in the Exchange Notice. The corporation shall cause the Exchange Debentures to be executed on the Exchange Date and, upon surrender in accordance with the Exchange Notice of the certificates for any shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock so exchanged (properly endorsed or assigned for transfer, if the Exchange Notice shall so state), such shares shall be exchanged by the corporation into Exchange Debentures as aforesaid. The corporation shall pay interest on the Exchange Debentures at the rate and on the dates specified therein from the Exchange Date. (D) If the Exchange Notice has been mailed as aforesaid, and if before the Exchange Date all Exchange Debentures necessary for such exchange shall have been duly executed by the corporation and delivered to the Trustee with irrevocable instructions to authenticate the Exchange Debentures necessary for such exchange, then the rights of the Holders as stockholders of the corporation shall cease (except the right to receive Exchange Debentures and accumulated and unpaid dividends (in cash or, in respect of accumulated and unpaid dividends relating to any Dividend Payment Date prior to April 1, 2001, at the option 20 of the corporation, in cash or a principal amount of Exchange Debentures equal to such amount in lieu of a payment in cash) to the Exchange Date), and the Person or Persons entitled to receive the Exchange Debentures issuable upon exchange shall be treated for all purposes as the registered Holder or Holders of such Exchange Debentures as of the date of exchange. Upon the exchange of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock for Exchange Debentures, the rights of Holders as stockholders of the corporation shall cease (except the right to receive the Exchange Debentures and accumulated and unpaid dividends (in cash or, in respect of accumulated and unpaid dividends relating to any Dividend Payment Date prior to April 1, 2001, at the option of the corporation, in cash or a principal amount of Exchange Debentures equal to such amount in lieu of a payment in cash) to the Exchange Date), and the Person or Persons entitled to receive the Exchange Debentures issuable upon exchange shall be treated for all purposes as registered holder or holders of such Exchange Debentures as of the date of exchange. IX. MERGER, CONSOLIDATION AND SALE OF ASSETS. Without the affirmative vote or consent of the holders of a majority of the issued and outstanding shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock, voting or consenting, as the case may be, separately as a single class, the corporation may not consolidate or merge with or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets to, any Person unless: (a) the entity formed by such consolidation or merger (if other than the corporation) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (the "resulting entity") shall be a corporation organized or existing under the laws of the United States or any state thereof or the District of Columbia; (b) any outstanding shares of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock shall remain unchanged and or be converted into or exchanged for and shall become shares of such resulting entity, having in respect of such resulting entity the same (or more favorable) powers, preferences and relative participating, optional or other special rights, and the same (or more favorable) qualifications, limitations or restrictions thereon, that the 11 1/8% Series L Redeemable Exchangeable Preferred Stock or the Series M Preferred Stock, as the case may be, had immediately prior to such transaction; and (c) immediately after giving effect to such transaction, no Voting Rights Triggering Event shall have occurred and be continuing. Notwithstanding the foregoing, the corporation may consolidate or merge with or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets to, any Person if the corporation makes adequate provision (i) prior to April 1, 2003, to redeem the 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock after a Change of Control or (ii) on or after April 1, 2003, to redeem the 11 1/8% Series L Redeemable Exchangeable Preferred Stock and Series M Preferred Stock at the applicable redemption price set forth herein. 21 X. COVENANT TO REPORT. Notwithstanding that the corporation may not be subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, the corporation will file with the SEC and provide the Transfer Agent and the holders of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock with all information, documents and reports specified in Section 13 and Section 15(d) of the Exchange Act. XI. MUTILATED OR MISSING 11 1/8% SERIES L REDEEMABLE EXCHANGEABLE PREFERRED STOCK CERTIFICATES. If any of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the corporation shall issue, in exchange and in substitution for and upon cancellation of the mutilated 11 1/8% Series L Redeemable Exchangeable Preferred Stock certificate, or in lieu of and substitution for the 11 1/8% Series L Redeemable Exchangeable Preferred Stock certificate lost, stolen or destroyed, a new 11 1/8% Series L Redeemable Exchangeable Preferred Stock certificate of like tenor and representing an equivalent amount of shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock, but only upon receipt of evidence of such loss, theft or destruction of such 11 1/8% Series L Redeemable Exchangeable Preferred Stock certificate and indemnity, if requested, satisfactory to the corporation and the Transfer Agent (if other than the corporation). XII. REISSUANCE; CONVERSION; PREEMPTIVE RIGHTS (i) Shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or exchanged, shall (upon compliance with any applicable provisions of the laws of the State of Delaware) have the status of authorized and unissued shares of preferred stock undesignated as to series and may be redesignated and reissued as part of any series of Additional Preferred Stock other than the 11 1/8% Series L Redeemable Exchangeable Preferred Stock. (ii) The Holders of 11 1/8% Series L Redeemable Exchangeable Preferred Stock shall not have any rights hereunder to convert such shares into or exchange such shares for shares of any other class or classes or of any other series of any class or classes of Capital Stock of the corporation. (iii) No shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock shall have any rights of preemption whatsoever as to any securities of the corporation, or any 22 warrants, rights or options issued or granted with respect thereto, regardless of how such securities or such warrants, rights or options may be designated, issued or granted. XIII. BUSINESS DAY. If any payment or redemption shall be required by the terms hereof to be made on a day that is not a Business Day, such payment, redemption or exchange shall be made on the immediately succeeding Business Day and no further dividends shall accumulate after the day payment was required. XIV. HEADINGS OF SUBDIVISIONS. The headings of various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. XV. SEVERABILITY OF PROVISIONS. If any right, preference or limitation of the 11 1/8% Series L Redeemable Exchangeable Preferred Stock set forth in these resolutions and the Certificate of Designations filed pursuant hereto (as such Certificate of Designations may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule or law or public policy, all other rights, preferences and limitations set forth in such Certificate of Designations, as amended, which can be given effect without the invalid, unlawful or unenforceable right, preference or limitation shall, nevertheless remain in full force and effect, and no right, preference or limitation herein set forth shall be deemed dependent upon any other such right, preference or limitation unless so expressed herein. XVI. NOTICE TO THE CORPORATION. All notices and other communications required or permitted to be given to the corporation hereunder shall be made by first-class mail, postage prepaid, to the corporation at its principal executive offices (currently located on the date of the adoption of these resolutions at the following address: Cablevision Systems Corporation, One Media Crossways, Woodbury, New York 11797, Attention: General Counsel). Minor imperfections in any such notice shall not affect the validity thereof. 23 XVII. LIMITATIONS. Except as may otherwise be required by law, the shares of 11 1/8% Series L Redeemable Exchangeable Preferred Stock shall not have any powers, preferences or relative, participating, optional or other special rights other than those specifically set forth in this resolution (as such resolution may be amended from time to time) or otherwise in the Certificate of Incorporation of the corporation. IN WITNESS WHEREOF, this Certificate has been signed on this 14th day of February, 1996. CABLEVISION SYSTEMS CORPORATION By: ---------------------------------- Name: Title: Attested by: - --------------------------- EX-4.6 3 EXHIBIT 4.6 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CABLEVISION SYSTEMS CORPORATION Depositary Shares Each Representing a One One-Hundredth Interest in a Share of 11 1/8% Series L Redeemable Exchangeable Preferred Stock ----------------------------- Registration Rights Agreement ----------------------------- Dated: February 15, 1996 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT dated February 15, 1996 between CABLEVISION SYSTEMS CORPORATION, a Delaware corporation (the "Company"), and BEAR, STEARNS & CO. INC., MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and MORGAN STANLEY & CO. INCORPORATED as the initial purchasers (the "Initial Purchasers") of the Securities referred to below pursuant to the Purchase Agreement dated February 8, 1996 between the Initial Purchasers and the Company, in connection with the issuance of up to 11,500,000 Depositary Shares (as defined in the Purchase Agreement) representing the Company's 11 1/8% Series L Redeemable Exchangeable Preferred Stock (such Depositary Shares hereafter referred to as the "Securities"). In consideration of the foregoing, the parties hereto agree as follows: 1. CERTAIN DEFINITIONS. As used in this Agreement, the following defined terms shall have the following meanings: "BEST EFFORTS" with respect to the Company shall mean the Company's best efforts except that such term shall mean reasonable best efforts in the event and to the extent that the Company could satisfy the standard for the issuance of a Suspension Notice pursuant to the third paragraph of Section 5 hereof. "BUSINESS DAY" shall mean any day except (i) a Saturday, Sunday or other day in The City of New York on which banks are required or authorized to close or (ii) any other day on which the SEC is closed. "CLOSING TIME" shall mean the Closing Time as defined in the Purchase Agreement. "COMPANY" shall have the meaning set forth in the preamble and shall also include the Company's successors. "DEPOSITARY" shall mean The First National Bank of Boston. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended from time to time. "EXCHANGE DEBENTURES" shall mean the 11 1/8% Senior Subordinated Debentures due 2008 of the Company into which the Securities are exchangeable at the option of the Company on or after April 1, 1996. 2 "EXCHANGE INDENTURE" shall mean the indenture relating to the Exchange Debentures dated as of February 15, 1996 between the Company and The Bank of New York, trustee. "EXCHANGE OFFER" shall mean the exchange offer by the Company of Exchange Securities for Registrable Securities pursuant to Section 2(a) hereof. "EXCHANGE OFFER REGISTRATION" shall mean a registration under the Securities Act effected pursuant to Section 2(a) hereof. "EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange offer registration statement of the Company pursuant to the provisions of Section 2(a) hereof on Form S-4 (or, if applicable,on another appropriate form), and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "EXCHANGE SECURITIES" shall mean the 11 1/8% Series M Redeemable Exchangeable Preferred Stock of the Company and the depositary shares that will represent such Series M Redeemable Exchangeable Preferred Stock issued as Registered Securities containing terms identical to the Securities (except that dividends thereon will accumulate from February 15, 1996 or from the most recent dividend payment date to which were dividends were paid on the Securities surrendered in exchange therefor and except that such Exchange Securities shall bear no legend and shall be free from restrictions on transfer), to be offered to Holders of Securities pursuant to the Exchange Offer. "HOLDER" shall mean, individually, each of the Initial Purchasers, for so long as they own any Registrable Securities, and any of the Initial Purchasers' successors, assigns and direct and indirect transferees who become registered owners of Registrable Securities. "INITIAL PURCHASERS" shall have the meaning set forth in the preamble. "MAJORITY HOLDERS" shall mean the Holders of a majority of the aggregate principal amount of outstanding Registrable Securities. "PERSON" shall mean an individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof. "PROSPECTUS" shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with 3 respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to a prospectus, including post-effective amendments, and in each case including all material incorporated by reference therein. PURCHASE AGREEMENT" shall mean the Purchase Agreement dated February 8, 1996 between the Company and the Initial Purchasers, providing for the initial purchase and sale of the Securities. "REGISTRABLE SECURITIES" shall mean the Securities; PROVIDED, HOWEVER, that any such Securities shall cease to be Registrable Securities upon the earlier to occur of (i) the Exchange Offer has been consummated, (ii) a Registration Statement with respect to such Securities shall have been declared effective under the Securities Act and such Securities shall have been disposed of pursuant to such Registration Statement, PROVIDED, THAT Securities not disposed of pursuant to an effective Shelf Registration Statement shall cease to be Registrable Securities three years from the date such Shelf Registration Statement is declared effective by the SEC, or such longer period as the Company's obligation to keep such Shelf Registration Statement effective is extended in accordance with Section 5 hereof, (iii) such Registrable Securities have been sold to the public pursuant to Rule 144(k) (or any similar provision then in force, but not Rule 144A) under the Securities Act, or (iv) such Registrable Securities shall have ceased to be outstanding. "REGISTRATION EXPENSES" shall mean any and all expenses incident to performance of or compliance by the Company with this Agreement, including without limitation: (i) all SEC or National Association of Securities Dealers, Inc. registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws, (iii) all expenses of any Persons acting on behalf of the Company in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto and other documents reasonably relating to the performance of and compliance with this Agreement by the Company, (iv) all rating agency fees, (v) the fees and disbursements of counsel for the Company and, in connection with a Shelf Registration Statement, the fees and disbursements of one counsel for the Holders (which counsel shall be selected by the Majority Holders and shall be reasonably acceptable to the Company), and (vi) any fees and expenses of the independent public accountants of the Company, including the expenses of any special audits or "cold comfort" letters (in connection with a Shelf Registration) required by or necessary to such performance and compliance, but excluding underwriting discounts and commissions, fees and expenses and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder. "REGISTRATION STATEMENT" shall mean any Exchange Offer Registration Statement or Shelf Registration Statement. 4 "SEC" shall mean the Securities and Exchange Commission. "SECURITIES" shall have the meaning set forth in the preamble. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended from time to time. "SHELF REGISTRATION" shall mean a registration effected pursuant to Section 2(b) hereof. "SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration statement of the Company pursuant to the provisions of Section 2(b) hereof which covers all of the Registrable Securities on an appropriate form under Rule 4l5 under the Securities Act, or any similar rule that may be adopted by the SEC and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "TRUSTEE" shall mean the trustee with respect to the Exchange Debentures under the Exchange Indenture. "UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" shall mean a registration in which Registrable Securities are sold to one or more Underwriters (as hereinafter defined) for reoffering to the public. 2. REGISTRATION UNDER THE SECURITIES ACT. (a) EXCHANGE OFFER REGISTRATION. The Company shall, for the benefit of the Holders of the Securities, file an Exchange Offer Registration Statement with respect to Exchange Securities within 60 days after the Closing Time and use its best efforts to cause such Exchange Offer Registration Statement to be declared effective under the Securities Act within 180 days after the Closing Time. Upon such Exchange Offer Registration Statement becoming effective under the Securities Act, the Company shall offer the Exchange Securities in return for surrender of the Securities. The Exchange Offer shall remain open for not less than 30 days (or longer if required by applicable law) after the date notice of the Exchange Offer is mailed to Holders of the Securities. For the Securities surrendered to the Company under the Exchange Offer, the Holder will receive Exchange Securities having an aggregate liquidation preference equal to that of the surrendered Securities. Dividends on the Exchange Securities shall accumulate from February 15 , 1996 or from the most recent dividend payment date to which dividends were paid on the Securities surrendered in exchange therefor (or on the Exchange Securities, as the case may be). The Company shall commence the Exchange Offer by mailing the related Exchange Offer Prospectus and accompanying documents to each Holder stating, in addition to such other disclosures as are required by applicable law: 5 (i) that the Exchange Offer is being made pursuant to this Registration Rights Agreement and that all Registrable Securities validly tendered will be accepted for exchange; (ii) the date of acceptance for exchange (which shall be a Business Day no earlier than 30 days nor later than 40 days (unless otherwise required by applicable law) from the date such notice is mailed) (the "Exchange Date"); (iii) that any Registrable Security not tendered will remain outstanding and shall accumulate dividends at the initial rate borne by the Securities and, other than Registrable Securities referred to in Section 2(b)(iii) below, will not retain any rights under this Registration Rights Agreement; (iv) that Holders electing to have a Registrable Security exchanged pursuant to the Exchange Offer will be required to surrender such Registrable Security, together with letters of transmittal, to the institution and at the address (located in the Borough of Manhattan, City of New York) specified in the notice prior to the close of business on the Business Day immediately preceding the Exchange Date; and (v) that Holders will be entitled to withdraw the election, not later than the close of business on the Business Day immediately preceding the Exchange Date, by sending to the institution and at the address (located in the Borough of Manhattan, City of New York) specified in the notice, a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the number of shares of Registrable Securities delivered for exchange, and a statement that such Holder is withdrawing its election to have such Registrable Securities exchanged. On the Exchange Date, the Company shall: (i) accept for exchange Registrable Securities tendered and not validly withdrawn pursuant to the Exchange Offer; and (ii) deliver, or cause to be delivered, to the Depositary for cancellation all Registrable Securities so accepted for exchange by the Company, and issue and mail to each Holder or such Holder's nominee, for the Registrable Securities so surrendered, new Exchange Securities having an aggregate liquidation preference equal to that of the Registrable Securities surrendered by such Holder. The Company shall use its best efforts to complete the Exchange Offer as provided above, and in accordance with the applicable requirements of the Securities Act, the Exchange Act and other applicable laws in connection with the Exchange Offer. Consummation of the Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not, and consummation of the Exchange Offer will not, violate applicable law or any applicable interpretation of the staff of the SEC. The Company shall inform the Initial 6 Purchasers of the names and addresses of the Holders to whom the Exchange Offer is made, and the Initial Purchasers shall have the right to contact such Holders and otherwise facilitate the tender of Registrable Securities in the Exchange Offer. (b) SHELF REGISTRATION. In the event that (i) the Company determines that the Exchange Offer Registration provided in Section 2(a) above is not available or may not be consummated because it would violate applicable law or the applicable interpretations of the Staff of the SEC, (ii) the Exchange Offer is not for any other reason consummated within 240 days after the Closing Time, or (iii) following the consummation of the Exchange Offer a Registration Statement must be filed and a Prospectus must be delivered by the Initial Purchasers in connection with any offering or sale of Registrable Securities because such Registrable Securities represent an unsold allotment of the Registrable Securities purchased by the Initial Purchasers from the Company, unless the Company has previously done so, the Company will (a) file as soon as practicable after such determination or date, as the case may be, a Shelf Registration Statement providing for the sale by the Holders of all of the Registrable Securities, (b) use its best efforts to have such Shelf Registration Statement declared effective by the SEC and (c) keep the Shelf Registration Statement continuously effective until the third anniversary of the Closing Time or such shorter period which will terminate when all of the Registrable Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement. In the event the Company is required to file a Shelf Registration Statement solely as a result of the matters referred to in clause (iii) of the preceding sentence, the Company shall file and have declared effective by the SEC both an Exchange Offer Registration Statement pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf Registration Statement (which may be a combined Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Securities held by the Initial Purchasers after completion of the Exchange Offer. The Company further agrees, if necessary, to supplement or amend the Shelf Registration Statement, if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the 1933 Act or by any other rules and regulations thereunder for shelf registration, and the Company agrees to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC. (c) EXPENSES. The Company shall pay all Registration Expenses in connection with any registration pursuant to Section 2(a) or 2(b) hereof. (d) EFFECTIVE REGISTRATION STATEMENT. An Exchange Offer Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC; PROVIDED, HOWEVER, that if, after it has been declared effective, the offering of Registrable Securities pursuant to a Shelf Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Registration Statement will be deemed not to have been 7 effective during the period of such interference, until the offering of Registrable Securities pursuant to such Registration Statement may legally resume. 3. PARTICIPATION OF BROKER-DEALERS IN EXCHANGE OFFER. (a) The Staff of the SEC has taken the position that any broker- dealer that receives Exchange Securities for its own account in the Exchange Offer in exchange for Securities that were acquired by such broker-dealer as a result of market-making or other trading activities (a "Participating Broker- Dealer") may be deemed to be an "underwriter" within the meaning of the Securities Act and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Securities. The Company understands that it is the Staff's position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the Exchange Securities, without naming the Participating Broker-Dealers or specifying the amount of Exchange Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers and other persons, if any, subject to similar prospectus delivery requirements to satisfy their prospectus delivery obligation under the Securities Act in connection with resales of Exchange Securities for their own accounts, so long as the Prospectus otherwise meets the requirements of the Securities Act. (b) In light of the above, notwithstanding the other provisions of this Agreement, the Company agrees that the provisions of this Agreement as they relate to a Shelf Registration shall also apply to an Exchange Offer Registration to the extent, and with such reasonable modifications thereto as may be, reasonably requested by the Initial Purchasers or by one or more Participating Broker-Dealers in each case as provided in clause (ii) below, in order to expedite or facilitate the disposition of any Exchange Securities by Participating Broker-Dealers consistent with the positions of the Staff recited in Section 3(a) above; PROVIDED that: (i) the Company shall not be required to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement, as would otherwise be contemplated by Section 5(i), for a period exceeding 90 days after the last Exchange Date (as such period may be extended pursuant to the penultimate paragraph of Section 5 of this Agreement) and Participating Broker-Dealers shall not be authorized by the Company to deliver and shall not deliver such Prospectus after such period in connection with the resales contemplated by this Section 3; and (ii) the application of the Shelf Registration procedures set forth in Section 5 of this Agreement to an Exchange Offer Registration, to the extent not required by the positions of the Staff of the SEC or the Securities Act and the rules and regulations thereunder, will be in conformity with the reasonable request to the Company by the Initial Purchasers or with the reasonable request in writing to the 8 Company by one or more broker-dealers who certify to the Initial Purchasers and the Company in writing that they anticipate that they will be Participating Broker-Dealers; and PROVIDED FURTHER that, in connection with such application of the Shelf Registration procedures set forth in Section 5 to an Exchange Offer Registration, the Company shall be obligated (x) to deal only with one entity representing the Participating Broker-Dealers, which shall be one of the Initial Purchasers unless they collectively elect not to act as such representative, (y) to pay the fees and expenses of only one counsel representing the Participating Broker-Dealers, which shall be counsel to the Initial Purchasers unless such counsel elects not to so act and (z) to cause to be delivered only one, if any, "cold comfort" letter with respect to the Prospectus in the form existing on the last Exchange Date and with respect to each subsequent amendment or supplement, if any, effected during the period specified in clause (i) above; PROVIDED, that the provisions of clauses (y) and (z) of this Section 3(b)(ii) shall apply only if one or more Participating Broker-Dealers holding at least 100,000 shares of Registrable Securities shall request that the provisions of this Agreement as they relate to a Shelf Registration also apply to an Exchange Offer Registration Statement for the disposition of Exchange Securities by Participating Broker-Dealers. 4. LIQUIDATED DAMAGES. In the event that, for any reason, either (i) the Exchange Offer Registration Statement is not filed with the SEC on or prior to the 60th calendar day following the Closing Time or (ii) the Exchange Offer is not consummated or a Shelf Registration Statement is not declared effective on or prior to the 240th calendar day following the Closing Time, the dividend rate borne by the Securities shall be increased by one-quarter of one percent per annum for the first 30 days following such 60-day period in the case of (i) above, or the first 90 days following such 240-day period in the case of (ii) above. Such dividend rate will increase by an additional one-quarter of one percent per annum at the beginning of each subsequent 30-day period in the case of (i) above, or 90-day period in the case of (ii) above, up to a maximum aggregate increase of one percent per annum. Upon (x) the filing of the Exchange Offer Registration Statement or (y) the consummation of the Exchange Offer or the effectiveness of a Shelf Registration Statement, as the case may be, the dividend rate borne by the Securities will be reduced to the original interest rate. 5. REGISTRATION PROCEDURES. In connection with the obligations of the Company with respect to the Registration Statement pursuant to Sections 2(a) and 2(b) hereof, the Company shall: (a) prepare and file with the SEC a Registration Statement on the appropriate form under the Securities Act, which form (x) shall be selected by the Company and (y) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities in accordance with the intended method or methods of distribution as the Company is so advised of by the selling Holders thereof and (z) 9 shall comply as to form in all material respects with the requirements of the applicable form and include (including through incorporation by reference) all financial statements required by the SEC to be filed therewith, and the Company shall use its best efforts to cause such Registration Statement to become effective and remain effective in accordance with Section 2 hereof; (b) prepare and file with the SEC such amendments and post-effective amendments to such Registration Statement as may be necessary to keep such Registration Statement in compliance with the Securities Act; and cause the Prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act; (c) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities and to each Underwriter of Registrable Securities, if any, without charge, as many copies of the Prospectus, including each preliminary prospectus, and any amendment or supplement thereto and such other documents as such Holder or Underwriter may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Securities; (d) in the case of a Shelf Registration, use its best efforts to register or qualify the Registrable Securities under all applicable state securities or "blue sky" laws of such jurisdictions as any Holder of Registrable Securities covered by such Shelf Registration Statement and or any Underwriter shall reasonably request in writing by the time the applicable Shelf Registration Statement is declared effective by the SEC, and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder or Underwriter to consummate the disposition in each such designated jurisdiction, PROVIDED, HOWEVER, that the Company shall not be required to (i) qualify generally to do business as a foreign corporation or as a broker-dealer in any jurisdiction where it would not otherwise be required to qualify but for this Section 5(d), (ii) consent to general service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction; (e) in the case of a Shelf Registration, promptly notify each Holder and, if requested by such Holder, confirm such advice in writing (i) when such Shelf Registration Statement has become effective and when any post- effective amendments and supplements thereto become effective, (ii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of such Shelf Registration Statement or the initiation of any proceedings for that purpose, (iii) if, between the effective date of such Shelf Registration Statement and the closing of any sale of Registrable Securities covered thereby, the Company receives any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, and (iv) of the happening of any event during the period such Shelf Registration Statement is effective which makes any statement made in such Shelf Registration Statement or the 10 related Prospectus untrue in any material respect or which requires the making of any changes in such Shelf Registration Statement or Prospectus in order to make the statements therein not misleading; (f) make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement promptly and shall provide notice to each Holder of the withdrawal of any such order as promptly as practicable; (g) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, without charge, at least one conformed copy of such Shelf Registration Statement and any post-effective amendment thereto (without documents incorporated therein by reference or exhibits thereto, unless requested); (h) in the case of a Shelf Registration, cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the selling Holders may reasonably request at least two business days prior to the closing of any sale of Registrable Securities; (i) in the case of a Shelf Registration, upon the occurrence of any event contemplated by Section 5(e)(iv) hereof, use its best efforts to prepare a supplement or post-effective amendment to such Shelf Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, such Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (j) in the case of a Shelf Registration Statement, enter into and deliver all such customary agreements, documents and take such other actions (including causing the delivery of opinions of counsel and "comfort" letters of independent certified public accountants) as are reasonably required to expedite or facilitate the disposition of Registrable Securities; (k) in the case of a Shelf Registration, upon reasonable notice make available for inspection by a representative of the Holders of the Registrable Securities, any Underwriter participating in any disposition pursuant to such Shelf Registration Statement, and any attorney or accountant designated by the Selling Holders, at reasonable times and in a reasonable manner, all financial and other records, pertinent documents and properties of the Company, and cause the respective officers, directors and employees of the Company to supply all information reasonably requested by any such representative, Underwriter, attorney or accountant in connection with a Shelf Registration Statement; PROVIDED, HOWEVER, that such 11 representatives, attorneys or accountants shall be acceptable to the Company in its judgment reasonably exercised and shall agree to enter into a written confidentiality agreement mutually acceptable to the Company and the Underwriters regarding any records, information or documents that are designated by the Company as confidential unless such records, information or documents are available to the public or disclosure of such records, information or documents is required by court or administrative order after the exhaustion of appeals therefrom and to use such information obtained pursuant to this provision only in connection with the transaction for which such information was obtained, and not for any other purpose; (1) in the case of a Shelf Registration, provide copies of any Prospectus, any amendment to any applicable Shelf Registration Statement or amendment or supplement to any Prospectus or any document which is to be incorporated by reference into such Shelf Registration Statement or any Prospectus after initial filing of such Shelf Registration Statement, a reasonable time prior to the filing of any such Prospectus, amendment, supplement or document, to the Initial Purchasers on behalf of the Holders and Underwriters, if any, and except with respect to a Shelf Registration filed pursuant to Section 2(b)(iii) not file any such document in a form to which the Initial Purchasers on behalf of the Holders or Underwriters, if any, shall reasonably object; and make the representatives of the Company as shall be reasonably requested by the Holders or the Initial Purchasers on behalf of such Holders available for discussion of such document; PROVIDED that the requirements of this paragraph shall not apply to the Company's annual report on Form 10-K, its Quarterly Reports on Form 10-Q, its current reports on Form 8-K or any other documents filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (the "Exchange Act Documents"); and further PROVIDED that the Company shall promptly notify Holders of the filing of any Exchange Act Documents except for such Exchange Act Documents specifically related to the offering of other securities and not to the Registrable Securities; (m) obtain a CUSIP number for all Exchange Securities or Registrable Securities, as the case may be, not later than the effective date of any Registration Statement; and (n) cause the Exchange Indenture to be qualified under the Trust Indenture Act of 1939, as amended (the "TIA"), in connection with the registration of the Exchange Debentures, cooperate with the Trustee and the Holders to effect such changes to the Exchange Indenture as may be required for the Exchange Indenture to be so qualified in accordance with the terms of the TIA and execute, and use its best efforts to cause the Trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable the Exchange Indenture to be so qualified in a timely manner. 12 In the case of a Shelf Registration Statement, the Company may (as a condition to such Holder's participation in a Shelf Registration) require each Holder to furnish to the Company information regarding the Holder and the proposed distribution by such Holder of any Registrable Securities as the company may from time to time reasonably request in writing. In the case of a Shelf Registration Statement, each Holder agrees that, upon receipt of any (i) notice from the Company of the happening of any event of the kind described in Section 5(e)(ii) or (iv) hereof, (ii) notice from the Company that it is in possession of material information that has not been disclosed to the public and the Company reasonably deems it to be advisable not to disclose such information in a registration statement or (iii) notice from the Company that it is in the process of a registered offering of securities and the Company reasonably deems it to be advisable to temporarily discontinue disposition of Registrable Securities pursuant to the Shelf Registration Statement (in each case, such notice being hereinafter referred to as a "Suspension Notice"), such Holder will forthwith discontinue disposition of Registrable Securities pursuant to any Shelf Registration Statement and shall not be entitled to the benefits provided under Section 6 hereof with respect to any sales made by it in contravention of this paragraph, until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 5(i) or a notice in accordance with Section 5(f) hereof that any order suspending the effectiveness of the Shelf Registration Statement has been withdrawn, or, in the case of (ii) or (iii) above, until further notice from the Company that disposition of Registrable Securities may resume, provided that (except with respect to a Shelf Registration filed pursuant to Section 2(b)(iii)) such further notice will be given within 90 days of the Suspension Notice in the case of (ii) above and within 120 days of the Suspension Notice in the case of (iii) above, and provided further that in the case of (ii) and (iii) above that any Suspension Notice must be based upon a good faith determination of the Board of Directors of the Company or the Executive Committee thereof that such Notice is necessary; and, if so directed by the Company, such Holder will deliver to the Company (at the expense of the Company) all copies in its possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. If the Company shall give any such notice to suspend the disposition of Registrable Securities pursuant to any Shelf Registration Statement, the Company shall extend the period during which such Shelf Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders shall have received copies of the supplemented or amended Prospectus necessary to resume such dispositions or received notice that any order suspending dispositions of the Securities has been withdrawn. Each Holder will furnish to the Company such information regarding such Holder and the distribution of such Registrable Securities as the Company may from time to time reasonably request in writing, but only to the extent that such information is required in order to comply with the Securities Act or any relevant state securities or Blue Sky law or obligation. Each Holder of Registrable Securities as to which any registration is being 13 effected agrees to notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by such Holder to the Company or of the happening of any event, in either case as a result of which any Prospectus relating to such registration contains an untrue statement of a material fact regarding such Holder or the distribution of such Registrable Securities or omits to state any material fact regarding such Holder or the distribution of such Registrable Securities required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and to furnish to the Company promptly any additional information required to correct and update any previously furnished information or required such that such prospectus shall not contain, with respect to such holder or the distribution of such Registrable Securities, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 6. INDEMNIFICATION; CONTRIBUTION. (a) The Company agrees to indemnify and hold harmless each Holder and each Person, if any, who controls any Holder within the meaning of Section 15 of the Securities Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any Shelf Registration Statement (or any amendment thereto) pursuant to which Registrable Securities were registered under the Securities Act, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or any Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatever.as incurred (including, subject to the provisions of subsection (c), fees and disbursements of counsel chosen by any Holder), reasonably incurred in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, 14 commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above; PROVIDED, HOWEVER, that this indemnity does not apply to any loss, claim, damage, liability or expense to the extent it arises out of an untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Holder expressly for use in a Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto). The foregoing indemnity with respect to any untrue statement contained in or any omission from a preliminary prospectus shall not inure to the benefit of any Holder (or any person controlling such Holder) from whom the person asserting any such loss, liability, claim, damage or expense purchased any of the Securities that are the subject thereof if the Company shall sustain the burden of proving that such person was not sent or given a copy of the Prospectus (or the Prospectus as amended or supplemented) (in each case exclusive of the documents from which information is incorporated by reference) at or prior to the written confirmation of the sale of such Securities to such person and the untrue statement contained in or the omission from such preliminary prospectus was corrected in the Prospectus (or the Prospectus as amended or supplemented). (b) Each Holder severally agrees to indemnify and hold harmless the Company, its directors, officers and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 6(a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Holder expressly for use in the Registration Statement (or any amendment thereto) or such Prospectus (or any amendment or supplement thereto). (c) Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve it from any liability which it may have otherwise than under this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action. In no event shall the indemnifying party or parties be liable for the fees and expenses of more than one counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction, arising out of the same general allegations or circumstances. (d) In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in this Section 6 is for any reason held to be 15 unenforceable by the indemnified parties although applicable in accordance with its terms, the Company and the Holders shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity agreement incurred by the Company and one or more of the Holders; PROVIDED, HOWEVER, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. As between the Company and the Holders, such parties shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity agreement in such proportion as shall be appropriate to reflect (i) the relative benefits received by the Company on the one hand and the Holders on the other hand, from the offering of the Exchange Securities or Registrable Securities included in such offering, and (ii) the relative fault of the Company on the one hand and the Holders on the other, with respect to the statements or omissions which resulted in such loss, liability, claim, damage or expense, or action in respect thereof, as well as any other relevant equitable considerations. The Company and the Holders of the Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 6 were to be determined by PRO RATA allocation or by any other method of allocation which does not take into account the relevant equitable considerations. For purposes of this Section 6, each Person, if any, who controls a Holder within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as such Holder, and each director of the Company, each officer of the Company who signed the Registration Statement, and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as the Company. 7. SELECTION OF UNDERWRITERS. The Holders of Registrable Securities covered by the Shelf Registration Statement who desire to do so may sell such Registrable Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers (the "Underwriters") that will administer the offering will be selected by the Majority Holders of the Registrable Securities included in such offering; PROVIDED THAT such Underwriters must be reasonably acceptable to the Company and of a reputation comparable to that of the Initial Purchasers. 8. ISSUANCE OF EXCHANGE DEBENTURES. In the event that Exchange Debentures are issued prior to the issuance of the Exchange Securities, the provisions herein shall apply equally in respect of the registration of any Exchange Debentures PROVIDED THAT changes in the dividend rate as provided for in Section 4 herein shall result in corresponding changes in the interest rate applicable to the Exchange Debentures. 9. MISCELLANEOUS. (a) NO INCONSISTENT AGREEMENTS. The Company has not entered into nor will the Company on or after the date of this Agreement enter into any agreement which is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way 16 conflict with and are not inconsistent with the rights granted to the holders of the Company's other issued and outstanding securities under any such agreements. (b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company has obtained the written consent of Holders of at least a majority of the issued and outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or departure; PROVIDED, HOWEVER, no amendment, modification or supplement, waiver or consent with respect to the provisions of Section 6 hereof shall be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder. (c) NOTICES. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, registered first- class mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such Holder to the Company by means of a notice given in accordance with the provisions of this Section 9(c); (ii) if to the Company, initially at One Media Crossways, Woodbury, New York 11797, Attention: General Counsel, and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 9(c). All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next business day if timely delivered to any courier guaranteeing overnight delivery. Copies of all such notices, demands, or other communications shall be concurrently delivered by the Person giving the same to the Depositary, at 150 Royall Street, Mail Stop 45-02-62, Canton, MA 02021, Attention: Margaret Dunn. (d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; PROVIDED that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement. If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof. 17 (e) ENFORCEMENT BY INITIAL PURCHASERS. The Initial Purchasers shall have the right to directly enforce the agreements made hereunder between the Company, on the one hand, and the Holders, on the other hand, to the extent they deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder, provided, however, that such right of direct enforcement shall terminate upon consummation of an Exchange Offer. (f) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (g) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (h) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. (i) SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. CABLEVISION SYSTEMS CORPORATION By: ----------------------------------------------- Name: Title: Confirmed and accepted as of the date first above written: BEAR, STEARNS & CO. INC. MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated MORGAN STANLEY & CO. INCORPORATED c/o Bear, Stearns & Co. Inc. By: Bear, Stearns & Co. Inc. By ---------------------------- Name: Title: EX-10.63 4 EXHIBIT 10.63 AMENDMENT NO. 2 AND WAIVER Dated as of September 28, 1995 to FOURTH AMENDED AND RESTATED CREDIT AGREEMENT Dated as of October 14, 1994 CABLEVISION SYSTEMS CORPORATION, a Delaware corporation (the "Company"), the Restricted Subsidiaries (as defined in the Credit Agreement referred to below), the banks parties to such Credit Agreement (the "Banks"), BANK OF MONTREAL, Chicago Branch, THE BANK OF NEW YORK, THE BANK OF NOVA SCOTIA, THE CANADIAN IMPERIAL BANK OF COMMERCE and NATIONSBANK OF TEXAS, N.A., as Co- Agents (the "Co-Agents"), and TORONTO DOMINION (TEXAS), INC., as Agent (the "Agent"), agree as follows: ARTICLE I AMENDMENTS Section 1.1. CREDIT AGREEMENT. Reference is made to the Fourth Amended and Restated Credit Agreement dated as of October 14, 1994, as amended by Amendment No. 1 thereto, dated as of March 6, 1995, among the Company, the Restricted Subsidiaries, the Banks, the Co-Agents and the Agent (the "Credit Agreement"). Terms used in this Amendment No. 2 and Waiver (this "Amendment and Waiver") that are not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement. The Credit Agreement as amended by this Amendment and Waiver (the "Amended Credit Agreement") is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed. Section 1.2. CERTAIN AMENDMENTS. Upon and after the Amendment and Waiver Effective Date (as defined in Section 1.4 hereof): (a) Section 1.01 of the Credit Agreement shall be amended by: (i) restating the definition of "Free Cash Flow Coverage Ratio" therein to read as follows: "FREE CASH FLOW COVERAGE RATIO" shall mean, as of the last day of any four consecutive Quarter period (the "Test Period"), the ratio of (a) the Operating Cash Flow for such Test Period PLUS CNJ Availability as of the first day of such Test Period PLUS (x) the lesser of (i) (A) the Total Available Revolving Credit Commitment as of the first day of such Test Period (less the aggregate principal amount of the Revolving Credit Loans and Letter of Credit Liabilities then outstanding on such day) PLUS (B) Net Cash Proceeds from New Preferred Stock, New Common Stock and New Subordinated Debt issued during such Test Period, in each case to the extent such Net Cash Proceeds do not constitute Refunding Proceeds, MINUS (C) the amount of any reduction in the Total Commitment pursuant to Section 2.04(c)(1)(A) or (C) during such Test Period MINUS (D) the amount of any increase in the limit on unspecified Investments during such Test Period as specified in a notice to the Agent provided for in clauses (A) and (B) of the first proviso contained in Section 9.16(ix), and (ii) for each Test Period beginning on or before December 31, 1995, $150,000,000, (B) for each Test Period beginning thereafter and on or before December 31, 1996, $140,000,000, (C) for each Test Period beginning thereafter and on or before December 31, 1997, $130,000,000, and (D) for each Test Period beginning on or after January 1, 1998, 120,000,000, MINUS (y) the aggregate amount of capital expenditures made and taxes paid in cash during such Test Period, to (b) Total Debt Expense for such Test Period. (ii) inserting therein a new definition of "New Common Stock" as follows: "NEW COMMON STOCK" shall mean any common stock of any class of the Company issued after September 1, 1995. (iii) inserting the words "(other than with common stock or other New Preferred Stock of the Company)" after the words "in whole or in part" in clause (i) of the definition of "New Preferred Stock" therein. (iv) restating the definition of "Refunding Proceeds" therein to read as follows: -2- "REFUNDING PROCEEDS" shall mean, as specified in a notice from the Company to the Agent, with respect to any New Subordinated Debt, any New Preferred Stock or any New Common Stock of the Company, (i) an amount equal to up to 100% of the Net Cash Proceeds thereof, but only to the extent that the Company purchases, acquires, redeems, retires, pays or prepays Subordinated Debt, any obligations of the Company under any Guarantee permitted under Section 9.12(x) hereof or preferred stock of the Company (other than, in the case of Net Cash Proceeds of New Subordinated Debt, New Preferred Stock as to which notice had been given pursuant to Section 9.16(ix)(A) hereof) with such Net Cash Proceeds immediately upon receipt thereof or (ii) the proceeds of Revolving Credit Loans reborrowed by the Company in an aggregate amount not to exceed other Revolving Credit Loans that were prepaid with the Net Cash Proceeds of such New Subordinated Debt, New Preferred Stock or New Common Stock (less the amount of any such Net Cash Proceeds constituting Refunding Proceeds by reason of clause (i) above), but, in each case, only to the extent that the Company purchases, acquires, redeems, retires, pays or prepays Subordinated Debt, any obligations of the Company under any Guarantee permitted under Section 9.12(x) hereof or preferred stock of the Company (other than, in the case of any Revolving Credit Loans that were repaid with Net Cash Proceeds of New Subordinated Debt, New Preferred Stock as to which notice had been given pursuant to Section 9.16(ix)(A) hereof) with such reborrowed amounts at any time within the period ending (A) if such reborrowed amounts were prepaid with Net Cash Proceeds of New Subordinated Debt, 75 days after the date of the incurrence, issuance or sale of such New Subordinated Debt and (B) if such reborrowed amounts were prepaid with Net Cash Proceeds of New Preferred Stock or New Common Stock of the Company, one year after the incurrence, issuance or sale of such New Preferred Stock or New Common Stock. (v) inserting the words "(other than to the extent any such dividends and distributions are paid in New Common Stock or New Preferred Stock)" after the words "during such period" in clause (i) of the definition of "Total Fixed Charges" therein. (b) Section 9.16(ix) of the Credit Agreement shall be amended by (i) deleting the words "six months" in clause (A) thereof and inserting in lieu thereof the words "one year", (ii) inserting the words "not constituting Refunding Proceeds" after the word "issuance" the first time such word appears in the thirteenth line thereof, and (iii) deleting the words "(B) upon the issuance of common stock by 66.60% of the Net Cash Proceeds of such issuance;" in the thirteenth and fourteenth lines thereof and inserting in lieu thereof the following: (B) upon notice from the Company to the Agent given within one year after the date of issuance of any New Common Stock -3- (which notice may be given only once in respect of each such issuance), by the amount specified in the such notice (which amount shall not be in excess of 66.60% of the Net Cash Proceeds of such issuance not constituting Refunding Proceeds); (c) Section 9.17 of the Credit Agreement shall be amended by (i) deleting the word "permitted" in clause (i)(A) thereof and inserting in lieu thereof the words "not prohibited", (ii) inserting the words "or any preferred stock issued to holders of Series E Redeemable Exchangeable Convertible Preferred Stock in exchange therefor, provided that the interest on such preferred stock will not exceed the interest currently due on the Series E Redeemable Exchangeable Convertible Preferred Stock" after the words "Series E Redeemable Exchangeable Convertible Preferred Stock" in clause (i)(B) thereof, (iii) deleting the word "and" at the end of clause (iii) thereof and inserting a comma in lieu thereof and (iv) inserting the words "and (v) make any Restricted Payment to the extent payable in New Common Stock or New Preferred Stock of the Company" before the period at the end thereof. Section 1.3. WAIVER. Upon and after the Amendment and Waiver Effective Date as defined in Section 1.4, the Banks shall waive compliance with: (a) the limitation set forth in the second parenthetical in clause (A) of the first proviso contained in Section 9.16(ix) of the Credit Agreement solely to the extent necessary to permit the Company to increase the amount of Investments permitted by Section 9.16(ix) by 100% of the Net Cash Proceeds received from the issuance by the Company of its New Preferred Stock to General Electric Capital Corporation in an aggregate amount not exceeding $500,000,000 (the "Preferred Issuance") upon notice to the Agent, which notice is hereby deemed to have been given; and (b) the commitment reduction provision of Section 2.04(c)(i)(C) solely with respect to the Preferred Issuance. Section 1.4. EFFECTIVE DATE. This Amendment and Waiver shall be effective on the first date (the "Amendment and Waiver Effective Date") when the following conditions shall have been satisfied: (a) This Amendment and Waiver shall have been duly executed and delivered by each of the Company, the Restricted Subsidiaries that are parties to the Credit Agreement, the Agents and the Majority Banks. (b) The Company and the Restricted Subsidiaries shall have provided the Agent (with copies to be provided for each Bank) with: -4- (i) certified copies of the name and signature of each of the persons authorized to sign this Amendment and Waiver on behalf of the Company and such of the Restricted Subsidiaries as are parties hereto; (ii) an opinion of Robert Lemle, Esq., General Counsel to the Company and the Restricted Subsidiaries, covering such matters as any Bank or special New York counsel to the Agent may reasonably request; and (iii) an opinion of Sullivan & Cromwell, special New York Counsel to the Company and the Restricted Subsidiaries, covering such matters as any Bank or special New York counsel to the Agent may reasonably request. ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1. REPRESENTATIONS AND WARRANTIES. Each of the Company and the Restricted Subsidiaries represents and warrants as follows: (a) POWER; BINDING AGREEMENTS. Each of the Company and the Restricted Subsidiaries has full power, authority and legal right to make and perform such of this Amendment and Waiver and the Amended Credit Agreement to which it is a party. This Amendment and Waiver and the Amended Credit Agreement constitute the legal, valid and binding obligations of each of the Company and the Restricted Subsidiaries as are parties thereto, enforceable in accordance with their terms (except for limitations on enforceability under bankruptcy, reorganization, insolvency and other similar laws affecting creditors' rights generally and limitations on the availability of the remedy of specific performance imposed by the application of general equitable principles). (b) AUTHORITY; NO CONFLICT. The making and performance of this Amendment and Waiver and the Amended Credit Agreement by each of the Company and the Restricted Subsidiaries which is a party thereto have been duly authorized by all necessary action and do not and will not (i) violate any provision of any laws, orders, rules or regulations presently in effect (other than violations that, singly or in the aggregate, have not had and are not likely to have a Materially Adverse Effect), or any provision of any of the Company's or the Restricted Subsidiaries' respective partnership agreements, charters or by-laws presently in effect; (ii) result in the breach of, or constitute a default or require any consent under, any existing indenture or other agreement or instrument to which the Company or any of the Restricted Subsidiaries is a party or by which their respective properties may be bound or affected (other than any breach, default or required consent that, singly or in the aggregate, have not had and are not likely to have a -5- Materially Adverse Effect); or (iii) result in, or require, the creation or imposition of any Lien (other than those contemplated by the Security Documents) upon or with respect to any of the properties or assets now owned or hereafter acquired by the Company or any of the Restricted Subsidiaries. (c) APPROVAL OF REGULATORY AUTHORITIES. No approval or consent of, or filing or registration with, any federal, state or local commission or other regulatory authority is required in connection with the execution, delivery and performance by the Company and the Restricted Subsidiaries of this Amendment and Waiver and the Amended Credit Agreement. Section 2.2. SURVIVAL. Each of the foregoing representations and warranties shall be made at and as of the Amendment and Waiver Effective Date and shall constitute a representation and warranty of the Company and the Restricted Subsidiaries made under the Amended Credit Agreement and it shall be an Event of Default if any such representation and warranty shall prove to have been incorrect or misleading in any material respect when made. Each of the representations and warranties made under the Amended Credit Agreement (and including those representations and warranties made herein) shall survive and not be waived by the execution and delivery of this Amendment and Waiver. ARTICLE III MISCELLANEOUS Section 3.1. GOVERNING LAW. This Amendment and Waiver shall be construed in accordance with and governed by the laws of the State of New York. Section 3.2. COUNTERPARTS. This Amendment and Waiver may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Section 3.3. EXPENSES. The Company hereby agrees to pay or reimburse the Agent for all reasonable fees and expenses, including attorneys' fees, incurred in connection with the negotiation, preparation, execution and delivery of this Amendment and Waiver. [THE NEXT PAGE IS A SIGNATURE PAGE] -6- IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Waiver to be duly executed by their duly authorized officers in counterparts all as of the day and year first above written. CABLEVISION SYSTEMS CORPORATION, for itself and as a General Partner of Cablevision Finance Limited Partnership By -------------------------------- Title: CABLEVISION AREA 9 CORPORATION CABLEVISION FAIRFIELD CORPORATION CABLEVISION FINANCE CORPORATION CABLEVISION LIGHTPATH, INC. CABLEVISION OF CLEVELAND GP, INC., for itself and as a General Partner of Cablevision of Cleveland Limited Partnership CABLEVISION OF CLEVELAND LP, INC. CABLEVISION OF CONNECTICUT CORPORATION CABLEVISION OF MICHIGAN, INC. CABLEVISION SYSTEMS DUTCHESS CORPORATION CABLEVISION SYSTEMS EAST HAMPTON CORPORATION CABLEVISION SYSTEMS GREAT NECK CORPORATION CABLEVISION SYSTEMS HUNTINGTON CORPORATION CABLEVISION SYSTEMS ISLIP CORPORATION CABLEVISION SYSTEMS LONG ISLAND CORPORATION CABLEVISION SYSTEMS SUFFOLK CORPORATION CABLEVISION SYSTEMS WESTCHESTER CORPORATION COMMUNICATIONS DEVELOPMENT CORPORATION CSC ACQUISITION CORPORATION CSC ACQUISITION - MA, INC. CSC ACQUISITION - NY, INC. By -------------------------------- Title: of each of the above- named twenty corporations CABLEVISION FINANCE LIMITED PARTNERSHIP By Cablevision Systems Corporation, as General Partner CABLEVISION OF CLEVELAND LIMITED PARTNERSHIP By Cablevision of Cleveland GP, Inc., as General Partner -7- THE TORONTO-DOMINION BANK, Grand Cayman Islands Branch, B.W.I. By -------------------------------- Title: BANK OF MONTREAL, Chicago Branch, as Bank and Co-Agent By -------------------------------- Title: THE BANK OF NEW YORK, as Bank and Co-Agent By -------------------------------- Title: THE BANK OF NOVA SCOTIA, as Bank and Co-Agent By -------------------------------- Title: THE CANADIAN IMPERIAL BANK OF COMMERCE, as Bank and Co-Agent By -------------------------------- Title: NATIONSBANK OF TEXAS, N.A., as Bank and Co-Agent By -------------------------------- Title: -8- CREDIT LYONNAIS, Cayman Islands Branch By -------------------------------- Title: MELLON BANK, N.A. By -------------------------------- Title: ROYAL BANK OF CANADA By -------------------------------- Title: THE FIRST NATIONAL BANK OF BOSTON By -------------------------------- Title: THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) By -------------------------------- Title: CHEMICAL BANK By -------------------------------- Title: BANQUE PARIBAS By -------------------------------- Title: -9- CITIBANK, N.A. By -------------------------------- Title: THE FIRST NATIONAL BANK OF CHICAGO By -------------------------------- Title: SHAWMUT BANK CONNECTICUT, N.A. By -------------------------------- Title: BARCLAYS BANK PLC By -------------------------------- Title: THE DAIWA BANK, LIMITED By -------------------------------- Title: CORESTATES BANK, N.A. By -------------------------------- Title: FIRST UNION NATIONAL BANK OF NORTH CAROLINA By -------------------------------- Title: -10- THE FUJI BANK, LIMITED, New York Branch By -------------------------------- Title: LTCB Trust Company By -------------------------------- Title: NATWEST BANK, N.A. (formerly NATIONAL WESTMINSTER BANK USA) By -------------------------------- Title: PNC BANK, National Association By -------------------------------- Title: SOCIETE GENERALE By -------------------------------- Title: UNION BANK By -------------------------------- Title: TORONTO DOMINION (TEXAS), INC., as Agent By -------------------------------- Title: -11- EX-10.64 5 EXHIBIT 10.64 AMENDMENT NO. 3 AND WAIVER Dated as of November 7, 1995 to FOURTH AMENDED AND RESTATED CREDIT AGREEMENT Dated as of October 14, 1994 CABLEVISION SYSTEMS CORPORATION, a Delaware corporation (the "Company"), the Restricted Subsidiaries (as defined in the Credit Agreement referred to below), the banks that are parties to such Credit Agreement (the "Banks"), BANK OF MONTREAL, Chicago Branch, THE BANK OF NEW YORK, THE BANK OF NOVA SCOTIA, THE CANADIAN IMPERIAL BANK OF COMMERCE and NATIONSBANK OF TEXAS, N.A., as Co-Agents (the "Co-Agents"), and TORONTO DOMINION (TEXAS), INC., as Agent (the "Agent"), agree as follows: ARTICLE I AMENDMENTS AND WAIVER Section 1.1. CREDIT AGREEMENT. Reference is made to (i) the Fourth Amended and Restated Credit Agreement dated as of October 14, 1994, as amended by Amendment No. 1 thereto, dated as of March 6, 1995, and as further amended by Amendment No. 2 and Waiver thereto, dated as of September 28, 1995, among the Company, the Restricted Subsidiaries, the Banks, the Co-Agents and the Agent (as so amended, the "Credit Agreement") and (ii) the CSC/CNYC Adjustment Agreement dated October 14, 1994 (the "Adjustment Agreement"), between the Company and the Agent. Terms used in this Amendment No. 3 and Waiver (this "Amendment") that are not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement. The Credit Agreement as amended by this Amendment (the "Amended Credit Agreement") is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed. Section 1.2. AMENDMENTS. Upon and after the Effective Date (as defined in Section 1.6 hereof) (except as provided in Section 1.6(b)): (a) Section 1.01 of the Credit Agreement shall be amended by: (i) restating the definition of "FREE CASH FLOW COVERAGE RATIO" therein to read as follows: "FREE CASH FLOW COVERAGE RATIO" shall mean, as of the last day of any four consecutive Quarter period (the "Test Period"), the ratio of (a) the Operating Cash Flow for such Test Period PLUS (x) CNJ Availability as of the first day of such Test Period PLUS (y) the lesser of (i) (A) the Total Available Revolving Credit Commitment as of the first day of such Test Period (less the aggregate principal amount of the Revolving Credit Loans and Letter of Credit Liabilities then outstanding on such day) PLUS (B) Net Cash Proceeds from New Preferred Stock, New Common Stock and New Subordinated Debt issued during such Test Period, in each case to the extent such Net Cash Proceeds do not constitute Refunding Proceeds, MINUS (C) the amount of any reduction in the Total Commitment pursuant to Section 2.04(c)(1)(A) or (C) during such Test Period MINUS (D) the amount of any increase in the limit on unspecified Investments during such Test Period as specified in a notice to the Agent provided for in clauses (A) and (B) of the first proviso contained in Section 9.16(ix), and (ii) $150,000,000 MINUS (z) the aggregate amount of capital expenditures made and taxes paid in cash during such Test Period, to (b) Total Debt Expense for such Test Period. (ii) inserting therein the following definition in the proper alphabetical order: "UNRESTRICTED NEW SUBORDINATED DEBT" shall mean any New Subordinated Debt incurred, issued or sold by the Company after November 1, 1995, PROVIDED that such New Subordinated Debt (i) shall be unsecured, (ii) shall have a commercially reasonable interest rate (which rate shall be deemed commercially reasonable if such New Subordinated Debt is sold by a member of the National Association of Securities Dealers, Inc. in an underwritten offering), (iii) shall have terms no more restrictive or burdensome than the most restrictive and burdensome applicable terms of any other New Subordinated Debt (which condition shall be deemed satisfied if such terms are no more restrictive than the terms contained in the Company's Indenture dated as of -2- April 1, 1993 between the Company and The Bank of New York, as Trustee, as in effect on November 1, 1995, relating to the Company's 9 7/8% Senior Subordinated Debentures due 2023), and (iv) shall be neither (A) redeemable, payable or required to be purchased or otherwise retired or extinguished in whole or in part at a fixed or determinable date (whether by operation of a sinking fund or otherwise) at the option of any Person other than the Company or upon the occurrence of a condition not solely within the control of the Company (such as a redemption required to be made out of future earnings) nor (B) convertible into any other Indebtedness or capital stock of the Company that may be so retired, extinguished or converted, in the case of clause (A) or (B) above, at any time before the date that is two years after the Commitment Termination Date as in effect at the time of the incurrence, issuance or sale of such New Subordinated Debt. (b) Section 2.04(a)(i) of the Credit Agreement shall be amended by deleting the columns set forth therein under the headings "(x)" and "(y)" and entitled "QUARTERLY DATE FALLING ON OR NEAREST TO" and "TERM REDUCTION AMOUNT" respectively and inserting in lieu thereof the following: Quarterly Date Term Falling on or Nearest to Reduction Amount ------------------------ ---------------- June 30, 1997 $12,000,000 September 30, 1997 $12,000,000 December 31, 1997 $12,000,000 March 31, 1998 $15,000,000 June 30, 1998 $15,000,000 September 30, 1998 $15,000,000 December 31, 1998 $15,000,000 March 31, 1999 $20,000,000 June 30, 1999 $20,000,000 September 30, 1999 $20,000,000 December 31, 1999 $20,000,000 March 31, 2000 $20,000,000 June 30, 2000 $20,000,000 September 30, 2000 $20,000,000 December 31, 2000 $20,000,000 March 31, 2001 $20,000,000 June 30, 2001 $20,000,000 September 30, 2001 $20,000,000 December 31, 2001 $20,000,000 March 31, 2002 $10,000,000 June 30, 2002 $10,000,000 September 30, 2002 $10,000,000 December 31, 2002 $10,000,000 March 31, 2003 $12,000,000 June 30, 2003 $12,000,000 -3- (c) Section 2.04(a)(ii) of the Credit Agreement shall be amended by deleting the columns set forth therein under the headings "(x)" and "(y)" and entitled "QUARTERLY DATE FALLING ON OR NEAREST TO" and "REVOLVING CREDIT REDUCTION AMOUNT" respectively and inserting in lieu thereof the following: Quarterly Date Revolving Credit Falling on or Nearest to Reduction Amount ------------------------ ---------------- December 31, 1996 $10,500,000 March 31, 1997 $6,500,000 June 30, 1997 $17,000,000 September 30, 1997 $17,000,000 December 31, 1997 $17,000,000 March 31, 1998 $26,125,000 June 30, 1998 $26,125,000 September 30, 1998 $26,125,000 December 31, 1998 $26,125,000 March 31, 1999 $36,875,000 June 30, 1999 $36,875,000 September 30, 1999 $36,875,000 December 31, 1999 $36,875,000 March 31, 2000 $43,500,000 June 30, 2000 $43,500,000 September 30, 2000 $43,500,000 December 31, 2000 $43,500,000 March 31, 2001 $51,250,000 June 30, 2001 $51,250,000 September 30, 2001 $51,250,000 December 31, 2001 $51,250,000 March 31, 2002 $50,250,000 June 30, 2002 $50,250,000 September 30, 2002 $50,250,000 December 31, 2002 $50,250,000 March 31, 2003 $62,500,000 June 30, 2003 $62,500,000 (d) Section 2.04(c)(i)(A) shall be amended by (i) inserting the words "(other than Unrestricted New Subordinated Debt)" after the words "New Subordinated Debt" the first time such words are used therein, and (ii) deleting the second proviso therein in its entirety. (e) Section 3.01(a) shall be amended by (i) deleting the word "Loans" the second time such word appears in the third line thereof and inserting in lieu thereof the words "Base Rate Loans on any Business Day if prior notice is given to the Agent before 11:00 a.m. New York time on such day (and if such notice is received by the Agent after 11:00 a.m. New York time, on the next succeeding Business Day), and Eurodollar Loans", and (ii) deleting the parenthetical beginning in the fourth line thereof and inserting in lieu thereof the parenthetical "(and the Agent shall promptly notify the Banks in each case of such notice)". -4- (f) Section 3.01(b)(iii) shall be amended by (i) deleting the words "to the extent that the aggregate principal amount of such New Subordinated Debt, together with all other New Subordinated Debt incurred, issued or sold on or after the Effective Date, does not exceed $200,000,000 or" in the proviso in the first sentence thereof, and (ii) inserting the words "(other than Unrestricted New Subordinated Debt)" after the words "New Subordinated Debt" the first time such words are used in the second sentence thereof. Section 1.3. ARSENAL MSUB 2 INC. (V CABLE LONG ISLAND). The parties hereto agree that the Company may designate each of Arsenal MSub 2 Inc. ("Arsenal") and its Subsidiaries a "Restricted Subsidiary" for all purposes under the Amended Credit Agreement by giving a notice captioned "Designation of Arsenal as Restricted Subsidiary" to the Agent, PROVIDED that, concurrently with the giving of such notice, the Company shall (i) comply with the requirements of clauses (i), (ii) and (iii) of Section 9.08(a) of the Amended Credit Agreement as such clauses would be applied to Arsenal and its Subsidiaries as if each were a "New Subsidiary", and (ii) certify to the Agent that, as of the date of such notice, (A) outstanding Consolidated Indebtedness of Arsenal and its Subsidiaries before giving effect to such new designation does not exceed $250,000,000 and (B) no Default has occurred and is continuing under the Amended Credit Agreement both before and after giving effect to such new designation. Upon the giving of such notice and compliance with such requirements, all references to "Restricted Subsidiaries" and "Unrestricted Subsidiaries" in the Amended Credit Agreement and Schedules 1.01(v) and 1.01(vi) thereto shall be deemed amended to reflect such new designation. Section 1.4. WAIVER. Upon and after the Effective Date, the Agent and the Banks shall waive compliance with the requirement set forth in clause (A)(i)(y) of the Adjustment Agreement, PROVIDED, THAT, notwithstanding such waiver, upon the prepayment of any CNYC Loan, the Company shall comply with the requirements of clause (A)(iii) of the Adjustment Agreement as if the Company had failed to comply with such clause (A)(i)(y). Section 1.5. NOTICE. In accordance with the requirements of the definition of "New Subordinated Debt" in Section 1.01 of the Credit Agreement, notice is hereby deemed given by the Company to the Agent of the proposed issuance by the Company on or about November 7, 1995 of its 9 1/4% Senior Subordinated Notes in an aggregate principal amount of $300,000,000 and with a final maturity of November 1, 2005. Section 1.6. EFFECTIVE DATE. (a) This Amendment shall become effective (except as provided in clause (b) below) as of the date first written above (the "Effective Date") on the first date when the following conditions shall have been satisfied: -5- (i) This Amendment shall have been duly executed and delivered by each of the Company, the Restricted Subsidiaries that are parties to the Credit Agreement, the Agent and the Majority Banks. (ii) The Company and the Restricted Subsidiaries shall have provided the Agent (with copies to be provided for each Bank) with: (A) certified copies of the name and signature of each of the persons authorized to sign this Amendment on behalf of the Company and such of the Restricted Subsidiaries as are parties hereto; (B) an officer's certificate of the Company stating that no Default has occurred and is continuing under the Credit Agreement both before and after giving effect hereto and the amendments to be effected hereby; (C) an opinion of Robert Lemle, Esq., General Counsel to the Company and the Restricted Subsidiaries, covering such matters as any Bank or special New York counsel to the Agent may reasonably request; and (D) an opinion of Sullivan & Cromwell, special New York Counsel to the Company and the Restricted Subsidiaries, covering such matters as any Bank or special New York counsel to the Agent may reasonably request. (b) Notwithstanding the foregoing, the amendments described in Sections 1.2(b) and (c) hereof shall become effective as of the date first written above on the first date when (i) this Amendment shall have been duly executed and delivered by the Company, each of the Restricted Subsidiaries that are parties to the Credit Agreement, the Agent and each Bank and (ii) the requirements of clause (a)(ii) above shall have been satisfied. (c) On the date of the effectiveness of the amendments described in Sections 1.2(b) and (c) hereof, (i) the Revolving Credit Commitment of each Bank shall be increased, and the Term Commitment of each Bank shall be decreased, by an amount equal to (A) $350,000,000 multiplied by (B) the fraction obtained by dividing such Bank's Term Commitment by the Total Term Commitment (both measured as of the date immediately preceding the Effective Date); and (ii) a portion of the outstanding Term Loans specified in writing by the Company equal to $350,000,000 shall be deemed Revolving Credit Loans for all purposes of the Amended Credit Agreement, and the Banks may mark their respective Notes accordingly. After giving effect to the adjustments described in the preceding sentence, (x) the Total Term Commitment and the aggregate amount of Term Loans outstanding shall both be $400,000,000 and (y) the Total Revolving Credit Commitment shall be $1,025,000,000. Promptly after the Effective Date, the -6- Company shall issue new Revolving Credit Notes to the Banks reflecting the foregoing adjustments in exchange for the Revolving Credit Notes outstanding on the date hereof. ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1. REPRESENTATIONS AND WARRANTIES. Each of the Company and the Restricted Subsidiaries that are parties to the Credit Agreement represents and warrants as follows: (a) POWER; BINDING AGREEMENTS. Each of the Company and such Restricted Subsidiaries has full power, authority and legal right to make and perform this Amendment and the Amended Credit Agreement. This Amendment and the Amended Credit Agreement constitute the legal, valid and binding obligations of each of the Company and such Restricted Subsidiaries, enforceable in accordance with their terms (except for limitations on enforceability under bankruptcy, reorganization, insolvency and other similar laws affecting creditors' rights generally and limitations on the availability of the remedy of specific performance imposed by the application of general equitable principles). (b) AUTHORITY; NO CONFLICT. The making and performance of this Amendment and the Amended Credit Agreement by each of the Company and such Restricted Subsidiaries have been duly authorized by all necessary action and do not and will not (i) violate any provision of any laws, orders, rules or regulations presently in effect (other than violations that, singly or in the aggregate, have not had and are not likely to have a Materially Adverse Effect), or any provision of any of the Company's or the Restricted Subsidiaries' respective partnership agreements, charters or by-laws presently in effect; (ii) result in the breach of, or constitute a default or require any consent under, any existing indenture or other agreement or instrument to which the Company or any of the Restricted Subsidiaries is a party or by which their respective properties may be bound or affected (other than any breach, default or required consent that, singly or in the aggregate, have not had and are not likely to have a Materially Adverse Effect); or (iii) result in, or require, the creation or imposition of any Lien (other than those contemplated by the Security Documents) upon or with respect to any of the properties or assets now owned or hereafter acquired by the Company or any of the Restricted Subsidiaries. (c) APPROVAL OF REGULATORY AUTHORITIES. No approval or consent of, or filing or registration with, any federal, state or local commission or other regulatory authority is required in connection with the execution, delivery and performance by the Company and such Restricted Subsidiaries of this Amendment and the Amended Credit Agreement. -7- Section 2.2. SURVIVAL. Each of the foregoing representations and warranties shall be made at and as of the Effective Date and shall constitute a representation and warranty of the Company and the Restricted Subsidiaries made under the Amended Credit Agreement and it shall be an Event of Default if any such representation and warranty shall prove to have been incorrect or misleading in any material respect when made. Each of the representations and warranties made under the Amended Credit Agreement (and including those representations and warranties made herein) shall survive and not be waived by the execution and delivery of this Amendment. ARTICLE III MISCELLANEOUS Section 3.1. GOVERNING LAW. This Amendment shall be construed in accordance with and governed by the laws of the State of New York. Section 3.2. COUNTERPARTS. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Section 3.3. EXPENSES. The Company hereby agrees to pay or reimburse the Agent for all reasonable fees and expenses, including attorneys' fees, incurred in connection with the negotiation, preparation, execution and delivery of this Amendment. -8- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers in counterparts all as of the day and year first above written. CABLEVISION SYSTEMS CORPORATION, for itself and as a General Partner of Cablevision Finance Limited Partnership By --------------------------------- Title: CABLEVISION AREA 9 CORPORATION CABLEVISION FAIRFIELD CORPORATION CABLEVISION FINANCE CORPORATION CABLEVISION LIGHTPATH, INC. CABLEVISION OF CLEVELAND GP, INC., for itself and as a General Partner of Cablevision of Cleveland Limited Partnership CABLEVISION OF CLEVELAND LP, INC. CABLEVISION OF CONNECTICUT CORPORATION CABLEVISION OF MICHIGAN, INC. CABLEVISION SYSTEMS DUTCHESS CORPORATION CABLEVISION SYSTEMS EAST HAMPTON CORPORATION CABLEVISION SYSTEMS GREAT NECK CORPORATION CABLEVISION SYSTEMS HUNTINGTON CORPORATION CABLEVISION SYSTEMS ISLIP CORPORATION CABLEVISION SYSTEMS LONG ISLAND CORPORATION CABLEVISION SYSTEMS SUFFOLK CORPORATION CABLEVISION SYSTEMS WESTCHESTER CORPORATION COMMUNICATIONS DEVELOPMENT CORPORATION CSC ACQUISITION CORPORATION CSC ACQUISITION - MA, INC. CSC ACQUISITION - NY, INC. By --------------------------------- Title: of each of the above- named twenty corporations CABLEVISION FINANCE LIMITED PARTNERSHIP By Cablevision Systems Corporation, as General Partner CABLEVISION OF CLEVELAND LIMITED PARTNERSHIP By Cablevision of Cleveland GP, Inc., as General Partner THE TORONTO-DOMINION BANK, Grand Cayman Islands Branch, B.W.I. By --------------------------------- Title: BANK OF MONTREAL, Chicago Branch, as Bank and Co-Agent By --------------------------------- Title: THE BANK OF NEW YORK, as Bank and Co-Agent By --------------------------------- Title: THE BANK OF NOVA SCOTIA, as Bank and Co-Agent By --------------------------------- Title: THE CANADIAN IMPERIAL BANK OF COMMERCE, as Bank and Co-Agent By --------------------------------- Title: NATIONSBANK OF TEXAS, N.A., as Bank and Co-Agent By --------------------------------- Title: CREDIT LYONNAIS, Cayman Islands Branch By --------------------------------- Title: MELLON BANK, N.A. By --------------------------------- Title: ROYAL BANK OF CANADA By --------------------------------- Title: THE FIRST NATIONAL BANK OF BOSTON By --------------------------------- Title: THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) By --------------------------------- Title: CHEMICAL BANK By --------------------------------- Title: BANQUE PARIBAS By --------------------------------- Title: CITIBANK, N.A. By --------------------------------- Title: THE FIRST NATIONAL BANK OF CHICAGO By --------------------------------- Title: SHAWMUT BANK CONNECTICUT, N.A. By --------------------------------- Title: BARCLAYS BANK PLC By --------------------------------- Title: THE DAIWA BANK, LIMITED By --------------------------------- Title: CORESTATES BANK, N.A. By --------------------------------- Title: FIRST UNION NATIONAL BANK OF NORTH CAROLINA By --------------------------------- Title: THE FUJI BANK, LIMITED, New York Branch By --------------------------------- Title: LTCB Trust Company By --------------------------------- Title: NATWEST BANK, N.A. (formerly NATIONAL WESTMINSTER BANK USA) By --------------------------------- Title: PNC BANK, National Association By --------------------------------- Title: SOCIETE GENERALE By --------------------------------- Title: UNION BANK By --------------------------------- Title: TORONTO DOMINION (TEXAS), INC., as Agent By --------------------------------- Title: EX-10.65 6 EXHIBIT 10.65 AMENDMENT NO. 4, WAIVER AND CONSENT Dated as of March 4, 1996 to FOURTH AMENDED AND RESTATED CREDIT AGREEMENT Dated as of October 14, 1994 CABLEVISION SYSTEMS CORPORATION, a Delaware corporation (the "Company"), the Restricted Subsidiaries (as defined in the Credit Agreement referred to below), the banks that are parties to such Credit Agreement (the "Banks"), BANK OF MONTREAL, Chicago Branch, THE BANK OF NEW YORK, THE BANK OF NOVA SCOTIA, THE CANADIAN IMPERIAL BANK OF COMMERCE and NATIONSBANK OF TEXAS, N.A., as Co-Agents (the "Co-Agents"), and TORONTO DOMINION (TEXAS), INC., as Agent (the "Agent"), agree as follows: ARTICLE I AMENDMENTS AND WAIVER Section 1.1. CREDIT AGREEMENT. Reference is made to the Fourth Amended and Restated Credit Agreement dated as of October 14, 1994, as amended by Amendment No. 1 thereto, dated as of March 6, 1995, as further amended by Amendment No. 2 and Waiver ("Amendment No. 2") thereto, dated as of September 28, 1995, and as further amended by Amendment No. 3 and Waiver thereto, dated as of November 7, 1995, among the Company, the Restricted Subsidiaries, the Banks, the Co-Agents and the Agent (as so amended, the "Credit Agreement"). Terms used in this Amendment No. 4, Waiver and Consent (this "Amendment") that are not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement. The Credit Agreement as amended by this Amendment (the "Amended Credit Agreement") is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed. Section 1.2. AMENDMENTS. Upon and after the Effective Date (as defined in Section 1.5 hereof): (a) Section 2.04(a) of the Credit Agreement shall be deleted in its entirety and restated as follows: "(a) SCHEDULED REDUCTIONS. (i) SCHEDULED REDUCTIONS TO TOTAL TERM COMMITMENT. Subject to the adjustments described in Section 2.04(d)(i) hereof, the Total Term Commitment shall be automatically reduced on each Quarterly Date falling on or nearest to the date specified in column (x) below (each such Quarterly Date, a "Scheduled Term Reduction Date") by the Dollar amount specified in column (y) below opposite such date (the "Term Reduction Amount"): (x) (y) Quarterly Date Term Falling on or Nearest to Reduction Amount ------------------------ ---------------- June 30, 1997 $7,500,000 September 30, 1997 $7,500,000 December 31, 1997 $7,500,000 March 31, 1998 $9,375,000 June 30, 1998 $9,375,000 September 30, 1998 $9,375,000 December 31, 1998 $9,375,000 March 31, 1999 $12,500,000 June 30, 1999 $12,500,000 September 30, 1999 $12,500,000 December 31, 1999 $12,500,000 March 31, 2000 $12,500,000 June 30, 2000 $12,500,000 September 30, 2000 $12,500,000 December 31, 2000 $12,500,000 March 31, 2001 $12,500,000 June 30, 2001 $12,500,000 September 30, 2001 $12,500,000 December 31, 2001 $12,500,000 March 31, 2002 $6,250,000 June 30, 2002 $6,250,000 September 30, 2002 $6,250,000 December 31, 2002 $6,250,000 March 31, 2003 $7,500,000 June 30, 2003 $7,500,000 The Total Term Commitment shall be reduced to zero on the Commitment Termination Date (ii) SCHEDULED REDUCTIONS TO TOTAL REVOLVING CREDIT COMMITMENT. Subject to the adjustments described in Section 2.04(d)(ii) hereof, the Total Revolving Credit Commitment shall be automatically reduced on each Quarterly Date falling on or nearest to the date specified in column (x) below (each such Quarterly Date, a "Scheduled Revolving Credit Reduction Date") by the Dollar amount specified in -2- column (y) below opposite such date (the "Revolving Credit Reduction Amount"): (x) (y) Quarterly Date Revolving Credit Falling on or Nearest to Reduction Amount ------------------------ ---------------- December 31, 1996 $10,500,000 March 31, 1997 $6,500,000 June 30, 1997 $21,500,000 September 30, 1997 $21,500,000 December 31, 1997 $21,500,000 March 31, 1998 $31,750,000 June 30, 1998 $31,750,000 September 30, 1998 $31,750,000 December 31, 1998 $31,750,000 March 31, 1999 $44,375,000 June 30, 1999 $44,375,000 September 30, 1999 $44,375,000 December 31, 1999 $44,375,000 March 31, 2000 $51,000,000 June 30, 2000 $51,000,000 September 30, 2000 $51,000,000 December 31, 2000 $51,000,000 March 31, 2001 $58,750,000 June 30, 2001 $58,750,000 September 30, 2001 $58,750,000 December 31, 2001 $58,750,000 March 31, 2002 $54,000,000 June 30, 2002 $54,000,000 September 30, 2002 $54,000,000 December 31, 2002 $54,000,000 March 31, 2003 $67,000,000 June 30, 2003 $67,000,000 The Total Revolving Credit Commitment shall be reduced to zero on the Commitment Termination Date." (b) Exhibit A(2) to the Credit Agreement shall be deleted in its entirety and replaced with Exhibit A(2) hereto. Section 1.3. WAIVER. Upon and after the Effective Date (as defined in Section 1.5 hereof): (a) the Banks shall waive compliance with the limitation set forth in the second parenthetical in clause (A) of the first proviso contained in Section 9.16(ix) of the Credit Agreement solely to the extent necessary to permit the Company to increase the amount of Investments permitted by Section 9.16(ix) by an amount equal to up to $570,000,000 of the Net Cash Proceeds received from the issuance by the Company on or about February 15, 1996 of its Depositary Shares representing shares of its 11 1/8% Series L Redeemable Exchangeable Preferred Stock (the -3- "Preferred Issuance") upon notice to the Agent, which notice is hereby deemed to have been given; (b) the Banks shall waive compliance with the commitment reduction provision of Section 2.04(c)(i)(C) solely with respect to the Preferred Issuance; and (c) the waiver set forth in Section 1.3 of Amendment No. 2 to the Credit Agreement shall terminate and be of no effect. Section 1.4. DISPOSITION OF CLEVELAND ENTITIES. The Banks hereby agree that the disposition by the Company of the Cleveland Entities (as defined below) to one or more Unrestricted Subsidiaries shall, to the extent such disposition complies with the requirements of Section 9.15(a)(v), constitute an Investment permitted under Section 9.16(vi) (and, accordingly, shall not constitute an unspecified Investment under Section 9.16(ix)). The Banks further agree to take all such action, and make all such filings, as reasonably requested by the Company to release the Cleveland Entities from their respective obligations as Restricted Subsidiaries, Guarantors and Securing Parties under the Credit Agreement and the Security Agreement promptly after the disposition referred to in the previous sentence is completed. The Company agrees that, on the date of the disposition of the Cleveland Entities, it shall prepay Revolving Credit Loans in an amount not less than $70,000,000. For purposes of this Section 1.4, "Cleveland Entities" shall mean Cablevision of Cleveland, L.P., Cablevision of Cleveland, G.P., Inc. and Cablevision of Cleveland, L.P., Inc. Section 1.5. EFFECTIVE DATE. (a) This Amendment shall become effective as of the date first written above (the "Effective Date") on the first date when the following conditions shall have been satisfied: (i) This Amendment shall have been duly executed and delivered by the Company, each of the Restricted Subsidiaries that are parties to the Credit Agreement, the Agent and each Bank. (ii) The Company and the Restricted Subsidiaries shall have provided the Agent (with copies to be provided for each Bank) with: (A) certified copies of the name and signature of each of the persons authorized to sign this Amendment on behalf of the Company and such of the Restricted Subsidiaries as are parties hereto; (B) an officer's certificate of the Company stating that no Default has occurred and is continuing under the Credit Agreement both before and after giving effect hereto and the amendments to be effected hereby; -4- (C) an opinion of Robert Lemle, Esq., General Counsel to the Company and the Restricted Subsidiaries, covering such matters as any Bank or special New York counsel to the Agent may reasonably request; and (D) an opinion of Sullivan & Cromwell, special New York Counsel to the Company and the Restricted Subsidiaries, covering such matters as any Bank or special New York counsel to the Agent may reasonably request. (iii) The Company shall have prepaid Term Loans with a portion of the proceeds of the Preferred Issuance in an aggregate amount equal to at least $150,000,000. (b) On the Effective Date (i) the Revolving Credit Commitment of each Bank shall be increased by an amount equal to (A) $150,000,000 multiplied by (B) the fraction obtained by dividing such Bank's Revolving Credit Commitment by the Total Revolving Credit Commitment. After giving effect to this Amendment, (x) the Total Term Commitment shall be $250,000,000 and (y) the Total Revolving Credit Commitment shall be $1,175,000,000. Promptly after the Effective Date, the Company shall issue to each Bank that so requests a new Revolving Credit Note in the form attached hereto as Exhibit A(2) in exchange for the Revolving Credit Note outstanding to such Bank on the date hereof. ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1. REPRESENTATIONS AND WARRANTIES. Each of the Company and the Restricted Subsidiaries that are parties to the Credit Agreement represents and warrants as follows: (a) POWER; BINDING AGREEMENTS. Each of the Company and such Restricted Subsidiaries has full power, authority and legal right to make and perform this Amendment and the Amended Credit Agreement. This Amendment and the Amended Credit Agreement constitute the legal, valid and binding obligations of each of the Company and such Restricted Subsidiaries, enforceable in accordance with their terms (except for limitations on enforceability under bankruptcy, reorganization, insolvency and other similar laws affecting creditors' rights generally and limitations on the availability of the remedy of specific performance imposed by the application of general equitable principles). (b) AUTHORITY; NO CONFLICT. The making and performance of this Amendment and the Amended Credit Agreement by each of the Company and such Restricted Subsidiaries have been duly authorized by all necessary action and do not and will not (i) violate any provision of any laws, orders, rules or -5- regulations presently in effect (other than violations that, singly or in the aggregate, have not had and are not likely to have a Materially Adverse Effect), or any provision of any of the Company's or the Restricted Subsidiaries' respective partnership agreements, charters or by-laws presently in effect; (ii) result in the breach of, or constitute a default or require any consent under, any existing indenture or other agreement or instrument to which the Company or any of the Restricted Subsidiaries is a party or by which their respective properties may be bound or affected (other than any breach, default or required consent that, singly or in the aggregate, have not had and are not likely to have a Materially Adverse Effect); or (iii) result in, or require, the creation or imposition of any Lien (other than those contemplated by the Security Documents) upon or with respect to any of the properties or assets now owned or hereafter acquired by the Company or any of the Restricted Subsidiaries. (c) APPROVAL OF REGULATORY AUTHORITIES. No approval or consent of, or filing or registration with, any federal, state or local commission or other regulatory authority is required in connection with the execution, delivery and performance by the Company and such Restricted Subsidiaries of this Amendment and the Amended Credit Agreement. Section 2.2. SURVIVAL. Each of the foregoing representations and warranties shall be made at and as of the Effective Date and shall constitute a representation and warranty of the Company and the Restricted Subsidiaries made under the Amended Credit Agreement and it shall be an Event of Default if any such representation and warranty shall prove to have been incorrect or misleading in any material respect when made. Each of the representations and warranties made under the Amended Credit Agreement (and including those representations and warranties made herein) shall survive and not be waived by the execution and delivery of this Amendment. ARTICLE III MISCELLANEOUS Section 3.1. GOVERNING LAW. This Amendment shall be construed in accordance with and governed by the laws of the State of New York. Section 3.2. COUNTERPARTS. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Section 3.3. EXPENSES. The Company hereby agrees to pay or reimburse the Agent for all reasonable fees and expenses, including attorneys' fees, incurred in connection with the -6- negotiation, preparation, execution and delivery of this Amendment. -7- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers in counterparts all as of the day and year first above written. CABLEVISION SYSTEMS CORPORATION, for itself and as a General Partner of Cablevision Finance Limited Partnership By -------------------------------- Title: CABLEVISION AREA 9 CORPORATION CABLEVISION FAIRFIELD CORPORATION CABLEVISION FINANCE CORPORATION CABLEVISION LIGHTPATH, INC. CABLEVISION OF CLEVELAND GP, INC., for itself and as a General Partner of Cablevision of Cleveland Limited Partnership CABLEVISION OF CLEVELAND LP, INC. CABLEVISION OF CONNECTICUT CORPORATION CABLEVISION OF MICHIGAN, INC. CABLEVISION SYSTEMS DUTCHESS CORPORATION CABLEVISION SYSTEMS EAST HAMPTON CORPORATION CABLEVISION SYSTEMS GREAT NECK CORPORATION CABLEVISION SYSTEMS HUNTINGTON CORPORATION CABLEVISION SYSTEMS ISLIP CORPORATION CABLEVISION SYSTEMS LONG ISLAND CORPORATION CABLEVISION SYSTEMS SUFFOLK CORPORATION CABLEVISION SYSTEMS WESTCHESTER CORPORATION COMMUNICATIONS DEVELOPMENT CORPORATION CSC ACQUISITION CORPORATION CSC ACQUISITION - MA, INC. CSC ACQUISITION - NY, INC. CABLEVISION OF BOSTON, INC. By -------------------------------- Title: of each of the above- named twenty-one corporations CABLEVISION FINANCE LIMITED PARTNERSHIP By Cablevision Systems Corporation, as General Partner CABLEVISION OF CLEVELAND LIMITED PARTNERSHIP By Cablevision of Cleveland GP, Inc., as General Partner THE TORONTO-DOMINION BANK, Grand Cayman Islands Branch, B.W.I. By -------------------------------- Title: BANK OF MONTREAL, Chicago Branch, as Bank and Co-Agent By -------------------------------- Title: THE BANK OF NEW YORK, as Bank and Co-Agent By -------------------------------- Title: THE BANK OF NOVA SCOTIA, as Bank and Co-Agent By -------------------------------- Title: THE CANADIAN IMPERIAL BANK OF COMMERCE, as Bank and Co-Agent By -------------------------------- Title: NATIONSBANK OF TEXAS, N.A., as Bank and Co-Agent By -------------------------------- Title: CREDIT LYONNAIS, Cayman Island Branch By -------------------------------- Title: MELLON BANK, N.A. By -------------------------------- Title: ROYAL BANK OF CANADA By -------------------------------- Title: THE FIRST NATIONAL BANK OF BOSTON By -------------------------------- Title: THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) By -------------------------------- Title: CHEMICAL BANK By -------------------------------- Title: BANQUE PARIBAS By -------------------------------- Title: CITIBANK, N.A. By -------------------------------- Title: THE FIRST NATIONAL BANK OF CHICAGO By -------------------------------- Title: FLEET NATIONAL BANK (formerly SHAWMUT BANK CONNECTICUT, N.A.) By -------------------------------- Title: BARCLAYS BANK PLC By -------------------------------- Title: THE SUMITOMO BANK, LIMITED By -------------------------------- Title: CORESTATES BANK, N.A. By -------------------------------- Title: FIRST UNION NATIONAL BANK OF NORTH CAROLINA By -------------------------------- Title: THE FUJI BANK, LIMITED, New York Branch By -------------------------------- Title: LTCB TRUST COMPANY By -------------------------------- Title: NATWEST BANK, N.A. (formerly NATIONAL WESTMINSTER BANK USA) By -------------------------------- Title: PNC BANK, NATIONAL ASSOCIATION By -------------------------------- Title: SOCIETE GENERALE By -------------------------------- Title: UNION BANK By -------------------------------- Title: TORONTO DOMINION (TEXAS), INC., as Agent By -------------------------------- Title: EXHIBIT A(2) [Form of Revolving Credit Note] REVOLVING CREDIT NOTE ___, 199__ New York, New York FOR VALUE RECEIVED, CABLEVISION SYSTEMS CORPORATION, a Delaware corporation (the "COMPANY"), hereby promises to pay to the order of (the "BANK") for the account of its Applicable Lending Office (as defined in the Credit Agreement referred to below), at the principal office of Toronto Dominion (Texas), Inc. at 909 Fannin Street, Suite 1700, Houston, Texas 77010, the aggregate principal amount of the Revolving Credit Loans evidenced hereby, in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each Revolving Credit Loan made by the Bank to the Company under the Credit Agreement, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement. The Bank is hereby authorized by the Company to endorse on the schedule attached to this Revolving Credit Note (or any continuation thereof) the amount and type of, and the duration of each Interest Period for, each Revolving Credit Loan made by the Bank to the Company under the Credit Agreement, the date such Loan is made, and the amount of each payment on account of principal of such Loan received by the Bank, provided that any failure by the Bank to make any such endorsement shall not affect the obligations of the Company hereunder or under the Credit Agreement in respect of such Loans. This Revolving Credit Note is one of the Notes referred to in the Fourth Amended and Restated Credit Agreement dated as of October 14, 1994 among the Company, the Restricted Subsidiaries named therein, the Co-Agents and the Banks (including the Bank) named therein and Toronto Dominion (Texas), Inc. as Agent, as the same may be amended from time to time (the "CREDIT AGREEMENT"), and evidences Revolving Credit Loans made by the Bank thereunder. Capitalized terms used in this Revolving Credit Note have the respective meanings assigned to them in the Credit Agreement. Upon the occurrence of an Event of Default, the principal hereof and accrued interest hereon shall become, or may be declared to be, forthwith due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement. The Company may at its option prepay, and may be required to prepay, all or part of the principal of this Revolving Credit Note before maturity upon the terms provided in the Credit Agreement. This Revolving Credit Note is also entitled to the benefits of, and is secured by, the Security Agreement. The obligations of the Company evidenced hereby constitute "Senior Indebtedness" as such term is defined in all documents to which the Company or any Restricted Subsidiary is a party. CABLEVISION SYSTEMS CORPORATION By: ---------------------------- Title: [Form of Schedule to Revolving Credit Note] This Revolving Credit Note evidences Revolving Credit Loans made under the within-described Credit Agreement to the Company, in the principal amounts, of the types and having the Interest Periods set forth below, which Loans were made on the dates set forth below, subject to the payments in respect of principal set forth below: Principal Amount Type Principal Balance Date of of Amount Out- Interest Made Loan Loan Paid standing Period - ---- --------- ---- ---------- -------- -------- EX-10.66 7 EXHIBIT 10.66 AMENDED AND RESTATED SENIOR LOAN AGREEMENT Dated as of March 15, 1996 between U.S. CABLE TELEVISION GROUP, L.P. a Delaware limited partnership as Borrower and THE LENDERS NAMED HEREIN as Lenders and GENERAL ELECTRIC CAPITAL CORPORATION as Agent and Lender TABLE OF CONTENTS SECTION PAGE ------- ---- 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. AMOUNT AND TERMS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . 