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S-1/A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form S-1/A on 11/04/1999
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<PAGE>   1

                                                                   EXHIBIT 10.38


                       GOLDMAN SACHS CREDIT PARTNERS L.P.

                            C/O GOLDMAN, SACHS & CO.
                                 85 BROAD STREET
                            NEW YORK, NEW YORK 10004


                                COMMITMENT LETTER


PERSONAL AND CONFIDENTIAL

October 15, 1999

Mr. Kent Kalkwarf
Chief Financial Officer
Charter Communications, Inc.
12444 Powerscourt Drive
St. Louis, Missouri  63131


Ladies and Gentlemen:

   
This amended and restated commitment letter amends and restates that certain
commitment letter of even date herewith between Charter and GSCP. We are pleased
to confirm the arrangements under which Goldman Sachs Credit Partners L.P.
("GSCP" or the "ADMINISTRATIVE AGENT") is exclusively authorized by Charter
Communications, Inc. ("CHARTER") to act as the sole arranger and sole
syndication agent in connection with the bridge loans described herein, and,
together with the other lenders set forth on Schedule 1 hereto and any other
entities that become lenders in accordance with the syndication arrangements set
forth below (collectively with the Administrative Agent, the "LENDERS"), commits
(severally and not jointly) to provide the bridge loans described herein, in
each case on the terms and subject to the conditions set forth in this letter,
the attached Annex A and Annex B (together, the "COMMITMENT
 LETTER") and the Fee
Letter (as defined below).
    

We understand that Charter has signed an agreement (the "ACQUISITION AGREEMENT")
to acquire (the "ACQUISITION") all of the outstanding partnership interests in
Falcon Communications, L.P. (together with its successor by merger, "FALCON")
from Falcon Holding Group, L.P. and certain of its affiliates. Furthermore, you
have advised us that following the Acquisition, Falcon may require funds on an
interim basis, in the form of bridge loans, to repurchase certain of its
outstanding bonds pursuant to certain mandatory repurchase offers triggered by
the Acquisition. Falcon intends to repay borrowings under these bridge loans
through an offering of Debt Securities (as defined) pursuant to the terms of the
Engagement Letter referred to below (the "PERMANENT DEBT SECURITIES").

   
1. Commitment. Each of the Lenders is pleased to confirm its commitment (each a
"COMMITMENT"), severally and jointly, to provide Falcon Senior Increasing Rate
Bridge Loans in the principal amount set forth opposite its name on Schedule 1
hereto (the "BRIDGE LOANS"), or such lesser pro rata amount as Falcon may
specify, having the terms set forth on Annex B on the terms and subject to the
conditions contained in this Commitment Letter. The Commitment of each Lender
individually shall equal the amount set forth opposite its name on Schedule 1
hereto. Each Lender's Commitment is subject to the conditions set forth in this
Commitment Letter, including without limitation the conditions precedent set
forth in Annex B hereto, and to 
    


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CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 2

the negotiation, execution and delivery of definitive documentation, including,
without limitation, a bridge loan agreement (the "BRIDGE LOAN AGREEMENT"),
consistent with the terms of Annex B hereto and satisfactory to each of Falcon,
the Lenders and their counsel and the satisfaction of the terms, conditions and
covenants contained therein. The terms of this Commitment Letter are intended as
an outline of certain of the material terms of the Bridge Loans, but do not
include all of the terms, conditions, covenants, representations, warranties,
default clauses and other provisions that will be contained in the Bridge Loan
Agreement.

   
2. Fees and Expenses. The fees for these services are set forth in a separate
amended and restated fee letter (the "FEE LETTER"), entered into by the Lenders
and Charter. In addition, pursuant to an amended and restated engagement letter
(the "ENGAGEMENT Letter"), dated as of the date hereof, among Charter, Goldman,
Sachs & Co. ("GOLDMAN SACHS") and certain other entities affiliated with the
various Lenders, Charter has offered the Agents named therein the right to act
as initial purchasers, underwriters or placement agents in connection with the
sale of the Permanent Debt Securities.
    

   
3. Syndication. The Administrative Agent intends and reserves the right to
syndicate the Commitments and/or the Bridge Loans to other Lenders. The
Administrative Agent will lead the syndication, including determining the timing
of all offers to potential Lenders and the acceptance of commitments, any title
of agent or similar designations awarded to Lenders, the amounts offered and the
compensation provided to each Lender from the amounts to be paid to the
Administrative Agent pursuant to the terms of this Commitment Letter and the Fee
Letter. The Administrative Agent will determine the identity of any entities
that become Lenders after the date hereof and the final commitment allocations
subject to the consent of Charter, which will not be unreasonably withheld, and
will notify Charter of such determinations. Pursuant to the syndication process
described herein, the rights and obligations of each Lender, including the right
and obligation to make any Bridge Loan, may (with the consent of the
Administrative Agent, in its sole discretion, prior to the Closing Date (as
defined in Annex B) such consent not to be unreasonably withheld after the
Closing Date and subject to the consent of Charter in the case of transfers to
non-affiliates, which consent will not be unreasonably withheld) be assigned by
such Lender, in whole or in part, to any other bank, financial institution or
other investor and upon such assignment, the assignee shall become a Lender
hereunder and the assigning Lender will be relieved from all obligations with
respect to any Commitment assigned. To ensure an orderly and effective
syndication of the Bridge Loans, you agree that, from the closing of the
Acquisition until the later of the termination of the syndication as determined
by the Administrative Agent and 90 days following the date of initial funding
under the Bridge Loans, Charter will not permit Falcon or any of its
subsidiaries to, and Falcon will not, syndicate or issue, attempt to syndicate
or issue, announce or authorize the announcement of the syndication or issuance
of, or engage in discussions concerning the syndication or issuance of, any debt
facility or debt or preferred equity security (other than the Bridge Loans),
including any renewals or refinancings of any existing debt facility or debt or
preferred equity security, without the prior written consent of the
Administrative Agent. You also agree that the Administrative Agent shall be
entitled, but not obligated, after consultation with you, to change the terms,
conditions, pricing and/or structure of the Bridge Loans if the Administrative
Agent determines in its discretion that such changes are advisable to insure the
successful syndication of all of the Bridge Loans; provided that the total
amount of the Bridge Loans remains unchanged. The Lenders acknowledge that
neither Charter nor Falcon has any obligation to utilize the financing offered
hereby and can terminate this Commitment Letter at
    

