-----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, PhauX5JV8Lk2p3u5iPZejlt3tnKJqH1zDUXOgreOAe/C+50CDDKczBFWzfjD9Wrg OrMSh4HYXU1badMQt9podg== 0001104659-04-034477.txt : 20041109 0001104659-04-034477.hdr.sgml : 20041109 20041109091837 ACCESSION NUMBER: 0001104659-04-034477 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041109 DATE AS OF CHANGE: 20041109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CSC HOLDINGS INC 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09046 FILM NUMBER: 041127568 BUSINESS ADDRESS: STREET 1: 1111 STEWART AVENUE CITY: BETHPAGE STATE: NY ZIP: 11714 BUSINESS PHONE: 5138032300 MAIL ADDRESS: STREET 1: 1111 STEWART AVENUE CITY: BETHPAHE STATE: NY ZIP: 11714 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CABLEVISION SYSTEMS CORP /NY CENTRAL INDEX KEY: 0001053112 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-14764 FILM NUMBER: 041127567 BUSINESS ADDRESS: STREET 1: 1111 STEWART AVENUE CITY: BETHPAGE STATE: NY ZIP: 11714 BUSINESS PHONE: 5163806230 MAIL ADDRESS: STREET 1: 1111 STEWART AVENUE CITY: BETHPAGE STATE: NY ZIP: 11714 10-Q 1 a04-12386_110q.htm 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number	Registrant; State of Incorporation; Address and Telephone Number	IRS Employer Identification No.

1-14764	Cablevision Systems Corporation Delaware 1111 Stewart Avenue Bethpage, New York 11714 (516) 803-2300	11-3415180

1-9046	CSC Holdings, Inc. Delaware 1111 Stewart Avenue Bethpage, New York 11714 (516) 803-2300	11-2776686

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

Cablevision Systems Corporation	Yes ý	No o
CSC Holdings, Inc.	Yes ý	No o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

Cablevision Systems Corporation	Yes ý	No o
CSC Holdings, Inc.	Yes ý	No o

Number of shares of common stock outstanding as of November 1, 2004:

Cablevision NY Group Class A Common Stock -	220,474,258
Cablevision NY Group Class B Common Stock -	66,752,531
CSC Holdings, Inc. Common Stock -	6,429,987

PART I. FINANCIAL INFORMATION

For information required by Item 1 and Item 2, refer to Index to Financial Statements on page 10.

Item 3. Quantitative And Qualitative Disclosures About Market Risk

The Company is exposed to market risks from changes in certain equity security prices and interest rates. Our exposure to changes in equity security prices stems primarily from the Comcast Corporation, AT&T Corp., Charter Communications, Inc., AT&T Wireless Services, Inc., General Electric Company, Leapfrog Enterprises, Inc., and Adelphia Communications Corporation common stock held by us. We have entered into prepaid forward contracts consisting of a collateralized loan and an equity collar to hedge our equity price risk and to monetize the value of these securities. These contracts, at maturity, are expected to offset declines in the fair value of these securities below the hedge price per share, while allowing us to retain upside appreciation from the hedge price per share to the relevant cap price. The contracts’ actual hedge prices per share vary depending on average stock prices in effect at the time the contracts were executed. The contracts’ actual cap prices vary depending on the maturity and terms of each contract, among other factors. In the event of an early termination of any of these contracts, we would be obligated to repay the fair value of the collateralized indebtedness less the sum of the fair value of the underlying stock and the fair value of the equity collar, calculated at the termination date. The underlying stock and equity collars are carried at fair value on our consolidated balance sheet and the collateralized indebtedness is carried at its accreted value.

As of September 30, 2004, the fair value and the carrying value of our holdings of Comcast, AT&T, Charter Communications, AT&T Wireless, General Electric, Leapfrog and Adelphia Communications common stock aggregated $1,219.5 million. Assuming a 10% change in price, the potential change in the fair value of these investments would be approximately $122.0 million. As of September 30, 2004, the net fair value and the carrying value of the equity collar component of the prepaid forward contracts entered into to hedge the equity price risk of certain of these securities aggregated $516.0 million, a net receivable position.

The maturity, number of shares deliverable at the relevant maturity, hedge price per share, and the lowest and highest cap prices received for each security monetized via a prepaid forward contract are summarized in the following table:

Security	# of Shares Deliverable	Maturity	Hedge Price per Share*	Cap Price **
Security	# of Shares Deliverable	Maturity	Hedge Price per Share*	Low		High

Comcast	7,159,205	2005	$35.90 - $38.47	$	46.62	$	63.91
	7,159,206	2006

AT&T	4,426,093	2005	$34.39 - $42.08	$	44.71	$	61.21
	4,426,093	2006

Charter Communications	1,862,229	2005	$22.35 - $22.92	$	32.24	$	38.33
	5,586,687	2006
	3,724,460	2007

AT&T Wireless ***	7,121,583	2005	$16.84 - $18.65	$	27.62	$	33.15
	7,121,583	2006

General Electric	12,742,033	2006	$23.14 - $25.67	$	27.76	$	30.81

Adelphia Communications	1,010,000	2005	$39.04 - $40.04	$	62.57	$	63.57

Leapfrog	800,000	2007	$23.55 - $24.55	$	29.87	$	30.87

* Represents the ranges of prices below which we are provided with downside protection and above which we retain upside appreciation. Also represents the ranges of prices used in determining the cash proceeds payable to us at inception of the contracts.

** Represents the ranges of prices up to which we receive the benefit of stock price appreciation.

*** On October 28, 2004, the Company received $213.6 million in cash in exchange for all 14.2 million shares it owned of AT&T Wireless common stock, representing the $15 share price paid in consideration of the merger between AT&T Wireless and Cingular Wireless LLC. As a result of that exchange, the Company’s prepaid forward contracts relating to its shares of AT&T Wireless were terminated. The termination events require the Company to repay the fair value of the collateralized indebtedness less the sum of the fair value of the underlying stock and equity collars.

Our exposure to interest rate movements results from our use of floating and fixed rate debt to fund our working capital, capital expenditures, and other operational and investment requirements. To manage interest rate risk, from time to time we have entered into interest rate swap contracts to adjust the proportion of total debt that is subject to variable and fixed interest rates. Such contracts fix the borrowing rates on floating rate debt to provide an economic hedge against the risk of rising rates and/or convert fixed rate borrowings to variable rates to provide an economic hedge against the risk of higher borrowing costs in a declining interest rate environment. In addition, from time to time we may utilize short-term interest rate lock agreements to hedge the risk that the cost of a future issuance of fixed rate debt may be adversely affected by changes in interest rates. We do not enter into interest rate swap contracts for speculative or trading purposes.

Fair Value of Debt: Based on the level of interest rates prevailing at September 30, 2004, the fair value of our fixed rate debt of $8,102.1 million exceeded its carrying value of $7,771.4 million by approximately $330.7 million. The fair value of these financial instruments is estimated based on reference to quoted market prices for these or comparable securities. Our floating rate borrowings bear interest in reference to current LIBOR-based market rates and thus approximate fair value. The effect of a hypothetical 100 basis point decrease in interest rates prevailing at September 30, 2004 would increase the estimated fair value of our fixed rate debt by approximately $367.8 million to $8,469.9 million. This estimate is based on the assumption of an immediate and parallel shift in interest rates across all maturities.

Interest Rate Derivative Contracts: As of September 30, 2004, we had outstanding interest rate swap contracts to convert fixed rate debt to floating rate debt covering a total notional principal amount of $450 million. As of September 30, 2004, the fair market value and carrying value of these interest rate swap contracts was approximately $0.8 million, a net payable position, as reflected under derivative contracts in our consolidated balance sheet. Assuming an immediate and parallel shift in interest rates across the yield curve, a 100 basis point increase in interest rates from September 30, 2004 prevailing levels would increase the fair value of these contracts to a net liability of $15.1 million.

In addition, we had outstanding prepaid interest rate swap contracts with a notional value of $1,115.0 million entered into in connection with our monetization transactions to convert fixed rate obligations to floating rates of interest. As of September 30, 2004, such contracts had a fair market value and carrying value of $50.0 million, a net payable position, reflected as liabilities under derivative contracts in our consolidated balance sheet. Assuming an immediate and parallel shift in interest rates across the yield curve, a 100 basis point increase in interest rates from September 30, 2004 prevailing levels would increase the fair market value of our liabilities under derivative contracts by approximately $12.5 million to a liability of $62.5 million.

Item 4. Controls and Procedures

An evaluation was carried out under the supervision and with the participation of Cablevision’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Securities and Exchange Commission rules). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective as of the end of the period covered by this report.

Wilmer Cutler Pickering Hale and Dorr LLP has completed its investigation of improper expense recognition and has made recommendations with respect to improvements in internal controls. The Company had already begun implementing new policies and procedures that covered the same subjects as certain of the Wilmer Cutler recommendations including:

• adoption of vendor payment guidelines, signature and password protection, and communication of information to those responsible for the preparation of financial statements;

• enhancements and reinforcements of existing policies and procedures, including those related to expense recognition and accruals and required support for payments and accruals; and

• additional required support and approval for certain types of payments and accruals.

The Company continues to reinforce existing policies and procedures and adopt new policies and procedures as other recommendations made by Wilmer Cutler are in the process of being implemented. In April 2004, the Company adopted a Code of Ethics for directors, officers and employees (which includes a code of ethics for senior financial officers) and procedures for any person who has a concern with respect to accounting, internal accounting controls or auditing matters to communicate those concerns in a confidential or anonymous manner to the Company’s

Audit Committee by contacting a designated confidential contact organization. Other recommendations in the process of being implemented by the Company are as follows:

• additional internal audit procedures were implemented commencing in the second quarter of 2004;

• additional training and education of employees of the operating units responsible for accumulating information for and used in the preparation of financial statements are expected to be implemented commencing in the fourth quarter of 2004; and

• reassessment and improvement of the structure and accountability of employees responsible for accumulating information for and used in the preparation of financial statements are expected to be implemented commencing in the fourth quarter of 2004.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is party to various lawsuits, some involving substantial amounts. Although the outcome of these matters cannot be predicted with certainty, management does not believe that the resolution of these lawsuits will have a material adverse effect on the financial position, results of operations or liquidity of the Company.

At Home

On April 25, 2001, At Home Corporation commenced a lawsuit in the Court of Chancery of the State of Delaware alleging that Cablevision had breached its obligations under certain agreements with At Home. The suit sought a variety of remedies including: rescission of the agreements between At Home and Cablevision and cancellation of all warrants held by Cablevision, damages, and/or an order prohibiting Cablevision from continuing to offer its Optimum Online service and requiring it to convert its Optimum Online customers to the Optimum@Home service and to roll out the Optimum@Home service. On September 28, 2001, At Home filed a petition for reorganization in federal bankruptcy court. In connection with the liquidation of At Home, the claims in this lawsuit, among others, were assigned to the General Unsecured Creditors Liquidated Trust (“GUCLT”).

On June 26, 2003, the GUCLT initiated a separate action against Cablevision in the United States District Court for the Northern District of California. The California action stems from a May 1997 agreement between Cablevision and At Home that is no longer in effect. The GUCLT seeks monetary damages of “at least $12.5 million” due to the claimed failure by Cablevision to make alleged required payments to At Home during the 2001 calendar year. Cablevision has denied the material allegations of the complaint and sought a declaration that its potential liability, if any, is limited to payments for services actually provided by At Home net of all appropriate offsets.

On July 29, 2003, based on an agreed Stipulation filed jointly by Cablevision and the GUCLT, the Court dismissed the Delaware action with prejudice, other than solely with respect to the specific claims brought by the GUCLT in the California action.

In August 2004, Cablevision filed a motion for summary judgment seeking a declaration as to certain matters of contractual interpretation. On October 26, 2004, the federal district court denied the motion on the ground that disputed issues of material fact exist that could not be resolved at the summary judgment stage.

YES Network

On April 29, 2002, Yankees Entertainment & Sports Network, LLC (the “YES Network”) filed a complaint and, on September 24, 2002, an amended complaint against the Company in the United States District Court, Southern District of New York. The lawsuit arose from the failure of the YES Network and the Company to reach agreement on the carriage of programming of the YES Network (primarily New York Yankees baseball games and New Jersey Nets basketball games) on the Company’s cable television systems. The amended complaint alleged a variety of anticompetitive acts and sought declaratory judgments as to violations of laws, treble damages and injunctive relief, including an injunction requiring the Company to carry the YES Network on its cable television systems. The Company believes that the claims set forth in the complaint were without merit. On June 28, 2004, a stipulated Order was entered dismissing all claims with prejudice.

On March 31, 2003, YES Network and Cablevision reached an agreement pursuant to which Cablevision began carrying programming of the YES Network. Under this agreement, Cablevision agreed to carry the YES Network programming for one year under interim arrangements while the parties sought to finalize the terms of a definitive long-term affiliation agreement and/or submitted the matter to arbitration. The matter was ultimately submitted to arbitration. The hearing before the arbitration panel ended in March 2004 and, through the arbitrators’ decision and a new written agreement by the parties, established the terms for a definitive long-term affiliation agreement that is effective retroactively to March 31, 2003.

As part of the original March 31, 2003 agreement, Cablevision agreed to pay YES Network for certain revenue reductions and expenses that YES Network experienced while the interim agreement was in place, under the “most favored nations” provisions of YES Network’s affiliation agreements with certain other distributors. In light of the arbitration decision, no further indemnification payments are being made and appropriate refunds as to amounts already paid are expected.

Tracking Stock Litigation

plaintiffs to compel the inspection of certain books and records of the Company. On October 26, 2004, the parties entered into a stipulation dismissing the related action, and providing for the Company’s production of certain documents. The parties also entered into a stipulation setting the schedule for the filing of an amended consolidated complaint and also setting forth a schedule for the filing of an answer or a motion to dismiss. The Company anticipates that the plaintiff will file a consolidated amended complaint on December 13, 2004. The Company believes the claims are without merit and intends to contest the lawsuits vigorously.

In August 2003, a purported class action naming as defendants the Company, directors and officers of the Company and certain current and former officers and employees of the Company’s Rainbow Media Holdings and American Movie Classics subsidiaries was filed in New York Supreme Court by the Teachers Retirement System of Louisiana. The actions relate to the August 2002 Rainbow Media Group tracking stock exchange and allege, among other things, that the exchange ratio was based upon a price of the Rainbow Media Group tracking stock that was artificially deflated as a result of the improper recognition of certain expenses at the national services division of Rainbow Media Holdings. The complaint alleges breaches by the individual defendants of fiduciary duties. The complaint also alleges breaches of contract and unjust enrichment by the Company. The complaint seeks monetary damages and such other relief as the court deems just and proper. The Company intends to contest the lawsuit vigorously. On October 31, 2003, the Company and other defendants moved to stay the action in favor of the previously filed actions pending in Delaware or, in the alternative, to dismiss for failure to state a claim. On June 10, 2004, the court stayed the action until a review by the court at the earlier of a decision in the previously filed actions in Delaware on the pending motion to dismiss in those actions or at a conference before the court on November 10, 2004.

Time Warner Litigation

On November 14, 2003, American Movie Classics Company filed an action against Time Warner Entertainment, L.P. in New York State Supreme Court for declaratory relief and damages caused by Time Warner’s anticipatory repudiation of its cable television affiliation agreement with American Movie Classics. American Movie Classics filed that action as a result of Time Warner’s notice purporting to terminate the contract based upon their allegation that American Movie Classics had changed its programming. The Company believes the notice was improper. American Movie Classics is seeking a declaratory judgment that it is entitled to full performance of the agreement, and, at its option, is entitled to rescind the agreement and recover damages. Time Warner filed an answer and counterclaims in December 2003 that, among other things, seeks a declaratory judgment as to its right to terminate the affiliation agreement, an injunction requiring American Movie Classics to deliver a classic films channel and damages for an alleged breach of contract.

Accounting Related Investigations

The Securities and Exchange Commission and the U.S. Attorney’s Office for the Eastern District of New York continue to conduct investigations into matters related to the improper expense recognition previously reported by the Company. In July 2004, in connection with the Company’s response to the comments of the staff of the Division of Corporation Finance of the Securities and Exchange Commission on the Company’s filings under the Securities Exchange Act of 1934, the Company provided information with respect to certain of its previous

restatement adjustments relating to the timing of recognition of launch support, marketing and other payments under affiliation agreements.

Item 6. Exhibits

	4.1	Indenture, dated as of August 20, 2004, relating to Rainbow National Services LLC’s and RNS Co-Issuer Corporation’s $300,000,000 8 3/4%% Senior Notes due 2012.

	4.2	Indenture, dated as of August 20, 2004, relating to Rainbow National Services LLC’s and RNS Co-Issuer Corporation’s $500,000,000 10 3/8% Senior Subordinated Notes due 2014.

	10.1	Loan Agreement, dated as of August 20, 2004, among Rainbow National Services LLC, the Guarantors party thereto, Bank of America, N.A. as Syndication Agent, Credit Suisse First Boston, Citicorp North America, Inc. and Wachovia Bank, National Association as Co-Documentation Agents, JP Morgan Chase Bank as Administrative Agent and the other Credit Parties thereto.

	10.2	Letter Agreement, dated August 2, 2004, between Cablevision Systems Corporation and Michael Huseby.

	10.3	Letter Agreement, dated October 11, 2004, between Cablevision Systems Corporation and Wm. Keith Harper.

	31.1	Section 302 Certification of the CEO

	31.2	Section 302 Certification of the CFO

	32	Section 906 Certification of the CEO and CFO

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.

		CABLEVISION SYSTEMS CORPORATION
		CSC HOLDINGS, INC.


Date:	November 9, 2004		/s/ Michael P. Huseby
		By:	Michael P. Huseby as Executive Vice President and Chief Financial Officer of Cablevision Systems Corporation and CSC Holdings, Inc.


Date:	November 9, 2004	By:	/s/ Wm. Keith Harper
			Wm. Keith Harper as Senior Vice President and Controller and Principal Accounting Officer of Cablevision Systems Corporation and CSC Holdings, Inc.

INDEX TO FINANCIAL STATEMENTS

		Page
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets – September 30, 2004 (unaudited) and December 31, 2003	I-1

	Condensed Consolidated Statements of Operations - Three and Nine Months Ended September 30, 2004 and 2003 (unaudited)	I-3

	Condensed Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2004 and 2003 (unaudited)	I-4

	Notes to Condensed Consolidated Financial Statements (unaudited)	I-5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	I-22


CSC HOLDINGS, INC. AND SUBSIDIARIES

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets – September 30, 2004 (unaudited) and December 31, 2003	II-1

	Condensed Consolidated Statements of Operations – Three and Nine Months Ended September 30, 2004 and 2003 (unaudited)	II-3

	Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2004 and 2003 (unaudited)	II-4

	Notes to Condensed Consolidated Financial Statements (unaudited)	II-5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	II-22

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	September 30, 2004		December 31, 2003
	(unaudited)
ASSETS

Current Assets

Cash and cash equivalents	$	922,924	$	326,962
Accounts receivable trade (less allowance for doubtful accounts of $38,039 and $44,941)	368,372		355,835
Notes and other receivables, current	90,532		61,586
Note receivable, affiliate	5,102		12,877
Investment securities, current	3,770		5,874
Inventory	27,840		9,419
Prepaid expenses and other current assets	130,450		98,652
Feature film inventory, net	115,055		92,362
Deferred tax asset, current	55,654		66,649
Advances to affiliates	1,858		31,600
Investment securities pledged as collateral	256,627		—
Derivative contracts	207,786		—
Total current assets	2,185,970		1,061,816

Property, plant and equipment, net	4,413,563		4,593,210
Investments in affiliates	26,320		25,449
Investment securities pledged as collateral	959,184		1,224,498
Notes and other receivables	78,940		95,815
Derivative contracts	389,515		586,894
Other assets	53,267		63,272
Long-term feature film inventory, net	400,126		303,393
Deferred carriage fees, net	113,184		119,225
Franchises	731,848		731,848
Affiliation, broadcast and other agreements, net of accumulated amortization of $382,225 and $314,723	566,378		630,523
Other intangible assets, net of accumulated amortization of $46,929 and $34,979	259,365		164,311
Excess costs over fair value of net assets acquired	1,471,114		1,471,114
Deferred financing and other costs, net of accumulated amortization of $58,559 and $61,783	146,051		117,831
	$	11,794,825	$	11,189,199

See accompanying notes to

condensed consolidated financial statements.

I-1

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(Dollars in thousands)

	September 30, 2004			December 31, 2003
	(unaudited)
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

Current Liabilities
Accounts payable	$	366,605		$	334,283
Accrued liabilities	829,229			853,026
Accounts payable to affiliates	14,768			10,231
Deferred revenue, current	153,098			117,709
Feature film and contract obligations	107,777			92,206
Liabilities under derivative contracts	8,530			38,968
Current portion of bank debt	13,708			111,039
Current portion of collateralized indebtedness	455,700			—
Current portion of capital lease obligations	13,669			15,636
Total current liabilities	1,963,084			1,573,098

Feature film and contract obligations, long-term	333,292			286,955
Deferred revenue	14,304			16,322
Deferred tax liability	104,655			289,055
Liabilities under derivative contracts	123,486			127,751
Other long-term liabilities	251,625			264,906
Bank debt, long-term	2,467,000			2,246,000
Collateralized indebtedness	1,203,565			1,617,620
Senior notes and debentures	5,991,265			3,692,699
Senior subordinated debentures	746,134			599,203
Notes payable	150,000			150,000
Capital lease obligations, long-term	61,783			69,220
Series H Redeemable Exchangeable Preferred Stock	—			434,181
Series M Redeemable Exchangeable Preferred Stock	—			1,110,113
Deficit investment in affiliates	53,973			41,111
Minority interests	659,882			580,766
Total liabilities	14,124,048			13,099,000

Preferred Stock of CSC Holdings, Inc.	—			80,001

Commitments and contingencies

Stockholders’ deficiency:
Preferred Stock, $.01 par value, 50,000,000 shares authorized, none issued	—			—
CNYG Class A Common Stock, $.01 par value, 800,000,000 shares authorized, 241,977,657 and 241,408,518 shares issued and 220,161,430 and 219,592,291 shares outstanding	2,420			2,414
CNYG Class B Common Stock, $.01 par value, 320,000,000 shares authorized, 67,024,781 and 67,217,427 shares issued and outstanding	670			672
RMG Class A Common Stock, $.01 par value, 600,000,000 shares authorized, none issued	—			—
RMG Class B Common Stock, $.01 par value, 160,000,000 shares authorized, none issued	—			—
Paid-in capital	1,167,627			1,136,786
Accumulated deficit	(3,139,238		)	(2,768,972		)
	(1,968,521		)	(1,629,100		)
Treasury stock, at cost (21,816,227 shares)	(359,750		)	(359,750		)
Accumulated other comprehensive loss	(952		)	(952		)
Total stockholders’ deficiency	(2,329,223		)	(1,989,802		)
	$	11,794,825		$	11,189,199

See accompanying notes

to condensed consolidated financial statements.

I-2

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended September 30,								Nine Months Ended September 30,
	2004				2003				2004			2003

Revenues, net	$	1,169,029			$	975,766			$	3,568,430		$	2,949,864

Operating expenses:
Technical and operating (excluding depreciation and amortization)	508,982				412,639				1,664,317			1,303,734
Selling, general and administrative	313,865				262,150				960,773			780,968
Other operating expense (income)	83				(9,036			)	(95,757		)	(9,036		)
Restructuring charges (credits)	(1,203			)	8,004				2,186			11,423
Depreciation and amortization	277,189				282,013				817,292			785,048
	1,098,916				955,770				3,348,811			2,872,137

Operating income	70,113				19,996				219,619			77,727

Other income (expense):
Interest expense	(174,720			)	(171,496			)	(533,253		)	(435,399		)
Interest income	2,658				3,826				4,866			14,089
Equity in net income (loss) of affiliates	(6,234			)	(2,918			)	(7,349		)	437,780
Loss on sale of cable assets	—				(13,644			)	—			(13,644		)
Write-off of deferred financing costs	(12,694			)	—				(18,961		)	—
Gain (loss) on investments, net	6,280				52,810				(9,906		)	210,858
Gain (loss) on derivative contracts, net	21,623				(39,531			)	(34,049		)	(165,782		)
Loss on extinguishment of debt	—				—				(72,495		)	—
Minority interests	(13,966			)	(15,638			)	(64,834		)	(128,334		)
Miscellaneous, net	(23			)	(115			)	(89		)	(2,307		)
	(177,076			)	(186,706			)	(736,070		)	(82,739		)
Loss from continuing operations before income taxes	(106,963			)	(166,710			)	(516,451		)	(5,012		)
Income tax (expense) benefit	43,788				51,432				159,436			(81,533		)

Loss from continuing operations	(63,175			)	(115,278			)	(357,015		)	(86,545		)
Income (loss) from discontinued operations, net of taxes	—				8,316				(5,815		)	(13,392		)

Loss before extraordinary item	(63,175			)	(106,962			)	(362,830		)	(99,937		)
Extraordinary loss on investment, net of taxes	—				—				(7,436		)	—

Net loss	$		(63,175	)	$		(106,962	)	$	(370,266	)	$	(99,937	)

Basic and diluted net loss per share:

Loss from continuing operations	$		(0.22	)	$		(0.40	)	$	(1.24	)	$	(0.30	)

Income (loss) from discontinued operations	$		—		$		0.03		$	(0.02	)	$	(0.05	)

Extraordinary loss	$		—		$		—		$	(0.03	)	$	—
Net loss	$		(0.22	)	$		(0.37	)	$	(1.29	)	$	(0.35	)

Weighted average common shares (in thousands)	287,173				286,716				287,006			285,054

See accompanying notes to

condensed consolidated financial statements.

I-3

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Nine Months Ended September 30,
	2004			2003
Cash flows from operating activities:
Loss from continuing operations	$	(357,015	)	$	(86,545	)
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities:
Depreciation and amortization	817,292			785,048
Non-cash other operating income	(41,788		)	—
Equity in net (income) loss of affiliates	7,349			(437,780		)
Loss on sale of cable assets	—			13,644
Minority interests	64,834			41,075
Unrealized loss (gain) on investments, net	10,435			(210,858		)
Write-off of deferred financing costs and discounts on indebtedness	19,733			—
Unrealized loss on derivative contracts	25,217			142,064
Amortization and write-off of feature film inventory	82,788			51,156
Amortization of deferred financing, discounts on indebtedness and other deferred costs	84,081			66,709
Compensation expense related to issuance of restricted stock	25,376			16,330
Deferred income tax provision (benefit)	(164,217		)	94,117
Changes in other assets and liabilities, net of effects of acquisitions and dispositions	(148,886		)	(196,068		)
Net cash provided by operating activities	425,199			278,892

Cash flows from investing activities:
Capital expenditures	(554,641		)	(661,937		)
Payment for acquisitions	(84,738		)	(250,406		)
Proceeds from sale of equipment	1,039			7,090
Decrease (increase) in investment securities and other investments	(237		)	3,105
Additions to intangible assets	(14,660		)	(1,750		)
Decrease in investments in affiliates, net	32,615			445,426
Net cash used in investing activities	(620,622		)	(458,472		)

Cash flows from financing activities:
Proceeds from bank debt	3,188,208			1,314,082
Repayment of bank debt	(3,064,539		)	(1,357,287		)
Repayment of note payable	—			(7,500		)
Issuance of senior notes	2,793,922			—
Redemption of preferred stock	(1,694,622		)	—
Redemption of senior subordinated debentures	(350,000		)	—
Net proceeds from collateralized indebtedness	—			330,728
Issuance of common stock	3,352			1,898
Issuance of preferred stock of CSC Holdings	—			75,000
Distribution to minority partner	(1,748		)	—
Payments on capital lease obligations and other debt	(12,356		)	(12,677		)
Additions to deferred financing	(70,832		)	(6,016		)
Net cash provided by financing activities	791,385			338,228

Net increase in cash and cash equivalents from continuing operations	595,962			158,648

Net effect of discontinued operations on cash and cash equivalents	—			(32,284		)

Cash and cash equivalents at beginning of year	326,962			125,940

Cash and cash equivalents at end of period	$	922,924		$	252,304

See accompanying notes to

condensed consolidated financial statements.

I-4

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

(Unaudited)

NOTE 1. BUSINESS

Cablevision Systems Corporation and its majority-owned subsidiaries (“Cablevision” or the “Company”) owns and operates cable television systems and, through its wholly-owned subsidiary, Rainbow Media Holdings LLC, has ownership interests in companies that produce and distribute national and regional entertainment and sports programming services, including Madison Square Garden, L.P. The Company also owns companies that provide advertising sales services for the cable television industry, provide switched telephone service, operate motion picture theaters and provide direct broadcast satellite service. The Company classifies its business interests into four segments: Telecommunications Services, consisting principally of its cable television, telephone, high-speed data and Voice over Internet Protocol services operations; Rainbow, consisting principally of interests in national and regional cable television programming networks; Madison Square Garden, which owns and operates professional sports teams, regional cable television networks, live productions and entertainment venues; and Rainbow DBS, which consists of our direct broadcast satellite service and the 21 high definition channels currently carried exclusively by this service.

NOTE 2. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these statements do not include all the information and notes required for complete financial statements.

The financial statements as of and for the three and nine months ended September 30, 2004 and 2003 presented in this Form 10-Q are unaudited; however, in the opinion of management, such statements include all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented.

The results of operations for the interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending December 31, 2004.

The interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s and CSC Holdings, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2003.

The preparation of financial statements in conformity with GAAP 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.

I-5

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

NOTE 3. RECLASSIFICATIONS

Certain reclassifications have been made to the 2003 financial statements to conform to the 2004 presentation.

NOTE 4. COMPREHENSIVE LOSS

Comprehensive loss for the three and nine months ended September 30, 2004 and 2003 equals the net loss for the respective periods.

NOTE 5. LOSS PER SHARE

Basic and diluted net loss per common share are computed by dividing net loss by the weighted average number of common shares outstanding. Potential dilutive common shares are not included in the computation as their effect would be antidilutive.

NOTE 6. 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.

During the nine months ended September 30, 2004 and 2003, the Company’s non-cash investing and financing activities and other supplemental data were as follows:

	Nine Months Ended September 30,
	2004		2003
Non-Cash Investing and Financing Activities:
Capital lease obligations	$	2,952	$	10,003

Supplemental Data:
Cash interest paid, net – continuing operations	447,848		371,055
Cash interest paid, net – discontinued operations	—		525
Income taxes paid, net	5,289		6,772
Restricted cash	35,924		7,256

NOTE 7. TRANSACTIONS

In January 2004, Rainbow DBS, an indirect wholly-owned subsidiary of the Company, invested $100 for a 49% interest in DTV Norwich, an entity that acquired licenses at auction from the FCC to provide multichannel video distribution and data service (“MVDDS”) in 46 metropolitan areas in the United States. In connection with the equity investment, the Company loaned DTV Norwich an additional $84,600 for the acquisition of these licenses (the “DTV Norwich Transaction”). Under the terms of the promissory note with DTV Norwich, the loan was forgiven when the FCC granted the MVDDS licenses to DTV Norwich on July 27, 2004 and September 23, 2004.

I-6

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

Rainbow DBS also agreed to a put/call option with the other investor in DTV Norwich. Rainbow DBS had a call option to purchase an additional 41% membership interest in DTV Norwich at an exercise price of $4,230. Rainbow DBS exercised its call option on October 29, 2004. Rainbow DBS will need FCC approval to acquire the 41% membership interest because the acquisition would give Rainbow DBS control of this entity. The other investor has the right, for ten years, to put its remaining 10% interest to Rainbow DBS at fair value to be determined by a process involving independent valuation experts.

Pursuant to FIN 46, Consolidation of Variable Interest Entities, this entity was consolidated with the Company as of the date of the transaction since it does not have sufficient equity to demonstrate that it can finance its activities without additional subordinated financial support. The acquired licenses have been recorded in the accompanying consolidated balance sheet as other intangible assets and are deemed to have an indefinite life. Since this variable interest entity is not considered a business pursuant to FIN 46, the excess of the fair value of the consideration paid and the newly consolidated non-controlling interest over the fair value of the newly consolidated identifiable assets, of $7,436 net of taxes of $5,384, was recorded as an extraordinary loss in the first quarter of 2004.

NOTE 8. STOCK OPTION PLAN

The Company applies APB 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its stock option plans. The table below sets forth the pro forma net loss as if compensation cost was determined in accordance with Statement of Financial Accounting Standards No. 123 for options granted in 1995 through 2004:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Net loss:
Net loss, as reported	$	(63,175	)	$	(106,962	)	$	(370,266	)	$	(99,937	)
Add: Stock-based employee compensation expense included in reported net loss, net of taxes	3,867			837			10,156			12,540
Deduct: Stock-based employee compensation expense determined under fair value-based method, net of taxes	(4,635		)	(2,216		)	(13,459		)	(21,037		)
Pro forma net loss	$	(63,943	)	$	(108,341	)	$	(373,569	)	$	(108,434	)

Basic and diluted net loss per common share:
As reported	$	(0.22	)	$	(0.37	)	$	(1.29	)	$	(0.35	)
Pro forma	$	(0.22	)	$	(0.38	)	$	(1.30	)	$	(0.38	)

I-7

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

The Company estimated the fair value of each option grant using the Black-Scholes option pricing model. The following assumptions were used in calculating the fair values of options granted in 2004 and 2003:

	2004			2003

Risk –free interest rate	3.7		%	2.8		%
Volatility	55.7		%	60.5		%
Dividend yield	0		%	0		%
Average fair value	$	9.56		$	6.59

NOTE 9. NET ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

In accordance with the provisions of FIN 46, the assets and liabilities attributable to the Company’s 49.9% interest in Northcoast Communications, LLC (a wireless personal communications business) were consolidated and classified as assets and liabilities held for sale in the consolidated balance sheet as of March 31, 2004. Northcoast Communications’ consolidated net assets consisted solely of the net assets of its Cleveland PCS subsidiary. Vendor financing for the Cleveland PCS business consisted of a $75,000 credit facility at Cleveland PCS, LLC. This facility had no recourse to the Company or to Northcoast Communications, other than pursuant to a pledge by Northcoast Communications of the stock of Cleveland PCS and a guarantee of the payment by Northcoast Communications and the Company of the FCC indebtedness of the Cleveland PCS subsidiary which held the Cleveland PCS license. In March 2004, Northcoast Communications agreed to sell its Cleveland PCS business to an unaffiliated entity. The FCC indebtedness was fully repaid by Cleveland PCS in the second quarter of 2004. The sale of Cleveland PCS was consummated in July 2004 and the obligations of Cleveland PCS under the vendor financing were satisfied. The Company did not record any gain or loss in connection with the sale. The net assets sold consisted of the following:

Cash, receivables, inventory, prepaid and other assets	$	15,245
Property, equipment and PCS licenses	46,825
Total assets sold	$	62,070

Accounts payable and accrued expenses	$	15,212
Other liabilities	46,858
Total liabilities sold	$	62,070

The operating results and adjustments to the gains on the transfer of the retail electronics stores in March 2003 and the sale of the Bravo programming business in December 2002, have been classified as discontinued operations, net of taxes, in the Company’s consolidated statement of operations for all periods presented. Operating results of discontinued operations for the nine months ended September 30, 2004 and the three and nine months ended September 30, 2003 are summarized as follows:

I-8

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

	Nine Months Ended September 30, 2004
	Retail Electronics			Bravo			Total

Revenues, net	$	—		$	—		$	—

Loss before income taxes	$	(5,678	)	$	(1,823	)	$	(7,501	)
Income tax benefit	920			766			1,686

Net loss	$	(4,758	)	$	(1,057	)	$	(5,815	)

For the nine months ended September 30, 2004, the Company recorded losses, net of taxes, of approximately $1,057, representing the finalization of film asset adjustments that relate to the sale of the Bravo programming business in December 2002. In addition, the Company recorded losses, net of taxes, of approximately $4,758 for the nine months ended September 30, 2004 that related primarily to estimated legal and payroll tax settlements in connection with the transfer of the retail electronics business in March 2003.

	Retail Electronics
	Three Months				Nine months
	Ended September 30, 2003

Revenues, net	$	—			$			30,842

Loss before income taxes	$	(198		)	$		(19,560		)
Income tax benefit	8,514				6,168
Net income (loss)	$		8,316		$	(13,392			)

The net income (loss) for the three and nine months ended September 30, 2003, includes income (loss) on the disposal of the retail electronics business, net of taxes, of $8,316 and $(6,292), respectively.

NOTE 10. RECENTLY ISSUED ACCOUNTING STANDARDS

In January 2003, the FASB issued FIN 46, Consolidation of Variable Interest Entities. FIN 46, as revised in December 2003, addresses consolidation by business enterprises of variable interest entities, which are entities that either (a) do not have equity investors with characteristics of a controlling financial interest, (b) equity investors do not have voting rights that are proportionate to their economic interest, or (c) have equity investors that do not provide sufficient financial resources for the entity to support its activities. For all variable interest entities created prior to February 1, 2003, the Company was required to apply the provisions of FIN 46 by March 31, 2004. For variable interest entities created subsequent to January 31, 2003, FIN 46 was effective in 2003. The Company consolidated its investment in Northcoast Communications at March 31, 2004 and its investment in DTV Norwich as of the date of the DTV Norwich Transaction. In addition, the Company consolidated its investment in PVI Virtual Media Services LLC in the second quarter of 2004 in connection with an amendment to the LLC agreement which caused the Company to reconsider whether PVI Virtual Media was a variable interest entity. PVI Virtual Media markets a real time video insertion system that through patented technology places

I-9

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

computer generated electronic images into television broadcasts of sporting events and other programming. PVI Virtual Media’s total assets and liabilities consolidated in the second quarter of 2004 amounted to approximately $15,000 and $4,000, respectively.

In the second quarter of 2004, the Company implemented Emerging Issues Task Force (“EITF”) Issue No. 03-6, Participating Securities and the Two-Class Method under FASB Statement No. 128. EITF 03-6 requires convertible participating securities to be included in the computation of earnings per share using the “two-class” method. The Company’s Series A Exchangeable Participating Preferred Stock was considered a convertible participating security. When applicable, basic and diluted earnings per share would be restated to reflect the impact of utilizing the two-class method required by EITF 03-6. The implementation of EITF 03-6 had no impact on earnings per share for the three and nine months ended September 30, 2004 and 2003.

In March 2004, the EITF ratified its consensus related to the application guidance within EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. EITF 03-1 applies to investments in debt and equity securities within the scope of FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, and equity securities that are not subject to the scope of Statement No. 115 and not accounted for under the equity method under APB Opinion 18 and related interpretations. EITF 03-1 requires that a three-step model be applied in determining when an investment is considered impaired, whether that impairment is other than temporary and the measurement of an impairment loss. The adoption of EITF 03-1 did not have an impact on the Company’s financial position or results of operations for the three and nine months ended September 30, 2004.

In March 2004, the EITF reached a consensus regarding Issue No. 03-16, Accounting for Investments in Limited Liability Companies. EITF 03-16 requires investments in limited liability companies that have separate ownership accounts for each investor to be accounted for similar to a limited partnership investment under Statement of Position No. 78-9, Accounting for Investments in Real Estate Ventures. Investors would be required to apply the equity method of accounting to their investments at a much lower ownership threshold than the 20% threshold applied under Accounting Principles Board No. 18, The Equity Method of Accounting for Investments in Common Stock. EITF 03-16 is effective for the first period beginning after June 15, 2004. The adoption of EITF 03-16 did not have an impact on the Company’s financial position or results of operations for the three and nine months ended September 30, 2004.

NOTE 11. DEBT

In March 2004, borrowings under the Madison Square Garden (a wholly-owned subsidiary of Regional Programming Partners) credit facility were repaid in full and the credit facility was terminated with proceeds from an equity contribution from Regional Programming Partners, a 60% owned subsidiary of Rainbow Media Holdings. The Company wrote off approximately $1,187 of unamortized deferred financing costs in connection with the termination of the credit facility.

I-10

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

In April 2004, Cablevision issued $1,000,000 face amount of 8% senior notes due 2012 and $500,000 face amount of floating rate senior notes due 2009. In addition, CSC Holdings, Inc. (a wholly-owned subsidiary of the Company) issued $500,000 face amount of 6-3/4% senior notes due 2012.

In May 2004, CSC Holdings redeemed all of the following securities: its 11-3/4% Series H Redeemable Exchangeable Preferred Stock; its 11-1/8% Series M Redeemable Exchangeable Preferred Stock; its 9-7/8% Senior Subordinated Debentures due 2013; and its 9-7/8% Senior Subordinated Debentures due 2023. In connection with the redemptions, the Company recognized a loss of $72,495 representing primarily the redemption premiums paid. In addition, the Company wrote off $5,080 of unamortized deferred financing costs in connection with these redemptions.

In August 2004, Rainbow National Services LLC (“RNS”), an indirect wholly-owned subsidiary of Rainbow Media Enterprises (a wholly-owned subsidiary of Rainbow Media Holdings) which owns the common equity interests in the Company’s three national programming services — AMC, WE: Women’s Entertainment and The Independent Film Channel (“IFC”), entered into a $950,000 senior secured credit facility ($350,000 of which is a revolving credit facility and $600,000 of which is a term loan facility) and issued $300,000 aggregate principal amount of 8 3/4% senior notes due 2012 and $500,000 aggregate principal amount of 10 3/8% senior subordinated notes due 2014. The RNS credit facility is secured by the assets and stock of AMC, WE and IFC and guaranteed by AMC, WE and IFC, and Rainbow Programming Holdings, RNS’s direct parent. The RNS credit facility contains certain covenants that require the maintenance of financial ratios (as defined in the credit facility) as well as restrictions on distributions, additional indebtedness, and liens. The maximum total leverage ratio per the credit facility is 6.75 times the cash flow (as defined) of AMC, IFC and WE through 2006. The revolving credit facility requires commitment reductions beginning December 31, 2009 through September 30, 2011. The term loan requires quarterly amortization payments beginning June 30, 2005 through March 31, 2012. Borrowings under the revolving credit facility bear interest at LIBOR plus a margin based upon the leverage ratio. Amounts under the term loan bear interest at LIBOR plus 2.75%. There were no amounts outstanding under the revolving credit facility as of September 30, 2004.

In connection with the RNS financing, RNS distributed approximately $704,900 to Rainbow Media Holdings which it used to repay all outstanding amounts under its credit facility and collateralize outstanding letters of credit. The Company wrote off approximately $12,694 of unamortized deferred financing costs in connection with the termination of the credit facility.

The Company has outstanding guarantees of $23,400 consisting primarily of guarantees by CSC Holdings in favor of certain financial institutions in respect of ongoing interest expense obligations and potential early termination events in connection with the monetization, by certain of its subsidiaries that are not included in the Restricted Group, of the Company’s holdings of Charter Communications, Inc., General Electric Company, and Adelphia Communications Corporation common stock. Amounts payable under such monetization guarantees are estimated as of a particular point in time by the financial institution counterparty and are based upon the

I-11

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

current price of the underlying common stock and various other assumptions, including stock market volatility and prevailing interest rates. Such guaranteed amounts approximate the fair value of the monetization indebtedness less the sum of the fair values of the underlying stock and the equity collar as reflected in the Company’s accompanying balance sheet, plus accrued interest.

NOTE 12. INCOME TAXES

The income tax benefit attributable to continuing operations for the nine months ended September 30, 2004 of $159,436 differs from the income tax benefit derived from applying the statutory federal rate to the pretax loss due principally to the impact of non-deductible preferred stock dividends, the non-deductible premiums paid upon the redemptions of preferred stock, a non-deductible expense related to the exchange right and put option related to the Series A Preferred Stock of CSC Holdings, an increase in the valuation allowance of $3,483, and state taxes.

