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EXHIBIT 10.24
CONFORMED COPY
GOLDMAN SACHS CREDIT PARTNERS L.P. MORGAN STANLEY SENIOR FUNDING, INC.
C/O GOLDMAN, SACHS & CO. 1585 BROADWAY
85 BROAD STREET NEW YORK, NEW YORK 10036
NEW YORK, NEW YORK 10004
COMMITMENT LETTER
PERSONAL AND CONFIDENTIAL
February 26, 2001
Mr. Kent Kalkwarf
Chief Financial Officer
Charter Communications Holdings, LLC
Charter Communications Holdings Capital Corporation
12444 Powerscourt Drive
St. Louis, Missouri 63131
Ladies and Gentlemen:
We are pleased to confirm the arrangements under which Goldman
Sachs Credit Partners L.P. ("GSCP") and Morgan Stanley Senior Funding, Inc.
("MSSF" and, together with GSCP, the "Administrative Agents") are exclusively
authorized by Charter Communications Holdings, LLC and Charter Communications
Holdings Capital Corporation (collectively, "Charter") to act as joint arrangers
and joint syndication agents in connection with the bridge loans described
herein, and, together with any additional initial lenders arranged for by
Charter pursuant to Section 1(b) hereof and made party to this Commitment Letter
(collectively with GSCP and MSSF, the "Initial Lenders") and any other entities
that become lenders in accordance with the syndication arrangements set forth
below (collectively with the Initial Lenders, the "Lenders"), commit, severally
and not jointly, to provide the bridge loans described herein, in each case on
the terms and subject to the conditions set forth in this letter and the
attached Annex A (together, the "Commitment Letter") and the Fee Letter (as
defined below).
We understand that Charter has entered into agreements, dated
today, with AT&T Broadband & Internet Services ("AT&T") to acquire certain cable
systems owned by AT&T in Alabama, Missouri and Nevada (collectively, the
"Acquisition"). We understand that Charter may require funds on an interim
basis, in the form of bridge loans, to fund the Acquisition and Charter's
accelerated capital expenditure plan and for general corporate purposes.
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1. Commitment. (a) Each of GSCP and MSSF is pleased to confirm its
commitment (each a "Commitment"), severally and not jointly, to provide Charter
with Senior Increasing Rate Bridge Loans (the "Bridge Loans"), in the principal
amount set forth opposite its name on Schedule I hereto, or such lesser pro rata
amount as Charter may specify, having the terms set forth on Annex A, on the
terms and subject to the conditions contained in this Commitment Letter;
provided that the Commitments of GSCP and MSSF shall be reduced, on a pro rata
basis, by an amount equal to the aggregate amount of additional commitments
arranged by Charter pursuant to Section 1(b) hereof. Each Lender's Commitment is
subject to the conditions set forth in this Commitment Letter, including,
without limitation, the conditions precedent set forth in Annex A hereto, and to
the negotiation, execution and delivery of definitive documentation, including,
without limitation, a bridge loan agreement (the "Bridge Loan Agreement"),
consistent with the terms of Annex A hereto and satisfactory to each of Charter,
the Lenders and their counsel and the satisfaction of the terms, conditions and
covenants contained therein. The terms of this Commitment Letter are intended as
an outline of certain of the material terms of the Bridge Loans, but do not
include all of the terms, conditions, covenants, representations, warranties,
default clauses and other provisions that will be contained in the Bridge Loan
Agreement.
(b) Charter shall have the right, for a period of 15 business days
after the date of the first announcement by Charter of the proposed Acquisition,
to arrange for additional banks or financial institutions to commit to provide
Bridge Loans pursuant to this Commitment Letter up to an aggregate amount of
$600 million, subject to the consent of the Administrative Agents to any such
additional bank or financial institution (which consent will not be unreasonably
withheld). Charter, GSCP and MSSF agree to amend and restate this Commitment
Letter as soon as practicable after the earlier of (x) the last day of such
15-day period and (y) the date that Charter notifies the Administrative Agents
that it has arranged an aggregate of $600 million in additional commitments
hereunder, to add hereto any such additional banks or financial institutions and
to reflect their respective commitments to provide Bridge Loans in accordance
with the terms of this Commitment Letter (as well as their pro rata allocation
of the fees set forth in the Fee Letter (as herein defined)), the maximum
aggregate commitments hereunder for all Lenders not to exceed $2 billion.
(c) Notwithstanding the foregoing, if the Acquisition or any part
thereof is not completed for any reason or if either Charter or AT&T, or any of
their respective affiliates, publicly announces its intent (or if Charter
decides or is notified that AT&T has decided) not to pursue or complete the
Acquisition or any part thereof for any reason, the Commitments of the Lenders
hereunder shall be automatically and permanently reduced, on a pro rata basis,
by the principal amount or amounts set forth on Schedule II hereto, up to $1
billion. Charter shall promptly notify the Administrative Agents of any decision
by it or AT&T not to pursue or complete the Acquisition or any part thereof.
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2. Fees and Expenses. The fees for these services are set forth in a
separate fee letter (the "Fee Letter"), dated the date hereof, entered into by
GSCP, MSSF and Charter. In addition, pursuant to an engagement letter (the
"Engagement Letter"), dated the date hereof, among Charter, Charter
Communications, Inc., Goldman, Sachs & Co. ("Goldman Sachs") and Morgan Stanley
& Co. Incorporated ("Morgan Stanley" and, together with Goldman Sachs, the
"Underwriters"), Charter and Charter Communications, Inc. have agreed to offer
the Underwriters the right to act as the exclusive initial purchasers,
underwriters or placement agents in connection with the sale of Securities (as
defined in the Engagement Letter) and to offer Goldman Sachs and Morgan Stanley
the right to act as joint bookrunners, in each case, pursuant to the terms of
the Engagement Letter.