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CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 3

any time.

   
4. Cooperation. Charter agrees to cooperate, and to cause Falcon and its
affiliates to cooperate, with the Administrative Agent in connection with (i)
the preparation of an information package regarding the business, operations and
prospects of Falcon including, without limitation, the delivery of all
information relating to the transactions contemplated hereunder and all other
information deemed reasonably necessary by the Administrative Agent to complete
the syndication of the Commitment and/or Bridge Loans and (ii) the presentation
of such information package in lender meetings and other communications with
prospective Lenders in connection with the syndication of the Bridge Loans.
Charter agrees to make its representatives and senior management and the
representatives and senior management of Falcon reasonably available to meet
with the Lenders and prospective Lenders and rating agencies and to make
customary "road show" presentations at such locations as the Administrative
Agent may reasonably suggest. Charter and Falcon shall be solely responsible for
the contents of any such information package and presentation (other than
information concerning the Lenders and the syndication process) and acknowledge
that the Administrative Agent will be using and relying upon the information
contained in such information package and presentation without independent
verification thereof. In addition, Charter and Falcon represent and covenant
that all information provided by Charter and Falcon or its agents to the
Administrative Agent or the other Lenders in connection with the transactions
contemplated hereunder is and will be complete and correct in all material
respects and does not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. Charter and Falcon agree to supplement such information from time to
time until the Closing Date (as defined in Annex B) and, if requested by the
Administrative Agent in writing, for a reasonable period thereafter (not to
exceed six months) necessary to complete the syndication of the Bridge Loans, so
that the representations and covenants contained in the preceding sentence
remain correct.
    

5. Annex A. In connection with arrangements such as this, it is our policy to
receive indemnification. Charter and Falcon agree to the provisions with respect
to our indemnity and other matters set forth in Annex A which is incorporated by
reference into this Commitment Letter.

6. Confidentiality. Please note that this Commitment Letter, the Fee Letter and
any written or oral advice provided by the Lenders in connection with this
arrangement is exclusively for the information of the Board of Directors of
Charter and Falcon and may not be disclosed to any other party or circulated or
referred to publicly without the Lenders' prior written consent, except, after
providing written notice to the Administrative Agent, pursuant to a subpoena or
order issued by a court of competent jurisdiction or by a judicial,
administrative or legislative body or committee. In addition, we hereby consent
to your disclosure of such advice to your officers, directors, agents and
advisors who are directly involved in the consideration of the Bridge Loans to
the extent such persons are obligated to hold such advice in confidence and to
the filing of this Commitment Letter with the SEC and the description of this
Commitment Letter in any SEC filing.

7. Company to Become a Party. Charter agrees to cause Falcon to become jointly
and 

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CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 4

severally liable for the obligations and liabilities of Charter under this
Commitment Letter (including Annex A and Annex B) upon the consummation of the
Acquisition. The obligations and liabilities of Charter under Annex A to this
Commitment Letter and pursuant to Section 1 of the Fee Letter shall terminate
when the Acquisition has been consummated and Falcon has expressly assumed such
obligations and liabilities.

   
8. Additional Matters. Except as provided in Section 7 above, you may not assign
any of your rights or be relieved of any of your obligations hereunder without
the prior written consent of each of the Lenders. As you know, each of the
Lenders is a full service securities firm and as such may from time to time
effect transactions, for its own account or the account of customers, and hold
positions in securities or options on securities of Charter, Falcon, and their
subsidiaries and other companies that may be the subject of this arrangement. In
addition, the Administrative Agent may employ the services of its affiliates in
providing certain services hereunder and may exchange with such affiliates
information concerning Charter, Falcon, and their subsidiaries and other
companies that may be the subject of this arrangement. Nothing in this
Commitment Letter shall be construed to render this Commitment an "investment"
of West Street Fund I, L.L.C. under the terms of the ERISA "Plan Assets"
regulation.
    

   
9. Supercedes Prior Agreement. This amended and restated Commitment Letter
supercedes that certain commitment letter dated October 15, 1999 between GSCP
and Charter. 
    

The Lenders' commitment hereunder shall terminate 120 days from the date hereof
unless the closing of the Bridge Loans, on the terms and subject to the
conditions contained herein, shall have been consummated.