31 2.1. Revolving Credit Advances. . . . . . . . . . . . . . . . . . . . 31 2.2. Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 2.3. Mandatory Prepayment . . . . . . . . . . . . . . . . . . . . . . 34 2.4. Optional Prepayment; Prepayment Premium. . . . . . . . . . . . . 35 2.5. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 35 2.6. Single Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . 36 2.7. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 2.8. Limitations on Types of Advances . . . . . . . . . . . . . . . . 39 2.9. Receipt of Payments. . . . . . . . . . . . . . . . . . . . . . . 39 2.10. Application of Payments. . . . . . . . . . . . . . . . . . . . . 39 2.11. Sharing of Payments, Etc.. . . . . . . . . . . . . . . . . . . . 40 2.12. Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 2.13. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 2.14. Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 2.15. Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 2.16. Capital Adequacy; Increased Costs; Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 2.17. Income Tax Reporting . . . . . . . . . . . . . . . . . . . . . . 47 3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . 49 3.1. Conditions to Effectiveness. . . . . . . . . . . . . . . . . . . 49 3.2. Conditions to Each Revolving Credit Advance . . . . . . . . . . . . . . . . . . . . . . . . . 51 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 52 4.1. Corporate or Partnership Existence; Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . 52 4.2. Executive Offices. . . . . . . . . . . . . . . . . . . . . . . . 52 4.3. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 53 4.4. Corporate or Partnership Power; Authorization; Enforceable Obligations . . . . . . . . . . . . . 53 4.5. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 4.6. Financial Statements . . . . . . . . . . . . . . . . . . . . . . 54 4.7. [INTENTIONALLY OMITTED]. . . . . . . . . . . . . . . . . . . . . 55 4.8. Ownership of Property; Liens . . . . . . . . . . . . . . . . . . 55 4.9. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 4.10. Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 57 4.11. Other Ventures . . . . . . . . . . . . . . . . . . . . . . . . . 57 4.12. Investment Company Act . . . . . . . . . . . . . . . . . . . . . 57 4.13. Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . 57 i SECTION PAGE ------- ---- 4.14. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 4.15. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 4.16. No Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 61 4.17. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 4.18. Redemption Agreement; Prepayment Transactions; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 4.19. Outstanding Stock; Options; Warrants; Etc. . . . . . . . . . . . 62 4.20. Employment and Labor Agreements. . . . . . . . . . . . . . . . . 62 4.21. Patents, Trademarks, Copyrights and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 4.22. Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . 63 4.23. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 4.24. Media Licenses . . . . . . . . . . . . . . . . . . . . . . . . . 63 4.25. Environmental Protection . . . . . . . . . . . . . . . . . . . . 64 4.26. Receipt of Agreements. . . . . . . . . . . . . . . . . . . . . . 64 5. FINANCIAL STATEMENTS AND INFORMATION . . . . . . . . . . . . . . . . . . 65 5.1. Reports and Notices. . . . . . . . . . . . . . . . . . . . . . . 65 5.2. Communication with Accountants . . . . . . . . . . . . . . . . . 69 6. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 70 6.1. Maintenance of Existence and Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . 70 6.2. Payment of Obligations . . . . . . . . . . . . . . . . . . . . . 70 6.3. Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 71 6.4. Books and Records. . . . . . . . . . . . . . . . . . . . . . . . 71 6.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 6.6. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 6.7. Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . 72 6.8. Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 6.9. Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . 72 6.10. Media Licenses . . . . . . . . . . . . . . . . . . . . . . . . . 74 6.11. Leases; New Real Estate. . . . . . . . . . . . . . . . . . . . . 74 6.12. Environmental Matters. . . . . . . . . . . . . . . . . . . . . . 75 6.13. SEC Filings; Certain Other Notices . . . . . . . . . . . . . . . 77 6.14. Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . 77 6.15. Post-Effective Date Items. . . . . . . . . . . . . . . . . . . . .73 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 7.1. Mergers, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 77 7.2. Investments; Loans and Advances. . . . . . . . . . . . . . . . . 78 7.3. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 79 7.4. Employee Loans . . . . . . . . . . . . . . . . . . . . . . . . . 80 7.5. Capital Structure. . . . . . . . . . . . . . . . . . . . . . . . 80 7.6. Maintenance of Business. . . . . . . . . . . . . . . . . . . . . 80 7.7. Transactions with Affiliates . . . . . . . . . . . . . . . . . . 80 ii SECTION PAGE ------- ---- 7.8. Guarantied Indebtedness. . . . . . . . . . . . . . . . . . . . . 81 7.9. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 7.10. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . 82 7.11. Sales of Assets. . . . . . . . . . . . . . . . . . . . . . . . . 82 7.12. Cancellation of Indebtedness . . . . . . . . . . . . . . . . . . 83 7.13. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 83 7.14. Hedging Transactions . . . . . . . . . . . . . . . . . . . . . . 83 7.15. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . 84 7.16. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 7.17. Modification of Certain Agreements . . . . . . . . . . . . . . . 84 8. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 8.1. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 85 8.2. Survival of Obligations Upon Termination of Financing Arrangement . . . . . . . . . . . . . . . . . . . . 85 8.3. Termination Prior to Effective Date. . . . . . . . . . . . . . . 86 9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . 86 9.1. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 86 9.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 9.3. Waivers by Borrower. . . . . . . . . . . . . . . . . . . . . . . 91 9.4. Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . 91 9.5. Cure of Capital Expenditure Default. . . . . . . . . . . . . . . 92 10. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 10.1. Authorization and Action . . . . . . . . . . . . . . . . . . . . 92 10.2. Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . 93 10.3. GE Capital and Affiliates. . . . . . . . . . . . . . . . . . . . 94 10.4. Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . 94 10.5. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 94 10.6. Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . . 95 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 11.1. Complete Agreement; Modification of Agreement; Sale of Interest. . . . . . . . . . . . . . . . . . . 95 11.2. Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . 98 11.3. No Waiver by Agent or Any Lender . . . . . . . . . . . . . . . . 99 11.4. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 11.5. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . 99 11.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 100 11.7. Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 11.8. Conflict of Terms. . . . . . . . . . . . . . . . . . . . . . . . 100 11.9. Authorized Signature . . . . . . . . . . . . . . . . . . . . . . 100 11.10. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 100 11.11. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 11.12. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 11.13. Section Titles . . . . . . . . . . . . . . . . . . . . . . . . . 103 iii SECTION PAGE ------- ---- 11.14. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 103 11.15. Liability of General Partners. . . . . . . . . . . . . . . . . . 103 iv INDEX OF EXHIBITS, SCHEDULES AND ANNEXES Exhibit A - Form of Notice of Revolving Credit Advance or Conversion Exhibit A-1 - Form of Notice of Term Loan Conversion Exhibit B - Form of Borrowing Date Certificate Exhibit C-1 - Form of Legal Opinion of Sullivan & Cromwell Exhibit C-2 - Form of Legal Opinion of Robert S. Lemle Schedule 1 - Capitalization Policies of Cablevision and Affiliates Schedule 4.2 - Executive Offices Schedule 4.3 - Subsidiaries Schedule 4.5 - Insurance Schedule 4.8(a) - Owned Property Schedule 4.8(b) - Leased Property Schedule 4.11 - Other Ventures Schedule 4.14 - Tax Matters Schedule 4.15 - ERISA Matters Schedule 4.16 - Litigation Schedule 4.19 - Partners of Borrower Schedule 4.20 - Employment Matters Schedule 4.21 - Patents, Trademarks, Copyrights and Licenses Schedule 4.24(a) - Media Licenses of Borrower and its Subsidiaries Schedule 4.24(b) - Notices of Media License Material Default or Breach of Covenant Schedule 7.2 - Certain Existing Loans Schedule 7.7 - Transactions with Affiliates Schedule 7.9 - Certain Liens Schedule 11.9 - Authorized Signatures Annex 1 - Allocation Policy for Cablevision Stock Incentive Programs v AMENDED AND RESTATED SENIOR LOAN AGREEMENT, dated as of March 15, 1996, between U.S. CABLE TELEVISION GROUP, L.P., a Delaware limited partnership having an office at One Media Crossways, Woodbury, New York 11797 ("Borrower"), the lenders listed on the signature pages hereof ("Lenders"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation having an office at 201 High Ridge Road, Stamford, Connecticut 06927-5100 ("GE Capital"), as agent for Lenders hereunder (GE Capital, in such capacity, being "Agent"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Borrower, Lenders and Agent are parties to the Senior Loan Agreement, dated as of December 31, 1992 (the "Existing USC Senior Loan Agreement"); WHEREAS, as of the date hereof Borrower and certain of its affiliates are consummating the Prepayment Transactions, as defined in the Partnership Agreement, and in connection therewith the parties hereto desire to amend and restate the Existing USC Senior Loan Agreement in its entirety; NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto agree that, effective as of the Effective Date, the Existing Loan Agreement is hereby amended and restated in its entirety as follows: 1. DEFINITIONS In addition to the defined terms appearing elsewhere in this Agreement, capitalized terms used in this Agreement shall have the following respective meanings when used herein: "Active Subsidiaries" shall mean, collectively, the Subsidiaries of Borrower set forth as such on Schedule 4.3 hereof. "Advance" shall mean an Index Rate Advance or a LIBOR Advance (each of which shall be a "Type" of Advance). "Adverse Environmental Condition" shall mean any of the matters referred to in clause (i) or (iii) of the definition of Environmental Claim or any Environmental Claim based on any of the matters referred to in clause (ii) of the definition of Environmental Claim. "Affiliate" shall mean, with respect to any Person, (i) each Person that, directly or indirectly, owns or controls, whether beneficially or as trustee, guardian or other fiduciary, 10% or more of the Stock having ordinary voting power in the election of directors of such Person and (ii) each Person that controls, is controlled by or is under common control with such Person. For the purpose of this definition, "control" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise; PROVIDED, HOWEVER, that with respect to each of Borrower and any of its Subsidiaries or Affiliates, the term "Affiliate" shall not include GE Capital. "Agent" shall have the meaning assigned to it in the first paragraph of this Agreement and shall include GE Capital and any successor Agent appointed pursuant to Section 10.6 hereof. "Aggregate Loan" shall have the meaning assigned to it in Section 2.17(a) hereof. "Agreement" shall mean this Amended and Restated Senior Loan Agreement, including all amendments, modifications and supplements hereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to this Agreement as the same may be in effect at the time any reference hereto becomes operative. "Ancillary Agreement" shall mean any agreement, undertaking, instrument, document or other writing executed by Borrower or any of its Subsidiaries or any of their direct or indirect stockholders or partners, as a condition to advances or funding under this Agreement or otherwise in connection herewith, including, without limitation, the Partnership Agreement, the Loan Documents and all amendments or supplements thereto. "Annualized Consolidated Operating Cash Flow" shall mean, for any Fiscal Quarter, the product of (i) Operating Cash Flow of Borrower and its Subsidiaries for such Fiscal Quarter multiplied by (ii) 4. 2 "Annualized Consolidated System Cash Flow" shall mean, for any Fiscal Quarter, the product of (i) System Cash of Borrower and its Subsidiaries for such Fiscal Quarter multiplied by (ii) 4. "Applicable Margin" shall mean an interest margin determined quarterly and based upon the ratio of Total Debt to Annualized Consolidated Operating Cash Flow for the immediately preceding Fiscal Quarter as follows: TOTAL DEBT TO ANNUALIZED INDEX LIBOR CONSOLIDATED OPERATING RATE RATE CASH FLOW RATIO PLUS PLUS ------------------------ ----- ------ greater than or equal .750% 1.750% to 5.50:1.00 less than 5.50:1.00 .500% 1.500% For purposes of determining the Applicable Margin to be used in calculating the interest which is payable in respect of any Fiscal Quarter or Interest Period, as the case may be, Annualized Consolidated Operating Cash Flow shall be determined based upon the last quarterly financial statements required to have been delivered to Lenders pursuant to Section 5.1(b) hereof; PROVIDED, HOWEVER, that if Borrower shall fail to deliver such financial statements on a timely basis, the Applicable Margin shall be the highest rate set forth above for the period until such financial statements have been delivered (whereupon the Applicable Margin shall be the applicable rate provided above for periods commencing after the date of such delivery until the following period's financial statements are due). "Borrower" shall have the meaning assigned to it in the first paragraph of this Agreement. "Borrowing Date Certificate" shall mean a certificate in the form attached hereto as Exhibit B. "Business Day" shall mean any day that is not a Saturday, a Sunday nor a day on which banks are required or permitted to be closed in the State of New York. "Cablevision" shall mean Cablevision Systems Corporation, a Delaware corporation. "Capital Expenditures" shall mean all amounts accrued (or, without double counting, paid) in respect of 3 any fixed assets or improvements or for replacements, substitutions or additions thereto, that have a useful life of more than one year and that are required to be capitalized in accordance with GAAP. "Capital Lease" shall mean, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, would be required either to be classified and accounted for as a capital lease on a balance sheet of such Person or otherwise to be disclosed as such in a note to such balance sheet, other than, in the case of Borrower or any of its Subsidiaries, any such lease under which Borrower or such Subsidiary is the lessor. "Capital Lease Obligation" shall mean, with respect to any Capital Lease, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would be required to appear on a balance sheet of such lessee in respect of such Capital Lease or otherwise be disclosed as such an obligation in a note to such balance sheet. "Charges" shall mean all federal, state, county, city, municipal, local, foreign or other governmental (including, without limitation, PBGC) taxes at the time due and payable, levies, assessments, charges, liens, claims or encumbrances upon or relating to (i) the Collateral, (ii) the Obligations, (iii) Borrower's or any of its Subsidiaries' employees, payroll, income or gross receipts, (iv) Borrower's or any of its Subsidiaries' ownership or use of any of its assets, or (v) any other aspect of Borrower's or any of its Subsidiaries' business. "Code" shall mean the Uniform Commercial Code of the jurisdiction with respect to which such term is used, as in effect from time to time. "Collateral" shall mean, collectively, all Collateral and all other collateral referred to in the Security Agreements and all Pledged Collateral, as well as all other property and interests in property and proceeds thereof now owned or hereafter acquired by any Loan Party in or upon which a Lien is granted under any of the Collateral Documents. "Collateral Documents" shall mean, collectively, the Guaranties, the Security Agreements, the Pledge Agreements, the Nonrecourse Guaranty and Pledge Agreements and 4 any other document executed and delivered by a Loan Party granting a Lien on any of its property to secure payment of the Obligations. "Commitment Termination Date" shall mean the earlier of (i) the Maturity Date and (ii) the date on which payment in full of the Revolving Credit Loan may otherwise be required pursuant to the proviso in Section 8.1 hereof. "Consolidated Available Cash Flow" shall mean, for any Person for any period, Consolidated Operating Cash Flow of such Person for such period PLUS (x) the sum of (i) the excess, if any, of such Person's Working Capital at the beginning of such period over such Person's Working Capital at the end of such period and (ii) for Borrower, any Curing Capital Contribution made to Borrower during such period or within 90 days thereafter (without double counting any Curing Capital Contribution taken into account in determining Consolidated Available Cash Flow for any previous period) MINUS (y) (without double counting) the sum of (a) such Person's Capital Expenditures for such period to the extent such Capital Expenditures are permitted hereunder (including by Section 9.5 hereof), (b) cash interest paid by such Person during such period, (c) principal payments made by such Person on its Indebtedness during such period to the extent permitted hereunder (other than prepayments of the Revolving Credit Loan that do not permanently reduce the amount of the Maximum Revolving Credit Loan), (d) the excess, if any, of such Person's Working Capital at the end of such period over such Person's Working Capital at the beginning of such period and (e) amounts accrued by such Person in respect of taxes (other than deferred taxes) for such period. Any calculations relating to the Consolidated Available Cash Flow of Borrower shall include such calculations with respect to Borrower's consolidated Subsidiaries (including, without limitation, Missouri Partnership). "Consolidated Operating Cash Flow" shall mean, for any Person for any period, the consolidated operating income (before extraordinary items, interest, taxes, depreciation, amortization, non-cash charges, other non-cash items, compensation in respect of Borrower's and its Subsidiaries' allocable portion of Cablevision's employee stock incentive programs (not to exceed in the aggregate for any calendar year 5% of Consolidated Operating Cash Flow for the preceding calendar year) which employee stock incentive expense shall be allocated among Cablevision' Subsidiaries 5 based on the existing Cablevision allocation methodology reflected in Annex 1 hereto, with respect to Borrower, amounts constituting Allocation Items (as defined in the USC Management Agreement) that are payable pursuant to the terms of the USC Management Agreement which have been accrued but have not been paid and the payment of which has been subordinated to all Obligations in a manner satisfactory to Agent) of such Person and its consolidated Subsidiaries (with respect to Borrower, including, without limitation, Missouri Partnership) determined in accordance with GAAP and (to the extent consistent with GAAP) in a manner consistent with the past practices of Borrower; PROVIDED, HOWEVER, that the amounts set forth above shall be determined on the basis of the capitalization policies of Cablevision and its Affiliates as in effect on the Effective Date and set forth on Schedule 1 hereto. "Contaminant" shall mean any waste, pollutant, hazardous substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, or any constituent of any such substance or waste, including any such substance regulated under any Environmental Law. "Curing Capital Contribution" shall have the meaning assigned to it in Section 9.5 hereof. "Default" shall mean any event which, with the passage of time or notice or both, would, unless cured or waived, become an Event of Default. "Disposition" shall mean any sale, transfer, assignment or other disposition (whether voluntary or involuntary) of all or a portion of any member of the USC Group (including, without limitation, by means of transfer of equity interests or assets or by merger or consolidation). "DOL" shall mean the United States Department of Labor or any successor to any of its relevant functions. "ECC" shall mean ECC Holding Corporation, a Delaware corporation and a wholly-owned subsidiary of USC. "Effective Date" shall mean the date hereof, subject to the satisfaction (or the waiver thereof) or the conditions set forth in Section 3.1. 6 "Environmental Claim" shall mean any accusation, allegation, notice of violation, claim, demand, abatement or other order or direction (conditional or otherwise) by any Governmental Authority or any other Person for personal injury (including sickness, disease or death), tangible or intangible property damage, damage to the environment, nuisance, pollution, contamination or other adverse effects on the environment, or for fines, penalties or restrictions, resulting from or based upon (i) the existence, or the continuation of the existence, of a Release (including, without limitation, any sudden or non-sudden, accidental or non-accidental Release) of, or exposure to, any substance, chemical, material, pollutant, Contaminant, odor or audible noise or other release or emission in, into or onto the environment (including, without limitation, the air, ground, water or any surface) at, in, by, from or related to the Facilities, (ii) the environmental aspects of the transportation, storage, treatment or disposal of materials in connection with the operation of the Facilities or (iii) the violation, or alleged violation, of any Environmental Law, ordinance, order, Permit or license of or from any Governmental Authority, relating to environmental matters connected with the Facilities. "Environmental Laws" shall mean the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, ET SEQ., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, ET SEQ., the Clean Air Act, 42 U.S.C. Section 7401, ET SEQ., the Clean Water Act, 33 U.S.C. Section 1251, ET SEQ., the Toxic Substances Control Act, 15 U.S.C. Section 2601, ET SEQ., the Occupational Safety and Health Act, 29 U.S.C. Section 651, ET SEQ., and all other federal, state, and local laws, ordinances, regulations, rules, orders, Permits, and the like, which are aimed at the protection of human health or the environment, each as in effect from time to time. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and any regulations promulgated thereunder. "ERISA Affiliate" shall mean, with respect to any Person, all trades or businesses (whether or not incorporated) which are under common control with such Person and which, together with such Person, are treated as a single employer under Section 414(b), (c), (m) or (o) of the IRC. 7 "ERISA Event" shall mean, with respect to Borrower or any of its ERISA Affiliates, (a) a Reportable Event (other than a Reportable Event not subject to the provision for 30-day notice to the PBGC under regulations issued under Section 4043 of ERISA), (b) the withdrawal of Borrower or any of its ERISA Affiliates from a Plan subject to Section 4063 of ERISA during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, (e) the complete or partial withdrawal of Borrower or any of its ERISA Affiliates from any Multiemployer Plan, (f) the failure to make required contributions to a Plan under Section 412 of the IRC or (g) any other event or condition which might reasonably be expected to constitute grounds under Section 4042(a)(1), (2) or (3) of ERISA for the termination of, or the appointment of a trustee to administer, any Plan. "Essex" shall mean Essex Communications Corporation, a Delaware corporation and an indirect wholly-owned subsidiary of Borrower. "Event of Default" shall have the meaning assigned to it in Section 9.1 hereof. "Existing USC Loans" shall mean, collectively, (i) the revolving credit loans and the senior term loans made by GE Capital to Borrower pursuant to the Existing USC Senior Loan Agreement and (ii) all accrued and unpaid interest on the loans referred to in clause (i). "Existing USC Senior Loan Agreement" shall have the meaning provided in the recitals hereto. "Facilities" shall mean real property owned or leased or used by Borrower or any of its Subsidiaries. "FCC" shall mean the Federal Communications Commission (or any successor). "FCC Consent" shall mean an order or orders issued by the FCC to Borrower approving the management of Borrower by Cablevision pursuant to the USC Management Agreement. 8 "Federal Funds Rate" shall mean, for any date, a fluctuating interest rate per annum equal for such day to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Agent from three Federal funds brokers of recognized standing selected by it. "Federal Reserve Board" shall have the meaning assigned to it in Section 4.13 hereof. "Financials" shall mean the financial statements referred to in Section 4.6(a) hereof. "Fiscal Quarter" shall mean the calendar quarter ending on each March 31, June 30, September 30 and December 31 of each year. Subsequent changes of the fiscal quarters of Borrower shall not change the term "Fiscal Quarter" unless the Required Lenders shall consent in writing to such changes. "Fiscal Year" shall mean the calendar year. Subsequent changes of the fiscal year of Borrower shall not change the term "Fiscal Year" unless the Required Lenders shall consent in writing to such changes. "Funding Arrangements" shall have the meaning assigned to it in Section 2.14(b) hereof. "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time. "GE Capital" shall have the meaning assigned to it in the first paragraph of this Agreement. "Governmental Authority" shall mean any nation or government, any state or other political subdivision thereof and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "G.P. and L.P. Nonrecourse Guaranty and Pledge Agreement" shall mean the agreement, dated as of December 9 31, 1992, among GE Capital (as agent for Lenders) and the pledgors listed on the signature pages thereof, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such G.P. and L.P. Nonrecourse Guaranty and Pledge Agreement as the same may be in effect at the time any reference thereto becomes operative. "Guarantied Indebtedness" shall mean, as to any Person, any obligation of such Person guarantying any indebtedness, lease, dividend or other obligation ("primary obligations") of any other Person (the "primary obligor") in any manner, including, without limitation, any obligation or arrangement of such Person (i) to purchase or repurchase any such primary obligation, (ii) to advance or supply funds (a) for the purchase or payment of any such primary obligation or (b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) to indemnify the owner of such primary obligation against loss in respect thereof. "Guaranties" shall mean the USC/Subsidiary (Senior) Guaranty. "Guarantor" shall mean each Subsidiary of Borrower which is executing and delivering to Agent any of the Guaranties. "Homes Passed" shall mean the sum of: (i) all dwelling units passed by energized cable of the cable systems of Borrower or any of its Subsidiaries which are occupied or, if not occupied, are in a condition permitting occupation, and which are capable of being furnished with a signal level not less than six decibels, including each dwelling unit in a multiple dwelling unit that has basis for a first set connection (whether or not Borrower or any of its Subsidiaries enters into an arrangement with a multiple dwelling unit for provision of service to such unit on a discounted basis) or that is an individual dwelling unit to which a first set connection could be offered and supplied, but in any case excluding any multiple dwelling unit and the individual dwelling units therein to which Borrower or any of its Subsidiaries does not have and cannot obtain access 10 for the provision of such first set connection to such individual dwelling units; (ii) each commercial subscriber which is actually connected to the cable systems of Borrower or any of its Subsidiaries and is receiving service; and (iii) each non-connected hotel or motel (counted as one "home" each) passed by energized cable of the cable systems of Borrower or any of its Subsidiaries; PROVIDED, HOWEVER, that "Homes Passed" shall not in any event include any non-connected commercial establishments other than the hotels and motels referred to in clause (iii) above. "IMP and EHR Nonrecourse Guaranty and Pledge Agreement" shall mean the agreement, dated as of December 31, 1992, among GE Capital (as agent for Lenders), IMP Cable Management, Inc. and Golden Holdings, Inc., including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such IMP and EHR Nonrecourse Guaranty and Pledge Agreement as the same may be in effect at the time any reference thereto becomes operative. "Indebtedness" of any Person shall mean (a)(i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (including, without limitation, reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers' acceptances, whether or not matured, but not including obligations to trade creditors incurred in the ordinary course of business), (ii) all obligations of such Person evidenced by notes, bonds, debentures or similar instruments, (iii) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (iv) all Capital Lease Obligations of such Person, (v) all Guarantied Indebtedness of such Person, (vi) all Indebtedness of such Person referred to in clause (i), (ii), (iii), (iv) or (v) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, and (vii) all Unfunded Pension Liabilities and all Withdrawal Liabilities of such Person and (b) with respect to Borrower or any of its 11 Subsidiaries, (i) all Indebtedness of such Person referred to in clause (a) above and (ii) the Obligations. "Index Rate" shall mean, on any date, the greater of (i) the highest of the daily prime, base, commercial loan or equivalent rate of interest published or publicly announced for such date by Bankers Trust Company, Chemical Bank, N.A., Citibank, N.A., Morgan Guaranty Trust Company of New York or The Chase Manhattan Bank, N.A. (whether or not such rate is actually charged by any such bank) as in effect for such date and (ii) the Federal Funds Rate for such date plus 1/2 of 1%. "Index Rate Advance" shall mean a portion of a Loan which bears interest at a rate based on the Index Rate. "Interest Expense" shall mean, for any period, gross interest expense of Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, LESS the following for Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP: (a) the sum of (i) interest capitalized during construction for such period, (ii) interest income for such period, and (iii) gains for such period on interest rate contracts (to the extent not included in interest income above and to the extent not deducted in the calculation of gross interest expense), PLUS the following for Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP: (b) the sum of (i) losses for such period on interest rate contracts (to the extent not included in gross interest expense), and (ii) the expensing of upfront costs or fees for such period associated with interest rate contracts (to the extent not included in gross interest expense). "Interest Period" shall mean, for any LIBOR Advance, the period commencing and ending on such dates as are selected by Borrower pursuant to the provisions set forth below. The duration of each Interest Period shall be one, two or three, six or, to the extent available and if agreed to by all Lenders, nine or twelve months as Borrower may, upon notice received by Agent not later than 10:00 A.M. (New York City time) on the second Business Day prior to the first day of such Interest Period, select; PROVIDED, HOWEVER, that: (i) Borrower may not select any Interest Period which ends after the Maturity Date; and 12 (ii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day. "Investments" shall mean any advances, loans, accounts receivable (other than (x) accounts receivable arising in the ordinary course of business of Borrower or any Subsidiary of Borrower and (y) accounts receivable owing to Borrower from any Subsidiary of Borrower for management services (other than such accounts receivable that constitute direct charges or out-of-pocket expenses relating to such services) provided by Borrower to such Subsidiary) or other extensions of credit (excluding, however, accrued and unpaid interest in respect of any advance, loan or other extension of credit) or capital contributions to (by means of transfers of property to others, or payments for property or services for the account or use of others, or otherwise), or the purchase or ownership of any stocks, bonds, notes, debentures or other securities (including, without limitation, any interests in any partnership, joint venture or joint adventure) of, or any bank accounts with, or guarantee any Indebtedness or other obligations of, any Person. "IRC" shall mean the Internal Revenue Code of 1986, as amended, and any successor thereto. "IRS" shall mean the Internal Revenue Service or any entity succeeding to any or all of its functions. "Leases" shall mean all of those leasehold estates in real property now owned or hereafter acquired by Borrower or any of its Subsidiaries, as lessee. "Lender" or "Lenders" shall have the meaning assigned to it in the first paragraph of this Agreement and shall include GE Capital and any future holder of all or any portion of the Notes. "LIBOR Advance" shall mean a portion of a Loan which bears interest at a rate based on the LIBOR Rate. "LIBOR Rate" shall mean, for any Interest Period, the rate obtained by dividing (i) the average of the four rates reported from time to time by Telerate News Service on page 3875 thereof (or such other number of rates as such 13 service may from time to time report) at which foreign branches of major U.S. banks offer U.S. dollar deposits to other banks for such Interest Period in the London interbank market at approximately 11:00 A.M., London time, on the second full Eurodollar Business Day (as hereinafter defined) next preceding such Interest Period by (ii) a percentage equal to 100% minus the weighted average of the maximum rates of all reserve requirements (including, without limitation, any marginal emergency, supplemental, or special or other reserves) scheduled to be applicable during such Interest Period to any member bank of the Federal Reserve System in respect of eurocurrency or eurodollar funding or liabilities. If such interest rates shall cease to be available from Telerate News Service, the LIBOR Rate shall be determined from such financial reporting service or other information as shall be mutually acceptable to Agent and Borrower. The term "Eurodollar Business Day" shall mean a Business Day on which banks generally are open in the city of London for interbank or foreign exchange transactions. "Lien" shall mean any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement (other than an unrestricted bank account in the name of and maintained by Borrower or any of its Subsidiaries), lien, Charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any lease or title retention agreement, any arrangement having substantially the same economic effect as any of the foregoing (including any financing lease), and the filing of, or agreement to give, any financing statement perfecting a security interest under the Code or comparable law of any jurisdiction). "Loan" shall mean the Revolving Credit Loan and any Term Loan. "Loan Documents" shall mean, collectively, this Agreement, the Notes, the Collateral Documents, the Pompadur Letter Agreement, the Missouri Assumption Agreement and the USC Non-Competition Agreement. "Loan Party" shall mean Borrower and each of its Subsidiaries and Cablevision. "Material Adverse Effect" shall mean a material adverse effect on (i) the business, assets, operations or financial condition of Borrower and its Subsidiaries taken 14 as a whole, (ii) Borrower's and its Subsidiaries' collective ability to pay the Obligations in accordance with the terms thereof, (iii) the Collateral or (iv) Lenders' Liens on the Collateral taken as a whole or the priority of such Liens taken as a whole. "Maturity Date" shall mean the earlier of (i) the closing under the Redemption Agreement and (ii) July 15, 1998. "Maximum Lawful Rate" shall have the meaning assigned to it in Section 2.7(g) hereof. "Maximum Revolving Credit Loan" shall mean, at any time, an amount equal to $30,000,000; PROVIDED that the Maximum Revolving Credit Loan shall increase by $5,000,000 commencing on January 1, 1997; and, PROVIDED FURTHER that such aggregate amount may be reduced from time to time pursuant to Section 2.3 hereof. "Media Approval" shall mean any FCC Consent and any other approval necessary with respect to the investment by V Cable and V Sub in the Borrower and the management of Borrower by Cablevision pursuant to the USC Management Agreement. "Media License" shall mean any franchise, license, permit, certificate, ordinance, right by contract or other authorization from any Governmental Authority which is necessary for the cable television operations of any Person. "Missouri Assumption Agreement" shall mean the Missouri Assumption Agreement, dated as of December 31, 1992, among Borrower, Missouri Partnership and GE Capital, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such Missouri Assumption Agreement as the same may be in effect at the time any reference thereto becomes operative. "Missouri Partnership" shall mean Missouri Cable Partners, L.P., a Delaware limited partnership. "Missouri Partnership Agreement" shall mean the Limited Partnership Agreement, dated as of June 30, 1992, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such Missouri Partnership 15 Agreement as the same may be in effect at the time any reference thereto becomes operative (but only giving effect to such amendments, modifications or supplements consented to by GE Capital). "Mortgage Supplements" shall mean the supplements, dated as of December 31, 1992, to the Mortgages. "Mortgages" shall mean the mortgages or deeds of trust made in connection with the Existing USC Loans in favor of GE Capital, in its individual capacity or as agent, by Borrower or any of its Subsidiaries, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such Mortgages as the same may be in effect at the time any reference thereto becomes operative. "Multiemployer Plan" shall mean, with respect to any Person, a "multiemployer plan," as defined in Section 4001(a)(3) of ERISA, to which such Person or any of its ERISA Affiliates is making, or is obligated to make, contributions or has made, or has been obligated to make, contributions within the preceding five years. "Net Cash Proceeds" of a Disposition shall mean cash payments actually received by Borrower from any sale or other disposition or series of related sales or other dispositions net of the amount of any and all (i) reasonable expenses incurred as a direct result of and directly attributable to such sale or disposition, (ii) reasonable fees, including attorneys' fees, accountant's fees, brokerage, consultant and other customary fees, commissions and other costs, actually incurred therewith, and (iii) all foreign, federal, state and local taxes payable or reasonably estimated to be payable as a direct consequence of such sale or disposition. "Newco" shall mean VC Holding, Inc., a Delaware corporation. "Nonrecourse Guaranty and Pledge Agreements" shall mean, collectively, the USC Nonrecourse Guaranty and Pledge Agreement, the Pompadur Et Al. Nonrecourse Guaranty and Pledge Agreement, the G.P. and L.P. Nonrecourse Guaranty and Pledge Agreement and the IMP and EHR Nonrecourse Guaranty and Pledge Agreement. 16 "Notes" shall mean, collectively, the Revolving Credit Note and the Term Notes. "Notice of Revolving Credit Advance or Conversion" shall have the meaning assigned to it in Section 2.1(b) hereof. "Obligations" shall mean all loans, advances, debts, liabilities and obligations for monetary amounts (whether or not such amounts are liquidated or determinable) owing by Borrower or any of its Subsidiaries or any other Loan Party to Agent or any Lender, and all covenants and duties regarding the payment of such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument, in each case arising under any of the Loan Documents. "Obligations" include, without limitation, all interest, Charges, expenses, attorneys' fees and any other sum chargeable to Borrower or any of its Subsidiaries or any other Loan Party under any of the Loan Documents. "Operating Cash Flow" shall mean, for any period, the following for Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP: (i) aggregate operating revenues MINUS (ii) aggregate operating expenses (including technical, programming, sales, selling, general administrative expenses and salaries and other compensation paid to any general partner, director, officer or employee of Borrower or any Subsidiary of Borrower and any management fees paid to Cablevision, but excluding interest, depreciation and amortization and, to the extent otherwise included in operating expenses, any losses resulting from a writeoff or writedown of Investments by Borrower or any Subsidiary of Borrower in Affiliates); PROVIDED, HOWEVER, that for purposes of determining Operating Cash Flow, there shall be excluded (x) all management fees paid to Borrower or any Subsidiary of Borrower during such period, (y) the amortization of deferred installation income and (z) compensation in respect of Borrower's and its Subsidiaries' allocable portion of Cablevision's employee stock incentive programs (not to exceed in the aggregate for any calendar year 5% of Consolidated Operating Cash Flow for the preceding calendar year) which employee stock incentive expense shall be allocated among Cablevision's Subsidiaries based on the existing Cablevision allocation methodology reflected in Annex 1 hereto. 17 "Other Taxes" shall have the meaning assigned to it in Section 2.13(b) hereof. "Participants" shall have the meaning assigned to it in Section 11.1(b)(ii) hereof. "Partnership Agreement" shall mean the Second Amended and Restated Limited Partnership Agreement of Borrower, dated as of the date hereof, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such Partnership Agreement as the same may be in effect at the time any reference thereto becomes operative (but only after giving effect to such amendments, modifications or supplements consented to by GE Capital). "PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions. "Permit" shall mean any permit, approval, authorization, license, variance or permission required from a Governmental Authority under any applicable Environmental Law. "Permitted Encumbrances" shall mean the following encumbrances: (i) Liens for taxes or assessments or other governmental charges or levies either not yet due and payable or to the extent that nonpayment thereof is permitted by the terms of this Agreement; (ii) pledges or deposits securing obligations under workers' compensation, unemployment insurance, social security or public liability laws or similar legislation; (iii) pledges or deposits securing bids, tenders, contracts (other than contracts for the payment of money) or leases to which Borrower or any of its Subsidiaries is a party as lessee made in the ordinary course of business; (iv) deposits securing public or statutory obligations of Borrower or any of its Subsidiaries; (v) workers', mechanics', suppliers', carriers', warehousemen's or other similar Liens arising in the ordinary course of business and securing indebtedness aggregating not in excess of $500,000 at any time outstanding and not yet due and payable; (vi) deposits securing or in lieu of surety, appeal or customs bonds in proceedings to which Borrower or any of its Subsidiaries is a party; (vii) any attachment or judgment Lien, unless the judgment it secures shall not, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal or shall not have 18 been discharged within 60 days after the expiration of any such stay; (viii) Capital Leases permitted under Section 7.3(a)(iv) hereof; and (ix) zoning restrictions, easements, licenses or other restrictions on the use of real property or other minor irregularities in title (including leasehold title) thereto, so long as the same do not materially impair the use, value or marketability of such real property, leases or leasehold estates. "Permitted USC Sale" shall mean a Disposition permitted pursuant to Section 7.11(a)(i) or 7.11(a)(ii) hereof. "Person" shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, company, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof). "Plan" shall mean, with respect to any Person or any of its ERISA Affiliates, at any time, an employee pension benefit plan, as defined in Section 3(2) of ERISA (including a Multiemployer Plan), that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the IRC and is maintained by such Person or any of its ERISA Affiliates. "Pledge Agreements" shall mean the USC Group Pledge Agreement. "Pledged Collateral" shall mean, collectively, the Pledged Collateral referred to in the Pledge Agreements and the Nonrecourse Guaranty and Pledge Agreements. "Pompadur Et Al. Nonrecourse Guaranty and Pledge Agreement" shall mean the agreement, dated as of December 31, 1992, among GE Capital (as agent for Lenders) and the pledgors listed on the signature pages thereof, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such Pompadur Et Al. Nonrecourse Guaranty and Pledge Agreement as the same may be in effect at the time any reference thereto becomes operative. 19 "Pompadur Letter Agreement" shall mean that certain letter agreement, dated as of June 30, 1992, between I. Martin Pompadur and GE Capital, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such Pompadur Letter Agreement as the same may be in effect at the time any reference thereto becomes operative. "Preferred USC Interest" shall mean the collective reference to the 19% limited partnership interest in Borrower and the 1% general partnership interest in Borrower held by V Cable, Inc. and V Cable G.P., Inc. "Premium Services" shall mean such cable television programming services as Borrower and/or its Subsidiaries from time to time determine in the course of its business constitute "Premium Services" or the like. "Premium Units" shall mean the total number of Premium Services subscribed to by each Subscriber. "Prepayment Transactions" shall have the meaning assigned in the recitals to the Partnership Agreement. "Real Estate" shall mean all of those plots, pieces or parcels of land now owned or hereafter acquired by Borrower or any of its Subsidiaries (the "Land"), including, without limitation, those listed on Schedule 4.8(a) hereto, together with the right, title and interest of Borrower or any of its Subsidiaries, if any, in and to the streets, the land lying in the bed of any streets, roads or avenues, opened or proposed, in front of, adjoining or abutting the Land to the center line thereof, the air space and development rights pertaining to the Land and right to use such air space and development rights, all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining thereto, all fixtures, all easements now or hereafter benefiting the Land and all royalties and rights appertaining to the use and enjoyment of the Land, including, without limitation, all alley, vault, drainage, mineral, water, oil and gas rights, together with all of the buildings and other improvements now or hereafter erected on the Land, and all fixtures and articles of personal property appertaining thereto and all additions thereto and substitutions and replacements thereof. 20 "Redemption Agreement" shall mean the Partnership Interests Redemption Agreement, dated as of the date hereof, among Borrower, the limited partners and general partners of Borrower and the other parties listed on the signature pages thereto. "Release" shall have the meaning assigned to it in Section 101(20) of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601(22). "Reportable Event" shall have the meaning assigned to it in Section 4043 of ERISA. "Required Lenders" shall mean, on any date on which any Loan is outstanding, the holders of Notes evidencing at least a majority of the aggregate unpaid principal amount of the Loans; PROVIDED, HOWEVER, that any amendment to, modification of or supplement to this Agreement or waiver of a Default or an Event of Default hereunder that would have the effect of reinstating the obligations to make Revolving Credit Advances from and after the date such obligations have been terminated or changing the terms of, amount of or obligation to make Revolving Credit Advances shall require the affirmative consent thereto of holders of Notes evidencing at least a majority of the aggregate unpaid principal amount of the Revolving Credit Loan then outstanding or, in the event that at such date there is no Revolving Credit Loan then outstanding, then the holders of Notes evidencing at least a majority of the unused portion of the Maximum Revolving Credit Loan. "Reserves" shall mean such reserves for doubtful accounts, returns, allowances and the like as may be established by Borrower or any of its Subsidiaries or as may otherwise be required in accordance with GAAP. "Restricted Payment" shall mean (i) the declaration of any dividend, the making of any distribution or the incurrence of any liability to make any other payment or distribution of cash or other property or assets in respect of Stock of Borrower, (ii) any payment on account of the purchase, redemption or other retirement of Stock of Borrower, any direct or indirect partner of Borrower or any other Affiliate of Borrower (other than a Subsidiary of Borrower) or any other payment or distribution made in respect thereof, either directly or indirectly, or (iii) any payment on account of federal, state or local taxes (inclusive of interest and penalties), in respect of any 21 consolidated, combined or unitary tax return filed by any partner of Borrower which includes Borrower or any of its Subsidiaries, or any other payment by Borrower of any federal, state or local taxes (inclusive of interest and penalties) of its partners. "Revolving Credit Advance" shall have the meaning assigned to it in Section 2.1(a) hereof, and may consist of an Index Rate Advance or a LIBOR Advance. "Revolving Credit Loan" shall mean the aggregate amount of Revolving Credit Advances outstanding at any time. "Revolving Credit Note" shall have the meaning assigned to it in Section 2.1(c) hereof. "Sale" shall have the meaning assigned to it in Section 11.1(b) hereof. "Security Agreements" shall mean, collectively, the Mortgages and the USC Group Security Agreement. "Stock" shall mean all shares, options, warrants, general or limited partnership interests, participations or other equivalents (regardless of how designated) of or in a corporation, partnership or equivalent entity, whether voting or nonvoting, including, without limitation, common stock, preferred stock and any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended). "Subscribers", on any date, shall mean the sum of (a) the total number of households (exclusive of "second outlets", as such term is commonly understood in the cable television industry), subscribing on such date to any cable television system of Borrower or any of its Subsidiaries and paying any currently available rate for monthly service fees and charges imposed by such system, for any level of programming services offered by such system; PROVIDED that such term shall not include any household whose account is more than 60 days past due. For purposes of this definition, an account shall be deemed due on the last day of each monthly billing period for which service has been provided to a household. 22 "Subsidiary" shall mean, with respect to any Person, (a) any corporation of which an aggregate of more than 50% of the outstanding Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person and/or one or more Subsidiaries of such Person, and (b) any partnership in which such Person and/or one or more Subsidiaries of such Person is a general partner or shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than 50% (including with respect to Borrower, without limitation, Missouri Partnership and any of its Subsidiaries); PROVIDED that none of Newco or any of its Subsidiaries shall be considered a Subsidiary of Borrower. "System Cash Flow" of Borrower shall mean, for any period, the consolidated operating income (before extraordinary items, interest, taxes, depreciation, amortization, non-cash charges and other non-cash items and, with respect to Borrower, amounts constituting Allocation Items (as defined in the USC Management Agreement) that are payable (whether or not paid) pursuant to the terms of the USC Management Agreement, and expenses and costs directly related to the consummation of the transactions contemplated by the Loan Documents) of Borrower and its consolidated Subsidiaries (including, without limitation, Missouri Partnership) determined in accordance with GAAP and (to the extent consistent with GAAP) in a manner consistent with the past practices of Borrower; PROVIDED, HOWEVER, that such amounts shall be determined on the basis of the capitalization policies of Cablevision and its Affiliates as in effect on the Closing Date and set forth on Schedule 1 hereto; and PROVIDED FURTHER, HOWEVER, that to the extent that Cablevision or its Affiliates provides to any of Borrower, ECC, Essex or any of their respective Subsidiaries, goods or services for consideration which is below the fairly allocable cost thereof, for purposes of the calculations herein, such goods and services shall be deemed to be provided at the fairly allocable cost. "Systems" shall mean the cable television systems owned and operated by Borrower and its Subsidiaries, wherever located. 23 "Taxes" shall have the meaning assigned to it in Section 2.13(a) hereof. "Termination and Modification Documents" shall mean the collective reference to the Termination and Amendatory Agreement, dated as of the date hereof, among Agent, V Cable and certain affiliates of V Cable, the Termination and Amendatory Agreement, dated as of the date hereof, among Agent, VC Holding and certain affiliates of VC Holding, Amendment No. 1 the CSC Nonrecourse Guaranty and Pledge Agreement, dated as of the date hereof, between Agent and Cablevision, to the CSC Nonrecourse Guaranty and Pledge Agreement and the Termination and Release Agreement, dated as of the date hereof, between Agent and USC. "Termination Date" shall mean the date on which all Loans and other Obligations hereunder have been completely discharged and Borrower shall have no further right to borrow any monies hereunder. "Term Loans" shall have the meaning assigned to it in Section 2.2(a) hereof. "Term Notes" shall have the meaning assigned to it in Section 2.2(a) hereof. "Total Debt" shall mean all Indebtedness of Borrower and its consolidated Subsidiaries. "Treasury Regulation" shall mean the Income Tax Regulations promulgated under the IRC as such regulations may be amended from time to time (including temporary and proposed regulations). "Type" of Advance shall have the meaning assigned to it in the definition of Advance. "Unfunded Pension Liability" shall mean, with respect to any Person at any time, the aggregate amount, if any, of the sum of (i) the amount by which the present value of all accrued benefits under each Plan of such Person, any of its Subsidiaries or any of its ERISA Affiliates exceeds the fair market value of all assets of such Plan allocable to such benefits in accordance with Title IV of ERISA, all determined as of the most recent valuation date for each such Plan using the actuarial assumptions in effect under such Plan, and (ii) for a period of five years following a transaction reasonably likely to be covered by Section 4069 24 of ERISA, the liabilities (whether or not accrued) that could be avoided by such Person, any of its Subsidiaries or any of its ERISA Affiliates as a result of such transaction. "U.S. Cable Partners" shall mean U.S. Cable Partners, a Delaware general partnership. "USC Group" shall mean Borrower, USC, ECC and Essex and their respective corporate, partnership and other direct or indirect wholly-owned Subsidiaries, including, without limitation, Missouri Partnership (so long as Borrower owns its limited partnership interest therein). "USC Group Pledge Agreement" shall mean the agreement, dated as of December 31, 1992, among GE Capital (as agent for Lenders), Borrower and the Subsidiaries of Borrower listed on the signature pages thereof, including all amendments, modifications, and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such USC Group Pledge Agreement as the same may be in effect at the time any reference thereto becomes operative. "USC Group Security Agreement" shall mean the agreement, dated as December 31, 1992, among GE Capital (as agent for Lenders) and Borrower and the Subsidiaries of Borrower listed on the signature pages thereof, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such USC Group Security Agreement as the same may be in effect at the time any reference thereto becomes operative. "USC Management Agreement" shall mean the agreement, dated as of December 31, 1992, among Cablevision, Borrower and the Subsidiaries of Borrower listed on the signature pages thereof, providing, INTER ALIA, for the management of Borrower and its cable television systems, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such USC Management Agreement as the same may be in effect at the time any reference thereto becomes operative (but only giving effect to such amendments, modifications or supplements consented to by GE Capital). "USC Non-Competition Agreement" shall mean the agreement, dated as of December 31, 1992, among Cablevision, 25 Borrower and GE Capital (as agent for Lenders) and in its individual capacity as lender, providing, INTER ALIA, for Cablevision's agreement not to compete with the operations of Borrower and its Subsidiaries, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such USC Non-Competition Agreement as the same may be in effect at the time any reference thereto becomes operative (but only giving effect to such amendments, modifications or supplements consented to by GE Capital). "USC Nonrecourse Guaranty and Pledge Agreement" shall mean the agreement, dated as of December 31, 1992, between GE Capital (as agent for Lenders) and Borrower, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such USC Nonrecourse Guaranty and Pledge Agreement as the same may be in effect at the time any reference thereto becomes operative. "USC/Subsidiary (Senior) Guaranty" shall mean the agreement, dated as of December 31, 1992, made in favor of Agent by the Subsidiaries of Borrower listed on the signature pages thereof, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such USC/Subsidiary (Senior) Guaranty as the same may be in effect at the time any reference thereto becomes operative. "V Cable" shall mean V Cable, Inc., a Delaware corporation. "Welfare Plan" shall mean any welfare plan, as defined in Section 3(1) of ERISA, which is maintained or contributed to by Borrower or any of its Subsidiaries on behalf of former employees after such employees' termination of employment (other than continuation coverage provided pursuant to Section 4980B of the IRC and at the sole expense of the participant or the beneficiary of the participant). "Withdrawal Liability" shall mean, (a) with respect to Borrower, at any time, the aggregate amount of the liabilities of any Loan Party, any of its Subsidiaries or any of its ERISA Affiliates pursuant to Section 4201 of ERISA, and any increase in contributions required to be made pursuant to Section 4243 of ERISA, with respect to all Multiemployer Plans of any such Person and (b) with respect 26 to any other Person, at any time, the aggregate amount of the liabilities of such Person, any of its Subsidiaries or any of its ERISA Affiliates pursuant to Section 4201 of ERISA, and any increase in contributions required to be made pursuant to Section 4243 of ERISA, with respect to all Multiemployer Plans of any such Person. "Working Capital" shall mean, for any Person (including, with respect to Borrower, without limitation, Missouri Partnership) on any date, the excess of current assets of such Person on such date (excluding cash, cash equivalents and marketable securities) over current liabilities of such Person on such date (including, for Borrower, the outstanding balance of the Revolving Credit Loan, but excluding current maturities of other long-term Indebtedness) determined on a consolidated basis in accordance with GAAP and (to the extent consistent with GAAP) in a manner consistent with the past practices of Borrower; PROVIDED, HOWEVER, that, with respect to Borrower, such amount shall be determined on the basis of the capitalization policies of Cablevision and its Affiliates as in effect on the Effective Date and set forth on Schedule 1 hereto. Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed, unless otherwise specifically provided herein, in accordance with GAAP consistently applied. That certain terms or computations are explicitly modified by the phrase "in accordance with GAAP" shall in no way be construed to limit the foregoing. All other undefined terms contained in this Agreement shall, unless the context indicates otherwise, have the meanings provided for by the Code as in effect in the State of New York to the extent the same are used or defined therein. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole, including the Exhibits and Schedules hereto, as the same may from time to time be amended, modified or supplemented, and not to any particular section, subsection or clause contained in this Agreement. 27 Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. 2. AMOUNT AND TERMS OF CREDIT 2.1. REVOLVING CREDIT ADVANCES. (a) Upon and subject to the terms and conditions hereof, GE Capital agrees to make available, from time to time until the Commitment Termination Date, for Borrower's use and upon the request of Borrower therefor, advances (each, a "Revolving Credit Advance") in an aggregate amount outstanding which shall not at any time exceed the Maximum Revolving Credit Loan. Subject to the foregoing and to the provisions of Section 2.3 hereof and until all amounts outstanding in respect of the Revolving Credit Loan shall become due and payable on the Commitment Termination Date, Borrower may from time to time borrow, repay and reborrow under this Section 2.1(a). Revolving Credit Advances outstanding on the date hereof under the Existing USC Senior Loan Agreement after giving effect to the Prepayment Transactions shall constitute "Revolving Credit Advances" for purposes of this Agreement. (b) Each Revolving Credit Advance shall be made on notice, given no later than 1:00 P.M. (New York City time) on the Business Day of the proposed Revolving Credit Advance, by Borrower to GE Capital. Each such notice (a "Notice of Revolving Credit Advance or Conversion") shall be in writing or by telephone to GE Capital's Account Executive, (203) 316-7661, telecopy, telex or cable, if by telephone confirmed immediately in writing, in substantially the form of Exhibit A hereto, specifying therein (consistent with this Agreement), INTER ALIA, the requested (i) date and aggregate amount of such Advance, (ii) Type or Types of Advance comprising such Revolving Credit Advance and the amount of each such Type and (iii) Interest Period for each such Advance which is a LIBOR Advance. Each Revolving Credit Advance shall be deemed to be an Index Rate Advance unless otherwise specified by Borrower in the Notice of Revolving Credit Advance or Conversion delivered to GE Capital in relation to such Advance in accordance with the procedures and time set forth in this Section 2.1(b). GE Capital shall, before 5:00 P.M. (New York City time) on the date of the proposed Revolving Credit Advance (or, if the Notice of Revolving Credit Advance or Conversion is 28 given by 10:30 A.M. (New York City time) on such date, by 2:00 P.M. (New York City time) on the date of the proposed Revolving Credit Advance), upon fulfillment of the applicable conditions set forth in Section 3 hereof, wire the amount of such Revolving Credit Advance to a bank designated by Borrower and reasonably acceptable to GE Capital. (c) The Revolving Credit Loan of GE Capital shall be evidenced by the promissory note executed and delivered by Borrower to GE Capital at the time of the initial Revolving Credit Advance (the "Revolving Credit Note"). The Revolving Credit Note shall be payable to the order of GE Capital and shall represent the obligation of Borrower to pay the amount of the Maximum Revolving Credit Loan or, if less, the aggregate unpaid principal amount of all Revolving Credit Advances made by GE Capital to Borrower with interest thereon as prescribed in Section 2.7 hereof. The date and amount of each Revolving Credit Advance and the Type of each such Advance (and, if a LIBOR Advance, the Interest Period therefor) and each payment of principal with respect thereto shall be recorded on the books and records of GE Capital, which books and records shall (absent manifest error) constitute PRIMA FACIE evidence of the accuracy of the information therein recorded. The entire unpaid balance of the Revolving Credit Loan shall be due and payable on the Commitment Termination Date. (d) Not later than 10:00 A.M. on the second Business Day prior to the end of any Interest Period for each Revolving Credit Advance consisting of a LIBOR Advance, Borrower shall deliver to GE Capital a Notice of Revolving Credit Advance or Conversion electing to convert such LIBOR Advance into an Index Rate Advance or into a LIBOR Advance (or part into an Index Rate Advance and part into a LIBOR Advance), in each case effective at the end of the Interest Period for such Advance. Each such Notice of Revolving Credit Advance or Conversion shall be in writing or by telephone to GE Capital's Account Executive, (203) 316-7661, telex, telecopy or cable, if by telephone confirmed immediately in writing, specifying therein (consistent with this Agreement), INTER ALIA, (i) the aggregate amount and Type of Advance which is to be converted and the last day of the current Interest Period for such Advance, (ii) the Type or Types of Advance into which such Advance is to be converted and the amount of each such Type and (iii) the Interest Period for each Advance which is to be a LIBOR Advance. If Borrower shall fail to provide a Notice of Revolving Credit 29 Advance or Conversion on or prior to 10:00 A.M. on the second Business Day prior to the end of the Interest Period in respect of any LIBOR Advance, such Advance shall automatically convert into an Index Rate Advance on the day following the last day of such Interest Period. (e) Borrower shall be entitled to convert all or any part of any Index Rate Advance into a LIBOR Advance by delivery to GE Capital, not later than 10:00 A.M. on the second Business Day prior to the date such conversion is to occur, of a Notice of Revolving Credit Advance or Conversion in the manner, and containing the relevant information indicated in, Section 2.1(d) hereof; PROVIDED, HOWEVER, that no such conversion shall occur or be effective on any date which is not a Business Day. 2.2. TERM LOANS. (a) The Series A Term Loans and the Series B Term Loans outstanding under the Existing USC Senior Loan Agreement shall constitute and be referred to as the "Term Loans" for purposes of this Agreement. The promissory notes evidencing the Term Loans shall be referred to herein as the "Term Notes". (b) The principal amount of the Term Loans shall be payable in full, together with accrued and unpaid interest thereon, on the Maturity Date. (c) Not later than 10:00 A.M. on the second Business Day prior to the end of any Interest Period for each portion of a Term Loan consisting of a LIBOR Advance, Borrower shall deliver to Agent a notice in substantially the form of Exhibit A-1 hereto (a "Notice of Term Advance or Conversion") electing to convert such LIBOR Advance into an Index Rate Advance or into a LIBOR Advance (or part into an Index Rate Advance and part into a LIBOR Advance), in each case effective at the end of the Interest Period for such Advance. Each such Notice of Term Advance or Conversion shall be in writing or by telephone to Agent's Account Executive, 203-316-7661, telex, telecopy or cable, if by telephone confirmed immediately in writing, specifying therein (consistent with this Agreement), INTER ALIA, (i) the aggregate amount and Type of Advance which is to be converted and the last day of the current Interest Period for such Advance, (ii) the Type or Types of Advance into which such Advance is to be converted and the amount of each such Type and (iii) the Interest Period for each Advance which is to be a LIBOR Advance. If Borrower shall fail to provide a Notice of Term Advance or Conversion on or prior 30 to 10:00 A.M. on the second Business Day prior to the end of the Interest Period in respect of any LIBOR Advance, such Advance shall automatically convert into an Index Rate Advance on the day following the last day of such Interest Period. (d) Borrower shall be entitled to convert any portion of a Term Loan consisting of an Index Rate Advance into a LIBOR Advance by delivery to Agent, not later than 10:00 A.M. on the second Business Day prior to the date such conversion is to occur, of a Notice of Term Advance or Conversion in the manner, and containing the relevant information indicated in, Section 2.2(c) hereof; provided, however, that no such conversion shall occur or be effective on any date which is not a Business Day. 2.3. MANDATORY PREPAYMENT. (a) Immediately upon receipt by Borrower of any Net Cash Proceeds pursuant to (and to the extent provided in) Section 7.11(a)(ii) hereof, Borrower shall use the proceeds of any such assets sales to repay FIRST, such outstanding Loans (other than the Revolving Credit Loan) as Agent shall determine in its sole discretion and, SECOND, to the then outstanding principal amount of the Revolving Credit Loan. Notwithstanding the foregoing, Borrower shall not make a prepayment, with the proceeds of asset sales under Section 7.11(a)(ii), otherwise required pursuant to this Section 2.3(a) to the extent that such prepayment is waived by Agent (at the direction or with the consent of the Required Lenders) in writing. Any prepayment with the proceeds of such asset sales pursuant to this Section 2.3(a) shall be accompanied by all accrued and unpaid interest on the principal amount so prepaid; provided that except in connection with a prepayment in full of the Loans, such accrued and unpaid interest in respect of the Series B Term Loan shall be paid in kind in the same manner as provided in Section 2.7(c). Any prepayments of any Loans pursuant to this Section 2.3(a) shall be applied FIRST, to those portions of such Loans that constitute Index Rate Advances, and NEXT, to those portions of such Loans that constitute LIBOR Advances. Notwithstanding the foregoing, if any prepayment of a LIBOR Advance in the manner and at the times provided above would result in any such prepayment occurring prior to the last day of the Interest Period for such Advance, such prepayment shall instead be made on the last day of the Interest Period therefor (unless GE Capital otherwise directs). Borrower shall use reasonable good 31 faith efforts to select Interest Periods in respect of its LIBOR Advances in order to avoid circumstances whereby (or to minimize, to the extent possible, the extent to which) any mandatory prepayments pursuant to this Section 2.3(a) would in the absence of the previous sentence result in a LIBOR Advance being prepaid prior to the last day of the Interest Period with respect thereto. Any prepayments of Revolving Credit Advances pursuant to this Section 2.3(a) shall not be available to be reborrowed, and the Maximum Revolving Credit Loan shall be permanently reduced by an amount equal to the maximum amount of proceeds of asset sales available to be applied to reduce Revolving Credit Advances pursuant to clause (a) above (even if all or a portion of such amounts available pursuant to clause (a) above shall not have been applied in prepayment of Revolving Credit Advances due to the outstanding amount of Revolving Credit Advances being less than the amount of such asset sales proceeds available pursuant to clause (a) above). (b) In the event that in the reasonable determination of Agent, (i) Borrower fails to use its best efforts to perform its obligations under the Redemption Agreement and to cause all conditions precedent thereunder of parties other than Borrower to be satisfied, or (ii) the closing thereunder does not occur due to a breach by Borrower under such Redemption Agreement, the Obligations shall be due and payable on July 1, 1997. (c) No prepayment fee shall be payable in respect of any mandatory prepayment under this Section 2.3. 2.4. OPTIONAL PREPAYMENT; PREPAYMENT PREMIUM. (a) Borrower shall have the right at any time (but subject to the provisions set forth below), on 5 Business Days' prior written notice to Agent, to voluntarily prepay, in whole or in part, the then outstanding balance, including accrued and unpaid interest, of the Loans, without premium or penalty except as set forth in Section 2.4(b) below; PROVIDED, HOWEVER, that such prepayment shall be applied in the manner set forth in Section 2.10 hereof as determined by Agent or Lenders in their discretion. (b) Notwithstanding the foregoing, Borrower shall have no right to prepay any LIBOR Advance or Term Loan prior to the end of the respective Interest Period therefor except to the extent required under Section 2.3 above; PROVIDED, HOWEVER, that Borrower may prepay any such LIBOR Advance or any Term Loan in connection with a prepayment in full of 32 such Loans if such prepayment is accompanied by payment of all amounts (if any) required to be paid by Borrower in respect thereof pursuant to Section 2.14(b) hereof. 2.5. USE OF PROCEEDS. Borrower shall use the proceeds of the Revolving Credit Loan for working capital purposes. 2.6. SINGLE LOAN. The Revolving Credit Loan, the Term Loans and all of the other Obligations of Borrower arising under this Agreement and the other Loan Documents shall constitute one general obligation of Borrower secured, until the Termination Date, by all of the Collateral. 2.7. INTEREST. (a) Borrower shall pay interest on the unpaid principal amount of each Revolving Credit Advance from the date of such Advance until the principal amount thereof shall be paid in full, as follows: at all times from the Effective Date, at a rate based on either the Index Rate or the LIBOR Rate as follows: (A) with respect to each Index Rate Advance, at a rate per annum equal to the Index Rate plus the Applicable Margin, payable quarterly in arrears on the last day of each Fiscal Quarter commencing on or after the Effective Date and on the date such Advance is repaid in full; and (B) with respect to each LIBOR Advance, at a rate per annum equal at all times during the Interest Period therefor to the LIBOR Rate for such Interest Period plus the Applicable Margin, payable in arrears on the last day of such Interest Period or, if such Interest Period exceeds three months, on the last day of each three month period and on the date such Advance is repaid in full. (b) Borrower shall pay interest on the unpaid principal amount of each Term Loan from the Effective Date until the principal amount thereof shall be paid in full, as follows: at all times from the Effective Date, at a rate based on either the Index Rate or the LIBOR Rate as follows: (A) with respect to each Term Loan bearing interest at the Index Rate, at a rate per annum equal to the Index Rate plus the Applicable Margin, payable quarterly in arrears on the last day of each Fiscal Quarter commencing on or after the Effective Date and on the date such Term Loan is repaid in full; and (B) with respect to each Term Loan bearing interest at the LIBOR Rate, at a rate per annum equal at all times during the Interest Period therefor to the LIBOR Rate for such Interest Period plus the Applicable Margin, payable in arrears on the last day of such Interest Period or, if such Interest Period exceeds three months, on the last day 33 of each three month period and on the date such Term Loan is repaid in full. (c) All computations of the LIBOR Rate shall be made by Agent on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last) occurring in the period for which such interest is payable. All computations of the Index Rate or any Fixed Rate shall be made by Agent on the basis of a year of 365 or 366 days, as the case may be, for the actual number of days occurring in the period for which such interest is payable or accrues. Each determination of the Index Rate for Index Rate Advances shall be on a daily basis for (and for the period through and including) the next succeeding Business Day. Each determination by Agent of an interest rate hereunder shall be, in the absence of manifest error, conclusive and binding for all purposes. (d) If any payment on any Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall accrue at the then applicable rate during such extension and shall be payable on such next succeeding Business Day. (e) So long as any default in the payment of principal or interest hereunder shall have occurred and be continuing, the interest rate applicable to each Loan shall be increased by 2% per annum above the rate otherwise applicable. (f) Notwithstanding anything to the contrary set forth in this Section 2.7, if at any time until payment in full of all of the Obligations, any stated rate of interest hereunder exceeds the highest rate of interest permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto (the "Maximum Lawful Rate"), then in such event and so long as the Maximum Lawful Rate would be so exceeded, the rate of interest hereunder shall to the extent permitted by law be equal to the Maximum Lawful Rate; PROVIDED, HOWEVER, that if at any time thereafter, any stated rate of interest hereunder is less than the Maximum Lawful Rate, to the extent permitted by law interest shall continue to be paid or accrued hereunder at the Maximum Lawful Rate until such time as the total interest received by any Lender hereunder is equal to the total interest which such Lender would have 34 received had each such interest rate been (but for the operation of this paragraph) the interest rate since the Effective Date. Thereafter, the interest rate hereunder shall be the rate otherwise set forth in this Agreement for each Loan or portion thereof, unless and until any such interest rate again exceeds the Maximum Lawful Rate, in which event this paragraph shall again apply. In no event shall the total interest received by any Lender pursuant to the terms hereof exceed the amount which such Lender could lawfully have received had the interest due hereunder been calculated for the full term hereof at the Maximum Lawful Rate. In the event interest is calculated at the Maximum Lawful Rate pursuant to this paragraph, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made. In the event that a court of competent jurisdiction, notwithstanding the provisions of this Section 2.7(f), shall make a final determination that any Lender has received interest hereunder or under any of the Loan Documents in excess of the Maximum Lawful Rate, such Lender shall, to the extent permitted by applicable law, promptly apply such excess first to any interest due and not yet paid under the Loans, then to any due and payable principal of the Loans, then to the remaining principal amount of the Loans, then to other unpaid Obligations and thereafter refund any excess to Borrower or as a court of competent jurisdiction may otherwise order. 2.8. LIMITATIONS ON TYPES OF ADVANCES. Notwithstanding any other provision of this Agreement, there shall not at any time be in effect (and Borrower shall not be entitled to select) more than three Interest Periods with respect to all outstanding LIBOR Advances. 2.9. RECEIPT OF PAYMENTS. Borrower shall make each payment under this Agreement not later than 2:00 P.M. (New York City time) on the day when due in lawful money of the United States of America in immediately available funds to Agent's depository bank in the United States as designated by Agent from time to time for deposit in Agent's depositary account or, if Agent so notifies Borrower, directly to each Lender, ratably based on the respective principal amounts of the Notes held by each Lender that relate to the Loan in respect of which such payment is made or applied. Agent will, upon any such deposit to its depositary account, promptly thereafter cause to be distributed like funds relating to the payment of principal or interest (other than interest or principal payments on 35 the Revolving Credit Loan, which will be paid directly to GE Capital) ratably to Lenders as provided above, and like funds relating to the payment of any other amount payable to any Lender to such Lender, in each case to be applied in accordance with the terms of this Agreement. For purposes only of computing interest hereunder, all payments shall be applied by GE Capital to the Revolving Credit Loan and by each Lender to its Term Loans on the day payment has been credited by Agent's depository bank to Agent's depositary account in immediately available funds or, if Agent has notified Borrower to make any such payments directly to any Lender, such payments shall be applied by each Lender to its Term Loans on the day payment has been received by such Lender in immediately available funds. For purposes of determining the amount of funds available for borrowing by Borrower pursuant to Section 2.1(a) hereof, such payments shall be applied by GE Capital against the outstanding amount of the Revolving Credit Loan at the time they are credited to its account. 2.10. APPLICATION OF PAYMENTS. Except as otherwise expressly provided herein, Borrower irrevocably waives the right to direct the application of any and all payments at any time or times hereafter received by Agent or any Lender from or on behalf of Borrower pursuant to the terms of this Agreement, and Borrower irrevocably agrees that, except as otherwise expressly provided herein, Agent and Lenders shall have the continuing exclusive right to apply any and all such payments against the then due and payable Obligations and in repayment of the Revolving Credit Loan and the Term Loans as they each may deem advisable. In the absence of a specific determination by Agent and the Required Lenders with respect thereto, the same shall be applied in the following order: (i) then due and payable fees and expenses; (ii) then due and payable interest payments on the Loans; and (iii) then due and payable principal payments on the Loans. Notwithstanding the foregoing, prior to the occurrence of a Default or Event of Default, Agent agrees to apply payments received in accordance with instructions received from Borrower (if any) in connection with such payments, to the extent such instructions are consistent with the provisions of this Agreement. GE Capital is authorized to, and at its option may, make advances on behalf of Borrower for payment of all fees, expenses, Charges, costs, principal or interest incurred by Borrower hereunder. Such advances shall be made when and as Borrower fails to promptly pay such fees, expenses, Charges, costs, principal or interest and at GE Capital's option 36 shall be deemed to be additional Revolving Credit Advances constituting part of the Revolving Credit Loan hereunder and comprised of Index Rate Advances or LIBOR Advances (as selected by GE Capital). 2.11. SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off or otherwise) on account of any Loan made by it in excess of its ratable share of payments on account of such Loan obtained by all Lenders, such Lender shall forthwith purchase from each other Lender such participations in such Loan made by each other Lender as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each other Lender; PROVIDED, HOWEVER, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and each Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.11 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of Borrower in the amount of such participation. 2.12. ACCOUNTING. Agent will provide a monthly accounting of transactions under the Revolving Credit Loan and the Term Loans, if applicable, to Borrower. Each and every such accounting shall (absent manifest error) be deemed final, binding and conclusive upon Borrower in all respects as to all matters reflected therein unless Borrower, within 90 days after the date any such accounting is rendered, shall notify Agent in writing of any objection which Borrower may have to any such accounting, describing the basis for such objection with specificity. In that event, only those items expressly objected to in such notice shall be deemed to be disputed by Borrower. Agent's determination, based upon the facts available, of any item objected to by Borrower in such notice shall (absent manifest error) be final, binding and conclusive on Borrower, unless Borrower shall, within 30 days following Agent's 37 notifying Borrower of such determination, either (i) commence a judicial proceeding to resolve such objection or (ii) submit such dispute to KPMG Peat Marwick, independent public accountants, for resolution of the items in dispute (which resolution shall be final, conclusive and binding on both parties). The fees of such independent public accountant shall be borne by Lenders if such resolution shall indicate that the items in dispute were not accounted for accurately by Agent, and shall otherwise be borne by Borrower. 2.13. TAXES. (a) Any and all payments by Borrower hereunder or under the Notes shall be made, in accordance with Section 2.9 hereof, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on or measured by the net income of any Lender or Agent, as the case may be (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Lender or Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.13) such Lender or Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions and (iii) Borrower shall pay the full amount deducted to the relevant taxing or other authority in accordance with applicable law. (b) In addition to the foregoing, Borrower agrees to pay any present or future stamp or documentary taxes or any other sales, excise or property taxes, charges or similar levies that arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as "Other Taxes"). (c) Borrower shall indemnify each Lender and Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.13) paid by such Lender or Agent and any liability (including penalties, interest and expenses) arising 38 therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Such indemnification shall be made within 30 days from the date such Lender or Agent makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, Borrower shall furnish to Agent and each Lender, at their addresses referred to in Section 11.11 hereof, the original or a certified copy of a receipt evidencing payment thereof. (e) Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower contained in this Section 2.13 shall survive the payment in full of principal and interest hereunder and under the Notes. 2.14. INDEMNITY. (a) Borrower shall indemnify and hold Agent and each Lender harmless from and against any and all suits, actions, proceedings, claims, damages, losses, liabilities and expenses (including, without limitation, reasonable attorneys' fees and disbursements, including those incurred upon any appeal) which may be instituted or asserted against or incurred by Agent or such Lender as a result of its having entered into any of the Loan Documents or extended credit hereunder; PROVIDED, HOWEVER, that Borrower shall not be liable for such indemnification to any such indemnified Person to the extent that any such suit, action, proceeding, claim, damage, loss, liability or expense (x) results from such indemnified Person's gross negligence or willful misconduct, (y) relates to a dispute between Agent or any Lender and any of the Loan Parties or (z) results from a breach by Agent or such Lender of its obligations under the last sentence of Section 11.1(b) hereof. (b) Borrower understands that in connection with Lenders' arranging to provide the LIBOR Advances from time to time at the option of Borrower on the terms provided herein, Lenders have entered or may enter into funding arrangements with third parties ("Funding Arrangements") on terms and conditions which could result in substantial losses to such Lenders if any LIBOR Advances do not remain outstanding at the interest rates provided herein for the entire Interest Period with respect to which such LIBOR Advance has been fixed. Consequently, in order to induce Lenders to provide the LIBOR Advances on the terms provided herein and in consideration for the entering into by Lenders 39 of Funding Arrangements from time to time in contemplation thereof, if any LIBOR Advance is repaid in whole or in part prior to the last day of the Interest Period therefor (whether any such repayment is made pursuant to any provision of this Agreement or any other Loan Document or is the result of acceleration, by operation of law or otherwise), Borrower shall indemnify and hold harmless each Lender from and against and in respect of any and all losses, costs and expenses resulting from, or arising out of or imposed upon or incurred by such Lender by reason of the liquidation or reemployment of funds acquired or committed to be acquired by such Lender to fund such LIBOR Advance, pursuant to the Funding Arrangements. The amount of any losses, costs or expenses resulting in an obligation of Borrower to make a payment pursuant to the foregoing sentence shall not include any losses attributable to any Lender's lost profit, but shall represent the excess, if any, of (i) such Lender's cost of borrowing the relevant LIBOR Advance pursuant to the Funding Arrangements over (ii) the return such Lender would receive on its reinvestment of such funds; PROVIDED, HOWEVER, that if any Lender terminates any Funding Arrangements in respect of any LIBOR Advance, the amount of such losses, costs and expenses shall include the cost to such Lender of such termination. As promptly as practicable under the circumstances, each Lender shall provide Borrower with its written calculation of all amounts payable pursuant to the next preceding sentence, and such calculation shall be binding on the parties hereto unless Borrower shall object thereto in writing within ten Business Days of receipt thereof. Notwithstanding the foregoing, the provisions of this Section 2.14(b) shall not apply in respect of any such prepayment of any Term Loan or LIBOR Advance required to be made solely as a result of the provisions of Section 2.3 (other than with the proceeds of asset sales) or Section 2.16(c) hereof. (c) Borrower hereby waives and relinquishes any set-off or similar rights which it may have against Agent or any Lender with respect to any Obligation under this Agreement; PROVIDED that, with respect to any Default or Event of Default asserted by Agent or any Lender, this sentence shall not be deemed to impair Borrower's right to assert any claim against Agent or any Lender that, if adjudicated to be correct by a court of competent jurisdiction, would excuse or cure such Default or Event of Default. 40 2.15. ACCESS. (a) Without limiting any other rights that Agent or any Lender may otherwise have, Agent and any of its officers, employees and/or agents shall have the right, exercisable as frequently as Agent determines to be appropriate, during normal business hours (or at such other times as may reasonably be requested by Agent), to inspect the properties and facilities of Borrower and its Subsidiaries and to inspect, audit and make extracts from all of Borrower's and its Subsidiaries' records, files and books of account at the place(s) where the same shall be located all to the extent, but only to the extent, that such inquiry is related to its position as Agent. Borrower shall deliver any document or instrument reasonably necessary for Agent, as it may request, to obtain records from any service bureau maintaining records for Borrower or its Subsidiaries. Borrower shall instruct its and its Subsidiaries' banking and other financial institutions to make available to Agent such information and records as Agent may reasonably request. (b) Agent and each Lender agree to exercise their reasonable efforts to keep any information delivered or made available by Borrower pursuant hereto confidential from anyone other than Persons employed or retained by Agent or such Lender who are expected to become engaged in evaluating, approving, structuring, administering or transferring the Loans; PROVIDED, that nothing herein shall prevent Agent or any Lender from disclosing such information (i) to any other Lender, (ii) upon the order of any court or administrative agency or as otherwise may be required by law, (iii) upon the request or demand of any regulatory agency or authority having jurisdiction over Agent or such Lender, as the case may be, (iv) which has been publicly disclosed or is otherwise available to Agent or such Lender on a nonconfidential basis, (v) in connection with any litigation to which Agent, any Lender, Cablevision, Borrower or any other Loan Party or any of its Subsidiaries may be a party, (vi) to the extent reasonably required in connection with the exercise or enforcement of any rights or remedies under the Loan Documents, (vii) to Agent's or such Lender's legal counsel and independent auditors and (viii) to any actual or proposed participant or to any other Person in connection with any actual or proposed sale, transfer or other disposition of all or any part of the Loans, if such other Person, prior to such disclosure, agrees for the benefit of Borrower to comply with the provisions of this subsection (b). 41 2.16. CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY. (a) If any Lender shall determine that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof or compliance by such Lender (or its lending office) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender's capital as a consequence of its obligations hereunder or credit extended by it hereunder to a level below that which such Lender could have achieved but for such adoption, change or compliance by an amount deemed by such Lender to be material, then from time to time as specified by such Lender by written notice to Borrower, Borrower shall pay such additional amount or amounts as will compensate such Lender for such reduction (such notice to indicate Lender's method of determining the amount of such reduction and that such method is consistent with such Lender's treatment of customers similar to Borrower having similar provisions generally in their agreements with such Lender, which method and amount will be conclusive and binding absent manifest error). (b) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining any Loan or portion thereof bearing interest based on the LIBOR Rate, then Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to Agent), pay to Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to Borrower and Agent by such Lender, shall be conclusive and binding on Borrower for all purposes, absent manifest error. Each Lender agrees that, as promptly as practicable after it becomes aware of any circumstances referred to in clause (i) or (ii) above which would result in any such increased cost to such Lender, such Lender shall, to the extent not inconsistent with such Lender's internal policies of general application, use reasonable commercial efforts to minimize 42 costs and expenses incurred by it and payable to it by Borrower pursuant to this Section 2.16(b). (c) Notwithstanding anything to the contrary contained herein, if the introduction of or any change in or in the interpretation of any law or regulation shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to agree to make or to make or to continue to fund or maintain any Loan bearing interest based on the LIBOR Rate, then, unless such Lender is able to agree to make or to continue to fund or to maintain such Loan which bears interest based on the LIBOR Rate at another branch or office of such Lender without, in such Lender's opinion, adversely affecting it or its Loans or the income obtained therefrom, on notice thereof and demand therefor by such Lender to Borrower through Agent, (i) the obligation of such Lender to agree to make or to make or to continue to fund or maintain Loans or any portion thereof bearing interest based on the LIBOR Rate shall terminate and (ii) Borrower shall forthwith prepay in full all outstanding Loans or any portions thereof then bearing interest based on the LIBOR Rate, together with interest accrued thereon (but without any penalty for such prepayment), of such Lender UNLESS Borrower, within five Business Days after the delivery of such notice and demand, converts each such Loan into a Loan bearing interest based on the Index Rate. (d) Agent, upon becoming aware thereof, shall promptly notify Borrower of the occurrence of any event described in this Section 2.16. Borrower shall have the right within five Business Days of receipt of such notice to convert any outstanding LIBOR Advance to an Index Rate Advance. 2.17. INCOME TAX REPORTING. (a) Subject to Section 2.17(b), Borrower, Lenders and Agent hereby acknowledge and agree that, for U.S. federal income tax reporting purposes: (i) the Term Loans will be aggregated (as contemplated by proposed Treasury Regulation Section 1.1275-2(c)) (as aggregated, the "Aggregate Loan") and treated as a single debt instrument with a single issue price, maturity date, yield to maturity and stated redemption price at maturity for purposes of Sections 1271 43 through 1275 of the IRC and the proposed Treasury Regulations thereunder; (ii) the Aggregate Loan is a debt instrument to which Section 1274 of the IRC applies; (iii) the "issue date" (as defined in Section 1275(a)(2) of the IRC and the proposed Treasury Regulations thereunder) of the Aggregate Loan is the Effective Date; (iv) the maturity date of the Aggregate Loan is the Maturity Date; (v) the Aggregate Loan constitutes a "variable rate debt instrument" as defined in proposed Treasury Regulation Section 1.1275- 5; and (vi) the Aggregate Loan is not part of an "investment unit" and the provisions governing the determination of the issue price of an investment unit as set forth in proposed Treasury Regulation Section 1.1273-2(d) do not apply. (b) Notwithstanding Section 2.17(a), if the Internal Revenue Service promulgates new final, temporary or proposed regulations under any of Sections 1271 through 1275 of the IRC, or if any of Sections 1271 through 1275 of the IRC are amended, and such regulations or amendments are applicable to any of the loans made pursuant to this Agreement, or if there is another change in the tax law (or interpretations thereof) applicable to the reporting of the loans made pursuant to this Agreement, Borrower and Agent will negotiate in good faith to determine the effect of any of the foregoing on the reporting of the loans made pursuant to this Agreement and to agree upon a consistent treatment for federal income tax reporting purposes of the loans made pursuant to this Agreement. (c) Within 20 days after the end of any year, Agent shall furnish Borrower with its computation of the amount of interest income and deductions attributable to the Loans for U.S. federal income tax purposes. If Borrower does not agree with such computation, Borrower shall notify Agent, and promptly thereafter Borrower and Agent will negotiate in good faith to attempt to resolve any disagreement with respect to Agent's computation. It is Borrower's, Lenders' and Agent's intention to use their 44 reasonable efforts to reach an agreement with respect to such computation. If such agreement is reached, each of Borrower and the Lenders will consistently report the amount of any interest income and deductions reflected in such agreed upon computation. 3. CONDITIONS PRECEDENT 3.1. CONDITIONS TO EFFECTIVENESS. Notwithstanding any other provision of this Agreement and without affecting in any manner the rights of Agent or any Lender hereunder, this Agreement shall not be effective unless and until the Effective Date shall have occurred under the Partnership Agreement and Borrower shall have delivered to Agent, in form and substance satisfactory to Agent and (unless otherwise indicated) each dated the Effective Date: (a) Evidence, in form and substance reasonably satisfactory to Agent, that all aspects of the Prepayment Transactions have closed or are simultaneously closing on terms satisfactory to Agent, in compliance with all relevant laws and regulations. (b) A Notice of Revolving Credit Advance or Conversion, if a Revolving Credit Advance is to be made on the Effective Date, duly executed by Borrower. (c) Favorable opinions of Sullivan & Cromwell, counsel to Cablevision, V Cable, Newco and their respective Subsidiaries, in substantially the form attached hereto as Exhibit C-1 and of Robert S. Lemle, counsel to Cablevision, in substantially the form attached hereto as Exhibit C-2, it being understood that to the extent that any such opinion shall rely upon any other opinion of counsel or any of such opinions are to instead be rendered by other counsel, each such other counsel shall be acceptable to Agent and each such other opinion shall be in form and substance reasonably satisfactory to Agent and shall provide that Agent and each Lender may rely thereon. (d) Resolutions of (i) the board of directors of each Loan Party which is a corporation, certified by the Secretary or Assistant Secretary of such Loan Party and (ii) the general partners or management committee of each Loan Party which is a partnership, certified by a general partner of each such partnership, in each case as of the Effective Date, to be duly adopted and in full force and effect on such date, authorizing (A) the consummation of 45 each of the transactions contemplated by the Loan Documents to which each such Loan Party is a party, (B) specific officers to execute and deliver this Agreement (in the case of Borrower) and each other Loan Document to which such Loan Party is a party and (C) the execution, delivery and performance by each such Loan Party of each other Ancillary Agreement to be delivered on or prior to the Effective Date to which such Loan Party is a party. (e) [Intentionally Omitted] (f) A copy of the organizational documents and all amendments thereto of each Loan Party and copies of such Loan Party's by-laws and partnership agreements, certified by the Secretary or Assistant Secretary (or general partner, if applicable) of such Loan Party as true and correct as of the Effective Date. (g) A certificate of the Senior Vice President and Treasurer of a general partner of Borrower stating that all of the representations and warranties (other than the representations contained in Section 4.16 hereof) of each Loan Party contained herein or in any of the Loan Documents are correct on and as of the Effective Date as though made on and as of such date (except to the extent any such representation or warranty expressly relates to an earlier date and except for changes therein permitted or contemplated by this Agreement) and that no event has occurred and is continuing, or would result from a Revolving Credit Advance, if made on the Effective Date, or the Prepayment Transactions, which constitutes or would constitute a Default or an Event of Default. (h) Payment of all reasonable fees and expenses of (i) Agent's outside counsel Weil, Gotshal & Manges (upon submission no later than 11:00 A.M. (New York City time) on the Effective Date of a statement thereof in reasonable detail) and (ii) all special local counsel (including, without limitation, Kaye, Scholer, Fierman, Hays & Handler and Akin, Gump, Strauss, Hauer & Feld, L.L.P.) retained in connection with any of the Loan Documents and the transactions contemplated thereby. (i) Certificates of the Secretary or an Assistant Secretary of each Loan Party which is a corporation and of a general partner of each Loan Party which is a partnership as to the incumbency and signatures of the officers or representatives of such entity executing this Agreement, any of 46 the Loan Documents or other Ancillary Agreements or any other certificate or document to be delivered by such Person pursuant hereto or thereto, together with evidence of the incumbency and authority of such Secretary or Assistant Secretary or general partner. (j) A copy (or other evidence reasonably satisfactory to Agent) of each consent, license and approval required to have been obtained in connection with the execution, delivery, performance, validity and enforceability of this Agreement, the other Loan Documents and Ancillary Agreements, the consummation of the Prepayment Transactions, such consents, licenses and approvals to be satisfactory, in form and substance, to Agent. (k) Such additional information and materials as Agent may reasonably request, including, without limitation, copies of any debt agreements, security agreements and other material contracts. 