3. Syndication. The Administrative Agents intend and reserve the right
to syndicate the Commitments and/or the Bridge Loans to other Lenders (the
"Syndication"), subject to Section 1(b) hereof. The Administrative Agents will
lead the Syndication, including determining the timing of all offers to
potential Lenders and the acceptance of commitments, any title of agent or
similar designations awarded to Lenders, the amounts offered and the
compensation provided to each Lender from the amounts to be paid to the
Administrative Agents pursuant to the terms of this Commitment Letter and the
Fee Letter. Subject to Section 1(b), the Administrative Agents will determine
the identity of any entities that become Lenders after the date hereof and the
final commitment allocations subject to the consent of Charter, which will not
be unreasonably withheld, and will notify Charter of such determinations.
Pursuant to the syndication process described herein, the rights and obligations
of each Lender, including the right and obligation to make any Bridge Loan, may
(with the consent of the Administrative Agents (in their sole discretion) prior
to the earlier of (x) the date that is four months after the Closing Date (as
defined in Annex A) and (y) the date on which the Syndication has been completed
(as determined by the Administrative Agents), and thereafter with the consent of
the Administrative Agents (such consent not to be unreasonably withheld), in
each case subject to the consent of Charter in the case of transfers to
non-affiliates, which consent will not be unreasonably withheld) be assigned by
such Lender, in whole or in part, to any other bank, financial institution or
other investor and upon such assignment, the assignee shall become a Lender
hereunder and the assigning Lender will be relieved from all obligations with
respect to any Commitment assigned. Prior to the date that is four months after
the Closing Date, the Commitments and/or Bridge Loans of the Initial Lenders
shall be reduced on a pro rata basis as and when commitments are received from
other Lenders in the Syndication. To ensure an orderly and effective Syndication
of the Bridge Loans, Charter agrees that until the later of the termination of
the Syndication as determined by the Administrative Agents and 90 days following
the date of initial funding under the Bridge Loans, Charter will not and will
not permit any of its subsidiaries to syndicate or issue, attempt to syndicate
or issue, announce or authorize the announcement of the syndication or issuance
of, or engage in discussions concerning the syndication or issuance of, any debt
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facility or debt or preferred or common equity security (other than the Bridge
Loans), including any renewals or refinancings of any existing debt facility or
debt or preferred equity security, without the prior written consent of the
Administrative Agents (which consent will not be unreasonably withheld).
Notwithstanding the foregoing, Charter may syndicate (and take appropriate
actions in connection therewith) at any time (x) up to an aggregate of $590
million currently permitted to be incurred under the incremental term
facilities, or greenshoes, under the current Falcon and Charter Operating credit
facilities (not to exceed $400 million in the case of the Charter Operating
facility) less the aggregate amount of any additional Falcon credit facility
commitments syndicated pursuant to the following clause and (y) the refinancing
or replacement of the current Falcon credit facility (including the syndication
of up to $590 million in additional commitments in connection therewith less the
aggregate amount of Falcon and Charter Operating incremental term facility
borrowings syndicated under the preceding clause (x)). The Lenders acknowledge
that Charter has no obligation to utilize the financing offered hereby and can
terminate this Commitment Letter at any time.
4. Cooperation. Charter agrees to cooperate, and to cause its
affiliates to cooperate, with the Administrative Agents in connection with (i)
the preparation of an information package regarding the business, operations and
prospects of Charter including, without limitation, the delivery of all
information relating to the transactions contemplated hereunder and all other
information deemed reasonably necessary by the Administrative Agents to complete
the syndication of the Commitments and/or Bridge Loans and (ii) the presentation
of such information package in lender meetings and other communications with
prospective Lenders in connection with the syndication of the Bridge Loans.
Charter agrees to make its representatives and senior management reasonably
available to meet with the Lenders and prospective Lenders and rating agencies
and to make customary "road show" presentations at such locations as the
Administrative Agents may reasonably suggest. Charter shall be solely
responsible for the contents of any such information package and presentation
(other than information concerning the Lenders and the syndication process) and
acknowledges that the Lenders will be using and relying upon the information
contained in such information package and presentation without independent
verification thereof. In addition, Charter represents and covenants that all
information provided by Charter or its agents to the Administrative Agents or
the other Lenders in connection with the transactions contemplated hereunder is
and will be complete and correct in all material respects and does not and will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. Charter agrees to
supplement such information from time to time until the Closing Date and, if
requested by the Administrative Agents in writing, for a reasonable period
thereafter (not to exceed six months) necessary to complete the syndication of
the Commitments and/or Bridge Loans, so that the representations and covenants
contained in the preceding sentence remain correct.
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5. Indemnification and Contribution. In partial consideration for our
commitments hereunder, Charter hereby agrees to indemnify and hold harmless each
Lender, each of the members or shareholders or other investors or holders of
interests in, or other transferees of any Lender (collectively, "Additional
Investors"), any affiliates of the Lenders and the Additional Investors, and
each other person, if any, controlling the Lenders or any Additional Investors
and any of their respective affiliates, and any of the directors, officers,
agents and employees of any of the foregoing (each, an "Indemnified Person")
from and against any losses, claims, damages or liabilities related to, arising
out of or in connection with the matters which are the subject of the
commitments made hereunder (including, without limitation, any use made or
proposed to be made by Charter of the proceeds from the transactions referred to
above) (collectively, the "Subject Matter"), and will reimburse any Indemnified
Person for all expenses (including fees and expenses of counsel) as they are
incurred in connection with investigating, preparing, pursuing or defending any
action, claim, suit, investigation or proceeding related to, arising out of or
in connection with the Subject Matter, whether or not pending or threatened and
whether or not such action, claim, suit, investigation or proceeding is brought
by you, your affiliates, creditors or any Indemnified Person, or any Indemnified
Person is otherwise a party thereto. Charter will not, however, be responsible
to an Indemnified Person for any losses, claims, damages or liabilities (or
expenses relating thereto) that are finally judicially determined to have
resulted from the bad faith or gross negligence of such Indemnified Person.