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CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 5

   
Please confirm that the foregoing is in accordance with your understanding by
signing and returning to GSCP the enclosed copies of this Commitment Letter,
together, if not previously executed and delivered, with the Fee Letter on or
before the close of business, on November 2, 1999, whereupon this Commitment
Letter and the Fee Letter shall become binding agreements between us. If not
signed and returned as described in the preceding sentence by such date, this
offer will terminate on such date. We look forward to working with you on this
transaction.
    

Very truly yours,

GOLDMAN SACHS CREDIT PARTNERS L.P.


By:      --------------------
         Authorized Signatory          

   
CHASE

By:
-------------------------------
     Authorized Signatory


CREDIT LYONNAIS NEW YORK BRANCH

By:
-------------------------------
     Authorized Signatory


CREDIT SUISSE FIRST BOSTON

By:
-------------------------------
     Authorized Signatory

    
   

FLEET CORPORATE FINANCE, INC.
    

By:
-------------------------------
     Authorized Signatory

MERRILL LYNCH CAPITAL CORPORATION

By:
-------------------------------
     Authorized Signatory

MORGAN STANLEY SENIOR LENDING, INC.

By:
-------------------------------
     Authorized Signatory

TD (TEXAS), INC.

By:
-------------------------------
     Authorized Signatory

FIRST UNION INVESTORS, INC.

By:
-------------------------------
     Authorized Signatory

PNC BANK, NATIONAL ASSOCIATION

By:
-------------------------------
     Authorized Signatory

SUNTRUST EQUITABLE SECURITIES

By:
-------------------------------
     Authorized Signatory
[/R]


                                      Confirmed as of the date above:


                                       CHARTER COMMUNICATIONS, INC.


                                       By: /s/ Kent D. Kalkwarf
                                          -------------------------------
                                          Name: Kent D. Kalkwarf
                                          Title: Senior Vice President and
                                                 Chief Financial Officer

The undersigned agrees to be bound by the terms and conditions of this
Commitment Letter as if it were an original addressee hereof:

   
CCVII Holdings, L.L.C., the successor by merger to FALCON COMMUNICATIONS, L.P.
    


By: Kent D. Kalkwarf  
    -----------------------------------
    Name: Kent D. Kalkwarf
    Title: Senior Vice President and
           Chief Financial Officer



<PAGE>   6
   
Charter Communications, Inc.
October 15, 1999
Page 9


                                   SCHEDULE I


         LENDER                                            COMMITMENT
         ------                                            ----------

         GSCP.........................................$348.75 million

         CHASE........................................$131.25 million

         CREDIT LYONNAIS NEW YORK BRANCH..............  37.50 million

         CREDIT SUISSE FIRST BOSTON...................  37.50 million

         FLEET CORPORATE FINANCE, INC. ...............  37.50 million

         MERRILL LYNCH CAPITAL CORPORATION............  37.50 million

         MORGAN STANLEY SENIOR LENDING, INC. .......... 37.50 million

         TD (TEXAS), INC............................... 37.50 million

         FIRST UNION INVESTORS, INC. .................. 15.00 million

         PNC BANK, NATIONAL ASSOCIATION................ 15.00 million

         SUNTRUST EQUITABLE SECURITIES................. 15.00 million

         TOTAL........................................ $750.0 million

    

<PAGE>   7

CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 6

                                     ANNEX A


In the event that any of the Lenders or the Administrative Agent (each, an
"INDEMNIFIED PARTY") becomes involved in any capacity in any action, proceeding
or investigation brought by or against any person, including stockholders of
Charter in connection with or as a result of either this arrangement or any
matter referred to in this Commitment Letter or the Fee Letter (together, the
"LETTERS"), Charter periodically will reimburse such Indemnified Party for its
legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith; provided, however, that if it is
found in any such action, proceeding or investigation that any loss, claim,
damage, or liability of an Indemnified Party has resulted from the gross
negligence, willful misconduct or bad faith of such Indemnified Party in
performing the services that are the subject of this letter, such Indemnified
Party will repay such portion of the reimbursed amounts that are attributable to
expenses incurred in relation to the act or omission of such Indemnified Party
that is the subject of such finding. Charter also will indemnify and hold each
Indemnified Party harmless against any and all losses, claims, damages or
liabilities to any such person in connection with or as a result of either this
arrangement or any matter referred to in the Letters except to the extent that
any such loss, claim, damage or liability results from the gross negligence,
willful misconduct or bad faith of such Indemnified Party in performing the
services that are the subject of the Letters. If for any reason the foregoing
indemnification is unavailable to any Indemnified Party or insufficient to hold
it harmless, then Charter shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative economic interests of
Charter and its stockholders on the one hand and such Indemnified Party on the
other hand in the matters contemplated by the Letters as well as the relative
fault of Charter, on the one hand, and such Indemnified Party, on the other
hand, with respect to such loss, claim, damage or liability and any other
relevant equitable considerations. The reimbursement, indemnity and contribution
obligations of Charter under this paragraph shall be in addition to any
liability which Charter may otherwise have, shall extend upon the same terms and
conditions to any affiliate of any Indemnified Party and the partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of such Indemnified Party and any such affiliate, and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of Charter, such Indemnified Party, any such affiliate and any
such person. Charter also agrees that neither any Indemnified Party nor any of
such affiliates, partners, directors, agents, employees or controlling persons
shall have any liability to Charter, any person asserting claims on behalf of or
in right of Charter, or any other person in connection with or as a result of
either this arrangement or any matter referred to in the Letters except to the
extent that any losses, claims, damages, liabilities or expenses incurred by
Charter, result from the gross negligence, willful misconduct or bad faith of
such Indemnified Party in performing the services that are the subject of the
Letters; provided, however, that in no event shall such Indemnified Party or
such other parties have any liability for any indirect, consequential or
punitive damages in connection with or as a result of such Indemnified Party's
or such other parties' activities related to the Bridge Loans. ANY RIGHT TO
TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING IN CONNECTION
WITH OR AS A RESULT OF EITHER THIS ARRANGEMENT OR ANY MATTER REFERRED TO IN THE
LETTERS IS HEREBY WAIVED BY THE PARTIES HERETO. THE PROVISIONS OF THIS ANNEX A
SHALL SURVIVE ANY TERMINATION OR 

