EXCHANGE AGREEMENT BETWEEN CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND CHARTER INVESTMENT, INC. AND MR. PAUL G. ALLEN DATED AS OF OCTOBER 31, 2005
Exhibit
10.18
BETWEEN
CHARTER
COMMUNICATIONS HOLDING COMPANY, LLC
AND
CHARTER
INVESTMENT, INC.
AND
▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇
DATED
AS OF OCTOBER 31, 2005
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Page
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| I. | EXCHANGE RIGHTS |
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| 1.1 | CII Exchange Rights. |
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| 1.2 | HoldCo Exchange Rights. |
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| 1.3 | Exchange Rate; Exchange Price; Adjustments. |
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| 1.4 | Provision in Case of Consolidation, Merger or Sale of Assets. |
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| 1.5 | Notice of Adjustment of Exchange Price. |
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| 1.6 | Exercise of the Exchange Right. |
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| 1.7 | Tax Treatment of Exchange of the Note for HoldCo Units. |
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| II. | REPRESENTATIONS AND WARRANTIES OF CII. |
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| 2.1 | Power, Authority and Enforceability. |
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| III. | REPRESENTATIONS AND WARRANTIES OF HOLDCO. |
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| 3.1 | Power, Authority and Enforceability. |
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| 3.2 | Compliance with Other Instruments. |
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| IV. | COVENANTS. |
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| 4.1 | Transfer or Assignment of Exchange Rights. |
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| V. | MISCELLANEOUS. |
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| 5.1 | Successors and Assigns. |
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| 5.2 | Governing Law. |
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| 5.3 | Counterparts. |
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| 5.4 | Titles and Subtitles. |
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| 5.5 | Notices. |
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| 5.6 | Amendments and Waivers. |
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| 5.7 | Severability. |
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| 5.8 | Entire Agreement. |
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-i-
TABLE OF CONTENTS
(continued)
EXHIBITS
Exhibit
A HoldCo
Limited Liability Company Agreement
Exhibit B Exchange
Notice
-ii-
This
EXCHANGE AGREEMENT (this "Agreement")
is made
as of the 31st day of October, 2005 by and among Charter
Investment, Inc., a Delaware corporation ("CII"),
and
Charter Communications Holding Company, LLC, a Delaware limited liability
company ("HoldCo"),
and
solely for purposes of Article IV, ▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇.
▇▇▇▇▇").
W
I T
N E S S E T H
WHEREAS,
concurrently with the execution and delivery of this Agreement, CII, HoldCo
and
certain other parties are entering into a Settlement Agreement (the
"Settlement
Agreement"),
providing for, among other things, the formation of CCHC, LLC, a Delaware
limited liability company ("CCHC");
WHEREAS,
in connection with the Settlement Agreement, CCHC has authorized and issued
a
subordinated promissory note (the "CCHC
Note"),
to
CII in exchange for certain of CII's Class A Preferred Units of CC VIII, LLC
upon the terms and conditions set forth in the Settlement Agreement;
and
WHEREAS,
each of CII and HoldCo desire to enter into this Agreement in conjunction with
the Settlement Agreement in order to provide for the exchange of the CCHC Note
in certain circumstances as provided herein.
NOW,
THEREFORE, in consideration of the foregoing recitals and the terms and
conditions set forth herein, and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, CII and HoldCo (each
a
"Party"
and,
collectively, the "Parties"),
intending to be legally bound, hereby agree as follows:
I. EXCHANGE
RIGHTS.
1.1 CII
Exchange Rights.
Subject
to the terms and conditions of this Agreement, CII shall have the right at
any
time to exchange the CCHC Note for HoldCo Units at the Exchange Rate (as defined
herein). Such HoldCo Units shall be exchangeable into shares of stock of Charter
Communications, Inc., a Delaware corporation ("CCI"),
in
accordance with the terms of the Exchange Agreement dated as of November 12,
1999 by and among CCI, CII, Vulcan Cable III, Inc., and ▇▇. ▇▇▇▇▇ (the "▇▇▇▇▇
Exchange Agreement").
1.2 HoldCo
Exchange Rights.
(a) Commencing
on March 1, 2009, if the CCI Common Stock Price (as defined herein) for at
least
20 consecutive Trading Days (as defined herein) within any period of 30
consecutive Trading Days is at or above the Exchange Price, HoldCo shall for
30
days following the end of any such 30 consecutive Trading Day period, have
the
right at any time to cause CII to exchange the CCHC Note for HoldCo Units at
the
Exchange Rate.
(b) "Trading
Day"
means a
day during which trading in securities generally occurs on the principal U.S.
national or regional securities exchange on which CCI Common stock is then
listed or, if CCI Common Stock is not then listed on a national or regional
securities exchange, on the Nasdaq National Market or, if CCI Common Stock
is
not then quoted on Nasdaq National Market, on the principal other market on
which CCI Common Stock is then traded.
