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o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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same may be amended from time to time, the “Disclosure Statement”), each of which shall be consistent with the Term Sheet, the following sets forth the agreement between the Parties concerning their respective obligations.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the promises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

 

1. Term Sheet.

 

The Term Sheet is incorporated by reference herein and is made part of this Agreement as if fully set forth herein.  The general terms and conditions of the Restructuring are set forth in the Term Sheet; provided, however, that the Term Sheet is supplemented by the terms and conditions of this Agreement.  In the event of any inconsistencies between the terms of this Agreement and the Term Sheet, the Term Sheet shall govern.

 

2. Effectuating the Restructuring.

 

To implement the Term Sheet, the Parties have agreed, on the terms and conditions set forth herein, that the Company shall use its commercially reasonable best efforts to:

 

(a)	solicit the requisite acceptances of the Plan (i) in accordance with section 1125 of the Bankruptcy Code; and (ii) if, after the Chapter 11 Cases have commenced, the Bankruptcy Court has approved the Disclosure Statement;

 

(b)	move the Bankruptcy Court to confirm the Plan as expeditiously as practicable under the Bankruptcy Code, including under section 1129(b) thereof, the Federal Rules of Bankruptcy Procedure and the Bankruptcy Court’s local rules (the federal and local rules being the “Bankruptcy Rules”); and

 

(c)	consummate the Plan;

 

provided, however, that the form and substance of the Plan (including any Plan Supplement filed in connection therewith) and the Disclosure Statement shall be consistent in all material respects with the Term Sheet.

3. Commitments of the Undersigned Holder Under this Agreement and the Term Sheet.

 

(a) Voting by Undersigned Holder.

 

As long as a Termination Event (as defined herein) has not occurred, or has occurred but has been duly waived or cured in accordance with the terms hereof, the

 

 

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Undersigned Holder agrees for itself that, so long as it is the legal owner, beneficial owner and/or the investment advisor or manager of or with power and/or authority to bind any Charter Claims and has been properly solicited pursuant to sections 1125 and 1126 of the Bankruptcy Code, it shall timely vote its Charter Claims (and not revoke or withdraw its vote) to accept the Plan, subject to the proviso in Section 2 hereof.

 

(b) Support of Plan.

 

As long as a Termination Event has not occurred, or has occurred but has been duly waived or cured in accordance with the terms hereof, the Undersigned Holder, agrees for itself that, so long as it remains the legal owner, beneficial owner and/or the investment advisor or manager of or with power and/or authority to bind any Charter Claims, subject to the proviso in Section 2 hereof, by having executed and become party to this Agreement, it will:

 

i.

from and after the date hereof not directly or indirectly seek, solicit, support or vote in favor of any other plan, sale, proposal or offer of dissolution, winding up, liquidation, reorganization, merger or restructuring of the Company that could reasonably be expected to prevent, delay or impede the Restructuring of the Company as contemplated by the Term Sheet, the Plan or any other document filed with the Bankruptcy Court in furtherance of confirming the Plan;

 

ii.

agree to permit disclosure in the Disclosure Statement and any filings by the Company with the Securities and Exchange Commission of the contents of this Agreement; provided that the amount of the Charter Claims held by the Undersigned Holder shall be disclosed only to the Company and shall not be disclosed by the Company to any other person or entity;

 

iii.

cooperate with the Company to secure consents, approvals or waivers required to be obtained from governmental authorities in connection with the Plan with respect to the transfer or change in control of Franchises (as defined in the Communications Act of 1934, as amended, 47 U.S.C Sections 151 et seq.), licenses and permits; provided that the Company shall reimburse the Undersigned Holder for all reasonable out-of-pocket expenses incurred in connection with this Section 3(b)(iii); and

 

iv.

forbear from exercising, directly or indirectly, any right to accelerate or commence any action to collect indebtedness outstanding under any indenture to which the Company and/or any of its subsidiaries (each, a “Company Indenture”) is a party or to file or join in an involuntary petition for relief under the Bankruptcy Code against the Company based upon the failure to pay any such indebtedness.

 

 

4

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As long as a Termination Event has not occurred, or has occurred but has been duly waived or cured in accordance with the terms hereof, the Company and the Undersigned Holder, so long as it is the legal owner, beneficial owner and/or the investment advisor or manager of or with power and/or authority to bind any Charter Claim, further agree that they shall not:

 

i.	object to or otherwise commence any proceeding opposing any of the terms of this Agreement, the Term Sheet, the Disclosure Statement or the Plan; or

 

ii.	take any action that is inconsistent with, or that would delay approval of the Disclosure Statement or Confirmation of the Plan.