Charter also agrees that no Indemnified Person shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to Charter for or in
connection with the Subject Matter, except for any such liability for losses,
claims, damages or liabilities incurred by Charter that are finally judicially
determined to have resulted from the bad faith or gross negligence of such
Indemnified Person. No Lender shall be liable or responsible for any
consequential damages that may be alleged as a result of any failure to fund the
Bridge Loans.
Charter will not, without the prior written consent of the
Lenders, settle, compromise, consent to the entry of any judgment in or
otherwise seek to terminate any action, claim, suit, investigation or proceeding
in respect of which indemnification may be sought hereunder (whether or not any
Indemnified Person is a party thereto) unless such settlement, compromise,
consent or termination includes a full and unconditional release of each
Indemnified Person from any liabilities arising out of such action, claim, suit,
investigation or proceeding. No Indemnified Person seeking indemnification,
reimbursement or contribution under this agreement will, without Charter's prior
written consent, settle, compromise, consent to the entry of any judgment in or
otherwise seek to terminate any action, claim, suit, investigation or proceeding
referred to in the preceding paragraph.
If the indemnification provided for in the second preceding
paragraph of this Commitment Letter is judicially determined to be unavailable
(other than in accordance with the terms hereof) to an Indemnified Person in
respect of any losses,
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claims, damages or liabilities referred to herein, then, in lieu of indemnifying
such Indemnified Person hereunder, Charter agrees to contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (and expenses relating thereto) (i) in such proportion as
is appropriate to reflect the relative benefits to Charter on the one hand, and
the Lenders, on the other hand, of the financing or (ii) if the allocation
provided by clause (i) is not available, in such proportion as is appropriate to
reflect not only the relative benefits referred to in such clause (i) but also
the relative fault of Charter on the one hand, and the Lenders, on the other
hand, as well as any other relevant equitable considerations; provided that in
no event shall any Lender's contribution to the amount paid or payable exceed
the aggregate amount of fees actually received by such Lender under the Fee
Letter.
6. Confidentiality. Please note that this Commitment Letter, the Fee
Letter, the Engagement Letter and any written or oral advice provided by the
Initial Lenders in connection with this arrangement is exclusively for the
information of the Board of Directors of Charter and may not be disclosed to any
other party or circulated or referred to publicly without the Initial Lenders'
prior written consent, except, after providing written notice to the Initial
Lenders, pursuant to law or a subpoena or order issued by a court of competent
jurisdiction or by a judicial, administrative or legislative body or committee.
In addition, we hereby consent to your disclosure of this Commitment Letter, the
Fee Letter, the Engagement Letter and such advice to your officers, directors,
agents and advisors who are directly involved in the consideration of the Bridge
Loans to the extent such persons are obligated to hold such material in
confidence and to the filing, after notice to the Administrative Agents, of this
Commitment Letter with the SEC, if required, and the description of this
Commitment Letter in any SEC filing, to the extent required.
7. Additional Matters. You may not assign any of your rights or be
relieved of any of your obligations hereunder without the prior written consent
of each of the Lenders. As you know, each of the Lenders is a full service
securities firm and as such may from time to time effect transactions, for its
own account or the account of customers, and hold positions in securities or
options on securities of any of Charter Communications, Inc., Charter and their
subsidiaries (collectively, the "Charter Entities") and other companies that may
be the subject of this arrangement. In addition, the Administrative Agents may
employ the services of their affiliates in providing certain services hereunder
and may exchange with such affiliates information concerning any of the Charter
Entities and their subsidiaries and other companies that may be the subject of
this arrangement.
8. Choice of Law. This Commitment Letter shall be governed by and
construed in accordance with the laws of the State of New York.
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9. Trial by Jury. Charter (on its own behalf and, to the extent
permitted by law, on behalf of its stockholders) waives any right to trial by
jury in any action, claim, suit or proceeding arising out of or in connection
with this Commitment Letter, the Engagement Letter and the Fee Letter.
The Lenders' Commitments hereunder shall terminate on the earlier of
(x) December 31, 2001 and (y) the execution and delivery of the Bridge Loan
Agreement, subject to the terms and conditions contained herein.
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Please confirm that the foregoing is in accordance with your
understanding by signing and returning to each of GSCP and MSSF one of the
enclosed copies of this Commitment Letter, together, if not previously executed
and delivered, with the Fee Letter and the Engagement Letter on or before the
close of business, on the date first above written, whereupon this Commitment
Letter, the Fee Letter and the Engagement Letter shall become binding agreements
among us. If not signed and returned as described in the preceding sentence by
such date, this offer will terminate on such date. We look forward to working
with you on this transaction.
Very truly yours,
GOLDMAN SACHS CREDIT PARTNERS L.P.
By: /s/ Ed Forst
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Authorized Signatory
MORGAN STANLEY SENIOR FUNDING, INC.
By: /s/ John R. Orem
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Authorized Signatory
Confirmed as of the date above:
CHARTER COMMUNICATIONS HOLDINGS, LLC
By: /s/ Eloise A. Engman
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Eloise A. Engman
Vice President
CHARTER COMMUNICATIONS HOLDINGS
CAPITAL CORPORATION
By: /s/ Eloise A. Engman
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Eloise A. Engman
Vice President
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Schedule I
Commitments
Lender Commitment
- ------ ----------
Goldman Sachs Credit Partners L.P. $1,000.0 million
Morgan Stanley Senior Funding, Inc. $1,000.0 million
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Total $2,000.0 million
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Schedule II
Amount of Commitment Reductions Pursuant to Section 1(c)
Cable Systems Principal Amount of Commitment Reduction
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St. Louis, Missouri $631.0 million
Nevada $178.0 million
Alabama $191.0 million
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Total $1,000.0 million
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ANNEX A
SUMMARY OF TERMS AND CONDITIONS OF BRIDGE LOANS
This Summary of Terms and Conditions outlines certain terms of the
Bridge Loans and the Bridge Loan Agreement referred to in the Commitment Letter,
of which this Annex A is a part. Certain capitalized terms used herein are
defined in the Commitment Letter.
