EXECUTION VERSION
EXHIBIT 10.33
$1,500,000,000
CHARTER COMMUNICATIONS OPERATING, LLC
CHARTER COMMUNICATIONS OPERATING CAPITAL CORP.
$1,100,000,000
8% SENIOR SECOND LIEN NOTES DUE 2012
$400,000,000
8-3/8% SENIOR SECOND LIEN NOTES DUE 2014
PURCHASE AGREEMENT
Dated April 20, 2004
April 20, 2004
J.P. Morgan Securities Inc.
Banc of America Securities LLC
Citigroup Global Markets Inc.
Credit Suisse First Boston LLC
c/o J.P. Morgan Securities Inc.
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
Charter Communications Operating, LLC, a Delaware limited liability
company (the "Company"), and Charter Communications Operating Capital Corp., a
Delaware corporation ("CCO Capital" and, together with the Company, the
"Issuers"), propose, subject to the terms and conditions stated herein, to issue
and sell to the purchasers named in Schedule I hereto (the "Purchasers") an
aggregate of $1,100,000,000 principal amount of 8% Senior Second Lien Notes due
2012 (the "Eight Year Notes") and (ii) an aggregate of $400,000,000 principal
amount of 8-3/8% Senior Second Lien Notes due 2014 (the "Ten Year Notes" and,
together with the Eight Year Notes, the "Notes"). The Notes will be issued
pursuant to an Indenture to be dated as of April 27, 2004 (the "Indenture")
among the Issuers and Wells Fargo Bank, N.A., as trustee (the "Trustee").
In connection with the sale of the Notes, the Issuers have prepared
an offering memorandum, dated April 20, 2004 (the "Offering Memorandum"). The
Offering Memorandum sets forth certain information concerning the Issuers and
their subsidiaries and the Notes. The Issuers hereby confirm that they have
authorized the use of the Offering Memorandum, and any amendment or supplement
thereto, in connection with the offer and sale of the Notes by the Purchasers.
Pursuant to the Security Documents (as defined in the Offering
Memorandum), the Notes will be secured by a second priority lien on the
Collateral (as defined in the Offering Memorandum), subject to certain
exceptions and otherwise in accordance with the terms of the Indenture and the
Security Documents. The Notes will have the benefit of certain collateral
security as provided in the Security Documents.
The Notes are being issued in connection with the refinancing of
four existing credit facilities of the Company, CC VI Operating Company LLC,
Falcon Cable Communications, LLC and CC VIII Operating Company, LLC. The Company
and CCO Holdings, LLC will enter into an Amended and Restated Credit Agreement,
to be dated as of April 27, 2004, by and among the Company, CCO Holdings, LLC,
the lenders from time to time parties thereto, JPMorgan Chase Bank, as
Administrative Agent, JPMorgan Chase Bank, Bank of America, N.A., Citigroup
North America, Inc. and Credit Suisse First
Boston, acting through its Cayman Islands Branch, as Syndication Agents, and
General Electric Capital Corporation, Credit Lyonnais New York Branch and
Deutsche Bank AG, as Documentation Agents, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time
(the "Credit Facility"). This Agreement, the Notes, the Indenture, the Security
Documents and the agreements and instruments to which the Company of any of its
subsidiaries is a signatory relating to the Credit Facility collectively are
referred to herein as the "Transaction Documents."
1. Representations and Warranties of the Issuers. Each of the
Issuers represent and warrant to, and agree with, each of the Purchasers that:
(a) The Offering Memorandum and any amendments or supplements
thereto does not and will not, as of their respective dates, contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon
and in conformity with information relating to the Purchasers furnished in
writing to the Issuers by or on behalf of a Purchaser through J.P. Morgan
Securities Inc. expressly for use therein;
(b) None of the Issuers or any of their subsidiaries has sustained
since the date of the latest audited financial statements included in the
Offering Memorandum any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Offering Memorandum; and, since the respective
dates as of which information is given in the Offering Memorandum, there has not
been any change in the capital stock or limited liability company interests or
long-term debt of the Issuers or any of their subsidiaries or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial position,
members' or stockholders' equity or results of operations of Charter
Communications, Inc. ("CCI"), Charter Communications Holding Company, LLC ("CCH
LLC"), Charter Communications Holdings, LLC ("Holdings"), CCH I, LLC, CCH II,
LLC and CCO Holdings, LLC ("CCOH" and, collectively with CCI, CCH LLC, Holdings,
CCH I, LLC and CCH II LLC the "Parent Companies"), the Issuers and each of the
Issuers' subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Offering Memorandum;
(c) Each of the Issuers and its subsidiaries has good and
marketable title to all real property and good and valid title to all personal
property owned by it reflected as owned in the financial statements included in
the Offering Memorandum, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Offering Memorandum or except
such as do not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Issuers and
their subsidiaries; and any real property and buildings held under lease by the
Issuers and their subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Issuers and their subsidiaries;
(d) The Company has been duly formed and is validly existing as a
limited liability company in good standing under the laws of the State of
Delaware, and CCO Capital has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware; each of
the Issuers has power and authority to own its properties and conduct its
business as described in the Offering Memorandum and to execute, deliver and
perform its obligations under this Agreement, and has been duly qualified as a
foreign corporation or limited liability company, as the case may be, for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification; and is not
-2-
subject to liability or disability by reason of the failure to be so qualified
in any such jurisdiction, except such as would not, individually or in the
aggregate, have a material adverse effect on the current or future financial
position, members' or stockholders' equity or results of operations of the
Parent Companies, the Issuers and the Issuers' subsidiaries, taken as a whole (a
"Material Adverse Effect"); each Parent Company and each of the Issuers'
subsidiaries has been duly incorporated or formed, as the case may be, and is
validly existing as a corporation, partnership or limited liability company, as
the case may be, in good standing under the laws of its jurisdiction of
incorporation or formation, in each case except such as would, individually or
in the aggregate, not result in a Material Adverse Effect. CCO Capital has no
subsidiaries;
(e) All the outstanding ownership interests of the Issuers have
been duly and validly authorized and issued and are fully paid and
non-assessable; and all the outstanding capital stock, limited liability company
interests or partnership interests, as the case may be, of CCO Capital and each
"significant subsidiary" (as such term is defined in Rule 1-02 of Regulation
S-X) of the Company (each a "Significant Subsidiary") of the Company have been
duly and validly authorized and issued, are fully paid and nonassessable and
(except as otherwise set forth in the Offering Memorandum) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances, equities
or claims;
(f) This Agreement has been duly authorized and executed by each
of the Issuers;
(g) The Notes have been duly authorized and, when executed by the
Issuers and authenticated by the Trustee in accordance with the provisions of
the Indenture and when delivered to, and paid for, by the Purchasers in
accordance with the terms of this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and legally
binding obligations of the Issuers entitled to the benefits provided by the
Indenture under which they are to be issued and enforceable against the Issuers
in accordance with their terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles;
(h) The Indenture has been duly authorized, and when executed and
delivered by the Issuers (assuming the due execution and delivery thereof by the
Trustee), will constitute a valid and legally binding instrument, enforceable
against the Issuers in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles; the
Indenture meets the requirements for qualification under the United States Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"); and the Indenture
conforms in all. material respects to the descriptions thereof in the Offering
Memorandum;
(i) Each Security Document has been duly authorized by each Issuer
party thereto and, when duly executed and delivered by the Issuers (assuming the
due authorization, execution and delivery thereof by the Trustee (as defined in
the Offering Memorandum)), will constitute a valid and legally binding
obligation of each such Issuer in accordance with its terms, enforceable against
it in accordance with its terms except that (i) the enforcement thereof may be
subject, to (A) bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and (B) general
principles of equity, and (ii) any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and public policy
considerations;
(j) The Collateral Agreement, made by the Company in favor of the
Trustee, to be dated as of April 27, 2004 (the "Collateral Agreement"), once
executed and delivered, will create, in favor of the Trustee for the benefit of
the Trustee and the holders of the Notes, a valid and enforceable, and upon the
filing or recording of the appropriate financing statements and similar
instruments with the appropriate governmental authorities (and the payment of
the appropriate filing fees and any applicable
-3-
taxes) and the delivery of the applicable documents to the Trustee in accordance
with the provisions of the Collateral Agreement, a perfected security interest
in all Collateral, superior to and prior to the Liens (as defined in the
Offering Memorandum) of all third persons other than Liens not prohibited by the
Indenture;
(k) Each other Transaction Document to which either of the Issuers
is, or is to be, a party has been duly authorized, executed and delivered by
each Issuer a party thereto in accordance with its terms and, assuming the due
authorization, execution and delivery thereof by the other parties thereto,
constitutes the legal, valid and binding obligation of each such Issuer,
enforceable against each such Issuer in accordance with its terms subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles, whether arising in a court of equity or law;
(l) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of the
Notes) will violate or result in a violation of Section 7 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any regulation
promulgated thereunder, including, without limitation, Regulations T, U, and X
of the Board of Governors of the Federal Reserve System;
(m) Prior to the date hereof, none of the Issuers or any of their
affiliates has taken any action which is designed to or which has constituted or
which might have been expected to cause or result in stabilization or
manipulation of the price of any security of the Issuers in connection with the
offering of the Notes.