(c) "CCI
Common Stock"
means
the Class A Common Stock, par value $0.001, of CCI.
(d) "CCI
Common Stock Price"
on any
date means the closing sale price per share (or if no closing sale price is
reported, the average of the bid and asked prices or, if more than one in either
case, the average of the average bid and the average asked prices) on that
date
as reported in transactions for the principal U.S. securities exchange on which
CCI Common Stock is traded or, if CCI Common Stock is not listed on a U.S.
national or regional securities exchange, as reported by the Nasdaq National
Market. The CCI Common Stock Price will be determined without reference to
after-hours or extended market trading.
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(i)
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If
CCI Common Stock is not listed for trading on a U.S. national or
regional
securities exchange and not reported by the Nasdaq National Market
on the
relevant date, the "CCI
Common Stock Price"
will be the last quoted bid price for CCI Common Stock on the Nasdaq
Small
Cap Market or in the over-the-counter market on the relevant date
as
reported by Pink Sheets LLC or any similar organization (the "Closing
Bid Price").
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(ii)
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If
CCI Common Stock is not so quoted, the "CCI Common Stock Price" will
be
the average of the mid-point of the last bid and asked prices for
CCI
Common Stock on the relevant date from each of at least three nationally
recognized independent investment banking firms selected by HoldCo
for
this purpose.
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1.3 Exchange
Rate; Exchange Price; Adjustments.
(a) As
of any
date, the rate of exchange of the CCHC Note for HoldCo Units (the "Exchange
Rate")
shall
be: (i) the Accreted Value (as defined in the CCHC Note) of the CCHC Note on
such date divided
by (ii)
the exchange price on such date (the "Exchange
Price").
The
Exchange Price shall initially be $2.00 until adjusted in accordance with this
Section 1.3. The Exchange Rate shall be subject to adjustment from time to
time
pursuant to this Section 1.3.
(b) In
case
CCI shall pay or make a dividend or other distribution in shares of Common
Stock, subdivide outstanding shares of Common Stock into a greater number of
shares of Common Stock or combine the outstanding shares of Common Stock into
a
lesser number of shares of Common Stock, the Exchange Price in effect at the
opening of business on the day following the Record Date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution, or the Record Date for such subdivision or combination, as the
case may be, shall be adjusted based on the following formula:
2
For
purposes of further clarification, the formula set forth below expresses the
adjustments to the Exchange Price:
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EP(1)=
EP(0) x
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OS(0)
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OS(1)
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Where:
EP(0)
=
the Exchange Price in effect at the close of business on the Record
Date
EP(1)
=
the Exchange Price in effect immediately after the Record Date
OS(0)
=
the number of shares of Common Stock outstanding at the close of business on
the
Record Date
OS(1)
=
the number of shares of Common Stock that would be outstanding immediately
after
such event
If,
after
any such Record Date, any dividend or distribution is not in fact paid or the
outstanding shares of Common Stock are not subdivided or combined, as the case
may be, the Exchange Price shall be immediately readjusted, effective as of
the
date the Board of Directors determines not to pay such dividend or distribution,
or subdivide or combine the outstanding shares of Common Stock, as the case
may
be, to the Exchange Price that would have been in effect if such Record Date
had
not been fixed.
(c) In
case
CCI shall issue rights or warrants to all holders of its Common Stock entitling
them to subscribe for or purchase shares of Common Stock for a period expiring
45 days or less from the date of issuance of such rights or warrants at a price
per share less than (or having a conversion price per share less than) the
Current Market Price of the Common Stock, the Exchange Price in effect at the
opening of business on the day following the Record Date shall be adjusted
based
on the following formula:
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EP(1)
= EP(0) x
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OS(0)
+ Y
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OS(0)
+ X
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Where:
EP(0)
=
the Exchange Price in effect at the close of business on the Record
Date
EP(1)
=
the Exchange Price in effect immediately after the Record Date
OS(0)
=
the number of shares of Common Stock outstanding at the close of business on
the
Record Date
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X=
the
total number of shares of Common Stock issuable pursuant to such
rights
Y
= the
number of shares of Common Stock equal to the aggregate price payable to
exercise such rights divided by the average of the Sale Prices of the Common
Stock for the ten consecutive Trading Days prior to the Business Day immediately
preceding the announcement of the issuance of such rights
If,
after
any such Record Date, any such rights or warrants are not in fact issued, or
are
not exercised prior to the expiration thereof, the Exchange Price shall be
immediately readjusted, effective as of the date such rights or warrants expire,
or the date the Board of Directors determines not to issue such rights or
warrants, to the Exchange Price that would have been in effect if the
unexercised rights or warrants had never been granted or such Record Date had
not been fixed, as the case may be.
