UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark One)
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the quarterly period ended March 31, 2008
or
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the transition period from ________ to _________
Commission
file number: 000-27927
Charter Communications,
Inc.
(Exact name of registrant as
specified in its charter)
|
Delaware
|
43-1857213
|
|
(State or other jurisdiction
of incorporation or organization)
|
(I.R.S.
Employer Identification Number)
|
12405
Powerscourt Drive
St. Louis, Missouri
63131
(Address of principal executive
offices including zip code)
(314)
965-0555
(Registrant's telephone number,
including area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. YES [X] NO [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of “accelerated filer,” “large accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer þ Accelerated
filer o Non-accelerated
filer o Smaller
reporting company o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes oNo þ
Number of
shares of Class A common stock outstanding as of March 31, 2008:
407,829,551
Number of
shares of Class B common stock outstanding as of March 31, 2008:
50,000
Charter
Communications, Inc.
Quarterly
Report on Form 10-Q for the Period ended March 31, 2008
Table
of Contents
|
PART
I. FINANCIAL INFORMATION
|
Page
|
|
Item
1. Financial Statements - Charter
Communications, Inc. and Subsidiaries
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|
|
Condensed
Consolidated Balance Sheets as of March 31, 2008
|
|
|
and
December 31, 2007
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4
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Condensed
Consolidated Statements of Operations for the three
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|
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months
ended March 31, 2008 and 2007
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5
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Condensed
Consolidated Statements of Cash Flows for the
|
|
|
three
months ended March 31, 2008 and 2007
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6
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Notes
to Condensed Consolidated Financial Statements
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7
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Item
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
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18
|
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Item
3. Quantitative and Qualitative Disclosures about Market
Risk
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28
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Item
4. Controls and Procedures
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29
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PART
II. OTHER INFORMATION
|
|
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Item
1. Legal Proceedings
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30
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Item
1A. Risk Factors
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30
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Item
6. Exhibits
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33
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SIGNATURES
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S-1
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EXHIBIT
INDEX
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E-1
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This
quarterly report on Form 10-Q is for the three months ended March 31,
2008. The Securities and Exchange Commission ("SEC") allows us
to "incorporate by reference" information that we file with the SEC, which means
that we can disclose important information to you by referring you directly to
those documents. Information incorporated by reference is considered
to be part of this quarterly report. In addition, information that we
file with the SEC in the future will automatically update and supersede
information contained in this quarterly report. In this quarterly
report, "we," "us" and "our" refer to Charter Communications, Inc., Charter
Communications Holding Company, LLC and their subsidiaries.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS:
This
quarterly report includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities
Act"), and Section 21E of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), regarding, among other things, our plans, strategies and
prospects, both business and financial including, without limitation, the
forward-looking statements set forth in the "Results of Operations" and
"Liquidity and Capital Resources" sections under Part I, Item 2. "Management’s
Discussion and Analysis of Financial Condition and Results of Operations" in
this quarterly report. 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" under Part II, Item 1A
and the factors described under “Risk Factors” under Part I, Item 1A of our most
recent Form 10-K filed with the SEC. Many of the forward-looking
statements contained in this quarterly report may be identified by the use of
forward-looking words such as "believe," "expect," "anticipate," "should,"
"planned," "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 quarterly report are set forth in this quarterly
report and in other reports or documents that we file from time to time with the
SEC, and include, but are not limited to:
|
|
·
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the
availability, in general, of funds to meet interest payment obligations
under our debt and to fund our operations and necessary capital
expenditures, either through 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;
|
|
|
·
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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;
|
|
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·
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our
ability to pay or refinance debt prior to or when it becomes due and/or
refinance that debt through new issuances, exchange offers or otherwise,
including restructuring our balance sheet and leverage
position;
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|
·
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the
impact of competition from other distributors, including incumbent
telephone companies, direct broadcast satellite operators, wireless
broadband providers, and digital subscriber line (“DSL”)
providers;
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·
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difficulties
in growing, further introducing, and operating our telephone services,
while adequately meeting customer expectations for the reliability of
voice services;
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·
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our
ability to adequately meet demand for installations and customer
service;
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·
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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;
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·
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our
ability to obtain programming at reasonable prices or to adequately raise
prices to offset the effects of higher programming
costs;
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·
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general
business conditions, economic uncertainty or slowdown, including the
recent significant slowdown in the new housing sector and overall economy;
and
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·
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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 quarterly report.
3
PART
I. FINANCIAL INFORMATION.
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Item
1.
|
Financial
Statements.
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CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE
DATA)
|
March 31,
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December
31,
|
|||||||
|
2008
|
2007
|
|||||||
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(Unaudited)
|
||||||||
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ASSETS
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||||||||
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CURRENT
ASSETS:
|
||||||||
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Cash
and cash equivalents
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$ | 467 | $ | 75 | ||||
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Short-term
investments
|
74 | -- | ||||||
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Accounts
receivable, less allowance for doubtful accounts of
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||||||||
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$17
and $18, respectively
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207 | 225 | ||||||
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Prepaid
expenses and other current assets
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38 | 36 | ||||||
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Total
current assets
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786 | 336 | ||||||
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INVESTMENT
IN CABLE PROPERTIES:
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||||||||
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Property,
plant and equipment, net of accumulated depreciation
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5,114 | 5,103 | ||||||
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Franchises,
net
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8,941 | 8,942 | ||||||
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Total
investment in cable properties, net
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14,055 | 14,045 | ||||||
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OTHER
NONCURRENT ASSETS
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316 | 285 | ||||||
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Total
assets
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$ | 15,157 | $ | 14,666 | ||||
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LIABILITIES
AND SHAREHOLDERS’ DEFICIT
|
||||||||
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CURRENT
LIABILITIES:
|
||||||||
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Accounts
payable and accrued expenses
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$ | 1,408 | $ | 1,332 | ||||
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Total
current liabilities
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1,408 | 1,332 | ||||||
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LONG-TERM
DEBT
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20,575 | 19,908 | ||||||
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NOTE
PAYABLE – RELATED PARTY
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67 | 65 | ||||||
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DEFERRED
MANAGEMENT FEES – RELATED PARTY
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14 | 14 | ||||||
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OTHER
LONG-TERM LIABILITIES
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1,237 | 1,035 | ||||||
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MINORITY
INTEREST
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201 | 199 | ||||||
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PREFERRED
STOCK – REDEEMABLE; $.001 par value; 1 million
|
||||||||
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shares
authorized; 36,713 shares issued and outstanding
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5 | 5 | ||||||
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SHAREHOLDERS’
DEFICIT:
|
||||||||
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Class
A Common stock; $.001 par value; 10.5 billion shares
authorized;
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||||||||
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407,829,551
and 398,226,468 shares issued and outstanding,
respectively
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-- | -- | ||||||
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Class
B Common stock; $.001 par value; 4.5 billion
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||||||||
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shares
authorized; 50,000 shares issued and outstanding
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-- | -- | ||||||
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Preferred
stock; $.001 par value; 250 million shares
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||||||||
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authorized;
no non-redeemable shares issued and outstanding
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-- | -- | ||||||
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Additional
paid-in capital
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5,331 | 5,327 | ||||||
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Accumulated
deficit
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(13,454 | ) | (13,096 | ) | ||||
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Accumulated
other comprehensive loss
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(227 | ) | (123 | ) | ||||
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Total
shareholders’ deficit
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(8,350 | ) | (7,892 | ) | ||||
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Total
liabilities and shareholders’ deficit
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$ | 15,157 | $ | 14,666 | ||||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
4
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(DOLLARS
IN MILLIONS, EXCEPT PER SHARE DATA)
Unaudited
|
Three
Months Ended March 31,
|
||||||||
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2008
|
2007
|
|||||||
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REVENUES
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$ | 1,564 | $ | 1,425 | ||||
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COSTS
AND EXPENSES:
|
||||||||
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Operating
(excluding depreciation and amortization)
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681 | 631 | ||||||
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Selling,
general and administrative
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346 | 303 | ||||||
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Depreciation
and amortization
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321 | 331 | ||||||
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Other
operating expenses, net
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11 | 4 | ||||||
| 1,359 | 1,269 | |||||||
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Income
from operations
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205 | 156 | ||||||
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OTHER
EXPENSES:
|
||||||||
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Interest
expense, net
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(465 | ) | (464 | ) | ||||
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Change
in value of derivatives
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(37 | ) | (1 | ) | ||||
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Other
expense, net
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(3 | ) | (3 | ) | ||||
| (505 | ) | (468 | ) | |||||
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Loss
before income taxes
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(300 | ) | (312 | ) | ||||
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INCOME
TAX EXPENSE
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(58 | ) | (69 | ) | ||||
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Net loss
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$ | (358 | ) | $ | (381 | ) | ||
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LOSS
PER COMMON SHARE, BASIC AND DILUTED:
|
||||||||
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Net
loss
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$ | (0.97 | ) | $ | (1.04 | ) | ||
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Weighted
average common shares outstanding, basic and diluted
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370,085,187 | 366,120,096 | ||||||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
5
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS
IN MILLIONS)
Unaudited
|
Three
Months Ended March 31,
|
||||||||
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2008
|
2007
|
|||||||
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CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
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Net
loss
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$ | (358 | ) | $ | (381 | ) | ||
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Adjustments
to reconcile net loss to net cash flows from operating
activities:
|
||||||||
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Depreciation
and amortization
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321 | 331 | ||||||
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Noncash
interest expense
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13 | 11 | ||||||
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Change
in value of derivatives
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37 | 1 | ||||||
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Deferred
income taxes
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57 | 68 | ||||||
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Other,
net
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13 | 11 | ||||||
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Changes
in operating assets and liabilities, net of effects from
dispositions:
|
||||||||
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Accounts
receivable
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18 | 37 | ||||||
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Prepaid
expenses and other assets
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(2 | ) | (4 | ) | ||||
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Accounts
payable, accrued expenses and other
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105 | 192 | ||||||
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Net
cash flows from operating activities
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204 | 266 | ||||||
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CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
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Purchases
of property, plant and equipment
|
(334 | ) | (298 | ) | ||||
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Change
in accrued expenses related to capital expenditures
|
(31 | ) | (32 | ) | ||||
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Purchases
of short-term investments
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(74 | ) | -- | |||||
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Other,
net
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3 | 9 | ||||||
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Net cash flows from investing activities
|
(436 | ) | (321 | ) | ||||
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CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Borrowings
of long-term debt
|
1,765 | 911 | ||||||
|
Repayments
of long-term debt
|
(1,102 | ) | (691 | ) | ||||
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Payments
for debt issuance costs
|
(39 | ) | (20 | ) | ||||
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Net cash flows from financing activities
|
624 | 200 | ||||||
|
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
392 | 145 | ||||||
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CASH
AND CASH EQUIVALENTS, beginning of period
|
75 | 60 | ||||||
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CASH
AND CASH EQUIVALENTS, end of period
|
$ | 467 | $ | 205 | ||||
|
CASH
PAID FOR INTEREST
|
$ | 323 | $ | 304 | ||||
|
NONCASH
TRANSACTIONS:
|
||||||||
|
Cumulative
adjustment to Accumulated Deficit for the adoption of FIN
48
|
$ | -- | $ | 56 | ||||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
6
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars
in millions, except per share amounts and where
indicated)
|
Organization
and Basis of Presentation
|
Charter
Communications, Inc. ("Charter") is a holding company whose principal assets at
March 31, 2008 are the 55% controlling common equity interest (52% for
accounting purposes) in Charter Communications Holding Company, LLC ("Charter
Holdco") and "mirror" notes which are payable by Charter Holdco to Charter and
have the same principal amount and terms as those of Charter’s convertible
senior notes. Charter Holdco is the sole owner of CCHC, LLC ("CCHC"),
which is the sole owner of Charter Communications Holdings, LLC ("Charter
Holdings"). The consolidated financial statements include the
accounts of Charter, Charter Holdco, CCHC, Charter Holdings and all of their
subsidiaries where the underlying operations reside, which are collectively
referred to herein as the "Company." Charter has 100% voting control
over Charter Holdco and consolidates Charter Holdco as a variable interest
entity under Financial Accounting Standards Board ("FASB") Interpretation
("FIN") 46(R) Consolidation of
Variable Interest Entities. Charter Holdco’s limited liability
company agreement provides that so long as Charter’s Class B common stock
retains its special voting rights, Charter will maintain a 100% voting interest
in Charter Holdco. Voting control gives Charter full authority and
control over the operations of Charter Holdco. All significant
intercompany accounts and transactions among consolidated entities have been
eliminated.
The
Company is a broadband communications company operating in the United
States. The Company offers to residential and commercial customers
traditional cable video programming (analog and digital video), high-speed
Internet services, and telephone services, as well as advanced broadband
services such as high definition television, Charter OnDemand™ (“OnDemand”), and
digital video recorder service. The Company sells its cable video
programming, high-speed Internet, telephone, and advanced broadband services on
a subscription basis. The Company also sells local advertising on
cable networks.
The
accompanying condensed consolidated financial statements of the Company have
been prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and the rules and regulations of
the Securities and Exchange Commission (the "SEC"). Accordingly,
certain information and footnote disclosures typically included in Charter’s
Annual Report on Form 10-K have been condensed or omitted for this quarterly
report. The accompanying condensed consolidated financial statements
are unaudited and are subject to review by regulatory
authorities. However, in the opinion of management, such financial
statements include all adjustments, which consist of only normal recurring
adjustments, necessary for a fair presentation of the results for the periods
presented. Interim results are not necessarily indicative of results
for a full year.
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States (“GAAP”) requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Areas involving significant judgments
and estimates include capitalization of labor and overhead costs; depreciation
and amortization costs; impairments of property, plant and equipment, franchises
and goodwill; income taxes; and contingencies. Actual results could
differ from those estimates.
Reclassifications. Certain
prior year amounts have been reclassified to conform with the 2008
presentation.
2. Liquidity
and Capital Resources
The
Company incurred net losses of $358 million and $381 million for the three
months ended March 31, 2008 and 2007, respectively. The Company’s net
cash flows from operating activities were $204 million and $266 million for the
three months ended March 31, 2008 and 2007, respectively.
The
Company has a significant amount of debt. The Company's long-term
debt as of March 31, 2008 totaled $20.6 billion, consisting of $7.3 billion of
credit facility debt, $12.8 billion accreted value of high-yield notes, and $406
million accreted value of convertible senior notes. For the remainder
of 2008, $53 million of the Company’s debt matures. As of March 31,
2008, the Company’s 2009 debt maturities totaled $307 million. In
2010 and beyond, significant additional amounts will become due under the
Company’s remaining long-term debt obligations.
7
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars
in millions, except per share amounts and where
indicated)
The
Company requires significant cash to fund debt service costs, capital
expenditures and ongoing operations. The Company has historically
funded these requirements through cash flows from operating activities,
borrowings under its credit facilities, proceeds from sales of assets, issuances
of debt and equity securities, and cash on hand. However, the mix of
funding sources changes from period to period. For the three months
ended March 31, 2008, the Company generated $204 million of net cash flows from
operating activities, after paying cash interest of $323 million. In
addition, the Company used $408 million for purchases of property, plant and
equipment and short-term investments. Finally, the Company generated
net cash flows from financing activities of $624 million, as a result of
refinancing transactions completed during the quarter.
The
Company expects that cash on hand, cash flows from operating activities, and the
amounts available under the Charter Communications Operating, LLC (“Charter
Operating”) credit facilities will be adequate to fund its projected cash needs,
including scheduled maturities, through 2009. The Company believes
that cash flows from operating activities, and the amounts available under the
Charter Operating credit facilities will not be sufficient to fund projected
cash needs in 2010 (primarily as a result of the CCH II, LLC (“CCH II”) $2.2
billion of senior notes maturing in September 2010) and
thereafter. The Company’s projected cash needs and projected sources
of liquidity depend upon, among other things, its actual results, the timing and
amount of its capital expenditures, and ongoing compliance with the Charter
Operating credit facilities, including obtaining an unqualified audit opinion
from its independent accountants. Although the Company has been able
to refinance or otherwise fund the repayment of debt in the past, it may not be
able to access additional sources of refinancing on similar terms or pricing as
those that are currently in place, or at all, or otherwise obtain other sources
of funding. A continuation of the recent turmoil in the credit
markets and the general economic downturn could adversely impact the terms
and/or pricing when the Company needs to raise additional liquidity.
No assurances can be given that the Company will not experience liquidity
problems if it does not obtain sufficient additional financing on a timely basis
as the Company’s debt becomes due or because of adverse market conditions,
increased competition, or other unfavorable events.
If, at
any time, additional capital or borrowing capacity is required beyond amounts
internally generated or available under the Company’s credit facilities, the
Company would consider issuing equity, issuing convertible debt or some other
securities, further reducing the Company’s expenses and capital expenditures,
selling assets, or requesting waivers or amendments with respect to the
Company’s credit facilities.
If the
above strategies were not successful, the Company could be forced to restructure
its obligations or seek protection under the bankruptcy laws. In
addition, if the Company needs to raise additional capital through the issuance
of equity or finds it necessary to engage in a recapitalization or other similar
transaction, the Company’s shareholders could suffer significant dilution,
including potential loss of the entire value of their investment, and in the
case of a recapitalization or other similar transaction, the Company’s
noteholders might not receive principal and interest payments to which they are
contractually entitled.
Credit
Facility Availability
The
Company’s ability to operate depends upon, among other things, its continued
access to capital, including credit under the Charter Operating credit
facilities. The Charter Operating credit facilities, along with the
Company’s indentures and the CCO Holdings, LLC (“CCO Holdings”) credit facility,
contain certain restrictive covenants, some of which require the Company to
maintain specified leverage ratios, meet financial tests, and provide annual
audited financial statements with an unqualified opinion from the Company’s
independent accountants. As of March 31, 2008, the Company was in
compliance with the covenants under its indentures and credit facilities, and
the Company expects to remain in compliance with those covenants for the next
twelve months. As of March 31, 2008, the Company’s potential
availability under Charter Operating’s revolving credit facility totaled
approximately $1.4 billion, none of which was limited by covenant
restrictions. Continued access to the Company’s revolving credit
facility is subject to the Company remaining in compliance with these covenants,
including covenants tied to Charter Operating’s leverage ratio and first lien
leverage ratio. If any event of non-compliance were to occur, funding
under the revolving credit facility may not be available and defaults on some or
potentially all of the Company’s debt obligations could occur. An
event of default under any of the Company’s debt instruments could result in the
8
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars
in millions, except per share amounts and where
indicated)
acceleration
of its payment obligations under that debt and, under certain circumstances, in
cross-defaults under its other debt obligations, which could have a material
adverse effect on the Company’s consolidated financial condition and results of
operations.
Limitations
on Distributions
As long
as Charter’s convertible senior notes remain outstanding and are not otherwise
converted into shares of common stock, Charter must pay interest on the
convertible senior notes and repay the principal amount. Charter’s
ability to make interest payments on its convertible senior notes, and to repay
the outstanding principal of its convertible senior notes will depend on
its ability to raise additional capital and/or on receipt of payments or
distributions from Charter Holdco and its subsidiaries. As of March 31,
2008, Charter Holdco was owed $127 million in intercompany loans from Charter
Operating and had $63 million in cash and short-term investments, which amounts
were available to pay interest and principal on Charter's convertible senior
notes. In April 2008, Charter Holdco used $66 million to repurchase
Charter convertible notes and Charter Holdings notes. (See “Recent
Financing Transactions” below.)
Distributions
by Charter’s subsidiaries to a parent company (including Charter, Charter Holdco
and CCHC) for payment of principal on parent company notes, are restricted under
the indentures governing the CCH I Holdings, LLC (“CIH”) notes, CCH I, LLC (“CCH
I”) notes, CCH II notes, CCO Holdings notes, Charter Operating notes, and under
the CCO Holdings credit facility, unless there is no default under the
applicable indenture and credit facilities, and unless each applicable
subsidiary’s leverage ratio test is met at the time of such
distribution. For the quarter ended March 31, 2008, there was no
default under any of these indentures or credit facilities. However,
certain of the Company’s subsidiaries did not meet their applicable leverage
ratio tests based on March 31, 2008 financial results. As a result,
distributions from certain of the Company’s subsidiaries to their parent
companies would have been restricted at such time and will continue to be
restricted unless those tests are met. Distributions by Charter
Operating for payment of principal on parent company notes are further
restricted by the covenants in the Charter Operating credit
facilities.
Distributions
by CIH, CCH I, CCH II, CCO Holdings, and Charter Operating to a parent company
for payment of parent company interest are permitted if there is no default
under the aforementioned indentures and CCO Holdings credit
facility.
The
indentures governing the Charter Holdings notes permit Charter Holdings to make
distributions to Charter Holdco for payment of interest or principal on
Charter’s convertible senior notes, only if, after giving effect to the
distribution, Charter Holdings can incur additional debt under the leverage
ratio of 8.75 to 1.0, there is no default under Charter Holdings’ indentures,
and other specified tests are met. For the quarter ended March 31,
2008, there was no default under Charter Holdings’ indentures, and the other
specified tests were met. However, Charter Holdings did not meet the
leverage ratio test of 8.75 to 1.0 based on March 31, 2008 financial results.
As a result, distributions from Charter Holdings to Charter or Charter
Holdco would have been restricted at such time and will continue to be
restricted unless that test is met. During periods in which
distributions are restricted, the indentures governing the Charter Holdings
notes permit Charter Holdings and its subsidiaries to make specified investments
(that are not restricted payments) in Charter Holdco or Charter, up to an amount
determined by a formula, as long as there is no default under the
indentures.
Recent
Financing Transactions
In March
2008, Charter Operating issued $546 million principal amount of 10.875% senior
second-lien notes due 2014 and borrowed $500 million principal amount of
incremental term loans under the Charter Operating credit facilities (see Note
5). In April 2008, Charter Holdco repurchased, in private
transactions, from a small number of institutional holders, a total of
approximately $35 million principal amount of various Charter Holdings notes due
2009 and 2010 and approximately $35 million principal amount of Charter’s 5.875%
convertible senior notes due 2009, for approximately $66 million of
cash. Charter Holdco continues to hold the Charter Holdings
notes. The purchased
9
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars
in millions, except per share amounts and where
indicated)
5.875%
convertible senior notes were cancelled resulting in approximately $14 million
principal amount of such notes remaining outstanding.
3. Franchises
and Goodwill
Franchise
rights represent the value attributed to agreements with local authorities that
allow access to homes in cable service areas acquired through the purchase of
cable systems. Management estimates the fair value of franchise
rights at the date of acquisition and determines if the franchise has a finite
life or an indefinite life as defined by Statement of Financial Accounting
Standards (“SFAS”) No. 142, Goodwill and Other Intangible
Assets. Franchises that qualify for indefinite-life treatment
under SFAS No. 142 are tested for impairment annually each October 1 based
on valuations, or more frequently as warranted by events or changes in
circumstances. Franchises are aggregated into essentially inseparable
asset groups to conduct the valuations. The asset groups generally
represent geographical clustering of the Company’s cable systems into groups by
which such systems are managed. Management believes such grouping
represents the highest and best use of those assets.
As of
March 31, 2008 and December 31, 2007, indefinite-lived and finite-lived
intangible assets are presented in the following table:
|
March
31, 2008
|
December 31,
2007
|
|||||||||||||||||||||||
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
|||||||||||||||||||
|
Indefinite-lived
intangible assets:
|
||||||||||||||||||||||||
|
Franchises
with indefinite lives
|
$ | 8,934 | $ | -- | $ | 8,934 | $ | 8,929 | $ | -- | $ | 8,929 | ||||||||||||
|
Goodwill
|
67 | -- | 67 | 67 | -- | 67 | ||||||||||||||||||
| $ | 9,001 | $ | -- | $ | 9,001 | $ | 8,996 | $ | -- | $ | 8,996 | |||||||||||||
|
Finite-lived
intangible assets:
|
||||||||||||||||||||||||
|
Franchises
with finite lives
|
$ | 15 | $ | 8 | $ | 7 | $ | 23 | $ | 10 | $ | 13 | ||||||||||||
Franchise
amortization expense represents the amortization relating to franchises that did
not qualify for indefinite-life treatment under SFAS No. 142, including costs
associated with franchise renewals. During the three months ended
March 31, 2008, approximately $5 million of franchises that were previously
classified as finite-lived were reclassified to indefinite-lived, based on these
franchises migrating to state-wide franchising. Franchise amortization
expense for each of the three months ended March 31, 2008 and 2007 was
approximately $1 million. The Company expects that amortization
expense on franchise assets will be approximately $2 million annually for each
of the next five years. Actual amortization expense in future periods
could differ from these estimates as a result of new intangible asset
acquisitions or divestitures, changes in useful lives and other relevant
factors.
10
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars
in millions, except per share amounts and where
indicated)
4. Accounts
Payable and Accrued Expenses
Accounts
payable and accrued expenses consist of the following as of March 31, 2008 and
December 31, 2007:
|
March
31,
2008
|
December 31,
2007
|
|||||||
|
Accounts
payable - trade
|
$ | 129 | $ | 127 | ||||
|
Accrued
capital expenditures
|
64 | 95 | ||||||
|
Accrued
expenses:
|
||||||||
|
Interest
|
541 | 418 | ||||||
|
Programming
costs
|
284 | 273 | ||||||
|
Compensation
|
99 | 116 | ||||||
|
Franchise-related
fees
|
44 | 66 | ||||||
|
Other
|
247 | 237 | ||||||
| $ | 1,408 | $ | 1,332 | |||||
|
5.
|
Long-Term
Debt
|
Long-term
debt consists of the following as of March 31, 2008 and December 31,
2007:
|
March
31, 2008
|
December
31, 2007
|
|||||||||||||||
|
Principal
Amount
|
Accreted
Value
|
Principal
Amount
|
Accreted
Value
|
|||||||||||||
|
Long-Term
Debt
|
||||||||||||||||
|
Charter
Communications, Inc.:
|
||||||||||||||||
|
5.875%
convertible senior notes due November 16, 2009
|
$ | 49 | $ | 49 | $ | 49 | $ | 49 | ||||||||
|
6.50%
convertible senior notes due October 1, 2027
|
|
479 | 357 | 479 | 353 | |||||||||||
|
Charter
Communications Holdings, LLC:
|
||||||||||||||||
|
10.000%
senior notes due April 1, 2009
|
88 | 88 | 88 | 88 | ||||||||||||
|
10.750%
senior notes due October 1, 2009
|
63 | 63 | 63 | 63 | ||||||||||||
|
9.625%
senior notes due November 15, 2009
|
37 | 37 | 37 | 37 | ||||||||||||
|
10.250%
senior notes due January 15, 2010
|
18 | 18 | 18 | 18 | ||||||||||||
|
11.750%
senior discount notes due January 15, 2010
|
16 | 16 | 16 | 16 | ||||||||||||
|
11.125%
senior notes due January 15, 2011
|
47 | 47 | 47 | 47 | ||||||||||||
|
13.500%
senior discount notes due January 15, 2011
|
60 | 60 | 60 | 60 | ||||||||||||
|
9.920%
senior discount notes due April 1, 2011
|
51 | 51 | 51 | 51 | ||||||||||||
|
10.000%
senior notes due May 15, 2011
|
69 | 69 | 69 | 69 | ||||||||||||
|
11.750%
senior discount notes due May 15, 2011
|
54 | 54 | 54 | 54 | ||||||||||||
|
12.125%
senior discount notes due January 15, 2012
|
75 | 75 | 75 | 75 | ||||||||||||
|
CCH
I Holdings, LLC:
|
||||||||||||||||
|
11.125%
senior notes due January 15, 2014
|
151 | 151 | 151 | 151 | ||||||||||||
|
13.500%
senior discount notes due January 15, 2014
|
581 | 581 | 581 | 581 | ||||||||||||
|
9.920%
senior discount notes due April 1, 2014
|
471 | 471 | 471 | 471 | ||||||||||||
|
10.000%
senior notes due May 15, 2014
|
299 | 299 | 299 | 299 | ||||||||||||
|
11.750%
senior discount notes due May 15, 2014
|
815 | 815 | 815 | 815 | ||||||||||||
|
12.125%
senior discount notes due January 15, 2015
|
217 | 217 | 217 | 217 | ||||||||||||
|
CCH
I, LLC:
|
||||||||||||||||
|
11.000%
senior notes due October 1, 2015
|
3,987 | 4,080 | 3,987 | 4,083 | ||||||||||||
11
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars
in millions, except per share amounts and where
indicated)
|
March
31, 2008
|
December
31, 2007
|
|||||||||||||||
|
Principal
Amount
|
Accreted
Value
|
Principal
Amount
|
Accreted
Value
|
|||||||||||||
|
CCH
II, LLC:
|
||||||||||||||||
|
10.250%
senior notes due September 15, 2010
|
2,198 | 2,192 | 2,198 | 2,192 | ||||||||||||
|
10.250%
senior notes due October 1, 2013
|
250 | 260 | 250 | 260 | ||||||||||||
|
CCO
Holdings, LLC:
|
||||||||||||||||
|
8
3/4% senior notes due November 15, 2013
|
800 | 796 | 800 | 795 | ||||||||||||
|
Credit
facility
|
350 | 350 | 350 | 350 | ||||||||||||
|
Charter
Communications Operating, LLC:
|
||||||||||||||||
|
8.000%
senior second-lien notes due April 30, 2012
|
1,100 | 1,100 | 1,100 | 1,100 | ||||||||||||
|
8
3/8% senior second-lien notes due April 30, 2014
|
770 | 770 | 770 | 770 | ||||||||||||
|
10.875%
senior second-lien notes due September 15, 2014
|
546 | 525 | -- | -- | ||||||||||||
|
Credit
facilities
|
6,984 | 6,984 | 6,844 | 6,844 | ||||||||||||
| $ | 20,625 | $ | 20,575 | $ | 19,939 | $ | 19,908 | |||||||||
The
accreted values presented above generally represent the principal amount of the
notes less the original issue discount at the time of sale, plus the accretion
to the balance sheet date. However, certain of the notes are recorded
for financial reporting purposes at values different from the current accreted
value for legal purposes and notes indenture purposes (the amount that is
currently payable if the debt becomes immediately due). As of March
31, 2008, the accreted value of the Company’s debt for legal purposes and notes
indenture purposes is $20.6 billion.
In March
2008, Charter Operating issued $546 million principal amount of 10.875% senior
second-lien notes due 2014, guaranteed by CCO Holdings and certain other
subsidiaries of Charter Operating, in a private transaction. Net
proceeds from the senior second-lien notes were used to reduce borrowings, but
not commitments, under the revolving portion of the Charter Operating credit
facilities.
The
Charter Operating 10.875% senior second-lien notes may be redeemed at the option
of Charter Operating on or after varying dates, in each case at a premium, plus
the Make-Whole Premium. The Make-Whole Premium is an amount equal to the
excess of (a) the present value of the remaining interest and principal payments
due on an 10.875% senior second-lien note due 2014 to its final maturity date,
computed using a discount rate equal to the Treasury Rate on such date plus
0.50%, over (b) the outstanding principal amount of such note. The Charter
Operating 10.875% senior second-lien notes may be redeemed at any time on or
after March 15, 2012 at specified prices. In the event of specified change
of control events, Charter Operating must offer to purchase the Charter
Operating 10.875% senior second-lien notes at a purchase price equal to 101% of
the total principal amount of the Charter Operating notes repurchased plus any
accrued and unpaid interest thereon.
In
addition, Charter Operating borrowed $500 million principal amount of
incremental term loans (the "Incremental Term Loans") under the Charter
Operating credit facilities. The Incremental Term Loans have a final maturity of
March 6, 2014 and prior to this date will amortize in quarterly principal
installments totaling 1% annually beginning on June 30, 2008. The
Incremental Term Loans bear interest at LIBOR plus 5.0%, with a LIBOR floor of
3.5%, and are otherwise governed by and subject to the existing terms of the
Charter Operating credit facilities. Net proceeds from the Incremental
Term Loans were used for general corporate purposes.
6. Minority
Interest and Equity Interest of Charter Holdco
Charter
is a holding company whose primary assets are a controlling equity interest in
Charter Holdco, the indirect owner of the Company’s cable systems, and $528
million at March 31, 2008 and December 31, 2007 of mirror notes payable by
Charter Holdco to Charter, and which have the same principal amount and terms as
those of Charter’s 5.875% and 6.50% convertible senior
notes. Minority interest on the Company’s condensed consolidated
balance sheets represents Mr. Allen’s, Charter’s chairman and controlling
shareholder, 5.6% preferred membership interests in CC VIII, LLC ("CC VIII"), an
indirect subsidiary of Charter Holdco, of $201 million and $199 million as of
March 31, 2008 and December 31, 2007, respectively.
12
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars
in millions, except per share amounts and where
indicated)
|
7.
|
Comprehensive
Loss
|
The
Company reports changes in the fair value of interest rate agreements designated
as hedging the variability of cash flows associated with floating-rate debt
obligations, that meet the effectiveness criteria of SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, in accumulated other comprehensive
loss. Comprehensive loss was $462 million and $387 million for the
three months ended March 31, 2008 and 2007, respectively.
|
8.
|
Accounting
for Derivative Instruments and Hedging
Activities
|
The
Company uses interest rate swap agreements to manage its interest costs and
reduce the Company’s exposure to increases in floating interest
rates. The Company’s policy is to manage its exposure to fluctuations
in interest rates by maintaining a mix of fixed and variable rate debt within a
targeted range. Using interest rate swap agreements, the Company
agrees to exchange, at specified intervals through 2013, the difference between
fixed and variable interest amounts calculated by reference to agreed-upon
notional principal amounts.
The
Company’s hedging policy does not permit it to hold or issue derivative
instruments for speculative trading purposes. The Company does,
however, have certain interest rate derivative instruments that have been
designated as cash flow hedging instruments. Such instruments
effectively convert variable interest payments on certain debt instruments into
fixed payments. For qualifying hedges, SFAS No. 133 allows derivative
gains and losses to offset related results on hedged items in the consolidated
statement of operations. The Company has formally documented,
designated and assessed the effectiveness of transactions that receive hedge
accounting. For each of the three months ended March 31, 2008 and
2007, there was no cash flow hedge ineffectiveness on interest rate swap
agreements.
Changes
in the fair value of interest rate agreements that are designated as hedging
instruments of the variability of cash flows associated with floating-rate debt
obligations, and that meet the effectiveness criteria specified by SFAS No. 133
are reported in accumulated other comprehensive loss. For the three
months ended March 31, 2008 and 2007, losses of $104 million and $2 million,
respectively, related to derivative instruments designated as cash flow hedges,
were recorded in accumulated other comprehensive loss. The amounts
are subsequently reclassified as an increase or decrease to change in value of
derivatives in the same periods in which the related interest on the
floating-rate debt obligations affects earnings (losses).
Certain
interest rate derivative instruments are not designated as hedges as they do not
meet the effectiveness criteria specified by SFAS No. 133. However,
management believes such instruments are closely correlated with the respective
debt, thus managing associated risk. Interest rate derivative
instruments not designated as hedges are marked to fair value, with the impact
recorded as a change in value of derivatives in the Company’s consolidated
statements of operations. For the three months ended March 31, 2008 and
2007, change in value of derivatives includes losses of $30 million and
$1 million, respectively, resulting from interest rate derivative instruments
not designated as hedges.
As of
March 31,
2008 and December 31, 2007, the Company had $4.3 billion in notional
amounts of interest rate swaps outstanding. The notional amounts of
interest rate instruments do not represent amounts exchanged by the parties and,
thus, are not a measure of exposure to credit loss. The amounts
exchanged are determined by reference to the notional amount and the other terms
of the contracts.
Certain
provisions of the Company’s 5.875% and 6.50% convertible senior notes issued in
November 2004 and October 2007, respectively, were considered embedded
derivatives for accounting purposes and were required to be accounted for
separately from the convertible senior notes. In accordance with SFAS
No. 133, these derivatives are marked to market with gains or losses recorded as
the change in value of derivatives on the Company’s consolidated statement of
operations. For the three months ended March 31, 2008, the Company
recognized $7 million in losses related to these derivatives, as compared to no
gains or losses for the same period in 2007. At March 31, 2008 and
December 31, 2007, $40 million and $33 million, respectively, is recorded on the
Company’s balance sheets related to these derivatives.
13
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars
in millions, except per share amounts and where
indicated)
The Company adopted SFAS
157, Fair
Value
Measurements, on its financial assets and liabilities effective January
1, 2008, and has an established process for determining fair
value. The Company has deferred adoption of SFAS 157 on its
nonfinancial assets and liabilities including fair value measurements under SFAS
142 and SFAS 144 of franchises, goodwill, property, plant, and equipment, and
other long-term assets until January 1, 2009 as permitted by FASB Staff Position
(“FSP”) 157-2. Fair value is based upon quoted market prices, where
available. If such valuation methods are not available, fair value is
based on internally or externally developed models using market-based or
independently-sourced market parameters, where available. Fair value
may be subsequently adjusted to ensure that those assets and liabilities are
recorded at fair value. The Company’s methodology may produce a fair
value that may not be indicative of net realizable value or reflective of future
fair values, but the Company believes its methods are appropriate and consistent
with other market peers. The use of different methodologies or
assumptions to determine the fair value of certain financial instruments could
result in a different fair value estimate as of the Company’s reporting
date.
SFAS 157
establishes a three-level hierarchy for disclosure of fair value measurements,
based upon the transparency of inputs to the valuation of an asset or liability
as of the measurement date, as follows:
|
·
|
Level
1 – inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active
markets.
|
|
·
|
Level
2 – inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for
substantially the full term of the financial
instrument.
|
|
·
|
Level
3 – inputs to the valuation methodology are unobservable and significant
to the fair value measurement.
|
Interest
rate derivatives are valued using a present value calculation based on an
implied forward LIBOR curve (adjusted for Charter Operating’s credit risk)
classified within level 2 of the valuation hierarchy. The fair values
of the embedded derivatives within Charter’s 5.875% and 6.50% convertible senior
notes issued in November 2004 and October 2007, respectively, are derived from
valuations using a simulation technique with market based inputs, including
Charter’s Class A common stock price, implied volatility of Charter’s Class A
common stock, Charter’s credit risk and costs to borrow Charter’s Class A common
stock. These valuations are classified within level 3 of the
valuation hierarchy.
As of
March 31, 2008, Charter had $74 million of available-for-sale investments in
commercial paper with initial maturities of between three and six
months. The investments were valued using quoted prices classified
within level 1 of the valuation hierarchy. In April 2008, $61 million
of the investments were liquidated.
The
Company’s financial assets and financial liabilities that are accounted for at
fair value on a recurring basis are presented in the table below:
|
Fair
Value As of March 31, 2008
|
||||||||||||||||
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|||||||||||||
|
Short-term
investments:
|
||||||||||||||||
|
Available-for-sale
investments
|
$ | 74 | $ | -- | $ | -- | $ | 74 | ||||||||
| $ | 74 | $ | -- | $ | -- | $ | 74 | |||||||||
|
Other
long-term liabilities:
|
||||||||||||||||
|
Interest
rate swap agreements
|
$ | -- | $ | 303 | $ | -- | $ | 303 | ||||||||
|
Embedded
derivatives
|
-- | -- | 40 | 40 | ||||||||||||
| $ | -- | $ | 303 | $ | 40 | $ | 343 | |||||||||
14
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars
in millions, except per share amounts and where
indicated)
9. Other
Operating Expenses, Net
Other
operating expenses, net consist of the following for the three months ended
March 31, 2008 and 2007:
|
Three
Months
Ended
March 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Loss
on sale of assets, net
|
$ | 2 | $ | 3 | ||||
|
Special
charges, net
|
9 | 1 | ||||||
| $ | 11 | $ | 4 | |||||
Special
charges, net for the three months ended March 31, 2008 primarily represent
severance charges and litigation settlements. Special charges, net
for the three months ended March 31, 2007 primarily represent severance
charges.
|
10.
|
Other
Expense, Net
|
Other
expense, net consists of the following for the three months ended March 31, 2008
and 2007:
|
Three
Months
Ended
March 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Loss
on extinguishment of debt
|
$ | -- | $ | (1 | ) | |||
|
Minority
interest
|
(2 | ) | (2 | ) | ||||
|
Other,
net
|
(1 | ) | -- | |||||
| $ | (3 | ) | $ | (3 | ) | |||
|
11.
|
Income
Taxes
|
All
operations are held through Charter Holdco and its direct and indirect
subsidiaries. Charter Holdco and the majority of its subsidiaries are
generally limited liability companies that are not subject to income
tax. However, certain of these limited liability companies are
subject to state income tax. In addition, the subsidiaries that are
corporations are subject to federal and state income tax. All of the
remaining taxable income, gains, losses, deductions and credits of Charter
Holdco are passed through to its members: Charter, Charter Investment, Inc.
(“CII”) and Vulcan Cable III Inc. ("Vulcan Cable"). Charter is
responsible for its share of taxable income or loss of Charter Holdco allocated
to Charter in accordance with the Charter Holdco limited liability company
agreement (the "LLC Agreement") and partnership tax rules and
regulations. Charter also records financial statement deferred tax
assets and liabilities related to its investment in Charter Holdco.
During the three months
ended March 31, 2008 and 2007, the Company recorded $58 million and $69 million
of income tax expense, respectively. Income tax expense was
recognized through increases in deferred tax liabilities related to Charter’s
investment in Charter Holdco, and certain of Charter’s subsidiaries, in addition
to current federal and state income tax expense.
As of
March 31, 2008 and December 31, 2007, the Company had net deferred income tax
liabilities of approximately $723 million and $665 million,
respectively. Included in these deferred tax liabilities is
approximately $228 million and $226 million of deferred tax liabilities at March
31, 2008 and December 31, 2007, respectively, relating to certain indirect
subsidiaries of Charter Holdco that file separate income tax returns. The
remainder of the Company’s deferred
15
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars
in millions, except per share amounts and where
indicated)
tax
liability arises from Charter’s investment in Charter Holdco, and is largely
attributable to the characterization of franchises for financial reporting
purposes as indefinite-lived.
As of
March 31, 2008, the Company has deferred tax assets of $5.2 billion, which
include $1.9 billion of financial losses in excess of tax losses allocated to
Charter from Charter Holdco. The deferred tax assets also include
$3.3 billion of tax net operating loss carryforwards (generally expiring in
years 2008 through 2028) of Charter and its indirect
subsidiaries. Valuation allowances of $4.9 billion exist with respect
to these deferred tax assets. In assessing the realizability of
deferred tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will be
realized. Because of the uncertainties in projecting future taxable
income of Charter Holdco, valuation allowances have been established except for
deferred benefits available to offset certain deferred tax liabilities that will
reverse over time.
The
amount of any benefit from the Company’s tax net operating losses is dependent
on: (1) Charter and its subsidiaries’ ability to generate future taxable income
and (2) the unexpired amount of net operating loss carryforwards available to
offset amounts payable on such taxable income. Any future “ownership
changes” of Charter's common stock, as defined in the applicable federal income
tax rules, would place significant limitations, on an annual basis, on the use
of such net operating losses to offset any future taxable income the Company may
generate. Such limitations, in conjunction with the net operating
loss expiration provisions, could effectively eliminate the Company’s ability to
use a substantial portion of its net operating losses to offset future taxable
income. Although the Company has adopted the Rights Plan as an
attempt to protect against an “ownership change,” certain transactions and the
timing of such transactions could cause such an ownership change including, but
not limited to, the following: the issuance of shares of
common stock upon future conversion of Charter’s convertible senior notes;
reacquisition of the shares borrowed under the share lending agreement by
Charter (of which 24.8 million were outstanding as of March 31, 2008); or
acquisitions or sales of shares by certain holders of Charter’s shares,
including persons who have held, currently hold, or accumulate in the future,
five percent or more of Charter’s outstanding stock (including upon an exchange
by Mr. Allen or his affiliates, directly or indirectly, of membership units of
Charter Holdco into CCI common stock). Many of the foregoing
transactions, including whether Mr. Allen exchanges his Charter Holdco units,
are beyond management’s control.
The
deferred tax liability for Charter’s investment in Charter Holdco is largely
attributable to the characterization of franchises for financial reporting
purposes as indefinite lived. If certain exchanges, as described
above, were to take place, Charter would likely record for financial reporting
purposes additional deferred tax liability related to its increased interest in
Charter Holdco and the related underlying indefinite lived franchise
assets.
Charter
and Charter Holdco are currently under examination by the Internal Revenue
Service for the tax years ending December 31, 2004 and
2005. Management does not expect the results of these
examinations to have a material adverse effect on the Company’s consolidated
financial condition or results of operations.
In
January 2007, the Company adopted FIN 48, Accounting for Uncertainty in Income
Taxes—an Interpretation of FASB Statement No. 109, which provides
criteria for the recognition, measurement, presentation and disclosure of
uncertain tax positions. A tax benefit from an uncertain position may be
recognized only if it is “more likely than not” that the position is sustainable
based on its technical merits. The adoption of FIN 48 resulted in a
deferred tax benefit of $56 million related to a settlement with Mr. Allen
regarding ownership of the CC VIII preferred membership interests, which was
recognized as a cumulative adjustment to the accumulated deficit in the first
quarter of 2007. The Company does not believe it has taken any
significant positions that would not meet the “more likely than not” criteria
and require disclosure.
12. Contingencies
The
Company is a defendant or co-defendant in several unrelated lawsuits claiming
infringement of various patents relating to various aspects of its
businesses. Other industry participants are also defendants in
certain of these cases, and, in many cases, the Company expects that any
potential liability would be the responsibility of its equipment vendors
pursuant to applicable contractual indemnification provisions. In the event that
a court ultimately determines
16
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars
in millions, except per share amounts and where
indicated)
that the
Company infringes on any intellectual property rights, it may be subject to
substantial damages and/or an injunction that could require the Company or its
vendors to modify certain products and services the Company offers to its
subscribers. While the Company believes the lawsuits are without
merit and intends to defend the actions vigorously, the lawsuits could be
material to the Company’s consolidated results of operations of any one period,
and no assurance can be given that any adverse outcome would not be material to
the Company’s consolidated financial condition, results of operations or
liquidity.
Charter
is a party to lawsuits and claims that arise in the ordinary course of
conducting its business. The ultimate outcome of these other legal
matters pending against the Company or its subsidiaries cannot be predicted, and
although such lawsuits and claims are not expected individually to have a
material adverse effect on the Company’s consolidated financial condition,
results of operations or liquidity, such lawsuits could have, in the aggregate,
a material adverse effect on the Company’s consolidated financial condition,
results of operations or liquidity.
13. Stock
Compensation Plans
The
Company has stock compensation plans (the “Plans”) which provide for the grant
of non-qualified stock options, stock appreciation rights, dividend equivalent
rights, performance units and performance shares, share awards, phantom stock
and/or shares of restricted stock (not to exceed 20.0 million shares of Charter
Class A common stock), as each term is defined in the
Plans. Employees, officers, consultants and directors of the Company
and its subsidiaries and affiliates are eligible to receive grants under the
Plans. Options granted generally vest over four years from the grant
date, with 25% generally vesting on the first anniversary of the grant date and
ratably thereafter. Generally, options expire 10 years from the
grant date. Restricted stock vests annually over a one to three-year
period beginning from the date of grant. The 2001 Stock Incentive
Plan allows for the issuance of up to a total of 90.0 million shares of Charter
Class A common stock (or units convertible into Charter Class A common
stock). In March 2008, the Company adopted an incentive program to
allow for performance cash. Under the incentive program, performance
units under the 2001 Stock Incentive Plan and performance cash are deposited
into a performance bank of which one-third of the balance is paid out each
year. During the three months ended March 31, 2008, Charter granted
9.9 million shares of restricted stock, 11.7 million performance units, and $8
million of performance cash under Charter’s 2008 incentive
program.
The
Company recorded $8 million and $5 million of stock compensation expense for the
three months ended March 31, 2008 and 2007, respectively, which is included in
selling, general, and administrative expense.
14. Recently
Issued Accounting Standards
In March
2008, the FASB issued SFAS 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No.
133, which requires companies to disclose their objectives and strategies
for using derivative instruments, whether or not designated as hedging
instruments under SFAS 133. SFAS 161 is effective for interim periods
and fiscal years beginning after November 15, 2008. The Company will
adopt SFAS 161 effective January 1, 2009. The Company is currently
assessing the impact of SFAS 161 on its financial statements.
The
Company does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on its
accompanying financial statements.
17
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
|
General
Charter
Communications, Inc. ("Charter") is a holding company whose principal assets at
March 31, 2008 are the 55% controlling common equity interest (52% for
accounting purposes) in Charter Communications Holding Company, LLC ("Charter
Holdco") and "mirror" notes that are payable by Charter Holdco to Charter and
have the same principal amount and terms as Charter’s convertible senior
notes.
We are a
broadband communications company operating in the United States with
approximately 5.6 million customers at March 31, 2008. Through our
hybrid fiber and coaxial cable network, we offer our customers traditional cable
video programming (analog and digital, which we refer to as “video” service),
high-speed Internet access, and telephone services, as well as, advanced
broadband services (such as OnDemand high definition television service, and
DVR).
The
following table summarizes our customer statistics for basic video, digital
video, residential high-speed Internet, and telephone as of March 31, 2008 and
2007:
|
Approximate
as of
|
||||||||
|
March
31,
|
March
31,
|
|||||||
|
2008
(a)
|
2007
(a)
|
|||||||
|
Video
Cable Services:
|
||||||||
|
Basic
Video:
|
||||||||
|
Residential
(non-bulk) basic video customers (b)
|
4,949,100 | 5,146,700 | ||||||
|
Multi-dwelling
(bulk) and commercial unit customers (c)
|
258,900 | 268,700 | ||||||
|
Total
basic video customers (b)(c)
|
5,208,000 | 5,415,400 | ||||||
|
Digital
Video:
|
||||||||
|
Digital
video customers (d)
|
3,023,200 | 2,862,900 | ||||||
|
Non-Video
Cable Services:
|
||||||||
|
Residential
high-speed Internet customers (e)
|
2,768,200 | 2,525,900 | ||||||
|
Telephone
customers (f)
|
1,085,000 | 572,600 | ||||||
After
giving effect to sales and acquisitions of cable systems in 2007, basic video
customers, digital video customers, high-speed Internet customers and telephone
customers would have been 5,353,300, 2,835,400, 2,517,300, and 573,300,
respectively, as of March 31, 2007.
|
(a)
|
"Customers"
include all persons our corporate billing records show as receiving
service (regardless of their payment status), except for complimentary
accounts (such as our employees). At March 31, 2008 and 2007,
"customers" include approximately 30,600 and 31,700 persons whose accounts
were over 60 days past due in payment, approximately 4,700 and 4,100
persons whose accounts were over 90 days past due in payment, and
approximately 3,200 and 2,000 of which were over 120 days past due in
payment, respectively.
|
|
(b
|
"Basic
video customers" include all residential customers who receive video cable
services.
|
|
(c)
|
Included
within "basic video customers" are those in commercial and multi-dwelling
structures, which are calculated on an equivalent bulk unit ("EBU")
basis. EBU is calculated for a system by dividing the bulk
price charged to accounts in an area by the most prevalent price charged
to non-bulk residential customers in that market for the comparable tier
of service. The EBU method of estimating basic video customers
is consistent with the methodology used in determining costs paid to
programmers and has been used
consistently.
|
|
(d)
|
"Digital
video customers" include all basic video customers that have one or more
digital set-top boxes or cable cards
deployed.
|
18
|
(e)
|
"Residential
high-speed Internet customers" represent those residential customers who
subscribe to our high-speed Internet
service.
|
|
(f)
|
"Telephone
customers" include all customers receiving telephone
service.
|
Overview
For the
three months ended March 31, 2008 and 2007, our income from operations was $205
million and $156 million, respectively. We had operating margins of
13% and 11% for the three months ended March 31, 2008 and 2007,
respectively. The increase in income from operations and operating
margins for the three months ended March 31, 2008 compared to the three months
ended March 31, 2007 was principally due to an increase in revenue over cash
expenses as a result of increased customers for high-speed Internet, digital
video, and telephone, as well as overall rate increases.
We have a
history of net losses. Further, we expect to continue to report net
losses for the foreseeable future. Our net losses are principally
attributable to insufficient revenue to cover the combination of operating
expenses and interest expenses we incur because of our high amounts of debt, and
depreciation expenses resulting from the capital investments we have made and
continue to make in our cable properties. We expect that these
expenses will remain significant.
Critical
Accounting Policies and Estimates
For a
discussion of our critical accounting policies and the means by which we develop
estimates therefore, see "Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations" in our 2007 Annual Report on Form
10-K.
19
RESULTS
OF OPERATIONS
The
following table sets forth the percentages of revenues that items in the
accompanying condensed consolidated statements of operations constituted for the
periods presented (dollars in millions, except per share data):
|
Three
Months Ended March 31,
|
||||||||||||||||
|
2008
|
2007
|
|||||||||||||||
|
REVENUES
|
$ | 1,564 | 100 | % | $ | 1,425 | 100 | % | ||||||||
|
COSTS
AND EXPENSES:
|
||||||||||||||||
|
Operating
(excluding depreciation
and
amortization)
|
681 | 44 | % | 631 | 44 | % | ||||||||||
|
Selling,
general and administrative
|
346 | 22 | % | 303 | 21 | % | ||||||||||
|
Depreciation
and amortization
|
321 | 21 | % | 331 | 24 | % | ||||||||||
|
Other
operating expenses, net
|
11 | -- | 4 | -- | ||||||||||||
| 1,359 | 87 | % | 1,269 | 89 | % | |||||||||||
|
Income
from operations
|
205 | 13 | % | 156 | 11 | % | ||||||||||
|
OTHER
EXPENSES:
|
||||||||||||||||
|
Interest
expense, net
|
(465 | ) | (464 | ) | ||||||||||||
|
Change
in value of derivatives
|
(37 | ) | (1 | ) | ||||||||||||
|
Other
expense, net
|
(3 | ) | (3 | ) | ||||||||||||
| (505 | ) | (468 | ) | |||||||||||||
|
Loss
before income taxes
|
(300 | ) | (312 | ) | ||||||||||||
|
INCOME
TAX EXPENSE
|
(58 | ) | (69 | ) | ||||||||||||
|
Net
loss
|
$ | (358 | ) | $ | (381 | ) | ||||||||||
|
LOSS
PER COMMON SHARE, BASIC AND DILUTED:
|
||||||||||||||||
|
Net
loss
|
$ | (0.97 | ) | $ | (1.04 | ) | ||||||||||
|
Weighted
average common shares outstanding, basic and diluted
|
370,085,187 | 366,120,096 | ||||||||||||||
Revenues. Average
monthly revenue per basic video customer increased to $100 for the three months
ended March 31, 2008 from $88 for the three months ended March 31,
2007. Average monthly revenue per basic video customer represents
total quarterly revenue, divided by three, divided by the average number of
basic video customers during the respective period. Revenue growth
primarily reflects increases in the number of telephone, high-speed Internet,
and digital video customers, price increases, and incremental video revenues
from OnDemand, DVR, and high-definition television services offset by a decrease
in basic video customers. Cable system sales, net of acquisitions, in
2007 reduced the increase in revenues for the three months ended March 31, 2008
as compared to the three months ended March 31, 2007 by approximately $9
million.
20
Revenues
by service offering were as follows (dollars in millions):
|
Three
Months Ended March 31,
|
||||||||||||||||||||||||
|
2008
|
2007
|
2008
over 2007
|
||||||||||||||||||||||
|
Revenues
|
%
of
Revenues
|
Revenues
|
%
of
Revenues
|
Change
|
%
Change
|
|||||||||||||||||||
|
Video
|
$ | 858 | 55 | % | $ | 838 | 59 | % | $ | 20 | 2 | % | ||||||||||||
|
High-speed
Internet
|
328 | 21 | % | 294 | 21 | % | 34 | 12 | % | |||||||||||||||
|
Telephone
|
121 | 8 | % | 63 | 4 | % | 58 | 92 | % | |||||||||||||||
|
Commercial
|
93 | 6 | % | 81 | 6 | % | 12 | 15 | % | |||||||||||||||
|
Advertising
sales
|
68 | 4 | % | 63 | 4 | % | 5 | 8 | % | |||||||||||||||
|
Other
|
96 | 6 | % | 86 | 6 | % | 10 | 12 | % | |||||||||||||||
| $ | 1,564 | 100 | % | $ | 1,425 | 100 | % | $ | 139 | 10 | % | |||||||||||||
Video
revenues consist primarily of revenues from basic and digital video services
provided to our non-commercial customers. Basic video customers
decreased by 207,400 customers from March 31, 2007, 62,100 of which was related
to asset sales, net of acquisitions, compared to March 31,
2008. Digital video customers increased by 160,300, reduced by the
sale, net of acquisitions, of 27,500 customers. The increases in
video revenues are attributable to the following (dollars in
millions):
|
Three
months ended
March
31, 2008
compared
to
three
months ended
March
31, 2007
Increase
/ (Decrease)
|
||||
|
Incremental
video services and rate adjustments
|
$ | 29 | ||
|
Increase
in digital video customers
|
15 | |||
|
Decrease
in basic video customers
|
(17 | ) | ||
|
System
sales, net of acquisitions
|
(7 | ) | ||
| $ | 20 | |||
High-speed
Internet customers grew by 242,300 customers, reduced by system sales, net of
acquisitions, of 8,600 customers, from March 31, 2008 to March 31,
2007. The increase in high-speed Internet revenues from our
residential customers is attributable to the following (dollars in
millions):
|
Three
months ended
March
31, 2008
compared
to
three
months ended
March
31, 2007
Increase
/ (Decrease)
|
||||
|
Increase
in high-speed Internet customers
|
$ | 33 | ||
|
Rate
adjustments and service upgrades
|
2 | |||
|
System
sales, net of acquisitions
|
(1 | ) | ||
| $ | 34 | |||
Revenues
from telephone services increased primarily as a result of an increase of
512,400 telephone customers from March 31, 2007 to March 31, 2008.
21
Commercial
revenues consist primarily of revenues from services provided to our commercial
customers. Commercial revenues increased primarily as a result of
increases in commercial high-speed Internet and telephone
customers.
Advertising
sales revenues consist primarily of revenues from commercial advertising
customers, programmers, and other vendors. Advertising sales revenues
increased primarily as a result of an increase in political advertising
sales offset by
decreased revenues from the automotive and furniture
sectors. For each of the three months ended March 31, 2008 and
2007, we received $4 million in advertising sales revenues from
vendors.
Other
revenues consist of franchise fees, equipment rental, customer installations,
home shopping, late payment fees, wire maintenance fees and other miscellaneous
revenues. For the three months ended March 31, 2008 and 2007,
franchise fees represented approximately 52% and 51%, respectively, of total
other revenues. The increase was primarily the result of increases in
universal service fund revenues, wire maintenance fees, and late payment
fees.
Operating
expenses. The increase in
operating expenses is attributable to the following (dollars in
millions):
|
Three
months ended
March
31, 2008
compared
to
three
months ended
March
31, 2007
Increase
/ (Decrease)
|
||||
|
Labor
costs
|
$ | 20 | ||
|
Programming
costs
|
20 | |||
|
Maintenance
costs
|
4 | |||
|
Costs
of providing high-speed Internet and telephone services
|
2 | |||
|
Other,
net
|
9 | |||
|
System
sales, net of acquisitions
|
(5 | ) | ||
| $ | 50 | |||
Programming
costs were approximately $409 million and $393 million, representing 60% and 62%
of total operating expenses for the three months ended March 31, 2008 and 2007,
respectively. Programming costs consist primarily of costs paid to
programmers for analog, premium, digital, OnDemand, and pay-per-view
programming. The increase in programming costs is primarily a result
of annual contractual rate adjustments. Programming costs were also
offset by the amortization of payments received from programmers in support of
launches of new channels of $5 million for each of the three months ended March
31, 2008 and 2007. We expect programming expenses to continue to
increase due to a variety of factors, including annual increases imposed by
programmers, amounts paid for retransmission consent, and additional
programming, including high-definition and OnDemand programming, being provided
to our customers.
Labor
costs increased primarily due to an increased headcount to support improved
service levels and telephone deployment.
22
Selling, general
and administrative expenses. The increase in
selling, general and administrative expenses is attributable to the following
(dollars in millions):
|
Three
months ended
March
31, 2008
compared
to
three
months ended
March
31, 2007
Increase
/ (Decrease)
|
||||
|
Employee
costs
|
$ | 16 | ||
|
Bad
debt and collection costs
|
8 | |||
|
Marketing
costs
|
7 | |||
|
Stock
compensation costs
|
3 | |||
|
Other,
net
|
10 | |||
|
System
sales, net of acquisitions
|
(1 | ) | ||
| $ | 43 | |||
Depreciation and
amortization. Depreciation and
amortization expense decreased by $10 million for the three months ended March
31, 2008 compared to March 31, 2007, and was primarily the result of certain
assets becoming fully depreciated and the impact to changes in the useful lives
of certain assets during 2007, offset by depreciation on capital
expenditures.
Other operating
expenses, net. For the three months ended March 31, 2008
compared to March 31, 2007, the increase in other operating expenses, net is
primarily attributable to an $8 million increase in special
charges. For more information, see Note 9 to the accompanying
condensed consolidated financial statements contained in “Item 1. Financial
Statements.”
Interest expense,
net. For
the three months ended March 31, 2008 compared to the three months ended March
31, 2007, net interest expense increased by $1 million, which was a result of
average debt outstanding increasing from $19.2 billion for the first quarter of
2007 to $20.3 billion for the first quarter of 2008, offset by a decrease in our
average borrowing rate from 9.5% in the first quarter of 2007 to 8.8% in the
first quarter of 2008.
Other expense,
net. Other expense remained consistent between
quarters. For more information, see Note 10 to the accompanying
condensed consolidated financial statements contained in “Item 1. Financial
Statements.”
Change in value
of derivatives. Interest rate swaps are
held to manage our interest costs and reduce our exposure to increases in
floating interest rates. Additionally, certain provisions of our
5.875% and 6.50% convertible senior notes issued in November 2004 and October
2007, respectively, were considered embedded derivatives for accounting purposes
and were required to be accounted for separately from the convertible senior
notes and marked to fair value at the end of each reporting
period. Change in value of derivatives consists of the following for
the three months ended March 31, 2008 and 2007:
|
Three
months ended March 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Interest
rate swaps
|
$ | (30 | ) | $ | (1 | ) | ||
|
Embedded
derivatives from convertible senior notes
|
(7 | ) | -- | |||||
| $ | (37 | ) | $ | (1 | ) | |||
Income tax
expense. Income tax expense was
recognized for the three months ended March 31, 2008 and 2007, through increases
in deferred tax liabilities related to our investment in Charter Holdco and
certain of our subsidiaries, in addition to current federal and state income tax
expense. Income tax expense included $18 million of deferred tax
expense related to asset sales occurring in the three months ended March 31,
2007.
23
Net
loss. Net
loss decreased by $23 million, or 6%, for the three months ended March 31, 2008
compared to the three months ended March 31, 2007 as a result of the factors
described above.
Loss per common
share. During the three months
ended March 31, 2008 compared to the three months ended March 31, 2007, net loss
per common share decreased by $0.07, or 7%, as a result of the factors described
above.
Liquidity and Capital
Resources
Introduction
This
section contains a discussion of our liquidity and capital resources, including
a discussion of our cash position, sources and uses of cash, access to credit
facilities and other financing sources, historical financing activities, cash
needs, capital expenditures and outstanding debt.
We have
significant amounts of debt. Our long-term debt as of March 31, 2008
totaled $20.6 billion, consisting of $7.3 billion of credit facility debt, $12.8
billion accreted value of high-yield notes, and $406 million accreted value of
convertible senior notes. For the remainder of 2008, $53 million of
our debt matures. As of March 31, 2008, our 2009 debt maturities
totaled $307 million. In 2010 and beyond, significant additional
amounts will become due under our remaining long-term debt
obligations.
