Charter 2002 Annual Report Download - page 99

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002, 2001 and 2000
(dollars in millions, except where indicated)
Company refers to as the equity contribution. The equity interests to be transferred in the equity contribution
have been pledged as security for the loans under the Charter Operating credit facility. The Company would
also be required to use its commercially reasonable eÅorts to obtain the consent of the lenders under the
Charter Operating credit facility to the grant to the lender of a second priority lien on the equity interests
transferred to CCH II, LLC. Upon the equity contribution, CCH II, LLC would become the borrower under
the facility.
In addition to the liens on our corporate headquarters, on the corporate aircraft and on the equity interests
transferred pursuant to the equity contribution, the facility would also be secured on a pari passu basis by liens
or security interests granted on any assets or properties (other than assets or properties of CCH II, LLC,
which shall secure the facility on a Ñrst priority basis, subject to the prior lien in favor of the lenders under
Charter Operating credit facility on the equity interests transferred pursuant to the equity contribution) to
secure any indebtedness of us or any of our subsidiaries (other than the operating company credit facilities and
other ordinary and customary exceptions to be determined).
The interest rate on the loans would be initially 13% per annum, reducing to 12% per annum at such time
as CCH II, LLC became the borrower under the facility. If the borrower were unable to receive funds from its
operating subsidiaries to pay such interest, the borrower would be able to pay interest by delivering additional
notes to the lender in the amount of the accrued interest calculated at the rate of 15% per annum, reducing to
14% per annum for any issuance after CCH II, LLC became the borrower under the facility. Such additional
notes would bear interest at the same rate as, and otherwise be on the same terms as, the notes issued to
represent the original loans under the facility. Upon the occurrence of an event of default, the interest rate
would be increased by 2% per annum over the interest rate otherwise applicable.
If letters of credit are issued pursuant to the facility, the borrower would pay a letter of credit fee of 8%
per annum of the face amount of the letter of credit.
The borrower would pay the lender a facility fee of 1.5% of the amount of the facility, payable over three
years (with 0.5% being earned upon execution of the commitment letter and 1.0% being earned upon
execution of the deÑnitive documentation). In addition to the facility fee, the borrower would pay a
commitment fee on the undrawn portion of the facility in the amount of 0.5% per annum commencing upon
execution of the deÑnitive documentation.
The borrower would have the right to terminate the facility at any time that no loans or letters of credit
are outstanding, although any fees earned prior to termination would remain payable. No amortization
payments would be required prior to maturity. The facility would mature on November 12, 2009, provided that
at such time as CCH II, LLC became the borrower under the facility the maturity date would become
March 1, 2007. The loan may not be prepaid prior to March 31, 2004, but the borrower would have the right to
make prepayments at any time after March 31, 2004, without the payment of any premium or penalty. The
borrower would be required to oÅer to purchase outstanding notes evidencing the loans under the facility with
the proceeds of certain asset sales and debt issuances.
The deÑnitive documentation would contain customary representations, covenants, events of default and
indemniÑcation provisions including a total leverage covenant and an interest coverage covenant, in each case
modeled after the comparable covenants in the operating company credit facilities, with appropriate
adjustments to be determined.
The facility is subject to the negotiation and execution of deÑnitive documentation by June 30, 2003. If
the parties have not executed the deÑnitive documentation by that date, the facility will terminate. Once the
documentation has been executed, the borrower's ability to draw on the facility would be subject to certain
conditions, such as the use of other available funds for covenant compliance purposes, evidence of compliance
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