(d) In
case
CCI shall pay a dividend or distribution consisting exclusively of cash to
all
holders of its Common Stock, the Exchange Price in effect at the opening of
business on the day following the Record Date for such dividend or distribution
shall be adjusted based on the following formula:
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EP(1)
= EP(0) x
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SP(0)
- C
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SP(0)
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Where:
EP(0)
=
the Exchange Price in effect at the close of business on the Record
Date
EP(1)
=
the Exchange Price in effect immediately after the Record Date
SP0=
the
Current Market Price
C=
the
amount in cash per share distributed by CCI to holders of Common
Stock
In
the
event that C is greater than or equal to SP0, in lieu of the adjustment
contemplated, CII will be entitled to participate ratably in the cash
distribution from HoldCo to CCI as though the CCHC Note had been exchanged
for
HoldCo Units on the applicable date of calculation for the amounts to be
received by holders of Common Stock. If after any such Record Date, any such
dividend or distribution is not in fact made, the Exchange Price shall be
immediately readjusted, effective as of the date of the Board of Directors
determines not to make such dividend or distribution, to the Exchange Price
that
would have been in effect if such Record Date had not been fixed.
(e) In
case
CCI shall, by dividend or otherwise, distribute to all holders of its Common
Stock shares of its capital stock (other than Common Stock) or evidences of
its
indebtedness or assets (including cash or securities, but excluding (i) any
rights or warrants referred to in Section 1.3(c), (ii) any dividend or
distribution paid exclusively in cash, (iii) any dividend or distribution
referred to in Section 1.3(b) or 1.3(f), and (iv) mergers or consolidations
4
to
which
Section 1.4 applies), the Exchange Price in effect at the opening of business
on
the day following the Record Date for such dividend or distribution shall
be
adjusted based on the following formula:
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EP(1)
= EP(0) x
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SP(0)
- FMV
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SP(0)
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Where:
EP(0)
=
the Exchange Price in effect at the close of business on the Record
Date
EP(1)
=
the Exchange Price in effect immediately after the Record Date
SP0=
the
Current Market Price
FMV=the
fair market value (as determined by the Board of Directors) of the shares of
capital stock, evidences of indebtedness, assets or property distributed with
respect to each outstanding share of Common Stock on the Record Date for such
distribution
In
the
event that FMV is greater than or equal to SP0, in lieu of the adjustment
contemplated, CII will be entitled to participate ratably in the relevant
distribution from HoldCo to CCI as though the CCHC Note had been exchanged
for
HoldCo Units on the applicable date of calculation for the amounts to be
received by holders of Common Stock. If after any such Record Date, any such
dividend or distribution is not in fact made, the Exchange Price shall be
immediately
readjusted, effective as of the date of the Board of Directors determines not
to
make such dividend or distribution, to the Exchange Price that would have been
in effect if such Record Date had not been fixed.
Rights
or
warrants distributed by CCI to all holders of Common Stock entitling the holders
thereof to subscribe for or purchase shares of the CCI's Capital Stock (either
initially or under certain circumstances), which rights or warrants, until
the
occurrence of a specified event or events ("Trigger Event"):
(i)
are
deemed to be transferred with such shares of Common Stock,
(ii)
are
not
exercisable, and
(iii)
are
also
issued in respect of future issuances of Common Stock
shall
be
deemed not to have been distributed for purposes of this Section 1.3 (e) (and
no
adjustment to the Exchange Price under this Section 1.3(e) will be required)
until the occurrence of the earliest Trigger Event. If such right or warrant
is
subject to subsequent events, upon the occurrence of which such right or warrant
shall become exercisable to purchase different securities, evidences of
indebtedness or other assets or entitle the holder to purchase a different
number or amount of the foregoing or to purchase any of the foregoing at a
different purchase
5
price,
then the occurrence of each such event shall be deemed to be the date of
issuance and Record Date with respect to a new right or warrant (and a
termination or expiration of the existing right or warrant without exercise
by
the holder thereof). In addition, in the event of any distribution
(or deemed distribution) of rights or warrants, or any Trigger Event or other
event (of the type described in the preceding sentence) with respect thereto,
that resulted in an adjustment to the Exchange Price under this Section
1.3(e):
(1)
in
the
case of any such rights or warrants that shall all have been redeemed or
repurchased without exercise by any holders thereof, the Exchange Price shall
be
readjusted upon such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price received
by
a holder of Common Stock with respect to such rights or warrant (assuming such
holder had retained such rights or warrants), made to all holders of Common
Stock as of the date of such redemption or repurchase, and
(2)
in
the
case of such rights or warrants all of which shall have expired or been
terminated without exercise, the Exchange Price shall be readjusted as if such
rights and warrants had never been issued.