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CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 7


COMPLETION OF THE ARRANGEMENT PROVIDED BY THE LETTERS, AND THIS COMMITMENT
LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.


<PAGE>   9

CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 8

                                     ANNEX B

                           FALCON HOLDING GROUP, L.P.

                 SUMMARY OF TERMS AND CONDITIONS OF BRIDGE LOANS

This Summary of Terms and Conditions outlines certain terms of the Bridge Loans
and the Bridge Loan Agreement referred to in the Commitment Letter, of which
this Annex B is a part. Certain capitalized terms used herein are defined in the
Commitment Letter.
   

           BORROWER                 CCVII Holdings, L.L.C. as the successor by
                                    merger to Falcon Communications, L.P.
    
                                    ("FALCON" or the "COMPANY").

           LOANS                    $750 million in aggregate principal amount
                                    of Senior Increasing Rate Loans (the "BRIDGE
                                    LOANS").

           MATURITY                 One year from the date of the making of the
                                    Bridge Loans (the "MATURITY DATE"). If, upon
                                    the Maturity Date, any Bridge Loan has not
                                    been previously repaid in full, and provided
                                    no "CONVERSION DEFAULT" (as defined below)
                                    has occurred and is continuing, such Bridge
                                    Loan shall be automatically converted into a
                                    Term Loan (each A "TERM LOAN") due on the
                                    nine-year anniversary of the Maturity Date.
                                    At any time on or after the Maturity Date,
                                    at the option of the applicable Lender, the
                                    Term Loans may be exchanged in whole or in
                                    part for Senior Exchange Notes due on the
                                    nine-year anniversary of the Maturity Date
                                    (the "EXCHANGE NOTES") having an equal
                                    principal amount. The initial date of
                                    issuance of the Bridge Loans is hereinafter
                                    referred to as the "CLOSING DATE."

                                    
                                    "CONVERSION DEFAULT" shall mean any material
                                    default under the Bridge Loan Agreement, any
                                    payment default under the Credit Facility
                                    (the "CREDIT FACILITY") of Falcon Cable
                                    Communications LLC, a wholly owned
                                    subsidiary of Falcon, or any other material
                                    indebtedness, a bankruptcy default (as
                                    defined) or any default under the Engagement
                                    Letter or the Fee Letter.

                                    The Term Loans will be governed by the
                                    provisions of the Bridge Loan Agreement and
                                    will have the same terms as the Bridge Loans
                                    except as expressly set forth on Exhibit 1
                                    to this Annex B. The Exchange Notes will be
                                    issued pursuant to an Indenture that will
                                    have the terms set forth on Exhibit 1 to
                                    this Annex B.


<PAGE>   10

CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 9

           INTEREST                 The Bridge Loans will initially bear
                                    interest at a rate per annum equal to (a)
                                    the one-month London interbank offered rate,
                                    adjusted for actual reserve costs calculated
                                    on the basis of the actual number of days
                                    elapsed in a year of 360 days, plus (b) a
                                    spread (the "SPREAD") of 400 basis points.
                                    If the Bridge Loans are not repaid in whole
                                    within three months following the Closing
                                    Date, the Spread will increase by 25 basis
                                    points at the end of such three-month period
                                    and will increase by an additional 25 basis
                                    points at the end of each three-month period
                                    thereafter. Notwithstanding the foregoing,
                                    at no time will the interest rate in effect
                                    on the Bridge Loans be less than 9% per
                                    annum or exceed 15% per annum and to the
                                    extent that the interest payable on the
                                    Bridge Loans on any interest payment date on
                                    or prior to the Maturity Date is at a rate
                                    that exceeds 13% per annum, the Company will
                                    have the option to pay such excess interest
                                    by capitalizing it to principal on the
                                    Bridge Loans.

                                    Notwithstanding the foregoing, after the
                                    occurrence and during the continuance of a
                                    Default or an Event of Default, interest
                                    will accrue on the Bridge Loans at the
                                    then-applicable rate plus 200 basis points
                                    per annum.

                                    Interest will be payable at the end of each
                                    interest period in arrears and on the date
                                    of any prepayment of the Bridge Loans.
   