(n) The issue and sale of the Notes and the compliance by the
Issuers with all provisions of each of the Transaction Documents, including
those described under the caption "Description of the Notes" and the
consummation of the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, lease, license, franchise agreement, permit or other
agreement or instrument to which the Issuers, the Parent Companies or any of the
Issuers' subsidiaries is a party or by which the Issuers, the Parent Companies
or any of the Issuers' subsidiaries is bound or to which any of the property or
assets of the Issuers, the Parent Companies or any of the Issuers' subsidiaries
is subject, nor will such action result in any violation of any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Issuers, the Parent Companies or any of the Issuers'
subsidiaries or any of their properties, including, without limitation, the
Communications Act of 1934, as amended, the Cable Communications Policy Act of
1984, as amended, the Cable Television Consumer Protection and Competition Act
of 1992, as amended, and the Telecommunications Act of 1996 (collectively, the
"Cable Acts") or any order, rule or regulation of the Federal Communications
Commission (the "FCC"), except where such conflicts, breaches, violations or
defaults would not, individually or in the aggregate, have a Material Adverse
Effect and would not have the effect of preventing the Issuers from performing
any of their respective obligations under this Agreement or any of the other
Transaction Documents to which they are, or are to be, a party; nor will such
action result in any violation of the certificate of formation or limited
liability company agreement of the Company or the certificate of incorporation
or bylaws of CCO Capital; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental agency
or body is required, including, without limitation, under the Cable Acts or any
order, rule or regulation of the FCC, for the issue and sale of the Notes or the
consummation by the Issuers of the transactions contemplated in this paragraph
(n), except such consents, approvals, authorizations, registrations or
qualifications as have been made or except as may be required under state or
foreign securities or Blue Sky laws in connection with the purchase and
distribution of the Notes by the Purchasers and except such as may be required
by the National Association of Securities Dealers, Inc. (the "NASD");
-4-
(o) None of the Issuers, the Parent Companies or any of the
Issuers' subsidiaries is (i) in violation of its certificate of incorporation,
bylaws, certificate of formation, limited liability company agreement,
partnership agreement or other organizational document, as the case may be, (ii)
in default in the performance or observance of-any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease, license, permit or other agreement or instrument to which it
is a party or by which it or any of its properties may be bound or (iii) in
violation of the terms of any franchise agreement, or any law, statute, rule or
regulation or any judgment, decree or order, in any such case, of any court or
governmental or regulatory agency or other body having jurisdiction over the
Issuers, the Parent Companies or any of the Issuers' subsidiaries or any of
their properties or assets, including, without limitation, the Cable Acts or any
order, rule or regulation of the FCC, except, in the case of clauses (ii) and
(iii), such as would not, individually or in the aggregate, have a Material
Adverse Effect;
(p) The statements set forth in the Offering Memorandum under the
captions "Description of the Notes," insofar as it purports to constitute a
summary of the terms of the Notes and under the captions "Risk factors,"
"Business," "Regulation and legislation," "Management," "Certain relationships
and related party transactions," "Description of certain indebtedness" and
"Important United States federal income tax considerations for non-U.S. holders"
insofar as they purport to describe the provisions of the laws, documents and
arrangements referred to therein, are accurate in all material respects;
(q) Other than as set forth in the Offering Memorandum, there are
no legal or governmental proceedings (including, without limitation, by the FCC
or any franchising authority) pending to which the Issuers, the Parent Companies
or any of the Issuers' subsidiaries is a party or of which any property of the
Issuers, the Parent Companies or any of the Issuers' subsidiaries is the subject
which, if determined adversely with respect to the Issuers, any of the Parent
Companies or any of the Issuers' subsidiaries, would, individually or in the
aggregate, have a Material Adverse Effect; and, to the best knowledge of the
Issuers and, except as disclosed in the Offering Memorandum, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others;
(r) Each of the Issuers, the Parent Companies and the Issuers'
subsidiaries carries insurance (including, without limitation, self-insurance)
in such amounts and covering such risks as in the reasonable determination of
the Issuers is adequate for the conduct of its business and the value of its
properties;
(s) Except as set forth in the Offering Memorandum, there is no
strike, labor dispute, slowdown or work stoppage with the employees of any of
the Issuers or their subsidiaries which is pending or, to the best knowledge of
the Issuers, threatened which would, individually or in the aggregate, have a
Material Adverse Effect;
(t) When the Notes are issued and delivered pursuant to this
Agreement, the Notes will not be of the same class (within the meaning of Rule
144A under the Securities Act of 1933, as amended, (the "Act")) as securities
which are listed on a national securities exchange registered under Section 6 of
the Exchange Act or quoted in a U.S. automated inter-dealer quotation system;
(u) Neither Issuer is, or after giving effect to the offering and
sale of the Notes will be, an "investment company" or any entity "controlled" by
an "investment company" as such terms are defined in the U.S. Investment Company
Act of 1940, as amended (the "Investment Company Act");
(v) None of the Issuers or any of their affiliates, nor any person
authorized to act on their behalf (other than the Purchasers, as to whom the
Issuers make no representations) has, directly or
-5-
indirectly, made offers or sales of any security, or solicited offers to buy any
security, under circumstances that would require the registration of the Notes
under the Act;
(w) None of the Issuers or any of the Parent Companies or the
Issuers' subsidiaries, or any person authorized to act on their behalf (other
than the Purchasers, as to whom the Issuers make no representation) has offered
or sold, the Notes by means of any general solicitation or general advertising
within the meaning of Rule 502(c) under the Act or, with respect to Notes sold
outside the United States to non-U.S. persons (as defined in Rule 902 under the
Act), by means of any directed selling efforts within the meaning of Rule 902
under the Act and the Issuers, any affiliate of the Issuers and any person
authorized to act on their behalf (other than the Purchasers, as to whom the
Issuers make no representation) has complied with and will implement the
offering restriction within the meaning of such Rule 902;
(x) Within the preceding six months, none of the Issuers or any
other person authorized to act on their behalf (other than the Purchasers, as to
whom the Issuers make no representation) has offered or sold to any person any
Notes, or any securities of the same or a similar class as the Notes, other than
Notes offered or sold to the Purchasers hereunder. The Issuers will take
reasonable precautions designed to ensure that any offer or sale, direct or
indirect, in the United States or to any U.S. person (as defined in Rule 902
under the Act) of any Notes or any substantially similar security issued by the
Issuers, within six months subsequent to the date on which the distribution of
the Notes has been completed (as notified to the Issuers by J.P. Morgan
Securities Inc.), is made under restrictions and other circumstances reasonably
designed not to affect the status of the offer and sale of the Notes in the
United States and to U.S. persons contemplated by this Agreement as transactions
exempt from the registration provisions of the Act;
(y) The consolidated financial statements (including the notes
thereto) included in the Offering Memorandum present fairly in all material
respects the respective consolidated financial positions, results of operations
and cash flows of the entities to which they relate at the dates and for the
periods to which they relate and have been prepared in accordance with U.S.