Our
business requires significant cash to fund debt service costs, capital
expenditures and ongoing operations. We have historically funded
these requirements through cash flows from operating activities, borrowings
under our credit facilities, proceeds from sales of assets, issuances of debt
and equity securities, and cash on hand. However, the mix of funding
sources changes from period to period. For the three months ended
March 31, 2008, we generated $204 million of net cash flows from operating
activities after paying cash interest of $323 million. In addition,
we used $408 million for purchases of property, plant and equipment and
short-term investments. Finally, we generated net cash flows from
financing activities of $624 million, as a result of refinancing transactions
completed during the quarter. We expect that our mix of sources of
funds will continue to change in the future based on overall needs relative to
our cash flow and on the availability of funds under the credit facilities of
our subsidiaries, our access to the debt and equity markets, the timing of
possible asset sales, and based on our ability to generate cash flows from
operating activities.
We expect
that cash on hand, cash flows from operating activities, and the amounts
available under Charter Operating’s credit facilities will be adequate to fund
our projected cash needs, including scheduled maturities, through
2009. We believe that cash flows from operating activities and the
amounts available under Charter Operating’s credit facilities will not be
sufficient to fund projected cash needs in 2010 (primarily as a result of the
CCH II, LLC (“CCH II”) $2.2 billion of senior notes maturing in September 2010)
and thereafter. Our projected cash needs and projected sources of
liquidity depend upon, among other things, our actual results, the timing and
amount of our capital expenditures, and ongoing compliance with the Charter
Operating credit facilities, including obtaining an unqualified audit opinion
from our independent accountants. Although we have been able to
refinance or otherwise fund the repayment of debt in the past, we may not be
able to access additional sources of refinancing on similar terms or pricing as
those that are currently in place, or at all, or otherwise obtain other sources
of funding. A continuation of the recent turmoil in the credit
markets and the general economic downturn could adversely impact the terms
and/or pricing when we need to raise additional liquidity.
Access
to Capital
Our
significant amount of debt could negatively affect our ability to access
additional capital in the future. Additionally, our ability to incur
additional debt may be limited by the restrictive covenants in our indentures
and credit facilities. No assurances can be given that we will not
experience liquidity problems if we do not obtain sufficient additional
financing on a timely basis as our debt becomes due or because of adverse market
conditions, increased competition or other unfavorable events. If, at
any time, additional capital or borrowing capacity is required beyond amounts
internally generated or available under our credit facilities, we would
consider:
|
•
|
issuing
equity that would significantly dilute existing
shareholders;
|
|
|
•
|
issuing
convertible debt or some other securities that may have structural or
other priority over our existing notes and may also, in the case of
convertible debt, significantly dilute Charter’s existing
shareholders;
|
|
|
•
|
further
reducing our expenses and capital expenditures, which may impair our
ability to increase revenue and
|
24
|
|
grow
operating cash flows;
|
|
|
•
|
selling
assets; or
|
|
|
•
|
requesting
waivers or amendments with respect to our credit facilities, which may not
be available on acceptable terms, and cannot be
assured.
|
If the
above strategies were not successful, we could be forced to restructure our
obligations or seek protection under the bankruptcy laws. In
addition, if we need to raise additional capital through the issuance of equity
or find it necessary to engage in a recapitalization or other similar
transaction, our shareholders could suffer significant dilution, including
potential loss of the entire value of their investment, and in the case of a
recapitalization or other similar transaction, our noteholders might not receive
the full principal and interest payments to which they are contractually
entitled.
Credit
Facility Availability
Our
ability to operate depends upon, among other things, our continued access to
capital, including credit under the Charter Operating credit
facilities. The Charter Operating credit facilities, along with our
indentures and the CCO Holdings, LLC (“CCO Holdings”) credit facility, contain
certain restrictive covenants, some of which require us to maintain specified
leverage ratios and meet financial tests, and provide annual audited financial
statements with an unqualified opinion from our independent
accountants. As of March 31, 2008, we were in compliance with the
covenants under our indentures and credit facilities, and we expect to remain in
compliance with those covenants for the next twelve months. As of
March 31, 2008, our potential availability under Charter Operating’s revolving
credit facility totaled approximately $1.4 billion, none of which was limited by
covenant restrictions. Continued access to our revolving credit
facility is subject to our remaining in compliance with these covenants,
including covenants tied to Charter Operating’s leverage ratio and first lien
leverage ratio. If any event of non-compliance were to occur, funding
under the revolving credit facility may not be available and defaults on some or
potentially all of our debt obligations could occur. An event of
default under any of our debt instruments could result in the acceleration of
our payment obligations under that debt and, under certain circumstances, in
cross-defaults under our other debt obligations, which could have a material
adverse effect on our consolidated financial condition and results of
operations.
Limitations
on Distributions
As long
as Charter’s convertible senior notes remain outstanding and are not otherwise
converted into shares of common stock, Charter must pay interest on the
convertible senior notes and repay the principal amount. Charter’s
ability to make interest payments on its convertible senior notes and to repay
the outstanding principal of its convertible senior notes will depend on its
ability to raise additional capital and/or on receipt of payments or
distributions from Charter Holdco and its subsidiaries. As of March 31,
2008, Charter Holdco was owed $127 million in intercompany loans from Charter
Operating and had $63 million in cash and short-term investments, which amounts
were available to pay interest and principal on Charter's convertible senior
notes. In April 2008, Charter Holdco used $66 million to repurchase
Charter convertible notes and Charter Holdings notes. (See “Recent
Financing Transactions” below.)
Distributions
by Charter’s subsidiaries to a parent company (including Charter, Charter Holdco
and CCHC, LLC (“CCHC”)) for payment of principal on parent company notes, are
restricted under the indentures governing the CCH I Holdings, LLC (“CIH”) notes,
CCH I, LLC (“CCH I”) notes, CCH II notes, CCO Holdings notes, Charter Operating
notes, and under the CCO Holdings credit facility, unless there is no default
under the applicable indenture and credit facilities, and unless each applicable
subsidiary’s leverage ratio test is met at the time of such
distribution. For the quarter ended March 31, 2008, there was no
default under any of these indentures or credit facilities. However,
certain of our subsidiaries did not meet their applicable leverage ratio tests
based on March 31, 2008 financial results. As a result, distributions
from certain of our subsidiaries to their parent companies would have been
restricted at such time and will continue to be restricted unless those tests
are met. Distributions by Charter Operating for payment of principal
on parent company notes are further restricted by the covenants in the Charter
Operating credit facilities.
Distributions
by CIH, CCH I, CCH II, CCO Holdings and Charter Operating to a parent company
for payment of parent company interest are permitted if there is no default
under the aforementioned indentures and CCO Holdings credit
facility.
25
The
indentures governing the Charter Holdings notes permit Charter Holdings to make
distributions to Charter Holdco for payment of interest or principal on
Charter’s convertible senior notes, only if, after giving effect to the
distribution, Charter Holdings can incur additional debt under the leverage
ratio of 8.75 to 1.0, there is no default under Charter Holdings’ indentures,
and other specified tests are met. For the quarter ended March 31,
2008, there was no default under Charter Holdings’ indentures, and the other
specified tests were met. However, Charter Holdings did not meet its
leverage ratio test of 8.75 to 1.0 based on March 31, 2008 financial results.
As a result, distributions from Charter Holdings to Charter or Charter
Holdco would have been restricted at such time and will continue to be
restricted unless that test is met. During periods in which
distributions are restricted, the indentures governing the Charter Holdings
notes permit Charter Holdings and its subsidiaries to make specified investments
(that are not restricted payments) in Charter Holdco or Charter, up to an amount
determined by a formula, as long as there is no default under the
indentures.
In
addition to the limitation on distributions under the various indentures
discussed above, distributions by our subsidiaries may be limited by applicable
law. See “Risk Factors — Because of our holding company structure,
our outstanding notes are structurally subordinated in right of payment to all
liabilities of our subsidiaries. Restrictions in our subsidiaries’
debt instruments and under applicable law limit their ability to provide funds
to us or our various debt issuers.”
Recent Financing
Transactions
On March
19, 2008, Charter Operating issued $546 million principal amount of 10.875%
senior second-lien notes due 2014 (the “Notes"), guaranteed by CCO Holdings and
certain other subsidiaries of Charter Operating, in a private transaction.
The net proceeds of this issuance were used to repay, but not permanently
reduce, the outstanding debt balances under the existing revolving credit
facility of Charter Operating. The Notes were sold to qualified
institutional buyers in reliance on Rule 144A and outside the United States to
non-U.S. persons in reliance on Regulation S.
On March
20, 2008, Charter Operating borrowed $500 million principal amount of
incremental term loans (the "Incremental Term Loans") under the Charter
Operating credit facilities. The net proceeds were used for general
corporate purposes. The Incremental Term Loans have a final maturity of
March 6, 2014 and prior to this date will amortize in quarterly principal
installments totaling 1% annually beginning on June 30, 2008. The
Incremental Term Loans bear interest at LIBOR plus 5.0%, with a LIBOR floor of
3.5%, and are otherwise governed by and subject to the existing terms of the
Charter Operating credit facilities.
In April
2008, Charter Holdco repurchased, in private transactions, from a small number
of institutional holders, a total of approximately $35 million principal amount
of various Charter Holdings notes due 2009 and 2010 and approximately $35
million principal amount of Charter’s 5.875% convertible senior notes due 2009,
for $66 million of cash. Charter Holdco continues to hold the Charter
Holdings notes. The purchased 5.875% convertible senior notes were
cancelled resulting in approximately $14 million principal amount of such notes
remaining outstanding.
Historical
Operating, Investing and Financing Activities
Cash and Cash
Equivalents. We held $467 million in cash and cash equivalents
as of March 31, 2008 compared to $75 million as of December 31,
2007. The increase in cash and cash equivalents is primarily the
result of the borrowing of $500 million of Incremental Term Loans under the
Charter Operating credit facility in March 2008.
Operating
Activities. Net cash provided by
operating activities decreased $62 million, or 23%, from $266 million for the
three months ended March 31, 2007 to $204 million for the three months ended
March 31, 2008, primarily as a result
of changes in operating assets and liabilities that provided $104 million less
cash during the three months ended March 31, 2008 than the corresponding period
in 2007, offset by revenues increasing at a faster rate than cash
expenses.
Investing
Activities. Net cash used in
investing activities was $436 million and $321 million for the three months
ended March 31, 2008 and 2007, respectively. The increase is
primarily due to an increase of $36 million in cash used for the purchase of
property, plant, and equipment and $74 million used to purchase short-term
investments.
Financing
Activities. Net cash provided by
financing activities was $624 million and $200 million for the three months
ended March 31, 2008 and 2007, respectively. The increase in cash
provided during the three months ended
26
March
31, 2008 as compared to the corresponding period in 2007, was primarily the
result of increased borrowings of long-term debt.
Capital
Expenditures
We have
significant ongoing capital expenditure requirements. Capital
expenditures were $334 million and $298 million for the three months ended March
31, 2008 and 2007, respectively. Capital expenditures increased as a
result of spending on customer premise equipment and support capital to meet
increased digital, high-speed Internet, and telephone customer
growth. See the table below for more
details.
Our
capital expenditures are funded primarily from cash flows from operating
activities, the issuance of debt, and borrowings under our credit
facilities. In addition, during the three months ended March 31, 2008
and 2007, our liabilities related to capital expenditures decreased $31 million
and $32 million, respectively.
During
2008, we expect capital expenditures to be approximately $1.2
billion. We expect the nature of these expenditures will continue to
be composed primarily of purchases of customer premise equipment related to
telephone and other advanced services, support capital, and scalable
infrastructure. We have funded and expect to continue to fund capital
expenditures for 2008 primarily from cash flows from operating activities and
borrowings under our credit facilities. The actual amount of our capital
expenditures depends on the deployment of advanced broadband services and
offerings. We may need additional capital if there is accelerated
growth in high-speed Internet, telephone or digital customers or there is an
increased need to respond to competitive pressures by expanding the delivery of
other advanced services.
We have
adopted capital expenditure disclosure guidance, which was developed by eleven
then publicly traded cable system operators, including Charter, with the support
of the National Cable & Telecommunications Association
("NCTA"). The disclosure is intended to provide more consistency in
the reporting of capital expenditures among peer companies in the cable
industry. These disclosure guidelines are not required disclosures
under GAAP, nor do they impact our accounting for capital expenditures under
GAAP.
The
following table presents our major capital expenditures categories in accordance
with NCTA disclosure guidelines for the three months ended March 31, 2008 and
2007 (dollars in millions):
|
Three
Months Ended
March
31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Customer
premise equipment (a)
|
$ | 165 | $ | 161 | ||||
|
Scalable
infrastructure (b)
|
81 | 49 | ||||||
|
Line
extensions (c)
|
21 | 24 | ||||||
|
Upgrade/Rebuild
(d)
|
17 | 12 | ||||||
|
Support
capital (e)
|
50 | 52 | ||||||
|
Total
capital expenditures
|
$ | 334 | $ | 298 | ||||
|
(a)
|
Customer
premise equipment includes costs incurred at the customer residence to
secure new customers, revenue units and additional bandwidth
revenues. It also includes customer installation costs in
accordance with SFAS No. 51, Financial Reporting by Cable
Television Companies, and customer premise equipment (e.g., set-top
boxes and cable modems, etc.).
|
|
(b)
|
Scalable
infrastructure includes costs, not related to customer premise equipment
or our network, to secure growth of new customers, revenue units and
additional bandwidth revenues or provide service enhancements (e.g.,
headend equipment).
|
|
(c)
|
Line
extensions include network costs associated with entering new service
areas (e.g., fiber/coaxial cable, amplifiers, electronic equipment,
make-ready and design engineering).
|
|
(d)
|
Upgrade/rebuild
includes costs to modify or replace existing fiber/coaxial cable networks,
including betterments.
|
|
(e)
|
Support
capital includes costs associated with the replacement or enhancement of
non-network assets due to technological and physical obsolescence (e.g.,
non-network equipment, land, buildings and
vehicles).
|
27
Interest Rate
Risk
We are
exposed to various market risks, including fluctuations in interest
rates. We use interest rate swap agreements to manage our interest
costs and reduce our exposure to increases in floating interest
rates. Our policy is to manage our exposure to fluctuations in
interest rates by maintaining a mix of fixed and variable rate debt within a
targeted range. Using interest rate swap agreements, we agree to
exchange, at specified intervals through 2013, the difference between fixed and
variable interest amounts calculated by reference to agreed-upon notional
principal amounts.
As of
March 31, 2008 and December 31, 2007, our long-term debt totaled approximately
$20.6 billion and $19.9 billion, respectively. As of March 31, 2008
and December 31, 2007, the weighted average interest rate on the credit facility
debt was approximately 6.3% and 6.8%, respectively; the weighted average
interest rate on the high-yield notes was approximately 10.3% and 10.3%;
respectively, and the weighted average interest rate on the convertible senior
notes was approximately 6.4% and 6.4%, respectively, resulting in a blended
weighted average interest rate of 8.9% and 9.0%, respectively. The
interest rate on approximately 85% of the total principal amount of our debt was
effectively fixed, including the effects of our interest rate swap agreements,
as of March 31, 2008 and December 31, 2007. The fair value of our
high-yield notes was $9.7 billion and $10.3 billion at March 31, 2008 and
December 31, 2007, respectively. The fair value of our convertible
senior notes was $244 million and $332 million at March 31, 2008 and December
31, 2007, respectively. The fair value of our credit facilities was
$6.3 billion and $6.7 billion at March 31, 2008 and December 31, 2007,
respectively. The fair value of high-yield and convertible notes was
based on quoted market prices, and the fair value of the credit facilities was
based on dealer quotations.
We do not
hold or issue derivative instruments for trading purposes. We do,
however, have certain interest rate derivative instruments that have been
designated as cash flow hedging instruments. Such instruments
effectively convert variable interest payments on certain debt instruments into
fixed payments. For qualifying hedges, SFAS No. 133 allows derivative
gains and losses to offset related results on hedged items in the consolidated
statement of operations. We have formally documented, designated and
assessed the effectiveness of transactions that receive hedge
accounting. For the each of three months ended March 31, 2008 and
2007, there was no cash flow hedge ineffectiveness on interest rate swap
agreements.
Changes
in the fair value of interest rate agreements that are designated as hedging
instruments of the variability of cash flows associated with floating-rate debt
obligations, and that meet the effectiveness criteria of SFAS No. 133 are
reported in accumulated other comprehensive loss. For the three months ended
March 31, 2008 and 2007, losses of $104
million and $2 million, respectively, related to derivative instruments
designated as cash flow hedges, were recorded in accumulated other comprehensive
loss. The amounts are subsequently reclassified as an increase or
decrease to change in value of derivatives in the same periods in which the
related interest on the floating-rate debt obligations affects earnings
(losses).
Certain
interest rate derivative instruments are not designated as hedges as they do not
meet the effectiveness criteria specified by SFAS No. 133. However,
management believes such instruments are closely correlated with the respective
debt, thus managing associated risk. Interest rate derivative
instruments not designated as hedges are marked to fair value, with the impact
recorded as a change in value of derivatives in our statements of
operations. For the three months ended March 31, 2008 and
2007, change in value of derivatives included losses of $30 million and
$1 million, respectively, resulting from interest rate derivative instruments
not designated as hedges.
28
The table
set forth below summarizes the fair values and contract terms of financial
instruments subject to interest rate risk maintained by us as of March 31, 2008
(dollars in millions):
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
Thereafter
|
Total
|
Fair
Value at March 31, 2008
|
||||||||||||||||||||||
|
Debt:
|
||||||||||||||||||||||||||||||
|
Fixed
Rate
|
$ |
--
|
$ |
237
|
$
|
2,232
|
$
|
281
|
$
|
1,654
|
$
|
1,050
|
$
|
7,837
|
$
|
13,291
|
$
|
9,937
|
||||||||||||
|
Average
Interest Rate
|
--
|
9.29%
|
10.26%
|
11.25%
|
7.75%
|
9.11%
|
10.93%
|
10.25%
|
||||||||||||||||||||||
|
Variable
Rate
|
$
|
53
|
$
|
70
|
$
|
70
|
$
|
70
|
$
|
70
|
$
|
70
|
$
|
6,931
|
$
|
7,334
|
$
|
6,251
|
||||||||||||
|
Average Interest
Rate
|
5.22%
|
5.04%
|
5.76%
|
6.36%
|
6.72%
|
6.99%
|
6.75%
|
6.71%
|
||||||||||||||||||||||
|
Interest
Rate Instruments:
|
||||||||||||||||||||||||||||||
|
Variable
to Fixed Swaps
|
$
|
--
|
$
|
--
|
$
|
500
|
$
|
300
|
$
|
2,500
|
$
|
1,000
|
$
|
--
|
$
|
4,300
|
$
|
(303)
|
||||||||||||
|
Average Pay
Rate
|
--
|
--
|
7.02%
|
7.20%
|
7.16%
|
7.15%
|
--
|
7.14%
|
||||||||||||||||||||||
|
Average Receive
Rate
|
--
|
--
|
5.92%
|
6.07%
|
6.88%
|
6.90%
|
--
|
6.72%
|
||||||||||||||||||||||
The
notional amounts of interest rate instruments do not represent amounts exchanged
by the parties and, thus, are not a measure of our exposure to credit
loss. The amounts exchanged are determined by reference to the
notional amount and the other terms of the contracts. The estimated
fair value approximates the costs (proceeds) to settle the outstanding
contracts. Interest rates on variable debt are estimated using the
average implied forward LIBOR for the year of maturity based on the yield
curve in effect at March 31, 2008 including applicable bank spread.
At March
31, 2008 and December 31, 2007, we had $4.3 billion in notional amounts of
interest rate swaps outstanding. The notional amounts of interest
rate instruments do not represent amounts exchanged by the parties and, thus,
are not a measure of exposure to credit loss. The amounts exchanged
are determined by reference to the notional amount and the other terms of the
contracts.
Item
4. Controls
and Procedures.
As of the
end of the period covered by this report, management, including our Chief
Executive Officer and Interim Chief Financial Officer, evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures with respect to the information generated for use in this quarterly
report. The evaluation was based in part upon reports and
certifications provided by a number of executives. Based upon, and as
of the date of that evaluation, our Chief Executive Officer and Interim Chief
Financial Officer concluded that the disclosure controls and procedures were
effective to provide reasonable assurances that information required to be
disclosed in the reports we file or submit under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the time periods
specified in the Commission’s rules and forms.
In
designing and evaluating the disclosure controls and procedures, our management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable, not absolute, assurance of achieving the
desired control objectives, and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures. Based upon the above evaluation, we believe that our
controls provide such reasonable assurances.
There was
no change in our internal control over financial reporting during the quarter
ended March 31, 2008 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
29
PART
II. OTHER INFORMATION.
|
Legal
Proceedings.
|
See Note
12 to our consolidated financial statements of this Quarterly Report on Form
10-Q for a discussion concerning our legal proceedings.
|
Item
1A.
|
Risk
Factors.
|
Our
Annual Report on Form 10-K for the year ended December 31, 2007 includes “Risk
Factors” under Item 1A of Part I. Except for the updated risk factors
described below, there have been no material changes from the risk factors
described in our Form 10-K. The information below updates, and should
be read in conjunction with, the risk factors and information disclosed in our
Form 10-K.
Risks Related to Significant
Indebtedness of Us and Our Subsidiaries
We
and our subsidiaries have a significant amount of debt and may incur significant
additional debt, including secured debt, in the future, which could adversely
affect our financial health and our ability to react to changes in our
business.
We and
our subsidiaries have a significant amount of debt and may (subject to
applicable restrictions in our debt instruments) incur additional debt in the
future. As of March 31, 2008, our total debt was approximately $20.6
billion, our shareholders’ deficit was approximately $8.4 billion and the
deficiency of earnings to cover fixed charges for the three months ended March
31, 2008 was $298 million.
Because
of our significant indebtedness and adverse changes in the capital markets, our
ability to raise additional capital at reasonable rates or at all is uncertain,
and the ability of our subsidiaries to make distributions or payments to their
parent companies is subject to availability of funds and restrictions under our
subsidiaries’ applicable debt instruments and under applicable
law. If we need to raise additional capital through the issuance of
equity or find it necessary to engage in a recapitalization or other similar
transaction, our shareholders could suffer significant dilution, including
potential loss of the entire value of their investment, and in the case of a
recapitalization or other similar transaction, our noteholders might not receive
principal and interest payments to which they are contractually
entitled.
Our
significant amount of debt could have other important
consequences. For example, the debt will or could:
|
|
·
|
require
us to dedicate a significant portion of our cash flow from operating
activities to make payments on our debt, reducing our funds available for
working capital, capital expenditures, and other general corporate
expenses;
|
|
|
·
|
limit
our flexibility in planning for, or reacting to, changes in our business,
the cable and telecommunications industries, and the economy at
large;
|
|
|
·
|
place
us at a disadvantage compared to our competitors that have proportionately
less debt;
|
|
|
·
|
make
us vulnerable to interest rate increases, because net of hedging
transactions approximately 15% of our borrowings are, and will continue to
be, subject to variable rates of
interest;
|
|
|
·
|
expose
us to increased interest expense to the extent we refinance existing debt
with higher cost debt;
|
|
|
·
|
adversely
affect our relationship with customers and
suppliers;
|
|
|
·
|
limit
our ability to borrow additional funds in the future, due to applicable
financial and restrictive covenants in our
debt;
|
|
|
·
|
make
it more difficult for us to satisfy our obligations to the holders of our
notes and for our subsidiaries to satisfy their obligations to the lenders
under their credit facilities and to their noteholders;
and
|
|
|
·
|
limit
future increases in the value, or cause a decline in the value of our
equity, which could limit our ability to raise additional capital by
issuing equity.
|
A default
by one of our subsidiaries under its debt obligations could result in the
acceleration of those obligations, which in turn could trigger cross-defaults
under other agreements governing our long-term indebtedness. In
addition, the secured lenders under the Charter Operating credit facilities, the
holders of the Charter Operating senior second-lien notes, the secured lenders
under the CCO Holdings credit facility, and the holders of the CCH I
30
notes
could foreclose on the collateral, which includes equity interests in certain of
our subsidiaries, and exercise other rights of secured creditors. Any
default under those credit facilities or the indentures governing our
convertible senior notes or our subsidiaries’ debt could adversely affect our
growth, our financial condition, our results of operations, the value of our
equity and our ability to make payments on our convertible senior notes, Charter
Operating’s credit facilities, and other debt of our subsidiaries, and could
force us to seek the protection of the bankruptcy laws. We and our
subsidiaries may incur significant additional debt in the future. If
current debt amounts increase, the related risks that we now face will
intensify.
We
may not be able to access funds under the Charter Operating revolving credit
facilities if we fail to satisfy the covenant restrictions, which could
adversely affect our financial condition and our ability to conduct our
business.
Our
subsidiaries have historically relied on access to credit facilities to fund
operations, capital expenditures, and to service parent company debt, and we
expect such reliance to continue in the future. Our total potential
borrowing availability under our revolving credit facility was approximately
$1.4 billion as of March 31, 2008, none of which was limited by covenant
restrictions. There can be no assurance that actual availability
under our credit facility will not be limited by covenant restrictions in the
future.
One of
the conditions to the availability of funding under the Charter Operating
revolving credit facility is the absence of a default under such facility,
including as a result of any failure to comply with the covenants under the
facilities. Among other covenants, the Charter Operating credit
facility requires us to maintain specified leverage ratios. The
Charter Operating revolving credit facility also provides that Charter Operating
obtain an unqualified audit opinion from its independent accountants for each
fiscal year, which, among other things, requires Charter to demonstrate its
ability to fund its projected liquidity needs for a reasonable period of time
following the balance sheet date of the financial statements being
audited. There can be no assurance that Charter Operating will be
able to continue to comply with these or any other of the covenants under the
credit facilities. See “—We and our subsidiaries have a significant
amount of debt and may incur significant additional debt, including secured
debt, in the future, which could adversely affect our financial health and our
ability to react to changes in our business” for a discussion of the
consequences of a default under our debt obligations.
We
depend on generating (and having available to the applicable obligor) sufficient
cash flow and having access to additional liquidity sources to fund our debt
obligations, capital expenditures, and ongoing operations.
Our
ability to service our debt and to fund our planned capital expenditures and
ongoing operations will depend on both our ability to generate and grow cash
flow and our access (by dividend or otherwise) to additional liquidity sources.
Our ability to generate and grow cash flow is dependent on many factors,
including:
|
·
|
the
impact of competition from other distributors, including incumbent
telephone companies, direct broadcast satellite operators, wireless
broadband providers and 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;
|
|
·
|
general
business conditions, economic uncertainty or slowdown, including the
recent significant slowdown in the new housing sector and overall economy;
and
|
|
·
|
the
effects of governmental regulation on our
business.
|
Some of
these factors are beyond our control. It is also difficult to assess
the impact that the general economic downturn and recent turmoil in the credit
markets will have on future operations and financial
results. However, we believe there is risk that the economic slowdown
could result in reduced spending by customers and advertisers, which could
reduce our revenues and our cash flows from operating activities from those that
otherwise would have been generated. If we are unable to generate
sufficient cash flow or we are unable to access additional liquidity sources,
we may not be able to service and repay our debt, operate our business,
respond to competitive challenges, or fund our other liquidity and capital
needs. We expect that cash on hand, cash flows from operating
activities, and
31
the
amounts available under Charter Operating’s credit facilities will be adequate
to fund our projected cash needs, including scheduled maturities, through
2009. We believe that cash flows from operating activities, and the
amounts available under the Charter Operating credit facilities will not be
sufficient to fund projected cash needs in 2010 (primarily as a result of the
CCH II $2.2 billion of senior notes maturing in September 2010) and
thereafter. Our projected cash needs and projected sources of
liquidity depend upon, among other things, our actual results, the timing and
amount of our capital expenditures, and ongoing compliance with the Charter
Operating credit facilities, including obtaining an unqualified audit opinion
from our independent accountants. Although we have been able to
refinance or otherwise fund the repayment of debt in the past, we may not be
able to access additional sources of refinancing on similar terms or pricing as
those that are currently in place, or at all, or otherwise obtain other sources
of funding. An inability to access additional sources of liquidity to
fund our cash needs in 2010 or thereafter or to refinance or otherwise fund the
repayment of the CCH II senior notes could adversely affect our growth, our
financial condition, our results of operations, and our ability to make payments
on our debt, and could force us to seek the protection of the bankruptcy laws,
which could materially adversely impact our ability to operate our business and
to make payments under our debt instruments. See “Part
I. Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations — Liquidity and Capital
Resources.”
Because
of our holding company structure, our outstanding notes are structurally
subordinated in right of payment to all liabilities of our
subsidiaries. Restrictions in our subsidiaries’ debt instruments and
under applicable law limit their ability to provide funds to us or our various
debt issuers.
Charter’s
primary assets are our equity interests in our subsidiaries. Our
operating subsidiaries are separate and distinct legal entities and are not
obligated to make funds available to us for payments on our notes or other
obligations in the form of loans, distributions or otherwise. Our
subsidiaries’ ability to make distributions to us or the applicable debt issuers
to service debt obligations is subject to their compliance with the terms of
their credit facilities and indentures and restrictions under applicable
law. See “Part I. Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations — Liquidity and Capital
Resources — Limitations on Distributions.” Under the Delaware Limited
Liability Company Act, our subsidiaries may only make distributions if they have
“surplus” as defined in the act. Under fraudulent transfer laws, our
subsidiaries may not pay dividends if they are insolvent or are rendered
insolvent thereby. The measures of insolvency for purposes of these
fraudulent transfer laws vary depending upon the law applied in any proceeding
to determine whether a fraudulent transfer has occurred. Generally, however, an
entity would be considered insolvent if:
|
·
|
the
sum of its debts, including contingent liabilities, was greater than the
fair saleable value of all its
assets;
|
|
·
|
the
present fair saleable value of its assets was less than the amount that
would be required to pay its probable liability on its existing debts,
including contingent liabilities, as they become absolute and mature;
or
|
|
·
|
it
could not pay its debts as they became
due.
|
While we
believe that our relevant subsidiaries currently have surplus and are not
insolvent, there can be no assurance that these subsidiaries will not become
insolvent or will be permitted to make distributions in the future in compliance
with these restrictions in amounts needed to service our
indebtedness. Our direct or indirect subsidiaries include the
borrowers and guarantors under the Charter Operating and CCO Holdings credit
facilities. Several of our subsidiaries are also obligors and
guarantors under senior high yield notes. Our convertible senior
notes are structurally subordinated in right of payment to all of the debt and
other liabilities of our subsidiaries. As of March 31, 2008, our
total debt was approximately $20.6 billion, of which approximately $20.2 billion
was structurally senior to our convertible senior notes.
In the
event of bankruptcy, liquidation or dissolution of one or more of our
subsidiaries, that subsidiary’s assets would first be applied to satisfy its own
obligations, and following such payments, such subsidiary may not have
sufficient assets remaining to make payments to its parent company as an equity
holder or otherwise. In that event:
|
|
·
|
the
lenders under Charter Operating’s credit facilities whose interests are
secured by substantially all of our operating assets, and all holders of
other debt of our subsidiaries, will have the right to be paid in full
before us from any of our subsidiaries’ assets;
and
|
|
|
·
|
the
holders of preferred membership interests in our subsidiary, CC VIII,
would have a claim on a portion of its assets that may reduce the amounts
available for repayment to holders of our outstanding
notes.
|
32
Risks
Related to Our Business
The
failure to maintain a minimum share price of $1.00 per share of
Class A common stock could result in delisting of our shares on the NASDAQ
Global Select Market, which would harm the market price of Charter’s
Class A common stock.
In order
to retain our listing on the NASDAQ Global Select Market we are required to
maintain a minimum bid price of $1.00 per share. On April 14, 2008,
we received notice from the NASDAQ Global Select market that our Class A common
stock had closed below the minimum bid price of $1.00 per share for 30
consecutive business days and, therefore, is not in compliance with the minimum
bid price rule. We can regain compliance if our Class A common stock
closes at or above $1.00 per share for 10 consecutive days during the 180 days
immediately following April 14, 2008 or at any time by October 13, 2008. If we are
unable to take action to increase the bid price per share (either by reverse
stock split or otherwise), we could be subject to delisting from the NASDAQ
Global Select Market.
The
failure to maintain our listing on the NASDAQ Global Select Market would harm
the liquidity of Charter’s Class A common stock and would have adverse
effect on the market price of our common stock. If the stock were to trade it
would likely trade on the OTC “pink sheets,” which provide significantly less
liquidity than does the NASDAQ Global Select Market. As a result, the liquidity
of our common stock would be impaired, not only in the number of shares which
could be bought and sold, but also through delays in the timing of transactions,
reduction in security analysts’ and news media’s coverage, and lower prices for
our common stock than might otherwise be attained. In addition, our common stock
would become subject to the low-priced security or so-called “penny stock” rules
that impose additional sales practice requirements on broker-dealers who sell
such securities.
|
Exhibits.
|
The index
to the exhibits begins on page E-1 of this quarterly report.
33
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, Charter
Communications, Inc. has duly caused this quarterly report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CHARTER
COMMUNICATIONS, INC.,
Registrant
|
Dated:
May 12, 2008
|
By:
/s/ Kevin D.
Howard
|
|
|
Name:
|
Kevin
D. Howard
|
|
|
Title:
|
Vice
President, Controller and
|
|
|
Chief
Accounting Officer
|
||
S-1
|
Exhibit
Number
|
Description
of Document
|
|||
| 10.1 |
Indenture
relating to the 10.875% senior second lien notes due 2014, dated as
of March 19, 2008, by and among Charter Communications Operating, LLC,
Charter Communications Operating Capital Corp. and Wilmington Trust
Company, as trustee.
|
|||
| 10.2 |
Collateral
Agreement, dated as of March 19, 2008, by and among Charter Communications
Operating, LLC, Charter Communications Operating Capital Corp., CCO
Holdings, LLC, and certain of its subsidiaries in favor of Wilmington
Trust Company, as trustee.
|
|||
| 10.3 | + |
Separation
Agreement and Release for Jeffrey T. Fisher.
|
||
| 10.4 | (a)+ |
Amended
and Restated Employment Agreement between Eloise E. Schmitz and Charter
Communications, Inc., dated as of August 1, 2007.
|
||
| 10.4 | (b)+ |
Amendment
to Amended and Restated Employment Agreement between Eloise E. Schmitz and
Charter Communications, Inc., dated as of April 7,
2008.
|
||
| 10.5 | + |
Amendment
to Amended and Restated Employment Agreement between Michael J. Lovett and
Charter Communications, Inc., dated as of March 5,
2008.
|
||
| 10.6 | + |
Amendment
to Amended and Restated Employment Agreement between Grier C. Raclin and
Charter Communications, Inc., dated as of March 5,
2008.
|
||
| 12.1 |
Computation
of Ratio of Earnings to Fixed Charges.
|
|||
| 31.1 |
Certificate
of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under
the Securities Exchange Act of 1934.
|
|||
| 31.2 |
Certificate
of Interim Chief Financial Officer pursuant to Rule 13a-14(a)/Rule
15d-14(a) under the Securities Exchange Act of 1934.
|
|||
| 32.1 |
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (Chief Executive
Officer).
|
|||
| 32.2 |
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (Interim Chief Financial
Officer).
|
|||
+
Management compensatory plan or arrangement
E-1
Exhibit
10.1
CHARTER
COMMUNICATIONS OPERATING, LLC
and
CHARTER
COMMUNICATIONS OPERATING CAPITAL CORP.,
as
Issuers,
EACH OF
THE GUARANTORS FROM TIME TO TIME PARTY HERETO,
as
Guarantors,
and
WILMINGTON
TRUST COMPANY,
as
Trustee
______
INDENTURE
Dated as
of March 19, 2008
10.875%
Senior Second Lien Notes due 2014
TABLE OF
CONTENTS
Page
|
ARTICLE
1
|
||
|
DEFINITIONS
AND INCORPORATION BY REFERENCE
|
||
|
Section
1.01
|
Definitions.
|
1
|
|
Section
1.02
|
Other
Definitions.
|
29
|
|
Section
1.03
|
Incorporation
by Reference of Trust Indenture Act.
|
30
|
|
Section
1.04
|
Rules
of Construction.
|
31
|
|
ARTICLE
2
|
||
|
THE
NOTES
|
||
|
Section
2.01
|
Form
and Dating.
|
31
|
|
Section
2.02
|
Execution
and Authentication.
|
32
|
|
Section
2.03
|
Registrar
and Paying Agent.
|
33
|
|
Section
2.04
|
Paying
Agent to Hold Money in Trust.
|
33
|
|
Section
2.05
|
Holder
Lists.
|
34
|
|
Section
2.06
|
Transfer
and Exchange.
|
34
|
|
Section
2.07
|
Replacement
Notes.
|
37
|
|
Section
2.08
|
Outstanding
Notes.
|
38
|
|
Section
2.09
|
Treasury
Notes.
|
38
|
|
Section
2.10
|
Temporary
Notes.
|
38
|
|
Section
2.11
|
Cancellation.
|
39
|
|
Section
2.12
|
Defaulted
Interest.
|
39
|
|
Section
2.13
|
Special
Transfer Provisions
|
39
|
|
Section
2.14
|
Temporary
Regulation S Global Notes
|
41
|
|
Section
2.15
|
Issuance
of Additional Notes
|
41
|
|
Section
2.16
|
CUSIP
Numbers
|
41
|
|
ARTICLE
3
|
||
|
REDEMPTION
AND PREPAYMENT
|
||
|
Section
3.01
|
Notices
to Trustee.
|
42
|
|
Section
3.02
|
Selection
of Notes to Be Redeemed.
|
42
|
|
Section
3.03
|
Notice
of Redemption.
|
42
|
|
Section
3.04
|
Effect
of Notice of Redemption.
|
43
|
|
Section
3.05
|
Deposit
of Redemption Price.
|
43
|
|
Section
3.06
|
Notes
Redeemed in Part.
|
43
|
|
Section
3.07
|
Optional
Redemption.
|
44
|
|
Section
3.08
|
Mandatory
Redemption.
|
44
|
|
Section
3.09
|
Offer
to Purchase by Application of Excess Proceeds.
|
44
|
-i-
|
ARTICLE
4
|
||
|
COVENANTS
|
||
|
Section
4.01
|
Payment
of Notes.
|
46
|
|
Section
4.02
|
Maintenance
of Office or Agency.
|
46
|
|
Section
4.03
|
Reports.
|
47
|
|
Section
4.04
|
Compliance
Certificate.
|
48
|
|
Section
4.05
|
Taxes.
|
48
|
|
Section
4.06
|
Stay,
Extension and Usury Laws.
|
48
|
|
Section
4.07
|
Restricted
Payments.
|
48
|
|
Section
4.08
|
Investments.
|
51
|
|
Section
4.09
|
Dividend
and Other Payment Restrictions Affecting Subsidiaries.
|
52
|
|
Section
4.10
|
Incurrence
of Indebtedness and Issuance of Preferred Stock.
|
53
|
|
Section
4.11
|
Limitation
on Asset Sales.
|
56
|
|
Section
4.12
|
Sale
and Leaseback Transactions.
|
57
|
|
Section
4.13
|
Transactions
with Affiliates.
|
58
|
|
Section
4.14
|
Liens.
|
59
|
|
Section
4.15
|
Existence.
|
59
|
|
Section
4.16
|
Repurchase
at the Option of Holders upon a Change of Control.
|
59
|
|
Section
4.17
|
Additional
Note Guarantees; Security.
|
61
|
|
Section
4.18
|
Payments
for Consent.
|
62
|
|
Section
4.19
|
Suspension
of Covenants.
|
62
|
|
ARTICLE
5
|
||
|
SUCCESSORS
|
||
|
Section
5.01
|
Merger,
Consolidation, or Sale of Assets.
|
63
|
|
Section
5.02
|
Successor
Corporation Substituted.
|
64
|
|
ARTICLE
6
|
||
|
DEFAULTS
AND REMEDIES
|
||
|
Section
6.01
|
Events
of Default.
|
65
|
|
Section
6.02
|
Acceleration.
|
66
|
|
Section
6.03
|
Other
Remedies.
|
66
|
|
Section
6.04
|
Waiver
of Existing Defaults.
|
67
|
|
Section
6.05
|
Control
by Majority.
|
67
|
|
Section
6.06
|
Limitation
on Suits.
|
67
|
|
Section
6.07
|
Rights
of Holders to Receive Payment.
|
68
|
|
Section
6.08
|
Collection
Suit by Trustee.
|
68
|
|
Section
6.09
|
Trustee
May File Proofs of Claim.
|
68
|
|
Section
6.10
|
Priorities.
|
68
|
|
Section
6.11
|
Undertaking
for Costs.
|
69
|
-ii-
|
ARTICLE
7
|
||
|
TRUSTEE
|
||
|
Section
7.01
|
Duties
of Trustee.
|
69
|
|
Section
7.02
|
Rights
of Trustee.
|
70
|
|
Section
7.03
|
Individual
Rights of Trustee.
|
71
|
|
Section
7.04
|
Trustee’s
Disclaimer.
|
71
|
|
Section
7.05
|
Notice
of Defaults.
|
71
|
|
Section
7.06
|
Reports
by Trustee to Holders.
|
71
|
|
Section
7.07
|
Compensation
and Indemnity.
|
72
|
|
Section
7.08
|
Replacement
of Trustee.
|
72
|
|
Section
7.09
|
Successor
Trustee by Merger, etc.
|
73
|
|
Section
7.10
|
Eligibility;
Disqualification.
|
73
|
|
Section
7.11
|
Preferential
Collection of Claims Against the Issuers.
|
73
|
|
Section
7.12
|
Authorization
of the Trustee.
|
74
|
|
ARTICLE
8
|
||
|
LEGAL
DEFEASANCE AND COVENANT DEFEASANCE
|
||
|
Section
8.01
|
Option
to Effect Legal Defeasance or Covenant Defeasance.
|
74
|
|
Section
8.02
|
Legal
Defeasance and Discharge.
|
74
|
|
Section
8.03
|
Covenant
Defeasance.
|
75
|
|
Section
8.04
|
Conditions
to Legal or Covenant Defeasance.
|
75
|
|
Section
8.05
|
Deposited
Money and Government Securities to Be Held in Trust; Other Miscellaneous
Provisions.
|
77
|
|
Section
8.06
|
Repayment
to Issuers.
|
77
|
|
Section
8.07
|
Reinstatement.
|
78
|
|
ARTICLE
9
|
||
|
AMENDMENT,
SUPPLEMENT AND WAIVER
|
||
|
Section
9.01
|
Without
Consent of Holders.
|
78
|
|
Section
9.02
|
With
Consent of Holders.
|
79
|
|
Section
9.03
|
Compliance
with Trust Indenture Act.
|
80
|
|
Section
9.04
|
Revocation
and Effect of Consents.
|
80
|
|
Section
9.05
|
Notation
on or Exchange of Notes.
|
80
|
|
Section
9.06
|
Trustee
to Sign Amendments, etc.
|
81
|
|
ARTICLE
10
|
||
|
COLLATERAL
AND SECURITY DOCUMENTS
|
||
|
Section
10.01
|
Security
Documents.
|
81
|
|
Section
10.02
|
Suits
to Protect the Collateral.
|
81
|
|
Section
10.03
|
Release
of Collateral.
|
81
|
-iii-
|
Section
10.04
|
Sufficiency
of Release.
|
83
|
|
Section
10.05
|
Actions
by the Trustee.
|
83
|
|
ARTICLE
11
|
||
|
GUARANTEE
|
||
|
Section
11.01
|
Unconditional
Guarantee.
|
83
|
|
Section
11.02
|
Severability.
|
84
|
|
Section
11.03
|
Limitations
on Guarantors’ Liability.
|
84
|
|
Section
11.04
|
Release
of Guarantor.
|
84
|
|
Section
11.05
|
Contribution.
|
85
|
|
Section
11.06
|
Waiver
of Subrogation.
|
85
|
|
Section
11.07
|
Execution
of Note Guarantee.
|
86
|
|
Section
11.08
|
Waiver
of Stay, Extension or Usury Laws.
|
86
|
|
ARTICLE
12
|
||
|
MISCELLANEOUS
|
||
|
Section
12.01
|
Trust
Indenture Act Controls.
|
86
|
|
Section
12.02
|
Notices.
|
87
|
|
Section
12.03
|
Communication
by Holders with Other Holders.
|
88
|
|
Section
12.04
|
Certificate
and Opinion as to Conditions Precedent.
|
88
|
|
Section
12.05
|
Statements
Required in Certificate or Opinion.
|
88
|
|
Section
12.06
|
Rules
by Trustee and Agents.
|
89
|
|
Section
12.07
|
No
Personal Liability of Directors, Officers, Employees, Managers, Members
and Stockholders.
|
89
|
|
Section
12.08
|
Governing
Law.
|
89
|
|
Section
12.09
|
No
Adverse Interpretation of Other Agreements.
|
89
|
|
Section
12.10
|
Successors.
|
89
|
|
Section
12.11
|
Severability.
|
89
|
|
Section
12.12
|
Counterpart
Originals.
|
89
|
|
Section
12.13
|
Table
of Contents, Headings, etc.
|
90
|
|
ARTICLE
13
|
||
|
SATISFACTION
AND DISCHARGE
|
||
|
Section
13.01
|
Satisfaction
and Discharge of Indenture.
|
90
|
|
Section
13.02
|
Application
of Trust Money.
|
91
|
| Exhibit A | Form of Note |
|
Exhibit
B
|
Form
of Certificate to be Delivered in connection with Transfers Pursuant to
Rule 144A
|
|
Exhibit
C
|
Form
of Certificate to be Delivered in connection with Transfers Pursuant to
Regulation S
|
|
Exhibit
D
|
Form
of Certificate of Beneficial Ownership in connection with exchanges of
Temporary Regulation S Global Notes
|
-iv-
| Exhibit E | Form of Supplemental Indenture |
-v-
INDENTURE
dated as of March 19, 2008 among Charter Communications Operating, LLC, a
Delaware limited liability company (as further defined below, the “Company”), Charter
Communications Operating Capital Corp., a Delaware corporation (as further
defined below, “Capital
Corp” and together with the Company, the “Issuers”), the Guarantors
from time to time party hereto, and Wilmington Trust Company, as
Trustee.
The
Issuers and the Trustee agree as follows for the benefit of each other and for
the equal and ratable benefit of the Holders:
ARTICLE
1
DEFINITIONS
AND INCORPORATION BY REFERENCE
Section
1.01 Definitions.
“Acquired Debt” means, with
respect to any specified Person:
|
|
(1)
|
Indebtedness
of any other Person existing at the time such other Person is merged with
or into or became a Subsidiary of such specified Person, whether or not
such Indebtedness is incurred in connection with, or in contemplation of,
such other Person merging with or into, or becoming a Subsidiary of, such
specified Person; and
|
|
|
(2)
|
Indebtedness
secured by a Lien encumbering any asset acquired by such specified
Person.
|
“Additional First Lien
Agreement” means any agreement approved for designation as such by the
First Lien Representative and the Second Lien Representative.
“Additional Notes” means the
Issuers’ 10.875% Senior Secured Notes due 2014 issued under this Indenture in
addition to the Initial Notes (other than any Notes issued in respect of Initial
Notes pursuant to Section 2.06, 2.07, 2.10, 3.06, 3.09, 4.16 or
9.05).
“Additional Pari Passu First Priority
Indebtedness” means Pari Passu Indebtedness incurred in compliance with
the terms of this Indenture, including Section 4.14 (other than
Indebtedness owed to a Subsidiary or Affiliate of CCOH), which Indebtedness is
secured by a first-priority Lien or otherwise is pari passu, in terms of sharing
of proceeds of Collateral, with Indebtedness under the CCO Credit Facility,
Related Obligations or other Pari Passu First Priority Indebtedness of the
Company or its Restricted Subsidiaries, as such Indebtedness may be amended or
refinanced from time to time.
“Additional Pari Passu Second
Priority Indebtedness” means Pari Passu Indebtedness incurred in
compliance with the terms of this Indenture, including Section 4.14 (other
than Indebtedness owed to a Subsidiary or Affiliate of CCOH), which Indebtedness
is secured by a second-priority Lien or otherwise is pari passu, in terms of
sharing of proceeds of Collateral, with Indebtedness under the Notes and the
Existing CCO Notes, as such Indebtedness may be amended or refinanced from time
to time.
“Additional Second Lien
Agreement” means any agreement approved for designation as such by the
First Lien Representative and the Second Lien Representative.
“Additional Second Lien
Obligations” means, with respect to any Additional Second Lien Agreement,
(i) all principal of and interest (including any Post-Petition Interest) and
premium (if any) on
all
indebtedness under such Additional Second Lien Agreement, and (ii) all fees,
expenses and other amounts (including costs and indemnification obligations)
payable from time to time pursuant to the Second Lien Documents entered into in
connection with such Additional Second Lien Agreement (including amounts payable
under any Second Lien Guarantee relating to such Additional Second Lien
Agreement), in each case whether or not allowed or allowable in an Insolvency
Proceeding.
“Affiliate” of any specified
Person means any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified
Person. For purposes of this definition, “control,” as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise; provided, however, that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. It is
understood that the Trustee is under no obligation to ascertain whether or not
such 10% threshold has been met. For purposes of this definition, the
terms “controlling,” “controlled by” and “under common control with” shall have
correlative meanings.
“Agent” means any Registrar or
Paying Agent.
“Asset Acquisition”
means:
|
|
(a)
|
an
Investment by the Company or any of its Restricted Subsidiaries in any
other Person pursuant to which such Person shall become a Restricted
Subsidiary of the Company or any of its Restricted Subsidiaries or shall
be merged with or into the Company or any of its Restricted Subsidiaries,
or
|
|
|
(b)
|
the
acquisition by the Company or any of its Restricted Subsidiaries of the
assets of any Person which constitute all or substantially all of the
assets of such Person, any division or line of business of such Person or
any other properties or assets of such Person other than in the ordinary
course of business.
|
“Asset Sale”
means:
|
|
(1)
|
the
sale, lease, conveyance or other disposition of any assets or rights,
other than sales of inventory in the ordinary course of the Cable Related
Business; provided, however, that the sale, conveyance or other
disposition of all or substantially all of the assets of the Company and
its Subsidiaries, taken as a whole, shall be governed by Section 4.16
and/or Section 5.01 and not by the provisions of Section 4.11;
and
|
|
|
(2)
|
the
issuance of Equity Interests by any Restricted Subsidiary of the Company
or the sale of Equity Interests in any Restricted Subsidiary of the
Company.
|
Notwithstanding
the preceding, the following items shall not be deemed to be Asset
Sales:
|
|
(1)
|
any
single transaction or series of related transactions
that:
|
(a) involves
assets having a fair market value of less than $100 million; or
(b) results
in net proceeds to the Company and its Restricted Subsidiaries of less than $100
million;
2
|
|
(2)
|
a
transfer of assets between or among the Company and/or its Restricted
Subsidiaries;
|
|
|
(3)
|
an
issuance of Equity Interests by a Restricted Subsidiary of the Company to
the Company or to another Wholly Owned Restricted Subsidiary of the
Company;
|
|
|
(4)
|
a
Restricted Payment that is permitted by Section 4.07, a Restricted
Investment that is permitted by Section 4.08 or a Permitted
Investment;
|
|
|
(5)
|
the
incurrence of Liens not prohibited by this Indenture and the disposition
of assets related to such Liens by the secured party pursuant to a
foreclosure; and
|
|
|
(6)
|
any
disposition of cash or Cash
Equivalents.
|
“Attributable Debt” in respect
of a sale and leaseback transaction means, at the time of determination, the
present value of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction,
including any period for which such lease has been extended or may, at the
option of the lessee, be extended. Such present value shall be
calculated using a discount rate equal to the rate of interest implicit in such
transaction, determined in accordance with GAAP.
“Authority” means any
national, federal, state, municipal or local government or quasi-governmental
agency or authority.
“Bank Agents” means the
Persons acting as the duly authorized representatives of the Lenders pursuant to
any of the Credit Facilities then outstanding under clause (1) of the definition
of “Permitted Debt.”
“Bankruptcy Code” means Title
11, U.S. Code
“Bankruptcy Law” means the
Bankruptcy Code or any federal or state law of any jurisdiction relating to
bankruptcy, insolvency, winding up, liquidation, reorganization or relief of
debtors.
“Beneficial Owner” has the
meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange
Act, except that in calculating the beneficial ownership of any particular
“person” (as such term is used in Section 13(d)(3) of the Exchange Act), such
“person” shall be deemed to have beneficial ownership of all securities that
such “person” has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition.
“Board of Directors” means the
board of directors or comparable governing body of CCI or, if so specified, the
Company, in either case, as constituted as of the date of any determination
required to be made, or action required to be taken, pursuant to this
Indenture.
“Business Day” means any day
other than a Legal Holiday.
“Cable Related Business” means
the business of owning cable television systems and businesses ancillary,
complementary and related thereto.
“Capital Corp” means Charter
Communications Operating Capital Corp., a Delaware corporation, and any
successor Person thereto.
3
“Capital Lease Obligation”
means, at the time any determination thereof is to be made, the amount of the
liability in respect of a capital lease that would at that time be required to
be capitalized on a balance sheet in accordance with GAAP.
“Capital Stock”
means:
|
|
(1)
|
in
the case of a corporation, corporate
stock;
|
|
|
(2)
|
in
the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
|
|
|
(3)
|
in
the case of a partnership or limited liability company, partnership or
membership interests (whether general or limited);
and
|
|
|
(4)
|
any
other interest (other than any debt obligation) or participation that
confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing
Person.
|
“Capital Stock Sale Proceeds”
means the aggregate net proceeds (including the fair market value of the
non-cash proceeds, as determined by an independent appraisal firm) received by
the Company or its Restricted Subsidiaries from and after the Issue Date, in
each case:
|
|
(x)
|
as
a contribution to the common equity capital or from the issue or sale of
Equity Interests (other than Disqualified Stock and other than issuances
or sales to a Subsidiary of the Company) of the Company after the Issue
Date; or
|
|
|
(y)
|
from
the issue or sale of convertible or exchangeable Disqualified Stock or
convertible or exchangeable debt securities of the Company that have been
converted into or exchanged for such Equity Interests (other than Equity
Interests (or Disqualified Stock or debt securities) sold to a Subsidiary
of the Company).
|
“Cash Equivalents”
means:
|
|
(1)
|
United
States dollars;
|
|
|
(2)
|
securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the
full faith and credit of the United States is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition;
|
|
|
(3)
|
certificates
of deposit and eurodollar time deposits with maturities of twelve months
or less from the date of acquisition, bankers’ acceptances with maturities
not exceeding six months and overnight bank deposits, in each case, with
any domestic commercial bank having combined capital and surplus in excess
of $500 million and a Thomson BankWatch Rating at the time of acquisition
of “B” or better;
|
|
|
(4)
|
repurchase
obligations with a term of not more than seven days for underlying
securities of the types described in clauses (2) and (3) above entered
into with any financial institution meeting the qualifications specified
in clause (3) above;
|
4
|
|
(5)
|
commercial
paper having a rating at the time of acquisition of at least “P-1” from
Moody’s or at least “A-1” from S&P and in each case maturing within
twelve months after the date of
acquisition;
|
|
|
(6)
|
corporate
debt obligations maturing within twelve months after the date of
acquisition thereof, rated at the time of acquisition at least “Aaa” or
“P-1” by Moody’s or “AAA” or “A-1” by
S&P;
|
|
|
(7)
|
auction-rate
Preferred Stocks of any corporation maturing not later than 45 days after
the date of acquisition thereof, rated at the time of acquisition at least
“Aaa” by Moody’s or “AAA” by
S&P;
|
|
|
(8)
|
securities
issued by any state, commonwealth or territory of the United States, or by
any political subdivision or taxing authority thereof, maturing not later
than six months after the date of acquisition thereof, rated at the time
of acquisition at least “A” by Moody’s or S&P;
and
|
|
|
(9)
|
money
market or mutual funds at least 90% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (8) of this
definition.
|
“Cash Management Obligations”
means, with respect to any Loan Party, any obligations of such Loan Party owed
to any First Lien Secured Party (or any of its affiliates) in respect of
treasury management arrangements, depositary or other cash management
services.
“CCH I” means CCH I, LLC, a
Delaware limited liability company, and any successor Person
thereto.
“CCH I Indentures” means,
collectively, the indenture entered into by CCH I and CCH I Capital Corp., a
Delaware corporation, with respect to their 11.00% Senior Secured Notes due 2015
and any indentures, note purchase agreements or similar documents entered into
by CCH I and CCH I Capital Corp. for the purpose of incurring Indebtedness in
exchange for, or the proceeds from which are used to refinance, any of the
Indebtedness described above, in each case, together with all instruments and
other agreements entered into by CCH I and CCH I Capital Corp. in connection
therewith, as any of the foregoing may be refinanced, replaced, amended,
supplemented or otherwise modified from time to time.
“CCH II” means CCH II, LLC, a
Delaware limited liability company, and any successor Person
thereto.
“CCH II Indentures” means,
collectively, the indentures entered into by CCH II and CCH II Capital Corp., a
Delaware corporation, with respect to their 10.25% Senior Notes due 2010 and
their 10.25% Senior Notes due 2013 and any indentures, note purchase agreements
or similar documents entered into by CCH II and CCH II Capital Corp. for
the purpose of incurring Indebtedness in exchange for, or the proceeds of which
are used to refinance, any of the Indebtedness described above, in each case,
together with all instruments and other agreements entered into by CCH II and
CCH II Capital Corp. in connection therewith, as any of the foregoing may be
refinanced, replaced, amended, supplemented or otherwise modified from time to
time.
“CCHC” means CCHC, LLC, a
Delaware limited liability company, and any successor Person
thereto.
5
“CCI” means Charter
Communications, Inc., a Delaware corporation, and any successor Person
thereto.
“CCI Indentures” means,
collectively, the indentures entered into by CCI with respect to its 5.75%
Convertible Senior Notes due 2005, 4.75% Convertible Senior Notes due 2006,
5.875% Convertible Senior Notes due 2009 and 6.50% Convertible Senior Notes due
2027 and any indentures, note purchase agreements or similar documents entered
into by CCI after the Issue Date for the purpose of incurring Indebtedness in
exchange for, or the proceeds of which are used to refinance, any of the
Indebtedness described above, in each case, together with all instruments and
other agreements entered into by CCI in connection therewith, as any of the
foregoing may be refinanced, replaced, amended, supplemented or otherwise
modified from time to time.
“CCO Credit Facility” means
the Amended and Restated Credit Agreement, dated as of March 6, 2007, by and
among the Company, CCOH, the Lenders from time to time parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent, JPMorgan Chase Bank, N.A., and Bank
of America, N.A.., as Syndication Agents, Citicorp North America, Inc., Deutsche
Bank Securities Inc., General Electric Capital Corporation and Credit Suisse
Securities (USA) LLC, as Revolving Facility Co-Documentation Agents, and
Citicorp North America, Inc., Credit Suisse Securities (USA) LLC, General
Electric Capital Corporation and Deutsche Bank Securities Inc., as Term Facility
Co-Documentation Agents, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.
“CCOH” means CCO Holdings,
LLC, a Delaware limited liability company, and any successor Person
thereto.
“CCOH Credit Facility” means the
Credit Agreement, dated as of March 6, 2007, by and among CCOH, the Lenders from
time to time parties thereto, Bank of America, N.A., as Administrative Agent,
Banc of America Securities LLC and J.P. Morgan Securities Inc., as
Co-Syndication Agents, and Citigroup Global Markets Inc., Credit Suisse
Securities (USA) LLC and Deutsche Bank Securities Inc., as Co-Documentation
Agents, as amended, restated, modified, renewed, refunded, replaced or
refinanced in whole or in part from time to time.
“CCOH Indentures” means,
collectively, the indenture entered into by CCOH and CCO Holdings Capital Corp.,
a Delaware corporation, with respect to their 8 3/4% Senior Notes due 2013
and any indentures, note purchase agreements or similar documents entered into
by CCOH and CCO Holdings Capital Corp. for the purpose of incurring Indebtedness
in exchange for, or the proceeds of which are used to refinance, any of the
Indebtedness described above, in each case, together with all instruments and
other agreements entered into by CCOH and CCO Holdings Capital Corp. in
connection therewith, as any of the foregoing may be refinanced, replaced,
amended, supplemented or otherwise modified from time to time.
“Change of Control” means the
occurrence of any of the following:
|
|
(1)
|
the
sale, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole, or of a Parent and its Subsidiaries, taken
as a whole, to any “person” (as such term is used in Section 13(d)(3) of
the Exchange Act) other than Paul G. Allen or a Related
Party;
|
|
|
(2)
|
the
adoption of a plan relating to the liquidation or dissolution of the
Company or a Parent (except the liquidation of any Parent into any other
Parent);
|
6
|
|
(3)
|
the
consummation of any transaction, including any merger or consolidation,
the result of which is that any “person” (as defined above) other than
Paul G. Allen or any of the Related Parties becomes the Beneficial Owner,
directly or indirectly, of more than 35% of the Voting Stock of the
Company or a Parent, measured by voting power rather than the number of
shares, unless Paul G. Allen or a Related Party Beneficially Owns,
directly or indirectly, a greater percentage of Voting Stock of the
Company or such Parent, as the case may be, measured by voting power
rather than the number of shares, than such
person;
|
|
|
(4)
|
after
the Issue Date, the first day on which a majority of the members of the
Board of Directors of CCI are not Continuing
Directors;
|
|
|
(5)
|
the
Company or a Parent consolidates with, or merges with or into, any Person,
or any Person consolidates with, or merges with or into, the Company or a
Parent, in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of the Company or such Parent is converted into
or exchanged for cash, securities or other property, other than any such
transaction where the Voting Stock of the Company or such Parent
outstanding immediately prior to such transaction is converted into or
exchanged for Voting Stock (other than Disqualified Stock) of the
surviving or transferee Person constituting a majority of the outstanding
shares of such Voting Stock of such surviving or transferee Person
immediately after giving effect to such issuance;
or
|
|
|
(6)
|
(i)
Charter Communications Holding Company, LLC shall cease to own
beneficially, directly or indirectly, 100% of the Capital Stock of Charter
Holdings or (ii) Charter Holdings shall cease to own beneficially,
directly or indirectly, 100% of the Capital Stock of the
Company.
|
“Charter Holdings” means
Charter Communications Holdings, LLC, a Delaware limited liability company, and
any successor Person thereto.
“Charter Holdings Indentures”
means, collectively, (a) the indentures entered into by Charter Holdings and
Charter Communications Holdings Capital Corp. in connection with the issuance of
the 8.250% Senior Notes due 2007 dated March 1999, 8.625% Senior Notes due 2009
dated March 1999, 9.920% Senior Discount Notes Due 2011 dated March 1999, 10.00%
Senior Notes Due 2009 dated January 2000, 10.250% Senior Notes Due 2010 dated
January 2000, 11.750% Senior Discount Notes Due 2010 dated January 2000, 10.75%
Senior Notes Due 2009 dated January 2001, 11.125% Senior Notes Due 2011 dated
January 2001, 13.50% Senior Discount Notes Due 2011 dated January 2001, 9.625%
Senior Notes Due 2009 dated May 2001, 10.00% Senior Notes Due 2011 dated May
2001, 11.750% Senior Discount Notes Due 2011 dated May 2001, 9.625% Senior Notes
Due 2009 dated January 2002, 10.00% Senior Notes Due 2011 dated January 2002 and
12.125% Senior Discount Notes Due 2012 dated January 2002, and (b) any
indentures, note purchase agreements or similar documents entered into by
Charter Holdings and/or Charter Communications Holdings Capital Corp. after the
Issue Date for the purpose of incurring Indebtedness in exchange for, or
proceeds of which are used to refinance, any of the Indebtedness described in
the foregoing clause (a), in each case, together with all instruments and other
agreements entered into by Charter Holdings or Charter Communications Holdings
Capital Corp. in connection therewith, as the same may be refinanced, replaced,
amended, supplemented or otherwise modified from time to time.