For
purposes of this Section 1.3(e) and Section 1.3(b) and 1.3(c), any dividend
or
distribution to which this Section 1.3(e) applies that also includes shares
of
Common Stock or a subdivision or combination of Common Stock to which Section
1.3(b) applies, or rights or warrants to subscribe for or purchase shares of
Common Stock to which Section 1.3(c) applies (or any combination thereof),
shall
be deemed instead to be:
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(1)
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a
dividend or distribution of the evidences of indebtedness, assets,
shares
of capital stock, rights or warrants other than such shares of Common
Stock, such subdivision or combination or such rights or warrants
to which
Section 1.3(b) and 1.3(c) apply, respectively (and any Exchange Price
decrease required by this 1.3(e) with respect to such dividend or
distribution shall then be made), immediately followed by
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(2)
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a
dividend or distribution of such shares of Common Stock, such subdivision
or combination or such rights or warrants (and any further Exchange
Price
decrease required by Section 1.3(b) and 1.3(c) with respect to such
dividend or distribution shall then be made), except that any shares
of
Common Stock included in such dividend or distribution shall not
be deemed
"outstanding at the close of business on the Record Date" within
the
meaning of Section 1.3(b) and any reduction or increase in the number
of
shares of Common Stock resulting from such subdivision or combination
shall be disregarded in connection with such dividend or
distribution.
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(f) In
case
CCI shall, by dividend or otherwise, distribute to all holders of its Common
Stock shares of Capital Stock of, or similar equity interests in, a Subsidiary
or other business unit of CCI, the Exchange Price shall be adjusted based on
the
following formula:
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EP(1)
= EP(0) x
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MP(0)
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FMV(0)
+ MP(0)
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6
Where:
EP(0)
=
the Exchange Price in effect at the close of business on the Record
Date
EP(1)
=
the Exchange Price in effect immediately after the Record Date
FMV(0)
=
the average of the Sale Prices of the Capital Stock or similar equity interest
distributed to holders of Common Stock applicable to one share of Common Stock
over the 10 Trading Days commencing on and including the fifth Trading Day
after
the date on which "ex-distribution trading" commences for such dividend or
distribution on the Nasdaq National Market or such other national or regional
exchange or market on which the Common Stock is then listed or
quoted
MP(0)
=
the average of the Sale Prices of the Common Stock over the 10 Trading Days
commencing on and including the fifth Trading Day after the date on which
"ex-distribution trading" commences for such dividend or distribution on the
Nasdaq National Market or such other national or regional exchange or market
on
which the Common Stock is then listed or quoted
If
after
any such Record Date, any such distribution is not in fact made, the Exchange
Price shall be immediately readjusted, effective as of the date the Board of
Directors determines not to make such distribution, to the Exchange Price that
would have been in effect if such Record Date had not been fixed.
(g) In
case
CCI or any Subsidiary of CCI purchases all or any portion of the Common Stock
pursuant to a tender offer or exchange offer by CCI or any Subsidiary of CCI
for
the Common Stock and the cash and value of any other consideration included
in
the payment per share of the Common Stock exceeds the Current Market Price
per
share on the Trading Day next succeeding the last date on which tenders or
exchanges may be made pursuant to such tender or exchange offer (the "Expiration
Date"), the Exchange Price shall be will be adjusted based on the following
formula:
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EP(1)
= EP(0) x
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OS(0)
X SP(1)
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FMV
+ (SP(1) X OS(1))
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Where:
EP(0)=
the Exchange Price in effect on the Expiration Date
EP(1)=
the Exchange Price in effect immediately after the Expiration Date
FMV=the
fair market value (as determined by the Board of Directors) of the aggregate
value of all cash and any other consideration paid or payable for shares of
Common Stock validly tendered or exchanged and not withdrawn as of the
Expiration Date (the "Purchased Shares")
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OS(1)
=
the number of shares of Common Stock outstanding immediately after the
Expiration Date less any Purchased Shares
OS(0)
=
the number of shares of Common Stock outstanding immediately after the
Expiration Date, including any Purchased Shares
SP(1)
=
the Sale Price of the Common Stock on the Trading Day next succeeding the
Expiration Date
Such
decrease (if any) shall become effective immediately prior to the opening of
business on the day following the Expiration Date. In the event that CCI is
obligated to purchase shares pursuant to any such tender offer, but CCI is
permanently prevented by applicable law from effecting any such purchases or
all
such purchases are rescinded, the Exchange Price shall again be adjusted to
be
the Exchange Price that would then be in effect if such tender or exchange
offer
had not been made. If the application of this Section 1.3(g) to any tender
or
exchange offer would result in an increase in the Exchange Price, no adjustment
shall be made for such tender or exchange offer under this Section
1.3(g).
