Exhibit 10.7
HOLDCO MIRROR NOTES
AGREEMENT
This MIRROR NOTES AGREEMENT (the "Agreement") is entered into as of the
22nd day of November, 2004, by and between Charter Communications, Inc., a
Delaware corporation ("CCI") and Charter Communications Holding Company, LLC, a
Delaware limited liability company ("Holdco"), with reference to the following
facts (capitalized terms used but not otherwise defined herein shall have the
meanings set forth in Exhibit A hereto):
A. CCI is the beneficial owner of the Mirror Note dated as of
October 30, 2000 (the "2005 Mirror Note") which had an original principal
balance of $750 Million, which 2005 Mirror Note has economic terms
substantially identical to those of CCI's 5.75% Convertible Senior Notes
due 2005 (the "2005 CCI Notes");
B. The remaining principal balance of the 2005 Mirror Note is
approximately $588 million after giving effect to (i) the cancellation of
$131,969,000 principal amount in exchange for certain notes of CCH II, LLC
on September 23, 2003; which notes were distributed to certain holders of
the 2005 CCI Notes in exchange for 2005 CCI Notes (ii) the cancellation of
$10 million in principal amount in exchange for 2,385,705 common mirror
units on March 29, 2004, in connection with a similar exchange of shares
for notes by CCI with a holder of 2005 CCI Notes and (iii) the
cancellation of $20 million in principal amount in exchange for 4,867,113
common mirror units on May 6, 2004, in connection with a similar exchange
of shares for notes by CCI with a holder of 2005 CCI Notes;
C. Pursuant to a Purchase Agreement dated November 16, 2004 (the
"Purchase Agreement"), CCI has agreed to issue and sell (after giving
effect to the exercise of the initial purchasers' over-allotment option in
full, which occurred on November 18, 2004) $862,500,000 principal amount
of its new 5.875% convertible senior notes due 2009 (the "2009 CCI
Notes");
D. CCI has agreed to redeem the 2005 CCI Notes promptly following
the closing of the sale of the 2009 CCI Notes (the "Closing"), at a
redemption price per note equal to the current redemption price as
specified in the indenture governing the 2005 CCI Notes (the "Redemption
Price") plus all accrued and unpaid interest thereon to (but not
including) the redemption date of the 2005 CCI Notes (the "Redemption
Date"); and
E. CCI and Holdco wish to arrange for, on the terms and conditions
set forth herein, the loan by CCI to Holdco, concurrently with the Closing
of the proceeds of the 2009 CCI Notes, to be evidenced by a new mirror
note, which new mirror note will contain economic terms substantially
identical to those of the 2009 CCI Notes. Holdco intends to repay all
amounts outstanding under the 2005
Mirror Note (including any accrued and unpaid interest thereon) to CCI
prior to or concurrently with the redemption by CCI of the 2005 CCI Notes.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter contained, the parties hereto agree as
follows:
1. Purchase of 2009 Mirror Note; Pledges. In consideration for the
on-lending by CCI to Holdco of the proceeds of the 2009 CCI Notes, subject to
the terms and conditions of this Agreement, CCI agrees to purchase from Holdco,
and Holdco hereby agrees to issue and sell to CCI, a new mirror note (the "2009
Mirror Note") in the original aggregate principal amount of $862,500,000, with
economic terms that are substantially identical to those of the 2009 CCI Notes,
which terms are as described in the Offering Memorandum dated November 16, 2004
("Offering Memorandum"). In the event that CCI elects from time to time to
accrete the principal amount of the 2009 CCI Notes as described in the Offering
Memorandum, the principal amount of the 2009 Mirror Note shall accrete by a like
amount. Holdco agrees to use a portion of the purchase price to purchase Pledged
Securities (as described in the Offering Memorandum), which Holdco will promptly
pledge to CCI as security for the 2009 Mirror Note, pursuant to pledge and
escrow arrangements established by Holdco, CCI and the trustee and collateral
agent under the indenture for the 2009 CCI Notes. Holdco hereby consents to the
repledge by CCI of its interest in the Pledged Securities for the benefit of
holders of the 2009 CCI Notes.
