Charter 2011 Annual Report Download - page 68

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Notes
Provided below is a brief description of the notes issued by CCH II, CCO Holdings and Charter Operating.
CCH II Notes
The CCH II notes are senior debt obligations of CCH II and CCH II Capital Corp. Such notes are guaranteed by Charter. The
CCH II notes pay interest in cash semi-annually in arrears at the rate of 13.5% per annum and are unsecured and will mature on
November 30, 2016. The CCH II notes are structurally subordinated to all obligations of the subsidiaries of CCH II, including
the CCO Holdings notes and credit facility and the Charter operating notes and credit facilities.
CCO Holdings Notes
The CCO Holdings notes are senior debt obligations of CCO Holdings and CCO Holdings Capital Corp. Such notes are guaranteed
by Charter. They rank equally with all other current and future unsecured, unsubordinated obligations of CCO Holdings and CCO
Holdings Capital Corp. They are structurally subordinated to all obligations of subsidiaries of CCO Holdings, including the Charter
Operating notes and Charter Operating credit facilities.
Charter Operating Notes
Subject to specified limitations, CCO Holdings and those subsidiaries of Charter Operating that are guarantors of, or otherwise
obligors with respect to, indebtedness under the Charter Operating credit facilities and related obligations are required to guarantee
the Charter Operating notes. The note guarantee of each such guarantor is:
• a senior obligation of such guarantor;
• structurally senior to the outstanding CCO Holdings notes and the outstanding CCH II notes;
• senior in right of payment to any future subordinated indebtedness of such guarantor; and
• effectively senior to the relevant subsidiary’s unsecured indebtedness, to the extent of the value of the collateral but subject
to the prior lien of the credit facilities.
The Charter Operating notes and related note guarantees are secured by a second-priority lien on all of Charter Operating’s and
its subsidiaries’ assets that secure the obligations of Charter Operating or any subsidiary of Charter Operating with respect to the
Charter Operating credit facilities and the related obligations. The collateral currently consists of the capital stock of Charter
Operating held by CCO Holdings, all of the intercompany obligations owing to CCO Holdings by Charter Operating or any
subsidiary of Charter Operating, and substantially all of Charter Operating’s and the guarantors’ assets (other than the assets of
CCO Holdings) in which security interests may be perfected under the Uniform Commercial Code by filing a financing statement
(including capital stock and intercompany obligations), including, but not limited to:
• with certain exceptions, all capital stock (limited in the case of capital stock of foreign subsidiaries, if any, to 66% of the
capital stock of first tier foreign Subsidiaries) held by Charter Operating or any guarantor; and
• with certain exceptions, all intercompany obligations owing to Charter Operating or any guarantor.
In the event that additional liens are granted by Charter Operating or its subsidiaries to secure obligations under the Charter
Operating credit facilities or the related obligations, second priority liens on the same assets will be granted to secure the Charter
Operating notes, which liens will be subject to the provisions of an intercreditor agreement (to which none of Charter Operating
or its affiliates are parties). Notwithstanding the foregoing sentence, no such second priority liens need be provided if the time
such lien would otherwise be granted is not during a guarantee and pledge availability period (when the Leverage Condition is
satisfied), but such second priority liens will be required to be provided in accordance with the foregoing sentence on or prior to
the fifth business day of the commencement of the next succeeding guarantee and pledge availability period.
The Charter Operating notes are senior debt obligations of Charter Operating and Charter Communications Operating Capital
Corp. To the extent of the value of the collateral (but subject to the prior lien of the credit facilities), they rank effectively senior
to all of Charter Operating’s future unsecured senior indebtedness.