BORROWERS........................................... Charter Communications Holdings, LLC and Charter
Communications Holdings Capital Corporation
(collectively, "Charter"), jointly and severally
liable.
LOANS............................................... Senior Increasing Rate Bridge Loans in a principal
amount of up to $2.0 billion, subject to reduction
as set forth in Section 1(c) of the Commitment
Letter and as otherwise provided herein (the
"Bridge Loans").
NUMBER OF PERMITTED DRAWS........................... Two (the first such draw, "Draw 1 Bridge Loan" and
the second such draw, "Draw 2 Bridge Loan") on or
prior to December 31, 2001.
MINIMUM DRAW AMOUNT................................. $500 million.
NOTICE.............................................. Charter must provide written notice to the
Administrative Agents three business days prior to
any requested funding date.
MATURITY............................................ The Bridge Loans mature one year from the date of
the making of Draw 1 Bridge Loan (the "Maturity
Date"). If, upon the Maturity Date, the Bridge
Loans have not been previously repaid in full, and
provided no Conversion Default (as defined below)
has occurred and is continuing, the outstanding
Bridge Loans shall be automatically converted into
Senior Term Loans (each a "Term Loan") due on the
nine-year anniversary of the Maturity Date.
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At any time on or after the Maturity Date,
at the option of the applicable Lender, the
Senior Term Loans may be exchanged in whole
or in part for Senior Exchange Notes due on
the nine-year anniversary of the Maturity
Date (the "Exchange Notes") having an equal
principal amount. The initial date of
funding of the Draw 1 Bridge Loan is
hereinafter referred to as the "Closing
Date."
"Conversion Default" shall have the same meaning
(with all necessary and appropriate changes having
been made) as the term "Conversion Default" set
forth in Section 1.1 of the Senior Bridge Loan
Agreement, dated as of August 4, 2000 (the "August
Agreement"), among Charter and the initial lenders,
the sole arranger and the agents parties thereto.
The Senior Term Loans will be governed by the
provisions of the Bridge Loan Agreement and will
have the same terms as the Bridge Loans, except
as expressly set forth on Exhibit 1 to this
Annex A. The Exchange Notes will be issued
pursuant to an Indenture that will have the terms
set forth on Exhibit 1 to this Annex A.
INTEREST............................................ The Draw 1 Bridge Loan will initially bear interest
at a rate per annum equal to (a) the bid-side yield
(as confirmed by the Administrative Agents), as of
the Closing Date, on the 11.125% Senior Notes due
2011 of Charter or, at the discretion of the
Administrative Agents, such other issue of cash-pay
senior notes of Charter (the "Benchmark Notes")
less (b) 25 basis points. If the Draw 1 Bridge
Loan is not repaid in whole within 90 days
following the Closing Date, the interest rate on
such outstanding Bridge Loan will increase by
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125 basis points at the end of such 90-day
period and will increase by an additional 50
basis points at the end of each 90-day
period thereafter. The last day of each such
period being a "Step-Up Date."
The Draw 2 Bridge Loan will initially bear interest
at a rate per annum equal to the greater of (a) the
interest rate on the Draw 1 Bridge Loan on the date
of funding of the Draw 2 Bridge Loan and (b) the
bid-side yield (as confirmed by the Administrative
Agents), as of the date of funding of the Draw 2
Bridge Loan, on the Benchmark Notes. If the Draw 2
Bridge Loan is not repaid in whole by any Step-Up
Date following the funding of the Draw 2 Bridge
Loan, the interest rate on such outstanding Bridge
Loan will increase on such Step-Up Date by an
amount equal to the increase in interest rate on
Draw 1 Bridge Loan on such Step-Up Date.
Notwithstanding the foregoing, except in the case
of default interest described below, at no time
will the interest rate in effect on the Bridge
Loans be less than 9% per annum or exceed 15% per
annum.
Interest will be payable quarterly in arrears and on
the date of any prepayment of the Bridge Loans.
Notwithstanding the foregoing, after the occurrence
and during the continuance of an Event of Default (to
be defined in the Bridge Loan Agreement, as herein
specified), interest will accrue on the Bridge Loans
at the then applicable rate plus 200 basis points per
annum.
USE OF PROCEEDS..................................... To fund the Acquisition and Charter's accelerated
capital expenditure plan and for
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general corporate purposes.
MANDATORY REPAYMENT; COMMITMENT REDUCTION........... On the date of each borrowing under the Bridge Loan
Agreement, the aggregate stated commitments of the
Lenders to make advances shall be automatically and
permanently reduced, on a pro rata basis, by an
amount equal to the aggregate amount of the
borrowings made on such date.