 

(c) Transfer (as defined below) of Claims, Interests and Securities.

 

The Undersigned Holder hereby agrees, for so long as this Agreement shall remain in effect (such period, the “Restricted Period”), not to sell, assign, transfer, hypothecate or otherwise dispose of, directly or indirectly (each such transfer, a “Transfer”), all or any of its Charter Claims (or any right related thereto and including any voting rights associated with such Charter Claims), unless the transferee thereof (a) agrees in an enforceable writing to assume and be bound by this Agreement and the Term Sheet, and to assume the rights and obligations of the Undersigned Holder under this Agreement and (b) promptly delivers such writing to the Company (each such transferee becoming, upon the Transfer, an Undersigned Holder hereunder).  The Company shall promptly acknowledge any such Transfer in writing and provide a copy of that acknowledgement to the transferor.  By its acknowledgement of the relevant Transfer, the Company shall be deemed to have acknowledged that its obligations to the Undersigned Holder hereunder shall be deemed to constitute obligations in favor of the relevant transferee as an Undersigned Holder hereunder.  Any sale, transfer or assignment of any Relevant Claim (as defined below) that does not comply with the procedure set forth in the first sentence of this Subsection 3(c) shall be deemed void ab initio.

 

(d) Further Acquisition of Charter Claims.

 

This Agreement shall in no way be construed to preclude the Undersigned Holder or any of its respective subsidiaries from acquiring additional Charter Claims; provided that any such additional Charter Claims acquired by the Undersigned Holder or any subsidiary thereof shall automatically be deemed to be subject to the terms of this Agreement.  Upon the request of the Company, the Undersigned Holder shall, in writing and within five (5) business days, provide an accurate and current list of all Charter Claims that it and any subsidiary holds at that time, subject to any applicable confidentiality restrictions and applicable law.

 

(e) Representation of the Undersigned Holder’s holdings.

 

The Undersigned Holder represents that, as of the date hereof:

 

i.	it is the legal owner, beneficial owner and/or the investment advisor or manager for the legal or beneficial owner of such

 

 

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Charter Claims set forth on its respective signature page (collectively, the “Relevant Claims”);

 

ii.	there are no Charter Claims of which it is the legal owner, beneficial owner and/or investment advisor or manager for such legal or beneficial owner that are not part of its Relevant Claims unless the Undersigned Holder does not possess the full power to vote and dispose of such claims; and

 

iii.	it has full power to vote, dispose of and compromise the aggregate principal amount of the Relevant Claims.

 

(f) Undersigned Holder Escrow Agreement.

 

Notwithstanding anything to the contrary herein, if the January Payments (as defined in the Escrow Agreement, dated February 11, 2009, by and between, inter alia, the Undersigned Holder and Charter Communications Holdings, LLC (the “Escrow Agreement”)) are made on or before the Acceleration Date (as defined in the Escrow Agreement), then on or before five (5) calendar days following the date the Undersigned Holder receives its respective Holder’s Payment (as defined in the Escrow Agreement), the Undersigned Holder shall (or shall cause its affiliate to) deposit funds in the amount of [____] pursuant to the Escrow Agreement (even if the Undersigned Holder actually receives its respective Holder’s Payment after the Company commences or becomes subject to proceedings under the Bankruptcy Code).

 

4. The Company’s Responsibilities.

 

(a) Other Support Agreement.

 

The Company represents and warrants that it has entered into (or concurrently herewith is entering into) binding restructuring agreements, plan support or lock-up agreements consistent in all material respects with the terms and provisions of this Agreement and the Plan (collectively, the “Other Support Agreements”) with Paul G. Allen, Charter Investment, Inc. and CCI and with other Consenting Holders (each, an “Other Support Agreement Party”, and collectively, the “Other Support Agreement Parties”) pursuant to which, except as previously disclosed to the Undersigned Holder in writing, each Other Support Party has agreed to be bound to the Other Support Agreements which are substantially similar to this Agreement, including without limitation, to be bound by the substantially similar provisions set forth in Section 3(a), (b), (c), (d) and (e) above and Section 8 below.

 

(b) Implementation of Plan.