(h) In
case
of a tender or exchange offer made by a Person other than CCI or any Subsidiary
for an amount that increases the offeror's ownership of Common Stock to more
than twenty-five percent (25%) of the Common Stock outstanding and shall involve
the payment by such Person of consideration per share of Common Stock having
a
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive, and described in a resolution of the Board of Directors)
that as of the last date (the "Offer Expiration Date") tenders or exchanges
may
be made pursuant to such tender or exchange offer (as it shall have been
amended) exceeds the Sale Price per share of the Common Stock on the Trading
Day
next succeeding the Offer Expiration Date, and in which, as of the Offer
Expiration Date the Board of Directors is not recommending rejection of the
offer, the Exchange Price shall be adjusted based on the following formula:
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EP(1)
= EP(0) x
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OS(0)
X SP(1)
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FMV
+ (SP(1) X OS(1))
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Where:
EP(0)=
the Exchange Price in effect on the Offer Expiration Date
EP(1)=
the Exchange Price in effect immediately after the Offer Expiration
Date
FMV=
the
fair market value (as determined by the Board of Directors) of the aggregate
consideration payable to holders of Common Stock based on the acceptance (up
to
any maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Offer
Expiration Date (the shares deemed so accepted, up to any such maximum, being
referred to as the "Accepted Purchased Shares")
8
OS(1)
=
the number of shares of Common Stock outstanding immediately after the Offer
Expiration Date less any Accepted Purchased Shares
OS(0)
=
the number of shares of Common Stock outstanding immediately after the Offer
Expiration Date, including any Accepted Purchased Shares
SP(1)
=
the Sale Price of the Common Stock on the Trading Day next succeeding the Offer
Expiration Date
Such
adjustment shall become effective immediately prior to the opening of business
on the day following the Offer Expiration Date. In the event that such Person
is
obligated to purchase shares pursuant to any such tender or exchange offer,
but
such Person is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Exchange Price shall again
be
adjusted to be the Exchange Price that would then be in effect if such tender
or
exchange offer had not been made. Notwithstanding the foregoing, the adjustment
described in this Section 1.3(h) shall not be made if, as of the Offer
Expiration Date, the offering documents with respect to such offer disclose
a
plan or intention to cause CCI to engage in any
transaction
described in Section 1.4.
(i) For
purposes of this Section 1.3:
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(i)
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"Board
of Directors" means the Board of Directors of CCI or any authorized
committee of the Board of Directors of
CCI.
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(ii)
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"Business
Day" means any day other than a Legal Holiday.
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(iii)
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"Capital
Stock" means:
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(a) in
the
case of a corporation, corporate stock;
(b) in
the
case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock;
(c)
in
the case of a partnership or limited liability company, partnership or
membership interests (whether general or limited); and
(d)
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.
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(iv)
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"Common
Stock" means the Class A Common Stock, par value $.001 per share,
of CCI
authorized at the date of this instrument as originally executed.
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(v)
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"Current
Market Price" of the Common Stock on any day means the average of
the Sale
Price of the Common Stock for each of the 10 consecutive Trading
Days
ending on the earlier of the day in
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9
| question and the day before the "ex-date" with respect to the issuance or distribution requiring such computation. |
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For
purposes of this paragraph, the term "ex" date, when
used:
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(A)
with
respect to any issuance or distribution, means the first date on which the
shares of the Common Stock trade on the applicable exchange or in the applicable
market, regular way, without the right to receive such issuance or
distribution;
(B)
with
respect to any subdivision or combination of shares of Common Stock, means
the
first date on which the Common Stock trades regular way on such exchange or
in
such market after the time at which such subdivision or combination becomes
effective, and
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(C)
with respect to any tender or exchange offer, means the first date
on
which the Common Stock trades regular way on such exchange or in
such
market after the Expiration Date or Offer Expiration Date of such
offer.
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Notwithstanding
the foregoing, whenever successive adjustments to the Exchange Price are called
for pursuant to this Section 1.3, such adjustments shall be made to the Current
Market Price as may be necessary or appropriate to effectuate the intent of
this
Section 1.3 and to avoid unjust or inequitable results as determined in good
faith by the Board of Directors.
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(vi)
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"Fair
Market Value" shall mean the amount that a willing buyer would pay
a
willing seller in an arm's length
transaction.
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(vii)
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"Legal
Holiday" means a Saturday, a Sunday or a day on which banking institutions
in The City of New York are authorized by law, regulation or executive
order to remain closed.
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(viii)
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"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.