           MANDATORY
           REPAYMENT                The net cash proceeds from (i) any direct or
                                    indirect public offering or private
                                    placement of any debt or equity securities
                                    by the Company or any subsidiary of the
                                    Company, (ii) any future bank borrowings
                                    other than under the Credit Facility as in
                                    effect on the Closing Date and (iii) any
                                    future asset sales (subject to certain
                                    ordinary course exceptions and other
                                    exceptions to be agreed) by the Company or
                                    any subsidiary of the Company will be used
                                    to redeem the Bridge Loans in each case at
                                    100% of the principal amount of the Bridge
                                    Loans redeemed plus accrued interest to the
                                    date of the redemption subject, in the case
                                    of clauses (ii) and (iii) only, to the
                                    required prepayment of any amounts
                                    outstanding under the Credit Facility.

    

<PAGE>   11

CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 10

           CHANGE OF
           CONTROL                  Each holder of Bridge Loans will be entitled
                                    to require the Company, and the Company must
                                    offer, to repay the Bridge Loans held by
                                    such holder at a price of 101% of principal
                                    amount, plus accrued interest, upon the
                                    occurrence of a Change of Control (as
                                    defined) of the Company or Charter, subject
                                    to the optional redemption provisions
                                    described below.

           OPTIONAL
           REPAYMENT                The Bridge Loans may be prepaid, in whole or
                                    in part, at the option of the Company at any
                                    time upon three business days' written
                                    notice at a price equal to 100% of the
                                    principal amount thereof plus accrued
                                    interest to the date of redemption.

           PAYMENTS                 Payments by the Company will be made by wire
                                    transfer of immediately available funds.

   
           TRANSFERABILITY AND
           PARTICIPATIONS           Each of the Lenders will
                                    be free (with the consent of the
                                    Administrative Agent, in its sole
                                    discretion, such consent not to be
                                    unreasonably withheld after the Closing
                                    Date) to sell or transfer all or any part of
                                    or any participation in any of the Bridge
                                    Loans to any third party and to pledge any
                                    or all of the Bridge Loans to any commercial
                                    bank or other institutional lender, to the
                                    extent permitted by law.
    

           MODIFICATION OF
           THE BRIDGE LOANS         Modification of the Bridge Loans may be made
                                    with the consent of Lenders holding greater
                                    than 50% of the Bridge Loans then
                                    outstanding, except that no modification or
                                    change may extend the maturity of any Bridge
                                    Loan or time of payment of interest of any
                                    Bridge Loan, reduce the rate of interest or
                                    the principal amount of any Bridge Loan,
                                    alter the redemption provisions of any
                                    Bridge Loan or reduce the percentage of
                                    holders necessary to modify or change the
                                    Bridge Loans without the consent of Lenders
                                    holding 100% of the Bridge Loans affected
                                    thereby.


<PAGE>   12

CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 11

           COST AND
           YIELD PROTECTION         The Lenders will receive cost and yield
                                    protection customary for facilities and
                                    transactions of this type, including, but
                                    not limited to, LIBOR break funding costs,
                                    taxes (including but not limited to gross-up
                                    provisions for withholding taxes imposed by
                                    the United States or any State thereof as a
                                    result of a change in law, and income taxes
                                    associated with all gross-up payments),
                                    changes in capital requirements, guidelines
                                    or policies or their interpretation or
                                    application, illegality, change in
                                    circumstances, reserves and other provisions
                                    deemed necessary by the Lenders to provide
                                    customary protection for U.S. and non-U.S.
                                    financial institutions.


<PAGE>   13

CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 12

           CONDITIONS
           PRECEDENT                The several obligations of the Lenders to
                                    make, or cause one of their respective
                                    affiliates to make, the Bridge Loans will be
                                    subject to closing conditions deemed
                                    appropriate by the Lenders for financings of
                                    this kind generally and for this transaction
                                    in particular, including, without
                                    limitation, the following closing
                                    conditions:

                                    1.       Concurrent Transactions. The
                                             Acquisition shall have been
                                             consummated and Falcon shall have
                                             become a wholly owned subsidiary of
                                             Charter. There shall not exist any
                                             default or event of default under
                                             the Credit Facility, the Bridge
                                             Loans, the Bridge Loan Agreement or
                                             any of the other Loan Documents, or
                                             under other material Indebtedness
                                             of the Company or its subsidiaries.
                                             Charter shall have completed its
                                             initial public offering and
                                             obtained at least $2.5 billion of
                                             net proceeds therefrom.

                                    2.       Due Diligence. Each of the Lenders
                                             shall have conducted a due
                                             diligence review in form, scope and
                                             substance satisfactory to each of
                                             the Lenders and shall be satisfied
                                             with the results thereof. Such
                                             review may include but may not be
                                             limited to an examination of (i)
                                             the capitalization, corporate and
                                             ownership structure of the Company
                                             before and after giving effect to
                                             the Acquisition, (ii) accounting,
                                             legal, regulatory, tax, labor,
                                             insurance, pension and
                                             environmental liabilities, actual
                                             or contingent (which, at the
                                             request of the Lenders, shall
                                             include an environmental audit
                                             satisfactory to the Lenders and
                                             their counsel), (iii) material
                                             contracts, leases and debt
                                             agreements and (iv) the general
                                             business, operations, financial
                                             condition, management, prospects
                                             and value of the Company.

                                             The Lenders shall not have become 
                                             aware of any information relating 
                                             to conditions or events not 
                                             previously described to the Lenders
                                             or constituting new information or
                                             additional developments concerning
                                             conditions or events previously
                                             disclosed to the Lenders which
                                             they, in their judgment, believe
                                             may have a material adverse effect
                                             on the condition (financial or
                                             otherwise), assets, liabilities
                                             (contingent or otherwise),
                                             properties, solvency, business,
                                             management or prospects of Charter.