generally accepted accounting principles ("GAAP") applied on a consistent basis
(except as otherwise noted therein). The selected historical financial data in
the Offering Memorandum present fairly in all material respects the information
shown therein and, except with respect to the selected historical financial data
for the calendar year ended December 31, 1999 (which has not been restated),
have been prepared and compiled on a basis consistent with the audited financial
statements included therein;
(z) The pro forma financial information included in the Offering
Memorandum (i) complies as to form in all material respects with the applicable
requirements of Regulation S-X for Form S-1 promulgated under the Exchange Act,
and (ii) has been properly computed on the bases described therein; the
assumptions used in the preparation of the pro forma financial information
included in the Offering Memorandum are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or circumstances
referred to therein;
(aa) KPMG LLP, who has certified the financial statements included
in the Offering Memorandum, is a firm of independent public accountants as
required by the Act and the rules and regulations of the Securities and Exchange
Commission (the "Commission") thereunder, based upon representations by such
firm to us;
(bb) The Issuers, the Parent Companies and the Issuers'
subsidiaries own or possess, or can acquire on reasonable terms, adequate
licenses, trademarks, service marks, trade names and copyrights (collectively,
"Intellectual Property") necessary to conduct the business now or proposed to be
operated by each of them as described in the Offering Memorandum, except where
the failure to own, possess or have the ability to acquire any Intellectual
Property would not, individually or in the aggregate,
-6-
have a Material Adverse Effect; and none of the Issuers or any of the Parent
Companies or the Issuers' subsidiaries has received any notice of infringement
of or conflict with (and none actually knows of any such infringement of or
conflict with) asserted rights of others with respect to any Intellectual
Property which, if any such assertion of infringement or conflict were sustained
would, individually or in the aggregate, have a Material Adverse Effect;
(cc) Except as described in the Offering Memorandum, the Issuers,
the Parent Companies and the Issuers' subsidiaries have obtained all consents,
approvals, orders, certificates, licenses, permits, franchises and other
authorizations of and from, and have made all declarations and filings with, all
governmental and regulatory authorities (including, without limitation, the
FCC), all self-regulatory organizations and all courts and other tribunals
legally necessary to own, lease, license and use their respective properties and
assets and to conduct their respective businesses in the manner described in the
Offering Memorandum, except to the extent that the failure to so obtain or file
would not, individually or in the aggregate, have a Material Adverse Effect;
(dd) The Issuers, the Parent Companies and the Issuers'
subsidiaries have filed all necessary federal, state and foreign income and
franchise tax returns required to be filed as of the date hereof, except where
the failure to so file such returns would not, individually or in the aggregate,
have a Material Adverse Effect, and have paid all taxes shown as due thereon;
and there is no tax deficiency that has been asserted against the Issuers or any
of their subsidiaries (other than those which the amount or validity thereof are
currently being challenged in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the relevant entity) that could reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect;
(ee) The Issuers, the Parent Companies and the Issuers'
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences;
(ff) Except as described in the Offering Memorandum: (i) each of
the franchises held by, or necessary for any operations of, the Issuers and
their subsidiaries that are material to the Issuers and their subsidiaries,
taken as a whole, is in full force and effect, with no material restrictions or
qualifications; (ii) to the best knowledge of the Issuers, no event has occurred
which permits, or with notice or lapse of time or both .would permit, the
revocation or non-renewal of any such franchises, assuming the filing of timely
renewal applications and the timely payment of all applicable filing and
regulatory fees to the applicable franchising authority, or which would be
reasonably likely to result, individually or in the aggregate, in any other
material impairment of the rights of the Issuers and the Issuers' subsidiaries
in such franchises; and (iii) the Issuers have no reason to believe that any
franchise that is material to the operation of the Issuers and their
subsidiaries will not be renewed;
(gg) Each of the programming agreements entered into by, or
necessary for any operations of, the Issuers, their Parent Companies or their
subsidiaries that are material to the Issuers and their subsidiaries, taken as a
whole, is in full force and effect (or in any cases where the Issuers or their
subsidiaries and any suppliers of content are operating in the absence of an
agreement, such content providers and the Issuers and their subsidiaries provide
and receive service in accordance with terms that have been agreed to or
consistently acknowledged or accepted by both parties, including, without
limitation, situations in which providers or suppliers of content accept regular
payment for the provision of such content);
-7-
and to the best knowledge of the Issuers, no event has occurred (or with notice
of lapse of time or both would occur) which would be reasonably likely to result
in the early termination or non-renewal of any such programming agreements and
which would, individually or in the aggregate, result in a Material Adverse
Effect; no amendments or other changes to such programming agreements, other
than amendments relating to intra-company transfers, extensions of termination
dates or pricing adjustments, together with other changes that are not in the
aggregate material, have been made to the copies of the programming agreements
provided for the review of the Purchasers or their representatives;
(hh) The Issuers, the Parent Companies and the Issuers'
subsidiaries (i) are in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), (ii) have received all
permits, licenses or other approvals required of `them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to. comply with
the terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, have a Material Adverse Effect;
(ii) Immediately after the consummation of this offering (including
after giving effect to the execution, delivery and performance of this Agreement
and the Indenture and the issuance and sale of the Notes), (i) the fair market
value of the assets of each of Holdings, CCH I, LLC, CCH II, LLC, CCOH and the
Company, each on a consolidated basis with its subsidiaries, exceeds and will
exceed its liabilities, on a consolidated basis with its subsidiaries; (ii) the
present fair saleable value of the assets of each of Holdings, CCH I, LLC, CCH
II, LLC, CCOH and the Company, each on a consolidated basis with its
subsidiaries, exceeds and will exceed its liabilities, on a consolidated basis
with its subsidiaries; (iii) each of Holdings, CCH I, LLC, CCH II, LLC, CCOH and
the Company, each on a consolidated basis with its subsidiaries, is and will be
able to pay its debts, on a consolidated basis with its subsidiaries, as such
debts respectively mature or otherwise become absolute or due; and (iv) each of
Holdings, CCH I, LLC, CCH II, LLC, CCOH and the Company, on a consolidated basis
with its subsidiaries, does not have and will not have unreasonably small
capital with which to conduct its respective operations;
(jj) The Issuers and their Parent Companies each maintain a system
of disclosure controls and procedures to ensure that material information
relating to the Issuers and their Parent Companies, including their consolidated
subsidiaries, is made known to each of them by others within those entities,
particularly during the period in which the periodic reports are being prepared;
(kk) There is, and has been, no failure on the part of the Issuers,
the Parent Companies or the Issuers' subsidiaries, or any of their directors or
officers, in their capacities as such, to comply with any provision of the
Sarbanes Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith, including, without limitation, Section 402 related to
loans and Sections 302 and 906 related to certifications;
(ll) The statistical and market-related data included in the
Offering Memorandum are based on or derived from sources that the Issuers
believe to be reliable and accurate; and
(mm) Each of the relationships and transactions specified in Item
404 of Regulation S-K that would have been required to be described in a
prospectus if this offering had been registered under the Act have been so
described in the Offering Memorandum (exclusive of any amendment or supplement
thereto).