 

The Company shall use its commercially reasonable best efforts to:

 

i.	effectuate and consummate the Restructuring on the terms described in the Term Sheet and the Plan;

 

ii.	commence the Chapter 11 Cases on or before April 1, 2009;

 

 

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iii.

file the Plan and Disclosure Statement, consistent with the terms of the Term Sheet and reasonably acceptable to the Requisite Holders, and implement all steps necessary and desirable to obtain from the Bankruptcy Court an order confirming the Disclosure Statement (the “Disclosure Statement Order”), which Disclosure Statement Order shall be entered by the Bankruptcy Court no later than on or before the 50th day following the Petition Date;

 

iv.

implement all steps necessary and desirable to obtain from the Bankruptcy Court an order confirming the Plan, which order shall be in form and substance consistent with the Term Sheet and reasonably acceptable to the Requisite Holders (the “Confirmation Order”), which Confirmation Order shall be entered by the Bankruptcy Court no later than on or before the 130th day following the Petition Date;

 

v.

cause the Effective Date of the Plan to occur no later than on or before the 150th day following the Petition Date; provided, that if consents, approvals or waivers required to be obtained from governmental authorities in connection with the Plan with respect to Franchises, licenses and permits covering areas serving at least 80% of the basic subscribers have not been obtained on or before the 150th day following the Petition Date, then cause the Effective Date of the Plan to occur no later than on or before December 15, 2009; and

 

vi.	take no actions inconsistent with this Agreement, the Term Sheet and the Plan or the expeditious Confirmation and Consummation of the Plan.

 

5. Mutual Representations, Warranties, and Covenants.

 

Each Party makes the following representations, warranties and covenants to each of the other Parties, each of which are continuing representations, warranties and covenants:

 

(a) Enforceability.

 

Subject to the provisions of sections 1125 and 1126 of the Bankruptcy Code, this Agreement is a legal, valid and binding obligation of the Party, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

 

(b) No Consent or Approval.

 

Except as expressly provided in this Agreement, no consent or approval is required by any other entity in order for it to carry out the provisions of this Agreement.

 

 

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(c) Power and Authority.

 

It has all requisite power and authority to enter into this Agreement and to carry out the transactions contemplated by, and perform its respective obligations under, this Agreement, the Term Sheet and the Plan.

 

(d) Authorization.

 

The execution and delivery of this Agreement and the performance of its obligations hereunder have been duly authorized by all necessary action on its part.

 

(e) No Conflicts.

 

The execution, delivery and performance of this Agreement does not and shall not:  (a) violate any provision of law, rule or regulations applicable to it or any of its subsidiaries; (b) violate its certificate of incorporation, bylaws or other organizational documents or those of any of its subsidiaries; or (c) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it or any of its subsidiaries is a party.

 

6. No Waiver of Participation and Preservation of Rights.

 

This Agreement and the Plan are part of a proposed settlement of disputes among the Parties.  Without limiting the foregoing sentence in any way, if the transactions contemplated by this Agreement or otherwise set forth in the Plan are not consummated as provided herein, if a Termination Event occurs, or if this Agreement is otherwise terminated for any reason, the Parties each fully reserve any and all of their respective rights, remedies, claims and interests.

 

7. Acknowledgement.

 

This Agreement and the Term Sheet and the transactions contemplated herein and therein are the product of negotiations between the Parties and their respective representatives.  This Agreement is not and shall not be deemed to be a solicitation of votes for the acceptance of a plan of reorganization for the purposes of sections 1125 and 1126 of the Bankruptcy Code or otherwise.  The Company will not solicit acceptances of the Plan from the Undersigned Holder in any manner inconsistent with the Bankruptcy Code or applicable nonbankruptcy law.

 

8. Termination.

 

(a) Termination Events.

 

The term “Termination Event,” wherever used in this Agreement, means any of the following events (whatever the reason for such Termination Event and whether it is voluntary or involuntary):

 

i.	the commitments set forth in that certain commitment letter, dated February 11, 2009 (the “Commitment Letter”), expire or terminate pursuant to Section 9 of the Commitment Letter;

 

 

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ii.

the Company’s board of directors is advised in writing by its outside counsel that continued pursuit of the Plan is inconsistent with its fiduciary duties because, and the board of directors determines in good faith that, (A) a proposal or offer from a third party is reasonably likely to be more favorable to the Company than is proposed under the Term Sheet, taking into account, among other factors, the identity of the third party, the likelihood that any such proposal or offer will be negotiated to finality within a reasonable time, and the potential loss to the company if the proposal or offer were not accepted and consummated, or (B) the Plan is no longer confirmable or feasible;

 

iii.	the Plan or any subsequent plan filed by the Company with the Bankruptcy Court (or a plan supported or endorsed by the Company) is not in a form and substance that is reasonably consistent in all material respects with the Term Sheet;

 

iv.	the Company shall not have filed for chapter 11 relief with the Bankruptcy Court on or before April 1, 2009;

