Charter 2003 Annual Report Download - page 76

CCH II is not permitted to grant liens on its assets other than speciÑed permitted liens. Permitted liens
include liens securing debt and other obligations incurred under our subsidiaries' credit facilities, liens securing
the purchase price of new assets, other liens securing indebtedness up to $50 million and speciÑed liens
incurred in the ordinary course of business. The lien covenant does not restrict liens on assets of subsidiaries of
CCH II.
CCH II and CCH II Capital Corp., its co-issuer, are generally not permitted to sell all or substantially all
of their assets or merge with or into other companies unless their leverage ratio after any such transaction
would be no greater than their leverage ratio immediately prior to the transaction, or unless CCH II and its
subsidiaries could incur $1.00 of new debt under the 5.50 to 1.0 debt incurrence test described above after
giving eÅect to the transaction, no default exists, and the surviving entity is a U.S. entity that assumes the
CCH II notes.
CCH II and its restricted subsidiaries may generally not otherwise sell assets or, in the case of restricted
subsidiaries, issue equity interests, unless they receive consideration at least equal to the fair market value of
the assets or equity interests, consisting of at least 75% in cash, assumption of liabilities, securities converted
into cash within 60 days or productive assets. CCH II and its restricted subsidiaries are then required within
365 days after any asset sale either to commit to use the net cash proceeds over a speciÑed threshold to acquire
assets, including current assets, used or useful in their businesses or use the net cash proceeds to repay debt, or
to oÅer to repurchase the CCH II notes with any remaining proceeds.
CCH II and its restricted subsidiaries may generally not engage in sale and leaseback transactions unless,
at the time of the transaction, CCH II could have incurred secured indebtedness in an amount equal to the
present value of the net rental payments to be made under the lease, and the sale of the assets and application
of proceeds is permitted by the covenant restricting asset sales.
CCH II's restricted subsidiaries may generally not enter into restrictions on their ability to make
dividends or distributions or transfer assets to CCH II on terms that are materially more restrictive than those
governing their debt, lien, asset sale, lease and similar agreements existing when they entered into the
indentures, unless those restrictions are on customary terms that will not materially impair CCH II's ability to
repay the CCH II notes.
The restricted subsidiaries of CCH II are generally not permitted to guarantee or pledge assets to secure
debt of CCH II, unless the guarantying subsidiary issues a guarantee of the CCH II notes of comparable
priority and tenor, and waives any rights of reimbursement, indemnity or subrogation arising from the
guarantee transaction for at least one year.
The indentures also restrict the ability of CCH II and its restricted subsidiaries to enter into certain
transactions with aÇliates involving consideration in excess of $15 million without a determination by the
board of directors that the transaction is on terms no less favorable than arm's length, or transactions with
aÇliates involving over $50 million without receiving an independent opinion as to the fairness of the
transaction to the holders of the CCH II notes.
CCO Holdings Senior Notes
In November 2003, CCO Holdings and CCO Holdings Capital Corp. jointly issued $500 million total
principal amount of 8∂% senior notes due 2013. The CCO Holdings notes are general unsecured obligations of
CCO Holdings and CCO Holdings Capital Corp. They rank equally with all other current or future
unsubordinated obligations of CCO Holdings and CCO Holdings Capital Corp. The CCO Holdings notes are
structurally subordinated to all obligations of subsidiaries of CCH II, including the credit facilities.
Interest on the CCO Holdings senior notes accrues at 8∂% per year, from November 10, 2003 or, if
interest already has been paid, from the date it was most recently paid. Interest is payable semi-annually in
arrears on each May 15 and November 15, commencing on May 15, 2004.
At any time prior to November 15, 2006, the issuers of the CCO Holdings senior notes may redeem up to
35% of the total principal amount of the CCO Holdings senior notes to the extent of public equity proceeds
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