3.2. CONDITIONS TO EACH REVOLVING CREDIT ADVANCE. (a) It shall be a condition to the funding of each subsequent Revolving Credit Advance that the following statements shall be true on the date of each such funding: (i) All of the representations and warranties of the Loan Parties contained herein or in any of the Loan Documents shall be correct on and as of each such date as though made on and as of such date, except (A) to the extent that any such representation or warranty expressly relates to an earlier date and (B) for changes therein permitted or contemplated by this Agreement. (ii) No event shall have occurred and be continuing, or would result from any such funding or incurrence, which constitutes or would constitute a Default or an Event of Default. (b) The acceptance by Borrower of the proceeds of any Revolving Credit Advance shall be deemed to constitute, as of the date of such acceptance, (i) a representation and warranty by Borrower that the conditions in Section 3.2(a) hereof have been satisfied and (ii) a confirmation by Borrower of the granting and continuance of Agent's Liens pursuant to the Collateral Documents. 47 4. REPRESENTATIONS AND WARRANTIES To induce GE Capital and Lenders to make the Revolving Credit Loan, as herein provided for, Borrower makes the following representations and warranties to GE Capital and Lenders, each and all of which (subject, in the case of Section 4.8 hereof, to Section 6.15 hereof) shall be true and correct as of the date of execution and delivery of this Agreement after giving effect to the Prepayment Transactions, and each and all of which shall survive the execution and delivery of this Agreement: 4.1. CORPORATE OR PARTNERSHIP EXISTENCE; COMPLIANCE WITH LAW. (a) Borrower and each of its Active Subsidiaries (i) is a corporation or partnership duly organized, validly existing and in good standing under the laws of its state of incorporation or organization; (ii) is duly qualified to do business and is in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification (except for jurisdictions in which such failure to so qualify or to be in good standing would not have a Material Adverse Effect). (b) Borrower and each of its Subsidiaries (i) has the requisite corporate or partnership power and authority to own, pledge, mortgage or otherwise encumber and operate its properties, to lease the property it operates under lease, and to conduct its business as now and proposed to be conducted; (ii) has, or will by the Effective Date have, all material licenses, permits, consents or approvals from or by, and has made all material filings with, and has given all material notices to, all Governmental Authorities having jurisdiction, to the extent required for such ownership, operation and conduct (except where any failure to obtain such licenses, permits, consents or approvals, or to make such filings, would not have a Material Adverse Effect); (iii) is in compliance with its certificate of incorporation and by-laws or certificate or articles of partnership or partnership agreement (as the case may be); and (iv) is in compliance with all applicable provisions of law where the failure to comply would have a Material Adverse Effect. 4.2. EXECUTIVE OFFICES. The current location of Borrower's and each of its Subsidiaries' executive offices and principal place of business is set forth on Schedule 4.2 hereto. 48 4.3. SUBSIDIARIES. There currently exist no Subsidiaries of Borrower other than as set forth on Schedule 4.3 hereto, which sets forth such Subsidiaries, together with their respective jurisdictions of organization, and the authorized and outstanding Stock of each such Subsidiary by class and the number and percentage of each such class legally owned by Borrower or a Subsidiary of Borrower or any other Person, or to be owned by the Effective Date. There are no outstanding options, warrants, rights to purchase or similar rights covering Stock of any such Subsidiary. The Subsidiaries of Borrower, other than the Active Subsidiaries, have no significant liabilities or obligations and conduct no business. 4.4. CORPORATE OR PARTNERSHIP POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The execution, delivery and performance by Borrower and its Subsidiaries of the Loan Documents and all other existing Ancillary Agreements and all instruments and documents to be delivered by Borrower and its Subsidiaries, to the extent they are parties thereto, hereunder and thereunder, and the creation of all Liens provided for herein and therein: (i) are within Borrower's and its Subsidiaries' corporate or partnership power; (ii) have been, or by the Effective Date will be, duly authorized by all necessary or proper corporate or partnership action; (iii) are not in contravention of any provision of Borrower's or its Subsidiaries' respective certificates or articles of incorporation or by-laws or certificates or articles of partnership or partnership agreements, as the case may be; (iv) will not violate any law or regulation, or any order or decree of any court or Governmental Authority (other than violations which will not, individually or in the aggregate, have a Material Adverse Effect and which are not known to Borrower); (v) will not conflict with or result in the breach or termination of, or constitute a default under or accelerate any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which Borrower or any of its Subsidiaries is a party or by which Borrower or any of its Subsidiaries or any of their property is bound; (vi) will not result in the creation or imposition of any Lien upon any of the property of Borrower or any of its Subsidiaries other than those in favor of Agent, pursuant to the Loan Documents; and (vii) do not require the consent or approval of any Governmental Authority or any other Person, except for the Media Approvals, all of which will have been duly obtained, made or complied with prior to the Effective Date, except as provided in the Collateral 49 Documents and except for violations which will not have a Material Adverse Effect and which are not known to Borrower. Upon the delivery, on or prior to the Effective Date, of each of the Loan Documents, each such Loan Document will have been duly executed and delivered for the benefit of or on behalf of Borrower or its Subsidiaries, as the case may be, and each will then constitute a legal, valid and binding obligation of Borrower or its Subsidiaries, to the extent they are parties thereto, enforceable against them in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and laws affecting creditors' rights generally and, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding of law or in equity). 4.5. INSURANCE. Schedule 4.5 hereto lists all insurance of any nature maintained by Borrower and each Subsidiary of Borrower, as well as a summary of the terms of such insurance. 4.6. FINANCIAL STATEMENTS. (a) The audited and unaudited balance sheets and statements of income, retained earnings and statements of cash flow of Borrower and its consolidated Subsidiaries most recently furnished to GE Capital, as agent, and each lender under the Existing USC Loan Agreements prior to the date of this Agreement, have been, except as noted therein, prepared in conformity with GAAP consistently applied throughout the periods involved, and present fairly the consolidated financial position of Borrower and such Subsidiaries in each case as at the dates thereof, and the results of operations and statements of cash flow for the periods then ended (as to the unaudited interim financial statements, subject to normal year-end audit adjustments). (b) Borrower and its Subsidiaries, as of December 31, 1995, had no obligations, contingent liabilities or liabilities for Charges, long-term leases or unusual forward or long-term commitments which are not reflected in the consolidated balance sheet of Borrower and its Subsidiaries referred to in Section 4.6(a) hereof and which would have a Material Adverse Effect. (c) No dividends or other distributions have been declared, paid or made upon any Stock of Borrower or any of its Subsidiaries nor has any Stock of Borrower or any of its Subsidiaries been redeemed, retired, purchased or otherwise acquired for value by Borrower or any of its Subsidiaries 50 since December 31, 1995, otherwise than as permitted by this Agreement or as reflected in the consolidated balance sheet of Borrower and its consolidated Subsidiaries referred to in Section 4.6(a) hereof. 4.7. [INTENTIONALLY OMITTED] 4.8. OWNERSHIP OF PROPERTY; LIENS. (a) (i) Except as disclosed in Schedules 4.8(a) and 4.8(b) hereto, each of Borrower and each of its Subsidiaries owns good and marketable fee simple title to all of the Real Estate described on Schedule 4.8(a) hereto and good, valid and marketable leasehold interests in the Leases described in Schedule 4.8(b) hereto, and good and marketable title to, or valid leasehold interests in, all of its other properties and assets, except where any failure to hold any such title or interest would not have a Material Adverse Effect; (ii) none of the properties or assets of Borrower or any of its Subsidiaries, including, without limitation, the Real Estate and Leases, are subject to any Liens, except (x) Permitted Encumbrances and (y) Liens pursuant to the Collateral Documents; and (iii) Borrower and each of its Subsidiaries have received all deeds, assignments, waivers, consents, non-disturbance and recognition or similar agreements, bills of sale and other documents, and duly effected all recordings, filings and other actions necessary to establish, protect and perfect Borrower's and its Subsidiaries' right, title and interest in and to all such property except where the failure to have received such documents or effected such actions will not, in the aggregate, have a Material Adverse Effect. (b) All real property owned or leased by Borrower or any of its Subsidiaries is set forth on Schedules 4.8(a) and 4.8(b) hereto, respectively. Neither Borrower nor any of its Subsidiaries owns any other Real Estate or is lessee or lessor under any leases other than as set forth therein. Schedules 4.8(a) and 4.8(b) hereto are true and correct in all material respects. Part One of Schedule 4.8(b) hereto sets forth all Leases of real property held by Borrower or any of its Subsidiaries as lessee and Part Two of Schedule 4.8(b) hereto sets forth all leases of real property held by Borrower or any of its Subsidiaries as lessor together with information regarding the commencement date, termination date, renewal options (if any) and annual base rents for the years [1995 and 1996]. Each of such leases is valid and enforceable in accordance with its terms and is in full force and effect, subject to applicable bankruptcy, insolvency, 51 reorganization, moratorium and other laws affecting creditors' rights generally and to general equitable principles. Borrower has delivered to Agent true and complete copies of each of such leases set forth on Part One and Part Two of Schedule 4.8(b) hereto and all documents affecting the rights or obligations of Borrower or any of its Subsidiaries which is a party thereto, including, without limitation, any non-disturbance and recognition agreement, subordination agreement, attornment agreement and any agreement regarding the term or rental of any of the Leases. Neither Borrower nor any of its Subsidiaries nor any other party to any such lease is in default of its obligations thereunder or has delivered or received any notice of default under any such lease, nor has any event occurred which, with the giving of notice, the passage of time or both, would constitute a default under any such lease, except for any default which would not have a Material Adverse Effect. (c) No real property, or any part thereof, owned or leased by Borrower or any of its Subsidiaries has been materially damaged by fire or other casualty which has not been completely restored or is subject to any pending, or, to the knowledge of Borrower or any of its Subsidiaries, threatened or contemplated condemnation proceeding or any sale or other disposition thereof, in lieu of condemnation. 4.9. NO DEFAULT. Neither Borrower nor any of its Subsidiaries is in default, nor, to Borrower's knowledge, is any third party in default, under or with respect to any Media License, contract, agreement, lease or other instrument to which it is a party, except for any default which (either individually or collectively with other defaults arising out of the same event or events) would not have a Material Adverse Effect, and no Default or Event of Default has occurred and is continuing. 4.10. LABOR MATTERS. There are no strikes or other labor disputes against Borrower or any of its Subsidiaries pending or, to Borrower's knowledge, threatened, which would have a Material Adverse Effect. Hours worked by and payment made to employees of Borrower and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable law dealing with such matters which would have a Material Adverse Effect. All payments due from Borrower or any of its Subsidiaries on account of employee health and welfare insurance which would have a Material Adverse Effect if not paid have been paid or ac 52 crued as a liability on the books of Borrower or such Subsidiary. 4.11. OTHER VENTURES. Except as set forth in Schedule 4.11, neither Borrower nor any of its Subsidiaries is engaged in any joint venture or partnership with any other Person. 4.12. INVESTMENT COMPANY ACT. Neither Borrower nor any of its Subsidiaries is an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. None of the making of the Revolving Credit Advances by GE Capital, the application of the proceeds and repayment thereof by Borrower or the consummation of the transactions contemplated by this Agreement and the other Loan Documents will violate any provision of such Act or any rule, regulation or order issued by the Securities and Exchange Commission thereunder. 4.13. MARGIN REGULATIONS. Borrower does not own any "margin security," as that term is defined in Regulations G and U of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), and the proceeds of the Loans will be used only for the purposes contemplated hereby. None of the Loans will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Loans to be considered a "purpose credit" within the meaning of Regulation G, T, U or X of the Federal Reserve Board. Borrower will not take or permit any agent acting on its behalf to take any action which might cause this Agreement or any document or instrument delivered pursuant hereto to violate any regulation of the Federal Reserve Board. 4.14. TAXES. All federal, state, local and foreign tax returns, reports and statements required to be filed by Borrower or any of its Subsidiaries have been filed with the appropriate Governmental Authorities and all Charges and other impositions shown thereon to be due and payable have been paid prior to the date on which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof, or any such fine, penalty, interest, late charge or loss has been paid or, as disclosed on 53 Schedule 4.14 hereto, is being contested in good faith by appropriate procedures (and the provisions of Section 6.2(b) hereof are being met with respect thereto). Each of Borrower and each of its Subsidiaries has paid when due and payable all requisite Charges (except where the failure to do so would not have a Material Adverse Effect). Proper and accurate amounts have been withheld by Borrower and each of its Subsidiaries from their respective employees for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of applicable federal, state, local and foreign law and such withholdings have been timely paid to the respective Governmental Authorities (except where the failure to do so would not have a Material Adverse Effect). Schedule 4.14 hereto sets forth, for each of Borrower and each of its Subsidiaries, those taxable years for which its tax returns are currently being audited by the IRS or any other applicable Governmental Authority. Except as described in Schedule 4.14 hereto, neither Borrower nor any of its Subsidiaries has executed or filed with the IRS or any other Governmental Authority any agreement or other document extending, or having the effect of extending, the period for assessment or collection of any Charges. Neither Borrower nor any of its Subsidiaries has filed a consent pursuant to IRC Section 341(f) or agreed to have IRC Section 341(f)(2) apply to any dispositions of subsection (f) assets (as such term is defined in IRC Section 341(f)(4)). None of the property owned by Borrower or any of its Subsidiaries is property which such Person is required to treat as being owned by any other Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, as in effect immediately prior to the enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within the meaning of IRC Section 168(h). Except as set forth on Schedule 4.14 hereto, neither Borrower nor any of its Subsidiaries has agreed or has been requested to make any adjustment under IRC Section 481(a) by reason of a change in accounting method or otherwise initiated by Borrower or any of its Subsidiaries and neither Borrower nor any of its Subsidiaries has any knowledge that the IRS has proposed any such adjustment or change in accounting method. Except as set forth on Schedule 4.14 hereto, neither Borrower nor any of its Subsidiaries has any obligation under any written tax sharing agreement. 4.15. ERISA. Schedule 4.15 hereto lists all Plans maintained or contributed to by Borrower or any of its ERISA Affiliates, and separately identifies any Multiem- 54 ployer Plans of Borrower or any of its ERISA Affiliates and any Welfare Plans. Each such Plan has been determined by the IRS to be tax qualified under IRC Section 401(a), and the trusts created thereunder have been determined to be exempt from tax under the provisions of IRC Section 501, and nothing has occurred which would cause the loss of such qualification or tax-exempt status or the imposition of any IRC or ERISA liability or penalty in excess of $1,000,000. Each such Plan is in compliance in all material respects with the applicable provisions of ERISA and the IRC, including the filing of reports required under ERISA, the IRC or any other applicable law or regulation with the relevant Governmental Authority the failure of which to file could reasonably be expected to result in a liability of Borrower or such ERISA Affiliate in excess of $1,000,000 and all such reports which are true and correct in all material respects as of the date given. None of Borrower, any of its Subsidiaries or any of its ERISA Affiliates, with respect to any of their Plans, has failed to make any contribution or pay any amount due as required under Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan. Neither Borrower nor any of its ERISA Affiliates has engaged in a "prohibited transaction," as such term is defined in IRC Section 4975 and Title I of ERISA, in connection with any of their Plans which would subject, or has a reasonable likelihood of subjecting, Borrower or such ERISA Affiliate (after giving effect to any exemption) to the tax on prohibited transactions imposed by IRC Section 4975 or any other liability, PROVIDED that the "amount involved" under said section is in excess of $1,000,000. No Plan of Borrower or any of its ERISA Affiliates which is not a Multiemployer Plan has been terminated, nor has any accumulated funding deficiency (as defined in IRC Section 412(a)) been incurred (without regard to any waiver granted under IRC Section 412), nor has any funding waiver from the IRS been received or requested. There has not been any Reportable Event or any event requiring disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Plan of Borrower or any of its ERISA Affiliates (other than a Multiemployer Plan), if any of the foregoing could reasonably result in liability of Borrower or any of its ERISA Affiliates in excess of $1,000,000. The value of the assets of each Plan of Borrower or any of its ERISA Affiliates (other than a Multiemployer Plan) equalled or exceeded the present value of the accrued benefits of each such Plan as of the end of the preceding Plan year using Plan actuarial assumptions as in effect for such Plan year. There are no claims (other than claims for benefits in the 55 normal course), actions or lawsuits asserted or instituted against, and neither Borrower nor any of its ERISA Affiliates has knowledge of any threatened litigation or claims against (i) the assets of any of their Plans (other than a Multiemployer Plan) or against any fiduciary of such Plan with respect to the operation of such Plan or (ii) Borrower, any of its Subsidiaries or any of Borrower's ERISA Affiliates with respect to any of their Plans which, if adversely determined, could have a material effect on the business, operations, properties, assets or conditions (financial or otherwise) of Borrower or any of its ERISA Affiliates, taken as a whole. Any bond required to be obtained by Borrower or any of its ERISA Affiliates under ERISA with respect to any Plan has been obtained and is in full force and effect. Neither Borrower nor any of its ERISA Affiliates has incurred (a) any Withdrawal Liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 of ERISA as a result of a complete or partial withdrawal (within the meaning of Section 4203 or 4205 of ERISA) from a Multiemployer Plan, which would exceed $1,000,000 in the aggregate or (b) any liability under ERISA Section 4062 to the PBGC, to a trust established under ERISA Section 4041 or 4042 or to a trustee appointed under ERISA Section 4042. Neither Borrower nor any of its ERISA Affiliates nor any organization to which Borrower or such ERISA Affiliate is a successor or parent corporation within the meaning of ERISA Section 4069(b) has engaged in a transaction within the meaning of ERISA Section 4069. Except as set forth on Schedule 4.15 hereto, neither Borrower nor any of its Subsidiaries maintains or has established any Welfare Plan. Borrower and each of its ERISA Affiliates has complied in all material respects with the notice and continuation coverage requirements of Section 4980B of the IRC and the regulations thereunder. Except as set forth on Schedule 4.15 hereto, no liability under any Plan of Borrower or any of its ERISA Affiliates has been funded, nor has such obligation been satisfied, with the purchase of a contract from an insurance company that is not rated AAA by Standard & Poor's Corporation and the equivalent by each other nationally recognized statistical rating organization. 4.16. NO LITIGATION. Except as set forth on Schedule 4.16 hereto, no action, claim or proceeding is now pending or, to the knowledge of Borrower, threatened against Borrower or any of its Subsidiaries, at law, in equity or otherwise, before any court, board, commission, agency or 56 instrumentality of any federal, state or local government or of any agency or subdivision thereof, or before any arbitrator or panel of arbitrators, which, if determined adversely, is reasonably likely to have a Material Adverse Effect, nor, to the knowledge of Borrower, does a state of facts exist which is reasonably likely to give rise to any such proceeding. Except as expressly set forth on Schedule 4.16 hereto, none of the matters set forth therein questions the validity of any of the Loan Documents, any of the other documents to be entered into in connection with the Restructuring or any action taken or to be taken pursuant thereto, or would either individually or in the aggregate have a Material Adverse Effect. 4.17. BROKERS. No broker or finder acting on behalf of Borrower brought about the obtaining, making or closing of the Loans made pursuant to this Agreement or the Restructuring and Borrower has no obligation to any Person in respect of any finder's or brokerage fees in connection with the Loans contemplated by this Agreement or the Restructuring. 4.18. REDEMPTION AGREEMENT; PREPAYMENT TRANSACTIONS; CONSENTS. (a) A true and complete copy of the Redemption Agreement (including all exhibits, schedules and amendments thereto) has been delivered to Agent, and a true and complete copy of each document delivered at the closing of the transactions contemplated by the Prepayment Transactions will be delivered to Agent on the Effective Date. None of Borrower or any of its Subsidiaries is in default under the Redemption Agreement or under any instrument or document to be delivered in connection therewith. (b) All necessary consents of the FCC and other Governmental Authorities required in connection with the USC Management Agreement, the Partnership Agreement, the Redemption Agreement and all the Prepayment Transactions have been obtained or will be obtained prior to the Effective Date, except (with respect to any consents required under any Media Licenses) where neither the failure to obtain any such consent nor the termination of any such Media License could reasonably be expected to have a Material Adverse Effect. 4.19. OUTSTANDING STOCK; OPTIONS; WARRANTS; ETC. The Stock of Borrower owned by the partners of Borrower listed on Schedule 4.19 hereto at the Effective Date will 57 constitute all of the issued and outstanding Stock of Borrower immediately following the Effective Date. Borrower will on the Effective Date have no outstanding rights, options, warrants or agreements pursuant to which it may be required to issue or sell any Stock other than the Redemption Agreement. 4.20. EMPLOYMENT AND LABOR AGREEMENTS. Except for the Partnership Agreement and the USC Management Agreement and as set forth on Schedule 4.20 hereto, there are no employment, consulting or management agreements covering management of Borrower or any of its Subsidiaries and there are no collective bargaining agreements or other labor agreements covering any employees of Borrower or any of its Subsidiaries. A true and complete copy of each such agreement has been furnished to Agent. 4.21. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Except as set forth on Schedule 4.21 hereto, there are no licenses, patents, patent applications, copyrights, service marks, trademarks, trademark applications or trade names necessary for Borrower or any of its Subsidiaries to continue to conduct its business as now conducted by them or proposed to be conducted by them. Borrower and each of its Subsidiaries conducts its respective businesses without infringement or claim of infringement of any license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of others, except where such infringement or claim of infringement would not have a Material Adverse Effect. To the best of Borrower's knowledge, there is no infringement or claim of infringement by others of any material license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of Borrower or any of its Subsidiaries. 4.22. FULL DISCLOSURE. No information contained in this Agreement, the other Loan Documents, the Financials, or any written statement furnished by or on behalf of Borrower or any of its Subsidiaries pursuant to the terms of this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which made and taking into account the transactions contemplated hereby and by the Prepayment Transactions. 58 4.23. LIENS. Except as otherwise provided in the Collateral Documents, the Liens granted to Lenders pursuant to the Collateral Documents will on the Effective Date be fully perfected first priority Liens in and to the Collateral described therein, except as such priority may be affected by any Permitted Encumbrances. 4.24. MEDIA LICENSES. Set forth on Schedule 4.24(a) hereto is a complete and correct list of all of the Media Licenses held by Borrower or any of its Subsidiaries relating to any of the Systems (which list sets forth the number of Subscribers attributable to such Media License as of December 31, 1995). All approvals, applications, filings, registrations, consents or other actions required of any local, state or federal authority to enable Borrower or any of its Subsidiaries (as the case may be) to exploit any such Media License have been obtained or made. Except as set forth on Schedule 4.24(b) hereto, neither Borrower nor any of its Subsidiaries has received any notice from the granting body or any other Governmental Authority with respect to any material breach of any covenant under, or any material default with respect to, any Media License held by Borrower or any of its Subsidiaries. True and complete copies of all Media Licenses listed on Schedule 4.24(a) hereto have previously been, or will upon receipt be, delivered to Agent. No material default has occurred and is continuing under any Media License held by Borrower or any of its Subsidiaries which default could reasonably be expected to have a Material Adverse Effect. All consents and approvals of and filings and registrations with, and all other actions in respect of, all Governmental Authorities required to maintain any Media License held by Borrower or any of its Subsidiaries in full force and effect prior to the scheduled date of expiration thereof have been or, prior to the time when required, will have been, obtained, given, filed or taken and are or will be in full force and effect, except where the loss of any such Media License, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 4.25. ENVIRONMENTAL PROTECTION. To Borrower's knowledge, all property owned or leased by Borrower or any of its Subsidiaries is free of Contaminants or any other substance which could result in the incurrence of material liabilities, or constituent thereof, currently defined, identified or listed as hazardous or toxic pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, ET SEQ., or any other 59 Environmental Law, or any other substance which has in the past or could at any time in the future cause or constitute a health, safety or environmental hazard to any Person or property, including, without limitation, asbestos in any building, petroleum products, PCBs, pesticides and radioactive materials. To Borrower's knowledge, none of Borrower or any of its Subsidiaries has caused or suffered to occur any Release of any Contaminant into the environment or any other condition that could result in the incurrence of material liabilities or any material violations of any Environmental Law. To Borrower's knowledge, based on reasonable investigation, none of Borrower or any of its Subsidiaries has caused or suffered to occur any condition on any of Borrower's Facilities that could give rise to the imposition of any Lien under any Environmental Law. To Borrower's knowledge, based on reasonable investigation, none of Borrower or any of its Subsidiaries is engaged in any manufacturing or any other operations, other than the use of petroleum products for vehicles, that require the use, handling, transportation, storage or disposal of any Contaminant, where such operations require permits or are otherwise regulated pursuant to any Environmental Law. 4.26. RECEIPT OF AGREEMENTS. Borrower acknowledges receipt of, and has reviewed, each Ancillary Agreement delivered on or prior to the Effective Date. 5. FINANCIAL STATEMENTS AND INFORMATION 5.1. REPORTS AND NOTICES. Borrower covenants and agrees that from and after the Effective Date and until the Termination Date, it shall deliver to Agent and, with respect to Sections 5.1(a) through (h), to each Lender: (a) Within 30 days after the end of each month, (i) a copy of the unaudited consolidated balance sheet of Borrower and its Subsidiaries as of the end of such month and (ii) a copy of the unaudited consolidated and consolidating statements of income of Borrower and its Subsidiaries for such month and for the year to date, all prepared in accordance with GAAP (subject to normal year-end adjustments and, in the case of the balance sheet, to the lack of requisite footnotes), setting forth in comparative form in each case the projected consolidated figures for such period (all such financial statements to include appropriate supporting details (prepared separately for each of Missouri, Kentucky, Florida, North Carolina and any other state, if any) delineating the financial positions and 60 performance of each System and the amount and nature of any Capital Expenditures during such month). (b) Within 45 days after the end of each Fiscal Quarter, (i) a copy of the unaudited consolidated balance sheet of Borrower and its Subsidiaries as of the close of such quarter and the related consolidated and consolidating statements of income and cash flows for that portion of the Fiscal Year ending as of the close of such Fiscal Quarter and (ii) a copy of the unaudited consolidated and consolidating statements of income and cash flow of Borrower and its Subsidiaries for such Fiscal Quarter, all prepared in accordance with GAAP (subject to normal year-end adjustments), such financial statements to include appropriate supporting details delineating the financial position and condition of each System and to be accompanied by (A) a statement in reasonable detail showing the calculations used in determining compliance with the covenant set forth in Section 7.10 hereof, (B) a statement in reasonable detail showing the amount and nature of any Capital Expenditures (prepared separately for each of Missouri, Kentucky, Florida, North Carolina and any other state, if any) during such Fiscal Quarter and (C) the certification of the chief executive officer or chief financial officer of Borrower that all such financial statements are complete and correct and present fairly in accordance with GAAP (subject to normal year-end adjustments) the consolidated financial position, the consolidated and consolidating results of operations and the cash flows of Borrower and its Subsidiaries as at the end of such quarter and for the period then ended, and that there was no Default or Event of Default in existence as of such time. (c) Within 90 days after the end of each Fiscal Year (or, if Borrower shall then be subject to the periodic reporting requirements of Section 13 or Section 15(d) of the Securities and Exchange Act of 1934, as amended, and its Fiscal Year shall then end on December 31 of each year, on such later date as Borrower files its Annual Report on Form 10-K, but in no event later than 105 days after the end of each Fiscal Year), a copy of the annual audited consolidated and unaudited consolidating financial statements of Borrower and its Subsidiaries, consisting of consolidated and consolidating balance sheets and consolidated and consolidating statements of income and partners' capital and cash flows, setting forth in comparative form in each case the consolidated and consolidating figures for the previous Fiscal Year, which financial statements shall be prepared in accor- 61 dance with GAAP, certified (only with respect to the consolidated financial statements) without qualification by the independent certified public accountants regularly retained by Borrower, by any other "Big 6" firm of independent certified public accountants or by any other firm of independent certified public accountants of recognized national standing selected by Borrower and acceptable to Agent, and accompanied by (i) a schedule in reasonable detail showing the calculations used in determining (x) compliance with the covenant set forth in Section 7.10 hereof and (y) the amount of Consolidated Available Cash Flow for such Fiscal Year, (ii) a report from such accountants to the effect that in connection with their audit examination, nothing has come to their attention to cause them to believe that a Default or Event of Default has occurred, (iii) a certification of the chief executive officer or chief financial officer of Borrower that, to the best of his knowledge, there was no Default or Event of Default in existence as at the end of such Fiscal Year, (iv) a statement in reasonable detail showing the amount and nature of any Capital Expenditures (prepared respectively for each of Missouri, Kentucky, Florida, North Carolina and any other state, if any) during such Fiscal Year, and (v) in the case of Fiscal Year 1995, a certificate of Borrower certifying the ratio of Total Debt to Annualized Consolidated System Cash Flow as of the Effective Date together with a certificate of KPMG Peat Marwick certifying Annualized Consolidated System Cash Flow as of the Effective Date. (d) As soon as practicable, but in any event within five Business Days after an executive officer of Borrower becomes aware of the existence of any Default or Event of Default, or any development or other information which has had, or which such officer reasonably believes will have, a Material Adverse Effect, telephonic or telegraphic notice specifying the nature of such Default or Event of Default or development or information, including the anticipated effect thereof, which notice shall be promptly (and in any event within ten days) confirmed in writing (specifying that such notice is a "Notice of Default or Event of Default" or a "Notice of Material Adverse Effect", as the case may be). (e) (i) Within 30 days after the beginning of each Fiscal Year: (A) projected consolidated cash flow statements of Borrower and its Subsidiaries (prepared 62 separately for each of Missouri, Kentucky, Florida, North Carolina and any other state, if any), including summary details of cash disbursements, including for Capital Expenditures, for such Fiscal Year, on a monthly basis; and (B) projected consolidated income statements of Borrower and its Subsidiaries (prepared separately for each of Missouri, Kentucky, Florida, North Carolina and any other state, if any) for such Fiscal Year, on a monthly basis; (ii) Within 60 days after the beginning of each Fiscal Year, projected consolidated balance sheets of Borrower and its Subsidiaries for such Fiscal Year, on a quarterly basis; (iii) Within 90 days after the beginning of each Fiscal Year: (A) projected consolidated balance sheets of Borrower and its Subsidiaries for each subsequent Fiscal Year through and including the Fiscal Year in which the Maturity Date occurs, on an annual basis; (B) projected consolidated cash flow statements of Borrower and its Subsidiaries (prepared separately for each of Missouri, Kentucky, Florida, North Carolina and any other state, if any), including summary details of cash disbursements, including for Capital Expenditures, for each subsequent Fiscal Year through and including the Fiscal Year in which the Maturity Date occurs, on an annual basis; and (C) projected consolidated income statements of Borrower and its Subsidiaries (prepared separately for each of Missouri, Kentucky, Florida, North Carolina and any other state, if any), for each subsequent Fiscal Year through and including the Fiscal Year in which the Maturity Date occurs, on an annual basis; together (in the case of clauses (i), (ii) and (iii) above) with appropriate supporting details as may be reasonably requested by any Lender (including, without limitation, a breakout (prepared separately for each of Missouri, 63 Kentucky, Florida, North Carolina and any other state, if any) of projected Subscribers, Premium Units, Homes Passed and rates in effect for Subscribers). (f) If requested in writing by Agent or any Lender, copies of all federal, state, local and foreign tax returns and reports in respect of income, franchise or other taxes on or measured by income (excluding sales, use or like taxes) filed by Borrower or any of its Subsidiaries. (g) Within 30 days following the end of each calendar month, a Subscriber statistic report for such month in such detail as may be reasonably requested by Agent, certified by Borrower, including but not limited to (i) the number of Subscribers and Premium Units for each cable television system (prepared separately for each of Missouri, Kentucky, Florida, North Carolina and any other state, if any) owned or operated by Borrower or any of its Subsidiaries separately identifying the number of Subscribers (A) whose accounts payable to Borrower or any of its Subsidiaries are more than 90 days past due from the date of billing or (B) as to which a request has been made that service be discontinued, (ii) Homes Passed during such period, (iii) average recurring revenue per Subscriber during such period and (iv) a comparison of such actual number of Subscribers and Premium Units with the number and composition of Subscribers and Premium Units assumed by Borrower for purposes of the projections relating to such period furnished by Borrower to Agent and each Lender pursuant to Section 5.1(e) hereof. (h) Within 15 days after being requested to do so by Agent within one year after the Effective Date, supplements or amendments, if any, to the Schedules hereto and representations and warranties herein with respect to any matter hereafter arising which, if existing or occurring at the date of this Agreement, would have been required to be set forth in such Schedule or as an exception to such representation or warranty or which is necessary to correct any information in such Schedule or representation or warranty which has been rendered inaccurate thereby; PROVIDED, HOWEVER, that Borrower shall be required to prepare and deliver such supplements and amendments only once. (i) Within 60 days after the Effective Date, an unaudited balance sheet of Borrower and its Subsidiaries as 64 of the Effective Date (and after giving effect to the Prepayment Transactions), prepared in accordance with GAAP. (j) Such information as Agent may reasonably request concerning the amount and method of allocation of Allocation Items (as defined in the USC Management Agreement) charged to Borrower or any of its Subsidiaries pursuant to the USC Management Agreement. (k) Such other information respecting Borrower's or any of its Subsidiaries' business, financial condition or prospects as Agent or any Lender may, from time to time, reasonably request in writing. 5.2. COMMUNICATION WITH ACCOUNTANTS. Borrower authorizes Agent to communicate directly with its independent certified public accountants and authorizes those accountants to disclose to Agent any and all financial statements and other supporting financial documents and schedules, including copies of any management letter with respect to the business, financial condition and other affairs of Borrower or any of its Subsidiaries. On or before the Effective Date, Borrower shall deliver a letter addressed to such accountants instructing them to comply with the provisions of this Section 5.2. Agent agrees to provide Borrower with reasonable notice prior to requesting any such information from Borrower's accountants (and an officer of Borrower shall be entitled to attend any meeting between, and to participate in any communication between, Agent and such accountants), except that no such notice shall be required upon the occurrence and during the continuance of any Event of Default. 6. AFFIRMATIVE COVENANTS Borrower covenants and agrees that, unless the Required Lenders shall otherwise consent in writing, from and after the date hereof and until the Termination Date: 6.1. MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Borrower shall, and shall cause each of its Subsidiaries to, (a) do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and its rights, licenses, privileges and franchises; (b) continue to conduct its business substantially as conducted on the date hereof (other than changes therein otherwise permitted hereunder); and (c) at all times maintain, preserve and protect all of its trademarks and 65 trade names and preserve the remainder of its property in use or useful in the conduct of its business and keep the same in good repair, working order and condition (taking into consideration ordinary wear and tear) and from time to time make, or cause to be made, all needful and proper repairs, renewals and replacements, betterments and improvements thereto consistent with cable television industry practices, so that the business carried on in connection therewith may be properly and advantageously conducted at all times; SUBJECT, in the case of clauses (b) and (c) above, to such changes which are consistent with the operation by Borrower and its Subsidiaries of cable television systems and which would not have a Material Adverse Effect. 6.2. PAYMENT OF OBLIGATIONS. (a) Borrower shall, and shall cause each of its Subsidiaries to, (i) pay and discharge or cause to be paid and discharged, all the Obligations, as and when due and payable and (ii) pay and discharge, or cause to be paid and discharged promptly, all (A) Charges imposed upon it, its income and profits or any of its property (real, personal or mixed) and (B) lawful claims for labor, materials, supplies and services or otherwise before any thereof shall become in default (except, in the case of clauses (A) and (B) above, for Charges and other claims not exceeding $600,000 in the aggregate at any one time outstanding. (b) Borrower and its Subsidiaries may in good faith contest, by proper legal actions or proceedings, the validity or amount of any Charges or claims referred to in Section 6.2(a)(i) or (ii) hereof, PROVIDED that at the time of commencement of any such action or proceeding, and during the pendency thereof (i) no Default or Event of Default shall have occurred as a result thereof; (ii) adequate Reserves with respect thereto are maintained on the books of Borrower or such Subsidiary, in accordance with GAAP; (iii) such contest operates to suspend collection of the contested Charges or claims; (iv) none of the Collateral would be subject to forfeiture or loss or any Lien by reason of the institution or prosecution of such contest; (v) no Lien shall exist for such Charges or claims during such action or proceeding; (vi) Borrower or such Subsidiary shall promptly pay or discharge such contested Charges and all additional charges, interest, penalties and expenses, if any, and shall deliver to Agent evidence reasonably acceptable to Agent of such compliance, payment or discharge, if such contest is terminated or discontinued adversely to 66 Borrower or such Subsidiary; and (vii) nonpayment or nondischarge thereof would not have a Material Adverse Effect. (c) Notwithstanding anything to the contrary contained in Section 6.2(b) hereof, Borrower and each of its Subsidiaries shall have the right to pay the Charges or claims described in Section 6.2(a)(ii) hereof and in good faith contest, by proper legal actions or proceedings, the validity or amount of such Charges or claims. 6.3. AGENT'S FEES. Borrower shall pay to Agent, on demand, any and all reasonable fees, costs or expenses that Agent shall pay to a bank or other similar institution arising out of or in connection with the forwarding to Borrower or any other Person on behalf of Borrower by Agent of proceeds of the Loans. 6.4. BOOKS AND RECORDS. Borrower shall, and shall cause each of its Subsidiaries to, keep adequate records and books of account with respect to its business activities, in which proper entries, reflecting all of their financial transactions, are made in accordance with GAAP and on a basis consistent with the Financials referred to in Section 4.6(b) hereof. 6.5. LITIGATION. Borrower shall notify Agent in writing, promptly upon learning thereof, of any litigation commenced against Borrower and/or any of its Subsidiaries, and of the institution against any of them of any suit or administrative proceeding in each case that, either individually or in the aggregate, might, in the reasonable judgment of Borrower, have a Material Adverse Effect. 6.6. INSURANCE. Borrower shall, and shall cause each of its Subsidiaries to, maintain insurance covering, without limitation, fire, theft, burglary, public liability, property damage, product liability, workers' compensation and insurance on all property and assets, all in amounts and scope customary for the cable television industry and under policies issued by insurers reasonably satisfactory to Agent and with a lender's loss payable clause in favor of Agent for the benefit of Lenders. Borrower shall, and shall cause each of its Subsidiaries to, pay all insurance premiums payable by them when due. 6.7. COMPLIANCE WITH LAW. Borrower shall, and shall cause each of its Subsidiaries to, comply with all federal, state and local laws and regulations applicable to 67 it, including, without limitation, those regarding the collection, payment and deposit of employees' income, unemployment and social security taxes and those relating to environmental matters, except in each case where the failure to comply is not reasonably likely to have a Material Adverse Effect. 6.8. AGREEMENTS. Borrower shall, and shall cause each of its Subsidiaries to, perform, within all required time periods (after giving effect to any applicable grace periods), all of its obligations and enforce all of its rights under each agreement with any of its Affiliates to which it is a party, including, without limitation, any leases to which Borrower or such Subsidiary is a party, where the failure to so perform and enforce would have a Material Adverse Effect. Borrower shall not, and shall cause each of its Subsidiaries not to, terminate or modify in any manner adverse to any such party any provision of any such agreement which termination or modification could have a Material Adverse Effect. 6.9. EMPLOYEE PLANS. (a) With respect to other than a Multiemployer Plan, (i) for each Plan hereafter adopted or maintained by Borrower or any of its ERISA Affiliates, Borrower shall or shall cause such ERISA Affiliate to seek and receive determination letters from the IRS to the effect that such Plan is qualified within the meaning of IRC Section 401(a); (ii) from and after the adoption of any Plan by Borrower or any of its ERISA Affiliates, Borrower shall cause such Plan to be qualified within the meaning of IRC Section 401(a) and to be administered in all material respects in accordance with the requirements of ERISA and IRC Section 401(a); and (iii) Borrower shall not take any action which would cause such Plan not to be qualified within the meaning of IRC Section 401(a) or not to be administered in all material respects in accordance with the requirements of ERISA and IRC Section 401(a). (b) Borrower shall, and shall cause each of its ERISA Affiliates to, deliver to Agent: (i)(A) as soon as possible, and in any event within 30 days, after Borrower or any such ERISA Affiliate knows or has reason to know that any ERISA Event described in clause (a) of the definition of ERISA Event or any event requiring disclosure under Section 4063(a) of ERISA with respect to any Plan of Borrower or any of its ERISA Affiliates has occurred and (B) within 10 days after Borrower or any of its ERISA Affiliates knows or has reason to know that any other ERISA Event with respect to 68 any Plan of Borrower or any of its ERISA Affiliates has occurred or a request for a minimum funding waiver under IRC Section 412 with respect to any Plan of Borrower or any of its ERISA Affiliates has been made, a statement of the chief financial officer of Borrower or such ERISA Affiliate setting forth details as to such Reportable Event or other event and the action which Borrower or such ERISA Affiliate proposes to take with respect thereto, together with a copy of the notice of such Reportable Event or other event, if required by the applicable regulations under ERISA, given to the PBGC; (ii) promptly (and in any event within 30 days) after the filing thereof by Borrower or such ERISA Affiliate with the DOL, IRS or the PBGC, copies of each annual and other report with respect to each Plan of Borrower and its ERISA Affiliates; (iii) promptly (and in any event within 30 days) after receipt thereof, a copy of any adverse notice, determination letter, ruling or opinion Borrower or such ERISA Affiliate may receive from the PBGC, DOL or IRS with respect to any Plan of Borrower or any of its ERISA Affiliates; (iv) promptly, and in any event within ten Business Days after receipt thereof, a copy of any correspondence Borrower or such ERISA Affiliate receives from the plan sponsor (as defined in ERISA Section 4001(a)(10)) of any Multiemployer Plan concerning potential withdrawal liability pursuant to ERISA Section 4219 or Section 4202, and a statement from the chief financial officer of Borrower or such ERISA Affiliate setting forth details as to the events giving rise to such potential withdrawal liability and the action which Borrower or such ERISA Affiliate proposes to take with respect thereto; (v) notification within 30 days of any material increase in the benefits of any existing Plan of Borrower or any of its ERISA Affiliates which is not a Multiemployer Plan or the establishment of any new Plan or the commencement of contributions to any Plan to which Borrower or such ERISA Affiliate was not previously contributing; (vi) promptly, and in any event within ten Business Days, after receipt thereof by Borrower or such ERISA Affiliate from the PBGC, copies of each notice received by Borrower or such ERISA Affiliate of the PBGC's intention to terminate any of their Plans or to have a trustee appointed to administer any of their Plans; (vii) notification within ten days of a request for a minimum funding waiver under IRC Section 412 with respect to any Plan and a copy of such request; (viii) notification within two Business Days after Borrower or any of its ERISA Affiliates knows or has reason to know that Borrower or such ERISA Affiliate has or intends to file a notice of intent to terminate any Plan under a distress termination within the 69 meaning of Section 4041(c) of ERISA and a copy of such notice; and (ix) promptly after the commencement thereof, notice of all actions, suits and proceedings before any court or Governmental Authority, domestic or foreign, affecting Borrower, any of its ERISA Affiliates or any Plan of Borrower or any of its ERISA Affiliates except those which, if adversely determined, would not have a reasonable likelihood of having a Material Adverse Effect. 6.10. MEDIA LICENSES. Borrower shall, and shall cause each of its Subsidiaries to, keep in full force and effect all of their Media Licenses, except those the loss of which individually or in the aggregate would not have a Material Adverse Effect. Borrower shall furnish to Agent copies of all notices which Borrower or any of its Subsidiaries shall have received from the FCC or other Governmental Authorities concerning any Media License, other than communications of a daily or routine nature, promptly after such receipt. 6.11. LEASES; NEW REAL ESTATE. (a) Borrower shall, and shall cause each of its Subsidiaries to, provide Agent with copies of all material leases of real property or similar agreements with respect to real property (and all amendments thereto) entered into by Borrower or any such Subsidiary after the date hereof, whether as lessor or lessee. Borrower shall, and shall cause each of its Subsidiaries to, comply in all material respects with all of its and their obligations under all leases now existing or hereafter entered into or assumed by it or them with respect to real property, including, without limitation, all leases listed on Schedule 4.8(b) hereto, except where any failures to comply would not, individually or in the aggregate, have a Material Adverse Effect. Borrower shall, and shall cause each of its Subsidiaries to, (i) provide Agent with a copy of each notice of default received by Borrower or such Subsidiary under any such lease as soon as practicable after receipt of any such notice and deliver to Agent a copy of each notice of default sent by Borrower or such Subsidiary under any such lease simultaneously with its delivery of such notice under such lease; (ii) notify Agent at least 14 days prior to the date Borrower or such Subsidiary takes possession of material newly leased premises or becomes liable under any material lease, whichever is earlier; and (iii) obtain and deliver to Agent a non-disturbance agreement, in form and substance satisfactory to Agent, prior to entering into any material new Lease. 70 (b) If Borrower or any of its Subsidiaries shall acquire any Real Estate or enter into a Lease which Agent designates as material to Borrower or any of its Subsidiaries at any time prior to the Termination Date, Borrower or such Subsidiary shall, at the request of Agent or any Lender, promptly execute and deliver to Agent a first priority mortgage (or deed of trust, as appropriate) in favor of Agent for the benefit of Lenders covering such Real Estate or Lease, in form and substance reasonably satisfactory to Agent. In such case, Borrower or such Subsidiary shall deliver to Agent with respect to each mortgaged property an A.L.T.A. form B (or other form reasonably acceptable to Agent) mortgagee policy of title insurance in an amount and issued by a title insurance company satisfactory to Agent insuring that the relevant mortgage relating thereto creates and constitutes a valid first Lien against such mortgaged property in favor of Agent, subject only to exceptions and reservations which do not impair the use of the premises and which are reasonably acceptable to counsel to Agent, with such endorsements and affirmative insurance (including, without limitation, survey coverage, perimeter, metes and bounds) as Agent may reasonably request. 6.12. ENVIRONMENTAL MATTERS. (a) Borrower shall, and shall cause each of its Subsidiaries to, (i) comply in all material respects with the Environmental Laws applicable to it, (ii) notify Agent promptly after becoming aware thereof of any Release, Adverse Environmental Condition or Environmental Claim in connection with Borrower's or any of its Subsidiaries' Facilities, and (iii) promptly forward to Agent a copy of any order, notice, permit, application or any other communication or report received by Borrower or any of its Subsidiaries in connection with any such matters as they may affect such premises, if material. (b) Borrower shall fully and promptly indemnify and hold harmless Agent and each Lender, their respective Subsidiaries and Affiliates and each of their respective officers, directors, employees and agents, from and against any loss, liability, damage, deficiency, fine, penalty or expense, including, without limitation, attorneys' fees, suffered or incurred by Agent or any Lender, whether as mortgagee in possession, or as successor in interest to Borrower or any of its Subsidiaries as lessee of any premises by virtue of foreclosure or acceptance in lieu of foreclosure (i) under or on account of any Environmental Law, including the assertion of any Lien thereunder; (ii) with respect to any Release or Contaminant affecting such premises, whether 71 or not the same originates or emanates from such premises or any contiguous Real Estate, including any loss of value of such premises as a result of a Release or Contaminant; and (iii) with respect to any other matter affecting such premises within the jurisdiction of any federal, state or municipal agency or official administering any Environmental Law, except if caused by Agent's or any Lender's gross negligence or willful misconduct. (c) In the event of any Release or Contaminant affecting any premises occupied by Borrower or any of its Subsidiaries, whether or not the same originates or emanates from such premises or any contiguous Real Estate, and if Borrower or such Subsidiary shall fail to comply with any of the requirements of any Environmental Law, or in the case of any leasehold premises, if required to do so under the applicable Lease, Agent or any Lender may, but shall not be obligated to, give such notices or cause such work to be performed or take any and all actions deemed necessary or desirable to remedy such Release or remove such Contaminant or cure such failure to comply. Any amounts paid by Agent or any such Lender as a result thereof, together with interest thereon at the rate set forth in Section 2.7 hereof then applicable to Index Rate Advances, shall be immediately due and payable by Borrower and, until paid, shall be added to the Obligations. Nothing in this Agreement shall be construed as limiting or impeding Borrower's rights and obligations to take any and all necessary or desirable actions to address any Release or Adverse Environmental Condition or to comply with any Environmental Law. 6.13. SEC FILINGS; CERTAIN OTHER NOTICES. Borrower shall furnish to Agent and each Lender (i) promptly after the filing thereof with the Securities and Exchange Commission, a copy of each report, notice or other filing, if any, by Borrower with the Securities and Exchange Commission, (ii) copies of all notices which Borrower or any of its Subsidiaries shall have received from the FCC or any other Governmental Authority concerning any Media License which notices are (A) material to the business of Borrower and its Subsidiaries taken as a whole or (B) relate to the revocation or renewal of, or default under, any Media License, in each case promptly after each such receipt or delivery, and (iii) a copy of each written report or other communication received by Borrower from or delivered by Borrower to the Securities and Exchange Commission in each case promptly after each such receipt or delivery. 72 6.14. FINANCIAL COVENANTS. (a) TOTAL DEBT TO ANNUALIZED CONSOLIDATED SYSTEM CASH FLOW. Borrower and its Subsidiaries shall, on a consolidated basis, maintain a ratio of Total Debt to Annualized Consolidated System Cash Flow not in excess of 6.25:1.00; PROVIDED, HOWEVER, that compliance with this financial covenant shall be determined at the time of each request by Borrower for an Advance and such determination shall be based on Total Debt as of such date, after giving effect to such Advance, and Annualized Consolidated System Cash Flow for the most recently completed Fiscal Quarter of Borrower or portion thereof occurring after the Effective Date. (b) OPERATING CASH FLOW TO INTEREST EXPENSE. Borrower and its Subsidiaries, on a consolidated basis, shall maintain through the Maturity Date (determined based on the most recently completed two consecutive Fiscal Quarters of Borrower or portion thereof occurring after the Effective Date) a ratio of Operating Cash Flow to Interest Expense of not less than 1.50:1.00. 6.15. POST-EFFECTIVE DATE ITEMS. On or prior to March 21, 1996 (or April 14, 1996 with respect to clause (iii) below for any New York corporations), Borrower shall deliver to Agent copies of (i) Schedules 4.8(a) and 4.8(b) hereto, (ii) governmental certificates, dated the most recent practicable date prior to such date, with telegram updates where available, showing that Cablevision, Borrower, and each of the Guarantors is organized and in good standing in the jurisdiction of its organization and is qualified as a foreign corporation or partnership and, if applicable, in good standing in all other jurisdictions in which it is qualified to transact business, and (iii) the documents of each Loan Party referred to in Section 3.1(f) hereof (except any partnership agreement) certified as of a recent date by the Secretary of State of the jurisdiction of such Loan Party's organization, which Schedules, governmental certificates and documents shall be in form and substance satisfactory to Agent. 7. NEGATIVE COVENANTS Borrower covenants and agrees that, without the Required Lenders' prior written consent, from and after the date hereof and until the Termination Date: 73 7.1. MERGERS, ETC. Neither Borrower nor any Subsidiary of Borrower shall, directly or indirectly, by operation of law or otherwise, merge with, consolidate with, acquire any assets (other than in the ordinary course of business) or capital stock of, or combine with, any Person, nor form or acquire any Subsidiary, directly or indirectly, except for any merger or consolidation of Active Subsidiaries of Borrower (other than Missouri Partnership or any of its Subsidiaries) if Borrower shall have given Agent 30 Business Days' prior written notice thereof (describing such proposed transaction in reasonable detail) and Agent shall have consented thereto; PROVIDED that, in the case of such exception above, Borrower shall have taken all actions necessary to maintain the priority and perfection of Lenders' Liens on the Collateral under the Loan Documents, which obligation shall include the execution and delivery by all Persons reasonably deemed appropriate by Agent of a guaranty, security agreement, pledge agreement and any other similar document deemed appropriate by Agent, all containing terms substantially similar to the Collateral Documents (as applicable). 7.2. INVESTMENTS; LOANS AND ADVANCES. Except as otherwise permitted by Section 7.3 or 7.4 hereof or set forth on Schedule 7.2 hereof, Borrower shall not, and shall not permit any of its Subsidiaries to, make any investment in, or make or accrue any loans or advances of money to any Person, through the direct or indirect holding of securities or otherwise; PROVIDED, HOWEVER, that Borrower shall be permitted hereunder, and may permit hereunder its Active Subsidiaries (other than Missouri Partnership or any of its Subsidiaries) to, (a) make one or more cash investments in, or make or accrue one or more loans or advances of money to, Borrower or any other Active Subsidiary of Borrower, provided that such loans and advances to Missouri Partnership shall not exceed $1,000,000 at any time outstanding; and (b) make the payments required pursuant to Section 6.11 of the Partnership Agreement; and PROVIDED FURTHER, HOWEVER, that Borrower and its Active Subsidiaries may make and own investments in (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and at the time of its acquisition having the highest rating obtainable from either Standard & Poor's Corporation or Moody's Investors Service, Inc., (iii) certificates of deposit, maturing no more than one year from 74 the date of creation thereof, issued by commercial banks incorporated under the laws of the United States of America or any State thereof, each having combined capital, surplus and undivided profits of not less than $200,000,000 and having a rating of "A" or better by a nationally recognized statistical rating organization, and (iv) time deposits, maturing no more than 90 days from the date of creation thereof, with commercial banks or savings bank or savings and loan associations, the deposits of which are insured by the Federal Deposit Insurance Corporation, and in amounts not exceeding the maximum amounts of insurance thereunder. 7.3. INDEBTEDNESS. (a) Except as otherwise expressly permitted by this Section 7.3 or this Agreement, Borrower shall not, and shall not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, whether recourse or nonrecourse, whether superior or junior, and whether secured or unsecured, PROVIDED THAT Borrower or any of its Active Subsidiaries may create, incur or permit to exist (i) Indebtedness secured by Liens permitted under Section 7.9 hereof, (ii) the Obligations, (iii) trade credit incurred to acquire goods, supplies, services (including, without limitation, obligations incurred to employees for compensation for services rendered in the ordinary course of business), or merchandise on terms similar to those granted to purchasers in similar lines of business as Borrower or such Active Subsidiary as of the date hereof and incurred in the ordinary and normal course of business, (iv) lease payment obligations under Leases which Borrower or such Active Subsidiary is not prohibited from entering into under the Loan Documents (PROVIDED that none of Borrower nor any of its Subsidiaries shall become a party to or bound by Capital Leases which, in the aggregate for all such companies, require payments in excess of $6,600,000 prior to the Termination Date), (v) deferred taxes, (vi) unfunded pension fund and other employee benefit plan obligations and liabilities but only to the extent they are permitted to remain unfunded under applicable law, (vii) Indebtedness to any Active Subsidiary or to Borrower; PROVIDED FURTHER, that such Indebtedness of Missouri Partnership shall not exceed $1,000,000 at any time outstanding; (viii) Indebtedness in connection with surety bonds provided in the ordinary course of business securing obligations not exceeding $4,000,000 in the aggregate, (ix) liabilities under Title IV of ERISA if such liabilities, individually or in the aggregate, do not result in a violation of Section 7.16 hereof, (x) other Indebtedness for borrowed money to Lenders, (xi) accrued 75 liabilities of Borrower and its Active Subsidiaries under Media Licenses, and PROVIDED FURTHER, that the Subsidiaries of Borrower may create, incur or permit to exist Indebtedness of Subsidiaries of Borrower created under the USC/Subsidiary (Senior) Guaranty and (xii) Indebtedness incurred pursuant to Section 6.11 of the Partnership Agreement. (b) Except as provided in Section 7.11 hereof, Borrower shall not, and shall not permit any of its Subsidiaries to, sell or transfer, either with or without recourse, any assets, of any nature whatsoever, in respect of which a Lien is granted or to be granted pursuant to any Loan Document or engage in any sale-leaseback or similar transaction involving any of such assets. 7.4. EMPLOYEE LOANS. Borrower shall not, and shall not permit any of its Subsidiaries to, make or accrue any loans or other advances of money to any employee of Borrower or such Subsidiary, except for loans by Borrower or any Active Subsidiary to employees not in excess at any one time outstanding of $300,000 in the aggregate for all such loans, PROVIDED that such loans are made only in the ordinary course of Borrower's or such Active Subsidiary's business consistent with past practices. 7.5. CAPITAL STRUCTURE. Borrower shall not, and shall not permit any of its Subsidiaries to, issue or agree to issue any of its authorized but not outstanding Stock (including treasury shares). 7.6. MAINTENANCE OF BUSINESS. Except as otherwise permitted hereunder, Borrower shall not, and shall not permit any of its Subsidiaries to, engage in any business other than constructing, owning, acquiring, altering, repairing, financing, operating, promoting and otherwise exploiting cable television systems. In addition, none of Borrower or any of its Subsidiaries shall acquire or operate any cable television system (other than the Systems) or acquire or commence any alternate form of television program distribution, including, without limitation, broadcast television, multipoint distribution services, multichannel multipoint distribution services, satellite master antenna systems and direct broadcast satellites. 7.7. TRANSACTIONS WITH AFFILIATES. (a) Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or be a party to any 76 transaction with any Affiliate of Borrower or such Subsidiary (other than an Active Subsidiary of Borrower), or with Cablevision or any of its Subsidiaries, on terms that are, taken as a whole, less favorable to Borrower or such Subsidiary, as the case may be, than would be available in a comparable transaction with a Person not an Affiliate of Borrower or such Subsidiary; PROVIDED that the foregoing restriction shall not apply to (i) any transaction permitted under Section 7.15 hereof; (ii) performance under any contract or agreement in effect on the date hereof and set forth on Schedule 7.7 hereto; (iii) performance under any contract or agreement which was entered into with a Person which was not an Affiliate of Borrower or any of its Subsidiaries on the date of such contract or agreement other than a contract or agreement entered into with a Person in anticipation of such Person's becoming such an Affiliate or a holder of 10% of a class of equity securities of such company; (iv) continued performance under any contract or arrangement which was not less favorable to Borrower or such Subsidiary than would have been available in a comparable transaction with an unrelated party at the date of the contract or commencement of the arrangement; (v) payments by Borrower under the USC Management Agreement; (vi) transactions with any entity 10% or more of the Stock of which is owned by any Person which also owns 10% or more of the Stock of Borrower if (A) such other entity is not controlled by such Person and (B) neither Borrower nor any of its Subsidiaries is aware of such Person's investment in such other entity; (vii) transactions pursuant to or contemplated by the Guaranties, the Redemption Agreement, the Partnership Agreement or otherwise pursuant to the Prepayment Transactions; (viii) the transactions contemplated pursuant to that certain Letter Agreement dated as of June 30, 1992 by and among Borrower, U.S. Cable Management Partners, Multivision Cable TV Corp. and consented to by GE Capital; and (ix) the transactions contemplated pursuant to that certain Letter Agreement dated as of June 30, 1992 by and among Multivision Cable TV Corp., Borrower and Cablevision. (b) Borrower shall not, and shall not permit any of its Subsidiaries to, enter into any agreement or transaction to pay to any Person any management or similar fee based on or related to Borrower's or any such Subsidiary's operating performance or income or any percentage thereof or pay any management or similar fee to an Affiliate, except as provided in the USC Management Agreement. 77 7.8. GUARANTIED INDEBTEDNESS. Borrower shall not, and shall not permit any of its Subsidiaries to, incur any Guarantied Indebtedness (excluding the Guarantied Indebtedness pursuant to the Guaranties) except (i) by endorsement of instruments or items of payment for deposit to the account of Borrower or such Subsidiary, (ii) for Guarantied Indebtedness incurred for the benefit of Borrower or such Subsidiary if the primary obligation is permitted by this Agreement and (iii) for liabilities under surety bonds permitted under Section 7.3(a)(viii) hereof. 7.9. LIENS. Except as set forth on Schedule 7.9 hereto, Borrower shall not, and shall not permit any of its Subsidiaries to, create or permit any Lien on any of its properties or assets except: (a) presently existing or hereafter created Liens in favor of Lenders; and (b) Permitted Encumbrances. 7.10. CAPITAL EXPENDITURES. Borrower shall not, and shall not permit any of its Subsidiaries to, make Capital Expenditures that, in the aggregate, exceed $18,500,000 in any Fiscal Year; PROVIDED, HOWEVER, that any excess of the amount provided above for any one Fiscal Year over the actual aggregate Capital Expenditures of Borrower and its Subsidiaries during such Fiscal Year may be carried forward only to, and made available only for, the next succeeding Fiscal Year. Agent and Lenders hereby waive any Default or Event of Default (as such terms are defined in the Existing USC Senior Loan Agreement) resulting from Borrower's failure to comply with Section 7.10 of the Existing USC Senior Loan Agreement as a result of having made Capital Expenditures for Fiscal Year 1995 of up to $20,600,000 (but not in excess of such amount). 7.11. SALES OF ASSETS. (a) Borrower shall not, and shall not permit any of its Subsidiaries to, sell, transfer, convey or otherwise dispose of any of its assets or properties; PROVIDED, HOWEVER, that the foregoing shall not prohibit: (i) a Disposition to any Person (which may include Cablevision); PROVIDED that the Net Cash Proceeds thereof shall not be less than the sum of (x) the aggregate outstanding amount of the Obligations and (y) $4,010,000; PROVIDED FURTHER that such Net Cash Proceeds are immediately 78 applied to repay in full the Obligations, and an additional $4,010,000 of such Net Cash Proceeds are paid to such Person or Persons as GE Capital shall in its sole discretion direct; (ii) the sale of surplus or obsolete equipment and fixtures or transfers resulting from any casualty or condemnation of assets or properties, PROVIDED that if the proceeds of such sales or transfers exceed $150,000 in any one instance or $1,800,000 in the aggregate, Borrower shall, within 90 days thereafter, prepay the Loans, in an amount equal to the excess of (x) the entire proceeds of any such single sale or transfer exceeding $150,000 (or the amount of such aggregate proceeds in excess of $1,800,000 as the case may be), over (y) the amount expended by Borrower to repair or replace such assets or properties prior to, or within 90 days after, the occurrence of such sale or transfer; PROVIDED FURTHER that any net sales proceeds to be applied to prepay Loans shall be applied in accordance with the provisions of Section 2.3(a) hereof; (iii) any transfer of the Newco Stock to V Cable pursuant to the Exchange Agreement Termination (as defined in the Redemption Agreement); and (iv) a disposition of a System to any Person; PROVIDED, HOWEVER, that (i) (a) a Required Approval (as defined in the Redemption Agreement) with respect to such System is a condition to the consummation of the transaction under the Redemption Agreement and (b) Borrower has not been able to obtain such Required Approval and would not, in its reasonable judgment, be able to obtain such Required Approval in a timely manner, (ii) the Net Cash Proceeds thereof are applied to repay a portion of the Obligations and (iii) after giving effect to any such disposition Borrower will be in compliance with Section 6.14 hereof as if such disposition had occurred prior to the end of the last full Fiscal Quarter ending immediately preceding the date of such disposition as evidenced by a certificate of an officer of Borrower; and, PROVIDED, FURTHER, that Borrower shall not be permitted to dispose of a System pursuant to this clause (iv) if after giving effect to such disposition, the total number of Subscribers (measured on the latest practicable date prior to such disposition) attributable to Systems disposed of pursuant to this clause (iv), after giving effect to the proposed disposition, would in the aggregate exceed 10% of the total number of Subscribers (measured as of the latest practicable date) attributable to 79 Systems owned by Borrower and its Subsidiaries as of such date. (b) In the event of any prepayment of any Obligations pursuant to Section 7.11(a)(i) hereof, Borrower's right to receive Revolving Credit Advances hereunder shall simultaneously terminate. 7.12. CANCELLATION OF INDEBTEDNESS. Borrower shall not, and shall not permit any of its Subsidiaries to, cancel any claim or debt owing to it, except for reasonable consideration and in the ordinary course of business or for sound business reasons. 7.13. EVENTS OF DEFAULT. Borrower shall not, and shall not permit any of its Subsidiaries to, take or omit to take any action, which act or omission would constitute a material default or event of default pursuant to, or noncompliance with, any contract, Lease, mortgage, deed of trust or instrument to which it is a party or by which it or any of its property is bound, or any document creating a Lien, unless such default, event of default or noncompliance would not have a Material Adverse Effect. 7.14. HEDGING TRANSACTIONS. Borrower shall not, and shall not permit any of its Subsidiaries to, engage in any interest rate hedging, swaps or similar transaction, except as contemplated by this Agreement; PROVIDED that Borrower and its Active Subsidiaries may engage in interest rate caps. 7.15. RESTRICTED PAYMENTS. Borrower shall not, and shall not permit any of its Subsidiaries to, make any Restricted Payment nor shall Borrower permit any Subsidiary of Borrower to do so with respect to Borrower's Stock. Nothing contained in this Section 7.15 shall restrict any payment required or permitted to be made (a) to Cablevision pursuant to the terms of the USC Management Agreement, or (b) to any Person pursuant to Section 6.11 of the Partnership Agreement. 7.16. ERISA. Borrower shall not, directly or indirectly, (a) terminate, or permit any of its ERISA Affiliates to directly or indirectly terminate, any of their respective Plans subject to Title IV of ERISA so as to result in any liability to Borrower or any of its ERISA Affiliates which would have a Material Adverse Effect, (b) permit to exist any ERISA Event which would have a 80 Material Adverse Effect, (c) make or permit any of Borrower's ERISA Affiliates to make a complete or partial withdrawal (within the meaning of Section 4201 of ERISA) from any Multiemployer Plan so as to result in any material (in the opinion of Agent) liability to Borrower or any of its ERISA Affiliates which would have a Material Adverse Effect, (d) permit, or permit its Subsidiaries or any of Borrower's ERISA Affiliates to (i) satisfy any liability under any Plan of Borrower or any of its ERISA Affiliates by purchasing annuities from an insurance company or (ii) invest the assets of any Plan with an insurance company, unless, in each case, such insurance company is rated AA by Standard & Poor's Corporation and the equivalent by each other nationally recognized statistical rating organization at the time of the investment, (e) establish or become obligated to, or permit any of Borrower's ERISA Affiliates to establish or become obligated to establish, any Welfare Plan, or modify any Welfare Plan which would result in the present value of future liabilities under any such Plan to increase by more than $250,000, or (f) increase the benefits of any of its Plans or the Plans of any of its ERISA Affiliates, or begin to maintain or begin to contribute to any new Plan. 7.17. MODIFICATION OF CERTAIN AGREEMENTS. (a) Borrower shall not amend, supplement or otherwise modify any of the provisions of its certificate of limited partnership of its Partnership Agreement and shall not permit any of its Subsidiaries to amend its organizational documents, including, without limitation, its certificate of limited partnership, partnership agreements without the prior written consent of Agent. (b) Borrower shall not, and shall not permit (x) any of its Subsidiaries to, amend, supplement, modify or terminate any of the USC Non- Competition Agreement or Missouri Partnership Agreement to which it is party without the prior written consent of Agent and the Required Lenders and (y) any of its Subsidiaries to consent to any amendment, modification, cancellation or extension of any of the USC Non-Competition Agreement, Missouri Partnership Agreement or the Tax Sharing Agreement to which it is a party without the prior written consent of Agent and the Required Lenders. 8. TERM 8.1. TERMINATION. Subject to the provisions of Section 2 hereof, the financing arrangement contemplated 81 hereby in respect of the Revolving Credit Loan shall be in effect until (and only until) the Commitment Termination Date; PROVIDED, HOWEVER, that in the event of a prepayment of any part of or the entire Revolving Credit Loan prior to the Commitment Termination Date with funds borrowed from any Person other than Lenders, then, without limiting any other remedies of Lenders or Agent hereunder, Agent shall be entitled in its discretion to require Borrower to simultaneously therewith pay to Lenders, in immediately available funds, all Obligations in full, in accordance with the terms of the agreements creating and instruments evidencing such Obligations. 8.2. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING ARRANGEMENT. Except as otherwise expressly provided for in the Loan Documents, no termination or cancellation (regardless of cause or procedure) of any financing arrangement under this Agreement shall in any way affect or impair the powers, obligations, duties, rights or liabilities of Borrower or the rights of Agent or any Lender relating to any transaction or event occurring prior to such termination. Except as otherwise expressly provided herein or in any other Loan Document, all undertakings, agreements, covenants, warranties and representations contained in the Loan Documents shall survive such termination or cancellation and shall continue in full force and effect until such time as all of the Obligations have been paid in full in accordance with the terms of the agreements creating such Obligations, at which time the same shall terminate. 8.3. TERMINATION PRIOR TO EFFECTIVE DATE. In the event that the Effective Date shall not have occurred on or prior to April 15, 1996, upon notice by Agent to Borrower, all obligations of Agent and each Lender hereunder shall forthwith be terminated. Notwithstanding any such termination, Borrower shall continue to be obligated to indemnify Agent and each Lender pursuant to the provisions of Section 2.14(a) hereof. 9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES 9.1. EVENTS OF DEFAULT. The occurrence of any one or more of the following events (regardless of the reason therefor) shall constitute an "Event of Default" hereunder: (a) Borrower shall fail to make any payment of principal of, interest on or any other amount owing in 82 respect of, the Revolving Credit Loan, either Term Loan or any of the other Obligations when due and payable or declared due and payable, except that (i) with respect to expenses payable under this Agreement, or other Obligations owing under any Loan Document other than this Agreement, such failure shall have remained unremedied for a period of ten days after Borrower has received notice of such failure from Agent and (ii) with respect to interest payable under this Agreement, Borrower shall be entitled to not more than one ten-day grace period during any period of 365 consecutive days. (b) Borrower shall fail or neglect to perform, keep or observe any of the provisions of Section 6.15 hereof or Article 7 hereof and, with respect to any such breach of Section 7.10 hereof, such failure or neglect shall not be cured within the period and in the manner provided in Section 9.5 hereof. (c) Borrower or any other Loan Party shall fail or neglect to perform, keep or observe any other provision of this Agreement or of any of the other Loan Documents and the same shall remain unremedied for a period of 30 days after Borrower or such other Loan Party shall become aware thereof. (d) A default shall occur under any other agreement, document or instrument to which any Loan Party is a party or by which any such Loan Party or any such Loan Party's property is bound and such default (i) involves the failure to make any payment (whether of principal, interest or otherwise) due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) in respect of any Indebtedness of any Loan Party in an aggregate amount exceeding $600,000 or (ii) causes (or permits any holder of such Indebtedness or a trustee to cause) such Indebtedness or a portion thereof in an aggregate amount exceeding $600,000 to become due prior to its stated maturity or prior to its regularly scheduled dates of payment. (e) Any representation or warranty herein or in any Loan Document, in any written statement pursuant hereto or thereto, or in any report, financial statement or certificate made or delivered to Agent or any Lender by any Loan Party pursuant hereto or thereto, shall be untrue or incorrect in any material respect as of the date when made or deemed made (including those made or deemed made pursuant to Section 3.3 hereof). 83 (f) Any of the assets of any Loan Party shall be attached, seized, levied upon or subjected to a writ or distress warrant, or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors of any Loan Party and shall remain unstayed or undismissed for 30 consecutive days; or any Person other than any Loan Party shall apply for the appointment of a receiver, trustee or custodian for any of the assets of any Loan Party and such application shall remain unstayed or undismissed for 30 consecutive days; or any Loan Party shall have concealed, removed or permitted to be concealed or removed, any part of its property, with intent to hinder, delay or defraud its creditors or any of them or made or suffered a transfer of any of its property or the incurring of an obligation which may be fraudulent under any bankruptcy, fraudulent conveyance or other similar law. (g) A case or proceeding shall have been commenced against any Loan Party in a court having competent jurisdiction seeking a decree or order in respect of such Loan Party (i) under title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of such Loan Party or of any substantial part of its properties or (iii) ordering the winding-up or liquidation of the affairs of such Loan Party and such case or proceeding shall remain undismissed or unstayed for 60 consecutive days or such court shall enter a decree or order granting the relief sought in such case or proceeding. (h) Any Loan Party shall (i) file a petition seeking relief under title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) consent to the institution of proceedings thereunder or to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of such Loan Party or of any substantial part of its properties, (iii) fail generally to pay its debts as such debts become due or (iv) take any corporate action in furtherance of any such action. (i) Final judgment or judgments (after the expiration of all times to appeal therefrom) for the payment of money in excess of $600,000 in the aggregate shall be ren- 84 dered against Borrower or any of its Subsidiaries and the same shall not be (i) fully covered by insurance in accordance with Section 6.6 hereof or (ii) vacated, stayed, bonded, paid or discharged for a period of 15 days. (j) With respect to any Plan of Borrower or any of its ERISA Affiliates: (i) Borrower or any other party-in-interest or disqualified person shall engage in any transactions which in the aggregate would reasonably be expected to result in a direct or indirect liability of Borrower or any of its ERISA Affiliates in excess of $600,000 under Section 409 or 502 of ERISA or IRC Section 4975; (ii) Borrower or any of its ERISA Affiliates shall incur any accumulated funding deficiency, as defined in IRC Section 412, in the aggregate in excess of $600,000, or request a funding waiver from the IRS for contributions in the aggregate in excess of $600,000; (iii) Borrower or any of its ERISA Affiliates shall incur any withdrawal liability in the aggregate in excess of $600,000 as a result of a complete or partial withdrawal within the meaning of Section 4203 or 4205 of ERISA; (iv) Borrower or any of its ERISA Affiliates shall notify the PBGC of an intent to terminate, or the PBGC shall institute proceedings to terminate, a Plan; (v) a Reportable Event shall occur with respect to a Plan, and within 15 days after the reporting of such Reportable Event to any Lender, such Lender shall have notified Borrower in writing that (A) it has made a determination that, on the basis of such Reportable Event, there are reasonable grounds under Section 4042(a)(1), (2) or (3) of ERISA for the termination of such Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Plan and (B) as a result thereof a Default or an Event of Default shall occur hereunder; (vi) a trustee shall be appointed by a court of competent jurisdiction to administer any Plan or the assets thereof; (vii) the benefits of any Plan shall be increased, or Borrower or any of its ERISA Affiliates shall begin to maintain, or begin to contribute to, any Plan, without the prior written consent of the Required Lenders; or (viii) any ERISA Event with respect to a Plan shall have occurred, and 30 days thereafter (A) such ERISA Event (if correctable) shall not have been corrected and (B) the then present value of such Plan's vested benefits shall exceed the then current value of assets accumulated in such Plan; PROVIDED, HOWEVER, that the events listed in subsections (iv)-(viii) shall constitute Events of Default only if, as of the date thereof or any subsequent date, the maximum amount of liability Borrower or any of its ERISA Affiliates could incur in the 85 aggregate under Section 4062, 4063, 4064, 4219 or 4243 of ERISA or any other provision of law with respect to all such Plans, computed by the actuary of the Plan taking into account any applicable rules and regulations of the PBGC at such time, and based on the actuarial assumptions used by the Plan, resulting from or otherwise associated with such event, exceeds $600,000. (k) Any material provision of any Collateral Document, after delivery thereof pursuant to Section 3.1 hereof, shall for any reason cease to be valid or enforceable in accordance with its terms, except as provided in the Termination and Modification Documents, or any security interest created under any Collateral Document shall cease to be a valid and perfected first priority security interest or Lien (except as otherwise stated therein or permitted thereunder and except as provided in the Termination and Modification Documents, in any material portion of the Collateral purported to be covered thereby. (l) V Cable and V Sub shall cease to own 100% of the Preferred USC Interest or (ii) U.S. Cable Partners shall cease to own the Class II General Partnership Interest (as defined in the Partnership Agreement). (m) Cablevision, Borrower or any Subsidiary thereof shall (i) breach any material obligation under the USC Management Agreement (including any obligation under Article III or Article VI thereof) and such breach shall remain uncured for a period of 30 days, or breach any representation or warranty thereunder in any material respect or (ii) breach any obligation under the USC Non-Competition Agreement. (n) The USC Management Agreement shall be terminated. (o) Borrower shall amend, modify or supplement, without the prior written consent of Agent, the Partnership Agreement or the USC Management Agreement. (p) Borrower shall breach any provisions of the Redemption Agreement. (q) GE Capital, based on the certificates of the Borrower and KPMG Peat Marwick delivered pursuant to Section 5.1(c)(v) hereof, shall determine that the ratio of Total Debt to Annua lized Consolidated System Cash Flow shall 86 exceed 5.94:1:00 as of the Effective Date and Borrower shall not have cured such noncompliance within 30 days after notice thereof from GE Capital. 9.2. REMEDIES. (a) If any Event of Default shall have occurred and be continuing, (i) GE Capital may terminate this facility with respect to further Revolving Credit Advances, whereupon no further Revolving Credit Advances shall be made hereunder, and/or (ii) Agent shall at the request, or may with the consent, of the Required Lenders declare all Obligations to be forthwith due and payable, whereupon all such Obligations shall become and be due and payable, without presentment, demand, protest or further notice of any kind, all of which are expressly waived by Borrower; PROVIDED, HOWEVER, that upon the occurrence of an Event of Default specified in Section 9.1(g) or (h) hereof, such Obligations shall become due and payable without declaration, notice or demand by Agent or any Lender. (b) Agent shall take such action with respect to any Default or Event of Default as shall be directed by the Required Lenders; PROVIDED, HOWEVER, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of Agent and Lenders taken as a whole, including any action (or failure to act) pursuant to the Loan Documents. 9.3. WAIVERS BY BORROWER. Except as otherwise provided for in this Agreement and to the extent permitted by applicable law, Borrower waives (i) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Agent or any Lender on which Borrower may in any way be liable and hereby ratifies and confirms whatever Agent or any Lender may do in this regard, (ii) all rights to notice and a hearing prior to Agent's or any Lender's taking possession or control of, or to Agent's or any Lender's replevy, attachment or levy upon, the Collateral or any bond or security which might be required by any court prior to allowing Agent or any Lender to exercise any of its remedies and (iii) the benefit of all valuation, appraisal and exemption laws. Borrower acknowl- 87 edges that it has been advised by counsel of its choice with respect to this Agreement, the other Loan Documents and the transactions evidenced by this Agreement and the other Loan Documents. 9.4. RIGHT OF SET-OFF. Upon the occurrence and during the continuance of any Event of Default, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of Borrower against any and all of the obligations of Borrower now or hereafter existing under this Agreement and the Notes held by such Lender, whether or not such Lender shall have made any demand under this Agreement or any such Note and although such obligations may be unmatured. Each Lender agrees promptly to notify Borrower after any such set-off and application made by such Lender; PROVIDED, HOWEVER, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this Section 9.4 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Lender may have. 9.5. CURE OF CAPITAL EXPENDITURE DEFAULT. Borrower shall be entitled to cure any breach of the covenant set forth in Section 7.10 hereof if V Cable (solely with new funds provided by Cablevision as a capital contribution to such entity) shall make, during the Fiscal Year in respect of which such breach occurred or within 90 days thereafter, a capital contribution to Borrower in cash, equal to the excess of the amount of Capital Expenditures made by Borrower and its Subsidiaries for the applicable Fiscal Year over the aggregate amount of Capital Expenditures permitted to be made for such Fiscal Year pursuant to Section 7.10 hereof. Borrower shall notify Agent of the making by V Cable of any capital contribution constituting a cure of any breach of the covenant in Section 7.10 pursuant to this Section 9.5 within five days after the making thereof, which notice shall also specify (i) the date any such capital contribution was made and (ii) the amount of any such capital contribution. Such capital contribution applied to cure a breach of the provisions of Section 7.10 shall be referred to as a "Curing Capital Contribution." 88 10. THE AGENT 10.1. AUTHORIZATION AND ACTION. Each Lender hereby appoints and authorizes Agent to take such action on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement and the other Loan Documents (including, without limitation, enforcement or collection of the Notes), Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders (including, without limitation, (a) the application of payments in any manner other than as set forth in Section 2.10 hereof and (b) if any prepayment of a LIBOR Advance in the manner and at the times provided in this Agreement would result in any such prepayment occurring prior to the last day of the Interest Period for such Advance, directing Borrower to make (or not prohibiting Borrower from making) such prepayment on a day other than the last day of the Interest Period therefor), and such instructions shall be binding upon all Lenders; PROVIDED, HOWEVER, that Agent shall not be required to take any action which exposes Agent to personal liability or which is contrary to this Agreement or the other Loan Documents or applicable law. Agent agrees to give each Lender prompt notice of each notice given to it by Borrower pursuant to Article 2 or Section 6.5 hereof (other than notices relating solely to the Revolving Credit Loan). Except for the foregoing notices, and such other specific notices or reports received by Agent from Borrower as any Lender may reasonably request, Agent shall have no duty or responsibility to provide to any Lender any credit or other information concerning the business, operations, assets, property, financial and other condition, prospects or creditworthiness of Borrower which may come into the possession of Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates. 10.2. AGENT'S RELIANCE, ETC. Neither Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the other Loan Documents, except for its or their own gross negligence or wilful misconduct. Without limitation of the generality of the foregoing, Agent: (i) may treat the payee of any 89 Note as the holder thereof until Agent receives written notice of the assignment or transfer thereof signed by such payee and in form satisfactory to Agent; (ii) may consult with legal counsel (including counsel for any Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statement, warranty or representation made in or in connection with this Agreement or the other Loan Documents; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of any Loan Party or to inspect the property (including the books and records) of any Loan Party; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall incur no liability under or in respect of this Agreement or the other Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. 10.3. GE CAPITAL AND AFFILIATES. With respect to its commitment hereunder to make Revolving Credit Advances and the Term Loans made by it, GE Capital shall have the same rights and powers under this Agreement and the other Loan Documents as any other Lender and may exercise the same as though it were not Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include GE Capital in its individual capacity. GE Capital and its Affiliates may lend money to, and generally engage in any kind of business with, any Loan Party, any Subsidiary or Affiliate of any Loan Party and any Person who may do business with or own securities of any Loan Party or any such Subsidiary or Affiliate, all as if GE Capital were not Agent and without any duty to account therefor to any Lender. 10.4. LENDER CREDIT DECISION. Each Lender acknowledges that it has, independently and without reliance upon Agent or any other Lender and based on the financial statements referred to in Section 4.6 hereof and such other documents and information as it has deemed appropriate, made 90 its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. 10.5. INDEMNIFICATION. Each Lender agrees to indemnify Agent (to the extent that Agent is not reimbursed by Borrower), ratably according to the respective principal amounts of the Notes then held by each of them, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by Agent under this Agreement; PROVIDED that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent's gross negligence or wilful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each other Loan Document, to the extent that Agent is not reimbursed for such expenses by Borrower. 10.6. SUCCESSOR AGENT. If GE Capital shall, consistent with Section 11.1 hereof, hold 50% or less of the aggregate principal amount of the Notes, Agent may resign by giving written notice thereof to each Lender and Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving notice of resignation, then the retiring Agent may, on behalf of Lenders, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any state thereof and having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appoint- 91 ment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article 10 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the other Loan Documents. 