 

v.	a Disclosure Statement Order reasonably acceptable to the Company and the Requisite Holders is not entered by the Bankruptcy Court on or before the 50th day following the Petition Date;

 

vi.	a Confirmation Order reasonably acceptable to the Company and the Requisite Holders is not entered by the Bankruptcy Court on or before the 130th day following the Petition Date;

 

vii.

either (a) the Effective Date shall not have occurred on or before the 150th day following the Petition Date or (b) if consents, approvals or waivers required to be obtained from governmental authorities in connection with the Plan with respect to Franchises, licenses and permits covering areas serving at least 80% of the basic subscribers have not been obtained on or before the 150th day following the Petition Date, and all other conditions precedent to the Effective Date shall have been satisfied before the 150th day following the Petition Date or waived by the Requisite Holders (other than those conditions that by their nature are to be satisfied on the Effective Date), then the Effective Date shall not have occurred on or before December 15, 2009;

 

viii.

any of the Chapter 11 Cases of the Company is converted to cases under chapter 7 of the Bankruptcy Code and such event causes the Plan not to be confirmable;

 

 

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ix.

the Bankruptcy Court shall enter an order in any of the Chapter 11 Cases appointing (i) a trustee under chapter 7 or chapter 11 of the Bankruptcy Code, (ii) a responsible officer or (iii) an examiner, in each case with enlarged powers relating to the operation of the business (powers beyond those set forth in subclauses (3) and (4) of section 1106(a)) under section 1106(b) of the Bankruptcy Code;

 

x.	any of the Chapter 11 Cases of the Company is dismissed and such event causes the Plan not to be confirmable;

 

xi.	the Confirmation Order is reversed on appeal or vacated;

 

xii.

any Party has breached any material provision of this Agreement or the Term Sheet and any such breach has not been duly waived or cured in accordance with the terms hereof after a period of five (5) days; provided, that any such waiver by the Undersigned Holder shall require the approval of the Requisite Holders;

 

xiii.

the Company shall withdraw the Plan or publicly announce its intention not to support the Plan;

 

xiv.	the Effective Date shall have occurred;

 

xv.

any Other Support Agreement has terminated or any Other Support Party has breached any material provision of its Other Support Agreement or the Term Sheet and any such breach has not been duly waived or cured in accordance with the terms of the Other Support Agreement after a period of five (5) days; or

 

xvi.	the Company shall not have reached agreement with senior management on a compensation program reasonably acceptable to the Company and the Requisite Holders by March 12, 2009.

 

The foregoing Termination Events are intended solely for the benefit of the Company and the Undersigned Holder; provided that no Party may seek to terminate this Agreement based upon a material breach or a failure of a condition (if any) in this Agreement arising out of its own actions or omissions; provided, further, that such actions or omissions may entitle the other Parties to the remedies described in Section 9(e) hereof.

 

(b) Termination Event Procedures.

 

i.

Upon the occurrence of a Termination Event contemplated by clause (i) or (ii) of Section 8(a) hereof or clause (xii) of Section 8(a) hereof due to a material breach of this Agreement by the Undersigned Holder, in each case subject to the last sentence of Section 8(a) hereof, the Company shall have the right to terminate

 

 

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this Agreement and the Term Sheet by giving written notice thereof to the other Parties.

 

ii.	Upon the occurrence of a Termination Event contemplated by clause (viii), (xi), (xiv) or (xvi) of Section 8(a) hereof, in each case subject to the last sentence of Section 8(a) hereof, this Agreement and the Term Sheet shall automatically terminate without further action.

 

iii.

Except as set forth in Section 8(b)(i) and 8(b)(ii) hereof, upon the occurrence of a Termination Event (including, for the avoidance of doubt, a Termination Event contemplated by clause (i) or (ii) of Section 8(a) hereof), subject to the last sentence of Section 8(a) hereof, the Undersigned Holder shall have the right to terminate this Agreement and the Term Sheet by giving written notice to the other Parties unless no later than three (3) business days after the occurrence of any such Termination Event, the occurrence of such Termination Event is waived in writing by the Requisite Holders.  The Parties hereby waive any requirement under section 362 of the Bankruptcy Code to lift the automatic stay thereunder (the “Automatic Stay”) in connection with giving any such notice (and agree not to object to any non-breaching Party seeking to lift the Automatic Stay in connection with giving any such notice, if necessary).  Any such termination (or partial termination) of the Agreement shall not restrict the Parties’ rights and remedies for any breach of the Agreement by any Party, including, but not limited to, the reservation of rights set forth in Section 6 hereof.