                                    3.       Absence of Certain Changes. No
                                             material change in the capital
                                             stock or long-term debt of the


<PAGE>   14
CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 13

                                             Company and its subsidiaries or any
                                             material adverse change, or any
                                             development involving a prospective
                                             material adverse change, in or
                                             affecting the general affairs,
                                             management, financial position,
                                             stockholders' equity, results of
                                             operations or prospects of the
                                             Company or Charter, shall have
                                             occurred since June 30, 1999 (the
                                             date of the most recent financial
                                             statements that have been delivered
                                             to the Lenders as of the date
                                             hereof) and no material inaccuracy
                                             in such financial statements shall
                                             exist. The Company or Charter shall
                                             have no material liabilities except
                                             those set forth on the balance
                                             sheet dated June 30, 1999 and those
                                             incurred in the ordinary course of
                                             business since such date in amounts
                                             that are consistent with past
                                             practice. On or after the date
                                             hereof (i) no downgrading shall
                                             have occurred in the rating
                                             accorded the Company's or Charter's
                                             debt securities by any "nationally
                                             recognized statistical rating
                                             organization," as that term is
                                             defined by the Securities and
                                             Exchange Commission for purposes of
                                             Rule 436(g)(2) under the Act, and
                                             (ii) no such organization shall
                                             have publicly announced that it has
                                             under surveillance or review, with
                                             possible negative implications, its
                                             rating of any of the Company's or
                                             Charter's debt securities.

                                    4.       Documentation, Legal Matters, etc.
                                             The Bridge Loan Agreement and the
                                             other definitive documentation
                                             evidencing the Bridge Loans shall
                                             be prepared by counsel to the
                                             Administrative Agent and shall be
                                             in form and substance reasonably
                                             satisfactory to the Lenders and the
                                             Company. All other matters relating
                                             to the Acquisition, the Bridge Loan
                                             Agreement, the Credit Facility and
                                             the transactions contemplated
                                             thereby shall be reasonably
                                             satisfactory to the Company and the
                                             Lenders in all respects and the
                                             Lenders shall have received such
                                             additional certificates, legal and
                                             other opinions, including a
                                             third-party opinion with respect to
                                             the solvency of the Company, in
                                             form and substance reasonably
                                             satisfactory to each of the Lenders
                                             and their counsel, and such other
                                             documentation as they shall
                                             request.



<PAGE>   15
CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 14

                                    5.       Market Disruption. There shall not
                                             have occurred any disruption or
                                             adverse change, as determined by
                                             Goldman, Sachs & Co. in its sole
                                             discretion, in the financial or
                                             capital markets generally, or in
                                             the markets for bridge loan
                                             syndication, high yield debt or
                                             equity securities in particular or
                                             affecting the syndication or
                                             funding of bridge loans (or the
                                             refinancing thereof) that may have
                                             a material adverse impact on the
                                             ability to sell or place the
                                             Permanent Debt Securities or to
                                             syndicate the Bridge Loans.

                                    6.       Financial Statements. At least 10
                                             days prior to the Closing Date,
                                             each of the Lenders shall have
                                             received audited financial
                                             statements for the three-year
                                             period immediately preceding the
                                             Acquisition and any appropriate
                                             unaudited financial statements for
                                             any interim period or periods of
                                             the Company and all other recent,
                                             probable or pending acquisitions
                                             (including pro forma financial
                                             statements), all meeting the
                                             requirements of Regulation S-X for
                                             Form S-1 registration statements
                                             and all such financial statements
                                             shall be satisfactory in form and
                                             substance to each of the Lenders.
                                             Such financial statements shall
                                             show actual consolidated operating
                                             cash flow of the Company
                                             (calculated in accordance with
                                             Regulation S-X and including only
                                             those adjustments that the
                                             Administrative Agent agrees are
                                             appropriate) for the three-month
                                             period ended September 30, 1999 and
                                             for the latest three-month period
                                             for which statements are available,
                                             of not less than $48.5 million.


<PAGE>   16
CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 15

                                    7.       Approvals and Consents. All
                                             governmental, shareholder and
                                             third-party approvals and consents
                                             necessary or desirable in
                                             connection with the Acquisition and
                                             the financing thereof shall have
                                             been received and shall be in full
                                             force and effect, and all
                                             applicable waiting periods shall
                                             have expired without any action
                                             being taken by any applicable
                                             authority.

                                    8.       Litigation, etc.. There shall not
                                             exist any action, suit,
                                             investigation, litigation or
                                             proceeding pending or threatened in
                                             any court or before any arbitrator
                                             or governmental authority that, in
                                             the opinion of the Lenders, affects
                                             the Acquisition, the financing
                                             thereof or any of the other
                                             transactions contemplated hereby,
                                             or that could have a material
                                             adverse effect on the Company,
                                             Charter, the Acquisition, the
                                             financing thereof, or any of the
                                             transactions contemplated hereby.

                                    9.       Availability under Credit Facility.
                                             After giving effect to the
                                             consummation of the Acquisition,
                                             the Company shall have adequate
                                             availability under the Credit
                                             Facility, in the sole judgment of
                                             the Administrative Agent.