11. MISCELLANEOUS 11.1. COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT; SALE OF INTEREST. (a) The Loan Documents constitute the complete agreement between the parties with respect to the subject matter hereof and may not be modified, altered or amended except in accordance with Section 11.1(e) below. (b) Borrower may not sell, assign or transfer any of the Loan Documents or any portion thereof, including, without limitation, Borrower's rights, title, interests, remedies, powers and duties hereunder or thereunder. Borrower hereby consents to Agent's and any Lender's sale of participations, assignment, transfer or other disposition (each, a "Sale"), at any time or times, of any of the Loan Documents or of any portion thereof or interest therein to any bank or other financial institution, including, without limitation, Agent's and any Lender's rights, title, interests, remedies, powers or duties thereunder, whether evidenced by a writing or not; PROVIDED, HOWEVER, that, unless an Event of Default has occurred and is continuing, no Lender shall (without the written consent of Borrower and Agent) (i) effect any Sale of any Term Loans (A) if such Sale would result in any increased tax withholding obligation (or, in the case of a Sale by any Lender other than GE Capital, if such Sale would result in any additional payment being required to be made by Borrower pursuant to Section 2.13 hereof) and (B) unless GE Capital or any of its Affiliates would, after giving effect to such Sale, retain more than 50% of the aggregate principal amount of the Notes or (ii) effect a Sale of participations to one or more banks or other financial institutions ("Participants") in or to any of the Notes or any portion thereof or interest therein, PROVIDED that any Lender may effect a Sale of such participations so long as (w) such Lender does not sell (A) participations in an aggregate of 50% or more of the aggregate principal amount of such Lender's Notes or 92 (B) individual participations of less than $5,000,000, (x) such Lender shall remain solely responsible for all of its obligations under this Agreement and the Loan Documents, (y) Borrower, Agent and each other Lender shall continue to be entitled to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and (z) no Participant shall be entitled to require such Lender to take or omit to take any action hereunder; and PROVIDED FURTHER, HOWEVER, that in the event any Lender shall determine to effect a Sale, other than to an Affiliate of such Lender, of any portion of any Term Note, such Lender shall (except as otherwise agreed by Borrower) use reasonable good faith efforts to sell such participations and assignments to institutions reasonably acceptable to Borrower on terms acceptable to such Lender in such Lender's sole discretion. Each Lender agrees that the Sale of any participations or assignments in any Loan shall take place in accordance with all applicable laws, rules and regulations. (c) Without limiting the provisions of Section 11.1(b) hereof, unless an Event of Default occurs and is continuing, no Lender shall, without the prior written consent of Agent, effect any Sale other than (x) a Sale to one or more Affiliates of such Lender or as required by law, (y) a Sale to GE Capital or (z) a Sale of participations to one or more banks or other financial institutions in accordance with the limitations set forth in Section 11.1(b)(ii) hereof (PROVIDED that, in the case of clauses (x), (y) and (z) of this Section 11.1(c), Agent shall have received prior written notice thereof). Any consent of Agent contemplated hereunder may be given or withheld in its sole discretion and without any consent or approval of Borrower being required. (d) In the event Agent or any Lender effects a Sale or otherwise transfers all or any part of any Note consistent with the terms of this Agreement, Borrower shall, upon the request of Agent or such Lender, (i) issue new Notes to effect such assignment or transfer and (ii) execute such amendments to this Agreement as Agent may reasonably deem necessary or appropriate in order that the transferee may become a party thereto. (e) No amendment or waiver of any provision of this Agreement or the Notes or any other Loan Document, nor consent to any departure by Borrower therefrom, nor release of any Collateral or Guaranty, shall in any event be effec- 93 tive unless the same shall be in writing and signed by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; PROVIDED, HOWEVER, that no amendment, waiver or consent shall (i) subject any Lender to any additional obligations (without the written consent of such Lender), or (ii) amend this Section 11.1(e) without the written consent of each Lender affected thereby; and PROVIDED FURTHER, HOWEVER, that no amendment, waiver or consent shall, unless in writing and signed by Agent in addition to the Lenders required above to take such action, affect the rights or duties of Agent under this Agreement, any Note or any other Loan Document. (f) If GE Capital shall effect a Sale of any participations in the Term Loans to any Person, Borrower shall pay to GE Capital, from time to time, all amounts that the holder of such participation would have been entitled to receive pursuant to Section 2.14(b), 2.16(a) or 2.16(b) hereof if such holder was a Lender under this Agreement and directly held that portion of the Notes (or interest therein) underlying such participation (in which event GE Capital's right to receive such amounts pursuant to such provisions shall be correspondingly reduced). 11.2. FEES AND EXPENSES. Borrower shall pay all reasonable out-of-pocket expenses of Agent in connection with the preparation of the Loan Documents (including the reasonable fees and expenses of all of its counsel retained in connection with the Loan Documents and the transactions contemplated thereby). If, at any time or times, regardless of the existence of an Event of Default (except with respect to paragraphs (iii) and (iv) below, which shall be subject to an Event of Default having occurred and continuing), Agent (or, in the case of paragraphs (iii) and (iv) below, any Lender) shall employ counsel for advice or other representation or shall incur reasonable legal or other costs and expenses in connection with: (i) any amendment, modification or waiver, or consent with respect to, any of the Loan Documents; (ii) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent or any Lender, Borrower, any Subsidiary of Borrower or, subject to Section 2.14(a), any other Person) in any way relating to the Collateral, any of the Loan 94 Documents or any other agreement to be executed or delivered in connection herewith; (iii) any attempt to enforce any rights of Agent or any Lender against Borrower, any Subsidiary of Borrower or any other Person that may be obligated to any Lender by virtue of any of the Loan Documents; or (iv) any attempt to verify, protect, collect, sell, liquidate or otherwise dispose of the Collateral; then, and in any such event, the attorneys' fees arising from such services, including those of any appellate proceedings, and all expenses, costs, charges and other fees incurred by such counsel in any way or respect arising in connection with or relating to any of the events or actions described in this Section 11.2 shall be payable, on demand, by Borrower to Agent or such Lender and shall be additional Obligations secured under this Agreement and the other Loan Documents; PROVIDED, HOWEVER, that with respect to Lenders other than GE Capital, Borrower shall be responsible for the attorneys' fees of only one counsel for such other Lenders. Without limiting the generality of the foregoing, such expenses, costs, charges and fees may include: paralegal fees, costs and expenses; accountants' fees, costs and expenses; court costs and expenses; photocopying and duplicating expenses; court reporter fees, costs and expenses; long distance telephone charges; air express charges; telegram charges; secretarial overtime charges; and expenses for travel, lodging and food paid or incurred in connection with the performance of such legal services. 11.3. NO WAIVER BY AGENT OR ANY LENDER. Agent's or any Lender's failure, at any time or times, to require strict performance by any Loan Party of any provision of this Agreement or any of the other Loan Documents shall not waive, affect or diminish any right of Agent or such Lender thereafter to demand strict compliance and performance therewith. Any suspension or waiver by Agent or Lenders of an Event of Default by any Loan Party under any Loan Document shall not suspend, waive or affect any other Event of Default by any Loan Party under any Loan Document, whether the same is prior or subsequent thereto and whether of the same or of a different type. None of the undertakings, agreements, warranties, covenants and representations of any Loan Party contained in this Agreement or in any of the other Loan Documents and no Event of Default and no default by any Loan Party under any of the Loan Documents shall be 95 deemed to have been suspended or waived by Agent or Lenders, unless such suspension or waiver is by an instrument in writing signed by an officer of Agent and Required Lenders and directed to such Loan Party specifying such suspension or waiver. 11.4. REMEDIES. Agent's and each Lender's rights and remedies under this Agreement shall be cumulative and non-exclusive of any other rights and remedies which Agent and Lenders may have under any other agreement, including, without limitation, the Loan Documents, by operation of law or otherwise. Recourse to the Collateral shall not be required. 11.5. WAIVER OF JURY TRIAL. The parties hereto waive all right to trial by jury in any action or proceeding to enforce or defend any rights under the Loan Documents. 11.6. SEVERABILITY. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 11.7. PARTIES. This Agreement and the other Loan Documents shall be binding upon, and inure to the benefit of, the successors of Borrower, Agent and Lenders and the permitted assigns, transferees and endorsees of Agent and Lenders. 11.8. CONFLICT OF TERMS. Except as otherwise provided in this Agreement or any of the other Loan Documents by specific reference to the applicable provisions of this Agreement, if any provision contained in this Agreement is in conflict with, or inconsistent with, any provision in any of the other Loan Documents, the provision contained in this Agreement shall govern and control. 11.9. AUTHORIZED SIGNATURE. Until Agent shall be notified by Borrower to the contrary, the signature upon any document or instrument delivered pursuant hereto of an officer of V Sub listed on Schedule 11.9 hereto, which officer signs such document on behalf of V Sub in its capacity as general partner of Borrower, shall bind Borrower and be deemed to be the act of Borrower. 96 11.10. GOVERNING LAW. Except as otherwise expressly provided in any of the Loan Documents, in all respects, including all matters of construction, validity and performance, this Agreement and the Obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws, and any applicable laws of the United States of America. Agent, each Lender and Borrower agree to submit to personal jurisdiction and to waive any objection as to venue in the County of New York, State of New York. Service of process on Borrower, Agent or any Lender in any action arising out of or relating to any of the Loan Documents shall be effective if mailed to such party at the address listed in Section 11.11 hereof. Nothing herein shall preclude Agent, any Lender or Borrower from bringing suit or taking other legal action in any other jurisdiction. 11.11. NOTICES. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by another, or whenever any of the parties desires to give or serve upon another any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be delivered either in person with receipt acknowledged, or by telecopy, or by registered or certified mail, return receipt requested, postage prepaid, or by overnight courier, addressed as follows: (a) If to Agent at: General Electric Capital Corporation 201 High Ridge Road Stamford, Connecticut 06927-5100 Attention: Region Operations Manager Telecopy: (203) 316-7810 97 With copies to: General Electric Capital Corporation 3379 Peachtree Road, N.E., Suite 600 Atlanta, Georgia 30326 Attention: Thomas P. Waters Telecopy: (404) 842-1533 and General Electric Capital Corporation 201 High Ridge Road Stamford, Connecticut 06927-5100 Attention: Commercial Finance Legal Counsel Telecopy: (203) 316-7889 and Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attention: William M. Gutowitz, Esq. Norman D. Chirite, Esq. Telecopy: (212) 310-8007 (b) If to Borrower at: U.S. Cable Television Group, L.P. One Media Crossways Woodbury, New York 11797 Attention: General Counsel Telecopy: (516) 496-1780 With copies to: Proskauer Rose Goetz & Mendelsohn 1585 Broadway New York, New York 10036 Attention: Lawrence H. Budish, Esq. Telecopy: (212) 969-2900 98 and Sullivan & Cromwell 125 Broad Street New York, New York 10004 Attention: John P. Mead, Esq. Telecopy: (212) 558-3588 (c) If to any Lender, at its address indicated on the signature pages hereof, or, as to any party hereto, at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered or transmitted by telecopy or three Business Days after the same shall have been deposited in the United States mail or one Business Day after the same shall have been deposited with an overnight courier. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to the Persons designated above to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication. 11.12. SURVIVAL. The representations and warranties of Borrower in this Agreement shall survive the execution, delivery and acceptance hereof by the parties hereto and the closing of the transactions described herein or related hereto. 11.13. SECTION TITLES. The Section titles and Table of Contents contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto. 11.14. COUNTERPARTS. This Agreement may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement. 11.15. LIABILITY OF GENERAL PARTNERS. Neither V Sub nor U.S. Cable Partners shall have any personal liability in respect of Borrower's Obligations under this 99 Agreement or any other Loan Document executed and delivered by Borrower solely by reason of their status as general partners of Borrower; PROVIDED that the foregoing shall in no way limit or impair any Obligations or other obligations or liabilities of V Sub or U.S. Cable Partners under the Collateral Documents. IN WITNESS WHEREOF, this Agreement has been duly executed in New York, New York as of the date first written above. U.S. CABLE TELEVISION GROUP, L.P. By: V Cable G.P., Inc., its general partner By:/s/ Barry J. O'Leary ------------------------------ Name: Barry J. O'Leary Title: Senior Vice President, Finance and Treasurer GENERAL ELECTRIC CAPITAL CORPORATION, as Agent By: ------------------------------- Name: Title: GENERAL ELECTRIC CAPITAL CORPORATION, as Lender By: ------------------------------ Name: Title: 100 EX-10.67 8 EXHIBIT 10.67 AMENDED AND RESTATED LOAN AGREEMENT Dated as of March 15, 1996 between VC HOLDING, INC. a Delaware corporation as Borrower and THE LENDERS NAMED HEREIN as Lenders and GENERAL ELECTRIC CAPITAL CORPORATION as Agent and Lender TABLE OF CONTENTS SECTION PAGE - ------- ---- 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. AMOUNT AND TERMS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . 26 2.1. REVOLVING CREDIT ADVANCES.. . . . . . . . . . . . . . . . . . 26 2.2. TERM LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . 28 2.3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . 30 2.4. MANDATORY PREPAYMENT. . . . . . . . . . . . . . . . . . . . . 32 2.5. OPTIONAL PREPAYMENT; PREPAYMENT PREMIUM.. . . . . . . . . . . 33 2.6. USE OF PROCEEDS.. . . . . . . . . . . . . . . . . . . . . . . 33 2.7. SINGLE LOAN.. . . . . . . . . . . . . . . . . . . . . . . . . 33 2.8. INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . 33 2.9. LIMITATIONS ON TYPES OF ADVANCES. . . . . . . . . . . . . . . 36 2.10. RECEIPT OF PAYMENTS.. . . . . . . . . . . . . . . . . . . . . 36 2.11. APPLICATION OF PAYMENTS.. . . . . . . . . . . . . . . . . . . 37 2.12. SHARING OF PAYMENTS, ETC. . . . . . . . . . . . . . . . . . . 37 2.13. ACCOUNTING. . . . . . . . . . . . . . . . . . . . . . . . . . 38 2.14. TAXES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 2.15. INDEMNITY.. . . . . . . . . . . . . . . . . . . . . . . . . . 39 2.16. ACCESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 2.17. CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY. . . . . . . . 42 2.18. INCOME TAX REPORTING. . . . . . . . . . . . . . . . . . . . . 44 3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . 46 3.1. CONDITIONS TO EFFECTIVENESS.. . . . . . . . . . . . . . . . . 46 3.2. CONDITIONS TO EACH REVOLVING CREDIT ADVANCE AND EACH INCURRENCE OF A LETTER OF CREDIT OBLIGATION. . . . . . . . . 48 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 49 4.1. CORPORATE OR PARTNERSHIP EXISTENCE; COMPLIANCE WITH LAW.. . . 49 4.2. EXECUTIVE OFFICES.. . . . . . . . . . . . . . . . . . . . . . 50 4.3. SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . 50 4.4. CORPORATE OR PARTNERSHIP POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 50 4.5. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . 51 4.6. [INTENTIONALLY OMITTED] . . . . . . . . . . . . . . . . . . . 52 4.7. OWNERSHIP OF PROPERTY; LIENS. . . . . . . . . . . . . . . . . 52 4.8. NO DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . 54 4.9. LABOR MATTERS.. . . . . . . . . . . . . . . . . . . . . . . . 54 i SECTION PAGE - ------- ---- 4.10. OTHER VENTURES. . . . . . . . . . . . . . . . . . . . . . . . 54 4.11. INVESTMENT COMPANY ACT. . . . . . . . . . . . . . . . . . . . 54 4.12. MARGIN REGULATIONS. . . . . . . . . . . . . . . . . . . . . . 54 4.13. TAXES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 4.14. ERISA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 4.15. NO LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . 58 4.16. BROKERS.. . . . . . . . . . . . . . . . . . . . . . . . . . . 58 4.17. PREPAYMENT TRANSACTIONS; CONSENTS. . . . . . . . . . . . . . 59 4.18. OUTSTANDING STOCK; OPTIONS; WARRANTS; ETC.. . . . . . . . . . 59 4.19. EMPLOYMENT AND LABOR AGREEMENTS.. . . . . . . . . . . . . . . 59 4.20. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. . . . . . . . . 59 4.21. FULL DISCLOSURE.. . . . . . . . . . . . . . . . . . . . . . . 60 4.22. LIENS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 4.23. MEDIA LICENSES. . . . . . . . . . . . . . . . . . . . . . . . 60 4.24. ENVIRONMENTAL PROTECTION. . . . . . . . . . . . . . . . . . . 61 4.25. EXISTING LOAN AGREEMENT.. . . . . . . . . . . . . . . . . . . 62 4.26. INSURANCE.. . . . . . . . . . . . . . . . . . . . . . . . . . 62 4.27. RECEIPT OF AGREEMENTS . . . . . . . . . . . . . . . . . . . . 62 5. FINANCIAL STATEMENTS AND INFORMATION . . . . . . . . . . . . . . . . 62 5.1. REPORTS AND NOTICES.. . . . . . . . . . . . . . . . . . . . . 62 5.2. COMMUNICATION WITH ACCOUNTANTS. . . . . . . . . . . . . . . . 67 6. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 67 6.1. MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. . . . . . . 67 6.2. PAYMENT OF OBLIGATIONS. . . . . . . . . . . . . . . . . . . . 68 6.3. FINANCIAL COVENANTS.. . . . . . . . . . . . . . . . . . . . . 69 6.4. AGENT'S FEES. . . . . . . . . . . . . . . . . . . . . . . . . 70 6.5. BOOKS AND RECORDS.. . . . . . . . . . . . . . . . . . . . . . 70 6.6. LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . 70 6.7. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 70 6.8. COMPLIANCE WITH LAW.. . . . . . . . . . . . . . . . . . . . . 70 6.9. AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 71 6.10. EMPLOYEE PLANS. . . . . . . . . . . . . . . . . . . . . . . . 71 6.11. MEDIA LICENSES. . . . . . . . . . . . . . . . . . . . . . . . 73 6.12. LEASES; NEW REAL ESTATE.. . . . . . . . . . . . . . . . . . . 73 6.13. ENVIRONMENTAL MATTERS.. . . . . . . . . . . . . . . . . . . . 74 6.14. SEC FILINGS; CERTAIN OTHER NOTICES. . . . . . . . . . . . . . 75 6.15. POST-EFFECTIVE DATE ITEMS . . . . . . . . . . . . . . . . . . .76 7. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 76 7.1. MERGERS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . 76 7.2. INVESTMENTS; LOANS AND ADVANCES.. . . . . . . . . . . . . . . 77 7.3. INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . . . . . . 78 7.4. EMPLOYEE LOANS. . . . . . . . . . . . . . . . . . . . . . . . 79 7.5. CAPITAL STRUCTURE.. . . . . . . . . . . . . . . . . . . . . . 79 7.6. MAINTENANCE OF BUSINESS.. . . . . . . . . . . . . . . . . . . 80 ii SECTION PAGE - ------- ---- 7.7. TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . . . . . . 80 7.8. GUARANTIED INDEBTEDNESS.. . . . . . . . . . . . . . . . . . . 81 7.9. LIENS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 7.10. CAPITAL EXPENDITURES. . . . . . . . . . . . . . . . . . . . . 81 7.11. SALES OF ASSETS.. . . . . . . . . . . . . . . . . . . . . . . 82 7.12. CANCELLATION OF INDEBTEDNESS. . . . . . . . . . . . . . . . . 83 7.13. EVENTS OF DEFAULT.. . . . . . . . . . . . . . . . . . . . . . 83 7.14. HEDGING TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . 83 7.15. RESTRICTED PAYMENTS.. . . . . . . . . . . . . . . . . . . . . 84 7.16. ERISA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 7.17. MODIFICATION OF CERTAIN AGREEMENTS. . . . . . . . . . . . . . 84 8. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 8.1. TERMINATION.. . . . . . . . . . . . . . . . . . . . . . . . . 85 8.2. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING ARRANGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 85 8.3. TERMINATION PRIOR TO EFFECTIVE DATE.. . . . . . . . . . . . . 86 9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES . . . . . . . . . . . . . . . 86 9.1. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . 86 9.2. REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 90 9.3. WAIVERS BY BORROWER.. . . . . . . . . . . . . . . . . . . . . 91 9.4. RIGHT OF SET-OFF. . . . . . . . . . . . . . . . . . . . . . . 91 9.5. CURE OF FINANCIAL COVENANT DEFAULT. . . . . . . . . . . . . . 92 10. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 10.1. AUTHORIZATION AND ACTION. . . . . . . . . . . . . . . . . . . 93 10.2. AGENT'S RELIANCE, ETC.. . . . . . . . . . . . . . . . . . . . 93 10.3. GE CAPITAL AND AFFILIATES.. . . . . . . . . . . . . . . . . . 94 10.4. LENDER CREDIT DECISION. . . . . . . . . . . . . . . . . . . . 95 10.5. INDEMNIFICATION.. . . . . . . . . . . . . . . . . . . . . . . 95 10.6. SUCCESSOR AGENT.. . . . . . . . . . . . . . . . . . . . . . . 95 11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 11.1. COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT; SALE OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . 96 11.2. FEES AND EXPENSES.. . . . . . . . . . . . . . . . . . . . . . 98 11.3. NO WAIVER BY AGENT OR ANY LENDER. . . . . . . . . . . . . . . 100 11.4. REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 100 11.5. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . 100 11.6. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . 100 11.7. PARTIES.. . . . . . . . . . . . . . . . . . . . . . . . . . . 100 11.8. CONFLICT OF TERMS.. . . . . . . . . . . . . . . . . . . . . . 101 11.9. AUTHORIZED SIGNATURE. . . . . . . . . . . . . . . . . . . . . 101 11.10. GOVERNING LAW.. . . . . . . . . . . . . . . . . . . . . . . . 101 11.11. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . . 101 11.12. SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 103 11.13. SECTION TITLES. . . . . . . . . . . . . . . . . . . . . . . . 103 11.14. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . 103 iii INDEX OF EXHIBITS, SCHEDULES AND ANNEXES Exhibit A - Form of Notice of Revolving Credit Advance or Conversion Exhibit A-1 - Form of Notice of Term Loan Conversion Exhibit B - Form of Borrowing Date Certificate Exhibit C-1 - Form of Legal Opinion of Sullivan & Cromwell Exhibit C-2 - Form of Legal Opinion of Robert S. Lemle Schedule 1 - Capitalization Policies of Borrower Schedule 4.2 - Executive Offices Schedule 4.3 - Subsidiaries Schedule 4.7(a) - Owned Property Schedule 4.7(b) - Leased Property Schedule 4.10 - Other Ventures Schedule 4.13 - Tax Matters Schedule 4.14 - ERISA Matters Schedule 4.15 - Litigation Schedule 4.19 - Employment Matters Schedule 4.20 - Patents, Trademarks, Copyrights and Licenses Schedule 4.23(a) - Media Licenses of Borrower as held after the Effective Date Schedule 4.23(b) - Notices of Media License Material Default or Breach of Covenant Schedule 4.25 - Insurance Schedule 7.7 - Transactions with Affiliates Schedule 7.9 - Certain Liens Schedule 11.9 - Authorized Signatures Annex I - Cablevision Incentive Expense Allocation Methodology iv AMENDED AND RESTATED LOAN AGREEMENT, dated as of March 15, 1996, between VC HOLDING, INC., a Delaware corporation having an office at One Media Crossways, Woodbury, New York 11797 ("Borrower"), the lenders listed on the signature pages hereof ("Lenders"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation having an office at 201 High Ridge Road, Stamford, Connecticut 06927-5100 ("GE Capital"), as agent for Lenders hereunder (GE Capital, in such capacity, being "Agent"). W I T N E S S E T H : WHEREAS, Borrower, Lenders and Agent are parties to the Loan Agreement, dated as of December 31, 1992 (as heretofore amended, the "Existing Loan Agreement"); and WHEREAS, as of the date hereof, Borrower and certain of its affiliates are consummating the Prepayment Transactions (as defined in the USC Partnership Agreement), and in connection therewith the parties hereto desire to amend and restate the Existing Loan Agreement in its entirety; NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto agree that, effective as of the Effective Date, the Existing Loan Agreement is hereby amended and restated in its entirety as follows: 1. DEFINITIONS In addition to the defined terms appearing elsewhere in this Agreement, capitalized terms used in this Agreement shall have the following respective meanings when used herein: "Advance" shall mean an Index Rate Advance or a LIBOR Advance (each of which shall be a "Type" of Advance). "Adverse Environmental Condition" shall mean any of the matters referred to in clause (i) or (iii) of the definition of Environmental Claim or any Environmental Claim based on any of the matters referred to in clause (ii) of the definition of Environmental Claim. "Affiliate" shall mean, with respect to any Person, (i) each Person that, directly or indirectly, owns or controls, whether beneficially or as trustee, guardian or other fiduciary, 10% or more of the Stock having ordinary voting power in the election of directors of such Person and (ii) each Person that controls, is controlled by or is under common control with such Person. For the purpose of this definition, "control" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise; PROVIDED, HOWEVER, that with respect to each of Borrower and V Cable and any of its or their Subsidiaries or Affiliates, the term "Affiliate" shall not include GE Capital. "Agent" shall have the meaning assigned to it in the first paragraph of this Agreement and shall include GE Capital and any successor Agent appointed pursuant to Section 10.6 hereof. "Aggregate Loan" shall have the meaning assigned to it in Section 2.18(a) hereof. "Agreement" shall mean this Amended and Restated Loan Agreement, including all amendments, modifications and supplements hereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to this Agreement as the same may be in effect at the time any reference hereto becomes operative. "Ancillary Agreement" shall mean any agreement, undertaking, instrument, document or other writing executed by Borrower or any of its Subsidiaries, or any member of the V Cable Group, or any of their respective direct or indirect stockholders or partners, as a condition to advances or funding under this Agreement or otherwise in connection herewith, including, without limitation, the Tax Sharing Agreement, the Loan Documents and all amendments or supplements thereto. "Annualized Consolidated Operating Cash Flow" shall mean, for any Fiscal Quarter, the product of (i) Operating Cash Flow of Borrower and its Subsidiaries for such Fiscal Quarter multiplied by (ii) 4. "Applicable Margin" shall mean an interest margin determined quarterly and based upon the ratio of Total Debt to Annualized Consolidated Operating Cash Flow for the immediately preceding Fiscal Quarter as follows: 2 Total Debt to Annualized Index LIBOR Consolidated Operating Rate Rate Cash Flow Ratio plus plus ------------------------ ----- ----- greater than or .875% 1.875% equal to 6.25:1.00 greater than or .750% 1.750% equal to 5.50:1.00 and less than 6.25:1.00 less than 5.50:1.00 .500% 1.500% For purposes of determining the Applicable Margin to be used in calculating the interest which is payable in respect of any Fiscal Quarter or Interest Period, as the case may be, Annualized Consolidated Operating Cash Flow shall be determined based upon the last quarterly financial statements required to have been delivered to Lenders pursuant to Section 5.1(b) hereof; PROVIDED, HOWEVER, that if Borrower shall fail to deliver such financial statements on a timely basis, the Applicable Margin shall be the highest rate set forth above for the period until such financial statements have been delivered (whereupon the Applicable Margin shall be the applicable rate provided above for periods commencing after the date of such delivery until the following period's financial statements are due). "Borrower" shall have the meaning assigned to it in the first paragraph of this Agreement. "Borrowing Date Certificate" shall mean a certificate in the form attached hereto as Exhibit B. "Business Day" shall mean any day that is not a Saturday, a Sunday nor a day on which banks are required or permitted to be closed in the State of New York. "Cablevision" shall mean Cablevision Systems Corporation, a Delaware corporation. "Capital Expenditures" shall mean all amounts accrued (or, without double counting, paid) in respect of any fixed assets or improvements or for replacements, substitutions or additions thereto, that have a useful life of more than one year and that are required to be capitalized in accordance with GAAP. "Capital Lease" shall mean, with respect to any Person, any lease of any property (whether real, personal or 3 mixed) by such Person as lessee that, in accordance with GAAP, would be required either to be classified and accounted for as a capital lease on a balance sheet of such Person or otherwise to be disclosed as such in a note to such balance sheet, other than, in the case of Borrower or any of its Subsidiaries, any such lease under which Borrower or such Subsidiary is the lessor. "Capital Lease Obligation" shall mean, with respect to any Capital Lease, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would be required to appear on a balance sheet of such lessee in respect of such Capital Lease or otherwise be disclosed as such an obligation in a note to such balance sheet. "Cash Collateral Account" shall have the meaning assigned to it in Section 2.3(c)(i) hereof. "Cash Equivalents" shall have the meaning assigned to it in Section 2.3(c)(i) hereof. "Category 1 Capital Contribution" shall have the meaning assigned to it in Section 9.5 hereof. "Category 2 Capital Contribution" shall have the meaning assigned to it in Section 9.5 hereof. "Charges" shall mean all federal, state, county, city, municipal, local, foreign or other governmental (including, without limitation, PBGC) taxes at the time due and payable, levies, assessments, charges, liens, claims or encumbrances upon or relating to (i) the Collateral, (ii) the Obligations, (iii) Borrower's or any of its Subsidiaries' employees, payroll, income or gross receipts, (iv) Borrower's or any of its Subsidiaries' ownership or use of any of its assets, or (v) any other aspect of Borrower's or any of its Subsidiaries' business. "Code" shall mean the Uniform Commercial Code of the jurisdiction with respect to which such term is used, as in effect from time to time. "Collateral" shall mean, collectively, all Collateral referred to in the Security Agreements and all Pledged Collateral, as well as all other property and interests in property and proceeds thereof now owned or 4 hereafter acquired by any Loan Party in or upon which a Lien is granted under any of the Collateral Documents. "Collateral Documents" shall mean, collectively, the Guaranties, the Security Agreements, the Pledge Agreements, the Nonrecourse Guaranty and Pledge Agreement and any other document executed and delivered by a Loan Party granting a Lien on any of its property to secure payment of the Obligations. "Commitment Termination Date" shall mean the earlier of (i) the Maturity Date and (ii) the date on which payment in full of the Revolving Credit Loan may otherwise be required pursuant to the proviso in Section 8.1 hereof. "Contaminant" shall mean any waste, pollutant, hazardous substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, or any constituent of any such substance or waste, including any such substance regulated under any Environmental Law. "CSC Nonrecourse Guaranty and Pledge Agreement" shall mean the agreement, dated as of December 31, 1992, among GE Capital (as agent for Lenders and lenders under the V Cable Loan Agreement) and Cablevision, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such CSC Nonrecourse Guaranty and Pledge Agreement as the same may be in effect at the time any reference thereto becomes operative. "Default" shall mean any event which, with the passage of time or notice or both, would, unless cured or waived, become an Event of Default. "Disposition Proceeds" shall have the meaning assigned to it in Section 7.11(b) hereof. "DOL" shall mean the United States Department of Labor or any successor to any of its relevant functions. "Effective Date" shall mean the date hereof, subject to the satisfaction (or the waiver thereof) of the conditions set forth in Section 3.1 hereof. "Environmental Claim" shall mean any accusation, allegation, notice of violation, claim, demand, abatement or 5 other order or direction (conditional or otherwise) by any Governmental Authority or any other Person for personal injury (including sickness, disease or death), tangible or intangible property damage, damage to the environment, nuisance, pollution, contamination or other adverse effects on the environment, or for fines, penalties or restrictions, resulting from or based upon (i) the existence, or the continuation of the existence, of a Release (including, without limitation, any sudden or non-sudden, accidental or non-accidental Release) of, or exposure to, any substance, chemical, material, pollutant, Contaminant, odor or audible noise or other release or emission in, into or onto the environment (including, without limitation, the air, ground, water or any surface) at, in, by, from or related to the Facilities, (ii) the environmental aspects of the transportation, storage, treatment or disposal of materials in connection with the operation of the Facilities or (iii) the violation, or alleged violation, of any Environmental Law, ordinance, order, Permit or license of or from any Governmental Authority relating to environmental matters connected with the Facilities. "Environmental Laws" shall mean the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, ET SEQ., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, ET SEQ., the Clean Air Act, 42 U.S.C. Section 7401, ET SEQ., the Clean Water Act, 33 U.S.C. Section 1251, ET SEQ., the Toxic Substances Control Act, 15 U.S.C. Section 2601, ET SEQ., the Occupational Safety and Health Act, 29 U.S.C. Section 651, ET SEQ., and all other federal, state, and local laws, ordinances, regulations, rules, orders, Permits, and the like, which are aimed at the protection of human health or the environment, each as in effect from time to time. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and any regulations promulgated thereunder. "ERISA Affiliate" shall mean, with respect to any Person, all trades or businesses (whether or not incorporated) which are under common control with such Person and which, together with such Person, are treated as a single employer under Section 414(b), (c), (m) or (o) of the IRC. "ERISA Event" shall mean, with respect to Borrower or any of its ERISA Affiliates, (a) a Reportable Event (other than a Reportable Event not subject to the provision 6 for 30-day notice to the PBGC under regulations issued under Section 4043 of ERISA), (b) the withdrawal of Borrower or any of its ERISA Affiliates from a Plan subject to Section 4063 of ERISA during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, (e) the complete or partial withdrawal of Borrower or any of its ERISA Affiliates from any Multiemployer Plan, (f) the failure to make required contributions to a Plan under Section 412 of the IRC or (g) any other event or condition which might reasonably be expected to constitute grounds under Section 4042(a)(1), (2) or (3) of ERISA for the termination of, or the appointment of a trustee to administer, any Plan. "Event of Default" shall have the meaning assigned to it in Section 9.1 hereof. "Excluded Subsidiaries" shall mean V Sub and V-C Mo. G.P., Inc., a Delaware corporation and a wholly-owned Subsidiary of V Cable. "Existing Loan Agreement" shall have the meaning assigned thereto in the first recital to this Agreement. "Existing Loans" shall mean the loans outstanding under the Existing Loan Agreement. "Facilities" shall mean real property owned or leased or used by Borrower or any of its Subsidiaries. "FCC" shall mean the Federal Communications Commission (or any successor). "FCC Consent" shall mean an order or orders issued by the FCC to Borrower approving the transfer of control of the Systems in the manner contemplated by the Newco Management Agreement. "Federal Funds Rate" shall mean, for any date, a fluctuating interest rate per annum equal for such day to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next 7 preceding Business Day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Agent from three Federal funds brokers of recognized standing selected by it. "Federal Reserve Board" shall have the meaning assigned to it in Section 4.12 hereof. "Financials" shall mean the financial statements referred to in Section 4.5(a) hereof. "Financial Covenants" shall have the meaning assigned to it in Section 9.1(b) hereof. "Fiscal Quarter" shall mean the calendar quarter ending on each March 31, June 30, September 30 and December 31 of each year. Subsequent changes of the fiscal quarters of Borrower or V Cable shall not change the term "Fiscal Quarter" unless the Required Lenders shall consent in writing to such changes. "Fiscal Year" shall mean the calendar year. Subsequent changes of the fiscal year of Borrower or V Cable shall not change the term "Fiscal Year" unless the Required Lenders shall consent in writing to such changes. "Funding Arrangements" shall have the meaning assigned to it in Section 2.15(b) hereof. "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time. "GE Capital" shall have the meaning assigned to it in the first paragraph of this Agreement. "Governmental Authority" shall mean any nation or government, any state or other political subdivision thereof and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantied Indebtedness" shall mean, as to any Person, any obligation of such Person guarantying any indebtedness, lease, dividend or other obligation ("primary obligations") of any other Person (the "primary obligor") in any manner, including, without limitation, any obligation or 8 arrangement of such Person (i) to purchase or repurchase any such primary obligation, (ii) to advance or supply funds (a) for the purchase or payment of any such primary obligation or (b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) to indemnify the owner of such primary obligation against loss in respect thereof. "Guaranties" shall mean, collectively, the Newco Subsidiary Guaranty and the V Cable Group Guaranty. "Guarantor" shall mean each Subsidiary of Borrower and each member of the V Cable Group, which is executing and delivering to Agent any of the Guaranties. "Homes Passed" shall mean the sum of: (i) all dwelling units passed by energized cable of the cable systems of Borrower or any of its Subsidiaries which are occupied or, if not occupied, are in a condition permitting occupation, and which are capable of being furnished with a signal level not less than six decibels, including each dwelling unit in a multiple dwelling unit that has basis for a first set connection (whether or not Borrower or any of its Subsidiaries enters into an arrangement with a multiple dwelling unit for provision of service to such unit on a discounted basis) or that is an individual dwelling unit to which a first set connection could be offered and supplied, but in any case excluding any multiple dwelling unit and the individual dwelling units therein to which Borrower or any of its Subsidiaries does not have and cannot obtain access for the provision of such first set connection to such individual dwelling units; (ii) each commercial subscriber which is actually connected to the cable systems of Borrower or any of its Subsidiaries and is receiving service; and (iii) each non-connected hotel or motel (counted as one "home" each) passed by energized cable of the cable systems of Borrower or any of its Subsidiaries; PROVIDED, HOWEVER, that "Homes Passed" shall not in any event include any non-connected commercial establishments other than the hotels and motels referred to in clause (iii) above. "Indebtedness" of any Person shall mean (a) (i) all indebtedness of such Person for borrowed money or 9 for the deferred purchase price of property or services (including, without limitation, reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers' acceptances, whether or not matured, but not including obligations to trade creditors incurred in the ordinary course of business), (ii) all obligations of such Person evidenced by notes, bonds, debentures or similar instruments, (iii) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (iv) all Capital Lease Obligations of such Person, (v) all Guarantied Indebtedness of such Person, (vi) all Indebtedness of such Person referred to in clause (i), (ii), (iii), (iv) or (v) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, and (vii) all Unfunded Pension Liabilities and all Withdrawal Liabilities of such Person and (b) with respect to V Cable, Borrower or any of their respective Subsidiaries, (i) all Indebtedness of such Person referred to in clause (a) above, (ii) the Obligations, and (iii) any indemnity claim pursuant to the Supplemental Side Letter that shall have been established and quantified pursuant to paragraph (1) of such letter. "Index Rate" shall mean, on any date, the greater of (i) the highest of the daily prime, base, commercial loan or equivalent rate of interest published or publicly announced for such date by Bankers Trust Company, Chemical Bank, N.A., Citibank, N.A., Morgan Guaranty Trust Company of New York or The Chase Manhattan Bank, N.A. (whether or not such rate is actually charged by any such bank) as in effect for such date and (ii) the Federal Funds Rate for such date plus 1/2 of 1%. "Index Rate Advance" shall mean a portion of a Loan which bears interest at a rate based on the Index Rate. "Interest Expense" shall mean, for any period, gross interest expense of Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, LESS the following for Borrower and its 10 Subsidiaries determined on a consolidated basis in accordance with GAAP: (a) the sum of (i) interest capitalized during construction for such period, (ii) interest income for such period, and (iii) gains for such period on interest rate contracts (to the extent not included in interest income above and to the extent not deducted in the calculation of gross interest expense), PLUS the following for Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP: (b) the sum of (i) losses for such period on interest rate contracts (to the extent not included in gross interest expense), and (ii) the expensing of upfront costs or fees for such period associated with interest rate contracts (to the extent not included in gross interest expense). "Interest Period" shall mean for any LIBOR Advance, the period commencing and ending on such dates as are selected by Borrower pursuant to the provisions set forth below. The duration of each Interest Period shall be one, two, three, six or, to the extent available and if agreed to by all Lenders, nine or twelve months as Borrower may, upon notice received by Agent not later than 10:00 A.M. (New York City time) on the second Business Day prior to the first day of such Interest Period, select; PROVIDED, HOWEVER, that: (i) Borrower may not select any Interest Period which ends after the Maturity Date; (ii) Borrower may not select any Interest Period in respect of any LIBOR Advance such that any mandatory payment of the principal amount of the Term Loans pursuant to Section 2.2(b) hereof would result in such LIBOR Advance being required to be repaid, in whole or in part, prior to the end of the Interest Period applicable thereto; and (iii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day. "Investments" shall mean any advances, loans, accounts receivable (other than (x) accounts receivable arising in the ordinary course of business of Borrower or any Subsidiary of Borrower and (y) accounts receivable owing to Borrower from any Subsidiary of Borrower for management 11 services (other than such accounts receivable that constitute direct charges or out-of-pocket expenses relating to such services) provided by Borrower to such Subsidiary) or other extensions of credit (excluding, however, accrued and unpaid interest in respect of any advance, loan or other extension of credit) or capital contributions to (by means of transfers of property to others, or payments for property or services for the account or use of others, or otherwise), or the purchase or ownership of any stocks, bonds, notes, debentures or other securities (including, without limitation, any interests in any partnership, joint venture or joint adventure) of, or any bank accounts with, or guarantee any Indebtedness or other obligations of, any Person. "IRC" shall mean the Internal Revenue Code of 1986, as amended, and any successor thereto. "IRS" shall mean the Internal Revenue Service or any entity succeeding to any or all of its functions. "Leases" shall mean all of those leasehold estates in real property now owned or hereafter acquired by Borrower or any of its Subsidiaries, as lessee. "Lender" or "Lenders" shall have the meaning assigned to it in the first paragraph of this Agreement and shall include GE Capital and any future holder of all or any portion of the Notes. "Letter of Credit Obligations" shall mean all outstanding obligations incurred by GE Capital at the request of Borrower, whether direct or indirect, contingent or otherwise, due or not due, in connection with the issuance or guaranty by GE Capital of letters of credit, bankers' acceptances or similar obligations in respect of letters of credit. The amount of such Letter of Credit Obligations shall equal the maximum amount which may be payable by GE Capital thereupon or pursuant thereto. "Letters of Credit" shall mean commercial or standby letters of credit issued at the request and for the account of Borrower, and bankers' acceptances issued by Borrower, for which GE Capital has incurred Letter of Credit Obligations. "LIBOR Advance" shall mean a portion of a Loan which bears interest at a rate based on the LIBOR Rate. 12 "LIBOR Rate" shall mean, for any Interest Period, the rate obtained by dividing (i) the average of the four rates reported from time to time by Telerate News Service on page 3875 thereof (or such other number of rates as such service may from time to time report) at which foreign branches of major U.S. banks offer U.S. dollar deposits to other banks for such Interest Period in the London interbank market at approximately 11:00 A.M., London time, on the second full Eurodollar Business Day (as hereinafter defined) next preceding such Interest Period by (ii) a percentage equal to 100% minus the weighted average of the maximum rates of all reserve requirements (including, without limitation, any marginal emergency, supplemental, or special or other reserves) scheduled to be applicable during such Interest Period to any member bank of the Federal Reserve System in respect of eurocurrency or eurodollar funding or liabilities. If such interest rates shall cease to be available from Telerate News Service, the LIBOR Rate shall be determined from such financial reporting service or other information as shall be mutually acceptable to Agent and Borrower. The term "Eurodollar Business Day" shall mean a Business Day on which banks generally are open in the city of London for interbank or foreign exchange transactions. "Lien" shall mean any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement (other than an unrestricted bank account in the name of and maintained by Borrower or any of its Subsidiaries), lien, Charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any lease or title retention agreement, any arrangement having substantially the same economic effect as any of the foregoing (including any financing lease), and the filing of, or agreement to give, any financing statement perfecting a security interest under the Code or comparable law of any jurisdiction). "Loan" shall mean the Revolving Credit Loan and any Term Loan. "Loan Documents" shall mean, collectively, this Agreement, the Notes, the Collateral Documents and the Non-Competition Agreement. "Loan Party" shall mean Borrower and each of its Subsidiaries, each member of the V Cable Group and Cablevision. 13 "Material Adverse Effect" shall mean a material adverse effect on (i) the business, assets, operations or financial condition of Borrower and its Subsidiaries taken as a whole, (ii) Borrower's and its Subsidiaries' collective ability to pay the Obligations in accordance with the terms thereof, (iii) the Collateral or (iv) Lenders' Liens on the Collateral taken as a whole or the priority of such Liens taken as a whole. "Maturity Date" shall mean December 31, 2001. "Maximum Lawful Rate" shall have the meaning assigned to it in Section 2.8(f) hereof. "Maximum Revolving Credit Loan" shall mean, at any time, an amount equal to $125,000,000, as reduced from time to time pursuant to Section 2.4 hereof. "Media Approval" shall mean any FCC Consent and any other approval necessary for the transfer by V Cable of control of any of its assets or any portion of its business (including, without limitation, the Stock of V Cable's Subsidiaries), or for the assignment of any of their Media Licenses, to Borrower or any of its Subsidiaries. "Media License" shall mean any franchise, license, permit, certificate, ordinance, right by contract or other authorization from any Governmental Authority which is necessary for the cable television operations of any Person. "Missouri Partnership" shall mean Missouri Cable Partners, L.P., a Delaware limited partnership. "Multiemployer Plan" shall mean, with respect to any Person, a "multiemployer plan," as defined in Section 4001(a)(3) of ERISA, to which such Person or any of its ERISA Affiliates is making, or is obligated to make, contributions or has made, or has been obligated to make, contributions within the preceding five years. "Net Sales Proceeds" shall have the meaning assigned to it in Section 7.11(a)(i) hereof. "Newco Group Pledge Agreement" shall mean the agreement, dated as of December 31, 1992, among GE Capital (as agent for Lenders and lenders under the V Cable Loan Agreement), V Cable, Borrower and the Subsidiaries of Borrower listed on the signature pages thereof, including 14 all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such Newco Group Pledge Agreement as the same may be in effect at the time any reference thereto becomes operative. "Newco Group Security Agreement" shall mean the agreement, dated as of December 31, 1992, among GE Capital (as agent for Lenders and lenders under the V Cable Loan Agreement), Borrower and the Subsidiaries of Borrower listed on the signature pages thereof, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such Newco Group Security Agreement as the same may be in effect at the time any reference thereto becomes operative. "Newco Management Agreement" shall mean the agreement, dated as of December 31, 1992, among Cablevision, Borrower and the Subsidiaries of Borrower listed on the signature pages thereof, providing, INTER ALIA, for the management of Borrower and its Subsidiaries and the Systems, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such Newco Management Agreement as the same may be in effect at the time any reference thereto becomes operative (but only giving effect to such amendments, modifications or supplements consented to by GE Capital). "Newco Subsidiary Guaranty" shall mean the agreement, dated as of December 31, 1992, made in favor of Agent by each Subsidiary of Borrower, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such Newco Subsidiary Guaranty as the same may be in effect at the time any reference thereto becomes operative. "Non-Competition Agreement" shall mean an agreement, dated as of December 31, 1992, among Cablevision, V Cable, Borrower, and GE Capital (as Agent and as agent for lenders under the V Cable Loan Agreement and in its individual capacity), providing, INTER ALIA, for Cablevision's agreement not to compete with the operations of V Cable, Borrower and their respective Subsidiaries, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of 15 the foregoing, and shall refer to such Non-Competition Agreement as the same may be in effect at the time any reference thereto becomes operative (but only giving effect to such amendments, modifications or supplements consented to by GE Capital). "Nonrecourse Guaranty and Pledge Agreement" shall mean the CSC Nonrecourse Guaranty and Pledge Agreement. "Notes" shall mean, collectively, the Revolving Credit Note and the Term Notes. "Notice of Revolving Credit Advance or Conversion" shall have the meaning assigned to it in Section 2.1(b) hereof. "Obligations" shall mean all loans, advances, debts, liabilities and obligations for monetary amounts (whether or not such amounts are liquidated or determinable) owing by Borrower or any of its Subsidiaries or any other Loan Party to Agent or any Lender, and all covenants and duties regarding the payment of such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument, in each case arising under any of the Loan Documents. "Obligations" include, without limitation, all interest, Letter of Credit Obligations, Charges, expenses, attorneys' fees and any other sum chargeable to Borrower or any of its Subsidiaries or any other Loan Party under any of the Loan Documents. "Operating Cash Flow" shall mean, for any period, the following for Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP: (i) aggregate operating revenues MINUS (ii) aggregate operating expenses (including technical, programming, sales, selling, general administrative expenses and salaries and other compensation paid to any general partner, director, officer or employee of Borrower or any Subsidiary of Borrower and any management fees paid to Cablevision, but excluding interest, depreciation and amortization and compensation in respect of Borrower's and its Subsidiaries' allocable portion of Cablevision's employee stock incentive programs (not to exceed in the aggregate for any calendar year 5% of the Operating Cash Flow for the previous calendar year) which employee stock incentive expense shall be allocated among Cablevision's Subsidiaries based on the existing Cablevision allocation methodology reflected in Annex I hereto and, to the extent 16 otherwise included in operating expenses, any losses resulting from a writeoff or writedown of Investments by Borrower or any Subsidiary of Borrower in Affiliates); PROVIDED, HOWEVER, that for purposes of determining Operating Cash Flow, there shall be excluded (x) all management fees paid to Borrower or any Subsidiary of Borrower during such period, and (y) the amortization of deferred installation income. "Other Taxes" shall have the meaning assigned to it in Section 2.14(b) hereof. "Participants" shall have the meaning assigned to it in Section 11.1(b)(ii) hereof. "PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions. "Permit" shall mean any permit, approval, authorization, license, variance or permission required from a Governmental Authority under any applicable Environmental Law. "Permitted Encumbrances" shall mean the following encumbrances: (i) Liens for taxes or assessments or other governmental charges or levies either not yet due and payable or to the extent that nonpayment thereof is permitted by the terms of this Agreement; (ii) pledges or deposits securing obligations under workers' compensation, unemployment insurance, social security or public liability laws or similar legislation; (iii) pledges or deposits securing bids, tenders, contracts (other than contracts for the payment of money) or leases to which Borrower or any of its Subsidiaries is a party as lessee made in the ordinary course of business; (iv) deposits securing public or statutory obligations of Borrower or any of its Subsidiaries; (v) workers', mechanics', suppliers', carriers', warehousemen's or other similar Liens arising in the ordinary course of business and securing indebtedness aggregating not in excess of $500,000 at any time outstanding and not yet due and payable; (vi) deposits securing or in lieu of surety, appeal or customs bonds in proceedings to which Borrower or any of its Subsidiaries is a party; (vii) any attachment or judgment Lien, unless the judgment it secures shall not, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal or shall not have been discharged within 60 days after the expiration of any 17 such stay; (viii) Capital Leases permitted under Section 7.3(a)(iv) hereof; and (ix) zoning restrictions, easements, licenses or other restrictions on the use of real property or other minor irregularities in title (including leasehold title) thereto, so long as the same do not materially impair the use, value or marketability of such real property, leases or leasehold estates. "Person" shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, company, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof). "Plan" shall mean, with respect to any Person or any of its ERISA Affiliates, at any time, an employee pension benefit plan, as defined in Section 3(2) of ERISA (including a Multiemployer Plan), that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the IRC and is maintained by such Person or any of its ERISA Affiliates. "Pledge Agreements" shall mean, collectively, the Newco Group Pledge Agreement, the V Cable Group Pledge Agreement and the Preferred USC Interest Pledge Agreement. "Pledged Collateral" shall mean, collectively, the Pledged Collateral referred to in the Pledge Agreements and the Nonrecourse Guaranty and Pledge Agreement. "Preferred USC Interest" shall mean the collective reference to the 19% limited partnership interest in USC and the 1% general partnership interest in USC held by V Cable and V Sub. "Preferred USC Interest Pledge Agreement" shall mean the agreement, dated as of December 31, 1992, among GE Capital (as agent for Lenders and lenders under the V Cable Loan Agreement), V Cable and V Sub, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such Preferred USC Interest Pledge Agreement as the same may be in effect at the time any reference thereto becomes operative. 18 "Premium Services" shall mean such cable television programming services as Borrower and/or its Subsidiaries from time to time determine in the course of its business constitute "Premium Services" or the like. "Premium Units" shall mean the total number of Premium Services subscribed to by each Subscriber. "Prepayment Transactions" shall have the meaning assigned to it in the recitals to the USC Partnership Agreement. "Real Estate" shall mean all of those plots, pieces or parcels of land now owned or hereafter acquired by Borrower or any of its Subsidiaries (the "Land"), including, without limitation, those listed on Schedule 4.7(a) hereto, together with the right, title and interest of Borrower or any of its Subsidiaries, if any, in and to the streets, the land lying in the bed of any streets, roads or avenues, opened or proposed, in front of, adjoining or abutting the Land to the center line thereof, the air space and development rights pertaining to the Land and right to use such air space and development rights, all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining thereto, all fixtures, all easements now or hereafter benefiting the Land and all royalties and rights appertaining to the use and enjoyment of the Land, including, without limitation, all alley, vault, drainage, mineral, water, oil and gas rights, together with all of the buildings and other improvements now or hereafter erected on the Land, and all fixtures and articles of personal property appertaining thereto and all additions thereto and substitutions and replacements thereof. "Release" shall have the meaning assigned to it in Section 101(20) of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601(22). "Reportable Event" shall have the meaning assigned to it in Section 4043 of ERISA. "Required Lenders" shall mean, on any date on which any Loan is outstanding, the holders of Notes evidencing at least a majority of the aggregate unpaid principal amount of the Loans; PROVIDED, HOWEVER, that any amendment to, modification of or supplement to this Agreement or waiver of a Default or an Event of Default hereunder that 19 would have the effect of reinstating the obligations to make Revolving Credit Advances from and after the date such obligations have been terminated or changing the terms of, amount of or obligation to make Revolving Credit Advances shall require the affirmative consent thereto of holders of Notes evidencing at least a majority of the aggregate unpaid principal amount of the Revolving Credit Loan then outstanding or, in the event that at such date there is no Revolving Credit Loan then outstanding, then the holders of Notes evidencing at least a majority of the unused portion of the Maximum Revolving Credit Loan. "Reserves" shall mean such reserves for doubtful accounts, returns, allowances and the like as may be established by Borrower or any of its Subsidiaries or as may otherwise be required in accordance with GAAP. "Restricted Payment" shall mean (i) the declaration of any dividend, the making of any distribution or the incurrence of any liability to make any other payment or distribution of cash or other property or assets in respect of Stock of Borrower, (ii) any payment on account of the purchase, redemption or other retirement of Stock of Borrower, any member of the V Cable Group, Cablevision or any other Affiliate of Borrower (other than a Subsidiary of Borrower) or any other payment or distribution made in respect thereof, either directly or indirectly, or (iii) any payment on account of federal, state or local taxes (inclusive of interest and penalties) in respect of any consolidated, combined or unitary tax return filed by Cablevision or any of its Subsidiaries (other than V Cable or any of its Subsidiaries). "Revolving Credit Advance" shall have the meaning assigned to it in Section 2.1(a) hereof, and may consist of an Index Rate Advance or a LIBOR Advance. "Revolving Credit Loan" shall mean the aggregate amount of Revolving Credit Advances outstanding at any time. "Revolving Credit Note" shall have the meaning assigned to it in Section 2.1(c) hereof. "Sale" shall have the meaning assigned to it in Section 11.1(b) hereof. 20 "Security Agreements" shall mean, collectively, the Newco Group Security Agreement and the V Cable Group Security Agreement. "Stock" shall mean all shares, options, warrants, general or limited partnership interests, participations or other equivalents (regardless of how designated) of or in a corporation, partnership or equivalent entity, whether voting or nonvoting, including, without limitation, common stock, preferred stock and any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended). "Subscribers", on any date, shall mean the sum of (a) the total number of households (exclusive of "second outlets", as such term is commonly understood in the cable television industry), subscribing on such date to any cable television system of Borrower or any of its Subsidiaries and paying any currently available rate for monthly service fees and charges imposed by such system, for any level of programming services offered by such system; PROVIDED, HOWEVER that such term shall not include any household whose account is more than 60 days past due. For purposes of this definition, an account shall be deemed due on the last day of each monthly billing period for which service has been provided to a household. "Subsidiary" shall mean, with respect to any Person, (a) any corporation of which an aggregate of more than 50% of the outstanding Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person and/or one or more Subsidiaries of such Person, and (b) any partnership in which such Person and/or one or more Subsidiaries of such Person is a general partner or shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than 50%; PROVIDED, HOWEVER that none of USC or any of its Subsidiaries (other than Borrower and its Subsidiaries) or the Missouri Partnership shall be considered a Subsidiary of V Cable. 21 "Supplemental Side Letter" shall mean that letter agreement, dated as of December 31, 1992, among V Cable, Borrower and GE Capital, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such Supplemental Side Letter as the same may be in effect at the time any reference thereto becomes operative. "Systems" shall mean the cable television systems owned and operated by V Cable and its Subsidiaries, wherever located. "Tax Sharing Agreement" shall mean an income tax allocation agreement by and among V Cable and the Subsidiaries of V Cable listed on the signature pages thereof and Cablevision, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such Tax Sharing Agreement as the same may be in effect at the time any reference thereto becomes operative (but only giving effect to such amendments, modifications or supplements consented to by GE Capital). "Taxes" shall have the meaning assigned to it in Section 2.14(a) hereof. "Termination and Modification Documents" shall mean the collective reference to the Termination and Amendatory Agreement, dated as of the date hereof, among Agent, V Cable and certain affiliates of V Cable, the Termination and Amendatory Agreement, dated as of the date hereof, among Agent, VC Holding and certain affiliates of VC Holding, Amendment No. 1 the CSC Nonrecourse Guaranty and Pledge Agreement, dated as of the date hereof, between Agent and Cablevision, to the CSC Nonrecourse Guaranty and Pledge Agreement and the Termination and Release Agreement, dated as of the date hereof, between Agent and USC. "Termination Date" shall mean the date on which all Loans and other Obligations hereunder have been completely discharged and Borrower shall have no further right to borrow any monies hereunder or require GE Capital to incur any Letter of Credit Obligations. "Term Loans" shall have the meaning assigned to it in Section 2.2(a) hereof. 22 "Term Notes" shall have the meaning assigned to such term in Section 2.2(a) hereof. "Total Debt" shall mean all Indebtedness of Borrower and its consolidated Subsidiaries. "Treasury Regulation" shall mean the Income Tax Regulations promulgated under the IRC as such regulations may be amended from time to time (including temporary and proposed regulations). "Type" of Advance shall have the meaning assigned to it in the definition of Advance. "Unfunded Pension Liability" shall mean, with respect to any Person at any time, the aggregate amount, if any, of the sum of (i) the amount by which the present value of all accrued benefits under each Plan of such Person, any of its Subsidiaries or any of its ERISA Affiliates exceeds the fair market value of all assets of such Plan allocable to such benefits in accordance with Title IV of ERISA, all determined as of the most recent valuation date for each such Plan using the actuarial assumptions in effect under such Plan, and (ii) for a period of five years following a transaction reasonably likely to be covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that could be avoided by such Person, any of its Subsidiaries or any of its ERISA Affiliates as a result of such transaction. "U.S. Cable Partners" shall mean U.S. Cable Partners, a Delaware general partnership. "USC" shall mean U.S. Cable Television Group, L.P., a Delaware limited partnership. "USC Partnership Agreement" shall mean the Second Amended and Restated Limited Partnership Agreement of USC, dated as of the date hereof, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such USC Partnership Agreement as the same may be in effect at the time any reference thereto becomes operative (but only giving effect to such amendments, modifications or supplements consented to by GE Capital). "V Cable" shall mean V Cable, Inc., a Delaware corporation. 23 "V Cable Group" shall mean, collectively, V Cable and each of its Subsidiaries (other than Borrower and its Subsidiaries) including, without limitation, the Excluded Subsidiaries. "V Cable Group Guaranty" shall mean the agreement, dated as of December 31, 1992, made in favor of Agent by V Cable and the Subsidiaries of V Cable listed on the signature pages thereof, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such V Cable Group Guaranty as the same may be in effect at the time any reference thereto becomes operative. "V Cable Group Pledge Agreement" shall mean the agreement, dated as of December 31, 1992, among GE Capital (as agent for Lenders and lenders under the V Cable Loan Agreement), V Cable and the Subsidiaries of V Cable listed on the signature pages thereof, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such V Cable Group Pledge Agreement as the same may be in effect at the time any reference thereto becomes operative. "V Cable Group Security Agreement" shall mean the agreement, dated as of December 31, 1992, among GE Capital (as agent for Lenders and lenders under the V Cable Loan Agreement), V Cable and the Subsidiaries of V Cable listed on the signature pages thereof, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such V Cable Group Security Agreement as the same may be in effect at the time any reference thereto becomes operative. "V Cable Loan Agreement" shall mean the Loan Agreement, dated as of December 31, 1992, among V Cable, the lenders thereunder and GE Capital, as agent, including all amendments, modifications and supplements thereto and any appendices, exhibits or schedules to any of the foregoing, and shall refer to such V Cable Loan Agreement as the same may be in effect at the time any reference thereto becomes operative. "V Cable/Newco Collateral Documents" shall mean the CSC Nonrecourse Guaranty and Pledge Agreement, the Newco Group Security Agreement, the Newco Group Pledge Agreement, 24 the V Cable Group Security Agreement and the V Cable Group Pledge Agreement. "V Sub" shall mean V Cable G.P., Inc., a Delaware corporation and a wholly-owned subsidiary of V Cable. "Welfare Plan" shall mean any welfare plan, as defined in Section 3(1) of ERISA, which is maintained or contributed to by Borrower or any of its Subsidiaries on behalf of former employees after such employees' termination of employment (other than continuation coverage provided pursuant to Section 4980B of the IRC and at the sole expense of the participant or the beneficiary of the participant). "Withdrawal Liability" shall mean, (a) with respect to Borrower, at any time, the aggregate amount of the liabilities of any Loan Party, any of its Subsidiaries or any of its ERISA Affiliates pursuant to Section 4201 of ERISA, and any increase in contributions required to be made pursuant to Section 4243 of ERISA, with respect to all Multiemployer Plans of any such Person and (b) with respect to any other Person, at any time, the aggregate amount of the liabilities of such Person, any of its Subsidiaries or any of its ERISA Affiliates pursuant to Section 4201 of ERISA, and any increase in contributions required to be made pursuant to Section 4243 of ERISA, with respect to all Multiemployer Plans of any such Person. "Working Capital" shall mean, for any Person on any date, the excess of current assets of such Person on such date (excluding cash, cash equivalents and marketable securities) over current liabilities of such Person on such date (including, for Borrower, the outstanding balance of the Revolving Credit Loan, but excluding current maturities of other long-term Indebtedness) determined on a consolidated basis in accordance with GAAP and (to the extent consistent with GAAP) in a manner consistent with the past practices of V Cable; PROVIDED, HOWEVER, that, with respect to V Cable and Borrower, such amount shall be determined on the basis of the capitalization policies of V Cable and its Subsidiaries as in effect on the Effective Date and set forth on Schedule 1 hereto. Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed, unless otherwise specifically provided herein, in accordance 25 with GAAP consistently applied. That certain terms or computations are explicitly modified by the phrase "in accordance with GAAP" shall in no way be construed to limit the foregoing. All financial and other computations, covenants and reports hereunder shall be determined assuming Borrower and its Subsidiaries are at all times consolidated Subsidiaries of V Cable and its Subsidiaries, notwithstanding any accounting, tax or other treatment or requirement to the contrary. All other undefined terms contained in this Agreement shall, unless the context indicates otherwise, have the meanings provided for by the Code as in effect in the State of New York to the extent the same are used or defined therein. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole, including the Exhibits and Schedules hereto, as the same may from time to time be amended, modified or supplemented, and not to any particular section, subsection or clause contained in this Agreement. Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. 2. AMOUNT AND TERMS OF CREDIT 2.1. REVOLVING CREDIT ADVANCES. Upon and subject to the terms and conditions hereof, GE Capital agrees to make available, from time to time until the Commitment Termination Date, for Borrower's use and upon the request of Borrower therefor, advances (each, a "Revolving Credit Advance") in an aggregate amount outstanding which, when combined with all outstanding Letter of Credit Obligations, shall not at any time exceed the Maximum Revolving Credit Loan. Subject to the foregoing and to the provisions of Section 2.4 hereof and until all amounts outstanding in respect of the Revolving Credit Loan shall become due and payable on the Commitment Termination Date, Borrower may from time to time borrow, repay and reborrow under this Section 2.1(a). Revolving Credit Advances outstanding on the date hereof under the Existing Loan Agreement after 26 giving effect to the Prepayment Transactions shall constitute "Revolving Credit Advances" for purposes of this Agreement. (b) Each Revolving Credit Advance shall be made on notice, given no later than 1:00 P.M. (New York City time) on the Business Day of the proposed Revolving Credit Advance, by Borrower to GE Capital. Each such notice (a "Notice of Revolving Credit Advance or Conversion") shall be in writing or by telephone to GE Capital's Account Executive 203-316-7661, telecopy, telex or cable, if by telephone confirmed immediately in writing, in substantially the form of Exhibit A hereto, specifying therein (consistent with this Agreement), INTER ALIA, the requested (i) date and aggregate amount of such Advance, (ii) Type or Types of Advance comprising such Revolving Credit Advance and the amount of each such Type and (iii) Interest Period for each such Advance which is a LIBOR Advance. Each Revolving Credit Advance shall be deemed to be an Index Rate Advance unless otherwise specified by Borrower in the Notice of Revolving Credit Advance or Conversion delivered to GE Capital in relation to such Advance in accordance with the procedures and time set forth in this Section 2.1(b). GE Capital shall, before 5:00 P.M. (New York City time) on the date of the proposed Revolving Credit Advance (or, if the Notice of Revolving Credit Advance or Conversion is given by 10:30 A.M. (New York City time) on such date, by 2:00 P.M. (New York City time) on the date of the proposed Revolving Credit Advance), upon fulfillment of the applicable conditions set forth in Section 3 hereof, wire the amount of such Revolving Credit Advance to a bank designated by Borrower and reasonably acceptable to GE Capital. (c) The Revolving Credit Loan of GE Capital shall be evidenced by the promissory note executed and delivered by Borrower to GE Capital at the time of the initial Revolving Credit Advance (the "Revolving Credit Note"). The Revolving Credit Note shall be payable to the order of GE Capital and shall represent the obligation of Borrower to pay the amount of the Maximum Revolving Credit Loan or, if less, the aggregate unpaid principal amount of all Revolving Credit Advances made by GE Capital to Borrower with interest thereon as prescribed in Section 2.8 hereof. The date and amount of each Revolving Credit Advance and the Type of each such Advance (and, if a LIBOR Advance, the Interest Period therefor) and each payment of principal with respect thereto shall be recorded on the books and records of GE Capital, which books and records shall (absent manifest error) 27 constitute PRIMA FACIE evidence of the accuracy of the information therein recorded. The entire unpaid balance of the Revolving Credit Loan shall be due and payable on the Commitment Termination Date. (d) Not later than 10:00 A.M. on the second Business Day prior to the end of any Interest Period for each Revolving Credit Advance consisting of a LIBOR Advance, Borrower shall deliver to GE Capital a Notice of Revolving Credit Advance or Conversion electing to convert such LIBOR Advance into an Index Rate Advance or into a LIBOR Advance (or part into an Index Rate Advance and part into a LIBOR Advance), in each case effective at the end of the Interest Period for such Advance. Each such Notice of Revolving Credit Advance or Conversion shall be in writing or by telephone to GE Capital's Account Executive, 203-316- 7661, telex, telecopy or cable, if by telephone confirmed immediately in writing, specifying therein (consistent with this Agreement), INTER ALIA, (i) the aggregate amount and Type of Advance which is to be converted and the last day of the current Interest Period for such Advance, (ii) the Type or Types of Advance into which such Advance is to be converted and the amount of each such Type and (iii) the Interest Period for each Advance which is to be a LIBOR Advance. If Borrower shall fail to provide a Notice of Revolving Credit Advance or Conversion on or prior to 10:00 A.M. on the second Business Day prior to the end of the Interest Period in respect of any LIBOR Advance, such Advance shall automatically convert into an Index Rate Advance on the day following the last day of such Interest Period. (e) Borrower shall be entitled to convert all or any part of any Index Rate Advance into a LIBOR Advance by delivery to GE Capital, not later than 10:00 A.M. on the second Business Day prior to the date such conversion is to occur, of a Notice of Revolving Credit Advance or Conversion in the manner, and containing the relevant information indicated in, Section 2.1(d) hereof; PROVIDED, HOWEVER, that no such conversion shall occur or be effective on any date which is not a Business Day. 2.2. TERM LOANS. (a) The Series A Term Loan and the Series B Term Loan outstanding on the date hereof under the Existing Loan Agreement after giving effect to the Prepayment Transactions shall constitute the "Term Loans" for purposes of this Agreement. The promissory notes evidencing the Term Loans shall be referred to herein as the "Term Notes." 28 (b) The principal amount of the Term Loans shall be payable in installments, together with accrued and unpaid interest thereon, on March 31, June 30, September 30 and December 31 of each year, commencing on March 31, 1999 and ending on December 31, 2001, as follows: Quarterly Payment Dates Amount Per Payment ----------------------- ------------------ March 31 through December 31, 1999 $ 2,000,000 March 31 through December 31, 2000 $10,000,000 March 31 through December 31, 2001 $13,750,000 ; PROVIDED, HOWEVER, that in any event the outstanding principal amount of the Term Loans shall be payable, together with accrued and unpaid interest thereon, no later than the Maturity Date. (c) Not later than 10:00 A.M. on the second Business Day prior to the end of any Interest Period for each portion of a Term Loan consisting of a LIBOR Advance, Borrower shall deliver to Agent a notice in substantially the form of Exhibit A-1 hereto (a "Notice of Term Loan Conversion") electing to convert such LIBOR Advance into an Index Rate Advance or into a LIBOR Advance (or part into an Index Rate Advance and part into a LIBOR Advance), in each case effective at the end of the Interest Period for such Advance. Each such Notice of Term Advance or Conversion shall be in writing or by telephone to Agent's Account Executive, 203-316-7661, telex, telecopy or cable, if by telephone confirmed immediately in writing, specifying therein (consistent with this Agreement), inter alia, (i) the aggregate amount and Type of Advance which is to be converted and the last day of the current Interest Period for such Advance, (ii) the Type or Types of Advance into which such Advance is to be converted and the amount of each such Type and (iii) the Interest Period for each Advance which is to be a LIBOR Advance. If Borrower shall fail to provide a Notice of Term Advance or Conversion on or prior to 10:00 A.M. on the second Business Day prior to the end of the Interest Period in respect of any LIBOR Advance, such Advance shall automatically convert into an Index Rate Advance on the day following the last day of such Interest Period. (d) Borrower shall be entitled to convert any portion of a Term Loan consisting of an Index Rate Advance into a LIBOR Advance by delivery to Agent, not later than 10:00 A.M. on the second Business Day prior to the date such 29 conversion is to occur, of a Notice of Term Advance or Conversion in the manner, and containing the relevant information indicated in, Section 2.2(c) hereof; provided, however, that no such conversion shall occur or be effective on any date which is not a Business Day. 2.3. LETTERS OF CREDIT. (a) GE Capital agrees, subject to the terms and conditions hereinafter set forth, to incur, from time to time on not less than five Business Days' prior written request of Borrower (but only on a Business Day), Letter of Credit Obligations in respect of Letters of Credit which either (i) support indebtedness of Borrower incurred in the ordinary course of business and permitted under Section 7.3 hereof or (ii) secure performance obligations of Borrower and its Subsidiaries entered into in the ordinary course of business; PROVIDED, HOWEVER, that the amount of all Letter of Credit Obligations incurred by GE Capital pursuant to this Section 2.3(a) at any one time outstanding (whether or not then due and payable) shall not exceed the lesser of (A) $5,000,000 and (B) the Maximum Revolving Credit Loan less the aggregate principal amount of all outstanding Revolving Credit Advances; and PROVIDED FURTHER, HOWEVER, that (A) no Letter of Credit shall have an expiry date which is more than one year following the date of issuance thereof, (B) GE Capital shall be under no obligation to incur Letter of Credit Obligations in respect of any Letter of Credit having an expiry date which is later than the Commitment Termination Date, (C) no Letter of Credit shall be in a stated amount of less than $10,000 and (D) the terms of each Letter of Credit shall be acceptable to GE Capital in all respects, in its sole discretion. It is understood that the determination of the bank or other legally authorized Person (including GE Capital) which shall issue or accept, as the case may be, any letter of credit or bankers' acceptance contemplated by this Section 2.3(a) shall be made by GE Capital, in its sole discretion. (b) In the event that GE Capital shall make any payment on or pursuant to any Letter of Credit Obligation, such payment shall then be deemed to constitute a Revolving Credit Advance under Section 2.1(a) hereof. (c) (i) In the event that any Letter of Credit Obligation, whether or not then due and payable, shall for any reason be outstanding on the Commitment Termination Date, Borrower will pay to GE Capital cash or cash equivalents of the type referred to in the second proviso in Section 7.2 hereof ("Cash Equivalents") in an amount equal 30 to the maximum amount then available to be drawn under the related Letter of Credit. Such cash or Cash Equivalents shall be held by GE Capital in a cash collateral account (the "Cash Collateral Account"). The Cash Collateral Account shall be in the name of GE Capital (as a cash collateral account), and shall be under the sole dominion and control of GE Capital, subject to the terms of this Section 2.3(c). Borrower hereby pledges to GE Capital, and grants to GE Capital a security interest in, all such cash or Cash Equivalents held in the Cash Collateral Account from time to time and all proceeds thereof, as security for the payment of all amounts due in respect of such Letter of Credit Obligations, whether or not then due. (ii) From time to time after funds are deposited in the Cash Collateral Account, GE Capital may apply such cash or Cash Equivalents then held in the Cash Collateral Account to the payment of any amounts, in such order as GE Capital may elect, as shall be or shall become due and payable by Borrower to GE Capital with respect to such Letter of Credit Obligations. (iii) Neither Borrower nor any Person claiming on behalf of or through Borrower shall have any right to withdraw any of the cash or Cash Equivalents held in the Cash Collateral Account, except that upon the termination of any Letter of Credit Obligation in accordance with its terms and the payment of all amounts payable by Borrower to GE Capital in respect thereof, any cash or Cash Equivalents remaining in the Cash Collateral Account in excess of the then remaining Letter of Credit Obligations shall be returned to Borrower. (iv) GE Capital shall deposit the cash held in the Cash Collateral Account in an interest-bearing account, and interest thereon shall be the property of Borrower. Interest and earnings on the Cash Equivalents in the Cash Collateral Account shall be the property of Borrower. (d) In the event that GE Capital shall incur any Letter of Credit Obligations pursuant hereto at the request or on behalf of Borrower, Borrower agrees to pay to GE Capital, as compensation to GE Capital for such Letter of Credit Obligation, commencing with the Fiscal Quarter in which such Letter of Credit Obligation is incurred by GE Capital and quarterly thereafter for each Fiscal Quarter during which such Letter of Credit Obligation shall remain outstanding, a fee in an amount equal to the quotient of (i) 31 an amount equal to (A) the sum of the daily outstanding amount of such Letter of Credit Obligations on each day during such Fiscal Quarter multiplied by (B) a rate equal to 2% divided by (ii) 360. Fees payable in respect of Letter of Credit Obligations shall be paid to GE Capital, in arrears, on the last day of each Fiscal Quarter. 2.4. MANDATORY PREPAYMENT. (a) Upon receipt by Borrower of Net Sales Proceeds or other asset sale proceeds as contemplated pursuant to Section 7.11 hereof, Borrower shall prepay the Loans (other than the Revolving Credit Loan) with such proceeds and, with respect to any Net Sales Proceeds or other asset sale proceeds remaining after such prepayments, Borrower shall prepay the Revolving Credit Loan. Such prepayments shall be applied in the following manner: (i) FIRST, to the then outstanding principal amount of the remaining Term Loans, in such orders and as among the portions of such Loans as GE Capital shall determine, and (ii) SECOND to the then outstanding principal amount of the Revolving Credit Loan. Notwithstanding the foregoing, Borrower shall not make a prepayment otherwise required pursuant to this Section 2.4(a) with the proceeds of asset sales to the extent that such prepayment is waived by Agent (at the direction or with the consent of the Required Lenders) in writing. Any prepayments of any Loan pursuant to this Section 2.4(a) shall be applied FIRST, to those portions of such Loan that constitute Index Rate Advances, and NEXT, to those portions of such Loan that constitute LIBOR Advances. Notwithstanding the foregoing, if any prepayment of a LIBOR Advance in the manner and at the times provided above would result in any such prepayment occurring prior to the last day of the Interest Period for such Advance, such prepayment shall instead be made on the last day of the Interest Period therefor (unless the Agent, at the direction or with the consent of the Required Lenders, otherwise directs). Any prepayment of any Loan from the proceeds of asset sales pursuant to this Section 2.4(a) shall be accompanied by all accrued and unpaid interest on the principal amounts so prepaid. Any prepayments of Revolving Credit Advances pursuant to this Section 2.4(a) shall not be available to be reborrowed, and the Maximum Revolving Credit Loan shall be permanently reduced by an amount equal to the maximum amount of the proceeds of asset sales available to be applied to reduce Revolving Credit Advances pursuant to clause (ii) above (even if all or a portion of such proceeds of asset sales available pursuant to clause (ii) above shall not have been applied in prepayment of Revolving Credit Advances due to the 32 outstanding amount of Revolving Credit Advances being less than the amount of such proceeds of asset sales available pursuant to clause (ii) above). Borrower shall use reasonable good faith efforts to select Interest Periods in respect of its LIBOR Advances in order to avoid circumstances whereby (or to minimize, to the extent possible, the extent to which) any mandatory prepayments pursuant to this Section 2.4(a) would result in a LIBOR Advance being prepaid prior to the last day of the Interest Period with respect thereto. (b) No prepayment fee shall be payable in respect of any mandatory prepayment under this Section 2.4. 2.5. OPTIONAL PREPAYMENT; PREPAYMENT PREMIUM. (a) Borrower shall have the right at any time (but subject to the provisions set forth below), on 5 Business Days' prior written notice to Agent, to voluntarily prepay, in whole or in part, the then outstanding balance, including accrued and unpaid interest, of the Loans, without premium or penalty except as set forth in Section 2.5(b) or 2.15(b) hereof; PROVIDED, HOWEVER, that such prepayment shall be applied in the manner set forth in Section 2.4(a) hereof. (b) Notwithstanding the foregoing, Borrower shall have no right to prepay any LIBOR Advance prior to the end of the respective Interest Period therefor, except pursuant to Section 2.4 or 2.17(c) hereof; PROVIDED, HOWEVER, that Borrower may prepay any such LIBOR Advance in connection with a prepayment in full of the Loans if such prepayment is accompanied by payment of all amounts required to be paid by Borrower in respect thereof (if any) pursuant to Section 2.15(b) hereof. 2.6. USE OF PROCEEDS. Borrower shall use the proceeds of the Revolving Credit Loan for working capital purposes and Capital Expenditures related to the Systems. 2.7. SINGLE LOAN. The Revolving Credit Loan and the Term Loans and all of the other Obligations of Borrower arising under this Agreement and the other Loan Documents shall constitute one general obligation of Borrower secured, until the Termination Date, by all of the Collateral. 2.8. INTEREST. (a) Borrower shall pay interest on the unpaid principal amount of each Revolving Credit Advance from the date of such Advance until the principal amount thereof shall be paid in full, at all times from the 33 Effective Date at a rate based on either the Index Rate or the LIBOR Rate as follows: (x) with respect to each Term Loan bearing interest of the Index Rate, at a rate per annum equal to the Index Rate plus the Applicable Margin, payable quarterly in arrears on the last day of each Fiscal Quarter commencing on or after the Effective Date and on the date such Term Loan is repaid in full; and (y) with respect to each LIBOR Advance, at a rate per annum equal at all times during the Interest Period therefor to the LIBOR Rate for such Interest Period plus the Applicable Margin, payable in arrears on the last day of such Interest Period or, if such Interest Period exceeds three months, on the last day of each three month period and on the date such Term Loan is repaid in full. (b) Borrower shall pay interest on the unpaid principal amount of each Term Loan from the Effective Date until the principal amount thereof shall be paid in full at all times at a rate based on either the Index Rate or the LIBOR Rate as follows: (A) with respect to each Term Loan bearing interest at the Index Rate, at a rate per annum equal to the Index Rate plus the Applicable Margin, payable quarterly in arrears on the last day of each Fiscal Quarter commencing on or after the Effective Date and on the date such Term Loan is repaid in full; and (B) with respect to each Term Loan bearing interest at the LIBOR Rate, at a rate per annum equal at all times during the Interest Period therefor to the LIBOR Rate for such Interest Period plus the Applicable Margin, payable in arrears on the last day of each Interest Period or, if such Interest Period exceeds three months, on the last day of each three month period and on the date such Term Loan is repaid in full. (c) All computations of the LIBOR Rate shall be made by Agent on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last) occurring in the period for which such interest is payable. All computations of the Index Rate shall be made by Agent on the basis of a year of 365 or 366 days, as the case may be, for the actual number of days occurring in the period for which such interest is payable or accrues. Each determination of the Index Rate for Index Rate Advances shall be on a daily basis for (and for the period through and including) the next succeeding Business Day. Each determination by Agent of an interest rate hereunder shall be, in the absence of manifest error, conclusive and binding for all purposes. 34 (d) If any payment on any Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall accrue at the then applicable rate during such extension and shall be payable on such next succeeding Business Day. (e) So long as any default in the payment of principal or interest hereunder shall have occurred and be continuing, the interest rate applicable to each Loan shall be increased by 2% per annum above the rate otherwise applicable. (f) Notwithstanding anything to the contrary set forth in this Section 2.8, if at any time until payment in full of all of the Obligations, any stated rate of interest hereunder exceeds the highest rate of interest permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto (the "Maximum Lawful Rate"), then in such event and so long as the Maximum Lawful Rate would be so exceeded, the rate of interest hereunder shall to the extent permitted by law be equal to the Maximum Lawful Rate; PROVIDED, HOWEVER, that if at any time thereafter, any stated rate of interest hereunder is less than the Maximum Lawful Rate, to the extent permitted by law interest shall continue to be paid or accrued hereunder at the Maximum Lawful Rate until such time as the total interest received by any Lender hereunder is equal to the total interest which such Lender would have received had each such interest rate been (but for the operation of this paragraph) the interest rate since the Effective Date. Thereafter, the interest rate hereunder shall be the rate otherwise set forth in this Agreement for each Loan or portion thereof, unless and until any such interest rate again exceeds the Maximum Lawful Rate, in which event this paragraph shall again apply. In no event shall the total interest received by any Lender pursuant to the terms hereof exceed the amount which such Lender could lawfully have received had the interest due hereunder been calculated for the full term hereof at the Maximum Lawful Rate. In the event interest is calculated at the Maximum Lawful Rate pursuant to this paragraph, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made. In the event that a court of competent jurisdiction, notwithstanding the provisions of this Section 2.8(f), shall make a final determination that any Lender has 35 received interest hereunder or under any of the Loan Documents in excess of the Maximum Lawful Rate, such Lender shall, to the extent permitted by applicable law, promptly apply such excess first to any interest due and not yet paid under the Loans, then to any due and payable principal of the Loans, then to the remaining principal amount of the Loans, then to other unpaid Obligations and thereafter refund any excess to Borrower or as a court of competent jurisdiction may otherwise order. (g) Notwithstanding anything herein to the contrary, the rate of interest applicable to any Loan shall not be less than 2% per annum. 2.9. LIMITATIONS ON TYPES OF ADVANCES. Notwithstanding any other provision of this Agreement, there shall not at any time be in effect (and Borrower shall not be entitled to select) more than three Interest Periods with respect to all outstanding LIBOR Advances. 2.10. RECEIPT OF PAYMENTS. Borrower shall make each payment under this Agreement not later than 2:00 P.M. (New York City time) on the day when due in lawful money of the United States of America in immediately available funds to Agent's depository bank in the United States as designated by Agent from time to time for deposit in Agent's depositary account or, if Agent so notifies Borrower, directly to each Lender, ratably based on the respective principal amounts of the Notes held by each Lender that relate to the Loan in respect of which such payment is made or applied. Agent will, upon any such deposit to its depositary account, promptly thereafter cause to be distributed like funds relating to the payment of principal or interest (other than interest or principal payments on the Revolving Credit Loan, which will be paid directly to GE Capital) ratably to Lenders as provided above, and like funds relating to the payment of any other amount payable to any Lender to such Lender, in each case to be applied in accordance with the terms of this Agreement. For purposes only of computing interest hereunder, all payments shall be applied by GE Capital to the Revolving Credit Loan and by each Lender to its Term Loans on the day payment has been credited by Agent's depository bank to Agent's depositary account in immediately available funds or, if Agent has notified Borrower to make any such payments directly to any Lender, such payments shall be applied by each Lender to its Term Loans on the day payment has been received by such Lender in immediately available funds. For purposes of 36 determining the amount of funds available for borrowing by Borrower pursuant to Section 2.1(a) hereof, such payments shall be applied by GE Capital against the outstanding amount of the Revolving Credit Loan at the time they are credited to its account. 2.11. APPLICATION OF PAYMENTS. Except as otherwise expressly provided herein, Borrower irrevocably waives the right to direct the application of any and all payments at any time or times hereafter received by Agent or any Lender from or on behalf of Borrower pursuant to the terms of this Agreement, and Borrower irrevocably agrees that, except as otherwise expressly provided herein, Agent and Lenders shall have the continuing exclusive right to apply any and all such payments against the then due and payable Obligations and in repayment of the Revolving Credit Loan and the Term Loans as they each may deem advisable. In the absence of a specific determination by Agent and the Required Lenders with respect thereto, the same shall be applied in the following order: (i) then due and payable fees and expenses; (ii) then due and payable interest payments on the Loans; and (iii) then due and payable principal payments on the Loans. Notwithstanding the foregoing, prior to the occurrence of a Default or Event of Default, Agent agrees to apply payments received in accordance with instructions received from Borrower (if any) in connection with such payments, to the extent such instructions are consistent with the provisions of this Agreement. GE Capital is authorized to, and at its option may, make advances on behalf of Borrower for payment of all fees, expenses, Charges, costs, principal or interest incurred by Borrower hereunder. Such advances shall be made when and as Borrower fails to promptly pay such fees, expenses, Charges, costs, principal or interest and, at GE Capital's option shall be deemed to be additional Revolving Credit Advances constituting part of the Revolving Credit Loan hereunder and comprised of Index Rate Advances or LIBOR Advances (as selected by GE Capital). 2.12. SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off or otherwise) on account of any Loan made by it in excess of its ratable share of payments on account of such Loan obtained by all Lenders, such Lender shall forthwith purchase from each other Lender such participations in such Loan made by each other Lender as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each other 37 Lender; PROVIDED, HOWEVER, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and each Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.12 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of Borrower in the amount of such participation. 2.13. ACCOUNTING. Agent will provide a monthly accounting of transactions under the Revolving Credit Loan and the Term Loans, if applicable, to Borrower. Each and every such accounting shall (absent manifest error) be deemed final, binding and conclusive upon Borrower in all respects as to all matters reflected therein unless Borrower, within 90 days after the date any such accounting is rendered, shall notify Agent in writing of any objection which Borrower may have to any such accounting, describing the basis for such objection with specificity. In that event, only those items expressly objected to in such notice shall be deemed to be disputed by Borrower. Agent's determination, based upon the facts available, of any item objected to by Borrower in such notice shall (absent manifest error) be final, binding and conclusive on Borrower, unless Borrower shall, within 30 days following Agent's notifying Borrower of such determination, either (i) commence a judicial proceeding to resolve such objection or (ii) submit such dispute to KPMG Peat Marwick, independent public accountants, for resolution of the items in dispute (which resolution shall be final, conclusive and binding on both parties). The fees of such independent public accountant shall be borne by Lenders if such resolution shall indicate that the items in dispute were not accounted for accurately by Agent, and shall otherwise be borne by Borrower. 2.14. TAXES. (a) Any and all payments by Borrower hereunder or under the Notes shall be made, in accordance with Section 2.10 hereof, free and clear of and 38 without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on or measured by the net income of any Lender or Agent, as the case may be (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Lender or Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.14) such Lender or Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions and (iii) Borrower shall pay the full amount deducted to the relevant taxing or other authority in accordance with applicable law. (b) In addition to the foregoing, Borrower agrees to pay any present or future stamp or documentary taxes or any other sales, excise or property taxes, charges or similar levies that arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as "Other Taxes"). (c) Borrower shall indemnify each Lender and Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.14) paid by such Lender or Agent and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Such indemnification shall be made within 30 days from the date such Lender or Agent makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, Borrower shall furnish to Agent and each Lender, at their addresses referred to in Section 11.11 hereof, the original or a certified copy of a receipt evidencing payment thereof. (e) Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower contained in this Section 2.14 shall 39 survive the payment in full of principal and interest hereunder and under the Notes. 