 

(c) Consent to Termination.

 

In addition to the Termination Events set forth in Section 8(a) hereof, this Agreement shall be terminable immediately upon written notice to all of the Parties of the written agreement(s) of the Company and the Requisite Holders to terminate all of their restructuring agreements and the written agreement of the Company, CCI and Paul G. Allen to terminate their restructuring agreement.

 

9. Miscellaneous Terms.

 

(a) Binding Obligation; Assignment.

 

Binding Obligation.  Subject to the provisions of sections 1125 and 1126 of the Bankruptcy Code, this Agreement is a legally valid and binding obligation of the Parties, enforceable in accordance with its terms, and shall inure to the benefit of the Parties and their representatives.  Nothing in this Agreement, express or implied, shall give to any entity, other than the Parties and their respective members, officers, directors, agents, financial advisors, attorneys, employees, partners, Affiliates, successors, assigns, heirs, executors, administrators

 

 

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and representatives, any benefit or any legal or equitable right, remedy or claim under this Agreement.

 

Assignment.  No rights or obligations of any Party under this Agreement may be assigned or transferred to any other entity except as provided in Section 3(c) hereof.

 

(b) Further Assurances.

 

The Parties agree to execute and deliver such other instruments and perform such acts, in addition to the matters herein specified, as may be reasonably appropriate or necessary, from time to time, to effectuate the agreements and understandings of the Parties, whether the same occurs before or after the date of this Agreement.

 

(c) Headings.

 

The headings of all sections of this Agreement are inserted solely for the convenience of reference and are not a part of and are not intended to govern, limit or aid in the construction or interpretation of any term or provision hereof.

 

(d) Governing Law.

 

THIS AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO THE CHOICE OF LAWS PRINCIPLES THEREOF.  By its execution and delivery of this Agreement, each of the Parties hereto hereby irrevocably and unconditionally agrees for itself that any legal action, suit or proceeding with respect to any matter under or arising out of or in connection with this Agreement or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding, shall be brought exclusively in either a state or federal court of competent jurisdiction in the State of New York and County of New York.  By execution and delivery of this Agreement, each of the Parties hereto hereby irrevocably accepts and submits itself to the exclusive jurisdiction of each such court, generally and unconditionally, with respect to any such action, suit or proceeding.  Notwithstanding the foregoing consent to jurisdiction in either a state or federal court of competent jurisdiction in the State of New York and County of New York, upon the commencement of the Chapter 11 Cases, each of the Parties hereto hereby agrees that, if the Petitions have been filed and any of the Chapter 11 Cases are pending, the Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of or in connection with this Agreement.

 

(e) Specific Performance

 

The Parties hereby acknowledge that the rights of the Parties under this Agreement are unique and that remedies at law for breach or threatened breach of any provision of this Agreement would be inadequate and, in recognition of this fact, agree that, in the event of a breach or threatened breach of the provisions of this Agreement, in addition to any remedies at law, the Parties (with the consent of the Requisite Holders, in the case of the Undersigned Holder) shall, without posting any bond, be entitled to obtain equitable relief in the form of

 

 

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specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available and the Parties hereby waive any objection to the imposition of such relief.

 

(f) Complete Agreement, Interpretation and Modification.

 

i.

Complete Agreement.  This Agreement, the Term Sheet and the other agreements, exhibits and other documents referenced herein and therein constitute the complete agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements, oral or written, between or among the Parties with respect thereto.

 

ii.

Interpretation.  This Agreement is the product of negotiation by and among the Parties.  Any Party enforcing or interpreting this Agreement shall interpret it in a neutral manner.  There shall be no presumption concerning whether to interpret this Agreement for or against any Party by reason of that Party having drafted this Agreement, or any portion thereof, or caused it or any portion thereof to be drafted.

 

iii.	Modification of this Agreement and the Term Sheet.  Except as set forth in Section 8(b) hereof, as it applies to Termination Events, this Agreement and the Term Sheet may only be modified, altered, amended or supplemented by an agreement in writing signed by the Company and the Requisite Holders.

 

(g) Execution of this Agreement.

 

This Agreement may be executed and delivered (by facsimile or otherwise) in any number of counterparts, each of which, when executed and delivered, shall be deemed an original, and all of which together shall constitute the same agreement.  Except as expressly provided in this Agreement, each individual executing this Agreement on behalf of a Party has been duly authorized and empowered to execute and deliver this Agreement on behalf of said Party.

 

(h) Settlement Discussions.