“Charter Refinancing
Indebtedness” means any Indebtedness of a Charter Refinancing Subsidiary
issued in exchange for, or the net proceeds of which are used within 90 days
after the date of issuance thereof, to extend, refinance, renew, replace,
defease, purchase, acquire or refund (including suc-
7
cessive
extensions, refinancings, renewals, replacements, defeasances, purchases,
acquisitions or refunds) (i) Indebtedness initially incurred under any one or
more of the Charter Holdings Indentures, the CCI Indentures, the CIH Indentures,
the CCH I Indentures, the CCH II Indentures, the CCOH Indentures, the Existing
CCO Indenture or this Indenture or (ii) any other Indebtedness of a Charter
Refinancing Subsidiary; provided, however, that:
|
|
(1)
|
the
principal amount (or accreted value, if applicable) of such Charter
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of plus accrued interest and premium, if any, on the
Indebtedness so extended, refinanced, renewed, replaced, defeased,
purchased, acquired or refunded (plus the amount of reasonable fees,
commissions and expenses incurred in connection therewith);
and
|
|
|
(2)
|
such
Charter Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal
to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
|
“Charter Refinancing
Subsidiary” means CCHC, CIH, CCH I, CCH II or any other directly or
indirectly wholly owned Subsidiary (and any related corporate co-obligor if such
Subsidiary is a limited liability company or other association not taxed as a
corporation) of CCI or Charter Communications Holding Company, LLC which is or
becomes a Parent.
“CIH” means CCH I Holdings,
LLC, a Delaware limited liability company, and any successor Person
thereto.
“CIH Indentures” means,
collectively (a) the indenture pursuant to which the CIH Notes were issued
and (b) any indentures, note purchase agreements or similar documents
entered into by CIH and/or CCH I Holdings Capital Corp. on or after the Issue
Date for the purpose of incurring Indebtedness in exchange for, or the proceeds
of which are used to refinance, any of the Indebtedness outstanding under the
CIH Indenture described in the foregoing clause (a), in each case, together
with all instruments and other agreements entered into by CIH or CCH I Holdings
Capital Corp. in connection therewith, as the same may be refinanced, replaced,
amended, supplemented or otherwise modified from time to time.
“CIH Notes” means each of the
following series of notes issued by CIH and CCH I Holdings Capital
Corp.: The 11.125% Senior Accreting Notes Due 2014, the
9.920% Senior Accreting Notes Due 2014, the 10.00% Senior Accreting
Notes Due 2014, 11.75% Senior Accreting Notes Due 2014, the
13.50% Senior Accreting Notes Due 2014 and the 12.125% Senior
Accreting Notes Due 2015.
“Collateral” means the assets
that from time to time secure the Notes.
“Commission” or “SEC” means
the Securities and Exchange Commission.
“Company” means Charter
Communications Operating, LLC, a Delaware limited liability company, and any
successor Person thereto.
“Condemnation” means any
taking of the Collateral or any material part thereof, in or by condemnation,
expropriation or similar proceedings, eminent domain proceedings, seizure or
forfeiture, pursuant to any law, general or special, or by reason of the
temporary requisition of the use or occupancy of the Collateral, or any part
thereof, by any Authority.
8
“Consolidated EBITDA” means,
with respect to any Person, for any period, the consolidated net income (or net
loss) of such Person and its Restricted Subsidiaries for such period calculated
in accordance with GAAP plus, to the extent such amount was deducted in
calculating such net income:
|
|
(1)
|
Consolidated
Interest Expense;
|
|
|
(2)
|
income
taxes;
|
|
|
(3)
|
depreciation
expense;
|
|
|
(4)
|
amortization
expense;
|
|
|
(5)
|
all
other non-cash items, extraordinary items, nonrecurring and unusual items
(including any restructuring charges and charges related to litigation
settlements or judgments) and the cumulative effects of changes in
accounting principles reducing such net income, less all non-cash items,
extraordinary items, nonrecurring and unusual items and cumulative effects
of changes in accounting principles increasing such net
income;
|
|
|
(6)
|
amounts
actually paid during such period pursuant to a deferred compensation plan;
and
|
|
|
(7)
|
for
purposes of Section 4.10 only, Management
Fees;
|
all as
determined on a consolidated basis for such Person and its Restricted
Subsidiaries in conformity with GAAP, as in effect at December 31, 2002;
provided, however, that Consolidated EBITDA shall not include:
|
|
(x)
|
the
net income (or net loss) of any Person that is not a Restricted Subsidiary
(“Other Person”), except
|
(i) with
respect to net income, to the extent of the amount of dividends or other
distributions actually paid to such Person or any of its Restricted Subsidiaries
by such Other Person during such period; and
(ii) with
respect to net losses, to the extent of the amount of investments made by such
Person or any Restricted Subsidiary of such Person in such Other Person during
such period;
|
|
(y)
|
solely
for the purposes of calculating the amount of Restricted Payments that may
be made pursuant to clause (iii) of the first paragraph of Section 4.07
(and in such case, except to the extent includable pursuant to clause (x)
above), the net income (or net loss) of any Other Person accrued prior to
the date it becomes a Restricted Subsidiary or is merged into or
consolidated with such Person or any Restricted Subsidiaries or all or
substantially all of the property and assets of such Other Person are
acquired by such Person or any of its Restricted Subsidiaries;
and
|
|
|
(z)
|
the
net income of any Restricted Subsidiary of the Company to the extent that
the declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of such net income is not at the time of
determination of such Consolidated EBITDA
|
9
|
|
|
permitted
by the operation of the terms of such Restricted Subsidiary’s charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary (other
than any agreement or instrument evidencing Indebtedness or Preferred
Stock (i) outstanding on the Issue Date or (ii) incurred or issued
thereafter in compliance with Section 4.10; provided, however, that
(a) the terms of any such agreement or instrument restricting the
declaration and payment of dividends or similar distributions apply only
in the event of a default with respect to a financial covenant or a
covenant relating to payment, beyond any applicable period of grace,
contained in such agreement or instrument, (b) such terms are determined
by such Person to be customary in comparable financings and (c) such
restrictions are determined by the Company not to materially affect the
Issuers’ ability to make principal or interest payments on the Notes when
due).
|
“Consolidated Indebtedness”
means, with respect to any Person as of any date of determination, the sum,
without duplication, of:
|
|
(1)
|
the
total amount of outstanding Indebtedness of such Person and its Restricted
Subsidiaries, plus
|
|
|
(2)
|
the
total amount of Indebtedness of any other Person that has been Guaranteed
by the referent Person or one or more of its Restricted Subsidiaries,
plus
|
|
|
(3)
|
the
aggregate liquidation value of all Disqualified Stock of such Person and
all Preferred Stock of Restricted Subsidiaries of such Person, in each
case, determined on a consolidated basis in accordance with
GAAP.
|
“Consolidated Interest
Expense” means, with respect to any Person for any period, without
duplication, the sum of:
|
|
(1)
|
the
consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued (including
amortization or original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers’ acceptance financings, and net payments (if
any) pursuant to Hedging
Obligations);
|
|
|
(2)
|
the
consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period;
and
|
|
|
(3)
|
any
interest expense on Indebtedness of another Person that is guaranteed by
such Person or one of its Restricted Subsidiaries or secured by a Lien on
assets of such Person or one of its Restricted Subsidiaries (whether or
not such Guarantee or Lien is called
upon);
|
excluding,
however, any amount of such interest of any Restricted Subsidiary of the
referent Person if the net income of such Restricted Subsidiary is excluded in
the calculation of Consolidated EBITDA pursuant to clause (z) of the definition
thereof (but only in the same proportion as the net income of such Restricted
Subsidiary is excluded from the calculation of Consolidated EBITDA pursuant to
clause (z) of the definition thereof), in each case, on a consolidated basis and
in accordance with GAAP.
10
“Continuing Directors” means,
as of any date of determination, any member of the Board of Directors of CCI
who:
|
|
(1)
|
was
a member of the Board of Directors of CCI on the Issue Date;
or
|
|
|
(2)
|
was
nominated for election or elected to the Board of Directors of CCI with
the approval of a majority of the Continuing Directors who were members of
such Board of Directors at the time of such nomination or election, or
whose election or appointment was previously so
approved.
|
“Corporate Trust Office of the
Trustee” shall be at the address of the Trustee specified in
Section 12.02 or such other address as to which the Trustee may give notice
to the Issuers.
“Credit Facilities” means,
with respect to the Company and/or its Restricted Subsidiaries, one or more debt
facilities or commercial paper facilities (including the CCO Credit Facility),
in each case with banks or other lenders (other than a Parent of the Issuers)
providing for revolving credit loans, term loans, debt securities, receivables
financing (including through the sale of receivables to such lenders or to
special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to
time.
“Default” means any event that
is, or with the passage of time or the giving of notice or both would be, an
Event of Default.
“Definitive Note” means a
certificated Note registered in the name of the Holder thereof and issued in
accordance with Section 2.06, substantially in the form of Exhibit A
hereto, except that such Note shall not bear the Global Note Legend and shall
not have the “Schedule of Exchanges of Interests in the Global Note” attached
thereto.
“Depositary” means, with
respect to the Global Notes, the Person specified in Section 2.03 as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
“Disposition” means, with
respect to any Person, any merger, consolidation or other business combination
involving such Person (whether or not such Person is the surviving Person) or
the sale, assignment, transfer, lease or conveyance, or other disposition, of
all or substantially all of such Person’s assets or Capital Stock.
“Disqualified Stock” means any
Capital Stock that, by its terms (or by the terms of any security into which it
is convertible, or for which it is exchangeable, in each case at the option of
the holder thereof) or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to the date that is 91 days after the date on which the Notes
mature. Notwithstanding the preceding sentence, any Capital Stock
that would constitute Disqualified Stock solely because the holders thereof have
the right to require the Company to repurchase such Capital Stock upon the
occurrence of a change of control or an asset sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Section 4.07.
11
“Equity Interests” means
Capital Stock and all warrants, options or other rights to acquire Capital Stock
(but excluding any debt security that is convertible into, or exchangeable for,
Capital Stock).
“Equity Offering” means any
private or underwritten public offering of Qualified Capital Stock of the
Company or a Parent of which the gross proceeds to the Company or received by
the Company as a capital contribution from such Parent (directly or indirectly),
as the case may be, are at least $25 million.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, or any successor statute or
statutes thereto.
“Existing Indebtedness” means
Indebtedness of the Company and its Restricted Subsidiaries in existence on the
Issue Date, until such amounts are repaid.
“Existing CCO Indenture” means
(a) the indenture pursuant to which the Existing CCO Notes were issued and (b)
any indentures, note purchase agreements or similar documents entered into by
the Issuers after the Issue Date for the purpose of incurring Indebtedness in
exchange for, or the proceeds of which are used to refinance, any of the
Indebtedness described in the foregoing clause (a), in each case, together
with all instruments and other agreements entered into by the Issuers in
connection therewith, as the same may be refinanced, replaced, amended,
supplemented or otherwise modified from time to time.
“Existing CCO Notes” means the
8% Senior Second Lien Notes due 2012 and the 8 3/8% Senior Second Lien Notes due
2014 of the Issuers.
“Existing CCO Notes
Obligations” means (i) all principal of and interest (including any
Post-Petition Interest) and premium (if any) on all indebtedness under the
Existing CCO Indenture, and (ii) all fees, expenses and other amounts (including
costs and indemnification obligations) payable from time to time pursuant to the
Second Lien Documents entered into in connection with the Existing CCO Indenture
(including amounts payable under any Second Lien Guarantee relating to the
Existing CCO Indenture), in each case whether or not allowed or allowable in an
Insolvency Proceeding.
“First Lien Agreement” means
the collective reference to (i) the CCO Credit Facility, (ii) any
Additional First Lien Agreement and (iii) any other credit agreement, loan
agreement, note agreement, promissory note, indenture or other agreement or
instrument evidencing or governing the terms of any indebtedness or other
financial accommodation that has been incurred to extend, replace, refinance or
refund in whole or in part the indebtedness and other obligations outstanding
under the CCO Credit Facility, any Additional First Lien Agreement or any other
agreement or instrument referred to in this clause (iii) unless such
agreement or instrument expressly provides that it is not intended to be and is
not a First Lien Agreement hereunder. Any reference to the First Lien
Agreement hereunder shall be deemed a reference to any First Lien Agreement then
extant.
“First Lien Creditors” means
the First Lien Representative and the “Lenders” as defined in the First Lien
Agreement, or any Persons that are designated under the First Lien Agreement as
the “First Lien Creditors” for purposes of the Intercreditor
Agreement.
“First Lien Documents” means
the First Lien Agreement, each First Lien Security Document and each First Lien
Guarantee.
“First Lien Guarantee” means
any Guarantee by any Loan Party of any or all of the First Lien
Obligations.
12
“First Lien Obligation” means
(i) all principal of and interest (including any Post-Petition Interest)
and premium (if any) on all loans made pursuant to the First Lien Agreement,
(ii) all reimbursement obligations (if any) and interest thereon (including
any Post-Petition Interest) with respect to any letter of credit or similar
instruments issued pursuant to the First Lien Agreement, (iii) all Hedging
Obligations, (iv) all Cash Management Obligations and (v) all fees,
expenses and other amounts payable from time to time pursuant to the First Lien
Documents, in each case whether or not allowed or allowable in an Insolvency
Proceeding.
“First Lien Representative”
means, (i) for so long as any obligations remain outstanding under the CCO
Credit Facility and the Related Obligations, the agent appointed and acting in
accordance with the terms of the CCO Credit Facility and (ii) from and
after the time when no obligations remain outstanding under the CCO Credit
Facility and the Related Obligations, the agent appointed and acting on behalf
of the holders of Pari Passu First Priority Indebtedness determined in
accordance with the terms of the Intercreditor Agreement.
“First Lien Secured Parties”
means the First Lien Representative, the First Lien Creditors and any other
holders of the First Lien Obligations.
“First Lien Security
Documents” means each “Guarantee and Collateral Agreement” as defined in
the First Lien Agreement, and any other documents that are designated under the
First Lien Agreement as “First Lien Security Documents” for purposes of the
Intercreditor Agreement.
“GAAP” means generally
accepted accounting principles set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession, which are in
effect on the Issue Date.
“Global Note Legend” means the
legend set forth in Section 2.06(f)(ii), which is required to be placed on
all Global Notes issued under this Indenture.
“Global Notes” means,
individually and collectively, each of the Restricted Global Notes and the
Unrestricted Global Notes.
“Government Securities” means
direct obligations of, or obligations guaranteed by, the United States of
America, and the payment for which the United States pledges its full faith and
credit.
“Guarantee” or “guarantee”
means a guarantee other than by endorsement of negotiable instruments for
collection in the ordinary course of business, direct or indirect, in any manner
including by way of a pledge of assets or through letters of credit or
reimbursement agreements in respect thereof, of all or any part of any
Indebtedness, measured as the lesser of the aggregate outstanding amount of the
Indebtedness so guaranteed and the face amount of the guarantee.
“Guarantee and Pledge Availability
Period” means any period during which (a) Charter Holdings satisfies the
Leverage Condition or (b) the Leverage Condition is no longer applicable
(whether as a result of payment in full, defeasance or otherwise, but not as a
result of an exception not requiring satisfaction of the Leverage Condition) to
the ability of any Subsidiary of the Issuers to issue a Note Guarantee or pledge
collateral to secure the Notes.
“Guarantor”
means:
13
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(1)
|
each
Restricted Subsidiary that executes and delivers a Note Guarantee pursuant
to Section 4.17, and
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(2)
|
each
other Person that otherwise executes and delivers a Note Guarantee
(including CCOH),
|
in each
case, (i) whether or not the Effectiveness Condition is satisfied, and (ii)
until such time as such Person is released from its Note Guarantee in accordance
with the provisions of this Indenture. CCOH and any Restricted
Subsidiary that has executed and delivered this Indenture as a Guarantor shall
be deemed to have executed and delivered a Note Guarantee.
“Hedging Obligations” means,
with respect to any Person, the obligations of such Person under:
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(1)
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interest
rate swap agreements, interest rate cap agreements and interest rate
collar agreements;
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(2)
|
interest
rate option agreements, foreign currency exchange agreements, foreign
currency swap agreements; and
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(3)
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other
agreements or arrangements designed to protect such Person against
fluctuations in interest and currency exchange
rates.
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“Helicon Preferred Stock”
means the preferred limited liability company interest of Charter-Helicon LLC
with an aggregate liquidation value of $25 million.
“Holder” means a record-holder
of the Notes.
“Indebtedness” means, with
respect to any specified Person, any indebtedness of such Person, whether or not
contingent:
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(1)
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in
respect of borrowed money;
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(2)
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evidenced
by bonds, notes, debentures or similar instruments or letters of credit
(or reimbursement agreements in respect
thereof);
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(3)
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in
respect of banker’s acceptances;
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(4)
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representing
Capital Lease Obligations;
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(5)
|
in
respect of the balance deferred and unpaid of the purchase price of any
property, except any such balance that constitutes an accrued expense or
trade payable; or
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(6)
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representing
the notional amount of any Hedging
Obligations,
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if and to
the extent any of the preceding items (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of the specified
Person prepared in accordance with GAAP. In addition, the term
“Indebtedness” includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the guarantee
by such Person of any indebtedness of any other Person.
14
The
amount of any Indebtedness outstanding as of any date shall be:
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(1)
|
the
accreted value thereof, in the case of any Indebtedness issued with
original issue discount; and
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(2)
|
the
principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other
Indebtedness.
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“Indenture” means this
Indenture, as amended or supplemented from time to time.
“Initial Notes” means the
Issuers’ 10.875% Senior Second Lien Notes due 2014, issued on the Issue Date
(and any Notes issued in respect thereof pursuant to Section 2.06, 2.07, 2.10,
3.06, 3.09, 4.16 or 9.05).
“Insolvency Proceeding” means
any proceeding in respect of bankruptcy, insolvency, winding up, receivership,
dissolution or assignment for the benefit of creditors, in each of the foregoing
events whether under a Bankruptcy Law or otherwise.
“Institutional Accredited
Investor” means an institution that is an “accredited investor” as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is
not also a QIB.
“Intercreditor Agreement”
means the amended and restated Intercreditor Agreement, dated as of March 19,
2008, between, the Trustee, on behalf of all present and future holders of the
Notes, the trustee under the Existing CCO Indenture, on behalf of all present
and future holders of the Existing CCO Notes, and JPMorgan Chase Bank, N.A., as
administrative agent under the CCO Credit Facility, acting on behalf of itself
and all present and future First Lien Secured Parties, as amended, restated,
modified, renewed, refunded, replaced or refinanced in whole or in part from
time to time.
“Investment Grade Rating”
means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and
BBB- (or the equivalent) by S&P.
“Investments” means, with
respect to any Person, all investments by such Person in other Persons,
including Affiliates, in the forms of direct or indirect loans (including
guarantees of Indebtedness or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business) and purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.
“Issue Date” means March 19,
2008.
“Issuers” has the meaning
assigned to it in the preamble to this Indenture.
“Legal Holiday” means a
Saturday, a Sunday or a day on which banking institutions in The City of New
York or at a place of payment are authorized by law, regulation or executive
order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue on such payment for
the intervening period.
“Lenders” means the lenders
from time to time under the CCO Credit Facility.
15
“Leverage Condition” means the
condition in the Charter Holdings Indentures that Charter Holdings be able to
incur an additional $1.00 of Indebtedness (as defined in the Charter Holdings
Indentures) under the Leverage Ratio (as defined in the Charter Holdings
Indentures) test set forth in the first paragraph of Section 4.10 of each of the
Charter Holdings Indentures as in effect on the Issue Date, calculated in
accordance with the terms of the Charter Holdings Indentures and Charter
Holdings’ past practice (including, if applicable, review by Charter Holdings’
independent accountants) for satisfying such condition, which in any event shall
be deemed satisfied if, and at any time, such condition is deemed satisfied for
purposes of any CCO Credit Facility.
“Leverage Ratio” means, as to
the Company, as of any date, the ratio of:
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(1)
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the
Consolidated Indebtedness of the Company on such date
to
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(2)
|
the
aggregate amount of Consolidated EBITDA for the Company for the most
recently ended fiscal quarter for which internal financial statements are
available (the “Reference Period”) multiplied by
four.
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In
addition to the foregoing, for purposes of this definition, “Consolidated
EBITDA” shall be calculated on a pro forma basis after giving effect
to:
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(1)
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the
issuance of the Notes;
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(2)
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the
incurrence of the Indebtedness or the issuance of the Disqualified Stock
or other Preferred Stock (and the application of the proceeds therefrom)
giving rise to the need to make such calculation and any incurrence or
issuance (and the application of the proceeds therefrom) or repayment of
other Indebtedness, Disqualified Stock or Preferred Stock, other than the
incurrence or repayment of Indebtedness for ordinary working capital
purposes, at any time subsequent to the beginning of the Reference Period
and on or prior to the date of determination, as if such incurrence (and
the application of the proceeds thereof), or the repayment, as the case
may be, occurred on the first day of the Reference Period;
and
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(3)
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any
Dispositions or Asset Acquisitions (including any Asset Acquisition giving
rise to the need to make such calculation as a result of such Person or
one of its Restricted Subsidiaries (including any person that becomes a
Restricted Subsidiary as a result of such Asset Acquisition) incurring,
assuming or otherwise becoming liable for or issuing Indebtedness,
Disqualified Stock or Preferred Stock) made on or subsequent to the first
day of the Reference Period and on or prior to the date of determination,
as if such Disposition or Asset Acquisition (including the incurrence,
assumption or liability for any such Indebtedness, Disqualified Stock or
Preferred Stock and also including any Consolidated EBITDA associated with
such Asset Acquisition, including any cost savings adjustments in
compliance with Regulation S-X promulgated by the Commission) had occurred
on the first day of the Reference
Period.
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“Lien” means, with respect to
any asset, any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset, whether or not filed, recorded or
otherwise perfected under applicable law, including any conditional sale or
other title retention agreement, any lease in the nature thereof, any option or
other agreement to sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction.
16
“Loan Party” means the Company
and each direct or indirect affiliate or shareholder (or equivalent) of the
Company or any of its affiliates that is now or hereafter becomes a party to any
First Lien Document or Second Lien Document.
“Make-Whole Premium” means an
amount equal to the excess of (a) the present value of the remaining interest
and principal payments due on a Note to its final maturity date, computed using
a discount rate equal to the Treasury Rate on such date plus 0.50%, over (b) the
outstanding principal amount of such Note.
“Management Fees” means the
fees (including expense reimbursements) payable to any Parent pursuant to the
management and mutual services agreements between or among any one or more of
the Company, its Parents and their Restricted Subsidiaries and pursuant to the
limited liability company agreements of certain Restricted Subsidiaries as such
management, mutual services or limited liability company agreements exist on the
Issue Date (or, if later, on the date any new Restricted Subsidiary is acquired
or created), including any amendment or replacement thereof; provided, however,
that any such new agreements or amendments or replacements of existing
agreements, taken as a whole, are not more disadvantageous to the Holders in any
material respect than such agreements existing on the Issue Date; and provided
further, however, that such new, amended or replacement management agreements do
not provide for percentage fees, taken together with fees under existing
agreements, any higher than 3.5% of CCI’s consolidated total revenues for the
applicable payment period.
“Moody’s” means Moody’s
Investors Service, Inc. or any successor to the rating agency business
thereof.
“Net Proceeds” means the
aggregate cash proceeds received by the Company or any of its Restricted
Subsidiaries in respect of any Asset Sale (including any cash received upon the
sale or other disposition of any non-cash consideration received in any Asset
Sale), net of the direct costs relating to such Asset Sale, including legal,
accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result thereof or taxes paid or payable as a
result thereof (including amounts distributable in respect of owners’, partners’
or members’ tax liabilities resulting from such sale), in each case after taking
into account any available tax credits or deductions and any tax sharing
arrangements and amounts required to be applied to the repayment of
Indebtedness.
“Non-Recourse Debt” means
Indebtedness:
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(1)
|
as
to which neither the Company nor any of its Restricted
Subsidiaries
|
(a) provides
credit support of any kind (including any undertaking, agreement or instrument
that would constitute Indebtedness);
(b) is
directly or indirectly liable as a guarantor or otherwise; or
(c) constitutes
the lender;
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|
(2)
|
no
default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of
any other Indebtedness (other than the Notes) of the Company or any of its
Restricted Subsidiaries to declare a default on such
|
17
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|
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other
Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and
|
|
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(3)
|
as
to which the lenders have been notified in writing that they will not have
any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries.
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“Non-U.S. Person” means a
Person who is not a U.S. Person.
“Note Custodian” means the
Trustee when serving as custodian for the Depositary with respect to the Global
Notes, or any successor entity thereto.
“Note Guarantee” means the
guarantee of the Issuers’ payment obligations under the Notes subject to the
Effectiveness Condition. If the Effectiveness Condition is satisfied,
the Note Guarantees will be unconditional guarantees of payment.
“Notes” means the Initial
Notes and any Additional Notes. The Initial Notes and any
Additional Notes shall be treated as a single class for all purposes under this
Indenture, and unless the context otherwise requires, all references to the
Notes shall include the Initial Notes and any Additional Notes.
“Notes Obligations” means (i)
all principal of and interest (including any Post-Petition Interest) and premium
(if any) on all indebtedness under this Indenture and the Notes, and (ii) all
fees, expenses and other amounts (including costs and indemnification
obligations) payable from time to time pursuant to the Second Lien Documents
entered into in connection with this Indenture (including amounts payable under
any Note Guarantee relating to this Indenture), in each case whether or not
allowed or allowable in an Insolvency Proceeding.
“Officer” means, with respect
to any Person, the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Vice-President of such Person.
“Officers’ Certificate” means
a certificate signed on behalf of the Company or Capital Corp, as the case may
be, by two Officers of the Company or Capital Corp, as the case may be, one of
whom must be the principal executive officer, the chief financial officer or the
treasurer of the Company or Capital Corp, as the case may be, that meets the
requirements of Section 12.05.
“Opinion of Counsel” means an
opinion from legal counsel that meets the requirements of
Section 12.05. The counsel may be an employee of or counsel to
the Company or any Subsidiary of the Company.
“Other Global Note” means a
global note substantially in the form of Exhibit A hereto bearing the Global
Note Legend and the Private Placement Legend and deposited with or on behalf of,
and registered in the name of, the Depositary or its nominee that will be issued
(or the principal amount of which will be increased) in connection with a
transfer pursuant to Section 2.13(c).
“Parent” means CCOH, CCH II,
CCH I, CIH, Charter Holdings, CCHC, Charter Communications Holding Company, LLC,
CCI and/or any direct or indirect Subsidiary of the foregoing 100% of the
Capital Stock of which is owned directly or indirectly by one or more of the
foregoing Persons, as applicable, and that directly or indirectly beneficially
owns 100% of the Capital Stock of the Company, and any successor Person to any
of the foregoing.
18
“Pari Passu First Priority
Indebtedness” means the Indebtedness represented by (i) the obligations
under a Credit Facility and any Related Obligations to the extent incurred in
compliance with the terms of this Indenture and (ii) the obligations under any
Additional Pari Passu First Priority Indebtedness to the extent incurred in
compliance with the terms of this Indenture.
“Pari Passu First Priority Secured
Parties” means each of (i) the Bank Agents on behalf of themselves and
the Lenders and the Related Obligations Counterparties and (ii) the holders from
time to time of any Additional Pari Passu First Priority Indebtedness and the
duly authorized representative(s) of such holders, if any; provided, however,
that each such Person, or the duly authorized representative thereof, shall have
become a party to the applicable Security Documents.
“Pari Passu Indebtedness”
means, with respect to any Person, Indebtedness of such Person unless, with
respect to any other item of Indebtedness of such Person, the instrument
creating or evidencing the same or pursuant to which the same is outstanding or
any other agreement governing the terms of such Indebtedness expressly provides
that such Indebtedness shall be subordinated in right of payment to any other
Indebtedness or obligation of such Person. Notwithstanding the
foregoing, “Pari Passu Indebtedness” shall not include:
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(i)
|
Indebtedness
of the Company owed to any Restricted Subsidiary or Affiliate of the
Company or Indebtedness of any such Restricted Subsidiary owed to the
Company or any other Restricted Subsidiary or any Affiliate of such
Restricted Subsidiary;
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(ii)
|
Indebtedness
incurred in violation of this
Indenture;
|
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(iii)
|
Indebtedness
represented by Disqualified Stock;
and
|
|
|
(iv)
|
any
Indebtedness to or guaranteed on behalf of any shareholder (other than a
Parent), director, officer or employee of the Company or any Restricted
Subsidiary of the Company.
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“Pari Passu Second Priority
Indebtedness” means the Indebtedness represented by (i) the Notes and the
Note Guarantees, (ii) the Existing CCO Notes and the guarantees thereof and
(iii) the obligations under any Additional Pari Passu Second Priority
Indebtedness, in each case, to the extent incurred in compliance with the terms
of this Indenture.
“Pari Passu Second Priority Secured
Parties” means each of (i) the Trustee, on behalf of itself and the
Holders, (ii) the trustee for the Existing CCO Notes, on behalf of itself and
the holders of the Existing CCO Notes, and (iii) the holders from time to time
of any Additional Pari Passu Second Priority Indebtedness and the duly
authorized representative(s) of such holders, if any; provided, however, that
each such Person, or the duly authorized representative thereof, shall have
become a party to the applicable Security Documents.
“Permanent Regulation S Global
Note” means a Regulation S Global Note that does not bear the Temporary
Regulation S Legend.
“Permitted Investments”
means:
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(1)
|
any
Investment by the Company in a Restricted Subsidiary thereof, or any
Investment by a Restricted Subsidiary of the Company in the Company or in
another Restricted Subsidiary of the
Company;
|
19
|
|
(2)
|
any
Investment in Cash Equivalents;
|
|
|
(3)
|
any
Investment by the Company or any of its Restricted Subsidiaries in a
Person, if as a result of such
Investment:
|
(a) such
Person becomes a Restricted Subsidiary of the Company, or
(b) such
Person is merged, consolidated or amalgamated with or into, or transfers or
conveys substantially all of its assets to, or is liquidated into, the Company
or a Restricted Subsidiary of the Company;
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|
(4)
|
any
Investment made as a result of the receipt of non-cash consideration from
an Asset Sale that was made pursuant to and in compliance with Section
4.11;
|
|
|
(5)
|
any
Investment made out of the net cash proceeds of the issue and sale (other
than to a Subsidiary of the Company) of Equity Interests (other than
Disqualified Stock) or cash contributions to the common equity of the
Company, in each case after April 27, 2004, to the extent that such net
cash proceeds have not been applied to make a Restricted Payment or to
effect other transactions pursuant to Section 4.07 hereof (with the
amount of usage of the basket in this clause (5) being determined net of
the aggregate amount of principal, interest, dividends, distributions,
repayments, proceeds or other value otherwise returned or recovered in
respect of any such Investment but not to exceed the initial amount of
such Investment);
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|
|
(6)
|
other
Investments in any Person (other than any Parent) having an aggregate fair
market value, when taken together with all other Investments in any Person
made by the Company and its Restricted Subsidiaries (without duplication)
pursuant to this clause (6) from and after the Issue Date, not to exceed
$750 million (initially measured on the date each such Investment was made
and without giving effect to subsequent changes in value, but reducing the
amount outstanding by the aggregate amount of principal, interest,
dividends, distributions, repayments, proceeds or other value otherwise
returned or recovered in respect of any such Investment, but not to exceed
the initial amount of such Investment) at any one time
outstanding;
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|
|
(7)
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Investments
in customers and suppliers in the ordinary course of business which
either;
|
(A) generate
accounts receivable, or
(B) are
accepted in settlement of bona
fide disputes;
|
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(8)
|
Investments
consisting of payments by the Company or any of its Subsidiaries of
amounts that are neither dividends nor distributions but are payments of
the kind described in clause (2) of the second paragraph of Section 4.07
to the extent such payments constitute Investments;
and
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20
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|
(9)
|
regardless
of whether a Default then exists, Investments in any Unrestricted
Subsidiary made by the Company and/or any of its Restricted Subsidiaries
with the proceeds of (x) distributions from any Unrestricted Subsidiary or
(y) capital contributions received from any Parent (other than
CCI).
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“Permitted Liens”
means;
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(1)
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Liens
on the assets of the Company and its Restricted Subsidiaries securing
Indebtedness described under clause (1) of the second paragraph of Section
4.10 and other obligations under the agreements governing such
Indebtedness and Related Obligations or under clause (10) of such second
paragraph;
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(2)
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Liens
in favor of the Company;
|
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|
(3)
|
Liens
to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature and that do
not constitute Indebtedness, incurred in the ordinary course of
business;
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(4)
|
Liens
for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided,
however, that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made
therefor;
|
|
|
(5)
|
statutory
and common law Liens of landlords and carriers, warehousemen, mechanics,
suppliers, materialmen, repairmen or other similar Liens arising in the
ordinary course of business and with respect to amounts not yet delinquent
or being contested in good faith by appropriate legal proceedings promptly
instituted and diligently conducted and for which a reserve or other
appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made;
|
|
|
(6)
|
Liens
incurred or deposits made in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other types of
social security;
|
|
|
(7)
|
Liens
incurred or deposits made to secure the performance of tenders, bids,
leases, statutory or regulatory obligation, bankers’ acceptance, surety
and appeal bonds, government contracts, performance and return-of-money
bonds and other obligations of a similar nature incurred in the ordinary
course of business (exclusive of obligations for the payment of borrowed
money);
|
|
|
(8)
|
easements,
rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of the Company or any of
its Restricted Subsidiaries;
|
|
|
(9)
|
Liens
of franchisors or other regulatory bodies arising in the ordinary course
of business;
|
|
|
(10)
|
Liens
arising from filing Uniform Commercial Code financing statements regarding
leases or other Uniform Commercial Code financing statements for
precautionary purposes relating to arrangements not constituting
Indebtedness;
|
21
|
|
(11)
|
Liens
arising from the rendering of a final judgment or order against the
Company or any of its Restricted Subsidiaries that does not give rise to
an Event of Default;
|
|
|
(12)
|
Liens
securing reimbursement obligations with respect to letters of credit (but
not with respect to Indebtedness) that encumber documents and other
property relating to such letters of credit and the products and proceeds
thereof;
|
|
|
(13)
|
Liens
consisting of any interest or title of licensor in the property subject to
a license;
|
|
|
(14)
|
Liens
arising from the sales or other transfers of accounts receivable which are
past due or otherwise doubtful of collection in the ordinary course of
business;
|
|
|
(15)
|
Liens
incurred in the ordinary course of business of the Company and its
Restricted Subsidiaries with respect to obligations which in the aggregate
do not exceed $50 million at any one time
outstanding;
|
|
|
(16)
|
Liens
in favor of the Trustee arising under this Indenture and similar
provisions in favor of trustees or other agents or representatives under
indentures or other agreements governing debt instruments entered into
after the date hereof;
|
|
|
(17)
|
Liens
in favor of the Trustee for its benefit and the benefit of Holders of all
of the Notes, as their respective interests
appear;
|
|
|
(18)
|
purchase
money mortgages or other purchase money Liens (including any Capital Lease
Obligations) incurred by the Company or any Restricted Subsidiary upon any
fixed or capital assets, assets useful in developing a telephony business
and/or assets useful for general operating financing needs acquired after
the Issue Date or purchase money mortgages (including Capital Lease
Obligations) on any such assets, whether or not assumed, existing at the
time of acquisition of such assets, whether or not assumed, so long
as:
|
(a) such
mortgage or lien does not extend to or cover any of the assets of the Company or
such Restricted Subsidiary, except the asset so developed, constructed or
acquired, and directly related assets such as enhancements and modifications
thereto, substitutions, replacements, proceeds (including insurance proceeds),
products, rents and profits thereof; and
(b) such
mortgage or lien secures the obligation to pay all or a portion of the purchase
price of such asset, interest thereon and other charges, costs and expenses
(including the cost of design, development, construction, acquisition,
transportation, installation, improvement and migration) and is incurred in
connection therewith (or the obligation under such Capital Lease Obligation)
only;
|
|
(19)
|
Liens
securing Permitted Refinancing Indebtedness, to the extent that the
Indebtedness being refinanced was secured or was permitted to be secured
by such Liens; and
|
|
|
(20)
|
Liens
securing Indebtedness outstanding under the CCO Credit Facilities on the
Issue Date.
|
22
“Permitted Refinancing
Indebtedness” means any Indebtedness of the Company or any of its
Restricted Subsidiaries issued in exchange for, or the net proceeds of which are
used, directly or indirectly, within 60 days of the date of issuance thereof to
extend, refinance, renew, replace, defease or refund, other Indebtedness of the
Company or any of its Restricted Subsidiaries (other than intercompany
Indebtedness); provided, however, that unless permitted otherwise by this
Indenture, no Indebtedness of any Restricted Subsidiary may be issued in
exchange for, nor may the net proceeds of Indebtedness be used to extend,
refinance, renew, replace, defease or refund, Indebtedness of the Company;
provided further, however, that:
|
|
(1)
|
the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or
accreted value, if applicable) plus accrued interest and premium, if any,
on the Indebtedness so extended, refinanced, renewed, replaced, defeased
or refunded (plus the amount of reasonable expenses incurred in connection
therewith), except to the extent that any such excess principal amount (or
accreted value, as applicable) would be then permitted to be incurred by
other provisions of
Section 4.10;
|
|
|
(2)
|
such
Permitted Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and
|
|
|
(3)
|
if
the Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded is subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and is subordinated in right of payment to,
the Notes on terms at least as favorable to the Holders as those contained
in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or
refunded.
|
“Person” means any individual,
corporation, partnership, joint venture, association, limited liability company,
joint stock company, trust, unincorporated organization, government or agency or
political subdivision thereof or any other entity.
“Post-Petition Interest” means
any interest or entitlement to fees or expenses or other charges that accrues
after the commencement of any Insolvency Proceeding, whether or not allowed or
allowable in any such Insolvency Proceeding.
“Preferred Stock,” as applied
to the Capital Stock of any Person, means Capital Stock of any class or classes
(however designated) which, by its terms, is preferred as to the payment of
dividends, or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such Person, over shares of Capital Stock of any
other class of such Person.
“Private Placement Legend”
means the legend set forth in Section 2.06(f)(i) to be placed on all Notes
issued under this Indenture except where otherwise permitted by the provisions
of this Indenture.
“Productive Assets” means
assets (including assets of a referent Person owned directly or indirectly
through ownership of Capital Stock) of a kind used or useful in the Cable
Related Business.
“QIB” means a “qualified
institutional buyer” as defined in Rule 144A.
23
“QIB Global Note” means a
global note substantially in the form of Exhibit A hereto bearing the Global
Note Legend and the Private Placement Legend and deposited with or on behalf of,
and registered in the name of, the Depositary or its nominee that will be issued
in an initial denomination that, when aggregated with the initial denomination
of the other QIB Global Notes, will equal the outstanding principal amount of
the Initial Notes or any Additional Notes, in each case initially sold in
reliance on Rule 144A or Section 4(2) of the Securities Act.
“Qualified Capital Stock”
means Capital Stock that is not Disqualified Stock.
“Rating Agencies” means
Moody’s and S&P.
“Regulation S” means
Regulation S promulgated under the Securities Act.
“Regulation S Global Note”
means a global note substantially in the form of Exhibit A hereto, bearing
the Global Note Legend and the Private Placement Legend and deposited with or on
behalf of, and registered in the name of, the Depositary or its nominee that
will be issued in an initial denomination that, when aggregated with the initial
denominations of the other Regulation S Global Notes, will equal to the
outstanding principal amount of the Initial Notes or any Additional Notes , in
each case, initially sold in reliance on Rule 903 of Regulation
S.
“Related Cash Management
Obligations” means obligations of the Company or any Restricted
Subsidiary arising from treasury, depository and cash management services
provided by one or more of the Bank Agents or the Lenders or their Affiliates or
designees or other parties permitted under the CCO Credit Facility.
“Related Hedging Obligations”
means Hedging Obligations of the Company or any Restricted Subsidiary entered
into with one or more of the Bank Agents or the Lenders or their Affiliates or
designees or other parties permitted under the CCO Credit Facility.
“Related Obligations” means,
collectively, the Related Cash Management Obligations and the Related Hedging
Obligations.
“Related Obligations
Counterparties” means the Bank Agents and/or Lenders and their Affiliates
counterparties to the Related Obligations.
“Related Party”
means:
|
|
(1)
|
the
spouse or an immediate family member, estate or heir of Paul G. Allen;
or
|
|
|
(2)
|
any
trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or
more controlling interest of which consist of Paul G. Allen and/or such
other Persons referred to in the immediately preceding clause
(1).
|
“Responsible
Officer,” when used with respect to the Trustee, means any officer within the
Corporate Trust Administration of the Trustee (or any successor group of the
Trustee) with direct responsibility for the administration of this Indenture and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
24
“Restricted Definitive Note”
means a Definitive Note bearing the Private Placement Legend.
“Restricted Global Note” means
a Global Note bearing the Private Placement Legend.
“Restricted Investment” means
an Investment other than a Permitted Investment.
“Restricted Period” means the
relevant 40-day distribution compliance period as defined in
Regulation S.
“Restricted Subsidiary” of a
Person means any Subsidiary of the referent Person that is not an Unrestricted
Subsidiary.
“Rule 144” means
Rule 144 promulgated under the Securities Act.
“Rule 144A” means
Rule 144A promulgated under the Securities Act.
“Rule 144A Global Note”
means a global note substantially in the form of Exhibit A hereto, bearing the
Global Note Legend and the Private Placement Legend and deposited with or on
behalf of, and registered in the name of, the Depositary or its nominee that
will be issued in an initial denomination equal to the outstanding principal
amount of the Initial Notes or any Additional Notes, in each case initially sold
in reliance on Rule 144A.
“Rule 903” means
Rule 903 promulgated under the Securities Act.
“Rule 904” means
Rule 904 promulgated under the Securities Act.
“S&P” means Standard &
Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc., or any
successor to the rating agency business thereof.
“Second Lien Agreement” means
the collective reference to (i) the Existing CCO Indenture, (ii) this Indenture,
(iii) each Additional Second Lien Agreement and (iv) any other credit
agreement, loan agreement, note agreement, promissory note, indenture, or other
agreement or instrument evidencing or governing the terms of any indebtedness or
other financial accommodation that has been incurred to extend, replace,
refinance or refund in whole or in part the indebtedness and other obligations
outstanding under the Existing CCO Indenture, this Indenture, any Additional
Second Lien Agreement or any other agreement or instrument referred to in this
clause (iv). Any reference to the Second Lien Agreement
hereunder shall be deemed a reference to any Second Lien Agreement then
extant.
“Second Lien Documents” means
each Second Lien Agreement, each Second Lien Security Document and each Second
Lien Guarantee.
“Second Lien Guarantee” means
any Guarantee by any Loan Party that is a Subsidiary or Parent of the Company of
any or all of the Second Lien Obligations.
“Second Lien Obligations”
means (i) the Notes Obligations, (ii) the Existing CCO Notes Obligations and
(iii) any Additional Second Lien Obligations.
“Second Lien Representative”
means the Trustee, but shall also include any Person identified as a “Second
Lien Representative” in any Second Lien Agreement other than the
Indenture.
25
“Secured Parties” means,
collectively, the Pari Passu First Priority Secured Parties and the Pari Passu
Second Priority Secured Parties.
“Securities Act” means the
Securities Act of 1933, as amended, or any successor statute or statutes
thereto.
“Security Documents” means,
collectively, all security agreements, mortgages, deeds of trust, pledges,
collateral assignments and other agreements or instruments evidencing or
creating any security in favor of the Trustee and any Holders in any or all of
the Collateral, in each case, as amended from time to time in accordance with
the terms thereof.
“Senior Secured Leverage
Ratio” means, as to the Company, as of any date, the ratio
of:
|
|
(1)
|
the
Indebtedness, Attributable Debt or Trade Payables of the Company and any
of its Subsidiaries that are secured by, or have the benefit of, any Lien
that is in any respect senior to the Liens in favor of the Notes on such
date to
|
|
|
(2)
|
the
aggregate amount of Consolidated EBITDA for the Company for the most
recently ended fiscal quarter for which internal financial statements are
available (the “Reference Period”) multiplied by
four.
|
In
addition to the foregoing, for purposes of this definition, “Consolidated
EBITDA” shall be calculated on a pro forma basis after giving
effect to
|
|
(1)
|
the
issuance of the Notes;
|
|
|
(2)
|
the
incurrence of the Indebtedness or the issuance of the Disqualified Stock
or other Preferred Stock (and the application of the proceeds therefrom)
giving rise to the need to make such calculation and any incurrence or
issuance (and the application of the proceeds therefrom) or repayment of
other Indebtedness, Disqualified Stock or Preferred Stock, other than the
incurrence or repayment of Indebtedness for ordinary working capital
purposes, at any time subsequent to the beginning of the Reference Period
and on or prior to the date of determination, as if such incurrence (and
the application of the proceeds thereof) or the repayment, as the case may
be, occurred on the first day of the Reference Period;
and
|
|
|
(3)
|
any
Dispositions or Asset Acquisitions (including any Asset Acquisition giving
rise to the need to make such calculation as a result of such Person or
one of its Restricted Subsidiaries (including any Person that becomes a
Restricted Subsidiary as a result of such Asset Acquisition) incurring,
assuming or otherwise becoming liable for or issuing Indebtedness,
Disqualified Stock or Preferred Stock) made on or subsequent to the first
day of the Reference Period and on or prior to the date of determination,
as if such Disposition or Asset Acquisition (including the incurrence,
assumption or liability for any such Indebtedness, Disqualified Stock or
Preferred Stock and also including any Consolidated EBITDA associated with
such Asset Acquisition, including any cost savings adjustments in
compliance with Regulation S-X promulgated by the Commission) had occurred
on the first day of the Reference
Period.
|
“Significant Subsidiary” means
(a) with respect to any Person, any Restricted Subsidiary of such Person which
would be considered a “Significant Subsidiary” as defined in Rule 1-02(w) of
Regulation S-X under the Securities Act and (b) in addition, with respect to the
Company, Capital Corp.
26
“Stated Maturity” means, with
respect to any installment of interest or principal on any series of
Indebtedness, the date on which such payment of interest or principal was
scheduled to be paid in the documentation governing such Indebtedness on the
Issue Date, or, if none, the original documentation governing such Indebtedness,
and shall not include any contingent obligations to repay, redeem or repurchase
any such interest or principal prior to the date originally scheduled for the
payment thereof.
“Subsidiary” means, with
respect to any Person:
|
|
(1)
|
any
corporation, association or other business entity of which at least 50% of
the total voting power of shares of Capital Stock entitled (without regard
to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of such Person (or a combination thereof) and, in the
case of any such entity of which 50% of the total voting power of shares
of Capital Stock is so owned or controlled by such Person or one or more
of the other Subsidiaries of such Person, such Person and its Subsidiaries
also have the right to control the management of such entity pursuant to
contract or otherwise; and
|
|
|
(2)
|
any
partnership
|
(a) the
sole general partner or the managing general partner of which is such Person or
a Subsidiary of such Person, or
(b) the
only general partners of which are such Person or one or more Subsidiaries of
such Person (or any combination thereof).
“Tax” shall mean any tax,
duty, levy, impost, assessment or other governmental charge (including
penalties, interest and any other liabilities related thereto).
“Temporary Regulation S Global
Note” means a Regulation S Global Note that bears the Temporary
Regulation S Legend.
“TIA” means the Trust
Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date
on which this Indenture is qualified under the TIA; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, then “TIA”
means, to the extent required by such amendment, the Trust Indenture Act of 1939
as so amended.
“Transfer Restricted Notes”
means Notes that bear or are required to bear the Private Placement
Legend.
“Treasury Rate” means, for any
date, the yield to maturity at the time of computation of United States Treasury
securities with a constant maturity (as compiled and published in the most
recent Federal Reserve Statistical Release H.15(519) that has become publicly
available at least two Business Days prior to the applicable redemption date
(or, if such Statistical Release is no longer published, any publicly available
source of similar market data)) most nearly equal to the period from the
applicable redemption date to March 15, 2012; provided, however, that if the
period from the applicable redemption date is not equal to the constant maturity
of a United States Treasury security for which a weekly average yield is given,
the Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such
27
yields
are given except that if the period from the applicable redemption date to March
15, 2012 is less than one year, the weekly average yield on actually traded
United States Treasury Securities adjusted to a constant maturity of one year
shall be used.
“Trustee” means Wilmington
Trust Company until a successor replaces Wilmington Trust Company in accordance
with the applicable provisions of this Indenture and thereafter means the
successor serving hereunder.
“Unrestricted Definitive Note”
means one or more Definitive Notes that do not bear and are not required to bear
the Private Placement Legend.
“Unrestricted Global Note”
means a permanent global note substantially in the form of Exhibit A attached
hereto that bears the Global Note Legend and that has the “Schedule of Exchanges
of Interests in the Global Note” attached thereto, and that is deposited with or
on behalf of and registered in the name of the Depositary, representing Notes
that do not bear the Private Placement Legend.
“Unrestricted Subsidiary”
means any Subsidiary of the Company that is designated by the Board of Directors
of the Company or CCI as an Unrestricted Subsidiary pursuant to a board
resolution, but only to the extent that such Subsidiary:
|
|
(1)
|
has
no Indebtedness other than Non-Recourse
Debt;
|
|
|
(2)
|
is
not party to any agreement, contract, arrangement or understanding with
the Company or any Restricted Subsidiary of the Company unless the terms
of any such agreement, contract, arrangement or understanding are no less
favorable to the Company or any Restricted Subsidiary of the Company than
those that might be obtained at the time from Persons who are not
Affiliates of the Company unless such terms constitute Investments
permitted by Section 4.08, Asset Sales permitted by Section 4.11 or
sale-leaseback transactions permitted by Section
4.12;
|
|
|
(3)
|
is
a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect
obligation
|
(a) to
subscribe for additional Equity Interests or
(b) to
maintain or preserve such Person’s financial condition or to cause such Person
to achieve any specified levels of operating results;
|
|
(4)
|
has
not guaranteed or otherwise directly or indirectly provided credit support
for any Indebtedness of the Company or any of its Restricted Subsidiaries;
and
|
|
|
(5)
|
does
not own any Capital Stock of any Restricted Subsidiary of the
Company.
|
Any
designation of a Subsidiary of the Company as an Unrestricted Subsidiary shall
be evidenced to the Trustee by filing with the Trustee a certified copy of the
board resolution giving effect to such designation and an Officers’ Certificate
certifying that such designation complied with the preceding conditions and was
permitted by Section 4.08. If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of this Indenture, except in the case of an Unrestricted Subsidiary
that is deemed to become a
28
Restricted
Subsidiary on any Reversion Date, and any Indebtedness of such Subsidiary shall
be deemed to be incurred by a Restricted Subsidiary of the Company as of such
date and, if such Indebtedness is not permitted to be incurred as of such date
under Section 4.10, the Company shall be in default of Section
4.10. The Board of Directors of the Company or CCI may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted
if:
|
|
(1)
|
such
Indebtedness is permitted under Section 4.10, calculated on a pro forma
basis as if such designation had occurred at the beginning of the
four-quarter reference period; and
|
|
|
(2)
|
no
Default or Event of Default would be in existence immediately following
such designation.
|
Any such
designation shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the board resolution giving effect to such designation and an
Officer’s Certificate certifying such designation complied with the preceding
conditions.
“U.S. Person” means a U.S.
person as defined in Rule 902(k) under the Securities Act.
“Voting Stock” of any Person
as of any date means the Capital Stock of such Person that is at the time
entitled to vote in the election of the board of directors or comparable
governing body of such Person.
“Weighted Average Life to
Maturity” means, when applied to any Indebtedness at any date, the number
of years obtained by dividing:
|
|
(1)
|
the
sum of the products obtained by
multiplying
|
(a) the
amount of each then remaining installment, sinking fund, serial maturity or
other required payments of principal, including payment at final maturity, in
respect thereof, by
(b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by
|
|
(2)
|
the
then outstanding principal amount of such
Indebtedness.
|
“Wholly Owned Restricted
Subsidiary” of any Person means a Restricted Subsidiary of such Person
all of the outstanding common equity interests or other ownership interests of
which (other than directors’ qualifying shares) shall at the time be owned by
such Person and/or by one or more Wholly Owned Restricted Subsidiaries of such
Person.
Section
1.02 Other
Definitions.
29
|
Term
|
Defined
in Section
|
|||
|
“Adjusted
Net
Assets”
|
11.05 | |||
|
“Affiliate
Transaction”
|
4.13 | |||
|
“Agent
Members
|
2.06 | |||
|
“Asset
Sale
Offer”
|
3.09 | |||
|
“Authentication
Order”
|
2.02 | |||
|
“Change
of Control
Offer”
|
4.16 | |||
|
“Change
of Control
Payment”
|
4.16 | |||
|
“Change
of Control Payment
Date”
|
4.16 | |||
|
“Company
Notice”
|
10.03 | |||
|
“Covenant
Defeasance”
|
8.03 | |||
|
“DTC”
|
2.03 | |||
|
“Effectiveness
Condition”
|
11.03 | |||
|
“Event
of
Default”
|
6.01 | |||
|
“Excess
Proceeds”
|
4.11 | |||
|
“Funding
Guarantor”
|
11.05 | |||
|
“incur”
|
4.10 | |||
|
“Legal
Defeasance”
|
8.02 | |||
|
“Offer
Amount”
|
3.09 | |||
|
“Offer
Period”
|
3.09 | |||
|
“Paying
Agent”
|
2.03 | |||
|
“Payment
Default”
|
6.01 | |||
|
“Permitted
Debt”
|
4.10 | |||
|
“Purchase
Date”
|
3.09 | |||
|
“QIB
|
2.01 | |||
|
“Ratio
Debt”
|
4.10 | |||
|
“Reference
Date”
|
4.07 | |||
|
“Registrar”
|
2.03 | |||
|
“Released
Collateral”
|
10.03 | |||
|
“Restricted
Payments”
|
4.07 | |||
|
“Reversion
Date”
|
4.19 | |||
|
“Regulations
S”
|
2.01 | |||
|
“Rule
144A”
|
2.01 | |||
|
“Suspended
Covenants”
|
4.19 | |||
|
“Suspension
Period”
|
4.19 | |||
|
“Temporary
Regulation S
Legend”
|
2.06 | |||
|
“Trustee”
|
8.05 | |||
Section
1.03 Incorporation
by Reference of Trust Indenture Act.
Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture.
The
following TIA terms used in this Indenture have the following
meanings:
“indenture
securities” means the Notes;
“indenture
security holder” means a Holder;
30
“indenture
to be qualified” means this Indenture;
“indenture
trustee” or “institutional trustee” means the Trustee; and
“obligor”
on the Notes means the Issuers and any successor obligor upon the
Notes.
All other
terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule under the TIA have the
meanings so assigned to them.
Section
1.04 Rules
of Construction.
Unless
the context otherwise requires:
(i) a term
has the meaning assigned to it;
(ii) an
accounting term not otherwise defined has the meaning assigned to it, and all
accounting determinations shall be made, in accordance with GAAP;
(iii) “or” is
not exclusive and “including” means “including without limitation”;
(iv) words in
the singular include the plural, and in the plural include the
singular;
(v) all
exhibits are incorporated by reference herein and expressly made a part of this
Indenture;
(vi) references
to sections of or rules under the Securities Act shall be deemed to include
substitute, replacement or successor sections or rules adopted by the SEC from
time to time;
(vii) references
to any statute, law, rule or regulation shall be deemed to refer to the same as
from time to time amended and in effect and to any successor statute, law, rule
or regulation;
(viii) references
to any contract, agreement or instrument shall mean the same as amended,
modified, supplemented or amended and restated from time to time, in each case,
in accordance with any applicable restrictions contained in this Indenture;
and
(ix) any
transaction or event shall be considered “permitted by” or made “in accordance
with” or “in compliance with” this Indenture or any particular provision thereof
if such transaction or event is not expressly prohibited by this Indenture or
such provision, as the case may be.
ARTICLE
2
THE
NOTES
Section
2.01 Form
and Dating.
(a) General. The Notes and
the Trustee’s certificate of authentication shall be substantially in the form
of Exhibit A hereto. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $2,000 and integral multiples of $1,000 in excess
thereof.
31
The
Global Notes shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee as custodian for the Depositary, and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Issuers and authenticated by the Trustee as hereinafter
provided.
Each
Global Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the aggregate amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
amount of outstanding Notes represented thereby may from time to time be reduced
or increased, as appropriate, to reflect exchanges, redemptions and transfers of
interests. Any endorsement of a Global Note to reflect the amount of
any increase or decrease in the amount of outstanding Notes represented thereby
shall be made by the Trustee or the Note Custodian, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.06 hereof.
(b) The Initial
Notes are being issued by the Issuers only (i) to “qualified institutional
buyers” (as defined in Rule 144A under the Securities Act (“Rule
144A”))
(“QIBs”) and
(ii) in reliance on Regulation S under the Securities Act
(“Regulation S”). After
such initial offers, Initial Notes that are Transfer Restricted Notes may be
transferred (i) to an Issuer, (ii) pursuant to an effective registration
statement under the Securities Act, (iii) so long as such Initial Note is
eligible for resale pursuant to Rule 144A, to a person whom the transferor
reasonably believes is a QIB purchasing for its own account or for the account
of a QIB, in each case, to whom notice is given that the offer, resale, pledge
or other transfer is being made in reliance on Rule 144A, (iv) to Non-U.S.
Persons in an offshore transaction in accordance with Rule 904 of
Regulation S, or (v) in any other transaction that does not require
registration under the Securities Act. Initial Notes that are offered
to QIBs in reliance on Section 4(2) of the Securities Act shall be issued in the
form of one or more permanent QIB Global Notes deposited with the Trustee, as
Note Custodian, duly executed by the Issuers and authenticated by the Trustee as
hereinafter provided. Initial Notes that are offered in offshore
transactions in reliance on Regulation S shall be issued in the form of one or
more Temporary Regulation S Global Notes deposited with the Trustee, as Note
Custodian, duly executed by the Issuers and authenticated by the Trustee as
hereinafter provided. The QIB Global Notes and the Regulation S
Global Notes shall each be issued with separate CUSIP numbers. The
aggregate principal amount of each Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
Note Custodian. Transfers of Notes between or among QIBs and to or by
purchasers pursuant to Regulation S shall be represented by appropriate
increases and decreases to the respective amounts of the appropriate Global
Notes, as more fully provided in Sections 2.06 and
2.14.
Section
2.01(b) shall apply only to Global Notes deposited with or on behalf of the
Depositary.
(c) The Trustee
shall have no responsibility or obligation to any Holder that is a member of (or
a participant in) DTC or any other Person with respect to the accuracy of the
records of DTC (or its nominee) or of any participant or member thereof, with
respect to any ownership interest in the Notes or with respect to the delivery
of any notice (including any notice of redemption) or the payment of any amount
or delivery of any Notes (or other security or property) under or with respect
to the Notes. The Trustee may rely (and shall be fully protected in
relying) upon information furnished by DTC with respect to its members,
participants and any beneficial owners in the Notes.
Section
2.02 Execution
and Authentication.
Two
Officers shall sign the Notes for each Issuer by manual or facsimile
signature.
If an
Officer whose signature is on a Note no longer holds that office at the time a
Note is authenticated, the Note shall nevertheless be valid.
32
A Note
shall not be valid until authenticated by the manual signature (which may be by
facsimile) of the Trustee. The signature shall be conclusive evidence
that the Note has been authenticated under this Indenture.
At any
time and from time to time after the execution and delivery of this Indenture,
the Issuers may deliver Notes executed by the Issuers to the Trustee for
authentication; and the Trustee shall authenticate and deliver (i) Initial
Notes for original issue in the aggregate principal amount of $545,896,000, and
(ii) Additional Notes from time to time for original issue in aggregate
principal amount specified by the Issuers, in each case, upon a written order of
the Issuers signed by two Officers of each of the Issuers (an “Authentication
Order”). Such Authentication Order shall specify the amount of
the Notes to be authenticated and the date on which the Notes are to be
authenticated, whether such Notes are to be Initial Notes or Additional Notes
and whether the Notes are to be issued as one or more Global Notes and such
other information as the Issuers may include or the Trustee may reasonably
request. The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is unlimited.
Initial
Notes and Additional Notes offered and sold in reliance on the exemption from
registration under the Securities Act provided by Section 4(2) thereunder or
Rule 144A shall be issued as one or more Rule 144A Global
Notes. Initial Notes and Additional Notes offered and sold in
offshore transactions in reliance on Regulation S shall be issued as one or more
Regulation S Global Notes.
The
Trustee may appoint an authenticating agent acceptable to the Issuers to
authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to
deal with Holders or an Affiliate of the Issuers.
Section
2.03 Registrar
and Paying Agent.
The
Issuers shall maintain an office or agency where Notes may be presented for
registration of transfer or for exchange (“Registrar”) and an office or
agency where Notes may be presented for payment (“Paying
Agent”). The Registrar shall keep a register of the Notes and
of their transfer and exchange. The Issuers may appoint one or more
co-registrars and one or more additional paying agents. The term
“Registrar” includes
any co-registrar and the term “Paying Agent” includes any
additional paying agent. The Issuers may change any Paying Agent or
Registrar without notice to any Holder. The Issuers shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Issuers fail to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of its Subsidiaries may act as Paying Agent or
Registrar.
The
Issuers initially appoint The Depository Trust Company (“DTC”) to act as Depositary
with respect to the Global Notes.
The
Issuers initially appoint the Trustee to act as the Registrar and Paying Agent
and to act as custodian with respect to the Global Notes.
Section
2.04 Paying Agent to Hold Money in
Trust.
The
Issuers shall require each Paying Agent other than the Trustee to agree in
writing that the Paying Agent shall hold in trust for the benefit of Holders or
the Trustee all money held by the Paying Agent for the payment of all amounts
payable to the Trustee under the first clause of Section 6.10, and of principal,
premium, if any, or interest on the Notes, and shall notify the Trustee of any
default by the Issuers in making any such payment. While any such
default continues, the Trustee may require a
33
Paying
Agent to pay all money held by it to the Trustee and to account for monies
already paid. The Issuers at any time may require a Paying Agent to
pay all money held by it to the Trustee. Upon payment over to the
Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have
no further liability for the money. If the Company or a Subsidiary
acts as Paying Agent, it shall segregate and hold in a separate trust fund for
the benefit of the Holders or the Trustee all money held by it as Paying
Agent.
Section
2.05 Holder
Lists.
The
Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of all Holders and
shall otherwise comply with TIA § 312(a). If the Trustee is not
the Registrar, the Issuers shall furnish to the Trustee at least seven Business
Days before each interest payment date and at such other times as the Trustee
may request in writing, a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of the Holders and the Issuers
shall otherwise comply with TIA § 312(a).
Section
2.06 Transfer
and Exchange.
(a) Each Global
Note shall (i) be registered in the name of the Depositary for such Global Notes
or the nominee of such Depositary, (ii) be delivered to the Trustee as custodian
for such Depositary and (iii) bear legends as set forth in Section
2.06(f).
Members
of, or participants in, the Depositary (“Agent Members”) shall have no
rights under this Indenture with respect to any Global Note held on their behalf
by the Depositary, or the Trustee as its custodian, or under such Global Note,
and the Depositary may be treated by the Issuers, the Trustee and any agent of
the Company or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Issuers, the Trustee or any agent of the Issuers or the
Trustee, from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.