The income tax expense attributable to continuing operations of $81,533 for the nine months ended September 30, 2003, differs from the income tax benefit derived from applying the statutory federal rate to the pretax loss due principally to the impact of non-deductible preferred stock dividends, a non-deductible expense related to the exchange right and put option related to the Series A Preferred Stock of CSC Holdings, an adjustment to the deferred tax rate, and state taxes.

NOTE 13. RESTRUCTURING

The following table summarizes the accrued restructuring liability related to the 2001 restructuring plan for continuing operations:

	Employee Severance			Facility Realignment and Other Costs			Total

Balance at December 31, 2003	$	3		$	19,212		$	19,215
Additional credits	—			(4,143		)	(4,143		)
Payments	(3		)	(5,938		)	(5,941		)
Balance at September 30, 2004	$	—		$	9,131		$	9,131

The following table summarizes the accrued restructuring liability related to the 2002 restructuring plan for continuing operations:

	Employee Severance			Facility Realignment and Other Costs			Total

Balance at December 31, 2003	$	207		$	39,623		$	39,830
Additional charges (credits)	(14		)	765			751
Payments	(139		)	(8,210		)	(8,349		)
Balance at September 30, 2004	$	54		$	32,178		$	32,232

I-12

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

The following table summarizes the accrued restructuring liability related to the 2003 restructuring plan for continuing operations:

	Employee Severance

Balance at December 31, 2003	$	2,258
Additional charges	138
Payments	(2,105		)
Balance at September 30, 2004	$	291

In connection with the acquisition of Fox Sports Networks’ 50% interest in Fox Sports Net Chicago in December 2003, the Company consolidated a restructuring liability of $380 relating to facility realignment costs. As of September 30, 2004, no payments were made against this liability.

During 2004, the Company recorded restructuring charges aggregating $5,440, associated with the elimination of certain positions in various business units of the Company. As of September 30, 2004, approximately $3,364 of these charges was paid.

At September 30, 2004, approximately $42,228 of the total restructuring liability was classified as a current liability in the consolidated balance sheet.

NOTE 14. INTANGIBLE ASSETS

The following table summarizes information relating to the Company’s acquired intangible assets at September 30, 2004 and December 31, 2003:

	September 30, 2004		December 31, 2003
Gross carrying amount of amortizable intangible assets
Affiliation agreements	$	786,901	$	794,186
Broadcast rights	152,944		142,302
Player contracts	8,758		8,758
Other intangibles	212,278		197,391
	1,160,881		1,142,637
Accumulated amortization
Affiliation agreements	305,648		248,595
Broadcast rights	68,122		58,507
Player contracts	8,455		7,621
Other intangibles	46,929		34,979
	429,154		349,702
Indefinite-lived intangible assets
Franchises	731,848		731,848
FCC licenses and other intangibles	94,016		1,899
Excess costs over the fair value of net assets acquired	1,471,114		1,471,114
	2,296,978		2,204,861

Total intangibles	$	3,028,705	$	2,997,796

Aggregate amortization expense
Nine months ended September 30, 2004 and year ended December 31, 2003	$	79,469	$	82,636

Estimated amortization expense
Year ending December 31, 2004			$	103,039
Year ending December 31, 2005			90,129
Year ending December 31, 2006			86,393
Year ending December 31, 2007			84,543
Year ending December 31, 2008			83,600

I-13

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

Certain reclassifications have been made in the 2004 period to reflect changes to the preliminary allocation of the purchase price to intangible assets acquired in connection with Regional Programming Partners’ acquisition of Fox Sports Networks’ 50% interest in each of Fox Sports Net Chicago and Fox Sports Net Bay Area in December 2003.

NOTE 15. BENEFIT PLANS

In December 2003, the FASB issued a revision to Statement No. 132 (“Statement 132R”), Employers’ Disclosures about Pensions and Other Postretirement Benefits. Statement 132R requires additional disclosure regarding certain aspects of pension plans including, but not limited to, asset and investment strategy, expected employer contributions and expected benefit payments. Statement 132R also requires certain disclosures for interim periods. The disclosure requirements of Statement 132R were effective for financial statements of periods ending after December 15, 2003; therefore, the Company has modified its disclosures as required.

The Company has a Cash Balance Retirement Plan (the “Retirement Plan”) for the benefit of employees other than those of the theater business. The Retirement Plan is a defined benefit plan, under which participants earn benefits related to their compensation during their career. Benefits earned each year will grow annually at a nominal rate of interest. Components of the net periodic pension cost for the Retirement Plan for the three and nine months ended September 30, 2004 and 2003 are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003

Service cost	$	6,219		$	5,737		$	18,687		$	17,211
Interest cost	1,266			1,025			3,804			3,073
Expected return on plan assets	(1,521		)	(1,052		)	(4,559		)	(3,154		)

Net periodic benefit cost	$	5,964		$	5,710		$	17,932		$	17,130

The Company previously disclosed in its financial statements for the year ended December 31, 2003, that it expected to contribute approximately $26,900 to its Retirement Plan in 2004. As of September 30, 2004, contributions of approximately $20,800 have been made.

I-14

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

NOTE 16. SEGMENT INFORMATION

The Company’s reportable segments are strategic business units that are managed separately. The Company evaluates segment performance based on several factors, of which the primary financial measure is business segment adjusted operating cash flow (defined as operating income (loss) before depreciation and amortization, stock plan income or expense and restructuring charges or credits).

	Three Months Ended September 30,							Nine Months Ended September 30,
	2004				2003			2004						2003
Revenues, net from continuing operations
Telecommunications Services	$	788,256			$	693,515		$	2,303,501					$	1,992,338
Rainbow	280,253				190,424			835,337						555,643
Madison Square Garden	110,227				107,780			480,564						449,380
Rainbow DBS	5,920				—			9,621						—
All other	25,811				20,955			62,687						61,700
Intersegment eliminations	(41,438			)	(36,908		)	(123,280					)	(109,197			)
Total	$	1,169,029			$	975,766		$			3,568,430			$	2,949,864

Adjusted operating cash flow from continuing operations
Telecommunications Services	$	317,438			$	274,159		$				901,784		$	773,328
Rainbow	86,096				52,592			245,357						127,309
Madison Square Garden	15,173				16,238			115,217						39,543
Rainbow DBS	(60,376			)	(29,448		)	(177,152					)	(34,590			)
All Other	(5,477			)	(2,100		)	(29,210					)	(9,772			)
Total	$		352,854		$	311,441		$		1,055,996				$		895,818

I-15

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

A reconciliation of reportable segment amounts to the Company’s consolidated balances is as follows:

	Three Months Ended September 30,									Nine Months Ended September 30,
	2004			2003						2004					2003
Revenues, net from continuing operations
Total revenue for reportable segments	$	1,184,656		$	991,719					$	3,629,023				$			2,997,361
Other revenue and intersegment eliminations	(15,627		)	(15,953					)	(60,593				)	(47,497				)
Total consolidated revenue	$	1,169,029		$			975,766			$	3,568,430				$	2,949,864

Adjusted operating cash flow to loss from continuing operations before income taxes
Total adjusted operating cash flow for reportable segments	$	358,331		$				313,541		$		1,085,206			$	905,590
All other adjusted operating cash flow	(5,477		)	(2,100					)	(29,210				)	(9,772				)
Items excluded from adjusted operating cash flow:
Depreciation and amortization	(277,189		)	(282,013					)	(817,292				)	(785,048				)
Stock plan expense	(6,755		)	(1,428					)	(16,899				)	(21,620				)
Restructuring credits (charges)	1,203			(8,004					)	(2,186				)	(11,423				)
Interest expense	(174,720		)	(171,496					)	(533,253				)	(435,399				)
Interest income	2,658			3,826						4,866					14,089
Equity in net income (loss) of affiliates	(6,234		)	(2,918					)	(7,349				)	437,780
Loss of sale of cable assets	—			(13,644					)	—					(13,644				)
Write-off of deferred financing costs	(12,694		)	—						(18,961				)	—
Gain (loss) on investments, net	6,280			52,810						(9,906				)	210,858
Gain (loss) on derivative contracts, net	21,623			(39,531					)	(34,049				)	(165,782				)
Loss on extinguishment of debt	—			—						(72,495				)	—
Minority interests	(13,966		)	(15,638					)	(64,834				)	(128,334				)
Miscellaneous, net	(23		)	(115					)	(89				)	(2,307				)
Loss from continuing operations before income taxes	$	(106,963	)	$		(166,710			)	$			(516,451	)	$		(5,012		)

Substantially all revenues and assets of the Company’s reportable segments are attributed to or located in the United States.

The Company does not have a single external customer which represents 10 percent or more of its consolidated revenues.

NOTE 17. LEGAL MATTERS

I-16

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

At Home

On June 26, 2003, the GUCLT initiated a separate action against Cablevision in the United States District Court for the Northern District of California. The California action stems from a May 1997 agreement between Cablevision and At Home that is no longer in effect. The GUCLT seeks monetary damages of “at least $12,500” due to the claimed failure by Cablevision to make alleged required payments to At Home during the 2001 calendar year. Cablevision has denied the material allegations of the complaint and sought a declaration that its potential liability, if any, is limited to payments for services actually provided by At Home net of all appropriate offsets.

YES Network

I-17

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

Tracking Stock Litigation

In August 2002, purported class actions naming as defendants the Company and each of its directors were filed in the Delaware Chancery Court. The actions, which allege breach of fiduciary duties and breach of contract with respect to the exchange of the Rainbow Media Group tracking stock for Cablevision NY Group common stock, were purportedly brought on behalf of all holders of publicly traded shares of Rainbow Media Group tracking stock. The actions sought to (i) enjoin the exchange of Rainbow Media Group tracking stock for Cablevision NY Group common stock, (ii) enjoin any sales of “Rainbow Media Group assets,” or, in the alternative, award rescissory damages, (iii) if the exchange is completed, rescind it or award rescissory damages, (iv) award compensatory damages, and (v) award costs and disbursements. The actions were consolidated into one action on September 17, 2002, and on October 3, 2002, the Company filed a motion to dismiss the consolidated action. The action was stayed by agreement of the parties pending resolution of a related action brought by one of the plaintiffs to compel the inspection of certain books and records of the Company. On October 26, 2004, the parties entered into a stipulation dismissing the related action, and providing for the Company’s production of certain documents. The parties also entered into a stipulation setting the schedule for the filing of an amended consolidated complaint and also setting forth a schedule for the filing of an answer or a motion to dismiss. The Company anticipates that the plaintiff will file a consolidated amended complaint on December 13, 2004. The Company believes the claims are without merit and intends to contest the lawsuits vigorously.

I-18

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

defendants of fiduciary duties. The complaint also alleges breaches of contract and unjust enrichment by the Company. The complaint seeks monetary damages and such other relief as the court deems just and proper. The Company intends to contest the lawsuit vigorously. On October 31, 2003, the Company and other defendants moved to stay the action in favor of the previously filed actions pending in Delaware or, in the alternative, to dismiss for failure to state a claim. On June 10, 2004, the court stayed the action until a review by the court at the earlier of a decision in the previously filed actions in Delaware on the pending motion to dismiss in those actions or at a conference before the court on November 10, 2004.

Time Warner Litigation

On November 14, 2003, American Movie Classics filed an action against Time Warner Entertainment, L.P. in New York State Supreme Court for declaratory relief and damages caused by Time Warner’s anticipatory repudiation of its cable television affiliation agreement with American Movie Classics. American Movie Classics filed that action as a result of Time Warner’s notice purporting to terminate the contract based upon their allegation that American Movie Classics had changed its programming. The Company believes the notice was improper. American Movie Classics is seeking a declaratory judgment that it is entitled to full performance of the agreement, and, at its option, is entitled to rescind the agreement and recover damages. Time Warner filed an answer and counterclaims in December 2003 that, among other things, seeks a declaratory judgment as to its right to terminate the affiliation agreement, an injunction requiring American Movie Classics to deliver a classic films channel and damages for an alleged breach of contract.

Accounting Related Investigations

NOTE 18. PREFERRED STOCK OF CSC HOLDINGS

In February 2003, Quadrangle Capital Partners LP, a private investment firm, invested $75,000 in CSC Holdings, in the form of 10% Series A Exchangeable Participating Preferred Stock convertible into Cablevision NY Group Class A common stock. In connection with the issuance of the Series A preferred stock to Quadrangle, CSC Holdings entered into an agreement with Quadrangle which granted Quadrangle the right to require CSC Holdings to purchase the preferred stock (“put option”) for cash or through the issuance of registered equity securities of Cablevision, at CSC Holdings’ option. The exchange right and the put option had been accounted for as a derivative. In October 2003, Quadrangle exercised its “put option” to require CSC Holdings to purchase all of its Series A preferred stock. The parties entered into an

I-19

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

agreement that the put price was $150,328. The put price was paid in cash by CSC Holdings in August 2004.

The change in the fair value of the exchange right and put option of $31,709 for the nine months ended September 30, 2004 has been reflected as a loss on derivative contracts in the accompanying condensed consolidated statement of operations.

NOTE 19. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of the Company’s debt instruments are summarized as follows:

	September 30, 2004
	Carrying Amount			Estimated Fair Value
Debt instruments:
Bank debt	$		2,480,708	$	2,480,708
Collateralized indebtedness	1,659,265			1,699,547
Senior notes and debentures	5,991,265			6,224,380
Senior subordinated notes and debentures	746,134			803,450
Notes payable	150,000			150,000
	$	11,027,372		$		11,358,085

	December 31, 2003
	Carrying Amount			Estimated Fair Value
Debt instruments:
Bank debt	$		2,357,039	$	2,357,039
Collateralized indebtedness	1,617,620			1,699,530
Senior notes and debentures	3,692,699			3,879,551
Senior subordinated notes and debentures	599,203			649,293
Redeemable exchangeable preferred stock	1,544,294			1,611,615
Notes payable	150,000			150,000
	$	9,960,855		$		10,347,028

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 20. OTHER MATTERS

In the second quarter of 2004, Madison Square Garden received $54,052 in cash in connection with the New York Mets’ termination of their broadcast rights agreement with Madison Square Garden. The termination of the rights agreement will be effective after the 2005 baseball season. As a result of the termination notice, the Company recorded a reversal of a purchase accounting liability of $41,788 related to this broadcast rights agreement. These items have been reflected as other operating income in the Company’s condensed consolidated statement of operations.

I-20

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

Effective September 16, 2004, the National Hockey League (“NHL”) commenced a lockout of players in support of its attempt to reach a new collective bargaining agreement. There can be no assurance that the NHL and the NHL Player’s Association will reach an agreement on a new collective bargaining agreement. The Collective Bargaining Agreement (“CBA”) between the National Hockey League and the National Hockey League Players Association expired on September 15, 2004 and the NHL Board of Governors imposed a lockout of NHL players beginning on September 16, 2004, which continues. We can give no assurance as to when this labor dispute will be resolved and therefore can not determine the extent to which our operating results will be negatively impacted. We do not expect the lockout to have a significant impact on the Company’s consolidated operating results, however if the entire season were cancelled, the effect on the operating results of the Madison Square Garden segment would be significant.

In October 2004, Fox Sports Chicago’s agreements with two major suppliers of distribution rights to certain live sporting events were terminated. Fox Sports Chicago is a wholly-owned subsidiary of Regional Programming Partners. Fox Sports Chicago expects to continue its operations with content from its partners and their affiliates. Fox Sports Chicago’s revenues will decline in future periods as a result of the termination by the cable television services that decline to carry Fox Sports Net Chicago without these distribution rights agreements.

NOTE 21. SUBSEQUENT EVENTS

On October 28, 2004, the Company received approximately $213,600 in cash in exchange for all 14.2 million shares it owned of AT&T Wireless common stock, representing the $15 share price paid in consideration of the merger between AT&T Wireless and Cingular Wireless LLC. As a result of that exchange, the Company’s prepaid forward contracts relating to its shares of AT&T Wireless were terminated. The termination provisions under the prepaid forward contracts require the Company to repay the fair value of the collateralized indebtedness less the sum of the fair value of the underlying stock and equity collars. The Company does not expect any material cash payment to be required as a result of the early terminations. The Company expects to recognize a loss representing the difference between the fair value and the carrying value of the collateralized indebtedness in the fourth quarter.

On August 20, 2004, our subsidiary, American Movie Classics Company LLC (“AMC LLC”) which owns our AMC and WE programming services, issued redeemable preferred membership interests with an initial liquidation preference of $350,000 in the aggregate to Rainbow Media Holdings LLC in exchange for common membership interests in AMC LLC. Distributions on the redeemable preferred membership interests were to accrue commencing upon the spin off of Rainbow Media Enterprises at an annual rate to be established immediately prior to the spin off. It was intended that Rainbow Media Holdings would transfer those interests to Cablevision at the time of the spin off and the interests would not be included in the spin off. On November 5, 2004, the Board of Directors of Cablevision decided to modify the terms of the spin off to eliminate the retained redeemable preferred membership interest in AMC LLC. This decision was made in light of expected increases in Rainbow Media Enterprises’ financing requirements. The elimination will be accomplished by having the redeemable preferred membership interests recontributed to a subsidiary of Rainbow Media Enterprises and converted back to common membership interest in AMC LLC prior to the spin off.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report contains statements that constitute forward looking information within the meaning of the Private Securities Litigation Reform Act of 1995, including restructuring charges, availability under credit facilities, levels of capital expenditures, sources of funds and funding requirements, among others. Investors are cautioned that such forward looking statements are not guarantees of future performance or results and involve risks and uncertainties and that actual results or developments may differ materially from the forward looking statements as a result of various factors. Factors that may cause such differences to occur include but are not limited to:

• the level of our revenues;

• video and high speed data subscriber demand and growth;

• demand for and growth of our digital cable and Voice over Internet Protocol services, which are impacted by competition from other services and the other factors set forth below;

• the cost of programming and industry conditions;

• the regulatory environment in which we operate;

• developments in the government investigations relating to improper expense recognition;

• the outcome of litigation and other proceedings, including the matters described under “Legal Proceedings”;

• general economic conditions in the areas in which we operate;

• demand for advertising time and space;

• our ability to obtain programming for our programming business and maintain and renew affiliation agreements for those businesses;

• the level of capital expenditures;

• the level of our expenses, including costs of our new services, such as expenses related to the roll out of our digital cable service and the development of our Voice over Internet Protocol voice and data services;

• pending and future acquisitions and dispositions of assets;

• market demand for new services;

• whether any pending uncompleted transactions are completed on the terms and at the times set forth (if at all);

• competition from existing competitors and new competitors entering our franchise areas;

• other risks and uncertainties inherent in the cable television business, the programming and entertainment businesses and our other businesses;

• financial community and rating agency perceptions of our business, operations, financial condition and the industry in which we operate;

• the health and performance of our Rainbow 1 DBS satellite;

• the ability of Rainbow DBS to acquire and retain large numbers of subscribers to its VOOM^SM service at a reasonable subscriber acquisition cost;

• our ability to obtain adequate financing at a reasonable cost to cover the funding needs of our Rainbow DBS business;

I-22

• our ability to successfully and timely complete our planned spin off of an entity owning our Rainbow DBS business, certain of Rainbow Media Holdings’ national entertainment services and Clearview Cinemas; and

• the factors described in our filings with the Securities and Exchange Commission, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein.

We disclaim any obligation to update or revise the forward-looking statements contained herein, except as otherwise required by applicable federal securities laws.

Summary

Our future performance is dependent, to a large extent, on general economic conditions including capital market characteristics, the effectiveness of direct competition, our ability to manage our businesses effectively, and our relative strength and leverage in the marketplace, both with suppliers and customers.

Telecommunications

In our Telecommunications segment we derive revenues principally through monthly payments by subscribers to our cable television systems. These monthly payments include charges for cable television, as well as, in many cases, equipment rental, pay-per-view charges, high-speed Internet access and charges for Internet protocol voice service. Revenue increases are derived from price increases, increases in the number of subscribers to our cable television systems, and increases in the number and changes in the type of programming and services sold to our existing subscribers. We also derive revenues from the sale of advertising time available to cable television systems. Revenues from advertising vary based upon the number and demographics of our subscribers who view the programming carried on our cable television systems.

By far the most serious challenge we face in our provision of cable television services, which accounted for 50% of our revenues in 2003 and 47% of our revenues for the nine months ended September 30, 2004, comes from competition from the direct broadcast satellite business. There are two major providers of DBS service in the United States, each with significantly higher numbers of subscribers than we have. We intend to compete with these DBS competitors by “bundling” our service offerings with products that the DBS companies cannot efficiently provide at this time, such as high-speed Internet access and Internet protocol voice service carried over the cable distribution plant, as well as by providing “on demand” services that are currently unavailable to a DBS subscriber.

I-23

Our high-speed Internet access business, which accounted for 10% of our revenues in 2003 and 12% of our revenues for the nine months ended September 30, 2004, faces competition from DSL providers. These providers have become increasingly aggressive in their pricing strategies in recent years, and customers may decide that a reduced price is more important to them than the superior speed that cable modems provide. In addition, with 43% of our basic subscribers now subscribing to our high-speed Internet service, opportunities to expand that base at the current pace may be limited. The recent gains in cable modem penetration may therefore not be indicative of the results we achieve in the future.

Our consumer Voice over Internet Protocol voice and data offering, which is in its initial rollout stage, is competitive with incumbent offerings primarily on the basis of pricing, where unlimited continental long distance, regional and local calling, together with certain features for which the incumbent providers charge extra, are offered at one low price. To the extent the incumbents, who have financial resources that exceed those of the Company, decide to meet our pricing and/or features or reduce their pricing, future growth and success of this business may be impaired. The regulatory framework for cable modem service and Voice over Internet Protocol service is being developed and differing regulatory alternatives will be considered, including increased regulation, which may affect our competitive position.

Lightpath, our commercial telephone and broadband business, operates in the most competitive business telecommunications market in the country and competes against the very largest telecommunications companies — both incumbent local exchange companies, other competitive local exchange companies and long distance companies. To the extent that dominant market leaders decide to reduce their prices, future success of the Company may be impaired. The trend in business communications has been shifting from a wired voice medium to a wireless, data medium. Should this trend accelerate dramatically, future growth of Lightpath may be impaired.

In addition, the telephone companies may find technological or other solutions to upgrade their service offering, providing additional competition for our video, data and voice service offerings.

Rainbow

In our Rainbow segment, which accounted for 18% of our 2003 revenues and 23% of our revenues for the nine months ended September 30, 2004, we earn revenues in two principal ways. First, we receive payments from operators of cable television systems and direct broadcast satellite operators. These revenues are earned under multi-year affiliation agreements with those companies. The specific affiliate fees we earn vary from operator to operator and also vary among our networks. The second principal source of revenues in this segment is from advertising. Under our agreements with cable and satellite operators we have the right to sell a specific amount of advertising time on our programs. Our advertising revenues are more variable than affiliate fees. This is because most of our advertising is sold on a short-term basis, not under long-term contracts. Also, our advertising revenues vary based upon the popularity of our programming as measured by rating services.

We seek to grow our revenues in the Rainbow segment by increasing the number of cable systems and satellite providers that carry our services and the number of subscribers to cable systems and satellite services that receive our programming. We refer to this as our

I-24

“penetration.” AMC, which is widely distributed, has less ability to increase its penetration than newer, less penetrated services. Cable television operators and satellite providers are increasingly interested in obtaining financial payments in return for carrying new services. These payments take the form of marketing support or direct payments for carriage. We seek to increase our advertising revenues through intensified marketing and by airing an increased number of minutes of national advertising but, ultimately, the level of our advertising revenues are directly related to the penetration of our services and the popularity (including within desirable demographic groups) of our services as measured by rating services.

The principal goals in this segment are to increase our affiliation fees and advertising revenues through increasing penetration of our national services. To do this we must continue to contract for and produce high-quality, attractive programming. Our greatest challenge arises from the increasing concentration of subscribers in the hands of a few cable television and satellite operators. This increased concentration increases the power of those operators and providers and could adversely affect our ability to increase the penetration of our services or even result in decreased penetration. In addition, this concentration gives those distributors greater leverage in negotiating the pricing and other terms of affiliation agreements. Moreover, as a result of this concentration the impact from a loss of any one of our major affiliate relationships becomes more severe.

In December 2003, Regional Programming Partners completed the acquisition of the 50% interests in Fox Sports Net Bay Area and Fox Sports Net Chicago that it did not already own in a transaction that was accounted for as a purchase. As a result, as of December 18, 2003, we have begun to consolidate the results of Fox Sports Net Bay Area and Fox Sports Net Chicago. The consolidation will increase the revenues and expenses in our Rainbow segment, although the amount of revenues that the Rainbow segment will receive from Fox Sports Net Chicago will decline in future periods as a result of the termination by the cable television services that decline to carry Fox Sports Net Chicago without these distribution rights agreements.

Madison Square Garden

Madison Square Garden, which accounted for 18% of our 2003 revenues and 13% of our revenues for the nine months ended September 30, 2004, consists of professional sports teams (principally the New York Knicks of the National Basketball Association (“NBA”), the New York Rangers of the National Hockey League (“NHL”)) and the New York Liberty of the Womens National Basketball Association), the MSG Networks sports programming business, and an entertainment business, which operates the Madison Square Garden arena, Radio City Music Hall, the Hartford Civic Center and Rentschler Field (entertainment venues), and faces competitive challenges unique to these activities. We derive revenues in this segment primarily from the sale of tickets, including luxury box rentals, to sporting and entertainment events, from rental rights fees paid to this segment by promoters that present events at our entertainment venues and the sports teams’ share of league-wide distributions of national television rights fees and royalties. We also derive revenue from the sale of advertising at our entertainment venues, from food, beverage and merchandise sales at the venues and from the licensing of our trademarks. MSG Networks derives its revenues from affiliate fees paid by cable television and satellite providers, sales of advertising, and from rights fees paid to this segment by television broadcasters and programming services that telecast events of sports teams which are under contract with MSG Networks. MSG Networks carries

I-25

Knicks and Ranger games, so that, like the rest of this segment, its performance is related to the performance of the teams. All of these revenues are ultimately dependent upon the quality of our sporting and entertainment events.

Our sports teams’ financial success is dependent on their ability to generate advertising sales, paid attendance, luxury box rentals, and food, beverage and merchandise sales. To a large extent, the ability of the team to build excitement among fans and therefore produce higher revenue streams, depends on the teams’ winning performance, which generates regular season and playoff attendance, and which supports increases in prices charged for tickets, luxury box rentals, and advertising placement. Each teams’ success is dependent on its ability to acquire highly competitive players. Although players are most often highly compensated, future successful performance is not certain. The governing bodies of the NBA and the NHL have the power and authority to take certain actions that they deem to be in the best interest of their respective leagues, which may not necessarily be consistent with maximizing MSG’s results of operations.

The Collective Bargaining Agreement (“CBA”) between the National Hockey League and the National Hockey League Players Association expired on September 15, 2004 and the NHL Board of Governors imposed a lockout of NHL players beginning on September 16, 2004, which continues. Through November 7, 2004, 7 New York Rangers scheduled home games have not been played. In addition a total of 30 NHL games scheduled to be broadcast by our networks were cancelled as a result of the lockout. We can give no assurance as to when this labor dispute will be resolved and the extent to which our operating results will be negatively impacted. We do not expect the lockout to have a significant impact on the Company’s consolidated operating results, however if the entire season were cancelled, the effect on the operating results of the Madison Square Garden segment would be significant.

Our MSG Networks sports programming business’ success is affected by our ability to secure desired programming of a variety of professional sports teams in addition to our proprietary programming. The continued carriage and success of the teams that are telecast by us will impact our revenues from distribution and from the rates charged for affiliation and advertising. In the second quarter of 2004, the New York Mets’ terminated their broadcast rights agreement with Madison Square Garden. The termination of the rights agreement will be effective after the 2005 baseball season.

Our entertainment business is largely dependent on the continued success of our Radio City Christmas Spectacular and our touring Christmas shows, as well as availability of, and our venues’ ability to attract, concerts, family shows and events.

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Rainbow DBS

Rainbow DBS launched its VOOM^SM service on October 15, 2003. It had not produced any revenues and incurred operating expenses of $57.7 million during 2003. For the nine months ended September 30, 2004, Rainbow DBS’ net revenues amount to $9.6 million and operating losses amounted to $211.6 million. The principal challenge for this business is to attract a sufficient subscriber base to reach and exceed a break-even point and to do so with subscriber acquisition and other costs that are within its funding capabilities. There can be no assurance that it will be able to meet this challenge. In addition, Rainbow DBS faces challenges in developing its infrastructure and processes to meet the demand of its evolving business. As of September 30, 2004, this business had approximately 26,000 activated customers. In the period from June through September 2004, there was a slow down in the rate at which Rainbow DBS added new customers. The business has also experienced an increase in customer deactivations. As a result, Rainbow DBS experienced a reduction in the number of subscribers from July to September 2004. Rainbow DBS increased its marketing efforts in mid-September and plans to continue to test a variety of pricing, promotion and marketing plans to develop the most effective strategy to attract and retain subscribers to the DBS service.

Recent Transactions

2004 Transactions. In 2004, Rainbow DBS invested approximately $85,000 in exchange for a substantial interest in an entity that recently acquired licenses from the FCC to provide multichannel video distribution and data service in 46 metropolitan areas in the United States.

In July 2004, Northcoast Communications, a subsidiary of the Company, completed its sale of its wholly-owned subsidiary, Cleveland PCS to an unaffiliated entity. The Company did not record any gain or loss in connection with the sale.

2003 Transactions. In March 2003, the Company transferred the stock of its wholly-owned subsidiary, Cablevision Electronics Investments, Inc. to GBO Electronics Acquisition, LLC.

In May 2003, Northcoast Communications, a subsidiary of CSC Holdings, completed its sale of PCS licenses to Verizon Wireless for approximately $763.0 million in cash. Of the proceeds, approximately $51.0 million was used by Northcoast Communications to retire debt. The remaining proceeds, after payment of expenses, were distributed to the partners of Northcoast Communications, including the Company.

In July 2003, the Company repurchased MGM’s 20% interest in each of AMC, The Independent Film Channel (“IFC”) and WE: Women’s Entertainment for $500 million.

In December 2003, Regional Programming Partners acquired Fox Sports Networks’ 50% interest in each of Fox Sports Net Chicago and Fox Sports Net Bay Area pursuant to Fox Sports Networks’ exercise of its contractual put right for $150 million.

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Results of Operations - Cablevision Systems Corporation

The following table sets forth on a historical basis certain items related to operations as a percentage of net revenues for the periods indicated.

STATEMENT OF OPERATIONS DATA

	Three Months Ended September 30,
	2004					2003					(Increase)
	Amount			% of Net Revenues		Amount			% of Net Revenues		Decrease in Net Loss
	(dollars in thousands)

Revenues, net	$	1,169,029		100	%	$	975,766		100	%	$	193,263

Operating expenses:
Technical and operating (excluding depreciation and amortization)	508,982			44		412,639			42		(96,343		)
Selling, general and administrative	313,865			27		262,150			27		(51,715		)
Other operating expense (income)	83			—		(9,036		)	(1	)	(9,119		)
Restructuring charges (credits)	(1,203		)	—		8,004			1		9,207
Depreciation and amortization	277,189			24		282,013			29		4,824
Operating income	70,113			6		19,996			2		50,117
Other income (expense):
Interest expense, net	(172,062		)	(15	)	(167,670		)	(17	)	(4,392		)
Equity in net loss of affiliates	(6,234		)	(1	)	(2,918		)	—		(3,316		)
Loss on sale of cable assets	—			—		(13,644		)	(1	)	13,644
Write-off of deferred financing costs	(12,694		)	(1	)	—			—		(12,694		)
Gain on investments, net	6,280			1		52,810			5		(46,530		)
Gain (loss) on derivative contracts, net	21,623			2		(39,531		)	(4	)	61,154
Minority interests	(13,966		)	(1	)	(15,638		)	(2	)	1,672
Miscellaneous, net	(23		)	—		(115		)	—		92
Loss from continuing operations before taxes	(106,963		)	(9	)	(166,710		)	(17	)	59,747
Income tax benefit	43,788			4		51,432			5		(7,644		)
Loss from continuing operations	(63,175		)	(5	)	(115,278		)	(12	)	52,103
Income from discontinued operations, net of taxes	—			—		8,316			1		(8,316		)
Net loss	$	(63,175	)	(5	)%	$	(106,962	)	(11	)%	$	43,787

I-28

	Nine Months Ended September 30,
	2004					2003					(Increase)
	Amount			% of Net Revenues		Amount			% of Net Revenues		Decrease in Net Loss
	(dollars in thousands)

Revenues, net	$	3,568,430		100	%	$	2,949,864		100	%	$	618,566

Operating expenses:
Technical and operating (excluding depreciation and amortization)	1,664,317			47		1,303,734			44		(360,583		)
Selling, general and administrative	960,773			27		780,968			26		(179,805		)
Other operating income	(95,757		)	(3	)	(9,036		)	—		86,721
Restructuring charges	2,186			—		11,423			—		9,237
Depreciation and amortization	817,292			23		785,048			27		(32,244		)
Operating income	219,619			6		77,727			3		141,892
Other income (expense):
Interest expense, net	(528,387		)	(15	)	(421,310		)	(14	)	(107,077		)
Equity in net income (loss) of affiliates	(7,349		)	—		437,780			15		(445,129		)
Loss on sale of cable assets	—			—		(13,644		)	—		13,644
Write-off of deferred financing costs	(18,961		)	(1	)	—			—		(18,961		)
Gain (loss) on investments, net	(9,906		)	—		210,858			7		(220,764		)
Loss on derivative contracts, net	(34,049		)	(1	)	(165,782		)	(6	)	131,733
Loss on extinguishment of debt	(72,495		)	(2	)	—			—		(72,495		)
Minority interests	(64,834		)	(2	)	(128,334		)	(4	)	63,500
Miscellaneous, net	(89		)	—		(2,307		)	—		2,218
Loss from continuing operations before taxes	(516,451		)	(14	)	(5,012		)	—		(511,439		)
Income tax (expense) benefit	159,436			4		(81,533		)	(3	)	240,969
Loss from continuing operations	(357,015		)	(10	)	(86,545		)	(3	)	(270,470		)
Loss from discontinued operations, net of taxes	(5,815		)	—		(13,392		)	—		7,577
Loss before extraordinary item	(362,830		)	(10	)	(99,937		)	(3	)	(262,893		)
Extraordinary loss on investment, net of taxes	(7,436		)	—		—			—		(7,436		)
Net loss	$	(370,266	)	(10	)%	$	(99,937	)	(3	)%	(270,329		)

I-29

Comparison of Three and Nine Months Ended September 30, 2004 Versus Three and Nine Months Ended September 30, 2003

Consolidated Results – Cablevision Systems Corporation

Revenues, net for the three and nine months ended September 30, 2004 increased $193.3 million (20%) and $618.6 million (21%), respectively, as compared to revenues for the same periods in the prior year. The net increases were attributable to the following:

	Three Months		Nine Months
	Ended September 30, 2004
	(dollars in millions)

Increased revenue in Rainbow Media Holdings’ programming services excluding those of Madison Square Garden and Rainbow DBS	$	89.8	$	279.7
Increase in net revenue from high-speed data services	32.3		125.7
Higher revenue per cable television subscriber attributable primarily to rate increases and digital subscriber growth, net of changes in the average number of subscribers	35.0		104.8
Increase in Madison Square Garden’s revenue	2.4		31.2
Increased revenues from video on demand, subscription video on demand and pay-per view	6.1		30.3
Increased net revenue from VoIP business	14.8		29.5
Other net increases	12.9		17.4
	$	193.3	$	618.6

Technical and operating expenses include primarily:

• cable programming costs which are costs paid to programmers, net of amortization of any launch support received, for cable content and are generally paid on a per-subscriber basis;

• network management and field service costs which represent costs associated with the maintenance of our broadband network, including costs of certain customer connections;

• contractual rights payments to broadcast certain live sporting events and contractual payments pursuant to employment agreements with professional sports teams personnel;

• programming and production costs of our Rainbow businesses;

• costs associated with our direct broadcast satellite business, including programming and production costs, costs to operate the uplink and broadcast facility, and subscriber related costs; and

• interconnection, call completion and circuit fees relating to our telephony business.

Technical and operating expenses for the three and nine months ended September 30, 2004 increased $96.3 million (23%) and $360.6 million (28%), respectively, as compared to the same periods in the prior year. The net increases are attributable to the following:

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	Three Months		Nine Months
	Ended September 30, 2004
	(dollars in millions)
Increase in Rainbow and Madison Square Garden programming and production costs, including contractual rights	$	32.9	$	161.8
Increase in programming costs incurred by cable operations	16.3		81.1
Increased costs incurred in connection with our direct broadcast satellite service	17.0		62.1
Increase in network management and field service costs	15.1		36.9
Other net increases	15.0		18.7
	$	96.3	$	360.6

As a percentage of revenues, technical and operating expenses increased 2% and 3% during the three and nine months ended September 30, 2004, respectively, as compared to the same periods in 2003.

Selling, general and administrative expenses include primarily sales, marketing and advertising expenses, administrative costs, costs of facilities and costs of customer call centers. Selling, general and administrative expenses increased $51.7 million (20%) and $179.8 million (23%) for the three and nine months ended September 30, 2004, respectively, as compared to the same periods in the prior year. The net increases are attributable to the following:

	Three Months			Nine Months
	Ended September 30, 2004
	(dollars in millions)
Increased costs incurred in connection with marketing and administrative costs of our direct broadcast satellite service	$	19.9		$	89.7
Increase in sales and marketing costs	9.3			31.4
Increase in customer service costs	7.1			19.0
Reinstatement of management bonuses and increase in employee bonuses in certain divisions	6.2			24.0
Decrease in expenses relating to a long-term incentive plan	(9.9		)	(3.0		)
Increase in general and administrative costs	8.3			21.9
Increase (decrease) in stock plan expenses (includes the effects of changes in stock price, the vesting of restricted stock and employee terminations)	5.3			(4.7		)
Other net increases	5.5			1.5
	$	51.7		$	179.8

As a percentage of revenues, selling, general and administrative expenses remained constant for the three months ended September 30, 2004 and increased 1% for the nine months ended September 30, 2004, as compared to the same periods in 2003. Excluding the effects of the stock plan, as a percentage of revenues such costs decreased 1% for the three months ended September 30, 2004 and remained constant for the nine months ended September 30, 2004 as compared to the same periods in 2003.

Other operating income of $95.8 million for the nine months ended September 30, 2004 includes a $54.0 million cash payment received in connection with the New York Mets’ termination of the broadcast rights agreement with Madison Square Garden which will be effective after the 2005 baseball season and a $41.8 million reversal of a purchase accounting liability related to this broadcast rights agreement. Other operating income of $9.0 million for the three and nine months ended September 30, 2003 resulted from the sale of trade accounts receivable from a cable operator in bankruptcy for which a reserve had previously been recorded.

I-31

Restructuring charges (credits) amounted to $(1.2) million and $2.2 million for the three and nine months ended September 30, 2004, respectively, as compared to $8.0 million and $11.4 million for the three and nine months ended September 30, 2003, respectively. The credit for the three months ended September 30, 2004 consisted of adjustments to provisions previously recorded in connection with the 2001, 2002 and 2003 restructuring plans of $2.1 million, partially offset by severance costs of $0.9 million. The charge for the nine months ended September 30, 2004 resulted from severance costs of $5.4 million, partially offset by a $3.2 million credit as a result of adjustments to provisions previously recorded in connection with the 2001, 2002 and 2003 restructuring plans. The 2003 amounts resulted primarily from adjustments to provisions previously recorded in connection with the 2001 and 2002 restructuring plans due primarily to changes in estimates of lease termination costs and to severance costs incurred in connection with the elimination of certain staff positions in 2003.

Depreciation and amortization expense decreased $4.8 million (2%) for the three months ended September 30, 2004 and increased $32.2 million (4%) for the nine months ended September 30, 2004, as compared to the same periods in 2003. The net decrease for the three months ended September 30, 2004 resulted from a decrease in the write-off and disposal costs of fixed assets, partially offset by increases in depreciation expense of the satellite and new plant assets and increases resulting from the amortization of acquired intangibles. The net increase for the nine months ended September 30, 2004 resulted from increases due to the amortization of acquired intangibles and increases in depreciation expense of the satellite and new plant assets, partially offset by a decrease in the write-off and disposal costs of fixed assets compared to the prior year period.

Net interest expense increased $4.4 million (3%) and $107.1 million (25%) during the three and nine months ended September 30, 2004, respectively, as compared to the same periods in 2003. The net increases are attributable to the following:

	Three Months			Nine Months
	Ended September 30, 2004
	(dollars in millions)

Higher average debt balances, partially offset by lower average interest rates	$	39.9		$	68.4
Lower interest income	1.2			9.2
Classification of dividends on CSC Holdings’ Series H and Series M Redeemable Preferred Stock as interest expense in connection with the implementation of Statement of Financial Accounting Standards No. 150 as of July 1, 2003.	—			60.4
Decrease in dividends on CSC Holdings’ Series H and Series M Redeemable Preferred Stock due to their redemption in May 2004	(43.6		)	(43.6		)
Other net increases	6.9			12.7
	$	4.4		$	107.1

Equity in net income (loss) of affiliates amounted to $(6.2) million and $(7.3) million in the three and nine months ended September 30, 2004 compared to $(2.9) million and $437.8 million, respectively, in the same periods in 2003. Such amounts consist of the Company’s share of the net income or loss of certain businesses in which the Company has varying minority ownership interests. The amount for the nine month period in 2003 includes $434.6 million representing our equity in the net income of Northcoast Communications, LLC which resulted primarily from

I-32

Northcoast Communications’ sale of certain of its personal communications services licenses to Verizon Wireless.

Write-off of deferred financing costs of $12.7 million and $19.0 million in the three and nine months ended September 30, 2004, respectively, consisted of costs written off in connection with the redemption of CSC Holdings’ Series H and Series M Redeemable Exchangeable Preferred Stock and CSC Holdings’ 9-7/8% senior subordinated debentures aggregating $5.1 million in the second quarter of 2004 and termination of certain of the Company’s credit agreements aggregating $13.9 million ($1.2 million in the first quarter and $12.7 million in the third quarter).

Loss on extinguishment of debt of $72.5 million for the nine months ended September 30, 2004 represents premiums of $58.2 million on the early redemption of CSC Holdings’ Series H and Series M Redeemable Preferred Stock and $14.3 million on the early redemption of CSC Holdings’ 9-7/8% senior subordinated debentures.

Gain (loss) on investments, net for the three and nine months ended September 30, 2004 of $6.3 million and $(9.9) million, respectively, as compared to $52.8 million and $210.9 million in the same periods in 2003, consists primarily of the net increase (decrease) in the fair value of Charter Communications, Adelphia Communications, AT&T, AT&T Wireless, Comcast, General Electric, and Leapfrog common stock.