The net cash proceeds received by any of the Charter
Entities from (i) any direct or indirect public
offering or private placement of any debt or equity
securities by any of the Charter Entities, (ii) any
future bank borrowings by any of the Charter Entities
(other than (x) revolving credit borrowings under any
of the existing credit facilities of Charter's
subsidiaries (the "Credit Facilities") as in effect
on the Closing Date, (y) borrowings by Falcon and
Charter Operating pursuant to the incremental term
facilities, or greenshoes, under the current Falcon
and Charter Operating credit facilities,
respectively, in an aggregate amount not to exceed
$590 million (not to exceed $400 million in the case
of the Charter Operating facility) (the "Incremental
Borrowings") less the aggregate amount of any
Additional Falcon Borrowings (as defined below), and
(z) borrowings by Falcon under an amended and
restated or new credit facility not to exceed $1.8
billion, representing the $1.21 billion committed
under the current Falcon credit facility plus an
additional amount of up to $590 million (such
additional amount, the "Additional Falcon
Borrowings"), less the aggregate amount of any
Incremental Borrowings; provided that the aggregate
amount under the Credit
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Facilities, including the Falcon and the Charter
Operating credit facilities, does not exceed $9.2
billion) and (iii) any future asset sales (it being
understood that the provisions of the Bridge Loan
Agreement regarding asset sales shall be
substantially the same (with all necessary and
appropriate changes having been made) as those set
forth in the August Agreement) by any of the Charter
Entities will be used to prepay the Bridge Loans in
each case at 100% of the principal amount of the
Bridge Loans redeemed plus accrued interest to the
date of the redemption subject, in the case of
clauses (ii) and (iii) only, to the terms of the
existing Credit Facilities or indentures requiring
prepayment of any amounts outstanding thereunder;
provided that, for purposes of clause (i), "net cash
proceeds" shall not include net cash proceeds
received by Charter Communications, Inc. ("CCI") from
any sale by CCI of shares of its Class A common stock
in an amount not to exceed $550 million (or, if the
net cash proceeds from such sale are less than $1.1
billion, not to exceed 50% of such net cash proceeds)
if such amount of net cash proceeds is designated for
payment to AT&T at the closing of the Acquisition or
any part thereof as consideration therefor in lieu of
CCI issuing shares of Class A common stock to AT&T in
connection therewith as long as such amount can be
transferred to Charter without restriction to fund
the Acquisition or any part thereof and to prepay
Bridge Loans and, if such amount were to be
transferred to any other Charter Entity, as long as
such amount could be subsequently transferred to
Charter without restriction to fund the Acquisition
or any part thereof and to prepay Bridge Loans (such
amount, the "Designated Equity Amount"); provided
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further that, if any portion of the Designated Equity
Amount is not paid to AT&T in connection with the
Acquisition or any part thereof, such portion shall
be used promptly to prepay Bridge Loans. The Bridge
Loan Agreement will contain a provision to the effect
that Charter will be required to use all of the
Designated Equity Amount to fund the Acquisition or
any part thereof prior to the Lenders being required
to make any Bridge Loan for the purpose of funding
the Acquisition or any part thereof.
The unused commitments of the Lenders (under the
Commitment Letter or the Bridge Loan Agreement, as
the case may be) shall be automatically and
permanently reduced, on a pro rata basis, (A) by an
amount equal to the net cash proceeds received by any
of the Charter Entities from any transaction
specified in clauses (i), (ii) and (iii) of the
preceding paragraph minus the amount of such net cash
proceeds applied to prepay Bridge Loans in accordance
with the preceding paragraph, and (B) as provided in
Section 1(c) of the Commitment Letter; provided that,
for purposes of clause (A), "net cash proceeds" shall
not include any Designated Equity Amount; provided
further that, if any portion of the Designated Equity
Amount is not paid to AT&T at the closing of the
Acquisition or any part thereof, the unused
commitments of the Lenders (under the Commitment
Letter or the Bridge Loan Agreement, as the case may
be), if any, shall be automatically and permanently
reduced, on a pro rata basis, by such portion
(without duplication of any commitment reductions as
provided in Section 1(c) of the Commitment Letter).
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In addition, at any time when the Underwriters are no
longer entitled under the Engagement Letter to act as
initial purchasers, underwriters or placement agents
in connection with the sale of Securities and there
still remain unused commitments of the Lenders, all
unused commitments of the Lenders (under the
Commitment Letter or the Bridge Loan Agreement, as
the case may be) shall be automatically and
immediately terminated in full if any of the Charter
Entities enters into any mandate, commitment,
engagement or other agreement, whether oral or
written, with any person (other than the Underwriters
in the capacities contemplated by the Engagement
Letter) pursuant to which such person is offered the
right to act as an initial purchaser, underwriter or
placement agent in connection with any sale of
Securities.
CHANGE OF CONTROL................................... Each holder of Bridge Loans will be entitled to
require Charter, and Charter must offer, to repay
the Bridge Loans held by such holder at a price of
100% of principal amount, plus accrued interest,
upon the occurrence of a Change of Control (which
term shall have the same meaning as the term
"Change of Control" set forth in the August
Agreement) of Charter, subject to the optional
redemption provisions described below.
OPTIONAL REPAYMENT.................................. The Bridge Loans may be prepaid, in whole or in
part, at the option of Charter at any time upon
three business days' written notice at a price
equal to 100% of the principal amount thereof plus
accrued interest to the date of repayment.
PAYMENTS............................................ Payments by Charter will be made by wire
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transfer of immediately available funds.
TRANSFERABILITY AND
PARTICIPATIONS...................................... Each of the Lenders will be free (with the consent
of the Administrative Agents (in their sole
discretion) prior to the earlier of (x) the date
that is four months after the Closing Date and (y)
the date on which the Syndication has been
completed (as determined by the Administrative
Agents), and thereafter with the consent of the
Administrative Agents (such consent not to be
unreasonably withheld)), to sell or transfer all or
any part of or any participation in any of the
Bridge Loans to any third party and to pledge any
or all of the Bridge Loans to any commercial bank
or other institutional lender or the Federal
Reserve Bank, to the extent permitted by law.
MODIFICATION OF
THE BRIDGE LOANS.................................... Modification of the Bridge Loans may be made with
the consent of Lenders holding greater than 50% of
the Bridge Loans then outstanding, except that no
modification or change may extend the maturity of
the Bridge Loans or time of payment of interest of
the Bridge Loans, reduce the rate of interest or
the principal amount of the Bridge Loans, alter the
redemption provisions of the Bridge Loans or reduce
the percentage of holders necessary to modify or
change the Bridge Loans without the consent of
Lenders holding 100% of the Bridge Loans affected
thereby.