(b) Transfers of
a Global Note shall be limited to transfers of such Global Note in whole, but
not in part, to the Depositary, its successors or their respective
nominees. Interests of beneficial owners in a Global Note may be
transferred in accordance with Section 2.13 and the rules and procedures of the
Depositary. In addition, Definitive Notes shall be transferred to all
beneficial owners in exchange for their beneficial interests if (i) the
Depositary notifies the Issuers that the Depositary is unwilling or unable to
continue as Depositary for the Global Notes or the Depositary ceases to be a
“clearing agency” registered under the Exchange Act and a successor depositary
is not appointed by the Issuers within ninety (90) days of such notice,
(ii) the Issuers at their sole discretion, notify the Trustee in writing
that they elect to cause the issuance of Definitive Notes under this Indenture
or (iii) an Event of Default of which a Responsible Officer of the Trustee has
actual notice has occurred and is continuing and the Registrar has received a
request from the Depositary to issue such Definitive
Notes.
(c) In
connection with the transfer of the entire Global Note to beneficial owners
pursuant to clause (b) of this Section, such Global Note shall be deemed to be
surrendered to the Trustee for cancellation, and the Issuers shall execute, and
the Trustee shall authenticate and deliver, to each beneficial owner identified
by the Depositary in exchange for its beneficial interest in such Global Note an
equal aggregate principal amount of Definitive Notes of authorized
denominations.
(d) The
registered holder of a Global Note may grant proxies and otherwise authorize any
person, including Agent Members and persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Notes.
34
(e) A Definitive
Note may not be transferred or exchanged for a beneficial interest in a Global
Note.
(f) Legends. The
following legends shall appear on the face of all Global Notes and Definitive
Notes issued under this Indenture unless specifically stated otherwise in the
applicable provisions of this Indenture.
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(i)
|
Private Placement
Legend. Except as permitted by Section 2.13, each Global
Note and each Definitive Note (and all Notes issued in exchange therefor
or substitution thereof) shall bear the legend in substantially the
following form:
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THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY
BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) WHICH IS
ONE YEAR, OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(D) UNDER THE
SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER, AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF, AND THE LAST DATE ON WHICH THE ISSUERS OR ANY
AFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY) OR SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY LAW, ONLY (A)
TO THE ISSUERS OR ANY OF THEIR SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN “ACCREDITED
INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS AN “INSTITUTIONAL ACCREDITED INVESTOR” ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE
SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
35
FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS’ AND THE
TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES
(D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
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(ii)
|
Global Note
Legend. Each Global Note shall bear a legend in
substantially the following
form:
|
UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OR TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS
OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART,
TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S
NOMINEE.
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(iii)
|
Temporary Regulation S
Legend. Each
Regulation S Global Note shall initially bear a legend (the
“Temporary
Regulation S Legend”) in
substantially the following
form:
|
THE
HOLDER OF THIS NOTE BY ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS
THAT IF IT IS A PURCHASER IN A SALE THAT OCCURS OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF REGULATION S OF THE SECURITIES ACT, IT ACKNOWLEDGES THAT, UNTIL
EXPIRATION OF THE “40-DAY DISTRIBUTION COMPLIANCE PERIOD” WITHIN THE MEANING OF
RULE 903 OF REGULATION S, ANY OFFER OR SALE OF THIS NOTE SHALL NOT BE MADE BY IT
TO A U.S. PERSON TO OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON WITHIN THE
MEANING OF RULE 902(k) UNDER THE SECURITIES ACT.
(g) Cancellation and/or Adjustment of Global
Notes. At such time as all beneficial interests in a
particular Global Note have been exchanged for Definitive Notes or a particular
Global Note has been redeemed, repurchased or canceled in whole and not in part,
each such Global Note shall be re-
36
turned to or
retained and canceled by the Trustee in accordance with
Section 2.11. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note or for Definitive Notes, the principal amount of Notes represented
by such Global Note shall be reduced accordingly and an endorsement shall be
made on such Global Note by the Trustee or by the Depositary at the direction of
the Trustee to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.
(h) General
Provisions Relating to Transfers and Exchanges.
(i) To permit
registrations of transfers and exchanges, the Issuers shall execute and the
Trustee shall authenticate Global Notes and Definitive Notes upon the Issuers’
order or at the Registrar’s request.
(ii) No service
charge shall be made to a holder of a beneficial interest in a Global Note or to
a Holder of a Definitive Note for any registration of transfer or exchange, but
the Issuers may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or transfer
pursuant to Sections 2.10, 3.09, 4.11, 4.16 and
9.05).
(iii) The
Registrar shall not be required to register the transfer of or exchange any Note
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part.
(iv) All Global
Notes and Definitive Notes issued upon any registration of transfer or exchange
of Global Notes or Definitive Notes shall be the valid obligations of the
Issuers, evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.
(v) The Issuers
shall not be required to register the transfer of or to exchange a Note for a
period of 15 days immediately preceding the redemption of a Note or between a
record date and the next succeeding interest payment
date.
(vi) Prior to due
presentment for the registration of a transfer of any Note, the Trustee, any
Agent and the Issuers may deem and treat the Person in whose name any Note is
registered as the absolute owner of such Note for the purpose of receiving
payment of principal of and interest on such Notes and for all other purposes,
and none of the Trustee, any Agent or the Issuers shall be affected by notice to
the contrary.
(vii) The Trustee
shall authenticate Global Notes and Definitive Notes in accordance with the
provisions of Section 2.02.
(viii) All
certifications, certificates and Opinions of Counsel required to be submitted to
the Registrar pursuant to this Section 2.06 to effect a registration of
transfer or exchange may be submitted by facsimile.
Section
2.07 Replacement
Notes.
37
If any
mutilated Note is surrendered to the Trustee or the Issuers and the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, the Issuers shall issue and the Trustee, upon receipt of an Authentication
Order, shall authenticate a replacement Note if the Trustee’s requirements are
met. If required by the Trustee or the Issuers, an indemnity bond
must be supplied by the Holder that is sufficient in the judgment of the Trustee
and the Issuers to protect the Issuers, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Issuers may charge for their expenses in replacing a
Note.
Every
replacement Note is an additional legally binding obligation of the Issuers and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section
2.08 Outstanding
Notes.
The Notes
outstanding at any time are all the Notes authenticated by the Trustee except
for those canceled by it, those delivered to it for cancellation, those
reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions of this Indenture, and those described in this
Section 2.08 as not outstanding. Except as set forth in
Section 2.09, a Note does not cease to be outstanding because the Company
or an Affiliate of the Company holds the Note.
If a Note
is replaced pursuant to Section 2.07, it ceases to be outstanding unless
the Company receives proof satisfactory to it that the replaced Note is held by
a protected purchaser.
If the
principal amount of any Note is considered paid under Section 4.01, it
ceases to be outstanding and interest on it ceases to accrue.
If the
Paying Agent (other than an Issuer, a Subsidiary or an Affiliate of any thereof)
holds, on a redemption date or maturity date, money sufficient to pay Notes
payable on that date, then on and after that date such Notes shall be deemed to
be no longer outstanding and shall cease to accrue interest.
Section
2.09 Treasury
Notes.
In
determining whether the Holders of the required principal amount of Notes have
concurred in any direction, waiver or consent, Notes owned by an Issuer, or by
any Person directly or indirectly controlling or controlled by or under direct
or indirect common control with an Issuer, shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Responsible Officer of the Trustee knows are so owned shall be so
disregarded.
Section
2.10 Temporary
Notes.
Until
certificates representing Notes are ready for delivery, the Issuers may prepare
and the Trustee, upon receipt of an Authentication Order, shall authenticate
temporary Notes. Temporary Notes shall be substantially in the form
of certificated Notes but may have variations that the Issuers consider
appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Issuers shall prepare and
the Trustee shall authenticate, upon due receipt of an Authentication Order,
definitive Notes in exchange for temporary Notes.
Holders
of temporary Notes shall be entitled to all of the benefits of this
Indenture.
38
Section
2.11 Cancellation.
The
Issuers at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the
Trustee any Notes surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Notes
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall dispose of such canceled Notes in its customary
manner. The Issuers may not issue new Notes to replace Notes that
they have paid or that have been delivered to the Trustee for
cancellation.
Section
2.12 Defaulted
Interest.
If the
Issuers default in a payment of interest on the Notes, they shall pay the
defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01. The Issuers shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Issuers shall fix or cause to
be fixed each such special record date and payment date; provided, however, that
no such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. At least 15 days before the
special record date, the Issuers (or, upon the written request of the Issuers,
the Trustee in the name and at the expense of the Issuers) shall mail or cause
to be mailed to Holders a notice that states the special record date, the
related payment date and the amount of such defaulted interest to be
paid.
Section
2.13 Special
Transfer Provisions.
Unless and until a Transfer Restricted
Note is transferred or exchanged under an effective registration statement under
the Securities Act, the following provisions shall apply:
(a) Transfers to
QIBs. The following provisions shall apply with respect to the
registration of any proposed transfer of a Transfer Restricted Note to a
QIB:
(i) The
Registrar shall register the transfer of a Transfer Restricted Note by a Holder
to a QIB if such transfer is being made by a proposed transferor who has
provided the Registrar with (a) an appropriately completed certificate of
transfer in the form attached to the Note and (b) a letter substantially in the
form set forth in Exhibit B hereto.
(ii) If the
proposed transferee is an Agent Member and the Transfer Restricted Note to be
transferred consists of an interest in either a Regulation S Global Note or an
Other Global Note, upon receipt by the Registrar of (x) the items required
by paragraph (i) above and (y) instructions given in accordance with the
Depositary’s and the Registrar’s procedures therefor, the Registrar shall
reflect on its books and records the date and an increase in the principal
amount of the QIB Global Note in an amount equal to the principal amount of
the beneficial interest in the Regulation S Global Note or Other Global
Note, as applicable, to be so transferred, and the Registrar shall reflect on
its books and records the date and an appropriate decrease in the principal
amount of such Regulation S Global Note or Other Global Note, as
applicable.
(b) Transfers Pursuant to
Regulation S. The Registrar shall register the transfer
of any Permanent Regulation S Global Note without requiring any additional
certification. The following provisions shall apply with respect to
the registration of any proposed transfer of a Transfer Restricted Note pursuant
to Regulation S:
39
(i) The
Registrar shall register any proposed transfer of a Transfer Restricted Note
pursuant to Regulation S by a Holder upon receipt of (a) an appropriately
completed certificate of transfer in the form attached to the Note and (b) a
letter substantially in the form set forth in Exhibit C hereto from the
proposed transferor.
(ii) If the
proposed transferee is an Agent Member and the Transfer Restricted Note to be
transferred consists of an interest in a QIB Global Note or an Other Global
Note, upon receipt by the Registrar of (x) the items required by
paragraph (i) above and (y) instructions given in accordance with the
Depositary’s and the Registrar’s procedures therefor, the Registrar shall
reflect on its books and records the date and an increase in the principal
amount of the Regulation S Global Note in an amount equal to the principal
amount of the beneficial interest in the QIB Global Note or Other Global Note,
as applicable, to be transferred, and the Registrar shall reflect on its books
and records the date and an appropriate decrease in the principal amount of the
QIB Global Note or Other Global Note, as applicable.
(c) Other Transfers. The
following provisions shall apply with respect to the registration by the
Registrar of any other proposed transfer of a Transfer Restricted Note that does
not require registration under the Securities Act:
(i) The
Registrar shall register such transfer if it is being made by a proposed
transferor who has provided the Registrar with (a) an appropriately completed
certificate of transfer in the form attached to the Note and (b) a legal opinion
from a law firm of nationally recognized standing to the effect that such
transfer does not require registration under the Securities
Act.
(ii) Subject to
clause (iii) below, if the proposed transferee is an Agent Member and the
Transfer Restricted Note to be transferred consists of an interest in either a
QIB Global Note or a Regulation S Global Note, upon receipt by the Registrar of
(x) the items required by paragraph (i) above and (y) instructions given in
accordance with the Depositary’s and the Registrar’s procedures therefor, the
Registrar shall reflect on its books and records the date and an increase in the
principal amount of the Other Global Note in an amount equal to the principal
amount of the beneficial interest in the QIB Global Note or the Regulation S
Global Note, as applicable, to be so transferred, and the Registrar shall
reflect on its books and records the date and an appropriate decrease in the
principal amount of such QIB Global Note or Regulation S Global Note or, as
applicable.
(iii) In
connection with the first transfer pursuant to this Section 2.13(c), an Other
Global Note shall be issued in the form of a permanent Global Note substantially
in the form set forth in Exhibit A deposited with the Trustee, as Note
Custodian, duly executed by the Issuers and authenticated by the Trustee as
herein provided. The Other Global Note shall be issued with its own
CUSIP number. The aggregate principal amount of the Other Global Note
may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as Note Custodian.
(d) Private Placement
Legend. Upon the transfer, exchange or replacement of Notes
not bearing the Private Placement Legend, the Registrar shall deliver Notes that
do not bear the Private Placement Legend. Upon the transfer, exchange
or replacement of Transfer Restricted Notes, the Registrar shall deliver only
Transfer Restricted Notes unless either (i) such transfer or exchange is
made in connection with a registered exchange offer, (ii) the circumstances
contemplated in Section 2.14 exist, or (iii) there is delivered to the
Registrar an Opinion of Counsel reasonably satisfactory to the Issuers and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act.
40
(e) General. By its acceptance
of any Transfer Restricted Note, each Holder of such a Note acknowledges the
restrictions on transfer of such Note set forth in this Indenture and in the
Private Placement Legend and agrees that it shall transfer such Note only as
provided in this Indenture.
The
Registrar shall retain copies of all letters, notices and other written
communications received pursuant to this Section 2.13.
Section
2.14 Temporary
Regulation S Global Notes. An
owner of a beneficial interest in a Temporary Regulation S Global Note (or a
Person acting on behalf of such an owner) may provide to the Trustee (and the
Trustee shall accept) a duly completed certificate in the form of Exhibit D
hereto at any time after the Restricted Period (it being understood that the
Trustee shall not accept any such certificate during the Restricted
Period). Promptly after acceptance of such a certificate with respect
to such a beneficial interest, the Trustee shall cause such beneficial interest
to be exchanged for an equivalent beneficial interest in a Permanent
Regulation S Global Note, and shall (x) permanently reduce the principal
amount of such Temporary Regulation S Global Note by the amount of such
beneficial interest and (y) increase the principal amount of such Permanent
Regulation S Global Note by the amount of such beneficial interest.
Section
2.15 Issuance
of Additional Notes. The
Issuers shall be entitled to issue Additional Notes under this Indenture that
shall have identical terms as the Initial Notes, other than with respect to the
date of issuance, issue price and amount of interest payable on the first
interest payment date applicable thereto (and, if such Additional Notes shall be
issued in the form of Transfer Restricted Notes, other than with respect to
transfer restrictions, any registration rights agreement and additional interest
with respect thereto). The Initial Notes and any Additional Notes
shall be treated as a single class for all purposes under this
Indenture.
With
respect to any Additional Notes, the Issuers shall set forth in a resolution of
each of their Boards of Directors and in an Officers’ Certificate, a copy of
each of which shall be delivered to the Trustee, the following
information:
(a) the
aggregate principal amount of such Additional Notes to be authenticated and
delivered pursuant to this Indenture;
(b) the issue
price, the date on which such Additional Notes shall be issued, the CUSIP
number, the first interest payment date and the amount of interest payable on
such first interest payment date applicable thereto and the date from which
interest shall accrue; and
(c) whether such
Additional Notes shall be Transfer Restricted Notes.
Section
2.16 CUSIP
Numbers. The
Issuers, in issuing the Notes, may use one or more “CUSIP” numbers (and, if
Notes are also to be issued outside the United States, one or more similar
identifying numbers as is customary in such global markets; references in this
Section 2.16 to CUSIP numbers being deemed to include any such similarly
identifying numbers) and, if so, the Trustee shall use such CUSIP numbers in
notices of repurchase or conversion as a convenience to the Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness or accuracy of any CUSIP numbers printed in the notice or on the
Notes, and that any reliance may be placed only on the other identification
numbers printed on the Notes. Any repurchase or conversion will not
be affected by any defect in or the omission of such CUSIP
numbers. The Issuers will promptly notify the Trustee of any change
to the CUSIP numbers.
41
ARTICLE
3
REDEMPTION
AND PREPAYMENT
Section
3.01 Notices
to Trustee.
If the
Issuers elect to redeem Notes pursuant to the optional redemption provisions of
Section 3.07, they shall furnish to the Trustee, at least 30 days but not more
than 60 days before a redemption date, an Officers’ Certificate setting forth
(i) the paragraph of the Notes and/or the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
Section
3.02 Selection
of Notes to Be Redeemed.
If less
than all of the Notes are to be redeemed at any time, the Trustee shall select
the Notes to be redeemed among the Holders of the Notes as follows:
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(a)
|
if any
of the Notes are listed, in compliance with the requirements of the
principal national securities exchange on which such Notes are listed;
or
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|
(b)
|
if
such Notes are not so listed, on a pro
rata basis,
to the extent practicable (and in such manner as complies with applicable
legal requirements).
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In the
event of partial redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding Notes not
previously called for redemption.
The
Trustee shall promptly notify the Issuers in writing of the Notes selected for
redemption and, in the case of any Note selected for partial redemption, the
principal amount thereof to be redeemed. Notes and portions of Notes selected
shall be in amounts of $2,000 or an integral multiple of $1,000 in excess
thereof; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section
3.03 Notice
of Redemption.
Subject
to the provisions of Section 3.09, at least 30 days but not more than 60 days
before a redemption date, the Issuers shall mail or cause to be mailed, by first
class mail, a notice of redemption to each Holder whose Notes are to be redeemed
at its registered address.
The
notice shall identify the Notes to be redeemed and shall state:
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(a)
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the
redemption date;
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(b)
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the
redemption price;
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(c)
|
if any
Note is being redeemed in part, the portion of the principal amount of
such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original
Note;
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42
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(d)
|
the
name and address of the Paying
Agent;
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(e)
|
that
Notes called for redemption must be surrendered to the Paying Agent to
collect the redemption
price;
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(f)
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that,
unless the Issuers default in making such redemption payment, interest on
Notes called for redemption, or if any Note is being redeemed only in
part, interest on a portion of the principal amount of such Note to be
redeemed, ceases to accrue on and after the redemption
date;
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(g)
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the
paragraph of the Notes and/or Section of this Indenture pursuant to which
the Notes called for redemption are being redeemed;
and
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(h)
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that
no representation is made as to the correctness or accuracy of the CUSIP
number, if any, listed in such notice or printed on the
Notes.
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At the
Issuers’ request, the Trustee shall give the notice of redemption in the
Issuers’ name and at their expense; provided, however, that each
of the Issuers shall have delivered to the Trustee, at least 45 days prior to
the redemption date, an Officers’ Certificate requesting that the Trustee give
such notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
Section
3.04 Effect
of Notice of Redemption.
Once
notice of redemption is mailed in accordance with Section 3.03, Notes called for
redemption, or if any Note is being redeemed only in part, the portion of the
principal amount of such Note to be redeemed, become irrevocably due and payable
on the redemption date at the redemption price. A notice of
redemption may not be conditional.
Section
3.05 Deposit
of Redemption Price.
At or
prior to 10:00 a.m., New York City time, on the redemption date, the Issuers
shall deposit with the Trustee or with the Paying Agent money in same day funds
sufficient to pay the redemption price of and accrued interest on all Notes to
be redeemed on that date. The Trustee or the Paying Agent shall
promptly return to the Issuers any money deposited with the Trustee or the
Paying Agent by the Issuers in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Notes to be
redeemed.
If the
Issuers comply with the provisions of the preceding paragraph, on and after the
redemption date, interest shall cease to accrue on the Notes or the portions of
Notes called for redemption. If a Note is redeemed on or after an interest
record date but on or prior to the related interest payment date, then any
accrued and unpaid interest shall be paid to the Person in whose name such Note
was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Issuers to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01.
Section
3.06 Notes
Redeemed in Part.
43
Upon
surrender of a Note that is redeemed in part, the Issuers shall issue and, upon
receipt of an Authentication Order, the Trustee shall authenticate for the
Holder at the expense of the Issuers a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
Section
3.07 Optional
Redemption.
(a) The Issuers
may, at any time and from time to time, prior to March 15, 2012, at their
option, redeem the outstanding Notes, in whole or in part, at a redemption price
equal to 100% of the principal amount thereof plus accrued and unpaid interest,
if any, to the redemption date, plus the Make-Whole
Premium.
(b) At any time
prior to March 15, 2011, the Issuers may, on any one or more occasions, redeem
up to 35% of the original aggregate principal amount of the Notes issued on the
Issue Date (plus any Additional Notes) at a redemption price of 110.875% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the
redemption date, with the net cash proceeds of one or more Equity Offerings;
provided,
however, that:
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(i)
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at
least 65% of the original aggregate principal amount of the Notes issued
on the Issue Date (plus any Additional Notes actually issued) remains
outstanding immediately after the occurrence of such redemption (excluding
Notes held by the Issuers and their Subsidiaries);
and
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(ii)
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the
redemption must occur within 60 days of the date of the closing of such
Equity Offering.
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(c) On or after
March 15, 2012, the Issuers shall have the option to redeem the Notes, in whole
or in part, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest, if any, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on March 15 of the years indicated below:
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Year
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Percentage
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|||
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2012
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105.438 | % | ||
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2013
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102.719 | % | ||
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2014
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100.000 | % | ||
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(d)
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Any
redemption pursuant to this Section 3.07 shall be made pursuant to the
provisions of Sections 3.01 through
3.06.
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Section
3.08 Mandatory
Redemption.
Without
prejudice to the obligations of the Issuers under Section 4.11 and
Section 4.16 below, the Issuers shall not be required to make mandatory
redemption payments with respect to the Notes.
Section
3.09 Offer
to Purchase by Application of Excess Proceeds.
44
In the
event that the Issuers shall be required to commence an offer to all Holders to
purchase Notes pursuant to Section 4.11 (an “Asset Sale Offer”), the
Issuers shall follow the procedures specified below.
The Asset
Sale Offer shall remain open for a period of 20 Business Days following its
commencement and no longer, except to the extent that a longer period is
required by applicable law (the “Offer Period”). No
later than five Business Days after the termination of the Offer Period (the
“Purchase Date”), the
Issuers shall purchase the principal amount of Notes required to be purchased
pursuant to Section 4.11 (the “Offer Amount”) or, if less
than the Offer Amount has been tendered, all Notes tendered in response to the
Asset Sale Offer. Payment for any Notes so purchased shall be made in
the same manner as interest payments are made. Unless the Issuers
default in making such payment, any Note accepted for payment pursuant to the
Asset Sale Offer shall cease to accrue interest after the Purchase
Date.
To the
extent that the provisions of any securities laws or regulations conflict with
the provisions of this Section 3.09, the Issuers’ compliance with such laws and
regulations shall not in and of itself cause a breach of their obligations under
this Section 3.09.
If the
Purchase Date is on or after an interest record date and on or before the
related interest payment date, any accrued and unpaid interest shall be paid to
the Person in whose name a Note is registered at the close of business on such
record date.
Upon the
commencement of an Asset Sale Offer the Issuers shall send, by first class mail,
a notice to the Trustee and each of the Holders, with a copy to the
Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all
Holders. The notice, which shall govern the terms of the Asset Sale
Offer, shall state:
(a) that the
Asset Sale Offer is being made pursuant to this Section 3.09 and
Section 4.11 and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer
Amount, the purchase price and the Purchase Date;
(c) that any
Note not tendered or accepted for payment shall continue to accrue
interest;
(d) that, unless
the Issuers default in making such payment, any Note accepted for payment
pursuant to the Asset Sale Offer shall cease to accrue interest after the
Purchase Date;
(e) that Holders
electing to have a Note purchased pursuant to an Asset Sale Offer may elect to
have Notes purchased in amounts equal to $2,000 or integral multiples of $1,000
in excess thereof only;
(f) that Holders
electing to have a Note purchased pursuant to any Asset Sale Offer shall be
required to surrender the Note, with the form entitled “Option of Holder to
Elect Purchase” on the reverse of the Note completed, or transfer by book-entry
transfer, to the Issuers, a depositary, if appointed by the Issuers, or a Paying
Agent at the address specified in the notice at least three Business Days before
the Purchase Date;
(g) that Holders
shall be entitled to withdraw their election if the Issuers, the depositary or
the Paying Agent, as the case may be, receives, not later than the expiration of
the Offer Period, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder,
45
the principal amount of the Note
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note
purchased;
(h) that, if the
aggregate principal amount of Notes surrendered by Holders exceeds the Offer
Amount, the Issuers shall select the Notes to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the Issuers so that only
Notes in denominations of $2,000, or integral multiples of $1,000 in excess
thereof, shall be purchased); and
(i) that Holders
whose Notes were purchased only in part shall be issued at the expense of the
Issuers new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry
transfer).
On or
before the Purchase Date, the Issuers shall, to the extent lawful, accept for
payment, on a pro rata
basis to the extent necessary, the Offer Amount of Notes or portions thereof
tendered pursuant to the Asset Sale Offer or if less than the Offer Amount has
been tendered, all Notes tendered, and shall deliver to the Trustee an Officers’
Certificate stating that such Notes or portions thereof were accepted for
payment by the Issuers in accordance with the terms of this
Section 3.09. The Issuers, the Depositary or the Paying Agent,
as the case may be, shall promptly (but in any case not later than five days
after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Issuers for purchase, and the Issuers shall promptly issue a new Note, and
the Trustee, upon receipt of an Authentication Order, shall authenticate and
mail or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted
shall be promptly mailed or delivered by the Issuers to the Holder
thereof. The Issuers shall publicly announce the results of the Asset
Sale Offer on the Purchase Date.
ARTICLE
4
COVENANTS
Section
4.01 Payment
of Notes.
The
Issuers shall pay or cause to be paid the principal, premium, if any, and
interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered
paid on the date due if the Paying Agent, if other than the Issuers or a
Subsidiary thereof, holds as of 10:00 a.m., New York City time, on the due date
money deposited by the Issuers in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then
due.
The
Issuers shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal at the rate equal to 2% per annum
in excess of the then applicable interest rate on the Notes to the extent
lawful; they shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
Section
4.02 Maintenance
of Office or Agency.
The
Issuers shall maintain in the Borough of Manhattan, The City of New York, an
office or agency (which may be an office of the Trustee or an Affiliate of the
Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Issuers in respect of the Notes and this Indenture may be
served. The Issuers shall
46
give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Issuers shall
fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the
Trustee.
The
Issuers may also from time to time designate one or more other offices or
agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Issuers
of their obligation to maintain an office or agency in the Borough of Manhattan,
The City of New York for such purposes. The Issuers shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency. The
Issuers hereby designate Wilmington Trust Company, Rodney Square North, 1100 N.
Market Street, Wilmington, DE 19890-1615, as one such office or agency of the
Issuers in accordance with Section 2.03.
Section
4.03 Reports.
So long
as any Notes are outstanding, the Company shall furnish to the Holders, within
the time periods that such information would have otherwise been required to
have been provided to the Commission under Section 13 or 15(d) of the Exchange
Act if the rules and regulations applicable to the filing of such information
were applicable to the Company:
(1) all
quarterly and annual financial and other information that would be required to
be contained in a filing with the Commission on Forms 10-Q and 10-K if the
Issuers were required to file such forms, including a “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” section (together
with the certifications that would be required to be filed with the Commission
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, unless such
certifications are provided by any Parent in a filing with the Commission) and,
with respect to the year-end financial statements only, a report on the annual
consolidated financial statements of the Company by its independent public
accountants; provided, however, that the Company shall not be required to
furnish separate financial statements for any Guarantor or for any Subsidiary,
individually or as a group, whose equity securities constitute part of the
Collateral; and
(2) all current
reports that would be required to be filed with the Commission on Form 8-K if
the Issuers were required to file such reports.
If the
Company has designated any of its Subsidiaries as Unrestricted Subsidiaries,
then the quarterly and annual financial information required by the preceding
paragraph shall include a reasonably detailed presentation, either on the face
of the financial statements or in the footnotes thereto, and in Management’s
Discussion and Analysis of Financial Condition and Results of Operations, of the
financial condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company.
In
addition, the Issuers shall cause a copy of all of the information and reports
referred to in clauses (1) and (2) above to be posted, no later than the date
such information is required to be furnished to registered Holders, on the
website of CCI (and remain there for a period of one year from the date of such
posting). So long as any Notes remain outstanding, the Company will
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4).
During
any period when the rules and regulations of the Commission applicable to filing
of financial reports of the kinds described in the first paragraph of this
Section 4.03 are not applicable to
47
the
Company, the Company shall not be required to comply with the requirements of §
314 of the TIA except § 314(b)(2) thereof.
Section
4.04 Compliance
Certificate.
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(a)
|
The
Issuers shall deliver to the Trustee, within 90 days after the end of each
fiscal year, an Officers’ Certificate stating that a review of the
activities of the Issuers and their Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers
with a view to determining whether the Issuers have kept, observed,
performed and fulfilled their obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to
the best of his or her knowledge the Issuers have kept, observed,
performed and fulfilled each and every covenant contained in this
Indenture and are not in default in the performance or observance of any
of the terms, provisions and conditions of this Indenture (or, if a
Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and
what action the Issuers are taking or propose to take with respect
thereto).
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(b)
|
The
Issuers shall, so long as any of the Notes are outstanding, deliver to the
Trustee, forthwith upon any Officer becoming aware of any Default or Event
of Default, an Officers’ Certificate specifying such Default or Event of
Default and what action the Issuers are taking or propose to take with
respect thereto.
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Section
4.05 Taxes.
The
Company shall pay, and shall cause each of its Restricted Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not likely to result in a material
adverse effect on the Company and its Restricted Subsidiaries, taken as a
whole.
Section
4.06 Stay,
Extension and Usury Laws.
Each of
the Issuers covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and each of the Issuers (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
Section
4.07 Restricted Payments.
The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly:
(1) declare or
pay any dividend or make any other payment or distribution on account of its or
any of its Restricted Subsidiaries’ Equity Interests (including any payment in
connection with any merger or consolidation involving the Company or any of its
Restricted Subsidiaries) or to the direct or indirect holders of the Company’s
or any of its Restricted
Subsidiaries’ Equity Interests in their capacity as such (other than dividends
or distributions payable (x) solely in Equity
In-
48
terests (other than Disqualified Stock) of the Company or (y) in the case of the
Company and its Restricted Subsidiaries, to the Company or a Restricted
Subsidiary thereof); or
(2) purchase,
redeem or otherwise acquire or retire for value (including in connection with
any merger or consolidation involving the Company or any of its Restricted
Subsidiaries) any Equity Interests of the Company or any direct or indirect
Parent of the Company or any Restricted Subsidiary of the Company (other than,
in the case of the Company and its Restricted Subsidiaries, any such Equity
Interests owned by the Company or any of its Restricted
Subsidiaries)
(all such
payments and other actions set forth in clauses (1) and (2) above are
collectively referred to as “Restricted Payments”),
unless, at the time of and after giving effect to such Restricted
Payment:
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(i)
|
no
Default or Event of Default shall have occurred and be continuing or would
occur as a consequence
thereof;
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(ii)
|
the
Company would, at the time of such Restricted Payment and after giving pro
forma effect thereto as if such Restricted Payment had been made at the
beginning of the applicable quarter period, have been permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio
test set forth in the first paragraph of Section 4.10;
and
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(iii)
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such
Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by the Company and its Restricted Subsidiaries
from and after April 27, 2004 (excluding Restricted Payments permitted by
clauses (2), (3), (4), (5), (6), (7), (8) and (9) of the next succeeding
paragraph), shall not exceed, at the date of determination, the sum
of:
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(a) an amount
equal to 100% of the Consolidated EBITDA of the Company for the period beginning
on the first day of the fiscal quarter commencing April 1, 2004 to the end of
the Company’s most recently ended full fiscal quarter for which internal
financial statements are available, taken as a single accounting period, less
the product of 1.3 times the Consolidated Interest Expense of the Company for
such period, plus
(b) an amount
equal to 100% of Capital Stock Sale Proceeds less any amount of such Capital
Stock Sale Proceeds used in connection with an Investment made on or after April
27, 2004 and on or prior to the date such Restricted Payment is made (the
“Reference
Date”) pursuant
to clause (5) of the definition of “Permitted Investments,”
plus
(c) $100
million.
So long
as no Default under this Indenture has occurred and is continuing or would be
caused thereby, the preceding provisions shall not prohibit:
(1) the payment
of any dividend within 60 days after the date of declaration thereof, if at said
date of declaration such payment would have complied with the provisions of this
Indenture;
(2) regardless
of whether a Default then exists, the payment of any dividend or distribution
made in respect of any calendar year or portion thereof during which the Company
or any of its
49
Subsidiaries
is a Person that is not treated as a separate tax paying entity for United
States federal income tax purposes by the Company and its Subsidiaries (directly
or indirectly) to the direct or indirect holders of the Equity Interests of the
Company or its Subsidiaries that are Persons that are treated as a separate tax
paying entity for United States federal income tax purposes, in an amount
sufficient to permit each such holder to pay the actual income taxes (including
required estimated tax installments) that are required to be paid by it with
respect to the taxable income of any Parent (through its direct or indirect
ownership of the Company and/or its Subsidiaries), the Company, its Subsidiaries
or any Unrestricted Subsidiary, as applicable, in any calendar year, as
estimated in good faith by the Company or its Subsidiaries, as the case may
be;
(3) regardless
of whether a Default then exists, the payment of any dividend by a Restricted
Subsidiary of the Company to the holders of its common Equity Interests on a pro
rata basis;
(4) the payment
of any dividend on the Helicon Preferred Stock or the redemption, repurchase,
retirement or other acquisition of the Helicon Preferred Stock in an amount not
in excess of its aggregate liquidation value;
(5) the
repurchase, redemption or other acquisition or retirement for value, or the
payment of any dividend or distribution to the extent necessary to permit the
repurchase, redemption or other acquisition or retirement for value, of any
Equity Interests of the Company or a Parent of the Company held by any member of
the Company’s, such Parent’s or any Restricted Subsidiary’s management pursuant
to any management equity subscription agreement or stock option agreement
entered into in accordance with the policies of the Company, any Parent or any
Restricted Subsidiary; provided, however, that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $10 million in any fiscal year of the Issuers;
(6) payment of
fees in connection with any acquisition, merger or similar transaction in an
amount that does not exceed an amount equal to 1.25% of the transaction value of
such acquisition, merger or similar transaction;
(7) additional
Restricted Payments directly or indirectly to any Parent (i) regardless of
whether a Default exists (other than a Default under Section 6.01(1), (2), (7)
or (8)), for the purpose of enabling Charter Holdings, CCOH, CCH II, CCH I, CIH
and/or any Charter Refinancing Subsidiary to pay interest when due on
Indebtedness under the Charter Holdings Indentures, the CCOH Indentures, the
CCOH Credit Facility, the CCH II Indentures, the CCH I Indentures, the CIH
Indentures and/or any Charter Refinancing Indebtedness, (ii) for the
purpose of enabling CCI and/or any Charter Refinancing Subsidiary to pay
interest when due on Indebtedness under the CCI Indentures and/or any Charter
Refinancing Indebtedness and (iii) so long as the Company would have been
permitted, at the time of such Restricted Payment and after giving pro forma
effect thereto as if such Restricted Payment had been made at the beginning of
the applicable quarter period, to incur at least $1.00 of additional
Indebtedness pursuant to the Leverage Ratio test set forth in
the first paragraph of Section 4.10,
(A) consisting
of dividends or distributions to the extent required to enable CCH II, Charter
Holdings, CCI, CCOH, CCH I, CIH or any Charter Refinancing Subsidiary to
defease, redeem, repurchase, prepay, repay, discharge or otherwise acquire or
retire for value Indebtedness under the CCH II Indentures, the Charter Holdings
Indentures, the CCI Indentures, the CCOH Indentures, the CCOH Credit Facility,
the CCH I Indentures, the CIH Indentures or any Charter Refinancing Indebtedness
(including any expenses incurred by any Parent in connection therewith) or
(B) consisting of purchases, redemptions or other acquisitions by the
Company or its Restricted Subsidiaries of Indebtedness under the CCH II
Indentures, the Charter Holdings Indentures, the CCI Indentures, the CCOH
Indentures, the CCOH Credit Facility, the CCH I Indentures, the CIH Indentures
or any Charter Refinancing Indebtedness (including any expenses incurred by the
Company and its
50
Restricted
Subsidiaries in connection therewith) and the distribution, loan or investment
to any Parent of Indebtedness so purchased, redeemed or
acquired.
(8) Restricted
Payments directly or indirectly to CCOH or any other Parent regardless of
whether a Default exists (other than a Default under Section 6.01(1), (2), (7)
or (8)), for the purpose of enabling such Person (A) to pay interest on and (B)
so long as the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable quarter period, have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to the first paragraph of
Section 4.10, to defease, redeem, repurchase, prepay, repay, discharge or
otherwise acquire or retire, in each case, Indebtedness of such Parent (x) which
is not held by another Parent and (y) to the extent that the net cash proceeds
of such Indebtedness are or were used for the (1) payment of interest or
principal (or premium) on any Indebtedness of a Parent (including (A) by way of
a tender, redemption or prepayment of such Indebtedness and (B) amounts set
aside to prefund any such payment), (2) direct or indirect Investment in the
Company or any of its Restricted Subsidiaries (to the extent such Investment is
deducted from clause (iii)(b) of the first paragraph of this Section 4.07) or
(3) payment of amounts that would be permitted to be paid by way of a Restricted
Payment under clause (9) below (including the expenses of any exchange
transaction); and
(9) Restricted
Payments directly or indirectly to CCOH or any other Parent of (A) attorneys’
fees, investment banking fees, accountants’ fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection with any issuance, sale or incurrence by CCOH or such Parent of
Equity Interests or Indebtedness, or any exchange of securities or tender for
outstanding debt securities, or (B) the costs and expenses of any offer to
exchange privately placed securities in respect of the foregoing for publicly
registered securities or any similar concept having a comparable
purpose.
The
amount of all Restricted Payments (other than cash) shall be the fair market
value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or any of its Restricted
Subsidiaries pursuant to the Restricted Payment. The fair market
value of any assets or securities that are required to be valued by this Section
4.07 shall be determined by the Board of Directors of the Company, whose
resolution with respect thereto shall be delivered to the
Trustee. Such Board of Directors’ determination must be based upon an
opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing if the fair market value exceeds $100
million.
Not later
than the date of making any Restricted Payment involving an amount or fair
market value in excess of $10 million, the Issuers shall deliver to the Trustee
an Officers’ Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this
Section 4.07 were computed, together with a copy of any fairness opinion or
appraisal by an accounting, appraisal, valuation or investment banking firm of
national standing as required by this Indenture.
Section
4.08 Investments.
The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly:
(1) make any
Restricted Investment; or
(2) allow any of
its Restricted Subsidiaries to become an Unrestricted Subsidiary, unless, in
each case:
51
(a) no Default
or Event of Default under this Indenture shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) the Company would, at the time of, and after
giving effect to, such Restricted Investment or such designation of a Restricted
Subsidiary as an Unrestricted Subsidiary, have been permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth
in the first paragraph of Section 4.10.
An
Unrestricted Subsidiary may be redesignated as a Restricted Subsidiary if such
redesignation would not cause a Default.
Section
4.09 Dividend
and Other Payment Restrictions Affecting
Subsidiaries.
The
Company shall not, directly or indirectly, create or permit to exist or become
effective any encumbrance or restriction on the ability of any of its Restricted
Subsidiaries to:
(1) pay
dividends or make any other distributions on its Capital Stock to the Company or
any of its Restricted Subsidiaries, or with respect to any other interest or
participation in, or measured by, its profits, or pay any Indebtedness owed to
the Company or any of its Restricted Subsidiaries;
(2) make loans
or advances to the Company or any of its Restricted Subsidiaries;
or
(3) transfer any
of its properties or assets to the Company or any of its Restricted
Subsidiaries.
The
preceding restrictions shall not apply to encumbrances or restrictions existing
under or by reason of:
(4) Existing
Indebtedness, contracts and other instruments as in effect on the Issue Date
(including Indebtedness under any of the Credit Facilities or the Existing CCO
Indenture) and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided,
however, that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are not materially more restrictive,
taken as a whole, with respect to such dividend and other payment restrictions
than those contained in the most restrictive Existing Indebtedness, contracts or
other instruments, as in effect on the Issue Date;
(5) this
Indenture and the Notes;
(6) applicable
law;
(7) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so acquired;
provided,
however, that, in
the case of Indebtedness, such Indebtedness was permitted by the terms of this
Indenture to be incurred;
52
(8) customary
non-assignment provisions in leases, franchise agreements and other commercial
agreements entered into in the ordinary course of
business;
(9) purchase
money obligations for property acquired in the ordinary course of business that
impose restrictions on the property so acquired of the nature described in
clause (3) of the preceding paragraph;
(10) any
agreement for the sale or other disposition of Capital Stock or assets of a
Restricted Subsidiary that restricts distributions by such Restricted Subsidiary
pending such sale or other disposition;
(11) Permitted
Refinancing Indebtedness; provided, however, that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are not
materially more restrictive at the time such restrictions become effective,
taken as a whole, than those contained in the agreements governing the
Indebtedness being refinanced;
(12) Liens
securing Indebtedness or other obligations otherwise permitted to be incurred
under Section 4.14 that limit the right of the Company or any of its
Restricted Subsidiaries to dispose of the assets subject to such
Lien;
(13) provisions
with respect to the disposition or distribution of assets or property in joint
venture agreements and other similar agreements entered into in the ordinary
course of business;
(14) restrictions
on cash or other deposits or net worth imposed by customers under contracts
entered into in the ordinary course of business;
(15) restrictions
contained in the terms of Indebtedness or Preferred Stock permitted to be
incurred under Section 4.10; provided, however, that such restrictions are
not materially more restrictive, taken as a whole, than the terms contained in
the most restrictive, together or individually, of the Credit Facilities and
other Existing Indebtedness as in effect on April 27, 2004;
and
(16) restrictions
that are not materially more restrictive, taken as a whole, than customary
provisions in comparable financings and that the management of the Company
determines, at the time of such financing, will not materially impair the
Issuers’ ability to make payments as required under the
Notes.
Section
4.10 Incurrence
of Indebtedness and Issuance of Preferred Stock.
The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, “incur”)
any Indebtedness (including Acquired Debt) and the Company shall not issue any
Disqualified Stock and shall not permit any of its Restricted Subsidiaries to
issue any shares of Disqualified Stock or Preferred Stock; provided, however, that the
Company or any of its Restricted Subsidiaries that are Guarantors may incur
Indebtedness, the Company may issue Disqualified Stock and Restricted
Subsidiaries of the Company that are Guarantors may issue Preferred Stock if the
Leverage Ratio of the Company and its Restricted Subsidiaries would have been
not greater than 4.25 to 1.0 determined on a pro forma basis (including a
pro forma application
of the net proceeds therefrom), as if the additional Indebtedness had been
incurred, or the Disqualified Stock or Preferred Stock had been issued, as the
case may be, at the beginning of the most recently ended fiscal
quar-
53
ter. Debt
incurred under this paragraph, or once incurred under this paragraph and
subsequently refinanced under clause (5) of the next succeeding paragraph, is
collectively referred to as “Ratio
Debt”).
So long
as no Default under this Indenture shall have occurred and be continuing or
would be caused thereby, the first paragraph of this Section 4.10 shall not
prohibit the incurrence of any of the following items of Indebtedness
(collectively, “Permitted
Debt”):
(1) the
incurrence of Indebtedness under the Credit Facilities by the Company and its
Restricted Subsidiaries that are Guarantors or that are not Guarantors because
of the failure of the Effectiveness Condition to be satisfied (or that cease to
be Guarantors as a result of the operation of the first paragraph of clause (a)
of Section 11.04 and are no longer otherwise obligors with respect to the
CCO Credit Facility and the Related Obligations, except continuing to secure the
Company’s obligations under the CCO Credit Facility and the Related Obligations
and the Issuers’ obligations with respect to the Notes under Article 10);
provided,
however, that the
aggregate principal amount of all Indebtedness of the Company and its Restricted
Subsidiaries outstanding under this clause (1) for all Credit Facilities after
giving effect to such incurrence does not exceed an amount equal to $6.8 billion
less the aggregate amount of all Net Proceeds from Asset Sales applied by the
Company or any of its Restricted Subsidiaries to repay Indebtedness under a
Credit Facility pursuant to Section 4.11;
(2) the
incurrence by the Company and its Restricted Subsidiaries of Existing
Indebtedness (including Indebtedness outstanding on the Issue Date under the CCO
Credit Facility);
(3) the
incurrence on the Issue Date by the Company and its Restricted Subsidiaries of
Indebtedness represented by the Notes (other than any Additional
Notes);
(4) the
incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness
represented by Capital Lease Obligations, mortgage financings or purchase money
obligations, in each case, incurred for the purpose of financing all or any part
of the purchase price or cost of construction or improvement (including the cost
of design, development, construction, acquisition, transportation, installation,
improvement and migration) of Productive Assets of the Company or any of its
Restricted Subsidiaries, in an aggregate principal amount not to exceed,
together with any related Permitted Refinancing Indebtedness permitted by clause
(5) below, $75 million at any time outstanding;
(5) the
incurrence by the Company or any of its Restricted Subsidiaries of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which are used
to refund, refinance or replace, in whole or in part, Indebtedness that was
permitted by this Indenture to be incurred under this clause (5), the first
paragraph of this Section 4.10 (but only with respect to such first paragraph if
by the Company and its Restricted Subsidiaries that are Guarantors) or clause
(2), (3) or (4) of this paragraph;
(6) the
incurrence by the Company or any of its Restricted Subsidiaries of intercompany
Indebtedness between or among the Company and/or any of its Restricted
Subsidiaries; provided,
however,
that:
(a) if the
Company or a Restricted Subsidiary of the Company that is a Guarantor is the
obligor on such Indebtedness, such Indebtedness must be expressly subordinated
to the Notes or the Note Guarantee of such Guarantor on the same terms as such
Indebtedness is subordinated to the CCO Credit Facility and the Related
Obligations; and
54
(b) (i) any
subsequent issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a Restricted
Subsidiary of the Company and (ii) any sale or other transfer of any such
Indebtedness to a Person that is neither the Company nor a Restricted Subsidiary
of the Company shall be deemed, in each case, to constitute an incurrence of
such Indebtedness that was not permitted by this clause
(6);
(7) the
incurrence by the Company or any of its Restricted Subsidiaries of Hedging
Obligations that are incurred for the purpose of fixing, hedging or swapping
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of this Indenture to be
outstanding;
(8) the
guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness
of a Restricted Subsidiary that was permitted to be incurred by another
provision of this Section 4.10 and the guarantee by a Guarantor or by a
Subsidiary that is not a Guarantor because of the failure of the Effectiveness
Condition to be satisfied (or that ceases to be a Guarantor as a result of the
operation of the first paragraph of clause (a) of Section 11.04 and is no
longer otherwise an obligor with respect to the CCO Credit Facility and the
Related Obligations, except continuing to secure the Company’s obligations under
the CCO Credit Facility and the Related Obligations and the Issuers’ obligations
with respect to the Notes under Article 10) of Indebtedness of CCO that was
permitted to be incurred by another provision of this Section
4.10;
(9) Acquired
Debt of a Person that becomes, or is merged into, a Restricted Subsidiary that
is not a Guarantor; provided, however, that (x) such Acquired Debt was not
incurred in connection with, or in contemplation of, such Person becoming, or
being merged into, a Restricted Subsidiary and (y) the Company would, at
the time such Person becomes, or is merged into, a Restricted Subsidiary and
after giving pro forma effect thereto as if such acquisition or merger had been
made at the beginning of the applicable quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio
test set forth in the first paragraph of this Section
4.10;
(10) the
incurrence by the Company or any of its Restricted Subsidiaries of additional
Indebtedness in an aggregate principal amount at any time outstanding under this
clause (10) not to exceed $300 million;
(11) the
accretion or amortization of original issue discount and the write-up of
Indebtedness in accordance with purchase accounting;
and
(12) Indebtedness
of the Company or any of its Restricted Subsidiaries arising from the honoring
by a bank or other financial institution of a check, draft or similar instrument
drawn by the Company or such Restricted Subsidiary in the ordinary course of
business against insufficient funds, so long as such Indebtedness is promptly
repaid.
Indebtedness
outstanding under the CCO Credit Facility on the Issue Date, shall be deemed to
be outstanding in reliance on clause (2) above (and not in reliance on clause
(1)). For purposes of determining compliance with this
Section 4.10, in the event that an item of proposed Indebtedness
(a) meets the criteria of more than one of the categories of Permitted Debt
described in clauses (1) through (12) above or (b) is entitled to be incurred
pursuant to the first paragraph of this Section 4.10, the Company shall be
permitted to classify and from time to time to reclassify such item of
Indebtedness in any manner that complies with this Section 4.10. Once
any item of Indebtedness is so reclassified, it shall no longer be deemed
outstanding under the category of Permitted Debt, where initially incurred or
previously reclassified. For avoidance of doubt, Indebtedness
incurred pursuant to a single agreement, instrument, program, facility or line
of credit may be classified as Indebtedness arising in part under one of the
55
clauses
listed above or under the first paragraph of this Section 4.10, and in part
under any one or more of the clauses listed above, to the extent that such
Indebtedness satisfies the criteria for such classification.
The
Company shall not, directly or indirectly, incur, or permit any of its
Restricted Subsidiaries that is a Guarantor to incur, any Indebtedness which by
its contractual terms (or by the contractual terms of any agreement to which any
of the Company or its Restricted Subsidiaries is a party governing such
Indebtedness) is subordinated in right of payment to any other Indebtedness of
the Company or such Guarantor, unless such Indebtedness is also by its terms (or
by the contractual terms of any agreement to which the Company or such Guarantor
is a party governing such Indebtedness) made expressly subordinate to the Notes
(or relevant Note Guarantee) to the same extent and in the same manner as such
Indebtedness is subordinated to other Indebtedness of the Company or such
Restricted Subsidiary, as the case may be (it being understood that Indebtedness
would not be considered subordinated in right of payment (i) merely by
reason of being secured with a lower-priority Lien, (ii) if such
Indebtedness constitutes Additional Pari Passu Second Priority Indebtedness or
(iii) if such Indebtedness is pari passu in right of payment to the Notes
and subject to an agreement the terms of which are substantially similar to the
intercreditor agreement referred to in Section 7.12.
Notwithstanding
the foregoing, all Indebtedness incurred during any Suspension Period shall not
be deemed to have been incurred for the purposes of this Section 4.10, but shall
be included in the calculation of outstanding Indebtedness from and after the
next succeeding Reversion Date.
Section
4.11 Limitation
on Asset Sales.
The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:
(1) the Company
or such Restricted Subsidiary receives consideration at the time of such Asset
Sale at least equal to the fair market value of the assets or Equity Interests
issued or sold or otherwise disposed of;
(2) such fair
market value is determined by the Board of Directors of the Company and
evidenced by a resolution of such Board of Directors set forth in an Officers’
Certificate delivered to the Trustee; and
(3) at least 75%
of the consideration therefor received by the Company or such Restricted
Subsidiary is in the form of cash, Cash Equivalents or readily marketable
securities.
For
purposes of this Section 4.11, each of the following shall be deemed to be
cash:
(a) any
liabilities (as shown on the Company’s or such Restricted Subsidiary’s most
recent balance sheet) of the Company or any Restricted Subsidiary thereof (other
than contingent liabilities and liabilities that are by their terms subordinated
to the Notes) that are assumed by the transferee of any such assets pursuant to
a customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability;
56
(b) any
securities, notes or other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are converted by the recipient
thereof into cash, Cash Equivalents or readily marketable securities within 60
days after receipt thereof (to the extent of the cash, Cash Equivalents or
readily marketable securities received in that conversion);
and
(c) Productive
Assets.
Within
365 days after the receipt of any Net Proceeds from an Asset Sale, the Company
or a Restricted Subsidiary of the Company may apply an amount equal to such Net
Proceeds at its option:
(4) to repay
debt under Credit Facilities (other than debt securities issued as part of, or
to refinance, a Credit Facility that are not Pari Passu First Priority
Indebtedness) or other Pari Passu First Priority Indebtedness or any other
Indebtedness of the Restricted Subsidiaries of the Company (other than
Indebtedness represented solely by a guarantee of a Restricted Subsidiary of the
Company); or
(5) to invest in
Productive Assets; provided,
however, that any
such amount of Net Proceeds which the Company or a Restricted Subsidiary has
committed to invest in Productive Assets within 365 days of the applicable Asset
Sale may be invested in Productive Assets within two years of such Asset
Sale.
The
amount of any Net Proceeds received from Asset Sales that are not applied or
invested as provided in the preceding paragraph shall constitute “Excess
Proceeds.” When the aggregate amount of Excess Proceeds
exceeds $25 million, the Company shall make an offer (an “Asset Sale Offer”) to all
Holders and all holders of other Indebtedness that is of equal priority with the
Notes (including the Existing CCO Notes) containing provisions requiring offers
to purchase or redeem with the proceeds of sales of assets to purchase the
maximum principal amount of Notes and such other Indebtedness of equal priority
that may be purchased out of the Excess Proceeds, irrespective of the $25
million threshold. The offer price in any Asset Sale Offer shall be
payable in cash and equal to 100% of the principal amount of the subject Notes
plus accrued and unpaid interest, if any, to the date of purchase. If
the aggregate principal amount of Notes and such other Indebtedness of equal
priority tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other Indebtedness of
equal priority to be purchased on a pro rata basis.
If any
Excess Proceeds remain after consummation of an Asset Sale Offer, then the
Company or any Restricted Subsidiary thereof may use such remaining Excess
Proceeds for any purpose not otherwise prohibited by this
Indenture. Upon completion of any Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero.
In the
event that the Company shall be required to commence an offer to Holders to
purchase Notes pursuant to this Section 4.11, it shall follow the
procedures specified in Section 3.09.
Section
4.12 Sale
and Leaseback Transactions.
The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
enter into any sale and leaseback transaction; provided, however, that the
Company and its Restricted Subsidiaries may enter into a sale and leaseback
transaction if:
57
(1) the Company
or such Restricted Subsidiary could have
(a) incurred
Indebtedness in an amount equal to the Attributable Debt relating to such sale
and leaseback transaction under the Leverage Ratio test in the first paragraph
of Section 4.10; and
(b) incurred a
Lien to secure such Indebtedness pursuant to Section 4.14 or the definition
of “Permitted Liens”; and
(2) the transfer
of assets in that sale and leaseback transaction is permitted by, and the
Company or such Restricted Subsidiary applies the proceeds of such transaction
in compliance with, Section 4.11.
Section
4.13 Transactions
with Affiliates.
The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each, an “Affiliate Transaction”),
unless:
(1) such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person; and
(2) the Company
delivers to the Trustee:
(a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration given or received by the Company or any such
Restricted Subsidiary in excess of $15 million, a resolution of the Board of
Directors of the Company or CCI in its capacity as manager of the Company (other
than with respect to an Affiliate Transaction involving CCI) set forth in an
Officers’ Certificate certifying that such Affiliate Transaction complies with
this Section 4.13 and that such Affiliate Transaction has been approved by
a majority of the members of such Board of Directors;
and
(b) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration given or received by the Company or any
Restricted Subsidiary in excess of $50 million, an opinion as to the fairness to
the Holders of such Affiliate Transaction from a financial point of view issued
by an accounting, appraisal or investment banking firm of national
standing.
The
following items shall not be deemed to be Affiliate Transactions and, therefore,
shall not be subject to the provisions of the prior paragraph:
(1) any
existing employment agreement and employee benefit arrangement (including stock
purchase or option agreements, deferred compensation plans, and retirement,
savings or similar plans) entered into by the Company or any of its Subsidiaries
and any employment
58
agreements
and employee benefit arrangements entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business;
(3) transactions
between or among the Company and/or its Restricted
Subsidiaries;
(4) payment of
reasonable directors’ fees to Persons who are not otherwise Affiliates of the
Company and customary indemnification and insurance arrangements in favor of
directors, regardless of affiliation with the Company or any of its Restricted
Subsidiaries;
(5) payment of
Management Fees;
(6) Restricted
Payments that are permitted by Section 4.07 and Restricted Investments that
are permitted by Section 4.08;
(7) Permitted
Investments;
(8) transactions
pursuant to agreements existing on the Issue Date, as in effect on the Issue
Date, or as subsequently modified, supplemented, or amended, to the extent that
any such modifications, supplements or amendments complied with the applicable
provisions of the first paragraph of this Section 4.13;
and
(9) contributions
to the common equity capital of the Company or the issue or sale of Equity
Interests of the Company.
Section
4.14 Liens.
The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or incur any Lien of any kind securing
Indebtedness, Attributable Debt or trade payables on any of their respective
assets, whether owned on the Issue Date or thereafter acquired, if such Lien is
to secure such an obligation on a basis contractually senior, in any respect, to
the Liens securing the Notes and if after giving effect thereto, or after giving
effect to the incurrence of such Indebtedness (including Pari Passu First
Priority Indebtedness), Attributable Debt or trade payables, the Senior Secured
Leverage Ratio would exceed 3.75 to 1.0. The foregoing restriction
shall not apply to Permitted Liens.
Section
4.15 Existence.
Subject
to Article 5, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect (i) its limited liability
company existence, and the corporate, partnership or other existence of each of
its Subsidiaries, in accordance with the respective organizational documents (as
the same may be amended from time to time) of the Company or any such Subsidiary
and (ii) the rights (charter and statutory), licenses and franchises of the
Company and its Subsidiaries; provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of its Subsidiaries (other than Capital
Corp), if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders.
Section
4.16 Repurchase
at the Option of Holders upon a Change of Control.
59
If a
Change of Control occurs, each Holder shall have the right to require the
Issuers to repurchase all or any part (equal to $2,000 or an integral multiple
of $1,000 in excess thereof) of that Holder’s Notes pursuant to a “Change of Control
Offer.” In the Change of Control Offer, the Issuers shall
offer a “Change of Control
Payment” in cash equal to 101% of the aggregate principal amount of Notes
repurchased plus accrued and unpaid interest thereon, if any, to the date of
purchase.
Within
ten days following any Change of Control, the Issuers shall mail a notice to
each Holder (with a copy to the Trustee) describing the transaction or
transactions that constitute the Change of Control and stating:
(1) the purchase
price and the purchase date, which shall not exceed 30 Business Days from the
date such notice is mailed (the “Change
of Control Payment Date”);
(2) that any
Note not tendered shall continue to accrue interest;
(3) that, unless
the Issuers default in the payment of the Change of Control Payment, all Notes
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Payment
Date;
(4) that Holders
electing to have any Notes purchased pursuant to a Change of Control Offer shall
be required to surrender the Notes, with the form entitled “Option of Holder to
Elect Purchase” on the reverse of the Notes completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment
Date;
(5) that Holders
shall be entitled to withdraw their election if the Paying Agent receives, not
later than the close of business on the second Business Day preceding the Change
of Control Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes delivered
for purchase, and a statement that such Holder is withdrawing his election to
have the Notes purchased; and
(6) that Holders
whose Notes are being purchased only in part shall be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $2,000 in principal amount or an integral
multiple of $1,000 in excess thereof.
The
Issuers shall comply with the requirements of Rule 14e-1 under the Exchange
Act (or any successor rules) and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Notes as a result of a Change of
Control. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.16, the Issuers’
compliance with such laws and regulations shall not in and of itself cause a
breach of their obligations under this Section 4.16.
On the
Change of Control Payment Date, the Issuers shall, to the extent
lawful:
(1) accept for
payment all Notes or portions thereof properly tendered pursuant to the Change
of Control Offer;
60
(2) deposit with
the Paying Agent an amount equal to the Change of Control Payment in respect of
all Notes or portions thereof so tendered; and
(3) deliver or
cause to be delivered to the Trustee the Notes so accepted together with an
Officers’ Certificate stating the aggregate principal amount of Notes or
portions thereof being purchased by the Issuers.
The
Paying Agent shall promptly mail to each Holder so tendered the Change of
Control Payment for such Notes, and the Trustee shall, upon receipt of an
Authentication Order, promptly authenticate and mail (or cause to be transferred
by book entry) to each Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided, however, that
each such new Note shall be in a principal amount of $2,000 or an integral
multiple of $1,000 in excess thereof. The Issuers shall publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
The
provisions described above that require the Issuers to make a Change of Control
Offer following a Change of Control shall be applicable regardless of whether or
not any other provisions in this Indenture are applicable. Except as
described above with respect to a Change of Control, this Indenture does not
contain provisions that permit the Holders to require that the Issuers
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
Notwithstanding
any other provision of this Section 4.16, the Issuers shall not be required
to make a Change of Control Offer upon a Change of Control if the Company
delivers to the Trustee an Officers’ Certificate certifying that a third party
has made or will make the Change of Control Offer in the manner, at the times
and otherwise in compliance with the requirements set forth in this Indenture
applicable to a Change of Control Offer made by the Issuers and has purchased or
will purchase all Notes validly tendered and not withdrawn under such Change of
Control Offer.
Section
4.17 Additional
Note Guarantees; Security.
The
Company shall cause each Restricted Subsidiary of the Company that, after the
Issue Date, directly or indirectly, Guarantees or pledges any assets to secure
the payment of, or otherwise becomes an obligor with respect to, any
Indebtedness under the CCO Credit Facility or clause (1) of the second
paragraph of Section 4.10 or Related Obligations:
(1) to the
extent that such Subsidiary Guarantees or becomes an obligor with respect to
such Indebtedness, to execute and deliver a supplemental indenture substantially
in the form of Exhibit E hereto providing for the guarantee of the payment of
the Notes such Restricted Subsidiary pursuant to a Note Guarantee, subject,
however, to the Effectiveness Condition; and
(2) to the
extent such Indebtedness is secured by a security interest in any assets of such
Restricted Subsidiary, execute one or more Security Documents upon substantially
the same terms that grant the collateral agent under the Security Documents, for
the benefit of the Trustee and the Holders, a perfected second-priority security
interest in the assets of such Subsidiary that secure First Lien
Obligations.
provided, however, that no
such Note Guarantee and/or security need be provided if the time such Note
Guarantee and security would otherwise be granted is not during a Guarantee and
Pledge Availability Period, but such Note Guarantee and/or security will be
required to be provided in accordance with the pro-
61
visions
of this Section 4.17 on or prior to the fifth Business Day after the
commencement of the next succeeding Guarantee and Pledge Availability
Period. If, following the release of any Note Guarantee or any
Collateral in accordance with the provisions of this Indenture, such Guarantor
again guarantees, pledges any assets to secure the payment of, or otherwise
becomes an obligor with respect to, the CCO Credit Facility and the Related
Obligations or any other Indebtedness under clause (1) of the second paragraph
of Section 4.10 or Related Obligations, then such Guarantor shall also
guarantee the Notes and/or repledge such assets, as applicable, as described
above under this Section 4.17.
In the
event that additional Liens are granted by the Company or its Subsidiaries to
secure obligations under the CCO Credit Facility or the Related Obligations,
second-priority Liens on the same assets will be granted to secure the Notes and
other Second Lien Obligations of the Company, which Liens will be subject to the
provisions of the Intercreditor Agreement. Notwithstanding the
foregoing sentence, no such second-priority Liens need be provided if the time
such Lien would otherwise be granted is not during a Guarantee and Pledge
Availability Period, but such second-priority Lien shall be required to be
provided in accordance with the foregoing sentence on or prior to the fifth
Business Day of the commencement of the next succeeding Guarantee and Pledge
Availability Period.