2. Repayment of 2005 Mirror Note. On the Redemption Date, Holdco shall pay
or cause to be paid to or on behalf of CCI in cash the sum of (a) all accrued
and unpaid interest on the 2005 Mirror Note to, but not including, the
Redemption Date, on the terms set forth in the Mirror Note, and (b) the costs
and expenses relating to the redemption of the 2005 CCI Notes. In exchange
therefor, CCI shall sell, assign and transfer to Holdco all right, title and
interest in and to, the 2005 Mirror Note and all Claims in respect of or arising
or having arisen as a result of, CCI's status as a holder of, the entire amount
of the 2005 Mirror Note, free and clear of all Liens.
3. Covenants.
(a) Reasonable Efforts to Close. CCI and Holdco shall use
reasonable efforts to take such actions as are necessary or desirable to
consummate the transactions contemplated by this Agreement.
(b) Acknowledgment of One-for-one Requirement. CCI and Holdco
acknowledge and agree that the transactions contemplated herein are required
pursuant to their respective restated certificate of incorporation and
limited liability company agreement in order to maintain the one-for-one
requirements contained therein.
(c) New Mirror Note Not Registered. Each of CCI and Holdco
acknowledges and agrees that the 2009 Mirror Note, when issued, will not have
been registered under the Securities Act and are issued in reliance upon an
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exemption from the registration requirements of the Securities Act. Each of
CCI and Holdco acknowledges and agrees that it has not offered, sold or
delivered the 2009 Mirror Note to be acquired by CCI, and neither of them
will offer, sell or deliver such 2009 Mirror Note except pursuant to an
exemption from registration to the extent available under the Securities Act.
4. Conditions to Closing.
4.1 Issuance of 2009 CCI Notes. The obligations of CCI and Holdco to close
the issuance of the 2009 Mirror Note and pledge of Pledged Securities are
subject to the consummation of the sale of the 2009 CCI Notes.
4.2 Redemption of 2005 Mirror Note. The obligation of Holdco to repay the
2005 Mirror Note prior to or on the Redemption Date is subject to the condition
subsequent of the consummation of the redemption by CCI of the 2005 CCI Notes.
5. Termination and Amendment.
5.1 By Mutual Consent. This Agreement may be terminated or amended at any
time prior to the Closing Date by the mutual written consent of CCI and Holdco.
5.2 By CCI. This Agreement may be terminated or amended by CCI solely to
reflect the termination of the Purchase Agreement.
5.3 Effect of Termination. If this Agreement is terminated as provided in
this Section 4, then this Agreement will forthwith become null and void and
there will be no liability on the part of any party hereto to any other party
hereto or any other person or entity in respect thereof, provided that the
obligations of the parties described in Section 5.3 will survive any such
termination.
6. Miscellaneous.
6.1 Governing Law. This Agreement shall be governed in all respects by the
internal laws of the State of New York without regard to principles of conflicts
of law or choice of law.
6.2 Further Assurances; Additional Documents. The parties shall take any
actions and execute any other documents that may be necessary or desirable to
the implementation and consummation of this Agreement upon the reasonable
request of the other party. In that regard, the parties agree to equitably
adjust the terms of this agreement and/or the 2009 Mirror Notes from time to
time as may be necessary to ensure that the 2009 Mirror Note qualifies as a
mirror security, in respect of all 2009 CCI Notes, for purposes of CCI's
certificate of incorporation.
6.3 Fees and Expenses. Holdco shall be responsible for all fees and
expenses of each party in connection with this agreement, the financing
resulting from the issuance and sale of the 2009 CCI Notes and the 2009 Mirror
Note and the redemption of the 2005 CCI Notes and 2005 Mirror Note. Holdco will
either reimburse CCI for all such
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expenses or pay such expenses directly. Holdco specifically agrees to pay to the
initial purchasers (who shall be third party beneficiaries only with respect to
this provision of this agreement) under the Purchase Agreement an amount equal
to 3.5% of the aggregate initial principal amount of the 2009 CCI Notes as a fee
for the management of that offering.