2.15. INDEMNITY. (a) Borrower shall indemnify and hold Agent and each Lender harmless from and against any and all suits, actions, proceedings, claims, damages, losses, liabilities and expenses (including, without limitation, reasonable attorneys' fees and disbursements, including those incurred upon any appeal) which may be instituted or asserted against or incurred by Agent or such Lender as a result of its having entered into any of the Loan Documents or extended credit hereunder; PROVIDED, HOWEVER, that Borrower shall not be liable for such indemnification to any such indemnified Person to the extent that any such suit, action, proceeding, claim, damage, loss, liability or expense (x) results from such indemnified Person's gross negligence or willful misconduct, (y) relates to a dispute between Agent or any Lender and any of the Loan Parties or (z) results from a breach by Agent or such Lender of its obligations under the last sentence of Section 11.1(b) hereof. (b) Borrower understands that in connection with Lenders' arranging to provide the LIBOR Advances from time to time at the option of Borrower on the terms provided herein, Lenders have entered or may enter into funding arrangements with third parties ("Funding Arrangements") on terms and conditions which could result in substantial losses to such Lenders if any LIBOR Advances do not remain outstanding at the interest rates provided herein for the entire Interest Period with respect to which such LIBOR Advance has been fixed. Consequently, in order to induce Lenders to provide the LIBOR Advances on the terms provided herein and in consideration for the entering into by Lenders of Funding Arrangements from time to time in contemplation thereof, if any LIBOR Advance is repaid in whole or in part prior to the last day of the Interest Period therefor (whether any such repayment is made pursuant to any provision of this Agreement or any other Loan Document or is the result of acceleration, by operation of law or otherwise), Borrower shall indemnify and hold harmless each Lender from and against and in respect of any and all losses, costs and expenses resulting from, or arising out of or imposed upon or incurred by such Lender by reason of the liquidation or reemployment of funds acquired or committed to be acquired by such Lender to fund such LIBOR Advance, pursuant to the Funding Arrangements. The amount of any losses, costs or expenses resulting in an obligation of 40 Borrower to make a payment pursuant to the foregoing sentence shall not include any losses attributable to any Lender's lost profit, but shall represent the excess, if any, of (i) such Lender's cost of borrowing the relevant LIBOR Advance pursuant to the Funding Arrangements over (ii) the return such Lender would receive on its reinvestment of such funds; PROVIDED, HOWEVER, that if any Lender terminates any Funding Arrangements in respect of any LIBOR Advance, the amount of such losses, costs and expenses shall include the cost to such Lender of such termination. As promptly as practicable under the circumstances, each Lender shall provide Borrower with its written calculation of all amounts payable pursuant to the next preceding sentence, and such calculation shall be binding on the parties hereto unless Borrower shall object thereto in writing within ten Business Days of receipt thereof. Notwithstanding the foregoing, the provisions of this Section 2.15(b) shall not apply in respect of any such prepayment of any Loan or LIBOR Advance required to be made solely as a result of the provisions of Section 2.4 (other than with the proceeds of asset sales) or 2.17(c) hereof. (c) Borrower hereby waives and relinquishes any set-off or similar rights which it may have against Agent or any Lender with respect to any Obligation under this Agreement; PROVIDED that, with respect to any Default or Event of Default asserted by Agent or any Lender, this sentence shall not be deemed to impair Borrower's right to assert any claim against Agent or any Lender that, if adjudicated to be correct by a court of competent jurisdiction, would excuse or cure such Default or Event of Default. 2.16. ACCESS. (a) Without limiting any other rights that Agent or any Lender may otherwise have, Agent and any of its officers, employees and/or agents shall have the right, exercisable as frequently as Agent determines to be appropriate, during normal business hours (or at such other times as may reasonably be requested by Agent), to inspect the properties and facilities of Borrower and its Subsidiaries and to inspect, audit and make extracts from all of Borrower's and its Subsidiaries' records, files and books of account at the place(s) where the same shall be located all to the extent, but only to the extent, that such inquiry is related to its position as Agent. Borrower shall deliver any document or instrument reasonably necessary for Agent, as it may request, to obtain records from any service bureau maintaining records for Borrower or its Subsidiaries. Borrower shall instruct its and its Subsidiaries' banking 41 and other financial institutions to make available to Agent such information and records as Agent may reasonably request. (b) Agent and each Lender agree to exercise their reasonable efforts to keep any information delivered or made available by Borrower pursuant hereto confidential from anyone other than Persons employed or retained by Agent or such Lender who are expected to become engaged in evaluating, approving, structuring, administering or transferring the Loans; PROVIDED, that nothing herein shall prevent Agent or any Lender from disclosing such information (i) to any other Lender, (ii) upon the order of any court or administrative agency or as otherwise may be required by law, (iii) upon the request or demand of any regulatory agency or authority having jurisdiction over Agent or such Lender, as the case may be, (iv) which has been publicly disclosed or is otherwise available to Agent or such Lender on a nonconfidential basis, (v) in connection with any litigation to which Agent, any Lender, Cablevision, Borrower or any other Loan Party or any of its Subsidiaries may be a party, (vi) to the extent reasonably required in connection with the exercise or enforcement of any rights or remedies under the Loan Documents, (vii) to Agent's or such Lender's legal counsel and independent auditors and (viii) to any actual or proposed participant or to any other Person in connection with any actual or proposed sale, transfer or other disposition of all or any part of the Loans, if such other Person, prior to such disclosure, agrees for the benefit of Borrower to comply with the provisions of this subsection (b). 2.17. CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY. (a) If any Lender shall determine that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof or compliance by such Lender (or its lending office) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender's capital as a consequence of its obligations hereunder or credit extended by it hereunder to a level below that which such Lender could have achieved but for such adoption, change or compliance by an amount deemed by such Lender to 42 be material, then from time to time as specified by such Lender by written notice to Borrower, Borrower shall pay such additional amount or amounts as will compensate such Lender for such reduction (such notice to indicate Lender's method of determining the amount of such reduction and that such method is consistent with such Lender's treatment of customers similar to Borrower having similar provisions generally in their agreements with such Lender, which method and amount will be conclusive and binding absent manifest error). (b) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining any Loan or portion thereof bearing interest based on the LIBOR Rate, then Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to Agent), pay to Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to Borrower and Agent by such Lender, shall be conclusive and binding on Borrower for all purposes, absent manifest error. Each Lender agrees that, as promptly as practicable after it becomes aware of any circumstances referred to in clause (i) or (ii) above which would result in any such increased cost to such Lender, such Lender shall, to the extent not inconsistent with such Lender's internal policies of general application, use reasonable commercial efforts to minimize costs and expenses incurred by it and payable to it by Borrower pursuant to this Section 2.17(b). (c) Notwithstanding anything to the contrary contained herein, if the introduction of or any change in or in the interpretation of any law or regulation shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to agree to make or to make or to continue to fund or maintain any Loan bearing interest based on the LIBOR Rate, then, unless such Lender is able to agree to make or to continue to fund or to maintain such Loan which bears interest based on the LIBOR Rate at another branch or office of such Lender without, in such Lender's opinion, adversely affecting it or its Loans or the income obtained therefrom, on notice thereof and demand therefor by such Lender to 43 Borrower through Agent, (i) the obligation of such Lender to agree to make or to make or to continue to fund or maintain Loans or any portion thereof bearing interest based on the LIBOR Rate shall terminate and (ii) Borrower shall forthwith prepay in full all outstanding Loans or any portions thereof then bearing interest based on the LIBOR Rate, together with interest accrued thereon (but without any penalty for such prepayment), of such Lender UNLESS Borrower, within five Business Days after the delivery of such notice and demand, converts each such Loan into a Loan bearing interest based on the Index Rate. (d) Agent, upon becoming aware thereof, shall promptly notify Borrower of the occurrence of any event described in this Section 2.17. Borrower shall have the right within five Business Days of receipt of such notice to convert any outstanding LIBOR Advance to an Index Rate Advance. 2.18. INCOME TAX REPORTING. (a) Subject to Section 2.18(c), Borrower, Lenders and Agent hereby acknowledge and agree that for U.S. federal income tax reporting purposes: (i) the Term Loans will be aggregated (as contemplated by proposed Treasury Regulation Section 1.1275-2(c)) (as aggregated, the "Aggregate Loan") and treated as a single debt instrument with a single issue price, maturity date, yield to maturity and stated redemption price at maturity for purposes of Sections 1271 through 1275 of the IRC and the proposed Treasury Regulations thereunder; (ii) the Aggregate Loan is a debt instrument to which Section 1274 of the IRC applies; (iii) the "issue date" (as defined in Section 1275(a)(2) of the IRC and the proposed Treasury Regulations thereunder) of the Aggregate Loan is the Effective Date; (iv) the maturity date of the Aggregate Loan is the Maturity Date; (v) the Aggregate Loan constitutes a "variable rate debt instrument" as defined in proposed Treasury Regulation Section 1.1275- 5; and 44 (vi) the Aggregate Loan is not part of an "investment unit" and the provisions governing the determination of the issue price of an investment unit as set forth in proposed Treasury Regulation Section 1.1273-2(f) do not apply. (b) Notwithstanding Section 2.19(a), if the Internal Revenue Service promulgates new final, temporary or proposed regulations under any of Sections 1271 through 1275 of the IRC, or if any of Sections 1271 through 1275 of the IRC are amended, and such regulations or amendments are applicable to any of the loans made pursuant to this Agreement, or if there is another change in the tax law (or interpretations thereof) applicable to the reporting of the loans made pursuant to this Agreement, Borrower and Agent will negotiate in good faith to determine the effect of any of the foregoing on the reporting of the loans made pursuant to this Agreement and to agree upon a consistent treatment for federal income tax reporting purposes of the loans made pursuant to this Agreement. (c) Within 20 days after the end of any year, Agent shall furnish Borrower with its computation of the amount of interest income and deductions attributable to the Loans for U.S. federal income tax purposes. If Borrower does not agree with such computation, Borrower shall notify Agent, and promptly thereafter Borrower and Agent will negotiate in good faith to attempt to resolve any disagreement with respect to Agent's computation. It is Borrower's, Lenders' and Agent's intention to use their reasonable efforts to reach an agreement with respect to such computation. If such agreement is reached, each of Borrower and the Lenders will consistently report the amount of any interest income and deductions reflected in such agreed upon computation. 3. CONDITIONS PRECEDENT 3.1. CONDITIONS TO EFFECTIVENESS. Notwithstanding any other provision of this Agreement and without affecting in any manner the rights of Agent or any Lender hereunder, this Agreement shall not be effective unless and until the Effective Date shall have occurred under the USC Partnership Agreement and Borrower shall have delivered to Agent, in form and substance satisfactory to Agent and (unless otherwise indicated) each dated the Effective Date: 45 (a) Evidence, in form and substance reasonably satisfactory to Agent, that all aspects of the Prepayment Transactions have closed or are simultaneously closing herewith on terms satisfactory to Agent, in compliance with all relevant laws and regulations. (b) A Notice of Revolving Credit Advance or Conversion, if a Revolving Credit Advance is to be made on the Effective Date, each duly executed by Borrower. (c) Favorable opinions of Sullivan & Cromwell, counsel to the Loan Parties, in substantially the form attached hereto as Exhibit C-1, and of Robert S. Lemle, counsel to Cablevision, in substantially the form attached hereto as Exhibit C-2, it being understood that to the extent that any such opinion shall rely upon any other opinion of counsel or any of such opinions are to instead be rendered by other counsel, each such other counsel shall be acceptable to Agent and each such other opinion shall be in form and substance reasonably satisfactory to Agent and shall provide that Agent and each Lender may rely thereon. (d) Resolutions of (i) the board of directors of each Loan Party which is a corporation, certified by the Secretary or Assistant Secretary of such Loan Party and (ii) the general partners or management committee of each Loan Party which is a partnership, certified by a general partner of each such partnership, in each case as of the Effective Date, to be duly adopted and in full force and effect on such date, authorizing (A) the consummation of each of the transactions contemplated by the Loan Documents to which each such Loan Party is a party, (B) specific officers to execute and deliver this Agreement (in the case of Borrower) and each other Loan Document to which such Loan Party is a party and (C) the execution, delivery and performance by each such Loan Party of each Ancillary Agreement to be delivered on or prior to the Effective Date and to which such Loan Party is a party. (e) [Intentionally Omitted] (f) A copy of the organizational documents and all amendments thereto of each Loan Party and copies of such Loan Party's by-laws and partnership agreements, certified by the Secretary or Assistant Secretary (or general partner, if applicable) of such Loan Party as true and correct as of the Effective Date. 46 (g) A certificate of the Senior Vice President and Treasurer of Borrower (or other officer of Borrower acceptable to Agent) stating that all of the representations and warranties of each Loan Party contained herein or in any of the Loan Documents are correct on and as of the Effective Date as though made on and as of such date (except to the extent any such representation or warranty expressly relates to an earlier date and except for changes therein permitted or contemplated by this Agreement) and that no event has occurred and is continuing, or would result from a Revolving Credit Advance, if made on the Effective Date, or the Prepayment Transactions, which constitutes or would constitute a Default or an Event of Default. (h) Payment of all reasonable fees and expenses of (i) Agent's outside counsel Weil, Gotshal & Manges LLP (upon submission no later than 11:00 A.M. (New York City time) on the Effective Date of a statement thereof in reasonable detail) and (ii) all special local counsel (including, without limitation, Kaye, Scholer, Fierman, Hays & Handler and Akin, Gump, Strauss, Hauer & Feld, L.L.P.) retained in connection with any of the Loan Documents and the transactions contemplated thereby. (i) Certificates of the Secretary or an Assistant Secretary of each Loan Party (or other officer of Borrower acceptable to Agent) which is a corporation and of a general partner of each Loan Party which is a partnership as to the incumbency and signatures of the officers or representatives of such entity executing this Agreement, the Term Notes, the Revolving Credit Note, any of the Loan Documents or other Ancillary Agreements to be delivered on or prior to the Effective Date or any other certificate or document to be delivered by such Person pursuant hereto or thereto, together with evidence of the incumbency and authority of such Secretary or Assistant Secretary. (j) A copy (or other evidence reasonably satisfactory to Agent) of each consent, license and approval required to have been obtained in connection with the execution, delivery, performance, validity and enforceability of this Agreement, the other Loan Documents and Ancillary Agreements, the consummation of the Prepayment Transactions, such consents, licenses and approvals to be satisfactory, in form and substance, to Agent. (k) Such additional information and materials as Agent may reasonably request, including, without limitation, 47 copies of any debt agreements, security agreements and other material contracts. CONDITIONS TO EACH REVOLVING CREDIT ADVANCE AND EACH INCURRENCE OF A LETTER OF CREDIT OBLIGATION. (a) It shall be a condition to the funding of each subsequent Revolving Credit Advance and to the incurrence by GE Capital of Letter of Credit Obligations, that the following statements shall be true on the date of each such funding, advance or incurrence: (i) All of the representations and warranties of the Loan Parties contained herein or in any of the Loan Documents shall be correct on and as of each such date as though made on and as of such date, except (A) to the extent that any such representation or warranty expressly relates to an earlier date and (B) for changes therein permitted or contemplated by this Agreement. (ii) No event shall have occurred and be continuing, or would result from any such funding or incurrence, which constitutes or would constitute a Default or an Event of Default. (iii) The aggregate unpaid principal amount of the Revolving Credit Loan plus the aggregate outstanding Letter of Credit Obligations, after giving effect to such Revolving Credit Advance or incurrence of Letter of Credit Obligations, shall not exceed the Maximum Revolving Credit Loan. (b) The acceptance by Borrower of the proceeds of any Revolving Credit Advance, including the incurrence by GE Capital of any Letter of Credit Obligations, shall be deemed to constitute, as of the date of such acceptance, (i) a representation and warranty by Borrower that the conditions in Section 3.2(a) hereof have been satisfied and (ii) a confirmation by Borrower of the granting and continuance of Agent's Liens pursuant to the Collateral Documents. 48 4. REPRESENTATIONS AND WARRANTIES To induce GE Capital and Lenders to make the Revolving Credit Loan and to incur the Letter of Credit Obligations, each as herein provided for, Borrower makes the following representations and warranties to GE Capital and Lenders, each and all of which (subject, in the case of Section 4.7 hereof, to the provisions of Section 6.15 hereof) shall be true and correct as of the date of execution and delivery of this Agreement after giving effect to the Prepayment Transactions, and each and all of which shall survive the execution and delivery of this Agreement: 4.1. CORPORATE OR PARTNERSHIP EXISTENCE; COMPLIANCE WITH LAW. Borrower and each of its Subsidiaries (i) is a corporation or partnership duly organized, validly existing and in good standing under the laws of its state of incorporation or organization; (ii) is duly qualified to do business and is in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification (except for jurisdictions in which such failure to so qualify or to be in good standing would not have a Material Adverse Effect); (iii) has the requisite corporate or partnership power and authority to own, pledge, mortgage or otherwise encumber and operate its properties, to lease the property it operates under lease, and to conduct its business as now and proposed to be conducted; (iv) has, or will by the Effective Date have, all material licenses, permits, consents or approvals from or by, and has made all material filings with, and has given all material notices to, all Governmental Authorities having jurisdiction, to the extent required for such ownership, operation and conduct (except where any failure to obtain such licenses, permits, consents or approvals, or to make such filings, would not have a Material Adverse Effect); (v) is in compliance with its certificate of incorporation and by-laws or certificate or articles of partnership or partnership agreement (as the case may be); and (vi) is in compliance with all applicable provisions of law where the failure to comply would have a Material Adverse Effect. 4.2. EXECUTIVE OFFICES. The current location of Borrower's and each of its Subsidiaries' executive offices and principal place of business is set forth on Schedule 4.2 hereto. 49 4.3. SUBSIDIARIES. There currently exist no Subsidiaries of Borrower other than as set forth on Schedule 4.3 hereto, which sets forth such Subsidiaries, together with their respective jurisdictions of organization, and the authorized and outstanding Stock of each such Subsidiary by class and the number and percentage of each such class legally owned by Borrower or a Subsidiary of Borrower or any other Person, or to be owned by the Effective Date. There are no outstanding options, warrants, rights to purchase or similar rights covering Stock of any such Subsidiary. 4.4. CORPORATE OR PARTNERSHIP POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The execution, delivery and performance by Borrower and its Subsidiaries of the Loan Documents, and all other existing Ancillary Agreements and all instruments and documents to be delivered by Borrower and its Subsidiaries, to the extent they are parties thereto, hereunder and thereunder, and the creation of all Liens provided for herein and therein: (i) are within Borrower's and its Subsidiaries' corporate or partnership power; (ii) have been, or by the Effective Date will be, duly authorized by all necessary or proper corporate or partnership action; (iii) are not in contravention of any provision of Borrower's or its Subsidiaries' respective certificates or articles of incorporation or by-laws or certificates or articles of partnership or partnership agreements, as the case may be; (iv) will not violate any law or regulation, or any order or decree of any court or Governmental Authority (other than violations which will not, individually or in the aggregate, have a Material Adverse Effect and which are not known to Borrower); (v) will not conflict with or result in the breach or termination of, or constitute a default under or accelerate any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which Borrower or any of its Subsidiaries is a party or by which Borrower or any of its Subsidiaries or any of their property is bound; (vi) will not result in the creation or imposition of any Lien upon any of the property of Borrower or any of its Subsidiaries other than those in favor of Agent pursuant to the Loan Documents; and (vii) do not require the consent or approval of any Governmental Authority or any other Person, except for the Media Approvals, all of which will have been duly obtained, made or complied with prior to the Effective Date, except as provided in the Collateral Documents and except for violations which will not have a 50 Material Adverse Effect and which are not known to Borrower. Upon the delivery, on or prior to the Effective Date, of each of the Loan Documents, each such Loan Document will have been duly executed and delivered for the benefit of or on behalf of Borrower or its Subsidiaries, as the case may be, and each will then constitute a legal, valid and binding obligation of Borrower or its Subsidiaries, to the extent they are parties thereto, enforceable against them in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and laws affecting creditors' rights generally and, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding of law or in equity). 4.5. FINANCIAL STATEMENTS. (a) The audited and unaudited balance sheets and statements of income, retained earnings and statements of cash flow of V Cable and its consolidated Subsidiaries most recently furnished to GE Capital, as agent and each lender under the Existing Loan Agreement prior to the date of this Agreement, have been, except as noted therein, prepared in conformity with GAAP consistently applied throughout the periods involved, and present fairly the consolidated financial position of V Cable or such Subsidiary (as the case may be) in each case as at the dates thereof, and the results of operations and statements of cash flow for the periods then ended (as to the unaudited interim financial statements, subject to normal year-end audit adjustments). (b) V Cable and its Subsidiaries, as of December 31, 1995, had no obligations, contingent liabilities or liabilities for Charges, long-term leases or unusual forward or long-term commitments which are not reflected in the consolidated balance sheet of Borrower and its Subsidiaries referred to in Section 4.5(a) hereof and which would have a Material Adverse Effect. (c) No dividends or other distributions have been declared, paid or made upon any Stock of V Cable or Borrower or any of its Subsidiaries nor has any Stock of Borrower or any of its Subsidiaries been redeemed, retired, purchased or otherwise acquired for value by Borrower or any of its Subsidiaries since December 31, 1995, otherwise than as permitted by this Agreement or as reflected in the consolidated balance sheet of Borrower and its consolidated Subsidiaries referred to in Section 4.5(a) hereof. 51 [INTENTIONALLY OMITTED] 4.7. OWNERSHIP OF PROPERTY; LIENS. (a)(i) Except as disclosed in Schedules 4.7(a) and 4.7(b) hereto, each of Borrower and each of its Subsidiaries owns good and marketable fee simple title to all of the Real Estate described on Schedule 4.7(a) hereto and good, valid and marketable leasehold interests in the Leases described in Schedule 4.7(b) hereto, and good and marketable title to, or valid leasehold interests in, all of its other properties and assets, except where any failure to hold any such title or interest would not have a Material Adverse Effect; (ii) none of the properties or assets of Borrower or any of its Subsidiaries, including, without limitation, the Real Estate and Leases, are subject to any Liens, except (x) Permitted Encumbrances and (y) Liens pursuant to the Collateral Documents; and (iii) Borrower and each of its Subsidiaries have received all deeds, assignments, waivers, consents, non-disturbance and recognition or similar agreements, bills of sale and other documents, and duly effected all recordings, filings and other actions necessary to establish, protect and perfect Borrower's and its Subsidiaries' right, title and interest in and to all such property except where the failure to have received such documents or effected such actions will not, in the aggregate, have a Material Adverse Effect. (b) All real property owned or leased by Borrower or any of its Subsidiaries is set forth on Schedules 4.7(a) and 4.7(b) hereto, respectively. Neither Borrower nor any of its Subsidiaries owns any other Real Estate or is lessee or lessor under any leases other than as set forth therein. Schedules 4.7(a) and 4.7(b) hereto are true and correct in all material respects. Part One of Schedule 4.7(b) hereto sets forth all Leases of real property held by Borrower or any of its Subsidiaries as lessee and Part Two of Schedule 4.7(b) hereto sets forth all leases of real property held by Borrower or any of its Subsidiaries as lessor together with information regarding the commencement date, termination date, renewal options (if any) and annual base rents for the years 1994 and 1995. Each of such leases is valid and enforceable in accordance with its terms and is in full force and effect, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors' rights generally and to general equitable principles. Borrower has delivered to Agent true and com- 52 plete copies of each of such leases set forth on Part One and Part Two of Schedule 4.7(b) hereto and all documents affecting the rights or obligations of Borrower or any of its Subsidiaries which is a party thereto, including, without limitation, any non-disturbance and recognition agreement, subordination agreement, attornment agreement and any agreement regarding the term or rental of any of the Leases. Neither Borrower nor any of its Subsidiaries nor any other party to any such lease is in default of its obligations thereunder or has delivered or received any notice of default under any such lease, nor has any event occurred which, with the giving of notice, the passage of time or both, would constitute a default under any such lease, except for any default which would not have a Material Adverse Effect. (c) No real property, or any part thereof, owned or leased by Borrower or any of its Subsidiaries has been materially damaged by fire or other casualty which has not been completely restored or is subject to any pending, or, to the knowledge of Borrower or any of its Subsidiaries, threatened or contemplated condemnation proceeding or any sale or other disposition thereof, in lieu of condemnation. 4.8. NO DEFAULT. Neither Borrower nor any of its Subsidiaries is in default, nor, to Borrower's knowledge, is any third party in default, under or with respect to any Media License, contract, agreement, lease or other instrument to which it is a party, except for any default which (either individually or collectively with other defaults arising out of the same event or events) would not have a Material Adverse Effect, and no Default or Event of Default has occurred and is continuing. 4.9. LABOR MATTERS. There are no strikes or other labor disputes against V Cable, Borrower or any of their respective Subsidiaries pending or, to Borrower's knowledge, threatened, which would have a Material Adverse Effect. Hours worked by and payment made to employees of Borrower and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable law dealing with such matters which would have a Material Adverse Effect. All payments due from Borrower or any of its Subsidiaries on account of employee health and welfare insurance which would have a Material Adverse Effect if not 53 paid have been paid or accrued as a liability on the books of Borrower or such Subsidiary. 4.10. OTHER VENTURES. Except as set forth in Schedule 4.10 neither Borrower nor any of its Subsidiaries is engaged in any joint venture or partnership with any other Person. 4.11. INVESTMENT COMPANY ACT. Neither Borrower nor any of its Subsidiaries is an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. None of the making of the Revolving Credit Advances by GE Capital, the application of the proceeds and repayment thereof by Borrower or the consummation of the transactions contemplated by this Agreement and the other Loan Documents will violate any provision of such Act or any rule, regulation or order issued by the Securities and Exchange Commission thereunder. 4.12. MARGIN REGULATIONS. Borrower does not own any "margin security," as that term is defined in Regulations G and U of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), and the proceeds of the Loans will be used only for the purposes contemplated hereby. None of the Loans will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Loans to be considered a "purpose credit" within the meaning of Regulation G, T, U or X of the Federal Reserve Board. Borrower will not take or permit any agent acting on its behalf to take any action which might cause this Agreement or any document or instrument delivered pursuant hereto to violate any regulation of the Federal Reserve Board. 4.13. TAXES. All federal, state, local and foreign tax returns, reports and statements required to be filed by Borrower or any of its Subsidiaries have been filed with the appropriate Governmental Authorities and all Charges and other impositions shown thereon to be due and payable have been paid prior to the date on which any fine, penalty, interest or late charge may be added thereto for 54 nonpayment thereof, or any such fine, penalty, interest, late charge or loss has been paid or, as disclosed on Schedule 4.13 hereto, is being contested in good faith by appropriate procedures (and the provisions of Section 6.2(b) hereof are being met with respect thereto). Each of Borrower and each of its Subsidiaries has paid when due and payable all requisite Charges (except where the failure to do so would not have a Material Adverse Effect). Proper and accurate amounts have been withheld by Borrower and each of its Subsidiaries from their respective employees for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of applicable federal, state, local and foreign law and such withholdings have been timely paid to the respective Governmental Authorities (except where the failure to do so would not have a Material Adverse Effect). Schedule 4.13 hereto sets forth, for each of Borrower and each of its Subsidiaries, those taxable years for which its tax returns are currently being audited by the IRS or any other applicable Governmental Authority. Except as described in Schedule 4.13 hereto, neither Borrower nor any of its Subsidiaries has executed or filed with the IRS or any other Governmental Authority any agreement or other document extending, or having the effect of extending, the period for assessment or collection of any Charges. Neither Borrower nor any of its Subsidiaries has filed a consent pursuant to IRC Section 341(f) or agreed to have IRC Section 341(f)(2) apply to any dispositions of subsection (f) assets (as such term is defined in IRC Section 341(f)(4)). None of the property owned by Borrower or any of its Subsidiaries is property which such Person is required to treat as being owned by any other Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, as in effect immediately prior to the enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within the meaning of IRC Section 168(h). Except as set forth on Schedule 4.13 hereto, neither Borrower nor any of its Subsidiaries has agreed or has been requested to make any adjustment under IRC Section 481(a) by reason of a change in accounting method or otherwise initiated by Borrower or any of its Subsidiaries and neither Borrower nor any of its Subsidiaries has any knowledge that the IRS has proposed any such adjustment or change in accounting method. Except as set forth on Schedule 4.13 hereto, neither Borrower nor any of its Subsidiaries has any obligation under any written tax sharing agreement. 55 4.14. ERISA. Schedule 4.14 hereto lists all Plans maintained or contributed to by Borrower or any of its ERISA Affiliates, and separately identifies any Multiemployer Plans of Borrower or any of its ERISA Affiliates and any Welfare Plans. Each such Plan has been determined by the IRS to be tax qualified under IRC Section 401(a), and the trusts created thereunder have been determined to be exempt from tax under the provisions of IRC Section 501, and nothing has occurred which would cause the loss of such qualification or tax- exempt status or the imposition of any IRC or ERISA liability or penalty in excess of $1,000,000. Each such Plan is in compliance in all material respects with the applicable provisions of ERISA and the IRC, including the filing of reports required under ERISA, the IRC or any other applicable law or regulation with the relevant Governmental Authority the failure of which to file could reasonably be expected to result in a liability of Borrower or such ERISA Affiliate in excess of $1,000,000 and all such reports which are true and correct in all material respects as of the date given. None of Borrower, any of its Subsidiaries or any of its ERISA Affiliates, with respect to any of their Plans, has failed to make any contribution or pay any amount due as required under Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan. Neither Borrower nor any of its ERISA Affiliates has engaged in a "prohibited transaction," as such term is defined in IRC Section 4975 and Title I of ERISA in connection with any of their Plans which would subject, or has a reasonable likelihood of subjecting, Borrower or such ERISA Affiliate (after giving effect to any exemption) to the tax on prohibited transactions imposed by IRC Section 4975 or any other liability, provided that the "amount involved" under said section is in excess of $1,000,000. No Plan of Borrower or any of its ERISA Affiliates which is not a Multiemployer Plan has been terminated, nor has any accumulated funding deficiency (as defined in IRC Section 412(a)) been incurred (without regard to any waiver granted under IRC Section 412), nor has any funding waiver from the IRS been received or requested. There has not been any Reportable Event or any event requiring disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Plan of Borrower or any of its ERISA Affiliates (other than a Multiemployer Plan), if any of the foregoing could reasonably result in liability of Borrower or any of its ERISA Affiliates in excess of $1,000,000. The value of the assets of each Plan of 56 Borrower or any of its ERISA Affiliates (other than a Multiemployer Plan) equalled or exceeded the present value of the accrued benefits of each such Plan as of the end of the preceding Plan year using Plan actuarial assumptions as in effect for such Plan year. There are no claims (other than claims for benefits in the normal course), actions or lawsuits asserted or instituted against, and neither Borrower nor any of its ERISA Affiliates has knowledge of any threatened litigation or claims against (i) the assets of any of their Plans (other than a Multiemployer Plan) or against any fiduciary of such Plan with respect to the operation of such Plan or (ii) Borrower, any of its Subsidiaries or any of Borrower's ERISA Affiliates with respect to any of their Plans which, if adversely determined, could have a material effect on the business, operations, properties, assets or conditions (financial or otherwise) of Borrower or any of its ERISA Affiliates, taken as a whole. Any bond required to be obtained by Borrower or any of its ERISA Affiliates under ERISA with respect to any Plan has been obtained and is in full force and effect. Neither Borrower nor any of its ERISA Affiliates has incurred (a) any Withdrawal Liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 of ERISA as a result of a complete or partial withdrawal (within the meaning of Section 4203 or 4205 of ERISA) from a Multiemployer Plan, which would exceed $1,000,000 in the aggregate or (b) any liability under ERISA Section 4062 to the PBGC, to a trust established under ERISA Section 4041 or 4042 or to a trustee appointed under ERISA Section 4042. Neither Borrower nor any of its ERISA Affiliates nor any organization to which Borrower or such ERISA Affiliate is a successor or parent corporation within the meaning of ERISA Section 4069(b) has engaged in a transaction within the meaning of ERISA Section 4069. Except as set forth on Schedule 4.14 hereto, neither Borrower nor any of its Subsidiaries maintains or has established any Welfare Plan. Borrower and each of its ERISA Affiliates has complied in all material respects with the notice and continuation coverage requirements of Section 4980B of the IRC and the regulations thereunder. Except as set forth on Schedule 4.14 hereto, no liability under any Plan of Borrower or any of its ERISA Affiliates has been funded, nor has such obligation been satisfied, with the purchase of a contract from an insurance company that is not rated AAA by Standard 57 & Poor's Corporation and the equivalent by each other nationally recognized statistical rating organization. 4.15. NO LITIGATION. Except as set forth on Schedule 4.15 hereto, no action, claim or proceeding is now pending or, to the knowledge of Borrower, threatened against Borrower or any of its Subsidiaries, at law, in equity or otherwise, before any court, board, commission, agency or instrumentality of any federal, state or local government or of any agency or subdivision thereof, or before any arbitrator or panel of arbitrators, which, if determined adversely, is reasonably likely to have a Material Adverse Effect, nor, to the knowledge of Borrower, does a state of facts exist which is reasonably likely to give rise to any such proceeding. Except as expressly set forth on Schedule 4.15 hereto, none of the matters set forth therein questions the validity of any of the Loan Documents, any of the other documents to be entered into in connection with the Prepayment Transactions or any action taken or to be taken pursuant thereto, or would either individually or in the aggregate have a Material Adverse Effect. 4.16. BROKERS. No broker or finder acting on behalf of Borrower brought about the obtaining, making or closing of the Loans made pursuant to this Agreement and Borrower has no obligation to any Person in respect of any finder's or brokerage fees in connection with the Loans contemplated by this Agreement. 4.17. PREPAYMENT TRANSACTIONS; CONSENTS. (a) A true and complete copy of each document delivered at the closing of the transactions contemplated by the Prepayment Transactions will be delivered to Agent on the Effective Date. (b) All necessary consents of the FCC and other Governmental Authorities required in connection with the Newco Management Agreement and all the Prepayment Transactions have been obtained or will be obtained prior to the Effective Date, except (with respect to any consents required under any Media Licenses) where neither the failure to obtain any such consent nor the termination of any such Media License could reasonably be expected to have a Material Adverse Effect. 58 4.18. OUTSTANDING STOCK; OPTIONS; WARRANTS; ETC. The Stock of Borrower owned by V Cable at the Effective Date will constitute all of the issued and outstanding Stock of Borrower immediately following the Effective Date. Borrower will on the Effective Date have no outstanding rights, options, warrants or agreements pursuant to which it may be required to issue or sell any Stock other than the Redemption Agreement. 4.19. EMPLOYMENT AND LABOR AGREEMENTS. Except for the Newco Management Agreement and as set forth on Schedule 4.19 hereto, there are no employment, consulting or management agreements covering management of Borrower or any of its Subsidiaries and there are no collective bargaining agreements or other labor agreements covering any employees of Borrower or any of its Subsidiaries. A true and complete copy of each such agreement has been furnished to Agent. 4.20. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Except as set forth on Schedule 4.20 hereto, there are no licenses, patents, patent applications, copyrights, service marks, trademarks, trademark applications or trade names necessary for Borrower or any of its Subsidiaries to continue to conduct its business as heretofore conducted by them or the members of the V Cable Group (except the Excluded Subsidiaries), now conducted by them or the members of the V Cable Group (except the Excluded Subsidiaries) or proposed to be conducted by them. Borrower and each of its Subsidiaries conducts its respective businesses without infringement or claim of infringement of any license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of others, except where such infringement or claim of infringement would not have a Material Adverse Effect. To the best of Borrower's knowledge, there is no infringement or claim of infringement by others of any material license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of Borrower or any of its Subsidiaries. 4.21. FULL DISCLOSURE. No information contained in this Agreement, the other Loan Documents, the Financials or any written statement furnished by or on behalf of Borrower or any of its Subsidiaries pursuant to the terms of this Agreement (other than the Projections) contains any untrue statement of a material fact or omits to state a 59 material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which made and taking into account the transactions contemplated hereby and the Prepayment Transactions. 4.22. LIENS. Except as otherwise provided in the Collateral Documents, the Liens granted to Lenders pursuant to the Collateral Documents will on the Effective Date be fully perfected first priority Liens in and to the Collateral described therein, except as such priority may be affected by any Permitted Encumbrances. 4.23. MEDIA LICENSES. Set forth on Schedule 4.23(a) is a complete and correct list of all of the Media Licenses held by Borrower and its Subsidiaries relating to Systems owned by Borrower or any of its Subsidiaries immediately following the closing of the transactions contemplated to occur on the Effective Date (which list sets forth the number of Subscribers attributable to each such Media License as of December 31, 1995 and the name of the holder of the Media License). All approvals, applications, filings, registrations, consents or other actions required of any local, state or federal authority to enable Borrower or any of its Subsidiaries to exploit the Media Licenses of Borrower and its Subsidiaries have been obtained or made. Except as set forth on Schedule 4.23(b) hereto, neither Borrower nor any of its Subsidiaries has received any notice from the granting body or any other Governmental Authority with respect to any material breach of any covenant under, or any material default with respect to, any Media License held by Borrower or any of its Subsidiaries. True and complete copies of all Media Licenses listed on Schedule 4.23(a) hereto have previously been, or will upon receipt be, delivered to Agent. No material default has occurred and is continuing under any Media License held by Borrower or any of its Subsidiaries, which default could reasonably be expected to have a Material Adverse Effect. All consents and approvals of and filings and registrations with, and all other actions in respect of, all Governmental Authorities required to maintain any Media License held by Borrower or any of its Subsidiaries in full force and effect prior to the scheduled date of expiration thereof have been or, prior to the time when required, will have been, obtained, given, filed or taken and are or will be in full force and effect, except where the loss of any such Media License, 60 individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 4.24. ENVIRONMENTAL PROTECTION. To Borrower's knowledge, all property owned or leased by Borrower or any of its Subsidiaries is free of Contaminants or any other substance which could result in the incurrence of material liabilities, or constituent thereof, currently defined, identified or listed as hazardous or toxic pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, ET SEQ., or any other Environmental Law, or any other substance which has in the past or could at any time in the future cause or constitute a health, safety or environmental hazard to any Person or property, including, without limitation, asbestos in any building, petroleum products, PCBs, pesticides and radioactive materials. To Borrower's knowledge, none of Borrower, V Cable or any of their respective Subsidiaries has caused or suffered to occur any Release of any Contaminant into the environment or any other condition that could result in the incurrence of material liabilities or any material violations of any Environmental Law. To Borrower's knowledge, based on reasonable investigation, none of Borrower, V Cable or any of their respective Subsidiaries has caused or suffered to occur any condition on any of Borrower's Facilities that could give rise to the imposition of any Lien under any Environmental Law. To Borrower's knowledge, based on reasonable investigation, none of Borrower, V Cable or any of their respective Subsidiaries is engaged in any manufacturing or any other operations, other than the use of petroleum products for vehicles, that require the use, handling, transportation, storage or disposal of any Contaminant, where such operations require permits or are otherwise regulated pursuant to any Environmental Law. 4.25. EXISTING LOAN AGREEMENT. (a) As of the date hereof and immediately prior to Prepayment Transactions, no event has occurred and is continuing which constitutes or would constitute a Default or Event of Default under the Existing Loan Agreement. (b) As of the date hereof and immediately prior to the Prepayment Transactions, all of the representations and warranties of each Loan Party (as defined in the Existing Loan Agreement) contained in the Existing Loan 61 Agreement and in the related loan documents are true and correct, except to the extent that any such representation or warranty relates to an earlier date. 4.26. INSURANCE. Schedule 4.26 hereto lists all insurance of any nature maintained by Borrower and each Subsidiary of Borrower, as well as a summary of the terms of such insurance. 4.27. RECEIPT OF AGREEMENTS. Borrower acknowledges receipt of, and has reviewed, each Ancillary Agreement (as defined in the V Cable Loan Agreement) delivered on or prior to the Effective Date. 5. FINANCIAL STATEMENTS AND INFORMATION 5.1. REPORTS AND NOTICES. Borrower covenants and agrees that from and after the Effective Date and until the Termination Date, it shall deliver to Agent and, with respect to Sections 5.1(a) through (h), to each Lender: (a) Within 30 days after the end of each month, (i) a copy of the unaudited consolidated balance sheet of Borrower and its Subsidiaries as of the end of such month and (ii) a copy of the unaudited consolidated and consolidating statements of income of Borrower and its Subsidiaries for such month and for the year to date, all prepared in accordance with GAAP (subject to normal year-end adjustments and, in the case of the balance sheet, to the lack of requisite footnotes), setting forth in comparative form in each case the projected consolidated figures for such period (all such financial statements to include appropriate supporting details prepared separately for Ohio and Long Island) delineating the financial positions and performance of each System and the amount and nature of any Capital Expenditures during such month). (b) Within 45 days after the end of each Fiscal Quarter, (i) a copy of the unaudited consolidated balance sheet of Borrower and its Subsidiaries as of the close of such quarter and the related consolidated and consolidating statements of income and cash flows for that portion of the Fiscal Year ending as of the close of such Fiscal Quarter and (ii) a copy of the unaudited consolidated and consolidating statements of income and cash flow of Borrower and its Subsidiaries for such Fiscal Quarter, all prepared in 62 accordance with GAAP (subject to normal year-end adjustments), such financial statements to include appropriate supporting details delineating the financial position and condition of each System and to be accompanied by (A) a statement in reasonable detail showing the calculations used in determining (x) compliance with the Financial Covenants set forth in Sections 6.3 and 7.10 hereof and (y) the amount of Operating Cash Flow for such Fiscal Quarter, (B) a statement in reasonable detail showing the amount and nature of any Capital Expenditures (prepared separately for Ohio and Long Island) during such Fiscal Quarter and (C) the certification of the chief executive officer or chief financial officer of Borrower that all such financial statements are complete and correct and present fairly in accordance with GAAP (subject to normal year-end adjustments) the consolidated financial position, the consolidated and consolidating results of operations and the cash flows of Borrower and its Subsidiaries as at the end of such quarter and for the period then ended, and that there was no Default or Event of Default in existence as of such time. (c) Within 90 days after the end of each Fiscal Year (or, if Borrower shall then be subject to the periodic reporting requirements of Section 13 or Section 15(d) of the Securities and Exchange Act of 1934, as amended, and its Fiscal Year shall then end on December 31 of each year, on such later date as Borrower files its Annual Report on Form 10-K, but in no event later than 105 days after the end of each Fiscal Year), a copy of the annual audited consolidated and unaudited consolidating financial statements of Borrower and its Subsidiaries, consisting of consolidated and consolidating balance sheets and consolidated and consolidating statements of income and retained earnings and cash flows, setting forth in comparative form in each case the consolidated and consolidating figures for the previous Fiscal Year, which financial statements shall be prepared in accordance with GAAP, certified (only with respect to the consolidated financial statements) without qualification by the independent certified public accountants regularly retained by Borrower, by any other "Big 6" firm of independent certified public accountants or by any other firm of independent certified public accountants of recognized national standing selected by Borrower and acceptable to Agent, and accompanied by (i) a schedule in reasonable detail showing the calculations used in determining (x) compliance with the Financial Covenants set forth in Sections 6.3 and 7.10 63 hereof and (y) the amount of Operating Cash Flow for such Fiscal Year, (ii) a report from such accountants to the effect that in connection with their audit examination, nothing has come to their attention to cause them to believe that a Default or Event of Default has occurred, (iii) a certification of the chief executive officer or chief financial officer of Borrower that, to the best of his knowledge, there was no Default or Event of Default in existence as at the end of such Fiscal Year and (iv) a statement in reasonable detail showing the amount and nature of any Capital Expenditures (prepared separately for Ohio and Long Island) during such Fiscal Year. (d) As soon as practicable, but in any event within five Business Days after an executive officer of Borrower becomes aware of the existence of any Default or Event of Default, or any development or other information which has had, or which such officer reasonably believes will have, a Material Adverse Effect, telephonic or telegraphic notice specifying the nature of such Default or Event of Default or development or information, including the anticipated effect thereof, which notice shall be promptly (and in any event within ten days) confirmed in writing (specifying that such notice is a "Notice of Default or Event of Default" or a "Notice of Material Adverse Effect", as the case may be). (e) (i) Within 30 days after the beginning of each Fiscal Year: (A) projected consolidated cash flow statements of Borrower and its Subsidiaries (prepared separately for Ohio and Long Island), including summary details of cash disbursements, including for Capital Expenditures, for such Fiscal Year, on a monthly basis; and (B) projected consolidated income statements of Borrower and its Subsidiaries (prepared separately for Ohio and Long Island) for such Fiscal Year, on a monthly basis; (ii) Within 60 days after the beginning of each Fiscal Year, projected consolidated balance sheets of Borrower and its Subsidiaries for such Fiscal Year, on a quarterly basis; 64 (iii) Within 90 days after the beginning of each Fiscal Year: (A) projected consolidated balance sheets of Borrower and its Subsidiaries for each subsequent Fiscal Year through and including Fiscal Year 2001, on an annual basis; (B) projected consolidated cash flow statements of Borrower and its Subsidiaries (prepared separately for Ohio and Long Island), including summary details of cash disbursements, including for Capital Expenditures, for each subsequent Fiscal Year through and including Fiscal Year 2001, on an annual basis; and (C) projected consolidated income statements of Borrower and its Subsidiaries (prepared separately for Ohio and Long Island) for each subsequent Fiscal Year through and including Fiscal Year 2001, on an annual basis; together (in the case of clauses (i), (ii) and (iii) above) with appropriate supporting details as may be reasonably requested by any Lender (including, without limitation, a breakout (prepared separately for Ohio and Long Island) of projected Subscribers, Premium Units, Homes Passed and rates in effect for Subscribers). (f) If requested in writing by Agent or any Lender, copies of all federal, state, local and foreign tax returns and reports in respect of income, franchise or other taxes on or measured by income (excluding sales, use or like taxes) filed by Borrower or any of its Subsidiaries. (g) Within 30 days following the end of each calendar month, a Subscriber statistic report for such month in such detail as may be reasonably requested by Agent, certified by Borrower, including but not limited to (i) the number of Subscribers and Premium Units for each cable television system (prepared separately for Ohio and Long Island) owned or operated by Borrower or any of its Subsidiaries separately identifying the number of Subscribers (A) whose accounts payable to Borrower or any of its Subsidiaries are more than 90 days past due from the date of billing or (B) as to which a request has been made that service be discontinued, (ii) Homes Passed during such 65 period, (iii) average recurring revenue per Subscriber during such period and (iv) a comparison of such actual number of Subscribers and Premium Units with the number and composition of Subscribers and Premium Units assumed by Borrower for purposes of the projections relating to such period furnished by Borrower to Agent and each Lender pursuant to Section 5.1(e) hereof. (h) Within 15 days after being requested to do so by Agent within one year after the Effective Date, supplements or amendments, if any, to the Schedules hereto and representations and warranties herein with respect to any matter hereafter arising which, if existing or occurring at the date of this Agreement, would have been required to be set forth in such Schedule or as an exception to such representation or warranty or which is necessary to correct any information in such Schedule or representation or warranty which has been rendered inaccurate thereby; PROVIDED, HOWEVER, that Borrower shall be required to prepare and deliver such supplements and amendments only once. (i) Within 60 days after the Effective Date, an unaudited balance sheet of Borrower and its Subsidiaries as of the Effective Date (and after giving effect to the Prepayment Transactions), prepared in accordance with GAAP. (j) Such information as Agent may reasonably request concerning the amount and method of allocation of Allocation Items (as defined in the Newco Management Agreement) charged to Borrower or any of its Subsidiaries pursuant to the Newco Management Agreement. (k) Such other information respecting Borrower's or any of its Subsidiaries' business, financial condition or prospects as Agent or any Lender may, from time to time, reasonably request in writing. 5.2. COMMUNICATION WITH ACCOUNTANTS. Borrower authorizes Agent to communicate directly with its independent certified public accountants and authorizes those accountants to disclose to Agent any and all financial statements and other supporting financial documents and schedules, including copies of any management letter with respect to the business, financial condition and other affairs of Borrower or any of its Subsidiaries. On or be- 66 fore the Effective Date, Borrower shall deliver a letter addressed to such accountants instructing them to comply with the provisions of this Section 5.2. Agent agrees to provide Borrower with reasonable notice prior to requesting any such information from Borrower's accountants (and an officer of Borrower shall be entitled to attend any meeting between, and to participate in any communication between, Agent and such accountants), except that no such notice shall be required upon the occurrence and during the continuance of any Event of Default. 6. AFFIRMATIVE COVENANTS Borrower covenants and agrees that, unless the Required Lenders shall otherwise consent in writing, from and after the date hereof and until the Termination Date: 6.1. MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Borrower shall, and shall cause each of its Subsidiaries to, (a) do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and its rights, licenses, privileges and franchises; (b) conduct its business substantially as conducted by V Cable and its Subsidiaries immediately prior to the Prepayment Transactions (other than changes therein otherwise permitted hereunder); and (c) at all times maintain, preserve and protect all of its trademarks and trade names and preserve the remainder of its property in use or useful in the conduct of its business and keep the same in good repair, working order and condition (taking into consideration ordinary wear and tear) and from time to time make, or cause to be made, all needful and proper repairs, renewals and replacements, betterments and improvements thereto consistent with cable television industry practices, so that the business carried on in connection therewith may be properly and advantageously conducted at all times; SUBJECT, in the case of clauses (b) and (c) above, to such changes which are consistent with the operation by Borrower and its Subsidiaries of cable television systems and which would not have a Material Adverse Effect. 6.2. PAYMENT OF OBLIGATIONS. (a) Borrower shall, and shall cause each of its Subsidiaries to, (i) pay and discharge or cause to be paid and discharged, all the Obligations, as and when due and payable and (ii) pay and discharge, or cause to be paid and discharged promptly, all 67 (A) Charges imposed upon it, its income and profits or any of its property (real, personal or mixed) and (B) lawful claims for labor, materials, supplies and services or otherwise before any thereof shall become in default (except, in the case of clauses (A) and (B) above, for Charges and other claims not exceeding $1,000,000 in the aggregate at any one time outstanding. (b) Borrower and its Subsidiaries may in good faith contest, by proper legal actions or proceedings, the validity or amount of any Charges or claims referred to in Section 6.2(a)(i) or (ii) hereof, provided that at the time of commencement of any such action or proceeding, and during the pendency thereof (i) no Default or Event of Default shall have occurred as a result thereof; (ii) adequate Reserves with respect thereto are maintained on the books of Borrower or such Subsidiary, in accordance with GAAP; (iii) such contest operates to suspend collection of the contested Charges or claims; (iv) none of the Collateral would be subject to forfeiture or loss or any Lien by reason of the institution or prosecution of such contest; (v) no Lien shall exist for such Charges or claims during such action or proceeding; (vi) Borrower or such Subsidiary shall promptly pay or discharge such contested Charges and all additional charges, interest, penalties and expenses, if any, and shall deliver to Agent evidence reasonably acceptable to Agent of such compliance, payment or discharge, if such contest is terminated or discontinued adversely to Borrower or such Subsidiary; and (vii) nonpayment or nondischarge thereof would not have a Material Adverse Effect. (c) Notwithstanding anything to the contrary contained in Section 6.2(b) hereof, Borrower and each of its Subsidiaries shall have the right to pay the Charges or claims described in Section 6.2(a)(ii) hereof and in good faith contest, by proper legal actions or proceedings, the validity or amount of such Charges or claims. 6.3. FINANCIAL COVENANTS. (a) TOTAL DEBT TO ANNUALIZED CONSOLIDATED OPERATING CASH FLOW. Borrower and its Subsidiaries shall, on a consolidated basis, maintain a ratio of Total Debt to Annualized Consolidated Operating Cash Flow during each period set forth below equal to or less than the ratio set forth below: 68 7.25:1.00 from the date hereof to June 30, 1997; 6.75:1.00 from July 1, 1997 to June 30, 1998; 6.50:1.00 from July 1, 1998 to June 30, 1999; 6.25:1.00 from July 1, 1999 to June 30, 2000; and 5.75:1.00 from July 1, 2000 to December 31, 2001 ; PROVIDED, HOWEVER, that compliance by Borrower with this Section 6.3(a) shall be determined at the time of each request by Borrower for an extension of credit under this Agreement and such determination shall be based on Total Debt as of such date, after giving effect to such extension of credit, and Annualized Consolidated Operating Cash Flow for Borrower and its Subsidiaries determined as of the last day of the most recent month for which financial information is available. (b) OPERATING CASH FLOW TO INTEREST EXPENSE. From and after June 30, 1996, Borrower and its Subsidiaries, on a consolidated basis, shall maintain through the Maturity Date (determined based on the most recently completed two consecutive Fiscal Quarters of Borrower, PROVIDED that for any date prior to September 30, 1996, such determination shall be based on the most recent Fiscal Quarter multiplied by two (2)) a ratio of Operating Cash Flow to Interest Expense of not less than 1.50:1.00. 6.4. AGENT'S FEES. Borrower shall pay to Agent, on demand, any and all reasonable fees, costs or expenses that Agent shall pay to a bank or other similar institution arising out of or in connection with the forwarding to Borrower or any other Person on behalf of Borrower by Agent of proceeds of the Loans. 6.5. BOOKS AND RECORDS. Borrower shall, and shall cause each of its Subsidiaries to, keep adequate records and books of account with respect to its business activities, in which proper entries, reflecting all of their financial transactions, are made in accordance with GAAP and on a basis consistent with the Financials referred to in Section 4.5(a) hereof. 69 6.6. LITIGATION. Borrower shall notify Agent in writing, promptly upon learning thereof, of any litigation commenced against Borrower and/or any of its Subsidiaries, and of the institution against any of them of any suit or administrative proceeding in each case that, either individually or in the aggregate, might, in the reasonable judgment of Borrower, have a Material Adverse Effect. 6.7. INSURANCE. Borrower shall, and shall cause each of its Subsidiaries to, maintain insurance covering, without limitation, fire, theft, burglary, public liability, property damage, product liability, workers' compensation and insurance on all property and assets, all in amounts and scope customary for the cable television industry and under policies issued by insurers reasonably satisfactory to Agent and with a lender's loss payable clause in favor of Agent for the benefit of Lenders. Borrower shall, and shall cause each of its Subsidiaries to, pay all insurance premiums payable by them when due. 6.8. COMPLIANCE WITH LAW. Borrower shall, and shall cause each of its Subsidiaries to, comply with all federal, state and local laws and regulations applicable to it, including, without limitation, those regarding the collection, payment and deposit of employees' income, unemployment and social security taxes and those relating to environmental matters, except in each case where the failure to comply is not reasonably likely to have a Material Adverse Effect. 6.9. AGREEMENTS. Borrower shall, and shall cause each of its Subsidiaries to, perform, within all required time periods (after giving effect to any applicable grace periods), all of its obligations and enforce all of its rights under each agreement with any of its Affiliates to which it is a party, including, without limitation, any leases to which Borrower or such Subsidiary is a party, where the failure to so perform and enforce would have a Material Adverse Effect. Borrower shall not, and shall cause each of its Subsidiaries not to, terminate or modify in any manner adverse to any such party any provision of any such agreement which termination or modification could have a Material Adverse Effect. 6.10. EMPLOYEE PLANS. (a) With respect to other than a Multiemployer Plan, (i) for each Plan hereafter 70 adopted or maintained by Borrower or any of its ERISA Affiliates, Borrower shall or shall cause such ERISA Affiliate to seek and receive determination letters from the IRS to the effect that such Plan is qualified within the meaning of IRC Section 401(a); (ii) from and after the adoption of any Plan by Borrower or any of its ERISA Affiliates, Borrower shall cause such Plan to be qualified within the meaning of IRC Section 401(a) and to be administered in all material respects in accordance with the requirements of ERISA and IRC Section 401(a); and (iii) Borrower shall not take any action which would cause such Plan not to be qualified within the meaning of IRC Section 401(a) or not to be administered in all material respects in accordance with the requirements of ERISA and IRC Section 401(a). (b) Borrower shall, and shall cause each of its ERISA Affiliates to, deliver to Agent: (i)(A) as soon as possible, and in any event within 30 days, after Borrower or any such ERISA Affiliate knows or has reason to know that any ERISA Event described in clause (a) of the definition of ERISA Event or any event requiring disclosure under Section 4063(a) of ERISA with respect to any Plan of Borrower or any of its ERISA Affiliates has occurred and (B) within 10 days after Borrower or any of its ERISA Affiliates knows or has reason to know that any other ERISA Event with respect to any Plan of Borrower or any of its ERISA Affiliates has occurred or a request for a minimum funding waiver under IRC Section 412 with respect to any Plan of Borrower or any of its ERISA Affiliates has been made, a statement of the chief financial officer of Borrower or such ERISA Affiliate setting forth details as to such Reportable Event or other event and the action which Borrower or such ERISA Affiliate proposes to take with respect thereto, together with a copy of the notice of such Reportable Event or other event, if required by the applicable regulations under ERISA, given to the PBGC; (ii) promptly (and in any event within 30 days) after the filing thereof by Borrower or such ERISA Affiliate with the DOL, IRS or the PBGC, copies of each annual and other report with respect to each Plan of Borrower and its ERISA Affiliates; (iii) promptly (and in any event within 30 days) after receipt thereof, a copy of any adverse notice, determination letter, ruling or opinion Borrower or such ERISA Affiliate may receive from the PBGC, DOL or IRS with respect to any Plan of Borrower or any of its ERISA Affiliates; (iv) promptly, and in any event within ten Business Days after receipt thereof, a copy of any corre- 71 spondence Borrower or such ERISA Affiliate receives from the plan sponsor (as defined in ERISA Section 4001(a)(10)) of any Multiemployer Plan concerning potential withdrawal liability pursuant to ERISA Section 4219 or Section 4202, and a statement from the chief financial officer of Borrower or such ERISA Affiliate setting forth details as to the events giving rise to such potential withdrawal liability and the action which Borrower or such ERISA Affiliate proposes to take with respect thereto; (v) notification within 30 days of any material increase in the benefits of any existing Plan of Borrower or any of its ERISA Affiliates which is not a Multiemployer Plan or the establishment of any new Plan or the commencement of contributions to any Plan to which Borrower or such ERISA Affiliate was not previously contributing; (vi) promptly, and in any event within ten Business Days, after receipt thereof by Borrower or such ERISA Affiliate from the PBGC, copies of each notice received by Borrower or such ERISA Affiliate of the PBGC's intention to terminate any of their Plans or to have a trustee appointed to administer any of their Plans; (vii) notification within ten days of a request for a minimum funding waiver under IRC Section 412 with respect to any Plan and a copy of such request; (viii) notification within two Business Days after Borrower or any of its ERISA Affiliates knows or has reason to know that Borrower or such ERISA Affiliate has or intends to file a notice of intent to terminate any Plan under a distress termination within the meaning of Section 4041(c) of ERISA and a copy of such notice; and (ix) promptly after the commencement thereof, notice of all actions, suits and proceedings before any court or Governmental Authority, domestic or foreign, affecting Borrower, any of its ERISA Affiliates or any Plan of Borrower or any of its ERISA Affiliates except those which, if adversely determined, would not have a reasonable likelihood of having a Material Adverse Effect. 6.11. MEDIA LICENSES. Borrower shall, and shall cause each of its Subsidiaries to, keep in full force and effect all of their Media Licenses, except those the loss of which individually or in the aggregate would not have a Material Adverse Effect. Borrower shall furnish to Agent copies of all notices which Borrower or any of its Subsidiaries shall have received from the FCC or other Governmental Authorities concerning any Media License, other than communications of a daily or routine nature, promptly after such receipt. 72 6.12. LEASES; NEW REAL ESTATE. (a) Borrower shall, and shall cause each of its Subsidiaries to, provide Agent with copies of all material leases of real property or similar agreements with respect to real property (and all amendments thereto) entered into by Borrower or any such Subsidiary after the date hereof, whether as lessor or lessee. Borrower shall, and shall cause each of its Subsidiaries to, comply in all material respects with all of its and their obligations under all leases now existing or hereafter entered into or assumed by it or them with respect to real property, including, without limitation, all leases listed on Schedule 4.7(b) hereto, except where any failures to comply would not, individually or in the aggregate, have a Material Adverse Effect. Borrower shall, and shall cause each of its Subsidiaries to, (i) provide Agent with a copy of each notice of default received by Borrower or such Subsidiary under any such lease as soon as practicable after receipt of any such notice and deliver to Agent a copy of each notice of default sent by Borrower or such Subsidiary under any such lease simultaneously with its delivery of such notice under such lease; (ii) notify Agent at least 14 days prior to the date Borrower or such Subsidiary takes possession of material newly leased premises or becomes liable under any material lease, whichever is earlier; and (iii) obtain and deliver to Agent a non-disturbance agreement, in form and substance satisfactory to Agent, prior to entering into any material new Lease. (b) If Borrower or any of its Subsidiaries shall acquire any Real Estate or enter into a Lease which Agent designates as material to Borrower or any of its Subsidiaries at any time prior to the Termination Date, Borrower or such Subsidiary shall, at the request of Agent or any Lender, promptly execute and deliver to Agent a first priority mortgage (or deed of trust, as appropriate) in favor of Agent for the benefit of Lenders covering such Real Estate or Lease, in form and substance reasonably satisfactory to Agent. In such case, Borrower or such Subsidiary shall deliver to Agent with respect to each mortgaged property an A.L.T.A. form B (or other form reasonably acceptable to Agent) mortgagee policy of title insurance in an amount and issued by a title insurance company satisfactory to Agent insuring that the relevant mortgage relating thereto creates and constitutes a valid first Lien against such mortgaged property in favor of Agent, subject only to exceptions and reservations which do 73 not impair the use of the premises and which are reasonably acceptable to counsel to Agent, with such endorsements and affirmative insurance (including, without limitation, survey coverage, perimeter, metes and bounds) endorsements as Agent may reasonably request. 6.13. ENVIRONMENTAL MATTERS. (a) Borrower shall, and shall cause each of its Subsidiaries to, (i) comply in all material respects with the Environmental Laws applicable to it, (ii) notify Agent promptly after becoming aware thereof of any Release, Adverse Environmental Condition or Environmental Claim in connection with Borrower's or any of its Subsidiaries' Facilities, and (iii) promptly forward to Agent a copy of any order, notice, permit, application or any other communication or report received by Borrower or any of its Subsidiaries in connection with any such matters as they may affect such premises, if material. (b) Borrower shall fully and promptly indemnify and hold harmless Agent and each Lender, their respective Subsidiaries and Affiliates and each of their respective officers, directors, employees and agents, from and against any loss, liability, damage, deficiency, fine, penalty or expense, including, without limitation, attorneys' fees, suffered or incurred by Agent or any Lender, whether as mortgagee in possession, or as successor in interest to Borrower or any of its Subsidiaries as lessee of any premises by virtue of foreclosure or acceptance in lieu of foreclosure (i) under or on account of any Environmental Law, including the assertion of any Lien thereunder; (ii) with respect to any Release or Contaminant affecting such premises, whether or not the same originates or emanates from such premises or any contiguous Real Estate, including any loss of value of such premises as a result of a Release or Contaminant; and (iii) with respect to any other matter affecting such premises within the jurisdiction of any federal, state or municipal agency or official administering any Environmental Law, except if caused by Agent's or any Lender's gross negligence or willful misconduct. (c) In the event of any Release or Contaminant affecting any premises occupied by Borrower or any of its Subsidiaries, whether or not the same originates or emanates from such premises or any contiguous Real Estate, and if Borrower or such Subsidiary shall fail to comply with any of the requirements of any Environmental Law, or in the case of 74 any leasehold premises, if required to do so under the applicable Lease, Agent or any Lender may, but shall not be obligated to, give such notices or cause such work to be performed or take any and all actions deemed necessary or desirable to remedy such Release or remove such Contaminant or cure such failure to comply. Any amounts paid by Agent or any such Lender as a result thereof, together with interest thereon at the rate set forth in Section 2.8 hereof then applicable to Revolving Credit Advances which are Index Rate Advances, shall be immediately due and payable by Borrower and, until paid, shall be added to the Obligations. Nothing in this Agreement shall be construed as limiting or impeding Borrower's rights and obligations to take any and all necessary or desirable actions to address any Release or Adverse Environmental Condition or to comply with any Environmental Law. 6.14. SEC FILINGS; CERTAIN OTHER NOTICES. Borrower shall furnish to Agent and each Lender (i) promptly after the filing thereof with the Securities and Exchange Commission, a copy of each report, notice or other filing, if any, by Borrower with the Securities and Exchange Commission, (ii) copies of all notices which Borrower or any of its Subsidiaries shall have received from the FCC or any other Governmental Authority concerning any Media License which notices are (A) material to the business of Borrower and its Subsidiaries taken as a whole or (B) relate to the revocation or renewal of, or default under, any Media License, in each case promptly after each such receipt or delivery, and (iii) a copy of each written report or other communication received by Borrower from or delivered by Borrower to the Securities and Exchange Commission in each case promptly after each such receipt or delivery. 6.15. POST-EFFECTIVE DATE ITEMS. On or prior to March 21, 1996 (or April 14, 1996 with respect to clause (iii) below for any New York corporations), Borrower shall deliver to Agent copies of (i) Schedules 4.8(a) and 4.8(b) hereto, (ii) governmental certificates, dated the most recent practicable date prior to such date, with telegram updates where available, showing that Cablevision, Borrower and each of the Guarantors is organized and in good standing in the jurisdiction of its organization and is qualified as a foreign corporation or partnership and, if applicable, is in good standing in all other jurisdictions in which it is qualified to transact business, and (iii) the documents of 75 each Loan Party referred to in Section 3.1(f) hereof (except any partnership agreement) certified as of a recent date by the Secretary of State of the jurisdiction of such Loan Party's organization, which Schedules, governmental certificates and documents shall be in form and substance satisfactory to Agent. 7. NEGATIVE COVENANTS Borrower covenants and agrees that, without the Required Lenders' prior written consent, from and after the date hereof and until the Termination Date: 7.1. MERGERS, ETC. Neither Borrower nor any Subsidiary of Borrower shall, directly or indirectly, by operation of law or otherwise, merge with, consolidate with, acquire any assets (other than in the ordinary course of business) or capital stock of, or combine with, any Person, nor form or acquire any Subsidiary, directly or indirectly, except for (i) the formation by Borrower of any wholly-owned Subsidiary and (ii) any merger or consolidation of Subsidiaries of Borrower or of Borrower and a Subsidiary of Borrower if Borrower shall have given Agent 30 Business Days' prior written notice thereof (describing such proposed transaction in reasonable detail) and Agent shall have consented thereto; PROVIDED, HOWEVER, that, in the case of clauses (i) and (ii) above, Borrower shall have taken all actions necessary to maintain the priority and perfection of Lenders' Liens on the Collateral under the Loan Documents, which obligation shall include the execution and delivery by all Persons reasonably deemed appropriate by Agent of a guaranty, security agreement, pledge agreement and any other similar document deemed appropriate by Agent, all containing terms substantially similar to the Collateral Documents (as applicable); and PROVIDED, FURTHER, that, in the case of any merger or consolidation of Borrower and any of its Subsidiaries permitted hereunder, Borrower shall be the surviving entity. Notwithstanding the foregoing, Borrower shall be entitled to acquire another cable television system by means of a simultaneous "swap" of cable television systems or franchises with a third party (other than USC or any of its Subsidiaries) that is not an Affiliate of Cablevision or Borrower, does not have any economic interest or investment in Cablevision, V Cable, Borrower or any of their 76 respective Subsidiaries and is not an officer of director of Cablevision, V Cable, Borrower or any of their respective Subsidiaries, PROVIDED that (x) Borrower shall demonstrate to the reasonable satisfaction of Agent that the aggregate fair market value of all cable television systems or franchises transferred by Borrower or any of its Subsidiaries in connection with any such "swap" arrangement from or after the date of this Agreement will not exceed $20,000,000, (y) no Default or Event of Default shall have occurred and be continuing or result therefrom and (z) prior to the date of each such "swap", Agent shall have received projected pro forma consolidated balance sheets and statements of income and cash flows of Borrower and its Subsidiaries covering the periods, and containing the supporting details, of the type required prior to such date pursuant to Section 5.1(e) hereof, in form and substance reasonably satisfactory to Agent, and Agent shall have determined that, based on such statements, there will be no material adverse effect on Borrower's and its Subsidiaries' collective ability to pay the Obligations in accordance with the terms hereof and Borrower will remain in compliance with all of the Financial Covenants. If Borrower or any of its Subsidiaries shall receive any cash consideration in connection with any such "swap", such cash shall be applied to the Term Loans in the manner provided in Section 7.11(a)(iv) hereof. 7.2. INVESTMENTS; LOANS AND ADVANCES. Except as otherwise permitted by Section 7.3 or 7.4 hereof, Borrower shall not, and shall not permit any of its Subsidiaries to, make any investment in, or make or accrue any loans or advances of money to any Person, through the direct or indirect holding of securities or otherwise; PROVIDED, HOWEVER, that Borrower shall be permitted hereunder, and may permit hereunder its Subsidiaries to, (a) make one or more investments in, or make or accrue one or more loans or advances of money to, Borrower or any other Subsidiary of Borrower, (b) make one or more investments not in excess of $1,000,000 in the aggregate outstanding at any time, and (c) make loans or advances to V Cable in an amount equal to any payment of principal, interest or fees required to be paid by V Cable pursuant to the V Cable Loan Agreement (provided that such loans or advances are evidenced by instruments in form reasonably satisfactory to Agent (and are subordinated to all obligations of V Cable to GE Capital or any other Lender under the V Cable Loan Agreement) and such instruments are pledged to Agent in a manner reasonably satisfactory to Agent); and PROVIDED FURTHER, HOWEVER, that 77 Borrower and its Subsidiaries may make and own investments in (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and at the time of its acquisition having the highest rating obtainable from either Standard & Poor's Corporation or Moody's Investors Service, Inc., (iii) certificates of deposit, maturing no more than one year from the date of creation thereof, issued by commercial banks incorporated under the laws of the United States of America or any State thereof, each having combined capital, surplus and undivided profits of not less than $200,000,000 and having a rating of "A" or better by a nationally recognized statistical rating organization, and (iv) time deposits, maturing no more than 90 days from the date of creation thereof, with commercial banks or savings banks or savings and loan associations, the deposits of which are insured by the Federal Deposit Insurance Corporation, and in amounts not exceeding the maximum amounts of insurance thereunder. 7.3. INDEBTEDNESS. (a) Except as otherwise expressly permitted by this Section 7.3 or this Agreement, Borrower shall not, and shall not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, whether recourse or nonrecourse, whether superior or junior, and whether secured or unsecured, except (i) Indebtedness secured by Liens permitted under Section 7.9 hereof, (ii) the Obligations, (iii) trade credit incurred to acquire goods, supplies, services (including, without limitation, obligations incurred to employees for compensation for services rendered in the ordinary course of business), or merchandise on terms similar to those granted to purchasers in similar lines of business as Borrower or such Subsidiary as of the date hereof and incurred in the ordinary and normal course of business, (iv) lease payment obligations under Leases which Borrower or such Subsidiary is not prohibited from entering into under the Loan Documents (provided that none of Borrower nor any of its Subsidiaries shall become a party to or bound by Capital Leases which, in the aggregate for all such companies and V Cable and its Subsidiaries, require payments in excess of $11,000,000 prior to the Termination Date), (v) deferred taxes, (vi) unfunded pension fund and other employee benefit plan obligations and liabilities but only to the extent they 78 are permitted to remain unfunded under applicable law, (vii) Indebtedness to any Subsidiary of Borrower or to Borrower, (viii) Indebtedness of Subsidiaries of Borrower created under the Newco Subsidiary Guaranty, (ix) Indebtedness in connection with surety bonds provided in the ordinary course of business securing obligations of V Cable, Borrower and their Subsidiaries not exceeding $3,000,000 in the aggregate, (x) liabilities under Title IV of ERISA if such liabilities, individually or in the aggregate, do not result in a violation of Section 7.16 hereof, (xi) other Indebtedness for borrowed money to Lenders, (xii) Indebtedness of Borrower and its Subsidiaries under the V Cable Subsidiary Guaranty (as defined in the V Cable Loan Agreement), (xiii) accrued liabilities of the Borrower and its Subsidiaries under Media Licenses and (xiv) Indebtedness of the type referred to in clause (b)(iii) of the definition of "Indebtedness". Notwithstanding anything herein to the contrary, this Section 7.3 shall in no way limit the effect of Section 6.3 hereof. (b) Except as provided in Section 7.11 hereof, Borrower shall not, and shall not permit any of its Subsidiaries to, sell or transfer, either with or without recourse, any assets, of any nature whatsoever, in respect of which a Lien is granted or to be granted pursuant to any Loan Document or engage in any sale-leaseback or similar transaction involving any of such assets. 7.4. EMPLOYEE LOANS. Borrower shall not, and shall not permit any of its Subsidiaries to, make or accrue any loans or other advances of money to any employee of Borrower or such Subsidiary, except for loans to employees (other than persons who are also officers of Cablevision) not in excess at any one time outstanding of $1,000,000 in the aggregate for all such loans, provided that such loans are made only in the ordinary course of Borrower's or such Subsidiary's business consistent with past practices. 7.5. CAPITAL STRUCTURE. Borrower shall not, and shall not permit any of its Subsidiaries to, issue or agree to issue any of its authorized but not outstanding Stock (including treasury shares). 7.6. MAINTENANCE OF BUSINESS. Except as otherwise permitted hereunder, Borrower shall not, and shall not permit any of its Subsidiaries to, engage in any business 79 other than constructing, owning, acquiring, altering, repairing, financing, operating, promoting and otherwise exploiting cable television systems. In addition, none of Borrower or any of its Subsidiaries shall acquire or operate any cable television system (other than the Systems and systems acquired by "swaps" permitted pursuant to Section 7.1 hereof) or acquire or commence any alternate form of television program distribution, including, without limitation, broadcast television, multipoint distribution services, multichannel multipoint distribution services, satellite master antenna systems and direct broadcast satellites. 7.7. TRANSACTIONS WITH AFFILIATES. (a) Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or be a party to any transaction with any Affiliate of Borrower or such Subsidiary (other than a Subsidiary of Borrower), on terms that are, taken as a whole, less favorable to Borrower or such Subsidiary, as the case may be, than would be available in a comparable transaction with a Person not an Affiliate of Borrower or such Subsidiary; PROVIDED that the foregoing restriction shall not apply to (i) any transaction permitted under Section 7.15 hereof; (ii) performance under any contract or agreement in effect on the date hereof and set forth on Schedule 7.7 hereto; (iii) performance under any contract or agreement which was entered into with a Person which was not an Affiliate of Borrower or any of its Subsidiaries on the date of such contract or agreement other than a contract or agreement entered into with a Person in anticipation of such Person's becoming such an Affiliate or a holder of 10% of a class of equity securities of such company; (iv) continued performance under any contract or arrangement which was not less favorable to Borrower or such Subsidiary than would have been available in a comparable transaction with an unrelated party at the date of the contract or commencement of the arrangement; (v) payments by Borrower under the Newco Management Agreement; (vi) transactions with any entity 10% or more of the Stock of which is owned by any Person which also owns 10% or more of the Stock of Borrower if (A) such other entity is not controlled by such Person and (B) neither Borrower nor any of its Subsidiaries is aware of such Person's investment in such other entity; and (vii) transactions pursuant to or contemplated by the Guaranties, the V Cable Subsidiary Guaranty 80 (as defined in the V Cable Loan Agreement) or otherwise pursuant to the Prepayment Transactions. (b) Borrower shall not, and shall not permit any of its Subsidiaries to, enter into any agreement or transaction to pay to any Person any management or similar fee based on or related to Borrower's or any such Subsidiary's operating performance or income or any percentage thereof or pay any management or similar fee to an Affiliate, except as provided in the Newco Management Agreement. 7.8. GUARANTIED INDEBTEDNESS. Borrower shall not, and shall not permit any of its Subsidiaries to, incur any Guarantied Indebtedness (excluding the Guarantied Indebtedness pursuant to the Guaranties) except (i) by endorsement of instruments or items of payment for deposit to the account of Borrower or such Subsidiary, (ii) for Guarantied Indebtedness incurred for the benefit of Borrower or such Subsidiary if the primary obligation is permitted by this Agreement, (iii) for liabilities under surety bonds permitted under Section 7.3(a)(ix) hereof, and (iv) the V Cable Subsidiary Guaranty (as defined in the V Cable Loan Agreement). 7.9. LIENS. Except as set forth on Schedule 7.9 hereto, Borrower shall not, and shall not permit any of its Subsidiaries to, create or permit any Lien on any of its properties or assets except: (a) presently existing or hereafter created Liens in favor of Lenders and lenders under the V Cable Loan Agreement; and (b) Permitted Encumbrances. 7.10. CAPITAL EXPENDITURES. Borrower shall not, and shall not permit any of its Subsidiaries to, make Capital Expenditures that, in the aggregate, exceed: $84,000,000 for the Fiscal Year ending December 31, 1996; $87,000,000 for the Fiscal Year ending December 31, 1997; $78,000,000 for the Fiscal Year ending December 31, 1998; $35,000,000 for the Fiscal Year ending December 31, 1999; $22,000,000 for the Fiscal Year ending December 31, 2000; and $20,000,000 for the Fiscal Year ending December 31, 2001; 81 PROVIDED, HOWEVER, that any excess of the amount provided above for any one Fiscal Year over the actual aggregate Capital Expenditures of Borrower and its Subsidiaries during such Fiscal Year may be carried forward only to, and made available only for, the next succeeding Fiscal Year. 7.11. SALES OF ASSETS. (a) Borrower shall not, and shall not permit any of its Subsidiaries to, sell, transfer, convey or otherwise dispose of any of its assets or properties; PROVIDED, HOWEVER, that the foregoing shall not prohibit: (i) the sale of surplus or obsolete equipment and fixtures or transfers resulting from any casualty or condemnation of assets or properties, PROVIDED that if the proceeds of such sales or transfers exceed $250,000 in any one instance or $3,000,000 in the aggregate, Borrower shall, within 90 days thereafter, prepay the Loans in accordance with the provisions of Section 2.4(b) hereof, in an aggregate amount equal to the excess (the "Net Sales Proceeds") of (x) the entire proceeds of any such single sale or transfer exceeding $250,000 (or the amount of such aggregate proceeds in excess of $3,000,000, as the case may be), over (y) the amount expended by Borrower to repair or replace such assets or properties prior to, or within 90 days after, the occurrence of such sale or transfer; (ii) any sale or other disposition of any asset of Borrower or its Subsidiaries with the prior written consent of Agent and the Required Lenders (which may be given or withheld in their sole discretion), it being agreed that Borrower shall be required to prepay the Revolving Credit Loan and/or the Term Loans out of the proceeds of any such permitted sale or disposition, in an amount and in the manner specified by Agent and the Required Lenders in such consent and may retain such portion of the proceeds as it may be permitted to retain as provided in such consent; (iii) any cable television "swap" expressly permitted pursuant to Section 7.1 above; and (iv) such other sales or dispositions which do not, individually or in the aggregate, exceed $5,000,000, PROVIDED that the net sales proceeds thereof shall, promptly after receipt thereof be applied to prepay the Loans in accordance with the provisions of Section 2.4(b) hereof. 82 (b) Notwithstanding the provisions of Section 7.11(a) hereof, so long as no Default or Event of Default shall have occurred and be continuing, Borrower may in good faith sell, in a bona fide third party transaction, all or substantially all of its business and assets at such time and on such terms as it shall deem appropriate, but only so long as (x) the net after tax cash proceeds realized by Borrower on such sale (the "Disposition Proceeds") shall be sufficient to prepay and discharge in full all Obligations and all Obligations (as defined in the V Cable Loan Agreement) then outstanding, and (y) provision reasonably satisfactory to Agent is made for the application of the Disposition Proceeds immediately after such sale to discharge in full all such obligations. In the event of any prepayment of the Obligations pursuant to the immediately preceding sentence, Borrower's right to receive Revolving Credit Advances hereunder, and GE Capital's obligation to incur Letter of Credit Obligations hereunder, shall simultaneously terminate. 7.12. CANCELLATION OF INDEBTEDNESS. Borrower shall not, and shall not permit any of its Subsidiaries to, cancel any claim or debt owing to it, except for reasonable consideration and in the ordinary course of business or for sound business reasons. 7.13. EVENTS OF DEFAULT. Borrower shall not, and shall not permit any of its Subsidiaries to, take or omit to take any action, which act or omission would constitute a material default or event of default pursuant to, or noncompliance with, any contract, Lease, mortgage, deed of trust or instrument to which it is a party or by which it or any of its property is bound, or any document creating a Lien, unless such default, event of default or non- compliance would not have a Material Adverse Effect. 7.14. HEDGING TRANSACTIONS. Borrower shall not, and shall not permit any of its Subsidiaries to, engage in any interest rate hedging, swaps or similar transaction, except as contemplated by this Agreement; PROVIDED, HOWEVER, that Borrower and its Subsidiaries may engage in interest rate caps. 7.15. RESTRICTED PAYMENTS. Borrower shall not, and shall not permit any of its Subsidiaries to, make any Restricted Payment nor shall Borrower permit any Subsidiary 83 of Borrower to do so with respect to Borrower's Stock. Nothing contained in this Section 7.15 shall restrict (a) any payment required or permitted to be made to Cablevision pursuant to the terms of the Newco Management Agreement or (b) any transfer of cash by Borrower to V Cable for purposes of funding any payment required to be made by V Cable pursuant to the Tax Sharing Agreement. 7.16. ERISA. Borrower shall not, directly or indirectly, (a) terminate, or permit any of its ERISA Affiliates to directly or indirectly terminate, any of their respective Plans subject to Title IV of ERISA so as to result in any liability to Borrower or any of its ERISA Affiliates which would have a Material Adverse Effect, (b) permit to exist any ERISA Event which would have a Material Adverse Effect, (c) make or permit any of Borrower's ERISA Affiliates to make a complete or partial withdrawal (within the meaning of Section 4201 of ERISA) from any Multiemployer Plan so as to result in any material (in the opinion of Agent) liability to Borrower or any of its ERISA Affiliates which would have a Material Adverse Effect, (d) permit, or permit its Subsidiaries or any of Borrower's ERISA Affiliates to (i) satisfy any liability under any Plan of Borrower or any of its ERISA Affiliates by purchasing annuities from an insurance company or (ii) invest the assets of any Plan with an insurance company, unless, in each case, such insurance company is rated AA by Standard & Poor's Corporation and the equivalent by each other nationally recognized statistical rating organization at the time of the investment, (e) establish or become obligated to, or permit any of Borrower's ERISA Affiliates to establish or become obligated to establish, any Welfare Plan, or modify any Welfare Plan which would result in the present value of future liabilities under any such plans to increase by more than $250,000, or (f) increase the benefits of any of its Plans or the Plans of any of its ERISA Affiliates, or begin to maintain or begin to contribute to any new Plan. 7.17. MODIFICATION OF CERTAIN AGREEMENTS. (a) Borrower shall not amend, supplement or otherwise modify any of the provisions of its certificate of incorporation or by-laws and shall not permit any of its Subsidiaries to amend its organizational documents, including, without limitation, its certificate of limited partnership or partnership agreements, without the prior written consent of Agent. 84 (b) Borrower shall not, and shall not permit any of its Subsidiaries to, (x) amend, supplement, modify or terminate any of the Newco Management Agreement or the Non-Competition Agreement to which it is party without the prior written consent of Agent and the Required Lenders or (y) consent to any amendment, modification, cancellation or extension of any of Newco Management Agreement, the Non-Competition Agreement or the Tax Sharing Agreement to which it is a party without the prior written consent of Agent and the Required Lenders. 8. TERM 8.1. TERMINATION. Subject to the provisions of Section 2 hereof, the financing arrangement contemplated hereby in respect of the Revolving Credit Loan shall be in effect until (and only until) the Commitment Termination Date; PROVIDED, HOWEVER, that in the event of a prepayment of any part of or the entire Revolving Credit Loan prior to the Commitment Termination Date with funds borrowed from any Person other than Lenders, then, without limiting any other remedies of Lenders or Agent hereunder, Agent shall be entitled in its discretion to require Borrower to simultaneously therewith pay to Lenders, in immediately available funds, all Obligations in full, in accordance with the terms of the agreements creating and instruments evidencing such Obligations. 8.2. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING ARRANGEMENT. Except as otherwise expressly provided for in the Loan Documents, no termination or cancellation (regardless of cause or procedure) of any financing arrangement under this Agreement shall in any way affect or impair the powers, obligations, duties, rights or liabilities of Borrower or the rights of Agent or any Lender relating to any transaction or event occurring prior to such termination. Except as otherwise expressly provided herein or in any other Loan Document, all undertakings, agreements, covenants, warranties and representations contained in the Loan Documents shall survive such termination or cancellation and shall continue in full force and effect until such time as all of the Obligations have been paid in full in accordance with the terms of the agreements creating such Obligations, at which time the same shall terminate. 85 8.3. TERMINATION PRIOR TO EFFECTIVE DATE. In the event that the Effective Date shall not have occurred on or prior to April 15, 1996, upon notice by Agent to Borrower, all obligations of Agent and each Lender hereunder shall forthwith be terminated. Notwithstanding any such termination, Borrower shall continue to be obligated to indemnify Agent and each Lender pursuant to the provisions of Section 2.15(a) hereof. 9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES 9.1. EVENTS OF DEFAULT. The occurrence of any one or more of the following events (regardless of the reason therefor) shall constitute an "Event of Default" hereunder: (a) Borrower shall fail to make any payment of principal of, interest on or any other amount owing in respect of, the Revolving Credit Loan, the Term Loans or any of the other Obligations when due and payable or declared due and payable, except that (i) with respect to expenses payable under this Agreement, or other Obligations owing under any Loan Document other than this Agreement, such failure shall have remained unremedied for a period of ten days after Borrower has received notice of such failure from Agent and (ii) with respect to interest payable under this Agreement, Borrower shall be entitled to not more than one ten-day grace period during any period of 365 consecutive days. (b) Borrower (or, in the case of Section 6.3, V Cable) shall fail or neglect to perform, keep or observe (i) any of the provisions of Section 6.3 or 7.10 (the "Financial Covenants") and the same shall not be cured within the periods and in the manner provided in Section 9.5 hereof or (ii) Section 6.15 hereof or any other provision of Article 7 hereof. (c) Borrower or any other Loan Party shall fail or neglect to perform, keep or observe any other provision of this Agreement or of any of the other Loan Documents and the same shall remain unremedied for a period of 30 days after Borrower or such other Loan Party shall become aware thereof. 