Any
Restricted Subsidiary acquired after the Issue Date that is prohibited from
issuing a Note Guarantee pursuant to the restrictions contained in any debt
instrument or other agreement in existence at the time such Restricted
Subsidiary was acquired and not entered into in anticipation or contemplation of
such acquisition shall not be required to become a Guarantor so long as any such
restriction is in existence and to the extent of such restriction.
The
Company shall take, and cause each of its Subsidiaries to take, all action to
preserve and protect the security interests and Liens required to be granted by
this Section 4.17 to the extent it (or its Subsidiaries) takes such action to
preserve or protect similar Liens securing Indebtedness under clause (1) of the
second paragraph of Section 4.10 or Related Obligations.
Section
4.18 Payments
for Consent.
The
Company shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, pay or cause to be paid any consideration to or for the benefit of
any Holder for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of this Indenture or the Notes unless such consideration
is offered to be paid and is paid to all Holders that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement.
Section
4.19 Suspension
of Covenants.
During
any period of time that (a) any Notes have an Investment Grade Rating from
both Rating Agencies and (b) no Default or Event of Default has occurred and is
continuing under this Indenture (the “Suspension Period”), the
Company and its Restricted Subsidiaries shall not be subject to the provisions
of Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.13 and clause (D) of the
first paragraph of Section 5.01 (collectively, the “Suspended
Covenants”). The Issuers shall promptly notify the Trustee of
the commencement of a Suspension Period.
If the
Company and its Restricted Subsidiaries are not subject to the Suspended
Covenants for any period of time as a result of the previous sentence and,
subsequently, (i) one, or both, of the Rating Agencies withdraw their ratings or
downgrade the ratings assigned to the Notes below the required
62
Investment
Grade Ratings or (ii) a Default or Event of Default occurs and is
continuing under such Notes (each, a “Reversion Date”), then the
Company and its Restricted Subsidiaries shall thereafter again be subject to the
Suspended Covenants.
For
purposes of calculating the amount available to be made as Restricted Payments
under clause (iii) of the first paragraph of Section 4.07, calculations
under that clause will be made with reference to the Reference Date, as set
forth in that clause. Accordingly, (x) Restricted Payments made
during the Suspension Period not otherwise permitted pursuant to any of clauses
(1) through (9) of the second paragraph of Section 4.07 will reduce the amount
available to be made as Restricted Payments under clause (iii) of the second
paragraph of Section 4.07; provided, however, that the
amount available to be made as Restricted Payments on the Reversion Date shall
not be reduced below zero solely as a result of such Restricted Payments, but
may be reduced below zero as a result of Consolidated EBITDA for the purpose of
clause (iii)(a) of the second paragraph of Section 4.07 being negative, and
(y) the items specified in subclauses (a) through (c) of clause (iii) of
the second paragraph of Section 4.07 that occur during the Suspension Period
will increase the amount available to be made as Restricted Payments under
clause (iii) of the second paragraph of Section 4.07. Any
Unrestricted Subsidiary that was designated as such during any Suspension Period
that is a Subsidiary of the Company on the Reversion Date shall be deemed to be
a Restricted Subsidiary on the corresponding Reversion Date and such designation
shall not be deemed a Default or Event of Default under this
Indenture.
For
purposes of Sections 3.09 and 4.11, on the Reversion Date, the unutilized Excess
Proceeds will be reset to zero.
ARTICLE
5
SUCCESSORS
Section
5.01 Merger,
Consolidation, or Sale of Assets.
Neither
Issuer may, directly or indirectly: (1) consolidate or merge
with or into another Person or (2) sell, assign, transfer, convey or
otherwise dispose of all or substantially all of its properties or assets, in
one or more related transactions, to another Person; unless:
(A) either:
|
(i)
|
such
Issuer is the surviving Person;
or
|
|
(ii)
|
the
Person formed by or surviving any such consolidation or merger (if other
than such Issuer) or to which such sale, assignment, transfer, conveyance
or other disposition shall have been made is a Person organized or
existing under the laws of the United States, any state thereof or the
District of Columbia; provided, however, that if the Person formed by or
surviving any such consolidation or merger with such Issuer is a Person
other than a corporation, a corporate co-issuer shall also be an obligor
with respect to the Notes;
|
(B) the Person
formed by or surviving any such consolidation or merger (if other than such
Issuer) or the Person to which such sale, assignment, transfer, conveyance or
other disposition shall have been made assumes all the obligations of such
Issuer under the Notes and this In-
63
denture and the Security Documents pursuant to a supplemental indenture with the
Trustee and agreements with respect to the Security
Documents;
(C) immediately
after such transaction no Default or Event of Default exists;
and
(D) such Issuer or the Person
formed by or surviving any such consolidation or merger (if other than such
Issuer) will, on the date of such transaction after giving pro forma effect
thereto and any related financing transactions as if the same had occurred at
the beginning of the applicable four-quarter
period,
(x) be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Leverage Ratio test set forth in the first paragraph of Section 4.10;
or
(y) have
a Leverage Ratio immediately after giving effect to such consolidation or merger
no greater than the Leverage Ratio immediately prior to such consolidation or
merger.
In
addition, the Company may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person. The foregoing clause (D) shall not
apply to a sale, assignment, transfer, conveyance or other disposition of assets
between or among the Company and any of its Wholly Owned Restricted
Subsidiaries.
Except as
provided in paragraph (b) of Section 11.04, no Guarantor that is a Subsidiary of
the Company may, directly or indirectly, consolidate or merge with or into
(whether or not such Subsidiary is the surviving Person) another Person,
unless:
(A) either:
(i)such Subsidiary is the surviving or
continuing Person, or
(ii)the Person formed by or surviving any such
consolidation or merger is another Guarantor that is a Subsidiary of the Company
or assumes, by supplemental indenture in form and substance reasonably
satisfactory to the Trustee, all of the obligations of such Subsidiary under the
Note Guarantee of such Subsidiary, this Indenture and the Security Documents;
and
(B) immediately
after such transaction no Default or Event of Default exists.
Section
5.02 Successor
Corporation Substituted.
Upon any
consolidation or merger, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the assets of either Issuer in
accordance with Section 5.01, the successor Person formed by such
consolidation or into which either Issuer is merged or to which such transfer is
made shall succeed to and (except in the case of a lease) be substituted for,
and may exercise every right and power of, such Issuer under this Indenture with
the same effect as if such successor Person had been named therein as such
Issuer, and (except in the case of a lease) such Issuer shall be released from
the obligations under the Notes and this Indenture, except with respect to any
obligations that arise from, or are related to, such transaction.
64
ARTICLE
6
DEFAULTS
AND REMEDIES
Section
6.01 Events
of Default.
Each of
the following is an “Event of
Default” with respect to the Notes:
(1) default for
30 consecutive days in the payment when due of interest on the
Notes;
(2) default in
payment when due of the principal of or premium, if any, on the
Notes;
(3) failure by
the Company or any of its Restricted Subsidiaries to comply with the provisions
of Sections 4.16 and 5.01;
(4) failure by
the Company or any of its Restricted Subsidiaries for 30 consecutive days after
written notice thereof has been given to the Company by the Trustee or to the
Company and the Trustee by Holders of at least 25% of the aggregate principal
amount of Notes then outstanding to comply with any of its other covenants or
agreements in this Indenture;
(5) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries), whether such
Indebtedness or guarantee now exists or is created after the Issue Date, if that
default:
(a) is caused by
a failure to pay at final stated maturity the principal amount of such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a “Payment
Default”);
or
(b) results in
the acceleration of such Indebtedness prior to its express
maturity,
and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$100 million or more;
(6) failure by
the Company or any of its Restricted Subsidiaries to pay final judgments which
are non-appealable aggregating in excess of $100 million, net of applicable
insurance which has not been denied in writing by the insurer, which judgments
are not paid, discharged or stayed for a period of 60
days;
(7) the Company
or any of its Significant Subsidiaries pursuant to or within the meaning of
Bankruptcy Law:
(a) commences a
voluntary case,
(b) consents to
the entry of an order for relief against it in an involuntary
case,
(c) consents to
the appointment of a custodian of it or for all or substantially all of its
property, or
65
(d) makes a
general assignment for the benefit of its creditors;
or
(8) a court of
competent jurisdiction enters an order or decree under any Bankruptcy Law
that:
(a) is for
relief against the Company or any of its Significant Subsidiaries in an
involuntary case;
(b) appoints a
custodian of the Company or any of its Significant Subsidiaries or for all or
substantially all of the property of the Company or any of its Significant
Subsidiaries; or
(c) orders the
liquidation of the Company or any of its Significant
Subsidiaries;
and the
order or decree remains unstayed and in effect for 60 consecutive
days;
(9) any Note
Guarantee of any Guarantor that, taken together with all other such Guarantors,
would be a Significant Subsidiary ceases to be in full force and effect (other
than in accordance with the terms of this Indenture and such Note Guarantee) or
is declared null and void and unenforceable or found to be invalid or any
Guarantor denies its liability under its Note Guarantee with respect to the
Notes (other than, in each case, by reason of the Effectiveness Condition not
being satisfied or by reason of release of a Guarantor from its Note Guarantee
in accordance with the terms of this Indenture and such Note Guarantee);
and
(10) so long as
the Security Documents securing the Notes have not otherwise been terminated in
accordance with their terms or the Collateral as a whole has not otherwise been
released from the Lien of the Security Documents securing the Notes in
accordance with the terms thereof, (a) any default by the Company or any
Subsidiary in the performance of its obligations under the Security Documents
(after the lapse of any applicable grace periods) or this Indenture which
adversely affects the enforceability, validity, perfection or priority of the
Trustee’s Lien on the Collateral or which adversely affects the condition or
value of the Collateral, taken as a whole, in any material respect, (b)
repudiation or disaffirmation by the Company or any Subsidiary of its respective
obligations under the Security Documents securing the Notes and (c) the
determination in a judicial proceeding that the Security Documents securing the
Notes are unenforceable or invalid against the Company or any Subsidiary for any
reason.
Section
6.02 Acceleration.
In the
case of an Event of Default arising from clause (7) or (8) of
Section 6.01 with respect to the Company, all of the outstanding Notes
shall become due and payable immediately without further action or
notice. If any other Event of Default occurs and is continuing, the
Trustee by notice to the Issuers or the Holders of at least 25% in aggregate
principal amount of the Notes by notice to the Issuers and the Trustee may
declare the Notes to be due and payable immediately. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by written
notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences (except nonpayment of principal, interest or
premium that has become due solely because of the acceleration) if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived.
Section
6.03 Other
Remedies.
66
If an
Event of Default occurs and is continuing, the Trustee may pursue any available
remedy to collect the payment of principal, premium, if any, and interest on the
Notes or to enforce the performance of any provision of the Notes or this
Indenture.
The
Trustee may maintain a proceeding even if it does not possess any of the Notes
or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon a Default or an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in a Default or the Event of
Default. All remedies are cumulative to the extent permitted by
law.
Section
6.04 Waiver
of Existing Defaults.
Holders
of not less than a majority in aggregate principal amount of the Notes by notice
to the Trustee may on behalf of the Holders of all of the Notes waive an
existing Default or Event of Default with respect to the Notes and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase); provided, however, that the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration. Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
Section
6.05 Control
by Majority.
Holders
of a majority in aggregate principal amount of the Notes then outstanding may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be
prejudicial to the rights of other Holders or that may involve the Trustee in
personal liability. The Trustee may take any other action which it
deems proper that is not inconsistent with any such directive.
Section
6.06 Limitation
on Suits.
A Holder
may pursue a remedy with respect to this Indenture or the Notes only
if:
(a) the
Holder gives to the Trustee written notice of a continuing Event of
Default;
(b) the
Holders of at least 25% in principal amount of the Notes then outstanding make a
written request to the Trustee to pursue the remedy;
(c) such
Holder or Holders offer and, if requested, provide to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(d) the
Trustee does not comply with the request within 60 days after receipt of the
request and the offer and, if requested, the provision of indemnity;
and
(e) during
such 60-day period the Holders of a majority in aggregate principal amount of
the Notes then outstanding do not give the Trustee a direction inconsistent with
the request.
67
A Holder
may not use this Indenture to prejudice the rights of another Holder or to
obtain a preference or priority over another Holder.
Section
6.07 Rights
of Holders to Receive Payment.
Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of principal, premium, if any, and interest on the Note, on or after the
respective due dates expressed in the Note (including in connection with an
offer to purchase), or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
Section
6.08 Collection
Suit by Trustee.
If an
Event of Default specified in Section 6.01(1) or (2) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Issuers for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
Section
6.09 Trustee
May File Proofs of Claim.
The
Trustee is authorized to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Holders allowed in
any judicial proceedings relative to the Issuers (or any other obligor upon the
Notes), their creditors or their property and shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the Trustee, and in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under
Section 7.07. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
Section
6.10 Priorities.
If the
Trustee collects any money pursuant to this Article, it shall pay out the money
in the following order:
First: to
the Trustee, its agents and attorneys for amounts due under Section 7.07,
including payment of all compensation, expense and liabilities incurred, and all
advances made, by the Trustee and the costs and expenses of
collection;
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Second: to
Holders for amounts due and unpaid on the Notes for principal, premium, if any,
and interest, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Notes for principal, premium, if any and
interest, respectively; and
Third: to
the Issuers or to such party as a court of competent jurisdiction shall
direct.
The
Trustee may fix a record date and payment date for any payment to Holders
pursuant to this Section 6.10.
Section
6.11 Undertaking
for Costs.
In any
suit for the enforcement of any right or remedy under this Indenture or in any
suit against the Trustee for any action taken or omitted by it as a Trustee, a
court in its discretion may require the filing by any party litigant in the suit
of an undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys’ fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This
Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE
7
TRUSTEE
Section
7.01 Duties
of Trustee.
(1) If an Event
of Default has occurred and is continuing, the Trustee shall, subject to the
terms and conditions of this Indenture, exercise such of the rights and powers
vested in it by this Indenture and the Security Documents and use the same
degree of care and skill in its exercise, as a prudent person would exercise or
use under the circumstances in the conduct of such person’s own
affairs.
(2) Except
during the continuance of an Event of Default:
(a) the duties
of the Trustee shall be determined solely by the express provisions of the
agreements referred to in clause (1) and the Trustee need perform only those
duties that are specifically set forth in such agreements and no others, and no
implied covenants or obligations shall be read into such agreements against the
Trustee; and
(b) in the
absence of bad faith on its part, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon certificates or opinions required to be furnished to the Trustee hereunder
and conforming to the requirements of such agreements. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of such agreements (but need not confirm or
investigate the accuracy of any mathematical calculations or other facts stated
therein).
(3) The Trustee
may not be relieved from liabilities for its own gross negligent action, its own
gross negligent failure to act, or its own willful misconduct, except
that:
(a) This
paragraph does not limit the effect of paragraph (2) of this Section
7.01.
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(b) The Trustee
shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was grossly negligent
in ascertaining the pertinent facts.
(c) The Trustee
shall not be liable with respect to any action it takes or omits to take in good
faith in accordance with a direction received by it pursuant to
Section 6.05.
(d) Whether or
not therein expressly so provided, every provision of the agreements referred to
in clause (1) that in any way relates to the Trustee is subject to
paragraphs (1), (2), and (3) of this
Section 7.01.
(e) No provision
of any such agreements shall require the Trustee to expend or risk its own funds
or incur any liability. The Trustee shall be under no obligation to
exercise any of its rights and powers under this Indenture or the Security
Documents at the request of any Holder, unless such Holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability, claim, damage or expense.
(f) The Trustee
shall not be liable for interest on any money received by it except as the
Trustee may agree in writing with the Issuers. Money held in trust by
the Trustee need not be segregated from other funds except to the extent
required by law.
(g) The Trustee
shall not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture or other paper or
documents.
Section
7.02 Rights
of Trustee.
(1) The Trustee
may conclusively rely upon any document (including any statement made therein,
whether in its original or facsimile form) believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee need
not investigate any fact or matter stated in the
document.
(2) Before the
Trustee acts or refrains from acting, it may require an Officers’ Certificate or
an Opinion of Counsel or both. The Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance on such Officers’
Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its own selection and the written advice or opinion of such counsel
or any Opinion of Counsel shall be full and complete authorization and
protection from liability in respect of any action taken, suffered or omitted by
it hereunder in good faith and in reliance thereon.
(3) The Trustee
may act through its attorneys and agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due
care.
(4) The Trustee
shall not be liable for any action it takes or omits to take in good faith that
it believes to be authorized or within the rights or powers conferred upon it by
this Indenture or the Security Documents.
(5) Unless
otherwise specifically provided in this Indenture or the Security Documents, any
demand, request, direction or notice from either of the Issuers shall be
sufficient if signed by an Officer of such Issuer.
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(6) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture or the
Security Documents at the request or direction of any of the Holders unless such
Holders shall have offered to the Trustee reasonable security or
indemnity satisfactory to it against the costs, expenses and liabilities that
might be incurred by it in compliance with such request or
direction.
(7) The Trustee
shall not be charged with knowledge of any Default or Event of Default unless
either (a) a Responsible Officer of the Trustee shall have actual knowledge
of such Default or Event of Default or (b) written notice of such Default
or Event of Default shall have been given to and received by a Responsible
Officer of the Trustee by the Issuers or any Holder.
Section
7.03 Individual
Rights of Trustee.
The
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuers or any Affiliate of the Issuers
with the same rights it would have if it were not Trustee. However,
in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and
7.11.
Section
7.04 Trustee’s
Disclaimer.
The
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, it shall not be accountable
for the Issuers’ use of the proceeds from the Notes or any money paid to the
Issuers or upon the Issuers’ direction under any provision of this Indenture, it
shall not be responsible for the use or application of any money received by any
Paying Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Notes or any other document
in connection with the sale of the Notes or pursuant to this Indenture other
than its certificate of authentication.
Section
7.05 Notice
of Defaults.
If a
Default or Event of Default occurs and is continuing and if it is known to a
Responsible Officer of the Trustee, the Trustee shall mail to Holders a notice
of the Default or Event of Default within 90 days after the Trustee acquires
knowledge thereof. Except in the case of a Default or Event of
Default in payment of principal of, premium, if any, or interest on any Note,
the Trustee may withhold the notice if and so long as the Trustee’s board of
directors or a committee of the Trustee’s Responsible Officers in good faith
determines that withholding the notice is in the interests of the
Holders.
Section
7.06 Reports
by Trustee to Holders.
By May
15th of each year, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders a brief report dated as of such reporting date that
complies with TIA § 313(a) (but if no event described in TIA § 313(a) has
occurred within the twelve months preceding the reporting date, no report need
be transmitted). The Trustee also shall comply with TIA §
313(b)(2). The Trustee shall also transmit by mail all reports as
required by TIA § 313(c).
A copy of
each report at the time of its mailing to the Holders shall be mailed to the
Company and filed with the SEC and each stock exchange on which the Notes are
listed in accordance with TIA § 313(d). The Issuers shall
promptly notify the Trustee when the Notes are listed on any stock
exchange.
71
Section
7.07 Compensation
and Indemnity.
The
Issuers shall pay to the Trustee from time to time reasonable compensation for
its acceptance of this Indenture, the Security Documents and any other document
delivered in connection with any of such agreements and its services under any
of such agreements or other documents. The Trustee’s compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Issuers shall reimburse the Trustee promptly upon request
for all reasonable disbursements, advances and expenses incurred or made by it
in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee’s
agents and counsel.
The
Issuers shall, jointly and severally, indemnify the Trustee against any and all
losses, liabilities, claims, damages or expenses (including reasonable legal
fees and expenses) incurred by the Trustee arising out of or in connection with
the acceptance or administration of its duties under (or in connection with)
this Indenture, including the costs and expenses of enforcing this Indenture,
the Security Documents and any other document delivered in connection therewith
(including this Section 7.07) and defending itself against any claim (whether
asserted by the Issuers or any Holder or any other Person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its gross negligence or willful misconduct. The
Trustee shall notify the Issuers promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Issuers shall not
relieve the Issuers of their obligations hereunder. The Issuers shall
defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Issuers shall pay the reasonable fees
and expenses of such counsel. The Issuers need not pay for any
settlement made without their consent, which consent shall not be unreasonably
withheld.
The
obligations of the Issuers under this Section 7.07 shall survive resignation or
removal of the Trustee and the satisfaction and discharge of this
Indenture.
To secure
the Issuers’ payment obligations in this Section, the Trustee shall have a Lien
prior to the Notes on all money or property held or collected by the Trustee,
except that held in trust to pay principal and interest on particular
Notes. Such Lien shall survive the resignation or removal of the
Trustee and the satisfaction and discharge of this Indenture.
When the
Trustee incurs expenses or renders services after an Event of Default specified
in Section 6.01(7) or (8) occurs, the expenses and the compensation for the
services (including the fees and expenses of its agents and counsel) are
intended to constitute expenses of administration under any Bankruptcy
Law.
The
Trustee shall comply with the provisions of TIA § 313(b)(2) to the extent
applicable.
Section
7.08 Replacement
of Trustee.
A
resignation or removal of the Trustee and appointment of a successor Trustee
shall become effective only upon the successor Trustee’s acceptance of
appointment as provided in this Section.
The
Trustee may resign in writing at any time and be discharged from the trust
hereby created by so notifying the Issuers. The Holders of a majority
in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Issuers in writing. The
Issuers may remove the Trustee if:
(a) the Trustee
fails to comply with Section 7.10;
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(b) the Trustee
is adjudged a bankrupt or an insolvent or an order for relief is entered with
respect to the Trustee under any Bankruptcy Law;
(c) a custodian
or public officer takes charge of the Trustee or its property;
or
(d) the Trustee
becomes incapable of acting.
If the
Trustee resigns or is removed or if a vacancy exists in the office of Trustee
for any reason, the Issuers shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Issuers.
If a
successor Trustee does not take office within 60 days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Issuers, or the Holders of at
least 10% in principal amount of the then outstanding Notes may petition at the
expense of the Issuers any court of competent jurisdiction for the appointment
of a successor Trustee.
If the
Trustee, after written request by any Holder who has been a Holder for at least
six months, fails to comply with Section 7.10, such Holder may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A
successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Issuers. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee; provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Issuers’ obligations under Section 7.07 shall
continue for the benefit of the retiring Trustee.
Section
7.09 Successor
Trustee by Merger, etc.
If the
Trustee consolidates, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the successor
corporation without any further act shall be the successor Trustee.
Section
7.10 Eligibility;
Disqualification.
There
shall at all times be a Trustee hereunder that is a corporation organized and
doing business under the laws of the United States of America or of any state
thereof that is authorized under such laws to exercise corporate trustee power,
that is subject to supervision or examination by federal or state authorities
and that has a combined capital and surplus of at least $100 million as set
forth in its most recent published annual report of condition.
This
Indenture shall always have a Trustee who satisfies the requirements of TIA
§§ 310(a)(1), (2) and (5). The Trustee is subject to TIA
§ 310(b).
Section
7.11 Preferential
Collection of Claims Against the Issuers.
73
The
Trustee is subject to TIA § 311(a), excluding any creditor relationship listed
in TIA § 311(b). A Trustee who has resigned or been removed
shall be subject to TIA § 311(a) to the extent indicated
therein.
Section
7.12 Authorization
of the Trustee.
Each
present and future Holder by its acceptance of the Notes (a) authorizes the
Trustee, on such Holder’s behalf, to execute and deliver the Intercreditor
Agreement, and (b) agrees that, subject to the penultimate sentence of this
Section 7.12, notwithstanding any other provision to the contrary in this
Indenture, (i) the Trustee shall be authorized to take (or refrain from taking)
any and all actions required, authorized or contemplated by the Intercreditor
Agreement and (ii) the rights, agreements, obligations, covenants and duties of
the Trustee to or otherwise on behalf of the Holders under this Indenture and
the Security Documents shall be subject to the rights, agreements, obligations,
covenants and duties of the Trustee under the Intercreditor Agreement to or
otherwise on behalf of the Pari Passu First Priority Secured Parties and the
other Pari Passu Second Priority Secured Parties. The Trustee agrees
with the Holders that the Trustee will not enter into any amendment or
supplement to the Intercreditor Agreement (except to provide for the inclusion
therein of Additional Pari Passu First Priority Indebtedness or Additional Pari
Passu Second Priority Indebtedness to the extent contemplated by Section 10.3 of
the Intercreditor Agreement) without in each case obtaining the prior consent of
the Holders of at least a majority in aggregate principal amount of the then
outstanding Notes (but without the necessity of any consent from, or notice to,
the Company or any of its Affiliates). Each present and future Holder
in such capacity also by its acceptance of the Notes acknowledges and agrees
that, although the Issuers and their Affiliates may not be parties thereto or
bound thereby, such Holder will nonetheless be bound by the Intercreditor
Agreement and the Intercreditor Agreement will be directly enforceable against
such Holder in its capacity as such. None of the Issuers or any of
their Affiliates will be a party to, bound by, or a beneficiary of, any of the
provisions of the Intercreditor Agreement, nor will the parties to such
Intercreditor Agreement have any contractual right of enforcement thereunder
against the Issuers or any Guarantor. In addition, the Trustee may
enter into other agreements on behalf of Holders to the extent that such
agreements would be permitted as amendments or supplements under Article 9 of
this Indenture.
ARTICLE
8
LEGAL
DEFEASANCE AND COVENANT DEFEASANCE
Section
8.01 Option
to Effect Legal Defeasance or Covenant Defeasance.
The
Issuers may, at the option of their respective boards of directors or the Board
of Directors of CCI evidenced by a resolution set forth in an Officers’
Certificate of each of the Issuers, at any time, elect to have either Section
8.02 or 8.03 applied to the outstanding Notes and the obligations of the
Guarantors under the Note Guarantees with respect thereto upon compliance with
the conditions set forth below in this Article 8.
Section
8.02 Legal
Defeasance and Discharge.
Upon the
Issuers’ exercise under Section 8.01 of the option applicable to this Section
8.02, the Issuers and the Guarantors shall, subject to the satisfaction of the
conditions set forth in Section 8.04, be deemed to have been discharged from
their obligations with respect to the outstanding Notes and the Note Guarantees
with respect thereto on the date the conditions set forth below are satisfied
(hereinafter, “Legal
Defeasance”). For this purpose, Legal Defeasance means that
the Issuers and the Guarantors shall be deemed to have paid and discharged the
entire Indebtedness represented by the outstanding Notes and the Note Guarantees
with respect thereto, which shall thereafter be deemed to be “outstanding” only
74
for the
purposes of Section 8.05 and the other Sections of this Indenture referred to in
(a) and (b) below, and to have satisfied all their other obligations under such
Notes, such Note Guarantees with respect thereto and this Indenture (and the
Trustee, on demand of and at the expense of the Issuers, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged
hereunder:
(a) the rights
of Holders of the Notes to receive payments in respect of the principal of,
premium, if any, and interest on the Notes when such payments are due from the
trust referred to below;
(b) the Issuers’
obligations with respect to the Notes concerning issuing temporary Notes,
registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payment and money for security payments
held in trust;
(c) the rights,
powers, trusts, duties and immunities of the Trustee and the Issuers’
obligations in connection therewith; and
(d) the Legal
Defeasance provisions of this Indenture.
Subject to
compliance with this Article 8, the Issuers may exercise their option under this
Section 8.02 notwithstanding the prior exercise of their option under Section
8.03.
Section
8.03 Covenant
Defeasance.
Upon the
Issuers’ exercise under Section 8.01 of the option applicable to this Section
8.03, the Issuers and the Guarantors shall, subject to the satisfaction of the
conditions set forth in Section 8.04, be released from their obligations under
the covenants contained in Article 5 and Sections 4.03, 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.14, 4.16, 4.17, 4.19 and 10.01 with respect to the Notes on
and after the date the conditions set forth in Section 8.04 are satisfied
(hereinafter, “Covenant
Defeasance”), and the Notes shall thereafter be deemed not “outstanding”
for the purposes of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such covenants,
but shall continue to be deemed “outstanding” for all other purposes hereunder
(it being understood that the Notes shall not be deemed outstanding for
accounting purposes). For this purpose, Covenant Defeasance means
that, with respect to the outstanding Notes, the Issuers may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition,
upon the Issuers’ exercise under Section 8.01 of the option applicable to this
Section 8.03, subject to the satisfaction of the conditions set forth in Section
8.04, Sections 6.01(3) through 6.01(6) shall not constitute Events of
Default.
Section
8.04 Conditions
to Legal or Covenant Defeasance.
The
following shall be the conditions to the application of either Section 8.02 or
8.03 to the outstanding Notes:
In order
to exercise either Legal Defeasance or Covenant Defeasance:
75
(1) the Issuers
must irrevocably deposit with the Trustee, in trust, for the benefit of the
Holders, cash in U.S. dollars, non-callable Government Securities or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the outstanding Notes on the
stated maturity or on the applicable redemption date, as the case may be, and
the Issuers must specify whether the Notes are being defeased to maturity or to
a particular redemption date;
(2) in the case
of Legal Defeasance, the Issuers shall have delivered to the Trustee an opinion
of reputable counsel of national standing confirming
that
(a) the Issuers
have received from, or there has been published by, the Internal Revenue Service
a ruling or
(b) since the
Issue Date, there has been a change in the applicable federal income tax
law,
in either
case to the effect that, and based thereon such opinion of reputable counsel of
national standing shall confirm that, the Holders will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(3) in the case
of Covenant Defeasance, the Issuers shall have delivered to the Trustee an
opinion of reputable counsel of national standing confirming that the Holders
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not
occurred;
(4) no Default
or Event of Default shall have occurred and be continuing
either:
(a) on the date
of such deposit (other than a Default or Event of Default resulting from the
borrowing of funds to be applied to such deposit and the grant of any Lien
securing such borrowing); or
(b) insofar as
Events of Default from bankruptcy or insolvency events are concerned, at any
time in the period ending on the 91st day after the date of
deposit;
(5) such Legal
Defeasance or Covenant Defeasance will not result in a breach or violation of,
or constitute a default under, any material agreement or instrument (other than
this Indenture) to which the Company or any of its Restricted Subsidiaries is a
party or by which the Company or any of its Restricted Subsidiaries is
bound;
(6) the Issuers
must have delivered to the Trustee an opinion of reputable counsel of national
standing to the effect that after the 91st day, assuming no intervening
bankruptcy, that no Holder is an insider of either of the Issuers following the
deposit and that such deposit would not be deemed by a court of competent
jurisdiction a transfer for the benefit of either Issuer in its capacity as
such, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally;
(7) the Issuers
must deliver to the Trustee an Officers’ Certificate stating that the deposit
was not made by the Issuers with the intent of preferring the Holders over the
other creditors
76
of
the Issuers with the intent of defeating, hindering, delaying or defrauding
creditors of the Issuers or others; and
(8) the Issuers
must deliver to the Trustee an Officers’ Certificate and an opinion of reputable
counsel of national standing, each stating that all conditions precedent
relating to the Legal Defeasance or the Covenant Defeasance have been complied
with.
Notwithstanding
the foregoing, the opinion of reputable counsel of national standing required by
clause (2) above with respect to a Legal Defeasance need not be delivered and
the conditions set forth in clauses (4)(b) and (6) shall not apply if all
applicable Notes not theretofore delivered to the Trustee for
cancellation
(a) have become
due and payable; or
(b) will become
due and payable on the maturity date within one year, under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the
Issuers.
Section 8.05 Deposited
Money and Government Securities to Be Held in Trust; Other Miscellaneous
Provisions.
Subject
to Section 8.06, all money and non-callable Government Securities (including the
proceeds thereof) deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this Section 8.05, the “Trustee”) pursuant to Section
8.04 in respect of the outstanding Notes shall be held in trust and applied by
the Trustee, in accordance with the provisions of such Notes and this Indenture,
to the payment, either directly or through any Paying Agent (including the
Issuers acting as Paying Agent) as the Trustee may determine, to the Holders of
such Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from other
funds except to the extent required by law.
The
Issuers shall pay and indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against the cash or non-callable Government Securities
deposited pursuant to Section 8.04 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the outstanding Notes; it being understood that
the Trustee shall bear no responsibility for any such tax, fee or other charge
that is by law for the account of the Holders of the outstanding
Notes.
Anything
in this Article 8 to the contrary notwithstanding, the Trustee shall deliver or
pay to the Issuers from time to time upon the request of the Issuers any money
or non-callable Government Securities held by it as provided in Section 8.04
which, in the opinion of a nationally recognized investment bank, appraisal firm
or firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section
8.06 Repayment
to Issuers.
Any money
deposited with the Trustee or any Paying Agent, or then held by the Issuers, in
trust for the payment of the principal of, premium, if any, or interest on any
Note and remaining unclaimed for two years after such principal, and premium, if
any, or interest has become due and payable shall be paid to the Issuers on
their request or (if then held by the Issuers) shall be discharged from such
77
trust;
and the Holder of such Note shall thereafter look only to the Issuers for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Issuers as trustee
thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Issuers cause to be published once, in The New York Times and The Wall Street Journal
(national edition), notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such notification or publication, any unclaimed balance of such money then
remaining shall be repaid to the Issuers.
Section
8.07 Reinstatement.
If the
Trustee or Paying Agent is unable to apply any United States dollars or
non-callable Government Securities in accordance with Section 8.02 or 8.03, as
the case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Issuers’ obligations under this Indenture and the Notes, shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.02 or
8.03 until such time as the Trustee or Paying Agent is permitted to apply all
such money in accordance with Section 8.02 or 8.03, as the case may be;
provided, however, that, if the Issuers make any payment of principal of,
premium, if any, or interest on any Note following the reinstatement of their
obligations, the Issuers shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money held by the Trustee or Paying
Agent.
ARTICLE
9
AMENDMENT,
SUPPLEMENT AND WAIVER
Section
9.01 Without
Consent of Holders.
Notwithstanding
Section 9.02, the Issuers, the Guarantors and the Trustee, together, may amend
or supplement this Indenture, the Notes, the Note Guarantees or the Security
Documents without the consent of any Holder:
(1) to cure any
ambiguity, defect or inconsistency;
(2) to provide
for uncertificated Notes in addition to or in place of certificated
Notes;
(3) to provide
for or confirm the issuance of Additional Notes;
(4) to provide
for the assumption of the Issuers’ or any Guarantors’ obligations to Holders in
the case of a merger or consolidation or sale of all or substantially all of the
assets of such Issuer or Guarantor pursuant to Article
5;
(5) to make any
change that would provide any additional rights or benefits to the Holders or
that does not adversely affect the legal rights under this Indenture of any
Holder;
(6) to, if
applicable, comply with requirements of the SEC in order to, if applicable,
effect or maintain the qualification of this Indenture under the TIA or
otherwise as necessary to comply with applicable law;
(7) to release
Collateral or a Guarantor, as permitted under the terms of this Indenture or the
Security Documents;
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(8) to add any
additional assets as Collateral; or
(9) to add a
Guarantor.
Upon the
request of the Issuers accompanied by a resolution of their respective boards of
directors or the Board of Directors of CCI authorizing the execution of any such
amended or supplemental Indenture, and upon receipt by the Trustee of the
documents described in Section 7.02, the Trustee shall join with the Issuers in
the execution of any amended or supplemental Indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture, the Security Documents or
otherwise.
Section
9.02 With
Consent of Holders.
Except as
otherwise provided in this Section 9.02, this Indenture (including Sections 4.11
and 4.16), the Notes, the Note Guarantees or the Security Documents may be
amended or supplemented with the consent of the Holders of at least a majority
in aggregate principal amount of the Notes then outstanding (including consents
obtained in connection with a purchase of, or a tender offer or exchange offer
for, Notes) and, subject to Sections 6.04 and 6.07, any existing Default or
compliance with any provision of this Indenture, the Notes (other than any
provision relating to the right of any Holder to bring suit for the enforcement
of any payment of principal, premium, if any, and interest on the Note, on or
after the scheduled due dates expressed in the Notes), the Note Guarantees or
the Security Documents may be waived with the consent of the Holders of a
majority in aggregate principal amount of the Notes then
outstanding. Section 2.08 shall determine which Notes are considered
to be “outstanding” for purposes of this Section 9.02.
Upon the
request of the Issuers accompanied by a resolution of their respective boards of
directors or the Board of Directors of CCI authorizing the execution of any such
amended or supplemental Indenture, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders as aforesaid,
and upon receipt by the Trustee of the documents described in Section 7.02, the
Trustee shall join with the Issuers in the execution of such amended or
supplemental Indenture unless such amended or supplemental Indenture directly
affects the Trustee’s own rights, duties or immunities under this Indenture, the
Security Documents or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall
not be necessary for the consent of the Holders under this Section 9.02 to
approve the particular form of any proposed amendment or waiver, but it shall be
sufficient if such consent approves the substance thereof.
After an
amendment, supplement or waiver under this Section 9.02 becomes effective, the
Issuers shall mail to the Holders affected thereby a notice briefly describing
the amendment, supplement or waiver. Any failure of the Issuers to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such amended or supplemental Indenture or
waiver. Subject to Sections 6.04 and 6.07, the Holders of a majority
in aggregate principal amount of the Notes then outstanding may waive compliance
in a particular instance by the Issuers with any provision of this Indenture or
the Notes. However, without the consent of each Holder affected, an
amendment, supplement or waiver under this Section 9.02 may not (with respect to
any Notes held by a non-consenting Holder):
(1) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver;
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(2) reduce the
principal of or change the fixed maturity, or ranking, of any Note or alter the
scheduled payment provisions with respect to the redemption of the Notes, or
payment of principal or interest (other than provisions relating to Sections
4.11 and 4.16);
(3) reduce the
rate of or extend the time for payment of interest on any
Note;
(4) waive a
Default or Event of Default in the payment of principal of, or premium, if any,
or interest on the Notes (except a rescission of acceleration of the Notes by
the Holders of at least a majority in aggregate principal amount of the Notes
and a waiver of the payment default that resulted from such
acceleration);
(5) make any
Note payable in money other than that stated in the
Notes;
(6) make any
change in the provisions of this Indenture relating to waivers of past Defaults
or the rights of Holders to receive payments of principal of, or premium, if
any, or interest on the Notes;
(7) waive a
redemption payment with respect to any Note (which shall not include a payment
required by Section 4.11 or 4.16);
(8) make any
change in Section 9.01 or this Section 9.02; or
(9) release any
Guarantor that is a Significant Subsidiary from any of its obligations under its
Note Guarantee otherwise than in accordance with the terms of this
Indenture.
Notwithstanding
the foregoing provisions of this Section 9.02, in addition to the release
of Collateral expressly permitted by this Indenture and the Security Documents,
all or any portion of the Collateral may be released under this Indenture and
the Security Documents as to the Notes and any Guarantor may be released from
its obligations under its Note Guarantee, with the consent of the Holders of at
least 66 2/3% in aggregate principal amount of the Notes then
outstanding.
Section
9.03 Compliance
with Trust Indenture Act.
Every
amendment or supplement to this Indenture or the Notes shall be set forth in an
amended or supplemental Indenture that complies with the TIA as then in
effect.
Section
9.04 Revocation
and Effect of Consents.
Until an
amendment, supplement or waiver becomes effective, a consent to it by a Holder
is a continuing consent by the Holder and every subsequent Holder or portion of
a Note that evidences the same debt as the consenting Holder’s Note, even if
notation of the consent is not made on any Note. However, any such
Holder or subsequent Holder may revoke the consent as to its Note if the Trustee
receives written notice of revocation before the date the waiver, supplement or
amendment becomes effective. An amendment, supplement or waiver
becomes effective in accordance with its terms and thereafter binds every
Holder.
Section
9.05 Notation
on or Exchange of Notes.
The
Trustee may place an appropriate notation about an amendment, supplement or
waiver on any Note thereafter authenticated. The Issuers in exchange
for all Notes may issue and the
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Trustee
shall, upon receipt of an Authentication Order, authenticate new Notes that
reflect the amendment, supplement or waiver.
Failure
to make the appropriate notation or issue a new Note shall not affect the
validity and effect of such amendment, supplement or waiver.
Section
9.06 Trustee
to Sign Amendments, etc.
The
Trustee shall sign any amended or supplemental Indenture authorized pursuant to
this Article 9 if the amendment or supplement does not adversely affect the
rights, duties, liabilities or immunities of the Trustee under this Indenture,
the Security Documents or otherwise. The Issuers may not sign an
amendment or supplemental Indenture until their respective Boards of Directors
approve it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, in addition to the documents required by
Section 12.04, an Officers’ Certificate and an Opinion of Counsel, in each case
from each of the Issuers, stating that the execution of such amended or
supplemental indenture is authorized or permitted by this
Indenture.
ARTICLE
10
COLLATERAL
AND SECURITY DOCUMENTS
Section
10.01 Security
Documents.
The
Company and each Guarantor will execute and comply with, and cause each of its
Subsidiaries to execute and comply with, the terms of each Security Document to
which such Person is, or is required to be, a party. The Issuers
shall take, and shall cause their Restricted Subsidiaries to take, and the
Guarantors shall take, at their sole expense, upon request of the Trustee, any
and all actions reasonably required to cause the Security Documents to create
and maintain, as security for the obligations of the Issuers and the Guarantors
hereunder, a valid and enforceable perfected Lien in and on all the Collateral,
in favor of the Trustee on behalf of itself and the Holders and subject to no
Liens other than Liens permitted by Section 4.14.
Section 10.02 Suits
to Protect the Collateral.
The
Trustee shall have power to institute in its name and to maintain such suits and
proceedings as it may deem expedient to prevent any impairment of the Collateral
by any acts which may be unlawful or in violation of this Indenture or any of
the Security Documents, and such suits and proceedings as necessary to preserve
or protect its interests and the interests of the Holders in the Collateral,
including power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid, if
the enforcement of, or compliance with, such enactment, rule or order would
impair the security hereunder or under any of the Security Documents, or be
prejudicial to the interests of the Holders or the Trustee.
Section
10.03 Release
of Collateral.
(a) The Trustee
shall not at any time release Collateral from the Liens created by this
Indenture and the Security Documents unless such release is in accordance with
the provisions of this Indenture and the Security
Documents.
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(b) In the event
that (i) all of the Liens on any of the Collateral securing the CCO Credit
Facility and the Related Obligations are released for any reason, including in
connection with the repayment in full of all obligations under the CCO Credit
Facility and the Related Obligations, without the refinancing thereof on a
secured basis, and there is no Event of Default pursuant to clause (1) or
(2) of Section 6.01 hereof then existing (or that would result therefrom),
(ii) any Collateral is released in accordance with the provisions of Section
9.02, (iii) any Collateral is sold or otherwise disposed of in compliance with
Section 4.11 hereof, or (iv) with respect to assets of any Restricted Subsidiary
that is a Guarantor constituting Collateral, upon release of the Note Guarantee
of such Guarantor pursuant to Section 11.04(b)(ii), (iii) or (iv), the Liens on
such Collateral securing the Notes will be automatically released and
terminated. In addition, in the event of the Legal Defeasance or
Covenant Defeasance or discharge of the Notes pursuant to Article 13, the Liens
on all Collateral securing the Notes (except for any Liens required by Article
8) will be automatically released and terminated.
(c) To evidence
any such release and termination, the Company shall be entitled to such
releases, terminations and other documents and instruments as the Company or any
third party entitled to rely thereon may request, and the Trustee shall, at the
Company’s expense, execute and deliver such requested releases, terminations and
other documents and instruments, with respect to items of Collateral subject to
release pursuant to clauses (a) and (b) above (the “Released
Collateral”) upon
compliance with the conditions precedent that the Company shall have delivered
to the Trustee the following:
(2) a notice
from the Company requesting release of Released Collateral (a “Company
Notice”) and
specifically describing the proposed Released
Collateral;
(3) an Officers’
Certificate certifying that
(A) the release
of such Released Collateral complies with the terms and conditions of this
Indenture,
(B) all
conditions precedent in this Indenture and the Security Documents to such
release have been complied with, and
(C) no Default
or Event of Default pursuant to clause (1) or (2) of Section 6.01
hereof is in effect or continuing on the date thereof or would result therefrom
(including, without limitation, as a result of an Insolvency Proceeding),
and
(4) an Opinion
of Counsel substantially to the effect that all conditions precedent herein and
under any of the Security Documents relating to the release of such Collateral
have been complied with.
Notwithstanding
anything to the contrary in this Indenture and the Security Documents, including
this Section 10.03(c), (i) the release of any Collateral that is sold or
otherwise disposed of in compliance with Section 4.11 in a transaction that does
not constitute an Asset Sale and (ii) the exclusion of any assets from the
Collateral pursuant to the second paragraph of Section 3.1 of the Collateral
Agreement shall be automatic and shall not be subject to the
conditions precedent set forth in this Section and the Trustee shall execute and
deliver to the Company the documents and instruments contemplated by the
immediately preceding sentence upon delivery to it of the Officers’ Certificate
specifically describing the Released Collateral as contemplated by clause (2) of
such sentence.
(d) The release
of any Collateral from the Liens of the Security Documents or the release, in
whole or in part, of the Liens created by the Security Documents shall not be
deemed to impair
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the security
under this Indenture in contravention of the provisions hereof if and to the
extent the Collateral is released pursuant to this Indenture or the applicable
Security Documents.
Section
10.04 Sufficiency
of Release.
All
purchasers and grantees of any property or rights purporting to be released
shall be entitled to rely upon any release executed by the Trustee hereunder as
sufficient for the purpose of this Indenture and as constituting a good and
valid release of the property therein described from the Lien of this Indenture
and of the Security Documents.
Section
10.05 Actions
by the Trustee.
Subject
to the provisions of the Security Documents, the Intercreditor Agreement and
this Indenture, the Trustee may in its sole discretion and without the consent
of the Holders take all actions that are deemed necessary or appropriate in
order to (i) enforce any of the terms of the Security Documents and
(ii) to collect and receive all amounts payable in respect of the
obligations of the Company and any Guarantors under the Security Documents and
this Indenture. Subject to the terms of the Intercreditor Agreement,
the Trustee shall have the power to institute and maintain such suits and
proceedings as it may deem expedient in order to prevent any impairment of the
Collateral by any act that may be unlawful or in violation of this Indenture or
the Security Documents, and such suits and proceedings as the Trustee may deem
expedient to preserve or protect its interests and those of the Holders in the
Collateral. No duty beyond that set forth in Section 7.01 is
imposed on the Trustee pursuant to this Section 10.05.
ARTICLE
11
GUARANTEE
Section
11.01 Unconditional
Guarantee.
Each
Guarantor hereby guarantees (subject to the Effectiveness Condition and the
limitations set forth in Section 11.03, but otherwise unconditionally), on a
senior basis jointly and severally, to each Holder of Notes authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
that: (i) the principal of and interest on the Notes will be
promptly paid in full when due, subject to any applicable grace period, whether
at maturity, by acceleration or otherwise, and interest on the overdue
principal, if any, and interest on any interest, to the extent lawful, of the
Notes and all other Note Obligations of the Company to the Holders or the
Trustee hereunder or thereunder will be promptly paid in full or performed, all
in accordance with the terms hereof and thereof; and (ii) in case of any
extension of time of payment or renewal of any Notes or of any such other Note
Obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, subject to any applicable
grace period, whether at stated maturity, by acceleration or
otherwise. Each Guarantor agrees that its obligations hereunder shall
be subject to the Effectiveness Condition and the limitations set forth in
Section 11.03 and otherwise unconditional, irrespective of the validity,
regularity or enforceability of the Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder with respect to
any provisions hereof or thereof, the recovery of any judgment against the
Company, and action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each Guarantor waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that this Note
Guarantee will not be discharged except by complete performance of the Note
Obligations of the Company, and waives any and all defenses available to a
surety (other than payment in full). If any Holder or the Trustee is
required by any court or otherwise to return to the
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Company,
any Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Guarantor, any amount paid by the
Company or any Guarantor to the Trustee or such Holder, this Note Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and
effect. Each Guarantor further agrees that, as between each
Guarantor, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article 6 for the purposes of this Note Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Note Obligations guaranteed hereby, and
(y) in the event of any acceleration of such obligations as provided in
Article 6, such Note Obligations (whether or not due and payable) shall
forthwith become due and payable by each Guarantor for the purpose of this Note
Guarantee.
Section
11.02 Severability.
In case
any provision of this Note Guarantee shall be invalid, illegal or unenforceable,
the validity, legality, and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
Section
11.03 Limitations
on Guarantors’ Liability.
(a) Each
Guarantor, and by its acceptance of Notes, each Holder confirms that it is the
intention of all such parties that the Note Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of any Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar federal or state law. To effectuate the foregoing
intention, the Holders and such Guarantor irrevocably agree that the obligations
of such Guarantor shall be limited to the maximum amount as will, after giving
effect to all other contingent and fixed liabilities of such Guarantor and after
giving effect to any collections from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under this
Article 11, result in the obligations of such Guarantor under the Note Guarantee
not constituting such fraudulent transfer or
conveyance.
(b) Notwithstanding
anything in this Indenture to the contrary, the Note Guarantees (including the
provisions of Section 11.01 of this Indenture) and the obligations of each
Guarantor thereunder are effective and enforceable by the Holders or the Trustee
acting on their behalf only if the Note Guarantees and the related provisions of
the Intercreditor Agreement (including those contained in Section 7 thereof)
would not constitute “Subordinated Debt Financing” within the meaning of the
limitations contained in the CCH II Indentures, CCI Indentures, CCOH Indentures,
CCH I Indentures, CIH Indentures, Charter Holdings Indentures and future
indentures of any Parent that contain substantially identical limitations (the
“Effectiveness
Condition”);
provided, that nothing in this Section 11.03 shall affect the obligations of any
Guarantor under the Security Documents regardless of whether the Effectiveness
Condition is satisfied. The Trustee is not responsible for making any
determination as to the satisfaction of (or failure to satisfy) the
Effectiveness Condition.
Section
11.04 Release of
Guarantor.
(a) In the event
that all of a Guarantor’s obligations with respect to the CCO Credit Facility
and the Related Obligations or other Indebtedness under clause (1) of the
second paragraph of Section 4.10 are released or discharged, in full, for
any reason, including in connection with the repayment in full of all
obligations under the CCO Credit Facility and the Related Obligations or such
other Indebtedness, the Note Guarantee of such Guarantor will also be
automatically released and terminated. Notwithstanding the preceding
sentence, no such release shall be effective against the Trustee or the Holders
if a Default or Event of Default in the payment of principal of, premium, if
any, or interest on the Notes (including in connection with an offer to
purchase) (including as a result of the events described under
84
clause (7)
or (8) of Section 6.01) is in effect or continuing on the date thereof, or would
result therefrom shall have occurred and be continuing under this Indenture as
of the time of such proposed release until such time as (1) such Default or
Event of Default is cured or (2) such release is consented to by the
applicable Holders in accordance with the terms of this
Indenture.
(b) In addition
to release under the circumstances described in the foregoing clause (a), a
Restricted Subsidiary that is a Guarantor shall be released from its obligations
under its Note Guarantee with respect the Notes and its obligations under this
Indenture and the Security Documents:
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(i)
|
in the
event of the Legal Defeasance or Covenant Defeasance or discharge of the
Notes;
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(ii)
|
upon
the dissolution of a Guarantor which is not prohibited by the terms of
this Indenture;
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(iii)
|
in the
event of a sale or other disposition of all or substantially all of the
assets of such Guarantor, by way of merger, consolidation or otherwise, or
a sale or other disposition of all of the Equity Interests of such
Guarantor then held by the Issuers and their Restricted Subsidiaries;
provided, however, that such sale or disposition otherwise complies with
all of the terms of this Indenture, including those of Section 4.11;
or
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(iv)
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if
such Guarantor is designated as an Unrestricted Subsidiary in accordance
with the provisions of this Indenture, upon effectiveness of such
designation or when it first ceases to be a Restricted Subsidiary,
respectively.
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(c) The Trustee
shall deliver an appropriate instrument or instruments evidencing such release
upon receipt of a request by the Company accompanied by an Officers’ Certificate
and an Opinion of Counsel certifying as to the compliance with this Section
11.04.
Section
11.05 Contribution.
In order to
provide for just and equitable contribution among the Guarantors, the Guarantors
agree, inter se, that in the event any payment or distribution is made by any
Guarantor (a “Funding
Guarantor”) under its
Note Guarantee, such Funding Guarantor shall be entitled to a contribution from
all other Guarantors whose Note Guarantees are in effect and enforceable
pursuant to Section 11.03 in a pro rata amount based on the Adjusted Net Assets
(as defined below) of each Guarantor (including the Funding Guarantor) for all
payments, damages and expenses incurred by that Funding Guarantor in discharging
the Company’s obligations with respect to the Notes or any other Guarantor’s
obligations with respect to its Note Guarantee. “Adjusted
Net Assets” of such
Guarantor at any date shall mean the lesser of the amount by which (x) the
fair value of the property of such Guarantor exceeds the total amount of
liabilities, including contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date), but
excluding liabilities under the Note Guarantee of such Guarantor at such date,
and (y) the present fair salable value of the assets of such Guarantor at
such date exceeds the amount that will be required to pay the probable liability
of such Guarantor on its debts (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), excluding debt in
respect of the Note Guarantee of such Guarantor, as they become absolute and
matured.
Section
11.06 Waiver
of Subrogation.
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Until all
obligations are paid in full, each Guarantor irrevocably waives any claims or
other rights which it may now or hereafter acquire against the Company that
arise from the existence, payment, performance or enforcement of such
Guarantor’s obligations under its Note Guarantee and this Indenture, including
any right of subrogation, reimbursement, exoneration, indemnification, and any
right to participate in any claim or remedy of any Holder against the Company,
whether or not such claim, remedy or right arises in equity, or under contract,
statute or common law, including the right to take or receive from the Company,
directly or indirectly, in cash or other property or by setoff or in any other
manner, payment or security on account of such claim or other
rights. If any amount shall be paid to any Guarantor in violation of
the preceding sentence and the Notes shall not have been paid in full, such
amount shall have been deemed to have been paid to such Guarantor for the
benefit of, and held in trust for the benefit of, the Holders, and shall
forthwith be paid to the Trustee for the benefit of such Holders to be credited
and applied upon the Notes, whether matured or unmatured, in accordance with the
terms of this Indenture. Each Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this Section
11.06 is knowingly made in contemplation of such benefits.
Section
11.07 Execution
of Note Guarantee.
To evidence
its Note Guarantee to the Holders set forth in this Article 11, each
Guarantor agrees to execute the Note Guarantee which shall be endorsed on each
Note ordered to be authenticated and delivered by the Trustee. Each
Guarantor agrees that its Note Guarantee set forth in this Article 11 shall
remain in full force and effect notwithstanding any failure to endorse on each
Note a notation of such Note Guarantee. Each such Note Guarantee
shall be signed on behalf of each Guarantor by one of its authorized Officers
prior to the authentication of the Note on which it is endorsed, and the
delivery of such Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of such Note Guarantee on behalf of
such Guarantor. Such signatures upon the Note Guarantee may be by
manual or facsimile signature of such Officer and may be imprinted or otherwise
reproduced on the Note Guarantee, and in case any such Officer who shall have
signed the Note Guarantee shall cease to be such Officer before the Note on
which such Note Guarantee is endorsed shall have been authenticated and
delivered by the Trustee or disposed of by the Company, such Note nevertheless
may be authenticated and delivered or disposed of as though the Person who
signed the Note Guarantee had not ceased to be such Officer of the
Guarantor.
Section
11.08 Waiver of Stay, Extension or Usury
Laws.
Each
Guarantor covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive it from performing its Note Guarantee as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) each such Guarantor hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE
12
MISCELLANEOUS
Section
12.01 Trust
Indenture Act Controls.
86
If any
provision of this Indenture limits, qualifies or conflicts with the duties
imposed by TIA § 318(c), the imposed duties shall control.
Section
12.02 Notices.
Any notice
or communication by the Issuers or the Trustee to the others is duly given if in
writing and delivered in Person or mailed by first class mail (registered or
certified, return receipt requested), telex, telecopier or overnight air courier
guaranteeing next day delivery, to the others’ address:
If to the
Issuers or any Guarantor:
Charter
Communications Operating, LLC
Charter
Communications Operating Capital Corp.
c/o
Charter Communications, Inc.
12405
Powerscourt Drive, Suite 100
St.
Louis, Missouri 63131
Telecopier
No.: (314) 965-8793
Attention: Secretary
With a
copy to:
Gibson,
Dunn & Crutcher LLP
200 Park
Avenue
Suite
4700
New York,
New York 10166
Telecopier
No.: (212) 351-5276
Attention: Joerg
Esdorn
If to the
Trustee:
Wilmington
Trust Company
Rodney
Square North
1100 N.
Market Street
Wilmington,
DE 19890-1615
Telecopier
No.: (302) 636-4145
Attention:
Corporate Capital Market Services
The
Issuers or the Trustee, by notice to the other, may designate additional or
different addresses for subsequent notices or communications.
All
notices and communications (other than those sent to Holders) shall be deemed to
have been duly given: at the time delivered by hand, if personally delivered;
five Business Days after being deposited in the mail, postage prepaid, if
mailed; when answered back, if telexed; when receipt acknowledged, if
telecopied; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
Any
notice or communication to a Holder shall be mailed by first class mail,
certified or registered, return receipt requested, or by overnight air courier
guaranteeing next day delivery to its address shown on the register kept by the
Registrar. Any notice or communication shall also be so mailed
87
to any
Person described in TIA § 313(c), to the extent required by the
TIA. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other
Holders.
If a
notice or communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives
it.
If the
Issuers mail a notice or communication to Holders, it shall mail a copy to the
Trustee and each Agent at the same time.
Section
12.03 Communication
by Holders with Other Holders.
Holders
may communicate pursuant to TIA § 312(b) with other Holders with respect to
their rights under this Indenture or the Notes. The Issuers, the
Trustee, the Registrar and anyone else shall have the protection of TIA §
312(c).
Section
12.04 Certificate
and Opinion as to Conditions Precedent.
Upon any
request or application by the Issuers to the Trustee to take any action under
this Indenture, the Issuers shall furnish to the Trustee:
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(i)
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an
Officers’ Certificate in form and substance reasonably satisfactory to the
Trustee (which shall include the statements set forth in Section 12.05)
stating that, in the opinion of the signers, all conditions precedent and
covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied;
and
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(ii)
|
an
Opinion of Counsel in form and substance reasonably satisfactory to the
Trustee (which shall include the statements set forth in Section 12.05)
stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been
satisfied.
|
Section
12.05 Statements
Required in Certificate or Opinion.
Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA § 314(a)(4)) shall comply with the provisions of TIA § 314(e) and shall
include:
(i) a
statement that the Person making such certificate or opinion has read such
covenant or condition;
(ii) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based;
(iii) a
statement that, in the opinion of such Person, he or she has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(iv) a
statement as to whether or not, in the opinion of such Person, such condition or
covenant has been satisfied.
88
Section
12.06 Rules
by Trustee and Agents.
The
Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
Section 12.07 No
Personal Liability of Directors, Officers, Employees, Managers, Members and
Stockholders.
No
director, officer, employee, incorporator, manager, member or stockholder of the
Issuers or the Guarantors, or director, officer, employee, incorporator or
stockholder of CCI as manager of the Company and certain of the Guarantors, as
such, shall have any liability for any obligations of the Issuers or the
Guarantors under the Notes or this Indenture, or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for
issuance of the Notes and the Note Guarantees.
Section
12.08 Governing
Law.
THE
INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS
INDENTURE AND THE NOTES AND ANY NOTE GUARANTEES WITHOUT GIVING EFFECT TO THE
APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. EACH OF
THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE OR THE NOTES OR ANY NOTE GUARANTEE.
Section
12.09 No
Adverse Interpretation of Other Agreements.
This
Indenture may not be used to interpret any other indenture, loan or debt
agreement of the Issuers, their Parents or their Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section
12.10 Successors.
All
agreements of the Issuers in this Indenture and the Notes, as the case may be,
shall bind their respective successors. All agreements of the Trustee
in this Indenture shall bind its successors.
Section
12.11 Severability.
In case
any provision in this Indenture or the Notes, as the case may be, shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired
thereby.
Section
12.12 Counterpart
Originals.
The
parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
89
Section
12.13 Table
of Contents, Headings, etc.
The Table
of Contents, Cross-Reference Table and Headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part of this Indenture and shall in no way modify or restrict
any of the terms, conditions or provisions.
ARTICLE
13
SATISFACTION
AND DISCHARGE
Section
13.01 Satisfaction
and Discharge of Indenture.
This
Indenture shall cease to be of further effect (except as to any surviving rights
of registration of transfer or exchange of Notes herein expressly provided for),
and the Trustee, on demand of and at the expense of the Issuers, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when
(1) either
(a) all Notes
theretofore authenticated and delivered (other than (i) Notes which have
been destroyed, lost or stolen and which have been replaced or paid as provided
in Section 2.07 and (ii) Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Issuers and thereafter
repaid to the Issuers or discharged from such trust,) have been delivered to the
Trustee for cancellation; or
(b) all such
Notes not theretofore delivered to the Trustee for
cancellation
(i) have become
due and payable, or
(ii) will become
due and payable at their Stated Maturity within one year,
or
(iii) are to be
called for redemption within one year pursuant to irrevocable instructions
validly delivered by the Issuers to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Issuers,
and the
Issuers, in the case of (b)(i), (ii) or (iii) above, have deposited or caused to
be deposited with the Trustee as trust funds in trust for the purpose an amount
sufficient to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for principal (and
premium, if any) and interest to the date of such deposit (in the case of Notes
which have become due and payable) or to the maturity or redemption thereof, as
the case may be;
(2) the Issuers
have paid or caused to be paid all other sums payable hereunder by the Issuers;
and
90
(3) each of the
Issuers has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of this Indenture have been complied
with.
Notwithstanding
the satisfaction and discharge of this Indenture pursuant to this Article 13,
the obligations of the Issuers to the Trustee under Section 7.07, and, if money
shall have been deposited with the Trustee pursuant to subclause (b) of clause
(1) of this Section, the obligations of the Trustee under Section 13.02 shall
survive.
Section
13.02 Application
of Trust Money.
All money
deposited with the Trustee pursuant to Section 13.01 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has been deposited
with the Trustee.
[Signatures
on following page]
91
SIGNATURES
Dated as
of March 19, 2008
CHARTER
COMMUNICATIONS OPERATING, LLC, as an Issuer
By: /s/ Eloise
Schmitz
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Name:
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Eloise
Schmitz
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Title:
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Senior
Vice President
|
CHARTER
COMMUNICATIONS OPERATING CAPITAL CORP., as an Issuer
By: /s/ Eloise
Schmitz
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Name:
|
Eloise
Schmitz
|
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Title:
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Senior
Vice President
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CCO
HOLDINGS, LLC
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AMERICAN
CABLE ENTERTAINMENT COMPANY, LLC
|
CABLE EQUITIES COLORADO, LLC
CCO PURCHASING, LLC
CHARTER ADVERTISING OF SAINT LOUIS, LLC
CHARTER CABLE OPERATING COMPANY, LLC
CHARTER CABLE PARTNERS, LLC
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CHARTER
COMMUNICATIONS ENTERTAINMENT I, LLC
|
|
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CHARTER
COMMUNICATIONS ENTERTAINMENT II,
LLC
|
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|
CHARTER
COMMUNICATIONS ENTERTAINMENT, LLC
|
CHARTER COMMUNICATIONS PROPERTIES LLC
CHARTER COMMUNICATIONS, LLC
CHARTER DISTRIBUTION, LLC
CHARTER FIBERLINK, LLC
CHARTER HELICON, LLC
CHARTER RMG, LLC
HPI ACQUISITION CO. LLC
INTERLINK COMMUNICATIONS PARTNERS, LLC
LONG BEACH, LLC
MARCUS CABLE ASSOCIATES, L.L.C.
MARCUS CABLE OF ALABAMA, L.L.C.