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(ix)
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"Record
Date" shall mean, with respect to any dividend, distribution or
other
transaction or event in which the holders of Common Stock have
the right
to receive any cash, securities or other property or in which the
Common
Stock (or other applicable security) is exchanged for or converted
into
any combination of cash, securities or other property, the date
fixed for
determination of stockholders entitled to receive such cash, securities
or
other
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10
| property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise). |
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(x)
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"Sale
Price" of Common Stock or any other security on any date means
the closing
sale price per share (or if no closing sale price is reported,
the average
of the bid and asked prices or, if more than one in either case,
the
average of the average bid and the average asked prices) on that
date as
reported in transactions for the principal U.S. securities exchange
on
which the Common Stock or such other security is traded, or if
the Common
Stock or such other security is not listed on a U.S. national or
regional
securities exchange, as reported by the Nasdaq National Market.
The Sale
Price will be determined without reference to after-hours or extended
market trading. If the Common Stock or such other security is not
listed
for trading on a U.S. national or regional securities exchange
and not
reported by the Nasdaq National Market on the relevant date, the
Sale
Price will be the last quoted bid price for the Common Stock or
such other
security in the Nasdaq Small Cap Market or in the over-the-counter
market
on the relevant date as reported by Pink Sheets LLC or any similar
organization. If the Common Stock or such other security is not
so quoted,
the Sale Price will be the average of the mid-point of the last
bid and
asked prices for the Common Stock or such other security on the
relevant
date from each of at least three nationally recognized independent
investment banking firms selected by CCI for this
purpose.
|
|
(xi)
|
"Subsidiary"
means, with respect to any
Person:
|
(a)
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 that 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 has the right to control the management of such entity
pursuant to contract or otherwise; and
(b)
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 of one or more Subsidiaries of such Person
(or any combination thereof).
11
|
(xii)
|
"Trading
Day" means a day during which trading in securities generally occurs
on
the principal U.S. national or regional securities exchange on which
the
Common Stock is then listed or, if the Common Stock is not then listed
on
a national or regional securities exchange, on the Nasdaq National
Market
or, if the Common Stock is not then quoted on the Nasdaq National
Market,
on the principal other market on which the Common Stock is
traded.
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|
(xiii)
|
For
purposes of this Section 1.3, the number of shares of Common Stock
at any
time outstanding shall not include shares held in the treasury
of CCI but
shall include shares issuable in respect of scrip certificates
issued in
lieu of fractions of shares of Common Stock. HoldCo will cause
CCI not to
pay any dividend or make any distribution on shares of Common Stock
held
in the treasury of CCI.
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|
(xiv)
|
All
calculations under this Section 1.3 shall be made to the nearest
cent or
to the nearest one-hundredth of a share, as the case may
be.
|
|
(xv)
|
To
the extent CCI has a rights plan in effect upon exchange of the
CCHC Note
for HoldCo Units and the exchange of the HoldCo Units for Common
Stock,
CII shall receive, in addition to shares of Common Stock, the rights
under
the rights plan corresponding to the shares of Common Stock received
upon
conversion, unless prior to any conversion, the rights shall have
separated from the shares of Common Stock, in which case the Exchange
Price shall be adjusted as of the date of such separation as if
the
Company had distributed to all holders of Common Stock shares of
CCI’s
Capital Stock, evidences of indebtedness or other property as provided
in
Section 1.3(e), subject to readjustment in the event of the expiration,
termination or redemption of such
rights.
|
1.4 Provision
in Case of Consolidation, Merger or Sale of Assets.
In
case
of any recapitalization, reclassification or change in the Common Stock or
the
HoldCo Units (other than changes resulting from a subdivision or combination
which is subject to Section 1.3(b)), a consolidation, merger or combination
of
CCI or HoldCo with or into any other Person, any merger of another Person with
or into CCI or HoldCO (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares
of
Common Stock of CCI or HoldCo Units) or any conveyance, sale, transfer or lease
of the consolidated assets of CCI and its Subsidiaries substantially as an
entirety, or any statutory share exchange (any of the foregoing, a
"Transaction"), in each case as a result of which holders of Common Stock or
HoldCo Units are entitled to receive stock, other securities, other property
or
assets (including cash or any combination thereof) with respect to or in
exchange for the Common Stock or HoldCo Units, CII and HoldCo or the Person
formed by such consolidation or resulting from such merger or which acquires
such assets, as the case may be, shall execute and
12
deliver
an appropriate amendment this Agreement to provide for an appropriate adjustment
to the Exchange Price or to Section 1.1 to ensure that CII, upon exchange
of the
CCHC Note, will be able to receive what CII would have received if CII had
exchanged the CCHC Note for HoldCo units prior to such Transaction and, at
CII’s
option, exchanged such HoldCo Units for shares of common stock of CCI in
accordance with the provisions of the ▇▇▇▇▇ Exchange Agreement immediately
prior
to such Transaction. The above provisions of this Section 1.4 shall similarly
apply to successive consolidations, mergers, conveyances, sales, transfers
or
leases.
1.5 Notice
of Adjustment of Exchange Price.