COST AND YIELD PROTECTION........................... The Lenders will receive cost and yield protection
customary for facilities and transactions of this
type, including, but not limited to taxes
(including but not limited to gross-up provisions
for withholding taxes imposed by the United States
or any
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State thereof as a result of a change in law, and
income taxes associated with all gross-up payments),
changes in capital requirements, guidelines or
policies or their interpretation or application,
illegality, change in circumstances, reserves and
other provisions deemed necessary by the Lenders to
provide customary protection for U.S. and non-U.S.
financial institutions.
CONDITIONS PRECEDENT................................ The several obligations of the Lenders to make, or
cause one of their respective affiliates to make,
Bridge Loans will be subject to closing conditions
deemed appropriate by the Lenders for financings of
this kind generally and for this transaction in
particular, including, without limitation, the
closing conditions set forth in paragraphs 1
through 8 below (and such other conditions
substantially similar (with all necessary and
appropriate changes having been made) to those set
forth in the August Agreement except for section
3.1(b) thereof); provided that the Lenders shall
not be required to make Bridge Loans to fund the
Acquisition in a principal amount in excess of $1.8
billion in total and, with respect to the Missouri,
Nevada and Alabama parts of the Acquisition, in
excess of the purchase price therefor specified in
the agreements for the Acquisition as agreed upon
by the Administrative Agents. In addition, the
several obligations of the Lenders to make, or
cause one of their respective affiliates to make,
Bridge Loans to fund the acquisitions of the Nevada
and Alabama cable systems that are part of the
Acquisition will be subject to the additional
condition set forth in paragraph 9 below:
1. Defaults Under Financing Agreements. There
shall not exist any default or
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event of default under any of the Credit
Facilities, the Bridge Loans, the Bridge Loan
Agreement or any of the other documents to be
executed in connection therewith (the "Loan
Documents"), or under other material
indebtedness of Charter or its subsidiaries.
2. Due Diligence. Each of the Lenders shall have
conducted a due diligence review in form,
scope and substance satisfactory to such
Lender and shall be satisfied with the results
thereof. Such review may include but may not
be limited to an examination of (i) the
capitalization, corporate and ownership
structure of the Charter Entities, (ii)
accounting, legal, regulatory, tax, labor,
insurance, pension and environmental
liabilities, actual or contingent (which, at
the request of the Lenders, shall include an
environmental audit satisfactory to the
Lenders and their counsel), (iii) material
contracts, leases and debt agreements and (iv)
the general business, operations, financial
condition, management, prospects and value of
the Charter Entities.
The Lenders shall not have become aware of any
information relating to conditions or events
not previously described to the Lenders or
constituting new information or additional
developments concerning conditions or events
previously disclosed to the Lenders which
they, in their judgment, believe may have a
material adverse effect on the condition
(financial or otherwise), assets, liabilities
(contingent or otherwise), properties,
solvency, business, management or
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prospects of the Charter Entities.
3. Absence of Certain Changes. No material change
in the capital stock, liabilities or long-term
debt of the Charter Entities (other than
increases in liabilities and long-term debt
contemplated by and set forth in the
supplemental unaudited pro forma data in
Charter's Form 10-Q for the quarter ended
September 30, 2000 and those incurred in the
ordinary course of business consistent with
past practice) or any material adverse change,
or any development involving a prospective
material adverse change, in or affecting the
general affairs, management, financial
position, stockholders' equity, results of
operations or prospects of the Charter
Entities, shall have occurred since September
30, 2000 (the date of the most recent
financial statements that have been delivered
to the Lenders as of the date hereof) and no
material inaccuracy in such financial
statements shall exist. No Change of Control
shall have occurred. On or after the date
hereof (i) no downgrading (other than a
downgrading resulting from the execution of
the Commitment Letter or funding of the Bridge
Loans) shall have occurred in the rating
accorded Charter's debt securities by any
"nationally recognized statistical rating
organization," as that term is defined by the
Securities and Exchange Commission for
purposes of Rule 436(g)(2) under the Act, and
(ii) no such organization shall have publicly
announced that it has under surveillance or
review, with possible negative implications,
its rating of any of Charter's debt
securities, excluding
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any such surveillance or review caused by the
execution of the Commitment Letter or funding
of the Bridge Loans.
4. Documentation, Legal Matters, etc. The Bridge
Loan Agreement and the other definitive
documentation evidencing the Bridge Loans
shall be prepared by counsel to the
Administrative Agents and shall be in form and
substance reasonably satisfactory to the
Initial Lenders and Charter. All other matters
relating to the Bridge Loan Agreement shall be
reasonably satisfactory to Charter and the
Initial Lenders in all respects and the
Lenders shall have received such additional
certificates, legal and other opinions, in
form and substance reasonably satisfactory to
the Initial Lenders and counsel for the
Lenders, and such other documentation as they
shall request.
5. Market Disruption. There shall not have
occurred any disruption or adverse change, as
determined by GSCP and MSSF in their sole
discretion, in the financial or capital
markets generally, or in the markets for
bridge loan syndication, high yield debt or
equity securities in particular or affecting
the syndication or funding of bridge loans (or
the refinancing thereof) that may have a
material adverse impact on the ability to sell
or place Securities or to syndicate the Bridge
Loans.
6. Approvals and Consents. All governmental,
shareholder and third-party approvals and
consents necessary or, in the reasonable
opinion of the
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Administrative Agents, desirable in connection
with the Bridge Loans shall have been received
and shall be in full force and effect.
7. Litigation, etc. There shall not exist any
action, suit, investigation, litigation or
proceeding pending or threatened in any court
or before any arbitrator or governmental
authority that, in the reasonable opinion of
the Administrative Agents, affects any of the
transactions contemplated hereby, or that
could have a material adverse effect on the
Charter Entities.