PEACHTREE CABLE TV, LLC
RIFKIN ACQUISITION PARTNERS, LLC
TENNESSEE, LLC
VISTA BROADBAND COMMUNICATIONS, LLC
|
|
CABLE
EQUITIES OF COLORADO MANAGEMENT
CORP.
|
MARCUS CABLE, INC.
ROBIN MEDIA GROUP, INC.
HELICON PARTNERS I, L.P.
PEACHTREE CABLE TV, L.P.
THE HELICON GROUP, L.P.
CCO NR HOLDINGS, LLC
CHARTER COMMUNICATIONS VENTURES, LLC
CC SYSTEMS, LLC
CC FIBERLINK, LLC
CHARTER FIBERLINK – ALABAMA, LLC
CHARTER FIBERLINK – ILLINOIS, LLC
CHARTER FIBERLINK – KENTUCKY, LLC
CHARTER FIBERLINK – MICHIGAN, LLC
CHARTER FIBERLINK –MISSOURI, LLC
CHARTER FIBERLINK TX-CCO, LLC
CHARTER COMMUNICATIONS VII, LLC
FALCON CABLE COMMUNICATIONS, LLC
FALCON COMMUNITY CABLE, L.P.
FALCON VIDEO COMMUNICATIONS, L.P.
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|
FALCON
CABLE MEDIA, A CALIFORNIA LIMITED
PARTNERSHIP
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|
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FALCON
COMMUNITY VENTURES I LIMITED
PARTNERSHIP
|
FALCON CABLE SYSTEMS COMPANY II, L.P.
|
|
FALCON
CABLEVISION, A CALIFORNIA LIMITED
PARTNERSHIP
|
|
|
FALCON
TELECABLE, A CALIFORNIA LIMITED
PARTNERSHIP
|
FALCON FIRST, INC.
FALCON FIRST CABLE OF NEW YORK, INC.
FALCON FIRST CABLE OF THE SOUTHEAST, INC.
ATHENS CABLEVISION INC.
DALTON CABLEVISION INC.
PLATTSBURGH CABLEVISION INC.
SCOTTSBORO TV CABLE, INC.
AUSABLE CABLE TV, INC.
CHARTER FIBERLINK AR-CCVII, LLC
CHARTER FIBERLINK AZ-CCVII, LLC
CHARTER FIBERLINK ID-CCVII, LLC
CHARTER FIBERLINK NV-CCVII, LLC
CHARTER FIBERLINK OK-CCVII, LLC
CHARTER FIBERLINK OR-CCVII, LLC
CHARTER FIBERLINK UT-CCVII, LLC
CHARTER FIBERLINK WA-CCVII, LLC
CHARTER COMMUNICATIONS VI, LLC
CC 10, LLC
CC VI OPERATING COMPANY, LLC
TIOGA CABLE COMPANY, INC.
CHARTER FIBERLINK MS-CCVI, LLC
2
CHARTER FIBERLINK CA-CCO, LLC
CHARTER FIBERLINK KS-CCO, LLC
CHARTER FIBERLINK MA-CCO, LLC
CHARTER FIBERLINK NC-CCO, LLC
CHARTER FIBERLINK NM-CCO, LLC
CHARTER FIBERLINK OH-CCO, LLC
CHARTER FIBERLINK SC-CCO, LLC
CHARTER FIBERLINK VA-CCO, LLC
CHARTER FIBERLINK VT-CCO, LLC
CC V HOLDINGS, LLC
CC VIII, LLC
CC VIII HOLDINGS, LLC
CC VIII OPERATING, LLC
CC MICHIGAN, LLC
CHARTER COMMUNICATIONS V, LLC
CHARTER TELEPHONE OF MINNESOTA, LLC
HOMETOWN T.V., INC.
MIDWEST CABLE COMMUNICATIONS, INC.
CHARTER VIDEO ELECTRONICS, INC.
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|
CHARTER
COMMUNICATIONS ENTERTAINMENT I, DST
|
RENAISSANCE MEDIA, LLC
CC VIII LEASING OF WISCONSIN, LLC
CHARTER CABLE LEASING OF WISCONSIN, LLC
|
|
as
Guarantors
|
|
|
By:
|
/s/ Eloise
Schmitz
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|
|
Name:
|
Eloise
Schmitz
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|
Title:
|
Senior
Vice President
|
3
WILMINGTON
TRUST COMPANY,
as
Trustee
By: /s/ James J.
McGinley
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|
Name:
James J. McGinley
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Title:
Authorized Signer
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4
EXHIBIT
A
[Face of
Note]
CUSIP NO.
[_________]
10.875%
Senior Second Lien Notes due 2014
No.
$[________________]
CHARTER
COMMUNICATIONS OPERATING, LLC
and
CHARTER
COMMUNICATIONS OPERATING CAPITAL CORP.
promise
to pay
to _________________________________________________________,
or
registered assigns,
the
principal amount of _____________________________________________
Dollars
($______________________________)
on September 15, 2014.
Interest
Payment Dates: March 15 and September 15
Record
Dates: March 1 and September 1
Subject
to restrictions set forth in this Note.
A-1
IN
WITNESS WHEREOF, each of Charter Communications Operating, LLC and Charter
Communications Operating Capital Corp. has caused this instrument to be duly
executed.
Dated: [ ]
CHARTER COMMUNICATIONS OPERATING,
LLC
By: ________________________________________
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|
Name:
|
|
|
Title:
|
By: ________________________________________
|
|
Name:
|
|
|
Title:
|
CHARTER COMMUNICATIONS OPERATING
CAPITAL CORP.
By: ________________________________________
|
|
Name:
|
|
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Title:
|
By: ________________________________________
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Name:
|
|
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Title:
|
This is
one of the Notes referred to
in the
within-mentioned Indenture:
WILMINGTON
TRUST COMPANY,
as
Trustee
|
By:
|
__________________________________
|
|
|
Authorized
Signatory
|
A-2
[Back of
Note]
10.875%
Senior Second Lien Notes due 2014
THE
HOLDER OF THIS NOTE BY ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS
THAT IF IT IS A PURCHASER IN A SALE THAT OCCURS OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF REGULATION S OF THE SECURITIES ACT, IT ACKNOWLEDGES THAT, UNTIL
EXPIRATION OF THE “40-DAY DISTRIBUTION COMPLIANCE PERIOD” WITHIN THE MEANING OF
RULE 903 OF REGULATION S, ANY OFFER OR SALE OF THIS NOTE SHALL NOT BE MADE BY IT
TO A U.S. PERSON TO OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON WITHIN THE
MEANING OF RULE 902(k) UNDER THE SECURITIES ACT.
UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OR TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.1
TRANSFERS
OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART,
TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S
NOMINEE.2
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY
BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
1 This paragraph
should be included only if the Notes are issued in global form.
2 This paragraph
should be included only if the Notes are issued in global form.
A-3
TRANSFER
SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”)
WHICH IS ONE YEAR, OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(D)
UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER, AFTER THE LATER
OF THE ORIGINAL ISSUE DATE HEREOF, AND THE LAST DATE ON WHICH THE ISSUERS OR ANY
AFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY) OR SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY LAW, ONLY (A)
TO THE ISSUERS OR ANY OF THEIR SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN “ACCREDITED
INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS AN “INSTITUTIONAL ACCREDITED INVESTOR” ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE
SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS’ AND THE TRUSTEE’S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
THIS
NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT, FOR PURPOSES OF SECTIONS 1272,
1273, AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED FROM TIME TO
TIME. CHARTER COMMUNICATIONS HOLDING COMPANY, LLC (THE “COMPANY”) WILL,
BEGINNING NO LATER THAN TEN (10) DAYS AFTER THE ISSUE DATE, PROMPTLY PROVIDE TO
HOLDERS OF NOTES, UPON WRITTEN REQUEST, THE ISSUE PRICE, THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY WITH RESPECT TO THE NOTES. ANY
SUCH WRITTEN REQUEST SHOULD BE SENT TO THE CHIEF FINANCIAL OFFICER OR GENERAL
COUNSEL OF THE COMPANY AT CHARTER PLAZA, 12405 POWERSCOURT DRIVE, ST. LOUIS,
MISSOURI 63131.
A-4
Capitalized
terms used herein shall have the meanings assigned to them in the Indenture
referred to below unless otherwise indicated.
1. INTEREST. Charter
Communications Operating, LLC, a Delaware limited liability company (the “Company”), and Charter
Communications Operating Capital Corp., a Delaware corporation (“Capital Corp” and, together
with the Company, the “Issuers”), promise to pay
interest on the principal amount of this Note at the rate of 10.875% per annum
from the Issue Date until maturity. The Issuers will pay interest
semi-annually in arrears on March 15 and September 15 of each year (each an
“Interest Payment
Date”), or if any such day is not a Business Day, on the next succeeding
Business Day. Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face and the next succeeding Interest Payment Date, interest shall accrue
from such next succeeding Interest Payment Date; provided, further, that the
first Interest Payment Date shall be September 15, 2008. The Issuers
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 2% per annum in excess of the rate then in effect; they
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
2. METHOD
OF PAYMENT. The Issuers shall pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders at the close of
business on the March 1 or September 1 next preceding the
Interest Payment Date, even if such Notes are canceled after such record date
and on or before such Interest Payment Date, except as provided in Section 2.12
of the Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium, if any, and interest at the office or
agency of the Issuers maintained for such purpose within or without the City and
State of New York, or, at the option of the Issuers, payment of interest may be
made by check mailed to the Holders at their addresses set forth in the register
of Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest and premium on
all Global Notes and all other Notes the Holders of which shall have provided
wire transfer instructions to the Issuers or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private
debts.
3. PAYING
AGENT AND REGISTRAR. Initially, Wilmington Trust Company, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The
Issuers may change any Paying Agent or Registrar without notice to any
Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The
Issuers issued the Notes under an Indenture dated as of March 19, 2008 (the
“Indenture”) among
the Issuers, the guarantors party thereto and the Trustee. The Notes
arise out of and are made in accordance with the Indenture, including the terms
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (15 U.S. Code §§
77aaa-77bbbb). The Holders are referred to the Indenture and such Act
for a complete statement of such terms.
5. OPTIONAL
REDEMPTION.
(a) The
Issuers may, at any time and from time to time, prior to March 15, 2012, at
their option, redeem the outstanding Notes, in whole or in part, at a redemption
price equal to
A-5
100% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
redemption date, plus the Make-Whole Premium.
(b) At
any time prior to March 15, 2011, the Issuers may, on any one or more occasions,
redeem up to 35% of the original aggregate principal amount of the Notes issued
on the Issue Date (plus any Additional Notes actually issued) at a redemption
price of 110.875% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the redemption date, with the net cash proceeds of one or
more Equity Offerings; provided, however, that:
(i) at
least 65% of the original aggregate principal amount of the Notes issued on the
Issue Date (plus any Additional Notes actually issued) remains outstanding
immediately after the occurrence of such redemption (excluding Notes held by the
Issuers and their Subsidiaries); and
(ii) the
redemption must occur within 60 days of the date of the closing of such Equity
Offering.
(c) On
or after March 15, 2012, the Issuers shall have the option to redeem the Notes,
in whole or in part, at the redemption prices (expressed as percentages of
principal amount of the Notes) set forth below plus accrued and unpaid interest,
if any, to the applicable redemption date, if redeemed during the twelve-month
period beginning on March 15 of the years indicated below:
|
Year
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Percentage
|
|||
|
2012
|
105.438 | % | ||
|
2013
|
102.719 | % | ||
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2014
|
100.000 | % | ||
6. MANDATORY
REDEMPTION. Without prejudice to the Issuers’ obligations under
Paragraph 7 below, the Issuers shall not be required to make mandatory
redemption payments with respect to the Notes.
7. REPURCHASE
AT OPTION OF HOLDER.
(a) If there is
a Change of Control, the Issuers shall make an offer (a “Change
of Control Offer”) to
repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in
excess thereof) of each Holder’s Notes at a purchase price equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest thereon, if
any, to the date of purchase (the “Change
of Control Payment”). Within
10 days following any Change of Control, the Issuers shall mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Notes on the Change of Control Payment Date
specified in such notice, pursuant to the procedures required by the Indenture
and described in such notice.
(b) If the
Company or a Restricted Subsidiary thereof consummates any Asset Sale, when the
aggregate amount of Excess Proceeds exceeds $25.0 million, the Issuers shall
commence an offer (an “Asset
Sale Offer”) pursuant
to Section 4.11 of the Indenture to all Holders and all holders of other
Indebtedness that is of equal priority with the Notes containing provisions
requiring offers to purchase or redeem with the proceeds of sales of assets to
purchase the maximum principal amount of Notes and such other Indebtedness of
equal priority that may be purchased out of the Excess Proceeds (which amount
includes the entire amount of the Net Proceeds). The offer price in
any Asset Sale Offer will be payable in
A-6
cash and
equal to 100% of principal amount plus accrued and unpaid interest, if any, to
the date of purchase. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by the Indenture. If the
aggregate principal amount of Notes and such other Indebtedness of equal
priority tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other Indebtedness of
equal priority to be purchased on a pro
rata basis. Upon
completion of each Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero. Holders that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Issuers prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
“Option of Holder to Elect Purchase” on the reverse of the
Notes.
8. DENOMINATIONS,
TRANSFER, EXCHANGE. The Notes are in registered form without coupons
in denominations of $2,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Issuers may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Issuers need not exchange or
register the transfer of any Note or portion of a Note selected for redemption,
except for the unredeemed portion of any Note being redeemed in
part. Also, the Issuers need not exchange or register the transfer of
any Notes for a period of 15 days before a selection of Notes to be redeemed or
during the period between a record date and the corresponding Interest Payment
Date.
9. PERSONS
DEEMED OWNERS. The registered Holder may be treated as its owner for
all purposes.
10. AMENDMENT,
SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture,
the Notes, the Note Guarantees or the Security Documents may be amended or
supplemented with the consent of the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes (including consents obtained in
connection with a purchase of, or a tender offer or exchange offer for, Notes)
and, subject to Sections 6.04 and 6.07 of the Indenture, any existing Default or
compliance with any provision of the Indenture, the Notes (other than any
provision relating to the right of any Holder to bring suit for the enforcement
of any payment of principal, premium, if any, and interest on such Note, on or
after the scheduled due dates expressed in the Notes), the Note Guarantees or
the Security Documents may be waived with the consent of the Holders of a
majority in aggregate principal amount of the then outstanding Notes (including
consents obtained in connection with a purchase of, or a tender offer or
exchange offer for, Notes). Without the consent of any Holder, the
Issuers and the Trustee may amend or supplement the Indenture, the Notes, the
Note Guarantees or the Security Documents to cure any ambiguity, defect or
inconsistency; to provide for uncertificated Notes in addition to or in place of
certificated Notes; to provide for or confirm the issuance of Additional Notes;
to provide for the assumption of the Issuers’ or any Guarantor’s obligations to
Holders in the case of a merger or consolidation or sale of all or substantially
all of the assets of such Issuer or any Guarantor pursuant to Article 5 of the
Indenture; to make any change that would provide any additional rights or
benefits to the Holders or that does not adversely affect the legal rights under
the Indenture of any Holder; to, if applicable, comply with requirements of the
SEC in order to effect or maintain the qualification of the Indenture under the
TIA or otherwise as necessary to comply with applicable law; to release
Collateral or a Guarantor, as permitted under the terms of the Indenture or the
Security Documents; to add any additional assets as Collateral; or to add a
Guarantor.
11. DEFAULTS
AND REMEDIES. Each of the following is an Event of Default: (i)
default for 30 consecutive days in the payment when due of interest on the
Notes, (ii) default in payment when due of the principal of or premium, if any,
on the Notes, (iii) failure by the Company or any of its Restricted Subsidiaries
to comply with Sections 4.16 and 5.01 of the Indenture, (iv) failure by
A-7
the
Company or any of its Restricted Subsidiaries for 30 consecutive days after
written notice thereof has been given to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% of the aggregate
principal amount of the Notes outstanding to comply with any of its other
covenants or agreements in the Indenture, (v) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries), whether such Indebtedness or
guarantee now exists or is created after the date of the Indenture, if that
default: (a) is caused by a failure to pay at final stated maturity
the principal amount of such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a “Payment Default”); or (b)
results in the acceleration of such Indebtedness prior to its express maturity,
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$100 million or more, (vi) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments which are non-appealable aggregating in
excess of $100 million (net of applicable insurance which has not been denied in
writing by the insurer), which judgments are not paid, discharged or stayed for
a period of 60 days, (vii) certain events of bankruptcy or insolvency with
respect to the Company or any of its Significant Subsidiaries, (viii) any Note
Guarantee of any Guarantor that, taken together with all other such Guarantors,
would be a Significant Subsidiary ceases to be in full force and effect (other
than in accordance with the terms of the Indenture and such Note Guarantee) or
is declared null and void and unenforceable or found to be invalid or any
Guarantor denies its liability under its Note Guarantee with respect to the
Notes (other than, in each case, by reason of the Effectiveness Condition not
being satisfied or by reason of release of a Guarantor from its Note Guarantee
in accordance with the terms of the Indenture and such Note Guarantee), and (ix)
so long as the Security Documents securing the Notes have not otherwise been
terminated in accordance with their terms or the Collateral as a whole has not
otherwise been released from the Lien of the Security Documents securing the
Notes in accordance with the terms thereof, (a) any default by the Company or
any Subsidiary in the performance of its obligations under the Security
Documents securing the Notes (after the lapse of any applicable grace periods)
or the Indenture which adversely affects the enforceability, validity,
perfection or priority of the Trustee’s Lien on the Collateral or which
adversely affects the condition or value of the Collateral, taken as a whole, in
any material respect, (b) repudiation or disaffirmation by the Company or any
Subsidiary of its respective obligations under the Security Documents securing
the Notes and (c) the determination in a judicial proceeding that the Security
Documents securing the Notes are unenforceable or invalid against the Company or
any Subsidiary for any reason. In the case of an Event of Default
arising from certain events of bankruptcy or insolvency with respect to the
Company, all outstanding Notes will become due and payable without further
action or notice. If any other Event of Default occurs and is
continuing, the Trustee by notice to the Issuers or the Holders of at least 25%
in principal amount of the then outstanding Notes by notice to the Issuers and
the Trustee may declare all the Notes to be due and payable. Holders
may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in
aggregate principal amount of the then outstanding Notes may direct the Trustee
in its exercise of any trust or power. The Trustee may withhold from
Holders notice of any continuing Default or Event of Default (except a Default
or Event of Default relating to the payment of principal, premium, if any, or
interest) if it determines that withholding notice is in their interest, and in
such a case the Trustee will note be liable for the absence of
action. The Holders of a majority in aggregate principal amount of
the Notes then outstanding by notice to the Trustee may on behalf of the Holders
of all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, or premium, if any, on, the
Notes. The Issuers are required to deliver to the Trustee annually a
statement regarding compliance with the Indenture. Upon becoming
aware of any Default or Event of Default, the Issuers are required to deliver to
the Trustee a statement specifying such Default or Event of
Default.
A-8
12. TRUSTEE
DEALINGS WITH ISSUERS. The Trustee in its individual or any other
capacity may become the owner or pledgee of Notes and may otherwise deal with
the Issuers or any Affiliate of the Issuers with the same rights it would have
if it were not Trustee.
13. NO
RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator,
manager, member or stockholder of the Issuers or the Guarantors, director,
officer or employee incorporator or stockholder of CCI as manager of the Company
and certain of the Guarantors, as such, shall not have any liability for any
obligations of the Issuers or the Guarantors under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases
all such liability. The waiver and release are part of the
consideration for the issuance of the Notes and the Note
Guarantees.
14. GOVERNING
LAW. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS NOTE AND THE INDENTURE WITHOUT GIVING EFFECT TO THE
APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. EACH OF
THE PARTIES HERETO AND THE HOLDERS AGREE TO SUBMIT TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS NOTE.
15. AUTHENTICATION. This
Note shall not be valid until authenticated by the manual signature of the
Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary
abbreviations may be used in the name of a Holder or an assignee, such as: TEN
COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
17. CUSIP
NUMBERS. Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuers have caused CUSIP
numbers to be printed on the Notes and the Trustee may use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
18. SECURITY. THE
COMPANY HAS GRANTED, AND CERTAIN OTHER ENTITIES MAY GRANT IN THE FUTURE, LIENS
ON CERTAIN OF THEIR ASSETS TO THE TRUSTEE PURSUANT TO THE SECURITY
DOCUMENTS. THE LIENS ARE SUBJECT TO RELEASE UNDER CERTAIN CONDITIONS
DESCRIBED IN THE INDENTURE AND THE SECURITY DOCUMENTS. THE COMPANY
WILL EXECUTE AND COMPLY WITH, AND CAUSE EACH OF ITS SUBSIDIARIES TO EXECUTE AND
COMPLY WITH, THE TERMS OF EACH SECURITY DOCUMENT TO WHICH SUCH PERSON IS, OR IS
REQUIRED TO BE, A PARTY.
19. OTHER
REFERENCED AGREEMENTS. PURSUANT TO SECTION 7.12 OF THE INDENTURE, THE
TRUSTEE ON BEHALF OF EACH PRESENT AND FUTURE HOLDER IS AUTHORIZED TO ENTER INTO
THE INTERCREDITOR AGREEMENT. EACH HOLDER IN SUCH CAPACITY
ACKNOWLEDGES AND AGREES, ALTHOUGH NONE OF THE ISSUERS OR ANY OF THEIR AFFILIATES
MAY BE A PARTY TO OR BOUND THEREBY, THAT SUCH HOLDER WILL BE BOUND BY ANY SUCH
AGREEMENTS, AND THAT ANY SUCH AGREEMENTS WILL BE DIRECTLY ENFORCEABLE AGAINST
SUCH HOLDER IN ITS CAPACITY AS SUCH. NONE OF THE ISSUERS OR ANY OF
THEIR AFFILIATES WILL BE A PARTY
A-9
TO, BOUND
BY, OR A BENEFICIARY OF, ANY OF THE PROVISIONS OF THE INTERCREDITOR AGREEMENT,
NOR WILL THE PARTIES TO THE INTERCREDITOR AGREEMENT HAVE ANY CONTRACTUAL RIGHT
OF ENFORCEMENT THEREUNDER AGAINST THE ISSUERS OR ANY
GUARANTOR. COPIES OF THE INTERCREDITOR AGREEMENT WILL BE AVAILABLE
FROM THE TRUSTEE UPON REQUEST.
The
Issuers will furnish to any Holder upon written request and without charge a
copy of the Indenture and the Security Documents. Requests may be
made to:
Charter
Communications Operating, LLC
Charter
Communications Operating Capital Corp.
c/o
Charter Communications, Inc.
12405
Powerscourt Drive
Suite
100
St.
Louis, Missouri 63131
Attention: Secretary
Telecopier
No.: (314) 965-8793
A-10
ASSIGNMENT
FORM
To assign this Note,
fill in the form below:
(i) or
(we) assign and transfer this Note
to: _________________________________________________
(Insert assignee’s legal
name)
__________________________________________________________________________________
(Insert
assignee’s soc. sec. or tax I.D. no.)
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
Print or type assignee’s name, address and zip code)
Print or type assignee’s name, address and zip code)
and
irrevocably appoint ________________________________________________ to
transfer this Note on the books of the Issuers. The agent
may substitute another to act for him.
Date:______________________________
Your
Signature: _________________________________________________
(Sign exactly as your name appears on
the face of this Note)
Signature
Guarantee*: _____________________________________________
*
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-11
OPTION OF
HOLDER TO ELECT PURCHASE
If you
want to elect to have this Note purchased by the Issuers pursuant to Section
4.11 or 4.16 of the Indenture, check the appropriate box below:
o Section
4.11 o Section 4.16
If you
want to elect to have only part of the Note purchased by the Issuers pursuant to
Section 4.11 or Section 4.16 of the Indenture, state the amount you elect to
have purchased:
$
_______________________
Date:____________________
Your
Signature: __________________________________________________
(Sign exactly as your name appears on
the face of this Note)
Tax
Identification
No.: _____________________________________________
Signature
Guarantee*: _____________________________________________
*
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-12
SCHEDULE
OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE3
The
following exchanges of a part of this Global Note for an interest in another
Global Note or for a Definitive Note, or exchanges of a part of another Global
Note or Definitive Note for an interest in this Global Note, have been
made:
|
Date
of
Exchange
|
Amount
of decrease in Principal Amount of this Global Note
|
Amount
of increase in Principal Amount of this Global Note
|
Principal
Amount of this Global Note following such decrease (or
increase)
|
Signature
of authorized officer of Trustee or Note
Custodian
|
A-13
NOTE
GUARANTEE
For value
received, each of the undersigned hereby guarantees (subject to the
Effectiveness Condition and the limitations in Section 11.03 of the Indenture
but otherwise unconditionally), on a senior basis jointly and severally with
each other guarantor, to the Holder of this Note the cash payments in United
States dollars of principal of, premium, if any, and interest on this Note in
the amounts and at the times when due and interest on the overdue principal,
premium, if any, and interest, if any, of this Note, if lawful, and the payment
or performance of all other Note Obligations of the Company under the Indenture
or this Note, to the Holder of this Note and the Trustee, in accordance with the
Note, Article 11 of the Indenture and this Note Guarantee, including the
terms stated in the Note, the Indenture and this Note
Guarantee. Capitalized terms used but not defined herein shall have
the meanings ascribed to them in the Indenture dated as of March 19, 2008 among
Charter Communications Operating, LLC, a Delaware limited liability company,
Charter Communications Operating Capital Corp., a Delaware corporation, the
guarantors party thereto and Wilmington Trust Company, as trustee (as amended or
supplemented, the “Indenture”).
THIS NOTE
GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY. Each Guarantor hereby agrees
to submit to the jurisdiction of the courts of the State of New York in any
action or proceeding arising out of or relating to this Note
Guarantee.
This Note
Guarantee is subject to release upon the terms set forth in the
Indenture.
|
|
[GUARANTORS]
|
By:
___________________________________________
Name:
Title:
A-14
EXHIBIT
B
[FORM OF
CERTIFICATE TO BE DELIVERED
IN
CONNECTION WITH TRANSFERS PURSUANT TO RULE 144A]
Charter
Communications Operating, LLC
Charter
Communications Operating Capital Corp.
c/o
Charter Communications, Inc.
12405
Powerscourt Drive, Suite 100
St.
Louis, Missouri 63131
Wilmington
Trust Company
Rodney
Square North
1100 N.
Market Street
Wilmington,
DE 19890-1615
Attention:
Corporate Capital Market Services
|
|
Re:
|
10.875%
Senior Second Lien Notes due 2014
|
Ladies
and Gentlemen:
In
connection with our proposed sale of $________ aggregate principal amount of the
Notes, we hereby certify that such transfer is being effected pursuant to and in
accordance with Rule 144A (“Rule 144A”) under the United
States Securities Act of 1933, as amended (the “Securities Act”), and,
accordingly, we hereby further certify that the Notes are being transferred to a
person that we reasonably believe is purchasing the Notes for its own account,
or for one or more accounts with respect to which such person exercises sole
investment discretion, and such person and each such account is a “qualified
institutional buyer” within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A and such Notes are being transferred
in compliance with any applicable blue sky securities laws of any state of the
United States.
You and
the Issuers are entitled to rely upon this letter and are irrevocably authorized
to produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very
truly yours,
________________________________________________________
[Name of Transferor]
[Name of Transferor]
By: _____________________________________________________
Authorized
Signature
B-1
EXHIBIT
C
[FORM OF
CERTIFICATE TO BE DELIVERED
IN
CONNECTION WITH TRANSFERS
PURSUANT
TO REGULATION S]
Charter
Communications Operating, LLC
Charter
Communications Operating Capital Corp.
c/o
Charter Communications, Inc.
12405
Powerscourt Drive, Suite 100
St.
Louis, Missouri 63131
Wilmington
Trust Company
Rodney
Square North
1100 N.
Market Street
Wilmington,
DE 19890-1615
Attention:
Corporate Capital Market Services
|
|
Re:
|
10.875%
Senior Second Lien Notes due 2014
|
Ladies
and Gentlemen:
In
connection with our proposed sale of $________ aggregate principal amount of the
Notes, we confirm that such sale has been effected pursuant to and in accordance
with Regulation S under the United States Securities Act of 1933, as
amended (the “Securities
Act”), and, accordingly, we represent that:
(1) the
offer of the Notes was not made to a person in the United States;
(2) either
(a) at the time the buy order was originated, the transferee was outside
the United States or we and any person acting on our behalf reasonably believed
that the transferee was outside the United States or (b) the transaction
was executed in, on or through the facilities of a designated off-shore
securities market and neither we nor any person acting on our behalf knows that
the transaction has been pre-arranged with a buyer in the United
States;
(3) no
directed selling efforts have been made in the United States in contravention of
the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;
(4) the
transaction is being made in compliance with any applicable securities laws of
any state of the United States or any other applicable jurisdiction;
and
(5) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and not the result of offers or sales
specifically targeted to an identifiable group of U.S. citizens
abroad.
In
addition, if the sale is made during a restricted period and the provisions of
Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case
may be.
C-1
The
Issuers and you are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
|
|
Very
truly yours,
|
____________________________________________________
[Name of
Transferor]
By: ________________________________________________
Authorized
Signature
C-2
EXHIBIT
D
[COMPLETE
FORM I OR FORM II AS APPLICABLE.]
[FORM
I – To be used by
the
owner of a beneficial interest in a Temporary Regulation S Global
Note]
CERTIFICATE
OF BENEFICIAL OWNERSHIP IN CONNECTION WITH EXCHANGES OF TEMPORARY REGULATION S
GLOBAL NOTES
Charter
Communications Operating, LLC
Charter
Communications Operating Capital Corp.
c/o
Charter Communications, Inc.
12405
Powerscourt Drive, Suite 100
St.
Louis, Missouri 63131
Wilmington
Trust Company
Rodney
Square North
1100 N.
Market Street
Wilmington,
DE 19890-1615
Attention:
Corporate Capital Market Services
|
|
Re:
|
10.875%
Senior Second Lien Notes due 2014
|
Ladies
and Gentlemen:
Reference
is hereby made to the Indenture, dated as of March 19, 2008 (the “Indenture”), among Charter
Communications Operating, LLC (the “Company”), Charter
Communications Operating Capital Corp. (“Capital Corp” and, together
with the Company, the “Issuers”), the guarantors
party thereto and Wilmington Trust Company, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
We are
the beneficial owner of $____ principal amount of Notes issued under the
Indenture and represented by a Temporary Regulation S Global Note.
We hereby
certify as follows:
[CHECK
A OR B AS APPLICABLE.]
|
A.
|
We
are a non-U.S. person (within the meaning of Regulation S under the
Securities Act).
|
|
B.
|
We
are a U.S. person (within the meaning of Regulation S under the Securities
Act) that purchased the Notes in a transaction that did not require
registration under the Securities
Act.
|
You are
entitled to rely upon this Certificate and are irrevocably authorized to produce
this Certificate or a copy hereof to any interested party in any administrative
or legal proceeding or official inquiry with respect to the matters covered
hereby.
|
|
Very
truly yours,
|
|
|
[NAME
OF BENEFICIAL OWNER]
|
D-1
|
|
By:
|
__________________________________________ |
|
|
Name:
|
|
|
Title:
|
|
|
Address:
|
Date: _________________
D-2
[FORM
II – To be used by a Person acting on behalf of an owner of a beneficial
interest in a Temporary Regulation Global Note]
CERTIFICATE
OF BENEFICIAL OWNERSHIP IN CONNECTION WITH EXCHANGES OF TEMPORARY REGULATION S
GLOBAL NOTES
Charter
Communications Operating, LLC
Charter
Communications Operating Capital Corp.
c/o
Charter Communications, Inc.
12405
Powerscourt Drive, Suite 100
St.
Louis, Missouri 63131
Wilmington
Trust Company
Rodney
Square North
1100 N.
Market Street
Wilmington,
DE 19890-1615
Attention:
Corporate Capital Market Services
|
|
Re:
|
10.875%
Senior Second Lien Notes due 2014
|
Ladies
and Gentlemen:
Reference
is hereby made to the Indenture, dated as of March 19, 2008 (the “Indenture”), among Charter
Communications Operating, LLC (the “Company”), Charter
Communications Operating Capital Corp. (“Capital Corp” and, together
with the Company, the “Issuers”), the guarantors
party thereto and Wilmington Trust Company, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This is
to certify that based solely on certifications we have received in writing, by
tested telex or by electronic transmission from institutions appearing in our
records as persons being entitled to a portion of the principal amount of Notes
represented by a Temporary Regulation S Global Note issued under the
above-referenced Indenture, that as of the date hereof, $____ principal amount
of Notes represented by the Temporary Regulation S Global Note being submitted
herewith for exchange is beneficially owned by persons that are either (i)
non-U.S. persons (within the meaning of Regulation S under the Securities Act)
or (ii) U.S. persons that purchased the Notes in a transaction that did not
require registration under the Securities Act.
We
further certify that (i) we are not submitting herewith for exchange any portion
of such Temporary Regulation S Global Note excepted in such certifications and
(ii) as of the date hereof we have not received any notification from any
institution to the effect that the statements made by such institution with
respect to any portion of such Temporary Regulation S Global Note submitted
herewith for exchange are no longer true and cannot be relied upon as of the
date hereof.
You are
entitled to rely upon this Certificate and are irrevocably authorized to produce
this Certificate or a copy hereof to any interested party in any administrative
or legal proceeding or official inquiry with respect to the matters covered
hereby.
Yours
faithfully,
[Name of
DTC Participant]
D-3
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
Address:
|
Date: _________________
D-4
EXHIBIT
E
FORM
OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL
INDENTURE (this “Supplemental
Indenture”), dated as of
.
WHEREAS
Charter Communications Operating, LLC (the “Company”), Charter
Communications Operating Capital Corp. (“Capital Corp”), the
guarantors party thereto and Wilmington Trust Company, as trustee, are parties
to an Indenture (as it may be amended from time to time, the “Indenture”), dated as of
March 19, 2008, relating to the Issuers’ 10.875% Senior Second Lien Notes due
2014 (the “Notes”);
WHEREAS
Section 4.17 of the Indenture requires the Company to cause each Restricted
Subsidiary of the Company that, after the Issue Date, directly or indirectly,
Guarantees or pledges any assets to secure the payment, or otherwise becomes an
obligor with respect to, any Indebtedness under the CCO Credit Facility or
clause (1) of the second paragraph of Section 4.10 of the Indenture or Related
Obligations to execute and deliver to the Trustee a supplemental indenture
pursuant to which such Restricted Subsidiary, as the case may be, shall
guarantee all of the Company’s obligations under the Indenture and the Notes,
subject, however, to the Effectiveness Condition and the limitations set forth
in Section 11.03 of the Indenture.
NOW,
THEREFORE, for good and valuable consideration, the receipt of which is
acknowledged, [INSERT NAME OF NEW GUARANTOR] hereby agrees to guarantee the
Company’s obligations under the Notes on the terms and subject to the conditions
set forth in Article 11 of the Indenture, subject to the Effectiveness Condition
and the limitations set forth in Section 11.03 of the Indenture. From
and after the date hereof, such entity shall be a Guarantor for all purposes
under the Indenture and the Notes.
E-1
IN
WITNESS WHEREOF, each of the undersigned has caused this Supplemental Indenture
to be duly executed as of the date first above written.
|
|
[GUARANTORS]
|
By: ____________________________________________________
Name:
Title:
CHARTER
COMMUNICATIONS OPERATING, LLC, as an Issuer
By: ___________________________________________________
|
|
Name:
|
|
|
Title:
|
Vice
President
|
CHARTER
COMMUNICATIONS OPERATING CAPITAL CORP., as an Issuer
By: ___________________________________________________
|
|
Name:
|
|
|
Title:
|
Executive
Vice President
|
WILMINGTON
TRUST COMPANY,
as
Trustee
By: ___________________________________________________
|
|
Name:
|
|
|
Title:
|
100405135_9.DOC
E-2
Exhibit
10.2
EXECUTION VERSION
COLLATERAL
AGREEMENT
made
by
CHARTER
COMMUNICATIONS OPERATING, LLC
and the
other Grantors party hereto
in favor
of
WILMINGTON
TRUST COMPANY,
as
Trustee
Dated as
of March 19, 2008
TABLE OF
CONTENTS
Page
|
SECTION 1. DEFINED TERMS
|
1 | ||||||
| 1.1 |
Definitions
|
1 | |||||
| 1.2 |
Other Definitional
Provisions
|
6 | |||||
|
SECTION 2. FIRST LIEN CREDITORS; DELIVERY OF
COLLATERAL
|
7 | ||||||
| 2.1 |
Indenture
|
7 | |||||
| 2.2 |
Delivery of Collateral
|
7 | |||||
|
SECTION 3. GRANT OF SECURITY
INTEREST
|
7 | ||||||
| 3.1 |
Collateral
|
7 | |||||
|
SECTION 4. CERTIFICATED
INTERESTS
|
8 | ||||||
| 4.1 |
Pledged Partnership
Interests
|
8 | |||||
| 4.2 |
Pledged LLC Interests
|
8 | |||||
|
SECTION 5. REPRESENTATIONS AND
WARRANTIES
|
8 | ||||||
| 5.1 |
Title; No Other Liens
|
8 | |||||
| 5.2 |
Perfected Liens
|
8 | |||||
| 5.3 |
Jurisdiction of
Organization
|
9 | |||||
| 5.4 |
Pledged Securities
|
9 | |||||
|
SECTION 6. COVENANTS
|
9 | ||||||
| 6.1 |
Delivery of Instruments, Certificated Securities
and Chattel Paper
|
9 | |||||
| 6.2 |
Insurance
|
10 | |||||
| 6.3 |
Maintenance of Perfected Security Interest;
Further Documentation
|
10 | |||||
| 6.4 |
Changes in Locations, Name,
etc.
|
10 | |||||
| 6.5 |
Pledged Securities
|
10 | |||||
|
SECTION 7. REMEDIAL
PROVISIONS
|
12 | ||||||
| 7.1 |
Investment Property
|
12 | |||||
| 7.2 |
Proceeds To Be Turned Over to
Trustee
|
12 | |||||
| 7.3 |
Application of Proceeds
|
13 | |||||
| 7.4 |
Code and Other Remedies
|
13 | |||||
| 7.5 |
Registration Rights
|
14 | |||||
| 7.6 |
Deficiency
|
15 | |||||
| 7.7 |
Certain Matters Relating to Pledged
Receivables
|
15 | |||||
| 7.8 |
Communications with Obligors; Grantors Remain
Liable
|
15 | |||||
| 7.9 |
Silo Credit Agreements, etc
|
16 | |||||
| 7.1 |
Permitted Payments, etc.
|
16 | |||||
|
SECTION 8. THE TRUSTEE
|
16 | ||||||
| 8.1 |
Trustee’s Appointment as Attorney-in-Fact,
etc.
|
16 | |||||
| 8.2 |
Duty of Trustee
|
18 | |||||
| 8.3 |
Financing Statements
|
18 | |||||
| 8.4 |
Authority of Trustee
|
18 | |||||
|
SECTION 9. MISCELLANEOUS
|
19 | ||||||
| 9.1 |
Amendments in Writing
|
19 | |||||
| 9.2 |
Notices
|
19 | |||||
| 9.3 |
No Waiver by Course of Conduct; Cumulative
Remedies
|
19 | |||||
-i-
| 9.4 |
Enforcement Expenses;
Indemnification
|
19 | |||||
| 9.5 |
Successors and Assigns
|
20 | |||||
| 9.6 |
Counterparts
|
20 | |||||
| 9.7 |
Severability
|
20 | |||||
| 9.8 |
Governmental Approvals
|
20 | |||||
| 9.9 |
Section Headings
|
22 | |||||
| 9.1 |
Integration
|
22 | |||||
| 9.11 |
GOVERNING LAW
|
22 | |||||
| 9.12 |
Submission to Jurisdiction;
Waivers
|
22 | |||||
| 9.13 |
Acknowledgments
|
23 | |||||
| 9.14 |
Additional Grantors;
Release
|
23 | |||||
| 9.15 |
WAIVER OF JURY TRIAL
|
23 |
SCHEDULES
|
Schedule
1
|
Pledged
Securities
|
|
Schedule
2
|
Perfection
Matters
|
|
Schedule
3
|
Jurisdictions
of Organization
|
| Schedule 4 | Intellectual Property |
ANNEXES
Annex
1 Form
of Assumption Agreement
-ii-
COLLATERAL
AGREEMENT
COLLATERAL
AGREEMENT, dated as of March 19, 2008, made by CHARTER COMMUNICATIONS OPERATING,
LLC (the “Company”), CHARTER
COMMUNICATIONS OPERATING CAPITAL CORP. (“Capital Corp.”), CCO
HOLDINGS LLC (“CCOH”) and each of
the Restricted Subsidiaries of the Company party hereto (the “Subsidiary Grantors”
and, together with the Company, Capital Corp. and CCOH, collectively, the “Grantors”, and
individually, a “Grantor”), in favor
of WILMINGTON TRUST COMPANY, as Trustee (in such capacity, the “Trustee”), for the
record holders (the “Holders”) from time
to time of the Notes (as defined below) pursuant to the Indenture, dated as of
the date hereof (as amended, supplemented or otherwise modified from time to
time, the “Indenture”), among
the Company, Capital Corp., the several guarantors party thereto and the
Trustee.
W I T N E S S E T
H:
WHEREAS,
the Company and Capital Corp. have issued 10 7/8 % Senior
Second Lien Notes due 2014 pursuant to the Indenture (the “Initial Notes”) and
may hereafter issue Additional Notes (as defined in the Indenture, collectively,
the “Notes”);
and
WHEREAS,
it is a condition precedent to the purchase of Initial Notes by the initial
purchasers thereof that the Grantors shall have executed and delivered this
Agreement to the Trustee for the ratable benefit of the Holders.
NOW,
THEREFORE, in consideration of the above premises, the parties hereto hereby
agree as follows:
SECTION
1. DEFINED
TERMS
1.1 Definitions. (a) Unless
otherwise defined herein, terms defined in the Indenture and used herein shall
have the meanings given to them in the Indenture, and the following terms are
used herein as defined in the Applicable UCC: Accounts, Certificated
Security, Chattel Paper, Documents, Equipment, Fixtures, General Intangibles,
Instruments, Inventory, Letter-of-Credit Rights and Supporting
Obligations.
(b) The
following terms shall have the following meanings:
“Additional
Collateral”: all of the following property of the Company and
the Subsidiary Grantors, to the extent that a security interest in such property
can be perfected by the filing of a Uniform Commercial Code financing statement:
all Accounts, all Chattel Paper, all Documents, all Equipment, all Fixtures, all
General Intangibles, all Instruments, all Intellectual Property, all Inventory,
all Investment Property and all other property not otherwise described in this
definition.
“Agreement”: this
Collateral Agreement, as the same may be amended, supplemented, restated or
otherwise modified from time to time.
“Applicable
UCC”: the Uniform Commercial Code as from time to time in
effect in the State of Delaware, subject to Section 9.11.
“CATV
Franchise”: as defined in the CCO Credit Facility as in effect
on the date hereof.
“CATV
System”: as defined in the CCO Credit Facility as in effect on
the date hereof.
“CCH”: Charter
Communications Holdings, LLC, a Delaware limited liability company, together
with its successors.
“Charter
Group”: as defined in the CCO Credit Facility as in effect on
the date hereof.
“Collateral”: as
defined in Section 3.1.
“Collateral
Account”: any collateral account established by the Trustee as
provided in Section 7.2.
“FCC”: the
Federal Communications Commission and any successor thereto.
“FCC
License”: any community antenna relay service, broadcast
auxiliary license, earth station registration, business radio, microwave or
special safety radio service license issued by the FCC pursuant to the
Communications Act of 1934, as amended.
“Foreign
Subsidiary”: any Subsidiary organized under the laws of any
jurisdiction outside the United States of America.
“Foreign Subsidiary Voting
Equity Interests”: the voting Equity Interests of any Foreign
Subsidiary.
“Grantor”: as
defined in the preamble.
“Governmental
Authority”: any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance
Commissioners).
“Indenture
Documents”: the Indenture, the Notes, this Agreement, or any
other document made, delivered or given in connection with any of the
foregoing.
“Intellectual
Property”: the collective reference to all rights, priorities
and privileges in and to the Patents, the Patent Licenses, the Trademarks and
the Trademark Licenses, and all rights to sue at law or in equity for any
infringement or other impairment
-2-
thereof,
in each case, whether arising under United States, multinational or foreign laws
or otherwise, including the right to receive all proceeds and damages
therefrom.
“Intercompany
Obligations”: all obligations, whether constituting General
Intangibles or otherwise, owing to the Company or any Subsidiary Grantor by any
Affiliate of the Company or such Subsidiary Grantor, and with respect to CCOH,
all obligations, whether constituting General Intangibles or otherwise, owing to
CCOH by the Company or any of its Subsidiaries.
“Investment
Property”: the collective reference to (i) all “investment
property” as such term is defined in Section 9-102(a)(49) of the Applicable
UCC (other than any Foreign Subsidiary Voting Stock excluded from the definition
of “Pledged Stock”) and (ii) whether or not constituting “investment property”
as so defined, all Pledged Notes and all Pledged Stock.
“Issuers”: the
collective reference to each issuer of any Pledged Securities.
“License”: as
to any Person, any license, permit, certificate of need, authorization,
certification, accreditation, franchise, approval, or grant of rights by any
Governmental Authority or other Person necessary or appropriate for such Person
to own, maintain, or operate its business or property, including FCC
Licenses.
“Non-Recourse
Subsidiary” as defined in the CCO Credit Facility as in effect on the
date hereof.
“Obligations”: the
collective reference to the unpaid principal of and interest on the Notes and
all other obligations and liabilities of the Company (including any increase in
the aggregate principal amount of the Notes together with any interest accruing
at then applicable rate provided in the Indenture or the Notes after the
maturity of the Notes and interest accruing at then applicable rate provided in
the Indenture after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Company, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) to the Trustee or any Holder, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, the
Indenture, this Agreement, or any other document made, delivered or given in
connection with any of the foregoing, in each case whether on account of
principal, interest, fees, indemnities, costs, expenses or otherwise (including
all fees and disbursements of counsel that are required to be paid by the
Company pursuant to the terms of any of the foregoing agreements).
“Patents”: (i) all
letters patent of the United States, any other country or any political
subdivision thereof, all reissues and extensions thereof and all goodwill
associated therewith, including any of the foregoing referred to in Schedule 4,
(ii) all applications for letters patent of the United States or any other
country and all divisions, continuations and continuations-in-part thereof,
including any of the foregoing referred to in Schedule 4, and
(iii) all rights to obtain any reissues or extensions of the
foregoing.
-3-
“Patent
License”: all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including any of the
foregoing referred to in Schedule 4 (it being
understood that oral agreements are not required to be listed in Schedule
4).
“Pledged LLC
Interests”: in each case, whether now existing or hereafter acquired, all
of a Grantor’s right, title and interest in and to:
(i) any
Issuer (other than any Non-Recourse Subsidiary) that is a limited liability
company, but not any of such Grantor’s obligations from time to time as a holder
of interests in any such Issuer (unless the Trustee or its designee, on behalf
of the Trustee, shall elect to become a holder of interests in any such Issuer
in connection with its exercise of remedies pursuant to the terms
hereof);
(ii) any and
all moneys due and to become due to such Grantor now or in the future by way of
a distribution made to such Grantor in its capacity as a holder of interests in
any such Issuer or otherwise in respect of such Grantor’s interest as a holder
of interests in any such Issuer;
(iii) any other
property of any such Issuer to which such Grantor now or in the future may be
entitled in respect of its interests in any such Issuer by way of distribution,
return of capital or otherwise;
(iv) any other
claim or right which such Grantor now has or may in the future acquire in
respect of its interests in any such Issuer;
(v) the
organizational documents of any such Issuer;
(vi) all
certificates, options or rights of any nature whatsoever that may be issued or
granted by any such Issuer to such Grantor while this Agreement is in effect;
and
(vii) to the
extent not otherwise included, all Proceeds of any or all of the
foregoing.
“Pledged
Notes”: with respect to the Company and the Subsidiary
Grantors, any promissory note evidencing loans made by any Grantor to any member
of the Charter Group, and with respect to CCOH, any promissory note evidencing
loans made by CCOH to the Company or any of its Subsidiaries, including, in each
case, all promissory notes listed on Schedule
1.
“Pledged Partnership
Interests”: in each case, whether now existing or hereafter
acquired, all of a Grantor’s right, title and interest in and to:
(i) any
Issuer (other than any Non-Recourse Subsidiary) that is a partnership, but not
any of such Grantor’s obligations from time to time as a general or limited
partner, as the case may be, in any such Issuer (unless the Trustee or its
designee, on behalf of the Trustee, shall elect to become a general or limited
partner, as the case may
-4-
be, in
any such Issuer in connection with its exercise of remedies pursuant to the
terms hereof);
(ii) any and
all moneys due and to become due to such Grantor now or in the future by way of
a distribution made to such Grantor in its capacity as a general partner or
limited partner, as the case may be, in any such Issuer or otherwise in respect
of such Grantor’s interest as a general partner or limited partner, as the case
may be, in any such Issuer;
(iii) any other
property of any such Issuer to which such Grantor now or in the future may be
entitled in respect of its interests as a general partner or limited partner, as
the case may be, in any such Issuer by way of distribution, return of capital or
otherwise;
(iv) any other
claim or right which such Grantor now has or may in the future acquire in
respect of its general or limited partnership interests in any such
Issuer;
(v) the
partnership agreement or other organizational documents of any such
Issuer;
(vi) all
certificates, options or rights of any nature whatsoever that may be issued or
granted by any such Issuer to such Grantor while this Agreement is in effect;
and
(vii) to the
extent not otherwise included, all Proceeds of any or all of the
foregoing.
“Pledged
Receivables”: the collective reference to all Receivables
pledged by any Grantor as Collateral.
“Pledged
Securities”: the collective reference to the Pledged Notes and
the Pledged Stock, together with the Proceeds thereof.
“Pledged
Stock”: the Equity Interests listed on Schedule 1, together
with any other shares, stock certificates, options, interests or rights of any
nature whatsoever in respect of the Equity Interests (i) with respect to
the Company or any Subsidiary Grantor, of any Person (other than any
Non-Recourse Subsidiary) that may be issued or granted to, or held by, the
Company or any Subsidiary Grantor, and (ii) with respect to CCOH, of the
Company or any of its Subsidiaries, in each case while this Agreement is in
effect including, in any event, the Pledged LLC Interests and Pledged
Partnership Interests.
“Proceeds”: all
“proceeds” as such term is defined in Section 9-102(a)(64) of the
Applicable UCC and, in any event, shall include all dividends, distributions or
other income from the Pledged Securities and Investment Property, collections
thereon or distributions or payments with respect thereto.
-5-
“Receivable”: any
right to payment for goods sold or leased or for services rendered, whether or
not such right is evidenced by an Instrument or Chattel Paper and whether or not
it has been earned by performance (including any Account).
“Requirement of
Law”: as to any Person, the certificate of incorporation and
by-laws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
“Securities
Act”: the Securities Act of 1933, as amended.
“Silo Credit
Agreement” as defined in the CCO Credit Facility.
“Silo Collateral
Agreement” as defined in the CCO Credit Facility.
“Trademarks”: (i)
all trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos and other source
or business identifiers, and all goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including any of the
foregoing referred to in Schedule 4, and (ii)
the right to obtain all renewals thereof.
“Trademark
License”: any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right to use any Trademark, including
any of the foregoing referred to in Schedule 4 (it being
understood that oral agreements are not required to be listed on Schedule
4).
1.2 Other Definitional
Provisions. (a) The
words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section and
Schedule references are to this Agreement unless otherwise
specified.
(b) The
meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.
(c) Where the
context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Grantor, shall refer to such Grantor’s Collateral or the
relevant part thereof.
(d) The words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”, whether or not expressly stated.
-6-
SECTION
2. FIRST
LIEN CREDITORS; DELIVERY OF COLLATERAL
2.1 Indenture. In
the event of any conflict between this Agreement and the Indenture, the
provisions of the Indenture shall control.
2.2 Delivery of
Collateral. At
any time that the Intercreditor Agreement is in effect, any requirement for
delivery of Collateral to the Trustee under this Agreement shall be deemed
satisfied by delivery of such Collateral to the First Lien Representative or the
Second Lien Representative. Each Grantor hereby acknowledges that
such First Lien Representative or Second Lien Representative shall be holding
the Collateral for the benefit of the Trustee and the Holders.
SECTION
3. GRANT
OF SECURITY INTEREST
3.1 Collateral. Each
Grantor hereby assigns and transfers to the Trustee, and hereby grants to the
Trustee, for the ratable benefit of the Holders, a security interest in, all of
the following property now owned or at any time hereafter acquired by such
Grantor or in which such Grantor now has or at any time in the future may
acquire any right, title or interest (collectively, the “Collateral”), as collateral security for the prompt and complete
payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations:
(a) all
Pledged Securities;
(b) all
Intercompany Obligations;
(c) all of
the Additional Collateral
(d) all books
and records pertaining to the Collateral; and
(e) to the
extent not otherwise included, all Proceeds, Supporting Obligations and products
of any and all of the foregoing, all collateral security and guarantees given by
any Person with respect to any of the foregoing and any Instruments evidencing
any of the foregoing.
Notwithstanding
any of the other provisions set forth in this Agreement, (i) in no event
shall “Collateral” include any right, title or interest of any Grantor in or to
any property to the extent that such property is not then collateral security
for the CCO Credit Facility, any Related Obligations or any Indebtedness under
clause (1) of the second paragraph of Section 4.10 of the Indenture,
(ii) this Agreement shall not constitute a grant of a security interest in,
and the Collateral shall not include, (x) any property to the extent that such
grant of a security interest is prohibited by any Requirements of Law of a
Governmental Authority, requires a consent not obtained of any Governmental
Authority pursuant to such Requirement of Law or is prohibited by, or
constitutes a breach or default under or results in the termination of or
requires any consent not obtained under, any contract, license, agreement
(including any joint venture, partnership or limited liability company operating
agreement, unless the same relates to a Wholly
-7-
Owned
Subsidiary), instrument or other document evidencing or giving rise to such
property except to the extent that such Requirement of Law or the term in such
contract, license, agreement, instrument or other document providing for such
prohibition, breach, default or termination or requiring such consent is
ineffective under applicable law or (y) any property that is subject to a
purchase money security interest permitted by the Indenture for so long as it is
subject to such security interest and (iii) in no event shall more than 66%
of the total outstanding Foreign Subsidiary Voting Equity Interests of any
Foreign Subsidiary constitute Collateral or be required to be pledged hereunder
(collectively, “Excluded
Assets”).
The
parties hereto acknowledge that the Collateral granted by any Grantor hereunder
secures the Obligations whether or not such Grantor guarantees any of the
Obligations.
SECTION
4. CERTIFICATED
INTERESTS
4.1 Pledged Partnership
Interests. Concurrently
with the delivery to the Trustee of any certificate representing Pledged
Partnership Interests, if any, the relevant Grantor shall, if requested by the
Trustee, deliver an undated power covering such certificate, duly executed in
blank by such Grantor.
4.2 Pledged LLC
Interests. Concurrently
with the delivery to the Trustee of any certificate representing Pledged LLC
Interests, if any, the relevant Grantor shall, if requested by the Trustee,
deliver an undated power covering such certificate, duly executed in blank by
such Grantor.
SECTION
5. REPRESENTATIONS
AND WARRANTIES
To induce
the Trustee to enter into the Indenture and to induce the Holders to purchase
the Notes, each Grantor hereby represents and warrants to the Trustee and each
Holder that:
5.1 Title; No Other
Liens. Except
for the security interest granted to the Trustee for the ratable benefit of the
Holders pursuant to this Agreement and the other Liens not prohibited to exist
on the Collateral by the Indenture, such Grantor owns each item of the
Collateral free and clear of any and all Liens. For the avoidance of
doubt, it is understood and agreed that any Grantor may, as part of its
business, grant licenses to third parties to use Intellectual Property owned or
developed by a Grantor. For purposes of this Agreement and the
Indenture, such licensing activity shall not constitute a “Lien” on such
Intellectual Property. Each of the Trustee and each Holder
understands that any such licenses may be exclusive to the applicable licensees,
and such exclusivity provisions may limit the ability of the Trustee to utilize,
sell, lease or transfer the related Intellectual Property or otherwise realize
value from such Intellectual Property pursuant hereto.
5.2 Perfected
Liens. The
security interests granted pursuant to this Agreement (a) constitute valid
perfected security interests in all of the Collateral in favor of the Trustee,
for
-8-
the
ratable benefit of the Holders, as collateral security for the Obligations,
enforceable in accordance with the terms hereof against all creditors of such
Grantor and any Persons purporting to purchase any Collateral from such Grantor
and (b) are prior to all other Liens on the Collateral in existence on the
date hereof except for Liens not prohibited by the Indenture.
5.3 Jurisdiction of
Organization. On the date hereof, such
Grantor’s jurisdiction of organization is specified on Schedule
3.
5.4 Pledged
Securities. (a) The
Equity Interests, if any, pledged by such Grantor hereunder constitute all the
issued and outstanding shares of all classes of the Equity Interests of each
Issuer owned by such Grantor or, in the case of Foreign Subsidiary Voting Stock,
if less, 66% of the outstanding Foreign Subsidiary Voting Stock of each relevant
Issuer.
(b) Except
with respect to Pledged Stock from time to time constituting an immaterial
portion of the Collateral, all the shares of the Pledged Stock have been duly
and validly issued and are fully paid and nonassessable.
(c) None of
the Pledged LLC Interests or Pledged Partnership Interests constitutes a
security under Section 8-103 of the Applicable UCC or the corresponding
code or statute of any other applicable jurisdiction.
(d) Except
with respect to Pledged Notes from time to time constituting an immaterial
portion of the Collateral, each of the Pledged Notes constitutes the legal,
valid and binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(e) Such
Grantor is the record and beneficial owner of, and has good title to, the
Pledged Securities pledged by it hereunder, free of any and all Liens or options
in favor of, or claims of, any other Person, except the security interest
created by this Agreement and any Liens permitted under Section 4.14 of the
Indenture.
SECTION
6. COVENANTS
Each
Grantor covenants and agrees that, from and after the date of this Agreement
until the Obligations shall have been paid in full or the relevant Collateral
has been released in accordance with Section 9.14:
6.1 Delivery of Instruments,
Certificated Securities and Chattel Paper. If
any amount payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument, Certificated Security or Chattel Paper with
a face value of $5,000,000 or more, such Instrument, Certificated Security or
Chattel Paper shall be promptly delivered to the Trustee, duly indorsed in a
manner satisfactory to the Trustee, to be held as Collateral pursuant to this
Agreement.
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6.2 Insurance. All
insurance maintained by any Grantor with respect to the Collateral shall (a)
provide that no cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after receipt by the
Trustee of written notice thereof and (b) name the Trustee as insured party or
loss payee, as applicable and customary. At the request of the Trustee, such
Grantor shall provide evidence of compliance with this Section 6.2 to the
Trustee.
6.3 Maintenance of Perfected
Security Interest; Further Documentation. (a) Such
Grantor shall, at the request of the Trustee, take all reasonable actions to
maintain the security interest created by this Agreement as a perfected security
interest having at least the priority described in Section 5.2 (including
making the filings referred to on Schedule 2) and shall defend such security
interest against the claims and demands of all Persons whomsoever.
(b) Such
Grantor will furnish to the Trustee and the Holders from time to time, as
reasonably requested by the Trustee, statements and schedules further
identifying and describing the assets and property of such Grantor constituting,
or intended to constitute, Collateral and such other reports in connection
therewith as the Trustee may reasonably request, all in reasonable
detail.
(c) At any
time and from time to time, upon the written request of the Trustee, and at the
sole expense of such Grantor, such Grantor will promptly and duly execute and
deliver, and have recorded, such further instruments and documents and take such
further actions as the Trustee may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including (i) filing any financing or
continuation statements under the Uniform Commercial Code (or other similar
laws) in effect in any jurisdiction with respect to the security interests
created hereby and (ii) in the case of Pledged Securities, Investment
Property, Letter-of-Credit Rights and any other relevant Collateral, taking any
actions necessary to enable the Trustee to obtain “control” (within the meaning
of the applicable Uniform Commercial Code) with respect thereto; provided, that
no account control agreements will be required unless an Event of Default is in
existence.
6.4 Changes in Locations, Name,
etc. Such
Grantor will not, except upon prior written notice to the Trustee:
(a) change
its jurisdiction of organization from that referred to in Section 5.3;
or
(b) change
its name to such an extent that any financing statement filed by the Trustee in
connection with this Agreement would become seriously misleading;
unless,
within 30 days of the taking of any such actions, such Grantor delivers to the
Trustee notice of such change and all documents reasonably requested by the
Trustee to maintain the validity, perfection and priority of the security
interests provided for herein.
6.5 Pledged
Securities. (a) If
such Grantor shall become entitled to receive or shall receive any certificate
(including any certificate representing a dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in
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connection
with any reorganization), option or rights in respect of the Equity Interests of
any Issuer, whether in addition to, in substitution of, as a conversion of, or
in exchange for, any shares of the Pledged Stock, or otherwise in respect
thereof, such Grantor shall accept the same as the agent of the Trustee and the
Holders, hold the same in trust for the Trustee and the Holders, and, with
respect to Pledged Stock constituting securities under and as defined in
Section 8-103 of the Applicable UCC, deliver the same forthwith to the
Trustee in the exact form received, duly indorsed by such Grantor to the
Trustee, if required, together with an undated power covering such certificate
duly executed in blank by such Grantor, to be held by the Trustee, subject to
the terms hereof, as additional collateral security for the
Obligations. During the continuance of an Event of Default, subject
to Section 7.10, after written notice from the Trustee, any sums paid upon
or in respect of the Pledged Securities upon the liquidation or dissolution of
any Issuer shall be paid over to the Trustee to be held by it hereunder as
additional collateral security for the Obligations, and in case any distribution
of capital shall be made on or in respect of the Pledged Securities or any
property shall be distributed upon or with respect to the Pledged Securities
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, the property so distributed
shall be delivered to the Trustee to be held by it hereunder as additional
collateral security for the Obligations. Subject to
Section 7.10, if any sums of money or property so paid or distributed in
respect of the Pledged Securities shall be received by such Grantor, during the
continuance of an Event of Default, after notice from the Trustee, such Grantor
shall, until such money or property is paid or delivered to the Trustee, hold
such money or property in trust for the Holders, segregated from other funds of
such Grantor, as additional collateral security for the
Obligations.
(b) Without
the prior written consent of the Trustee, such Grantor will not (i) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Pledged Securities or Proceeds thereof (except pursuant to a
transaction not prohibited by the Indenture), or (ii) create, incur or permit to
exist any Lien on any of the Pledged Securities or Proceeds thereof, or any
interest therein, except for the security interests created by this Agreement or
Liens not prohibited under the Indenture.
(c) Without
the prior written consent of the Trustee, such Grantor will not, and will not
permit any Issuer that is a limited liability company or partnership, to amend
such Issuer’s certificate of formation, certificate of limited partnership,
statement of partnership existence, limited liability company agreement,
partnership agreement or operating agreement to provide that any Equity
Interests in any Issuer constitute a security under Section 8-103 of the
Applicable UCC or the corresponding code or statute of any other applicable
jurisdiction.
(d) In the
case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be
bound by the terms of this Agreement relating to the Pledged Securities issued
by it and will comply with such terms insofar as such terms are applicable to
it, (ii) it will notify the Trustee promptly in writing of the occurrence of any
of the events described in Section 6.5(a) with respect to the Pledged
Securities issued by it and (iii) the terms of Sections 7.1(c) and 7.5
shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to
Section 7.1(c) or 7.5 with respect to the Pledged Securities issued by
it. Each Grantor hereby consents to the pledge of the Pledged
Securities contemplated hereby and to each provision of this Agreement relating
to such Pledged Securities.