Loss on derivative contracts, net for the three and nine months ended September 30, 2004 and 2003 consists of the following:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2004		2003			2004			2003
	(dollars in millions)
Unrealized gain (loss) due to the change in fair value of the Company’s prepaid forward contracts relating to the AT&T, AT&T Wireless, Comcast, Charter Communications, General Electric, Leapfrog and Adelphia Communications shares	$	3.9	$	(51.4	)	$	(8.9	)	$	(155.9	)
Unrealized gain (loss) on exchange right and put option related to CSC Holdings’ Series A Preferred Stock	—		14.3			(31.7		)	(23.6		)
Unrealized and realized gain (loss) on interest rate swap contracts	17.7		(2.4		)	6.5			13.7
	$	21.6	$	(39.5	)	$	(34.1	)	$	(165.8	)

Minority interests represent other parties’ shares of the net income (loss) of entities which are not entirely owned by us but which are consolidated in our financial statements. For the three and nine months ended September 30, 2004 and 2003 minority interests consists of the following:

I-33

	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
	(dollars in millions)
Fox Sports Networks’ 40% share of the net income of Regional Programming Partners	$	(13.7	)	$	(11.6	)	$	(63.8	)	$	(18.0	)
MGM’s 20% share of the net income of AMC, WE and IFC	—			(1.6		)	—			(17.0		)
CSC Holdings’ Series H and Series M Preferred Stock dividend requirements through June 30, 2003*	—			—			—			(87.3		)
CSC Holdings’ Series A Preferred Stock dividend requirements	—			(2.0		)	—			(5.0		)
Other	(0.3		)	(0.4		)	(1.0		)	(1.0		)
	$	(14.0	)	$	(15.6	)	$	(64.8	)	$	(128.3	)

* Beginning July 1, 2003, these dividend requirements are recorded as interest expense.

Income tax benefit attributable to continuing operations amounted to $43.8 million and $159.4 million for the three and nine months ended September 30, 2004, respectively. The income tax benefit in the three month period ended September 30, 2004 resulted primarily from the pretax loss and state taxes and was partially offset by an increase in the valuation allowance of $0.3 million. The income tax benefit in the nine month period resulted primarily from the pretax loss, partially offset by the impact of non-deductible preferred stock dividends, the non-deductible premiums paid upon redemptions of preferred stock, a non-deductible expense related to the exchange right and put option related to the Series A Preferred Stock of CSC Holdings, an increase in the valuation allowance of $3.5 million and state taxes.

The income tax benefit attributable to continuing operations was $51.4 million and income tax expense was $81.5 million for the three and nine months ended September 30, 2003, respectively. The income tax benefit for the three months ended September 30, 2003 resulted primarily from a pretax loss, a non-taxable adjustment related to the exchange right and put option related to the Series A Preferred Stock of CSC Holdings and state taxes, partially offset by the impact of non-deductible preferred stock dividends. The income tax expense for the nine months ended September 30, 2003 resulted primarily from non-deductible preferred stock dividends, a non-deductible expense related to the exchange right and put option related to the Series A Preferred Stock of CSC Holdings, an adjustment to the deferred tax rate, and state taxes.

I-34

Income (loss) from discontinued operations, net of taxes for the three and nine months ended September 30, 2004 and 2003 reflects the following items associated with assets held for sale:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2004		2003		2004			2003
	(dollars in millions)
Loss on sale of Bravo programming service	$	—	$	—	$	(1.0	)	$	—
Net operating results of the retail electronics business	—		—		—			(7.1		)
Gain (loss) on sale of the retail electronics business	—		8.3		(4.8		)	(6.3		)
	$	—	$	8.3	$	(5.8	)	$	(13.4	)

Extraordinary loss, net of taxes of $7.4 million for the nine months ended September 30, 2004 resulted from Rainbow DBS’s investment in DTV Norwich, LLC and represents the excess of the purchase price over fair market value of the acquired assets.

Business Segments Results - Cablevision Systems Corporation

The Company classifies its business interests into four segments:

• Telecommunications Services, consisting principally of our cable television, telephone and high-speed data services operations;

• Rainbow, consisting principally of interests in national and regional cable television programming networks;

• Madison Square Garden, which owns and operates professional sports teams, regional cable television networks, live productions and entertainment venues; and

• Rainbow DBS, which consists of our direct broadcast satellite service (VOOM^SM) and the 21 high definition channels currently carried exclusively by this service.

The Company allocates certain costs to each segment based upon their proportionate estimated usage of services. The financial information for the segments does not include inter-segment eliminations.

I-35

Telecommunications Services

The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to net revenues for the Company’s Telecommunications Services segment.

	Three Months Ended September 30,
	2004					2003
	Amount			% of Net Revenues		Amount		% of Net Revenues
	(dollars in thousands)

Revenues, net	$	788,256		100	%	$	693,515	100	%
Technical and operating expenses (excluding depreciation and amortization)	320,908			41		282,802		41
Selling, general and administrative expenses	153,194			19		137,192		20
Restructuring charges (credits)	(62		)	—		39		—
Depreciation and amortization	199,395			25		208,322		30
Operating income	$	114,821		15	%	$	65,160	9	%

	Nine Months Ended September 30,
	2004				2003
	Amount		% of Net Revenues		Amount		% of Net Revenues
	(dollars in thousands)

Revenues, net	$	2,303,501	100	%	$	1,992,338	100	%
Technical and operating expenses (excluding depreciation and amortization)	941,936		41		804,930		40
Selling, general and administrative expenses	466,195		20		426,048		21
Restructuring charges	550		—		1,564		—
Depreciation and amortization	585,330		25		585,152		29
Operating income	$	309,490	13	%	$	174,644	9	%

Revenues, net for the three and nine months ended September 30, 2004 increased $94.7 million (14%) and $311.2 million (16%) as compared to revenues for the same periods in the prior year. The net increases were attributable to the following:

	Three Months		Nine Months
	Ended September 30, 2004
	(dollars in millions)

Increase in net revenue from high-speed data services	$	32.3	$	125.7
Higher revenue per cable television subscriber attributable primarily to rate increases and digital subscriber growth, net of changes in the average number of subscribers	35.0		104.8
Increased revenues from video on demand, subscription video on demand and pay-per view	6.1		30.3
Increased net revenue from VoIP business	14.8		29.5
Increase in Lightpath revenues, net of intersegment eliminations	4.0		11.0
Other net increases	2.5		9.9
	$	94.7	$	311.2

I-36

Technical and operating expenses for the three and nine months ended September 30, 2004 increased $38.1 million (13%) and $137.0 million (17%) compared to the same periods in 2003. The net increases were attributable to the following:

	Three Months		Nine Months
	Ended September 30, 2004
	(dollars in millions)

Increase in programming costs	$	17.9	$	86.6
Increase in network management and field service costs	15.1		36.9
Increase in technical management and employee bonuses	0.7		2.1
Other net increases	4.4		11.4
	$	38.1	$	137.0

As a percentage of revenues, technical and operating expenses remained constant for the three months ended September 30, 2004 and increased 1% during the nine months ended September 30, 2004 as compared to the same periods in 2003.

Selling, general and administrative expenses increased $16.0 million (12%) and $40.1 million (9%) for the three and nine months ended September 30, 2004 as compared to the same periods in 2003. The net increases were attributable to the following:

	Three Months			Nine Months
	Ended September 30, 2004
	(dollars in millions)

Increase in customer service costs	$	7.1		$	19.0
Increase in sales and marketing costs	8.2			18.4
Reinstatement of management bonuses and increase in employee bonuses	2.2			7.9
Lower expenses relating to a long-term incentive plan	(4.3		)	(1.1		)
Increase (decrease) in stock plan expenses (includes the effects of changes in stock price, the vesting of restricted stock and employee terminations)	2.6			(5.6		)
Other net increases	0.2			1.5
	$	16.0		$	40.1

As a percentage of revenues, selling, general and administrative expenses decreased 1% in each of the three and nine month periods ended September 30, 2004, as compared to the same periods in 2003. Excluding the effects of the stock plan, as a percentage of revenues such costs decreased 1% for the three and nine months ended September 30, 2004 as compared to the same periods in 2003.

Depreciation and amortization expense decreased $8.9 million (4%) and increased $0.2 million for the three and nine months ended September 2004, respectively, as compared to the same periods in 2003. The net decrease in the three month period resulted primarily from lower disposal costs, partially offset by depreciation of new subscriber devices, headend upgrades and new plant assets.

I-37

Rainbow

The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to net revenues for the Rainbow segment.

	Three Months Ended September 30,
	2004				2003
	Amount		% of Net Revenues		Amount			% of Net Revenues
	(dollars in thousands)

Revenues, net	$	280,253	100	%	$	190,424		100	%
Technical and operating expenses (excluding depreciation and amortization)	115,766		41		73,546			39
Selling, general and administrative expenses	80,370		29		73,025			38
Other operating income	—		—		(8,539		)	(4	)
Restructuring charges	842		—		117			—
Depreciation and amortization	31,599		11		29,129			15
Operating income	$	51,676	18	%	$	23,146		12	%

	Nine Months Ended September 30,
	2004				2003
	Amount		% of Net Revenues		Amount			% of Net Revenues
	(dollars in thousands)

Revenues, net	$	835,337	100	%	$	555,643		100	%
Technical and operating expenses (excluding depreciation and amortization)	348,067		42		225,701			41
Selling, general and administrative expenses	244,144		29		216,628			39
Other operating income	—		—		(8,539		)	(2	)
Restructuring charges	834		—		330			—
Depreciation and amortization	98,377		12		70,749			13
Operating income	$	143,915	17	%	$	50,774		9	%

Revenues for the three and nine months ended September 30, 2004 increased $89.8 million (47%) and $279.7 million (50%), respectively, as compared to revenues for the same period in 2003. Approximately $58.1 million and $173.1 million, respectively, of the increase was due to the acquisition of the remaining interests in Fox Sports Net Chicago and Fox Sports Net Bay Area in December 2003. Approximately $16.1 million and $44.4 million, respectively, of the increase was attributed primarily to growth in programming network subscribers and rate increases, approximately $12.5 million and $43.8 million, respectively, of the increase was due primarily to higher advertising revenue and the remaining increases of $3.1 million and $18.4 million, respectively, were from other revenue sources.

Technical and operating expenses for the three and nine months ended September 30, 2004 increased $42.2 million (57%) and $122.4 million (54%) compared to the same periods in 2003. Approximately $36.2 million and $108.5 million, respectively, of the increase resulted from the acquisition of the remaining interests in Fox Sports Net Chicago and Fox Sports Net Bay Area in December 2003. The remaining increase was primarily due to higher programming costs. As a

I-38

percentage of revenues, technical and operating expenses increased 2% and 1% for the three and nine months ended September 30, 2004, respectively, as compared to the 2003 periods.

Selling, general and administrative expenses increased $7.3 million (10%) and $27.5 million (13%) for the three and nine months ended September 30, 2004, respectively, as compared to the same periods in 2003. Approximately $7.1 million and $21.4 million, respectively, of the increase resulted from the acquisition of the remaining interests in Fox Sports Net Chicago and Fox Sports Net Bay Area in December 2003. The net increase in the nine month period ended September 30, 2004 further reflected increases of $11.5 million which resulted from higher sales, marketing and advertising costs and a $0.4 million increase from higher administrative costs, partially offset by a decrease of $2.9 million in charges related to a stock plan and a decrease $2.9 million in charges related to a long-term incentive plan. As a percentage of revenues, selling, general and administrative expenses decreased 9% and 10% in the three and nine months ended September 30, 2004, respectively, compared to the same periods in 2003 including and excluding the effects of the stock plan.

Other operating income of $8.5 million for the three and nine months ended September 30, 2003 resulted from the sale of trade accounts receivable from a cable operator in bankruptcy for which a reserve had previously been recorded.

Depreciation and amortization expense increased $2.5 million (8%) and $27.6 million (39%) for the three and nine months ended September 30, 2004, respectively, as compared to the same periods in 2003. The net increase resulted primarily from the amortization of acquired intangibles.

Madison Square Garden

The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenue for Madison Square Garden.

	Three Months Ended September 30,
	2004				2003
	Amount		% of Net Revenues		Amount			% of Net Revenues
	(dollars in thousands)

Revenues, net	$	110,227	100	%	$	107,780		100	%
Technical and operating expenses (excluding depreciation and amortization)	60,977		55		60,500			56
Selling, general and administrative expenses	35,131		32		31,275			29
Other operating income	—		—		(497		)	—
Restructuring charges	143		—		—			—
Depreciation and amortization	11,197		10		12,262			11
Operating income	$	2,779	3	%	$	4,240		4	%

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	Nine Months Ended September 30,
	2004					2003
	Amount			% of Net Revenues		Amount			% of Net Revenues
	(dollars in thousands)

Revenues, net	$	480,564		100	%	$	449,380		100	%
Technical and operating expenses (excluding depreciation and amortization)	362,181			75		313,289			70
Selling, general and administrative expenses	100,189			21		100,298			22
Other operating income	(95,840		)	(20	)	(497		)	—
Restructuring charges	4,101			1		3,696			1
Depreciation and amortization	34,252			7		39,457			9
Operating income (loss)	$	75,681		16	%	$	(6,863	)	(2	)%

Revenues for the three and nine months ended September 30, 2004 increased $2.4 million (2%) and $31.2 million (7%), respectively, as compared to revenues for the comparable periods in 2003.

	Three Months			Nine Months
	Ended September 30, 2004
	(dollars in millions)
Increases (decreases) from:
National Basketball Association expansion revenue received	$	—		$	10.3
Net higher revenues from venue rentals	5.8			3.2
Higher (lower) Knicks, Rangers and Liberty related revenues	(1.8		)	6.5
Net higher revenues from entertainment and other sporting events at Madison Square Garden and Radio City Music Hall	0.2			3.4
Higher (lower) revenues at MSG Networks	(2.8		)	2.0
Other net increases	1.0			5.8
	$	2.4		$	31.2

Technical and operating expenses for the three and nine months ended September 30, 2004 increased $0.5 million (1%) and $48.9 million (16%), respectively, over the same 2003 periods. The three month increase was driven primarily by higher net costs for venue rentals noted above and higher Liberty operating expenses due to the presentation of certain games at Radio City Music Hall. These increases were partially offset by lower Ranger player provisions related to player transactions in 2003 and lower venue and MSG Network operating costs.

The nine month increase was driven primarily by a $32.4 million increase resulting from higher team compensation and Knicks luxury tax. The nine month increase also reflected a $18.2 million net increase resulting from higher provisions for certain team transactions, a credit recorded in the first quarter of 2003 reflecting the reversal of a luxury tax provision attributable to a certain player who was previously waived due to a career ending injury, and Knick playoff expenses in 2004. It also reflects higher Liberty operating expenses due to the presentation of certain games at Radio City Music Hall, and costs associated with a boxing event in 2004 with no comparable event in 2003. These increases were partially offset by a net decrease in costs associated with the large scale events referred to above, and lower operating costs for MSG Networks and lower venue operating costs.

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Selling, general and administrative expenses for the three and nine months ended September 30, 2004 increased $3.9 million (12%) and decreased $0.1 million, respectively, over the same 2003 periods. The three month increase was driven primarily by higher professional fees and promotional costs and higher severance costs, partially offset by other net savings across the company.

The nine month decrease was primarily associated with a decrease in expenses related to employee stock and long term incentive plans and net cost savings across all divisions of Madison Square Garden, substantially offset by an increase in professional fees, severance costs and promotional costs.

Other operating income of $95.8 million in 2004 results from the termination of Madison Square Garden’s broadcasting rights agreement with the New York Mets. In the second quarter of 2004, the New York Mets gave notice of termination of their rights agreement with Madison Square Garden, and with the notice paid Madison Square Garden a contractually obligated termination fee of $54.0 million. The termination of the rights agreement will be effective after the 2005 baseball season. In addition, Madison Square Garden recorded a $41.8 million credit reflecting the reversal of a purchase accounting liability related to this rights agreement.

Restructuring charges of $4.1 million in 2004 represent severance costs associated with the elimination of certain staff positions in the first and second quarters of 2004. Restructuring charges of $3.7 million in 2003 primarily represent severance costs associated with the elimination of certain staff positions in the second quarter of 2003.

Depreciation and amortization expense for the three and nine months ended September 30, 2004 decreased $1.1 million (9%) and $5.2 million (13%) as compared to the same 2003 periods due primarily to certain intangibles and fixed assets becoming fully amortized and depreciated, respectively.

Rainbow DBS

The table below sets forth, for the periods presented, certain historical financial information for the Rainbow DBS segment.

	Three Months Ended September 30,							Nine Months Ended September 30,
	2004				2003			2004			2003
	(dollars in thousands)

Revenues, net	$		5,920		$	—		$	9,621		$	—
Technical and operating expenses (excluding depreciation and amortization)	30,573				13,615			75,999			13,865
Selling, general and administrative expenses	36,140				15,848			113,779			20,901
Depreciation	14,480				—			31,444			—
Operating loss	$	(75,273		)	$	(29,463	)	$	(211,601	)	$	(34,766	)

Revenues for the three and nine months ended September 30, 2004 consist primarily of programming service fees of $4.7 million and $6.5 million, respectively, equipment rental fees and amortized up-front deferred installation charges of $1.2 million and $1.6 million,

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respectively, and equipment sales of $0.3 million and $2.0 million, respectively, partially offset by $0.3 million and $0.5 million of subscriber credits. The Company recognizes revenues from programming services and equipment rental as those services are provided to subscribers. Up-front fees collected for installation of the equipment under the rental program are deferred over the estimated average customer life. The Company recognizes revenues from the sale of equipment upon installation, with an appropriate provision for returned merchandise. No revenues were recorded for the same periods in 2003 as the service did not launch until October 2003.

Technical and operating expenses for the three and nine months ended September 30, 2004 consist of $16.6 million and $44.4 million of costs to license and develop content for the VOOM high definition channels, $12.2 million and $27.7 million of costs primarily to operate the uplink and broadcast facility and the customer call center and $1.8 million and $3.9 million of costs of equipment sold and related installation, respectively, which includes an adjustment in the three and nine month periods in 2004 for inventory shrink resulting from a physical inventory taken in September 2004.

Selling, general and administrative expenses for the three and nine months ended September 30, 2004 increased $20.3 million and $92.9 million, respectively, as compared to the prior year periods primarily due to the launch of the service in October 2003. The increases consist principally of $13.5 million and $62.0 million, respectively, of increased marketing and subscriber acquisition costs, including installation costs for customers who rent equipment; an increase in general and administrative expenses of $6.4 million and $27.7 million, respectively, due to increases in various costs including corporate overhead, field operations, including costs to retrieve disconnected set top boxes, information technology costs and salaries resulting from additional manpower; and an increase of $0.4 million and $3.2 million, respectively, in stock plan and long term incentive plan expenses. The 2003 costs consist primarily of general administrative costs incurred prior to the launch of the service. Selling, general and administrative expenses were lower in the three month period ended September 30, 2004 as compared with the three months ended June 30, 2004 reflecting the Company’s decision to scale back its marketing efforts in light of installation problems. The Company expects to increase its advertising expenses in the fourth quarter of 2004.

Depreciation and amortization expense for the three and nine months ended September 30, 2004 of $14.5 million and $31.4 million, respectively, represents primarily depreciation of the satellite which was placed in service in October 2003 of $8.5 million and $23.5 million, respectively and depreciation of equipment rented to customers of $4.7 million and $5.3 million, which includes the write-off of customer equipment not required to be returned by deactivated customers, including satellite dishes, over-the-air antennas and wiring and a related provision based on estimated customer life.

Operating Activities

Net cash provided by operating activities amounted to $425.2 million for the nine months ended September 30, 2004 compared to $278.9 million for the nine months ended September 30, 2003. The 2004 cash provided by operating activities resulted from $574.1 million of income before depreciation and amortization and non-cash items, a $66.2 million increase in accrued interest, a

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$60.5 million increase in feature film rights payable, a $29.6 million increase in accounts payable, partially offset by decreases in cash resulting from a $202.2 million increase in feature film inventory resulting from new film licensing agreements, a $71.5 million increase in current and other assets (including an $18.4 million increase in Rainbow DBS inventory) and a $31.5 million decrease in accrued and other liabilities.

The 2003 cash provided by operating activities resulted primarily from $475.0 million of income before depreciation and amortization and non-cash items, a $110.5 million decrease in accounts receivable from affiliates. Partially offsetting these increases were decreases in cash resulting from a $123.4 million decrease in accounts payable, a $89.4 million decrease in accrued and other liabilities, a $52.8 million decrease in feature film rights payable, a $22.1 million increase in feature film inventory and a $18.9 million increase in current and other assets.

Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2004 was $620.6 million compared to $458.5 million for the nine months ended September 30, 2003. The 2004 investing activities consisted primarily of $554.6 million of capital expenditures, an $84.7 million payment for the acquisition of our interest in DTV Norwich and its acquisition of FCC licenses to provide multichannel video distribution and data service, and other net cash payments of $11.4 million, partially offset by $30.1 million received in connection with Northcoast Communications’ sale of PCS licenses, representing the release of funds held in escrow to provide for post-closing adjustments and any potential indemnification claims.

Net cash used in investing activities for the nine months ended September 30, 2003 consisted primarily of $661.9 million of capital expenditures, $250.4 million of payments for acquisitions and $1.8 million in other cash payments, partially offset by $445.4 million of cash distributions from affiliates resulting primarily from the Northcoast Communications sale of spectrum licenses, $7.1 million in proceeds from the sale of equipment, and a $3.1 million decrease in other investments.

Financing Activities

Net cash provided by financing activities amounted to $791.4 million for the nine months ended September 30, 2004 compared to $338.2 million for the nine months ended September 30, 2003. In 2004, the Company’s financing activities consisted primarily of $2,793.9 million of proceeds from the issuance of senior notes, $123.7 million of net proceeds from bank debt and $3.4 million from the issuance of common stock, partially offset by payments of $1,694.6 million for the redemption of CSC Holdings’ Series H and Series M Redeemable Preferred Stock and Series A Exchangeable Participating Preferred Stock, $350.0 million to redeem CSC Holdings’ 9-7/8% senior subordinated debentures, $70.8 million of deferred financing costs and other net cash payments of $14.2 million.

In 2003, the Company’s financing activities consisted primarily of proceeds from collateralized indebtedness of $330.7 million and proceeds from issuance of preferred stock of $75.0 million, partially offset by net repayments of bank debt of $43.2 million and other net cash payments of $24.3 million.

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Discontinued Operations

The net effect on cash of discontinued operations was $32.3 million for the nine months ended September 30, 2003.

Liquidity and Capital Resources

Overview

Cablevision has no operations independent of its subsidiaries. Our outstanding securities consist of Cablevision NY Group Class A and Cablevision NY Group Class B common stock and $1.5 billion in debt securities issued in April 2004 (see “Recent Events” below for a more detailed description of the securities). Funding for the debt service requirements of our debt securities will be provided by our subsidiary operations, as permitted by the covenants governing subsidiary credit agreements and CSC Holdings’ public debt securities, and we anticipate that sufficient cash distributions can be made to fund these requirements for the next twelve months. Funding for our subsidiaries is generally obtained through separate financial arrangements made available to the Restricted Group (as later defined), to our Rainbow business segment, and through cash on hand and cash flow from operations.

CSC Holdings and those of its subsidiaries which conduct our cable television and high speed data service operations as well as our commercial telephone and high speed data service throughout the New York metropolitan area comprise the “Restricted Group” since they are subject to the covenants and restrictions of the $2.4 billion credit facility and the public debt issued by CSC Holdings. Effective January 1, 2004, we reorganized the funding of certain of our businesses in light of the announcement of our intention to spin off Rainbow DBS, three of Rainbow’s national programming networks and certain other businesses (see “Recent Events” below). As a result, in 2004, the Restricted Group is expected to fund (i) requirements of the Telecommunications Services segment, (ii) requirements, if any, of certain Rainbow Media Holdings’ programming businesses that are expected to remain with Cablevision upon completion of the spin off (primarily our fuse subsidiary, our regional news operations, and the Regional Programming Partners subsidiaries), and (iii) certain other general corporate requirements. In 2004, the Restricted Group also funded certain Rainbow DBS expenditures planned for, but not funded, during 2003. The Restricted Group may also make other investments from time to time as permitted under its credit facility.

Rainbow National Services, which owns the common equity interests in the Company’s AMC, WE: Women’s Entertainment and IFC programming operations, generates cash from operations and is the issuer of $800 million of senior and senior subordinated notes and the obligor on a $950 million senior secured credit facility entered into in August 2004. Rainbow National Services’ cash from operations and proceeds from borrowings available to it will provide funding to Rainbow DBS subject to the applicable covenants and limitations contained in Rainbow National Services financing agreements. Madison Square Garden’s funding requirements have been primarily provided through cash from operations and borrowings under a $500 million credit facility. In March 2004, borrowings under the Madison Square Garden credit facility were

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repaid in full with proceeds from an equity contribution from Regional Programming Partners and the credit facility was terminated.

The following table summarizes our outstanding debt and present value of capital leases as well as interest expense and capital expenditures as of and for the nine months ended September 30, 2004:

	Restricted Group		Rainbow National Services		Other Entities		Total
	(dollars in thousands)

Bank debt	$	1,880,708	$	600,000	$	—	$	2,480,708
Capital leases	7,798		3,715		63,939		75,452
Notes payable	—		—		150,000		150,000
Senior notes and debentures	4,193,394		297,871		1,500,000		5,991,265
Senior subordinated debentures	250,000		496,134		—		746,134
Collateralized indebtedness relating to stock monetization	—		—		1,659,265		1,659,265
Total debt	$	6,331,900	$	1,397,720	$	3,373,204	$	11,102,824

Interest expense	$	376,823	$	13,262	$	143,168	$	533,253
Capital expenditures	$	473,385	$	295	$	80,961	$	554,641

Recent Events

Issuance of Debt Securities

In April 2004, Cablevision issued $1.0 billion face amount of 8.0% senior notes due 2012 and $500 million face amount of floating rate senior notes due 2009. The floating rate notes bear interest based on six month LIBOR plus 4.50%. The notes are unsecured and contain covenants similar to the covenants of CSC Holdings’ outstanding senior public debt securities, including a limitation on the incurrence of additional indebtedness based upon a maximum ratio of total indebtedness to cash flow (as defined in the indentures) of 9:1. Proceeds of the offerings, net of issuance costs, were invested in our CSC Holdings subsidiary through our purchase from CSC Holdings of its equity securities.

In April 2004, CSC Holdings issued $500 million face amount of 6-3/4% senior notes due 2012. The proceeds, net of issuance costs, along with the net proceeds received as equity contributions from Cablevision, were used to repay bank borrowings temporarily. Approximately $1.8 billion was reborrowed on May 6, 2004 to fund the debt redemptions described below.

On August 20, 2004, our wholly-owned subsidiary, Rainbow National Services LLC, or “RNS,” which holds all of the common equity interests in the AMC, WE and IFC programming services, put in place a $950 million senior secured credit facility ($350 million of which is a revolving credit facility and $600 million of which is a term loan facility) and issued $300 million aggregate principal amount of 8 3/4% senior notes due 2012 and $500 million aggregate principal amount of 10 3/8% senior subordinated notes due 2014. Proceeds of the financings totaling $1,366.1 million were distributed to Rainbow Media Enterprises, which in turn distributed approximately $704.9 million to Rainbow Media Holdings to repay and terminate its credit facility and collateralize outstanding letters of credit. The balance of the distribution,

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which totaled $661.2 million, is held by Rainbow Media Enterprises, which expects to invest the cash over time to fund requirements of certain of its subsidiaries, including primarily Rainbow DBS.

Redemption of Debt and Termination of Certain Securities

In May 2004, CSC Holdings redeemed, at the relevant early redemption prices, its 11-3/4% Series H Redeemable Exchangeable Preferred Stock due 2007; its 11-1/8% Series M Redeemable Exchangeable Preferred Stock due 2008; its 9-7/8% Senior Subordinated Debentures due 2013; and, its 9-7/8% Senior Subordinated Debentures due 2023. The redemptions were completed at a total cash cost, including the applicable redemption premiums and accrued and unpaid dividends and interest, of $2.0 billion.

In August 2004, CSC Holdings redeemed its Series A Preferred Stock held by Quadrangle Capital Partners LP for $150.3 million in cash funded with borrowings from the Restricted Group revolving credit facility.

On October 28, 2004, the Company received $213.6 million in cash in exchange for all 14.2 million shares it owned of AT&T Wireless (“AWE”) common stock, representing the $15 share price paid in consideration of the merger between AWE and Cingular Wireless LLC. As a result of that exchange, the Company’s prepaid forward contracts relating to its shares of AWE were terminated. The termination provisions under the prepaid forward contracts require the Company to repay the fair value of the collateralized indebtedness less the sum of the fair value of the underlying stock and equity collars. The Company does not expect any material cash payment to be required as a result of the early terminations. The Company expects to recognize a loss representing the difference between the fair value and the carrying value of the collateralized indebtedness in the fourth quarter.

Planned Spin off of Rainbow Media Enterprises

We have announced that our Board of Directors has approved an amended plan to spin off our recently launched satellite service, Rainbow DBS, along with three of Rainbow Media Holdings’ national entertainment services — AMC, WE: Women’s Entertainment and IFC, their subsidiaries, certain other Rainbow businesses and Clearview Cinemas in a company called Rainbow Media Enterprises (“RME”). We continue to make progress on this plan, having received a ruling from the Internal Revenue Service earlier this year to the effect that the spin-off will qualify as a tax-free transaction and approval from the FCC for the transfer of control of various FCC licenses, as well as having completed the financing for Rainbow Media Enterprises in August (see “Issuance of Debt Securities” above). Completion of the spin off remains subject to a number of factors and conditions, including the filing and effectiveness of a Form 10 with the Securities and Exchange Commission and final approval from the Cablevision board of directors. We made our initial Form 10 filing with the Securities and Exchange Commission in May 2004, with amended filings in July, September, and November 2004. We are currently planning to complete the spin off during the fourth quarter.

On August 20, 2004, our subsidiary, American Movie Classics Company LLC (“AMC LLC”) which owns our AMC and WE programming services, issued redeemable preferred membership

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interests with an initial liquidation preference of $350 million in the aggregate to Rainbow Media Holdings LLC in exchange for common membership interests in AMC LLC. Distributions on the redeemable preferred membership interests were to accrue commencing upon the spin off of Rainbow Media Enterprises at an annual rate to be established immediately prior to the spin off. It was expected that Rainbow Media Holdings would transfer those interests to Cablevision at the time of the spin off and the interests would not be included in the spin off. On November 5, 2004 the Board of Directors of Cablevision decided to modify the terms of the spin off to eliminate the retained redeemable preferred membership interest in AMC LLC. This decision was made in light of expected increases in Rainbow Media Enterprises’ financing requirements. The elimination will be accomplished by having the redeemable preferred membership interests recontributed to a subsidiary of Rainbow Media Enterprises and converted back to common membership interest in AMC LLC prior to the spin off.

Restricted Group

As of September 30, 2004, our Restricted Group consisted of: CSC Holdings and all of its subsidiaries holding our cable operations, which encompassed approximately 2.95 million subscribers (including approximately 1.34 million digital cable subscribers); our consumer high-speed Internet access operations, which encompassed approximately 1.26 million subscribers; and the commercial telephone and high-speed Internet access operations of Lightpath throughout the New York metropolitan area.

The Restricted Group has a $2.4 billion revolving credit facility in place that matures on June 30, 2006. As of November 5, 2004, total borrowings outstanding were $2,017 million, including $53.4 million reserved for Letters of Credit, with a resulting undrawn commitment of $383 million. The credit facility is guaranteed by certain subsidiaries and contains several financial covenants, including a limitation on the ratios of debt to cash flow, cash flow to interest expense, and cash flow to debt service expense (all as defined in the credit agreement) and restrictions on the permitted use of borrowed funds that may limit our ability to utilize all of the undrawn funds available. The limitation on debt to cash flow is a maximum of 6.25 times cash flow through March 31, 2005, 5.25 times cash flow from April 1, 2005 through December 31, 2005, and 4.50 times thereafter. The Restricted Group was in compliance with all of its financial covenants as of September 30, 2004

CSC Holdings, a member of the Restricted Group has also issued senior and senior subordinated public debentures, which also contain financial and other covenants, though they are generally less restrictive than the covenants contained in the Restricted Group’s credit facility. Principal covenants include a limitation on the incurrence of additional indebtedness based upon a maximum ratio of total indebtedness to cash flow (as defined in the indentures) of 9:1 and limitations on dividends and distributions subject to an aggregate cap. There are no covenants, events of default, borrowing conditions or other terms in the Restricted Group’s credit facility or in any of CSC Holdings’ other debt securities that are based on changes in the credit ratings assigned by any rating agency.

Sources of cash for the Restricted Group include primarily cash flow from the operations of the businesses in the Restricted Group and borrowings. The Restricted Group’s principal uses of cash include capital spending, in particular the capital requirements associated with the roll-out of its new services such as digital video and Voice over Internet Protocol, debt service, including

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distributions made to Cablevision to service interest expense on its public debt securities, other corporate expenses and changes in working capital. In addition, the Restricted Group has contributed the balance of the 2003 approved, unspent investment of approximately $87 million to Rainbow DBS and has also invested the $150 million distribution received from the proceeds of Rainbow Media Holdings’ term loan in December 2003 in Rainbow DBS. In April 2004, the Restricted Group also received $1.5 billion in cash proceeds from the issuance of capital stock to Cablevision that it used to redeem the outstanding securities described above. We currently expect that the net funding and investment requirements of the Restricted Group will be met with borrowings under the Restricted Group’s existing bank credit facility and that the Restricted Group’s available borrowing capacity under that facility will be sufficient to meet these requirements for the next twelve months.

Cablevision’s and CSC Holdings’ future access to the public debt markets and the cost of any future debt issuances are also influenced by their credit ratings, which are provided by Moody’s Investors Service and Standard & Poor’s. The ratings assigned by Standard and Poor’s remain on credit watch with negative implications and the ratings assigned by Moody’s remain on negative outlook from July 2003. Any downgrade to the Cablevision and CSC Holdings credit ratings by either rating agency could increase the interest rate on future debt issuances and could adversely impact its ability to raise additional funds.

Rainbow Media Holdings

Rainbow Media Holdings’ $820 million credit facility was repaid and terminated on August 20, 2004 with a distribution from the proceeds of the Rainbow National Services financing described below. On the same date, the commitment from a bank to provide up to $250 million of senior subordinated funding to Rainbow Media Holdings which was to be guaranteed by AMC, WE and IFC was also terminated.

Rainbow National Services

On August 20, 2004, RNS entered into new debt financing arrangements totaling approximately $1,750 million in a combination of a senior secured credit facility totaling approximately $950 million (comprised of a $600 million term loan and $350 million undrawn revolving credit facility), and senior and senior subordinated notes totaling approximately $800 million. Substantially all of the net proceeds of the new financings totaling approximately $1.37 billion were distributed to Rainbow Media Enterprises, which in turn distributed $704.9 million to Rainbow Media Holdings to repay and terminate its credit facility and collateralize outstanding letters of credit. The balance of the distribution, which totaled approximately $661.2 million is held by Rainbow Media Enterprises, which expects to invest the cash over time to fund cash requirements of certain of its subsidiaries, primarily Rainbow DBS.

The RNS credit facility is secured by the assets and common equity interests of AMC, WE and IFC and guaranteed by AMC, WE and IFC and Rainbow Programming Holdings, RNS’s direct parent. The term loan requires amortization of 0.25% per quarter beginning June 30, 2005. Outstanding borrowings under the facility were $600 million as of November 5, 2004, resulting in undrawn revolver commitments of $350 million. Financial covenants include (i) a maximum total leverage ratio of 6.75 times cash flow (as defined based on the combined cash flows of

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AMC, WE and IFC) through December 31, 2005 with reductions thereafter, (ii) a maximum senior leverage of 5.0 times cash flow, reducing to 4.75 times on October 1, 2005 with further reductions thereafter, and (iii) minimum ratios for cash flow to interest expense and cash flow to debt service. Additional covenants include limitations on liens, additional indebtedness and distributions. Permitted distributions include (i) up to $150 million annually, with a cumulative limit of $600 million, to fund Rainbow DBS, and (ii) up to $50 million annually, with a cumulative limit of $200 million, for other general purposes, and (iii) subject to maintaining a maximum ratio of total debt to cash flow of 5.0 times, distributions of up to $300 million from the proceeds of permitted future debt offerings. RNS was in compliance with all of its financial covenants as of September 30, 2004.

RNS’s notes offerings consisted of $300 million face amount of 8 ¾% senior notes due September 1, 2012, and $500 million face amount of 10 3/8% senior subordinated notes due September 1, 2014. Net proceeds from these offerings totaled $775.9 million. These issuances are guaranteed by substantially all of RNS’s subsidiaries. Principal covenants include limitations on additional indebtedness, including a maximum ratio of total indebtedness to cash flow (as defined in the indentures) of 7.0 times, reducing to 6.0 times after January 1, 2009, limitations on distributions and limitations on the ability to incur liens (as per the terms of the senior notes indenture).

Although the debt service requirements of the new financings are significant, RNS’s free cash flow (net of the debt service requirements) is expected to remain positive for at least the next twelve months. RNS’s excess free cash flow, as well as additional amounts that may be borrowed under its credit facility, will be used to fund the operations of Rainbow DBS. Distributions to Rainbow Media Enterprises over time may limit the funding available for new initiatives of RNS in the future.

RNS’s future access to the debt markets and the cost of any future debt issuances are also influenced by its credit ratings, which are provided by Moody’s Investors Service and Standard & Poor’s. In August 2004, Moody’s and Standard & Poor’s assigned ratings to RNS’s senior secured credit facility and senior and senior subordinated notes. Standard and Poor’s also assigned a negative outlook. Any downgrade to RNS’s credit ratings by either rating agency could increase the interest rate on future debt issuances and could adversely impact RNS’s ability to raise additional funds.

Madison Square Garden

Madison Square Garden’s primary source of liquidity has been cash flow from operations and its $500 million revolving credit facility. This facility was terminated in March 2004 with proceeds from a $146 million equity contribution from Regional Programming Partners.

Madison Square Garden’s funding requirements for the next twelve months will be met by its cash on hand and cash from operations, and/or intercompany loans or equity contributions from Regional Programming Partners or borrowings under any new bank credit facilities that may be entered into by Madison Square Garden or Regional Programming Partners, although there can be no assurance that such new facility can be obtained or obtained on acceptable terms.

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Rainbow DBS

Rainbow DBS business launched its service in October 2003. It has significant cash requirements and has limited access to funding. Funding needs for Rainbow DBS in 2004, which include capital expenditures of approximately $111 million; the acquisition of additional frequencies, including the investment in DTV Norwich for its acquisition of MVDDS licenses, of $90 million; operating losses; and funds required to develop its proprietary VOOM HD programming channels of approximately $101 million are expected to total $477 million. Prior to the completion of the RNS debt financings described above on August 20, 2004, the cash requirements of Rainbow DBS were funded by Cablevision and its subsidiary, Rainbow Media Holdings. By that date, Cablevision had contributed to Rainbow DBS in 2004 approximately $237 million and Rainbow Media Holdings had contributed approximately $47 million and provided $21 million in letters of credit under its credit facility. A significant portion of the proceeds from the RNS debt financing are expected to be invested in Rainbow DBS and are expected to be sufficient to fund its cash requirements through the end of 2005. Additional investments in Rainbow DBS above the proceeds from the RNS debt financings are subject to receipt of distributions from RNS, which are subject to limitations contained in its financing agreements.

Rainbow DBS does not have funding available for the construction and launch of the five Ka-band satellites for which Rainbow DBS has FCC authorization, or for the two Ku-band satellites necessary to exploit the Ku-band DBS frequencies for which it was the high bidder at a July 2004 FCC auction, or for the build-out of the infrastructure to exploit the MVDDS licenses acquired by DTV Norwich. The five Ka-band satellites are expected to cost between $1 billion and $1.5 billion in the aggregate, which amounts will need to be funded over the 2004 — 2009 time frame in order to meet FCC milestone obligations. The next milestone requires Rainbow DBS to enter into a definitive satellite construction contract by November 21, 2004. The two Ku-band satellites are expected to cost between $400 million and $500 million, in the aggregate, which amounts will need to be spent over a period of time based upon FCC milestones that have not yet been established but are likely to require some expenditures starting in 2005. Rainbow DBS does not have a cost estimate or time frame for the build-out of the MVDDS infrastructure. We expect to use a portion of the proceeds from the August 2004 RNS debt financings or borrowings under the revolving credit facility of RNS to pay for the early stage development costs for these projects. However, Rainbow DBS does not currently have any funding available to construct and launch the Ka-band or Ku-band satellites or to build-out the MVDDS infrastructure and there can be no assurance that Rainbow DBS will be able to obtain any funding for these purposes. It is possible that funding might come from, among other sources, (i) vendor or other third party financings; (ii) the proceeds from the August 2004 RNS debt financings or borrowings under the revolving credit facility of RNS; (iii) additional borrowings or debt issuances by RNS; (iv) third party cash investments; and (v) asset sales, or a combination of some or all of these sources. There can be no assurance that Rainbow DBS will be in a position to meet its milestone obligations or to utilize these licenses. In any event, Rainbow DBS will not be in a position to do so for a number of years and there can be no assurance that Rainbow DBS will ever be in a position to do so.

To the extent that Rainbow DBS utilizes any of the proceeds from the August 2004 RNS debt financings or borrowings under the revolving credit facility of RNS to fund development or construction costs related to its Ku-band, Ka-band or MVDDS licenses, it may not have sufficient funding to support the development of its existing DBS business.

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Commitments and Contingencies

As of September 30, 2004, the Company’s commitments and contingencies not reflected on the Company’s consolidated balance sheet decreased $131.4 million to $3,250.4 million as compared to $3,381.8 million outstanding at December 31, 2003. The decrease resulted primarily from the termination of Madison Square Garden’s broadcast rights agreement with the New York Mets and payments made on other outstanding commitments during the nine months ended September 30, 2004. These decreases were partially offset by a net increase in commitments under employment agreements with professional sports teams personnel and players of Madison Square Garden, which provide for payments that are guaranteed regardless of employee injury or termination (certain of these payments are covered by disability insurance if certain conditions are met), for long-term rights agreements which provide the Company with exclusive broadcast rights to certain live sporting events and lease agreements for transponder space on satellites.

Obligations Under Derivative Contracts

To manage interest rate risk, we have entered into interest rate swap contracts to adjust the proportion of total debt that is subject to variable and fixed interest rates. Such contracts fix the borrowing rates on floating rate debt to provide an economic hedge against the risk of rising rates and/or convert fixed rate borrowings to variable rates to provide an economic hedge against the risk of higher borrowing costs in a declining interest rate environment. We do not enter into interest rate swap contracts for speculative or trading purposes and have only entered into transactions with counterparties that are rated investment grade. All of our interest rate derivative contracts are entered into by CSC Holdings and are thus attributable to the Restricted Group; all such contracts are carried at their current fair market values on our consolidated balance sheets, with changes in value reflected in the consolidated statements of operations.

As of September 30, 2004, the notional value of all such contracts was $450 million and the fair value of these derivative contracts was $0.8 million, a net payable position. For the nine months ended September 30, 2004, we recorded a net gain on interest swap contracts of $5.4 million, as detailed in the table below:

Fair Market Value of Interest Rate Derivative Contracts
(dollars in thousands)

Fair market value as of September 30, 2004, a net payable position	$	(796	)
Less: fair market value as of December 31, 2003	(349		)
Change in fair market value, net	(447		)
Plus: realized gain from cash interest income	5,820

Net gain on interest rate swap contracts	$	5,373

We have also entered into derivative contracts to hedge our equity price risk and monetize the value of our shares of AT&T, Comcast, AT&T Wireless, Charter Communications, General Electric, Adelphia Communications and Leapfrog common stock. These contracts, at maturity, are expected to offset declines in the fair value of these securities below the hedge price per share, while allowing us to retain upside appreciation from the hedge price per share to the relevant cap price. In the event of an early termination of any of these contracts, we would be obligated to repay the fair value of the collateralized indebtedness less the sum of the fair values

I-51

of the underlying stock and equity collar, calculated at the termination date. The following table details our estimated early termination exposure as of September 30, 2004:

	AT&T			Comcast			AT&T Wireless**			Charter			General Electric			Adelphia			Total*
	(in millions)
Collateralized indebtedness (carrying value)	$	(307.0	)	$	(495.3	)	$	(233.6	)	$	(251.8	)	$	(314.0	)	$	(39.9	)	$	(1,641.6	)

Collateralized indebtedness (fair value estimate)	(315.4		)	(509.2		)	(241.9		)	(259.5		)	(315.9		)	(39.9		)	(1,681.8		)
Derivative contract	192.6			120.9			32.5			209.8			(81.3		)	38.6			513.1
Investment securities pledged as collateral	126.8			404.4			210.5			29.7			427.9			0.4			1,199.7
Net excess/ (shortfall)	4.0			16.1			1.1			(20.0		)	30.7			(0.9		)	31.0
Value of prepaid swaps with cross-termination rights	(6.9		)	(11.7		)	(6.9		)	—			—			—			(25.5		)
Net excess/ (shortfall) including prepaid swaps	$	(2.9	)	$	4.4		$	(5.8	)	$	(20.0	)	$	30.7		$	(0.9	)	$	5.5

* Excludes Leapfrog monetization contract which is not expected to generate a shortfall due to the prepayment of interest.