 

This Agreement and the Restructuring are part of a proposed settlement of a dispute between the Parties.  Nothing herein shall be deemed an admission of any kind.  Pursuant to Federal Rule of Evidence 408 and any applicable state rules of evidence, this Agreement and all negotiations relating thereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce the terms of this Agreement.

 

 

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(i) Consideration.

 

The Company and the Undersigned Holder hereby acknowledge that no consideration, other than that specifically described herein and in the Term Sheet, shall be due or paid to the Undersigned Holder for its agreement to vote to accept the Plan in accordance with the terms and conditions of this Agreement, other than the Company’s representations, warranties and agreement to use its commercially reasonable best efforts to obtain approval of the Disclosure Statement and to seek to confirm and consummate the Plan in accordance with the terms and conditions of the Term Sheet.

 

(j) Notices.

 

All notices hereunder shall be deemed given if in writing and delivered, if sent by facsimile, courier or by registered or certified mail (return receipt requested) to the following addresses and facsimile numbers (or at such other addresses or facsimile numbers as shall be specified by like notice):

 

i.	If to the Company, to:

 

Charter Communications, Inc.

12405 Powerscourt Drive

St. Louis, Missouri  63131

Attention:  General Counsel

with copies (which shall not constitute notice) to:

 

Kirkland & Ellis LLP

Citigroup Center

153 East 53rd Street

New York, New York  10022

Attention:  Richard M. Cieri and Paul Basta;

ii.	If to the Undersigned Holder or a transferee thereof, to the addresses or facsimile numbers set forth below following the Undersigned Holder’s signature (or as directed by any transferee thereof), as the case may be, with copies (which shall not constitute notice) to:

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019-6064

Attention:  Alan W. Kornberg and Kenneth M. Schneider;

vii.	Any notice given by delivery, mail or courier shall be effective when received.  Any notice given by facsimile shall be effective upon oral or machine confirmation of transmission.

 

 

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(k) No Obligations following Effective Date.

 

Upon the occurrence of a Termination Event pursuant to Section 8(a)(xii) hereof and termination of this Agreement in accordance with Section 8(b)(ii) hereof, this Agreement shall forthwith become void, there shall be no liability under this Agreement on the part of any Party and the Undersigned Holder shall have the sole and exclusive power to vote, or to direct the voting of, and to dispose, or to direct the disposition of, any securities received by the Undersigned Holder pursuant to the Plan.

(l) Savings Clause.

 

Prior to commencement of the Chapter 11 Cases, if and to the extent the Company’s execution, agreement, performance, undertaking, or similar arrangement herein or in the Term Sheet (each, a “Undertaking”) would cause a default or event of default under the CCO Credit Facility or the CCOH Credit Facility (and for the avoidance of doubt, in each case, including all notes issued thereunder), such Undertaking shall be deemed unenforceable solely to the extent necessary to avoid a default or event of default and such action shall be void ab initio to the extent necessary to avoid a default or event of default.  To the extent that any Undertaking is unenforceable or void in accordance with the foregoing, the Parties shall use commercially reasonable best efforts to restore equivalent consideration to any affected Party.

 

(m) Time of the Essence.

 

The Parties agree that time is of the essence with respect to each and every term and provision of this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

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IN WITNESS WHEREOF, the Parties have entered into this Agreement on the day and year first above written.

 

                    [CCH I/CCH II], LLC

                    By: ___________________                                                              

                    Title: _________________

 

 

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                     [INSERT ENTITY NAME HERE]

 

 

 

 

                                                   &# 160;By: _______________________

                                                   &# 160;    Name:

                                                   &# 160;    Title:

 

 

 

 

[Signature Page to Restructuring Agreement]

 

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EXHIBIT 1

 

TERM SHEET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Very truly yours, [Investor] By: ___________________________   Title: __________________________   Commitment:         Rollover Commitment:  $_____________________        New Debt Commitment:  $____________________        Equity Backstop:  $_________________________

 

 

 

 

[Signature Page to Commitment Letter]

 

 

Accepted and agreed to this ___ day of February, 2009, for and on behalf of all of the companies listed below:   Charter Communications, Inc. CCH I, LLC CCH II, LLC Charter Communications Operating, LLC (only for purposes of Section 7 hereof)   By: _____________________________                                                                Title: ____________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WHEREAS, other holders of certain claims under that certain 10.25% Senior Notes Supplemental Indenture dated as of July 2, 2008 (each, a “Consenting 10.25% New Senior Note Holder” and together with the Undersigned Holder, the Consenting 11% Old Senior Note Holders, the Consenting 11% New Senior Note Holders and the Consenting 10.25% Old Senior Note Holders, the “Consenting Holders”), between CCH II, LLC and CCH II Capital Corp., as