86 (d) A default shall occur under any other agreement, document or instrument to which any Loan Party is a party or by which any such Loan Party or any such Loan Party's property is bound and such default (i) involves the failure to make any payment (whether of principal, interest or otherwise) due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) in respect of any Indebtedness of any Loan Party in an aggregate amount exceeding $1,000,000 or (ii) causes (or permits any holder of such Indebtedness or a trustee to cause) such Indebtedness or a portion thereof in an aggregate amount exceeding $1,000,000 to become due prior to its stated maturity or prior to its regularly scheduled dates of payment. (e) Any representation or warranty herein or in any Loan Document, in any written statement pursuant hereto or thereto, or in any report, financial statement or certificate made or delivered to Agent or any Lender by any Loan Party pursuant hereto or thereto, shall be untrue or incorrect in any material respect as of the date when made or deemed made (including those made or deemed made pursuant to Section 3.3 hereof). (f) Any of the assets of any Loan Party shall be attached, seized, levied upon or subjected to a writ or distress warrant, or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors of any Loan Party and shall remain unstayed or undismissed for 30 consecutive days; or any Person other than any Loan Party shall apply for the appointment of a receiver, trustee or custodian for any of the assets of any Loan Party and such application shall remain unstayed or undismissed for 30 consecutive days; or any Loan Party shall have concealed, removed or permitted to be concealed or removed, any part of its property, with intent to hinder, delay or defraud its creditors or any of them or made or suffered a transfer of any of its property or the incurring of an obligation which may be fraudulent under any bankruptcy, fraudulent conveyance or other similar law. (g) A case or proceeding shall have been commenced against any Loan Party in a court having competent jurisdiction seeking a decree or order in respect of such Loan Party (i) under title 11 of the United States Code, as now constituted or hereafter amended, or any other appli- 87 cable federal, state or foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of such Loan Party or of any substantial part of its properties or (iii) ordering the winding-up or liquidation of the affairs of such Loan Party and such case or proceeding shall remain undismissed or unstayed for 60 consecutive days or such court shall enter a decree or order granting the relief sought in such case or proceeding. (h) Any Loan Party shall (i) file a petition seeking relief under title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) consent to the institution of proceedings thereunder or to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of such Loan Party or of any substantial part of its properties, (iii) fail generally to pay its debts as such debts become due or (iv) take any corporate action in furtherance of any such action. (i) Final judgment or judgments (after the expiration of all times to appeal therefrom) for the payment of money in excess of $1,000,000 in the aggregate shall be rendered against Borrower or any of its Subsidiaries and the same shall not be (i) fully covered by insurance in accordance with Section 6.7 hereof or (ii) vacated, stayed, bonded, paid or discharged for a period of 15 days. (j) With respect to any Plan of Borrower or any of its ERISA Affiliates: (i) Borrower or any other party-in-interest or disqualified person shall engage in any transactions which in the aggregate would reasonably be expected to result in a direct or indirect liability of Borrower or any of its ERISA Affiliates in excess of $1,000,000 under Section 409 or 502 of ERISA or IRC Section 4975; (ii) Borrower or any of its ERISA Affiliates shall incur any accumulated funding deficiency, as defined in IRC Section 412, in the aggregate in excess of $1,000,000, or request a funding waiver from the IRS for contributions in the aggregate in excess of $1,000,000; (iii) Borrower or any of its ERISA Affiliates shall incur any withdrawal liability in the aggregate in excess of $1,000,000 as a result of a complete or partial withdrawal within the meaning of Section 88 4203 or 4205 of ERISA; (iv) Borrower or any of its ERISA Affiliates shall notify the PBGC of an intent to terminate, or the PBGC shall institute proceedings to terminate, a Plan; (v) a Reportable Event shall occur with respect to a Plan, and within 15 days after the reporting of such Reportable Event to any Lender, such Lender shall have notified Borrower in writing that (A) it has made a determination that, on the basis of such Reportable Event, there are reasonable grounds under Section 4042(a)(1), (2) or (3) of ERISA for the termination of such Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Plan and (B) as a result thereof a Default or an Event of Default shall occur hereunder; (vi) a trustee shall be appointed by a court of competent jurisdiction to administer any Plan or the assets thereof; (vii) the benefits of any Plan shall be increased, or Borrower or any of its ERISA Affiliates shall begin to maintain, or begin to contribute to, any Plan, without the prior written consent of the Required Lenders; or (viii) any ERISA Event with respect to a Plan shall have occurred, and 30 days thereafter (A) such ERISA Event (if correctable) shall not have been corrected and (B) the then present value of such Plan's vested benefits shall exceed the then current value of assets accumulated in such Plan; PROVIDED, HOWEVER, that the events listed in subsections (iv)-(viii) shall constitute Events of Default only if, as of the date thereof or any subsequent date, the maximum amount of liability Borrower or any of its ERISA Affiliates could incur in the aggregate under Section 4062, 4063, 4064, 4219 or 4243 of ERISA or any other provision of law with respect to all such Plans, computed by the actuary of the Plan taking into account any applicable rules and regulations of the PBGC at such time, and based on the actuarial assumptions used by the Plan, resulting from or otherwise associated with such event, exceeds $1,000,000. (k) Any material provision of any Collateral Document, after delivery thereof pursuant to Section 3.1 hereof, shall for any reason cease to be valid or enforceable in accordance with its terms, except as provided in the Termination and Modification Documents, or any security interest created under any Collateral Document shall cease to be a valid and perfected first priority security interest or Lien (except as otherwise stated therein or permitted thereunder and except as provided in 89 the Termination and Modification Documents) in any material portion of the Collateral purported to be covered thereby. (l) Either (i) Cablevision shall cease to own 100% of the outstanding Stock of V Cable or (ii) V Cable shall cease to own, directly or indirectly through wholly-owned Subsidiaries, 100% of the outstanding Stock of each other member of the V Cable Group, 100% of the Preferred USC Interest and 100% of the outstanding Stock of Borrower. (m) Cablevision, Borrower or any Subsidiary thereof shall (i) breach any material obligation under the Newco Management Agreement (including any obligation under Article III or Article VI thereof) and such breach shall remain uncured for a period of 30 days, or breach any representation or warranty thereunder in any material respect, (ii) breach any provision of the Tax Sharing Agreement and such breach shall remain uncured for a period of 30 days or (iii) breach any obligation under the NonCompetition Agreement. (n) The Newco Management Agreement shall be terminated. (o) An Event of Default (as defined in the V Cable Loan Agreement) shall have occurred. 9.2. REMEDIES. (a) If any Event of Default shall have occurred and be continuing, (i) GE Capital may terminate this facility with respect to further Revolving Credit Advances (including Letter of Credit Obligations), whereupon no further Revolving Credit Advances (including Letter of Credit Obligations) shall be made or incurred hereunder, and/or (ii) Agent shall at the request, or may with the consent, of the Required Lenders, declare all Obligations to be forthwith due and payable, whereupon all such Obligations shall become and be due and payable, without presentment, demand, protest or further notice of any kind, all of which are expressly waived by Borrower; PROVIDED, HOWEVER, that upon the occurrence of an Event of Default specified in Section 9.1(g) or (h) hereof, such Obligations shall become due and payable without declaration, notice or demand by Agent or any Lender. (b) Agent shall take such action with respect to any Default or Event of Default as shall be directed by the 90 Required Lenders; PROVIDED, HOWEVER, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of Agent and Lenders taken as a whole, including any action (or failure to act) pursuant to the Loan Documents. 9.3. WAIVERS BY BORROWER. Except as otherwise provided for in this Agreement and to the extent permitted by applicable law, Borrower waives (i) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Agent or any Lender on which Borrower may in any way be liable and hereby ratifies and confirms whatever Agent or any Lender may do in this regard, (ii) all rights to notice and a hearing prior to Agent's or any Lender's taking possession or control of, or to Agent's or any Lender's replevy, attachment or levy upon, the Collateral or any bond or security which might be required by any court prior to allowing Agent or any Lender to exercise any of its remedies and (iii) the benefit of all valuation, appraisal and exemption laws. Borrower acknowledges that it has been advised by counsel of its choice with respect to this Agreement, the other Loan Documents and the transactions evidenced by this Agreement and the other Loan Documents. 9.4. RIGHT OF SET-OFF. Upon the occurrence and during the continuance of any Event of Default, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of Borrower against any and all of the obligations of Borrower now or hereafter existing under this Agreement and the Notes held by such Lender, whether or not such Lender shall have made any demand under this Agreement or any such Note and although such obligations may be unmatured. Each Lender agrees promptly to notify Borrower after any such set-off and application made by such Lender; PROVIDED, HOWEVER, that the failure to give such notice 91 shall not affect the validity of such set-off and application. The rights of each Lender under this Section 9.4 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Lender may have. 9.5. CURE OF FINANCIAL COVENANT DEFAULT. Borrower shall be entitled to cure any breach of the Financial Covenants set forth in Section 6.3 hereof if V Cable or any other member of the V Cable Group (solely with new funds provided by Cablevision as a capital contribution to such entity) shall make, during the Fiscal Quarter or Fiscal Year, as the case may be, in respect of which such breach occurred, or within 45 days thereafter, a capital contribution to Borrower in cash, sufficient to cause Borrower to be in compliance with such provisions for the applicable Fiscal Quarter or Fiscal Year. Borrower shall also be entitled to cure any breach of the Financial Covenant set forth in Section 7.10 hereof if V Cable or any member of the V Cable Group (solely with new funds provided by Cablevision as a capital contribution to such entity) shall make, during the Fiscal Year in respect of which such breach occurred or within 90 days thereafter, a capital contribution to Borrower in cash, equal to the excess of the amount of Capital Expenditures made by Borrower and its Subsidiaries for the applicable Fiscal Year over the aggregate amount of Capital Expenditures permitted to be made for such Fiscal Year pursuant to Section 7.10 hereof. Borrower shall notify Agent of the making by V Cable or any other member of the V Cable Group of any capital contribution constituting a cure of any breach of a Financial Covenant pursuant to this Section 9.5 within five days after the making thereof, which notice shall also specify (i) the date any such capital contribution was made, (ii) the amount of any such capital contribution and (iii) whether such capital contribution is to be applied to cure a breach of the Financial Covenants set forth in Section 6.3 or Section 7.10. No such capital contribution applied to cure a breach of the provisions of Section 6.3 (a "Category 1 Capital Contribution") shall be counted for purposes of curing a breach of the provisions of Section 7.10, and no such capital contribution applied to cure a breach of the provisions of Section 7.10 (a "Category 2 Capital Contribution") shall be counted for purposes of curing a breach of the provisions of Section 6.3. 92 10. THE AGENT 10.1. AUTHORIZATION AND ACTION. Each Lender hereby appoints and authorizes Agent to take such action on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement and the other Loan Documents (including, without limitation, enforcement or collection of the Notes), Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders (including, without limitation, (a) the application of payments in any manner other than as set forth in Section 2.11 hereof and (b) if any prepayment of a LIBOR Advance in the manner and at the times provided in this Agreement would result in any such prepayment occurring prior to the last day of the Interest Period for such Advance, directing Borrower to make (or not prohibiting Borrower from making) such prepayment on a day other than the last day of the Interest Period therefor), and such instructions shall be binding upon all Lenders; PROVIDED, HOWEVER, that Agent shall not be required to take any action which exposes Agent to personal liability or which is contrary to this Agreement or the other Loan Documents or applicable law. Agent agrees to give each Lender prompt notice of each notice given to it by Borrower pursuant to Article 2 or Section 6.6 hereof (other than notices relating solely to the Revolving Credit Loan). Except for the foregoing notices, and such other specific notices or reports received by Agent from Borrower as any Lender may reasonably request, Agent shall have no duty or responsibility to provide to any Lender any credit or other information concerning the business, operations, assets, property, financial and other condition, prospects or creditworthiness of Borrower which may come into the possession of Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates. 10.2. AGENT'S RELIANCE, ETC. Neither Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the other Loan Documents, except for its or their own gross negligence 93 or wilful misconduct. Without limitation of the generality of the foregoing, Agent: (i) may treat the payee of any Note as the holder thereof until Agent receives written notice of the assignment or transfer thereof signed by such payee and in form satisfactory to Agent; (ii) may consult with legal counsel (including counsel for any Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statement, warranty or representation made in or in connection with this Agreement or the other Loan Documents; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of any Loan Party or to inspect the property (including the books and records) of any Loan Party; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall incur no liability under or in respect of this Agreement or the other Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. 10.3. GE CAPITAL AND AFFILIATES. With respect to its commitment hereunder to make Revolving Credit Advances and the Term Loans made by it and to incur Letter of Credit Obligations, GE Capital shall have the same rights and powers under this Agreement and the other Loan Documents as any other Lender and may exercise the same as though it were not Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include GE Capital in its individual capacity. GE Capital and its Affiliates may lend money to, and generally engage in any kind of business with, any Loan Party, any Subsidiary or Affiliate of any Loan Party and any Person who may do business with or own securities of any Loan Party or any such Subsidiary or Affiliate, all as if GE Capital were not Agent and without any duty to account therefor to any Lender. 94 10.4. LENDER CREDIT DECISION. Each Lender acknowledges that it has, independently and without reliance upon Agent or any other Lender and based on the financial statements referred to in Section 4.5 hereof and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. 10.5. INDEMNIFICATION. Each Lender agrees to indemnify Agent (to the extent that Agent is not reimbursed by Borrower), ratably according to the respective principal amounts of the Notes then held by each of them, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by Agent under this Agreement; PROVIDED, HOWEVER, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent's gross negligence or wilful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each other Loan Document, to the extent that Agent is not reimbursed for such expenses by Borrower. 10.6. SUCCESSOR AGENT. If GE Capital shall, consistent with Section 11.1 hereof, hold 50% or less of the aggregate principal amount of the Notes, Agent may resign by giving written notice thereof to each Lender and Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders, 95 and shall have accepted such appointment, within 30 days after the retiring Agent's giving notice of resignation, then the retiring Agent may, on behalf of Lenders, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any state thereof and having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article 10 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the other Loan Documents. MISCELLANEOUS 11.1. COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT; SALE OF INTEREST. (a) The Loan Documents constitute the complete agreement between the parties with respect to the subject matter hereof and may not be modified, altered or amended except in accordance with Section 11.1(e) below. (b) Borrower may not sell, assign or transfer any of the Loan Documents or any portion thereof, including, without limitation, Borrower's rights, title, interests, remedies, powers and duties hereunder or thereunder. Borrower hereby consents to Agent's and any Lender's sale of participations, assignment, transfer or other disposition (each, a "Sale"), at any time or times, of any of the Loan Documents or of any portion thereof or interest therein to any bank or other financial institution, including, without limitation, Agent's and any Lender's rights, title, interests, remedies, powers or duties thereunder, whether evidenced by a writing or not; PROVIDED, HOWEVER, that unless an Event of Default has occurred and is continuing, no Lender shall (without the written consent of Borrower and Agent) (i) effect any Sale of any Term Loan (A) if such Sale would result in any increased tax withholding obligation (or, in the case of a Sale by any Lender other than GE Capital, if such Sale would result in any additional payment being required to be made by Borrower pursuant to Section 2.15 hereof) and (B) unless GE Capital or any of its 96 Affiliates would after giving effect to such Sale retain more than 50% of the aggregate principal amount of the Notes or (ii) effect a Sale of participations to one or more banks or other financial institutions ("Participants") in or to any of the Notes or any portion thereof or interest therein, PROVIDED that any Lender may effect a Sale of such participations so long as (w) such Lender does not sell (A) participations in an aggregate of 50% or more of the aggregate principal amount of such Lender's Notes or (B) individual participations of less than $5,000,000, (x) such Lender shall remain solely responsible for all of its obligations under this Agreement and the Loan Documents, (y) Borrower, Agent and each other Lender shall continue to be entitled to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and (z) no Participant shall be entitled to require such Lender to take or omit to take any action hereunder; and PROVIDED FURTHER, HOWEVER, that, in the event any Lender shall determine to effect a Sale of any portion of any Term Note other than to an Affiliate of such Lender, such Lender shall (except as otherwise agreed by Borrower) use reasonable good faith efforts to sell such participations and assignments to institutions reasonably acceptable to Borrower on terms acceptable to such Lender in such Lender's sole discretion. Each Lender agrees that the Sale of any participations or assignments in any Loan shall take place in accordance with all applicable laws, rules and regulations. (c) Without limiting the provisions of Section 11.1(b) hereof, unless an Event of Default occurs and is continuing, no Lender shall, without the prior written consent of Agent, effect any Sale other than (x) a Sale to one or more Affiliates of such Lender or as required by law, (y) a Sale to GE Capital or (z) a Sale of participations to one or more banks or other financial institutions in accordance with the limitations set forth in Section 11.1(b)(ii) hereof (PROVIDED that, in the case of clauses (x), (y) and (z) of this Section 11.1(c), Agent shall have received prior written notice thereof). Any consent of Agent contemplated hereunder may be given or withheld in its sole discretion and without any consent or approval of Borrower being required. (d) In the event Agent or any Lender effects a Sale or otherwise transfers all or any part of any Note 97 consistent with the terms of this Agreement, Borrower shall, upon the request of Agent or such Lender, (i) issue new Notes to effect such assignment or transfer and (ii) execute such amendments to this Agreement as Agent may reasonably deem necessary or appropriate in order that the transferee may become a party thereto. (e) No amendment or waiver of any provision of this Agreement or the Notes or any other Loan Document, nor consent to any departure by Borrower therefrom, nor release of any Collateral or Guaranty, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; PROVIDED, HOWEVER, that no amendment, waiver or consent shall (i) subject any Lender to any additional obligations (without the written consent of such Lender) or (ii) amend this Section 11.1(e) without the written consent of each Lender affected thereby; and PROVIDED, FURTHER, HOWEVER, that no amendment, waiver or consent shall, unless in writing and signed by Agent in addition to the Lenders required above to take such action, affect the rights or duties of Agent under this Agreement, any Note or any other Loan Document. (f) If GE Capital shall effect a Sale of any participations in any of the Term Loans to any Person, Borrower shall pay to GE Capital, from time to time, all amounts that the holder of such participation would have been entitled to receive pursuant to Section 2.15(b), 2.17(a) or 2.17(b) hereof if such holder was a Lender under this Agreement and directly held that portion of the Notes (or interest therein) underlying such participation (in which event GE Capital's right to receive such amounts pursuant to such provisions shall be correspondingly reduced). 11.2. FEES AND EXPENSES. Borrower shall pay all reasonable out-of-pocket expenses of Agent in connection with the preparation of the Loan Documents (including the reasonable fees and expenses of all of its counsel retained in connection with the Loan Documents and the transactions contemplated thereby). If, at any time or times, regardless of the existence of an Event of Default (except with respect to paragraphs (iii) and (iv) below, which shall be subject to an Event of Default having occurred and continuing), 98 Agent (or, in the case of paragraphs (iii) and (iv) below, any Lender) shall employ counsel for advice or other representation or shall incur reasonable legal or other costs and expenses in connection with: (i) any amendment, modification or waiver, or consent with respect to, any of the Loan Documents; (ii) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent or any Lender, Borrower, any Subsidiary of Borrower or, subject to Section 2.15(a), any other Person) in any way relating to the Collateral, any of the Loan Documents or any other agreement to be executed or delivered in connection herewith; (iii) any attempt to enforce any rights of Agent or any Lender against Borrower, any Subsidiary of Borrower or any other Person that may be obligated to any Lender by virtue of any of the Loan Documents; or (iv) any attempt to verify, protect, collect, sell, liquidate or otherwise dispose of the Collateral; then, and in any such event, the attorneys' fees arising from such services, including those of any appellate proceedings, and all expenses, costs, charges and other fees incurred by such counsel in any way or respect arising in connection with or relating to any of the events or actions described in this Section 11.2 shall be payable, on demand, by Borrower to Agent or such Lender and shall be additional Obligations secured under this Agreement and the other Loan Documents; PROVIDED, HOWEVER, that with respect to Lenders other than GE Capital, Borrower shall be responsible for the attorneys' fees of only one counsel for such other Lenders. Without limiting the generality of the foregoing, such expenses, costs, charges and fees may include: paralegal fees, costs and expenses; accountants' fees, costs and expenses; court costs and expenses; photocopying and duplicating expenses; court reporter fees, costs and expenses; long distance telephone charges; air express charges; telegram charges; secretarial overtime charges; and expenses for travel, lodging and food paid or incurred in connection with the performance of such legal services. 99 11.3. NO WAIVER BY AGENT OR ANY LENDER. Agent's or any Lender's failure, at any time or times, to require strict performance by any Loan Party of any provision of this Agreement or any of the other Loan Documents shall not waive, affect or diminish any right of Agent or such Lender thereafter to demand strict compliance and performance therewith. Any suspension or waiver by Agent or Lenders of an Event of Default by any Loan Party under any Loan Document shall not suspend, waive or affect any other Event of Default by any Loan Party under any Loan Document, whether the same is prior or subsequent thereto and whether of the same or of a different type. None of the undertakings, agreements, warranties, covenants and representations of any Loan Party contained in this Agreement or in any of the other Loan Documents and no Event of Default and no default by any Loan Party under any of the Loan Documents shall be deemed to have been suspended or waived by Agent or Lenders, unless such suspension or waiver is by an instrument in writing signed by an officer of Agent and Required Lenders and directed to such Loan Party specifying such suspension or waiver. 11.4. REMEDIES. Agent's and each Lender's rights and remedies under this Agreement shall be cumulative and non-exclusive of any other rights and remedies which Agent and Lenders may have under any other agreement, including, without limitation, the Loan Documents, by operation of law or otherwise. Recourse to the Collateral shall not be required. 11.5. WAIVER OF JURY TRIAL. The parties hereto waive all right to trial by jury in any action or proceeding to enforce or defend any rights under the Loan Documents. 11.6. SEVERABILITY. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 11.7. PARTIES. This Agreement and the other Loan Documents shall be binding upon, and inure to the benefit of, the successors of Borrower, Agent and Lenders and the 100 permitted assigns, transferees and endorsees of Agent and Lenders. 11.8. CONFLICT OF TERMS. Except as otherwise provided in this Agreement or any of the other Loan Documents by specific reference to the applicable provisions of this Agreement, if any provision contained in this Agreement is in conflict with, or inconsistent with, any provision in any of the other Loan Documents, the provision contained in this Agreement shall govern and control. 11.9. AUTHORIZED SIGNATURE. Until Agent shall be notified by Borrower to the contrary, the signature upon any document or instrument delivered pursuant hereto of an officer of Borrower listed on Schedule 11.9 hereto shall bind Borrower and be deemed to be the act of Borrower affixed pursuant to and in accordance with resolutions duly adopted by Borrower's Board of Directors. 11.10. GOVERNING LAW. Except as otherwise expressly provided in any of the Loan Documents, in all respects, including all matters of construction, validity and performance, this Agreement and the Obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws, and any applicable laws of the United States of America. Agent, each Lender and Borrower agree to submit to personal jurisdiction and to waive any objection as to venue in the County of New York, State of New York. Service of process on Borrower, Agent or any Lender in any action arising out of or relating to any of the Loan Documents shall be effective if mailed to such party at the address listed in Section 11.11 hereof. Nothing herein shall preclude Agent, any Lender or Borrower from bringing suit or taking other legal action in any other jurisdiction. 11.11. NOTICES. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by another, or whenever any of the parties desires to give or serve upon another any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communi- 101 cation shall be in writing and shall be delivered either in person with receipt acknowledged, or by telecopy or by registered or certified mail, return receipt requested, postage prepaid, or by overnight courier, addressed as follows: (a) If to Agent at: General Electric Capital Corporation 201 High Ridge Road Stamford, Connecticut 06927-5100 Attention: Region Operations Manager Telecopy: (203) 316-7810 With copies to: General Electric Capital Corporation 3379 Peachtree Road, N.E., Suite 600 Atlanta, Georgia 30326 Attention: Thomas P. Waters Telecopy: (404) 842-1533 and General Electric Capital Corporation 201 High Ridge Road Stamford, Connecticut 06927-5100 Attention: Commercial Finance Legal Counsel Telecopy: (203) 316-7889 and Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attention: William M. Gutowitz, Esq. Norman D. Chirite, Esq. Telecopy: (212) 310-8007 (b) If to Borrower at: VC Holding, Inc. One Media Crossways Woodbury, New York 11797 Attention: General Counsel Telecopy: (516) 496-1780 102 With a copy to: Sullivan & Cromwell 125 Broad Street New York, New York 10004 Attention: John P. Mead, Esq. Telecopy: (212) 558-3588 (c) If to any Lender, at its address indicated on the signature pages hereof, or, as to any party hereto, at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered or transmitted by telecopy or three Business Days after the same shall have been deposited in the United States mail or one Business Day after the same shall have been deposited with an overnight courier. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to the Persons designated above to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication. 11.12. SURVIVAL. The representations and warranties of Borrower in this Agreement shall survive the execution, delivery and acceptance hereof by the parties hereto and the closing of the transactions described herein or related hereto. 11.13. SECTION TITLES. The Section titles and Table of Contents contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto. 11.14. COUNTERPARTS. This Agreement may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement. 103 IN WITNESS WHEREOF, this Agreement has been duly executed in New York, New York as of the date first written above. VC HOLDING, INC. By: /s/ Barry J. O'Leary ----------------------- Name: Barry J. O'Leary Title: Senior Vice President, Finance and Treasurer GENERAL ELECTRIC CAPITAL CORPORATION as Agent By: /s/ Thomas P. Waters ---------------------------------- Name: Thomas P. Waters Title: Vice President Revolving GENERAL ELECTRIC CAPITAL CORPORATION Credit as Lender Commitment - ---------- $125,000,000 By: /s/ Thomas P. Waters ---------------------------------- Name: Thomas P. Waters Title: Vice President 105 EX-10.68 9 EXHIBIT 10.68 PARTNERSHIP INTERESTS REDEMPTION AGREEMENT by and among U.S. CABLE TELEVISION GROUP, L.P. and U.S. CABLE PARTNERS POMPADUR TRUST NO. 1 THE RULE TRUST DATED JUNE 11, 1987 ELLIOT H. STEIN I. MARTIN POMPADUR GENERAL ELECTRIC CAPITAL CORPORATION _____________________ Dated as of March 18, 1996 _____________________ TABLE OF CONTENTS Page ARTICLE I DEFINITIONS 1.1 Certain Definitions.. . . . . . . . . . . . . . . . . . . . . . 3 1.2 Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE II ASSIGNMENT AND REDEMPTION OF INTERESTS 2.1 Assignment and Redemption; Acquired Interests . . . . . . . . . 6 2.2 Redemption Price. . . . . . . . . . . . . . . . . . . . . . . . 7 2.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2.4 Deliveries by the Limited Partnership . . . . . . . . . . . . . 8 2.5 Deliveries by Transferors . . . . . . . . . . . . . . . . . . . 8 2.6 Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.7 Release of GE Capital . . . . . . . . . . . . . . . . . . . . . 8 2.8 Agreement With Respect To Section 13.10 Option. . . . . . . . . 9 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE LIMITED PARTNERSHIP 3.1 Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.3 Noncontravention. . . . . . . . . . . . . . . . . . . . . . . . 10 3.4 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . 10 3.5 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.6 Lawsuits, Claims. . . . . . . . . . . . . . . . . . . . . . . . 11 3.7 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . 11 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TRANSFERORS 4.1 Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 12 4.3 Noncontravention. . . . . . . . . . . . . . . . . . . . . . . . 12 4.4 Governing Documents of Transferor . . . . . . . . . . . . . . . 13 4.5 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . 13 4.6 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . 14 4.7 Title to Interests. . . . . . . . . . . . . . . . . . . . . . . 14 4.8 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . 15 -i- ARTICLE V COVENANTS 5.1 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . 15 5.2 Reasonable Efforts. . . . . . . . . . . . . . . . . . . . . . . 15 5.3 Notices of Certain Events . . . . . . . . . . . . . . . . . . . 15 5.4 Access to Books and Records . . . . . . . . . . . . . . . . . . 17 5.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 5.6 Income Tax Reporting. . . . . . . . . . . . . . . . . . . . . . 18 ARTICLE VI CONDITIONS TO CLOSING 6.1 Conditions to the Obligations of the Parties. . . . . . . . . . 25 6.2 Conditions to the Obligations of the Limited Partnership. . . . 27 6.3 Conditions to the Obligations of Transferor . . . . . . . . . . 29 ARTICLE VII SURVIVAL . . . . . . . . . . . . . . . . 32 ARTICLE VIII TERMINATION 8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 33 8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . 33 ARTICLE IX MISCELLANEOUS 9.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 9.2 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . 36 9.3 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . 37 9.4 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 37 9.5 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . 37 9.6 Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . 37 9.7 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 9.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 38 9.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 38 9.10 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 9.11 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 38 -ii- 9.12 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 38 9.13 Consent to Redemption . . . . . . . . . . . . . . . . . . . . . 39 9.14 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . 39 -iii- Annex I Pompadur Letter Agreement Annex II USCP Letter Agreement SCHEDULES Schedule 3.6 Lawsuits; Claims Schedule 3.7 Consents and Approvals Schedule 4.3 Noncontravention Schedule 4.6 Consents and Approvals Schedule 4.7 Redemption Agreement Schedule 5.6 Form of Balance Sheet -iv- PARTNERSHIP INTERESTS REDEMPTION AGREEMENT This PARTNERSHIP INTERESTS REDEMPTION AGREEMENT is made as of March 18, 1996 by and among U.S. Cable Television Group, L.P., a limited partnership organized under the laws of Delaware (the "LIMITED PARTNERSHIP"), and U.S. CABLE PARTNERS, a partnership organized under the laws of New York ("USCP"), POMPADUR TRUST NO. 1, a trust organized under the laws of Connecticut ("PT1"), THE RULE TRUST DATED JUNE 11, 1987, a trust organized under the laws of California ("RULE TRUST"), ELLIOT H. STEIN ("EHS"), I. MARTIN POMPADUR ("IMP"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("GE CAPITAL") (each of USCP, PT1, RULE TRUST, EHS, IMP as partners of the Limited Partnership and GE Capital a "TRANSFEROR" and collectively, the "TRANSFERORS"). W I T N E S S E T H: WHEREAS, each of PT1, RULE TRUST, EHS, IMP and GE Capital are limited partners (the "LIMITED PARTNERS") in the Limited Partnership; WHEREAS, USCP is a general partner in the Limited Partnership; WHEREAS, the Limited Partnership is engaged in the business of owning and operating cable television systems (such owned and operated systems hereinafter referred to collectively as the "SYSTEM"); and WHEREAS, each Transferor desires to transfer to the Limited Partnership, and the Limited Partnership desires to redeem, all of such Transferor's right, title and interest in and to the limited and general partnership interests in the Limited Partnership owned by such Transferor (hereinafter referred to as the "INTERESTS"), all as more fully set forth herein, on the terms and subject to the conditions set forth herein; and WHEREAS, Cablevision Systems Corporation, a Delaware corporation ("CSC"), is the manager of the Systems under a Management Agreement (the "MANAGEMENT AGREEMENT"), dated as of December 31, 1992, by and among the Limited Partnership, CSC and the Subsidiaries of the Limited Partnership listed on the signature pages thereof; NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: -2- ARTICLE I DEFINITIONS 1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the meanings set forth or as referenced below: "AFFILIATES" mean, with respect to any Person, any Persons directly or indirectly controlling, controlled by, or under common control with, such other Person; PROVIDED, however, that no Transferor shall be deemed to be an Affiliate of the Limited Partnership or its Subsidiaries. "AGREEMENT" means this Partnership Interests Redemption Agreement, as the same may be amended or supplemented from time to time in accordance with the terms hereof. "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on which banks in New York City are authorized or obligated by law or executive order to close. "CLOSING" means the closing of the transactions contemplated by this Agreement. "CLOSING DATE" has the meaning set forth in Section 2.3 hereof. "CODE" means the Internal Revenue Code of 1986, as amended. "CSC" has the meaning set forth in the recitals to this Agreement. "EHS" has the meaning set forth in the preamble of this Agreement. "ENCUMBRANCES" means liens, charges, encumbrances, security interests, options, restrictions or any other claims or third party rights. "EXCHANGE AGREEMENT" means the Exchange Agreement, dated as of December 31, 1992, among V Cable, Inc., V Cable GP, Inc., the Limited Partnership and GE Capital. "EXCHANGE TERMINATION AGREEMENT" means the agreement dated as of the date hereof, among the Limited -3- Partnership, GE Capital, V Cable GP, Inc. and V Cable, Inc., terminating the Exchange Agreement. "GE CAPITAL" has the meaning set forth in the preamble to this Agreement. "GOVERNMENTAL AUTHORIZATIONS" means all franchises, licenses, permits, certificates and other authorizations and approvals required under applicable law, ordinance or regulation of any governmental authority, Federal, state or local. "H-S-R ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "IMP" has the meaning set forth in the preamble to this Agreement. "INTERESTS" shall have the meaning set forth in the recitals of this Agreement. "LIMITED PARTNERS" has the meaning set forth in the recitals of this Agreement. "LIMITED PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement of Limited Partnership of the Limited Partnership, dated as of December 31, 1992 as amended through the date hereof. "MANAGEMENT AGREEMENT" has the meaning set forth in the recitals of this Agreement as amended through the date hereof. "MATERIAL ADVERSE EFFECT" means a material adverse effect on the assets, financial condition or results of operations of the Limited Partnership or the System. "MPA AGREEMENT" means the Management Performance Adjustment and Interborrower Agreement, dated as of December 31, 1992, among V Cable, Inc., V Cable GP, Inc., VC Holding, Inc., the V Cable, Inc. and VC Holding, Inc. subsidiaries listed therein, the Limited Partnership and GE Capital. "MPA TERMINATION AGREEMENT" means the agreement dated as of the date hereof, terminating the MPA Agreement. "PT1" has the meaning set forth in the preamble to this Agreement. -4- "PERSON" means an individual, a corporation, a partnership, an association, a trust or other entity or organization. "POMPADUR LETTER AGREEMENT" means the letter agreement, dated as of December 31, 1992, by and among the Limited Partnership, IMP, USCP, PT1, Rule Trust, EHS and GE Capital annexed hereto as Annex I. "REDEMPTION PRICE" has the meaning set forth in Section 2.2 hereof. "REQUIRED APPROVALS" has the meaning set forth in Section 4.6 hereof. "RULE TRUST" has the meaning set forth in the preamble to this Agreement. "STOCK PURCHASE AGREEMENT" means the Preferred Stock Purchase Agreement dated as of February 2, 1996, between CSC and GE Capital as from time to time amended, supplemented or otherwise modified. "SYSTEM" has the meaning set forth in the recitals of this Agreement. "TAXES" means all Federal, state, local or foreign income, gross receipts, windfall profits, severance, property, production, sales, use, license, excise, franchise, employment, withholding or similar taxes, real and personal property taxes, transfer taxes, gains taxes, mortgage recording taxes, transportation taxes or gross operating taxes, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties. "TRANSFEROR" has the meaning set forth in the preamble this Agreement. "USC LOAN DOCUMENTS" has the meaning set forth in each of the Senior and Junior Loan Agreements, each dated as of December 31, 1992, between the Limited Partnership, GE Capital and the lenders named in each Agreement. "USC JUNIOR LOAN AGREEMENT" means the Junior Loan Agreement, dated as of December 31, 1992 between the Limited Partnership, GE Capital and the lenders named therein. "USC SENIOR LOAN AGREEMENT" means the Amended and Restated Senior Loan Agreement, dated as of the date hereof -5- between the Limited Partnership, GE Capital and the lenders named therein. "USCP" has the meaning set forth in the recitals of this Agreement. "USCP LETTER AGREEMENT" means the letter agreement, dated as of December 31, 1992 between GE Capital and USCP annexed hereto as Annex II. "V CABLE LOAN AGREEMENT" means the Loan Agreement dated as of December 31, 1992, among V Cable, Inc. ("V CABLE"), GE Capital and the lenders named therein, as amended through the date hereof. "VC HOLDING LOAN AGREEMENT" means the Amended and Restated Loan Agreement dated as of the date hereof, among VC Holding, Inc. ("VC HOLDING"), GE Capital and the lenders named therein. 1.2 CERTAIN TERMS. (i) The words "HEREOF", "HEREIN" and "HEREUNDER" and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement unless otherwise specifically stated to the contrary. (ii) The terms defined in the singular have a comparable meaning when used in the plural, and vice versa. ARTICLE II ASSIGNMENT AND REDEMPTION OF INTERESTS 2.1 ASSIGNMENT AND REDEMPTION; ACQUIRED INTERESTS. On the terms and subject to the conditions set forth herein, and in reliance on the representations, warranties, covenants and agreements of such Transferor contained herein, at the Closing, upon payment of the Redemption Price (a) each Transferor (severally and not jointly) shall and shall be deemed to have hereby conveyed, transferred, assigned and delivered to the Limited Partnership, and the Limited Partnership shall be deemed to have hereby redeemed all of such Transferor's right, title and interest in and to the Interests, free of all -6- Encumbrances as of the Closing Date, and (b) each Transferor (severally and not jointly) (i) acknowledges that by its execution of this Agreement, and the transfer of all of his right, title and interest to the Interests as of the Closing, such Transferor, except as set forth in Section 5.4 and 5.6 hereof or otherwise with respect to its rights as a former partner, will no longer have rights in relation to the Partnership or under the Limited Partnership Agreement and (ii) agrees to make the deliveries required of it under Section 2.5 hereof. The Limited Partnership shall not assume any liabilities for Taxes, if any, which may be imposed on any Transferor in connection with the transactions contemplated by this Agreement, including without limitation any transfer taxes, recapture of depreciation deductions or investment tax credits or any taxes imposed by any taxing authority in lieu of income taxes. 2.2 REDEMPTION PRICE. On the terms and subject to the conditions set forth herein, the Limited Partnership agrees to pay an amount in cash to each Transferor at the Closing as follows: USCP $ 160,000 PT1 $ 400,000 RULE TRUST $1,890,000 EHS $ 60,000 IMP $1,490,000 GE Capital $ 10,000 The sum of such amounts being hereinafter referred to as the "REDEMPTION PRICE". 2.3 CLOSING. The Closing shall take place at the offices of Weil, Gotshal & Manges at 10:00 a.m., New York time, on the fifth Business Day following the date on which all the conditions set forth in Article VI hereof, other than those conditions which by their terms are to be satisfied as of Closing, have been satisfied or waived, or at -7- such other time and place as the parties hereto may mutually agree. The date on which the Closing occurs is called the "CLOSING DATE". 2.4 DELIVERIES BY THE LIMITED PARTNERSHIP. At the Closing, the Limited Partnership shall deliver the following to each Transferor: (i) such Transferor's portion of the Redemption Price, as set forth in Section 2.2, in immediately available funds by wire transfer and (ii) the opinions, certificates and other documents to be delivered pursuant to Section 6.3 hereof. 2.5 DELIVERIES BY TRANSFERORS. At the Closing, each Transferor, severally and not jointly, shall deliver to the Limited Partnership the following: (a) such other documents or instruments, in form and substance reasonably acceptable to the Limited Partnership, as may be necessary to consummate the transactions contemplated hereby and to comply with the terms hereof; and (b) the opinions, certificates, and other documents to be delivered by such Transferor pursuant to Section 6.2 hereof. 2.6 RELEASE. The Partnership agrees that from and after the Closing Date each Transferor shall be released from all of its liabilities under the Limited Partnership Agreement. 2.7 RELEASE OF GE CAPITAL. USCP, with respect to the USCP Letter Agreement, and each of IMP, USCP, PT1, Rule Trust and EHS, with respect to the Pompadur Letter Agreement, hereby agree that, from and after the Closing Date, GE Capital shall be released from any and all obligations to such party under the USCP Letter Agreement and the Pompadur Letter Agreement to the extent, and only to the extent, that GE Capital would have been released from -8- any and all such obligations had GE Capital purchased such Transferor's interest in the Limited Partnership pursuant to Section 13.10 of the Limited Partnership Agreement. 2.8 AGREEMENT WITH RESPECT TO SECTION 13.10 OPTION. GE Capital hereby agrees that (i) from and after the date hereof, so long as this Agreement has not been terminated in accordance with Section 8 hereof, GE Capital will not exercise, assign, transfer, or otherwise dispose of (including the naming of any person as its designee under) the option or any interest in (including any lien on or security interest in) the option granted to it pursuant to Section 13.10 of the Limited Partnership Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE LIMITED PARTNERSHIP The Limited Partnership represents and warrants to each Transferor as follows: 3.1 STATUS. The Limited Partnership is a limited partnership duly organized and validly existing under the laws of the State of Delaware, and is duly qualified to do business in each jurisdiction in which such qualification is required by applicable law. 3.2 AUTHORIZATION. The Limited Partnership has full power and authority to execute and deliver this Agreement, and to perform its obligations hereunder. The execution, delivery and performance by the Limited Partnership of this Agreement have been duly and validly authorized by all necessary action, and no additional authorization or consent is required in connection with the execution, delivery and performance by the Limited Partnership of this Agreement. -9- 3.3 NONCONTRAVENTION. The execution, delivery and performance by the Limited Partnership of this Agreement, and the consummation of the transactions contemplated hereby, does not and will not (i) violate any provision of the Limited Partnership Agreement, (ii) except as set forth on Schedule 3.7 hereto, conflict with, or result in a breach of, or constitute a default under, or result in the termination, cancellation or acceleration (whether after the filing of notice or lapse of time or both) of any right or obligation of the Limited Partnership under, or to a loss of any benefit to which the Limited Partnership is entitled under, any agreement, franchise, license, permit, instrument or undertaking to which the Limited Partnership is a party or by which it is bound or to which any of its assets are subject, including any Governmental Authorization, or result in the creation of any Encumbrance upon any of said assets, other than in each case under this clause (ii) any violation, conflict, breach, default, termination, cancellation or acceleration, loss or Encumbrance, that could not reasonably be expected to impair or delay the Limited Partnership's ability to perform its obligations hereunder or (iii) violate or result in a breach of or constitute a default under any judgment, order, injunction, decree, law, rule, regulation or other restriction of any court or governmental authority to which the Limited Partnership is subject, including any Governmental Authorization, other than in each case under this clause (iii), any violation, conflict, breach, default, termination, cancellation, acceleration, loss or Encumbrance that could not reasonably be expected to impair or delay the Limited Partnership's ability to perform its obligations hereunder. 3.4 BINDING EFFECT. This Agreement constitutes a valid and legally binding obligation of the Limited Partnership enforceable in accordance with its terms, subject to -10- the availability of the discretionary remedy of specific performance and to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights. 3.5 FINDER'S FEES. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission from the Limited Partnership in connection with the transactions contemplated by this Agreement. 3.6 LAWSUITS, CLAIMS. Except as set forth in Schedule 3.6 hereto, there is no civil, criminal or administrative action, suit, demand, claim, hearing, proceeding or investigation pending or, to the knowledge of the Limited Partnership, threatened against the Limited Partnership which could not reasonably be expected to adversely affect the ability of the Limited Partnership to consummate the Closing. The Limited Partnership is not subject to any order, writ, judgment, award, injunction or decree of any court or governmental or regulatory authority of competent jurisdiction or any arbitrator or arbitrators which could not reasonably be expected to adversely affect the ability of the Limited Partnership to consummate the Closing. 3.7 CONSENTS AND APPROVALS. Except for any filings under the H-S-R Act and as specifically set forth in Schedule 3.7 hereto, no consent, approval, permit, license, waiver or other authorization or approval is required to be obtained by the Limited Partnership from, and no notice or filing is required to be given by the Limited Partnership to or made by the Limited Partnership with, any Federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Limited Partnership of this Agreement. -11- ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TRANSFERORS Each Transferor, with respect only to such Transferor, represents and warrants to the Limited Partnership severally and not jointly as follows: 4.1 STATUS. With respect to a Transferor that is not a natural Person, such Transferor is duly organized and validly existing under the laws of the state of its organization, and is duly qualified to do business in each jurisdiction in which such qualification is required by applicable law except where the failure to be so qualified would not adversely affect the ability of such Transferor to complete the transactions contemplated hereby. 4.2 AUTHORIZATION. (i) With respect to any Transferor that is not a natural person, such Transferor has full power and authority to execute and deliver this Agreement, and to perform its obligations hereunder and no additional authorization or consent is required in connection with the execution, delivery and performance by such Transferor of this Agreement. (ii) With respect to any Transferor that is a natural person, such Transferor has the legal capacity and authority to enter into this Agreement and to perform its obligations hereunder and no additional authorization or consent is required in connection with the execution, delivery and performance by such Transferor of this Agreement. 4.3 NONCONTRAVENTION. Except as set forth in Schedule 4.3 hereto, the execution, delivery and performance by such Transferor of this Agreement, and the consummation of the transactions contemplated hereby, does not and will not (i) violate, in the case of any Transferor that is not a natural Person, any organizational documents of such -12- Transferor, (ii) conflict with, or result in a breach of, or constitute a default under, or result in the termination, cancellation or acceleration (whether after the filing of notice or lapse of time or both) of any right or obligation of such Transferor under, or to a loss of any benefit to which such Transferor is entitled under, any agreement, franchise, license, permit, instrument or undertaking to which such Transferor is a party or by which it is bound or to which any of its assets are subject, including any Governmental Authorization, or result in the creation of any Encumbrance upon any of said assets, other than in each case under this clause (ii) any violation, conflict, breach, default, termination, cancellation or acceleration, loss or Encumbrance, that will not impair or delay such Transferor's ability to perform its obligations hereunder or (iii) violate or result in a breach of or constitute a default under any judgment, order, injunction, decree, law, rule, regulation or other restriction of any court or governmental authority to which such Transferor is subject, including any Governmental Authorization other than in each case under this clause (iii), any violation, conflict, breach, default, termination, cancellation, acceleration, loss or Encumbrance that would not impair or delay any such Transferor's ability to perform its obligations hereunder. 4.4 GOVERNING DOCUMENTS OF TRANSFEROR. Such Transferor (other than GE Capital) has heretofore delivered to the Limited Partnership true and complete copies of its organizational documents, if any, each as in full force and effect on the date hereof. 4.5 BINDING EFFECT. This Agreement constitutes a valid and legally binding obligation of such Transferor enforceable against such Transferor in accordance with its terms, subject to the availability of the discretionary -13- remedy of specific performance and to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights. 4.6 CONSENTS AND APPROVALS. Except (i) any filings under the H-S-R Act, (ii) any consent, approval, permit, license, waiver or other authorization required as a result of the particular nature of the business or assets of the Limited Partnership and (iii) as specifically set forth in Schedule 4.6 hereto, no consent, approval, permit, license, waiver or other authorization or approval is required to be obtained by such Transferor from, and no notice or filing is required to be given by such Transferor to or made by such Transferor with, any Federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by such Transferor of this Agreement, and the consummation by such Transferor of the transactions contemplated hereby (together with the consents, approvals, permits, licenses, waivers, authorizations, notices and filings referred to in Section 3.7 hereof, the "REQUIRED APPROVALS"). 4.7 TITLE TO INTERESTS. Such Transferor has good and valid title to the Interests held by such Transferor as set forth in Schedule 4.7 hereto and is conveying the Interests held by such Transferor free and clear of any Encumbrances (other than liens securing indebtedness under the USC Senior Loan Agreement which GE Capital agrees shall be released upon the occurrence of the condition set forth in Section 6.1(e)) and to the best of such Transferor's knowledge, except as previously disclosed (but subsequent to the date of the Stock Purchase Agreement) to V Cable GP, Inc. and V Cable, Inc. in writing, no other interests in the Partnership other than as set forth on Schedule 4.7 are in existence. -14- 4.8 FINDER'S FEES. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission from such Transferor in connection with the transactions contemplated by this Agreement. ARTICLE V COVENANTS 5.1 CONSENTS AND APPROVALS. The parties hereto agree to cooperate with each other to secure as promptly as practicable all Required Approvals. All costs of obtaining the Required Approvals shall be borne by the Limited Partnership. The Limited Partnership shall file within sixty (60) days of the date hereof the Notification Form under the H-S-R Act with respect to the transactions contemplated hereby. Each Transferor agrees to cooperate with the Limited Partnership in the preparation and filing of such Notification Form. 5.2 REASONABLE EFFORTS. Each party hereto shall take all reasonable steps to fulfill the conditions precedent to such party's obligations and to each other party's obligations hereunder to the extent applicable to such party. 5.3 NOTICES OF CERTAIN EVENTS. (i) During the period beginning on the date hereof and ending on the Closing Date, each Transferor shall promptly notify the Limited Partnership, V Cable and V Cable GP, Inc. and each other Transferor of: (a) any notice or other communication received by such Transferor from any Person alleging that the consent of such person is or may be required in connection with the transactions contemplated by this Agreement (other than notice in respect of a consent disclosed in any Schedule hereto); -15- (b) any notice or other communication received by such Transferor from any governmental authority in connection with the transactions contemplated by this Agreement; (c) any actions, suits, demands, claims, hearings, investigations or proceedings pending or, to the knowledge of such Transferor, threatened against such Transferor insofar as they relate to the transactions contemplated by this Agreement; and (d) any fact or circumstance known to such Transferor which would prevent such Transferor from meeting the conditions set forth in Section 6.1 hereof; PROVIDED, HOWEVER, that no such notification shall in any way limit the representations and warranties set forth in this Agreement. (ii) During the period beginning on the date hereof and ending on the Closing Date, the Limited Partnership, V Cable and V Cable GP, Inc. shall promptly notify each Transferor of: (a) any notice or other communication received by the Limited Partnership from any Person alleging that the consent of such person is or may be required in connection with the transactions contemplated by this Agreement (other than notice in respect of a consent disclosed in any Schedule hereto); (b) any notice or other communication received by the Limited Partnership from any governmental authority in connection with the transactions contemplated by this Agreement; (c) any actions, suits, demands, claims, hearings, investigations or proceedings pending or, to the knowledge of the Limited Partnership, threatened against the Limited Partnership insofar as they relate to the transactions contemplated by this Agreement; and (d) any fact or circumstance known to the Limited Partnership which would prevent the -16- Limited Partnership from meeting the conditions set forth in Section 6.2 hereof; PROVIDED, HOWEVER, that no such notification shall in any way limit the representations and warranties set forth in this Agreement. 5.4 ACCESS TO BOOKS AND RECORDS. The Limited Partnership agrees to provide each Transferor, his or its accountants, counsel and other representatives, during normal business hours and upon reasonable notice, for a period of ten years after the Closing Date, reasonable access to, and to copy at such Transferor's expense, the books, records, income tax returns, contracts and other underlying data and documentation relating to the Limited Partnership and to make available to such Transferor personnel of the Limited Partnership in such Transferor's review thereof for the purpose of enabling such Transferor (i) to determine and calculate any tax liabilities in connection with the Interests or (ii) to defend or prosecute any actual or threatened litigation arising out of or relating to such Transferor's Interest. A Transferor may, by written notice, extend such ten-year period for another ten years if reasonably necessary to protect the Transferor's rights under clauses (i) and (ii) in the preceding sentence. The Limited Partnership agrees that, for such ten-year period (or as extended), it will preserve and keep intact all such books and records. Except as required by law, with respect to any such access, each Transferor agrees to treat all information regarding the Limited Partnership and the Interests as confidential, preserve the confidentiality thereof and not duplicate or use such information, except in connection with determining and calculating any tax liabilities or in defending or prosecuting any action arising out of or relating to such Transferor's Interest and such Transferor will, except as required by law, use all -17- reasonable efforts to maintain such confidentiality, including, without limitation, instructing its employees and agents who have had access to such information, unless such information is now, or is hereafter disclosed, through no act or omission of such party, in any manner making it available to the general public. The Limited Partnership and each Transferor agrees that GE Capital shall continue to have the benefits of Sections 12.3 and 12.4.3 of the Limited Partnership Agreement for so long and only for so long as is necessary to resolve with the Internal Revenue Service or any state or local tax authority all matters regarding the taxation of the Limited Partnership during those tax years that any Transferor was a partner of the Limited Partnership. Nothing in this Section 5.4 shall limit GE Capital's rights or reduce CSC's obligations under Section 5.6(h). 5.5 TAXES. Each Transferor agrees that Taxes imposed upon a Transferor arising from or incident to the transfer of such Transferor's Interests shall be paid by such Transferor. 5.6 INCOME TAX REPORTING. (i) The parties agree that they will each report the transactions provided for in this Agreement for income tax purposes in accordance with the following agreements: (a) REDEMPTION TRANSACTION. The parties hereto agree that the redemption of the Interest of each Transferor will be treated, for income tax purposes, as a complete liquidation of such Transferor's interest in the Limited Partnership. In connection therewith, GE Capital agrees that it will report for federal income tax purposes gain or income of at least $134,000,000, or $132,000,000 if the Limited Partnership's 1992 Federal income tax return is not amended. Moreover, the parties recognize that Section -18- 751(b) of the Code may apply to the transaction provided for in this Agreement, and, accordingly, agree that (i) the value of the Limited Partnership's assets (other than the Government Authorizations and the Limited Partnership's goodwill) is equal to such assets' adjusted basis for federal income tax purposes; and (ii) any excess of the amount received by a Transferor over its adjusted basis, for federal income tax purposes, in its Interest is attributable to the excess of the value of the Limited Partnership's Government Authorizations and goodwill over their respective adjusted basis. (b) CLOSING OF BOOKS. The parties agree that for purposes of reporting each Transferor's share of the Limited Partnership's income or loss (and items thereof) for the taxable year in which the Closing occurs, the Limited Partnership shall close its books as of the day before the Closing Date. The Transferors will be allocated their respective share of the Limited Partnership's income or loss for the portion of the taxable year ending on the day before the Closing Date in accordance with such closing of the books; PROVIDED, HOWEVER, that for this purpose such income or loss shall include (x) any item of income or loss recognized or realized by the Limited Partnership in connection with the transactions provided for in this Agreement (I.E., the redemption of the Interests of the Transferors) other than income or loss recognized by the Limited Partnership pursuant to Section 751 of the Code (provided, however, that this clause (x) shall not apply to any Transferor other than GE Capital) and (y) any income or gain recognized by the Limited Partnership in connection with the contribution or termination of the Junior Subordinated Loan Agreement, -19- dated as of December 31, 1992, between the Limited Partnership and GE Capital shall be specially allocated to GE Capital. Except as provided in the preceding sentence, the Limited Partnership (and the partners thereof other than the Transferors) will be allocated all items of income or loss of the Limited Partnership for all periods beginning on the Closing Date. The parties understand that the transactions provided by this Agreement (I.E., the redemption of the Interests of the Transferors) will not result in the recognition of any income or loss by the Limited Partnership (other than income or loss recognized by the Limited Partnership pursuant to Section 751 of the Code) and agree that the income tax return for the Limited Partnership for the period including the closing of the transactions provided for in this Agreement will be filed in a manner consistent with the understanding. (ii) GE Capital represents that the gain or income to be recognized by GE Capital for federal income tax purposes as a result of the redemption of its interest in the Limited Partnership pursuant to this Agreement (the "GE Capital Gain") will not be less than $134,000,000, or $132,000,000 if the Limited Partnership's 1992 Federal income tax return is not amended. (a) In the event of a breach of the representation contained in Section 5.6(ii) or the second sentence of Section 5.6(i)(a), GE Capital shall be liable for and indemnify CSC for the amount of any "Tax Damages" (as defined below), incurred by CSC resulting therefrom. CSC agrees that (i) the sole and exclusive remedy for any breach of the representation contained in Section 5.6(ii) or the second sentence of Section 5.6(i)(a) shall be to seek Tax Damages and (ii) the liability of GE Capital for any such breach shall not -20- exceed the amount of Tax Damages determined pursuant to this Section 5.6(ii). (b) A breach shall be considered to occur only if (i) GE Capital fails to report, for federal income tax purposes, a GE Capital Gain of at least $134,000,000, or $132,000,000 if the Limited Partnership's 1992 Federal income tax return is not amended, or (ii) there is a "determination" as such term is defined in Section 1313(a) of the Code with respect to GE Capital, or the Limited Partnership or the Limited Partnership or GE Capital executes an Internal Revenue Service Form 870AD, which, in either case, reduces the amount of the GE Capital Gain. (c) No breach shall be considered to have occurred to the extent the decrease in the amount of GE Capital Gain is attributable to any adjustment made to the federal income tax returns of the Limited Partnership which is attributable to any item of income, gain, loss or deduction arising from the ordinary operation of the Limited Partnership's business for 1992 and to any other item of income, gain, loss or deduction attributable to any year ending after 1992. (d) The amount of any breach shall be reduced by the following items; and no breach will be considered to have occurred if the amount of these items exceeds the amount of the decrease in the GE Capital Gain: (v) the amount of income or gain, up to $4,000,000, recognized for Federal income tax purposes by the Transferors (other than GE Capital) as a result of the redemption of Interests provided for by this Agreement (and increased above $4,000,000, but in no event increased more than $2,000,000, to the extent the Limited Partnership -21- actually receives an increase in the basis of its assets of more than $4,000,000 as a consequence of the redemption of the Interests of such Transferors); (w) The aggregate amount of all net operating loss carry forwards of the consolidated group of corporations of which ECC Holdings, Inc. ("ECC") is the common parent, generated during taxable years ending after 1991; (x) The amount of all net operating loss carryforwards of ECC actually used, to the extent such amount exceeds the amount described in (w) above. (y) The aggregate amount of any tax basis in assets either used to reduce gain or increase loss realized upon the sale of ECC assets to a third party or which increases the depreciation, amortization or other deductions available to ECC or CSC; provided that the amount thereof shall not be taken into account if already taken into account pursuant to clauses (w), (x) or (z) of this subsection (d). (z) The amount of any adjustment to items of income, gain, deduction or loss reflected on the Limited Partnership's federal income tax returns for all taxable years that results in an increase in the GE Capital Gain. (e) "Tax Damages" shall mean the excess, if any, of the aggregate amount of Adjusted Taxes over the aggregate amount of Projected Taxes, as such terms are defined below. Adjusted Taxes and Projected Taxes shall be calculated for each taxable year from and after the year in which a reduction in the GE Capital Gain occurs and results in a breach under this -22- Section 5.6 until the year in which no deductions or tax basis step up resulting from the transaction contemplated in this Agreement may be claimed by the CSC Group (as defined below) or are included in the carryover effects of a "net operating loss" by the CSC Group. GE Capital will pay to CSC the amount of Tax Damages determined hereunder for the first taxable in which there are Tax Damages. For each subsequent taxable year, GE Capital and CSC shall make payments to one another to the extent required such that CSC shall have received, in the aggregate, the net amount of Tax Damages then determined to be owing to CSC through such subsequent taxable year. (f) "Projected Taxes" shall mean the federal income tax liability of the consolidated group of corporations of which CSC is the common Parent (the "CSC Group"), as shown on the CSC Group's tax returns, as amended, except that such tax liability shall be recomputed using the following assumptions: (y) All federal income tax returns of the Limited Partnership are true and correct as filed or, where applicable, as amended as of the date hereof. (z) CSC had purchased the assets of the Limited Partnership and ECC on the Closing Date for an amount equal to the amount of outstanding debt owed to GE Capital on such date. The allocation of such purchase price shall be as set forth on the tax basis balance sheet as agreed upon and attached hereto in the form of Schedule 5.6. No account shall be taken of any loss which might be available in connection with the liquidation of ECC. For purposes of this determination, the outstanding amount of GE Capital debt will be -23- considered to be the amount of the debt due under the USC Senior Loan Agreement (excluding, however, the Zero Coupon Loan and that portion of the Series B Term Loan required to be assumed by V Cable pursuant to the terms of the MPA Agreement). All capitalized terms in the preceding sentence not otherwise defined herein shall have the meaning assigned to them in the USC Senior Loan Agreement. GE Capital and CSC agree that the tax basis balance sheet will reflect as an asset "goodwill" which is neither amortizable nor depreciable and that in the computation of Adjusted Taxes such asset shall be assumed to be neither amortizable nor depreciable. (g) "Adjusted Taxes" shall mean, in the event of a breach of the representation contained in Section 5.6(ii) or the second sentence of 5.6(i), the federal income tax liability of the CSC Group as shown on its federal income tax returns, as amended, taking into account the amount of the reduction in the GE Capital Gain that gives rise to the breach of such representation, provided that Adjusted Taxes shall not exceed the actual tax liability of the CSC Group for each taxable year after a reduction in the GE Capital Gain. (h) In the event of any claim for damages, CSC shall provide to GE Capital reasonable access to CSC's tax returns and any workpapers establishing the existence of Tax Damages. In the event of any audit or other administrative or judicial proceeding that could result in the adjustment of items of income, gain, deduction or loss that causes a reduction of the GE Capital Gain pursuant to which GE Capital would be obligated to indemnify CSC hereunder, CSC shall provide -24- GE Capital with notice of such proceeding and GE Capital shall participate in the negotiation, settlement and pursuit of litigation, and GE Capital shall control all decisions regarding the settlement, resolution or concession of such proceedings with the reasonable consent of CSC. GE Capital shall be entitled to reimbursement, with interest, of any funds paid by GE Capital as Tax Damages, in the event that Tax Damages is later reduced as a result of any administrative or judicial proceeding. (i) GE Capital will promptly inform the Limited Partnership and CSC of the amount of the GE Capital Gain actually reported on its Federal income tax return for the period in which the redemption contemplated by this Agreement occurs. (j) The parties hereto shall cooperate with each other in connection with the application of this Section 5.6. (k) On or prior to the Closing Date, each Transferor other than GE Capital shall advise the Partnership and GE Capital in writing of the amount of estimated net gain that will be reported by such Transferor resulting from the redemption pursuant hereto. In making such determination, such Transferor shall assume it was allocated no gain or loss for the 1996 year. ARTICLE VI CONDITIONS TO CLOSING 6.1 CONDITIONS TO THE OBLIGATIONS OF THE PARTIES. The obligations of the parties hereto to effect the Closing -25- are subject to the satisfaction, except as otherwise indicated, prior to the Closing of the following conditions: (a) H-S-R. Any required filings shall have been made and any required waiting period under the H-S-R Act applicable to the transactions contemplated hereby shall have expired or been earlier terminated. (b) NO INJUNCTIONS. No court or governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, or non-appealable judgment, decree, injunction or other order which is in effect on the Closing Date and prohibits the consummation of the Closing. (c) CONSENTS AND APPROVALS. The Limited Partnership shall have certified to such Transferor that all Required Approvals shall have been obtained and are in full force and effect, free of material burdensome conditions or restrictions. (d) SIMULTANEOUS CLOSING. The closing of each redemption hereunder is expressly conditioned on the simultaneous closing of each other redemption hereunder and no such transaction shall close unless all such transactions close, unless otherwise agreed to in writing by the Limited Partnership and each Transferor whose transaction is to close; provided, however, that so long as that portion of the Redemption Price to be paid to any Transferor is not affected, such agreement may be signed by GE Capital and IMP (on behalf of each Transferor other than GE Capital). (e) SENIOR LOAN REPAYMENT. All principal, interest and other obligations under the USC Senior Loan Agreement shall be repaid prior to or simultaneously with the Closing. -26- The foregoing conditions set forth in this Section 6.1 may be waived by IMP on behalf of itself and each other Transferor other than GE Capital, but may not be waived on behalf of GE Capital without GE Capital's consent. 6.2 CONDITIONS TO THE OBLIGATIONS OF THE LIMITED PARTNERSHIP. The obligation of the Limited Partnership to effect the Closing is subject to the satisfaction (or waiver) prior to the Closing, of the following conditions, except for those conditions which must by their terms be true as of the Closing, in which case the Limited Partnership's obligation is subject to such conditions being true as of the Closing: (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of each Transferor contained herein shall have been true and correct in all material respects when made and shall be true and correct in all material respects as of the Closing, as if made as of the Closing, and the Limited Partnership shall have received a certificate from each Transferor to such effect dated the Closing Date and duly executed by such Transferor, together with such backup documentation as the Limited Partnership may reasonably request. (b) COVENANTS. The covenants and agreements of each Transferor to be performed on or prior to the Closing shall have been duly performed in all material respects, and the Limited Partnership shall have received a certificate to such effect dated the Closing Date from each Transferor and duly executed by such Transferor, together with such backup documentation as the Limited Partnership may reasonably request. (c) LEGAL OPINIONS. On or prior to the Closing, the Limited Partnership shall have received from each -27- Transferor an opinion of counsel reasonably satisfactory to the Limited Partnership, dated as of the date hereof, substantially to the effect that (provided that such counsel need express no opinion with respect to Section 5.6(b)): (i) With respect to a Transferor that is not a natural Person, such Transferor is duly organized and validly existing under the laws of the state of its organization; (ii) With respect to any Transferor that is not a natural Person, such Transferor has full corporation, partnership or trust power and authority to execute and deliver this Agreement, and to perform its obligations hereunder; (iii) Except as set forth in Schedule 4.3 hereto, the execution, delivery and performance by such Transferor of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not (i) violate, in the case of any Transferor that is not a natural Person, any organizational documents of such Transferor, (ii) conflict with, or result in a breach of, or constitute a default under, any agreement to which such Transferor is a party or by which it is bound or to which any of its assets are subject, in each case known to such counsel other than in each case under this clause (ii) any violation, conflict, breach, or default that will not impair or delay such Transferor's ability to perform its obligations hereunder or (iii) violate any New York, [law of jurisdiction of organization] or federal law, rule or regulation or any judgment, order, injunction, decree, or other restriction of any court or governmental authority to which such Transferor is subject known to such counsel, other than in each case under this clause (iii), any violation, conflict, breach, default, termination, cancellation, acceleration, or loss that would not impair or delay, any such Transferor's ability to perform its obligations hereunder; provided, that, such counsel need express no opinion with respect to any (i) consents or approvals and authorizations that may be required pursuant to any media license or any laws, rules or regulations of the United States or any state thereof or locality therein relating particularly to the construction, ownership, operation, promotion, -28- extension or other exploitation of any type of communication, broadcasting or transmission system, including without limitation, any cable television system, (ii) any violation that may result from the nature of the business or assets of the Limited Partnership, (iii) fraudulent transfer laws, and (iv) bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights; and (iv) Such Transferor has duly executed and delivered this Agreement and this Agreement constitutes a valid and legally binding obligation of such Transferor enforceable against such Transferor in accordance with its terms, subject to the availability of the discretionary remedy of specific performance and to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights. (d) LITIGATION. No litigation, investigation or other proceeding shall have been commenced or threatened which questions the validity or legality of any of the transactions contemplated hereby. (e) NO MATERIAL ADVERSE CHANGE. There shall not have occurred prior to the Closing any change, or any development involving a prospective change, in or affecting the assets, financial condition or results of operation of the System or the Limited Partnership that has had or could reasonably be expected to have a Material Adverse Effect. (f) UCC REPORT. On the Closing Date, there shall have been delivered by each Transferor, a report, dated as of the most recent practicable date, showing an absence of Uniform Commercial Code filings with respect to such Transferor's Interest. 6.3 CONDITIONS TO THE OBLIGATIONS OF TRANSFEROR. The obligation of each Transferor, only with respect to such Transferor, to effect the Closing is subject to the satisfaction (or waiver by such Transferor or by IMP on behalf of -29- any such Transferor other than GE Capital) prior to the Closing of the following conditions, except for those conditions which must by their terms be true as of the Closing, in which case such Transferor's obligation is subject to such conditions being true as of the Closing: (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Limited Partnership and, with respect to the obligation of GE Capital to effect the Closing, each other Transferor contained herein shall have been true and correct in all material respects when made and shall be true and correct in all material respects as of the Closing, as if made as of the Closing, and such Transferor shall have received a certificate to such effect dated the Closing Date and executed by an officer of the Limited Partnership. (b) COVENANTS. The covenants and agreements of the Limited Partnership and, with respect to the obligation of GE Capital to effect the Closing, each other Transferor to be performed on or prior to the Closing shall have been duly performed in all material respects, and such Transferor shall have received a certificate to such effect dated the Closing Date and executed by an officer of the Limited Partnership. (c) LEGAL OPINIONS. (i) Such Transferor shall have received the opinion of Sullivan & Cromwell or other counsel reasonably satisfactory to a majority of the Transferors, dated as of the Closing Date, addressed to such Transferor, substantially to the effect that (provided that such counsel need express no opinion with respect to Section 5.6(b)): -30- (A) The Limited Partnership has been duly organized and is an existing limited partnership in good standing under the laws of the State of Delaware; (B) The Limited Partnership has all necessary partnership power and authority to execute and deliver this Agreement, and to perform its obligations hereunder; (C) This Agreement has been duly authorized, executed and delivered by the Limited Partnership and constitutes a valid and legally binding obligation of the Limited Partnership enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles affecting creditors' rights; and (D) The execution, delivery and performance by the Limited Partnership of this Agreement and the consummation of the transactions contemplated hereby will not violate any New York, Delaware corporate or Federal law or regulation, in each case applicable to the Limited Partnership; provided, that, such counsel need express no opinion with respect to filings under the H-S-R Act or to (i) any consents, approvals or authorizations (including those set forth in Schedule 3.7 to this Agreement) that may be required pursuant to any media license or any laws, rules or regulations of the United States or any state thereof or locality therein relating particularly to the construction, ownership, operation, promotion, extension or other exploitation of any type of communication, broadcasting or transmission system, including without limitation, any cable television system, (ii) any violation that may result from the nature of the business or assets of the Limited Partnership, (iii) fraudulent transfer laws, and (iv) bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights. (ii) Such Transferor shall have received the opinion of Robert S. Lemle, Esq., Executive Vice President, General Counsel and Secretary of CSC, dated as of the -31- Closing Date, addressed to such Transferor, substantially to the effect that: (A) The Limited Partnership is duly qualified to do business in each jurisdiction in which it owns or leases property, or in which the conduct of its business requires it to so qualify, except where the failure to do so would not have a material adverse effect on the business, of the Limited Partnership. (B) The execution, delivery and performance by the Limited Partnership of this Agreement and the consummation of the transactions contemplated hereby (i) will not violate any statute or rule or regulation or any order known to such counsel of any court or governmental instrumentality binding upon the Limited Partnership, (ii) will not conflict with or result in a breach of termination of, or constitute a default under any indenture, mortgage, deed of trust, lease, agreement or other instrument known to such counsel to which the Limited Partnership may be a party or by which any of its properties may be bound, and (iii) except as set forth in Schedule 3.7 to this Agreement and except for filings under the H-S-R Act, do not require the consent, authorization or approval or other action or filing with any federal governmental body, agency or authority. ARTICLE VII SURVIVAL Except for those representations, warranties and covenants set forth in Sections 2.6, 2.7, 4.7, 5.4, 5.5, 5.6 and 9.12, the representations, warranties and covenants contained in this Agreement shall not survive the Closing. The representations, warranties and covenants set forth in Sections 2.6, 2.7, 5.4, 5.5, 5.6(i) and 9.12 shall survive only until the expiration of the applicable statute of limitations and the representations, warranties and obligations of the parties set forth in Sections 4.7 and 5.6(ii) shall survive indefinitely. -32- ARTICLE VIII TERMINATION 8.1 TERMINATION. This Agreement may be terminated at any time prior to the Closing: (a) by agreement of the Limited Partnership, IMP on behalf of each other Transferor (other than GE Capital) and GE Capital; (b) by either the Limited Partnership or any Transferor if there shall be in effect on the Closing Date any law or regulation that prohibits the consummation of the Closing or if consummation on the Closing Date of the Closing would violate any non-appealable final order, decree or judgment of any court or governmental body having competent jurisdiction; or (c) by the Limited Partnership, GE Capital or IMP in the event the Closing Date shall not have occurred on or prior to March 18, 1997. 8.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement in accordance with Section 8.1 hereof, this Agreement shall thereafter become void and have no effect, and no party hereto shall have any liability to the other party hereto or their respective Affiliates, trustees, directors, officers or employees, except for the obligations of the parties hereto contained in this Section 8.2 and in Section 9.6 hereof, and except that nothing herein will relieve any party from liability for any breach of this Agreement prior to such termination. -33- ARTICLE IX MISCELLANEOUS 9.1 NOTICES. All notices or other communications hereunder shall be deemed to have been duly given and made if in writing and if served by personal delivery upon the party for whom it is intended, if delivered by registered or certified mail, return receipt requested, or by a national courier service, or if sent by telecopier, PROVIDED that the telecopy is promptly confirmed by telephone confirmation thereof, to the person at the address set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such person: To the Limited Partnership: U.S. Cablevision Television Group, L.P. c/o CABLEVISION SYSTEMS CORPORATION One Media Crossways Woodbury, New York 11797 Telephone: (516) 496-1532 Telecopy: (516) 496-1780 Attn: General Counsel With copies to: 1) SULLIVAN & CROMWELL 125 Broad Street New York, New York 10004 Telephone: (212) 558-4000 Telecopy: (212) 558-3588 Attn: John P. Mead Patricia A. Ceruzzi 2) GENERAL ELECTRIC CAPITAL CORPORATION 3379 Peachtree Road, N.E. Suite 600 Atlanta, GA 30326 Telecopy: (404) 814-3104 Attn: Michael Cummings -34- 3) WEIL, GOTSHAL & MANGES 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8167 Telecopy: (212) 310-8007 Attn: William M. Gutowitz Norman D. Chiritie To Transferors: If to USCP: U.S. Cable Partners 350 Park Avenue New York, New York 10022 Attn: I. Martin Pompadur With a copy to: Proskauer Rose Goetz & Mendelson LLP 1585 Broadway New York, New York Attn: Lawrence H. Budish If to PT1: POMPADUR TRUST NO. 1 10 Highland Farm Road Greenwich CT 06831 Attn: I. Martin Pompadur With a copy to: Proskauer Rose Goetz & Mendelson LLP 1585 Broadway New York, New York Attn: Lawrence H. Budish If to RULE TRUST: THE RULE TRUST Attn: c/o Hayes, Hume, Petas, Richards & Cohanne 10000 Santa Monica Blvd. Suite 450 Los Angeles, California 90069 Telecopy: Attention: Mary Muir, Esq. -35- If to EHS: Elliot H. Stein Attn: c/o Commonwealth Partners 245 Park Avenue New York, NY 10017 If to IMP: I. Martin Pompadur 10 Highland Farm Road Greenwich, CT 06831 With a copy to: Proskauer Rose Goetz & Mendelson LLP 1585 Broadway New York, New York Attn: Lawrence H. Budish If to GE Capital: GENERAL ELECTRIC CAPITAL CORPORATION 3379 Peachtree Road, N.E. Suite 600 Atlanta, GA 30326 Telecopy: (404) 814-3104 Attn: Michael Cummings With a copy to: WEIL, GOTSHAL & MANGES 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8167 Telecopy: (212) 310-8007 Attn: William M. Gutowitz Norman D. Chirite 9.2 AMENDMENT; WAIVER. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Limited Partnership and each Transferor, or in the case of a waiver, by the party against whom the waiver is to be effective; PROVIDED, HOWEVER, that for any amendment or waiver that does not affect that -36- portion of the Redemption Price to be paid to any Transferor, such amendment or waiver may be signed by IMP on behalf of each other Transferor (other than GE Capital) and by GE Capital. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 9.3 ASSIGNMENT. No party to this Agreement may assign any of it rights or obligations under this Agreement without the prior written consent of the other parties hereto. 9.4 ENTIRE AGREEMENT. This Agreement (including all Schedules and Annexes hereto) contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters. 9.5 PARTIES IN INTEREST. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Except as provided in the Section 9.6, nothing in this Agreement, express or implied, is intended to confer upon any person other than the Limited Partnership, each Transferor, or their successors or permitted assigns, any rights or remedies under or by reason of this Agreement. 9.6 THIRD PARTY BENEFICIARY. Each of the parties hereto acknowledge and agree that they intend Cablevision Systems Corporation and its subsidiaries to be a third party beneficiary of the agreements contained herein and that -37- Cablevision Systems Corporation shall be entitled to enforce the provisions of this Agreement to the same extent as if it were a party hereto. 9.7 EXPENSES. Except as otherwise provided in this Agreement or the Stock Purchase Agreement, each of the parties hereto shall bear its own expenses incurred in connection with this Agreement and with the performance of its obligations hereunder. 9.8 GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. 9.9 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement. 9.10 HEADINGS. The heading references herein and the table of contents hereto are for convenience purposes only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. 9.11 SEVERABILITY. The unenforceability or invalidity of any paragraph or subparagraph of this Agreement shall not affect the enforceability or validity of the balance of this Agreement. 9.12 FURTHER ASSURANCES. Each Transferor, on the one hand, and the Limited Partnership, on the other, agree, at any time and from time to time after the Closing, upon the request of the Limited Partnership, at the cost and expense of the Limited Partnership, to do, execute, acknowledge and deliver, or to cause to be done, executed, acknowledged and delivered, all such further acts, deeds, assignments, transfers, conveyances, powers of attorney and -38- assurances as may be required for the better assigning, transferring, conveying, and confirming to the Limited Partnership, or to its successors and assigns, or for the aiding, assisting, collecting and reducing to possession of, any or all of the Interests. Notwithstanding anything to the contrary contained herein and in recognition of the nature of this Agreement, the parties hereto agree that the Limited Partnership is not assuming any liabilities, contingent or otherwise, of such Transferor. 9.13 CONSENT TO REDEMPTION. By his execution hereof, each party hereto expressly consents to the execution of this Agreement by the Limited Partnership and each other party hereto and to the consummation of the transaction contemplated hereby for all purposes for which such consent may be necessary or desirable. 9.14 EFFECTIVENESS. Notwithstanding anything herein to the contrary, GE Capital shall have no obligations or liability hereunder unless and until the Prepayment Transactions shall have occurred under the Second Amended and Restated Agreement of Limited Partnership of the Limited Partnership dated as of the date hereof. -39- IN WITNESS WHEREOF, the parties have executed or caused this Agreement to be executed as of the date first written above. U.S. CABLE TELEVISION GROUP, L.P. V CABLE GP, INC. By: /s/ Barry O'Leary ------------------ Name: Barry O'Leary Title: Senior Vice President, Finance and Treasurer U.S. CABLE PARTNERS By: IMP CABLE MANAGEMENT, INC., a general partner By: /s/ I. Martin Pompadur ---------------------- Name: I. Martin Pompadur Title: President GOLDEN HOLDINGS INC., a general partner By: /s/ I. Martin Pompadur ---------------------- Name: I. Martin Pompadur Title: President /s/ Elliot H. Stein, Jr. ------------------------ Elliot H. Stein, Jr. /s/ I. Martin Pompadur ---------------------- I. Martin Pompadur -40- POMPADUR TRUST NO. 1 By: /s/ Marian Pompadur ------------------- Marian Pompadur, Trustee By: /s/ Bertram A. Abrams --------------------- Bertram A. Abrams, Trustee By: ------------------------ Jana Pompadur, Trustee GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Thomas P. Waters -------------------- Name: Thomas P. Waters Title: Vice President THE RULE TRUST DATED JUNE 11, 1987 By: /s/ Betty L. Rule ----------------- Betty L. Rule, Trustee V CABLE, INC. By: /s/ Barry O'Leary ------------------ Name: Barry O'Leary Title: -41- SCHEDULE 3.6 LAWSUITS; CLAIMS [NONE] -42- SCHEDULE 4.3 Noncontravention [NONE] -43- SCHEDULE 3.7 SCHEDULE 4.6 CONSENTS AND APPROVALS FRANCHISE CONSENTS A. KENTUCKY REGION 10-31-95 SUBSCRIBERS ----------- 1. Crittenden, KY 212 2. Guthrie, KY 345 3. Marion, KY 1,092 4. Salem, KY 212 5. Smithton, IL 414 --- TOTAL KENTUCKY 2,275 B. MISSOURI REGION 10-31-95 SUBSCRIBERS ----------- 1. Excelsior Springs, MO 2,809 2. Marshfield, MO 745 3. Rogersville, MO 178 4. Seymour, MO 241 5. Willard, MO 422 6. Cameron, MO 1,518 ----- TOTAL MISSOURI 5,914 C. NORTH CAROLINA REGION 10-31-95 SUBSCRIBERS ----------- 1. Ashe County, NC 1,674 2. Chowan County, NC 633 3. Edenton, NC 1,829 4. Hertford, NC 722 5. Perquimans County, NC 714 6. Washington County, NC 689 7. Jefferson, NC 560 8. Henderson County, NC* 15,035 -44- 9. Hendersonville, NC* 2,333 10. Laurel Park, NC* 784 11. West Jefferson, NC* 589 ------ TOTAL NORTH CAROLINA 25,707 D. FLORIDA REGION 10-31-95 SUBSCRIBERS ----------- 1. Mobile, AL (city) 221 2. Santa Rosa County, FL 9,592 3. Tyndall Air Force Base, FL 1,025 4. Whiting Naval Station, FL 234 5. Brewton, AL* 2,157 6. Clarke County, AL* 65 7. Evergreen, AL* 1,203 8. Havana, FL* 601 9. Jackson, AL* 1,752 10. Monroe County, AL* 172 11. Pensacola NAS, FL* 719 12. Thomasville, AL* 1,578 13. York County, AL 886 ------ TOTAL FLORIDA 19,952 E. ALABAMA REGION* 1. Louisville, MS 2,443 - --------------------------------------------------------------- - --------------------------------------------------------------- TOTAL SUBSCRIBERS 56,240 - --------------------------------------------------------------- - --------------------------------------------------------------- - -------------------- * Approval necessary in connection with an Essex roll-up. -45- SCHEDULE 4.7 REDEMPTION AGREEMENT SCHEDULE A U.S. CABLE TELEVISION GROUP, L.P. Names of Partners, Type of Partner, Percentage Interest and Class of Partnership Interest Type of Partner Initial (i.e., general or Percentage Class of Partner limited) Interest Interests ------- ----------------- ---------- --------- V Cable GP, Inc. Class I General 1% Class I General c/o Cablevision Partner, a general Partnership Systems Corporation partner Interest One Media Crossways Woodbury, New York 11797 Attention: General Counsel Telecopy: (516) 496-1780 V Cable, Inc. Class I Limited 19% Class I Limited c/o Cablevision Systems Partner, a limited Partnership Corporation partner Interest One Media Crossways Woodbury, New York 11797 Attention: General Counsel Telecopy: (516) 496-1780 U.S. Cable Partners Class II General 1% Class II General 350 Park Avenue Partner, a general Partnership New York, partner Interest New York 10022 Attention: I. Martin Pompadur Telecopy: (212) 980-8374 I. Martin Pompadur Class II Limited 2.71586% Class II Limited 10 Highland Farm Road Partner, a limited Partnership Greenwich partner Interest CT 06831 Telecopy: (203) 622-4876 -46- Type of Partner Initial (i.e., general or Percentage Class of Partner limited) Interest Interests ------- ----------------- ---------- --------- The Rule Trust dated Class II Limited 3.44556% Class II Limited June 11, 1987 Partner, a limited Partnership c/o Hayes, Hume, Petas, partner Interest Richards & Cohanne 10000 Santa Monica Blvd. Suite 450 Los Angeles, California 90069 Telecopy: Attention: Mary Muir, Esq. Pompadur Trust No. 1 Class II Limited 0.72898% Class II Limited 10 Highland Farm Road Partner, a limited Partnership Greenwich CT partner Interest 06831 Attention: I. Martin Pompadur Telecopy: (203) 622-4876 Elliot H. Stein, Jr. Class II Limited 0.10960% Class II Limited c/o Commonwealth Partner, a limited Partnership Partners partner Interest 245 Park Avenue New York, NY 10017 Telecopy: General Electric Class III Limited 0% Class III Limited Capital Corporation Partner, a limited Partnership 260 Long Ridge Road partner Interest Stamford, Connecticut 06902 Attention: Region Operations Manager and John Sprole Telecopy: (203) 357-4025 and (203) 357-3047, respectively -47- Type of Partner Initial (i.e., general or Percentage Class of Partner limited) Interest Interests ------- ----------------- ---------- --------- General Electric Class IV Limited 72% Class IV Limited Capital Corporation Partner, a limited Partnership 260 Long Ridge Road partner Interest Stamford Connecticut 06902 Attention: Region Operations Manager and John Sprole Telecopy: (203) 357-4025 and (203) 357-3047, respectively General Electric Class V Limited 0% Class V Limited Capital Corporation Partner, a limited Partnership 260 Long Ridge Road partner Interest Stamford Connecticut 06902 Attention: Region Operations Manager and John Sprole Telecopy: (203) 357-4025 and (203) 357-3047, respectively V Cable, Inc. Class VI Limited 0% Class VI Limited c/o Cablevision Partner, a limited Partnership Systems Corporation partner Interest One Media Crossways Woodbury, New York 11797 Attention: General Counsel Telecopy: (516) 496-1780 -48- EX-10.69 10 EXHIBIT 10.69 SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF U.S. CABLE TELEVISION GROUP, L.P. Dated as of March 18, 1996 TABLE OF CONTENTS Page ARTICLE 1 THE LIMITED PARTNERSHIP. . . . . . . . . . . . . . . . . . . . 4 1.1 Formation. . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.2 Certificate of Limited Partnership . . . . . . . . . . . . . 4 1.3 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.4 Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.5 Principal Offices. . . . . . . . . . . . . . . . . . . . . . 5 1.6 Registered Office; Agent for Service of Process. . . . . . . 5 1.7 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . 5 1.8 Term of the Partnership. . . . . . . . . . . . . . . . . . . 6 1.9 Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE 2 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 6 2.2 Other Definitions. . . . . . . . . . . . . . . . . . . . . .18 ARTICLE 3 [Intentionally Omitted.] . . . . . . . . . . . . . . . . . . .18 ARTICLE 4 [Intentionally Omitted.] . . . . . . . . . . . . . . . . . . .19 ARTICLE 5 [Intentionally Omitted.] . . . . . . . . . . . . . . . . . . .19 ARTICLE 6 CAPITAL CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . .19 6.1 Percentage Interests . . . . . . . . . . . . . . . . . . . .19 6.2 Capital. . . . . . . . . . . . . . . . . . . . . . . . . . .19 6.3 Capital Contributions. . . . . . . . . . . . . . . . . . . .19 6.4 Additional Contributions and Withdrawals . . . . . . . . . .21 6.5 Negative Capital Accounts. . . . . . . . . . . . . . . . . .21 6.6 No Liability for Capital Contributions . . . . . . . . . . .21 6.7 Liability of Limited Partners. . . . . . . . . . . . . . . .22 6.8 No Interest; Consent to Distributions. . . . . . . . . . . .22 6.9 Maintenance of Capital Accounts. . . . . . . . . . . . . . .22 6.10 Additional Limited Partner . . . . . . . . . . . . . . . . .24 6.11 Conversion Right of Class II Partners. . . . . . . . . . . .24 6.12 Withdrawal of Class VI Limited Partner. . . . . . . . . . . . . . .25 ARTICLE 7 CASH DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . .25 7.1 Time of Distributions. . . . . . . . . . . . . . . . . . . .25 7.2 Allocation of Cash Distributions from Partnership Operations . . . . . . . . . . . . . . . . . . . . . . . .26 7.3 Distribution of Newco Stock. . . . . . . . . . . . . . . . .26 ARTICLE 8 ALLOCATION OF INCOME, GAINS AND LOSSES . . . . . . . . . . . .27 8.1 [Intentionally Omitted.] . . . . . . . . . . . . . . . . . .27 8.2 Allocation of Income and Gains . . . . . . . . . . . . . . .27 8.3 Allocation of Losses . . . . . . . . . . . . . . . . . . . .28 8.3.1 Allocation of Net Losses. . . . . . . . . . . . . . .28 8.3.2 [Intentionally Omitted].. . . . . . . . . . . . . . .30 8.3.3 Allocation of Losses and Gross Income to the Class I Partners . . . . . . . . . . . . . . 