** See discussion above under “Recent Events.”

The underlying stock and the equity collars are carried at fair market value on our consolidated balance sheets and the collateralized indebtedness is carried at its accreted value. At maturity, the contracts provide for the option to deliver cash or shares of AT&T, Comcast, AT&T Wireless, Charter Communications, General Electric, Adelphia Communications, or Leapfrog stock (as the case may be), with a value determined by reference to the applicable stock price at maturity.

See “Item 3. Quantitative and Qualitative Disclosures About Market Risk” for information on how we participate in changes in the market price of the stocks underlying these derivative contracts.

All of our monetization transactions are obligations of our wholly-owned subsidiaries that are not part of the Restricted Group; however, in the General Electric, Adelphia Communications and Charter Communications transactions, CSC Holdings provided guarantees of the subsidiaries’ ongoing interest expense obligations and potential payments that could be due as a result of an early termination event (as defined in the agreements). The guarantee exposure approximates the net sum of the fair value of the collateralized indebtedness less the sum of the fair values of the underlying stock and the equity collar. All of our equity derivative contracts are carried at their current fair market value on our consolidated balance sheet with changes in value reflected in the consolidated statement of operations, and all of the counterparties to such transactions currently carry investment grade credit ratings. As of September 30, 2004, the fair value of our equity derivative contracts was $516.0 million, a net receivable position. For the nine months ended September 30, 2004, we recorded a net unrealized loss on all outstanding

I-52

equity derivative contracts of $8.9 million attributable to changes in market conditions during the period. We also recorded an unrealized loss on our holdings of the underlying stocks of $8.7 million for the nine months ended September 30, 2004, as shown in the following table:

Fair Market Value of Equity Derivative Contracts
(dollars in thousands)

Fair market value as of September 30, 2004	$	516,040
Less: fair market value at December 31, 2003	524,895
Unrealized loss due to changes in prevailing market conditions, net	$	(8,855	)

Unrealized loss on underlying stock positions due to changes in prevailing market conditions, net	$	(8,687	)

In 2001, in connection with the AT&T and AT&T Wireless monetization contracts, CSC Holdings entered into prepaid interest rate swaps with a notional contract value of $1,115.0 million. These contracts require CSC Holdings to pay floating rates of interest in exchange for receipt of fixed rate payments, the net present value of which was paid to CSC Holdings at the inception of the transaction in a total cash amount of $239.3 million. These swaps have maturities in 2005 and 2006 that coincide with the related prepaid equity forward maturities. Certain contracts provide for early termination of the prepaid interest rate swap in the event of an early termination of the related prepaid equity forward.

All of our prepaid interest rate swaps are carried at their current fair market values on our consolidated balance sheets with changes in value reflected in the consolidated statements of operations, and all of the counterparties to such transactions currently carry investment grade credit ratings. As of September 30, 2004, the fair value of our prepaid interest rate derivative contracts was $50.0 million, a net payable position. For the nine months ended September 30, 2004, we recorded a net gain on such derivative contracts of $1.1 million as detailed below:

Fair Market Value of Prepaid Interest Rate Derivative Contracts
(dollars in thousands)

Fair market value as of September 30, 2004	$	(49,959	)
Less: fair market value at December 31, 2003	(65,753		)
Unrealized gain, net	15,794
Plus: realized loss resulting from net cash payments	(14,651		)

Net gain on prepaid interest rate swap contracts	$	1,143

In connection with the issuance of the Series A Exchangeable Participating Preferred Stock of CSC Holdings, we entered into an agreement with Quadrangle Capital Partners LP which granted Quadrangle the right to require us to purchase the preferred stock beginning in the third quarter of 2003 (“put option”) for cash or through the issuance of our registered equity securities at our option. The exchange right and the put option had been accounted for as a derivative. In August 2004, CSC Holdings redeemed the securities at a repurchase price of $150.3 million which was paid in cash. The change in the fair value of the exchange right and put option of $31.7 million for the nine months ended September 30, 2004 has been reflected as a loss on derivative contracts in the accompanying condensed consolidated statement of operations.

I-53

Related Party Transactions

We hold a 49.9% voting interest and certain preferential distribution rights in Northcoast Communications. Northcoast Communications is controlled by John Dolan, a nephew of Charles F. Dolan and a cousin of James L. Dolan, the Company’s Chairman and Chief Executive Officer, respectively. The operations of Northcoast Communications were not consolidated with those of the Company at December 31, 2003, however, pursuant to FIN 46, Northcoast Communications was consolidated beginning March 31, 2004.

In May 2003, Northcoast Communications completed its sale of PCS licenses to Verizon Wireless for approximately $763.0 million in cash. Of the proceeds, approximately $51.0 million was used by Northcoast Communications to retire debt. The remaining proceeds, after payment of expenses, were distributed to the partners of Northcoast Communications, including the Company. Our share of the proceeds was approximately $651.0 million. All of the funds we received were used to repay bank debt under our Restricted Group credit facility.

As a result of an agreement with Northcoast PCS, LLC (the other member in Northcoast Communications, an entity wholly-owned by John Dolan), payment of indemnification claims, if any, under the Northcoast Communications/Verizon agreement for which Northcoast Communications is responsible will be made by us.

Vendor financing for Northcoast Communications’ Cleveland operation consisted of a $75 million credit facility at Cleveland PCS, LLC. This facility had no recourse to us or to Northcoast Communications, other than pursuant to a pledge by Northcoast Communications of the stock of Cleveland PCS and a guarantee of the payment by Northcoast Communications and Cablevision of the FCC indebtedness of the Cleveland PCS subsidiary which holds the Cleveland license. In March 2004, Northcoast Communications agreed to sell its Cleveland PCS business to an unaffiliated entity. The sale of Cleveland PCS was consummated in July 2004. As of September 30, 2004, both the FCC indebtedness and the obligations of Cleveland PCS under the vendor financing were satisfied.

Fox Sports Net Ohio and Cleveland Indians Baseball Club Limited Partnership (the “Indians”) are parties to a multi-year rights agreement under which Fox Sports Net Ohio pays license fees to the Indians in exchange for telecast rights to substantially all regular season Indians games. The Indians are owned by (i) Lawrence Dolan, a brother of Charles F. Dolan, the Company’s Chairman, (ii) a trust, the beneficiaries of which are Lawrence Dolan and certain descendants of Lawrence Dolan, and (iii) certain other trusts, the beneficiaries of which are certain descendants of Charles F. Dolan, including James L. Dolan, the Company’s Chief Executive Officer, and Thomas C. Dolan and Patrick F. Dolan, officers of the Company and brothers of James L. Dolan. Management control of the Indians is held by Lawrence Dolan.

Recently Issued Accounting Standards

I-54

to their economic interest, or (c) have equity investors that do not provide sufficient financial resources for the entity to support its activities. For all variable interest entities created prior to February 1, 2003, the Company was required to apply the provisions of FIN 46 by March 31, 2004. For variable interest entities created subsequent to January 31, 2003, FIN 46 was effective in 2003. Pursuant to FIN 46, the Company has consolidated its investment in Northcoast Communications, LLC at March 31, 2004 and its investment in DTV Norwich as of the date of the transaction. In addition, the Company consolidated its investment in PVI Virtual Media Services LLC in the second quarter of 2004 in connection with an amendment to the LLC agreement which caused the Company to reconsider whether PVI Virtual Media Services was a variable interest entity. PVI Virtual Media’s total assets and liabilities consolidated in the second quarter of 2004 amounted to approximately $15.0 million and $4.0 million, respectively.

In March 2004, the EITF ratified its consensus related to the application guidance within EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. EITF 03-1 applies to investments in debt and equity securities within the scope of FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, and equity securities that are not subject to the scope of Statement No. 115 and not accounted for under the equity method under APB Opinion 18 and related interpretations. EITF 03-1 requires that a three-step model be applied in determining when an investment is considered impaired, whether that impairment is other than temporary and the measurement of an impairment loss. The adoption of EITF 03-1 did not have any impact on the Company’s financial position or results of operations.

In March 2004, the EITF reached a consensus regarding Issue No. 03-16, Accounting for Investments in Limited Liability Companies. EITF 03-16 requires investments in limited liability companies that have separate ownership accounts for each investor to be accounted for similar to a limited partnership investment under Statement of Position No. 78-9, Accounting for Investments in Real Estate Ventures. Investors would be required to apply the equity method of accounting to their investments at a much lower ownership threshold than the 20% threshold applied under Accounting Principles Board No. 18, The Equity Method of Accounting for Investments in Common Stock. EITF 03-16 is effective for the first period beginning after June 15, 2004. The adoption of EITF 03-16 did not have any impact on the Company’s financial position or results of operations.

In September 2004, the SEC staff issued Topic D-108, Use of the Residual Method to Value Acquired Assets Other than Goodwill, which requires the direct method of separately valuing all intangible assets and does not permit goodwill to be included in franchise assets. Topic D-108 requires the application of the direct value method to such assets acquired in business combinations completed after September 29, 2004. Further, for registrants who have applied the residual method to the valuation of intangible assets for purposes of impairment testing should perform an impairment test using a direct value method on all intangible assets that were previously valued using the residual method by no later than the beginning of their first fiscal year beginning after December 15, 2004. Impairments recognized upon application of Topic D-108 should be reported as a cumulative effect of a change in accounting. The Company currently uses the direct value method for purposes of impairment testing of its indefinite-lived intangibles and therefore does not expect the adoption of Topic D-108 to have an impact on the Company's financial position on results of operations.

I-55

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	September 30, 2004		December 31, 2003
	(unaudited)
ASSETS

Current Assets:

Cash and cash equivalents	$	922,924	$	326,962
Accounts receivable trade (less allowance for doubtful accounts of $38,039 and $44,941)	368,372		355,835
Notes and other receivables, current	90,532		61,586
Note receivable, affiliate	5,102		12,877
Investment securities, current	3,770		5,874
Inventory	27,840		9,419
Prepaid expenses and other current assets	130,450		98,652
Feature film inventory, net	115,055		92,362
Deferred tax asset, current	55,654		66,649
Advances to affiliates	11,146		42,922
Investment securities pledged as collateral	256,627		—
Derivative contracts	207,786		—
Total current assets	2,195,258		1,073,138

Property, plant and equipment, net	4,413,563		4,593,210
Investments in affiliates	26,320		25,449
Investment securities pledged as collateral	959,184		1,224,498
Notes and other receivables	78,940		95,815
Derivative contracts	389,515		586,894
Other assets	53,267		63,272
Long-term feature film inventory, net	400,126		303,393
Deferred carriage fees, net	113,184		119,225
Franchises	731,848		731,848
Affiliation, broadcast and other agreements, net of accumulated amortization of $382,225 and $314,723	566,378		630,523
Other intangible assets, net of accumulated amortization of $46,929 and $34,979	259,365		164,311
Excess costs over fair value of net assets acquired	1,471,114		1,471,114
Deferred financing and other costs, net of accumulated amortization of $56,155 and $61,783	116,347		117,831
	$	11,774,409	$	11,200,521

See accompanying notes to

condensed consolidated financial statements.

II-1

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(Dollars in thousands)

	September 30, 2004			December 31, 2003
	(unaudited)
LIABILITIES AND STOCKHOLDER’S DEFICIENCY

Current Liabilities:

Accounts payable	$	366,605		$	334,283
Accrued liabilities	776,132			852,885
Accounts payable to affiliates	14,768			10,231
Deferred revenue, current	153,098			117,709
Feature film and contract obligations	107,777			92,206
Liabilities under derivative contracts	8,530			38,968
Current portion of bank debt	13,708			111,039
Current portion of collateralized indebtedness	455,700			—
Current portion of capital lease obligations	13,669			15,636
Total current liabilities	1,909,987			1,572,957

Feature film and contract obligations, long-term	333,292			286,955
Deferred revenue	14,304			16,322
Deferred tax liability	129,482			290,647
Liabilities under derivative contracts	123,486			127,751
Other long-term liabilities	251,625			264,906
Bank debt, long-term	2,467,000			2,246,000
Collateralized indebtedness	1,203,565			1,617,620
Senior notes and debentures	4,491,265			3,692,699
Senior subordinated debentures	746,134			599,203
Notes payable	150,000			150,000
Capital lease obligations, long-term	61,783			69,220
Series H Redeemable Exchangeable Preferred Stock	—			434,181
Series M Redeemable Exchangeable Preferred Stock	—			1,110,113
Deficit investment in affiliates	53,973			41,111
Minority interests	659,882			580,766
Total liabilities	12,595,778			13,100,451

Series A Exchangeable Participating Preferred Stock	—			80,001

Commitments and contingencies

Stockholder’s deficiency:
Series A Cumulative Convertible Preferred Stock, 200,000 shares authorized, none issued	—			—
Series B Cumulative Convertible Preferred Stock, 200,000 shares authorized, none issued	—			—
8% Series D Cumulative Preferred Stock, $.01 par value, 112,500 shares authorized, none issued ($100 per share liquidation preference)	—			—
Common Stock, $.01 par value, 10,000,000 shares authorized, 6,429,987 and 5,258,056 shares issued	64			53
Paid-in capital	2,326,532			829,801
Accumulated deficit	(3,147,013		)	(2,808,833		)
	(820,417		)	(1,978,979		)
Accumulated other comprehensive loss	(952		)	(952		)

Total stockholder’s deficiency	(821,369		)	(1,979,931		)
	$	11,774,409		$	11,200,521

See accompanying notes to

condensed consolidated financial statements.

II-2

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003

Revenues, net	$	1,169,029		$	975,766		$	3,568,430		$	2,949,864

Operating expenses:
Technical and operating (excluding depreciation and amortization)	508,982			412,639			1,664,317			1,303,734
Selling, general and administrative	313,865			262,150			960,773			780,968
Other operating expense (income)	83			(9,036		)	(95,757		)	(9,036		)
Restructuring charges (credits)	(1,203		)	8,004			2,186			11,423
Depreciation and amortization	277,189			282,013			817,292			785,048
	1,098,916			955,770			3,348,811			2,872,137

Operating income	70,113			19,996			219,619			77,727

Other income (expense):
Interest expense	(146,263		)	(171,496		)	(477,932		)	(435,399		)
Interest income	2,658			4,051			4,866			17,879
Equity in net income (loss) of affiliates	(6,234		)	(2,918		)	(7,349		)	437,780
Loss on sale of cable assets	—			(13,644		)	—			(13,644		)
Write-off of deferred financing costs	(12,694		)	—			(18,961		)	—
Gain (loss) on investments, net	6,280			52,810			(9,906		)	210,858
Gain (loss) on derivative contracts, net	21,623			(39,531		)	(34,049		)	(165,782		)
Loss on extinguishment of debt	—			—			(72,495		)	—
Minority interests	(13,966		)	(13,687		)	(64,834		)	(36,074		)
Miscellaneous, net	(23		)	(115		)	(89		)	(2,307		)
	(148,619		)	(184,530		)	(680,749		)	13,311

Income (loss) from continuing operations before income taxes and dividend requirements	(78,506		)	(164,534		)	(461,130		)	91,038

Income tax (expense) benefit	31,836			51,337			136,201			(83,125		)

Income (loss) from continuing operations before dividend requirements	(46,670		)	(113,197		)	(324,929		)	7,913

Dividend requirements applicable to preferred stock	—			(1,951		)	—			(92,260		)

Loss from continuing operations	(46,670		)	(115,148		)	(324,929		)	(84,347		)
Income (loss) from discontinued operations, net of taxes	—			8,316			(5,815		)	(13,392		)

Loss applicable to common shareholder before extraordinary item	(46,670		)	(106,832		)	(330,744		)	(97,739		)
Extraordinary loss on investment, net of taxes	—			—			(7,436		)	—
Net loss	$	(46,670	)	$	(106,832	)	$	(338,180	)	$	(97,739	)

See accompanying notes to

condensed consolidated financial statements.

II-3

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Nine Months Ended September 30,
	2004			2003
Cash flows from operating activities:
Income (loss) from continuing operations before dividend requirements	$	(324,929	)	$	7,913
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities:
Depreciation and amortization	817,292			785,048
Non-cash other operating income	(41,788		)	—
Equity in net (income) loss of affiliates	7,349			(437,780		)
Loss on sale of cable assets	—			13,644
Minority interests	64,834			36,074
Unrealized loss (gain) on investments, net	10,435			(210,858		)
Write-off of deferred financing costs and discounts on indebtedness	19,733			—
Unrealized loss on derivative contracts	25,217			142,064
Amortization and write-off of feature film inventory	82,788			51,156
Amortization of deferred financing, discounts on indebtedness and other deferred costs	81,677			66,709
Compensation expense related to issuance of restricted stock	25,376			16,330
Deferred income tax provision (benefit)	(140,982		)	95,709
Changes in other assets and liabilities, net of effects of acquisitions and dispositions	(199,809		)	(258,670		)
Net cash provided by operating activities	427,193			307,339

Cash flows from investing activities:
Capital expenditures	(554,641		)	(661,937		)
Payment for acquisitions	(84,738		)	(250,406		)
Proceeds from sale of equipment	1,039			7,090
Decrease (increase) in investment securities and other investments	(237		)	3,105
Additions to intangible assets	(14,660		)	(1,750		)
Increase in investments in affiliates, net	32,615			445,426
Net cash used in investing activities	(620,622		)	(458,472		)

Cash flows from financing activities:
Proceeds from bank debt	3,188,208			1,314,082
Repayment of bank debt	(3,064,539		)	(1,357,287		)
Issuance of senior notes	1,293,922			—
Redemption of preferred stock	(1,694,622		)	—
Redemption of senior subordinated debentures	(350,000		)	—
Net proceeds from collateralized indebtedness	—			330,728
Preferred stock dividends	—			(87,259		)
Capital contribution from Cablevision	1,469,250			53,210
Distribution to minority partner	(1,748		)	—
Payments on capital lease obligations and other debt	(12,356		)	(12,677		)
Additions to deferred financing	(38,724		)	(6,016		)
Issuance of preferred stock	—			75,000
Net cash provided by financing activities	789,391			309,781

Net increase in cash and cash equivalents from continuing operations	595,962			158,648

Net effect of discontinued operations on cash and cash equivalents	—			(32,284		)

Cash and cash equivalents at beginning of year	326,962			125,940

Cash and cash equivalents at end of period	$	922,924		$	252,304

See accompanying notes to

condensed consolidated financial statements.

II-4

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

(Unaudited)

NOTE 1. BUSINESS

CSC Holdings, Inc. (the “Company” or “CSC Holdings”), is a wholly-owned subsidiary of Cablevision Systems Corporation (“Cablevision”). The Company and its majority-owned subsidiaries own and operate cable television systems and, through its wholly-owned subsidiary, Rainbow Media Holdings LLC, have ownership interests in companies that produce and distribute national and regional entertainment and sports programming services, including Madison Square Garden, L.P. The Company also owns companies that provide advertising sales services for the cable television industry, provide switched telephone service, operate motion picture theaters and provide direct broadcast satellite service. The Company classifies its business interests into four segments: Telecommunications Services, consisting principally of its cable television, telephone, high-speed data and Voice over Internet Protocol services operations; Rainbow, consisting principally of interests in national and regional cable television programming networks; Madison Square Garden, which owns and operates professional sports teams, regional cable television networks, live productions and entertainment venues; and Rainbow DBS, which consists of our direct broadcast satellite service and the 21 high definition channels currently carried exclusively by this service.

NOTE 2. BASIS OF PRESENTATION

The results of operations for the interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending December 31, 2004.

The interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

II-5

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

NOTE 3. RECLASSIFICATIONS

Certain reclassifications have been made to the 2003 financial statements to conform to the 2004 presentation.

NOTE 4. COMPREHENSIVE LOSS

Comprehensive loss for the three and nine months ended September 30, 2004 and 2003 equals the net loss for the respective periods.

NOTE 5. LOSS PER COMMON SHARE

Net loss per common share is not presented since the Company is a wholly owned subsidiary of Cablevision.

NOTE 6. 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.

During the nine months ended September 30, 2004 and 2003, the Company’s non-cash investing and financing activities and other supplemental data were as follows:

	Nine Months Ended September 30,
	2004		2003
Non-Cash Investing and Financing Activities:
Capital lease obligations	$	2,952	$	10,003

Supplemental Data:
Cash interest paid, net – continuing operations	447,837		369,902
Cash interest paid, net – discontinued operations	—		525
Income taxes paid, net	5,289		6,772
Restricted cash	35,924		7,256

NOTE 7. TRANSACTIONS

II-6

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

NOTE 8. NET ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

Cash, receivables, inventory, prepaid and other assets	$	15,245
Property, equipment and PCS licenses	46,825
Total assets sold	$	62,070

Accounts payable and accrued expenses	$	15,212
Other liabilities	46,858
Total liabilities sold	$	62,070

II-7

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

	Nine Months Ended September 30, 2004
	Retail Electronics			Bravo			Total

Revenues, net	$	—		$	—		$	—

Loss before income taxes	$	(5,678	)	$	(1,823	)	$	(7,501	)
Income tax benefit	920			766			1,686

Net loss	$	(4,758	)	$	(1,057	)	$	(5,815	)

	Retail Electronics
	Three Months			Nine months
	Ended September 30, 2003

Revenues, net	$	—		$	30,842

Loss before income taxes	$	(198	)	$	(19,560	)
Income tax benefit	8,514			6,168
Net income (loss)	$	8,316		$	(13,392	)

NOTE 9. RECENTLY ISSUED ACCOUNTING STANDARDS

II-8

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

in 2003. The Company consolidated its investment in Northcoast Communications at March 31, 2004 and its investment in DTV Norwich as of the date of the DTV Norwich Transaction. In addition, the Company consolidated its investment in PVI Virtual Media Services LLC in the second quarter of 2004 in connection with an amendment to the LLC agreement which caused the Company to reconsider whether PVI Virtual Media was a variable interest entity. PVI Virtual Media markets a real time video insertion system that through patented technology places computer generated electronic images into television broadcasts of sporting events and other programming. PVI Virtual Media’s total assets and liabilities consolidated in the second quarter of 2004 amounted to approximately $15,000 and $4,000, respectively.

In March 2004, the Emerging Issues Task Force (“EITF”) ratified its consensus related to the application guidance within EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. EITF 03-1 applies to investments in debt and equity securities within the scope of FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, and equity securities that are not subject to the scope of Statement No. 115 and not accounted for under the equity method under APB Opinion 18 and related interpretations. EITF 03-1 requires that a three-step model be applied in determining when an investment is considered impaired, whether that impairment is other than temporary and the measurement of an impairment loss. The adoption of EITF 03-1 did not have an impact on the Company’s financial position or results of operations for the three and nine months ended September 30, 2004.

NOTE 10. DEBT

In April 2004, Cablevision issued $1,000,000 face amount of 8% senior notes due 2012 and $500,000 face amount of floating rate senior notes due 2009. The net proceeds of $1,469,250

II-9

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

were used by Cablevision to purchase 1,171,931 shares of the Company’s common stock. In addition, CSC Holdings issued $500,000 face amount of 6-3/4% senior notes due 2012.

In August 2004, Rainbow National Services LLC (“RNS”), an indirect wholly-owned subsidiary of Rainbow Media Enterprises (a wholly-owned subsidiary of Rainbow Media Holdings) which owns the common equity interests in the Company’s three national programming services –AMC, WE: Women’s Entertainment and The Independent Film Channel (“IFC”), entered into a $950,000 senior secured credit facility ($350,000 of which is a revolving credit facility and $600,000 of which is a term loan facility) and issued $300,000 aggregate principal amount of 8 3/4% senior notes due 2012 and $500,000 aggregate principal amount of 10 3/8% senior subordinated notes due 2014. The RNS credit facility is secured by the assets and stock of AMC, WE and IFC and guaranteed by AMC, WE and IFC, and Rainbow Programming Holdings, RNS’s direct parent. The RNS credit facility contains certain covenants that require the maintenance of financial ratios (as defined in the credit facility) as well as restrictions on distributions, additional indebtedness, and liens. The maximum total leverage ratio per the credit facility is 6.75 times the cash flow (as defined) of AMC, IFC and WE through 2006. The revolving credit facility requires commitment reductions beginning December 31, 2009 through September 30, 2011. The term loan requires quarterly amortization payments beginning June 30, 2005 through March 31, 2012. Borrowings under the revolving credit facility bear interest at LIBOR plus a margin based upon the leverage ratio. Amounts under the term loan bear interest at LIBOR plus 2.75%. There were no amounts outstanding under the revolving credit facility as of September 30, 2004.

II-10

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

value of the monetization indebtedness less the sum of the fair values of the underlying stock and the equity collar as reflected in the Company’s accompanying balance sheet, plus accrued interest.

NOTE 11. INCOME TAXES

The income tax benefit attributable to continuing operations for the nine months ended September 30, 2004 of $136,201 differs from the income tax benefit derived from applying the statutory federal rate to the pretax loss due principally to the impact of non-deductible preferred stock dividends, the non-deductible premiums paid upon the redemptions of preferred stock, a non-deductible expense related to the exchange right and put option related to the Company’s Series A Preferred Stock, an increase in the valuation allowance of $3,483 and state taxes.

The income tax expense attributable to continuing operations of $83,125 for the nine months ended September 30, 2003, differs from the income tax expense derived from applying the statutory federal rate to pretax income due principally to the impact of non-deductible preferred stock dividends, a non-deductible expense related to the exchange right and put option related to the Company’s Series A Preferred Stock, an adjustment to the deferred tax rate, and state taxes.

NOTE 12. RESTRUCTURING

The following table summarizes the accrued restructuring liability related to the 2001 restructuring plan for continuing operations:

	Employee Severance			Facility Realignment and Other Costs			Total

Balance at December 31, 2003	$	3		$	19,212		$	19,215
Additional credits	—			(4,143		)	(4,143		)
Payments	(3		)	(5,938		)	(5,941		)
Balance at September 30, 2004	$	—		$	9,131		$	9,131

The following table summarizes the accrued restructuring liability related to the 2002 restructuring plan for continuing operations:

	Employee Severance			Facility Realignment and Other Costs			Total

Balance at December 31, 2003	$	207		$	39,623		$	39,830
Additional charges (credits)	(14		)	765			751
Payments	(139		)	(8,210		)	(8,349		)
Balance at September 30, 2004	$	54		$	32,178		$	32,232

II-11

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

The following table summarizes the accrued restructuring liability related to the 2003 restructuring plan for continuing operations:

	Employee Severance

Balance at December 31, 2003	$	2,258
Additional charges	138
Payments	(2,105		)
Balance at September 30, 2004	$	291

At September 30, 2004, approximately $42,228 of the total restructuring liability was classified as a current liability in the consolidated balance sheet.

NOTE 13. INTANGIBLE ASSETS

The following table summarizes information relating to the Company’s acquired intangible assets at September 30, 2004 and December 31, 2003:

	September 30, 2004		December 31, 2003
Gross carrying amount of amortizable intangible assets
Affiliation agreements	$	786,901	$	794,186
Broadcast rights	152,944		142,302
Player contracts	8,758		8,758
Other intangibles	212,278		197,391
	1,160,881		1,142,637
Accumulated amortization
Affiliation agreements	305,648		248,595
Broadcast rights	68,122		58,507
Player contracts	8,455		7,621
Other intangibles	46,929		34,979
	429,154		349,702
Indefinite-lived intangible assets
Franchises	731,848		731,848
FCC licenses and other intangibles	94,016		1,899
Excess costs over the fair value of net assets acquired	1,471,114		1,471,114
	2,296,978		2,204,861

Total intangibles	$	3,028,705	$	2,997,796

Aggregate amortization expense
Nine months ended September 30, 2004 and year ended December 31, 2003	$	79,469	$	82,636

Estimated amortization expense
Year ending December 31, 2004			$	103,039
Year ending December 31, 2005			90,129
Year ending December 31, 2006			86,393
Year ending December 31, 2007			84,543
Year ending December 31, 2008			83,600

II-12

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

NOTE 14. BENEFIT PLANS

	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003

Service cost	$	6,219		$	5,737		$	18,687		$	17,211
Interest cost	1,266			1,025			3,804			3,073
Expected return on plan assets	(1,521		)	(1,052		)	(4,559		)	(3,154		)

Net periodic benefit cost	$	5,964		$	5,710		$	17,932		$	17,130

II-13

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

NOTE 15. SEGMENT INFORMATION

	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Revenues, net from continuing operations
Telecommunications Services	$	788,256		$	693,515		$	2,303,501		$	1,992,338
Rainbow	280,253			190,424			835,337			555,643
Madison Square Garden	110,227			107,780			480,564			449,380
Rainbow DBS	5,920			—			9,621			—
All other	25,811			20,955			62,687			61,700
Intersegment eliminations	(41,438		)	(36,908		)	(123,280		)	(109,197		)
Total	$	1,169,029		$	975,766		$	3,568,430		$	2,949,864

Adjusted operating cash flow from continuing operations
Telecommunications Services	$	317,438		$	274,159		$	901,784		$	773,328
Rainbow	86,096			52,592			245,357			127,309
Madison Square Garden	15,173			16,238			115,217			39,543
Rainbow DBS	(60,376		)	(29,448		)	(177,152		)	(34,590		)
All Other	(5,477		)	(2,100		)	(29,210		)	(9,772		)
Total	$	352,854		$	311,441		$	1,055,996		$	895,818

II-14

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

A reconciliation of reportable segment amounts to the Company’s consolidated balances is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Revenues, net from continuing operations
Total revenue for reportable segments	$	1,184,656		$	991,719		$	3,629,023		$	2,997,361
Other revenue and intersegment eliminations	(15,627		)	(15,953		)	(60,593		)	(47,497		)
Total consolidated revenue	$	1,169,029		$	975,766		$	3,568,430		$	2,949,864

Adjusted operating cash flow to loss from continuing operations before income taxes
Total adjusted operating cash flow for reportable segments	$	358,331		$	313,541		$	1,085,206		$	905,590
All other adjusted operating cash flow	(5,477		)	(2,100		)	(29,210		)	(9,772		)
Items excluded from adjusted operating cash flow:
Depreciation and amortization	(277,189		)	(282,013		)	(817,292		)	(785,048		)
Stock plan expense	(6,755		)	(1,428		)	(16,899		)	(21,620		)
Restructuring credits (charges)	1,203			(8,004		)	(2,186		)	(11,423		)
Interest expense	(146,263		)	(171,496		)	(477,932		)	(435,399		)
Interest income	2,658			4,051			4,866			17,879
Equity in net income (loss) of affiliates	(6,234		)	(2,918		)	(7,349		)	437,780
Loss of sale of cable assets	—			(13,644		)	—			(13,644		)
Write-off of deferred financing costs	(12,694		)	—			(18,961		)	—
Gain (loss) on investments, net	6,280			52,810			(9,906		)	210,858
Gain (loss) on derivative contracts, net	21,623			(39,531		)	(34,049		)	(165,782		)
Loss on extinguishment of debt	—			—			(72,495		)	—
Minority interests	(13,966		)	(13,687		)	(64,834		)	(36,074		)
Miscellaneous, net	(23		)	(115		)	(89		)	(2,307		)
Loss from continuing operations before income taxes and dividend requirements	$	(78,506	)	$	(164,534	)	$	(461,130	)	$	91,038

Substantially all revenues and assets of the Company’s reportable segments are attributed to or located in the United States.

The Company does not have a single external customer which represents 10 percent or more of its consolidated revenues.

NOTE 16. LEGAL MATTERS

II-15

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

At Home

On June 26, 2003, the GUCLT initiated a separate action against Cablevision in the United States District Court for the Northern District of California. The California action stems from a May 1997 agreement between Cablevision and At Home that is no longer in effect. The GUCLT seeks monetary damages of “at least $12,500” due to the claimed failure by Cablevision to make alleged required payments to At Home during the 2001 calendar year. Cablevision has denied the material allegations of the complaint and sought a declaration that its potential liability, if any, is limited to payments for services actually provided by At Home net of all appropriate offsets.

YES Network

II-16

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

Tracking Stock Litigation

II-17

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

services division of Rainbow Media Holdings. The complaint alleges breaches by the individual defendants of fiduciary duties. The complaint also alleges breaches of contract and unjust enrichment by the Company. The complaint seeks monetary damages and such other relief as the court deems just and proper. The Company intends to contest the lawsuit vigorously. On October 31, 2003, the Company and other defendants moved to stay the action in favor of the previously filed actions pending in Delaware or, in the alternative, to dismiss for failure to state a claim. On June 10, 2004, the court stayed the action until a review by the court at the earlier of a decision in the previously filed actions in Delaware on the pending motion to dismiss in those actions or at a conference before the court on November 10, 2004.

Time Warner Litigation

Accounting Related Investigations

NOTE 17. PREFERRED STOCK

II-18

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

accounted for as a derivative. In October 2003, Quadrangle exercised its “put option” to require CSC Holdings to purchase all of its Series A preferred stock. The parties entered into an agreement that the put price was $150,328. The put price was paid in cash by CSC Holdings in August 2004.

NOTE 18. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of the Company’s debt instruments are summarized as follows:

	September 30, 2004
	Carrying Amount		Estimated Fair Value
Debt instruments:
Bank debt	$	2,480,708	$	2,480,708
Collateralized indebtedness	1,659,265		1,699,547
Senior notes and debentures	4,491,265		4,680,630
Senior subordinated notes and debentures	746,134		803,450
Notes payable	150,000		150,000
	$	9,527,372	$	9,814,335

	December 31, 2003
	Carrying Amount		Estimated Fair Value
Debt instruments:
Bank debt	$	2,357,039	$	2,357,039
Collateralized indebtedness	1,617,620		1,699,530
Senior notes and debentures	3,692,699		3,879,551
Senior subordinated notes and debentures	599,203		649,293
Redeemable exchangeable preferred stock	1,544,294		1,611,615
Notes payable	150,000		150,000
	$	9,960,855	$	10,347,028

NOTE 19. OTHER MATTERS

II-19

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

liability of $41,788 related to this broadcast rights agreement. These items have been reflected as other operating income in the Company’s condensed consolidated statement of operations.

Effective September 16, 2004, the National Hockey League (“NHL”) commenced a lockout of players in support of its attempt to reach a new collective bargaining agreement. There can be no assurance that the NHL and the NHL Player’s Association will reach an agreement on a new collective bargaining agreement. The Collective Bargaining Agreement (“CBA”) between the National Hockey League and the National Hockey League Players Association expired on September 15, 2004 and the NHL Board of Governors imposed a lockout of NHL players beginning on September 16, 2004, which continues. We can give no assurance as to when this labor dispute will be resolved and therefore cannot determine the extent to which our operating results will be negatively impacted. We do not expect the lockout to have a significant impact on the Company’s consolidated operating results, however if the entire season were cancelled, the effect on the operating results of the Madison Square Garden segment would be significant.

NOTE 20. SUBSEQUENT EVENT

II-20

CSC HOLDINGS, INC. AND SUBSIDIARIES

(a wholly-owned subsidiary of Cablevision Systems Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

was made in light of expected increases in Rainbow Media Enterprises’ financing requirements. The elimination will be accomplished by having the redeemable preferred membership interests recontributed to a subsidiary of Rainbow Media Enterprises and converted back to common membership interest in AMC LLC prior to the spin off.

II-21

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The operations of CSC Holdings are identical to the operations of Cablevision, except for interest expense of $28.5 million and $55.3 million for the three and nine months ended September 30, 2004, and related tax benefit of $12.0 million and $23.2 million, respectively, relating to $1.5 billion of Cablevision senior notes issued in April 2004 included in the Cablevision consolidated statements of operations and interest income of $0.2 million and $3.8 million, and related tax expense of $0.1 million and $1.6 million, respectively, for the three and nine months ended September 30, 2003 included in CSC Holdings’ consolidated statements of operations which is eliminated in Cablevision’s consolidated statements of operations. In addition, prior to the implementation of Statement 150 on July 1, 2003, dividends attributable to the Series H and Series M Redeemable Exchangeable Preferred Stock of CSC Holdings were reported in minority interests in the consolidated financial statements of Cablevision. Refer to Cablevision’s Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this report.

II-22

EX-4.1 2 a04-12386_1ex4d1.htm EX-4.1

EXHIBIT 4.1

EXECUTION COPY

Rainbow National Services LLC

RNS Co-Issuer Corporation

and the Guarantors listed on the signature pages hereof

8¾% SENIOR NOTES DUE 2012

_________________________

Indenture

Dated as of August 20, 2004

_________________________

The Bank of New York

Trustee

_________________________

TABLE OF CONTENTS

ARTICLE ONE
DEFINITIONS AND INCORPORATION
BY REFERENCE

Section 1.01. Definitions
Section 1.02. Other Definitions
Section 1.03. Incorporation by Reference of Trust Indenture Act
Section 1.04. Rules of Construction

ARTICLE TWO
THE NOTES

Section 2.01. Form and Dating
Section 2.02. Execution and Authentication
Section 2.03. Methods of Receiving Payments on the Notes
Section 2.04. Registrar and Paying Agent
Section 2.05. Paying Agent to Hold Money in Trust
Section 2.06. Holder Lists
Section 2.07. Transfer and Exchange
Section 2.08. Replacement Notes
Section 2.09. Outstanding Notes
Section 2.10. Treasury Notes
Section 2.11. Temporary Notes
Section 2.12. Cancellation
Section 2.13. Defaulted Interest
Section 2.14. CUSIP Numbers

ARTICLE THREE
REDEMPTION AND OFFERS TO PURCHASE

Section 3.01. Notices to Trustee
Section 3.02. Selection of Notes to Be Redeemed
Section 3.03. Notice of Redemption
Section 3.04. Effect of Notice of Redemption
Section 3.05. Deposit of Redemption Price
Section 3.06. Notes Redeemed in Part
Section 3.07. Optional Redemption
Section 3.08. Repurchase Offers

ARTICLE FOUR
COVENANTS

Section 4.01. Payment of Notes

Section 4.02. Maintenance of Office or Agency
Section 4.03. Reports
Section 4.04. Compliance Certificate
Section 4.05. Taxes
Section 4.06. Stay, Extension and Usury Laws
Section 4.07. Restricted Payments
Section 4.08. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock
Section 4.10. Asset Sales
Section 4.11. Transactions with Affiliates
Section 4.12. Liens
Section 4.13. Business Activities
Section 4.14. Offer to Repurchase upon a Change of Control
Section 4.15. [Intentionally omitted]
Section 4.16. Designation of Restricted and Unrestricted Subsidiaries
Section 4.17. Payments for Consent
Section 4.18. Guarantees
Section 4.19. Suspension of Certain Covenants and Agreements
Section 4.20. Limitation on Issuances and Sales of Equity Interests in Restricted Subsidiaries

ARTICLE FIVE
SUCCESSORS

Section 5.01. Merger, Consolidation or Sale of Assets
Section 5.02. Successor Corporation Substituted

ARTICLE SIX
DEFAULTS AND REMEDIES

Section 6.01. Events of Default
Section 6.02. Acceleration
Section 6.03. Other Remedies
Section 6.04. Waiver of Past Defaults
Section 6.05. Control by Majority
Section 6.06. Limitation on Suits
Section 6.07. Rights of Holders of Notes to Receive Payment
Section 6.08. Collection Suit by Trustee
Section 6.09. Trustee May File Proofs of Claim
Section 6.10. Priorities
Section 6.11. Undertaking for Costs

ARTICLE SEVEN
TRUSTEE

Section 7.01. Duties of Trustee
Section 7.02. Certain Rights of Trustee

Section 7.03. Trustee’s Disclaimer
Section 7.04. May Hold Securities
Section 7.05. Money Held in Trust
Section 7.06. Compensation and Reimbursement
Section 7.07. Eligibility; Disqualification
Section 7.08. Replacement of Trustee
Section 7.09. Acceptance of Appointment by Successor.
Section 7.10. Merger, Conversion, Consolidation or Succession to Business
Section 7.11. Preferential Collection of Claims Against Issuers
Section 7.12. Trustee’s Application for Instructions from the Issuers.
Section 7.13. Notice of Defaults

ARTICLE EIGHT
DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance
Section 8.02. Legal Defeasance and Discharge
Section 8.03. Covenant Defeasance
Section 8.04. Conditions to Legal or Covenant Defeasance
Section 8.05. Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions
Section 8.06. Reinstatement

ARTICLE NINE
AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01. Without Consent of Holders of Notes
Section 9.02. With Consent of Holders of Notes
Section 9.03. Compliance with Trust Indenture Act
Section 9.04. Revocation and Effect of Consents
Section 9.05. Notation on or Exchange of Notes
Section 9.06. Trustee to Sign Amendments, Etc

ARTICLE TEN
NOTE GUARANTEES

Section 10.01. Guarantee
Section 10.02. Limitation on Guarantor Liability
Section 10.03. Execution and Delivery of Note Guarantee
Section 10.04. Guarantors May Consolidate, Etc., on Certain Terms
Section 10.05. Release of Guarantor

ARTICLE ELEVEN
SATISFACTION AND DISCHARGE

Section 11.01. Satisfaction and Discharge
Section 11.02. Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions

iii

Section 11.03. Repayment to the Issuers

ARTICLE TWELVE
[INTENTIONALLY OMITTED]

ARTICLE THIRTEEN
MISCELLANEOUS

Section 13.01. Trust Indenture Act Controls
Section 13.02. Notices
Section 13.03. Communication by Holders of Notes with Other Holders of Notes
Section 13.04. Certificate and Opinion as to Conditions Precedent
Section 13.05. Statements Required in Certificate or Opinion
Section 13.06. Rules by Trustee and Agents
Section 13.07. No Personal Liability of Directors, Officers, Employees and Stockholders
Section 13.08. Governing Law
Section 13.09. Consent to Jurisdiction
Section 13.10. Form of Documents Delivered to Trustee
Section 13.11. Successors
Section 13.12. Severability
Section 13.13. Counterpart Originals
Section 13.14. Acts of Holders
Section 13.15. Benefit of Indenture
Section 13.16. Table of Contents, Headings, Etc.

EXHIBITS

Exhibit A	FORM OF NOTE

Exhibit B	FORM OF CERTIFICATE OF TRANSFER

Exhibit C	FORM OF CERTIFICATE OF EXCHANGE

Exhibit D	FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Exhibit E	FORM OF NOTATION OF GUARANTEE

INDENTURE dated as of August 20, 2004 among Rainbow National Services LLC, a Delaware limited liability company (the “Company”), RNS Co-Issuer Corporation, a Delaware corporation and wholly owned subsidiary of the Company (“Co-Issuer Corp.” and, together with the Company, the “Issuers”), the initial Guarantors listed on the signature pages hereto and The Bank of New York, a New York banking corporation, as trustee.