                                    10.      Payment of Fees and Expenses. All
                                             fees and expenses due to the
                                             Lenders, GSCP, Goldman Sachs or the
                                             Administrative Agent on or before
                                             the closing date in connection with
                                             the Bridge Loans, pursuant to the
                                             Commitment Letter, the Fee Letter,
                                             the Engagement Letter or otherwise
                                             shall have been paid in full.


<PAGE>   17

CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 16

           COVENANTS                The Bridge Loan Agreement will contain such
                                    covenants by the Company (with respect to
                                    the Company and its subsidiaries) as are
                                    usual and customary for financings of this
                                    kind or as otherwise deemed appropriate by
                                    the Lenders for this transaction in
                                    particular (in their sole discretion), based
                                    upon the covenants in the Credit Facility,
                                    together with such special rights as may be
                                    required to comply with the ERISA "Plan
                                    Assets" regulation. 

           EVENTS OF
           DEFAULT                  The Bridge Loan Agreement will include such
                                    events of default (and, as appropriate,
                                    grace periods) as are usual and customary
                                    for financings of this kind or as otherwise
                                    deemed appropriate by the Lenders for this
                                    transaction in particular (in their sole
                                    discretion), based upon the events of
                                    default in the Credit Facility.
                                    

           REPRESENTATIONS AND
           WARRANTIES               The Bridge Loan Agreement will contain such
                                    representations and warranties by the
                                    Company (with respect to the Company and its
                                    subsidiaries) as are usual and customary for
                                    financings of this kind or as are otherwise
                                    deemed appropriate by each of the Lenders
                                    for this transaction in particular (in their
                                    sole discretion).



<PAGE>   18

CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 17


           TAXES, RESERVE 
           REQUIREMENTS AND
           INDEMNITIES              The Bridge Loan Agreement will provide that
                                    all payments will be made free and clear of
                                    any taxes (other than franchise taxes and
                                    taxes on overall net income), imposts,
                                    assessments, withholdings or other
                                    deductions whatsoever assessed by the United
                                    States or any State thereof and resulting
                                    from a change in law. Foreign Lenders will
                                    be required to furnish to the Administrative
                                    Agent appropriate certificates or other
                                    evidence of exemption from U.S. federal tax
                                    withholding.

                                    The Company will indemnify the Lenders
                                    against all increased costs of capital
                                    resulting from reserve requirements or
                                    otherwise imposed, in each case subject to
                                    customary increased costs, capital adequacy
                                    and similar provisions to the extent not
                                    taken into account in the calculation of the
                                    LIBOR Rate.

           INDEMNITY                The Bridge Loan Agreement will contain
                                    customary and appropriate provisions
                                    relating to indemnity and related matters in
                                    a form reasonably satisfactory to the
                                    Administrative Agent and the Lenders and
                                    acceptable to the Company.

           GOVERNING LAW AND
           JURISDICTION             The Bridge Loan Agreement will provide that
                                    the Company will submit to the non-exclusive
                                    jurisdiction and venue of the federal and
                                    state courts of the State of New York and
                                    will waive any right to trial by jury. New
                                    York law will govern the Loan Documents.

The foregoing is intended to summarize certain basic terms of the Bridge Loans.
It is not intended to be a definitive list of all of the requirements of the
Lenders in connection with the Bridge Loans.


<PAGE>   19

CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 18


                              EXHIBIT 1 TO ANNEX B

        SUMMARY OF TERMS AND CONDITIONS OF TERM LOANS AND EXCHANGE NOTES

Capitalized terms used herein have the meanings assigned to them in the Summary
of Terms and Conditions of Bridge Loans to which this Exhibit 1 is attached.

                                   TERM LOANS

On the Maturity Date, so long as no Conversion Default has occurred and is
continuing, the outstanding Bridge Loans will be automatically converted into
Term Loans. The Term Loans will be governed by the provisions of the Bridge Loan
Agreement and, except as expressly set forth below, will have the same terms as
the Bridge Loans.

           MATURITY                 The Term Loans will mature on the ninth
                                    anniversary of the Maturity Date.

           INTEREST RATE            The Term Loans will bear interest at a rate
                                    per annum equal to (a) the three-month
                                    London interbank offered rate, adjusted for
                                    reserves calculated on the basis of the
                                    actual number of days elapsed in a year of
                                    360 days, plus (b) the Conversion Spread (as
                                    defined below). Notwithstanding the
                                    foregoing, at no time will the interest rate
                                    in effect on the Term Loans exceed 15% per
                                    annum and to the extent that the interest
                                    payable on the Term Loans on any interest
                                    payment date is at a rate that exceeds 13%
                                    per annum, the Company will have the option
                                    to pay such excess interest by capitalizing
                                    it to principal on the Term Loans.

                                    "Conversion Spread" with respect to any Term
                                    Loans shall mean 500 basis points during the
                                    three-month period commencing on the
                                    Maturity Date and shall increase by 50 basis
                                    points per annum at the beginning of each
                                    subsequent three-month period.

                                    Notwithstanding the foregoing, after the
                                    occurrence and during the continuance of a
                                    Default or an Event of Default, interest
                                    will accrue on the Term Loans at the
                                    then-applicable rate plus 200 basis points
                                    per annum. Interest will be payable in
                                    arrears at the end of each fiscal quarter of
                                    the Company and on the maturity date of the
                                    Term Loans.