6.4 Severability. If any term or provision of this Agreement is determined
by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced by any rule of law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon
determination that any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to attempt to agree on a modification of this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the greatest extent possible.
6.5 Entire Agreement. This Agreement and the other Transaction Documents
represent the entire agreement and understandings between the parties concerning
the sale and issuance of the 2009 Mirror Note and the proposed redemption and
cancellation of the remaining 2005 Mirror Note and the other matters described
therein and supersedes and replaces any and all prior agreements and
understandings.
6.6 No Oral Modification. This Agreement may only be amended in writing
signed by CCI and Holdco.
6.7 Notices. All notices, requests and other communications hereunder
shall be in writing and shall be deemed to have been duly given at the time of
receipt if delivered by hand, by reputable overnight courier or by facsimile
transmission (with receipt of successful and full transmission) to the
applicable parties hereto at the address stated on the signature pages hereto or
if any party shall have designated a different address or facsimile number by
notice to the other party given as provided above, then to the last address or
facsimile number so designated.
6.8 Submission to Jurisdiction. Each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any federal court located in the
state of New York or any New York state court in the event any dispute arises
out of this agreement or any of the transactions contemplated hereby, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this agreement or any of the transactions
contemplated hereby in any court other than a federal or state court sitting in
the state of New York.
6.9 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original and all of which together
shall constitute one instrument. Facsimile signatures shall constitute original
signatures.
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[NEXT PAGE IS SIGNATURE PAGE]
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SIGNATURE PAGE TO MIRROR NOTE AGREEMENT
IN WITNESS WHEREOF the parties have executed this Agreement on the date
set forth below.
"CCI"
Dated: November 22, 2004 Charter Communications, Inc.
By: /s/ Xxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxx
Its: Executive Vice President
NOTICE ADDRESS:
Charter Communications, Inc. With a copy to:
12405 Powerscourt Drive Irell & Xxxxxxx LLP
Xx. Xxxxx, Xxxxxxxx 00000 0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Facsimile: (000) 000-0000 Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxx and Xxxxxx X. Xxxx, Esq. Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxx, Esq.
"HOLDCO"
Dated: November 22, 2004 Charter Communications Holding
Company, LLC
By: Charter Communications, Inc.,
as manager
By: /s/ Xxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxx
Its: Executive Vice President
NOTICE ADDRESS:
Charter Communications Holding Company, LLC With a copy to:
12405 Powerscourt Drive Irell & Xxxxxxx LLP
Xx. Xxxxx, Xxxxxxxx 00000 0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Facsimile: (000) 000-0000 Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxx and Xxxxxx X. Xxxx, Esq. Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxx, Esq.
EXHIBIT A
CERTAIN DEFINITIONS
Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
"Claims" means any claims, actions, causes of action, liabilities,
agreements, demands, damages, debts, rights, interests, obligations, suits,
judgments and charges of whatever nature, whether liquidated or unliquidated,
fixed or contingent, matured or unmatured, foreseen or unforeseen, known or
unknown, that exist or may exist as of the date of this Agreement, or thereafter
arising in law, equity or otherwise.
"Governmental Authority" means the United States of America, any
state, commonwealth, territory or possession of the United States of America,
any foreign state and any political subdivision or quasi governmental authority
of any of the same, including any court, tribunal, department, commission,
board, bureau, agency, county, municipality, province, parish or other
instrumentality of any of the foregoing.
"Legal Requirement" means applicable common law and any statute,
ordinance, code or other law, rule, regulation, order, technical or other
written standard, requirement, policy or procedure enacted, adopted,
promulgated, applied or followed by any Governmental Authority, including any
judgment or order and all judicial decisions applying common law or interpreting
any other Legal Requirement, in each case, as amended.
"Lien" means any security interest, any interest retained by the
transferor under a conditional sale or other title retention agreement,
mortgage, lien, pledge, option, encumbrance, adverse interest, constructive
exception to, defect in or other condition affecting title or other ownership
interest of any kind, which constitutes an interest in or claim against
property, whether or not arising pursuant to any Legal Requirement.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"Transaction Documents" means this Agreement and the other documents
and instruments to be executed and delivered in connection herewith at or prior
to the Closing.