The Issuers have duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of their 8¾% Senior Notes due 2012 to be issued as provided in this Indenture. The initial Guarantors have duly authorized the execution and delivery of this Indenture to provide for a guarantee of the Notes and of certain of the Issuers’ obligations hereunder.

The Issuers, the initial Guarantors and the Trustee (as defined below) agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined below) of the Issuers’ 8¾% Senior Notes due 2012 issued pursuant to this Indenture:

ARTICLE ONE

DEFINITIONS AND INCORPORATION

BY REFERENCE

Section 1.01. Definitions.

“144A Global Note” means Notes substantially in the form of Exhibit A bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, that shall be issued in a denomination equal to the outstanding principal amount at maturity of the Notes sold in reliance on Rule 144A.

“Acquired Debt” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged with or into, or becomes a Subsidiary of, such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Additional Notes” means an unlimited maximum aggregate principal amount of Notes (other than the Notes issued on the date hereof) issued under this Indenture in accordance with Sections 2.02 and 4.09.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by

agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” shall have correlative meanings.

“Agent” means any Registrar or Paying Agent.

“AMC Preferred Stock” means redeemable preferred membership interests of American Movie Classics Company LLC, as described in the Offering Memorandum.

“Annualized Cash Flow” means, with respect to the Company as of any date of determination, the product of (x) the Consolidated Cash Flow of the Company for the most recent two quarters for which internal financial statements are available immediately prior to such date of determination and (y) 2.0.

“Applicable Premium” means, with respect to a Note at any date of redemption, the excess of (A) the present value at such date of redemption of (1) the redemption price of such Note at September 1, 2008 plus (2) all remaining required interest payments due on such Note through September 1, 2008 (excluding accrued but unpaid interest to the date of redemption), computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (B) the principal amount of such Note.

“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange.

“Asset Sale” means:

(1) the sale, lease, conveyance or other disposition of any property or assets; other than a sale, lease, conveyance or other disposition governed by the provisions of Section 4.14 or 5.01; and

(2) the issuance of Equity Interests by any of the Company’s Restricted Subsidiaries or the sale by the Company or any Restricted Subsidiary thereof of Equity Interests in any of its Restricted Subsidiaries (other than directors’ qualifying shares and shares issued to foreign nationals to the extent required by applicable law).

Notwithstanding the preceding, the following items shall be deemed not to be Asset Sales:

(1) any single transaction or series of related transactions that involves assets having a Fair Market Value (as determined by the Board of Directors or senior management) of less than $10.0 million;

(2) a transfer of assets or properties between or among the Company and its Restricted Subsidiaries (including any transfer to any Person that concurrently becomes a Restricted Subsidiary of the Company);

(3) an issuance of Equity Interests by a Restricted Subsidiary of the Company to the Company or to another Restricted Subsidiary, including, without limitation, an

issuance of Equity Interests by a Restricted Subsidiary of the Company to the Company in exchange for or in conversion of AMC Preferred Stock;

(4) the sale, lease, conveyance or other disposition of equipment, inventory, accounts receivable or other assets in the ordinary course of business;

(5) the sale, lease, conveyance or other disposition of intellectual property and other intangibles under affiliation agreements or film rights agreements in the ordinary course of business consistent with past practice;

(6) the licensing or sublicensing of intellectual property or other general intangibles, and licenses, leases or subleases of other property in the ordinary course of business which do not materially interfere with the business of the Company or any of its Restricted Subsidiaries;

(7) the sale or other disposition of Cash Equivalents;

(8) dispositions of accounts receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings;

(9) a Restricted Payment that is not prohibited by Section 4.07 and any Permitted Investment;

(10) the granting of a Lien not prohibited hereunder;

(11) any surrender or waiver of contract rights or the settlement, release or surrender of contract rights or other litigation claims in the ordinary course of business; and

(12) any sale or disposition of any property or equipment that has become damaged, worn out, obsolete or otherwise unsuitable for use in connection with the business of the Company or its Restricted Subsidiaries.

“Bankruptcy Law” means Title 11 of the United States Code or any similar federal or state law for the relief of debtors.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act. The terms “Beneficially Owns” and “Beneficially Owned” shall have a corresponding meaning.

“Board of Directors” means:

(1) with respect to a corporation, the board of directors of the corporation or, except in the context of the definitions of “Change of Control” and “Continuing Directors,” a committee thereof authorized to exercise the power of the board of directors of such corporation;

(2) with respect to a partnership, the board of directors of the general partner of the partnership (or if the general partner is not a corporation, the board or committee of the general partner serving a similar function); and

(3) with respect to any other Person, the board or committee of such Person serving a similar function.

“Board Resolution” means a copy of a resolution certified by the Secretary of an Issuer or any Guarantor to have been duly adopted by the Board of Directors of such entity and to be in full force and effect on the date of such certification.

“Business Day” means any day other than a Saturday, a Sunday or a day on which commercial banking institutions are authorized or required by law, regulation or executive order to close in New York City.

“Capital Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“Cash Equivalents” means:

(1) United States dollars;

(2) marketable direct obligations of the United States of America maturing, unless such securities are deposited to defease any Indebtedness, within 397 days of the date of purchase;

(3) commercial paper issued by a Person having consolidated net worth of at least $250.0 million, which conducts a substantial part of its business in the United States of America, maturing within 180 days from the date of the original issue thereof, and rated “P-1” or better by Moody’s or “A-1” or better by S&P;

(4) fully collateralized repurchase agreements with financial institutions having a rating of “Baa” or better from Moody’s or a rating of “A–” or better from S&P;

(5) certificates of deposit, bankers’ acceptances and time deposits maturing within 397 days after the date of purchase, which are issued by a United States national or state bank or foreign bank having capital, surplus and undivided profits totaling more than $100.0 million, and having a rating of “Baa” or better from Moody’s, or a rating of “A–” or better from S&P; and

(6) money market funds that (i) comply with the criteria set forth in the Commission’s Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated “AAA” by S&P and “Aaa” by Moody’s and (iii) have portfolio assets of at least $5 billion.

“Cash Flow” means, with respect to any specified Person for any period, the sum of (a) Net Income of such Person for such period, excluding any unusual, non-recurring or extraordinary items (including any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with any sale of assets outside the ordinary course of business), plus (b) the sum, without duplication, for such period to the extent, in the case of each of clauses (i) through (vi), deducted in calculating such Net Income, of (i) Fixed Charges for such Person, plus (ii) non-cash dividends or distributions on Preferred Stock of such Person, plus (iii) depreciation for such Person, plus (iv) amortization for such person (other than (a) Film Rights Amortization and (b) amortization of prepaid cash expenses that were paid in a prior period), plus (v) taxes for such Person, plus (vi) other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period) for such Person, minus (vii) non-cash items for such Person increasing such Net Income, other than the accrual of revenue consistent with past practice, in each case, determined in accordance with GAAP.

“Change of Control” means the occurrence of any of the following:

(1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries, taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than to one or more of the Principals;

(2) the adoption of a plan relating to the liquidation or dissolution of the Company;

(3) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more of the Principals, becomes the ultimate Beneficial Owner, directly or indirectly, of 50% or more of the voting power of the Voting Stock of the Company;

(4) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors; or

(5) the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into the Company, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities

or other property, other than any such transaction where (A) the Voting Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting, or remains outstanding and constitutes, a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance) and (B) immediately after such transaction, no “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the Exchange Act), other than the Principals, becomes, directly or indirectly, the ultimate Beneficial Owner of 50% or more of the voting power of the Voting Stock of the surviving or transferee Person; provided that, following completion of the offer to purchase Notes pursuant to Section 4.14, any subsequent change in the voting power of the Voting Stock of the surviving or transferee Person Beneficially Owned by the “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) that resulted in such earlier Change of Control shall not result in an additional Change of Control.

“Clearstream” means Clearstream Banking S.A. and any successor thereto.

“Commission” means the United States Securities and Exchange Commission and any successor thereto.

“Consolidated Cash Flow” means, with respect to the Company for any period, (a) Cash Flow of the Company and its Subsidiaries for such period, plus (b) the sum for such period, in each case to the extent deducted in calculating such Cash Flow and without duplication, (i) any non-cash charges incurred subsequent to the date of this Indenture resulting from the application of Statement of Financial Accounting Standards No. 123 or Statement of Financial Accounting Standards No. 142, plus (ii) Deferred Carriage Fees, plus (iii) non-cash unrealized losses in respect of securities and derivatives, plus (iv) Restructuring Charges, plus (v) losses in respect of Monetization Transactions, minus (vi) non-cash unrealized gains in respect of securities and derivatives, minus (vii) gains in respect of Monetization Transactions, in each case, on a consolidated basis and determined in accordance with GAAP; provided that:

(1) for purposes of calculations under Section 4.07 only:

(a) the Cash Flow of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Cash Flow is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its equityholders; and

(b) the Cash Flow of any Person acquired during the specified period for any period prior to the date of such acquisition shall be excluded;

(2) the Cash Flow of any Person that is not a Restricted Subsidiary of the Company or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary thereof;

(3) the Cash Flow of a Restricted Subsidiary of the Company shall be included in the same percentage as the percentage ownership interest in the net income (loss) of such Restricted Subsidiary owned on the last day of such period by the Company or any of its Restricted Subsidiaries; and

(4) the cumulative effect of a change of accounting principles shall be excluded.

“Consolidated Leverage Ratio” means, as of any date of determination, the ratio of:

(1) the aggregate outstanding amount of Indebtedness of the Company and its Restricted Subsidiaries (other than Monetization Indebtedness) as of such date of determination on a consolidated basis (subject to the terms described in the paragraph below) after giving pro forma effect to the incurrence of the Indebtedness giving rise to the need to make such calculation (including a pro forma application of the use of proceeds therefrom), on such date to,

(2) the Annualized Cash Flow of the Company as of such date of determination.

For purposes of this definition:

(1) Consolidated Cash Flow shall be calculated on a pro forma basis after giving effect to (A) the incurrence of the Indebtedness of the Company and its Restricted Subsidiaries (and the application of the proceeds therefrom) giving rise to the need to make such calculation and any incurrence (and the application of the proceeds therefrom) or repayment of other Indebtedness on the date of determination, and (B) any acquisition or disposition (including, without limitation, any acquisition giving rise to the need to make such calculation as a result of the Company or one of its Restricted Subsidiaries (including any Person that becomes a Restricted Subsidiary as a result of such acquisition) incurring, assuming or otherwise becoming liable for Indebtedness) at any time on or subsequent to the first day of the applicable period specified and on or prior to the date of determination, as if such acquisition or disposition (including the incurrence or assumption of any such Indebtedness and also including any Consolidated Cash Flow associated with such acquisition or disposition) occurred on the first day of such two-quarter period; and

(2) pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Company and pro forma effect may be given to any non-recurring expenses, non-recurring costs and cost reductions within the first year after such acquisition that the Company reasonably anticipates in good faith if the Company delivers to the Trustee an Officers’ Certificate executed by the chief financial or accounting officer of the Company certifying to and describing and

quantifying with reasonable specificity such non-recurring expenses, non-recurring costs and cost reduction.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Company who:

(1) was a member of such Board of Directors on the date of this Indenture; or

(2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election.

“Corporate Trust Office of the Trustee” shall be at the address of the Trustee specified in Section 13.02 or such other address as to which the Trustee may give notice to the Issuers.

“Credit Agreement” means that certain loan agreement, dated as of the date of this Indenture, by and among the Company, the guarantors thereto, JPMorgan Chase Bank, as Administrative Agent, the other agents party thereto and the lenders party thereto from time to time, providing for term loan and revolving credit borrowings, including any related notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, modified, renewed, refunded, replaced, restated, restructured, increased, substituted or refinanced in whole or in part from time to time, regardless of whether such amendment, modification, renewal, refunding, replacement, restatement, restructuring, increase, substitution or refinancing is with the same financial institutions or otherwise.

“Credit Facilities” means one or more debt or borrowing facilities (including, without limitation, the Credit Agreement), commercial paper facilities or indentures, in each case with banks or other institutional lenders or a trustee, providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), letters of credit or issuances of notes, in each case, as amended, modified, renewed, refunded, replaced, restated, substituted or refinanced in whole or in part from time to time, regardless of whether such amendment, modification, renewal, refunding, replacement, restatement, substitution or refinancing is with the same financial institutions or otherwise.

“Custodian” means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto.

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“Deferred Carriage Fees” means the amortization of (x) launch support payments and (y) payment in exchange for carriage, in each case made by the Company or any of its Restricted Subsidiaries.

“Definitive Note” means a Note registered in the name of the Holder thereof and issued in accordance with Section 2.07, substantially in the form of Exhibit A, except that such

Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

“Depositary” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.04 as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07. The term “Disqualified Stock” shall also include any options, warrants or other rights that are convertible into Disqualified Stock or that are redeemable at the option of the holder, or required to be redeemed, prior to the date that is 91 days after the date on which the Notes mature.

“Distribution” means the distribution of capital stock of Rainbow Media Enterprises to the stockholders of Cablevision Systems Corporation as described in the Offering Memorandum.

“Dolan Family Members” means (i) Charles F. Dolan and (ii) any spouse, child, child of a spouse, parent, grandchild or other descendant of Charles F. Dolan (where applicable in each of the foregoing instances, whether natural or adopted), and any other intestate distributee, heir or legatee of Charles F. Dolan.

“Domestic Subsidiary” means any Restricted Subsidiary of the Company other than a Restricted Subsidiary that is (1) a “controlled foreign corporation” under Section 957 of the Internal Revenue Code (other than any such entity that Guarantees Indebtedness of the Company or of any of its other Domestic Subsidiaries) or (2) a Subsidiary of an entity described in the preceding clause (1).

“Earn-out Obligation” means any contingent consideration based on future operating performance of an acquired entity or assets or other purchase price adjustment or indemnification or similar obligation, payable following the consummation of an acquisition based on criteria set forth in the documentation governing or relating to such acquisition.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear system, and any successor thereto.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Existing Indebtedness” means the aggregate principal amount of Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the date of this Indenture after giving effect to the application of the proceeds of (1) the Notes and (2) any borrowings made under the Credit Agreement on the date of this Indenture. Existing Indebtedness shall include the Issuers’ 10³/₈% Senior Subordinated Notes due 2014, and the guarantees attached thereto, issued pursuant to the indenture dated as of the date of this Indenture among the Issuers, the guarantors thereto and The Bank of New York, as trustee.

“Fair Market Value” means the price that would be paid in an arm’s-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined, unless otherwise specified, in good faith by the Board of Directors or, if permitted by the terms of this Indenture, by senior management, whose determination in all cases shall be conclusive.

“Film Rights Amortization” means the amortization of expenditures of the Company and its Restricted Subsidiaries for the acquisition of film rights and broadcast programming.

“Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:

(1) the consolidated interest expense of such Person for such period, whether paid or accrued (without duplication), including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and the net payments made or received pursuant to Hedging Obligations, but excluding any dividends on Equity Interests of such Person to the extent paid solely in Equity Interests (other than Disqualified Stock) of such Person; plus

(2) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon,

in each case, on a consolidated basis and in accordance with GAAP.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and in the statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a

significant segment of the accounting profession, which are in effect on the date of this Indenture.

“Global Note Legend” means the legend set forth in Section 2.07(g)(ii), which is required to be placed on all Global Notes issued under this Indenture.

“Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A, issued in accordance with Section 2.01 or Section 2.07.

“Government Securities” means securities that are direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged.

“Guarantee” means, as to any Person, a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness of another Person.

“Guarantors” means, with respect to this Indenture:

(1) each direct or indirect Domestic Subsidiary of the Company on the date of this Indenture, other than (x) Co-Issuer Corp. and (y) any Insignificant Subsidiary; and

(2) any other subsidiary that executes a Note Guarantee in accordance with the provisions of this Indenture and a supplemental indenture, pursuant to which it agrees to be bound by the terms of this Indenture as Guarantor;

and their respective successors and assigns until released from their obligations under their Note Guarantees and this Indenture in accordance with the terms of this Indenture.

“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under:

(1) interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and other agreements or arrangements with respect to interest rates;

(2) commodity swap agreements, commodity option agreements, forward contracts and other agreements or arrangements with respect to commodity prices; and

(3) foreign exchange contracts, currency swap agreements and other agreements or arrangements with respect to foreign currency exchange rates.

“Holder” means a Person in whose name a Note is registered.

“incur” means, with respect to any Indebtedness, to incur, create, issue, assume, Guarantee or otherwise become directly or indirectly liable for or with respect to, or become responsible for, the payment of, contingently or otherwise, such Indebtedness.

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent:

(1) in respect of borrowed money;

(2) evidenced by bonds, notes, debentures or similar instruments;

(3) evidenced by letters of credit (or reimbursement agreements in respect thereof), but excluding obligations with respect to letters of credit (including trade letters of credit) securing obligations (other than obligations described in clauses (1) or (2) above or clauses (5), (6) or (8) below) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if drawn upon, to the extent such drawing is reimbursed no later than the 10th Business Day following receipt by such Person of a demand for reimbursement;

(4) in respect of bankers’ acceptances;

(5) in respect of Capital Lease Obligations;

(6) in respect of the balance deferred and unpaid of the purchase price of any property or services, except any such balance that constitutes an accrued expense or trade payable;

(7) representing the Fair Market Value (as determined by the Board of Directors or senior management) of Hedging Obligations, other than Hedging Obligations that are incurred for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; or

(8) representing Disqualified Stock valued at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued dividends.

In addition, the term “Indebtedness” includes (x) all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person), provided that the amount of such Indebtedness shall be the lesser of (A) the Fair Market Value (as determined by the Board of Directors or senior management) of such asset at such date of determination and (B) the amount of such Indebtedness, and (y) to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such

Disqualified Stock as if such Disqualified Stock were repurchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the Fair Market Value (as determined by the Board of Directors or senior management) of such Disqualified Stock, such fair market shall be determined in good faith by the Company’s Board of Directors.

The amount of any Indebtedness outstanding as of any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation, and shall be:

(1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and

(2) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness;

provided that Indebtedness shall not include:

(i) any liability for federal, state, local or other taxes,

(ii) any liability in respect of performance bonds, compensation claims, surety or appeal bonds and payment obligations in connection with self-insurance or similar obligations,

(iii) any liability arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, provided, however, that such liability is extinguished within five Business Days of its incurrence,

(iv) any accrued expense or trade payable to trade creditors arising in the ordinary course of business, including guarantees thereof or instruments evidencing such liabilities,

(v) any Earn-out Obligation, except to the extent that the contingent consideration relating thereto is not paid within five Business Days after the contingency relating thereto is resolved, or

(vi) agreements providing for indemnification, adjustment of purchase price or similar obligations, or Guarantees or letters of credit, surety bonds or performance bonds securing any obligations of the Company or any of its Restricted Subsidiaries pursuant to such agreements, in any case incurred or assumed in connection with the disposition of any business, assets or Restricted Subsidiary of the Company (other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or such Restricted Subsidiary for the purpose of financing such acquisition), so long as the principal amount does not exceed the gross proceeds actually received by the Company or any Restricted Subsidiary thereof in connection with such disposition.

“Indenture” means this Indenture, as amended or supplemented from time to time.

“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.

“Institutional Accredited Investor” means an institution that is an “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who is not also a QIB.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

“Insignificant Subsidiary” means any Subsidiary of the Company designated by the Company as an “Insignificant Subsidiary;” provided that the total assets of all Subsidiaries that are so designated, as reflected on the Company’s most recent consolidating balance sheet prepared in accordance with GAAP, do not in the aggregate at any time exceed $5.0 million.

“Investment Grade Rating” means (1) a rating of BBB– or better, in the case of S&P (or its equivalent under any successor Rating Categories of S&P) and a rating of Baa3 or better, in the case of Moody’s (or its equivalent under any successor Rating Categories of Moody’s), or (2) in each case, if a Rating Agency in the foregoing clause (1) ceases to rate the Notes for reasons outside the control of the Company, an equivalent Rating Category of any other Rating Agency.

“Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans or other extensions of credit (including Guarantees, but excluding advances to customers or suppliers in the ordinary course of business that are, in conformity with GAAP, recorded as accounts receivable, prepaid expenses or deposits on the balance sheet of the Company or its Restricted Subsidiaries and endorsements for collection or deposit arising in the ordinary course of business), advances (excluding commission, payroll, travel and similar advances to officers and employees made consistent with past practices), capital contributions (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.

If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value (as determined by senior management or the Board of Directors, unless such Fair Market Value exceeds $10.0 million, in which event such Fair Market Value must be determined by the Board of Directors) of the Investment in such Subsidiary not sold or disposed of. The acquisition by the Company or any Restricted Subsidiary of the Company of a Person that holds an Investment in a third Person

shall be deemed (without duplication) to be an Investment by the Company or such Restricted Subsidiary in such third Person at the time that the acquired Person becomes a Restricted Subsidiary of the Company in an amount equal to the Fair Market Value (as determined by senior management or the Board of Directors, unless such Fair Market Value exceeds $10.0 million, in which event such Fair Market Value must be determined by the Board of Directors) of the Investment held by the acquired Person in such third Person. Except as otherwise provided in this Indenture, the amount of an Investment shall be determined at the time the Investment is made and without giving effect to subsequent changes in value.

“Issue Date” means the date of the original issuance of the Notes under this Indenture.

“Legended Regulation S Global Note” means a Note in the form of Exhibit A bearing the Global Note Legend, the Private Placement Legend and the Regulation S Global Note Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount at maturity of the Notes initially sold in reliance on Rule 903 of Regulation S.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

“Monetization Indebtedness” means any Indebtedness of the Company or any Restricted Subsidiary thereof issued in connection with a Monetization Transaction; provided that, (i) on the date of its incurrence, the purchase price or principal amount of such Monetization Indebtedness does not exceed the Fair Market Value of the securities that are the subject of such Monetization Transaction on such date and (ii) the obligations of the Company and its Restricted Subsidiaries with respect to the purchase price or principal amount of such Monetization Indebtedness (x) may be satisfied in full by delivery of the securities that are the subject of such Monetization Transaction and any related options on such securities or any proceeds received by the Company or any Restricted Subsidiary thereof on account of such options; provided that if the Company or such Restricted Subsidiary no longer owns sufficient securities that were the subject of such Monetization Transaction and/or related options on such securities to satisfy in full the obligations of the Company and its Restricted Subsidiaries under such Monetization Indebtedness, such Indebtedness shall no longer be deemed to be Monetization Indebtedness, and (y) are not secured by any Liens on any of the Company’s or its Restricted Subsidiaries’ assets other than the securities that are the subject of such Monetization Transaction and the related options on such securities.

“Monetization Transaction” means a transaction pursuant to which (1) securities received pursuant to an Asset Sale are sold, transferred or otherwise conveyed (including by way of a forward purchase agreement, prepaid forward sale agreement, secured borrowing or similar agreement) within 120 days of such Asset Sale and (2) the Company receives (including by way

of borrowing under Monetization Indebtedness) not less than 75% of the Fair Market Value of such securities in the form of cash.

“Moody’s” means Moody’s Investors Service, Inc. and its successors.

“Net Income” means, with respect to any specified Person, the net income (loss) of such Person after taxes (unless such Person is a partnership or limited liability company), determined in accordance with GAAP.

“Net Proceeds” means the aggregate cash proceeds, including payments in respect of deferred payment obligations (to the extent corresponding to the principal, but not the interest component, thereof) received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of (1) the direct costs relating to such Asset Sale, including, without limitation, legal, accounting, investment banking and brokerage fees, and sales commissions, and any relocation expenses incurred as a result thereof, (2) taxes paid or payable as a result thereof, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, (3) amounts required to be applied to the repayment of Indebtedness or other liabilities, secured by a Lien on the asset or assets that were the subject of such Asset Sale, or is required to be paid as a result of such sale, (4) any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP and (5) appropriate amounts to be provided by the Company or its Restricted Subsidiaries as a reserve against liabilities associated with such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as determined in accordance with GAAP.

“Non-U.S. Person” means a Person who is not a U.S. Person.

“Note Guarantee” means a Guarantee of the Notes pursuant to this Indenture.

“Notes” means the 8¾% Senior Notes due 2012 of the Issuers issued on the date hereof and any Additional Notes. The Notes and the Additional Notes, if any, shall be treated as a single class for all purposes under this Indenture.

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

“Offering Memorandum” means the offering memorandum, dated August 13, 2004, relating to the Issuers’ 8¾% Senior Notes due 2012.

“Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any Vice-President.

“Officers’ Certificate” means a certificate signed on behalf of the Company by at least two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of this Indenture.

“Opinion of Counsel” means an opinion from legal counsel (who may be counsel to or an employee of the Company) that meets the requirements of this Indenture.

“Participant” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and with respect to DTC, shall include Euroclear and Clearstream).

“Permitted Business” means any business conducted or proposed to be conducted (as described in the Offering Memorandum) by the Company and its Restricted Subsidiaries on the date of this Indenture and other businesses reasonably related or ancillary thereto.

“Permitted Investments” means:

(1) any Investment in the Company or in a Restricted Subsidiary of the Company;

(2) any Investment in Cash Equivalents;

(3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary of the Company; or

(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company;

(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10;

(5) Investments to the extent acquired in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company;

(6) Hedging Obligations that are incurred for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder;

(7) any Investments received in satisfaction of judgments or in settlement of debt or compromises of obligations incurred in the ordinary course of business, including

pursuant to any plan of reorganization or similar arrangement upon bankruptcy or insolvency;

(8) any Investments received as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(9) advances to customers or suppliers in the ordinary course of business that are recorded in accordance with GAAP as accounts receivable or prepaid expenses or lease, utility or other similar deposits in the ordinary course of business; and

(10) Investments consisting of the licensing or contribution of intellectual property pursuant to affiliation agreements or film rights agreements in the ordinary course of business consistent with past practice.

“Permitted Liens” means:

(1) Liens securing Indebtedness in an amount not to exceed $1,250 million at any one time outsanding;

(2) Liens in favor of the Company or any Guarantor;

(3) Liens securing Monetization Indebtedness;

(4) Liens on property or assets of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any properties or assets other than those of the Person merged into or consolidated with the Company or the Restricted Subsidiary;

(5) Liens on property or assets existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such transaction and do not extend to any properties or assets other than those so acquired by the Company or the Restricted Subsidiary;

(6) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by Section 4.09(b)(iv) covering only the assets acquired with such Indebtedness;

(7) Liens existing on the date of this Indenture;

(8) Liens securing the Notes;

(9) during any period commencing from the date the Suspension Condition is first satisfied, Liens to secure Indebtedness that is not pari passu or subordinated to the Notes or the Note Guarantees;

(10) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $10.0 million at any one time outstanding;

(11) Liens securing Hedging Obligations of the Company or any of its Restricted Subsidiaries that do not constitute Indebtedness or securing letters of credit that support such Hedging Obligations;

(12) Liens incurred or deposits made in the ordinary course of business in connection with worker’s compensation, unemployment insurance or other social security obligations;

(13) Liens, deposits or pledges to secure the performance of bids, tenders, contracts (other than contracts for the payment of Indebtedness), leases, or other similar obligations arising in the ordinary course of business;

(14) survey exceptions, encumbrances, easements or reservations of, or rights of other for, rights of way, zoning or other restrictions as to the use of properties, and defects in title which, in the case of any of the foregoing, were not incurred or created to secure the payment of Indebtedness, and which in the aggregate do not materially adversely affect the value of such properties or materially impair the use for the purposes of which such properties are held by the Company or any of its Restricted Subsidiaries;

(15) judgment and attachment Liens not giving rise to an Event of Default and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made;

(16) Liens for taxes, assessments, fees or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;

(17) Liens securing obligations under film rights agreements or affiliation agreements that do not constitute Indebtedness and that were entered into in the ordinary course of business consistent with past practice;

(18) Liens, deposits or pledges to secure public or statutory obligations, surety, stay, appeal, indemnity, performance or other similar bonds or obligations; and Liens, deposits or pledges in lieu of such bonds or obligations, or to secure such bonds or obligations, or to secure letters of credit in lieu of or supporting the payment of such bonds or obligations;

(19) Liens on property or assets used to defease Indebtedness that was not incurred in violation of this Indenture;

(20) Liens in favor of collecting or payor banks having a right of set-off, revocation, refund or chargeback with respect to money or instruments of the Company or any Subsidiary thereof on deposit with or in possession of such bank;

(21) any interest or title of a lessor, licensor or sublicensor in the property subject to any lease, license or sublicense;

(22) Liens arising from precautionary UCC financing statements regarding operating leases or consignments; and

(23) Liens of franchisors in the ordinary course of business not securing Indebtedness.

“Permitted Refinancing Indebtedness” means:

(A) any Indebtedness of the Company or any of its Restricted Subsidiaries (other than Disqualified Stock) issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than Disqualified Stock and intercompany Indebtedness); provided that:

(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued and unpaid interest thereon and the amount of any reasonable premium necessary to accomplish such refinancing and such reasonable expenses incurred in connection therewith);

(2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes or the Note Guarantees, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable, taken as a whole in all material respects, to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

(4) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is pari passu in right of payment with the Notes or any Note Guarantees, such Permitted Refinancing Indebtedness is pari passu with, or subordinated in right of payment to, the Notes or such Note Guarantees; and

(5) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

(B) any Disqualified Stock of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace or refund Indebtedness or other Disqualified Stock of the Company or any of its Restricted Subsidiaries (other than Indebtedness or Disqualified Stock held by the Company or any of its Restricted Subsidiaries); provided that:

(1) the liquidation or face value of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness, or the liquidation or face value of the Disqualified Stock, as applicable, so extended, refinanced, renewed, replaced or refunded (plus all accrued and unpaid interest or dividends thereon and the amount of any reasonable premium necessary to accomplish such refinancing and such reasonable expenses incurred in connection therewith);

(2) such Permitted Refinancing Indebtedness has a final redemption date later than the final maturity or redemption date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness or Disqualified Stock being extended, refinanced, renewed, replaced or refunded;

(3) such Permitted Refinancing Indebtedness has a final redemption date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable, taken as a whole in all material respects, to the Holders of Notes as those contained in the documentation governing the Indebtedness or Disqualified Stock being extended, refinanced, renewed, replaced or refunded;

(4) such Permitted Refinancing Indebtedness is not redeemable at the option of the holder thereof or mandatorily redeemable prior to the final maturity or redemption date of the Indebtedness or Disqualified Stock being extended, refinanced, renewed, replaced or refunded; and

(5) such Disqualified Stock is issued either by the Company or by the Restricted Subsidiary who is the issuer of the Indebtedness or Disqualified Stock being extended, refinanced, renewed, replaced or refunded.

“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

“Preferred Stock” means, with respect to any Person, any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions upon liquidation.

Family Member or Members and not individually, (e) any Person, eighty percent (80%) of which is owned and controlled by any of the foregoing or combination of the foregoing, and (f) The Dolan Family Foundation, a New York not-for-profit corporation.

“Private Placement Legend” means the legend set forth in Section 2.07(g)(i) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

“Qualified Equity Offering” means (i) an offer and sale of Equity Interests (other than Disqualified Stock) of the Company pursuant to a registration statement that has been declared effective by the Commission pursuant to the Securities Act (other than a registration statement on Form S-8 or otherwise relating to equity securities issuable under any employee benefit plan of the Company) or (ii) any private placement of Equity Interests (other than Disqualified Stock) of the Company to any Person other than a Subsidiary of the Company.

“Rainbow Media Enterprises” means Rainbow Media Enterprises, Inc.

“Rating Agency” means (1) each of S&P and Moody’s and (2) if S&P or Moody’s ceases to rate the Notes for reasons outside the control of the Company, a “nationally recognized statistical rating organization” within the meaning of Rule 15c-3-1(c)(vi)(F) under the Exchange Act selected by the Company, which shall be substituted for S&P or Moody’s, as the case may be.

“Rating Category” means (1) with respect to S&P, any of the following categories (any of which may include a “+” or “–”: AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor categories), (2) with respect to Moody’s, any of the following categories: Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories), and (3) the equivalent of any such categories of S&P or Moody’s used by another Rating Agency, if applicable.

“Regulation S” means Regulation S promulgated under the Securities Act.

“Regulation S Global Note” means a Legended Regulation S Global Note or an Unlegended Regulation S Global Note, as appropriate.

“Regulation S Global Note Legend” means the legend set forth in Section 2.07(h) that is required to be placed in Legended Regulation S Global Notes under the Indenture.

“Replacement Assets” means any combination of (1) non-current assets that shall be used or useful in a Permitted Business or (2) all or substantially all the assets of a Permitted Business or a majority of the Voting Stock of any Person engaged in a Permitted Business (including by means of a merger, consolidation or other business combination permitted under this Indenture) that shall become on the date of acquisition thereof a Restricted Subsidiary.

“Responsible Officer,” when used with respect to the Trustee, means any officer within the Corporate Trust Office of the Trustee (or any successor group of the Trustee) or any

other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of the Indenture.

“Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.

“Restricted Global Note” means a Global Note bearing the Private Placement Legend.

“Restricted Investment” means an Investment other than a Permitted Investment.

“Restricted Period” means the 40-day distribution compliance period as defined in Regulation S.

“Restricted Subsidiary” of a Person means any Subsidiary of such Person that is not an Unrestricted Subsidiary.

“Restructuring Charges” means, with respect to the Company, restructuring charges incurred by the Company and its Restricted Subsidiaries in connection with exiting an activity or restructuring an operation or activity, in accordance with GAAP.

“Rule 144” means Rule 144 promulgated under the Securities Act.

“Rule 144A” means Rule 144A promulgated under the Securities Act.

“Rule 903” means Rule 903 promulgated under the Securities Act.

“Rule 904” means Rule 904 promulgated under the Securities Act.

“S&P” means Standard & Poor’s Rating Services, a Division of The McGraw-Hill Companies, Inc., and its successors.

“Securities Act” means the Securities Act of 1933, as amended.

“Significant Subsidiary” means any Subsidiary that would constitute a “significant subsidiary” within the meaning of Article 1 of Regulation S-X promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture.

“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

“Subsidiary” means, with respect to any specified Person:

(1) any corporation, association or other business entity of which more than 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 that Person (or a combination thereof); and

(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof).

“TIA” means the Trust Indenture Act of 1939, as in effect on the date of this Indenture.

“Treasury Rate” means the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (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 prepayment (or, if such Statistical Release is no longer published, any publicly available source for similar market data)) most nearly equal to the then remaining term of the Notes to September 1, 2008; provided, however, that if the then remaining term of the Notes to September 1, 2008 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the then remaining term of the Notes to September 1, 2008 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

“Trustee” means The Bank of New York, a New York banking corporation, until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

“Unlegended Regulation S Global Note” means a Note in the form of Exhibit A bearing the Global Note Legend and the Private Placement Legend, deposited with or on behalf of and registered in the name of the Depositary or its nominee and issued upon expiration of the Restricted Period.

“Unrestricted Definitive Note” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.

“Unrestricted Global Note” means a Global Note substantially in the form of Exhibit A that bears the Global Note Legend, that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, that is deposited with or on behalf of and registered in the name of the Depositary or its nominee and that does not bear the Private Placement Legend.

“Unrestricted Subsidiary” means any Subsidiary of the Company that is designated as an Unrestricted Subsidiary in compliance with Section 4.16 and any Subsidiary of such Subsidiary.

“U.S. Person” means a U.S. person as defined in Rule 902(o) under the Securities Act.

“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

(2) the then outstanding principal amount of such Indebtedness.

Section 1.02. Other Definitions.

Term		Defined in Section
“Act”		13.14
“Affiliate Transaction”		4.11
“Asset Sale Offer”		4.10
“Authentication Order”		2.02
“Basket Period”		4.07
“Change of Control Offer”		4.14
“Change of Control Payment”		4.14
“Change of Control Payment Date”		4.14
“Covenant Defeasance”		8.03
“DTC”		2.01
“Event of Default”		6.01
“Excess Proceeds”		4.10
“Legal Defeasance”		8.02
“Offer Amount”		3.08
“Offer Period”		3.08
“offshore transaction”		2.07
“Paying Agent”		2.04
“Payment Default”		6.01
“Permitted Debt”		4.09
“Purchase Date”		3.08
“Registrar”		2.04
“Related Proceedings”		13.09
“Repurchase Offer”		3.08
“Restricted Payments”		4.07
“Specified Courts”		13.09
“Suspension Condition”		4.19
“Suspended Covenants”		4.19

Section 1.03. Incorporation by Reference of Trust Indenture Act.

Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.

The following TIA terms used in this Indenture have the following meanings:

“obligor” on the Notes means the Issuers and any successor obligor upon the Notes.

Section 1.04. Rules of Construction. Unless the context otherwise requires:

(a) a term has the meaning assigned to it;

(b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(c) “or” is not exclusive;

(d) words in the singular include the plural, and in the plural include the singular;

(e) “herein”, “hereof” and other word of similar import refer to this Indenture as a whole and not to any particular Section, Article or other subdivision;

(f) all references to Sections or Articles or Exhibits refer to Sections or Articles or Exhibits of or to this Indenture unless otherwise indicated; and

(g) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the Commission from time to time.

ARTICLE TWO

THE NOTES

Section 2.01. Form and Dating.

(a) General. The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be issued in registered form without interest coupons in minimum denominations of $5,000 and integral multiples of $1,000 in excess thereof.

The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture, and the Issuers, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

(b) Global Notes. Notes issued in global form shall be substantially in the form of Exhibit A (and shall include the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it represents the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or, if the Custodian and the Trustee are not the same Person, by the Custodian at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.07 hereof.

(c) Regulation S Global Notes. Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Legended Regulation S Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, as custodian for The Depository Trust Company (“DTC”) in New York, New York, and registered in the name of the Depositary or its nominee for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Issuers and authenticated by the Trustee as hereinafter provided. Following the termination of the Restricted Period, beneficial interests in the Legended Regulation S Global Note may be exchanged for beneficial interests in Unlegended Regulation S Global Notes pursuant to Section 2.07 and the Applicable Procedures. Simultaneously with the authentication of Unlegended Regulation S Global Notes, the Trustee shall cancel any Legended Regulation S Global Notes. The aggregate principal amount of the Regulation S Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.

(d) Euroclear and Clearstream Procedures Applicable. The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream shall be applicable to transfers of beneficial interests in the Regulation S Global Notes that are held by Participants through Euroclear or Clearstream.

Section 2.02. Execution and Authentication.

The Notes shall be executed on behalf of each Issuer by any one of the following: its Chairman, Chief Executive Officer, President or Chief Financial Officer and attested by any of the aforementioned Officers other than the Officer who executed the Notes or any other Person authorized for such purpose. The signature of any of these officers on the Notes may be manual or facsimile.

If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid.

A Note shall not be valid until authenticated by the manual signature of a duly authorized signatory of the Trustee. Such signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is unlimited.

The Issuers may, subject to Article Four of this Indenture and applicable law, issue Additional Notes under this Indenture. The Notes issued on the Issue Date and any Additional Notes subsequently issued shall be treated as a single class for all purposes under this Indenture.

amount specified in such Authentication Order. The Authentication Order shall specify the amount of Notes to be authenticated and the date on which the Notes are to be authenticated.

The Trustee may appoint an authenticating agent acceptable to the Issuers to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Issuers.

Section 2.03. Methods of Receiving Payments on the Notes.

If a Holder has given wire transfer instructions to the Company, the Paying Agent, on behalf of the Issuers, shall pay all principal, interest and premium, if any, on that Holder’s Notes in accordance with those instructions. All other payments on Notes shall be made at the office or agency of the Paying Agent and Registrar within the City and State of New York unless the Issuers elect to make interest payments by check mailed to the Holders at their addresses set forth in the register of Holders.

Section 2.04. Registrar and Paying Agent.

(a) The Issuers shall maintain a registrar with an office or agency where Notes may be presented for registration of transfer or for exchange (“Registrar”) and a paying agent with an office or agency where Notes may be presented for payment (“Paying Agent”). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Issuers may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any successor thereto and co-registrar and the term “Paying Agent” includes any successor thereto and additional paying agent. The Issuers may change any Paying Agent or Registrar without prior notice to any Holder. The Issuers shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Issuers fail to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.

(b) The Issuers initially appoint DTC to act as Depositary with respect to the Global Notes.

(c) The Issuers initially appoint the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Notes.

Section 2.05. Paying Agent to Hold Money in Trust.

The Issuers shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and shall notify the Trustee of any default by the Issuers in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Issuers at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or one of its Subsidiaries) shall have no further liability for the money. If the

Company or one of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Issuers, the Trustee shall serve as Paying Agent for the Notes.

Section 2.06. Holder Lists.

(a) The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Issuers shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Issuers shall otherwise comply with TIA Section 312(a).

(b) Every Holder, by receiving and holding the same, agrees with the Issuers, the Guarantors and the Trustee that none of the Issuers, the Guarantors or the Trustee or any agent of theirs shall be held accountable by reason of the disclosure of any information as to the names and addresses of the Holders in accordance with TIA Section 312, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under TIA Section 312.

Section 2.07. Transfer and Exchange.

(a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes shall be exchanged by the Issuers for Definitive Notes if (i) DTC (A) notifies the Issuers that it is unwilling or unable to continue as Depositary for the Global Notes and the Issuers fail to appoint a successor Depositary within 90 days after receiving such notice or (B) has ceased to be a clearing agency registered under the Exchange Act and the Issuers fail to appoint a successor Depositary within 90 days after becoming aware of such condition; (ii) the Issuers, at their option, notify the Trustee in writing that they elect to cause the issuance of Definitive Notes; provided that in no event shall the Legended Regulation S Global Note be exchanged by the Issuers for Definitive Notes prior to the expiration of the Restricted Period; or (iii) there shall have occurred and be continuing a Default or Event of Default with respect to the Notes. Upon the occurrence of any of the preceding events in (i), (ii) or (iii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.08 and 2.11 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.07 or Section 2.08 or 2.11 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.07(a); however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.07(b) or (c) hereof.

(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Legended Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.07(b)(i).

(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.07(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Legended Regulation S Global Note prior to the expiration of the Restricted Period. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount at maturity of the relevant Global Notes pursuant to Section 2.07(i).

(iii) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global

Note if the transfer complies with the requirements of Section 2.07(b)(ii) above and the Registrar receives the following:

(A) if the transferee shall take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B, including the certifications in item (1) thereof; and

(B) if the transferee shall take delivery in the form of a beneficial interest in a Legended Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B, including the certifications in item (2) thereof.

(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any Holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.07(b)(ii) above and the Registrar receives the following:

(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C, including the certifications in item (1)(a) thereof; or

(B) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B, including the certifications in item (4) thereof;

and, in each such case set forth in this paragraph (iv), if the Registrar or the Issuers so request or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar and the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

If any such transfer is effected at a time when an Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred.

Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.

(i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation:

(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C, including the certifications in item (2)(a) thereof;

(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B, including the certifications in item (1) thereof;

(C) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than that listed in subparagraph (B) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; or

(D) if such beneficial interest is being transferred to the Issuers or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B, including the certifications in item (3)(a) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.07(i) hereof, and the Issuers shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.07(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.07(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

(ii) Beneficial Interests in Legended Regulation S Global Note to Definitive Notes. A beneficial interest in the Legended Regulation S Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to the expiration of the Restricted Period, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.

(iii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if the Registrar receives the following:

(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such Holder in the form of Exhibit C, including the certifications in item (1)(b) thereof; or

(B) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such Holder in the form of Exhibit B, including the certifications in item (4) thereof;

and, in each such case, if the Registrar or the Issuers so request or if the Applicable Procedures so require, an opinion of counsel in form reasonably acceptable to the Registrar and the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.07(b)(ii), the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.07(i), and the Issuers shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.07(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.07(c)(iv) shall not bear the Private Placement Legend.