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

•	the outcome of our discussions with our bondholders and the completion of the Company's announced restructuring including the outcome and impact on our business of any resulting proceedings under Chapter 11 of the Bankruptcy Code;

•

the availability and access, in general, of funds to meet interest payment obligations under our debt and to fund our operations and necessary capital expenditures, either through cash on hand, cash flows from operating activities, further borrowings or other sources and, in particular, our ability to fund debt obligations (by dividend, investment or otherwise) to the applicable obligor of such debt;

•	our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a default of our other obligations under cross-default provisions;

•

our ability to repay debt prior to or when it becomes due and/or successfully access the capital or credit markets to refinance that debt through new issuances, exchange offers or otherwise, including restructuring our balance sheet and leverage position, especially given recent volatility and disruption in the capital and credit markets;

•	the impact of competition from other distributors, including incumbent telephone companies, direct broadcast satellite operators, wireless broadband providers, and digital subscriber line ("DSL") providers;

•	difficulties in growing, further introducing, and operating our telephone services, while adequately meeting customer expectations for the reliability of voice services;

•	our ability to adequately meet demand for installations and customer service;

 

 

 

 

 

 

 

 

 

 

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“We are pleased with our operational results during the fourth quarter, particularly in this challenging economic environment,” said Neil Smit, President and Chief Executive Officer. “We remain committed to delivering value to our customers through our bundle of quality video, high-speed Internet, and telephone services. We are continuously expanding our high-definition offering, we’ve recently launched 60Mbps high-speed Internet service, and later this month we’ll upgrade Charter High-Speed Internet Max from 16 Mbps speed to 20 Mbps. Our operational results continue to reflect the underlying potential of our business, and our talented employees remain focused on offering enhanced products and service for our customers.”

Charter added 45,300 revenue generating units (RGUs) during the fourth quarter of 2008 and 650,900 RGUs during the full year. Approximately 53% of Charter’s customers subscribe to a bundle, up from 47% in the fourth quarter of 2007. Charter’s pro forma average monthly revenue per basic video customer for the fourth quarter of 2008 was $108.27, an increase of 10.2% compared to fourth quarter 2007, primarily as a result of higher bundled penetration and an increase in advanced services.

Fourth quarter expected RGU additions (on a pro forma basis for 2008 and 2007) consisted of the following:

 

·	Fourth quarter 2008 net losses of basic video customers were approximately 75,100 compared to a net loss of approximately 65,800 in the fourth quarter of 2007;

·	Fourth quarter 2008 net gains of digital video customers were approximately 22,300 compared to a net gain of approximately 59,500 in the fourth quarter of 2007;

·	Fourth quarter 2008 net gains of high-speed Internet customers were approximately 22,900 compared to a net gain of approximately 50,500 in the fourth quarter of 2007; and

·	Fourth quarter 2008 net gains of telephone customers were approximately 75,200, compared to a net gain of approximately 155,300 in the fourth quarter of 2007.  Telephone homes passed were approximately 10.4 million as of December 31, 2008.

Capital expenditures for the fourth quarter of 2008 are currently expected to be approximately $264 million, which would be lower than capital expenditures of $354 million during the same quarter in the prior year. Capital expenditures for the full year 2008 are expected to be approximately $1.202 billion, compared to $1.244 billion in 2007. Approximately 77% of Charter’s 2008 capital expenditures were success-based.

In the fourth quarter the Company expects to record approximately $1.5 billion of impairment for the year ended December 31, 2008. The Company intends to finalize its franchise impairment analysis, as

 

 

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required by SFAS No. 142, “Goodwill and Other Intangible Assets,” prior to the release of its 2008 financial results.

Because the fourth quarter has only recently ended, the information in this release is, by necessity, preliminary in nature and based only upon preliminary, unaudited information available to Charter as of the date of this release. Investors should be aware that the information in this release is subject to change upon the release of Charter’s audited results and therefore should exercise caution in relying on the information in this release. Information regarding certain financial performance measures not discussed in this release is not provided because the fourth quarter has only recently ended and final estimates of certain items used in the calculations of such measures are not yet available.  Investors should not draw any inferences from this information regarding financial or operating data that is not discussed in this release.

 

Use of Non-GAAP Financial Metrics

The Company uses certain measures that are not defined by Generally Accepted Accounting Principles (“GAAP”) to evaluate various aspects of its business. Adjusted EBITDA and pro forma adjusted EBITDA are non-GAAP financial measures and should be considered in addition to, not as a substitute for, net cash flows from operating activities reported in accordance with GAAP. These terms, as defined by Charter, may not be comparable to similarly titled measures used by other companies.