Unless
otherwise provided herein, whenever the Exchange Price is adjusted as herein
provided, HoldCo shall:
(a) compute
the adjusted Exchange Price in accor-dance with Section 1.3 hereof and shall
prepare a certificate signed by the manager of HoldCo setting forth the adjusted
Exchange Price and showing in reasonable detail the facts upon which such
adjustment is based; and
(b) prepare
and deliver a notice to CII at the address set forth in Section 5.5 hereof
stating that the Exchange Price has been adjusted and setting forth the adjusted
Exchange Price as soon as practicable after it is prepared.
1.6 Exercise
of the Exchange Right.
(a) Either
CII or HoldCo may, subject to the terms and conditions of Section 1.1 and 1.2,
exercise its exchange right, on any Trading Day. In order to exercise its
exchange right, CII or HoldCo, as the case may be, shall (i) deliver to other
Party a written notice at the address set forth in Section 5.5 hereof of the
election to exercise such exchange right (an "Exchange
Notice")
substantially in the form of Exhibit
B
hereto,
which Exchange Notice shall be irrevocable and, in the case of an exchange
right
exercisable by HoldCo shall, specify the number of HoldCo Units to be exchanged
for the CCHC Note, and (ii) deliver such certificate, certificates or other
instrument representing the securities exchangeable upon such exercise.
(b) Upon
receipt of such Exchange Notice, HoldCo shall, as promptly as practicable,
and
in any event within five (5) Trading Days thereafter, execute (or cause to
be
executed) and deliver (or cause to be delivered) to CII a certificate,
certificates or other instrument representing the HoldCo Units issuable upon
such exchange, as hereafter provided. The certificate, certificates or other
instrument so delivered shall be, to the extent possible, in such denomination
or denominations as CII shall reasonably request and shall be registered on
the
books of HoldCo in the name of CII or such other name as shall be designated
by
CII.
(c) HoldCo
shall not be required to issue a fractional unit of HoldCo Units upon exchange
by CII. As to any fraction of a HoldCo Unit that CII would otherwise be entitled
to upon such exchange, HoldCo shall pay to CII an amount in cash equal to such
fraction multiplied by the Exchange Price of one HoldCo Unit on the Exchange
Date.
13
1.7 Tax
Treatment of Exchange of the Note for HoldCo Units.
Upon
an
exchange by CII (or any transferee) of the CCHC Note for HoldCo Units pursuant
to Section 1.1 or 1.2 of this Agreement, such exchange shall be treated as
a
contribution to the capital of HoldCo under section 721 of the Internal Revenue
Code (the "Code")
by a
partner in its capacity as a partner and CII's (or such transferee's) capital
account in HoldCo shall be increased by the fair market value of such CCHC
Note
as of the date of such contribution, as determined in accordance with Treasury
Regulations issued pursuant to the Code.
II. REPRESENTATIONS
AND WARRANTIES OF CII.
CII
represents and warrants, as of the date of this Agreement:
2.1 Power,
Authority and Enforceability.
(a) CII
has
the requisite power and authority, and has taken all required action necessary,
to execute, deliver and perform this Agreement and to exchange the CCHC Note
hereunder.
(b) This
Agreement has been duly executed and delivered by CII and constitutes the legal,
valid and binding obligation of CII enforceable in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors’ rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
III. REPRESENTATIONS
AND WARRANTIES OF HOLDCO.
HoldCo
represents and warrants, as of the date of this Agreement:
3.1 Power,
Authority and Enforceability.
(a) HoldCo
has the requisite power and authority, and has taken all required action
necessary, to execute, deliver and perform this Agreement and to exchange the
HoldCo Units hereunder.
(b) This
Agreement has been duly executed and delivered by HoldCo and constitutes the
legal, valid and binding obligation of HoldCo enforceable in accordance with
its
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors’ rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies.
3.2 Compliance
with Other Instruments.
The
execution, delivery and performance of this Agreement by HoldCo and the
consummation by HoldCo of the transactions contemplated hereby do not and will
not (i) result
14
in
a
violation of HoldCo’s constituent documents or (ii) conflict with, or constitute
a default under (or an event which with notice or lapse of time or both would
become a default), or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or instrument
to which HoldCo or any of its subsidiaries is a party, or result in a violation
of any law, rule, regulation, order, judgment or decree applicable to HoldCo
or
any of its subsidiaries or by which any property or asset of HoldCo or any
of
its subsidiaries is bound or affected.
IV. COVENANTS.
4.1 Transfer
or Assignment of Exchange Rights.
(a) CII
shall
not transfer or assign its rights under this Agreement without the prior written
consent of HoldCo, which consent may be granted or withheld, conditioned or
delayed, as HoldCo may determine in its sole discretion; provided,
however,
that
CII may transfer or assign its rights under this Agreement without the prior
written consent of HoldCo to any Person to whom the CCHC Note is transferred
or
assigned in accordance with its terms.