(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

(i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a

Restricted Global Note, then, upon receipt by the Registrar of the following documentation:

(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C, including the certifications in item (2)(b) thereof;

(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B, including the certifications in item (1) thereof;

(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an “offshore transaction” in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B, including the certifications in item (2) thereof; or

(D) if such Restricted Definitive Note is being transferred to the Issuers or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B, including the certifications in item (3)(a) thereof,

the Trustee shall cancel the Restricted Definitive Note, and increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, and in the case of clause (C) above, the Regulation S Global Note.

(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if: the Registrar receives the following:

(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C, including the certifications in item (1)(c) thereof; or

(B) if the Holder of such Restricted Definitive Note proposes to transfer such Note to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B, including the certifications in item (4) thereof;

and, in each such case, if the Registrar or the Issuers so request or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar and the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.07(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.

(iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Unrestricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.

If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (ii) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.

(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.07(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.07(e).

(i) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:

(A) if the transfer shall be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B, including the certifications in item (1) thereof; and

(B) if the transfer shall be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.

(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted

Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:

(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C, including the certifications in item (1)(d) thereof; or

(B) if the Holder of such Restricted Definitive Note proposes to transfer such Note to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B, including the certifications in item (4) thereof;

and, in each such case, if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.

(f) [Intentionally omitted].

(g) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.

(i) Private Placement Legend. Except as permitted below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:

LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUERS OR ANY AFFILIATE OF THE ISSUERS WERE THE OWNER OF THIS NOTE AND THE GUARANTEES ENDORSED HEREON (OR ANY PREDECESSOR OF THIS NOTE AND THE GUARANTEES ENDORSED HEREON) (THE “RESALE RESTRICTION TERMINATION DATE”) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES AND GUARANTEES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS’ AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D) PRIOR TO THE END OF THE 40 DAY DISTRIBUTION COMPLIANCE PERIOD WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR PURSUANT TO CLAUSE (E) PRIOR TO THE RESALE RESTRICTION TERMINATION DATE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) to this Section 2.07 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.

(ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form:

NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.12 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUERS.

(h) Regulation S Global Note Legend. The Regulation S Global Note shall bear a legend in substantially the following form:

THE RIGHTS ATTACHING TO THIS REGULATION S GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).

(i) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.12 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

(j) General Provisions Relating to Transfers and Exchanges.

(i) To permit registrations of transfers and exchanges, the Issuers each shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Issuers’ order or at the Registrar’s request.

(ii) No service charge shall be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Issuers may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.11, 3.06, 3.08, 4.10, 4.14 and 9.05).

(iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.

(iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid and legally binding obligations of the Issuers, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

(v) The Issuers shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part, (C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date or (D) to register the transfer of or to exchange a Note tendered and not withdrawn in connection with a Change of Control Offer or an Asset Sale Offer.

(vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuers may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving all payments of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuers shall be affected by notice to the contrary.

(vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02.

(viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.07 to effect a registration of transfer or exchange may be submitted by facsimile.

Section 2.08. Replacement Notes.

(a) If any mutilated Note is surrendered to the Trustee or the Issuers and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Issuers shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee’s requirements are met. If required by the Trustee or the Issuers, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Issuers to protect the Issuers, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Issuers may charge for their expenses in replacing a Note.

(b) Every replacement Note is an additional obligation of the Issuers and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.

Section 2.09. Outstanding Notes.

(a) The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.10, a Note does not cease to be outstanding because the Issuers or an Affiliate of the Issuers holds the Note; however, Notes held by the Company or a Subsidiary of the Company shall not be deemed to be outstanding for purposes of Section 3.07(b).

(b) If a Note is replaced pursuant to Section 2.08, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser or protected purchaser.

(c) If the principal amount of any Note is considered paid under Section 4.01, it ceases to be outstanding and interest on it ceases to accrue.

(d) If the Paying Agent (other than the Company, a Subsidiary of the Company or an Affiliate of any of the foregoing) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.

Section 2.10. Treasury Notes.

In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuers, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuers, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded.

Section 2.11. Temporary Notes.

(a) Until certificates representing Notes are ready for delivery, the Issuers may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Issuers consider appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Issuers shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes.

(b) Holders of temporary Notes shall be entitled to all of the benefits of this Indenture.

Section 2.12. Cancellation.

The Issuers at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for

registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of canceled Notes in accordance with its procedures for the disposition of canceled securities in effect as of the date of such disposition (subject to the record retention requirement of the Exchange Act). Certification of the disposition of all canceled Notes shall be delivered to the Issuers upon their written request. The Issuers may not issue new Notes to replace Notes that they have paid or that have been delivered to the Trustee for cancellation.

Section 2.13. Defaulted Interest.

If the Issuers default in a payment of interest on the Notes, such interest and interest on such defaulted interest shall forthwith cease to be payable to the Holder on the record date set forth in the Notes by virtue of having been such Holder and the Issuers shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01. The Issuers shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Issuers shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 10 days before the special record date, the Issuers (or, upon the written request of the Issuers, the Trustee in the name and at the expense of the Issuers) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid.

Section 2.14. CUSIP Numbers.

The Issuers in issuing the Notes may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Issuers shall promptly notify the Trustee of any change in the “CUSIP” numbers.

ARTICLE THREE

REDEMPTION AND OFFERS TO

PURCHASE

Section 3.01. Notices to Trustee.

If the Issuers elect to redeem Notes pursuant to the optional redemption provisions of Section 3.07, they shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers’ Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price.

Section 3.02. Selection of Notes to Be Redeemed.

(a) If less than all of the Notes are to be redeemed at any time, the Trustee shall select the Notes for redemption as follows:

(i) if the Notes are listed on any national securities exchange, in compliance with the requirements of such principal national securities exchange; or

(ii) if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem appropriate.

In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption.

(b) The Trustee shall promptly notify the Issuers in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount at maturity thereof to be redeemed. No Notes in amounts of $5,000 or less shall be redeemed in part. Notes and portions of Notes selected shall be in amounts of $5,000 or whole multiples of $5,000; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $5,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.

Section 3.03. Notice of Redemption.

(a) At least 30 days but not more than 60 days before a redemption date, the Issuers shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address.

The notice shall identify the Notes to be redeemed and shall state:

(i) the redemption date;

(ii) the redemption price;

(iii) if any Note is being redeemed in part, the portion of the principal amount thereof to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion of the original Note shall be issued in the name of the Holder thereof upon cancellation of the original Note;

(iv) the name and address of the Paying Agent;

(v) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price and become due on the date fixed for redemption;

(vi) that, unless the Issuers default in making such redemption payment, interest, if any, on Notes called for redemption ceases to accrue on and after the redemption date;

(vii) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and

(viii) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.

(b) At the Issuers’ request, the Trustee shall give the notice of redemption in the Issuers’ name and at their expense; provided, however, that the Issuers shall have delivered to the Trustee, at least 35 days prior to the redemption date, an Officers’ Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. The notice, if mailed in the manner provided herein shall be presumed to have been given, whether or not the Holder receives such notice.

Section 3.04. Effect of Notice of Redemption.

Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. Interest, if any, on Notes called for redemption ceases to accrue on and after the redemption date, unless the Issuers default in making the applicable redemption payment. A notice of redemption may not be conditional.

Section 3.05. Deposit of Redemption Price.

(a) Not later than 12:00 p.m. (noon) Eastern Time on the redemption date, the Issuers shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued and unpaid interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Issuers any money deposited with the Trustee or the Paying Agent by the Issuers in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest on, all Notes to be redeemed.

(b) If the Issuers comply with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Issuers to comply with the preceding paragraph, interest shall be paid on the unpaid principal from the redemption date until such principal is paid and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01.

Section 3.06. Notes Redeemed in Part.

Upon surrender and cancellation of a Note that is redeemed in part, the Issuers shall issue and the Trustee shall authenticate for the Holder at the expense of the Issuers a new Note equal in principal amount to the unredeemed portion of the Note surrendered. No Notes in denominations of $5,000 or less shall be redeemed in part.

Section 3.07. Optional Redemption.

(a) Except as set forth in clauses (b) and (c) of this Section 3.07, the Issuers shall not have the option to redeem the Notes pursuant to this Section 3.07 prior to September 1, 2008. On or after September 1, 2008, the Issuers may redeem all or a part of the Notes at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon, to the applicable redemption date, if redeemed during the twelve-month period beginning on September 1 of the years indicated below:

Year	Percentage

2008	104.375	%
2009	102.188	%
2010 and thereafter	100.000	%

(b) At any time prior to September 1, 2007, the Issuers may redeem up to 35% of the aggregate principal amount of the Notes issued hereunder (including any Additional Notes) at a redemption price of 108.75% of the principal amount thereof, plus accrued and unpaid interest thereon to the redemption date, with the net cash proceeds of one or more Qualified Equity Offerings; provided that:

(i) at least 65% of the aggregate principal amount of the Notes issued hereunder (including any Additional Notes) remains outstanding immediately after the occurrence of such redemption (excluding, for purposes of such calculation, Notes held by the Company or its Subsidiaries); and

(ii) the redemption must occur within 90 days of the date of the closing of such Qualified Equity Offering.

(c) If at any time prior to September 1, 2008:

(i) (A) the Company has made an Asset Sale Offer for 50% or more of the outstanding Notes in compliance with Section 4.10, (B) the Company has purchased all Notes tendered and (C) less than all of the outstanding Notes have been tendered and purchased pursuant to such Asset Sale Offer; or

(ii) the Company or a Restricted Subsidiary thereof has entered into a binding agreement related to a transaction that is subject to Section 5.01 pursuant to which the Company or any of its Restricted Subsidiaries is entitled to receive net proceeds in excess of the sum of the principal amount of all secured Indebtedness and Notes outstanding at such time,

then the Company may redeem all or part of the Notes at a redemption price equal to the sum of (A) 100% of the principal amount thereof, plus (B) the Applicable Premium as of the date of redemption, plus (C) accrued and unpaid interest, if any, to the date of redemption.

(d) Any redemption pursuant to this Section 3.07 shall be made in accordance with the provisions of Sections 3.01 through 3.06.

Section 3.08. Repurchase Offers.

In the event that, pursuant to Section 4.10 or Section 4.14, the Issuers shall be required to commence an offer to all Holders to purchase all or a portion of their respective Notes (a “Repurchase Offer”), they shall follow the procedures specified in such Sections and, to the extent not inconsistent therewith, the procedures specified below.

The Repurchase Offer shall remain open for a period of no less than 30 days and no more than 60 days following its commencement, except to the extent that a longer period is required by applicable law (the “Offer Period”). No later than three Business Days after the termination of the Offer Period (the “Purchase Date”), the Issuers shall purchase the principal amount of Notes required to be purchased pursuant to Section 4.10 or 4.14 hereof (the “Offer Amount”) or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Repurchase Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made.

If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Repurchase Offer.

Upon the commencement of a Repurchase Offer, the Issuers shall send, by first class mail, a notice to each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Repurchase Offer. The Repurchase Offer shall be made to all Holders. The notice, which shall govern the terms of the Repurchase Offer, shall state:

(i) that the Repurchase Offer is being made pursuant to this Section 3.08 and Section 4.10 or Section 4.14 hereof, and the length of time the Repurchase Offer shall remain open;

(ii) the Offer Amount, the purchase price and the Purchase Date;

(iii) that any Note not tendered or accepted for payment shall continue to accrue interest;

(iv) that, unless the Issuers default in making such payment, any Note (or portion thereof) accepted for payment pursuant to the Repurchase Offer shall cease to accrue interest after the Purchase Date;

(v) that Holders electing to have a Note purchased pursuant to a Repurchase Offer may elect to have Notes purchased in integral multiples of $5,000 only and integral multiples of $1,000 in excess thereof;

(vi) that Holders electing to have a Note purchased pursuant to any Repurchase Offer shall be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, or transfer by book-entry transfer, to the Issuers, a depositary, if appointed by the Issuers, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date;

(vii) that Holders shall be entitled to withdraw their election if the Issuers, a depositary, if appointed by the Issuers, or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;

(viii) that, if the aggregate amount of Notes surrendered by Holders exceeds the Offer Amount, the Trustee shall, subject in the case of a Repurchase Offer made pursuant to Section 4.10, select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Trustee so that only Notes in denominations of $5,000, or integral multiples of $1,000 in excess thereof, shall be purchased); and

(ix) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).

On the Purchase Date, the Issuers shall, to the extent lawful, subject in the case of a Repurchase Offer made pursuant to Section 4.10 to the provisions of Section 4.10, accept for payment on a pro rata basis to the extent necessary, the Offer Amount of Notes (or portions thereof) tendered pursuant to the Repurchase Offer, or if less than the Offer Amount has been tendered, all Notes tendered, and shall deliver to the Trustee an Officers’ Certificate stating that such Notes (or portions thereof) were accepted for payment by the Issuers in accordance with the terms of this Section 3.08. The Issuers, a Depositary, if appointed by the Issuers, or the Paying Agent, as the case may be, shall promptly (but in any case not later than three days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of Notes tendered by such Holder, as the case may be, and accepted by the Issuers for purchase, and the Issuers shall promptly issue a new Note. The Trustee, upon written request from the Issuers shall authenticate and mail or deliver such new Note to such Holder, in a principal amount at maturity equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Issuers to the respective Holder thereof. The Issuers shall publicly announce the results of the Repurchase Offer on the Purchase Date.

The Issuers shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to a

Repurchase Offer. To the extent that the provisions of any securities laws or regulations conflict with Section 3.08, 4.10 or 4.14, the Issuers shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under Section 3.08, 4.10 or 4.14 by virtue of such compliance.

ARTICLE FOUR

COVENANTS

Section 4.01. Payment of Notes.

(a) The Issuers shall pay or cause to be paid the principal of, and premium, if any, and interest on, the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or one of its Subsidiaries, holds as of 12:00 p.m. (noon) Eastern Time on the due date money deposited by the Issuers in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due.

(b) The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful. The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful.

Section 4.02. Maintenance of Office or Agency.

(a) The Issuers shall maintain in the Borough of Manhattan, The City of New York, an office or agency (which may be an office of the Trustee or Registrar or agent of the Trustee or Registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuers in respect of the Notes and this Indenture may be served. The Issuers shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuers shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

(b) The Issuers may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Issuers of their obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Issuers shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

(c) The Issuers hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Issuers in accordance with Section 2.04 of this Indenture.

Section 4.03. Reports.

(a) So long as any Notes are outstanding, the Company shall provide the Trustee and the Holders of the Notes, within the time periods specified in the Commission’s rules and regulations, all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including:

(i) a “Management’s Discussion and Analysis of Financial Condition and Results of Operations;”

(ii) a presentation of Consolidated Cash Flow for each period presented; and

(iii) with respect to the annual information only, a report on the annual financial statements by the Company’s certified independent accountant;

provided, however, that (A) such reports shall not be required to contain separate financial statements for any Guarantors other than condensed consolidating footnote disclosure containing information with respect to Guarantors and Subsidiaries that are not Guaranteeing the Notes, in each case on an aggregate basis and (B) such reports shall not be required to comply with the rules, regulations and policies of the Commission with respect to any non-GAAP financial measures contained therein.

(b) In addition, if the Distribution has not been consummated on or prior to January 1, 2005 and at all times thereafter until the Distribution has been consummated, the Company shall:

(i) provide the Trustee and the Holders, within 10 Business Days, all current reports that would be required to be filed with the Commission on Form 8-K (other than (x) with respect to any entry into or termination of any agreement for the acquisition of film rights, (y) with respect to any entry into or termination of any affiliation agreement that would not have a material impact on the Company and its Restricted Subsidiaries and (z) Item 5.02 thereof) if the Company were required to file such reports;

(ii) hold a quarterly conference call for the Holders to discuss the information contained in the annual and quarterly reports required under this Section 4.03 not later than 5 Business Days from the time the Company distributes such information to the Holders;

(iii) no fewer than 3 Business Days prior to the date of the conference call required to be held in accordance with clause (ii) above, issue a press release to the appropriate wire services announcing the time and date of such conference call and directing the Holders, prospective investors and securities analysts to contact the investor relations office of the Company to obtain such information or to access such conference call; and

(iv) either (A) maintain a non-public website to which Holders, prospective investors and securities analysts are given access and to which such information and

conference call access details are posted or (B) distribute via electronic mail such information and conference call details to Holders, prospective investors and securities analysts who request to receive such distributions.

(c) If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries under this Indenture and such Subsidiaries together would constitute a Significant Subsidiary, then the quarterly and annual financial information required by this Section 4.03 shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company.

(d) For so long as any Notes remain outstanding, the Company and the Guarantors shall furnish to the Holders and to prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

Section 4.04. Compliance Certificate.

(a) The Issuers shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers’ Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Issuers have kept, observed, performed and fulfilled their obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to his or her knowledge, the Issuers have kept, observed, performed and fulfilled their obligations under this Indenture and are not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Issuers are taking or propose to take with respect thereto) and that to his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Issuers are taking or proposes to take with respect thereto.

(b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the Public Accounting Oversight Board or any other body that may oversee independent public accountants’ practices, and so long as permitted to be delivered pursuant to such independent public accountants’ internal rules and guidelines, the year-end financial statements delivered pursuant to Section 4.03(a)(i) above shall be accompanied by a written statement of the Company’s independent public accountants (which shall be a firm of established national reputation) that in making the examination necessary for

certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has failed to comply with the Company’s financial covenants set forth in Sections 8.8 through 8.11 of the Credit Agreement or, if an event of noncompliance has come to their attention, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation.

(c) The Issuers shall, so long as any of the Notes are outstanding, deliver to the Trustee, promptly after any Officer becomes aware of any Default or Event of Default, an Officers’ Certificate specifying such Default or Event of Default and what action the Issuers are taking or proposes to take with respect thereto.

Section 4.05. Taxes.

The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, any taxes, assessments, and governmental levies except such as are contested in good faith or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes.

Section 4.06. Stay, Extension and Usury Laws.

The Issuers and each of the Guarantors covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuers and each of the Guarantors (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenants that they shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.

Section 4.07. Restricted Payments.

(a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly:

(i) declare or pay any dividend or make any other payment or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends, payments or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or dividends, payments or distributions payable to the Company or a Restricted Subsidiary of the Company);

(ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the

Company) any Equity Interests of the Company or any Restricted Subsidiary of the Company held by Persons other than the Company or any of its Restricted Subsidiaries;

(iii) purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes or the Note Guarantees, except (i) a payment of interest thereon or principal at the Stated Maturity thereof or (ii) the purchase, redemption, defeasance or other acquisition or retirement of any such Indebtedness in anticipation of satisfying a sinking fund obligation or payment of principal at the Stated Maturity thereof, in each case, due within one year of the date of such purchase, redemption, defeasance or other acquisition or retirement; or

(iv) make any Restricted Investment;

(all such payments and other actions set forth in Section 4.07(a)(i) through (iv) being collectively referred to as “Restricted Payments”), unless, at the time of and after giving effect to such Restricted Payment:

(A) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

(B) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Leverage Ratio test set forth in Section 4.09(a) and

(C) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of this Indenture (excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x) or (xi) of Section 4.07(b)), is less than the sum, without duplication, of:

(1) an amount equal to the Company’s Consolidated Cash Flow for the period (taken as one accounting period) from July 1, 2004 to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (the “Basket Period”) less the product of (x) 1.4 and (y) the Company’s Fixed Charges for the Basket Period; plus

(2) 100% of the aggregate net cash proceeds received by the Company since the date of this Indenture as a contribution to its common equity capital or from the issue or sale of Equity Interests (other than Disqualified Stock) of the Company or from the issue or sale of Disqualified Stock or debt securities of the Company that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Restricted Subsidiary of the Company); plus

(3) with respect to Restricted Investments made by the Company and its Restricted Subsidiaries after the date of this Indenture, an amount equal to the

aggregate net cash proceeds from the sale of such Restricted Investment, except to the extent that any such proceeds are included in the calculation of Consolidated Cash Flow; plus

(4) to the extent that any Unrestricted Subsidiary that was designated as such after the date of this Indenture is redesignated as a Restricted Subsidiary of the Company, the Fair Market Value (as determined, if such Subsidiary is not an Insignificant Subsidiary, by the Board of Directors) of the Company’s Investments in such Subsidiary as of the date of such redesignation, not to exceed the amount of Restricted Investments previously made by the Company or any Restricted Subsidiary of the Company in such Unrestricted Subsidiary.

(b) Section 4.07(a) shall not prohibit:

(i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture;

(ii) the redemption, repurchase, retirement, defeasance or other acquisition of any Indebtedness of the Company, Co-Issuer Corp. or any Guarantor that is subordinated to the Notes or Note Guarantees or of any Equity Interests of the Company or any Restricted Subsidiary of the Company in exchange for, or out of the net cash proceeds of a contribution to the common equity of the Company or a substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of, Equity Interests (other than Disqualified Stock) of the Company; provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from Section 4.07(a)(C)(2);

(iii) the redemption, repurchase, retirement, defeasance or other acquisition of Indebtedness of the Company, Co-Issuer Corp. or any Guarantor that is subordinated to the Notes or Note Guarantees with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;

(iv) the redemption, repurchase, retirement, conversion, exchange or other acquisition of Preferred Stock of any Restricted Subsidiary of the Company in exchange for or out of the net cash proceeds of a substantially concurrent issuance or sale of Equity Interests (other than Disqualified Stock) of the Restricted Subsidiary of the Company that issued the Preferred Stock being redeemed, repurchased, retired or otherwise acquired; provided that the liquidation or face value of such Equity Interests proposed to be issued does not exceed the liquidation or face value of the Preferred Stock being redeemed, repurchased, retired, converted, exchanged or otherwise acquired (plus all accrued dividends thereon and the amount of any reasonable premium and other amounts necessary to accomplish such refinancing and such reasonable fees and expenses incurred in connection therewith);

(v) the payment of any dividend by a Restricted Subsidiary of the Company to the holders of its common Equity Interests on a pro rata basis;

(vi) Investments acquired as a capital contribution to, or in exchange for, or out of the net cash proceeds of a substantially concurrent offering of, Equity Interests (other than Disqualified Stock) of the Company; provided that the amount of any such net cash proceeds that are utilized for any such acquisition or exchange shall be excluded from Section 4.07(a)(C)(2);

(vii) the declaration and payment of dividends or distributions on AMC Preferred Stock (and any Preferred Stock issued in exchange therefor or issued to redeem, repurchase, retire or otherwise acquire AMC Preferred Stock, in each case, pursuant to Section 4.07(b)(iv) above) solely in the form of additional Equity Interests (other than Disqualified Stock);

(viii) the repurchase of Capital Stock deemed to occur upon the exercise of options or warrants to the extent that such Capital Stock represents all or a portion of the exercise price thereof;

(ix) so long as no Default has occurred and is continuing or would be caused thereby, payments to any direct or indirect parent of the Company to provide for operating costs and expenses and capital expenditures of such direct or indirect parent, including, without limitation, in respect of directors’ fees and expenses, administrative, legal and accounting services and costs and expenses with respect to filings with the Commission; provided that the aggregate amount of such dividends and other distributions, together with all other direct or indirect payments by the Company or any of its Restricted Subsidiaries on account of such costs and expenses, in any calendar year shall not exceed $20.0 million for calendar years 2004, 2005 and 2006 and $15.0 million for each calendar year thereafter;

(x) so long as no Default has occurred and is continuing or would be caused thereby, the payment of dividends or other distributions to any direct or indirect parent of the Company; provided that the aggregate amount of such dividends and other distributions shall not, since the date of this Indenture, exceed $325.0 million; or

(xi) the distribution of the proceeds of the issuance of the Notes and borrowings under the Credit Agreement to the extent described in the Offering Memorandum under the section entitled “Use of Proceeds.”

(c) The amount of all Restricted Payments (other than cash) shall be the Fair Market Value (as determined by the Board of Directors) on the date of the Restricted Payment of the assets or securities proposed to be transferred or issued to or by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. Not later than the date of making any Restricted Payment (other than cash) with a Fair Market Value (as determined by the Board of Directors) in excess of $25.0 million, the Company shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed.

(d) If the Company or a Restricted Subsidiary of the Company makes a Restricted Payment that, at the time of the making of such Restricted Payment, would, in the Company’s

good faith determination, be permitted under the requirements of this Section 4.07, such Restricted Payment shall be deemed to have been made in compliance with this Section 4.07 notwithstanding any subsequent adjustments made in good faith to the Company’s financial statements for any period affecting the calculations set forth above with respect to such Restricted Payment.

Section 4.08. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.

(a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary of the Company to:

(i) pay dividends or make any other distributions on its Capital Stock (or with respect to any other interest or participation in, or measured by, its profits) to the Company or any of its Restricted Subsidiaries or pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries;

(ii) make loans or advances to the Company or any of its Restricted Subsidiaries; or

(iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries.

(b) The restrictions in paragraph (a) above shall not apply to encumbrances or restrictions:

(i) existing under, by reason of or with respect to the Credit Agreement, Existing Indebtedness or any other agreements in effect on the date of this Indenture and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof, provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, than those contained in the Credit Agreement, Existing Indebtedness or such other agreements, as the case may be, as in effect on the date of this Indenture;

(ii) set forth in this Indenture, the Notes and the Note Guarantees;

(iii) existing under, by reason of or with respect to applicable law, rule, regulation or order;

(iv) with respect to any Person or the property or assets of a Person acquired by the Company or any of its Restricted Subsidiaries existing at the time of such acquisition and not incurred in connection with or in contemplation of such acquisition, which encumbrance or restriction is not applicable to any Person or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof, provided that the encumbrances and restrictions in any such amendments, modifications, restatements,

renewals, extensions, supplements, refundings, replacements, or refinancings are not materially more restrictive, taken as a whole, than those in effect on the date of the acquisition;

(v) in the case of Section 4.08(a)(iii):

(A) that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is a lease, license, conveyance or contract or similar property or asset;

(B) existing by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Restricted Subsidiary thereof not otherwise prohibited by this Indenture; or

(C) arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, materially detract from the value of property or assets of the Company or any Restricted Subsidiary thereof;

(vi) existing under, by reason of or with respect to any agreement for the sale or other disposition of all or substantially all of the capital stock of, or property and assets of, a Restricted Subsidiary that restrict distributions by that Restricted Subsidiary pending such sale or other disposition;

(vii) restrictions on cash or other deposits or net worth imposed by customers or lessors or required by insurance, surety or bonding companies, in each case, under contracts, leases or other agreements entered into in the ordinary course of business; and

(viii) existing under, by reason of or with respect to customary supermajority voting provisions and customary provisions with respect to the disposition or distribution of assets or property, in each case contained in joint venture, partnership, or limited liability company agreements.

Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.

(a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, incur any Indebtedness (including Acquired Debt), and the Company shall not permit any of its Restricted Subsidiaries to issue any Preferred Stock; provided, however, that the Company or any Guarantor may incur Indebtedness at any time prior to January 1, 2009 if the Company’s Consolidated Leverage Ratio at the time of the incurrence of such Indebtedness is less than 7.0 to 1.0 and, at any time on or after January 1, 2009, if the Company’s Consolidated Leverage Ratio at the time of the incurrence of such Indebtedness is less than 6.0 to 1.0.

(b) So long as no Default would be caused thereby, Section 4.09(a) shall not prohibit the incurrence or issuance of any of the following (collectively, “Permitted Debt”):

(i) the incurrence by the Company of Indebtedness under Credit Facilities (and the incurrence by Co-Issuer Corp. and the Guarantors of Guarantees thereof) in an aggregate principal amount at any one time outstanding pursuant to this clause (i) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) not to exceed $950.0 million, less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any Restricted Subsidiary of the Company to permanently repay any such Indebtedness pursuant to Section 4.10;

(ii) the incurrence of Existing Indebtedness;

(iii) the incurrence by the Issuers and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture;

(iv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (iv), not to exceed $60.0 million at any time outstanding;

(v) the incurrence by the Company or any Restricted Subsidiary of the Company of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under this Section 4.09(a) or clauses (ii), (iii), (iv), (v) or (xii) of this Section 4.09(b);

(vi) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness owing to and held by the Company or any of its Restricted Subsidiaries; provided, however, that:

(a) if the Company or any Guarantor is the obligor on such Indebtedness and such Indebtedness is held by a Person that is not the Company, Co-Issuer Corp. or a Guarantor, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor;

(b) Indebtedness owed to the Company or any Guarantor must be evidenced by an unsubordinated promissory note, unless the obligor under such Indebtedness is the Company or a Guarantor; and

(c) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (ii) any sale or other transfer of any

such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (vi);

(vii) the issuance of shares of Preferred Stock by any of the Company’s Restricted Subsidiaries to the Company or to a Guarantor; provided that (i) any subsequent issuance or transfer of any Equity Interests that results in such Preferred Stock being held by a Person other than the Company or a Guarantor and (ii) any sale or other transfer of any such Preferred Stock to a Person that is not either the Company or a Guarantor shall be deemed, in each case, to constitute an issuance of such shares of Preferred Stock that was not permitted by this clause (vii);

(viii) the Guarantee by the Issuers or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09;

(ix) the incurrence of any Monetization Indebtedness;

(x) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness to the extent the net proceeds thereof are promptly deposited to (i) defease all outstanding Notes pursuant to Article Eight hereof or (ii) satisfy and discharge this Indenture pursuant to Article 11 hereof;

(xi) the issuance of up to 3,500,000 shares of AMC Preferred Stock, any Preferred Stock issued in exchange therefor or issued to redeem, repurchase, retire or otherwise acquire such AMC Preferred Stock pursuant to Section 4.07(b)(iv), and any subsequent issuance of Equity Interests (other than Disqualified Stock) on any of the foregoing as a dividend; or

(xii) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (xii), not to exceed $50.0 million; provided that the aggregate principal amount (or accreted value, as applicable) of Indebtedness of all Restricted Subsidiaries of the Company that are not Guarantors incurred pursuant to this clause (xii), together with all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any such Indebtedness, shall not at any time exceed $25.0 million.

For purposes of determining compliance with this Section 4.09, in the event that any proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xii) above, or is entitled to be incurred pursuant to Section 4.09(a), the Company shall be permitted to classify at the time of its incurrence such item of Indebtedness in any manner that complies with this Section 4.09. Indebtedness under the Credit Agreement outstanding on the date on which Notes are first issued under this Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (i)

above. In addition, (A) any Indebtedness originally classified as incurred pursuant to clauses (i) through (xii) above may later be reclassified by the Company such that it shall be deemed as having been incurred pursuant to another of such clauses to the extent that such reclassified Indebtedness could be incurred pursuant to such new clause at the time of such reclassification and (B) any Indebtedness originally classified as incurred pursuant to Section 4.09(a) or pursuant to clauses 4.09(b)(ii) through (xii) above may later be reclassified by the Company such that it shall be deemed as having been incurred pursuant to Section 4.09(a) or pursuant to another of such clauses to the extent that such reclassified Indebtedness could be incurred pursuant to Section 4.09(a) or such new clause at the time of such reclassification.

(c) Notwithstanding any other provision of this Section 4.09:

(i) the maximum amount of Indebtedness that may be incurred pursuant to this Section 4.09 shall not be deemed to be exceeded with respect to any outstanding Indebtedness due solely to the result of fluctuations in the exchange rates of currencies;

(ii) any Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary of the Company shall be deemed to be incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary of the Company;

(iii) neither the accrual of interest nor the accretion of original issue discount (to the extent provided for when the Indebtedness on which such interest is paid was originally issued) shall be considered an incurrence of Indebtedness; provided that in each case the amount thereof is for all other purposes included in the Fixed Charges and, in the case of accretion of original issue discount, Indebtedness of the Company or its Restricted Subsidiaries as accrued or accreted, as applicable; and

(iv) the payment of interest in the form of additional Indebtedness with the same terms and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock (to the extent provided for when the Indebtedness or Disqualified Stock on which such interest or dividend is paid was originally issued) shall not be considered an incurrence of Indebtedness; provided that in each case the amount thereof is for all other purposes included in the Fixed Charges and Indebtedness of the Company or its Restricted Subsidiaries as accrued.

(d) (i) The Company shall not incur any Indebtedness that is subordinate or junior in right of payment to any other Indebtedness of the Company unless it is subordinate in right of payment to the Notes to the same extent and (ii) Co-Issuer Corp. shall not incur any Indebtedness that is subordinate or junior in right of payment to any other Indebtedness of Co-Issuer Corp. unless it is subordinate in right of payment to the Notes to the same extent.

No Guarantor shall incur any Indebtedness that is subordinate or junior in right of payment to any other Indebtedness of such Guarantor unless it is subordinate in right of payment to such Guarantor’s Note Guarantee to the same extent.

For purposes of this Section 4.09(d), no Indebtedness shall be deemed to be subordinated in right of payment to any other Indebtedness of the Company, Co-Issuer Corp. or any Guarantor, as applicable, solely by virtue of being unsecured or by virtue of the fact that the

holders of any secured Indebtedness have entered into intercreditor agreements giving one or more of such holders priority over the other holders in the collateral held by them.

Section 4.10. Asset Sales.

(a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the Fair Market Value (as determined by the Board of Directors) of the assets or Equity Interests issued or sold or otherwise disposed of; provided that this clause (i) shall not apply to an Asset Sale resulting solely from a foreclosure or sale by a third party upon assets or property subject to a Lien not prohibited by this Indenture;

(ii) where such Fair Market Value exceeds $25.0 million, the Company’s Board of Directors’ determination of such Fair Market Value is set forth in an Officers’ Certificate delivered to the Trustee; and

(iii) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of Cash Equivalents or Replacement Assets or a combination thereof. For purposes of this provision, each of the following shall be deemed to be Cash Equivalents:

(A) any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet, or would be shown on the Company’s or such Restricted Subsidiary’s balance sheet on the date of such Asset Sale) of the Company or any Restricted Subsidiary (other than contingent liabilities, Indebtedness that is by its terms subordinated to the Notes or any Note Guarantee and liabilities to the extent owed to the Company or any Affiliate of the Company) that are assumed by the transferee of any such assets pursuant to a written agreement that releases the Company or such Restricted Subsidiary from further liability therefor; and

(B) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted (including by way of any Monetization Transaction) by the Company or such Restricted Subsidiary into cash (to the extent of the cash received in that conversion) within 120 days of such Asset Sale.

(b) Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply such Net Proceeds at its option:

(i) to repay unsubordinated secured Indebtedness and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto;

(ii) to acquire all or substantially all of the assets of, or a majority of the Voting Stock of, another Permitted Business (including by means of a merger, consolidation or other business combination permitted under this Indenture) to be held, commencing on the date of such acquisition, as or in a Restricted Subsidiary of the Company;

(iii) to pay for or purchase Replacement Assets; or

(iv) any combination of the foregoing.

Pending the final application of any such Net Proceeds, the Company may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture.

(c) Any Net Proceeds from Asset Sales that are not applied or invested as provided in Section 4.10(b) above shall constitute “Excess Proceeds.” Within 30 days after the aggregate amount of Excess Proceeds exceeds $25.0 million, the Company shall make an Asset Sale offer (an “Asset Sale Offer”) to all Holders of Notes and all holders of other Indebtedness that is pari passu with the Notes or any Note Guarantee containing provisions similar to those set forth by this Indenture with respect to offers to purchase with the proceeds of sales of assets, to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer shall be equal to 100% of the principal amount of the Notes and such other pari passu Indebtedness plus accrued and unpaid interest to the date of purchase, and shall be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and such other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Notes and such other pari passu Indebtedness shall be purchased on a pro rata basis based on the principal amount of Notes and such other pari passu Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

(d) The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale Offer provisions of this Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the Asset Sale Offer provisions of this Indenture by virtue of such compliance.

Section 4.11. Transactions with Affiliates.

(a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into, make, amend, renew or extend any transaction, contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each, an “Affiliate Transaction”), unless:

(i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable arm’s-length transaction by the Company or such Restricted Subsidiary with a Person that is not an Affiliate of the Company; and

(ii) the Company delivers to the Trustee:

(A) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25.0 million, a resolution of the Board of Directors set forth in an Officers’ Certificate certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with this Section 4.11 and, if such Affiliate Transaction is with an entity other than Rainbow Media Enterprises or a Subsidiary thereof, that such Affiliate Transaction or series of related Affiliate Transactions has been approved by a majority of the disinterested members of the Board of Directors; and

(B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $50.0 million, an opinion as to the fairness to the Company or such Restricted Subsidiary of such Affiliate Transaction or series of related Affiliate Transactions from a financial point of view issued by an independent accounting, appraisal or investment banking firm of national standing.

(b) The following items shall not be deemed to be Affiliate Transactions and, therefore, shall not be subject to the provisions of Section 4.11(a):

(i) transactions between or among the Company and/or its Restricted Subsidiaries;

(ii) transactions, contracts, agreements, understandings, loans, advances or Guarantees having aggregate consideration (for all such transactions, contracts, agreements, understandings, loans, advances or Guarantees) not to exceed $500,000 in any fiscal year;

(iii) transactions or other arrangements pursuant to employment agreements, collective bargaining agreements, employee benefit plans or arrangements for employees, officers or directors, including vacation plans, health and life insurance plans, deferred compensation plans, directors’ and officers’ indemnification arrangements, retirement or savings plans, stock option, stock ownership and similar plans and similar arrangements; provided that, for any of the foregoing (A) any such transaction or arrangement is with respect to any Person other than a Principal and (B) the terms of any such transaction or arrangement have been approved by the Board of Directors of the Company in good faith;

(iv) Restricted Payments that are not prohibited by the provisions of Section 4.07;

(v) any sale of Capital Stock (other than Disqualified Stock) of the Company;

(vi) loans and advances to officers, directors or employees of the Company or its Restricted Subsidiaries (or guarantees of third party loans to such officers, directors or employees) in an amount not to exceed $5.0 million outstanding at any time;

(vii) the issuance of up to 3,500,000 shares of AMC Preferred Stock and any action taken by the holders of the AMC Preferred Stock permitted by the certificate of designations for the AMC Preferred Stock;

(viii) the payment of interest and principal to holders of Indebtedness; provided that (1) the terms of such interest and principal payments were set forth in the original documentation pursuant to which such Indebtedness was incurred, and (2) either (A) the incurrence of such Indebtedness was subject to and not prohibited by this Section 4.11 or (B) such Indebtedness was not initially issued, directly or indirectly, to any Affiliate of the Company or any of its Restricted Subsidiaries;

(ix) transactions pursuant to agreements or arrangements between Rainbow Media Enterprises and its Subsidiaries, on the one hand, and Cablevision Systems Corporation or its Subsidiaries, on the other hand, that are (1) put in place on or prior to the date of the Distribution and (2) on terms as favorable to the Company or the relevant Restricted Subsidiary of the Company as those available from unrelated parties for a comparable arrangement, or any amendment, modification or supplement thereto or any replacement thereof, as long as such agreement or arrangement as so amended, modified, supplemented or replaced, taken as a whole, is not materially more disadvantageous to the Company and its Restricted Subsidiaries than such original agreement or arrangement; and

(x) transactions pursuant to other agreements or arrangements in effect on the date of this Indenture that are either (A) described in the Offering Memorandum or (B) would not be required to be described pursuant to Item 404 of Regulation S-K promulgated pursuant to the Securities Act, or any amendment, modification or supplement thereto or any replacement thereof, as long as such agreement or arrangement as so amended, modified, supplemented or replaced, taken as a whole, is not materially more disadvantageous to the Company and its Restricted Subsidiaries than the original agreement or arrangement as in effect on the date of this Indenture.

Section 4.12. Liens.

The Company shall not, and shall not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under this Indenture and the Notes are secured on an equal and ratable basis with the obligations so secured (or, in the case of Indebtedness subordinated to the Notes or the Note Guarantees, senior thereto, with the same relative priority as the Notes shall have with respect to such subordinated Indebtedness) until such time as such obligations are no longer secured by a Lien.

Section 4.13. Business Activities.

(a) The Company shall not, and shall not permit any Restricted Subsidiary thereof to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole.

(b) Co-Issuer Corp. shall not hold any material assets or become liable for any Obligations or engage in any business activities; provided that Co-Issuer Corp. may be a co-obligor of the Notes (including any Additional Notes) pursuant to the terms of this Indenture, a borrower or guarantor pursuant to the terms of the Credit Agreement or a co-obligor on other Indebtedness of the Company if the Company is an obligor of such Indebtedness and the net proceeds of such Indebtedness are received by the Company or one or more of the Company’s Restricted Subsidiaries other than Co-Issuer Corp. Co-Issuer Corp. may, as necessary, engage in any activities directly related to or necessary in connection with serving as a co-obligor of the Notes, a borrower or guarantor pursuant to the terms of the Credit Agreement and a co-obligor on such other Indebtedness. The Company shall not sell or otherwise dispose of any of its Equity Interests in Co-Issuer Corp. and shall not permit Co-Issuer Corp., directly or indirectly, to issue or sell or otherwise dispose of any of its Equity Interests.

Section 4.14. Offer to Repurchase upon a Change of Control.

(a) If a Change of Control occurs, each Holder of Notes shall have the right to require the Issuers to repurchase all or any part (equal to $5,000 or an integral multiple of $1,000 in excess thereof) of that Holder’s Notes pursuant to an offer by the Issuers (a “Change of Control Offer”) at an offer price (a “Change of Control Payment”) in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, to the date of the Change of Control Payment Date. Within 60 days following any Change of Control, the Issuers shall mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on a date (the “Change of Control Payment Date”) specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures described in Section 3.08 (including the notice required thereby). The Issuers shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of this Indenture, the Issuers shall comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations under the Change of Control provisions of this Indenture by virtue of such compliance.

(b) On the Change of Control Payment Date, the Issuers shall, to the extent lawful:

(i) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer;

(ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered; and

(iii) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Issuers.

(c) The Paying Agent shall promptly mail or wire transfer to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note shall be in a principal amount of $5,000 or an integral multiple of $1,000 in excess thereof. Any Note so accepted for payment shall cease to accrue interest on and after the Change of Control Payment Date.

(d) The Issuers shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

(e) Notwithstanding anything to the contrary in this Section 4.14, the Issuers shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.14 and all other provisions of this Indenture applicable to a Change of Control Offer made by the Issuers and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

Section 4.15. [Intentionally omitted].

Section 4.16. Designation of Restricted and Unrestricted Subsidiaries.

(a) Unless designated as an Unrestricted Subsidiary, each newly acquired or created Subsidiary of the Company or a Restricted Subsidiary of the Company shall be a Restricted Subsidiary of the Company. Any Restricted Subsidiary of the Company (other than Co-Issuer Corp.) may be designated by the Company as an Unrestricted Subsidiary; provided that:

(i) any Guarantee by the Company or any Restricted Subsidiary thereof of any Indebtedness of the Subsidiary being so designated shall be deemed to be an incurrence of Indebtedness by the Company or such Restricted Subsidiary (or both, if applicable) at the time of such designation, and such incurrence of Indebtedness would be permitted under Section 4.09;

(ii) the aggregate Fair Market Value (as determined by senior management or the Board of Directors, unless such Fair Market Value exceeds $10.0 million, in which event such Fair Market Value must be determined by the Board of Directors) of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary being so designated (including any Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of such Subsidiary) shall be deemed to be a

Restricted Investment made as of the time of such designation and that such Investment would be permitted under Section 4.07;

(iii) such Subsidiary does not hold any Liens (other than Permitted Liens) on any property of the Company or any Restricted Subsidiary thereof; and

(iv) the Subsidiary being so designated:

(A) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company;

(B) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (1) to subscribe for additional Equity Interests or (2) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(C) has not Guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries, except to the extent such Guarantee or credit support would be released upon such designation;

(v) no Default or Event of Default would be in existence following such designation; and

(vi) if the Subsidiary being so designated is a Significant Subsidiary (or if the group of Subsidiaries being so designated would together constitute a Significant Subsidiary), such designation must be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors giving effect to such designation.