-8-
2. Purchase and Sale. (a) Subject to the terms and conditions
herein set forth, the Issuers agree to issue and sell to each of the Purchasers,
and each of the Purchasers agrees, severally and not jointly, to purchase from
the Issuers the principal amount of the Eight Year Notes set forth opposite the
name of such Purchaser in Schedule I hereto, at an aggregate purchase price of
$1,079,375,000 (representing 98.125% of the gross proceeds thereof).
(b) Subject to the terms and conditions herein set forth, the
Issuers agree to issue and sell to each of the Purchasers, and each of the
Purchasers agrees, severally and not jointly, to purchase from the Issuers the
principal amount of the Ten Year Notes set forth opposite the name of such
Purchaser in Schedule I hereto, at an aggregate purchase price of $392,500,000
(representing 98.125% of the gross proceeds thereof).
3. Representations, Warranties and Covenants of the Purchasers.
Upon the authorization by you of the release of the Notes, the several
Purchasers propose to offer the Notes for sale upon the terms and conditions set
forth in this Agreement and the Offering Memorandum and each Purchaser,
severally and not jointly, hereby represents and warrants to, and agrees with
the Issuers that:
(a) It will offer and sell the Notes only: (i) to persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within the
meaning of Rule 144A under the Act in transactions meeting the requirements of
Rule 144A or (ii) upon the terms and conditions set forth in Annex I to this
Agreement;
(b) It is an institutional "accredited investor" within the
meaning of Regulation D under the Act; and
(c) It has not offered and will not offer or sell the Notes by any
form of general solicitation or general advertising, including, without
limitation, the methods described in Rule 502(c) under the Act.
4. Delivery and Payment.
(a) The Notes to be purchased by each Purchaser hereunder will be
represented by definitive global Notes in book-entry form which will be
deposited by or on behalf of the Issuers with The Depository Trust Company
("DTC") or its designated custodian. The Issuers will deliver the Notes to J.P.
Morgan Securities Inc., for the account of each Purchaser, against payment by or
on behalf of such Purchaser of the purchase price therefor by wire transfer of
same day funds wired in accordance with the written instructions of the Company,
by causing DTC to credit the Notes to the account of J.P. Morgan Securities Inc.
at DTC. The Issuers will cause the certificates representing the Notes to be
made available to J.P. Morgan Securities Inc. for checking at least twenty-four
hours prior to the Time of Delivery at the office of DTC or its designated
custodian (the "Designated Office"). The time and date of such delivery and
payment shall be 9:30 a.m., New York City time, on April 27, 2004 or such other
time and date as J.P. Morgan Securities Inc. and the Issuers may agree upon in
writing. Such time and date are herein called the "Time of Delivery."
(b) The documents to be delivered at the Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including, without
limitation, the cross-receipt for the Notes and any additional documents
requested by the Purchasers pursuant to Section 7(l) hereof, will be delivered
at such time and date at the offices of Cahill Gordon & Reindel LLP, 80 Pine
Street, New York, New York 10005 or such other location as the parties mutually
agree (the "Closing Location"), and the Notes will be delivered at the
Designated Office, all at the Time of Delivery. A meeting will be held at the
Closing Location at 6 p.m., New York City time, on the New York Business Day
next preceding the Time of Deliv-
-9-
ery, at which meeting the final drafts of the documents to be delivered pursuant
to the preceding sentence will be available for review by the parties hereto.
For the purposes of this Section 4, "New York Business Day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
5. Agreements. Each of the Issuers agrees with each of the
Purchasers:
(a) To prepare the Offering Memorandum in a form approved by you;
to make no amendment or any supplement to the Offering Memorandum which shall
not be approved by you promptly after reasonable notice thereof; and to furnish
you with copies thereof;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Notes for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Notes; provided that in connection therewith the Issuers shall not be
required to qualify as a foreign corporation or limited liability company, as
the case may be, or to file a general consent to service of process in any
jurisdiction;
(c) To furnish the Purchasers with copies of the Offering
Memorandum and each amendment or supplement thereto signed by an authorized
officer of each of the Issuers with the independent accountants' reports in the
Offering Memorandum, and any amendment or supplement containing amendments to
the financial statements covered by such reports, signed by the accountants, and
additional copies thereof in, such quantities as you may from time to time
reasonably request, and if, at any time prior to the expiration of nine months
after the date of the Offering Memorandum, any event shall have occurred as a
result of which the Offering Memorandum as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Offering Memorandum is
delivered, not misleading, or, if for any other reason it shall be necessary or
desirable during such same period to amend or supplement the Offering
Memorandum, to notify you and upon your request to prepare and furnish without
charge to each Purchaser and to any dealer in securities as many copies as you
may from time to time reasonably request of an amended Offering Memorandum or a
supplement to the Offering Memorandum which will correct such statement or
omission or effect such compliance;
(d) During the period beginning from the date hereof and
continuing until the date 90 days after the Time of Delivery, not to, and not
permit any of its affiliates or anyone authorized to act on behalf of the
Issuers or their affiliates to, without the prior written consent of J.P. Morgan
Securities Inc., offer, sell, contract to sell or otherwise dispose of, except
as provided hereunder, any securities of the Issuers that are substantially
similar to the Notes;
(e) Not to be or become, at any time prior to the expiration of
two years after the Time of Delivery, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act;
(f) At any time when any Issuer is not subject to or in compliance
with Section 13 or 15(d) of the Exchange Act, for the benefit of holders from
time to time of Notes, to furnish at the Issuers' expense, upon request, to
holders of Notes and prospective purchasers of securities information (the
"Additional Issuer Information") satisfying the requirements of subsection
(d)(4)(i) of Rule 144A under the Act;
-10-
(g) If such documents are not then available on the Commission's
EDGAR Database, to furnish or make electronically available to the holders of
the Notes as soon as practicable after the end of each fiscal year an annual
report (including a balance sheet and statements of income, members' or
stockholders' equity and cash flows of the Issuers and their consolidated
subsidiaries certified by independent public accountants), and, as soon as
practicable after the end of each of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending after the date of the Offering
Memorandum), to make electronically available to holders of the Notes
consolidated summary financial information of the Issuers and their subsidiaries
for such quarter in reasonable detail;
(h) If such documents are not then available on the Commission's
EDGAR Database, during a period of three years from the date of the Offering
Memorandum, to furnish or make electronically available to you, copies of all
reports or other communications (financial or other) furnished to holders of
ownership interests of the Issuers or CCI, and to furnish or make electronically
available to you, as soon as they are available, of any reports and financial
statements furnished to or filed with the Commission or any securities exchange
on which the Notes or any class of securities of the Issuers or CCI is listed;
(i) During the period of two years after the Time of Delivery, the
Issuers will not, and will not permit any of their "affiliates" (as defined in
Rule 144 under the Act) to, resell any of the Notes which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them;
(j) To use the net proceeds received from the sale of the Notes
pursuant to this Agreement in the manner specified in the Offering Memorandum
under the caption "Use of proceeds";
(k) None of the Issuers or any of their affiliates, nor any person
authorized to act on their behalf (other than the Purchasers, as to whom the
Issuers take no responsibility) will engage in any directed selling efforts with
respect to the Notes in contravention of, and each of them will comply with, the
applicable offering restrictions requirement of Regulation S. Terms used in this
paragraph have the meanings given to them by Regulation S;.