(b) So
long
as CII/Successor holds the CCHC Note, neither ▇▇. ▇▇▇▇▇ nor any Person in
Control (as defined in the Note) of CII/Successor (as defined in the CCHC Note)
shall transfer Control of CII/Successor without the prior written consent of
HoldCo, which consent may be granted or withheld, conditioned or delayed, as
HoldCo may determine in its sole discretion; provided, however, that ▇▇. ▇▇▇▇▇
and any Person in Control of CII/Successor may transfer Control of CII/Successor
without the prior written consent of HoldCo in accordance with the terms of
the
CCHC Note; provided, however, that the foregoing is not intended to, nor shall
it, limit any rights of any person pursuant to the Exchange Agreement dated
as
of November 12, 1999 by and among CCI, CII, Vulcan Cable III, Inc., and ▇▇.
▇▇▇▇▇.
(c) Any
assignee or transferee to which CII has assigned or transferred its rights
hereunder in accordance with this Article IV shall succeed to all rights and
obligations of CII, and, except in connection with any transaction contemplated
by the ▇▇▇▇▇ Exchange Agreement, CII shall cause such assignee or transferee
to,
execute documents reasonably satisfactory to HoldCo evidencing such
succession.
V. MISCELLANEOUS
5.1 Successors
and Assigns.
Except
as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the Parties hereto. Nothing in this Agreement, express or implied,
is
intended to confer upon any party other than the Parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
5.2 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware, without giving effect to the conflict of law provisions
thereof.
15
5.3 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
5.4 Titles
and Subtitles.
The
title
and subtitles used in this Agreement are used for convenience only and are
not
to be considered in construing or interpreting this Agreement.
5.5 Notices.
Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given (a) upon personal
delivery to the party to be notified, (b) on the fifth (5th)
day
after deposit with the United States Post Office, by registered or certified
mail, postage prepaid, (c) on the next business day after dispatch via
nationally recognized overnight courier or (d) upon confirmation of transmission
by facsimile, all addressed to the party to be notified at the address indicated
for such party below, or at such other address as such party may designate
by
ten (10) days’ advance written notice to the other parties. Notices should be
provided in accordance with this Section at the following
addresses:
If
to CII
or ▇▇. ▇▇▇▇▇, to:
Charter
Investment, Inc.
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
General Counsel
Facsimile
(▇▇▇) ▇▇▇-▇▇▇▇
with
a
copy (which shall not constitute notice) to:
▇▇.
▇▇▇▇▇
D. ▇▇▇▇▇▇
▇▇▇▇▇▇
Pepper & Shefelman PLLC
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
and
with
a copy (which shall not constitute notice) to:
▇▇.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
16
If
to
HoldCo, to:
c/o
Charter Communications, Inc.
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:
General Counsel
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
with
a
copy (which shall not constitute notice) to:
▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
5.6 Amendments
and Waivers.
No
term
of this Agreement may be amended, without the written consent of each
Party.
5.7 Severability.
If
one or
more provisions of this Agreement are held to be unenforceable under applicable
law, such provision shall be excluded from this Agreement and the balance of
this Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.
5.8 Entire
Agreement.
This
Agreement, the Exhibits hereto and the agreements referred to herein constitute
and are intended to constitute the entire agreement of the Parties concerning
the subject matter hereof. No covenants, agreements, representations or
warranties of any kind whatsoever have been made by any Party hereto, except
as
specifically set forth herein. All prior or contemporaneous discussions or
negotiations with respect to the subject matter hereof are superseded by this
Agreement.
[Signature
Page Follows]
17
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
CHARTER
INVESTMENT, INC.
By: _______________________________
Name: _____________________________
Its: _______________________________
CHARTER
COMMUNICATIONS HOLDING COMPANY, LLC
By: _______________________________
Name: _____________________________
Its: _______________________________
▇▇▇▇
▇.
▇▇▇▇▇ has executed this Agreement effective as of the date set forth above
solely for purposes of confirming his consent to the provisions of Article
IV
hereof.
__________________________
▇▇▇▇
▇.
▇▇▇▇▇
Exhibit
B
NOTICE
OF
EXCHANGE
Pursuant
to the Exchange Agreement, by and between Charter Investment, Inc. and Charter
Communications Holding Company, LLC, dated as of October ___, 2005 (the
"Exchange
Agreement"),
the
undersigned irrevocably exercises the exchange right set forth in the Exchange
Agreement.
_______________________________
(Name)
_______________________________
(Signature)
_______________________________
(▇▇▇▇▇▇
▇▇▇▇▇▇▇)
_______________________________
(City)
(State) (Zip Code)