8. Payment of Fees and Expenses. All fees and
expenses due to the Lenders, GSCP, Goldman
Sachs, MSSF, Morgan Stanley or the
Administrative Agents on or before the Closing
Date pursuant to the Commitment Letter, the
Fee Letter, the Engagement Letter or otherwise
shall have been paid in full.
9. The Acquisition. CCI shall have raised at
least $490 million from the sale of its Class
A common stock which amount is designated to
fund the acquisitions of the Nevada and
Alabama cable systems that are part of the
Acquisition or AT&T and/or its affiliates
shall have concurrently taken at least $490
million in CCI Class A common stock as partial
consideration for such acquisitions.
COVENANTS........................................... The Bridge Loan Agreement will contain such
covenants by Charter (with respect to Charter and
its subsidiaries) as are usual and customary for
financings of this kind or as otherwise deemed
appropriate by the
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Lenders for this transaction in particular (in
their sole discretion), based upon the covenants
in the Credit Facilities (such covenants to be
substantially the same (with all necessary and
appropriate changes having been made) as those
set forth in the August Agreement).
The Bridge Loan Agreement will contain a covenant
to the effect that, at any time when funded
Bridge Loans, Senior Term Loans or Exchange Notes
are outstanding and the Underwriters are no
longer entitled under the Engagement Letter to
act as underwriters, placement agents or initial
purchasers in connection with any sale of
Securities, no Charter Entity will enter into any
mandate, commitment, engagement or other
agreement with any person (other than the
Underwriters in the capacities contemplated by
the Engagement Letter) pursuant to which such
person is offered the right to act as
underwriter, placement agent or initial purchaser
in connection with the sale of any Securities
unless such mandate, commitment, engagement or
other agreement (x) is in writing and (y)
constitutes a firm commitment by such person to
underwrite, place or sell such Securities (or, if
such Securities cannot be sold or placed in the
market for any reason, to purchase such
Securities for its own account or to provide
bridge or other loan financing in lieu of such
offering or placement of Securities), which
commitment is subject to closing conditions that
are usual and customary for financings of the
kind contemplated thereby and that are approved
by the Administrative Agents (which approval will
not be unreasonably withheld). For the avoidance
of doubt, the net cash proceeds received by any
Charter Entity
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from any financing contemplated by the previous
sentence, shall constitute "net cash proceeds"
for purposes of the mandatory repayment and
commitment reduction provisions of this
Commitment Letter and the Bridge Loan Agreement.
EVENTS OF DEFAULT................................... The Bridge Loan Agreement will include such events
of default (and, as appropriate, grace periods) as
are usual and customary for financings of this kind
or as otherwise deemed appropriate by the Lenders
for this transaction in particular (in their sole
discretion), based upon the events of default in
the Credit Facilities (such events of default to be
substantially the same (with all necessary and
appropriate changes having been made) as those set
forth in the August Agreement).
REPRESENTATIONS AND
WARRANTIES.......................................... The Bridge Loan Agreement will contain such
representations and warranties by Charter (with
respect to Charter and its subsidiaries) as are
usual and customary for financings of this kind or
as are otherwise deemed appropriate by the Lenders
for this transaction in particular (in their sole
discretion), based upon the representations and
warranties in the Credit Facilities (such
representations and warranties to be substantially
the same (with all necessary and appropriate
changes having been made) as those set forth in the
August Agreement).
TAXES, RESERVE
REQUIREMENTS AND
INDEMNITIES......................................... The Bridge Loan Agreement will provide that all
payments will be made free and clear of any taxes
(other than franchise taxes and taxes on overall
net income), imposts, assessments, withholdings or
other deductions whatsoever assessed by the United
States or any State thereof and resulting from a
change in law. Foreign
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Lenders will be required to furnish to the
Administrative Agents appropriate certificates or
other evidence of exemption from U.S. federal tax
withholding.
Charter will indemnify the Lenders against all
increased costs of capital resulting from reserve
requirements or otherwise imposed, in each case
subject to customary increased costs and capital
adequacy.
INDEMNITY........................................... The Bridge Loan Agreement will contain customary
and appropriate provisions relating to indemnity
and related matters in a form reasonably
satisfactory to the Administrative Agents and the
Lenders and acceptable to Charter.
GOVERNING LAW AND
JURISDICTION........................................ The Bridge Loan Agreement will provide that Charter
will submit to the non-exclusive jurisdiction and
venue of the federal and state courts of the State
of New York and will waive any right to trial by
jury. New York law will govern the Loan Documents.
The foregoing is intended to summarize certain basic terms of the
Bridge Loans. It is not intended to be a definitive list of all of the
requirements of the Lenders in connection with the Bridge Loans.
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EXHIBIT 1 TO ANNEX A
SUMMARY OF TERMS AND CONDITIONS OF SENIOR TERM LOANS AND EXCHANGE NOTES
Capitalized terms used herein have the meanings assigned to them in the
Summary of Terms and Conditions of Bridge Loans to which this Exhibit 1 is
attached.
SENIOR TERM LOANS
On the Maturity Date, so long as no Conversion Default has occurred and
is continuing, the outstanding Bridge Loans will be automatically converted into
Senior Term Loans. The Senior Term Loans will be governed by the provisions of
the Bridge Loan Agreement and, except as expressly set forth below, the Senior
Term Loans will have the same terms as the Bridge Loans.
MATURITY.................................... The Senior Term Loans will mature on the ninth
anniversary of the Maturity Date.