(l) None of the Issuers or any of their affiliates, nor any person
authorized to act on their behalf (other than the Purchasers, as to whom the
Issuers take no responsibility) will, directly or indirectly, make offers or
sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Notes under the Act;
(m) None of the Issuers or any of their affiliates, nor any person
authorized to act on their behalf (other than the Purchasers, as to whom the
Issuers take no responsibility), will engage in any form of general solicitation
or general advertising (within the meaning of Regulation D) in connection with
any offer or sale of the Notes in the United States;
(n) Except as otherwise permitted by Regulation M under the
Exchange Act, none of the Issuers or any of their affiliates will take, directly
or indirectly, any action designed to or which has constituted or which would
reasonably be expected to cause or result, under the Exchange Act or otherwise,
in stabilization or manipulation of the price of any security of the Issuers to
facilitate the sale or resale of the Notes; and
(o) The Issuers will use their best efforts prior to the Time of
Delivery to cause the Notes to be eligible for the PORTAL trading system of the
NASD.
6. Agreement to Pay Certain Fees. Each of the Issuers covenants
and agrees with the several Purchasers that the Issuers will pay or cause to be
paid the following: (i) the fees, disburse-
-11-
ments and expenses of the Issuers' counsel and accountants in connection with
the issue of the Notes and all other expenses in connection with the
preparation, printing and filing of the Offering Memorandum and any amendments
and supplements thereto and the mailing and delivering of copies thereof to the
Purchasers and dealers; (ii) the cost of printing or producing any Agreement
among Purchasers, this Agreement, the Indenture, the Notes, the Security
Documents, the Blue Sky and Legal Investment Memoranda, closing documents
(including, without limitation, any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Notes; (iii) all expenses in connection with the qualification of the Notes for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including, without limitation, the fees and disbursements of counsel for
the Purchasers in connection with such qualification and in connection with the
Blue Sky and Legal Investment surveys; (iv) any fees charged by securities
rating services for rating the Notes; (v) the cost of preparing the Notes; (vi)
the fees and expenses of the Trustee and any agent of the Trustee and the fees
and disbursements of counsel for the Trustee in connection with the Indenture
and the Notes; (vii) any cost incurred in connection with the designation of the
Notes for trading in PORTAL; (viii) all costs associated with the grant of the
security interests to be obtained under the Indenture and the Security Documents
including, without limitation, the preparation of the financing statement
referred to in Section 7(k) (including the reasonable expenses of counsel for
the Purchasers) and all filing fees and similar taxes; and (ix) all other costs
and expenses incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section. It is understood,
however, that, except as provided in this Section 6 and Sections 9 and 12
hereof; the Purchasers will pay all their own costs and expenses, including,
without limitation, the fees of their counsel, transfer taxes on resale of any
of the Notes by them, and any advertising expenses connected with any offers
they may make.
7. Conditions to the Obligations of the Purchasers. The
obligations of the Purchasers hereunder shall be subject, in their discretion,
to the condition that all representations and warranties and other statements of
the Issuers herein are, at and as of the date hereof and the Time of Delivery,
true and correct, the condition that the Issuers shall have performed all their
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Purchasers shall have received from Cahill Gordon &
Reindel LLP, counsel for the Purchasers, such opinion or opinions, dated the
Time of Delivery and addressed to the Purchasers, with respect to the issuance
and sale of the Notes and the Indenture and other related matters as the
Purchasers may reasonably require, and the Issuers shall have furnished to such
counsel such documents as they request for the purpose of enabling them to pass
upon such matters.
(b) Irell & Manella LLP, counsel for the Issuers, shall have
furnished to you their written opinions, dated the Time of Delivery,
substantially in the forms of Annex II-A and II-B hereto.
(c) Cole, Raywid & Braverman, L.L.P., special regulatory counsel
to the Issuers, shall have furnished to you their written opinion, dated the
Time of Delivery, in form and substance reasonably satisfactory to you, to the
effect that:
(i) The issue and sale of the Notes and the compliance by
the Issuers with all the provisions of the Notes, the Indenture, the
Security Documents and this Agreement and the consummation of the
transactions herein and therein contemplated do not and will not
contravene the Cable Acts or any order, rule or regulation of the FCC to
which the Issuers or any of their Parent Companies or subsidiaries or any
of their property is subject; however, to the extent that any document
purports to grant a security interest in licenses issued by the FCC, the
FCC has taken the position that security interests in FCC licenses are not
valid. To the extent that any party seeks to exercise control of an FCC
license in the event of a default or for any other reason, it may be
necessary to obtain prior FCC consent;
-12-
(ii) To the best of such counsel's knowledge, no consent,
approval, authorization or order of, or registration, qualification or
filing with the FCC is required under the Cable Acts or any order, rule or
regulation of the FCC in connection with the issue and sale of the Notes
and the compliance by the Issuers with all the provisions of the Notes,
the Indenture, the Security Documents and this Agreement and the
consummation of the transactions herein and therein contemplated; however,
to the extent that any document purports to grant a security interest in
licenses issued by the FCC, the FCC has taken the position that security
interests in FCC licenses are not valid; to the extent that any party
seeks to exercise control of an FCC license in the event of a default or
for any other reason, it may be necessary to obtain prior FCC consent;
(iii) The statements set forth in the Offering Memorandum
under the captions "Risk factors" under the subheading "Risks relating to
regulatory and legislative matters" and in "Regulation and legislation,"
insofar as they constitute summaries of laws referred to therein,
concerning the Cable Acts and the published rules, regulations and
policies promulgated by the FCC thereunder, fairly summarize the matters
described therein;
(iv) To such counsel's knowledge based solely upon its review
of publicly available records of the FCC and operational information
provided by the Issuers' and their Parent Companies and subsidiaries'
management, the Company and its Parent Companies and subsidiaries hold all
FCC licenses for cable antenna relay services necessary to conduct the
business of the Company and its subsidiaries as currently conducted,
except to the extent the failure to hold such FCC licenses would not,
individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect; and
(v) Except as disclosed in the Offering Memorandum and
except with respect to rate regulation matters, and general rulemakings
and similar matters relating generally to the cable television, industry,
to such counsel's knowledge, based solely upon its review of the publicly
available records of the FCC and upon inquiry of the Issuers' and their
Parent Companies' and subsidiaries' management, during the time the cable
systems of the Company and its Parent Companies and subsidiaries have been
owned by the Company and its Parent Companies and subsidiaries (A) there
has been no adverse FCC judgment, order or decree issued by the FCC
relating to the ongoing operations of any of the Company or one of its
subsidiaries that has had or could reasonably be expected to have a
Material Adverse Effect; and (B) there are no actions, suits, proceedings,
inquiries or investigations by or before the FCC pending or threatened in
writing against or specifically affecting the Company or any of its Parent
Companies or subsidiaries or any cable system of the Company or any of its
Parent Companies or subsidiaries which could, individually or in the
aggregate, be reasonably expected to result in a Material Adverse Effect;
(d) Curtis Shaw, Esq., General Counsel of the Company, shall have
furnished to you his written opinion, dated as of the Time of Delivery, in form
and substance satisfactory to you, to the effect that:
(i) Each subsidiary of the Company listed on a schedule
attached to such counsel's opinion (the "Charter Subsidiaries") has been
duly incorporated or formed, as the case may be, and is validly existing