(b) Any designation of a Restricted Subsidiary of the Company as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by this Indenture. If, at any time, any Unrestricted Subsidiary would fail to meet any of the preceding requirements described in Section 4.16(a)(iv) and such failure continues for a period of 30 days, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness, Investments, or Liens on the property, of such Subsidiary shall be deemed to be incurred or made by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness, Investments or Liens are not permitted to be incurred or made as of such date under this Indenture, the Company shall be in violation of the applicable provisions of this Indenture.

(c) The Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the Company; provided that:

(i) such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if such Indebtedness is permitted under the Section 4.09, calculated on a pro forma basis as if such designation had occurred at the beginning of the applicable two-quarter reference period;

(ii) all outstanding Investments owned by such Unrestricted Subsidiary shall be deemed to be made as of the time of such designation and such Investments shall only be permitted if such Investments would be permitted under Section 4.07;

(iii) all Liens upon property or assets of such Unrestricted Subsidiary existing at the time of such designation would be permitted under Section 4.12; and

(iv) no Default or Event of Default would be in existence following such designation.

Section 4.17. Payments for Consent.

The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Section 4.18. Guarantees.

(a) The Company shall not permit any of its Restricted Subsidiaries (other than Co-Issuer Corp. and any Insignificant Subsidiary), directly or indirectly, to Guarantee or pledge any assets to secure the payment of any other Indebtedness of the Company or any of the Company’s other Restricted Subsidiaries unless such Restricted Subsidiary (i) is a Guarantor under this Indenture or (ii) becomes a Guarantor under this Indenture and simultaneously executes and delivers a supplemental indenture pursuant to which it agrees to be bound by the terms of this Indenture as a Guarantor, provided that such Guarantee shall be senior to or pari passu with such Subsidiary’s Guarantee of such other Indebtedness.

(b) In the event that any Restricted Subsidiary that is an Insignificant Subsidiary ceases to be an Insignificant Subsidiary, then such Restricted Subsidiary must become a Guarantor and execute a supplemental indenture pursuant to which it agrees to be bound by the terms of this Indenture as a Guarantor and, if requested, deliver an Opinion of Counsel to the Trustee. The form of the Note Guarantee is attached as Exhibit E hereto.

(c) Notwithstanding Section 4.18(a), any Note Guarantee may provide by its terms that it shall be automatically and unconditionally released and discharged under the circumstances described under Section 10.05 hereof.

Section 4.19. Suspension of Certain Covenants and Agreements.

(a) During any period of time that the Notes maintain an Investment Grade Rating from both Rating Agencies and no Default or Event of Default shall have occurred and then be continuing (the foregoing conditions being referred to collectively as the “Suspension Condition”), the Company and its Restricted Subsidiaries shall not be subject to Sections 3.08, 4.07, 4.08, 4.09, 4.10, 4.11, 4.14, 4.20 and clauses (iii) and (v) of Section 5.01(a) (collectively, the “Suspended Covenants”).

(b) If the Company and its Restricted Subsidiaries are not subject to the Suspended Covenants with respect to the Notes for any period of time pursuant to Section 4.19(a) and, subsequently, one or both Rating Agencies withdraw their Investment Grade Rating or downgrade the Investment Grade Rating assigned to the Notes such that the Notes no longer have an Investment Grade Rating from both Rating Agencies, then the Company and each of its Restricted Subsidiaries shall thereafter again be subject to the Suspended Covenants. Compliance with the Suspended Covenants with respect to Restricted Payments made after the time of such withdrawal or downgrade shall be calculated in accordance with the terms of Section 4.07 as if such section had been in effect during the entire period of time from the date of this Indenture.

Section 4.20. Limitation on Issuances and Sales of Equity Interests in Restricted Subsidiaries.

The Company shall not transfer, convey, sell, lease or otherwise dispose of, and shall not permit any of its Restricted Subsidiaries to, issue, transfer, convey, sell, lease or otherwise dispose of any Equity Interests (other than issuances of AMC Preferred Stock or any Preferred Stock (other than Disqualified Stock)) issued in exchange therefor or issued to redeem, repurchase, retire, convert, exchange or otherwise acquire such AMC Preferred Stock pursuant to Section 4.07(b)(iv), and any subsequent issuance of Equity Interests (other than Disqualified Stock) on any of the foregoing as a dividend) in any Restricted Subsidiary of the Company to any Person (other than the Company or a Restricted Subsidiary of the Company or shares of its Capital Stock constituting directors’ qualifying shares or issuances of shares of Capital Stock of foreign Restricted Subsidiaries to foreign nationals, to the extent required by applicable law), except:

(i) if, immediately after giving effect to such issuance, transfer, conveyance, sale, lease or other disposition, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any Investment in such Person remaining after giving effect to such issuance or sale would have been permitted to be made under Section 4.07 if made on the date of such issuance or sale and the cash Net Proceeds from such transfer, conveyance, sale, lease or other disposition are applied in accordance with Section 4.10; or

(ii) sales of Equity Interests of a Restricted Subsidiary of the Company by the Company or a Restricted Subsidiary of the Company; provided that the Company or such Restricted Subsidiary complies with Section 4.10.

ARTICLE FIVE

SUCCESSORS

Section 5.01. Merger, Consolidation or Sale of Assets.

(a) The Company shall not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not the Company is the surviving corporation) or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties and assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless:

(i) either: (a) the Company is the surviving corporation or limited liability company; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made (1) is a Person organized or existing under the laws of the United States, any state thereof or the District of Columbia and (2) assumes all the obligations of the Company under the Notes and this Indenture pursuant to agreements reasonably satisfactory to the Trustee;

(ii) immediately after giving effect to such transaction, no Default or Event of Default exists;

(iii) immediately after giving effect to such transaction on a pro forma basis, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition shall have been made shall, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable two-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Leverage Ratio test set forth in Section 4.09(a);

(iv) each Guarantor, unless such Guarantor is the Person with which the Company has entered into a transaction under this Section 5.01, shall have by amendment to its Note Guarantee confirmed that such Note Guarantee shall apply to the obligations of the Company or the surviving Person in accordance with the Notes and this Indenture, and Co-Issuer Corp., unless it is the other party to the transactions in this Section 5.01, shall have by supplemental indenture confirmed its obligations under this Indenture and the Notes; and

(v) the Company delivers to the Trustee an Officers’ Certificate (attaching the arithmetic computation to demonstrate compliance with clause 5.01(iii)) and, if requested, an Opinion of Counsel, in each case stating that such transaction and such agreement complies with this Section 5.01 and that all conditions precedent provided for in this Indenture relating to such transaction have been complied with.

(b) In addition, neither the Company nor any Restricted Subsidiary thereof may, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. Section 5.01(a)(iii) shall not apply to any merger,

consolidation or sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any of its Restricted Subsidiaries.

Section 5.02. Successor Corporation Substituted.

Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, conveyance or other disposition, the provisions of this Indenture referring to the “Company” shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale, assignment, transfer, conveyance or other disposition of all of the Company’s assets that meets the requirements of Section 5.01 hereof.

ARTICLE SIX

DEFAULTS AND REMEDIES

Section 6.01. Events of Default.

(a) Each of the following is an “Event of Default”:

(i) default for 30 days in the payment when due of interest on the Notes;

(ii) default in payment when due (whether at maturity, upon acceleration, redemption or otherwise) of the principal of, or premium, if any, on the Notes;

(iii) failure by the Company or any of its Restricted Subsidiaries to comply with the provisions of Sections 3.08, 4.10(c), 4.14 or 5.01;

(iv) failure by the Company or any of its Restricted Subsidiaries for 60 days after written notice by the Trustee or Holders representing 25% or more of the aggregate principal amount of the Notes outstanding to comply with any of the other agreements in this Indenture;

(v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or Guarantee now exists, or is created after the date of this Indenture, if that default:

(A) is caused by a failure to make any payment when due at the final maturity of such Indebtedness (a “Payment Default”); or

(B) results in the acceleration of such Indebtedness prior to its express maturity,

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $15.0 million or more;

(vi) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $15.0 million, which judgments are not paid, discharged or stayed for a period of 60 days after such judgment becomes final and non-appealable;

(vii) except as permitted by this Indenture, the Note Guarantee of any Subsidiary that is not an Insignificant Subsidiary shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any such Guarantor, or any Person acting on behalf of any such Guarantor, shall deny or disaffirm its obligations under its Note Guarantee;

(viii) the Company, any Guarantor that is not an Insignificant Subsidiary or any Significant Subsidiary of the Company (or any Restricted Subsidiaries that together would constitute a Significant Subsidiary) pursuant to or within the meaning of Bankruptcy Law:

(A) commences a voluntary case;

(B) consents to the entry of an order for relief against it in an involuntary case;

(D) generally is not paying its debts as they become due; and

(ix) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(A) is for relief against the Company, any Guarantor that is not an Insignificant Subsidiary or any Significant Subsidiary of the Company (or Restricted Subsidiaries that together would constitute a Significant Subsidiary), in an involuntary case; or

(B) appoints a custodian of the Company, any Guarantor that is not an Insignificant Subsidiary or any Significant Subsidiary of the Company (or Restricted Subsidiaries that together would constitute a Significant Subsidiary) or for all or substantially all of the property of the Company, any Guarantor that is not an Insignificant Subsidiary or any of its Restricted Subsidiaries that is a Significant Subsidiary (or Restricted Subsidiaries that together would constitute a Significant Subsidiary); or

(C) orders the liquidation of the Company, any Guarantor that is not an Insignificant Subsidiary or any Significant Subsidiary of the Company (or Restricted Subsidiaries that together would constitute a Significant Subsidiary);

and the order or decree remains unstayed and in effect for 60 consecutive days.

Section 6.02. Acceleration.

(a) In the case of an Event of Default specified in clause (viii) or (ix) of Section 6.01 with respect to the Company, any Guarantor that is not an Insignificant Subsidiary or any Significant Subsidiary of the Company (or any Restricted Subsidiaries that together would constitute a Significant Subsidiary), all outstanding Notes shall become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.

(b) In the case of any Event of Default occurring by reason of any willful action or inaction taken or not taken by or on behalf of the Issuers with the intention of avoiding payment of the premium that the Issuers would have had to pay if the Issuers then had elected to redeem the Notes pursuant Section 3.07, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of such Notes. If an Event of Default occurs during any time that the Notes are outstanding, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Issuers with the intention of avoiding the prohibition on redemption of such Notes, then the premium specified in Section 3.07(c) shall also become immediately due and payable to the extent permitted by law upon the acceleration of such Notes.

Section 6.03. Other Remedies.

(a) If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

(b) The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.

Section 6.04. Waiver of Past Defaults.

(a) Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences hereunder except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes; provided, however, that the Holders of a majority in principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration.

(b) The Company shall deliver to the Trustee an Officers’ Certificate stating that the requisite percentage of Holders have consented to such waiver and attaching copies of such consents. In case of any such waiver, the Issuers, the Trustee and the Holders shall be restored to their former positions and rights hereunder and under the Notes, respectively. This Section 6.04 shall be in lieu of Section 316(a)(1)(B) of the TIA and such Section 316(a)(1)(B) of the TIA is hereby expressly excluded from this Indenture and the Notes, as permitted by the TIA. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

(c) In the event of a declaration of acceleration of the Notes because of an Event of Default specified in Section 6.01(a)(v) has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically annulled if the event of default or payment default triggering such Event of Default pursuant to Section 6.01(a)(v) shall be remedied or cured by the Company or a Restricted Subsidiary of the Company or waived by the holders of the relevant Indebtedness within 20 days after the declaration of acceleration with respect thereto and if (i) the annulment of the acceleration of such Notes would not conflict with any judgment or decree of a court of competent jurisdiction and (ii) all existing Events of Default, except non-payment of principal, premium or interest on the Notes that became due solely because of the acceleration of the Notes have been cured or waived.

Section 6.05. Control by Majority.

The Holders of a majority in principal amount of the then outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that may involve the Trustee in personal liability, or that the Trustee determines in good faith may be prejudicial to the rights of Holders of Notes not joining in the giving of such direction and may take any other action it deems proper that is not inconsistent with any such direction received from Holders of Notes.

Section 6.06. Limitation on Suits.

(a) A Holder may not pursue any remedy with respect to this Indenture or the Notes unless:

(i) the Holder gives the Trustee written notice of a continuing Event of Default;

(ii) the Holders of at least 25% in aggregate principal amount of the outstanding Notes make a written request to the Trustee to pursue the remedy;

(iii) such Holder or Holders offer the Trustee indemnity satisfactory to the Trustee against any costs, liability or expense;

(iv) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and

(v) during such 60-day period, the Holders of a majority in aggregate principal amount of the outstanding Notes do not give the Trustee a direction that is inconsistent with the request.

(b) A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note.

Section 6.07. Rights of Holders of Notes to Receive Payment.

Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of the principal of, premium, if any, or interest on such Note or to bring suit for the enforcement of any such payment, on or after the due date expressed in the Notes, which right shall not be impaired or affected without the consent of the Holder.

Section 6.08. Collection Suit by Trustee.

If an Event of Default specified in Section 6.01(a)(i) or (a)(ii) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Issuers for the whole amount of principal of, premium, if any, and interest, if any, remaining unpaid on the Notes and interest on overdue principal and premium, if any, and, to the extent lawful, and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

Section 6.09. Trustee May File Proofs of Claim.

The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Issuers or any Guarantor (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other securities or property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.06. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 7.06 out of the estate in any such proceeding shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights

of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.10. Priorities.

(a) If the Trustee collects any money pursuant to this Article Six, it shall pay out the money in the following order:

First: to the Trustee, its agents and attorneys for amounts due under Section 7.06, including payment of all reasonable compensation, expense and liabilities incurred, and all advances made, by the Trustee and the reasonable costs and expenses of collection;

Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and

Third: to the Issuers or to such party as a court of competent jurisdiction shall direct in writing.

(b) The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10.

Section 6.11. Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than ten percent in principal amount of the then outstanding Notes.

ARTICLE SEVEN

TRUSTEE

Section 7.01. Duties of Trustee.

Except to the extent, if any, provided otherwise in the TIA:

(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

(b) Except during the continuance of an Event of Default:

(i) The Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be forwarded to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i) this paragraph shall not be construed to limit the effect of paragraph (b) of this Section 7.01;

(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts;

(iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken in good faith in accordance with the direction of the Holders of a majority in principal amount of the outstanding Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Notes; and

(iv) no provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or indemnity against such risk or liability is not reasonably assured to it.

(d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.

Section 7.02. Certain Rights of Trustee.

Subject to the provisions of the TIA Sections 315(a) through 315(d):

(a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness

or other paper or document (whether in its original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) any request or direction of the Issuers mentioned herein shall be sufficiently evidenced by a written request or order signed, with respect to either Issuer, (i) by its Chairman, Chief Executive Officer, Chief Financial Officer, a Vice Chairman, its President or a Vice President and (ii) by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary and delivered to the Trustee; provided, however, that such written request or order may be signed by any two of the officers or directors listed in clause (i) above in lieu of being signed by one of such officers or directors listed in such clause (i) and one of the officers listed in clause (ii) above and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

(c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers’ Certificate;

(d) the Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;

(f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuers, personally or by agent or attorney at the expense of the Issuers and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation;

(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;

(h) the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;

(i) in no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action;

(j) the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture; and

(k) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

Section 7.03. Trustee’s Disclaimer.

The recitals contained herein and in the Notes, except the Trustee’s certificates of authentication, shall be taken as the statements of the Issuers, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Issuers of Notes or the proceeds thereof, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Notes and perform its obligations hereunder.

Section 7.04. May Hold Securities.

The Trustee, any Paying Agent, Registrar or any other agent of the Issuers, in its individual or any other capacity, may become the owner or pledgee of Notes subject to TIA Sections 310(b) and 311, may otherwise deal with the Issuers with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent.

Section 7.05. Money Held in Trust.

Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Issuers.

Section 7.06. Compensation and Reimbursement.

The Issuers and the Guarantors, jointly and severally, agree:

(a) to pay to the Trustee from time to time such compensation as shall be agreed to in writing between the Issuers and the Trustee for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(b) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as shall have been caused by its negligence or willful misconduct; and

(c) to indemnify each of the Trustee or any predecessor Trustee for, and to hold it harmless against, any and all loss, damage, claim, liability or expense including taxes (other than taxes based on the income of the Trustee) incurred without negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

As security for the performance of the obligations of the Issuers under this Section 7.06, the Trustee shall have a Lien prior to the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of Holders of particular Notes.

When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 6.01(viii) or 6.01(ix), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services shall be intended to constitute expenses of administration under any Bankruptcy Law.

The provisions of this Section 7.06 shall survive the termination of this Indenture.

Section 7.07. Eligibility; Disqualification.

There shall at all times be a Trustee hereunder qualified or to be qualified under TIA 310(a)(1) and which shall have a combined capital and surplus of at least $50,000,000 to the extent there is such an institution eligible and willing to serve. If the Trustee publishes reports of condition at least annually, pursuant to law or to the requirements of Federal, State, Territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 7.07, the combined capital and surplus of the Trustee shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.07, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

Section 7.08. Replacement of Trustee.

(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 7.09.

(b) The Trustee may resign at any time by giving written notice thereof to the Issuers. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee

may petition at the expense of the Issuers any court of competent jurisdiction for the appointment of a successor Trustee.

(c) The Trustee may be removed at any time by an Act of Holders of a majority in principal amount of the Notes, delivered to the Trustee and the Issuers. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the removed Trustee may petition at the expense of the Issuers any court of competent jurisdiction for the appointment of a successor Trustee.

(d) If at any time:

(i) the Trustee shall fail to comply with the provisions of TIA Section 310(b) after written request therefor by the Issuers or by any Holder who has been a bona fide Holder of a Note for at least six months; or

(ii) the Trustee shall cease to be eligible under Section 7.07 and shall fail to resign after written request therefor by the Issuers or by any Holder who has been a bona fide Holder of a Note for at least six months; or

(iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in any case, (A) the Issuers by a Board Resolution may remove the Trustee, or (B) subject to Section 6.11, the Holder of any Note who has been a bona fide Holder of a Note for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Issuers, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by the Act of Holders of a majority in principal amount of the Notes delivered to the Issuers and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with Section 7.09, become the successor Trustee and supersede the successor Trustee appointed by the Issuers. If no successor Trustee shall have been so appointed by the Issuers or the Holders of the Notes and so accepted appointment, the Holder of any Note who has been a bona fide Holder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee.

(f) The Issuers shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Notes as their names and addresses appear in the register of Notes. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.

No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.

Section 7.09. Acceptance of Appointment by Successor.

Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Issuers and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee, provided, however, that the retiring Trustee shall continue to be entitled to the benefit of Section 7.06(c); but, on request of the Issuers or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Issuers shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts.

Section 7.10. Merger, Conversion, Consolidation or Succession to Business.

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes.

Section 7.11. Preferential Collection of Claims Against Issuers.

If and when the Trustee shall be or become a creditor of the Issuers (or any other obligor under the Notes), the Trustee shall be subject to the provisions of the TIA regarding the collection of claims against the Issuers (or any such other obligor).

Section 7.12. Trustee’s Application for Instructions from the Issuers.

Any application by the Trustee for written instructions from the Issuers may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any Officer of the Issuers actually received such application) unless, with respect to any such action (or the effective date in the case of an omission), the Trustee shall have received written instructions in response to such application specifying the action to be taken or omitted).

Section 7.13. Notice of Defaults.

Within 90 days after the occurrence of any Default, the Trustee shall transmit by mail to all Holders, as their names and addresses appear in the register of Notes, notice of such Default hereunder actually known to a Responsible Officer of the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of or interest on any Note, the Trustee shall be protected in withholding such notice if and so long as a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders.

ARTICLE EIGHT

DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.

The Issuers may, at their option and at any time, elect to have either Section 8.02 or 8.03 be applied to all outstanding Notes and Note Guarantees upon compliance with the conditions set forth below in this Article Eight.

Section 8.02. Legal Defeasance and Discharge.

Upon the Issuers’ exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Issuers shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from all their obligations with respect to all outstanding Notes and all obligations of the Guarantors shall be deemed to have been discharged with respect to their obligations under the Note Guarantees on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”). For this purpose, Legal Defeasance means that the Issuers and the Guarantors shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes and Note Guarantees, respectively, which shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all their other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Issuers, shall execute proper instruments acknowledging the same), except for the following provisions, which shall survive until otherwise terminated or discharged hereunder:

(a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due;

(b) the Issuers’ obligations with respect to such Notes under Article Two concerning issuing temporary Notes, registration of Notes and mutilated, destroyed, lost or stolen Notes and the Issuers’ obligations under Section 4.02;

(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Issuers’ and the Guarantors’ obligations in connection therewith and

(d) this Section 8.02.

Subject to compliance with this Article Eight, the Issuers may exercise their option under this Section 8.02 notwithstanding the prior exercise of their option under Section 8.03 hereof.

Section 8.03. Covenant Defeasance.

Upon the Issuers’ exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Issuers and the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from their obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.16, 4.17, 4.18, 4.20, 5.01 and 10.04 with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, “Covenant Defeasance”), and neither the Notes nor the Note Guarantees shall thereafter be deemed “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Issuers and the Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Issuers’ exercise under Section 8.01 of the option applicable to this Section 8.03, subject to the satisfaction of the conditions set forth in Section 8.04, Sections 6.01(a)(iii) through (vii) shall not constitute Events of Default.

Section 8.04. Conditions to Legal or Covenant Defeasance.

(a) The following shall be the conditions to the application of either Section 8.02 or 8.03 to the outstanding Notes:

(i) the Issuers must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as shall be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, or interest and premium, if any, on the Notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Issuers must specify whether the Notes are being defeased to maturity or to a particular redemption date;

(ii) in the case of Legal Defeasance, the Issuers shall have delivered to the Trustee an Opinion of Counsel confirming that (a) the Issuers have received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes shall not recognize income, gain or loss for federal

income tax purposes as a result of such Legal Defeasance and shall be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(iii) in the case of Covenant Defeasance, the Issuers shall have delivered to the Trustee an Opinion of Counsel confirming that the Holders of the outstanding Notes shall not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and shall be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(iv) no Default or Event of Default shall have occurred and be continuing either: (a) on the date of such deposit; or (b) insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 123rd day after the date of deposit;

(v) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under any material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;

(vi) the Issuers must have delivered to the Trustee an Opinion of Counsel to the effect that, (1) assuming no intervening bankruptcy of the Issuers or any Guarantor between the date of deposit and the 123rd day following the deposit and assuming that no Holder is an “insider” of the Issuers under applicable bankruptcy law, after the 123rd day following the deposit, the trust funds shall not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, including Section 547 of the United States Bankruptcy Code and (2) the creation of the defeasance trust does not violate the Investment Company Act of 1940;

(vii) the Issuers must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Issuers with the intent of preferring the Holders of the Notes over the other creditors of the Issuers with the intent of defeating, hindering, delaying or defrauding creditors of the Issuers or others;

(viii) if the Notes are to be redeemed prior to their Stated Maturity, the Issuers must deliver to the Trustee irrevocable instructions to redeem all of the Notes on the specified redemption date; and

(ix) the Issuers must deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

Section 8.05. Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions.

(a) Subject to Section 8.06, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee pursuant to Section 8.04 in respect of

the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuers acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal and premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.

(b) The Issuers shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.

(c) Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuers from time to time upon the request of the Issuers any money or non-callable Government Securities held by it as provided in Section 8.04 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(a)), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

Section 8.06. Reinstatement.

If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuers’ obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 and, in the case of a Legal Defeasance, the Guarantors’ obligations under their respective Note Guarantees shall be revised and reinstated as though no deposit had occurred pursuant to Section 8.02, in each case until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03, as the case may be; provided, however, that, if the Issuers make any payment of principal of, premium, if any, or interest on any Note following the reinstatement of their obligations, the Issuers shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.

ARTICLE NINE

AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01. Without Consent of Holders of Notes.

Notwithstanding Section 9.02 below, the Issuers, the Guarantors, and the Trustee may amend or supplement this Indenture, the Notes or the Note Guarantees without the consent of any Holder of a Note:

(i) to cure any ambiguity, defect or inconsistency;

(ii) to provide for uncertificated Notes in addition to or in place of Certificated Notes;

(iii) to provide for the assumption of the Issuers’ or any Guarantor’s obligations to Holders of Notes in the case of a merger or consolidation or sale of all or substantially all of the Issuers’ or such Guarantor’s assets;

(iv) to make any change that would provide any additional rights or benefits to the Holders of Notes (including additional Note Guarantees or Liens securing the Notes) or that does not materially adversely affect the rights under this Indenture of any such Holder;

(v) to comply with the provisions of Section 4.18;

(vi) to evidence and provide for the acceptance of appointment by a successor Trustee; or

(vii) to provide for the issuance of Additional Notes in accordance with this Indenture.

Upon the request of the Issuers authorizing the execution of any such amended or supplemental Indenture, the Trustee shall join with the Issuers in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise.

Section 9.02. With Consent of Holders of Notes.

(a) Except as otherwise provided in this Section 9.02, the Issuers, the Guarantors and the Trustee may amend or supplement this Indenture, the Notes or the Notes Guarantees with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes), and, subject to Sections 6.04 and 6.07, any existing Default or Event of Default or compliance with any provision of this Indenture or the Notes or the Notes Guarantees may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including Additional Notes, if any) (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes).

(b) The Issuers may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to consent to any indenture supplemental hereto. If a record date is fixed, the Holders on such record date, or its duly designated proxies, and only such Persons, shall be entitled to consent to such supplemental indenture, whether or not such Holders remain Holders after such record date; provided that unless such consent shall have become effective by virtue of the requisite percentage having been obtained prior to the date which is 90 days after such record date, any such consent previously given shall automatically and without further action by any Holder be cancelled and of no further effect.

(c) Upon the request of the Issuers authorizing the execution of any such amendment or supplement to this Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02, the Trustee shall join with the Issuers in the execution of such amendment or supplement unless such amendment or supplement directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amendment or supplement.

(d) It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.

(e) After an amendment, supplement or waiver under this Section becomes effective, the Issuers shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Issuers to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver. Subject to Sections 6.04 and 6.07, the Holders of a majority in aggregate principal amount of the then outstanding Notes (including Additional Notes, if any) may waive compliance in a particular instance by the Issuers with any provision of this Indenture, or the Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder):

(i) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;

(ii) reduce the principal of or change the fixed maturity of the Notes or alter the provisions, or waive any payment, with respect to the redemption of the Notes to the extent such alteration or waiver reduces the principal amount or premium payable upon redemption of the Notes or changes the date on which the Notes may be redeemed;

(iii) reduce the rate of or change the time for payment of interest on the Notes;

(iv) waive a Default or Event of Default in the payment of principal of, or interest, or premium, if any, on, the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration);

(v) make the Notes payable in money other than U.S. dollars;

(vi) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of the Notes to receive payments of principal of, or interest or premium, if any, on the Notes;

(vii) release any Guarantor from any of its obligations under its Note Guarantee or this Indenture, except in accordance with the terms of this Indenture;

(viii) impair the right to institute suit for the enforcement of any payment on or with respect to the Notes or the Note Guarantees;

(ix) amend, change or modify the obligation of the Company to make and consummate an Asset Sale Offer with respect to any Asset Sale in accordance with Section 4.10(c) after the obligation to make such Asset Sale Offer has arisen, or the obligation of the Issuers to make and consummate a Change of Control Offer in the event of a Change of Control in accordance with Section 4.14 after such Change of Control has occurred, including, in each case, amending, changing or modifying any definition relating thereto;

(x) except as otherwise permitted under Sections 4.18 and 5.01, consent to the assignment or transfer by the Issuers or any Guarantor of any of their rights or obligations under this Indenture;

(xi) amend or modify any of the provisions of this Indenture or the related definitions affecting the ranking of the Notes or any Note Guarantee in any manner adverse to the holders of the Notes or Note Guarantee; or

(xii) make any change in the preceding amendment and waiver provisions.

Section 9.03. Compliance with Trust Indenture Act.

Every amendment or supplement to this Indenture or the Notes shall be set forth in a document that complies with the TIA as then in effect.

Section 9.04. Revocation and Effect of Consents.

Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

Section 9.05. Notation on or Exchange of Notes.

(a) The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Issuers in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.

(b) Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.

Section 9.06. Trustee to Sign Amendments, Etc.

The Trustee shall sign any amendment or supplement to this Indenture or any Note authorized pursuant to this Article Nine if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Issuers may not sign an amendment or supplemental Indenture or Note until the Board of Directors of the Company approves it. In executing any amendment or supplement or Note, the Trustee shall be provided with and (subject to Section 7.01) shall be fully protected in relying upon an Officers’ Certificate and an Opinion of Counsel stating that the execution of such amendment or supplement is authorized or permitted by this Indenture.

ARTICLE TEN

NOTE GUARANTEES

Section 10.01. Guarantee.

(a) Subject to this Article Ten, each of the Guarantors hereby, jointly and severally, and fully and unconditionally, guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of, this Indenture, the Notes or the obligations of the Issuers hereunder or thereunder, that: (i) the principal of, premium, if any, and interest on the Notes shall be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of, premium, if any, and interest on the Notes, if lawful (subject in all cases to any applicable grace period provided herein), and all other obligations of the Issuers to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, the same shall be promptly paid in full when due in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.

(b) The Guarantors hereby agree that, to the maximum extent permitted under applicable law, their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuers, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor. Subject to Section 6.06, each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuers, any right to require a proceeding first against the Issuers, protest, notice and all demands whatsoever and covenants that this Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture.

(c) If any Holder or the Trustee is required by any court or otherwise to return to the Issuers, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to any of the Issuers or the Guarantors, any amount paid by any of them to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.

(d) Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Six for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such obligations as provided in Article Six hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Note Guarantee.

Section 10.02. Limitation on Guarantor Liability.

Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Note Guarantee of such Guarantor not constitute (i) a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal, state or foreign law to the extent applicable to its Note Guarantee or (ii) an unlawful distribution under any applicable state law prohibiting shareholder distributions by an insolvent subsidiary to the extent applicable to its Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of such Guarantor shall be limited to the maximum amount as shall, after giving effect to all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Note Guarantee or this Article Ten, result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance or such an unlawful shareholder distribution.

Section 10.03. Execution and Delivery of Note Guarantee.

(a) To evidence its Note Guarantee set forth in Section 10.01, each Guarantor hereby agrees that a notation of such Note Guarantee substantially in the form included in Exhibit E shall be endorsed by an Officer of such Guarantor by manual or facsimile signature on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of such Guarantor by one of its Officers.

(b) Each Guarantor hereby agrees that its Note Guarantee set forth in Section 10.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee.

(c) If an Officer whose signature is on this Indenture or on the Note Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid nevertheless.

(d) The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Note Guarantee set forth in this Indenture on behalf of the Guarantors.

(e) If required by Section 4.18, the Company shall cause such Subsidiaries to execute supplemental indentures to this Indenture and Note Guarantees in accordance with Section 4.18 and this Article Ten, to the extent applicable.

Section 10.04. Guarantors May Consolidate, Etc., on Certain Terms.

(a) A Guarantor may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person, other than the Company or another Guarantor, unless:

(i) immediately after giving effect to that transaction, no Default or Event of Default exists; and

(ii) either:

(A) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (if other than the Guarantor) is organized or existing under the laws of the United States, any state thereof or the District of Columbia and assumes all the obligations of that Guarantor under this Indenture and its Note Guarantee pursuant to a supplemental indenture satisfactory to the Trustee; or

(B) such sale or other disposition or consolidation or merger complies with Section 4.10.

(b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Note Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by a Guarantor, such successor Person shall succeed to and be substituted for a Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor Person thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Issuers and delivered to the Trustee. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof.

(c) Except as set forth in Article Five, and notwithstanding clauses (i) and (ii) of Section 10.04(a), nothing contained in this Indenture or in any of the Notes shall prevent any

consolidation or merger of a Guarantor with or into the Company or another Guarantor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor.

Section 10.05. Release of Guarantor.

Any Guarantor shall be released and relieved of any obligations under its Note Guarantee;

(a) in connection with any sale or other disposition of all of the Capital Stock of that Guarantor to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of the Company, if the sale of all such Capital Stock of that Guarantor complies with Section 4.10;

(b) if the Company properly designates any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary under this Indenture; or

(c) upon the release or discharge of the Guarantee (including the Guarantee under the Credit Agreement) which resulted in the creation of such Note Guarantee pursuant to Section 4.18 (except a discharge or release by or as a result of payment under such Guarantee); provided that such Guarantor does not have any Preferred Stock outstanding at such time that is not held by the Company or any Guarantor.

Upon delivery by the Company to the Trustee of an Officers’ Certificate and an Opinion of Counsel to the effect that one of the foregoing requirements has been satisfied and the conditions to the release of a Guarantor under this Section 10.05 have been met, the Trustee shall execute any documents reasonably required in order to evidence the release of such Guarantor from its obligations under its Note Guarantee.

ARTICLE ELEVEN

SATISFACTION AND DISCHARGE

Section 11.01. Satisfaction and Discharge.

(a) This Indenture shall be discharged and shall cease to be of further effect as to all Notes issued hereunder, when:

(i) either:

(A) all Notes that have been authenticated under this Indenture (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Issuers) have been delivered to the Trustee for cancellation; or

with the Trustee as trust funds in trust solely for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as shall be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption;

(ii) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit shall not result in a breach or violation of, or constitute a default under, any other instrument to which the Issuers or any Guarantor are a party or by which the Issuers or any Guarantor are bound;

(iii) the Issuers or any Guarantor have paid or caused to be paid all sums payable by them under this Indenture; and

(iv) the Issuers have delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be.

(b) The Issuers must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

(c) Notwithstanding the above, the Trustee shall pay to the Issuers or any Guarantor from time to time upon their request any cash or Government Securities held by it as provided in this section which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification delivered to the Trustee, are in excess of the amount thereof that would then be required to be deposited to effect a satisfaction and discharge under this Article Eleven.

(d) After the conditions to discharge contained in this Article Eleven have been satisfied, the Trustee upon written request shall acknowledge in writing the discharge of the obligations of the Issuers and the Guarantors under this Indenture (except for those surviving obligations specified Section 11.01).

Section 11.02. Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions.

Subject to Section 11.03 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee pursuant to Section 11.01 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including either of the Issuers acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium and interest, but such money need not be segregated from other funds except to the extent required by law.

Section 11.03. Repayment to the Issuers.

Any money deposited with the Trustee or any Paying Agent, or then held by the Issuers, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Issuers on their request or (if then held by the Issuers) shall be discharged from such trust; and the Holder of such Note shall thereafter look only to the Issuers for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuers as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuers cause to be published once, in the New York Times or The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining shall be repaid to the Issuers.

ARTICLE TWELVE

[INTENTIONALLY OMITTED]

ARTICLE THIRTEEN

MISCELLANEOUS

Section 13.01. Trust Indenture Act Controls.

If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA Section 318(c), the imposed duties shall control.

Section 13.02. Notices.

(a) Any notice or communication by the Issuers or any Guarantor, on the one hand, or the Trustee on the other hand, to the other is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the others’ address:

If to the Issuers and/or any Guarantor:

Rainbow National Services LLC

200 Jericho Quadrangle

Jericho, NY 11753

Facsimile: 516-803-3003

Attention: Joshua W. Sapan

And to:

Rainbow National Services LLC

200 Jericho Quadrangle

Jericho, NY 11753

Facsimile: 516-803-3003

Attention: Chief Financial Officer

If to the Trustee:

The Bank of New York

101 Barclay Street, 8W

New York, NY 10286

Facsimile: 212-815-5707

Attention: Corporate Trust Administration

(b) The Issuers, the Guarantors or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications.

(c) All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.

(d) Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA Section 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. Any notice when mailed to a Holder in the aforesaid manner shall be conclusively deemed to have been received by such Holder whether or not actually received by such Holder.

(e) Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance on such waiver.

(f) In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.

(g) If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.

(h) If the Issuers mail a notice or communication to Holders, they shall mail a copy to the Trustee and each Agent at the same time.

Section 13.03. Communication by Holders of Notes with Other Holders of Notes.

Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Issuers, the Trustee, the Registrar and any other Person shall have the protection of TIA Section 312(c).

Section 13.04. Certificate and Opinion as to Conditions Precedent.

Upon any request or application by the Issuers to the Trustee to take any action under this Indenture, the Issuers shall furnish to the Trustee if requested:

(i) an Officers’ Certificate (which shall include the statements set forth in Section 13.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and

(ii) an Opinion of Counsel (which shall include the statements set forth in Section 13.05 hereof) stating that, in the opinion of such counsel (who may rely upon an Officers’ Certificate as to matters of fact), all such conditions precedent and covenants have been satisfied;

except that, in the case of such request or application as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular request or application, no additional certificate or opinion need be furnished.

Section 13.05. Statements Required in Certificate or Opinion.

(a) Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e) and shall include:

(i) a statement that the Person making such certificate or opinion has read such covenant or condition;

(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(iii) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(iv) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.

Section 13.06. Rules by Trustee and Agents.

The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

Section 13.07. No Personal Liability of Directors, Officers, Employees and Stockholders.

No director, officer, employee, incorporator, member, manager, partner or stockholder of either Issuer or of any Guarantor, as such, shall have any liability for any obligations of the Issuers or the Guarantors under the Notes, this Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

Section 13.08. Governing Law.

THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES.

Section 13.09. Consent to Jurisdiction.

Any legal suit, action or proceeding arising out of or based upon this Indenture or the transactions contemplated hereby (“Related Proceedings”) may be instituted in the federal courts of the United States of America located in the City of New York or the courts of the State of New York in each case located in the City of New York (collectively, the “Specified Courts”), and each party and each Holder by accepting the Notes irrevocably submits to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail (to the extent allowed under any applicable statute or rule of court) to such party’s address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties and each Holder by accepting the Notes irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court has been brought in an inconvenient forum.

Section 13.10. Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion, including any Officers’ Certificate or Opinion of Counsel, may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representation by, an officer or officers of an Issuer or Guarantor stating that the information with respect to such factual matters is in the possession of the Issuer or Guarantor, as applicable, unless such counsel knows, or in the exercise of reasonable care should show, that the certificate or opinion or representations with respect to such matters are erroneous.

Section 13.11. Successors.

All agreements of the Issuers in this Indenture and the Notes shall bind any of their successors. All agreements of the Trustee in this Indenture shall bind its successors. All agreements of each Guarantor in this Indenture shall bind such Guarantor’s successors, except as otherwise provided in Section 10.04.

Section 13.12. Severability.

In case any provision in this Indenture or the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 13.13. Counterpart Originals.

The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

Section 13.14. Acts of Holders.

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by the Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Issuers. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Issuers if made in the manner provided in this Section 13.14.

(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to such witness, notary or officer the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of authority. The fact and date of the execution of any such instrument or writing, or the authority

of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.

(c) Notwithstanding anything to the contrary contained in this Section 13.14, the principal amount and serial numbers of Notes held by any Holder, and the date of holding the same, shall be proved by the register of the Notes maintained by the Registrar as provided in Section 2.04.

(d) If the Issuers shall solicit from the Holders of the Notes any request, demand, authorization, direction, notice, consent, waiver or other Act, the Issuers may, at their option, by or pursuant to a resolution of the Board of Directors of the Company, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Issuers shall have no obligation to do so. Notwithstanding TIA Section 316(c), such record date shall be the record date specified in or pursuant to such resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation of Holders generally in connection therewith or the date of the most recent list of Holders forwarded to the Trustee prior to such solicitation pursuant to Section 2.06 and not later than the date such solicitation is completed. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of the then outstanding Notes have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the then outstanding Notes shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than eleven months after the record date.

(e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration or transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Paying Agent or the Issuers in reliance thereon, whether or not notation of such action is made upon such Note.

(f) Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Note may do so itself with regard to all or any part of the principal amount of such Note.

Section 13.15. Benefit of Indenture.

Nothing in this Indenture, the Notes or the Note Guarantees, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any Paying Agent, any Registrar and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.

Section 13.16. Table of Contents, Headings, Etc.

The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

[SIGNATURE PAGES FOLLOW]

100

IN WITNESS WHEREOF, the parties have executed this Indenture as of August , 2004.

RAINBOW NATIONAL SERVICES LLC


By:
		Name:
		Title:

RNS CO-ISSUER CORPORATION


By:
			Name:
			Title:

AMERICAN MOVIE CLASSICS COMPANY LLC


By:
			Name:
			Title:

THE INDEPENDENT FILM CHANNEL LLC
By: RAINBOW NATIONAL SERVICES LLC


By:
	Name:
	Title:

AMERICAN MOVIE CLASSICS IV HOLDING CORPORATION


By:
	Name:
	Title:

S-1

AMC PRODUCTIONS, INC.


By:
	Name:
	Title:

WE: WOMEN’S ENTERTAINMENT PRODUCTIONS, INC.


By:
		Name:
		Title:

IFC PROGRAMMING, INC.


By:
		Name:
		Title:

AMC FILM HOLDINGS LLC
By: AMERICAN MOVIE CLASSICS COMPANY LLC


By:
		Name:
		Title:

AMC MOVIE COMPANION LLC
By: AMERICAN MOVIE CLASSICS COMPANY LLC


By:
		Name:
		Title:

S-2

	AMC NEW MEDIA LLC
	By: AMERICAN MOVIE CLASSICS COMPANY LLC


	By:
		Name:
		Title:

	MONSTERS VOD SERVICES LLC
	By: AMERICAN MOVIE CLASSICS COMPANY LLC


	By:
		Name:
		Title:

	WE: WOMEN’S ENTERTAINMENT LLC
	By: AMERICAN MOVIE CLASSICS COMPANY LLC


	By:
		Name:
		Title:

	WE NEW MEDIA LLC
	By: WE: WOMEN’S ENTERTAINMENT LLC
		By: AMERICAN MOVIE CLASSICS COMPANY LLC


	By:
		Name:
		Title:

S-3

	IFC DIGITAL MEDIA LLC
	By: THE INDEPENDENT FILM CHANNEL LLC
		By: RAINBOW NATIONAL SERVICES LLC


	By:
		Name:
		Title:

	IFC VOD SERVICES LLC
	By: THE INDEPENDENT FILM CHANNEL LLC
		By: RAINBOW NATIONAL SERVICES LLC


	By:
		Name:
		Title:

S-4

	THE BANK OF NEW YORK, as Trustee


	By:
		Name:
		Title:

S-5

EXHIBIT A

[Face of Note]

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.12 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUERS.

THIS NOTE AND THE GUARANTEES ENDORSED HEREON HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR THE GUARANTEES ENDORSED HEREON NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE AND THE GUARANTEES ENDORSED HEREON, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUERS OR ANY AFFILIATE OF THE ISSUERS WERE THE OWNER OF THIS NOTE AND THE GUARANTEES ENDORSED HEREON (OR ANY PREDECESSOR OF THIS NOTE AND THE GUARANTEES ENDORSED HEREON) (THE “RESALE RESTRICTION TERMINATION DATE”) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES AND GUARANTEES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS’ AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D) PRIOR TO THE END OF THE 40 DAY DISTRIBUTION COMPLIANCE PERIOD WITHIN THE

A-1

MEANING OF REGULATION S UNDER THE SECURITIES ACT OR PURSUANT TO CLAUSE (E) PRIOR TO THE RESALE RESTRICTION TERMINATION DATE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

[Additional language for Regulation S Note to be inserted after paragraph 1]

THE RIGHTS ATTACHING TO THIS REGULATION S GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).