INTEREST RATE............................... The Senior Term Loans will initially bear
interest at a rate per annum equal to the sum of
(i) the greater of (a) the interest rate
applicable to the Draw 1 Bridge Loan on the
Maturity Date (after giving effect to any
applicable step-up) and (b) the interest rate
applicable to the Draw 2 Bridge Loan on the
Maturity Date (after giving effect to any
applicable step-up) plus (ii) 50 basis points. If
the Senior Term Loans are not repaid within 90
days following the Maturity Date, the interest
rate on the Senior Term Loans will increase by 50
basis points at the end of such 90-day period and
will increase by an additional 50 basis points at
the end of each 90-day period thereafter.
Notwithstanding the foregoing, except in the case
of default interest described below, at no time
will the interest rate in effect on the Senior
Term Loans be less than 9% per annum or exceed
15% per annum.
Interest on the Senior Term Loans will be payable
quarterly in arrears and on the date
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of any prepayment of such Senior Term Loans.
Notwithstanding the foregoing, after the
occurrence and during the continuance of an Event
of Default, interest will accrue on the Senior
Term Loans at the then applicable rate plus 200
basis points per annum.
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SENIOR EXCHANGE NOTES
At any time on or after the Maturity Date, upon five or more business
days prior notice, Senior Term Loans may, at the option of a Lender, be
exchanged for a principal amount of Exchange Notes equal to 100% of the
aggregate principal amount of the Senior Term Loans so exchanged in connection
with a transfer of Exchange Notes to an unaffiliated third party. No Exchange
Notes will be issued until Charter receives requests to issue at least $25.0
million in aggregate principal amount of Exchange Notes. Charter will issue
Exchange Notes under an indenture, in form and substance reasonably satisfactory
to the Administrative Agents, which complies with the Trust Indenture Act of
1939, as amended (the "Indenture"). Charter will appoint a trustee reasonably
acceptable to the holders of the Bridge Loans. Charter will agree in the Bridge
Loan Agreement to execute and deliver the Indenture within 150 days after the
date of the initial borrowing under the Bridge Loan Agreement.
MATURITY........................................... The Exchange Notes will mature on the ninth
anniversary of the Maturity Date.
INTEREST RATE...................................... Each Exchange Note will bear interest at a fixed
rate equal to the greater of (x) the interest rate
on the Senior Term Loans on the date of issuance of
such Exchange Notes and (y) the bid side yield (as
confirmed by the Administrative Agents) on the
Benchmark Notes, on the date prior to the date of
issuance of the Exchange Notes; provided that,
except in the case of default interest described
below, in no event will the interest rate in effect
on the Exchange Notes be less than 9% or exceed 15%
per annum.
OPTIONAL REDEMPTION................................ Exchange Notes will be non-callable until the fifth
anniversary of the Closing Date. Thereafter, each
Exchange Note will be callable at par plus accrued
interest plus a premium equal to one half of the
coupon on such Exchange Note, which premium shall
decline ratably on each yearly anniversary to zero
on the date that is two years prior to the maturity
of the Exchange Notes.
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DEFEASANCE
PROVISIONS OF
EXCHANGE NOTES..................................... Customary.
MODIFICATION....................................... Customary.
REGISTRATION RIGHTS................................ Charter will agree in the Bridge Loan Agreement to
execute and deliver a registration rights
agreement, in form and substance satisfactory to
the Administrative Agents (the "Registration Rights
Agreement"), within 150 days after the date of the
initial borrowings under the Bridge Loan
Agreement. The Registration Rights Agreement will
provide, among other provisions, that Charter will
file as soon as practicable, but no later than 300
days after the Closing Date and will use all
commercially reasonable efforts to cause to become
effective as soon thereafter as practicable, but no
later than the date that is 60 days prior to the
Maturity Date, a shelf registration statement with
respect to the Exchange Notes (a "Shelf
Registration Statement"). If a Shelf Registration
Statement is filed and becomes effective, Charter
will use commercially reasonable efforts to keep
such registration statement effective and available
(subject to customary exceptions) until it is no
longer needed to permit unrestricted resales of the
Exchange Notes. If a Shelf Registration Statement
for the Exchange Notes has not been declared
effective on or before the date that is 60 days
prior to the Maturity Date because Charter has
failed to use commercially reasonable efforts to
have it become effective, then Charter will pay
liquidated damages in the form of increased
interest of 50 basis points per annum on the
principal amount of Exchange Notes and Senior Term
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Loans outstanding to holders of such Exchange Notes
and Senior Term Loans from and including the
Maturity Date (if the Shelf Registration Statement
has not been declared effective by such date) to
but excluding the effective date of such Shelf
Registration Statement. On the 90th day after the
Maturity Date, if a Shelf Registration Statement
for the Exchange Notes has not been declared
effective because Charter has failed to use
commercially reasonable efforts to have it become
effective, the liquidated damages shall increase by
50 basis points per annum to a per annum rate of
100 basis points, and for all periods after the
90-day anniversary of the Maturity Date, if a Shelf
Registration Statement for the Exchange Notes has
not been declared effective because Charter has
failed to use commercially reasonable efforts to
have it become effective, the liquidated damages
shall be 100 basis points per annum. Charter will
also pay such liquidated damages for any period of
time (subject to customary exceptions) following
the effectiveness of a Shelf Registration Statement
that such Shelf Registration Statement is not
available for sales thereunder. All accrued
liquidated damages will be paid on each interest
payment date.
COVENANTS.......................................... The Indenture relating to the Exchange Notes will
include covenants that are substantially similar to
those contained in the indenture governing the
Benchmark Notes.
EVENTS OF DEFAULT.................................. The Indenture relating to the Exchange Notes will
provide for Events of Default similar to those
contained in the indenture governing the
Benchmark Notes.
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COUNSEL FOR
THE LENDERS........................................ Debevoise & Plimpton.
The foregoing is intended to summarize certain basic terms of the
Senior Term Loans and Exchange Notes. It is not intended to be a definitive list
of all of the requirements of the Lenders in connection with the Senior Term
Loans and Exchange Notes.
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