as a corporation, limited liability company or partnership, as the case
may be, in good standing under the laws of its jurisdiction of
incorporation or formation; and all the issued shares of capital stock,
limited liability company interests or partnership interests, as the case
may be, of each Charter Subsidiary are set forth on the books and records
of the Company and, except for those Charter Subsidiaries that are general
partners, assuming receipt of requisite consideration therefor, are fully
paid and nonassessable (in the case of corporate entities) and not subject
to additional capital contributions (in the case of limited liability
company entities
-13-
and limited partnerships); and, except as otherwise set forth in the
Offering Memorandum, and except for liens not prohibited under the credit
agreements listed on such schedule, all outstanding shares of capital
stock of each of the Charter Subsidiaries are owned by the Company, either
directly or indirectly or through wholly-owned subsidiaries free and clear
of any perfected security interest and, to the knowledge of such counsel,
after due inquiry, any other security interest, claim, lien or
encumbrance;
(ii) Each of the Issuers and the Charter Subsidiaries has
been duly qualified as a foreign corporation, partnership or limited
liability company, as the case may be, for the transaction of business and
is in good standing under the laws of each jurisdiction set forth in a
schedule to such counsel's opinion;
(iii) To the best of such counsel's knowledge and other than
as set forth in the Offering Memorandum, there are no legal or
governmental proceedings pending to which the Issuers, the Parent
Companies or any of the Issuers' subsidiaries is party or of which any
property of the Issuers, the Parent Companies or any of the Issuers'
subsidiaries is the subject, of a character required to be disclosed in a
registration statement on Form S-1, which is not disclosed in the Offering
Memorandum, except for such proceedings which are not likely to have,
individually or in the aggregate, a Material Adverse Effect; and, to the
best of such counsel's knowledge and other than as set forth in the
Offering Memorandum, no such proceedings are overtly threatened by
governmental authorities or by others; and
(iv) The issue and sale of the Notes and the compliance by
the Issuers with all the provisions of the Notes, the Indenture, the
Security Documents and this Agreement and the consummation of the
transactions therein contemplated will not result in a violation of the
provisions of the certificate of incorporation or by-laws, or certificate
of formation or limited liability company agreement or partnership
agreement, as the case may be, of any of the Charter Subsidiaries;
(e) On the date of the Offering Memorandum and also at the Time of
Delivery, KPMG LLP shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory to you;
(f) (i) None of the Issuers, any of the Parent Companies or any of
the Issuers' subsidiaries shall have sustained since the date of the latest
audited financial statements included in the Offering Memorandum any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Offering
Memorandum, and (ii) since the respective dates as of which information is given
in the Offering Memorandum (for clarification purposes, this excludes any
amendment or supplement to the Offering Memorandum on or after the date of this
Agreement) there shall not have been any change in the capital stock, limited
liability company interests, partnership interests or long-term debt of the
Issuers or any of their subsidiaries or any change, or any development involving
a prospective change, in or affecting the general affairs, management, financial
position, stockholders' or members' equity, or results of operations of the
Issuers and their subsidiaries, otherwise than as set forth or contemplated in
the Offering Memorandum, the effect of which, in any such case described in
clause (i) or (ii), is in the judgment of the Purchasers so material and adverse
as to make it impracticable or inadvisable to proceed with the offering or the
delivery of the Notes on the terms and in the manner contemplated in this
Agreement and in the Offering Memorandum;
(g) Subsequent to the execution and delivery of this Agreement,
(i) no downgrading shall have occurred in the rating accorded the Notes or any
other debt securities or preferred stock issued
-14-
or guaranteed by the Issuers by any "nationally recognized statistical rating
organization," as such term is defined by the 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, or has changed its outlook
with respect to, its rating of the Notes or of any other debt securities or
preferred stock issued or guaranteed by the Issuers (other than an announcement
with positive implications of a possible upgrading);
(h) On or after the date hereof there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or on the Nasdaq National
Market; (ii) a suspension or material limitation in trading in CCI's Class A
common stock on the Nasdaq National Market, (iii) a general moratorium on
commercial banking activities declared by either Federal or New York State
authorities; or (iv) the outbreak or escalation of hostilities or the
declaration of a national emergency or war or the occurrence of any other
calamity or crisis, if the effect of any such event specified in this clause
(iv) in the judgment of the Purchasers makes it impracticable or inadvisable to
proceed with the offering; sale or the delivery of the Notes on the terms and in
the manner contemplated in the Offering Memorandum;
(i) The Notes shall have been designated for trading on PORTAL;
(j) The Credit Facility shall have been executed by the respective
parties thereto and shall be in form and substance substantially similar to that
described in the Offering Memorandum;
(k) The Purchasers and the Trustee shall have received each of the
following documents which shall be reasonably satisfactory in form and substance
to J.P. Morgan Securities Inc. and the Trustee and each of their respective
counsel with respect to each item of Collateral, as appropriate:
(i) each Security Document;
(ii) to the extent delivered to the agents under the Credit
Facility, Uniform Commercial Code, judgment, tax lien and intellectually
property searches;
(iii) any UCC-1 financing statement required by the Collateral
Agreement to be filed in order to create in favor of the Trustee for the
benefit of the holders of the Notes, a perfected lien on the collateral
described therein;
(iv) to the extent delivered to the agents under the Credit
Facility, any certificate of an officer of any Parent Company or any
subsidiary of a Parent Company relating to the Collateral (which shall
also be addressed to each of the Purchasers and the Trustee); and
(v) opinions from all local and foreign counsel who deliver
opinions to the Bank Agents (as defined in the Offering Memorandum) (which
opinions shall be addressed to the Purchasers and the Trustee), which
opinions shall address, with respect to the Collateral and the Notes, the
matters addressed with respect to the Credit Facility with only such
modifications as are necessary to reflect the relative priority of the
Notes as contemplated by the Offering Memorandum and the Transaction
Documents and otherwise satisfactory to J.P. Morgan Securities Inc., the
Trustee and each of their respective counsel; and
(l) The Issuers shall have furnished or caused to be furnished to
you at the Time of Delivery certificates of officers of each Issuer satisfactory
to you as to the accuracy of the representations and warranties of the Issuers
herein at and as of such Time of Delivery, as to the performance by the Issuers
of all their obligations hereunder to be performed at or prior to such Time of
Delivery, as to the mat-
-15-
ters set forth in subsections (f) and (g) of this Section 7 and as to such other
matters as you may reasonably request.
8. Conditions to the Obligations of the Issuers. The obligations
of the Issuers hereunder shall be subject to the satisfaction of the condition
set forth in Section 7(j) above.
9. Indemnification and Contribution.
(a) Indemnification of the Purchasers. The Issuers jointly and
severally agree to indemnify and hold harmless each Purchaser, its affiliates,
directors and officers and each person, if any, who controls such Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities (including,
without limitation, reasonable legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted, as such
fees and expenses are incurred), joint or several, that arise out of, or are
based upon, any untrue statement or alleged untrue statement of a material fact
contained in the Offering Memorandum (or any amendment or supplement thereto) or
any omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except insofar as such losses, claims,
damages or liabilities arise out of, or are based upon, any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to any Purchaser furnished to the
Issuers in writing by such Purchaser through J.P. Morgan Securities Inc.
expressly for use therein.