<PAGE>   20

CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 19

                                 EXCHANGE NOTES

At any time on or after the Maturity Date, upon five or more business days prior
notice, the Term Loans may, at the option of a Lender, be exchanged for a
principal amount of Exchange Notes equal to 100% of the aggregate principal
amount of the Term Loan so exchanged (plus any accrued interest thereon not
required to be paid in cash) in connection with a transfer of Exchange Notes to
an unaffiliated third party. No Exchange Notes will be issued until the Company
receives requests to issue at least $25.0 million in aggregate principal amount
of Exchange Notes. The Company will issue Exchange Notes under an indenture
which complies with the Trust Indenture Act of 1939, as amended (the
"INDENTURE"). The Company will appoint a trustee reasonably acceptable to the
holders of the Bridge Loans. The Indenture will be fully executed and delivered
on the Closing Date and the Exchange Notes will be fully executed and deposited
into escrow on the Closing Date.

           MATURITY                 The Exchange Notes will mature on the ninth
                                    anniversary of the Maturity Date.

           INTEREST RATE            Each Exchange Note will bear interest at a
                                    fixed rate equal to the greater of (x) the
                                    interest rate on the Term Loans on the date
                                    exchanged or (y) if Falcon continues to be a
                                    wholly-owned subsidiary of Charter, the bid
                                    side yield on Charter's currently
                                    outstanding 8.625% Senior Notes due 2009
                                    (the "CHARTER NOTES"), on the date prior to
                                    the date of issuance of the Exchange Notes,
                                    plus, in the case of each of clause (x) and
                                    (y), 50 basis points; provided that in no
                                    event will the interest rate in effect on
                                    the Exchange Notes exceed 15% per annum and
                                    to the extent that the interest payable on
                                    the Exchange Notes exceeds 13% per annum the
                                    Company will have the option to pay such
                                    excess interest by issuing additional
                                    Exchange Notes.

           OPTIONAL
           REDEMPTION               Exchange Notes will be non-callable until
                                    the fifth anniversary of the Closing Date.
                                    Thereafter, each Exchange Note will be
                                    callable at par plus accrued interest plus a
                                    premium equal to one half of the coupon on
                                    such Exchange Note, which premium shall
                                    decline ratably on each yearly anniversary
                                    of the Closing Date to zero on the date that
                                    is two years prior to the maturity of the
                                    Exchange Notes.

<PAGE>   21

CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 20


           DEFEASANCE
           PROVISIONS OF
           EXCHANGE NOTES           Customary.

           MODIFICATION             Customary.

           REGISTRATION
           RIGHTS                   The Company will file within 300 days after
                                    the Closing Date and will use all
                                    commercially reasonable efforts to cause to
                                    become effective as soon thereafter as
                                    practicable, a shelf registration statement
                                    with respect to the Exchange Notes (a "SHELF
                                    REGISTRATION STATEMENT"). If a Shelf
                                    Registration Statement is filed, the Company
                                    will keep such registration statement
                                    effective and available (subject to
                                    customary exceptions) until it is no longer
                                    needed to permit unrestricted resales of the
                                    Exchange Notes. If within 90 days from the
                                    Maturity Date (the "EFFECTIVENESS DATE") a
                                    Shelf Registration Statement for the
                                    Exchange Notes has not been declared
                                    effective because the Company has failed to
                                    use its best efforts to become effective,
                                    then the Company will pay liquidated damages
                                    in the form of increased interest of 50
                                    basis points per annum on the principal
                                    amount of Exchange Notes and Term Loans
                                    outstanding to holders of such Exchange
                                    Notes and Term Loans who are unable freely
                                    to transfer Exchange Notes from and
                                    including the 91st day after the Maturity
                                    Date to but excluding the effective date of
                                    such Shelf Registration Statement. On the
                                    90th day after the Effectiveness Date, the
                                    liquidated damages shall increase by 50
                                    basis points per annum, and on each 90 day
                                    anniversary of the Effectiveness Date
                                    thereafter, shall increase by 50 basis
                                    points per annum, to a maximum increase in
                                    interest of 100 basis points (such damages
                                    to be payable by capitalizing principal on
                                    Term Loans or in the form of additional
                                    Bridge Loans or Exchange Notes, as
                                    applicable, if the interest rate thereon
                                    exceeds 13%). The Company will also pay such
                                    liquidated damages for any period of time
                                    (subject to customary exceptions) following
                                    the effectiveness of a Shelf Registration
                                    Statement that such Shelf Registration
                                    Statement is not available for sales
                                    thereunder. All accrued liquidated damages
                                    will be paid on each quarterly interest
                                    payment date.


<PAGE>   22

CHARTER COMMUNICATIONS, INC.
OCTOBER 15, 1999
Page 21


           COVENANTS                The indenture relating to the Exchange Notes
                                    will include covenants that are
                                    substantially similar to those contained in
                                    the indenture governing the Charter Notes,
                                    but more restrictive in certain limited
                                    respects. 

           EVENTS OF DEFAULT        The indenture relating to the Exchange Notes
                                    will provide for Events of Default similar
                                    to those contained in the indenture
                                    governing the Charter Notes.

           COUNSEL FOR
           THE LENDERS              Latham & Watkins.


The foregoing is intended to summarize certain basic terms of the Term Loans and
Exchange Notes. It is not intended to be a definitive list of all of the
requirements of the Lenders in connection with the Term Loans and Exchange
Notes.