Charter 2009 Annual Report Download - page 41

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The obligations of Charter Operating under the Charter Operating credit facilities (the “Obligations”) are guaranteed
by Charter Operating’ s immediate parent company, CCO Holdings, and subsidiaries of Charter Operating, except
for certain subsidiaries, including immaterial subsidiaries and subsidiaries precluded from guaranteeing by reason of
the provisions of other indebtedness to which they are subject (the “non-guarantor subsidiaries”). The Obligations
are also secured by (i) a lien on substantially all of the assets of Charter Operating and its subsidiaries (other than
assets of the non-guarantor subsidiaries), to the extent such lien can be perfected under the Uniform Commercial
Code by the filing of a financing statement, and (ii) a pledge by CCO Holdings of the equity interests owned by it in
Charter Operating or any of Charter Operating’ s subsidiaries, as well as intercompany obligations owing to it by any
of such entities.
CCO Holdings Credit Facility
In March 2007, CCO Holdings entered into a credit agreement (the “CCO Holdings credit facility”) which consists
of a $350 million term loan facility. The facility matures in September 2014. The CCO Holdings credit facility also
allows us to enter into incremental term loans in the future, maturing on the dates set forth in the notices establishing
such term loans, but no earlier than the maturity date of the existing term loans. However, no assurance can be
given that we could obtain such incremental term loans if CCO Holdings sought to do so. Borrowings under the
CCO Holdings credit facility bear interest at a variable interest rate based on either LIBOR or a base rate plus, in
either case, an applicable margin. The applicable margin for LIBOR term loans, other than incremental loans, is
2.50% above LIBOR. If an event of default were to occur, CCO Holdings would not be able to elect LIBOR and
would have to pay interest at the base rate plus the applicable margin. The applicable margin with respect to
incremental loans is to be agreed upon by CCO Holdings and the lenders when the incremental loans are established.
The CCO Holdings credit facility is secured by the equity interests of Charter Operating, and all proceeds thereof.
Credit Facilities — Restrictive Covenants
Charter Operating Credit Facilities
The Charter Operating credit facilities contain representations and warranties, and affirmative and negative
covenants customary for financings of this type. The financial covenants measure performance against standards set
for leverage to be tested as of the end of each quarter. Additionally, the Charter Operating credit facilities contain
provisions requiring mandatory loan prepayments under specific circumstances, including in connection with certain
sales of assets, so long as the proceeds have not been reinvested in the business. The Charter Operating credit
facilities permit Charter Operating and its subsidiaries to make distributions to pay interest on the subordinated and
parent company indebtedness, provided that, among other things, no default has occurred and is continuing under
the credit facilities.
The events of default under the Charter Operating credit facilities include among other things:
• the failure to make payments when due or within the applicable grace period;
• the failure to comply with specified covenants, including, but not limited to, a covenant to deliver audite
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financial statements for Charter Operating with an unqualified opinion from our independent accountants and
without a “going concern” or like qualification or exception;
• the failure to pay or the occurrence of events that cause or permit the acceleration of other indebtedness owing by
CCO Holdings, Charter Operating, or Charter Operating’ s subsidiaries in amounts in excess of $100 million in
aggregate principal amount;
• the failure to pay or the occurrence of events that result in the acceleration of other indebtedness owing by certain
of CCO Holdings’ direct and indirect parent companies in amounts in excess of $200 million in aggregate
principal amount;
• Mr. Allen and/or certain of his family members and/or their exclusively owned entities (collectively, the “Paul
Allen Group”) ceasing to have the power, directly or indirectly, to vote at least 35% of the ordinary voting powe
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for the management of Charter Operating on a fully diluted basis;
• the consummation of any transaction resulting in any person or group (other than the Paul Allen Group) having
power, directly or indirectly, to vote more than 35% of the ordinary voting power for the management of Charte
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Operating on a fully diluted basis, unless the Paul Allen Group holds a greater share of ordinary voting power fo
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the management of Charter Operating; and
• Charter Operating ceasing to be a wholly-owned direct subsidiary of CCO Holdings, except in certain very limited
circumstances.