A-2

CUSIP

No.

**$

RAINBOW NATIONAL SERVICES LLC

RNS CO-ISSUER CORPORATION

8¾% SENIOR NOTES DUE 2012

Issue Date:

Rainbow National Services LLC, a Delaware limited liability company (the “Company”), and RNS Co-Issuer Corporation, a Delaware corporation (the “Co-Issuer Corp.” and, together with the Company, the “Issuers,” which term includes any successor under the Indenture hereinafter referred to), for value received, promises to pay to CEDE & CO., or its registered assigns, the principal sum of $300,000,000 on September 1, 2012.

Interest Payment Dates: March 1 and September 1, commencing March 1, 2005.

Record Dates: February 15 and August 15.

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

[SIGNATURE PAGE FOLLOWS]

[Attach Notation of Guarantee for Guarantors]

A-3

IN WITNESS WHEREOF, the Issuers have caused this Note to be signed manually or by facsimile by its duly authorized officer.

	RAINBOW NATIONAL SERVICES LLC, a Delaware limited liability company


	By:
		Name:
		Title:


Attest:


By:
Name:
Title:


	RNS CO-ISSUER CORPORATION, a Delaware corporation


	By:
		Name:
		Title:


Attest:


By:
Name:
Title:

A-4

(Trustee’s Certificate of Authentication)

This is one of the 8¾% Senior Notes due 2012 described in the within-mentioned Indenture.

Dated: August 20, 2004


THE BANK OF NEW YORK,
as Trustee


By:
	Authorized Signatory

A-5

[Reverse Side of Note]

RAINBOW NATIONAL SERVICES LLC

RNS CO-ISSUER CORPORATION

8¾% SENIOR NOTES DUE 2012

Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

1. Interest. The Issuers promise to pay interest on the principal amount of this Note at 8¾% per annum from the date hereof until maturity. The Issuers shall pay interest semi-annually in arrears on March 1 and September 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an “Interest Payment Date”). Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided further that the first Interest Payment Date shall be March 1, 2005. The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal from time to time on demand at the same rate; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest shall be computed on the basis of a 360-day year of twelve 30-day months.

2. Method of Payment. The Issuers shall pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the record date immediately preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.13 of the Indenture with respect to defaulted interest. If a Holder has given wire transfer instructions to the Issuers, the Issuers shall pay all principal, interest and premium, if any, on that Holder’s Notes in accordance with those instructions. All other payments on Notes shall be made at the office or agency of the Paying Agent and Registrar within the City and State of New York unless the Issuers elect to make interest payments by check mailed to the Holders at their addresses set forth in the register of Holders. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

3. Paying Agent and Registrar. Initially, the Trustee under the Indenture shall act as Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar without prior notice to any Holder. The Issuers or any of their Subsidiaries may act in any such capacity.

4. Indenture. The Issuers issued the Notes under an Indenture dated as of August 20, 2004 (“Indenture”) among the Company, Co-Issuer Corp., the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those specifically made

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part of the Indenture by reference to the Trust Indenture Act of 1939, as amended. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Indenture pursuant to which this Note is issued provides that an unlimited aggregate principal amount of Additional Notes may be issued thereunder.

5. Optional Redemption. (a) Except as set forth in paragraphs 5(b) and (c) below, the Issuers shall not have the option to redeem the Notes prior to September 1, 2008. On or after September 1, 2008, the Issuers may redeem all or part of the Notes, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on September 1 of the years indicated below:

Year	Percentage
2008	104.375	%
2009	102.188	%
2010 and thereafter	100.000	%

(b) At any time prior to September 1, 2007, the Issuers may, on any one or more occasions, redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture (including any Additional Notes) at a redemption price of 108.75% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the applicable redemption date, with the net cash proceeds of one or more Qualified Equity Offerings; provided that (1) at least 65% of the aggregate principal amount of Notes issued under the Indenture (including any Additional Notes) remains outstanding immediately after the occurrence of such redemption, excluding Notes held by the Issuers and their Subsidiaries; and (2) the redemption must occur within 90 days of the date of the closing of such Qualified Equity Offering.

(c) If at any time prior to September 1, 2008: (i)(A) the Company has made an Asset Sale Offer for 50% or more of the outstanding Notes in compliance with Section 4.10, (B) the Company has purchased all Notes tendered and (C) less than all of the outstanding Notes have been tendered and purchased pursuant to such Asset Sale Offer; or (ii) the Company or a Restricted Subsidiary thereof has entered into a binding agreement related to a transaction that is subject to Section 5.01 pursuant to which the Company or any of its Restricted Subsidiaries is entitled to receive net proceeds in excess of the sum of the principal amount of all secured Indebtedness and Notes outstanding at such time, then the Company may redeem all or part of the Notes at a redemption price equal to the sum of (A) 100% of the principal amount thereof, plus (B) the Applicable Premium as of the date of redemption, plus (C) accrued and unpaid interest, if any, to the date of redemption.

6. Repurchase at Option of Holder. Upon the occurrence of (a) a Change of Control, the Holders of the Notes shall have the right to require the Company to purchase such Holder’s outstanding Notes on the terms set forth in the Indenture and (b) an Asset Sale, the Company may be obligated to make offers to purchase Notes with a portion of the Net Proceeds of such Asset Sale on the terms set forth in the Indenture.

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7. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in minimum denominations of $5,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuers may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuers are not required to transfer or exchange any Note selected for redemption.

8. Persons Deemed Owners. The registered Holder of a Note shall be treated as its owner for all purposes.

9. Amendment, Supplement and Waiver. The Indenture and the Notes may be amended or supplemented and any existing default or compliance with any provision of the Indenture or the Notes may be waived only in accordance with the Indenture.

10. Defaults and Remedies. In the case of an Event of Default arising from events of bankruptcy or insolvency specified in the Indenture, all outstanding Notes may become due and payable in the manner and with the effect provided in the Indenture.

11. Trustee Dealings with Issuers. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may become a creditor of, or otherwise deal with the Issuers or any of their Affiliates, with the same rights it would have if it were not Trustee.

12. No Recourse Against Others. No director, officer, employee, incorporator, member, manager, partner or stockholder of the Issuers or any Guarantor, as such, shall have any liability for any obligations of the Issuers or the Guarantors under the Notes, the Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. This waiver and release are part of the consideration for issuance of the Notes.

13. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

14. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

15. Guarantee. The Issuers’ obligations under the Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.

16. Copies of Documents. The Company shall furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to:

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Rainbow National Services LLC

200 Jericho Quadrangle

Jericho, New York 11753

Attention: Joshua W. Sapan, President and Chief Executive Officer

And to:

Rainbow National Services LLC

200 Jericho Quadrangle

Jericho, NY 11753

Attention: Chief Financial Officer

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ASSIGNMENT FORM

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:
	(INSERT ASSIGNEE’S LEGAL NAME)


(Insert assignee’s soc. sec. or tax I.D. no.)




(Print or type assignee’s name, address and zip code)

and irrevocably appoint
to transfer this Note on the books of the Issuers. The agent may substitute another to act for him.

Date:

	Your Signature:
		(Sign exactly as your name appears on the face of this Note)




Signature Guarantee*:

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

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OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company or the Issuers pursuant to Section 4.10(c) or 4.14 of the Indenture, respectively, check the appropriate box below:

o Section 4.10(c)

o Section 4.14

If you want to elect to have only part of the Note purchased by the Company or the Issuers pursuant to Section 4.10(c) or Section 4.14 of the Indenture, respectively, state the amount you elect to have purchased:

Date:

	Your Signature:
		(Sign exactly as your name appears on the face of this Note)

	Tax Identification No.:

Signature Guarantee*:

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

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[To be inserted for Rule 144A Global Note]

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

Date of Exchange	Amount of Decrease in Principal Amount at Maturity of this Global Note	Amount of Increase in Principal Amount at Maturity of this Global Note	Principal Amount at Maturity of this Global Note Following such decrease (or increase)	Signature of Authorized Officer of Trustee or Custodian

[To be inserted for Regulation S Global Note]

SCHEDULE OF EXCHANGES OF REGULATION S GLOBAL NOTE

The following exchanges of a part of this Regulation S Global Note for an interest in another Global Note or of other Restricted Global Notes for an interest in this Regulation S Global Note, have been made:

Date of Exchange	Amount of Decrease in Principal Amount at Maturity of this Global Note	Amount of Increase in Principal Amount at Maturity of this Global Note	Principal Amount at Maturity of this Global Note Following such decrease (or increase)	Signature of Authorized Officer of Trustee or Custodian

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EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

Rainbow National Services LLC

200 Jericho Quadrangle

Jericho, New York 11753

Attention: Joshua W. Sapan, President and Chief Executive Officer

The Bank of New York

101 Barclay Street, 8W

New York, New York 10286

Attention: Corporate Trust Administration

Re: 8¾% Senior Notes due 2012

Reference is hereby made to the Indenture, dated as of August 20, 2004 (the “Indenture”), among Rainbow National Services LLC, a Delaware limited liability company (the “Company”), RNS Co-Issuer Corporation, a Delaware corporation (the “Co-Issuer Corp.” and, together with the Company, the “Issuers”), the Guarantors, and The Bank of New York, a New York banking corporation, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

(the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount at maturity of $ in such Note[s] or interests (the “Transfer”), to (the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

o 1. Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act.

o 2. Check if Transferee will take delivery of a beneficial interest in a Legended Regulation S Global Note, or a Definitive Note pursuant to Regulation S. The

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Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (A) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (B) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Legended Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act.

o 3. Check and complete if Transferee will take delivery of a Restricted Definitive Note pursuant to any provision of the Securities Act other than Rule 144, Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

o (a) such Transfer is being effected to the Company or a subsidiary thereof; or

o (b) such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Definitive Notes and in the Indenture and the Securities Act.

4. Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.

o (a) Check if Transfer is Pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities

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laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

o (b) Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and, in the case of a transfer from a Restricted Global Note or a Restricted Definitive Note, the Transferor hereby further certifies that (a) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (b) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (c) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (d) the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person, and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

o (c) Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

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This certificate and the statements contained herein are made for your benefit and the benefit of the Issuers.

Dated:



[Insert Name of Transferor]


	By:
		Name:
		Title:

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ANNEX A TO CERTIFICATE OF TRANSFER

1. The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

o (a) a beneficial interest in the:

(i) 144A Global Note (CUSIP ); or

(ii) Regulation S Global Note (CUSIP ); or

o (b) a Restricted Definitive Note.

2. After the Transfer the Transferee will hold:

[CHECK ONE]

o (a) a beneficial interest in the:

(i) 144A Global Note (CUSIP ); or

(ii) Regulation S Global Note (CUSIP ); or

(iii) Unrestricted Global Note (CUSIP ); or

o (b) a Restricted Definitive Note; or

o (c) an Unrestricted Definitive Note,

in accordance with the terms of the Indenture.

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EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

Rainbow National Services LLC

200 Jericho Quadrangle

Jericho, New York 11753

Attention: Joshua W. Sapan, President and Chief Executive Officer

The Bank of New York

101 Barclay Street, 8W

New York, New York 10286

Attention: Corporate Trust Administration

Re: 8¾% Senior Notes due 2012

Reference is hereby made to the Indenture, dated as of August 20, 2004 (the “Indenture”), among Rainbow National Services LLC, a Delaware limited liability company (the “Company”), RNS Co-Issuer Corporation, a Delaware corporation (the “Co-Issuer Corp.” and, together with the Company, the “Issuers”), the Guarantors and The Bank of New York, a New York banking corporation, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

(the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount at maturity of $ in such Note[s] or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:

1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note

o (a) Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount at maturity, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

o (b) Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer,

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(ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

o (c) Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

o (d) Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes

o (a) Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount at maturity, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

o (b) Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] :

o 144A Global Note, :

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o Regulation S Global Note, :

with an equal principal amount at maturity, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

This certificate and the statements contained herein are made for your benefit and the benefit of the Issues.

	Dated:



	[Insert Name of Transferor]


	By:
			Name:
			Title:

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EXHIBIT D

FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Rainbow National Services LLC

200 Jericho Quadrangle

Jericho, New York 11753

Attention: Joshua W. Sapan, President and Chief Executive Officer

The Bank of New York

101 Barclay Street, 8W

New York, New York 10286

Attention: Corporate Trust Administration

Re: 8¾% Senior Notes due 2012

Reference is hereby made to the Indenture, dated as of August 20, 2004 (the “Indenture”), among Rainbow National Services LLC, a Delaware limited liability company (the “Company”), RNS Co-Issuer Corporation, a Delaware corporation (the “Co-Issuer Corp.” and, together with the Company, the “Issuers”), the Guarantors and The Bank of New York, a New York banking corporation, as trustee (the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

In connection with our proposed purchase of $ aggregate principal amount of:

(a) o beneficial interest in a Global Note, or

(b) o a Definitive Note,

we confirm that:

1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the “Securities Act”).

2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we shall do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined therein), (C) to an institutional “accredited investor” (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the

D-1

Issuers a signed letter substantially in the form of this letter and an Opinion of Counsel in form reasonably acceptable to the Issuers to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein.

3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Issuers such certifications, legal opinions and other information as you and the Issuers may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect.

4. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment.

5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional “accredited investor”) as to each of which we exercise sole investment discretion.

The Trustee and the Issuers are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

Dated:
	[Insert Name of Accredited Investor]


	By:
		Name:
		Title:

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EXHIBIT E

FORM OF NOTATION OF GUARANTEE

For value received, each Guarantor (which term includes any successor Person under the Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in and subject to the provisions in the Indenture dated as of August 20, 2004 (the “Indenture”) among Rainbow National Services LLC, a Delaware limited liability company (the “Company”), RNS Co-Issuer Corporation, a Delaware corporation (the “Co-Issuer Corp.” and, together with the Company, the “Issuers”), the other Guarantors (as defined in the Indenture) and The Bank of New York, a New York banking corporation, as trustee (the “Trustee”), (a) the due and punctual payment of the principal of, premium, if any, and interest on the Notes (as defined in the Indenture), whether at maturity, by acceleration, redemption or otherwise, and the due and punctual payment of interest on overdue principal, premium, if any, and interest on the Notes, if lawful (subject in all cases to any applicable grace periods provided in the Indenture and the Notes), and the due and punctual performance of all other obligations of the Issuers to the Holders or the Trustee all in accordance with the terms of the Indenture and the Notes and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Guarantors to the Holders of Notes and to the Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth in Article Ten of the Indenture and reference is hereby made to the Indenture for the precise terms of the Note Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound by such provisions and (b) appoints the Trustee attorney-in-fact of such Holder for such purpose.

[SIGNATURE PAGE FOLLOWS]

E-1

IN WITNESS HEREOF, each Guarantor has caused this Notation of Guarantee to be signed manually or by facsimile by its duly authorized officers.

	AMERICAN MOVIE CLASSICS COMPANY LLC


	By:
		Name:
		Title:

	THE INDEPENDENT FILM CHANNEL LLC
	By: RAINBOW NATIONAL SERVICES LLC


	By:
		Name:
		Title:

	AMERICAN MOVIE CLASSICS IV HOLDING CORPORATION


	By:
		Name:
		Title:

	AMC PRODUCTIONS, INC.


	By:
		Name:
		Title:

	WE: WOMEN’S ENTERTAINMENT PRODUCTIONS, INC.


	By:
		Name:
		Title:

E-2

	IFC PROGRAMMING, INC.


	By:
		Name:
		Title:

	AMC FILM HOLDINGS LLC
	By: AMERICAN MOVIE CLASSICS COMPANY LLC


	By:
		Name:
		Title:

	AMC MOVIE COMPANION LLC
	By: AMERICAN MOVIE CLASSICS COMPANY LLC


	By:
		Name:
		Title:

	AMC NEW MEDIA LLC
	By: AMERICAN MOVIE CLASSICS COMPANY LLC


	By:
		Name:
		Title:

	MONSTERS VOD SERVICES LLC
	By: AMERICAN MOVIE CLASSICS COMPANY LLC


	By:
		Name:
		Title:

E-3

WE: WOMEN’S ENTERTAINMENT LLC
By: AMERICAN MOVIE CLASSICS COMPANY LLC


By:
	Name:
	Title:

WE NEW MEDIA LLC
By: WE: WOMEN’S ENTERTAINMENT LLC
	By: AMERICAN MOVIE CLASSICS COMPANY LLC


By:
	Name:
	Title:

IFC DIGITAL MEDIA LLC
By: THE INDEPENDENT FILM CHANNEL LLC
		By: RAINBOW NATIONAL SERVICES LLC


By:
	Name:
	Title:

IFC VOD SERVICES LLC
By: THE INDEPENDENT FILM CHANNEL LLC
	By: RAINBOW NATIONAL SERVICES LLC


By:
	Name:
	Title:

E-4

EX-4.2 3 a04-12386_1ex4d2.htm EX-4.2

EXHIBIT 4.2

EXECUTION COPY

Rainbow National Services LLC

RNS Co-Issuer Corporation

and the Guarantors listed on the signature pages hereof

10³/₈% SENIOR SUBORDINATED NOTES DUE 2014

Indenture

Dated as of August 20, 2004

The Bank of New York

Trustee

TABLE OF CONTENTS

ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01. Definitions
Section 1.02. Other Definitions
Section 1.03. Incorporation by Reference of Trust Indenture Act
Section 1.04. Rules of Construction

ARTICLE TWO
THE NOTES
Section 2.01. Form and Dating
Section 2.02. Execution and Authentication
Section 2.03. Methods of Receiving Payments on the Notes
Section 2.04. Registrar and Paying Agent
Section 2.05. Paying Agent to Hold Money in Trust
Section 2.06. Holder Lists
Section 2.07. Transfer and Exchange
Section 2.08. Replacement Notes
Section 2.09. Outstanding Notes
Section 2.10. Treasury Notes
Section 2.11. Temporary Notes
Section 2.12. Cancellation
Section 2.13. Defaulted Interest
Section 2.14. CUSIP Numbers

ARTICLE THREE
REDEMPTION AND OFFERS TO PURCHASE

Section 3.01. Notices to Trustee
Section 3.02. Selection of Notes to Be Redeemed
Section 3.03. Notice of Redemption
Section 3.04. Effect of Notice of Redemption
Section 3.05. Deposit of Redemption Price
Section 3.06. Notes Redeemed in Part
Section 3.07. Optional Redemption
Section 3.08. Repurchase Offers
ARTICLE FOUR
COVENANTS

Section 4.01. Payment of Notes

Section 4.02. Maintenance of Office or Agency
Section 4.03. Reports
Section 4.04. Compliance Certificate
Section 4.05. Taxes
Section 4.06. Stay, Extension and Usury Laws
Section 4.07. Restricted Payments
Section 4.08. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock
Section 4.10. Asset Sales
Section 4.11. Transactions with Affiliates
Section 4.12. Liens
Section 4.13. Business Activities
Section 4.14. Offer to Repurchase upon a Change of Control
Section 4.15. Limitation on Senior Subordinated Debt
Section 4.16. Designation of Restricted and Unrestricted Subsidiaries
Section 4.17. Payments for Consent
Section 4.18. Guarantees
Section 4.19. Suspension of Certain Covenants and Agreements
Section 4.20. Limitation on Issuances and Sales of Equity Interests in Restricted Subsidiaries

ARTICLE FIVE
SUCCESSORS

Section 5.01. Merger, Consolidation or Sale of Assets
Section 5.02. Successor Corporation Substituted

ARTICLE SIX
DEFAULTS AND REMEDIES

Section 6.01. Events of Default
Section 6.02. Acceleration
Section 6.03. Other Remedies
Section 6.04. Waiver of Past Defaults
Section 6.05. Control by Majority
Section 6.06. Limitation on Suits
Section 6.07. Rights of Holders of Notes to Receive Payment
Section 6.08. Collection Suit by Trustee
Section 6.09. Trustee May File Proofs of Claim
Section 6.10. Priorities
Section 6.11. Undertaking for Costs

ARTICLE SEVEN
TRUSTEE

Section 7.01. Duties of Trustee
Section 7.02. Certain Rights of Trustee

Section 7.03. Trustee’s Disclaimer
Section 7.04. May Hold Securities
Section 7.05. Money Held in Trust
Section 7.06. Compensation and Reimbursement
Section 7.07. Eligibility; Disqualification
Section 7.08. Replacement of Trustee
Section 7.09. Acceptance of Appointment by Successor
Section 7.10. Merger, Conversion, Consolidation or Succession to Business
Section 7.11. Preferential Collection of Claims Against Issuers
Section 7.12. Trustee’s Application for Instructions from the Issuers
Section 7.13. Notice of Defaults

ARTICLE EIGHT
DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance
Section 8.02. Legal Defeasance and Discharge
Section 8.03. Covenant Defeasance
Section 8.04. Conditions to Legal or Covenant Defeasance
Section 8.05. Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions
Section 8.06. Reinstatement

ARTICLE NINE
AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01. Without Consent of Holders of Notes
Section 9.02. With Consent of Holders of Notes
Section 9.03. Compliance with Trust Indenture Act
Section 9.04. Revocation and Effect of Consents
Section 9.05. Notation on or Exchange of Notes
Section 9.06. Trustee to Sign Amendments, Etc

ARTICLE TEN
NOTE GUARANTEES

Section 10.01. Guarantee
Section 10.02. Limitation on Guarantor Liability
Section 10.03. Execution and Delivery of Note Guarantee
Section 10.04. Guarantors May Consolidate, Etc., on Certain Terms
Section 10.05. Release of Guarantor
Section 10.06. Subordination of Note Guarantee

ARTICLE ELEVEN
SATISFACTION AND DISCHARGE

Section 11.01. Satisfaction and Discharge

iii

Section 11.02. Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions
Section 11.03. Repayment to the Issuers

ARTICLE TWELVE
SUBORDINATION

Section 12.01. Agreement to Subordinate
Section 12.02. Liquidation; Dissolution; Bankruptcy
Section 12.03. Default on Designated Senior Debt
Section 12.04. Acceleration of Securities
Section 12.05. When Distribution Must Be Paid Over
Section 12.06. Notice by the Issuers
Section 12.07. Subrogation
Section 12.08. Relative Rights
Section 12.09. Subordination May Not Be Impaired by the Issuers
Section 12.10. Distribution or Notice to Representative
Section 12.11. Rights of Trustee and Paying Agent
Section 12.12. Authorization to Effect Subordination
Section 12.13. Trustee Not Fiduciary for Holders of Senior Indebtedness

ARTICLE THIRTEEN
MISCELLANEOUS

Section 13.01. Trust Indenture Act Controls
Section 13.02. Notices
Section 13.03. Communication by Holders of Notes with Other Holders of Notes
Section 13.04. Certificate and Opinion as to Conditions Precedent
Section 13.05. Statements Required in Certificate or Opinion
Section 13.06. Rules by Trustee and Agents
Section 13.07. No Personal Liability of Directors, Officers, Employees and Stockholders
Section 13.08. Governing Law
Section 13.09. Consent to Jurisdiction
Section 13.10. Form of Documents Delivered to Trustee
Section 13.11. Successors
Section 13.12. Severability
Section 13.13. Counterpart Originals
Section 13.14. Acts of Holders
Section 13.15. Benefit of Indenture
Section 13.16. Table of Contents, Headings, Etc.

EXHIBITS

Exhibit A	FORM OF NOTE

Exhibit B	FORM OF CERTIFICATE OF TRANSFER

Exhibit C	FORM OF CERTIFICATE OF EXCHANGE

Exhibit D	FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Exhibit E	FORM OF NOTATION OF GUARANTEE

The Issuers have duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of their 10³/₈% Senior Subordinated Notes due 2014 to be issued as provided in this Indenture. The initial Guarantors have duly authorized the execution and delivery of this Indenture to provide for a guarantee of the Notes and of certain of the Issuers’ obligations hereunder.

The Issuers, the initial Guarantors and the Trustee (as defined below) agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined below) of the Issuers’ 10³/₈% Senior Subordinated Notes due 2014 issued pursuant to this Indenture:

ARTICLE ONE

DEFINITIONS AND INCORPORATION

BY REFERENCE

Section 1.01. Definitions.

“Acquired Debt” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged with or into, or becomes a Subsidiary of, such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” shall have correlative meanings.

“Agent” means any Registrar or Paying Agent.

“AMC Preferred Stock” means redeemable preferred membership interests of American Movie Classics Company LLC, as described in the Offering Memorandum.

“Applicable Premium” means, with respect to a Note at any date of redemption, the excess of (A) the present value at such date of redemption of (1) the redemption price of such Note at September 1, 2009 plus (2) all remaining required interest payments due on such Note through September 1, 2009 (excluding accrued but unpaid interest to the date of redemption), computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (B) the principal amount of such Note.

“Asset Sale” means:

(1) the sale, lease, conveyance or other disposition of any property or assets; other than a sale, lease, conveyance or other disposition governed by the provisions of Section 4.14 or 5.01; and

(2) the issuance of Equity Interests by any of the Company’s Restricted Subsidiaries or the sale by the Company or any Restricted Subsidiary thereof of Equity Interests in any of its Restricted Subsidiaries (other than directors’ qualifying shares and shares issued to foreign nationals to the extent required by applicable law).

Notwithstanding the preceding, the following items shall be deemed not to be Asset Sales:

(1) any single transaction or series of related transactions that involves assets having a Fair Market Value (as determined by the Board of Directors or senior management) of less than $10.0 million;

(2) a transfer of assets or properties between or among the Company and its Restricted Subsidiaries (including any transfer to any Person that concurrently becomes a Restricted Subsidiary of the Company);

(3) an issuance of Equity Interests by a Restricted Subsidiary of the Company to the Company or to another Restricted Subsidiary, including, without limitation, an issuance of Equity Interests by a Restricted Subsidiary of the Company to the Company in exchange for or in conversion of AMC Preferred Stock;

(4) the sale, lease, conveyance or other disposition of equipment, inventory, accounts receivable or other assets in the ordinary course of business;

(5) the sale, lease, conveyance or other disposition of intellectual property and other intangibles under affiliation agreements or film rights agreements in the ordinary course of business consistent with past practice;

(6) the licensing or sublicensing of intellectual property or other general intangibles, and licenses, leases or subleases of other property in the ordinary course of business which do not materially interfere with the business of the Company or any of its Restricted Subsidiaries;

(7) the sale or other disposition of Cash Equivalents;

(8) dispositions of accounts receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings;

(9) a Restricted Payment that is not prohibited by Section 4.07 and any Permitted Investment;

(10) the granting of a Lien not prohibited hereunder;

(11) any surrender or waiver of contract rights or the settlement, release or surrender of contract rights or other litigation claims in the ordinary course of business; and

(12) any sale or disposition of any property or equipment that has become damaged, worn out, obsolete or otherwise unsuitable for use in connection with the business of the Company or its Restricted Subsidiaries.

“Bankruptcy Law” means Title 11 of the United States Code or any similar federal or state law for the relief of debtors.

“Board of Directors” means:

(1) with respect to a corporation, the board of directors of the corporation or, except in the context of the definitions of “Change of Control” and “Continuing Directors,” a committee thereof authorized to exercise the power of the board of directors of such corporation;

(2) with respect to a partnership, the board of directors of the general partner of the partnership (or if the general partner is not a corporation, the board or committee of the general partner serving a similar function); and

(3) with respect to any other Person, the board or committee of such Person serving a similar function.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“Cash Equivalents” means:

(1) United States dollars;

(2) marketable direct obligations of the United States of America maturing, unless such securities are deposited to defease any Indebtedness, within 397 days of the date of purchase;

(3) commercial paper issued by a Person having consolidated net worth of at least $250.0 million, which conducts a substantial part of its business in the United States of America, maturing within 180 days from the date of the original issue thereof, and rated “P-1” or better by Moody’s or “A-1” or better by S&P;

(4) fully collateralized repurchase agreements with financial institutions having a rating of “Baa” or better from Moody’s or a rating of “A–” or better from S&P;

(5) certificates of deposit, bankers’ acceptances and time deposits maturing within 397 days after the date of purchase, which are issued by a United States national or state bank or foreign bank having capital, surplus and undivided profits totaling more than $100.0 million, and having a rating of “Baa” or better from Moody’s, or a rating of “A–” or better from S&P; and

(6) money market funds that (i) comply with the criteria set forth in the Commission’s Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated “AAA” by S&P and “Aaa” by Moody’s and (iii) have portfolio assets of at least $5 billion.

“Change of Control” means the occurrence of any of the following:

(1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries, taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than to one or more of the Principals;

(2) the adoption of a plan relating to the liquidation or dissolution of the Company;

(3) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more of the Principals, becomes the ultimate Beneficial Owner, directly or indirectly, of 50% or more of the voting power of the Voting Stock of the Company;

(4) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors; or

(5) the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into the Company, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities

or other property, other than any such transaction where (A) the Voting Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting, or remains outstanding and constitutes, a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance) and (B) immediately after such transaction, no “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the Exchange Act), other than the Principals, becomes, directly or indirectly, the ultimate Beneficial Owner of 50% or more of the voting power of the Voting Stock of the surviving or transferee Person; provided that, following completion of the offer to purchase Notes pursuant to Section 4.14, any subsequent change in the voting power of the Voting Stock of the surviving or transferee Person Beneficially Owned by the “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) that resulted in such earlier Change of Control shall not result in an additional Change of Control.

“Clearstream” means Clearstream Banking S.A. and any successor thereto.

“Commission” means the United States Securities and Exchange Commission and any successor thereto.

(1) for purposes of calculations under Section 4.07 only:

(a) the Cash Flow of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Cash Flow is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its equityholders; and

(b) the Cash Flow of any Person acquired during the specified period for any period prior to the date of such acquisition shall be excluded;

(2) the Cash Flow of any Person that is not a Restricted Subsidiary of the Company or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary thereof;

(3) the Cash Flow of a Restricted Subsidiary of the Company shall be included in the same percentage as the percentage ownership interest in the net income (loss) of such Restricted Subsidiary owned on the last day of such period by the Company or any of its Restricted Subsidiaries; and

(4) the cumulative effect of a change of accounting principles shall be excluded.

“Consolidated Leverage Ratio” means, as of any date of determination, the ratio of:

(1) the aggregate outstanding amount of Indebtedness of the Company and its Restricted Subsidiaries (other than Monetization Indebtedness) as of such date of determination on a consolidated basis (subject to the terms described in the paragraph below) after giving pro forma effect to the incurrence of the Indebtedness giving rise to the need to make such calculation (including a pro forma application of the use of proceeds therefrom), on such date to,

(2) the Annualized Cash Flow of the Company as of such date of determination.

For purposes of this definition:

(1) Consolidated Cash Flow shall be calculated on a pro forma basis after giving effect to (A) the incurrence of the Indebtedness of the Company and its Restricted Subsidiaries (and the application of the proceeds therefrom) giving rise to the need to make such calculation and any incurrence (and the application of the proceeds therefrom) or repayment of other Indebtedness on the date of determination, and (B) any acquisition or disposition (including, without limitation, any acquisition giving rise to the need to make such calculation as a result of the Company or one of its Restricted Subsidiaries (including any Person that becomes a Restricted Subsidiary as a result of such acquisition) incurring, assuming or otherwise becoming liable for Indebtedness) at any time on or subsequent to the first day of the applicable period specified and on or prior to the date of determination, as if such acquisition or disposition (including the incurrence or assumption of any such Indebtedness and also including any Consolidated Cash Flow associated with such acquisition or disposition) occurred on the first day of such two-quarter period; and

(2) pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Company and pro forma effect may be given to any non-recurring expenses, non-recurring costs and cost reductions within the first year after such acquisition that the Company reasonably anticipates in good faith if the Company delivers to the Trustee an Officers’ Certificate executed by the chief financial or accounting officer of the Company certifying to and describing and

quantifying with reasonable specificity such non-recurring expenses, non-recurring costs and cost reduction.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Company who:

(1) was a member of such Board of Directors on the date of this Indenture; or

(2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election.

“Corporate Trust Office of the Trustee” shall be at the address of the Trustee specified in Section 13.02 or such other address as to which the Trustee may give notice to the Issuers.

“Custodian” means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto.

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“Definitive Note” means a Note registered in the name of the Holder thereof and issued in accordance with Section 2.07, substantially in the form of Exhibit A, except that such

Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

“Designated Senior Debt” means:

(1) any Indebtedness outstanding under the Credit Agreement; and

(2) to the extent permitted by the Credit Agreement, any other Senior Debt permitted under this Indenture the principal amount of which is $50.0 million or more and that has been designated by the Company as “Designated Senior Debt.”

“Distribution” means the distribution of capital stock of Rainbow Media Enterprises to the stockholders of Cablevision Systems Corporation as described in the Offering Memorandum.

“Earn-out Obligation” means any contingent consideration based on future operating performance of an acquired entity or assets or other purchase price adjustment or

indemnification or similar obligation, payable following the consummation of an acquisition based on criteria set forth in the documentation governing or relating to such acquisition.

“Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear system, and any successor thereto.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Existing Indebtedness” means the aggregate principal amount of Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the date of this Indenture after giving effect to the application of the proceeds of (1) the Notes and (2) any borrowings made under the Credit Agreement on the date of this Indenture. Existing Indebtedness shall include the Senior Notes and the Senior Note Guarantees issued on the date of this Indenture.

“Film Rights Amortization” means the amortization of expenditures of the Company and its Restricted Subsidiaries for the acquisition of film rights and broadcast programming.

“Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:

(1) the consolidated interest expense of such Person for such period, whether paid or accrued (without duplication), including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and the net payments made or received pursuant to Hedging Obligations, but excluding any dividends on Equity Interests of such Person to the extent paid solely in Equity Interests (other than Disqualified Stock) of such Person; plus

(2) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon,

in each case, on a consolidated basis and in accordance with GAAP.

“Global Note Legend” means the legend set forth in Section 2.07(g)(ii), which is required to be placed on all Global Notes issued under this Indenture.

“Government Securities” means securities that are direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged.

“Guarantors” means, with respect to this Indenture:

(1) each direct or indirect Domestic Subsidiary of the Company on the date of this Indenture, other than (x) Co-Issuer Corp. and (y) any Insignificant Subsidiary; and

(2) any other subsidiary that executes a Note Guarantee in accordance with the provisions of this Indenture and a supplemental indenture, pursuant to which it agrees to be bound by the terms of this Indenture as Guarantor;

and their respective successors and assigns until released from their obligations under their Note Guarantees and this Indenture in accordance with the terms of this Indenture.

“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under:

(1) interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and other agreements or arrangements with respect to interest rates;

(2) commodity swap agreements, commodity option agreements, forward contracts and other agreements or arrangements with respect to commodity prices; and

(3) foreign exchange contracts, currency swap agreements and other agreements or arrangements with respect to foreign currency exchange rates.

“Holder” means a Person in whose name a Note is registered.

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent:

(1) in respect of borrowed money;

(2) evidenced by bonds, notes, debentures or similar instruments;

(3) evidenced by letters of credit (or reimbursement agreements in respect thereof), but excluding obligations with respect to letters of credit (including trade letters of credit) securing obligations (other than obligations described in clauses (1) or (2) above or clauses (5), (6) or (8) below) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if drawn upon, to the extent such drawing is reimbursed no later than the 10th Business Day following receipt by such Person of a demand for reimbursement;

(4) in respect of bankers’ acceptances;

(5) in respect of Capital Lease Obligations;

(6) in respect of the balance deferred and unpaid of the purchase price of any property or services, except any such balance that constitutes an accrued expense or trade payable;

(7) representing the Fair Market Value (as determined by the Board of Directors or senior management) of Hedging Obligations, other than Hedging Obligations that are incurred for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; or

(8) representing Disqualified Stock valued at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued dividends.

Value (as determined by the Board of Directors or senior management) of such asset at such date of determination and (B) the amount of such Indebtedness, and (y) to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were repurchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the Fair Market Value (as determined by the Board of Directors or senior management) of such Disqualified Stock, such fair market shall be determined in good faith by the Company’s Board of Directors.

(1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and

(2) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness;

provided that Indebtedness shall not include:

(i) any liability for federal, state, local or other taxes,

(ii) any liability in respect of performance bonds, compensation claims, surety or appeal bonds and payment obligations in connection with self-insurance or similar obligations,

(iv) any accrued expense or trade payable to trade creditors arising in the ordinary course of business, including guarantees thereof or instruments evidencing such liabilities,

(v) any Earn-out Obligation, except to the extent that the contingent consideration relating thereto is not paid within five Business Days after the contingency relating thereto is resolved, or

(other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or such Restricted Subsidiary for the purpose of financing such acquisition), so long as the principal amount does not exceed the gross proceeds actually received by the Company or any Restricted Subsidiary thereof in connection with such disposition.

“Indenture” means this Indenture, as amended or supplemented from time to time.

“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.

“Institutional Accredited Investor” means an institution that is an “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who is not also a QIB.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

date of any such sale or disposition equal to the Fair Market Value (as determined by senior management or the Board of Directors, unless such Fair Market Value exceeds $10.0 million, in which event such Fair Market Value must be determined by the Board of Directors) of the Investment in such Subsidiary not sold or disposed of. The acquisition by the Company or any Restricted Subsidiary of the Company of a Person that holds an Investment in a third Person shall be deemed (without duplication) to be an Investment by the Company or such Restricted Subsidiary in such third Person at the time that the acquired Person becomes a Restricted Subsidiary of the Company in an amount equal to the Fair Market Value (as determined by senior management or the Board of Directors, unless such Fair Market Value exceeds $10.0 million, in which event such Fair Market Value must be determined by the Board of Directors) of the Investment held by the acquired Person in such third Person. Except as otherwise provided in this Indenture, the amount of an Investment shall be determined at the time the Investment is made and without giving effect to subsequent changes in value.

“Issue Date” means the date of the original issuance of the Notes under this Indenture.

“Moody’s” means Moody’s Investors Service, Inc. and its successors.

“Non-U.S. Person” means a Person who is not a U.S. Person.

“Note Guarantee” means a Guarantee of the Notes pursuant to this Indenture.

“Notes” means the 10³/₈% Senior Subordinated Notes due 2014 of the Issuers issued on the date hereof and any Additional Notes. The Notes and the Additional Notes, if any, shall be treated as a single class for all purposes under this Indenture.

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

“Offering Memorandum” means the offering memorandum, dated August 13, 2004, relating to the Issuers’ 10³/₈% Senior Subordinated Notes due 2014.

“Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer,

the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any Vice-President.

“Opinion of Counsel” means an opinion from legal counsel (who may be counsel to or an employee of the Company) that meets the requirements of this Indenture.

“Permitted Investments” means:

(1) any Investment in the Company or in a Restricted Subsidiary of the Company;

(2) any Investment in Cash Equivalents;

(3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary of the Company; or

(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company;

(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10;

(5) Investments to the extent acquired in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company;

(6) Hedging Obligations that are incurred for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder;

(7) any Investments received in satisfaction of judgments or in settlement of debt or compromises of obligations incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon bankruptcy or insolvency;

(8) any Investments received as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(9) advances to customers or suppliers in the ordinary course of business that are recorded in accordance with GAAP as accounts receivable or prepaid expenses or lease, utility or other similar deposits in the ordinary course of business; and

(10) Investments consisting of the licensing or contribution of intellectual property pursuant to affiliation agreements or film rights agreements in the ordinary course of business consistent with past practice.

“Permitted Junior Securities” means:

(1) Equity Interests in either Issuer or any Guarantor or any other business entity provided for by a plan of reorganization; and

(2) debt securities of either Issuer or any Guarantor or any other business entity provided for by a plan of reorganization that are subordinated to all Senior Debt and any debt securities issued in exchange for Senior Debt to the same extent as, or to a greater extent than, the Notes and the Note Guarantees are subordinated to Senior Debt under this Indenture.

“Permitted Liens” means:

(1) Liens on the properties or assets of the Company and any Guarantor securing Senior Debt that was permitted by the terms of this Indenture to be incurred;

(2) Liens in favor of the Company or any Guarantor;

(3) Liens securing Monetization Indebtedness;

(4) Liens on property or assets of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any properties or assets other than those of the Person merged into or consolidated with the Company or the Restricted Subsidiary;

(5) Liens on property or assets existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such transaction and do not extend

to any properties or assets other than those so acquired by the Company or the Restricted Subsidiary;

(6) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by Section 4.09(b)(iv) covering only the assets acquired with such Indebtedness;

(7) Liens existing on the date of this Indenture;

(8) Liens securing the Notes;

(9) during any period commencing from the date the Suspension Condition is first satisfied, Liens to secure Indebtedness that is not pari passu or subordinated to the Notes or the Note Guarantees;

(10) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $10.0 million at any one time outstanding;

“Permitted Refinancing Indebtedness” means:

(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued and unpaid interest thereon and the amount of any reasonable premium necessary to accomplish such refinancing and such reasonable expenses incurred in connection therewith);

(2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes or the Note Guarantees, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable, taken as a whole in all material respects, to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

(4) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is pari passu in right of payment with the Notes or any Note Guarantees,

such Permitted Refinancing Indebtedness is pari passu with, or subordinated in right of payment to, the Notes or such Note Guarantees; and

(5) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

(1) the liquidation or face value of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness, or the liquidation or face value of the Disqualified Stock, as applicable, so extended, refinanced, renewed, replaced or refunded (plus all accrued and unpaid interest or dividends thereon and the amount of any reasonable premium necessary to accomplish such refinancing and such reasonable expenses incurred in connection therewith);

(2) such Permitted Refinancing Indebtedness has a final redemption date later than the final maturity or redemption date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness or Disqualified Stock being extended, refinanced, renewed, replaced or refunded;

(3) such Permitted Refinancing Indebtedness has a final redemption date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable, taken as a whole in all material respects, to the Holders of Notes as those contained in the documentation governing the Indebtedness or Disqualified Stock being extended, refinanced, renewed, replaced or refunded;

(4) such Permitted Refinancing Indebtedness is not redeemable at the option of the holder thereof or mandatorily redeemable prior to the final maturity or redemption date of the Indebtedness or Disqualified Stock being extended, refinanced, renewed, replaced or refunded; and

(5) such Disqualified Stock is issued either by the Company or by the Restricted Subsidiary who is the issuer of the Indebtedness or Disqualified Stock being extended, refinanced, renewed, replaced or refunded.

“Principals” means (a) any Dolan Family Member, (b) any trusts for the benefit of any Dolan Family Members, (c) any estate of any Dolan Family Member or testamentary trust of any Dolan Family Member for the benefit of any Dolan Family Members, (d) any executor, administrator, conservator or legal or personal representative of any Person or Persons specified in clauses (a), (b) and (c) above to the extent acting in such capacity on behalf of any Dolan Family Member or Members and not individually, (e) any Person, eighty percent (80%) of which is owned and controlled by any of the foregoing or combination of the foregoing, and (f) The Dolan Family Foundation, a New York not-for-profit corporation.

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

“Rainbow Media Enterprises” means Rainbow Media Enterprises, Inc.

“Regulation S” means Regulation S promulgated under the Securities Act.

“Regulation S Global Note” means a Legended Regulation S Global Note or an Unlegended Regulation S Global Note, as appropriate.

“Regulation S Global Note Legend” means the legend set forth in Section 2.07(h) that is required to be placed in Legended Regulation S Global Notes under the Indenture.

“Representative” means the trustee, agent or representative for any Senior Debt.

“Responsible Officer,” when used with respect to the Trustee, means any officer within the Corporate Trust Office of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of the Indenture.