30 8.4 Special Allocations. . . . . . . . . . . . . . . . . . . . .30 8.4.1 Minimum Gain Chargeback . . . . . . . . . . . . . . .31 8.4.2 Partner Minimum Gain Chargeback . . . . . . . . . . .31 -i- 8.4.3 Qualified Income Offset . . . . . . . . . . . . . . .32 8.4.4 Nonrecourse Deductions. . . . . . . . . . . . . . . .32 8.4.5 Partner Nonrecourse Deductions. . . . . . . . . . . .32 8.4.6 Negation Allocation . . . . . . . . . . . . . . . . .32 8.5 Cancellation of Indebtedness Income. . . . . . . . . . . . .33 8.6 Interest of the General Partners . . . . . . . . . . . . . .33 8.7 Adjustments to Allocations . . . . . . . . . . . . . . . . .33 8.8 Allocation of Interest Income. . . . . . . . . . . . . . . .34 8.9 Allocation of Gain or Loss on Distribution of, or with Respect to Newco Stock . . . . . . . . . . . . . .34 8.10 Continuation of Treatment. . . . . . . . . . . . . . . . . .34 ARTICLE 9 MANAGEMENT OF THE PARTNERSHIP. . . . . . . . . . . . . . . . .35 9.1 Management of the Partnership's Business . . . . . . . . . .35 9.2 USC Partners' Committee. . . . . . . . . . . . . . . . . . .36 9.3 Extraordinary Decisions. . . . . . . . . . . . . . . . . . .39 9.4 Limitation on Agency . . . . . . . . . . . . . . . . . . . .41 9.5 Approval by Certain Limited Partners . . . . . . . . . . . .42 9.6 Liability of the General Partners and the Members of USC Partners' Committee . . . . . . . . . . . .42 9.7 Indemnification. . . . . . . . . . . . . . . . . . . . . . .44 9.8 Removal of Manager . . . . . . . . . . . . . . . . . . . . .45 9.9 Contingent Authority of Existing General Partner . . . . . .45 9.10 Other Cable Television Systems . . . . . . . . . . . . . . .45 9.11 Exempt Limited Partners. . . . . . . . . . . . . . . . . . .46 ARTICLE 10 COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . .48 10.1 Compensation to Pompadur Representative . . . . . . . . . .48 10.2 Compensation Restricted . . . . . . . . . . . . . . . . . .48 ARTICLE 11 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . .49 ARTICLE 12 ACCOUNTING, ACCOUNTS, RETURNS AND TAX MATTERS . . . . . . . .49 12.1 Books . . . . . . . . . . . . . . . . . . . . . . . . . . .49 12.2 Reports . . . . . . . . . . . . . . . . . . . . . . . . . .49 12.3 Filing of Tax Returns and Tax Reports to Current and Former Partners. . . . . . . . . . . . . . . .49 12.4.1 Elections. . . . . . . . . . . . . . . . . . . . .50 12.4.2 Change of Partners' Interests. . . . . . . . . . . 51 12.4.3 Tax Matters Partner. . . . . . . . . . . . . . . . 51 ARTICLE 13 TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . .54 13.1 General Partners. . . . . . . . . . . . . . . . . . . . . .54 13.2 Transfer of Limited Partner's Interest. . . . . . . . . . .57 13.3 Transferee's Rights . . . . . . . . . . . . . . . . . . . .59 13.4 Allocations and Distributions Subsequent to Transfer. . . . . . . . . . . . . . . . . . . . . . . .60 13.5 Satisfactory Written Transfer Required. . . . . . . . . . .60 -ii- 13.6 Substituted Limited Partner . . . . . . . . . . . . . . . .60 13.7 Substitution Required for Vote. . . . . . . . . . . . . . .61 13.8 Effective Date; Schedule A. . . . . . . . . . . . . . . . .62 13.9 Death, Bankruptcy, Dissolution or Incapacity of a Limited Partner. . . . . . . . . . . . . . . . . . . . . .62 13.10 Option on the Class II Partnership Interests. . . . . . . .62 13.11 Rights Subsequent to Transfer of Interests . . . . . . . . 63 ARTICLE 14 DISSOLUTION . . . . . . . . . . . . . . . . . . . . . . . . .62 14.1 Events of Dissolution . . . . . . . . . . . . . . . . . . .62 14.2 Final Accounting. . . . . . . . . . . . . . . . . . . . . .64 14.3 Liquidation and Distribution of Assets. . . . . . . . . . .64 14.4 Cancellation of Certificate . . . . . . . . . . . . . . . .65 ARTICLE 15 POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . .65 15.1 Appointment of New General Partner. . . . . . . . . . . . .65 15.2 Duration of Power . . . . . . . . . . . . . . . . . . . . .66 15.3 Further Assurances. . . . . . . . . . . . . . . . . . . . .67 ARTICLE 16 AMENDMENTS TO AGREEMENT . . . . . . . . . . . . . . . . . . .67 ARTICLE 17 MEETINGS OF THE PARTNERS. . . . . . . . . . . . . . . . . . .67 17.1 Meetings. . . . . . . . . . . . . . . . . . . . . . . . . .67 17.2 Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . .68 17.3 Written Consents. . . . . . . . . . . . . . . . . . . . . .68 ARTICLE 18 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . .68 18.1 Method for Notices. . . . . . . . . . . . . . . . . . . . .68 18.2 Routine Communications. . . . . . . . . . . . . . . . . . .69 18.3 Computation of Time . . . . . . . . . . . . . . . . . . . .69 ARTICLE 19 INVESTMENT REPRESENTATIONS. . . . . . . . . . . . . . . . . .69 19.1 Investment Purpose. . . . . . . . . . . . . . . . . . . . .69 19.2 Investment Restriction. . . . . . . . . . . . . . . . . . .69 ARTICLE 20 GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . .69 20.1 Entire Agreement. . . . . . . . . . . . . . . . . . . . . .69 20.2 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . .70 20.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . .70 20.4 Binding Effect. . . . . . . . . . . . . . . . . . . . . . .70 20.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . .70 20.6 Separability. . . . . . . . . . . . . . . . . . . . . . . .70 20.7 Headings. . . . . . . . . . . . . . . . . . . . . . . . . .70 20.8 Gender and Number . . . . . . . . . . . . . . . . . . . . .70 20.9 Waiver of Partition . . . . . . . . . . . . . . . . . . . .70 20.10 Partnership Tax Reporting . . . . . . . . . . . . . . . . .70 -iii- Schedule A - Partners and Percentage Interests Schedule B - Cable Brokers Schedule C - Exempt Limited Partners Annex 1 - Business Plan Annex 2 - Not Used Annex 3 - Supplemental Side Letter -iv- SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF U.S. CABLE TELEVISION GROUP, L.P. THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is entered into as of the 18th day of March, 1996 (the "Agreement"), by and among U.S. Cable Partners, a Delaware general partnership, as a general partner (the "Existing General Partner" or "Class II General Partner"), V Cable GP, Inc., a Delaware corporation ("V Cable GP"), as a general partner (the "New General Partner" or the "Class I General Partner"; and, together with the Existing General Partner, the "General Partners"), and those Persons who have executed, either personally or by an attorney-in-fact, this Agreement as limited partners and who are identified as limited partners and whose addresses are set forth in Schedule A annexed hereto, as the same may be amended from time to time pursuant to Section 13.8 hereof (the "Limited Partners"). The General Partners and the Limited Partners are referred to herein collectively as the "Partners." WHEREAS, U.S. CABLE TELEVISION GROUP, L.P. (the "Partnership" or "USC") was formed, in accordance with the Delaware Revised Uniform Limited Partnership Act, 6 DEL. C. Section 17-101, ET. SEQ. (the "Act"), by the filing by the Existing General Partner of a Certificate of Limited Partnership with the office of the Secretary of State of the State of Delaware on October 20, 1987 (as amended or restated, the "Certificate"), to acquire and operate cable television systems and entities that have interests in cable television systems, and conduct all activities incidental or reasonably related to any of those purposes; and WHEREAS, V Cable, Inc., a Delaware corporation ("V Cable") and the sole owner of all of the outstanding common stock of the New General Partner, and the New General Partner have previously acquired a limited partner interest and general partner interest, respectively, in the Partnership and (ii) the Partnership has acquired shares of Class B Common Stock of VC Holding, Inc., a Delaware corporation ("Newco") that as of the date of this Agreement owns and operates the assets previously held by V Cable and owns all of the outstanding capital stock of certain subsidiaries of V Cable; and WHEREAS, simultaneously with the execution of this Agreement, the Partnership is entering into a Partnership Interests Redemption Agreement pursuant to which the interests of the Original Limited Partners, the Existing General Partner and General Electric Capital Corporation ("GE Capital") will be redeemed; and WHEREAS, concurrently with the execution and delivery hereof: (a) Cablevision Systems Corporation ("CSC") is making an equity capital contribution to V Cable in the amount of $570,000,000; (b) V Cable is applying such funds as follows: (i) to prepay the outstanding principal amount of the Term Loan under the V Cable Loan Agreement plus interest accrued thereon in an aggregate amount of $27,797,797; (ii) to make an equity capital contribution to V Cable GP in the amount of $2,000,000, which is being contributed concurrently by V Cable GP to the equity capital of the Partnership on the terms set forth in this Agreement; (iii) to make an equity capital contribution to the Partnership in the amount of $181,605,958 on the terms set forth in this Agreement; and (iv) to make an equity capital contribution to Newco in the amount of $358,596,245; (c) the Partnership is applying the funds referred to in clause (b)(iii) immediately above as follows: (i) to prepay (A) the Accreted Value of the Zero Coupon Loan (as defined in the USC Senior Loan Agreement) in the aggregate amount of $98,835,321, less an agreed upon portion of the credit referred to in Section 2.20 of the VC Holding Loan Agreement as in effect immediately prior to the date hereof in the amount of $2,156,571, and (B) to prepay the Allocable Term Loan Amount (as defined in the USC Senior Loan Agreement) in the aggregate amount of $812,039; and (ii) to make an equity capital contribution to Newco in the amount of $84,115,169; and -2- (d) Newco is applying the funds referred to in clauses (b) (iv) and (c) (ii) immediately above (i) to prepay in full the outstanding Floating Series A Loan (as defined in the VC Holding Loan Agreement) plus interest accrued thereon in the aggregate amount of $248,686,673.09, (ii) to prepay a portion of the remaining outstanding principal amount of the Series A Term Loan (as defined in the VC Holding Loan Agreement) plus interest accrued thereon in the aggregate amount of $126,024,741, and (iii) to make an equity capital contribution to the Partnership in the amount of $68,000,000 in return for the Class VII Limited Partnership Interest (as defined herein); and (e) The Partnership is applying the funds referred to in clauses (b)(ii) and (d)(iii) to prepay an outstanding principal amount of the Series B Term Loan (as defined in the USC Senior Loan Agreement) plus interest accrued thereon in an aggregate amount of $70,000,000; and (f) CSC is paying to GE Capital on the date hereof the sum of $742,358.13 as partial payment of or reimbursement for GE Capital's legal fees and expenses incurred in connection with the (i) consummation of the transactions contemplated hereby and (ii) execution of the Preferred Stock Purchase Agreement, dated as of February 2, 1996, by and among GE Capital and CSC (the "Preferred Stock Purchase Agreement") (the transactions described in clauses (a), (b), (c), (d), (e) and (f) of this recital are herein referred to collectively as the "Prepayment Transactions" and the date of the consummation of the Prepayment Transactions shall hereinafter be referred to as the "Prepayment Transactions Date"); and WHEREAS, on the Prepayment Transactions Date the Partnership will distribute to V Cable the stock of Newco; and WHEREAS, on the Prepayment Transactions Date CSC is entering into an Amended and Restated Management Agreement, dated as of March 18, 1996, with the Partnership, in substantially the form of Exhibit I to the Preferred Stock Purchase Agreement, providing for the management by CSC of the Partnership and certain of its subsidiaries (as the same may be amended, modified or supplemented from time to time, the "Management Agreement"); and WHEREAS, effective as of the Prepayment Transactions Date, certain agreements among V Cable, each of those direct and indirect subsidiaries of V Cable set forth on the signature pages thereto (the "VC Subsidiaries"), the New General Partner, Newco, the Partnership and GE Capital, -3- in its individual capacity and as Agent and Lender under the loan documents referred to below, are being terminated or amended, including the MPA Agreement (as such term is hereinafter defined) and the Exchange Agreement (as such term is hereinafter defined); and WHEREAS, effective as of the Prepayment Transactions Date, GE Capital and USC are (A) modifying that certain Senior Loan Agreement, dated as of December 31, 1992, between USC and GE Capital (as the same has been and may be amended, modified or supplemented from time to time, the "USC Loan Agreement") and (B) terminating that certain Junior Subordinated Loan Agreement, dated as of December 31, 1992, between USC and GE Capital (as the same may be amended, modified or supplemented from time to time, the "Junior Subordinated Loan Agreement"); and WHEREAS, in connection with all of the foregoing, the Partners desire to, among other things, (i) provide for such capital contributions and distributions and (ii) modify the interests of the general and limited partners in the Partnership; and (iii) make such amendments, restatements and revisions to the Agreement of Limited Partnership of the Partnership as in effect immediately prior to the execution and delivery of this Agreement (the "Original Amended Agreement") as set forth below. NOW, THEREFORE, to reflect the foregoing, the parties hereto agree that the Original Amended Agreement hereby is amended and restated, effective as of the Effective Date (as defined herein) to read in its entirety as follows: ARTICLE 1 THE LIMITED PARTNERSHIP 1.1 FORMATION. The Partnership was formed as a limited partnership pursuant to the Act. 1.2 CERTIFICATE OF LIMITED PARTNERSHIP. The Partners, acting personally or through an attorney-in-fact, shall execute such further documents (including amendments and/or restatements to the Certificate) and take such further action as shall be appropriate to comply with all requirements of law for the formation and operation of a limited partnership in the State of Delaware and all other counties and states where the Partnership may elect to conduct its operations. A Limited Partner may obtain a copy -4- of the Certificate or any amendment and/or restatement thereto upon written request to the New General Partner. 1.3 NAME. The name of the Partnership shall be U.S. CABLE TELEVISION GROUP, L.P. but the operations of the Partnership may be conducted under any other name designated by the New General Partner and, in such event, the New General Partner shall notify the other Partners of such name change promptly thereafter. 1.4 PURPOSES. The Partnership shall have as its purpose investing, directly or indirectly through other entities, in the business of owning, operating, repairing, maintaining, promoting, leasing, selling and otherwise exploiting cable television systems and conducting related businesses and activities. Without limiting the foregoing, the Partnership shall have the power to own shares of Class B Common Stock of Newco and its limited partner interest in the Missouri Partnership. The Partnership may maintain one or more offices and engage personnel for the conduct of the Partnership's activities; and it may enter into, make and perform contracts, agreements and undertakings of all kinds as may be necessary, advisable or incidental to the carrying out of its purposes. In addition to the powers specified above, the Partnership shall have the power to do all and everything necessary, appropriate or advisable for the accomplishment of or in furtherance of any of the purposes set forth herein, and to do every other thing or things incidental or appurtenant to or arising from or connected with any of such purposes; PROVIDED, HOWEVER, that nothing set forth herein shall be construed as authorizing the Partnership to possess any purpose or power, or to do any act or thing, forbidden by law to a limited partnership formed under the laws of the State of Delaware. 1.5 PRINCIPAL OFFICES. The location of the principal offices of the Partnership shall be c/o Cablevision Systems Corporation, One Media Crossways, Woodbury, NY 11797-2013, or at such other location as may be selected from time to time by the New General Partner. If the New General Partner changes the location of the principal offices of the Partnership, the other Partners shall be notified promptly thereafter by the New General Partner. The Partnership may maintain such other offices at such other places as the New General Partner deems advisable. 1.6 REGISTERED OFFICE; AGENT FOR SERVICE OF PROCESS. The address of the Partnership's registered office in the State of Delaware is c/o United Corporate Services, Inc., 15 East North Street, Dover, Kent County, Delaware -5- 19901, and the name of the registered agent for service of process on the Partnership is United Corporate Services, Inc. 1.7 FISCAL YEAR. The fiscal year of the Partnership shall be the same as the taxable year of the Partnership for federal income tax purposes (the "Partnership Year"). The taxable year of the Partnership for federal income tax purposes shall be selected by the Tax Matters Partner (as such term is hereinafter defined), subject to the approval of the Class III Limited Partner, the Class IV Limited Partner and the Class V Limited Partner, in accordance with the rules contained in the Code (as such term is hereinafter defined). 1.8 TERM OF THE PARTNERSHIP. The term of the Partnership commenced on October 20, 1987 and shall continue until the earlier of (a) December 1, 2030, or (b) the date the Partnership is dissolved in accordance with Article 14 hereof. 1.9 EFFECTIVE DATE. (a) This Agreement shall be effective as of the date of the occurrence of the following: (i) the consummation of the Prepayment Transactions and (ii) the delivery to GE Capital of a certificate from the Partnership to the effect that the USC System Cash Flow Ratio of the Partnership and its Subsidiaries, after giving effect to the Prepayment Transactions and this Amendment on a pro forma basis, does not exceed 5.94:1.0. (b) GE Capital agrees that upon receipt of the certificate from CSC referred to in clause (a) above, it shall deliver to CSC a receipt to the effect that the Prepayment Transactions have been consummated. ARTICLE 2 DEFINITIONS 2.1 DEFINITIONS. The following defined terms used in this Agreement shall have the respective meanings specified below. "Accreted Value" means a cumulative, compounded, annual 16% return on $35,000,000, payable to the Class III Limited Partner, pursuant to Section 7.2(f) hereof. "Adjusted Capital Account Deficit" means, with respect to any Partner, the deficit balance, if any, in such -6- Partner's Capital Account as of the end of the relevant Partnership Year, after giving effect to the following adjustments: (i) Credit to such Capital Account any amounts which such Partner is deemed to be obligated to restore to the Partnership pursuant to the next- to-last sentences of Treas. Reg. Section 1.704-2(g)(1) and Treas. Reg. Section 1.704-2(i)(5), and (ii) Debit to such Capital Account the items described in Treas. Reg. Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6). "Affiliate" of a Person means (i) any Person directly or indirectly controlling, controlled by, or under common control with, such Person, (ii) a Person owning or controlling ten percent (10%) or more of the outstanding voting securities of such Person, (iii) any officer, director, partner or employee of such Person and (iv) any other entity for which any Person identified in clause (iii) acts in any such capacity. "Annualized Consolidated System Cash Flow" shall mean for any Fiscal Quarter, the product of (i) System Cash Flow for such Fiscal Quarter multiplied by (ii) 4. "Bankruptcy" of a Partner shall mean (i) the filing by a Partner of a voluntary petition seeking liquidation, reorganization, arrangement or readjustment, in any form, of its debts under Title 11 of the United States Code or any other federal or state insolvency law, or a Partner's filing an answer consenting to or acquiescing in any such petition, (ii) the making by a Partner of any assignment for the benefit of its creditors or (iii) the expiration of sixty days after the filing of an involuntary petition under Title 11 of the United States Code, an application for the appointment of a receiver for the assets of a Partner, or an involuntary petition seeking liquidation, reorganization, arrangement or readjustment of its debts under any other federal or state insolvency law, provided that the same shall not have been vacated, set aside or stayed within such sixty-day period. "Bankruptcy Code" shall mean 11 U.S.C. Sections 101 ET SEQ. "Business Plan" means the ten (10) year Business Plan of the Partnership, commencing as of the date of the Original Amended Agreement, in the form annexed hereto as Annex 1. -7- "Cablevision" or "CSC" means Cablevision Systems Corporation, a Delaware corporation. "Capital Account" means the account maintained for each Partner on the books of account of the Partnership in accordance with Section 6.9 hereof. "Capital Contributions" means, with respect to any Partner, the amount of cash and the fair market value of any other property contributed or deemed contributed to the capital of the Partnership by or on behalf of such Partner, net of any liabilities secured by such property that the Partnership is considered to assume under, or take subject to under, Code Section 752. "Change in Control" means (i) any Person or group of Persons, other than I. Martin Pompadur or, at his death, his estate, or a trust or trusts for the exclusive benefit of his spouse and/or children of which he (or another person acceptable to the Class III Limited Partner, the Class IV Limited Partner and the Class V Limited Partner) is the sole trustee, becomes after the date hereof the beneficial owner (as defined in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, as in effect on the date hereof) of a majority of the general partnership interests in the Existing General Partner, (ii) any Person or group of Persons other than I. Martin Pompadur or, at his death, his estate, or a trust or trusts for the exclusive benefit of his spouse and/or children of which he (or another person acceptable to the Class III Limited Partner, the Class IV Limited Partner and the Class V Limited Partner) is the sole trustee, obtains effective control over the management or policies of the Existing General Partner, or (iii) any Person or group of Persons acquires all or substantially all of the assets of the Existing General Partner; PROVIDED, HOWEVER, that (A) the purchase by IMP Cable Management, Inc. of EHR Cable Management, Inc.'s general partner interest in the Existing General Partner or the redemption of that interest, (B) the transfer of any of the general partnership interests in the Existing General Partner or of any or all of the assets of the Existing General Partner to GE Capital or any of its Affiliates, (C) GE Capital's (or any of its Affiliate's) obtaining effective control over the management or policies of the Existing General Partner, or (D) a change in any Class II Partners due to the exercise of the option in Section 13.10 shall not constitute a Change in Control for purposes of this Agreement. "Class B Common Stock" means the Class B Common Stock, par value $.01 per share, of Newco. -8- "Class I General Partner" means the holder of the Class I General Partnership Interest that is admitted to the Partnership as a general partner and is shown on the books and records of the Partnership and Schedule A annexed hereto (as such Schedule A may be amended from time to time) as the Class I General Partner of the Partnership. "Class I General Partnership Interest" means a 1% Percentage Interest in the Partnership, which interest shall be held by the New General Partner. "Class I Limited Partner" means the holder of the Class I Limited Partnership Interest that is admitted to the Partnership as a limited partner and is shown on the books and records of the Partnership and Schedule A annexed hereto (as such Schedule A may be amended from time to time) as the Class I Limited Partner of the Partnership. "Class I Limited Partnership Interest" means a 19% Percentage Interest in the Partnership, which interest shall initially be held by V Cable. "Class I Partners" means the Class I General Partner and the Class I Limited Partner. "Class I Partnership Interests" means the Class I General Partnership Interest and the Class I Limited Partnership Interest. "Class II General Partner" means the holder of the Class II General Partnership Interest that is admitted to the Partnership as a general partner and is shown on the books and records of the Partnership and Schedule A annexed hereto (as such Schedule A may be amended from time to time) as the Class II General Partner of the Partnership. "Class II General Partnership Interest" means a 1% Percentage Interest in the Partnership, which interest shall initially be held by the Existing General Partner. Such Class II General Partnership Interest shall have a preference on distributions from the Partnership with respect to its Class II Unrecovered Capital, in accordance with Section 7.2(b) hereof. "Class II Limited Partner" means a holder of a Class II Limited Partnership Interest that is admitted to the Partnership as a limited partner and is shown on the books and records of the Partnership and Schedule A annexed hereto (as such Schedule A may be amended from time to time) as a Class II Limited Partner of the Partnership. -9- "Class II Limited Partnership Interests" means partnership interests having initially, in the aggregate, a 7% Percentage Interest in the Partnership, which interests shall initially be held by the Persons specified on Schedule A hereto, in the proportions set forth opposite each of their respective names. Any Percentage Interest converted pursuant to Section 6.11 hereof will decrease the Percentage Interest of the Class II Limited Partners and will increase the Percentage Interest of the Class IV Limited Partner by a like amount. "Class II Partners" means the Class II General Partner and the Class II Limited Partners. "Class II Partnership Interests" means the Class II General Partnership Interest and the Class II Limited Partnership Interests. "Class II Unrecovered Capital" means $4,000,000 minus (i) any amounts previously distributed to the Class II Partners pursuant to Section 7.2(b) hereof and (ii) the amount of any senior debt into which any Class II Limited Partnership Interest is converted pursuant to Section 6.11 hereof. "Class III Limited Partner" means the holder of the Class III Limited Partnership Interest that is admitted to the Partnership as a limited partner and is shown on the books and records of the Partnership and Schedule A annexed hereto (as such Schedule A may be amended from time to time) as the Class III Limited Partner of the Partnership. "Class III Limited Partnership Interest" means an interest in the Partnership, which interest shall not have a Percentage Interest. The Class III Limited Partnership Interest shall initially be held by GE Capital. Such Partnership Interest will have a preference on distributions from the Partnership with respect to its Class III Unrecovered Capital, in accordance with Sections 7.2(b) and 7.2(c) hereof, and with respect to its Class III Unrecovered Accreted Value in accordance with Section 7.2(d) hereof. "Class III Unrecovered Accreted Value" means the amount of the Accreted Value minus any amounts previously distributed to the Class III Limited Partner pursuant to Section 7.2(d) hereof or its predecessor under the Original Amended Agreement. "Class III Unrecovered Capital" means $35,000,000 minus any amounts previously distributed to the Class III Limited Partner pursuant to Sections 7.2(b) and 7.2(c) -10- hereof or its predecessor under the Original Amended Agreement. "Class IV Limited Partner" means the holder of the Class IV Limited Partnership Interest that is admitted to the Partnership as a limited partner and is shown on the books and records of the Partnership and Schedule A annexed hereto (as such Schedule A may be amended from time to time) as the Class IV Limited Partner of the Partnership. "Class IV Limited Partnership Interest" means a 72% Percentage Interest in the Partnership. The Percentage Interest of such Class IV Limited Partnership Interest shall automatically increase by the amount of Percentage Interest (on a fully diluted basis), if any, converted by the Class II Partners into senior debt of the Partnership in accordance with Section 6.11 hereof. "Class V Limited Partner" means the holder of the Class V Limited Partnership Interest that is admitted to the Partnership as a limited partner and is shown on the books and records of the Partnership and Schedule A annexed hereto (as such Schedule A may be amended from time to time) as the Class V Limited Partner of the Partnership. "Class V Limited Partnership Interest" means an interest in the Partnership, which interest shall have no Percentage Interest. The Class V Limited Partnership Interest shall initially be held by GE Capital. Such Limited Partnership Interest will have a preference on distributions from the Partnership with respect to the Class V Unrecovered Capital in accordance with Section 7.2(e) hereof or its predecessor under the Original Amended Agreement. "Class V Unrecovered Capital" means (A) the sum of (i) the amount the Class V Limited Partner is entitled to receive under the Junior Subordinated Loan Agreement as of the date hereof and (ii) $165,761,293 together with an amount equal to the amount of interest that would accrue thereon at the same rate and compounded in the same manner as provided for the Junior Subordinated Loan minus (B) any amounts previously distributed to the Class V Limited Partner pursuant to Section 7.2(e) hereof. "Class VI Limited Partner" means the holder of the Class VI Limited Partnership Interest that is admitted to the Partnership as a limited partner and is shown on the books and records of the Partnership and Schedule A annexed hereto (as such Schedule A may be amended from time to time) as the Class VI Limited Partner of the Partnership. -11- "Class VI Limited Partnership Interest" means an interest in the Partnership, which interest shall have no Percentage Interest. The Class VI Limited Partnership Interest has been issued to V Cable as provided in Section 6.3(f) hereof and is being redeemed and canceled simultaneously with the Effective Date of this Agreement as provided in Section 6.12. "Class VII Limited Partner" means the holder of the Class VII Limited Partnership Interest that is admitted to the Partnership as a limited partner and is shown on the books and records of the Partnership and Schedule A annexed hereto (as such Schedule A may be amended from time to time) as the Class VII Limited Partner of the Partnership. "Class VII Limited Partnership Interest" means an interest in the Partnership, which interest shall have no Percentage Interest. The Class VII Limited Partnership Interest shall initially be held by VC Holding. Such Limited Partnership Interest will have a preference on distributions from the Partnership with respect to the Class VII Unrecovered Capital in accordance with Section 7.2(a) hereof. "Class VII Unrecovered Capital" means the excess, if any, of the sum of (i) all capital contributions made by the Class VII Limited Partner pursuant to Section 6.3(g) hereof and (ii) a preferred return on such capital contributions computed at a rate per annum equal to 10.62% per annum, compounded semiannually, over all amounts theretofore distributed to the Class VII Limited Partner pursuant to Section 7.2(a) hereof. "Code" means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law). "Exchange Agreement" means the Exchange Agreement, dated as of December 31, 1992, among the New General Partner, V Cable, the Partnership and GE Capital, in the form annexed hereto as Annex 2 to the Original Amended Agreement, as the same has been amended, modified or supplemented from time to time. "Excluded Assets" shall have the meaning set forth in Section 9.5(c)(vi) hereof. "Exempt Limited Partners" shall mean those Limited Partners listed on Schedule C hereto (as such Schedule may be modified from time to time pursuant to Section 9.11 hereof). The interests of the Exempt Limited Partners in -12- the Partnership are intended to be nonattributable and exempt from reporting requirements under FCC Regulations. The involvement of Exempt Limited Partners in the media-related activities of the Partnership shall be restricted as provided in Section 9.11. "Existing U.S. Cable Partners" means the Existing General Partner, The Rule Trust dated June 11, 1987, I. Martin Pompadur, Elliot H. Stein, Jr. and Pompadur Trust No. 1. "Extraordinary Decision" shall have the meaning set forth in Section 9.3 hereof. "FCC" means the Federal Communications Commission. "FCC Regulations" means all FCC regulations, rules, orders and policies related to attribution of ownership of cable television systems, including but not limited to the regulations published at 47 CFR 73.3555 and 76.501. "Fiscal Quarter" means a calendar quarter ending on March 31, June 30, September 30 or December 31 of any year. "Indebtedness" means, for the Partnership and its consolidated Subsidiaries, (i) all indebtedness of the Partnership and its consolidated Subsidiaries for borrowed money or for the deferred purchase price of property or services (including, without limitation, reimbursement and all other obligations with respect to letters of credit and bankers' acceptances, whether or not matured, but not including obligations to trade creditors incurred in the ordinary course of business), (ii) all obligations of the Partnership and its consolidated Subsidiaries evidenced by notes, bonds, debentures or similar instruments, (iii) all indebtedness of the Partnership and its consolidated Subsidiaries created or arising under any conditional sale or other title retention agreement with respect to property acquired by the Partnership and its consolidated Subsidiaries (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (iv) all Capital Lease Obligations of the Partnership and its consolidated Subsidiaries, (v) all Guaranteed Indebtedness of the Partnership and its consolidated Subsidiaries, (vii) all indebtedness of others of the types referred to in clause (i), (ii), (iii), (iv) or (v) above secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, -13- to be secured by) any Lien upon or in property (including, without limitation, accounts and contract rights) owned by the Partnership or any of its consolidated Subsidiaries, even though the Partnership or such Subsidiaries has not assumed or become liable for the payment of such indebtedness, and (vii) all Unfunded Pension Liabilities and all Withdrawal Liabilities (each as defined in the USC Senior Loan Agreement) of the Partnership and its consolidated Subsidiaries; "Interest" or "Partnership Interest" means interest(s) in the Partnership owned by a Partner. "Investment Agreement" means the Investment Agreement, dated as of June 30, 1992, by and among V Cable, the New General Partner, the Partnership and the Existing General Partner (as the same may be amended, modified or supplemented from time to time). "Junior Subordinated Loan" shall mean the "Loans" as defined in the Junior Subordinated Loan Agreement. "Junior Subordinated Loan Agreement" shall have the meaning set forth in the recitals hereto. "Manager" means CSC in its capacity as the Manager under the USC Management Agreement. "Missouri Partnership" means Missouri Cable Partners, L.P., which has been formed to hold the assets of the five cable television systems serving Albany, Bethany, Cameron, Excelsior Springs and Richmond, Missouri pursuant to that certain Limited Partnership Agreement dated June 30, 1992 between the Partnership and V-C Mo. G.P., Inc. "MPA Agreement" means the Management Performance Adjustment and Interborrower Agreement, dated as of December 31, 1992, among V Cable, the VC Subsidiaries, the New General Partner, Newco, the Partnership and GE Capital in the form annexed as Annex 3 to the Original Amended Agreement (as the same has been amended, modified or supplemented from time to time). "Net Income" or "Net Loss" means for each fiscal year of the Partnership, an amount equal to the Partnership's net income or loss for federal income tax purposes, determined in accordance with the accounting methods it has adopted for such purposes and computed by (i) including any items of non-taxable income or nondeductible expense of the Partnership, and (ii) excluding any items of -14- income or loss specially allocated pursuant to the provisions of Sections 8.3.3, 8.4, 8.5, 8.8 and 8.9 hereof. "Nonrecourse Deductions" has the meaning set forth in Treas. Reg. Section 1.704-2(b)(1). The amount of Nonrecourse Deductions for a fiscal year shall equal the net increase, if any, in the amount of Partnership Minimum Gain during such fiscal year reduced by any distributions during such fiscal year of proceeds of a Nonrecourse Liability that are allocable to an increase in Partnership Minimum Gain, determined according to the provisions of Treas. Reg. Section 1.704-2(c) and Treas. Reg. Section 1.704-2(h). "Nonrecourse Liability" has the meaning set forth in Treas. Reg. Section 1.704-2(b)(3), but shall not include, for any purpose under this Agreement, any Partnership liability that would otherwise be considered a Nonrecourse Liability under such Section of the Treasury Regulations to the extent there is outstanding with respect to such liability guaranties and/or letter of credit commitments provided by Partners (or VC Guarantors, as defined in the MPA Agreement) as contemplated by this Agreement. "Obligations" has the meaning set forth in the USC Loan Agreement. "Original Limited Partners" shall have the meaning set forth in Section 6.3(b)(ii) hereof. "Partner Nonrecourse Debt" has the meaning set forth in Treas. Reg. Section 1.704-2(b)(4). "Partner Nonrecourse Debt Minimum Gain" means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Treas. Reg. Section 1.704-2(i). "Partner Nonrecourse Deductions" has the meaning set forth in Treas. Reg. Section 1.704-2(i)(2). The amount of Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a fiscal year equals the net increase, if any, in Partner Nonrecourse Debt Minimum Gain during such fiscal year attributable to such Partner Nonrecourse Debt, reduced by any distributions during that fiscal year to the Partner that bears the economic risk of loss for such Partner Nonrecourse Debt to the extent that such distributions are from the proceeds of such Partner Nonrecourse Debt and are allocable to an increase in Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt, -15- determined according to the provisions of Treas. Reg. Section 1.704-2(h) and Treas. Reg. Section 1.704-2(i). "Partnership Interests Redemption Agreement" means the Partnership Interests Redemption Agreement, dated as of the date of, by and among the Partnership, GE Capital, each of the Class II Partners, and V Cable. "Partnership Minimum Gain" shall have the meaning set forth in Treas. Reg. Section 1.704-2(d). "Partnership Year" shall have the meaning set forth in Section 1.7 hereof. "Percentage Interest" means, with respect to any Partner, the amount specified in Schedule A hereto and for each class of Partners shall be equal to the amount specified in the definition of such class; PROVIDED that the Percentage Interests of the Partners shall be subject to adjustment as provided in this Agreement. "Person" means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature. "Pompadur Representative" shall have the meaning set forth in Section 6.11 hereof. "Preferred USC Interest Pledge Agreement" means the Preferred USC Interest Pledge Agreement, dated as of the Original Amended Agreement hereof, among V Cable, V Cable GP and GE Capital, as Agent (as the same may be amended, modified or supplemented from time to time). "Subsidiary" means, as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary power (other than stock having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned by such Person. "Supplemental Side Letter" means that certain side letter executed by Cablevision, V Cable and GE Capital, substantially in the form of Annex 3 hereto. "System Cash Flow" mean, for the Partnership and its consolidated Subsidiaries during any period, the consolidated operating income (before extraordinary items, interest, taxes, depreciation, amortization, non-cash -16- charges and other non-cash items and, with respect to the Partnership, amounts constituting Allocation items (as defined in the Management Agreement) that are payable (whether or not paid) pursuant to the terms of the Management Agreement, and expenses and costs directly related to the consummation of the Prepayment Transactions) of the Partnership and its consolidated Subsidiaries (including, without limitation, Missouri Cable Partners, L.P.) determined in accordance with GAAP (as defined in the USC Senior Loan Agreement) and (to the extent consistent with GAAP) in a manner consistent with the past practices of USC; PROVIDED, HOWEVER, that such amounts shall be determined on the basis of the capitalization polices of CSC and its affiliates as specified in Schedule 1 to the USC Senior Loan Agreement; and PROVIDED FURTHER, HOWEVER, that to the extent that CSC or any of its affiliates provides to any of the Partnership or any of its Subsidiaries goods or services for consideration which is below the fairly allocable cost thereof, for purposes of the calculations herein, such goods and services shall be deemed to be provided at the fairly allocable cost. "Tax Matters Partner" shall have the meaning set forth in Section 12.4.3 hereof. "Tier I USC Priority Distribution" means the total amount of cash that would be distributable pursuant to Section 7.2(a) hereof if there were sufficient cash available to make such distribution. "Tier II USC Priority Distribution" means the total amount of cash that would be distributable pursuant to Section 7.2(b) hereof if there were sufficient cash available to make such distribution. "Tier III USC Priority Distribution" means the total amount of cash that would be distributable pursuant to Section 7.2(c) hereof if there were sufficient cash available to make such distribution. "Tier IV USC Priority Distribution" means the total amount of cash that would be distributable pursuant to Section 7.2(d) hereof if there were sufficient cash available to make such distribution. "Tier V USC Priority Distribution" means the total amount of cash that would be distributable pursuant to Section 7.2(e) hereof if there were sufficient cash available to make such distribution. -17- "USC Loan Agreement" shall have the meaning set forth in the recitals hereto. "USC Loan Documents" means the USC Loan Agreement and all other agreements, instruments, documents and certificates, including, without limitation, pledges, powers of attorney, consents, assignments, contracts, notices and all other written matter executed by or on behalf of USC in connection with the USC Loan Agreement or the transactions contemplated thereby as the same have been or may be amended (including, without limitation, the "Loan Documents" as defined therein). "USC Partners' Committee" shall have the meaning set forth in Section 9.2 hereof. "USC Priority Distributions" means all of the Tier I USC Priority Distribution, Tier II USC Priority Distribution, Tier III USC Priority Distribution, Tier IV USC Priority Distribution and Tier V USC Priority Distribution. "USC System Cash Flow Ratio" means, on any date of determination, for the Partnership and its consolidated Subsidiaries, the ratio of (i) Indebtedness of the Partnership and its consolidated Subsidiaries as of such date to (ii) Annualized Consolidated System Cash Flow for the Fiscal Quarter most recently ended prior to such date. "V Cable Loan Agreement" means the loan agreement, dated December 31, 1992, among GE Capital, as agent, the lenders named therein, and V Cable, as amended and from time to time in effect. "VC Holding Loan Agreement" means the loan agreement, dated as of the date hereof, among GE Capital, as agent, the lenders named therein, and Newco, as amended and from time to time in effect. 2.2 OTHER DEFINITIONS. Certain additional defined terms used in this Agreement shall have the meanings specified throughout this Agreement. ARTICLE 3 [Intentionally Omitted.] -18- ARTICLE 4 [Intentionally Omitted.] ARTICLE 5 [Intentionally Omitted.] ARTICLE 6 CAPITAL CONTRIBUTIONS 6.1 PERCENTAGE INTERESTS. This Agreement provides for the determination of certain matters on the basis of the Partners' "Percentage Interests." From and after the Effective Date, the Partners shall have the Percentage Interests set forth on Schedule A to this Agreement and Newco will be admitted as a Class VII Limited Partner without the need for any further action on the part of the Partners. 6.2 CAPITAL. The capital of the Partnership shall consist of the amount of the Capital Contributions made to the Partnership pursuant to this Article 6. 6.3 CAPITAL CONTRIBUTIONS. The Capital Contributions of the Partners shall be as follows: (a) CLASS I PARTNERSHIP INTERESTS. (i) The New General Partner has contributed $1,000,000 to the capital of the Partnership, and the Partnership has issued to the New General Partner, in exchange therefor, the Class I General Partnership Interest. (ii) V Cable has contributed $18,970,000 to the capital of the Partnership, and the Partnership has issued to V Cable, in exchange therefor, the Class I Limited Partnership Interest. (iii) On the Prepayment Transactions Date, V Cable is contributing $181,605,958 and the New General Partner is contributing $2,000,000 to the Partnership, which contributions shall be treated as additional Capital Contributions in respect of the Class I Limited Partnership Interest and Class I General Partnership Interest, respectively. Upon receipt of such contribution, the Partnership shall use such capital contribution to -19- consummate the Prepayment Transactions to which it is a part. (iv) Any payments made by V Cable to the Partnership pursuant to Section 9.5 of the USC Loan Agreement shall be treated as additional Capital Contributions in respect of the Class I Limited Partnership Interest. (b) CLASS II PARTNERSHIP INTERESTS. (i) The Existing General Partner has previously contributed $160,000 to the capital of the Partnership in exchange for a general partner interest which interest was reclassified as the Class II General Partnership Interest. (ii) Those Persons specified in Schedule A hereto as Class II Limited Partners have previously contributed, or are the permitted transferees of Persons which have previously contributed (collectively, the "Original Limited Partners"), an aggregate of $3,840,000 to the capital of the Partnership in exchange for limited partner interests in the respective amounts set forth opposite each of their names on such schedule, which interests were reclassified as Class II Limited Partnership Interests. (c) CLASS III LIMITED PARTNERSHIP INTEREST. GE Capital has contributed $35,000,000 to the capital of the Partnership by means of the cancellation of indebtedness owed to GE Capital. In exchange therefor, the Partnership has issued to GE Capital the Class III Limited Partnership Interest. (d) CLASS IV LIMITED PARTNERSHIP INTEREST. GE Capital has contributed $1,000,000 to the capital of the Partnership by means of the cancellation of indebtedness owed to GE Capital. In exchange therefor, the Partnership has issued to GE Capital the Class IV Limited Partnership Interest. (e) CLASS V LIMITED PARTNER. On the Effective Date, GE Capital is contributing to capital all amounts due under the Junior Subordinated Loan Agreement. GE Capital, as lender under the Junior Subordinated Loan, and the Partners have agreed that for income tax purposes, the Junior Subordinated Loan has been and will be treated as an equity interest in the Partnership. In addition, GE Capital has contributed $162,799,947 to the capital of the Partnership by means of the cancellation of debt owed to GE -20- Capital. The Partnership has issued to GE Capital, in exchange for all such contributions, the Class V Limited Partnership Interest. (f) CLASS VI LIMITED PARTNER. The Partnership has issued the Class VI Limited Partnership Interest to V Cable in exchange for V Cable's commitment to make Capital Contributions to the Partnership pursuant to Sections 3(c), 4(a)(ii)(B) and 4(c) of the MPA Agreement. No such capital contributions were made and such interest is being redeemed and canceled simultaneously with the Effective Date. (g) CLASS VII LIMITED PARTNER. On the Prepayment Transactions Date, VC Holding is contributing to the capital of the Partnership $68,000,000 and the Partnership is issuing to VC Holding, in exchange therefor, the Class VII Limited Partnership Interest. Notwithstanding anything herein to the contrary, in the event that GE Capital has pursuant to the USC Loan Agreement provided notice to CSC or the Partnership that the certificate delivered to GE Capital pursuant to Section 1.9(a) hereof was not accurate when made, then VC Holding shall be entitled to make additional capital contributions to the Partnership that will be reflected in its Class VII Limited Partnership Interest. 6.4 ADDITIONAL CONTRIBUTIONS AND WITHDRAWALS. No Partner shall be entitled or required to make any Capital Contribution to the Partnership other than the contributions set forth in this Article 6 and Section 9.5 of the USC Loan Agreement. All Capital Contributions shall be held or expended by the New General Partner as specified in this Article 6 or in furtherance of the purposes of the Partnership. Except as set forth in Section 6.11 hereof, no Partner shall have the right to withdraw from the Partnership or to demand a return of all or any part of its Capital Contribution during the term of the Partnership, and any return of such Capital Contribution shall be made solely from the assets of the Partnership and only in accordance with the terms of this Agreement. 6.5 NEGATIVE CAPITAL ACCOUNTS. At no time during the term of the Partnership or upon dissolution and liquidation thereof shall a Partner with a negative balance in its Capital Account have any obligation to the Partnership or the other Partners to restore such negative balance, except as may be required by law or in respect of any negative balance resulting from a withdrawal of capital or dissolution in contravention of this Agreement. 6.6 NO LIABILITY FOR CAPITAL CONTRIBUTIONS. No Partner shall be personally liable for the return of any -21- portion of the Capital Contributions of any of the other Partners; the return of those Capital Contributions shall be made solely from the Partnership's assets. 6.7 LIABILITY OF LIMITED PARTNERS. Each Limited Partner shall be liable for the repayment and discharge of debts and obligations of the Partnership only to the extent of the amounts required to be contributed by that Limited Partner as provided in this Article 6 and to the extent provided by the Act. The Limited Partners shall not otherwise have any liability with respect to the debts and obligations of the Partnership and shall not otherwise be obligated to make any Capital Contribution to the Partnership beyond that required in this Article 6. 6. NO INTEREST; CONSENT TO DISTRIBUTIONS. No Partner shall receive any interest on his Capital Contributions or Capital Account and no General Partner shall be entitled to any payments or other compensation for assuming personal liability for any debt or obligation of the Partnership. To the extent any monies that any Partner is entitled to receive pursuant to this Agreement would constitute a return of capital, each Partner consents to the withdrawal of that capital. 6.9 MAINTENANCE OF CAPITAL ACCOUNTS. The Partnership shall maintain a Capital Account for each Partner for purposes of implementing and recording the allocations of Partnership income, loss and distributions attributable to each Partner's interest in the Partnership. Each Partner, regardless of whether it owns more than one class of interest in the Partnership, shall only have one Capital Account; PROVIDED, HOWEVER, that, for purposes of implementing the allocation provisions of Article 8 that refer to Partners' Capital Account balances, the portion of each Partner's Capital Account that is attributable to Capital Contributions, allocations and distributions relating to each class of interest in the Partnership held by such Partner shall be separately computed and treated as a separate account and references in such provisions of Article 8 to capital account balances shall be deemed to refer to such separate portions of each account with respect to which an allocation is to be made. The balance of each Partner's Capital Account shall be determined on the basis of an account maintained for that Partner on the books of account of the Partnership, in accordance with the following provisions: (a) The Capital Account of any Partner who was a Partner prior to the date hereof shall be credited or -22- debited with the positive or negative balance of such Partner's Capital Account to date. (b) To each Partner's Capital Account there shall be credited such Partner's Capital Contributions. (c) To each Partner's Capital Account there shall also be credited such Partner's distributive share of Net Income allocated to such Partner pursuant to Sections 8.2 and 8.3.3 and any other items of Partnership income specially allocated to the Partner pursuant to Sections 8.4, 8.5, 8.6, 8.8 and 8.9 hereof. (d) To each Partner's Capital Account there shall be debited the amount of cash and the fair market value of any Partnership property distributed to such Partner pursuant to Sections 7.2, 7.3, 8.6 and 14.3 hereof (net of any liabilities secured by such property that such Partner is considered to assume, or take subject to, under Code Section 752), such Partner's distributive share of Net Losses allocated to such Partner pursuant to Sections 8.3.1 and 8.3.2, and any other items of Partnership loss specially allocated to the Partner pursuant to Sections 8.4 and 8.6 hereof. (e) In the event any Partnership Interest is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred Partnership Interest. (f) The foregoing provisions of this Section 6.9 and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treas. Reg. Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Treasury Regulations. In the event that the New General Partner, with the consent of the Class IV Limited Partner, shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order to comply with such Treasury Regulations, the New General Partner may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Partner pursuant to Section 14 hereof upon the dissolution of the Partnership. The New General Partner, with the consent of the Class IV Limited Partner, also shall (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership's balance sheet, as computed for book purposes, in accordance with Treas. Reg. -23- Section 1.704-1(b)(2)(iv)(q); (ii) make any adjustments that are necessary if at any time Partnership property is reflected on the books of the Partnership at values which are different than their tax basis; and (iii) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Treas. Reg. Section 1.704-1(b). 6.10 ADDITIONAL LIMITED PARTNER. Except as contemplated by Section 6.1, Section 6.3 and Article 13, no Person shall become an additional Limited Partner. 6.11 CONVERSION RIGHT OF CLASS II PARTNERS. Upon the earliest to occur of: (a) the sale (including, without limitation, a sale pursuant to a foreclosure) of all or substantially all of the assets of the Partnership and its Subsidiaries (which shall be deemed to include any sale that satisfies the conditions set forth in Section 9.5(c) hereof; (b) the resignation of I. Martin Pompadur ("Pompadur") and any other Person designated by the Class II General Partner to serve with him as representatives of the Class II General Partner on the USC Partners' Committee (for purposes of this Section 6.11 and Section 10.1 and Article 9 hereof, Pompadur and any Person designated by the Class II General Partner to serve with him as the representatives of the Class II General Partner on the USC Partners' Committee are hereinafter referred to collectively as the "Pompadur Representative"), from the USC Partners' Committee at the request of the Class I General Partner (with the approval of the Class IV Limited Partner) for any reason other than cause; and (c) the tenth anniversary of the date of the Original Amended Agreement; then, so long as the Pompadur Representative (or a substitute designated by the Class II General Partner (or upon Pompadur's death, a substitute designated by his estate)) is then serving on the USC Partners' Committee, the Class II Partners (acting unanimously) shall be entitled to elect within 60 days after receipt of notice of the occurrence of the earliest to occur of the events set forth in clauses (A), (B) and (C) above to convert Class II Limited Partnership Interests representing 100% of the aggregate Percentage Interest of the Class II Partnership Interests into an immediately payable debt obligation of the Partnership in the amount of $4,000,000 that is senior to all other debt for borrowed money of the Partnership. -24- Notwithstanding the foregoing, if the Pompadur Representative is no longer serving on the USC Partners' Committee immediately prior to the event which triggers the conversion right described in this Section 6.11, then the Class II Partners (acting unanimously) shall only be entitled to convert a portion of the Class II Limited Partnership Interests representing a Percentage Interest equal to the product of (x) 100% of the aggregate Percentage Interest of the Class II Partnership Interests, multiplied by (y) a fraction (not greater than one) (the "Fraction"), the numerator of which is the number of full years the Pompadur Representative has served on the USC Partners' Committee, and the denominator of which is ten. If the aggregate Percentage Interest which can be converted by the Class II Partners is reduced in accordance with the preceding sentence, then the amount of the debt obligation into which such reduced Percentage Interest can be converted shall be reduced to an amount equal to $4,000,000 multiplied by the Fraction. Any conversion made pursuant to this Section 6.11 shall be treated as if there had been a distribution of Partnership cash in an amount equal to the face amount of the debt into which the interests have been converted. Upon any conversion pursuant to this Section 6.11, each Class II Limited Partner shall continue to be a Class II Limited Partner of the Partnership with respect to its remaining unconverted Class II Limited Partnership Interest. For the purposes of this Section 6.11, "cause" shall be defined as an act of fraud or any act of willful misconduct materially injurious to the Partnership or against the Partnership (or any of its Subsidiaries) and, in any case, if such act is not cured promptly after notice thereof to the Pompadur Representative by the Partnership. The determination as to whether "cause" (as defined above) shall exist shall be made by a court or other appropriate tribunal. 6.12 WITHDRAWAL OF CLASS VI LIMITED PARTNER. In exchange for the cancellation of its obligations to make capital contributions to the Partnership, V Cable hereby withdraws as the Class VI Limited Partner, and without the need for any action by any Partner, such interest in the Partnership is hereby redeemed and canceled. ARTICLE 7 CASH DISTRIBUTIONS 7.1 TIME OF DISTRIBUTIONS. Distributions of cash or other property (other than pursuant to Section 14) shall be made by the New General Partner as set forth in -25- Sections 7.2 and Section 7.3 below; PROVIDED, HOWEVER, that no distributions pursuant to Section 7.2 shall be made unless expressly permitted by the USC Loan Agreement. 7.2 ALLOCATION OF CASH DISTRIBUTIONS FROM PARTNERSHIP OPERATIONS. Subject to Section 14.3 hereof, all net cash from Partnership operations and net cash from sales or refinancings of Partnership assets or debt, respectively, shall be distributed to the Partners as follows and in the following order of priority: (a) first, with respect to the Class VII Limited Partnership Interest, in an amount equal to the Class VII Unrecovered Capital; PROVIDED, HOWEVER, that no amount shall be paid or distributed pursuant to this Section 7.2(a) until one year and one day following repayment in full of the obligations of USC under the USC Senior Loan Agreement; (b) next, with respect to the Class II Partnership Interests, in an amount equal to the Class II Unrecovered Capital, and with respect to the Class III Limited Partnership Interest, in an amount equal to the Class III Unrecovered Capital, in proportion to the relative amounts of Class II Unrecovered Capital and Class III Unrecovered Capital; (c) next, with respect to the Class III Limited Partnership Interest, an amount equal to the Class III Unrecovered Capital; (d) next, with respect to the Class III Limited Partnership Interest, an amount equal to the Class III Unrecovered Accreted Value; (e) next, with respect to the Class V Limited Partnership Interest, an amount equal to the Class V Unrecovered Capital; and (f) the balance, if any, in accordance with the Partner's Percentage Interests. Distributions (other than the distribution provided for in Section 7.3) shall be made (i) only to the extent the Manager, subject to the supervision of the New General Partner, determines that the Partnership has cash available for distribution (after taking into account the needs of the Partnership's business, including reasonable reserves), (ii) subject to Section 7.2(a), within 90 days after the end of the Partnership Year with respect to such year and (iii) after the computation of the Net Income and Net Loss have been made with respect to such year. -26- 7.3 DISTRIBUTION OF NEWCO STOCK. On the Prepayment Transactions Date, and after V Cable, the New General Partner and VC Holding have made the capital contributions required under this Agreement, the Partnership shall distribute to V Cable all of the Class B Common Stock of Newco owned by the Partnership. The capital account of V Cable shall be charged with an amount equal to the tax basis of the Class B Common Stock of Newco distributed pursuant to this Section 7.3. ARTICLE 8 ALLOCATION OF INCOME, GAINS AND LOSSES 8.1 [Intentionally Omitted.] 8.2 ALLOCATION OF INCOME AND GAINS. After giving effect to the special allocations set forth in Section 8.4 hereof, Net Income shall be allocated for each Partnership Year as follows and in the following order of priority: (a) first, any Net Income shall be allocated with respect to classes of interest to the extent that, in the aggregate, the Capital Accounts of the Partners holding such classes of interests have a negative balance (computed before taking into account any distributions to be made pursuant to Sections 7.2 and 7.3 with respect to such year) at the close of such Partnership Year, such income to be allocated in proportion to such negative balances, until each such negative balance is eliminated; (b) next, with respect to the Class VII Partnership Interest, to the extent necessary to create a positive Capital Account balance with respect to such interest equal to the Tier I USC Priority Distribution as of the end of such Partnership Year; (c) next, with respect to the Class II Partnership Interest and the Class III Limited Partnership Interest, to the extent necessary to create a positive Capital Account balance with respect to each such interest equal to such interest's share of the Tier II USC Priority Distribution as of the end of such Partnership Year, such amounts to be allocated in proportion to such relative shares; (d) then, with respect to the Class III Limited Partnership Interest, to the extent necessary to create a positive Capital Account balance with respect to such interest in an amount equal to the sum of (x) its share of -27- the Tier II USC Priority Distribution, (y) the Tier III USC Priority Distribution and (z) the Tier IV USC Priority Distribution, as of the end of such Partnership Year; (e) then, with respect to the Class V Limited Partnership Interest, to the extent necessary to create a positive Capital Account balance with respect to such interest in an amount equal to the Tier V USC Priority Distribution, as of the end of such Partnership Year; (f) next, if any one or more classes of interest has a Capital Account positive balance attributable to such interest that is in excess of such interest's share, if any, of the USC Priority Distributions, with respect to the classes of interest, to the extent necessary to make the relative excesses for all interests to be in the ratio of the Partners' respective Percentage Interests as of the end of such Partnership Year; and (g) the balance, if any, in accordance with the Partners' respective Percentage Interests. 8.3 ALLOCATION OF LOSSES. 8.3.1 ALLOCATION OF NET LOSSES. (a) Net Losses (other than those realized from the sale of all or substantially all of the Partnership's assets), shall be allocated for each Partnership Year (i) 96% with respect to the Class I Partnership Interests, in the following manner and order of priority: (x) an amount equal to 1% of such Net Losses shall be allocated to the Class I General Partnership Interest, and (y) the balance, if any, with respect to the Class I Limited Partnership Interest; and (ii) 4% with respect to the Class V Partnership Interest. (b) Net Losses realized from the sale or disposition of all or substantially all of the Partnership's assets shall be allocated in the following manner and order of priority: (i) first, with respect to each class of interest, the portion of the Capital Account positive balance attributable thereto that is in excess of the sum of each such interest's share, if any, of the USC Priority Distributions, in proportion to such relative excesses, to the extent necessary to make such relative excesses in the ratio of the Partners' respective Percentage Interests; -28- (ii) next, with respect to each class of interest, the portion of the Capital Account balance attributable thereto which is positive, in proportion to each such interest's Percentage Interest, until each such positive balance is equal to the sum of each such interest's share, if any, of the USC Priority Distributions; (iii) next, with respect to each class of interest, the portion of the Capital Account balance attributable thereto which is positive, to the extent necessary to make each such positive balance equal to the sum of each such interest's share, if any, of the Tier I USC Priority Distribution, Tier II USC Priority Distribution, Tier III USC Priority Distribution, Tier IV USC Priority Distribution and Tier V USC Priority Distribution, in proportion to such shares; (iv) next, with respect to each class of interest, the portion of the Capital Account balance attributable thereto which is positive, to the extent necessary to make each such positive balance equal to the sum of each such interest's share, if any, of the Tier I USC Priority Distribution, Tier II USC Priority Distribution, Tier III USC Priority Distribution and Tier IV USC Priority Distribution, in proportion to such shares; (v) next, with respect to each class of interest, the portion of the Capital Account balance attributable thereto which is positive, to the extent necessary to make each such positive balance equal to the sum of each such interest's share, if any, of the Tier I USC Priority Distribution, Tier II USC Priority Distribution and Tier III USC Priority Distribution, as of the end of such Partnership Year, in proportion to such shares; (vi) next, with respect to each class of interest, the portion of the Capital Account balance attributable thereto which is positive, to the extent necessary to make each such positive balance equal to the amount of each such interest's share, if any, of the Tier I USC Priority Distribution and Tier II USC Priority Distribution, as of the end of such Partnership Year, in proportion to such shares; -29- (vii) next, with respect to each class of interest, the portion of the Capital Account balance attributable thereto which is positive, to the extent necessary to make each such positive balance equal to the amount of each such interest's share, if any, of the Tier I USC Priority Distribution, as of the end of such Partnership Year, in proportion to such shares; (viii) next, with respect to each class of interest, the portion of the Capital Account balance attributable thereto which is positive, in proportion to such positive balances, until each such balance has been reduced to zero; and (ix) the balance, if any, (x) 96% with respect to the Class I Partnership Interests, in proportion to their relative Percentage Interests, and (y) 4% with respect to the Class V Limited Partnership Interest. 8.3.2 [Intentionally Omitted]. 8.3.3 ALLOCATION OF LOSSES AND GROSS INCOME TO THE CLASS I PARTNERS. (A) Notwithstanding any other provision of this Article 8, no allocation of Partnership loss shall be made with respect to the Class I Limited Partnership Interest which would create or increase a deficit balance in the portion of the Capital Account balance attributable to such interest (as maintained in accordance with Section 6.9 hereof; if, nevertheless, at the end of any Partnership Year, the portion of the Capital Account attributable to the Class I Limited Partnership Interest would have a deficit (determined as described above and after taking into account all other allocations and distributions with respect to such year), then there shall be allocated with respect to the Class I Limited Partnership Interest for such year items of gross income (which items shall be credited to the portion of the Capital Account attributable to such interest) in an amount sufficient to eliminate such deficit. (B) If, at the end of any Partnership Year, the portion of the Capital Account attributable to the Class I General Partnership Interest would have a deficit (determined after taking into account all other allocations and distributions with respect to such year), then there shall be allocated with respect to the Class I General Partnership Interest for such year items of gross income (which items shall be credited to the portion of the Capital -30- Account attributable to such interest) in an amount sufficient to eliminate such deficit. 8.4 SPECIAL ALLOCATIONS. The following special allocations shall be made in the following order: 8.4.1 MINIMUM GAIN CHARGEBACK. Notwithstanding any other provision of this Article 8, if there is a net decrease in Partnership Minimum Gain during any Partnership Year, each Partner shall be specially allocated items of Partnership income and gain for such Partnership Year (and, if necessary, subsequent Partnership Years) in an amount equal to such Partner's share of the net decrease in Partnership Minimum Gain, determined in accordance with Treas. Reg. Section 1.704-2(f) and Treas. Reg. Section 1.704-2(g)(2). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Treas. Reg. Section 1.704-2(f)(6) and Treas. Reg. Section 1.704-2(j)(2)(i) and (iii). The Partnership shall, however, (i) waive the Minimum Gain Chargeback required by this Section 8.4.1 and (ii) apply to the Commissioner of the Internal Revenue Service for approval of such waiver in the event that (x) the Partners have made Capital Contributions or received income allocations that have restored any previous Nonrecourse Deductions claimed or any distributions attributable to the proceeds of a Nonrecourse Liability, and (y) the Minimum Gain Chargeback requirement would distort the Partners' economic arrangement as reflected in this Agreement and as evidenced over the term of the Partnership by the Partnership's allocations and distributions and the Partners' Capital Contributions and it is not expected that the Partnership will have sufficient other income to correct that distortion. Except as otherwise modified herein, this Section 8.4.1 is intended to comply with the Minimum Gain Chargeback requirement in Treas. Reg. Section 1.704-2(f) and shall be interpreted consistently therewith. 8.4.2 PARTNER MINIMUM GAIN CHARGEBACK. Notwithstanding any other provision of this Article 8 except Section 8.4.1, if there is a net decrease in Partner Nonrecourse Debt Minimum Gain during any Partnership Year, each Partner who has a share of the Partner Nonrecourse Debt Minimum Gain, determined in accordance with Treas. Reg. Section 1.704-2(i)(5), shall be specially allocated items of Partnership income and gain for such Partnership Year (and, if necessary, subsequent Partnership Years) in an amount equal to such Partner's share of the net decrease in Partner Nonrecourse Debt Minimum Gain, determined in accordance with Treas. Reg. Section 1.704-2(g)(2) and Treas. Reg. Section 1.704-2(i)(4). -31- Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Treas. Reg. Section 1.704-2(f)(5), Treas. Reg. Section 1.704-2(i)(4) and Treas. Reg. Section 1.704-2(j)(2)(ii) and (iii). Except as otherwise modified herein, this Section 8.4.2 is intended to comply with the Partner Nonrecourse Debt Minimum Gain Chargeback requirement in Treas. Reg. Section 1.704-2(i)(4) and shall be interpreted consistently therewith. In addition, rules consistent with the provisions of Treas. Reg. Section 1.704-2(f)(2), (3), (4) and (5) (including rules regarding a waiver of the type discussed in Section 8.4.1 above) will apply to the special allocation required by this Section 8.4.2. 8.4.3 QUALIFIED INCOME OFFSET. In the event any Partner unexpectedly received any adjustments, allocations, or distributions described in Treas. Reg. Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be specially allocated to such Partner (in respect of its Capital Account) in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit of such Partner as quickly as possible, provided that an allocation pursuant to this Section 8.4.3 shall be made only if and to the extent that such Partner would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article 8 have been tentatively made as if this Section 8.4.3 were not in the Agreement. 8.4.4 NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any Partnership Year or other period shall be specially allocated among the Partners in accordance with their Percentage Interests. 8.4.5 PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse Deductions for any Partnership Year or other period shall be specially allocated to the Partner who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable in accordance with Treas. Reg. Section 1.704-2(i). 8.4.6 NEGATION ALLOCATION. Notwithstanding any provision of this Agreement, to the extent any allocation is made in any Partnership Year to any Partner pursuant to the provisions of Section 8.4.1, Section 8.4.2, Section 8.4.3, Section 8.4.4, Section 8.4.5 or Section 8.6, such Partner shall thereafter be specially allocated items of Partnership gross income or deduction in order to negate the above- -32- described allocations in the same Partnership Year if sufficient items of gross income or deduction are available and, if not available, in each succeeding Partnership Year until the aggregate amount of the above described allocations are fully negated. 8.5 CANCELLATION OF INDEBTEDNESS INCOME. Notwithstanding any other provision of this Article 8, for purposes of this Agreement (a) any cancellation of indebtedness income arising from the restructuring of the debt of the Partnership which was effected in connection with the Original Amended Agreement will be deemed to be realized and recognized by the Partnership immediately prior to the admission of V Cable and V Cable GP as partners to the Partnership and will be specially allocated among the Partners at that time in accordance with the provisions of the Original Agreement (as defined in the Original Amended Agreement) and (b) any cancellation of indebtedness income arising from the contribution to capital and termination of the Junior Subordinated Loan will be specially allocated to the Class V Limited Partner. 8.6 INTEREST OF THE GENERAL PARTNERS. Notwithstanding the provisions of Article 7 and Sections 8.2 through 8.5 (but not including Section 8.3.3(B) hereof), the Class I General Partner shall be allocated an amount of each material item of income, gain, loss, deduction or credit of the Partnership for any Partnership Year, other than items of income, gain, loss, deduction or credit allocated pursuant to Section 8.4 hereof, and shall be distributed a portion of cash of the Partnership with respect to any Partnership Year so that, after taking into account the allocation and distribution of each such item to the Class II General Partner pursuant to Article 7 and Sections 8.2 through 8.5 hereof, there will be allocated and distributed not less than 1% of each such item to the Class I and Class II General Partners in the aggregate and the amount of any item allocated to the Class I General Partner pursuant to this Section 8.6 shall reduce, by the same amount, the amount of such item otherwise allocable to the Class I Limited Partner. If, at any time after the date hereof, the Class II General Partner shall be the only general partner, for each Partnership Year there shall be allocated and distributed to such general partner an aggregate amount of not less than 1% of each such material item. In addition, if an allocation of income shall be made pursuant to the preceding sentence, there shall also be allocated to the Class II General Partner an amount of loss equal to the lesser of (i) the amount of income so allocated or (ii) the excess of 1% of the aggregate amount of losses of the Partnership for the period the Class II General Partner was -33- a general partner over the aggregate amount of losses previously allocated to the Class II General Partner for such period. 8.7 ADJUSTMENTS TO ALLOCATIONS. The New General Partner, with the consent of the Class IV Limited Partner (and the consent of the Class II General Partner with respect to any change which will have an adverse effect on the Class II Partners), shall have the authority to make changes in the allocations provided for in this Article 8 to the extent necessary to conform to the requirements of Section 704(b) of the Code and any regulations promulgated thereunder, provided that such changes are not likely to have a material effect on the amounts distributable to any Partner pursuant to Section 14 hereof upon the dissolution of the Partnership. 8.8 ALLOCATION OF INTEREST INCOME. Notwithstanding any other provision of this Article 8, there shall be specially allocated to the Class IV Limited Partner for each of the taxable years set forth below an amount of interest income equal to the excess of (x) the amount of interest income received or accrued by the Partnership for federal income tax purposes with respect to its loans to Essex Communications Corp. pursuant to those certain notes dated as of January 1, 1993 over (y) the base amount set forth below for each such taxable year: Year Base Amount ---- ----------- 1993 5,222,000 1994 5,508,000 1995 5,790,000 1996 6,058,000 1997 6,221,000 1998 6,420,000 1999 6,621,000 2000 6,841,000 2001 7,217,000 -34- 8.9 ALLOCATION OF GAIN OR LOSS ON DISTRIBUTION OF, OR WITH RESPECT TO NEWCO STOCK. Notwithstanding any other provision of this Agreement, income, gain or loss, if any, recognized (or to be recognized) by the Partnership in connection with the distribution of the Class B Common Stock of Newco to V Cable shall be allocated to V Cable and the amount by which the capital account of V Cable is charged to reflect such distribution shall be increased or decreased, as the case may be, to offset the effect of such allocation. 8.10 CONTINUATION OF TREATMENT. The Partners and the Partnership understand that the Prepayment Transactions will not result in the recognition of any income, gain or loss by the Partnership and agree that the income tax return for the Partnership and for each of the Partners for the period including the closing of the Prepayment Transactions will be filed in a manner consistent with this understanding. ARTICLE 9 MANAGEMENT OF THE PARTNERSHIP 9.1 MANAGEMENT OF THE PARTNERSHIP'S BUSINESS. (a) The General Partners, on behalf of the Partnership, have entered into the Management Agreement, pursuant to which the Manager will perform certain management services and duties for, and on behalf of, the Partnership. Except for actions and determinations which, pursuant to the terms of this Agreement, are to be taken or made (i) by the New General Partner (or, following (x) the removal, withdrawal, resignation, liquidation or Bankruptcy of the New General Partner or any other event that caused the New General Partner to cease to be a general partner of the Partnership or (y) the termination of the Management Agreement, the Existing General Partner in accordance with Section 9.9 hereof) or (ii) only with the consent of the Partners, the Limited Partners or the Class III Limited Partner, the Class IV Limited Partner and/or the Class V Limited Partner, as the case may be, the business and affairs of the Partnership shall be managed and directed exclusively by the New General Partner, subject to the provisions of this Agreement with respect to the USC Partners' Committee. Notwithstanding any provision of this Agreement to the contrary, the New General Partner is hereby expressly authorized to execute the Partnership Interests Redemption Agreement on behalf of the Partnership and the Partnership, and the New General Partner acting on behalf of the Partnership, is expressly authorized to consummate the -35- transactions contemplated thereby. Subject to the ultimate authority of the New General Partner to supervise the Manager, the New General Partner has delegated certain authority to the Manager in accordance with, and subject to the terms and provisions contained in, the Management Agreement for so long as the Management Agreement shall be in effect. Subject to the terms and conditions of the Management Agreement, the Manager may delegate such of its respective powers and authority to managers, employees and agents of the Manager or the Partnership as it shall deem necessary or appropriate for the conduct of the Partnership's business. The Partners have previously approved the Business Plan. (b) Without limiting the generality of the foregoing and except to the extent consented to by the Class III Limited Partner, the Class IV Limited Partner and the Class V Limited Partner, the New General Partner, on behalf of the Partnership, shall maintain in effect during the term of this Agreement liability insurance in connection with the operation of the Partnership in substantially the same amount and with substantially the same coverage as the liability insurance maintained by the Partnership as of the date of the Investment Agreement. (c) Notwithstanding the foregoing exceptions to the authority of the Manager, nothing contained in this Article 9 shall impose any obligation on any Person (other than CSC or an Affiliate of CSC) doing business or dealing with the Partnership to inquire as to whether the Manager has exceeded its authority in executing any contract, agreement, lease, mortgage, note, deed or other instrument in the name and on behalf of the Partnership, and any such Person shall be fully protected in relying upon the plenary authority of the Manager. (d) No provision of this Agreement or the Management Agreement nor any action taken by the Manager in accordance with the provisions of this Agreement or the Management Agreement shall be construed to constitute the Manager a general partner of the Partnership or to impose on the Manager any duties, liabilities or obligations except as expressly provided by the Management Agreement. (e) The Manager shall keep the USC Partners' Committee informed with respect to all matters relating to the business and affairs of the Partnership and its Partners and shall in any event report to the USC Partners' Committee not less frequently than once each calendar quarter. -36- (f) Any action that may be taken under this Agreement by a general partner of the Partnership, except as provided in Section 9.1(a) or unless this Agreement provides that a specific General Partner (the New General Partner, the Tax Matters Partner or the Existing General Partner) may or shall take such action, may be taken only by joint action of all of the General Partners of the Partnership, if there is more than one General Partner of the Partnership at the time of the taking of any such action. 9.2 USC PARTNERS' COMMITTEE. (a) Each of the General Partners shall designate two individuals, for a total of four members, to serve on a Partners' Committee of the Partnership (the "USC Partners' Committee") which shall be responsible for taking all action required under this Agreement to be taken by the USC Partners' Committee; PROVIDED, HOWEVER, that in the event of a Change in Control, the Class IV Limited Partner and the New General Partner shall each appoint an additional member of the USC Partners' Committee; and PROVIDED, FURTHER, that if the Class IV Limited Partner shall determine in good faith that the appointment by it of any such member would conflict with Section 9.11 of this Agreement, the Class IV Limited Partner shall, instead, assign its right to make such appointment to such third party not affiliated with GE Capital as the New General Partner shall reasonably select. If any General Partner shall cease to be a General Partner under this Agreement pursuant to Section 13.1(e) or otherwise, such former General Partner shall no longer be entitled to appoint any member of the USC Partners' Committee, and all members of such committee appointed by such former General Partner shall automatically be removed. Any additional member of the USC Partners' Committee appointed by the Class IV Limited Partner shall be reasonably acceptable to the New General Partner. Each member of the USC Partners' Committee shall have one vote on all matters to be voted on by the USC Partners' Committee, except that a Partner may, instead of appointing two members with one vote each (if it shall otherwise be entitled to do so), appoint to the USC Partners' Committee one member having the power to cast two votes on all matters to be voted on by the USC Partners' Committee; PROVIDED, HOWEVER, if the number of Persons entitled to serve on the USC Partners' Committee increases to six following a Change in Control, the New General Partner may, instead of appointing three members with one vote each, appoint to the USC Partners' Committee one member having the power to cast three votes on all matters to be voted on by the USC Partners' Committee. Notwithstanding anything herein to the contrary, the initial Class IV Limited Partner, or a transferee -37- reasonably acceptable to the New General Partner of all or more than 50% of its Class IV Limited Partnership Interest, shall be entitled, at its option, to designate one member of the USC Partners' Committee (in addition to any other member designated by it pursuant to the first sentence of this Section 9.2(a)), with a single vote, to take the place of one of the then incumbent members of the USC Partners' Committee (such incumbent member to be replaced shall be selected by the Class II General Partner) serving as representative of the Existing General Partner (or, if such representative of the Existing General Partner shall have been designated to cast two votes, the new member shall be in addition to the then incumbent members of the USC Partners' Committee, and the incumbent representative of the Existing General Partner shall then only be entitled to cast one vote), and any such replaced incumbent member of the USC Partners' Committee shall be automatically removed from the USC Partners' Committee; PROVIDED, HOWEVER, that if the Class IV Limited Partner shall determine in good faith that the appointment by it of any such member would conflict with Section 9.11 of this Agreement, the Class IV Limited Partner shall, instead, assign its right to make such appointment to such third party not affiliated with GE Capital as the New General Partner shall reasonably select. The USC Partners' Committee shall meet by telephone or, at the request of any member of the USC Partners' Committee, in Person, as often as shall be necessary to make any Extraordinary Decision or take any other action required to be taken or approved by the USC Partners' Committee. Any action that may be taken at a meeting of the USC Partners' Committee may be taken without a meeting by written consent of the members of the USC Partners' Committee; PROVIDED, HOWEVER, that any such written consent shall include the consent of at least one representative of each Partner that shall then have a representative on the USC Partners' Committee. Each member of the USC Partners' Committee shall be an agent for the purposes provided for in this Agreement of the Partner that appointed such member and shall not be an agent of the Partnership. (b) The Manager, either General Partner or any member of the USC Partners' Committee shall have the right to call a meeting of the USC Partners' Committee by giving three (3) days' prior written notice of the time, date and location (which shall be at the principal office of the Partnership unless otherwise agreed) or means of conducting such meeting to the General Partners, the members of the -38- USC Partners' Committee and the Manager. The presence or participation of members of the USC Partners' Committee entitled to cast at least a majority of the total number of votes which may be cast by all of the then members of the USC Partners' Committee shall constitute a quorum for the taking of any action. Any action required or permitted to be taken by the USC Partners' Committee must be by an affirmative vote of, or written consent representing, at least a majority of the total number of votes which may be cast by all of the then members of the USC Partners' Committee. Notwithstanding anything in this Article 9 to the contrary, the Class III Limited Partner shall have the right to designate, from time to time, one observer (the "Class III Observer") to attend meetings of the USC Partners' Committee. The Manager shall give the Class III Observer written notice of each meeting of the USC Partners' Committee at the same time as the Manager receives notice of, or itself schedules, a meeting of the USC Partners' Committee. The Class III Observer shall be entitled to attend, as a non-voting observer, all meetings of the USC Partners' Committee, shall receive reasonable advance notice of all such meetings and shall receive copies of all materials and information provided to members of the USC Partners' Committee (whether provided prior to, during or after any such meetings) except to the extent that the provision of such information would be inconsistent with Section 9.11 of this Agreement. If the USC Partners' Committee proposes to take any action by written consent in lieu of a meeting, the Manager shall give written notice thereof to the Class III Observer prior to the effective date of such consent, describing in reasonable detail the nature and substance of such action. (c) Any member of the USC Partners' Committee may be removed with or without cause at any time by the Partner which designated such member. If at any time any Partner entitled to designate one or more representatives to the USC Partners' Committee removes one or more of such representatives, such Partner shall give written notice of such removal to the Manager, the General Partners and any other Partner having a representative then serving on the USC Partners' Committee (other than the Person or Persons to be removed), and shall promptly appoint a successor member or members to represent such Partner on the USC Partners' Committee by giving written notice of such appointment to the Manager, the General Partners and any other Partner having a representative then serving on the USC Partners' Committee; PROVIDED, HOWEVER, that any such successor member or members (i) if appointed by the New General Partner, shall be a director, officer or employee of CSC or one of its Subsidiaries; (ii) if appointed by the Existing General Partner, shall be reasonably acceptable to the New General Partner and (iii) if appointed by the Class IV Limited Partner, shall be reasonably acceptable to the New General Partner. In the absence of written notice to the contrary, -39- the appointed representatives of any Partner on the USC Partners' Committee shall be conclusively presumed to be the duly appointed representatives of such Partner on such USC Partners' Committee. Except as set forth in Section 10.1 hereof, members of the USC Partners' Committee shall serve as such without compensation. (d) Any Person acting as a representative of the Existing General Partner on the USC Partners' Committee may be removed by the New General Partner for "cause" as such term is defined in Section 6.11 hereof. Any such removal shall be without prejudice to the right of the Existing General Partner to select a successor representative in accordance with Section 9.2(c) hereof. 9.3 EXTRAORDINARY DECISIONS. The following actions involving the Partnership ("Extraordinary Decisions") may be taken only with the prior approval of the USC Partners' Committee: (i) subject to Section 9.5 hereof, any sale of all or of a substantial portion of the operating assets of the Partnership on terms not contemplated or permitted by the Business Plan or by any agreement evidencing debt for borrowed money of the Partnership; (ii) any purchase by the Partnership of material assets on terms not contemplated or permitted by any agreement evidencing debt for borrowed money of the Partnership or the Business Plan; (iii) the incurrence of financial obligations or the making of any investments by the Partnership not contemplated or permitted by (a) any agreement evidencing debt for borrowed money of the Partnership or (b) Section 6.3(a)(iii) hereof; (iv) subject to Section 9.9 hereof, the undertaking by the USC Partners' Committee of any management function covered by the Management Agreement, the discharge of the Manager, the appointment of a successor manager, any amendment to the Management Agreement or the termination of the Management Agreement; (v) any material amendment to the Business Plan, but only to the extent not contemplated or permitted by any agreement evidencing debt for borrowed money of the Partnership; -40- the admission to the Partnership of any new partner other than pursuant to Article 13 hereof; (vii) providing any General or Limited Partner with the authority to act on behalf of the Partnership, except as otherwise provided in this Agreement or the Management Agreement or required under applicable law; or (viii) subject to Section 9.5 hereof, any action by or on behalf of the Partnership or any of its Subsidiaries to commence or bring about, or to file or consent to the filing of any petition commencing or requesting, (a) appointment of a receiver, custodian, liquidator or trustee (or similar official) for the Partnership or any of its Subsidiaries or any substantial part of their respective assets, (b) any assignment by the Partnership or any of its Subsidiaries for the benefit of creditors, (c) any dissolution, liquidation or winding-up of the affairs of the Partnership or any of its Subsidiaries, (d) any case, proceeding or other relief involving the Partnership or any of its Subsidiaries or any substantial part of their respective assets under the Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law. 9.4 LIMITATION ON AGENCY. (a) For so long as the Management Agreement shall be in effect and subject to the ultimate authority of the New General Partner to supervise the Manager, the Manager shall have exclusive authority to act for and to assume any obligation or responsibility on behalf of the Partnership except as (i) otherwise expressly provided in this Agreement and (ii) expressly restricted by this Agreement or the Management Agreement, and, without the approval of the USC Partners' Committee, no General Partner or Limited Partner shall have any authority to act for, or to assume any obligation or responsibility on behalf of, another Partner or the Partnership (or to authorize any other Person to do so) except as otherwise expressly provided herein with respect to a particular General Partner or under the terms of the Management Agreement. Notwithstanding the previous sentence, whenever a decision made as to the Partnership or its affairs in accordance with the limitations set forth in this Agreement and the Management Agreement requires for its implementation the execution of documents or other action by a Partner of the Partnership in order to bind the -41- Partnership, the New General Partner shall have the exclusive authority to take action to bind the Partnership in accordance with such decision. Nothing in this Section 9.4 shall limit any consent or other rights granted to any Limited Partner under this Agreement. (b) Each General Partner agrees for the benefit of the Partnership and the other Partners not to take any action on behalf of the Partnership, except as otherwise expressly provided herein. (c) Notwithstanding anything in this Agreement to the contrary, GE Capital may lend money to and transact other business with the Partnership and, subject to applicable law, shall have the same rights and obligations with respect thereto (including, without limitation, pursuant to the USC Loan Documents) as a Person who is not a partner of the Partnership. If a Limited Partner is a lender, in exercising its rights as a lender, including in making its decision on whether to foreclose on property of the Partnership, such lender will have no duty to consider (i) its status as a partner of the Partnership, (ii) the interests of the Partnership, or (iii) any duty (including fiduciary duties) it may have to any Partner or the Partnership. 9.5 APPROVAL BY CERTAIN LIMITED PARTNERS. (a) Notwithstanding anything in this Agreement, without the prior written approval of the Class III Limited Partner, the Class IV Limited Partner and the Class V Limited Partner, none of the Partnership, any Partner acting on behalf of the Partnership or the Manager shall take any of the following actions in respect of the Partnership or any of its Subsidiaries: (x) other than in the ordinary course of business, any sale, transfer or other disposition (including by means of any transfer of stock or assets by merger or consolidation) of any material amount of assets of USC or any of its Subsidiaries (any such transaction is hereinafter referred to as a "Disposition")) or (y) any action described in Section 9.3(vii) hereof. (b) The Partnership will not (i) assign, transfer or otherwise dispose of its limited partnership interest in the Missouri Partnership, or (ii), in its capacity as a limited partner of the Missouri Partnership, give its consent under Section 9.4, 10 or 15 of that certain Limited Partnership Agreement of the Missouri Partnership. (c) In exercising any approval or other rights granted to the Class III Limited Partner, the Class IV -42- Limited Partner and the Class V Limited Partner in this Agreement, the Act or any other agreement, such limited partner of the Partnership, shall be entitled to consider only such interests and factors as it desires and may consider its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Partnership or other Partners. 9.6 LIABILITY OF THE GENERAL PARTNERS AND THE MEMBERS OF USC PARTNERS' COMMITTEE. (a) No General Partner shall be liable, in damages or otherwise, to the Partnership or any Partner for any act or failure to act on behalf of the Partnership by such General Partner, unless (i) such act or omission constituted fraudulent or willful misconduct (including an intentional breach of Section 9.1 or 9.8 of this Agreement or any breach of Section 9.1 or 9.8 of this Agreement arising out of the gross negligence of such General Partner), or (ii) such act or omission constituted a breach of any of the terms and conditions of this Agreement other than Sections 9.1 and 9.8 or an act outside the scope of the authority conferred on such General Partner by this Agreement, was performed or omitted in bad faith or constituted gross negligence or a violation of law, provided that, solely for purposes of this clause (ii), in the case of any act or failure to act with respect to any matter (A) responsibility for which has been delegated to the Manager pursuant to the Management Agreement and (B) for which the New General Partner may be deemed to be responsible pursuant to this Agreement and (C) which does not constitute an express obligation of the New General Partner pursuant to this Agreement, the New General Partner shall be liable only if the Manager would be liable to the Partnership pursuant to the Management Agreement if the Manager had so acted or failed to act. To the fullest extent permitted by law, each General Partner shall be indemnified by the Partnership against liability for any claim, demand, loss, damage, liability or expense (including, without limitation, amounts paid in settlement, reasonable costs of investigation and reasonable legal expenses) resulting from any threatened, pending or completed action, suit or proceeding naming as a defendant the Partnership or such General Partner resulting from or in connection with the discharge of its duties and responsibilities under this Agreement, unless such General Partner's actions or omissions were of any of the types referred to in clauses (i) or (ii) above. (b) No Person serving on the USC Partners' Committee from time to time shall be liable, in damages or otherwise, to the Partnership or any Partner for any act or failure to act on behalf of the Partnership by such Person, unless such act or omission constituted fraudulent or will- -43- ful misconduct (including an act outside the scope of the authority conferred on such Person by this Agreement), was performed or omitted in bad faith or constituted gross negligence or a violation of law. To the fullest extent permitted by law, each Person serving on the USC Partners' Committee shall be indemnified by the Partnership against liability for any claim, demand, loss, damage, liability or expense (including, without limitation, amounts paid in settlement, reasonable costs of investigation and reasonable legal expenses) resulting from any threatened, pending or completed action, suit or proceeding naming as a defendant the Partnership or such Person serving on the USC Partners' Committee resulting from or in connection with the discharge of such Person's duties and responsibilities under this Agreement, provided such Person's actions were in good faith and did not constitute gross negligence, fraud, willful misconduct (including an act outside the scope of the authority conferred on such Person by this Agreement) or a violation of law. (c) It is expressly agreed that no Limited Partner will be required to make a Capital Contribution to the Partnership to satisfy any indemnification obligation of the Partnership. Notwithstanding the foregoing, nothing in Sections 9.6(a) or 9.6(b) shall provide for any exculpation or indemnification of V Cable or Newco with respect to any obligation it may have under the Supplemental Side Letter. 9.7 INDEMNIFICATION. Any Person asserting a right to indemnification under Section 9.6 shall so notify the Partnership in writing. If the facts giving rise to such indemnification shall involve any actual or threatened claim or demand by or against a third party, the Partnership shall be entitled to assume the conduct of the defense or prosecution of such claim or demand in the name of indemnified Person, with counsel reasonably satisfactory to the indemnified Person, if the Partnership notifies the indemnified Person in writing of its intention to do so within twenty (20) days of the receipt of such notice by the Partnership, without prejudice, however, to the right of the indemnified Person to participate therein through counsel of the indemnified Person's own choosing, which participation shall be at the indemnified Person's sole expense unless (i) the indemnified Person shall have been advised by its counsel that use of the same counsel to represent both the Partnership and the indemnified Person would present a conflict of interest (which shall be deemed to include any case where there may be a legal defense or claim available to the indemnified Person which is different from or additional to those available to the Partnership), in which case the Partnership shall not have the right to direct the -44- defense of such action on behalf of the indemnified Person, or (ii) the Partnership shall fail diligently to defend or prosecute such claim or demand within a reasonable time. Whether or not the Partnership chooses to defend or prosecute such claim, the parties hereto shall cooperate in the prosecution or defense of such claim and shall furnish such records, information and testimony and attend such conferences, discovery proceedings, hearings, trials and appeals as may reasonably be requested in connection therewith. The Partnership shall not settle or permit the settlement of any such third party claim or action without the prior written consent of the indemnified Person. Notwithstanding the foregoing, nothing in this Section 9.7 shall provide for any exculpation or indemnification of V Cable or Newco with respect to any obligation under the Supplemental Side Letter. 