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SECTION
7. REMEDIAL
PROVISIONS
(b) If an
Event of Default shall occur and be continuing and the Trustee shall give
written notice of its intent to exercise such rights to the relevant Grantor or
Grantors, subject to Section 7.10, (i) the Trustee shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Securities and make application thereof to the
Obligations in such order as the Trustee may determine, and (ii) any or all of
the Pledged Securities shall be registered in the name of the Trustee or its
nominee or the Second Lien Representative, and the Trustee or its nominee or the
Second Lien Representative may thereafter exercise (x) all voting,
organizational and other rights pertaining to such Pledged Securities at any
meeting of shareholders of the relevant Issuer or Issuers or otherwise and
(y) any and all rights of conversion, exchange and subscription and any
other rights, privileges or options pertaining to such Pledged Securities as if
it were the absolute owner thereof (including the right to exchange at its
discretion any and all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the
organizational structure of any Issuer, or upon the exercise by any Grantor or
the Trustee of any right, privilege or option pertaining to such Pledged
Securities, and in connection therewith, the right to deposit and deliver any
and all of the Pledged Securities with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
the Trustee may determine), all without liability except to account for property
actually received by it, but the Trustee shall have no duty to any Grantor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
7.2 Proceeds To Be Turned Over
to Trustee. Subject to Section 7.10, in
addition to the rights of the Trustee and the Holders specified in
Section 7.7 with respect to payments of Pledged Receivables, if an Event of
Default shall occur and be continuing, following written notice from the
Trustee, all Proceeds received by any Grantor consisting of
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cash,
checks and other near-cash items shall be held by such Grantor in trust for the
Trustee and the Holders, segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, be turned over to the Trustee in the
exact form received by such Grantor (duly indorsed by such Grantor to the
Trustee, if required). All Proceeds received by the Trustee hereunder
shall be held by the Trustee in a Collateral Account maintained under its sole
dominion and control. Subject to Section 7.10, all Proceeds
while held by the Trustee in a Collateral Account (or by such Grantor in trust
for the Trustee and the Holders) shall continue to be held as collateral
security for all the Obligations and shall not constitute payment thereof until
applied as provided in Section 7.3.
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reasonable
attorneys’ fees and disbursements, to the payment in whole or in part of the
Obligations, in such order as the Trustee may elect, and only after such
application and after the payment by the Trustee of any other amount required by
any provision of law, including Section 9-615(a)(3) of the Applicable UCC,
need the Trustee account for the surplus, if any, to any Grantor. To
the extent permitted by applicable law, each Grantor waives all claims, damages
and demands it may acquire against the Trustee or any Holder arising out of the
exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such sale
or other disposition.
7.5 Registration
Rights. (a) If
the Trustee shall determine to exercise its right to sell any or all of the
Pledged Stock pursuant to Section 7.4, and if in the opinion of the Trustee
it is necessary or advisable to have the Pledged Stock, or that portion thereof
to be sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may
be, in the opinion of the Trustee, necessary or advisable to register the
Pledged Stock, or that portion thereof to be sold, under the provisions of the
Securities Act, (ii) use its reasonable best efforts to cause the registration
statement relating thereto to become effective and to remain effective for a
period of one year from the date of the first public offering of the Pledged
Stock, or that portion thereof to be sold and (iii) make all amendments thereto
and/or to the related prospectus which, in the opinion of the Trustee, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. Each Grantor agrees to cause such
Issuer to comply with the provisions of the securities or “Blue Sky” laws of any
and all jurisdictions which the Trustee shall designate and to make available to
its security holders, as soon as practicable, an earnings statement (which need
not be audited) which will satisfy the provisions of Section 11(a) of the
Securities Act.
(b) Each
Grantor recognizes that the Trustee may be unable to effect a public sale of any
or all the Pledged Stock, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and may by
reason of such prohibitions be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale
thereof. Each Grantor acknowledges and agrees that any such private
sale may result in prices and other terms less favorable than if such sale were
a public sale and, notwithstanding such circumstances, to the extent permitted
by law, agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner. The Trustee shall be under no
obligation to delay a sale of any of the Pledged Stock for the period of time
necessary to permit the Issuer thereof to register such securities for public
sale under the Securities Act, or under applicable state securities laws, even
if such Issuer would agree to do so.
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all other
applicable Requirements of Law. Each Grantor further agrees that a
breach of any of the covenants contained in this Section 7.5 will cause
irreparable injury to the Trustee and the Holders, that the Trustee and the
Holders have no adequate remedy at law in respect of such breach and, as a
consequence, to the extent permitted by law, that each and every covenant
contained in this Section 7.5 shall be specifically enforceable against
such Grantor, and such Grantor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except for
a defense that no Event of Default has occurred under the
Indenture.
7.6 Deficiency. Each
Grantor shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay its Obligations and
the fees and disbursements of any attorneys employed by the Trustee or any
Holder to collect such deficiency. For the avoidance of doubt (and
without prejudice to the obligations, if any, of CCOH and the Subsidiary
Grantors pursuant to the Note Guarantees), nothing in this Agreement shall be
deemed to create any recourse against CCOH or any of the Subsidiary Grantors for
any of the Obligations except to the extent of the Collateral.
7.7 Certain Matters Relating to
Pledged Receivables. The
Trustee hereby authorizes each Grantor pledging Receivables hereunder to collect
such Grantor’s Pledged Receivables, provided that the
Trustee may curtail or terminate said authority at any time after the occurrence
and during the continuance of an Event of Default. If required by the
Trustee at any time after the occurrence and during the continuance of an Event
of Default, after written notice from the Trustee, any payments of Pledged
Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any
event, within two Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Trustee if required, in a
Collateral Account maintained under the sole dominion and control of the
Trustee, subject to withdrawal by the Trustee for the account of the Holders
only as provided in Section 7.3, and (ii) until so turned over, shall be
held by such Grantor in trust for the Trustee and the Holders, segregated from
other funds of such Grantor. Each such deposit of Proceeds of Pledged
Receivables shall be accompanied by a report identifying in reasonable detail
the nature and source of the payments included in the deposit.
7.8 Communications with
Obligors; Grantors Remain Liable. (a) The
Trustee in its own name or in the name of others may at any time after the
occurrence and during the continuance of an Event of Default communicate with
obligors under the Pledged Receivables to verify with them to the Trustee’s
satisfaction the existence, amount and terms of any Receivables.
(b) Upon the
written request of the Trustee at any time after the occurrence and during the
continuance of an Event of Default, each Grantor shall notify obligors on the
Pledged Receivables that the Pledged Receivables have been assigned to the
Trustee for the ratable benefit of the Holders and that payments in respect
thereof shall be made directly to the Trustee.
(c) Anything
herein to the contrary notwithstanding, each Grantor pledging Receivables shall
remain liable under each of the Pledged Receivables to observe and perform all
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the
conditions and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise
thereto. Neither the Trustee nor any Holder shall have any obligation
or liability under any Receivable (or any agreement giving rise thereto) by
reason of or arising out of this Agreement or the receipt by the Trustee or any
Holder of any payment relating thereto, nor shall the Trustee or any Holder be
obligated in any manner to perform any of the obligations of any Grantor under
or pursuant to any Receivable (or any agreement giving rise thereto), to make
any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or
times.
7.9 Silo Credit Agreements,
etc. After
the occurrence and during the continuance of an Event of Default, the Trustee
may exercise any and all rights and remedies of the Company pursuant to any Silo
Credit Agreement or Silo Guarantee and Collateral Agreement upon written notice
to the relevant borrower under the relevant Silo Credit Agreement.
7.10 Permitted Payments,
etc. Notwithstanding
anything to the contrary in this Agreement, regardless of whether a Default then
exists, any Grantor shall be permitted to make, pay, obtain, retain and/or
distribute dividends, distributions, payments or Proceeds (i) permitted to
be made under clause (2) of the second paragraph of Section 4.07 of the
Indenture or (ii) which are, under clause (8) of the definition of
“Permitted Investments” in the Indenture, a Permitted Investment.
SECTION
8. THE
TRUSTEE
8.1 Trustee’s Appointment as
Attorney-in-Fact, etc.(a) Each
Grantor hereby irrevocably constitutes and appoints the Trustee and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor or in its own name, for
the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the
Trustee the power and right, on behalf of such Grantor, without notice to or
assent by such Grantor, to do any or all of the following:
(i) in the
name of such Grantor or its own name, or otherwise, take possession of and
indorse and collect any checks, drafts, notes, acceptances or other instruments
for the payment of moneys due under any Pledged Receivable or with respect to
any other Collateral and file any claim or take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the Trustee for
the purpose of collecting any and all such moneys due under any Pledged
Receivable or with respect to any other Collateral whenever
payable;
(ii) in the
case of any Intellectual Property, execute and deliver, and have recorded, any
and all agreements, instruments, documents and papers as the
Trustee may
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request
to evidence the Trustee’s and the Holders’ security interest in such
Intellectual Property and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby;
(iii) pay or
discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repairs or any insurance called for by the terms of this
Agreement and pay all or any part of the premiums therefor and the costs
thereof;
(iv) execute,
in connection with any sale provided for in Section 7.4 or 7.5, any
indorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral;
(v) (1) direct
any party liable for any payment under any of the Collateral to make payment of
any and all moneys due or to become due thereunder directly to the Trustee or as
the Trustee shall direct; (2) ask or demand for, collect, and receive
payment of and receipt for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or arising out of any Collateral;
(3) sign and indorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect of
any Collateral; (5) defend any suit, action or proceeding brought against
such Grantor with respect to any Collateral; (6) settle, compromise or adjust
any such suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Trustee may deem appropriate; (7) assign any
Patent or Trademark (along with the goodwill of the business to which any such
Patent or Trademark pertains), throughout the world for such term or terms, on
such conditions, and in such manner, as the Trustee shall in its sole discretion
determine; and (8) generally, sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though the Trustee were the absolute owner thereof for all purposes, and do,
at the Trustee’s option and such Grantor’s expense, at any time, or from time to
time, all acts and things which the Trustee deems necessary to protect, preserve
or realize upon the Collateral and the Trustee’s and the Holders’ security
interests therein and to effect the intent of this Agreement, all as fully and
effectively as such Grantor might do; and
(vi) exercise
any of the Trustee’s rights pursuant to Section 7.9.
Anything
in this Section 8.1(a) to the contrary notwithstanding, the Trustee agrees
that it will not exercise any rights under the power of attorney provided for in
this Section 8.1(a) unless an Event of Default shall have occurred and be
continuing and the Trustee shall have given written notice of its intent to
exercise its rights under this Section 8.1(a).
(b) If any
Grantor fails to perform or comply with any of its agreements contained herein,
the Trustee, at its option, after prior notice to such Grantor, but without any
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obligation
so to do, may perform or comply, or otherwise cause performance or compliance,
with such agreement.
(c) The
expenses of the Trustee incurred in connection with actions undertaken as
provided in this Section 8.1, together with interest thereon at a rate per
annum equal to the highest rate per annum at which interest would then be
payable on the Notes, from the date of payment by the Trustee to the date
reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Trustee on demand.
(d) Each
Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.
8.2 Duty of
Trustee. The
Trustee’s sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of
the Applicable UCC or otherwise, shall be to deal with it in the same manner as
the Trustee deals with similar property for its own account. Neither
the Trustee, any Holder nor any of their respective officers, directors,
employees or agents shall be liable for failure to demand, collect or realize
upon any of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
any Grantor or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof. The powers conferred on
the Trustee and the Holders hereunder are solely to protect the Trustee’s and
the Holders’ interests in the Collateral and shall not impose any duty upon the
Trustee or any Holder to exercise any such powers. The Trustee and
the Holders shall be accountable only for amounts that they actually receive as
a result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to any Grantor for
any act or failure to act hereunder, except for their own gross negligence or
willful misconduct.
8.3 Financing
Statements. Pursuant
to any applicable law, each Grantor authorizes the Trustee to file or record
financing statements and other filing or recording documents or instruments with
respect to the Collateral without the signature of such Grantor in such form and
in such offices as the Trustee determines appropriate to perfect the security
interests of the Trustee under this Agreement. A photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement or other filing or recording document or instrument for filing or
recording in any jurisdiction. Each Grantor, authorizes the Trustee
to use the collateral description “all personal property” in any such financing
statements.
8.4 Authority of
Trustee. Each
Grantor acknowledges that the rights and responsibilities of the Trustee under
this Agreement with respect to any action taken by the Trustee or the exercise
or non-exercise by the Trustee of any option, voting right, request, judgment or
other right or remedy provided for herein or resulting or arising out of this
Agreement shall, as between the Trustee and the Holders, be governed by the
Indenture and by such other agreements with respect thereto as may exist from
time to time among them, but, as between the Trustee and each Grantor, the
Trustee shall be conclusively presumed to be acting as
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agent for
the Holders with full and valid authority so to act or refrain from acting, and
no Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
SECTION
9. MISCELLANEOUS
9.1 Amendments in
Writing. None
of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except in accordance with Article 9 of the
Indenture.
9.2 Notices. All
notices, requests and demands to or upon the Trustee or any Grantor hereunder
shall be effected in the manner provided for in Section 12.02 of the
Indenture.
9.3 No Waiver by Course of
Conduct; Cumulative Remedies. Neither
the Trustee nor any Holder shall by any act (except by a written instrument
pursuant to Section 9.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Trustee or any Holder, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Trustee or any Holder of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Trustee or such Holder would otherwise have on any
future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
9.4 Enforcement Expenses;
Indemnification. (a)
Each Grantor agrees to pay or reimburse each Holder and the Trustee for all its
costs and expenses incurred in enforcing or preserving any rights under this
Agreement and the other Indenture Documents to which such Grantor is a party,
including the fees and disbursements of one firm of counsel (together with any
special and local counsel) to the Trustee.
(b) Each
Grantor agrees to pay, and to save the Trustee and the Holders harmless from,
any and all liabilities with respect to, or resulting from any delay in paying,
any and all stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral.
(c) Each
Grantor agrees to pay, and to save the Trustee and the Holders harmless from,
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement to the extent the Company would be required to
do so pursuant to Section 7.07 of the Indenture.
(d) The
agreements in this Section 9.4 shall survive repayment of the Obligations
and all other amounts payable under the Indenture and the other Indenture
Documents.
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9.5 Successors and
Assigns. This
Agreement shall be binding upon the successors and assigns of each Grantor and
shall inure to the benefit of the Trustee and the Holders and their successors
and assigns; provided that no
Grantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of the Trustee.
9.6 Counterparts. This
Agreement may be executed by one or more of the parties to this Agreement on any
number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. Delivery
of an executed signature page of this Agreement by facsimile transmission shall
be effective as delivery of a manually executed counterpart hereof.
9.7 Severability. Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.8 Governmental
Approvals. (a) Notwithstanding
anything herein to the contrary, this Agreement, the other Indenture Documents
and the transactions contemplated hereby and thereby, prior to the exercise of
any rights and remedies provided in this Agreement or the other Indenture
Documents, including voting the Pledged Securities or a foreclosure of the
security interest granted under this Agreement, except to the extent not
prohibited by applicable Requirements of Law, (i) do not and will not
constitute, create, or have the effect of constituting or creating, directly or
indirectly, actual or practical ownership of the Company or any Subsidiary of
the Company by the Trustee or the Holders, or control, affirmative or negative,
direct or indirect, by the Trustee or the Holders over the management or any
other aspect of the operation of the Company or any Subsidiary of the Company,
which ownership and control remains exclusively and at all times in the Company
and such Subsidiary, and (ii) do not and will not constitute the transfer,
assignment, or disposition in any manner, voluntarily or involuntarily, directly
or indirectly, of any License at any time issued to the Company or any
Subsidiary of the Company, or the transfer of control of the Company or any
Subsidiary of the Company, including within the meaning of Section 310(d)
of the Communications Act of 1934, as amended.
(b) Notwithstanding
any other provision of this Agreement, any foreclosure on, sale, transfer or
other disposition of, or the exercise of any right to vote or consent with
respect to, any of the Pledged Securities, as provided herein, or any other
action taken or proposed to be taken by the Trustee hereunder which would affect
the operational, voting or other control of the Company or any Subsidiary of the
Company, shall be in accordance with applicable Requirements of
Law.
(c) Notwithstanding
anything to the contrary contained in this Agreement or in any other Indenture
Document, the Trustee shall not, without first obtaining the approval of the FCC
or any other applicable Governmental Authority, take any action pursuant to this
Agreement which would constitute or result in, or be deemed to constitute or
result in, any
-20-
assignment
of a License, including any CATV Franchise of the Company or any Subsidiary of
the Company, or any change of control of the Company or any Subsidiary of the
Company, if such assignment or change in control would require, under then
existing Requirements of Law (including the written rules and regulations
promulgated by the FCC), the prior approval of the FCC or such other
Governmental Authority.
(d) If
counsel to the Trustee reasonably determines that the consent of the FCC or any
other Governmental Authority is required in connection with any of the actions
which may be taken by the Trustee in the exercise of its rights under this
Agreement or any of the other Indenture Documents, then the Company, at its sole
cost and expense, shall use its reasonable best efforts to secure such consent
and to cooperate fully with the Trustee in any action commenced by the Trustee
to secure such consent. Upon the exercise by the Trustee of any
power, right, privilege or remedy pursuant to this Agreement which requires any
consent, approval, recording, qualification or authorization of the FCC or any
other Governmental Authority or instrumentality, the Company will promptly
prepare, execute, deliver and file, or will promptly cause the preparation,
execution, delivery and filing of, all applications, certificates, instruments
and other documents and papers that the Trustee reasonably deems necessary or
advisable to obtain such governmental consent, approval, recording,
qualification or authorization including the assignor’s or transferor’s portion
of any application or applications for consent to the assignment of license
necessary or appropriate under the rules and regulations of the FCC or any other
Governmental Authority for approval of any sale, transfer or assignment to the
Trustee or any other Person of the Pledged Securities. Subject to the
provisions of applicable law, if the Company fails or refuses to execute, or
fails or refuses to cause another Person to execute, such documents, the
Trustee, as attorney-in-fact for the Company appointed pursuant to
Section 8.1, or the clerk of any court of competent jurisdiction, may
execute and file the same on behalf of the Company. In addition to
the foregoing, during the continuance of an Event of Default, the Company agrees
to take, or cause to be taken, any action which the Trustee may reasonably
request in order to obtain and enjoy the full rights and benefits granted to the
Holders or the Trustee by this Agreement and any other instruments or agreements
executed pursuant hereto, including at the Company’s cost and expense, the
exercise of the Company’s best efforts to cooperate in obtaining FCC or other
governmental approval of any action or transaction contemplated by this
Agreement or any other instrument or agreement executed pursuant hereto which is
then required by law.
(e) The
Company recognizes that the authorizations, permits and licenses held by the
Company or any of its Subsidiaries are unique assets which may have to be
assigned or transferred in order for the Holders to realize the value of the
security interests granted to the Trustee. The Company further
recognizes that a violation of this covenant would result in irreparable harm to
the Trustee and the Holders for which monetary damages are not readily
ascertainable. Therefore, in addition to any other remedy which may
be available to the Trustee and Holders at law or in equity, to the extent
permitted by law, the Trustee and the Holders shall have the remedy of specific
performance of the provisions of this Section 9.8(e). To enforce
the provisions of this Section 9.8, the Trustee is authorized to request
the consent or approval of the FCC or other Governmental Authority to a
voluntary or an involuntary assignment or transfer of control of any
authorization, permit or license. In connection with the exercise of
its remedies under this Agreement or under any of the other Indenture Documents,
the Trustee may obtain the
-21-
appointment
of a trustee or receiver to assume, upon receipt of all necessary judicial, FCC
or other Governmental Authority consents or approvals, the control of any
Person, subject to compliance with applicable Requirements of
Law. Such trustee or receiver shall have all rights and powers
provided to it by law or by court order or provided to the Trustee under this
Agreement.
9.9 Section Headings. The
Section headings used in this Agreement are for convenience of reference
only and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
9.10 Integration. This
Agreement and the other Indenture Documents represent the agreement of each
Grantor, the Trustee and the Holders with respect to the subject matter hereof
and thereof, and there are no promises, undertakings, representations or
warranties by the Trustee or any Holder relative to subject matter hereof and
thereof not expressly set forth or referred to herein or in the other Indenture
Documents.
9.11 GOVERNING
LAW. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF DELAWARE. IF FOR ANY REASON THE CHOICE
OF GOVERNING LAW OF THE STATE OF DELAWARE AS PROVIDED IN THE PRECEDING SENTENCE
IS UNENFORCEABLE OR INVALID, ALL PROVISIONS OF THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK AND “APPLICABLE UCC” SHALL BE DEEMED TO REFER TO THE UNIFORM COMMERCIAL
CODE AS FROM TIME TO TIME IN EFFECT IN THE STATE OF NEW YORK.
9.12 Submission to Jurisdiction;
Waivers. Each
Grantor hereby irrevocably and unconditionally:
(a) submits
for itself and its property in any legal action or proceeding relating to this
Agreement and the other Indenture Documents to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York and
Delaware, the courts of the United States of America for the Southern
District of New York and the District of Delaware, and appellate courts from any
thereof;
(b) consents
that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to such Grantor at its address referred
to in Section 9.2 or at such other address of which the Trustee shall have
been notified pursuant thereto;
-22-
(d) agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other
jurisdiction; and
(e) waives,
to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this Section any
special, exemplary, punitive or consequential damages.
9.13 Acknowledgments. Each
Grantor hereby acknowledges that:
(a) it has
been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Indenture Documents to which it is a party;
(b) neither
the Trustee nor any Holder has any fiduciary relationship with or duty to any
Grantor arising out of or in connection with this Agreement or any of the other
Indenture Documents, and the relationship between the Grantors, on the one hand,
and the Trustee and Holders, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint
venture is created hereby or by the other Indenture Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Holders or
among the Grantors and the Holders.
9.14 Additional Grantors;
Release. (a) Each
Subsidiary of the Company that is required to become a party to this Agreement
pursuant to Section 4.17 of the Indenture shall become a Grantor for all
purposes of this Agreement upon execution and delivery by such Subsidiary of an
Assumption Agreement in the form of Annex 1
hereto.
(b) At such
time as the Notes and the other Obligations shall have been paid in full, the
Collateral shall be released from the Liens created hereby, and this Agreement
and all obligations (other than those expressly stated to survive such
termination) of the Trustee and each Grantor hereunder shall terminate, all
without delivery of any instrument or performance of any act by any party, and
all rights to the Collateral shall revert to the Grantors. At the
request and sole expense of the Company, following any such termination, the
Trustee shall deliver to such Grantor any Collateral held by the Trustee
hereunder, and execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to effect or to evidence such
termination.
(c) If any of
the Collateral shall be released in accordance with Section 10.03 of the
Indenture, then the Trustee, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral.
9.15 WAIVER OF JURY
TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.
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IN
WITNESS WHEREOF, each of the undersigned has caused this Collateral Agreement to
be duly executed and delivered as of the date first above written.
CHARTER
COMMUNICATIONS OPERATING, LLC, as Grantor
By:
Charter Communications, Inc., its manager
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By:
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/s/ Eloise
Schmitz
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Name:
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Eloise
Schmitz
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Title:
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Senior
Vice President
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CHARTER
COMMUNICATIONS OPERATING, CAPITAL CORP., as Grantor
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By:
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/s/ Eloise
Schmitz
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Name:
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Eloise
Schmitz
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Title:
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Senior
Vice President
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CCO
HOLDINGS, LLC
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AMERICAN
CABLE ENTERTAINMENT COMPANY, LLC
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CABLE
EQUITIES COLORADO, LLC
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CCO
PURCHASING, LLC
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CHARTER
ADVERTISING OF SAINT LOUIS, LLC
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CHARTER
CABLE OPERATING COMPANY, LLC
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CHARTER
CABLE PARTNERS, LLC
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CHARTER
COMMUNICATIONS ENTERTAINMENT I, LLC
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CHARTER
COMMUNICATIONS ENTERTAINMENT II,
LLC
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CHARTER
COMMUNICATIONS ENTERTAINMENT, LLC
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CHARTER
COMMUNICATIONS PROPERTIES LLC
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CHARTER
COMMUNICATIONS, LLC
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CHARTER
DISTRIBUTION, LLC
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CHARTER
FIBERLINK, LLC
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CHARTER
HELICON, LLC
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CHARTER
RMG, LLC
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HPI
ACQUISITION CO. LLC
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INTERLINK
COMMUNICATIONS PARTNERS, LLC
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LONG
BEACH, LLC
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MARCUS
CABLE ASSOCIATES, L.L.C.
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MARCUS
CABLE OF ALABAMA, L.L.C.
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PEACHTREE
CABLE TV, LLC
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RIFKIN
ACQUISITION PARTNERS, LLC
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TENNESSEE,
LLC
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VISTA
BROADBAND COMMUNICATIONS, LLC
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CABLE
EQUITIES OF COLORADO MANAGEMENT
CORP.
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MARCUS
CABLE, INC.
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ROBIN
MEDIA GROUP, INC.
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HELICON
PARTNERS I, L.P.
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PEACHTREE
CABLE TV, L.P.
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THE
HELICON GROUP, L.P.
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CCO
NR HOLDINGS, LLC
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CHARTER
COMMUNICATIONS VENTURES, LLC
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CC
SYSTEMS, LLC
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CC
FIBERLINK, LLC
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CHARTER
FIBERLINK – ALABAMA, LLC
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CHARTER
FIBERLINK – ILLINOIS, LLC
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CHARTER
FIBERLINK – KENTUCKY, LLC
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CHARTER
FIBERLINK – MICHIGAN, LLC
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CHARTER
FIBERLINK –MISSOURI, LLC
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CHARTER
FIBERLINK TX-CCO, LLC
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CHARTER
COMMUNICATIONS VII, LLC
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FALCON
CABLE COMMUNICATIONS, LLC
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FALCON
COMMUNITY CABLE, L.P.
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FALCON
VIDEO COMMUNICATIONS, L.P.
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FALCON
CABLE MEDIA, A CALIFORNIA LIMITED
PARTNERSHIP
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FALCON
COMMUNITY VENTURES I LIMITED
PARTNERSHIP
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FALCON
CABLE SYSTEMS COMPANY II, L.P.
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FALCON
CABLEVISION, A CALIFORNIA LIMITED
PARTNERSHIP
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FALCON
TELECABLE, A CALIFORNIA LIMITED
PARTNERSHIP
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FALCON
FIRST, INC.
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FALCON
FIRST CABLE OF NEW YORK, INC.
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FALCON
FIRST CABLE OF THE SOUTHEAST, INC.
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ATHENS
CABLEVISION INC.
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DALTON
CABLEVISION INC.
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PLATTSBURGH
CABLEVISION INC.
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SCOTTSBORO
TV CABLE, INC.
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AUSABLE
CABLE TV, INC.
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CHARTER
FIBERLINK AR-CCVII, LLC
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CHARTER
FIBERLINK AZ-CCVII, LLC
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CHARTER
FIBERLINK ID-CCVII, LLC
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CHARTER
FIBERLINK NV-CCVII, LLC
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CHARTER
FIBERLINK OK-CCVII, LLC
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CHARTER
FIBERLINK OR-CCVII, LLC
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CHARTER
FIBERLINK UT-CCVII, LLC
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CHARTER
FIBERLINK WA-CCVII, LLC
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CHARTER
COMMUNICATIONS VI, LLC
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CC
10, LLC
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CC
VI OPERATING COMPANY, LLC
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TIOGA
CABLE COMPANY, INC.
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CHARTER
FIBERLINK MS-CCVI, LLC
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CHARTER
FIBERLINK CA-CCO, LLC
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CHARTER
FIBERLINK KS-CCO, LLC
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CHARTER
FIBERLINK MA-CCO, LLC
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CHARTER
FIBERLINK NC-CCO, LLC
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CHARTER
FIBERLINK NM-CCO, LLC
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CHARTER
FIBERLINK OH-CCO, LLC
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CHARTER
FIBERLINK SC-CCO, LLC
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CHARTER
FIBERLINK VA-CCO, LLC
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CHARTER
FIBERLINK VT-CCO, LLC
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CC
V HOLDINGS, LLC
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CC
VIII, LLC
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CC
VIII HOLDINGS, LLC
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CC
VIII OPERATING, LLC
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CC
MICHIGAN, LLC
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CHARTER
COMMUNICATIONS V, LLC
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CHARTER
TELEPHONE OF MINNESOTA, LLC
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HOMETOWN
T.V., INC.
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MIDWEST
CABLE COMMUNICATIONS, INC.
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CHARTER
VIDEO ELECTRONICS, INC.
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CHARTER
COMMUNICATIONS ENTERTAINMENT I, DST
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RENAISSANCE
MEDIA, LLC
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CC
VIII LEASING OF WISCONSIN, LLC
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CHARTER
CABLE LEASING OF WISCONSIN, LLC
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By:
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/s/ Eloise
Schmitz
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Name:
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Eloise
Schmitz
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Title:
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Senior
Vice President
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Accepted
and Agreed to:
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WILMINGTON
TRUST COMPANY, as Trustee
By: /s/ James J.
McGinley
Name:
James J. McGinley
Title:
Authorized Signer
5-5
ACKNOWLEDGMENT
AND CONSENT
The
undersigned hereby acknowledges receipt of a copy of the Collateral Agreement,
dated as of March 19, 2008 (as the same may be further amended, amended and
restated, supplemented or otherwise modified from time to time, the “Agreement”), made by
the Grantors parties thereto for the benefit of Wilmington Trust Company, as
Trustee. The undersigned agrees for the benefit of the Trustee and
the Holders as follows:
1. The
undersigned will be bound by the terms of the Agreement and will comply with
such terms insofar as such terms are applicable to the undersigned.
2. The
undersigned will notify the Trustee promptly in writing of the occurrence of any
of the events described in Section 6.5(a) of the Agreement.
3. The
terms of Sections 7.1(c) and 7.5 of the Agreement shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to
Section 7.1(c) or 7.5 of the Agreement.
[NAME OF
ISSUER]
By:
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Name:
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Title:
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Address
for Notices:
Fax:
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- 6 -
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Annex 1
to the
Collateral
Agreement
ASSUMPTION
AGREEMENT, dated as of ________________, ____, made by
______________________________, a ______________ (the “Additional Grantor”),
in favor of Wilmington Trust Company, as Trustee (in such capacity, the “Trustee”), for the
holders (the “Holders”) pursuant to
the Indenture, dated as of March 19, 2008 (as amended, supplemented or otherwise
modified from time to time, the “Indenture”), among
Charter Communications Operating, LLC (the “Company”), Charter
Communications Operating Capital Corp. (“Capital Corp.”), the
guarantors party thereto and Wilmington Trust Company, as
Trustee. All capitalized terms not defined herein shall have the
meaning ascribed to them in such Indenture.
W I T N E S S E T H :
WHEREAS,
the Company and Capital Corp. have issued 10 7/8 % Senior
Second Lien Notes due 2014 and may hereafter issue Additional
Notes.
WHEREAS,
in connection with the Indenture, the Company and the other grantors party
thereto have entered into the Collateral Agreement, dated as of March 19, 2008
(as further amended, supplemented or otherwise modified from time to time, the
“Collateral
Agreement”), in favor of the Trustee for the benefit of the
Holders;
WHEREAS,
the Indenture requires the Additional Grantor to become a party to the
Collateral Agreement; and
WHEREAS,
the Additional Grantor has agreed to execute and deliver this Assumption
Agreement in order to become a party to the Collateral Agreement;
NOW,
THEREFORE, IT IS AGREED:
By
executing and delivering this Assumption Agreement, the Additional Grantor, as
provided in Section 9.14 of the Collateral Agreement, hereby becomes a
party to the Collateral Agreement as a Grantor thereunder with the same force
and effect as if originally named therein as a Grantor and, without limiting the
generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Grantor thereunder. The information set forth in
Annex 1-A
hereto is hereby added to the information set forth in the Schedules to the
Collateral Agreement. The Additional Grantor hereby represents and
warrants that each of the representations and warranties contained in
Section 5 of the Collateral Agreement with respect to the Additional
Grantor is true and correct on and as the date hereof (after giving effect to
this Assumption Agreement) as if made on and as of such date.
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- 7 -
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IN
WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly
executed and delivered as of the date first above written.
[ADDITIONAL
GRANTOR]
By:
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Name:
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Title:
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- 8 -
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Annex 1-A
to the
Assumption
Agreement
Supplement to Schedule
1
Supplement to Schedule
2
Supplement to Schedule
3
Supplement to Schedule
4
Exhibit
10.3
SEPARATION
AGREEMENT AND RELEASE
FOR
JEFFREY T. FISHER
This
Separation Agreement and Release (this “Agreement”) is entered into between
Charter Communications, Inc. (the “Company” or “Charter”) and me, Jeffrey T.
Fisher, as a condition to my receiving payments pursuant to my Employment
Agreement with Charter dated August 1, 2007 (the “Employment Agreement”) in
connection with the termination of my employment with Charter as of April 4,
2008 (the “Termination Date”). The Company and I hereby agree as
follows:
(a) Payments And Benefits
Payable Per The Employment Agreement: Provided I am not
terminated for breach of the terms of this agreement or of my Employment
Agreement prior thereto, I shall remain employed by Charter pursuant to the
terms of my Employment Agreement through the Termination Date, I shall receive
salary at my current annual rate of $515,000 in bi-weekly installments as such
installments are normally paid to senior executives (with all salary
installments due but not paid prior to my execution of this Agreement to be paid
on the first payday after all conditions in Section 15(g) of the
Employment Agreement are satisfied); I shall continue to receive all benefits,
without interruption, including, without limitation, health insurance; and I
shall continue to participate in all medical and child care flex spending
accounts I have previously selected, all through the Termination
Date. In addition, in exchange for my execution and delivery of this
Agreement, specifically including the effectiveness of the release set forth in
section “b” hereof (and the failure to revoke same within seven (7) days after I
sign and deliver it), the Company will provide me with the following payments
and benefits in satisfaction of the requirements of Section 15(b) of the
Employment Agreement and any other claim I may hold against Charter or its
employees:
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(i)
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The
base salary that would have been paid to me, calculated at the current
annual rate of $515,000 per annum plus target bonus, from the date my
employment is terminated through April 4, 2010 (the “Separation Term”);
provided that the total of all such payments shall not exceed, in the
aggregate, the gross amount of $1,751,000. Subject to the
provisions of Section 15(g) of the Employment Agreement, this amount
(the “Separation Payment”) will be paid over the Separation Term in equal
bi-weekly installments on the Company’s regular pay days for executives,
commencing with the first payday after all conditions in
Section 15(g) of the Employment Agreement are satisfied; provided
that, in order to avoid the tax consequences of Section 409A of the
Internal Revenue Code of 1986 (the “Code”), the first payment shall cover
all payments scheduled to be made to me in the bi-weekly payments that
would have been made to me for the period (the “Initial Payment Period”)
beginning on April 5, 2008 and ending on the six (6) month anniversary of
the date I have a separation from service for purposes of Code
Section 409A, and the first such payment shall be delayed until the
day after the end of the Initial Payment Period; and provided further that
if a Change of Control (as defined within Section 1(f) of the Employment
Agreement) occurs during the twenty-four (24) month Separation Term the
Company shall immediately pay upon any such Change in Control all amounts
remaining
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payable
to me as part of the Separation Payment in the form of a lump sum
payment;
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(ii)
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A
lump sum payment (net after deduction of taxes and other required
withholdings) equal to (a) twenty-four (24) times the monthly cost,
at the time my employment is terminated, for me to receive under COBRA the
paid coverage for health, dental and vision benefits then being provided
for me and my family at the Company’s cost at the time my employment is
terminated and (b) ten (10) days salary in lieu of a full thirty-day
notice of termination per Section 14(b) of the Employment Agreement,
This amount will be paid on the day after the last day of the Initial
Payment Period, and will not take into account future increases in costs
during the applicable time period;
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(iii)
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To
the extent authorized and permitted by the terms of the applicable plan,
any stock options previously awarded to me will continue to vest, any
restricted stock previously awarded to me shall have their restrictions
lapse and any performance shares shall continue to vest, as called for
under such plan for the Separation Term, in accordance with the schedule
attached hereto as Schedule
A. This Separation Term qualifies, in the case of a
payment under Section 15(b) of the Employment Agreement, as the period of
time during which I am receiving severance for purposes of
Section 5.4 of the Charter Communications, Inc 2001 Stock Incentive
Plan, as amended, and any applicable stock option, restricted stock
agreement or performance unit/share agreement signed pursuant to a grant
under such plan (and the payment specified in Section 15(b) of the
Employment Agreement qualifies as “severance” for purposes of
Section 5.4 of the Charter Communications, Inc. 2001 Stock Incentive
Plan). Notwithstanding the foregoing, no stock option shall
remain exercisable beyond the latest date on which the term of the stock
option could be extended without causing the stock option to be treated as
deferred compensation subject to Section 409A of the Internal Revenue
Code; and
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(iv)
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The
full cost of up to twelve (12) months, to the extent necessary, of
executive-level out-placement services that provides, as part of the
outplacement services, the use of an office and secretarial support as
near as reasonably practicable to my
residence.
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These
payments and benefits will be paid and/or provided as and when called for by the
Employment Agreement after all conditions to the effectiveness of this Agreement
and the releases called for by this Agreement have been
satisfied. The right to retain the same shall be subject to
compliance with this Agreement and the terms of the Employment
Agreement. In the event I die before all payments and amounts due to
me hereunder are paid, any remaining payments will be made to my spouse, if she
survives me and, if not, then to my estate.
I
acknowledge I have received my wages per the terms of my Employment Agreement
for all time worked through and ending April 4, 2008, and I will receive a cash
payout of 12.22 hours of
2
accrued
and unused vacation calculated as of April 4, 2008 at my rate of base salary in
effect as of April 4, 2008.
Complete
Release: I hereby understand and agree to the termination of
all offices, directorships, manager positions and other similar offices I hold
with Charter or any of its subsidiaries or related or affiliated corporations,
limited liability companies and partnerships and all employment by Charter
effective the close of business on April 4, 2008. In consideration
for the payments I am to receive hereunder, I unconditionally and irrevocably
release, waive and give up any and all known and unknown claims, lawsuits and
causes of action, if any, that I now may have or hold against Charter, its
current and former parents, plans, subsidiaries, and related or affiliated
corporations, ventures, limited liability companies and partnerships, and their
respective current and former employees, directors, fiduciaries, administrators,
insurers, members, managers, partners, and agents and related parties, in any
way arising out of, in connection with or based upon (i) any event or fact
that has occurred prior to the date I sign this Agreement, (ii) my
employment with Charter and/or any of its subsidiaries or affiliates to date and
any event or occurrence occurring during such employment, (iii) the
termination of my employment, (iv) any breach of the Employment Agreement,
(v) any claim to payment under or from Charter’s 2005 Executive Cash Award
Plan or for salary, bonus, stock options or restricted shares other than as
specifically granted pursuant to this Agreement; or (vi) any decision,
promise, agreement, statement, policy, practice, act or conduct prior to this
date of or by any person or entity I am releasing, and from any claims,
lawsuits. I understand that this means that, subject to the limitations
described below, I am releasing Charter and such other persons and entities
from, and may not bring claims against any of them under (a) Title VII of
the Civil Rights Act of 1964 or Sections 1981 and 1983 of the Civil Rights
Act of 1866, which prohibit discrimination based on race, color, national
origin, ancestry, religion, or sex; (b) the Age Discrimination in
Employment Act, which prohibits discrimination based on age; (c) the Equal
Pay Act, which prohibits paying men and women unequal pay for equal work;
(d) the Americans with Disabilities Act and Sections 503 and 504 of
the Rehabilitation Act of 1973, which prohibit discrimination based on
disability; (e) the WARN Act, which requires that advance notice be given
of certain workforce reductions or the Missouri Human Rights Act, chapter 213,
R.S. Mo; (f) the Employee Retirement Income Security Act, which among other
things, protects employee benefits; (g) the Family and Medical Leave Act of
1993, which requires employers to provide leaves of absence under certain
circumstances; (h) the Sarbanes-Oxley Act of 2002, which, among other
things, provides Whistleblower protection; (i) any federal or state law,
regulation, decision, or executive order prohibiting discrimination or
retaliation or for breach of contract; (j) any of the laws of the State of
Missouri or any political subdivision of such State; (k) any law
prohibiting retaliation based on exercise of my rights under any law, providing
whistleblowers protection, providing workers’ compensation benefits, protecting
union activity, mandating leaves of absence, prohibiting discrimination based on
veteran status or military service, restricting an employer’s right to terminate
employees or otherwise regulating employment, enforcing express or implied
employment contracts, requiring an employer to deal with employees fairly or in
good faith, providing recourse for alleged wrongful discharge, tort, physical or
personal injury, emotional distress, fraud, negligent or other
misrepresentation, defamation, and similar or related claims, and any other law
relating to salary, commission, compensation, benefits, and other
matters. I specifically represent and agree that I have not been
treated adversely on account of age, gender or other legally protected
classification, nor have I otherwise been treated wrongfully in connection with
my employment with the Company and/or
3
any of
its subsidiaries or affiliates and that I have no basis for a claim under the
Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964,
or any applicable law prohibiting employment or other discrimination or
retaliation. I acknowledge that the Company relied on the
representations and promises in this Agreement in agreeing to pay me the
benefits described in subsection (a). I understand that I am
releasing claims for events that have occurred prior to my signing this
Agreement that I may not know about. This release does not include claims
arising after the date I sign this Agreement, any claim under a stock option
plan or award agreement, incentive stock plan, or the restricted stock award
agreement based upon my service to and ending the date my employment terminates,
any claim under a group health insurance plan in which I participate for claims
accrued as of the date my employment terminated, a breach of the provisions of
this Agreement (including but not limited to a breach of any obligation to
provide me with the payments and benefits called for by Sections 15 (b) of
the Employment Agreement, as specified in paragraph (a) above) and any
pending claims for workers compensation that have already been filed or for
on-the-job injuries that have already been reported, or any claim for
indemnification by Charter for actions taken by me within the course and scope
of my employment to the degree such actions are subject to indemnification under
Charter’s policies and practices.
Charter
hereby states and acknowledges that, to the best current knowledge of its Chief
Executive Officer, Chief Operating Officer and General Counsel, Charter has no
claim against me for breach of my employment agreement or other claim of
material liability.
(b) Promise Not to File
Claims: I promise never to file, prosecute or pursue any
lawsuit based on a claim purportedly released by this Agreement, or (absent
court order) to assist others in filing or prosecuting similar claims against
Charter. I understand and agree that nothing in this Agreement
precludes me from filing a charge of discrimination under applicable federal or
state law, although I have personally released such claims with regard to
matters and facts occurring prior to this date. I specifically
acknowledge and agree that I am not entitled to severance or any other benefits
under the Charter Communications Special One-Time Severance Plan or other
severance plan or contract, or to any payments following termination of my
employment under or by reason of the Employment Agreement (other than the
payments and benefits called for by Sections 15(b) of the Employment
Agreement, as specified in paragraph (a) above), and that the payments and
benefits described in this Agreement are in lieu of any severance or other
benefits to which I may be entitled under such plan or any other policy,
program, plan or agreement and satisfy and are in lieu of any payments to which
I may be entitled under the Employment Agreement or any other such plan, policy,
program or arrangement, and I specifically waive any rights I may have under
that plan and any such agreement, if any.
(c) Non-admission of
Liability: This Agreement is not an admission of fault,
liability or wrongdoing by me or any released party, and should not be
interpreted or construed as such I understand that all released parties
specifically deny engaging in any liability or wrongdoing.
(d) Non-Disparagement: Neither
Charter nor I will make any statement or announcement concerning my departure
from Charter except as may be reviewed and approved by the other party in
advance provided that
both Charter and I may inform third parties that my employment will terminate or
was terminated (as the case may be) through mutual agreement on April 4,
2008. During the balance of and subsequent to my employment with
Charter and/or any of its
4
subsidiaries
or affiliates, I agree not to criticize, denigrate, disparage, or make any
derogatory statements about the Company (including any subsidiaries, or
affiliates), its business plans, policies and practices, or about any of its
officers, employees or former officers or employees, to customers, competitors,
suppliers, employees, former employees, members of the public (including but not
limited to in any internet publication, posting, message board or weblog),
members of the media, or any other person, nor shall I take any action
reasonably expected to harm or in any way adversely affect the reputation and
goodwill of the Company. During the balance of and subsequent to my
employment with Charter and/or any of its subsidiaries or affiliates, Charter
agrees, for itself, its directors and executive employees not to criticize,
denigrate, disparage, or make any derogatory statements about me to customers,
competitors, suppliers, employees, former employees, members of the public
(including but not limited to in any Internet publication, posting, message
board or weblog), members of the media, or any other person, nor shall Charter,
its directors, employees, or agents, take any action reasonably expected to harm
or in any way adversely affect my reputation. Nothing in this
paragraph shall prevent anyone from giving truthful testimony or information to
law enforcement entities, administrative agencies or courts or in any other
legal proceedings as required by law, including, but not limited to, assisting
in an investigation or proceeding brought by any governmental or regulatory body
or official related to alleged violations of any law relating to fraud or any
rule or regulation of the Securities and Exchange Commission.
(e) Future
Cooperation: I agree, at no cost to myself, to make myself
reasonably available by telephone, e-mail or in person to meet and speak with
representatives of Charter regarding events, omissions or other matters
occurring during my employment with Charter of which I have personal knowledge
or involvement that give rise or may give rise to a legal claim against
Charter. I, at no out of pocket cost to myself, also shall reasonably
cooperate with Charter in the defense of such claims, provided that, the
requirement for such cooperation with Charter shall terminate seven years from
the date of the identification of any such claim or claims. To the
fullest extent possible, Charter shall schedule any telephone conferences or
meetings with me for places near my residence and at times outside my normal
work schedule and shall take all other reasonable measures to ensure that my
schedule is disrupted to the least extent possible. To the fullest
extent possible, Charter will seek to avoid having me travel to locations
outside the metropolitan area within which I reside. If the Company requires me
to travel outside the metropolitan area in the United States where I then reside
to provide any testimony or otherwise provide any such assistance, then Charter
will reimburse me for any reasonable, ordinary and necessary travel and lodging
expenses incurred by me to do so, provided I submit all documentation required
under Charter’s standard travel expense reimbursement policies and as otherwise
may be required to satisfy any requirements under applicable tax laws for
Charter to deduct those expenses. I shall respond to requests by
Charter for nominal assistance (such as occasional requests for factual
recollections) at no charge but shall be compensated for my time and assistance
providing more than nominal amounts of historical factual information or
testimony at the rate of $259 per hour; and shall be compensated for any expert
testimony, including preparation time, at the rate of $500 per hour. Nothing in this Agreement
shall be construed or interpreted as requiring me to provide any testimony,
sworn statement or declaration that is not complete and truthful.
(f) Confidential and Proprietary
Information; Covenant Not To Compete: I reaffirm my
obligations under and agree to remain bound by and to comply with the provisions
of
5
Sections 17,
18 and 19 of my Employment Agreement with Charter, and agree those provisions
continue to apply to me, notwithstanding the termination of my employment, the
reason for termination of employment, or any act, promise, decision, fact or
conduct occurring prior to this date. The “Restricted Period” for
purposes of Section 19 of my Employment Agreement shall start for all
purposes on April 5, 2008 and shall end for (and solely for) the purposes of
section 19(b) of the Employment Agreement on April 4, 2010. In
addition, I reaffirm my obligations under and agree to remain bound by and to
comply with any other agreement or policy relating to confidential information,
invention, non-solicitation, non competition, or similar matters to which I am
now subject.
(g) Consideration of
Agreement: The Company advised me to take this Agreement home,
read it, and carefully consider all of its terms before signing
it. The Company gave me, and I understand that I have, 21 days in
which to consider this Agreement, sign it and return it to the Company. I waive
any right I might have to additional time within which to consider this
Agreement. I understand that I may discuss this Agreement with an
attorney, at my own expense during this period I understand that I may revoke
this Agreement within 7 days after I sign it by advising the Company orally or
in writing within that seven (7) day time period of my intention to revoke this
Agreement. I have carefully read this Agreement, I fully understand
what it means, and I am entering into it voluntarily. I am receiving valuable
consideration in exchange for my execution of this Agreement that I would not
otherwise be entitled to receive, consisting of the benefits described in
Paragraph (a) of this Agreement. If I revoke my acceptance of
this Agreement within such 7 day time period, or if I fail to accept this
Agreement within the 21 day time period, then Charter shall have no obligations
under this Agreement, including but not limited to any obligation to pay or
provide the payments specified in this Agreement or under the Employment
Agreement
(h) Return of
Property: I will return to the Company on or prior to the
Termination Date all files, memoranda, documents, records, credit cards, keys,
equipment (other than my Blackberry cell phone and laptop computer, although I
understand that I will no longer be provided service for such equipment after my
Termination Date), badges, vehicles, Confidential Information (as defined in the
Employment Agreement) and any other property of the Company then in my
possession or control as directed by the Company provided that I hereby
represent and warrant that I have not, and agree that I will not, make any
copies of company files residing my laptop or other computers accessible to me
and shall return the laptop to the company prior to the Termination Date so that
all company files and information can be removed from its memory prior to the
Termination Date. I also will reveal to the Company at the Company’s
request all access codes to any computer or other program or
equipment
(i) Choice of
Law: This Agreement was drafted in Missouri, and the Company’s
Corporate offices are in Missouri. Therefore, this Agreement is to be governed
by and interpreted according to the internal laws of the State of Missouri
without reference to conflicts of law principles, and this Agreement shall be
deemed to have been accepted and entered into in the State of
Missouri
(j) Amendment,
Miscellaneous: Neither this Agreement nor any of its terms may
be amended, changed, waived or added to except in a writing signed by both
parties. The Company has made no representations or promises to me to sign this
Agreement, other than those in or referred to by
6
this
Agreement. If any provision in this Agreement is found to be unenforceable, all
other provisions will remain fully enforceable
Remainder
Of Page Intentionally Left Blank
7
This
Agreement was presented to me on March 14, 2008. I have read it and
carefully consider all of its provisions before signing it I have had in excess
of 21 days in which to consider it, sign it and return it to Lynne Ramsey This
agreement will not become effective until it has been executed by the Company
representative named below
I have
carefully read this Agreement, I fully understand what it means, and I am
entering into it voluntarily.
Presented
By:
Name:
/s/ Lynne F.
Ramsey
Date
Delivered: March 14, 2008
Employee:
Signature:
/s/ J.T.
Fisher
Date
Signed: 5-2-08
Printed
Name : J. T.
Fisher
Company:
Signature:
/s/ Lynne F.
Ramsey
Date
Received: 5-8-08
Printed
Name : Lynne F.
Ramsey
Please
Return to:
Lynne F.
Ramsey
Senior
Vice President, Human Resources
Charter
Communications
!2405
Powerscourt Drive
St.
Louis, MO 63131
8
Exhibit 10.4a
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (the “Agreement”), dated
and effective the 1st
day of August, 2007 (the
“Effective
Date”) is made by and between CHARTER COMMUNICATIONS, INC., a Delaware
corporation (the “Company”), and Eloise E. Schmitz, an
adult resident of Missouri,
RECITALS:
WHEREAS, the Executive and the
Company have previously entered into that certain Employment Agreement dated
October 1, 2005 (the "Old Employment
Agreement") and the parties desire to amend and restate in its entirety
the Old Employment Agreement;
WHEREAS, it is the desire of
the Company to assure itself of the services of Executive by engaging Executive
as its Senior Vice President Strategic Planning and the Executive desires to
serve the Company on the terms herein provided;
WHEREAS, in connection with
the entry into the Agreement, the Executive will be granted performance units
and restricted shares of Company Stock pursuant to the
Company's 2001 Stock Incentive Plan, as amended as of the date hereof (the “Special
Equity”);
WHEREAS, Executive’s agreement
to the terms and conditions of Sections 17 and 19 are a material and essential
condition of Executive’s employment with the Company hereafter under the terms
of this Agreement;
NOW, THEREFORE, in
consideration of the foregoing and of the respective covenants and agreements
set forth below, the parties hereto agree as follows:
1. Certain
Definitions.
(a) “Allen”
shall mean Paul G. Allen (and his heirs or beneficiaries under his will(s),
trusts or other instruments of testamentary disposition), and any entity or
group over which Paul G. Allen has Control and that constitutes a Person as
defined herein. For the purposes of this definition, “Control” means the
power to direct the management and policies of an entity or to appoint or elect
a majority of its governing board.
(b) “Annual
Base Salary” shall have the meaning set forth in Section 5.
(c) “Board”
shall mean the Board of Directors of the Company.
(d) “Bonus”
shall have the meaning set forth in Section 6.
(e) The
Company shall have “Cause” to terminate Executive’s employment hereunder upon
Executive’s:
(i) Executive’s
breach of a material obligation (which, if curable, is not cured within ten
business (10) days after Executive receives written notice of such breach)
1
or
representation under this Agreement or breach of any fiduciary duty to the
Company which, if curable, is not cured within ten business (10) days after
Executive receives written notice of such breach; or any act of fraud or knowing
material misrepresentation or concealment upon, to or from the Company or the
Board;
(ii) Executive’s
failure to adhere in any material respect to (i) the Company’s Code of Conduct
in effect from time to time and applicable to officers and/or employees
generally, or (ii) any written Company policy, if such policy is material to the
effective performance by Executive of the Executive’s duties under this
Agreement, and if Executive has been given a reasonable opportunity to cure this
failure to comply within a period of time which is reasonable under the
circumstances but not more than the thirty (30) day period after written notice
of such failure is provided to Executive; provided that if Executive
cures this failure to comply with such a policy and then fails again to comply
with the same policy, no further opportunity to cure that failure shall be
required;
(iii) Executive’s
misappropriation (or attempted misappropriation) of a material amount of the
Company’s funds or property;
(iv) Executive’s
conviction of, the entering of a guilty plea or plea of nolo contendere or no contest
(or the equivalent), or entering into any pretrial diversion program or
agreement or suspended imposition of sentence, with respect to either a felony
or a crime that adversely affects or could reasonably be expected to adversely
affect the Company or its business reputation; or the institution of criminal
charges against Executive, which are not dismissed within sixty (60) days after
institution, for fraud, embezzlement, any felony offense involving dishonesty or
constituting a breach of trust or moral turpitude;
(v) Executive’s
admission of liability of, or finding of liability, for a knowing and deliberate
violation of any “Securities Laws.” As used herein, the term
“Securities Laws” means any federal or state law, rule or regulation governing
generally the issuance or exchange of securities, including without limitation
the Securities Act of 1933, the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder;
(vi) conduct
by Executive in connection with Executive’s employment that constitutes gross
neglect of any material duty or responsibility, willful
misconduct, or recklessness which, if curable, is not cured within
ten business (10) days after Executive receives written notice of such
breach;
(vii) Executive’s
illegal possession or use of any controlled substance, or excessive use of
alcohol at a work function, in connection with Executive’s duties, or on Company
premises; “excessive” meaning either repeated unprofessional use or any single
event of consumption giving rise to significant intoxication or unprofessional
behavior;
(viii) willful
or grossly negligent commission of any other act or failure to act in connection
with the Executive’s duties as an executive of the Company which causes or
reasonably may be expected (as of the time of such occurrence) to cause
substantial
2
economic
injury to or substantial injury to the business reputation of the Company or any
subsidiary or affiliate of the Company, including, without limitation, any
material violation of the Foreign Corrupt Practices Act, as described herein
below.
If
Executive commits or is charged with committing any offense of the character or
type specified in subparagraphs 1(e)(iv), (v) or (viii) above, then the Company
at its option may suspend the Executive with or without pay. If the
Executive subsequently is convicted of, pleads guilty or nolo contendere (or
equivalent plea) to, or enters into any type of suspended imposition of sentence
or pretrial diversion program with respect to, any such offense (or any matter
that gave rise to the suspension), the Executive shall immediately repay any
compensation paid in cash hereunder from the date of the
suspension. Notwithstanding anything to the contrary in any stock
option or equity incentive plan or award agreement, all vesting and all lapsing
of restrictions on restricted shares shall be tolled during the period of
suspension and all unvested options and restricted shares for which the
restrictions have not lapsed shall terminate and not be exercisable by or issued
to Executive if during or after such suspension the Executive is convicted of,
pleads guilty or nolo
contendere (or equivalent plea) to, or enters into any type of suspended
imposition of sentence or pretrial diversion program with respect to, any
offense specified in subparagraphs 1(e)(iv), (v) or (viii) above or any matter
that gave rise to the suspension.
(f) “Change
of Control” shall be deemed to have occurred if:
(i) any
Person is or becomes a “beneficial owner” (as determined for purposes of
Regulation 13D-G, as currently in effect, of the Exchange Act), directly or
indirectly, of securities representing the Applicable Percentage (as defined
below) or more of the total voting power of all of the Company’s then
outstanding voting securities. For purposes of this Section 1(f), the
term “Person” shall not include: (A) the Company or any of
its subsidiaries, (B) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any of its subsidiaries, or
(C) an underwriter temporarily holding securities pursuant to an offering
of said securities, or (D) Allen. For purposes of this Agreement, in
the case of a recapitalization or other exchange involving the exchange of
Company voting stock for the Company's debt, the group of debtholders that
acquires such Company voting stock as the result of such recapitalization or
exchange shall not be treated as a single Person solely by reason of such
recapitalization or exchange; or
(ii) the
occurrence of a
merger, consolidation or sale or other disposition of all or substantially all
of the assets of the Company (a “Business Combination”), in each case, unless
following such Business Combination: (A) all or substantially
all of the individuals and entities who were the “beneficial owners” (as
determined for purposes of Regulation 13D-G, as currently in effect, of the
Exchange Act) of the outstanding voting securities of the Company immediately
prior to such Business Combination beneficially own, directly or indirectly,
securities representing more than fifty percent (50%) of the total voting power
of the then outstanding voting securities of the entity resulting from such
Business Combination (or such assets as the case may be) or the parent of such
entity in substantially the same proportionate ownership as in effect
immediately prior to the Business Combination (the “Resulting Entity”); and
(B) a majority of the members of the board of directors or other governing
body of the Resulting Entity were members of the Board at the
3
time of
the execution of the initial agreement, or at the time of the action of the
Board, providing for such Business Combination; or
(iii) the
consummation of a plan of complete liquidation or dissolution of the Company;
or
(iv) if
and when Allen shall no longer have the power to appoint a majority of the
Board, during any period of two (2) consecutive calendar years, individuals who
either (A) at the beginning of such period are members of the Board ("Incumbent
Directors"), or (B) whose election to the Board during such period is approved
by a vote of the majority of those members of the Board who are Incumbent
Directors at the time of such approval, whereupon such individual so approved
shall be treated as an Incumbent Director with respect to future approvals,
cease for any reason to constitute a majority of the Board.
Notwithstanding
the foregoing subsections 1(f)(i) through (iii), a Change of Control shall
not include any transaction or series of transactions, including any
transactions described above if, following such transaction or transactions, (x)
Allen has the largest percentage ownership of the voting securities in the
Company or any successor or surviving corporation held by any Person (other
than any Person that includes Allen), provided such percentage ownership is more
than twenty-five percent or (y) Allen has the power to appoint a majority of the
members of the Board of Directors.
For
purposes of this definition, (A) at all times that Allen is or are the
“beneficial owner(s)” (as determined for purposes of Regulation 13D-G, as
currently in effect, of the Exchange Act) of securities representing in the
aggregate at least fifty percent (50%) of the total voting power of all of the
Company’s then outstanding voting securities, “Applicable Percentage” means
fifty percent (50%); and (B) at all times that Allen is or are the beneficial
owner(s) of securities representing in the aggregate less than fifty percent
(50%) of the total voting power of all of the Company’s then outstanding voting
securities, “Applicable Percentage” means any percentage that is more than the
greater of (1) the percentage of the total voting power of all of the
Company’s then outstanding voting securities represented by securities
beneficially owned by Allen or (2) twenty-five percent (25%).
(g) “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to
time.
(h) “Committee”
shall mean either the Compensation and Benefits Committee of the Board, or a
Subcommittee of such Committee duly appointed by the Board or the
Committee.
(i) “Company”
shall have the meaning set forth in the preamble hereto.
(j) “Company
Stock” shall mean the $.10 par value common stock of the Company.
4
(k) “Date
of Termination” shall mean (i) if Executive’s employment is terminated by
Executive’s death, the date of Executive’s death and (ii) if Executive’s
employment is terminated pursuant to Section 14(a)(ii) – (vi), the date of
termination of employment, as defined in 409(A) regulations under the
Code.
(l) For
purposes of this Agreement, Executive will be deemed to have a “Disability” if,
due to illness, injury or a physical or medically recognized mental condition,
(a) Executive is unable to perform Executive’s duties under this Agreement with
reasonable accommodation for 120 consecutive days, or 180 days during any twelve
month period, as determined in accordance with this Section, or (b) Executive is
considered disabled for purposes of receiving / qualifying for long term
disability benefits under any group long term disability insurance plan or
policy offered by Company in which Executive participates. The
Disability of Executive will be determined by a medical doctor selected by
written agreement of Company and Executive upon the request of either party by
notice to the other, or (in the case of and with respect to any applicable long
term disability insurance policy or plan) will be determined according to the
terms of the applicable long term disability insurance policy /
plan. If Company and Executive cannot agree on the selection of a
medical doctor, each of them will select a medical doctor and the two medical
doctors will select a third medical doctor who will determine whether Executive
has a Disability. The determination of the medical doctor selected
under this Section will be binding on both parties. Executive must
submit to a reasonable number of examinations by the medical doctor making the
determination of Disability under this Section, and to other specialists
designated by such medical doctor, and Executive hereby authorizes the
disclosure and release to Company of such determination and all supporting
medical records. If Executive is not legally competent, Executive’s
legal guardian or duly authorized attorney-in-fact will act in Executive’s stead
under this Section for the purposes of submitting Executive to the examinations,
and providing the authorization of disclosure, required under this
Section.
(m) “Executive”
shall have the meaning set forth in the preamble hereto.
(n) “Good
Reason” shall mean any of the events described herein that occur without
Executive's prior written consent: (i) any reduction in Executive’s Annual Base
Salary, Target Bonus Percentage, or title except as permitted hereunder, (ii)
any failure to pay Executive's compensation hereunder when due; (iii) any
material breach by the Company of a term hereof; (iv) relocation
of Executive’s primary workplace to a location that is more
than fifty (50) miles from the office where Executive is then
assigned to work as Executive’s principal office; (v) any change in reporting
structure such that Executive no longer reports directly to the officer (by
function) to whom Executive reports at the time of the execution of this
Agreement (or equivalent position if the Company has changed functional
responsibilities of its senior executive staff) (in each case “(i)” through
“(v)” only if Executive objects in writing within 30 days after being informed
of such events and unless Company retracts and/or rectifies the claimed Good
Reason within 30 days following Company’s receipt of timely
written objection from Executive); (vi) if within six months after a Change of
Control, Executive has not received an offer from the surviving company to
continue in an equivalent position in terms of title, responsibility and
compensation (except that the value of
equity-based compensation after such Change
of Control need only be commensurate with
the value of equity-based compensation
given to executives with equivalent positions in the surviving company, if any)
as set herein; (vii) the Company's decision not to renew this Agreement
5
at the end of its term, or (viii) the failure of a successor to the business of the Company to assume the Company's obligations under this Agreement in the event of a Change of Control during its term.
(o) “Notice
of Termination” shall have the meaning set forth in Section 14(b).
(p) “Options”
shall have the meaning set forth in Section 7
(q) “Performance
Unit” and “Performance Shares” shall have the meaning set forth in Section 9
hereof.