(b) Indemnification of the Issuers. Each Purchaser agrees,
severally and not jointly, to indemnify and hold harmless each Issuer, its
affiliates, officers, directors, employees, members, managers and agents, and
each person, if any, who controls an Issuer within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act to the same extent as the indemnity
set forth in paragraph (a) above, but only with respect to any losses, claims,
damages or liabilities that arise out of, or are based upon, any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with any information relating to such Purchaser furnished
to the Issuers in writing by such Purchaser through J.P. Morgan Securities Inc.
expressly for use in the Offering Memorandum (or any amendment or supplement
thereto), it being understood and agreed that the only such information consists
of the following: the statements set forth in the last paragraph of the cover
page regarding the delivery of the Notes, and under the heading "Plan of
distribution," the paragraph related to over-allotment, covering and
stabilization transactions.
(c) Notice and Procedures. If any suit, action, proceeding
(including any governmental or regulatory investigation), claim or demand shall
be brought or asserted against any person in respect of which indemnification
may be sought pursuant to either paragraph (a) or (b) above, such person (the
"Indemnified Person") shall promptly notify the person against whom such
indemnification may be sought (the "Indemnifying Person") in writing; provided
that the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have under this Section 9 except to the extent that it has
been materially prejudiced (through the forfeiture of substantive rights or
defenses) by such failure; and provided, further, that the failure to notify the
Indemnifying Person shall not relieve it from any liability that it may have to
an Indemnified Person otherwise than under this Section 9. If any such
proceeding shall be brought or asserted against an Indemnified Person and it
shall have notified the Indemnifying Person thereof, the Indemnifying Person
shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others entitled to indemnification
pursuant to this Section 9 that the Indemnifying Person may designate in such
proceeding and shall pay the reasonable fees and expenses of such counsel
related to such proceeding, as incurred. In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Person unless (i)
the Indemnifying Person and the Indem-
-16-
nified Person shall have mutually agreed to the contrary; (ii) the Indemnifying
Person has failed within a reasonable time to retain counsel reasonably
satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have
reasonably concluded that there may be legal defenses available to it which if
raised in a proceeding involving both parties would be inappropriate under
applicable legal or ethical standards due to actual or potential differing
interests between it and the Indemnifying Person; or (iv) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate under applicable legal or
ethical standards due to actual or potential differing interests between them.
It is understood and agreed that the Indemnifying Person shall not, in
connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons, and that all such reasonable
fees and expenses shall be reimbursed as they are incurred. Any such separate
firm for any Purchaser, its affiliates, directors and officers and any control
persons of such Purchaser shall be designated in writing by J.P. Morgan
Securities Inc. and any such separate firm for the Issuers and any control
persons of the Issuers shall be designated in writing by the Issuers. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, not subject to further appeal, the
Indemnifying Person agrees to indemnify each Indemnified Person from and against
any loss or liability provided for in such settlement or judgment. No
Indemnifying Person shall, without the written consent of the Indemnified Person
(which shall not be unreasonably withheld), effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnification could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an unconditional release
of such Indemnified Person, in form and substance reasonably satisfactory to
such Indemnified Person, from all liability on claims that are the subject
matter of such proceeding and (y) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf of such
Indemnified Person.
(d) Contribution. If the indemnification provided for in
paragraphs (a) and (b) above is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Issuers on the one hand and the Purchasers on
the other from the offering of the Notes or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
but also the relative fault of the Issuers on the one hand and the Purchasers on
the other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Issuers on the one hand
and the Purchasers on the other shall be deemed to be in the same respective
proportions as the net proceeds (before deducting expenses) received by the
Issuers from the sale of the Notes and the total discounts and commissions
received by the Purchasers in connection therewith, as provided in this
Agreement, bear to the aggregate offering price of the Notes. The relative fault
of the Issuers on the one hand and the Purchasers on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Issuers or by the
Purchasers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) Limitation on Liability. The Issuers and the Purchasers agree
that it would not be just and equitable if contribution pursuant to this Section
9 were determined by pro rata allocation (even if the Purchasers were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (d) above.
The amount paid or
-17-
payable by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such Indemnified Person in connection with any such action or claim.
Notwithstanding the provisions of this Section 9, in no event shall a Purchaser
be required to contribute any amount in excess of the amount by which the total
discounts and commissions received by such Purchaser with respect to the
offering of the Notes exceeds the amount of any damages that such Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Purchasers' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective purchase obligations
hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this
Section 9 are not exclusive and shall not limit any rights or remedies that may
otherwise be available to any Indemnified Person at law or in equity.
10. Default by a Purchaser.
(a) If any Purchaser shall default in its obligation to purchase
the Notes which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Notes on the
terms contained herein. If within thirty-six hours after such default by any
Purchaser you do not arrange for the purchase of such Notes, then the Issuers
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to you to purchase such
Notes on such terms. In the event that, within the respective prescribed
periods, you notify the Issuers. that you have so arranged for the purchase of
such Notes, or the Issuers notify you that they have so arranged for the
purchase of such Notes, you or the Issuers shall have the right to postpone the
Time of Delivery for a period of not more than seven days, in order to effect
whatever changes may thereby be made necessary in the Offering Memorandum, or in
any other documents or arrangements, and the Issuers agree to prepare promptly
any amendments to the Offering Memorandum which in your opinion may thereby be
made necessary. The term "Purchaser" as used in this Agreement shall include any
person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Notes.
(b) If, after giving effect to any arrangements for the purchase
of the Notes of a defaulting Purchaser or Purchasers by you and the Issuers as
provided in subsection (a) above, the aggregate principal amount of such Notes
which remains unpurchased does not exceed one-tenth of the aggregate principal
amount of all the Notes, then the Issuers shall have the right to require each
non-defaulting Purchaser to purchase the principal amount of Notes which such
Purchaser agreed to purchase hereunder and, in addition, to require each
non-defaulting Purchaser to purchase its pro rata share (based on the principal
amount of Notes which such Purchaser agreed to purchase hereunder) of the Notes
of such defaulting Purchaser or Purchasers for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Purchaser from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase
of the Notes of a defaulting Purchaser or Purchasers by you and the Issuers as
provided in subsection (a) above, the aggregate principal amount of Notes which
remains unpurchased exceeds one-tenth of the aggregate principal amount of all
the Notes, or if the Issuers shall not exercise the right described in
subsection (b) above to require non-defaulting Purchasers to purchase Notes of a
defaulting Purchaser or Purchasers, then this Agreement shall thereupon
terminate, without liability on the part of any non-defaulting Purchaser or the
Issuers, except for the expenses to be borne by the Issuers and the Purchasers
as provided in Section 6
-18-
hereof and the indemnity and contribution agreements in Section 9 hereof; but
nothing herein shall relieve a defaulting Purchaser from liability for its
default.
11. Representations and Indemnities to Survive. The respective
indemnities, agreements, representations, warranties and other statements of the
Issuers and the several Purchasers, as set forth in this Agreement or made by or
on behalf of them, respectively, pursuant to this Agreement, shall remain in
full force and effect, regardless of any investigation (or any statement as to
the results thereof) made by or on behalf of any Purchaser or any controlling
person of any Purchaser, or the Issuers, or any officer or director or
controlling person of the Issuers, and shall survive delivery of and payment for
the Notes.