9.8 REMOVAL OF MANAGER. (a) The Manager may be removed or discharged by the USC Partners' Committee as set forth in Section 9.3 only if the Partnership would then be entitled to terminate the Management Agreement in accordance with the terms thereof. (b) Upon the removal of the Manager in accordance with this Agreement and the Management Agreement, a new manager shall be appointed by the USC Partners' Committee as set forth in Section 9.2; PROVIDED, HOWEVER, that, until a successor manager has been appointed, the Partnership shall be managed by the New General Partner consistent with the provisions of the Management Agreement; and PROVIDED FURTHER that during such period the USC Partners' Committee shall direct the New General Partner in the management of the Partnership and the New General Partner shall act in accordance with such direction. 9.9 CONTINGENT AUTHORITY OF EXISTING GENERAL PARTNER. (a) Notwithstanding anything in this Agreement to the contrary, if an Event of Default occurs under Section 9.1(m)(i) of the V Cable Loan Agreement with respect to the Management Agreement and such default is not waived by GE Capital, then the Existing General Partner, upon receipt of notice of such default from GE Capital which declares such default to be a "material management default," shall have the authority to terminate the Management Agreement on behalf of the Partnership. (b) In the event that (x) the Management Agreement is terminated in accordance with the terms thereof or -45- (y) the New General Partner withdraws or resigns as general partner of the Partnership, liquidates or is subject to a Bankruptcy or any other event has occurred that would cause the New General Partner to cease to be a general partner of the Partnership, then, without any further action by the Partnership or the Partners, each of the duties expressly conferred upon the New General Partner by this Agreement (including those duties conferred upon the New General Partner in its capacity as Tax Matters Partner) shall devolve upon the Existing General Partner MUTATIS MUTANDIS. 9.10 OTHER CABLE TELEVISION SYSTEMS. It is understood that, subject to the provisions of the Non-Competition Agreement, Cablevision and its Affiliates (including V Cable) may possess interests in and operate other cable television systems whether or not currently so engaged, which activities may include (without limitation) the acquisition, construction, management, operation and sale of cable television systems and the creation and distribution of programming therefor, and may generally have other business interests and engage in other business activities in direct competition with the Partnership, for their own account and for the account of others, and neither the Partnership nor any of its partners shall have any rights in or to such independent ventures, businesses or activities or the income or profits derived therefrom; provided, that nothing in this sentence shall be construed to permit CSC or any of its Affiliates to own or possess any interest or engage in any activity in violation of the Non-Competition Agreement, as the same may be amended from time to time. It is also understood that, except as set forth in Section 6.1 of the Management Agreement, there is no obligation on the part of Cablevision and its Affiliates (including V Cable) to offer or provide any interest in such independent ventures, businesses or activities or any of their own business opportunities to the Partnership, or any of its Subsidiaries or any of its partners. -46- 9.11 EXEMPT LIMITED PARTNERS. It is the express purpose and intent of the Partners that each Exempt Limited Partner shall be sufficiently insulated from, and uninvolved in, the media-related activities of the Partnership so as to be non-attributable pursuant to (and within the meaning of) the FCC Regulations. Accordingly, the following provisions shall be read and interpreted with reference to all applicable FCC rules, orders or interpretations from time to time in effect, and shall apply notwithstanding anything to the contrary contained in this Agreement: No Exempt Limited Partner may act as an employee of the Limited Partnership if said employee's functions, directly or indirectly, relate to the media enterprises of the Partnership; No Exempt Limited Partner may serve, in any material capacity, as an independent contractor or agent with respect to the Partnership's media enterprises; No Exempt Limited Partner may communicate with the licensee of the Partnership's media enterprises or any of the General Partners on matters pertaining to the day-to-day operations of the Partnership's media-related business; The New General Partner (or, if the New General Partner shall cease to be a general partner of the Partnership, the Existing General Partner) may veto any admissions of additional General Partners admitted by vote of the Exempt Limited Partners; No Exempt Limited Partner may vote on the removal of a General Partner as a general partner of the Partnership except in situations where such General Partner is subject to bankruptcy proceedings, as described in Sections 402 (4)-(5) of the Delaware Revised Uniform Limited Partnership Act, is adjudicated incompetent by a court of competent jurisdiction, or is removed for cause, as determined by an independent party; No Exempt Limited Partner may perform any services for the Partnership materially relating to its media activities, with the exception of making loans to, or acting as a surety for, its businesses; and Exempt Limited Partners are prohibited from becoming actively involved in the management or -47- operation of the media businesses of the Partnership. An Exempt Limited Partner may, upon prior written notice to the General Partners and each other Limited Partner, elect to cease to be deemed an "Exempt Limited Partner" (and, if applicable FCC Regulations so provide, such Limited Partner shall thereupon become an attributable Limited Partner), in which case the prohibitions of this Section 9.11 shall cease to apply to such Limited Partner. Upon such election, (i) Schedule C hereto shall be appropriately amended to delete such Limited Partner therefrom and (ii) the New General Partner shall take such steps (if any) as may be necessary to comply with then-current FCC Regulations in a prompt and timely fashion, including the filing of any required notices and/or applications, and the Limited Partner that makes the election shall cooperate with the New General Partner in that regard. In addition, if any Exempt Limited Partner shall furnish to the Partnership an opinion of counsel that any of the prohibitions or other limitations set forth in this Section 9.11 (or elsewhere in this Agreement with respect to Exempt Limited Partners) are no longer necessary in order for such Exempt Limited Partner to maintain its non-attributable status, then (1) such limitations shall, with respect to such Limited Partner, automatically be null and void and of no further force and effect, and shall not thereafter apply in any context to such Limited Partner or (2) to the extent that such opinion states that a modified form of prohibition or limitation would be sufficient to retain such partner's non-attributable status (and specifies such modified limitations), such limitations shall be automatically modified to be consistent with such opinion. Each Exempt Limited Partner further agrees that it will not exercise its right, pursuant to the GE Capital Option, to remove the New General Partner unless such Exempt Limited Partner has either (i) theretofore exercised its right to cease to be an "Exempt Limited Partner" as provided above or (ii) furnished the Partnership with an opinion of counsel that the exercise of such right will not cause such Limited Partner to become an attributed Limited Partner. ARTICLE 10 COMPENSATION 10.1 COMPENSATION TO POMPADUR REPRESENTATIVE. The Partnership will pay to the Pompadur Representative -48- $50,000 per annum (payable in quarterly installments in arrears) in consideration of the Pompadur Representative's services on the USC Partners' Committee plus all reasonable out-of-pocket expenses incurred by the Pompadur Representative in connection with the performance of its services as a member of the USC Partners' Committee. Notwithstanding anything to the contrary in this Agreement, the right of the Pompadur Representative to receive the compensation set forth in the immediately preceding sentence shall forthwith terminate simultaneously with (A) the removal of the Pompadur Representative from service on the USC Partners' Committee in accordance with Section 9.2(d) hereof or (B) the voluntary resignation for any reason of the Pompadur Representative from service on the USC Partners' Committee. 10.2 COMPENSATION RESTRICTED. Except for the payments set forth in Section 10.1 above, payments made pursuant to the Management Agreement, payments made pursuant to Sections 9.6 and 9.7 hereof, and the right to be reimbursed in accordance with Section 12.4.3(b) hereof, neither the General Partners nor their respective Affiliates shall receive any other compensation or reimbursement of expenses from the Partnership for services as General Partners. ARTICLE 11 [Intentionally Omitted] ARTICLE 12 ACCOUNTING, ACCOUNTS, RETURNS AND TAX MATTERS 12.1 BOOKS. The New General Partner shall maintain, or cause to be maintained at the Partnership's expense, complete and accurate books of account of the Partnership's affairs at the Partnership's principal place of business, including a list of the names and addresses of all Partners and the Partnership Interests held by each Partner. The books of account of the Partnership shall be kept on the accrual basis of accounting in accordance with generally accepted accounting practices applied in a consistent manner. Each Partner shall have the right to inspect and copy the Partnership's books and records (including the list of the names and addresses of Partners) at any reasonable time upon advance request to the New General Partner. Notwithstanding anything in the Act (including Section 17-305(b) of the Act) or this Agreement -49- to the contrary, the General Partners shall not have the right to keep confidential from the Class III Limited Partner, the Class IV Limited Partner or the Class V Limited Partner, any information concerning the Partnership. 12.2 REPORTS. The books of account shall be closed promptly after the end of each Partnership Year. The independent public accountants of the Partnership shall initially be KPMG Peat Marwick; PROVIDED, HOWEVER, that in the event that such firm shall be unable or unwilling to so act, the New General Partner may select another nationally recognized "Big 6" accounting firm (other than a firm that is utilized by Cablevision) to act as the independent public accountants of the Partnership. The books and records of the Partnership shall be audited by the independent public accountants as of the end of each Partnership Year and audited financial statements (which shall include a statement of profits and losses and cash flows for the year ended and a balance sheet as of the close of the Partnership Year) prepared in accordance with generally accepted accounting principles shall be distributed to the Partners within ninety (90) days of the end of each Partnership Year. 12.3 FILING OF TAX RETURNS AND TAX REPORTS TO CURRENT AND FORMER PARTNERS. (a) The New General Partner shall cause the independent public accountants of the Partnership, selected pursuant to Section 12.2 hereof, to, at the expense of the Partnership, prepare and timely file a federal information tax return in compliance with section 6031 of the Code and any required state and local income tax and information returns for each Partnership Year. Notwithstanding the preceding sentence, in order to preserve and protect the financial investments of such partners (and avoid self-dealing by the New General Partner), no Partnership income tax or information return and no income tax or information return of any entity owned or controlled by the Partnership (including the Missouri Partnership) shall be filed with the Internal Revenue Service or any state and local tax authority unless, at least 30 days prior to the time for the filing of any such returns, including any extension of time for filing (but in no event later then three and a half months after the end of each Partnership Year), such returns have been submitted to the Class III Limited Partner, the Class IV Limited Partner and the Class V Limited Partner for review and approval and the New General Partner, the Class III Limited Partner, the Class IV Limited Partner and the Class V Limited Partner have consented to the filing of such returns. The New General Partner, at the Partnership's expense, shall cause the independent public accountants, selected pursuant to Section -50- 12.2 hereof, to prepare any reports or analyses with respect to the return requested by any Partner. (b) Within ninety (90) days of the end of each Partnership Year, the Partnership shall prepare and mail, or cause its independent public accountants, selected pursuant to Section 12.2 hereof, to prepare and mail, to each Partner and, to the extent necessary, to each former Partner (or his or its legal representatives), a report setting forth in sufficient detail such information as is required to be furnished to such Partners by law (E.G., Section 6031(b) of the Code and the regulations thereunder) which shall enable such Partners or former Partners (or his, its or their legal representatives) to prepare their respective federal and state and local income tax or information returns in accordance with the laws, rules and regulations then prevailing. 12.4.1 ELECTIONS. To the extent that the Partnership may be or is required, to make elections for federal, state or local income tax purposes, and to the extent that Partners may be or are required to make elections concerning the business and properties of the Partnership and those elections may not be made in different ways by different Partners, the elections shall be made by the New General Partner, with the prior written consent of the Class IV Limited Partner (in order to preserve and protect the financial investments of each partner and avoid self-dealing by the New General Partner). The Partners shall be required to treat a Partnership item for any taxable year on their federal, state or local income tax returns in a manner that is consistent with the treatment of the Partnership item on the Partnership federal, state or local income tax return with respect to such year. 12.4.2 CHANGE OF PARTNERS' INTERESTS. If there is a change in the Percentage Interests of the Partners during a Partnership Year, the New General Partner may elect, subject to the prior written consent of the Class IV Limited Partner, to adopt either (1) the interim closing of the books method, whereby the portion of the Partnership Year beginning with the first day of the Partnership Year (or the first day following an earlier change during that year) and ending with the date of the change shall be treated as if it were a separate Partnership Year and the Partnership's Net Income or Net Loss for the entire Partnership Year (excluding any net gains or losses from dispositions of Partnership property) shall be allocated -51- to the separate Partnership Years in proportion to the number of days in each; and the Partnership's net gains and losses from dispositions of Partnership property shall be allocated to the separate Partnership Years in which the dispositions were consummated; or (2) the pro rata method, whereby the Partnership's Net Income or Net Loss (including any net gains or losses from dispositions of Partnership property) shall be prorated among the Partners according to some reasonable method, previously consented to by the Class IV Limited Partner, which reflects the portion of the Partnership Year for which the Partner was a partner of the Partnership. 12.4.3 TAX MATTERS PARTNER. (a) The New General Partner shall be the "tax matters partner" (as such term is defined in Section 6231(a)(7) of the Code or under any corresponding provisions of state or local law) for the Partnership. (b) The Tax Matters Partner shall exercise the duties and responsibilities provided in Subchapter C of Chapter 63 of the Code and this Agreement. Notwithstanding the previous sentence, the Tax Matters Partner, unless otherwise required by law, (i) shall not take any action pursuant to this Section 12.4.3 unless such action has been consented to by the Class III Limited Partner, the Class IV Limited Partner and the Class V Limited Partner and (ii) in its capacity as Tax Matters Partner, shall perform all such duties and responsibilities as directed by the Class IV Limited Partner; PROVIDED, HOWEVER, that in the event the Tax Matters Partner is required to give its approval or consent in its capacity as the New General Partner with respect to a matter under this Agreement, the Tax Matters Partner shall not be subject to clauses (i) and (ii) of this sentence in the giving or withholding of such approval or consent. The Tax Matters Partner shall be reimbursed by the Partnership for reasonable expenses incurred as a result of acting in that capacity, including fees of outside counsel and public accountants. (c) The Tax Matters Partner shall keep each Partner informed of all administrative and judicial proceedings for the adjustment at the Partnership level of Partnership items, and shall provide the Class IV Limited Partner and any other Partners copies of any notices or communications received from the Internal Revenue Service or any state or local tax authority. The other Partners shall promptly provide to the Tax Matters Partner copies of all correspondence to or from, or summaries of any other communications with, the Internal Revenue Service or any state or local tax authority regarding any aspect of the Partnership and Partnership items. -52- (d) The Tax Matters Partner shall be responsible for all negotiations on behalf of the Partnership with the Internal Revenue Service or the Departments of the Treasury or Justice or any state or local tax authority with respect to the income tax treatment of Partnership items, and shall provide the Class IV Limited Partner the opportunity to participate, at its expense, in any such negotiations. Moreover, the Tax Matters Partner shall not bind the Class III Limited Partner, the Class IV Limited Partner, the Class V Limited Partner or any other Partner to a settlement agreement unless that Partner has given its written consent to such agreement. In addition, the New General Partner or Tax Matters Partner (whichever may have the authority) shall not agree to any settlement of any examination or audit of any entity in which the Partnership owns an interest without the consent of the Class III Limited Partner, the Class IV Limited Partner and the Class V Limited Partner. (e) The Tax Matters Partner shall not file a (i) request for an administrative adjustment of any Partnership item under Section 6227(b) of the Code, (ii) petition for readjustment of Partnership items under Section 6226(a) of the Code, or (iii) petition for an adjustment with respect to Partnership items under Section 6226(a) of the Code without first receiving the written approval of the Class IV Limited Partner and notifying all other Partners of the intended action (including the proposed treatment of the Partnership item(s) and the proposed court, if applicable). No Partner shall file a (1) request for an administrative adjustment of Partnership items under Section 6227(a) of the Code, (2) petition for readjustment of Partnership items under Section 6226(b) of the Code, or (3) civil action for refund under Section 6228(b)(2) of the Code without first giving reasonable advance notice of the intended action (including the proposed treatment of the Partnership item(s) and the proposed court, if applicable) to the New General Partner, the Class III Limited Partner, the Class IV Limited Partner and the Class V Limited Partner, and no Partner shall appear before a court in connection with any of the foregoing actions or file a request for an administrative adjustment of Partnership items under Section 6227(a) of the Code without first receiving written approval of the New General Partner, the Class III Limited Partner, the Class IV Limited Partner and the Class V Limited Partner. (f) The Tax Matters Partner has an obligation to perform its duties as Tax Matters Partner in such a manner as will give effect to the terms of this Agreement and will best serve the interests of the Partnership and the respective interests of all the Partners, including the Tax Matters Partner. Notwithstanding the foregoing, the Tax -53- Matters Partner shall not be liable to the Partnership, any Partner or any third party, for any action taken or omitted to be taken by the Tax Matters Partner in reliance on (i) an express provision of this Agreement, (ii) the instructions of the Class IV Limited Partner or (iii) the advice of the Partnership's independent public accountants selected pursuant to Section 12.2 hereof or the opinion of tax counsel of recognized standing, in each case that such action or omission to act is required by law or the provisions of this Agreement. (g) The provisions of this Section regarding the Tax Matters Partner shall survive the termination of this Agreement or the termination of any Partner's interest under this Agreement and shall remain binding on the Partners for a period of time necessary to resolve with the Internal Revenue Service or any state or local tax authority all matters regarding the taxation of the Partnership. The terms used in this Section 12.4.1 through 12.4.3 shall have the meaning accorded them in Sections 6221 through 6232 of the Code. ARTICLE 13 TRANSFERS 13.1 GENERAL PARTNERS. (a) Except as otherwise expressly permitted in Section 13.10 hereof and as provided in the Partnership Interests Redemption Agreement, none of the General Partners shall resign, withdraw from the Partnership, liquidate, take any action that would constitute an event of Bankruptcy or any other event that would cause such General Partner to cease to be a general partner of the Partnership, or assign, transfer or otherwise dispose of any of its interest as a general partner of the Partnership. (b) For purposes of this Section 13.1, if Cablevision, V Cable or any of their respective Subsidiaries proposes to enter into any transaction or series of transactions whereby V Cable GP, Inc. would cease to be a directly or indirectly wholly-owned Subsidiary of Cablevision and V Cable, such transaction or series of transactions, unless consented to (to the extent permitted by applicable law) by the Class IV Limited Partner, shall be deemed to be an assignment of V Cable GP, Inc.'s Partnership Interest and shall be subject to the provisions of this Section 13.1. For purposes of this Section 13.1, a Change in Control shall be deemed to be an assignment of the -54- Existing General Partner's Partnership Interest and shall be subject to the provisions of this Section 13.1. (c) Any other provision of this Agreement to the contrary notwithstanding, if any General Partner resigns or withdraws from the Partnership in violation of this Agreement or takes any action of the type described in Section 9.3(vii) hereof with respect to itself, or any other event occurs that would cause a General Partner to cease to be a general partner of the Partnership, then such General Partner or former General Partner shall not in respect of such resignation, withdrawal, action or event be entitled to the return of, or any payment in respect of, its Capital Contribution, and shall not be entitled to continue to participate in any profits, income or gain of the Partnership accruing after the date of such resignation, withdrawal, action or event or have any other rights and powers of a general partner hereunder and shall not be entitled to any distribution which exceeds the positive balance, if any, of the balance of its Capital Account as of the end of the month in which such resignation, withdrawal, action or event took place (based on an unaudited interim closing of the Partnership's books as of the end of such month), except that such General Partner or former General Partner and its Capital Account shall be subject to continuing losses of the Partnership. Such payment shall be made at the time as such amount would have been distributed (subject to the preceding sentence) if the General Partner resigning, withdrawing or taking such action or as to which such an event has occurred had remained as a General Partner in the Partnership. Upon any such resignation or withdrawal from the Partnership of a General Partner in violation of this Agreement or other event that would cause a General Partner to cease to be a general partner of the Partnership, other than in each case with respect to the sole remaining general partner of the Partnership, the interest of such General Partner shall for all purposes of this Agreement automatically be converted into a limited partner interest and such General Partner shall remain a limited partner of the Partnership until such time as such General Partner would have been able to resign or withdraw from the Partnership without violation of this Agreement. In the event of such resignation or withdrawal by the then sole remaining General Partner or the taking of any action by the sole remaining General Partner of the type described in Section 9.3(vii) as to itself, the Partnership shall be dissolved unless the Partners elect to carry on the business of the Partnership by election of one or more substitute general partners as provided in Section 14.1 hereof. If such resigning or withdrawing General Partner is the Existing General Partner and the Existing General Partner is -55- the then sole remaining General Partner, any substitute general partner elected in accordance with the immediately preceding sentence shall acquire a 1% Percentage Interest. Upon the payment of a Capital Contribution by any such substitute general partner to the Partnership of an amount equal to the fair market value of the interest in the Partnership received by it (which shall be determined by the Class IV Limited Partner) or upon the acquisition from one or more other Partners of at least a 1% Percentage Interest, the written agreement of the substitute general partner to be bound by the terms of this Agreement and the admission of the substitute general partner as a general partner of the Partnership, the Existing General Partner shall cease to be a general partner of the Partnership and the substitute general partner shall thereafter serve as a general partner of the Partnership subject to all of the terms, conditions and liabilities to which the Existing General Partner was then subject. In no event shall a substitute general partner have any greater rights in the Partnership than the former Existing General Partner. Except with respect to a sale of the Existing General Partner's Interest to the substitute general partner, upon the admission of a substitute general partner as a replacement for the Existing General Partner, the Existing General Partner's Partnership Interest shall for all purposes of this Agreement automatically be converted into a limited partner interest. Notwithstanding anything in this paragraph (c) to the contrary, upon any foreclosure pursuant to the G.P. and L.P. Non-Recourse Guarantee and Pledge Agreement (as defined in the USC Loan Documents), GE Capital or any Person designated by GE Capital may, to the extent not prohibited by applicable law, become a substitute general partner, which shall then hold the Existing General Partner's Partnership Interest previously held by the Existing General Partner prior to the conversion of such interest into a limited partner interest pursuant to this Section 13.1(c). Nothing in this Section 13.1(c) shall limit any other remedies available to the Partnership or any Partner in connection with any breach of this Agreement. (d) No General Partner may pledge, mortgage or otherwise encumber or grant any security interest or lien in or against all or any portion of his or its Interest except for a pledge to GE Capital or any other lender or assignee under the USC Loan Documents of his or its Partnership Interest or right to receive distributions (including liquidating distributions) from the Partnership. (e) The Class I Partners have entered into this Agreement in reliance upon the duties of loyalty, trust and confidence which the Class II General Partner will undertake -56- as a general partner entitled to designate members of the USC Partners' Committee. The Class II General Partner accepts this relationship of loyalty, trust and confidence the Class I Partners have placed in the Class II General Partner under this Agreement. Accordingly, the Class II General Partner agrees that the Class I Partners shall not be required to accept performance (including the designation of members of the USC Partners' Committee) under this Agreement from the Class II General Partner if there occurs a Change in Control of the Class II General Partner, including, without limitation, an event of Bankruptcy of the Class II General Partner (including, without limitation, instances where the Class II General Partner becomes a debtor in possession under the Bankruptcy Code, or any trustee is appointed for the Class II General Partner under the Bankruptcy Code). If any such event occurs, unless the Class II General Partner is then the sole remaining general partner of the Partnership, the interest of the Class II General Partner shall for all purposes of this Agreement automatically be converted into a limited partner interest (on the same terms as provided for in Section 13.1(c) above) for all purposes under this Agreement. 13.2 TRANSFER OF LIMITED PARTNER'S INTEREST. (a) Except as expressly permitted by this Section 13.2 and as provided in the Partnership Interests Redemption Agreement, no Limited Partner may sell, transfer, assign, pledge, mortgage, bequeath or otherwise dispose of or encumber or grant any security interest or lien in or against (each, a "Transfer") all or any portion of his or its Interest; PROVIDED, HOWEVER, that each of the Class III Limited Partner, the Class IV Limited Partner and the Class V Limited Partner and their respective assignees may transfer their respective interests to a Subsidiary of General Electric Company that consents in writing in form reasonably satisfactory to the New General Partner to be bound by the terms of this Agreement, including without limitation, the agreements contained in Article 15, as if it were the assignor. (b) Notwithstanding the provisions of Section 13.2(a): (i) any Original Limited Partner may Transfer any part of his or its Partnership Interest to any other Original Limited Partner to the extent permitted by the USC Loan Documents; (ii) any Original Limited Partner who is a natural Person may Transfer any part of his -57- Partnership Interest to any of his parents, spouse, children or siblings or to a trustee or trustees of a trust for the benefit of one or more of them or their issue to the extent permitted by the USC Loan Documents; (iii) any Original Limited Partner that is a trust may Transfer any part of its Partnership Interest to the beneficiary or beneficiaries of that trust, to the issue or a sibling of that beneficiary, or to a trust that has the same classes of beneficiaries as the transferor trust to the extent permitted by the USC Loan Documents; (iv) any Partner may at any time make a pledge to GE Capital of his or its Partnership Interest or right to receive distributions (including liquidating distributions) from the Partnership; (v) the Class III Limited Partner and any transferee thereof may Transfer its Class III Partnership Interest without restriction; (vi) at any time after the sale of all or substantially all of the assets of the Partnership the Class IV Limited Partner and any transferee thereof may Transfer its Class IV Partnership Interest without restriction; and (vii) the Class V Limited Partner and any transferee thereof may Transfer its Class V Partnership Interest without restriction. PROVIDED, HOWEVER, that as part of any Transfer made pursuant to this Section 13.2(b), no Original Limited Partner may assign his or its right to any distribution pursuant to Section 7.2(h) of this Agreement; and PROVIDED, FURTHER, that no Transfer permitted by this Section 13.2(b) shall be effective for any purpose unless: (i) the transferee consents in writing in form reasonably satisfactory to the New General Partner to be bound by the terms of this Agreement, including without limitation, the agreements contained in Article 15, as if it were the assignor; (ii) the New General Partner consents in writing to the Transfer, which consent shall be -58- given unless such assignment would, in the discretion of the New General Partner, jeopardize the status of the Partnership as a partnership for federal income tax purposes, or would violate, or cause the Partnership to violate, any applicable law or governmental rule or regulation; (iii) if reasonably requested by the New General Partner or the Class IV Limited Partner, an opinion from counsel to the transferee (which counsel and opinion shall be satisfactory to the New General Partner or the Class IV Limited Partner, as the case may be) is furnished to the Partnership stating that, in the opinion of said counsel, such Transfer would not jeopardize the status of the Partnership as a partnership for federal income tax purposes, cause a termination of the Partnership for purposes of the then applicable provisions of the Code or violate, or cause the Partnership to violate, any applicable law or governmental rule or regulation. By executing this Agreement, each Limited Partner shall be deemed to have consented to any assignment of a Limited Partner Interest consented to by the New General Partner. Notwithstanding the provisions of this Section 13.2, no transferee of any Limited Partner Interest shall become a limited partner of the Partnership except as and to the extent provided in Section 13.6 hereof. (c) Except for the transactions contemplated by the Partnership Interests Redemption Agreement, if General Electric Company or any of its Subsidiaries proposes to enter into any transaction or series of transactions whereby any Subsidiary of General Electric Company that holds a Class III Limited Partnership Interest, a Class IV Limited Partnership Interest or a Class V Limited Partnership Interest (as the case may be) would cease to be a Subsidiary of General Electric Company, such transaction or series of transactions shall be deemed to be a Transfer of such Class III Limited Partnership Interest, Class IV Limited Partnership Interest or Class V Limited Partnership Interest (as the case may be) and shall be subject to the provisions of this Section 13.2. If Cablevision or any of its Subsidiaries proposes to enter into any transaction or series of transactions whereby V Cable would cease to be a directly or indirectly wholly-owned Subsidiary of Cablevision, such transaction or series of transactions shall be deemed to be a Transfer of V Cable's Class I Limited Partnership Interest and Class VI Limited Partnership Interest. -59- (d) Each Limited Partner agrees, upon request of the New General Partner, to execute such certificates or other documents and perform such acts as the New General Partner reasonably deems appropriate to preserve the status of the Partnership as a limited partnership after the completion of any Transfer of an Interest under the laws of the jurisdiction in which the Partnership is conducting its operations. For purposes of this Section 13.2, any transfer of an Interest, whether voluntary or by operation of law, shall be considered a Transfer. (e) Each assigning Limited Partner agrees to pay, prior to the time the New General Partner consents to a Transfer of its Interest, all expenses, including attorneys' fees, incurred by the Partnership in connection with such Transfer. 13.3 TRANSFEREE'S RIGHTS. Any purported Transfer of an Interest or rights attributable to an Interest which is not in compliance with this Agreement is hereby declared to be null and void and of no force and effect whatsoever. A permitted transferee of any Interest shall be entitled to receive distributions of cash or other property from the Partnership and to receive allocations of the income, gains, credits, deductions, profits and losses of the Partnership attributable to such Interest after the effective date of the Transfer, but shall not be entitled to exercise any other of the rights of a limited partner against the Partnership or any Partner, unless such transferee shall become a limited partner of the Partnership in accordance with Section 13.6. The "effective date" of a Transfer of an Interest in the Partnership under the provisions of this Section 13.3, except as otherwise consented to by the New General Partner, shall be the first day of the next month, following receipt by the New General Partner of written notice of Transfer and fulfillment of all conditions precedent to such Transfer provided for in this Agreement. 13.4 ALLOCATIONS AND DISTRIBUTIONS SUBSEQUENT TO TRANSFER. All profits and losses of the Partnership attributable to any Interest transferred by reason of a Transfer and any distributions made with respect thereto shall be allocated (a) in respect of the portion of the Partnership Year ending on the effective date of the Transfer, to the transferor and (b) in respect of subsequent periods, to the transferee. 13.5 SATISFACTORY WRITTEN TRANSFER REQUIRED. Anything herein to the contrary notwithstanding, the Partnership, the General Partners and the Manager shall be entitled to treat the transferor of an Interest in the -60- Partnership as the absolute owner thereof in all respects, and shall incur no liability for distributions made in good faith to it, until such time as a written Transfer that conforms to the requirements of this Article 13 has been received by and recorded on the books of the Partnership and the transferee has complied with the requirements of Section 13.2(a)(i). 13.6 SUBSTITUTED LIMITED PARTNER. Notwithstanding anything in this Agreement to the contrary, in addition to the requirements of Section 13.2(a), the transferee of any limited partner interest in the Partnership shall not become a substituted limited partner in place of its transferor without the written consent of the New General Partner, which consent may be granted or withheld in the sole and absolute discretion of the New General Partner and in any event will not be given effect unless all of the following conditions are satisfied: (a) a duly executed and acknowledged written instrument of Transfer, being either a certificate evidencing the Interest in the Partnership owned by the transferor prior to such Transfer or some other instrument approved by the New General Partner, is filed with the Partnership setting forth the intention of the transferor that the transferee become a substituted limited partner in its place; (b) the transferee agrees in writing to be bound by the terms of this Agreement and such transferee (other than a transferee of the Class III Limited Partnership Interest, the Class IV Limited Partnership Interest or the Class V Limited Partnership Interest) executes an irrevocable Power of Attorney, satisfactory to the New General Partner, appointing the New General Partner as the transferee's lawful attorney-in-fact for the purposes specified in Article 15; (c) the transferor and transferee execute and acknowledge such other instruments, in form and substance reasonably satisfactory to the New General Partner, as the New General Partner may deem necessary or desirable to effect such substitution; (d) prior to the substitution, the transferring Limited Partner pays all reasonable expenses, including attorneys' fees, incurred by the Partnership in connection with such Transfer and substitution; and (e) if requested by the New General Partner, an opinion from counsel to the transferee (which opinion shall -61- be satisfactory to the New General Partner) is furnished to the Partnership stating that, in the opinion of said counsel, such substitution would not jeopardize the status of the Partnership as a partnership for federal income tax purposes, or cause a termination of the Partnership for the purposes of the then-applicable provisions of the Code, or violate, or cause the Partnership to violate, any applicable law or governmental rule or regulation. By executing this Agreement, each Limited Partner shall be deemed to have consented to any substitution of a transferee in the place and stead of a transferring Limited Partner permitted by the New General Partner and, if required by Section 13.6 hereof, the Class IV Limited Partner. 13.7 SUBSTITUTION REQUIRED FOR VOTE. Unless and until a transferee of an Interest becomes a substituted Limited Partner, such transferee shall not be entitled to exercise or withhold any vote or consent with respect to such Interest. 13.8 EFFECTIVE DATE; SCHEDULE A. The effective date of a substitution shall be the first day of the next month following receipt by the New General Partner of the instrument of assignment effecting substitution and fulfillment of all conditions precedent to such substitution provided for in this Agreement. Schedule A hereto shall be automatically amended upon the effective date of each such substitution to reflect such substitution. 13.9 DEATH, BANKRUPTCY, DISSOLUTION OR INCAPACITY OF A LIMITED PARTNER. The death, Bankruptcy, dissolution or adjudicated incompetency of a Limited Partner shall not cause a dissolution of the Partnership, but the rights of such Limited Partner to share in the profits and losses of the Partnership, to receive distributions and to assign its Interest pursuant to Section 13.2(a) or cause the substitution of a substitute limited partner pursuant to Section 13.6 shall, on the happening of such an event, devolve on its successor, executor, administrator, guardian, conservator or other legal representative for the purpose of settling its estate or administering its property, or in the event of the death of one whose interest is held in joint tenancy, pass to the surviving joint tenant, subject to the terms and conditions of this Agreement, and the Partnership shall continue as a limited partnership. Such successor or Personal representative, however, shall become a substituted limited partner only as provided in Section 13.6 with respect to an assignee of a Limited Partner's Interest. The successor or estate of the Limited Partner shall be liable -62- for all the obligations of the deceased, bankrupt, dissolved or incapacitated Limited Partner. 13.10 OPTION ON THE CLASS II PARTNERSHIP INTERESTS. Subject to the provisions of Section 9.11 of this Agreement, the Class IV Limited Partner or its designee, which designee shall be either (i) a direct or indirect Subsidiary of General Electric Company, or (ii) satisfactory to the New General Partner in its sole discretion, shall have the option, exercisable at any time upon not less than five (5) business days' notice to the Class II Partners, to purchase from the Class II Partners all of the Class II Partnership Interests for an aggregate of $4 million in cash LESS any amounts previously received by the Class II Partners pursuant to Sections 6.11 and 7.2(b) hereof, such amount to be allocated among the Class II Partners in accordance with their relative Percentage Interests; PROVIDED, however, that as long as the Partnership shall not have defaulted under the Partnership Interests Redemption Agreement or such agreement has not terminated, the Class IV Limited Partners agree not to exercise or transfer to any person (other than the New General Partner or an affiliate thereof) the option granted pursuant to this Section 13.10. 13.11 RIGHTS SUBSEQUENT TO TRANSFER OF INTERESTS Upon the Transfer of any Partner's Interest or Interests, as the case may be, all of such Partner's rights under this Agreement, except for those rights held by a former Partner with respect to the time such person was a partner, shall be extinguished. ARTICLE 14 DISSOLUTION 14.1 EVENTS OF DISSOLUTION. (a) The Partnership shall continue until December 31, 2030. Notwithstanding the foregoing, the Partnership shall be dissolved upon the earliest to occur of the following events: (i) the removal, withdrawal, resignation, liquidation, event of Bankruptcy or any other event that causes a General Partner to cease to be a general partner of the Partnership (an "Event of Withdrawal") of any General Partner (subject to -63- the right to continue the Partnership pursuant to the second proviso below); (ii) the Partnership's operations terminate and the Partnership sells, exchanges or otherwise disposes of all or substantially all of its assets, which shall cause an immediate dissolution of the Partnership; or (iii) the New General Partner and the Class IV Limited Partner elect to dissolve the Partnership; PROVIDED, HOWEVER, that upon the occurrence of an Event of Withdrawal, the Partnership shall not be dissolved if (i) at the time of such Event of Withdrawal there is at least one remaining General Partner who agrees to carry on the business of the Partnership (and such remaining General Partner is hereby authorized to carry on the business of the Partnership upon such an Event of Withdrawal), or (ii) within ninety (90) days after such Event of Withdrawal all Partners agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such Event of Withdrawal, of one or more general partners of the Partnership. (b) In the event of the continuation of the Partnership as provided in this Section 14.1, the successor general partner(s) will exercise the rights, powers and obligations hereunder of the Former General Partner (excluding, however, any obligations of the Former General Partner to the Partners occasioned by any breach or other violation by the Former General Partner of the terms of this Agreement or by the Former General Partner's resignation or withdrawal as general partner in violation of this Agreement), and shall have such interest in the profits, losses and distributions of the Partnership as shall be agreed upon by the successor general partner(s) and the Class III Limited Partner, the Class IV Limited Partner and the Class V Limited Partner upon the execution by such successor general partner(s) of a written acceptance of this Agreement. 14.2 FINAL ACCOUNTING. Upon the dissolution of the Partnership and the failure to continue the Partnership as provided in Section 14.1, a proper accounting shall be made by the Partnership's independent public accountants from the date of the last previous accounting to the date of dissolution. 14.3 LIQUIDATION AND DISTRIBUTION OF ASSETS. Upon the dissolution of the Partnership, the Class I General -64- Partner or a liquidating trustee appointed by the Class I General Partner, with the approval (subject to the provisions of Section 9.11 of this Agreement) of the Class IV Limited Partner, shall proceed to sell or liquidate the Partnership's assets within a reasonable time and, after paying or making reasonable provision for all liabilities (including contingent, conditional or unmatured liabilities known to the Partnership) to creditors, including Partners who are creditors, of the Partnership, shall distribute the Partnership's cash and other assets among the Partners in accordance with the provisions of this Section 14.3. 14.3.1 The proceeds derived from the sale or liquidation of the Partnership's assets, together with any assets to be distributed in kind, shall be distributed to the Partners in the amounts and order of priority set forth in Section 7.2 hereof; PROVIDED, HOWEVER, that no Partner shall receive a distribution of an amount which exceeds its positive Capital Account balance (determined as provided below). If a Partner would be entitled to receive a distribution which exceeds its positive Capital Account balance, such excess amount shall instead be distributed (i) first, to Partners whose Capital Accounts shall have positive balances (after taking into account all other distributions to be made under this Section 14.3.1 and Section 14.3.2), in the proportions thereof, until such positive balances shall have been eliminated; and (ii) the balance, if any, in accordance with the Partners' respective Percentage Interests. 14.3.2 For purposes of this Section 14.3, (a) Net Income and Net Loss shall include, in the case of assets distributed in kind, the gain or loss that would have been recognized by the Partnership if such assets were sold at their fair market value in a fully taxable transaction, and (b) the Partners' Capital Accounts shall be determined after making all allocations of Net Income or Net Loss, and all special allocations required pursuant to Article 8 hereof, for the year ending with the liquidation of the Partnership and after taking into account all Capital Contributions or other distributions made, or otherwise required to be made, for such year. 14.4 CANCELLATION OF CERTIFICATE. Upon the completion of the distribution of Partnership assets as provided in Section 14.3, or at such other time as may be required by law, a certificate of cancellation, signed by all General Partners or, if the General Partners are not winding up the Partnership's affairs, then by the liquidating trustee, shall be filed with the Secretary of State of the State of Delaware. The liquidating trustee -65- shall take such other actions as may be necessary or appropriate to terminate the Partnership. ARTICLE 15 POWER OF ATTORNEY 15.1 APPOINTMENT OF NEW GENERAL PARTNER. Each Limited Partner (other than the Class I Limited Partner, the Class III Limited Partner, the Class IV Limited Partner, the Class V Limited Partner and the Class VII Limited Partner), by the execution of this Agreement, does irrevocably constitute and appoint the New General Partner, with full power of substitution, as its true and lawful attorney, in its name, place and stead, to execute, acknowledge, swear to, deliver, record and/or file, as appropriate (a) this Agreement and any amendment and/or restatement to this Agreement, (b) the original Certificate and all amendments thereto required or permitted by law or the provisions of this Agreement, (c) all certificates and other instruments deemed necessary or advisable by the New General Partner to carry out the provisions of this Agreement or to qualify or continue the Partnership as a limited partnership or partnership wherein the Limited Partners have limited liability in the states where the Partnership may be conducting its operations, (d) all instruments that the New General Partner deems appropriate to reflect a change or modification of this Agreement or the Partnership in accordance with this Agreement, including, without limitation, the substitution of assignees as substituted limited partners pursuant to Section 13.6, (e) all conveyances and other instruments deemed necessary or advisable by the New General Partner to effect the dissolution and termination of the Partnership, (f) all fictitious or assumed name certificates required or permitted to be filed on behalf of the Partnership and (g) all other instruments or papers which may be required or permitted by law to be filed on behalf of the Partnership. 15.2 DURATION OF POWER. The power of attorney granted pursuant to Section 15.1 (i) is coupled with an interest and shall be irrevocable and survive the death, incompetency, Bankruptcy or dissolution of the grantor; (ii) may be exercised by the New General Partner either by signing separately as attorney-in-fact for each Limited Partner (other than the Class I Limited Partner, the Class III Limited Partner, the Class IV Limited Partner, the Class V Limited Partner and the Class VII Limited Partner) or, after listing all of the Limited Partners (other than the Class I Limited Partner, the Class III Limited Partner, the Class IV Limited Partner, the Class V Limited Partner and -66- the Class VII Limited Partner) executing an instrument, by signature of the New General Partner acting as attorneys-in-fact for all of them; and (iii) shall survive the delivery of an assignment by a Limited Partner (other than the Class I Limited Partner, the Class III Limited Partner, the Class IV Limited Partner, the Class V Limited Partner and the Class VII Limited Partner) of the whole or any fraction of its Partnership Interest, except that, where the assignee of the whole of such Limited Partner's Partnership Interest has been approved by the New General Partner and the Class IV Limited Partner, as the case may be, for admission to the Partnership as a substituted limited partner, the power of attorney of the assignor shall survive the delivery of such assignment for the sole purpose of enabling the New General Partner to execute, acknowledge, swear to, deliver, record and file any instrument necessary or appropriate to effect such substitution. In the event of any conflict between this Agreement and any document, instrument, conveyance or certificate executed or filed by the New General Partner pursuant to such power of attorney, this Agreement shall control. 15.3 FURTHER ASSURANCES. Each Limited Partner shall execute and deliver to the New General Partner, within five days after the receipt of the New General Partner's request therefor, such further designations, powers of attorney and other instruments as the New General Partner deems reasonably necessary or appropriate to carry out the provisions of this Agreement. ARTICLE 16 AMENDMENTS TO AGREEMENT Except for Section 14.1 hereof, which may only be amended with the approval or written consent of all of the Partners, this Agreement may be amended with the approval or written consent of the New General Partner, the Class I Limited Partner, the Class III Limited Partner, the Class IV Limited Partner, the Class V Limited Partner and the Class VII Limited Partner. Notwithstanding anything to the contrary in this Article 16, without the approval of (i) a majority in Percentage Interest of the Class II Partners affected thereby, no amendment shall change, alter or modify the provisions of Section 6.6, Section 6.7, Section 6.11, Section 7.2(a), Section 7.2(b), Section 7.2(f), Section 10.1 or the provisions of this Article 16 in an adverse manner to such affected Class II Partner or the provisions of Article 9 in a manner materially adverse to such affected Class II Partner, and (ii) the Existing General Partner, no amendment -67- shall change, alter or modify the provisions of (A) Section 7.2 so as to add any additional cash distributions prior to the distribution provided for in Section 7.2(b), (B) Section 8.2 so as to allocate additional USC Net Income to the Existing General Partner or the Class II Limited Partner or (C) Section 6.4 or Article 8 in an adverse manner to the Existing General Partner or to the Class II Limited Partners. The New General Partner shall give written notice to all Partners promptly after any amendment adopted in accordance with this Article 16 has become effective. ARTICLE 17 MEETINGS OF THE PARTNERS 17.1 MEETINGS. Meetings of the Limited Partners, for any purpose permitted by this Agreement, may be called by the New General Partner from time to time, in its discretion. Such meeting shall be held at the principal office of the Partnership, or at such other place as may be designated by the New General Partner. Notice of any such meeting shall be delivered to all Partners in the manner prescribed in Article 18 not fewer than fifteen days nor more than sixty days before the date of such meeting. The notice shall state the place, date, hour and purpose or purposes of the meeting. At each meeting of the Limited Partners, the Limited Partners present or represented by proxy shall adopt such rules for the conduct of such meeting as they shall deem appropriate. The expenses of any such meeting, including the cost of providing notice thereof, shall be borne by the Partnership. 17.2 PROXY. Each Limited Partner may authorize any Person or Persons to act for it by proxy in all matters in which a Limited Partner is entitled to participate. Every proxy must be signed by the Limited Partner or its attorney-in-fact (other than the New General Partner). No proxy shall be valid after the expiration of six months from the date thereof. Every proxy shall be revocable by the Limited Partner executing it. 17.3 WRITTEN CONSENTS. Whenever Partners are required or permitted to take any action by vote or at a meeting, such action may be taken without a meeting, without prior notice and without a vote, if a written consent setting forth the action so taken is signed by the Limited Partners owning not less than the minimum Interests that would be necessary to authorize or take such action by vote or at a meeting. Notice of any action so taken by written consent shall be given by the New General Partner to all -68- Partners, in the manner prescribed in Article 18, promptly after the taking of such action. ARTICLE 18 NOTICES 18.1 METHOD FOR NOTICES. All notices and other communications hereunder shall be given in writing and shall be deemed to have been duly given if delivered personally or by overnight courier with receipt acknowledged, upon such delivery, if transmitted by telecopier to the number(s) designated either below the signature of each such Person or on Schedule A hereto, upon receipt, or if mailed by registered or certified mail, postage prepaid, return receipt requested, five days after being placed in the mail, to the address(es) designated either below the signature of each such Person or on Schedule A hereto, or to such other address(es) as any party may specify to the Partnership in writing from time to time. 18.2 ROUTINE COMMUNICATIONS. Notwithstanding the provisions of Section 18.1, routine communications such as distribution checks or financial statements of the Partnership may be sent by first-class mail, postage prepaid. 18.3 COMPUTATION OF TIME. In computing any period of time under this Agreement, the day of the act, event or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included, unless it is a Saturday, Sunday or legal holiday in the State of Delaware, in which event the period shall run until the end of the next day which is not a Saturday, Sunday or legal holiday in the State of Delaware. ARTICLE 19 INVESTMENT REPRESENTATIONS 19.1 INVESTMENT PURPOSE. Each Limited Partner represents and warrants to the General Partners that it has acquired its Partnership Interests for its own account, for investment only and not with a view to the distribution thereof. Each Limited Partner recognizes that an investment in the Partnership is speculative and involves certain risks. -69- 19.2 INVESTMENT RESTRICTION. Each Limited Partner recognizes that (a) the Interests have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon an exemption from such registration, and agrees that it will not sell, offer for sale, transfer, pledge or hypothecate its Interests in the absence of an effective registration statement covering such Interests under the Securities Act, unless such sale, offer of sale, transfer, pledge or hypothecation is exempt from registration for any proposed sale and (b) the restrictions on transfer may severely affect the liquidity of its investment. ARTICLE 20 GENERAL PROVISIONS 20.1 ENTIRE AGREEMENT. This Agreement, the Partnership Interests Redemption Agreement and the Business Plan, constitutes the entire agreement among the parties thereto with respect to the subject matter thereof, and supersedes any prior agreement or understanding among the parties thereto with respect to the subject matter thereof. 20.2 AMENDMENT; WAIVER. Except as provided otherwise herein, this Agreement may not be amended nor may any rights hereunder be waived except by an instrument in writing signed by the party sought to be charged with such amendment or waiver. 20.3 GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without giving effect to the provisions, policies or principles thereof relating to choice or conflict of laws. 20.4 BINDING EFFECT. Except as provided otherwise herein, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, heirs, successors and assigns. 20.5 COUNTERPARTS. This Agreement may be executed either personally or by an attorney-in-fact, in any number of counterparts, each of which shall be considered an original. 20.6 SEPARABILITY. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to -70- the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 20.7 HEADINGS. The sections and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 20.8 GENDER AND NUMBER. Whenever required by the context hereof, the singular shall include the plural and the plural shall include the singular. The neuter gender shall include the feminine and masculine genders. 20.9 WAIVER OF PARTITION. Each Partner hereby irrevocably waives, during the term of the Partnership, any right that he may have to maintain any action for partition with respect to any Partnership property. 20.10 PARTNERSHIP TAX REPORTING. All parties to this Agreement agree that, for all federal, state and local income tax purposes, including, without limitation, the filing of all tax returns, reports or information returns or communication with the Internal Revenue Service, they shall not take a position which is inconsistent with the provisions of this Agreement. -71- IN WITNESS WHEREOF, the parties hereto have executed this Agreement, either directly or by an attorney-in-fact, to be effective as of the day and year first above written. GENERAL PARTNERS: LIMITED PARTNERS: V CABLE GP, INC. Those Persons named on Schedule A hereto By:/s/ Barry O'Leary /s/ Elliot H. Stein, Jr. ----------------- ------------------------ Name: Barry O'Leary Elliot H. Stein, Jr. Title: U.S. CABLE PARTNERS /s/ I. Martin Pompadur ---------------------- I. Martin Pompadur By: IMP Cable Management, Inc., POMPADUR TRUST NO. 1 a general partner By:/s/ I. Martin Pompadur By:/s/ Marian Pompadur ---------------------- ------------------- Name: I. Martin Pompadur Marian Pompadur, Trustee Title: President By:/s/ Bertram A. Abrams --------------------- Bertram A. Abrams, Trustee By:___________________________ Jana Pompadur, Trustee By: Golden Holdings Inc., V CABLE, INC. a general partner By:I. Martin Pompadur By: B. O'Leary ------------------ ---------- Name: Name: Title: Title: GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Thomas P. Waters -------------------- Name: Thomas P. Waters Title: Vice President -72- THE RULE TRUST DATED June 11, 1987 By: /s/ Betty L. Rule ------------------ Betty L. Rule, Trustee VC HOLDING, INC. By: /s/ Barry O'Leary ----------------- Name: Barry O'Leary Title: -73- SCHEDULE A U.S. CABLE TELEVISION GROUP, L.P. Names of Partners, Type of Partner, Percentage Interest and Class of Partnership Interest
Type of Partner (i.e., Initial general or Percentage Class of Partner limited) Interest Interests - ------- -------------- ---------- --------- V Cable GP, Inc. Class I General 1% Class I General c/o Cablevision Partner, a general Partnership Systems Corporation partner Interest One Media Crossways Woodbury, New York 11797 Attention: General Counsel Telecopy: (516) 496-1780 V Cable, Inc. Class I Limited 19% Class I Limited c/o Cablevision Partner, a limited Partnership Systems Corporation partner Interest One Media Crossways Woodbury, New York 11797 Attention: General Counsel Telecopy: (516) 496-1780 U.S. Cable Partners Class II General 1% Class II General 350 Park Avenue Partner, a general Partnership New York, partner Interest New York 10022 Attention: I. Martin Pompadur Telecopy: (212) 980-8374 I. Martin Pompadur Class II Limited 2.71586% Class II Limited 10 Highland Court Partner, a limited Partnership Greenwich, partner Interest CT 06381 Telecopy: ( ) [ ] A-1 Type of Partner (i.e., Initial general or Percentage Class of Partner limited) Interest Interests - ------- -------------- ---------- --------- The Rule Trust dated Class II Limited 3.44556% Class II Limited June 11, 1987 Partner, a limited Partnership c/o Hayes, Hume, partner Interest Petas, Richards & Cohanne 10000 San Monica Blvd. Suite 450 Los Angeles, California 90069 Telecopy: Attention : Mary Muir, Esq. Pompadur Trust No. 1 Class II Limited 0.72898% Class II Limited 350 Park Avenue Partner, a limited Partnership New York, partner Interest New York 10022 Attention: I. Martin Pompadur Telecopy: (212) [ ] Elliot H. Stein, Jr. Class II Limited 0.10960% Class II Limited c/o Commonwealth Partner, a limited Partnership Partners partner Interest 245 Park Avenue New York, NY 10017 Telecopy: General Electric Class III Limited 0% Class III Capital Corporation Partner, a limited Limited 260 Long Ridge Road partner Patnership Stamford, Connecticut Interest 06902 Attention: Region Operations Manager and John Sprole Telecopy: (203) 357-4025 and (203) 357-3047, respectively. A-2 Type of Partner (i.e., Initial general or Percentage Class of Partner limited) Interest Interests - ------- -------------- ---------- --------- General Electric Class IV Limited 72% Class IV Limited Capital Corporation Partner, a limited Partnership 260 Long Ridge Road partner Interest Stamford, Connecticut 06902 Attention: Region Operations Manager and John Sprole Telecopy: (203) 357-4025 and (203) 357-3047, respectively General Electric Class V Limited 0% Class V Limited Capital Corporation Partner, a limited Partnership 260 Long Ridge Road partner Interest Stamford, Connecticut 06902 Attention: Region Operation Manager and John Sprole Telecopy: (203) 357-4025 and (203) 357-3047, respectively VC Holding, Inc. Class VII Limited 0% Class VII c/o Cablevision Partner, a limited Limited Systems Corporation partner Partnership One Media Crossways Interest Woodbury, New York 11797 Attention: General Counsel Telecopy: (516) 496-1780
A-3 SCHEDULE B CABLE BROKERS Communications Equity Associates Inc. Daniels & Associates Waller Capital Corporation Lazard Freres & Co. Merrill Lynch, Pierce, Fenner & Smith, Inc. B-1 SCHEDULE C EXEMPT LIMITED PARTNERS General Electric Capital Corporation, as Class III Limited Partner, Class IV Limited Partner and Class V Limited Partner. C-1 EX-10.70 11 EXHIBIT 10.70 CABLEVISION SYSTEMS CORPORATION 1996 EMPLOYEE STOCK PLAN 1. PURPOSE. The purpose of the Cablevision Systems Corporation 1996 Employee Stock Plan, is to compensate key employees of the Company and its Affiliates who are and have been largely responsible for the management and growth of the business of the Company and its Affiliates and to advance the interests of the Company by encouraging and enabling the acquisition of a larger personal proprietary interest in the Company by key employees upon whose judgment and keen interest the Company and its Affiliates are largely dependent for the successful conduct of their operations. It is anticipated that such compensation and the acquisition of such proprietary interest in the Company will stimulate the efforts of such key employees on behalf of the Company and its Affiliates, and strengthen their desire to remain with the Company and its Affiliates. It is also expected that such compensation and the opportunity to acquire such a proprietary interest will enable the Company and its Affiliates to attract desirable personnel. 2. DEFINITIONS. When used in this Plan, unless the context otherwise requires: (a) "Affiliate" shall mean (i) any corporation controlling, controlled by, or under common control with the Company or any other Affiliate, (ii) any corporation in which the Company owns at least five percent of the outstanding shares of all classes of common shares of such corporation, (iii) any unincorporated trade or business controlling, controlled by, or under common control with the Company or any other Affiliate, and (iv) any unincorporated trade or business in which the Company owns at least a five percent interest in the capital or profits of such trade or business. (b) "Awards" shall mean options, Rights, Restricted Shares or Bonus Awards which are granted or made under the Plan. (c) "Board of Directors" shall mean the Board of Directors of the Company, as constituted at any time. (d) "Bonus Awards" shall mean awards made pursuant to Section 12. (e) "Committee" shall mean the Committee of the Board of Directors, as described in Section 3. (f) "Company" shall mean Cablevision Systems Corporation, a Delaware corporation. (g) "Fair Market Value" on a specified date shall mean the average of the bid and asked closing prices at which one Share is traded on the over- the-counter market, as reported on the National Association of Securities Dealers Automated Quotation System, or the closing price for a Share on the stock exchange, if any, on which such Shares are primarily traded, but if no Shares were traded on such date, then on the last previous date on which a Share was so traded, or, if none of the above is applicable, the value of a Share as established by the Committee for such date using any reasonable method of valuation. (h) "Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as amended. (i) "Options" shall mean the stock options issued pursuant to this Plan. (j) "Plan" shall mean the Cablevision Systems Corporation 1996 Employee Stock Plan. (k) "Restricted Period" shall mean the period of time during which Restrictions shall apply to a Restricted Share, as determined by the Committee pursuant to Section 11 hereof. (l) "Restricted Shares" shall mean the Shares granted pursuant to Section 11 hereof. (m) "Restrictions" shall mean the restrictions upon the sale, assignment, transfer, pledge or other disposal or encumbrance on a Restricted Share as set forth in Section 11 hereof. (n) "Rights" shall mean the stock appreciation rights issued to the grantee of an Option pursuant to Section 7 of the Plan to receive from the Company cash or Shares or a combination of cash or Shares, based on the excess of the Fair Market Value of the Shares at the time of exercise over the exercise price of the Shares subject to the related option, subject to the terms and conditions of the Plan. (o) "Share" shall mean a share of Class A common stock of the Company, par value $.Ol. (p) "Subsidiary" shall mean any "subsidiary corporation," as defined in Section 424(f) of the Internal Revenue Code. 3. ADMINISTRATION. The Plan shall be administered by the Committee, which shall consist of at least three members of the Board of Directors of the Company who shall be appointed by, and shall serve at the pleasure of, the Board of Directors of the Company. No member of the Committee shall (i) be eligible to receive an Award under the Plan while serving on the Committee or at any time within one year prior to his appointment to the Committee, or (ii) receive an award of equity securities under any other plan of the Company or any of its Affiliates while serving on the Committee or at any time prior to his appointment to the Committee, except as permitted by Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act") without the member ceasing to be considered a disinterested person thereunder. The Committee shall have full authority, subject to the terms of the Plan, to select the persons to whom Awards shall be granted or made under the Plan, to set the date of any such Award and any terms or conditions associated with any such Award. The Committee also shall have the authority to establish such rules and regulations; not inconsistent with the provisions of the Plan, for the proper administration of the Plan and to make such determinations and interpretations under and in connection with the Plan as it deems necessary or advisable. The 2 Plan, and all such rules, regulations, determinations and interpretations, shall be binding and conclusive upon the Company, its stockholders and all employees, and upon their respective legal representatives, heirs, beneficiaries, successors and assigns and upon all other persons claiming under or through any of them. 4. PARTICIPANTS. Except as hereinafter provided, all officers and key employees of the Company or an Affiliate shall be eligible to receive Awards under the Plan, except that Options that are intended to qualify as incentive stock options within the meaning of Section 422 of the Internal Revenue Code shall be granted only to employees of the Company or a Subsidiary. In addition, Charles F. Dolan shall not be eligible to receive Awards under the Plan. Nothing herein contained shall be construed to prevent the making of one or more Awards at the same or different times to the same employee. 5. SHARES. The Committee may make Awards under this Plan for up to an aggregate number of Shares equal to the sum of (i) 2,500,000 Shares, which may be either treasury Shares or authorized but unissued Shares, and (ii) the number of Restricted Shares, if any, purchased from employees by the Company. If an Award shall be paid or settled or shall expire, lapse, terminate or be cancelled for any reason without the issuance of Shares, or if Restricted Shares shall revert back to the Company, then the Committee may grant Awards with respect to the Shares subject to any such prior Award or the Restricted Shares which have reverted back to the Company. Awards payable only in cash shall not reduce the aggregate remaining number of Shares with respect to which Awards may be made under the Plan. The maximum number of Shares which may be issued under the Plan and the number of Shares with respect to which Awards may be made shall be adjusted to the extent necessary to accommodate the adjustments provided for in Section 13 hereof as well as those adjustments provided for in grants or awards made prior to the effective date of the Plan. 6. OPTIONS. Options granted under the Plan shall be either incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, or non-qualified options, as determined by the Committee in its sole discretion. (a) TERMS AND CONDITIONS. The form, terms and conditions of each Option shall be determined by the Committee and shall be set forth in a certificate or agreement (the "Option Certificate") signed by the Option holder and an officer of the Company. The Option Certificate shall state whether or not the option is an incentive stock option. The Committee may, in its sole discretion, establish one or more conditions to the exercise of an Option including, without limitation, conditions the satisfaction of which are measured by performance criteria applicable to the recipient or the Company, as the Committee may deem appropriate, provided that, if such Option is designated as an incentive stock option, then such condition or conditions shall not be inconsistent with Section 422 of the Internal Revenue Code. (b) EXERCISE PRICE FOR OPTIONS. The exercise price per Share of the Shares to be purchased pursuant to any Option shall be fixed by the Committee at the time an Option is granted, but in no event shall it be less than the Fair Market Value of a Share on the day on which the Option is granted. Such exercise price shall thereafter be subject to adjustment as required by the Option certificate relating to each Option. 3 (c) DURATION OF OPTIONS. The duration of any Option granted under this Plan shall be for a period fixed by the Committee but shall, except as described in the next sentence, in no event be more than ten years. Notwithstanding the foregoing, the Option Certificate issued in connection with a nonqualified Option granted under this Plan may provide that, in the event the Option holder dies while the Option is exercisable, the Option will remain exercisable by the holder's estate or beneficiary until the first anniversary of the holder's date of death, whether or not such first anniversary occurs prior to the expiration of ten years from the date the Option was granted. (d) OPTIONS GRANTED TO TEN PERCENT STOCKHOLDERS. No Option which is intended to qualify as an incentive stock option shall be granted under this Plan to any employee who, at the time the Option is granted, owns, or is considered as owning, within the meaning of Section 422 of the Internal Revenue Code, shares possessing more than ten percent of the total combined voting power or value of all classes of stock of the Company or any Subsidiary, unless the exercise price under such Option is at least 110 percent of the Fair Market Value of a Share on the date such Option is granted and the duration of such option is no more than five years. (e) INITIAL EXERCISABILITY LIMITATION. The aggregate Fair Market Value (determined at the time that an Option is granted) of the Shares with respect to incentive stock options granted in any calendar year under all stock option plans of the Company or any corporation which (at the time of the granting of such incentive stock option) was a parent or Subsidiary of the Company, or of any predecessor corporation of any such corporation, which are exercisable for the first time by an Option holder during any calendar year shall not exceed $100,000. (f) SETTLEMENT OF AN OPTION. When an Option is exercised pursuant to Section 9 hereof, the Committee, in its sole discretion, may elect, in lieu of issuing Shares pursuant to the terms of the Option, to settle the Option by paying the Option holder an amount equal to the product obtained by multiplying (i) the excess of the Fair Market Value of one Share on the date the Option is exercised over the exercise price of the Option (the "Option Spread") by (ii) the number of Shares with respect to which the Option is exercised. The amount payable to the Option holder in these circumstances shall be paid by the Company either in cash or in Shares having a Fair Market Value equal to the Option Spread, or a combination thereof, as the Committee shall determine at the time the Option is exercised or at the time the Option is granted. 7. RIGHTS. At the time an Option is granted, or anytime thereafter prior to its expiration, the Committee, in its sole discretion, may issue to the recipient of such Option related Rights with respect to the same number of Shares as are covered by the Option, subject to adjustment pursuant to the terms of Section 13 hereof. The duration of any such Right shall be coextensive with the duration of the related Option. (a) CONJUNCTIVE AND ALTERNATIVE RIGHTS. Such Rights shall entitle the holder to receive cash from the Company: (i) in addition to the right to exercise the related Option (such Rights being hereinafter referred to as "Conjunctive Rights"); and\or 4 (ii) in lieu of the right to exercise the related Option (such Rights being hereinafter referred to as "Alternative Rights"); as the Committee may determine, in its sole discretion, at the time the Right is granted. If the Option holder is granted Conjunctive Rights, he may exercise such Rights only if, and to the extent that, the related Option is exercisable. If the Option holder is granted Alternative Rights, he may exercise such Rights only to the extent such related Option is exercisable and the exercise of such Alternative Rights shall result in the cancellation of the related Option to the extent of the number of Shares with respect to which such Alternative Rights have been exercised and the exercise of the related Option shall result in the cancellation of the Alternative Rights to the extent of the number of Shares with respect to which such Option has been exercised. (b) TERMS AND CONDITIONS. Upon the exercise of any Rights, the Option holder shall be entitled to receive from the Company an amount in cash equal to the product obtained by multiplying (i) the excess of the Fair Market Value of one Share on the date the Rights are exercised over the exercise price of the related Option (the "Rights Spread") by (ii) the number of Shares with respect to which such Rights are exercised. The form, terms and conditions of Rights shall be determined by the Committee. A certificate of Rights (the "Rights Certificate") signed by an officer of the Company shall be issued to each person to whom Rights are granted. 8. NON-TRANSFERABILITY OF OPTIONS AND RIGHTS. Options and any related Rights may be exercised or surrendered during the holder's lifetime only by the holder thereof, and all rights thereunder shall be non-transferable and non- assignable by the holder thereof, other than by will or the laws of descent or distribution. 9. EXERCISE OF OPTIONS AND RIGHTS. Except as otherwise provided herein, an Option (and any related Rights), after the grant thereof, shall be exercisable by the holder at such rate and times as may be fixed by the Committee at the time the Option and the related Rights, if any, are granted; provided, however, that any Rights issued to the Option holder shall be exercisable only at the times and in the amounts at which the related Option shall be exercisable. All or any part of any remaining unexercised Options (and any related Rights) granted to any person shall be exercisable in full upon the occurrence of such special circumstances or events as, in the sole discretion of the Committee, merits special consideration. An Option shall be exercised by the delivery to any person who has been designated by the Company for the purpose of receiving the same, of a written notice duly signed by the Option holder thereof (or the representative of the estate or the heirs of a deceased Option holder) to such effect. Unless the Company chooses to settle the Option in cash, Shares or a combination thereof pursuant to Section 6(f) hereof, the holder of the Option shall be required to deliver to the Company, within five days of the delivery of the notice described above, either cash, a check payable to the order of the Company or Shares duly endorsed over to the Company (which Shares shall be valued at their Fair Market Value as of the date preceding the day of such exercise) or any combination of such methods of payment, which together amount to the full exercise price of the Shares purchased pursuant to the exercise of the Option. 5 Notwithstanding the preceding sentence, the Company and the holder of the Option may agree upon any other reasonable manner of providing for payment of the exercise price of the Option. Any Rights may be exercised by the holder thereof (or the representative of the estate or the heirs of a deceased Option holder), by delivery of a written notice of exercise of such Rights, together with the Rights Certificate to any person who has been designated by the Company for the purpose of receiving the same. No Option (or related Rights) may be granted pursuant to the Plan or exercised at any time when such Option or Rights, or the granting or exercise thereof, may result in the violation of any law or governmental order or regulation. Unless the Committee chooses to settle an Option in cash, Shares or a combination thereof pursuant to Section 6(f) hereof, within a reasonable time after exercise of an Option the Company shall cause to be delivered to the person entitled thereto (i) a certificate for the Shares purchased pursuant to the exercise of the Option and (ii) a check for the cash payable, if any, upon the exercise of the Rights. If the Option and/or related Rights shall have been exercised with respect to less than all of the Shares subject to the Option, the Company shall also cause to be delivered to the person entitled thereto a new Option Certificate and Rights Certificate, if applicable, in replacement of the Option Certificate and the Rights Certificate surrendered at the time of the exercise of the Option and Rights, indicating the number of Shares with respect to which the Option and related Rights remain available for exercise, or the original Option Certificate and Rights Certificate, if any, shall be endorsed to give effect to the partial exercise thereof. 10. TERMINATION OF OPTIONS AND RIGHTS UPON TERMINATION OF EMPLOYMENT. At the time an Option and the related Rights, if any, are granted, the Committee shall determine the period of time during which the Option holder may exercise such Option and related Rights, if any, following his termination of employment with the Company and its Affiliates; provided, however, that an Option shall be exercisable only to the extent such Option, by its terms, is exercisable as of the date the Option holder's employment is terminated, unless such Option is made fully exercisable by the Committee pursuant to Section 9 hereof, and such exercise must be accomplished prior to the expiration of the term of such Option and related Rights. The Committee may fix different periods of time during which such Option and related Rights may be exercised following the Option holder's termination of employment, depending on the cause for the Option holder's termination of employment. The Committee shall decide whether, and under what conditions, the Options and related Rights may continue in force in the event of an approved leave of absence. 11. RESTRICTED SHARES. The Committee, in its sole discretion, may grant to employees the right to receive such number of Restricted Shares, as determined by the Committee in its sole discretion. (a) ISSUANCE. The employee shall have forty-five (45) business days from the date of such grant to pay to the Company, in cash or by check, an amount equal to the par value of a Share multiplied by the number of Restricted Shares which have been granted to the employee by the Committee. Subject to the provisions of Section 16 hereof, upon the receipt of such payment, the Company shall issue to the employee a certificate representing such Restricted Shares. The terms and conditions of the grant of such Restricted Shares and the Restrictions 6 applicable to such Shares shall be set forth in writing, in an agreement signed by the employee and an officer of the Company (the "Restricted Shares Agreement"). In the event the employee fails to make payment to the Company for such Restricted Shares within ten (10) business days of the grant thereof, the grant of Restricted Shares shall lapse and the Committee may again grant Awards with respect to such Shares. (b) RESTRICTIONS ON SHARES. In no event shall a Restricted Share be sold, assigned, transferred, pledged or otherwise disposed of or encumbered until the expiration of the Restricted Period which relates to such Restricted Share. As of the date the Restricted Shares are granted, the Committee, in its sole discretion, shall specify the dates as of which, and the number of Shares with respect to which, Restrictions upon the Restricted Shares shall cease. Without limiting the foregoing, the Committee may provide with respect to any grant of Restricted Shares, that the termination of Restrictions on such Restricted Shares may be subject to, among other things, conditions, the satisfaction of which are measured by performance criteria applicable to the recipient or the Company, as the Committee may deem appropriate. (c) FORFEITURE OF RESTRICTED SHARES. If the employment of an employee by the Company and its Affiliates ceases prior to the end of the Restricted Period for any one of the reasons specified by the Committee at the time the Restricted Shares are granted and set forth in the Restricted Shares Agreement, Restricted Shares held by such employee which are subject to Restrictions shall revert back and belong to the Company. In the event that any Restricted Shares should revert back and belong to the Company pursuant to this section, any stock certificate or certificates representing such Restricted Shares shall be cancelled and the Restricted Shares shall be returned to the treasury of the Company. Upon the reversion of such Restricted Shares, the Company shall repay to the employee or (in the case of death) to the representative of the employee's estate, the full amount paid to the Company by the employee for such Restricted Shares. Notwithstanding the preceding, the Restrictions upon the Restricted Shares shall cease and upon the termination of the employee's employment with the Company and its Affiliates the Restricted Shares shall not revert back and belong to the Company, upon the occurrence of such special circumstances or events, as in the sole discretion of the Committee, merits special consideration. (d) RIGHT TO VOTE AND RECEIVE DIVIDENDS ON RESTRICTED SHARES. Each holder of Restricted Shares shall, during the Restricted Period, be the beneficial and record owner of such Restricted Shares and shall have full voting rights with respect thereto. During the Restricted Period, all dividends and distributions paid upon any Restricted Share shall be retained by the Company for the account of the holder of such Restricted Share. Such dividends and distributions shall revert back to the Company if for any reason the Restricted Share upon which such dividends and distributions were paid reverts back to the Company. Upon the expiration of the Restricted Period, all dividends and distributions made on such Restricted Share and retained by the Company will be paid to the holder. 12. BONUS AWARDS. (a) GRANT AND TERMS OF AWARDS. The Committee shall determine the employees that shall receive Bonus Awards, the number of Shares to be so awarded, and the terms and conditions of such Bonus Awards. The Committee shall determine whether, and under what 7 conditions, Bonus Awards shall remain in force in the event of the termination of the awardee's employment with the Company and its Affiliates. (b) TIME FOR ISSUANCE OF BONUS AWARD SHARES. Each grantee of a Bonus Award under the Plan shall receive a letter (the "Bonus Award Letter") after he has been selected to receive such Bonus Award, which letter shall state the terms of the Bonus Award, including, without limitation, the amount of the Bonus Award, the number of Shares proposed to be issued to him, the vesting schedule for such Bonus Award and the date or dates and the conditions upon which such Bonus Award shall be paid to the grantee. Without limiting the foregoing, the Committee may provide with respect to any Bonus Award, that the vesting of such Bonus Award may be subject to, among other things, conditions, the satisfaction of which are measured by performance criteria applicable to the recipient or the Company, as the Committee may deem appropriate. The time of issuance of Shares to any grantee may be accelerated by the Committee in its sole discretion. The Committee, in its sole discretion, may instruct the Company to pay on the date when Shares would otherwise be issued pursuant to a Bonus Award, in lieu of such Shares, a cash amount equal to the number of such Shares multiplied by the Fair Market Value of a Share on the date when Shares would otherwise have been issued. If a grantee is entitled to receive other stock, securities or other property as a result of adjustment, pursuant to Section 13 hereof, the Committee, in its sole discretion, may instruct the Company to pay, in lieu of such other stock, securities or other property, cash equal to the fair market value thereof as determined in good faith by the Committee. 13. CERTAIN ADJUSTMENTS. (a) DIVIDENDS, STOCK SPLITS, SPIN-OFFS, CONVERSIONS, ETC. If, during the period prior to complete exercise of any Option or Right (as to such Option or Right) or during the Restricted Period (as to Restricted Stock) or prior to the issuance and delivery of Shares pursuant to a Bonus Award (as to such Bonus Award) (such period being referred to herein as the "Award Period"), there shall be declared and paid a stock or property dividend or any other distribution by way of dividend, stock split (including a reverse stock split), or spin-off with respect to the Shares, or if the Class A common stock of the Company shall be converted, exchanged, reclassified or recapitalized, or if the Shares shall be in any way substituted for in a merger in which the entity surviving such merger or its parent is a public Company, then: (i) in the case of an Option or Right, the Option or Right, to the extent that it has not been exercised, shall entitle the holder thereof upon the future exercise of the Option or Right to such number and kind of securities or cash or other property, subject to the terms of the Option or Right, to which he would have been entitled had he actually owned the Shares subject to the unexercised portion of the Option or Right at the time of the occurrence of such dividend, stock split, spin-off, conversion, exchange, reclassification, recapitalization or substitution, and the aggregate purchase price upon the future exercise of the Option or Right shall be the same as if the Shares originally subject to the Option or Right were being purchased or used to determine the amount of the payment to which the holder is entitled thereunder; (ii) in the case of a Restricted Share, the holder of the Restricted Share shall receive, subject to the provisions of Section 11(c) hereof, the same securities or other 8 property as are received by the other holders of the Company's Shares pursuant to such dividend, stock split, spin-off, conversion, exchange, reclassification, recapitalization or substitution; and (iii) in the case of a Bonus Award, the Bonus Award shall entitle the holder thereof upon the future issuance and delivery of Shares pursuant to a Bonus Award to such number and kind of securities or cash or other property, subject to the terms of the Bonus Award, to which he would have been entitled had he actually owned the Shares subject to the Bonus Award at the time of the occurrence of such dividend, stock split, spin-off, conversion, exchange, reclassification, recapitalization or substitution. (b) OTHER EVENTS RESULTING IN DILUTION. If, during the Award Period, there occurs any event as to which the provisions against the effect of dilution contained in the Plan are not strictly applicable, but the failure to make any adjustment would not fairly protect the rights represented by the Award in accordance with the essential intent and principles thereof, then, in each such case, the Company shall appoint a firm of independent certified public accountants of recognized national standing, which shall give its opinion upon the adjustment, if any, on a basis consistent with the essential intent and principles established in the Plan, which they believe is necessary to preserve without dilution, the rights represented by the Award. Upon receipt of such opinion, the Company will promptly mail a copy thereof to the holder and shall make the adjustment described therein. (c) FRACTIONAL SHARES OR SECURITIES. Any fractional shares or securities payable upon the exercise of the Option or Right or to the holder of a Restricted Share or pursuant to a Bonus Award as a result of an adjustment pursuant to this Section 13 shall, at the election of the Committee, be payable in cash, Shares, or a combination thereof, based upon the fair market value of such shares or securities at the time of exercise. 14. NO RIGHTS OF A STOCKHOLDER. An Option holder, Rights holder or grantee of a Bonus Award shall not be deemed to be the holder of, or have any of the rights of a stockholder with respect to, any Shares subject to such Option, any related Rights or the Bonus Award unless and until (i) the Option and/or related Rights shall have been exercised pursuant to the terms thereof or the Shares subject to the Bonus Award shall have vested, (ii) the Company shall have issued and delivered Shares to the Option holder or grantee of a Bonus Award, and (iii) said holder's name shall have been entered as a stockholder of record on the books of the Company. Thereupon, said holder shall have full voting, dividend and other ownership rights with respect to such Shares. The Company will not be obligated to issue or deliver any Shares unless and until all legal matters in connection with the issuance and delivery of Shares have been approved by the Company's counsel and the Company's counsel determines that all applicable federal, state and other laws and regulations have been complied with and all listing requirements for relevant stock exchanges have been met. 15. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained herein or in any Options or Rights Certificate, Restricted Share Agreement or Bonus Award Letter shall be construed to confer on any employee any right to continue in the employ of the Company or any Affiliate or 9 derogate from the right of the Company and any Affiliate to retire, request the resignation of, or discharge such employee, at any time, with or without cause. 16. ISSUANCE OF SHARES AND COMPLIANCE WITH THE SECURITIES LAWS. (a) CERTAIN ASSURANCES. Before issuing or delivering any Shares to an Option holder or at any time prior to the end of the Restricted Period as to any Shares, the Company may: (i) require the holder to give satisfactory assurances that such Shares are being purchased for investment and not with a view to resale or distribution, and will not be transferred in violation of the applicable securities laws; (ii) restrict the transferability of such Shares and require a legend to be endorsed on the certificates representing the Shares; and (iii) condition the issuance and delivery of such Shares upon the listing, registration or qualification of such Shares upon a securities exchange or under applicable securities laws. The Company may also condition the issuance and delivery of Shares upon compliance with all applicable federal, state and other laws and regulations, as determined by the Company's counsel. (b) REGISTRATION RIGHTS INCIDENT TO AWARDS. Prior to the issuance of Shares pursuant to an Award under the Plan, the Company will cause an appropriate registration statement covering the shares to be issued pursuant to the Plan to be filed with the Securities and Exchange Commission under the Securities Act, if required, and, in any event, will cause a registration statement covering the reoffer and resale of Shares by grantees who may be deemed to be affiliates of the Company to be so filed, and shall use its best efforts to cause each such registration statement to become and remain effective for a period of at least two years from the date such Shares offered for resale were issued by the Company. (c) LEGENDED STOCK. Each stock certificate representing Restricted Shares shall contain an appropriate legend referring to the Plan and the Restrictions upon such Restricted Shares. Simultaneously with delivery of each stock certificate for Restricted Shares, the Company may cause a stop transfer order with respect to such certificate to be placed with the transfer agent of the Shares. 17. WITHHOLDING. If the Company or an Affiliate shall be required to withhold any amounts by reason of any federal, state or local tax laws, rules or regulations in respect of the payment of cash or the issuance of Shares pursuant to the exercise of an Option or Rights, an award of Restricted Stock or a Bonus Award, the Company or an Affiliate shall be entitled to deduct or withhold such amounts from any cash payments to be made to the holder. In any event, the holder shall make available to the Company or Affiliate, promptly when requested by the Company or such Affiliate, sufficient funds to meet the requirements of such withholding and the Company or Affiliate shall be entitled to take and authorize such steps as it may deem advisable in order to have such funds made available to the Company or Affiliate out of any funds or property to become due to the holder. The holder may elect, subject to the approval of the Committee, to satisfy the requirements of such tax withholding, in whole or in part, by having the Company withhold from the Shares which would otherwise be issued to the holder pursuant to the exercise of an Option or Rights or a Bonus Award, Shares having a Fair Market Value which is equal to the amount of tax required to be withheld. The election must be irrevocable and must be made on 10 or before the date on which the amount of tax to be withheld is determined. In addition, elections by holders who are subject to the restrictions of Section 16(b) of the Exchange Act either (i) must be made at least six months before the date on which the amount of tax to be withheld is determined, or (ii) (A) must be made in the "window period" beginning on the third business day following the release of the Company's quarterly or annual earnings and ending on the twelfth business day following such release, or be made outside of such "window period" but will only take effect in such window period, and (B) must not be made within six months of the grant or award of the Option, Right or Bonus Award (unless the holder's death or disability occurs prior to six months from such grant or award). 18. ADMINISTRATION AND AMENDMENT OF THE PLAN. The Board of Directors or the Committee may discontinue the Plan at any time and from time to time may amend or revise the terms of the Plan, as permitted by applicable law, except that it may not revoke or alter, in any manner unfavorable to the recipient of an outstanding award under the Plan, any award made under the Plan, without the consent of the recipient of that award, nor may it amend the Plan without the approval of the stockholders of the Company if such approval is required by Rule 16b-3 under the Exchange Act for transactions pursuant to the Plan to continue to be exempt thereunder. 19. EFFECTIVE DATE. This Plan shall become effective upon its adoption by the Board of Directors or the Committee and shall be submitted to the stockholders of the Company for their approval. In the event that the Plan is not approved by stockholders within 12 months of its adoption by the Board of Directors, the Plan and any awards granted hereunder on or after the date of adoption by the Board of Directors shall become null and void, notwithstanding any other provisions of the Plan to the contrary. 20. ASSUMPTION OF OPTIONS. The Committee, in its sole discretion, may, with the consent of the Option holder, elect to treat as an Option issued under this Plan (but not as an incentive stock Option, within the meaning of Section 422 of the Internal Revenue Code) an Option to purchase Shares (the "Assumed Option") which has been granted by any person other than the Company to a person who, as of the date such Assumed Option was granted, was an employee of the Company or an Affiliate. Thereafter, such Assumed Option shall be subject to the terms and conditions of this Plan except that for determining the exercise price of such Assumed Option, when and to what extent such Assumed Option may be exercised and the expiration date of such Assumed Option, the date as of which such Option was granted by such third party shall be treated as the date of grant for purposes of the Plan. Subject to the foregoing, to the extent that there is any conflict between the terms and conditions of this Plan and the Assumed Option, the terms and conditions of this Plan shall control. The number of Shares which may be purchased upon the exercise of any Assumed Option shall reduce, by the same amount, the number of Shares with respect to which Options, related Rights, Restricted Shares and Bonus Awards remain to be granted under the Plan pursuant to Section 5 hereof. In exchange for assuming an Option granted by someone other than the Company, the Company shall receive such consideration, if any, from such third party which the Committee, in its sole discretion, deems appropriate. 21. FINAL ISSUANCE DATE. No Awards shall be made under this Plan after February __, 2006. 11 EX-22 12 EXHIBIT 22 Exhibit 22 SUBSIDIARIES OF CABLEVISION SYSTEMS CORPORATION State of Name Organization - ---- ------------ A-R Cable Investments, Inc. Delaware A-R Cable Services, Inc. Massachusetts Rainbow Programming Holdings, Inc. New York V Cable, Inc. Delaware NYC LP Corp. Delaware Cablevision of New York City - Master L.P. Delaware Cablevision MFR, Inc. Delaware EX-23.1 13 EXHIBIT 23.1 Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS ------------------------------- We consent to the incorporation by reference in the registration statements (numbers 33-05987, 33-08768, 33-19409, 33-20583 and 33-54346) filed on Forms S-8 and in the registration statements (numbers 33-29192, 33-33596 and 33-62313) filed on Forms S-3 of Cablevision Systems Corporation of our reports dated March 18, 1996 relating to: (i) the consolidated balance sheets of Cablevision Systems Corporation and Subsidiaries as of December 31, 1995 and 1994 and the related consolidated statements of operations, stockholders' deficiency and cash flows and related schedule for each of the years in the three-year period ended December 31, 1995, and (ii) the consolidated balance sheets of A-R Cable Services, Inc. and Subsidiaries as of December 31, 1995 and 1994 and the related consolidated statements of operations, stockholder's deficiency and cash flows for each of the years in the three-year period ended December 31, 1995, which reports appear in the December 31, 1995 annual report on Form 10-K of Cablevision Systems Corporation. /s/ KPMG Peat Marwick LLP ------------------------- KPMG Peat Marwick LLP Jericho, New York March 21, 1996 EX-27 14 EXHIBIT 27
5 1000 12-MOS DEC-31-1995 DEC-31-1995 15,332 0 113,184 (12,678) 143,916 0 1,869,870 (843,515) 2,502,305 0 3,157,107 257,751 15 258 (1,891,949) 2,502,305 0 1,092,611 0 412,479 319,929 (14,551) 313,850 (317,458) 0 (317,458) 0 0 0 (317,458) (14.17) 0 Not presented as the resultant computation would be a decrease in net loss per share and therefore not meaningful.
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