(r) “Person”
shall have the meaning set forth in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934.
(s) “Plan”
shall mean the 2001 Stock Incentive Plan as amended by the Company from time to
time.
(s) “Restricted
Shares” shall have the meaning set forth in Section 8.
(t) “Term”
shall have the meaning set forth in Section 2.
(u) "Voluntary"
and "Voluntarily" in connection with Executive's termination of employment shall
mean a termination of employment resulting from the initiative of the Executive,
excluding a termination of employment attributable to Executive's death or
Disability. A resignation by Executive that is in response to a communicated
intent by the Company to discharge Executive other than for Cause is not
considered to be "Voluntary" and shall be considered to be a termination by the
Company for the purposes of this Agreement.
2. Employment
Term. The
Company hereby employs the Executive, and the Executive hereby accepts his
employment, under the terms and conditions hereof, for the period (the “Term”) beginning on
the Effective Date hereof and terminating upon the earlier of (i) July 31,
2010 (the “Initial Term”) and
(ii) the Date of Termination as defined in Section 1(k), and, if not terminated
earlier, will be automatically renewed at the end of its Initial Term and on
each anniversary thereafter for a period of one (1) year unless either party
shall give written notice of cancellation to the other party not later than
ninety (90) days prior to the end of the Initial Term or anniversaries
thereof.
3. Position
and Duties. Executive
shall serve as Senior Vice President Strategic Planning initially reporting
to the Chief Executive Officer but with such other reporting relationships as
shall be determined by the Chief Executive Officer from time to time”, with such
responsibilities, duties and authority as are customary for such role,
including, but not limited to, overall management responsibility for financial
strategic planning in the Company. Executive shall devote all
necessary business time and attention, and employ Executive’s reasonable best
efforts, toward the fulfillment and execution of all assigned duties, and the
satisfaction of defined annual and/or longer-term performance
criteria.
6
4. Place of
Performance. In connection with Executive’s employment during
the Term, Executive's initial primary workplace shall be the Company’s offices
in or near St. Louis, MO. except for necessary travel on the Company’s
business.
5. Annual
Base Salary. During the Term,
Executive shall receive a base salary at a rate not less than $365,575.00
per annum (the “Annual
Base Salary”), less standard deductions, paid in accordance with the
Company’s general payroll practices for executives, but no less frequently than
monthly. The Annual Base Salary shall compensate Executive for any
official position or directorship of a subsidiary or affiliate that Executive is
asked to hold in the Company or its subsidiaries or affiliates as a part of
Executive’s employment responsibilities. No less frequently than
annually during the Term, the Committee, on advice of the Company’s Chief
Executive Officer, shall review the rate of Annual Base Salary payable to
Executive, and may, in its discretion, increase the rate of Annual Base Salary
payable hereunder; provided,
however, that any increased rate shall thereafter be the rate of “Annual
Base Salary” hereunder.
6. Bonus. Except
as otherwise provided for herein, for each fiscal year or other period
consistent with the Company’s then-applicable normal employment practices during
which Executive is employed hereunder on the last day (the “Bonus Year”),
Executive shall be eligible to receive a bonus in an amount up to 50 % of
Executive’s Annual Base Salary (the “Bonus” and bonuses at
such percentage of Annual Base Salary being the “Target Bonus”)
pursuant to, and as set forth in, the terms of the Executive Bonus Plan as such
Plan may be amended from time to time, plus such other bonus payments, if any,
as shall be determined by the Committee in its sole discretion, with such Bonus
being paid on or before February 28 of the year next following the Bonus Year,
or as soon as is administratively practicable thereafter (e.g., after the public
disclosure of the Company’s financial results for the prior year on SEC Form
10-K or on such replacement form as the SEC shall determine, for those years as
the Company’s securities are traded publicly, and the Company’s annual financial
results are reported to the shareholders, for those (if any) years as the
Company’s securities are not traded publicly).
7. Stock
Options. The Company has previously granted to Executive
options to purchase shares of Company Stock as set forth in Exhibit A hereto,
and may, in the Committee’s discretion, grant to Executive additional options to
purchase shares of Company Stock (all of such options, collectively, the “Options”) pursuant to
the terms of the Plan, any successor plan and an associated Stock Option
Agreement.
8. Restricted
Shares. The Company has previously granted to Executive
Restricted Shares of Company Stock as set forth in Exhibit A hereto, and may, in
the Committee’s discretion, grant to Executive Restricted Shares (collectively,
the “Restricted
Shares”), which shall be subject to restrictions on their sale as set
forth in the Plan and an associated Restricted Shares Grant Letter.
9. Performance
Shares Units. The Company has previously granted to Executive
Performance Share Units of which some have been converted into Performance
Shares (which are not aggregated in the forgoing description of Restricted
Shares) as set forth in Exhibit A hereto, and may, in the Committee’s
discretion, grant to Executive further Performance Share Units (collectively,
the “Performance
Units”), which shall be subject to restrictions on their sale as set
forth in the Plan and an associated Performance Unit Grant Letter.
7
10. Executive
Cash Bonus Plan. Executive currently is a participant in the
Company’s 2005 Executive Cash Award Plan with a Plan Award (as defined in such
Plan) as set forth in Exhibit B and shall remain a participant in such Plan
under the terms therefore for the term of this Agreement.
11. Benefits. Executive
shall be entitled to receive such benefits and to participate in such employee
group benefit plans, including life, health and disability insurance policies,
and financial planning services, and other perquisites and plans as are
generally provided by the Company to its senior executives of comparable level
and responsibility in accordance with the plans, practices and programs of the
Company, as amended from time to time.
12. Expenses. The
Company shall reimburse Executive for all reasonable and necessary expenses
incurred by Executive in connection with the performance of Executive’s duties
as an employee of the Company in accordance with the Company’s generally
applicable policies and procedures. Such reimbursement is subject to
the submission to the Company by Executive of appropriate documentation and/or
vouchers in accordance with the customary procedures of the Company for expense
reimbursement, as such procedures may be revised by the Company from time to
time hereafter.
13. Vacations. Executive
shall be entitled to paid vacation in accordance with the Company’s vacation
policy as in effect from time to time provided that, in no event
shall Executive be entitled to less than three (3) weeks vacation per calendar
year. Executive shall also be entitled to paid holidays and personal
days in accordance with the Company’s practice with respect to same as in effect
from time to time.
14. Termination.
(a) Executive’s
employment hereunder may be terminated by the Company, on the one hand, or
Executive, on the other hand, as applicable, without any breach of this
Agreement, under the following circumstances:
(i) Death. Executive’s
employment hereunder shall automatically terminate upon Executive’s
death.
(ii) Disability. If
Executive has incurred a Disability, the Company may give Executive written
notice of its intention to terminate Executive’s employment. In such
event, Executive’s employment with the Company shall terminate effective on the
14th day after delivery of such notice to Executive, provided that within the 14
days after such delivery, Executive shall not have returned to full-time
performance of Executive’s duties. Executive may provide notice to
the Company of Executive's resignation on account of a bona fide Disability at
any time.
(iii) Cause. The
Company may terminate Executive’s employment hereunder for Cause effectively
immediately upon delivery of notice to Executive, taking into account any
procedural requirements set forth under Section 1(e) above.
8
(iv) Good
Reason. Executive may terminate Executive’s employment herein
for Good Reason upon (i) satisfaction of any advance notice and other procedural
requirements set forth under Section 1(n) above for any termination pursuant to
Section 1(n)(i) through (v) or (ii) at least 30 days’ advance written notice by
the Executive for any termination pursuant to Section 1(n)(vii) through
(viii).
(v) Without
Cause. The Company may terminate Executive’s employment
hereunder without Cause upon at least 30 days’ advance written notice to the
Executive.
(vi) Resignation Without Good
Reason. Executive may resign Executive’s employment without
Good Reason upon at least fourteen (14) days’ written notice to the
Company.
(b)
Notice of
Termination. Any termination of Executive’s employment by the
Company or by Executive under this Section 14 (other than pursuant to Sections
14(a)(i)) shall be communicated by a written notice (the “Notice of
Termination”) to the other party hereto, indicating the specific
termination provision in this Agreement relied upon, setting forth in reasonable
detail any facts and circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated, and specifying a Date
of Termination which notice shall be delivered within the applicable time
periods set forth in subsections 14(a)(ii)-(vi) above ( the “Notice Period”);
provided that the Company may pay to
Executive all Annual Base Salary, benefits and other rights due to Executive
during such Notice Period instead of employing Executive during such Notice
Period.
(c) Resignation from
Representational Capacities. Executive hereby acknowledges and
agrees that upon Executive's termination of employment with the Company for
whatever reason, [s]he shall be deemed to have, and shall have in fact,
effectively resigned from all executive, director or other positions with the
Company or its affiliates at the time of such termination of employment, and
shall return all property owned by the Company and in Executive’s possession,
including all hardware, files and documents, at that time.
(d) Termination in Connection
with Change in Control. If Executive’s employment is
terminated by the Company without Cause either upon or within thirty days before
or thirteen (13) months after a Change of Control, or prior to a Change in
Control at the request of a prospective purchaser whose proposed purchase would
constitute a Change in Control upon its completion, such termination shall be
deemed to have occurred immediately before such Change in Control for purposes
of this Agreement and the Plan.
15. Termination
Pay
(a) Effective
upon the termination of Executive’s employment, Company will be obligated to pay
Executive (or, in the event of Executive’s death, the Executive’s designated
beneficiary as defined below) only such compensation as is provided in this
Section 15, except to the extent otherwise provided for in any Company stock
incentive, stock option or cash award plan (including, among others, the Plan),
approved by the Board. For purposes of this Section 15, Executive’s
designated beneficiary will be such individual beneficiary or trust, located at
such
9
address,
as Executive may designate by notice to Company from time to time or, if
Executive fails to give notice to Company of such a beneficiary, Executive’s
estate. Notwithstanding the preceding sentence, Company will have no
duty, in any circumstances, to attempt to open an estate on behalf of Executive,
to determine whether any beneficiary designated by Executive is alive or to
ascertain the address of any such beneficiary, to determine the existence of any
trust, to determine whether any person purporting to act as Executive’s personal
representative (or the trustee of a trust established by Executive) is duly
authorized to act in that capacity, or to locate or attempt to locate any
beneficiary, personal representative, or trustee.
(b) Termination by Executive for
Good Reason or by Company without Cause. If prior to
expiration of the Term, Executive terminates his or her employment for Good
Reason, or if the Company terminates Executive’s employment other
than for Cause or Executive’s death or Disability, Executive will be entitled to
receive, subject to the conditions of this Agreement, the
following:
(i) (A)
all Annual Base Salary and Bonus duly payable under the applicable plan for
performance periods ending prior to the Date of Termination, but unpaid as of
the Date of Termination, plus (B) in consideration for Executive’s obligations
set forth in Section 19 hereof, an amount equal to one (1) times the Executive’s
then-current rate of Annual Base Salary and Target Bonus, which total sum shall
be payable following the Date of Termination in twenty-six (26) equal bi-weekly
installments in accordance with the Company’s normal payroll practices provided that, if a Change of
Control occurs (or is deemed pursuant to Sec. 14(d) hereof to have occurred
after such termination) during such twelve (12) month period (and
such Change of Control qualifies either as a “change in the ownership or
effective control” of the Company or a “change in the ownership of a substantial
portion of the assets” of the Company as such terms are defined under Section
409A of the Code), any amounts remaining payable to Executive hereunder
shall be paid in a single lump sum immediately upon such Change of
Control.
(ii) if
Executive’s employment is terminated by the Company without Cause either
upon or within thirty days before or thirteen (13) months after a Change of
Control, or prior to a Change in Control at the request of a prospective
purchaser whose proposed purchase would constitute a Change in Control upon its
completion, the Company shall treat as earned all unvested Performance Units for
which the performance term has not expired as of such Change of Control at the
rate calculated pursuant to the Plan and the applicable Grant Letter, and shall
immediately convert those Units into Restricted Shares and accelerate as of the
Date of Termination the removal of restrictions on such shares.
(iii) all
reasonable expenses Executive has incurred in the pursuit of Executive’s duties
under this Agreement through the Date of Termination which are payable under and
in accordance with this Agreement, which amount will be paid within thirty
(30) days after the submission by Executive of properly completed
reimbursement requests on the Company’s standard forms;
(iv) a
lump sum payment (net after deduction of taxes and other required withholdings)
equal to twelve (12) times the monthly cost, at the time Executive’s
10
employment
terminated, for Executive to receive under COBRA the paid coverage for health,
dental and vision benefits then being provided for Executive at the Company’s
cost at the time Executive’s employment terminated. This amount will
be paid at the same time the payment is made under Section 15(b)(i) and will not
take into account future increases in costs during the applicable time period;
and
(v) notwithstanding
anything to the contrary in any award agreement, Executive shall be deemed to be
actively employed during the twelve (12) month period following termination of
employment for purposes of vesting of all stock options, performance units and
restricted stock; provided
that if a Change of Control occurs (or is deemed pursuant to
Sec. 14(d) hereof to have occurred after such termination) within such
period, all remaining stock options that would have vested in the twelve
(12) month period shall vest, and all remaining restricted stock and performance
units whose restrictions would have lapsed in the twelve (12) month period shall
have their restrictions lapse immediately upon such Change of Control;
provided, however, that with respect to any equity-based compensation awards
subject to Section 409A of the Code (as determined by independent tax counsel
retained by the Company), vesting and/or the lapse of restrictions will only be
accelerated if such Change of Control qualifies either as a “change in the
ownership or effective control” of the Company or a “change in the ownership of
a substantial portion of the assets” of the Company as such terms are defined
under Section 409A of the Code, or the first subsequent time at which such
distribution may be made in compliance with Section 409A of the Code;
and
(vi) pay
the cost of up to twelve (12) months, as required, of executive-level
out-placement services (which provides as part of the outplacement the use of an
office and secretarial support as near as reasonably practicable to Executive’s
residence).
provided, however, any of the
benefits described in Section 15(b)(i) through (vi) that are due to be paid or awarded during the
first six (6) months after the Date of Termination shall, to the extent required
to avoid the tax consequences of Section 409A of the Code as determined by
independent tax counsel, be suspended and paid after the six (6) month
anniversary of Executive’s Date of Termination.
(c) The
Executive shall not be required to mitigate the amount of any payments provided
in Section 15, by seeking other employment or otherwise, nor shall the amount of
any payment provided for in this Section 15 be reduced by any compensation
earned by Executive as a result of employment by another company or business, or
by profits earned by Employee from any other source at any time before or after
the date of Termination, so long as Executive is not in breach of the
Agreement.
(d) Termination by Executive
without Good Reason or by Company for Cause. If prior to the
expiration of the Term or thereafter, Executive Voluntarily terminates Executive’s employment
prior to expiration of the Term without Good Reason or if Company terminates
this Agreement for Cause, Executive will be entitled to receive Executive’s
then-existing Annual Base Salary only through the date such termination is
effective and will be reimbursed for all reasonable expenses Executive has
incurred in the pursuit of Executive’s duties under this Agreement
through
11
the date
of termination which are payable under and in accordance with this Agreement;
any unvested options and shares of restricted stock shall terminate as of the
date of termination unless otherwise provided for in any applicable plan or
award agreement; and Executive shall be entitled to no other compensation,
bonus, payments or benefits except as expressly provided in this
paragraph.
(e) Termination upon Disability
or Death. If Executive’s employment shall terminate by reason
of Executive’s Disability (pursuant to Section 14(a)(ii)) or death (pursuant to
Section 14(a)(i)), the Company shall pay to Executive, in a lump sum cash
payment as soon as practicable following the Date of Termination, all unpaid
Annual Base Salary and Bonus previously earned for a performance period ending
prior to the Date of Termination, but unpaid as of the Date of Termination, and
the pro rata portion of
their Bonus for such year (when and as paid to other senior executives of the
Company) for the Performance Period in which the termination
occurred. In the case of Disability, if there is a period of time
during which Executive is not being paid Annual Base Salary and not receiving
long-term disability insurance payments, the Company shall make interim payments
equal to such unpaid disability insurance payments to Executive until
commencement of disability insurance payments; provided that, to the extent
required to avoid the tax consequences of Section 409A of the Code, as
determined by independent tax counsel, the first payment shall cover all
payments scheduled to be made to Executive during the first six (6) months after
the date Executive’s employment terminates, and the first such payment shall be
delayed until the day that is six (6) months after the date Executive’s
employment terminates.
(f) Benefits. Except as
otherwise required by law, Executive’s accrual of, and participation in plans
providing for, the Benefits will cease at the effective Date of the Termination
of employment.
(g) Conditions To
Payments. To be eligible to receive (and continue to receive) and retain
the payments and benefits described in Sections 15(b)(i) and 15(e), Executive
must comply with the provisions of Sections 17, 18 and 19. In
addition, to be eligible to receive (and continue to receive) and retain the
payments and benefits described in Sections 15(b) and 15(e) Executive (or
Executive’s executor and personal representatives in case of death) must first
execute and deliver to Company, and comply with, an agreement, in form and
substance reasonably satisfactory to Company, effectively releasing and giving
up all claims Executive may have against Company or any of its subsidiaries or
affiliates (and each of their respective controlling shareholders, employees,
directors, officers, plans, fiduciaries, insurers and agents) arising out of or
based upon any facts or conduct occurring prior to that date. The agreement will
be prepared by Company, will be based upon the standard form (if any) then being
utilized by Company for executive separations when severance is being paid,
and will be provided to Executive at the time Executive’s employment is
terminated or as soon as administratively practicable thereafter (not to exceed
five (5) business days). The agreement will require Executive to
consult with Company representatives, and voluntarily appear as a witness
for trial or deposition (and to prepare for any such testimony) in connection
with, any claim which may be asserted by or against Company, any investigation
or administrative proceeding, any matter relating to a franchise, or any
business matter concerning Company or any of its transactions or
operations. A copy of the standard form release being used by Company
as of the date of this agreement for executive separations when
12
severance
is being paid is attached to this Agreement as Exhibit C. It is understood
that the final document may not contain provisions specific to the release of a
federal age discrimination claim if Executive is not at least forty (40) years
of age, and may be changed as Company’s chief legal counsel considers necessary
and appropriate to enforce the same, including provisions to comply with changes
in applicable laws and recent court decisions. Payments under and/or
benefits provided by Section 15 will not be made unless and until Executive
executes and delivers that agreement to Company within twenty-one (21) days
after delivery of the document (or such lesser time as Company’s chief legal
counsel may specify in the document) and all conditions to the effectiveness of
that agreement and the releases contemplated thereby have been satisfied
(including without limitation the expiration of any applicable revocation period
without revoking acceptance).
(h) Survival. The
expiration or termination of the Term shall not impair the rights or obligations
of any party hereto which shall have accrued hereunder prior to such expiration,
subject to the terms of any agreement containing a general release provided by
Executive.
16. Excess
Parachute Payment.
(a) Anything
in this Agreement or the Plan to the contrary notwithstanding, to the extent
that any payment, distribution or acceleration of vesting to or for the benefit
of Executive by the Company (within the meaning of Section 280G of the Code and
the regulations thereunder), whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the "Total
Payments") is or will be subject to the excise tax imposed under Section 4999 of
the Code (the "Excise Tax"), then the Total Payments shall be reduced (but not
below zero) to the Safe Harbor Amount (as defined below) if and to the extent
that a reduction in the Total Payments would result in Executive retaining a
larger amount, on an after-tax basis (taking into account federal, state and
local income and employment taxes and the Excise Tax), than if Executive
received the entire amount of such Total Payments in accordance with their
existing terms (taking into account federal, state, and local income and
employment taxes and the Excise
Tax). For purposes of this Agreement, the term “Safe Harbor
Amount” means the largest portion of the Total Payments that would result in no
portion of the Total Payments being subject to the Excise Tax. Unless
Executive shall have given prior written notice specifying a different order to
the Company to effectuate the foregoing, the Company shall reduce or eliminate
the Total Payments, by first reducing or eliminating the portion of the Total
Payments which are payable in cash and then by reducing or eliminating non-cash
payments in such order as Executive shall determine; provided that Executive may
not so elect to the extent that, in the determination of the Determining Party
(as defined herein), such election would cause Executive to be subject to the
Excise Tax. Any notice given by Executive pursuant to the preceding
sentence shall take precedence over the provisions of any other plan,
arrangement or agreement governing Executive's rights and entitlements to any
benefits or compensation.
(b) The
determination of whether the Total Payments shall be reduced as provided in
Section 16(a) and the amount of such reduction shall be made at the Company's
expense by an accounting firm selected by Company from among the ten largest
accounting firms in the United States or by qualified independent tax counsel
(the “Determining Party”); provided that Executive shall
be given advance notice of the Determining Party selected by the Company, and
shall have
13
the
opportunity to reject to the selection, within two business days of being
notified of the selection, on the basis of that Determining Party’s having a
conflict of interest or other reasonable basis, in which case the Company shall
select an alternative auditing firm among the ten largest accounting firms
in the United States or alternative independent qualified tax counsel, which
shall become the Determining Party. Such Determining Party shall
provide its determination (the "Determination"), together with detailed
supporting calculations and documentation to the Company and Executive within
ten (10) days of the termination of Executive’s employment or at such other time
mutually agreed by the Company and Executive. If the Determining
Party determines that no Excise Tax is payable by Executive with respect to the
Total Payments, it shall furnish Executive with an opinion reasonably acceptable
to Executive that no Excise Tax will be imposed with respect to any such
payments and, absent manifest error, such Determination shall be binding, final
and conclusive upon the Company and Executive. If the Determining
Party determines that an Excise Tax would be payable, the Company shall have the
right to accept the Determination as to the extent of the reduction, if any,
pursuant to Section 16(a), or to have such Determination reviewed by another
accounting firm selected by the Company, at the Company’s expense. If
the two accounting firms do not agree, a third accounting firm shall be jointly
chosen by the Executive Party and the Company, in which case the determination
of such third accounting firm shall be binding, final and conclusive upon the
Company and Executive.
(c) If,
notwithstanding any reduction described in this Section 16, the IRS determines
that Executive is liable for the Excise Tax as a result of the receipt of any of
the Total Payments or otherwise, then Executive shall be obligated to pay back
to the Company, within thirty (30) days after a final IRS determination or in
the event that Executive challenges the final IRS determination, a final
judicial determination, a portion of the Total Payments equal to the “Repayment
Amount.” The Repayment Amount with respect to the payment of benefits
shall be the smallest such amount, if any, as shall be required to be paid to
the Company so that Executive’s net after-tax proceeds with respect to the Total
Payments (after taking into account the payment of the Excise Tax and all other
applicable taxes imposed on the Payment) shall be maximized. The
Repayment Amount shall be zero if a Repayment Amount of more than zero would not
result in Executive’s net after-tax proceeds with respect to the Total Payments
being maximized. If the Excise Tax is not eliminated pursuant to this
paragraph, the Executive shall pay the Excise Tax.
(d) Notwithstanding
any other provision of this Section 16, if (i) there is a reduction in the Total
Payments as described in this Section 16, (ii) the IRS later determines that
Executive is liable for the Excise Tax, the payment of which would result in the
maximization of Executive’s net after-tax proceeds (calculated as if Executive’s
benefits had not previously been reduced), and (iii) Executive pays the
Excise Tax, then the Company shall pay to Executive those payments or benefits
which were reduced pursuant to this Section 16 as soon as administratively
possible after Executive pays the Excise Tax so that Executive’s net after-tax
proceeds with respect to the Total Payments are maximized.
17. Competition/Confidentiality.
(a) Acknowledgments by
Executive. Executive acknowledges that (a) during the Term and
as a part of Executive’s employment, Executive has been and will be afforded
access to
14
Confidential
Information (as defined below); (b) public disclosure of such Confidential
Information could have an adverse effect on the Company and its business; (c)
because Executive possesses substantial technical expertise and skill with
respect to the Company’s business, Company desires to obtain exclusive ownership
of each invention by Executive while Executive is employed by the Company, and
Company will be at a substantial competitive disadvantage if it fails to acquire
exclusive ownership of each such invention by Executive; and (d) the provisions
of this Section 17 are reasonable and necessary to prevent the improper use or
disclosure of Confidential Information and to provide Company with exclusive
ownership of all inventions and works made or created by
Executive.
(b) Confidential
Information. (i) The Executive acknowledges that during the
Term Executive will have access to and may obtain, develop, or learn of
Confidential Information (as defined below) under and pursuant to a relationship
of trust and confidence. The Executive shall hold such Confidential
Information in strictest confidence and never at any time, during or after
Executive’s employment terminates, directly or indirectly use for Executive’s
own benefit or otherwise (except in connection with the performance of any
duties as an employee hereunder) any Confidential Information, or divulge,
reveal, disclose or communicate any Confidential Information to any unauthorized
person or entity in any manner whatsoever.
(ii) As
used in this Agreement, the term “Confidential
Information” shall include, but not be limited to, any of the following
information relating to Company learned by the Executive during the Term or as a
result of Executive’s employment with Company:
(A) information
regarding the Company’s business proposals, manner of the Company’s operations,
and methods of selling or pricing any products or services;
(B) the
identity of persons or entities actually conducting or considering conducting
business with the Company, and any information in any form relating to such
persons or entities and their relationship or dealings with the Company or its
affiliates;
(C) any
trade secret or confidential information of or concerning any business operation
or business relationship;
(D) computer
databases, software programs and information relating to the nature of the
hardware or software and how said hardware or software is used in combination or
alone;
(E) information
concerning Company personnel, confidential financial information, customer or
customer prospect information, information concerning subscribers, subscriber
and customer lists and data, methods and formulas for estimating costs and
setting prices, engineering design standards, testing procedures, research
results (such as marketing surveys, programming trials or product trials), cost
data (such as billing, equipment and programming cost projection models),
compensation information and models, business or marketing plans or strategies,
deal or business terms, budgets, vendor names, programming operations, product
names, information on proposed acquisitions or dispositions, actual performance
compared to budgeted performance, long-range plans, internal financial
information
15
(including
but not limited to financial and operating results for certain offices,
divisions, departments, and key market areas that are not disclosed to the
public in such form), results of internal analyses, computer programs and
programming information, techniques and designs, and trade secrets;
(F) information
concerning the Company’s employees, officers, directors and shareholders;
and
(G) any
other trade secret or information of a confidential or proprietary
nature.
(iii) Executive
shall not make or use any notes or memoranda relating to any Confidential
Information except for uses reasonably expected by Executive to be for the
benefit of the Company, and will, at Company’s request, return each original and
every copy of any and all notes, memoranda, correspondence, diagrams or other
records, in written or other form, that Executive may at any time have within
his possession or control that contain any Confidential
Information.
(iv) Notwithstanding
the foregoing, Confidential Information shall not include information which has
come within the public domain through no fault of or action by Executive or
which has become rightfully available to Executive on a non-confidential basis
from any third party, the disclosure of which to Executive does not violate any
contractual or legal obligation such third party has to the Company or its
affiliates with respect to such Confidential Information. None of the
foregoing obligations and restrictions applies to any part of the Confidential
Information that Executive demonstrates was or became generally available to the
public other than as a result of a disclosure by Executive or by any other
person bound by a confidentiality obligation to the Company in respect
of such Confidential Information.
(v) Executive
will not remove from the Company’s premises (except to the extent such removal
is for purposes of the performance of Executive’s duties at home or while
traveling, or except as otherwise specifically authorized by Company) any
Company document, record, notebook, plan, model, component, device, or computer
software or code, whether embodied in a disk or in any other form (collectively,
the “Proprietary
Items”). Executive recognizes that, as between Company and
Executive, all of the Proprietary Items, whether or not developed by Executive,
are the exclusive property of the Company. Upon termination of
Executive’s employment by either party, or upon the request of Company during
the Term, Executive will return to Company all of the Proprietary Items in
Executive’s possession or subject to Executive’s control, including all
equipment (e.g., laptop
computers, cell phone, portable e-mail devices, etc.), documents, files and
data, and Executive shall not retain any copies, abstracts, sketches, or other
physical embodiment of any such Proprietary Items.
18. Proprietary
Developments.
(a) Any
and all inventions, products, discoveries, improvements, processes, methods,
computer software programs, models, techniques, or formulae (collectively,
hereinafter referred to as “Developments”), made,
conceived, developed, or created by Executive (alone or in conjunction with
others, during regular work hours or otherwise) during Executive’s
employment,
16
which may
be directly or indirectly useful in, or relate to, the business conducted or to
be conducted by the Company will be promptly disclosed by Executive
to Company and shall be Company’s exclusive property. The term
“Developments” shall not be deemed to include inventions, products, discoveries,
improvements, processes, methods, computer software programs, models,
techniques, or formulae which were in the possession of Executive prior to the
Term. Executive hereby transfers and assigns to Company all
proprietary rights which Executive may have or acquire in any Developments and
Executive waives any other special right which the Executive may have or accrue
therein. Executive will execute any documents and to take any actions
that may be required, in the reasonable determination of Company’s counsel,
to effect and confirm such assignment, transfer and waiver, to direct the
issuance of patents, trademarks, or copyrights to Company with respect to such
Developments as are to be Company’s exclusive property or to vest in Company
title to such Developments; provided, however, that the expense of securing any
patent, trademark or copyright shall be borne by Company. The parties agree that
Developments shall constitute Confidential Information.
(b) “Work Made for
Hire.” Any work performed by Executive during Executive’s
employment with Company shall be considered a “Work Made for Hire”
as defined in the U.S. Copyright laws, and shall be owned by and for the express
benefit of Company. In the event it should be established that such
work does not qualify as a Work Made for Hire, Executive agrees to and does
hereby assign to Company all of Executive’s right, title, and interest in such
work product including, but not limited to, all copyrights and other proprietary
rights.
19. Non-Competition and
Non-Interference.
(a) Acknowledgments by
Executive. Executive acknowledges and agrees that: (a) the
services to be performed by Executive under this Agreement are of a special,
unique, unusual, extraordinary, and intellectual character; (b) the Company
competes with other businesses that are or could be located in any part of the
United States; and (c) the provisions of this Section 19 are reasonable and
necessary to protect the Company’s business and lawful protectable interests,
and do not impair Executive’s ability to earn a living.
(b) Covenants of
Executive. For purposes of this Section 19, the term “Restricted Period”
shall mean the period commencing as of the date of this Agreement and
terminating on the second anniversary (or, in the case of Section 19(b)(i), the
first anniversary), of the date Executive’s employment terminated provided that the “Restricted
Period” also shall encompass any period of time from whichever anniversary date
is applicable until and ending on the last date Executive is to be paid any
payment under Section 15 hereof. In consideration of the
acknowledgments by Executive, and in consideration of the compensation and
benefits to be paid or provided to Executive by Company, Executive covenants and
agrees that during the Restricted Period, the Executive will not, directly or
indirectly, for Executive’s own benefit or for the benefit of any other person
or entity other than the Company:
(i) in
the United States or any other country or territory where the Company then
conducts its business: engage in, operate, finance, control or be employed by a
“Competitive Business” (defined below); serve as an officer or director of a
Competitive Business (regardless of where Executive then lives or conducts such
activities); perform any work as an employee,
17
consultant
(other than as a member of a professional consultancy, law firm, accounting firm
or similar professional enterprise that has been retained by the Competitive
Business and where Executive has no direct role in such professional consultancy
and maintains the confidentiality of all information acquired by Executive
during his or her employment with the Company), contractor, or in any other
capacity with, a Competitive Business; directly or indirectly invest or own any
interest in a Competitive Business (regardless of where Executive then lives or
conducts such activities); or directly or indirectly provide any services or
advice to a any business, person or entity who or which is engaged in a
Competitive Business (other than as a member of a professional consultancy, law
firm, accounting firm or similar professional enterprise that has been retained
by the Competitive Business and where Executive has no direct role in such
professional consultancy and maintains the confidentiality of all information
acquired by Executive during his or her employment with the
Company). A “Competitive Business”
is any business, person or entity who or which, anywhere within that part of the
United States, or that part of any other country or territory, where the Company
conducts business; owns or operates a cable television system; provides direct
television or any satellite-based, telephone system-based, internet based or
wireless system for delivering television, music or other entertainment
programming (other than as an ancillary service, such as cellular telephone
providers); provides telephony services using any wired connection or fixed (as
opposed to mobile) wireless application; provides data or internet access
services; or offers, provides, markets or sells any service or product of a type
that is offered or marketed by or directly competitive with a service or product
offered or marketed by the Company at the time Executive’s employment
terminates; or who or which in any case is preparing or planning to do so. The
provisions of this Section 19 shall not be construed or applied (i) so as to
prohibit Executive from owning not more than five percent (5%) of any class of
securities that is publicly traded on any national or regional securities
exchange, as long as Executive’s investment is passive and Executive does not
lend or provide any services or advice to such business or otherwise violate the
terms of this Agreement in connection with such investment; or (ii) so as to
prohibit Executive from working as an employee in the cable television business
for a company/business that owns or operates cable television franchises (by way
of current example only, Time Warner, Cablevision, Cox or Comcast), provided that the
company/business is not providing cable services in any political subdivision/
geographic area where the Company has a franchise or provides cable services
(other than nominal overlaps of service areas) and the company/business is
otherwise not engaged in a Competitive Business, and provided Executive does not
otherwise violate the terms of this Agreement in connection with that
work;
(ii) contact,
solicit or provide any service to any person or entity that was a customer
franchisee, or prospective customer of the Company at any time during
Executive’s employment (a prospective customer being one to whom the Company had
made a business proposal within twelve (12) months prior to the time Executive’s
employment terminated); or directly solicit or encourage any customer,
franchisee or subscriber of the Company to purchase any service or product of a
type offered by or competitive with any product or service provided by the
Company, or to reduce the amount or level of business purchased by such
customer, franchisee or subscriber from the Company; or take away or procure for
the benefit of any competitor of the Company, any business of a type provided by
or competitive with a product or service offered by the Company; or
18
(iii) solicit
or recruit for employment, any person or persons who are employed by Company or
any of its subsidiaries or affiliates, or who were so employed at any time
within a period of six (6) months immediately prior to the date Executive’s
employment terminated, or otherwise interfere with the relationship between any
such person and the Company; nor will the Executive assist anyone else in
recruiting any such employee to work for another company or business or discuss
with any such person his or her leaving the employ of the Company or engaging in
a business activity in competition with the Company. This provision shall not
apply to secretarial, clerical, custodial or maintenance employees.
If
Executive violates any covenant contained in this Section 19, then the term of
the covenants in this Section shall be extended by the period of time Executive
was in violation of the same.
(c) Provisions Pertaining to the
Covenants. Executive recognizes that the existing business of
the Company extends to various locations and areas throughout the United States
and may extend hereafter to other countries and territories and agrees that the
scope of Section 19 shall extend to any part of the United States, and any other
country or territory, where the Company operates or conducts business, or has
concrete plans to do so at the time Executive’s employment
terminates. It is agreed that the Executive’s services hereunder are
special, unique, unusual and extraordinary giving them peculiar value, the loss
of which cannot be reasonably or adequately compensated for by damages, and in
the event of the Executive’s breach of this Section, Company shall be entitled
to equitable relief by way of injunction or otherwise in addition to the
cessation of payments and benefits hereunder. If any provision of
Sections 17, 18 or 19 of this Agreement is deemed to be unenforceable by a court
(whether because of the subject matter of the provision, the duration of a
restriction, the geographic or other scope of a restriction or otherwise), that
provision shall not be rendered void but the parties instead agree that the
court shall amend and alter such provision to such lesser degree, time, scope,
extent and/or territory as will grant Company the maximum restriction on
Executive’s activities permitted by applicable law in such circumstances.
Company’s failure to exercise its rights to enforce the provisions of this
Agreement shall not be affected by the existence or non existence of any other
similar agreement for anyone else employed by Company or by Company’s failure to
exercise any of its rights under any such agreement.
(d) Notices. In
order to preserve Company’s rights under this Agreement, Company is authorized
to advise any potential or future employer, any third party with whom Executive
may become employed or enter into any business or contractual relationship with,
and any third party whom Executive may contact for any such purpose, of the
existence of this Agreement and its terms, and Company shall not be
liable for doing so.
(e) Injunctive Relief and
Additional Remedy. Executive acknowledges that the injury that
would be suffered by Company as a result of a breach of the provisions of this
Agreement (including any provision of Sections 17, 18 and 19) would be
irreparable and that an award of monetary damages to Company for such a breach
would be an inadequate remedy. Consequently, Company will have the right,
in addition to any other rights it may have, to obtain injunctive relief to
restrain any breach or threatened breach or otherwise to specifically enforce
any provision of this Agreement, and Company will not be obligated to post bond
or other security in seeking such relief. Without limiting Company’s
rights under this Section or any other remedies of Company, if
19
Executive
breaches any of the provisions of Sections 17, 18 or 19, Company will have the
right to cease making any payments otherwise due to Executive under this
Agreement.
(f) Covenants of Sections
17, 18 and
19 are
Essential and Independent Covenants. The covenants by
Executive in Sections 17, 18 and 19 are essential elements of this Agreement,
and without Executive’s agreement to comply with such covenants, Company would
not have entered into this Agreement or employed Executive. Company
and Executive have independently consulted their respective counsel and have
been advised in all respects concerning the reasonableness and propriety of such
covenants, with specific regard to the nature of the business conducted by
Company. Executive’s covenants in Sections 17, 18 and 19 are
independent covenants and the existence of any claim by Executive against
Company, under this Agreement or otherwise, will not excuse Executive’s breach
of any covenant in Section 17, 18 or 19. If Executive’s employment hereunder is
terminated, this Agreement will continue in full force and effect as is
necessary or appropriate to enforce the covenants and agreements of Executive in
Sections 17, 18 and 19. The Company’s right to enforce the covenants
in Sections 17, 18 and 19 shall not be adversely affected or limited by the
Company’s failure to have an agreement with another employee with provisions at
least as restrictive as those contained in Sections 17, 18 or 19 , or by the
Company’s failure or inability to enforce (or agreement not to enforce) in full
the provisions of any other or similar agreement containing one or more
restrictions of the type specified in Sections 17, 18 and 19 of this
Agreement.
20. Executive’s
Representations And Further Agreements.
(a) Executive
represents, warrants and covenants to Company that:
(i) Neither
the execution and delivery of this Agreement by Executive nor the performance of
any of Executive’s duties hereunder in accordance with the Agreement will
violate, conflict with or result in the breach of any order, judgment,
employment contract, agreement not to compete or other agreement or arrangement
to which Executive is a party or is subject;
(ii) On
or prior to the date hereof, Executive has furnished to Company true
and complete copies of all judgments, orders, written employment contracts,
agreements not to compete, and other agreements or arrangements restricting
Executive’s employment or business pursuits, that have current application to
Executive;
(iii) Executive
is knowledgeable and sophisticated as to business matters, including the subject
matter of this Agreement, and that prior to assenting to the terms of this
Agreement, or giving the representations and warranties herein, Executive has
been given a reasonable time to review it and has consulted with counsel of
Executive’s choice; and
(iv) Executive
has not provided, nor been requested by Company to provide, to Company, any
confidential or non public document or information of a former employer that
constitutes or contains any protected trade secret, and will not use any
protected trade secrets in connection with the Executive’s
employment.
20
(b) During
and subsequent to expiration of the Term, the Executive will cooperate with
Company, and furnish any and all complete and truthful information, testimony or
affidavits in connection with any matter that arose during the Executive’s
employment, that in any way relates to the business or operations of the Company
or any of its parent or subsidiary corporations or affiliates, or of which the
Executive may have any knowledge or involvement; and will consult with and
provide information to Company and its representatives concerning such
matters. Executive shall fully cooperate with Company in the
protection and enforcement of any intellectual property rights that relate to
services performed by Executive for Company, whether under the terms of this
Agreement or prior to the execution of this Agreement. This shall
include without limitation executing, acknowledging, and delivering to Company
all documents or papers that may be necessary to enable Company to publish or
protect such intellectual property rights. Subsequent to the Term,
the parties will make their best efforts to have such cooperation performed at
reasonable times and places and in a manner as not to unreasonably interfere
with any other employment in which Executive may then be
engaged. Nothing in this Agreement shall be construed or interpreted
as requiring the Executive to provide any testimony, sworn statement or
declaration that is not complete and truthful. If Company
requires the Executive to travel outside the metropolitan area in the
United States where the Executive then resides to provide any testimony or
otherwise provide any such assistance, then Company will reimburse the Executive
for any reasonable, ordinary and necessary travel and lodging expenses incurred
by Executive to do so provided the Executive submits all documentation required
under Company’s standard travel expense reimbursement policies and as otherwise
may be required to satisfy any requirements under applicable tax laws for
Company to deduct those expenses. Nothing in this Agreement shall be construed
or interpreted as requiring the Executive to provide any testimony or affidavit
that is not complete and truthful.
21. Mutual
Non-Disparagement. Neither
the Company nor Executive shall make any oral or written statement about the
other party which is intended or reasonably likely to disparage the other party,
or otherwise degrade the other party’s reputation in the business or legal
community or in the telecommunications industry.
22. Foreign
Corrupt Practices Act. Executive
agrees to comply in all material respects with the applicable provisions of the
U.S. Foreign Corrupt Practices Act of 1977 (“FCPA”), as amended,
which provides generally that: under no circumstances will foreign officials,
representatives, political parties or holders of public offices be offered,
promised or paid any money, remuneration, things of value, or provided any other
benefit, direct or indirect, in connection with obtaining or maintaining
contracts or orders hereunder. When any representative, employee,
agent, or other individual or organization associated with Executive is required
to perform any obligation related to or in connection with this Agreement, the
substance of this section shall be imposed upon such person and included in any
agreement between Executive and any such person. Failure by Executive
to comply with the provisions of the FCPA shall constitute a material breach of
this Agreement and shall entitle the Company to terminate Executive’s employment
for Cause.
23. Purchases
and Sales of the Company’s
Securities. Executive
has read and agrees to comply in all respects with the Company’s Policy
Regarding the Purchase and Sale of the Company’s Securities by Employees, as
such Policy may be amended from time to time.
21
Specifically,
and without limitation, Executive agrees that Executive shall not purchase or
sell stock in the Company at any time (a) that Executive possesses material
non-public information about the Company or any of its businesses; and (b)
during any “Trading Blackout Period” as may be determined by the Company as set
forth in the Policy from time to time.
24. Indemnification. (a) If
Executive is made a party or is threatened to be made a party or is otherwise
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter, a "proceeding"), by reason of the
fact that he or she is or was a director or an officer of the Corporation or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee benefit
plan (hereinafter, a "Covered Person"), whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended, against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by such Covered Person in
connection therewith; provided, however, that,
except as provided in Section 24(c) hereof with respect to proceedings to
enforce rights to indemnification, the Corporation shall indemnify any such
Covered Person in connection with a proceeding (or part thereof) initiated by
such Covered Person only if such proceeding (or part thereof) was authorized by
the Board.
(b) The
Corporation shall pay the expenses (including attorneys' fees) incurred by
Executive in defending any such proceeding in advance of its final disposition
(hereinafter, an "advancement of expenses"), provided, however, that, if
the Delaware General Corporation Law so requires, an advancement of expenses
incurred by Executive in his or her capacity as such shall be made only upon
delivery to the Corporation of an undertaking (hereinafter, an "Undertaking"),
by or on behalf of such Executive, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter, a "Final Adjudication") that Executive was
not entitled to be indemnified for such expenses under this Section 24 or
otherwise. The rights to indemnification and to the advancement of
expenses conferred in Subsections 24(a) and (b) hereof shall be contract
rights and such rights shall continue even after Executive ceases to be employed
by the Company and shall inure to the benefit of Executive’s heirs, executors
and administrators.
(c) If
a claim under Section 24(a) or (b) hereof is not paid in full by the
Company within sixty (60) days after a written claim therefore has been
received by the Company, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty (20) days,
Executive may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim. If Executive is successful in whole
or in part in any such suit, or in a suit brought by the Company to recover an
advancement of expenses pursuant to the terms of an Undertaking, Executive shall
be entitled to be paid also the expense of prosecuting or defending such
suit. In (i) any suit brought by Executive to enforce a right to
indemnification hereunder (but not in a suit brought by Executive to enforce a
right to an advancement of expenses)
22
it shall
be a defense that, and (ii) any suit brought by the Company to recover an
advancement of expenses pursuant to the terms of an Undertaking, the Company
shall be entitled to recover such expenses upon a final adjudication that,
Executive has not met the applicable standard for indemnification set forth in
the Delaware General Corporation Law. To the fullest extent permitted
by law, neither the failure of the Company (including its disinterested
directors, committee thereof, independent legal counsel or its stockholders) to
have made a determination prior to the commencement of such suit that
indemnification of Executive is proper in the circumstances because the
Executive has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the Company (including
its disinterested directors, committee thereof, independent legal counsel or its
stockholders) that Executive has not met such applicable standard of conduct,
shall create a presumption that Executive has not met the applicable standard of
conduct or, in the case of such a suit brought by Executive, be a defense to
such suit. In any suit brought by Executive to enforce a right to
indemnification or to an advancement of expenses hereunder, or brought by the
Company to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that Executive is not entitled to be
indemnified, or to such advancement of expenses, under this Section 24 or
otherwise shall, to the extent permitted by law, be on the
Company.
(d) The
rights to indemnification and to the advancement of expenses conferred in this
Section 24 shall not be exclusive of any other right of indemnification which
Executive or any other person may have or hereafter acquire by any statute, the
Corporation's Certificate of Incorporation or Bylaws, agreement, vote of
stockholders or disinterested directors or otherwise.
(e) The
Company may maintain insurance, at its expense, to protect itself and any
director, officer, employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Company would have the power to indemnify
such person against such expense, liability or loss under the Delaware General
Corporation Law.
25. Withholding. Anything
to the contrary notwithstanding, all payments required to be made by Company
hereunder to Executive or his estate or beneficiary shall be subject
to the withholding of such amounts, if any, relating to tax and other payroll
deductions as the Company may reasonably determine it should withhold pursuant
to applicable law or regulation.
26. Notices
. Any
written notice required by this Agreement will be deemed provided and delivered
to the intended recipient when (a) delivered in person by hand; or (b) three
days after being sent via U.S. certified mail, return receipt requested; or (c)
the day after being sent via by overnight courier, in each case when such notice
is properly addressed to the following address and with all postage and similar
fees having been paid in advance:
|
|
If
to the Company:
|
Charter
Communications, Inc.
|
|
|
Attn.:
Human Resources
|
|
|
12405
Powerscourt Drive
|
|
| St. Louis, MO 63131 |
23
If to
Executive:
12405 Powerscourt Drive
St. Louis,
MO 63131
Either
party may change the address to which notices, requests, demands and other
communications to such party shall be delivered personally or mailed by giving
written notice to the other party in the manner described above.
27. Binding
Effect. This
Agreement shall be for the benefit of and binding upon the parties hereto and
their respective heirs, personal representatives, legal representatives,
successors and, where applicable, assigns.
28. Entire
Agreement. As
of the Effective Date, the Employee and the Company hereby irrevocably agree
that the Old Employment Agreement is hereby terminated in its entirety, and
neither party thereto shall have any rights or obligations under the Old
Employment Agreement, including but not limited to, in the case of the Employee,
any right to any severance payment or benefit. This Agreement
constitutes the entire agreement between the listed parties with respect to the
subject matter described in this Agreement and supersedes all prior agreements,
understandings and arrangements, both oral and written, between the parties with
respect to such subject matter, except to the extent said agreements,
understandings and arrangements are referenced or referred to in this
Agreement. This Agreement may not be modified, amended, altered or
rescinded in any manner, except by written instrument signed by both of the
parties hereto; provided, however, that the waiver by either party of a breach
or compliance with any provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or compliance. Except to the
extent the terms hereof are explicitly and directly inconsistent with the
terms of the Plan, nothing herein shall be deemed to override or replace the
terms of the Plan, including but not limited to sections 6.4, 9.4 and 10.4
thereof.
29. Severability. In
case any one or more of the provisions of this Agreement shall be held by any
court of competent jurisdiction or any arbitrator selected in accordance with
the terms hereof to be illegal, invalid or unenforceable in any respect, such
provision shall have no force and effect, but such holding shall not affect the
legality, validity or enforceability of any other provision of this Agreement
provided that the provisions held illegal, invalid or unenforceable does not
reflect or manifest a fundamental benefit bargained for by a party
hereto.
30. Assignment. Subject
to the Executive’s right to terminate in the event of a Change of Control
hereunder, this Agreement can be assigned by the Company only to a company that
controls, is controlled by, or is under common control with the Company and
which assumes all of the Company’s obligations hereunder. The duties
and covenants of Executive under this Agreement, being personal, may not be
assigned or delegated except that Executive may assign payments due hereunder to
a trust established for the benefit of Executive’s family or to Executive’s
estate or to any partnership or trust entered into by Executive and/or
Executive’s immediate family members (meaning, Executive’s spouse and lineal
descendants). This agreement shall be binding in all respects on
permissible assignees.
31. Notification. In
order to preserve the Company’s rights under this Agreement, the Company is
authorized to advise any third party with whom Executive may become employed or
24
enter
into any business or contractual relationship with, or whom Executive may
contact for any such purpose, of the existence of this Agreement and its terms,
and the Company shall not be liable for doing so.
32. Choice of
Law/Jurisdiction This Agreement is deemed to be accepted and entered into
in St. Louis County, Missouri. Executive and the Company intend and hereby
acknowledge that jurisdiction over disputes with regard to this Agreement, and
over all aspects of the relationship between the parties hereto, shall be
governed by the laws of the State of Missouri without giving effect to its rules
governing conflicts of laws. Executive agrees that in any suit to
enforce this Agreement, or as to any dispute that arises between the Company and
the Executive regarding or relating to this Agreement and/or any aspect of
Executive’s employment relationship with Company, venue and jurisdiction are
proper in the County of St. Louis, and (if federal jurisdiction exists) the
United States District Court for the Eastern Division of Missouri in St. Louis,
and Executive waives all objections to jurisdiction and venue in any such forum
and any defense that such forum is not the most convenient forum.
33. Section
Headings. The
section headings contained in this Agreement are for reference purposes only and
shall not affect in any manner the meaning or interpretation of this
Agreement.
34. Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
[remainder
of page intentionally left blank]
25
IN WITNESS WHEREOF, the
parties have executed this Agreement on the date and year first above
written.
Charter
Communications, Inc.
By:___/s/ Neil
Smit________________________
Name: Neil
Smit
Title: President
and Chief Executive Officer
EXECUTIVE
__/s/ Eloise E.
Schmitz_____________________
Name: Eloise
E. Schmitz
26
Charter
Communications
Grant
Summary Report
Exhibit
A
Activity
as of 6/25/2007
|
Grant
Date
|
Grant
Type
|
Grant
Price
|
Granted
|
Exercised
|
Canceled
|
Subject
to Repurchase
|
Outstanding
|
Vested
|
Outstanding
Exercisable
|
||||||||||||||||||||||||
|
2001
Non-Qualified Stock Option
|
|||||||||||||||||||||||||||||||||
|
Eloise
Engman Schmitz
|
|||||||||||||||||||||||||||||||||
|
2/12/2001
|
Non-Qualified
|
$ | 23.093800 | 20,000 | 0 | 20,000 | 0 | 0 | 15,000 | 0 | |||||||||||||||||||||||
|
9/28/2001
|
Non-Qualified
|
$ | 11.990000 | 20,000 | 0 | 20,000 | 0 | 0 | 10,000 | 0 | |||||||||||||||||||||||
|
7/23/2002
|
Non-Qualified
|
$ | 2.850000 | 40,000 | 0 | 0 | 0 | 40,000 | 32,000 | 32,000 | |||||||||||||||||||||||
|
4/29/2003
|
Non-Qualified
|
$ | 1.595000 | 35,000 | 26,250 | 0 | 0 | 8,750 | 35,000 | 8,750 | |||||||||||||||||||||||
|
1/27/2004
|
Non-Qualified
|
$ | 5.170000 | 28,000 | 0 | 0 | 0 | 28,000 | 21,000 | 21,000 | |||||||||||||||||||||||
|
1/27/2004
|
Restricted
|
$ | 0.000000 | 15,000 | 0 | 15,000 | 0 | 0 | 15,000 | 0 | |||||||||||||||||||||||
|
2/25/2004
|
Restricted
|
$ | 0.000000 | 10,000 | 10,000 | 0 | 0 | 0 | 10,000 | 0 | |||||||||||||||||||||||
|
3/25/2005
|
Non-Qualified
|
1.525000 | 83,700 | 0 | 0 | 0 | 83,700 | 41,850 | 41,850 | ||||||||||||||||||||||||
|
3/25/2005
|
Restricted
|
$ | 0.000000 | 40,500 | 0 | 5,569 | 0 | 34,931 | 0 | 0 | |||||||||||||||||||||||
|
3/10/2006
|
Non-Qualified
|
$ | 1.000000 | 31,100 | 0 | 0 | 0 | 31,100 | 7,775 | 7,775 | |||||||||||||||||||||||
|
3/10/2006
|
Restricted
|
$ | 0.000000 | 72,585 | 0 | 0 | 0 | 72,585 | 0 | 0 | |||||||||||||||||||||||
|
3/10/2006
|
Restricted
|
$ | 0.000000 | 103,551 | 0 | 0 | 0 | 103,551 | 0 | 0 | |||||||||||||||||||||||
|
8/29/2006
|
Non-Qualified
|
$ | 1.320000 | 100,000 | 0 | 0 | 0 | 100,000 | 0 | 0 | |||||||||||||||||||||||
|
8/29/2006
|
Restricted
|
$ | 0.000000 | 100,000 | 0 | 0 | 0 | 100,000 | 0 | 0 | |||||||||||||||||||||||
|
3/9/2007
|
Non-Qualified
|
$ | 2.835000 | 31,100 | 0 | 0 | 0 | 31,100 | 0 | 0 | |||||||||||||||||||||||
|
3/9/2007
|
Restricted
|
$ | 0.000000 | 72,585 | 0 | 0 | 0 | 72,585 | 0 | 0 | |||||||||||||||||||||||
|
Optionee
Total
|
803,121 | 36,250 | 60,589 | 0 | 706,302 | 187,625 | 111,375 | ||||||||||||||||||||||||||
|
Plan
Totals
|
803,121 | 36,250 | 60,589 | 0 | 706,302 | 187,625 | 111,375 | ||||||||||||||||||||||||||
27
Exhibit
B
Executive
Cash Award Plan
28
Exhibit 10.4b
AMENDMENT
TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This
Amendment to the Amended and Restated Employment Agreement is entered into as of
April 7, 2008 (the “Effective Date”) by and between CHARTER COMMUNICATIONS,
INC., a Delaware corporation (the “Company”), and ELOISE
E. SCHMITZ, an
adult resident of Missouri (the “Executive”).
WHEREAS,
the Company and the Executive entered into a Amended and Restated Employment
Agreement effective August 1, 2007 (the “Agreement”);
WHEREAS,
the Company and the Executive desire to amend the Agreement as set forth
herein;
NOW, THEREFORE, intending to be legally
bound and in consideration of the covenants and promises set forth herein, the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Executive agree that the Agreement shall be amended as follows:
1. The
first sentence of Section 3 is hereby replaced in totality with the following:
"Executive shall serve as Senior Vice President, Strategic Planning and Interim
Chief Financial Officer reporting to the Chief Executive Officer, but with other
reporting relationships as shall be determined by the Chief Executive Officer
from time to time, with such responsibilities, duties and authority as are
customary for such role, including, but not limited to, overall management
responsibility for the financial planning, reporting and strategic planning for
the Company and management of all personnel reporting to the Chief Financial
Officer. At any time in the future at his discretion, effective upon
oral or written notice to Executive, the Chief Executive Officer may remove “and
Interim Chief Financial Officer” from Executive’s title and remove from her job
function some or all responsibilities duties and authorities normally accruing
to a Chief Financial Officer."
2. In
Section 5 of the Agreement, Executive’s Annual Base Salary shall be $500,000 for
the period during which Executive serves as Interim Chief Financial
Officer.
3. In
Section 6 of the Agreement, the Executive’s eligibility to receive a Target
Bonus of “up to 50% of Executive’s Annual Base Salary” is hereby revised to add
“but up to 75% of Executive’s Annual Base Salary for such period that Executive
serves as Interim Chief Financial Officer”.
4. If,
at any time, Executive's title and responsibilities as Interim Chief Financial
Officer shall cease, the amendments herein to Sections 3, 5 and 6 shall no
longer have any further effect and the original Sections 3, 5 and 6 of the
Agreement shall be reinstated as stated prior to this amendment, provided that
any additional Bonus earned pursuant to the increase in the percentage of Target
Bonus set forth in
paragraph
3 above and not paid at the time of reinstatement of Section 6 of the
Agreement, shall be paid to Executive at the time of the payment of the
remainder of the annual bonus, if any.
The
Company and the Executive agree that all other provisions of the Agreement
(including the remainder of Sections 3, 5 and 6) shall remain in full force and
effect until expiration or earlier termination upon the terms
therein.
IN
WITNESS WHEREOF, the Company and the Executive have each caused this Amendment
to Restated and Amended Employment Agreement to be duly executed on its behalf
as of the date first above written.
CHARTER
COMMUNICATIONS, INC.
By: /s/ Lynne F. Ramsey
Name:
Lynne F. Ramsey
Title:
SVP, Human Resources
EXECUTIVE
___/s/ Eloise E.
Schmitz__________
Name: Eloise
E. Schmitz
Exhibit
10.5
AMENDMENT
TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This
Amendment to the Amended and Restated Employment Agreement is entered into on
March 5, 2008 (the “Effective Date”) by and between CHARTER COMMUNICATIONS,
INC., a Delaware corporation (the “Company”), and Michael J. Lovett, an
adult resident of Missouri (the “Executive”).
WHEREAS,
the Company and the Executive entered into a Amended and Restated Employment
Agreement effective August 1, 2007 (the “Agreement”);
WHEREAS,
the Company and the Executive desire to amend the Agreement as set forth
herein;
NOW, THEREFORE, intending to be legally
bound and in consideration of the covenants and promises set forth herein, the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Executive agree that the Agreement shall be amended as follows:
In
Section 6 of the Agreement, the Executive’s eligibility to receive a Target
Bonus of “up to 100%” of Annual Base Salary is hereby revised to state “up to
125%” of Annual Base Salary.
The
Company and the Executive agree that all other provisions of the Agreement
(including the remainder of Section 6) shall remain in full force and effect
until expiration or earlier termination upon the terms therein.
IN
WITNESS WHEREOF, the Company and the Executive have each caused this Amendment
to Restated and Amended Employment Agreement to be duly executed on its behalf
as of the date first above written.
CHARTER
COMMUNICATIONS, INC.
By: /s/ Lynne F. Ramsey
Name:
Lynne F. Ramsey
Title:
SVP, Human Resources
EXECUTIVE
____/s/ Michael J.
Lovett__________
Name: Michael
J. Lovett
Exhibit
10.6
AMENDMENT
TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This
Amendment to the Amended and Restated Employment Agreement is entered into on
March 5, 2008 (the “Effective Date”) by and between CHARTER COMMUNICATIONS,
INC., a Delaware corporation (the “Company”), and Grier C. Raclin, an
adult resident of Missouri (the “Executive”).
WHEREAS,
the Company and the Executive entered into a Amended and Restated Employment
Agreement effective August 1, 2007 (the “Agreement”);
WHEREAS,
the Company and the Executive desire to amend the Agreement as set forth
herein;
NOW, THEREFORE, intending to be legally
bound and in consideration of the covenants and promises set forth herein, the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Executive agree that the Agreement shall be amended as follows:
In
Section 6 of the Agreement, the Executive’s eligibility to receive a Target
Bonus of “up to 60%” of Annual Base Salary is hereby revised to state “up to
75%” of Annual Base Salary.
The
Company and the Executive agree that all other provisions of the Agreement
(including the remainder of Section 6) shall remain in full force and effect
until expiration or earlier termination upon the terms therein.
IN
WITNESS WHEREOF, the Company and the Executive have each caused this Amendment
to Restated and Amended Employment Agreement to be duly executed on its behalf
as of the date first above written.
CHARTER
COMMUNICATIONS, INC.
By:___/s/ Lynne F.
Ramsey______
Name: Lynne
F. Ramsey
Title: SVP,
Human Resources
EXECUTIVE
____/s/ Grier C.
Raclin___________
Name: Grier
C. Raclin
Exhibit 12.1
|
CHARTER
COMMUNICATIONS, INC AND SUBSIDIARIES
|
||||||||
|
RATIO
OF EARNINGS TO FIXED CHARGES CALCULATION
|
||||||||
|
(In
millions)
|
||||||||
|
Three
Months Ended March 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Earnings
|
||||||||
|
Loss
from Operations before Minority Interest and Income Taxes
|
$ | (298 | ) | $ | (310 | ) | ||
|
Fixed
Charges
|
467 | 466 | ||||||
|
Total
Earnings
|
$ | 169 | $ | 156 | ||||
|
Fixed
Charges
|
||||||||
|
Interest
Expense
|
$ | 458 | $ | 456 | ||||
|
Amortization
of Debt Costs
|
7 | 8 | ||||||
|
Interest
Element of Rentals
|
2 | 2 | ||||||
|
Total
Fixed Charges
|
$ | 467 | $ | 466 | ||||
|
Ratio
of Earnings to Fixed Charges (1)
|
- | - | ||||||
|
(1) Earnings
for the three months ended March 31, 2008 and 2007 were insufficient to
cover fixed charges by
|
||||||||
|
$298
million and $310 million, respectively. As a result of such
deficiencies, the ratios are not presented above.
|
||||||||
Exhibit
31.2
I, Eloise
E. Schmitz, certify that:
|
1.
|
I
have reviewed this Quarterly Report on Form 10-Q of Charter
Communications, Inc.;
|
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and
have:
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
||
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
||
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
|
||
|
(d)
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
|
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
||
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: May
12, 2008
/s/ Eloise E.
Schmitz
Eloise E.
Schmitz
Interim
Chief Financial Officer
(Principal
Financial Officer)
Exhibit
31.1
I, Neil
Smit, certify that:
|
1.
|
I
have reviewed this Quarterly Report on Form 10-Q of Charter
Communications, Inc.;
|
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and
have:
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
||
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
||
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
|
||
|
(d)
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
|
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
||
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: May
12, 2008
/s/ Neil
Smit
Neil
Smit
President
and Chief Executive Officer
Exhibit
32.2
CERTIFICATION
OF CHIEF FINANCIAL
OFFICER
REGARDING PERIODIC REPORT CONTAINING
FINANCIAL
STATEMENTS
I, Eloise
E. Schmitz, the Interim Chief Financial Officer of Charter Communications, Inc.
(the "Company") in compliance with 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that, the
Company's Quarterly Report on Form 10-Q for the period ended March 31, 2008 (the
"Report") filed with the Securities and Exchange Commission:
|
·
|
fully
complies with the requirements of Section 13(a) of the Securities Exchange
Act of 1934; and
|
|
·
|
the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
/s/ Eloise E.
Schmitz
Eloise E.
Schmitz
Interim Chief
Financial Officer
(Principal Financial
Officer)
May 12,
2008
Exhibit
32.1
CERTIFICATION
OF CHIEF EXECUTIVE
OFFICER
REGARDING PERIODIC REPORT CONTAINING
FINANCIAL
STATEMENTS
I, Neil
Smit, the President and Chief Executive Officer of Charter Communications, Inc.
(the "Company") in compliance with 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that, the
Company's Quarterly Report on Form 10-Q for the period ended March 31, 2008 (the
"Report") filed with the Securities and Exchange Commission:
|
·
|
fully
complies with the requirements of Section 13(a) of the Securities Exchange
Act of 1934; and
|
|
·
|
the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
/s/ Neil Smit
Neil
Smit
President
and
Chief Executive
Officer
May 12,
2008