12. Termination. If this Agreement shall be terminated pursuant to
Section 10 hereof, the Issuers shall not then be under any liability to any
Purchaser except as provided in Sections 6 and 9 hereof; but, if for any other
reason other than a termination pursuant to clauses (i), (iii) or (iv) of
Section 7(h), the Notes are not delivered by or on behalf of the Issuers as
provided herein, the Issuers will reimburse the Purchasers through you for all
out-of-pocket expenses approved in writing by you, including, fees and
disbursements of counsel, reasonably incurred by the Purchasers in making
preparations for the purchase, sale and delivery of the Notes, but the Issuers
shall then be under no further liability to any Purchaser except as provided in
Sections 6 and 9 hereof.
13. Reliance and Notices. In all dealings hereunder, you shall act
on behalf of each of the Purchasers, and the parties hereto shall be entitled to
act and rely upon any statement, request, notice or agreement on behalf of any
Purchaser made or given by you jointly or by J.P. Morgan Securities Inc. on
behalf of you as Purchasers.
All statements, requests, notices and agreements hereunder shall be
in writing, and if to the Purchasers (or any of them) shall be delivered or sent
by mail, telex or facsimile transmission to you as Purchasers (or a Purchaser)
to J.P. Morgan Securities Inc., Attn: James P. Casey, Managing Director, 270
Park Avenue, New York, New York 10017 (fax: (212) 270-1063), and if to the
Issuers shall be delivered or sent by mail, telex or facsimile transmission to
the address of the Issuers set forth in the Offering Memorandum, Attention:
Secretary. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
14. Successors. This Agreement shall be binding upon, and inure
solely to the benefit of, the Purchasers, the Issuers, and, to the extent
provided in Sections 9 and 11 hereof, the officers and directors of the Issuers
and the Purchasers and each person who controls the Issuers or any Purchaser,
and their respective heirs, executors, administrators, successors and assigns,
and no other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Notes from any Purchaser shall be deemed a
successor or assign by reason merely of such purchase.
15. Timeliness. Time shall be of the essence in this Agreement.
16. Applicable Law. This Agreement shall be governed by and
construed in. accordance with the laws of the State of New York.
17. Counterparts. This Agreement may be executed by any one or
more of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such respective counterparts shall together
constitute one and the same instrument.
-19-
If the foregoing is in accordance with your understanding, please
sign and return to us counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Purchasers, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Purchasers and the
Issuers. It is understood that your acceptance of this letter on behalf of each
of the Purchasers is pursuant to the authority set forth in a form of Agreement
among Purchasers, the form of which shall be submitted to the Issuers for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
CHARTER COMMUNICATIONS OPERATING, LLC
By: /s/ Eloise E. Schmitz
-----------------------------------
Name: Eloise E. Schmitz
Title: Vice President
CHARTER COMMUNICATIONS OPERATING
CAPITAL CORP.
By: /s/ Eloise Schmitz
------------------------------------
Name: Eloise E. Schmitz
Title: Vice President
-20-
Accepted as of the date hereof
J.P. MORGAN SECURITIES INC.
Acting severally on behalf of themselves
and the several Purchasers named
in Schedule I hereto.
By: /s/ Daniel M. Hochstadt
-----------------------------------
Name: Daniel M. Hochstadt
Title: Vice President
-21-
SCHEDULE I
Principal Amount of Eight Year Principal Amount of Ten Year
Purchasers Notes to be Purchased Notes to be Purchased
---------- --------------------- ---------------------
J.P. Morgan Securities Inc. US $291,500,000 US $106,000,000
Banc of America Securities LLC 165,000,000 60,000,000
Citigroup Global Markets Inc. 165,000,000 60,000,000
Credit Suisse First Boston LLC 165,000,000 60,000,000
Credit Lyonnais Securities (USA) Inc. 82,500,000 30,000,000
Deutsche Bank Securities Inc. 68,750,000 25,000,000
BNP Paribas Securities Corp. 22,000,000 8,000,000
BNY Capital Markets, Inc. 19,250,000 7,000,000
Rabo Securities USA, Inc. 19,250,000 7,000,000
Scotia Capital (USA) Inc. 19,250,000 7,000,000
ABN AMRO Incorporated 16,500,000 6,000,000
Harris Nesbitt Corp. 16,500,000 6,000,000
Morgan Stanley & Co. Incorporated 16,500,000 6,000,000
RBC Capital Markets Corporation 16,500,000 6,000,000
SG Cowen Securities Corp. 16,500,000 6,000,000
----------------- ---------------
Total........................ US $1,100,000,000 US $400,000,000
================= ===============
ANNEX I
Selling Restrictions for Offers and
Sales outside the United States
(1)(a) The Securities have not been and will not be registered under
the Act and may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons except in. accordance with Regulation S
under the Act or pursuant to an exemption from the registration requirements of
the Act. Each Purchaser represents and agrees that, except as otherwise
permitted under Section 3(a)(i) of the Agreement to which this is an annex, it
has offered and sold the Securities, and will offer and sell the Securities, (i)
as part of their distribution at any time; and (ii) otherwise until 40 days
after the later of the commencement of the offering and the Time of Delivery,
only in accordance with Rule 903 of Regulation S under the Act. Accordingly,
each Purchaser represents and agrees that neither it, nor any of its affiliates
nor any person acting on its or their behalf has engaged or will engage in any
directed selling efforts with respect to the Securities, and that it and they
have complied and will comply with the offering restrictions requirement of
Regulation S. Each Purchaser agrees that, at or prior to the confirmation of
sale of Securities (other than a sale of Securities pursuant to Section 3(a)(i)
of the Agreement to which this is an annex), it shall have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Securities from it during the distribution
compliance period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Act") and may not be
offered or sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of their distribution at any
time or (ii) otherwise until 40 days after the later of the
commencement of the offering and April 27, 2004, except in either
case in accordance with Regulation S or Rule 144A under the Act.
Terms used above have the meanings given to them by Regulation S."
(b) Each Purchaser also represents and agrees that it has not
entered and will not enter into any contractual arrangement with any distributor
with respect to the distribution of the Securities, except with its affiliates
or with the prior written consent of the Company.
(c) Terms used in this section have the meanings given to them by
Regulation S.
(2) Each Purchaser represents and agrees that:
(a) It has not offered or sold and prior to the expiry of the
period of six months from the closing of the offering of the Securities, will
not offer or sell any Securities to persons in the United Kingdom, except to
persons whose ordinary activities involve them in acquiring, holding, managing
or disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances that have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995.
(b) It has only communicated or caused to be communicated and will
only communicate or cause to be communicated any invitation or inducement to
engage in investment activity (within the meaning of section 21 of the Financial
Services and Markets Act 2000 ("FSMA")) received by it in connection with the
issue or sale of any Securities or Exchange Notes in circumstances in which
section 21(1) of the FSMA does not apply to the Company.
(c) It has complied and will comply with all applicable provisions
of the FSMA with respect to anything done by it in relation to the Securities or
Exchange Notes in, from or otherwise involving the United Kingdom.
(d) The offer in the Netherlands of the Securities or Exchange
Notes is exclusively limited to persons who trade or invest in securities in the
conduct of a profession or business (which includes banks, stockbrokers,
insurance companies, pension funds, other institutional investors and finance
companies and treasury departments of large enterprises).
(3) Each Purchaser agrees that it will not offer, sell or deliver
any of the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Securities in such jurisdictions. Each Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. Each Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities, except in any such case
with the express written consent of J.P. Morgan Securities Inc. and then only at
such Purchaser's own risk and expense.
-2-