Adjusted EBITDA is defined as income from operations before depreciation and amortization, impairment charges, stock compensation expense, and other operating expenses, such as special charges and loss on sale or retirement of assets. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of the Company’s businesses as well as other non-cash or non-recurring items, and is unaffected by the Company’s capital structure or investment activities. Adjusted EBITDA and pro forma adjusted EBITDA are liquidity measures used by Company management and its board of directors to measure the Company’s ability to fund operations and its financing obligations. For this reason, it is a significant component of Charter’s annual incentive compensation program. However, this measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and the cash cost of financing for the Company. Company management evaluates these costs through other financial measures.

 

 

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The Company believes that adjusted EBITDA and pro forma adjusted EBITDA provide information useful to investors in assessing Charter’s ability to service its debt, fund operations, and make additional investments with internally generated funds. In addition, adjusted EBITDA generally correlates to the leverage ratio calculation under the Company’s credit facilities or outstanding notes to determine compliance with the covenants contained in the facilities and notes (all such documents have been previously filed with the United States Securities and Exchange Commission).  Adjusted EBITDA and pro forma adjusted EBITDA, as presented, include management fee expenses in the amount of $32 million and $31 million for the three months ended December 31, 2008 and 2007, respectively, and $131 million and $129 million for the years ended December 31, 2008 and 2007, respectively, which expense amounts are excluded for the purposes of calculating compliance with leverage covenants.

In addition to the actual results for the three months and year ended December 31, 2008 and 2007, we have provided pro forma results in this release for the three months and year ended December 31, 2007. We believe these pro forma results facilitate meaningful analysis of the results of operations. Pro forma results in this release reflect certain sales and acquisitions of cable systems in 2008 and 2007 as if they had occurred as of January 1, 2007.

About Charter Communications

Charter Communications, Inc. is a leading broadband communications company and the third-largest publicly traded cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable® video entertainment programming, Charter High-Speed® Internet access, and Charter Telephone®. Charter Business™ similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media® brand. More information about Charter can be found at www.charter.com

 

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Cautionary Statement Regarding Forward-Looking Statements:

This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, our plans, strategies and prospects, both business and financial. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions including, without limitation, the factors described under "Risk Factors" from time to time in our filings with the Securities and Exchange Commission ("SEC"). Many of the forward-looking statements contained in this release may be identified by the use of forward-looking words such as "believe," "expect," "anticipate," "should," "plans," "will," "may," "intend," "estimated," "aim," "on track," "target," "opportunity" and "potential," among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this release are set forth in other reports or documents that we file from time to time with the SEC, including our quarterly reports on Form 10-Q filed in 2008 and our most recent annual report on Form 10-K and include, but are not limited to:

 

•	the outcome and impact on our business of our proceedings under Chapter 11 of the Bankruptcy Code;

•

the availability and access, in general, of funds to meet interest payment obligations under our debt and to fund our operations and necessary capital expenditures, either through cash on hand, cash flows from operating activities, further borrowings or other sources and, in particular, our ability to fund debt obligations (by dividend, investment or otherwise) to the applicable obligor of such debt;

•	our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a default of our other obligations under cross-default provisions;

•

our ability to repay debt prior to or when it becomes due and/or successfully access the capital or credit markets to refinance that debt through new issuances, exchange offers or otherwise, including restructuring our balance sheet and leverage position, especially given recent volatility and disruption in the capital and credit markets;

•	the impact of competition from other distributors, including incumbent telephone companies, direct broadcast satellite operators, wireless broadband providers, and digital subscriber line ("DSL") providers;

•	difficulties in growing, further introducing, and operating our telephone services, while adequately meeting customer expectations for the reliability of voice services;

•	our ability to adequately meet demand for installations and customer service;

•	our ability to sustain and grow revenues and cash flows from operating activities by offering video, high-speed Internet, telephone and other services, and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition;

•	our ability to obtain programming at reasonable prices or to adequately raise prices to offset the effects of higher programming costs;

•	the outcome of our discussions with our bondholders;

•	general business conditions, economic uncertainty or downturn, including the recent volatility and disruption in the capital and credit markets and the significant downturn in the housing sector and overall economy; and

•	the effects of governmental regulation on our business.

 

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All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We are under no duty or obligation to update any of the forward-looking statements after the date of this release.

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Contacts:

Media:

Anita Lamont, 314-543-2215

Or

Analysts:

Mary Jo Moehle, 314-543-2397

 

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