Communications Holding Company and Mr. Allen, will be an obligor or guarantor
under the notes. Furthermore, the indentures governing the notes expressly
provide that these parties will not have any liability for our obligations under
the notes or the indentures governing the notes. By accepting the notes, you
waive and release all such liability as consideration for issuance of the notes.
Consequently, if the issuers of the notes do not fulfill their obligations to
you under the notes, you will have no recourse against any of these parties.
Additionally, our equity holders, including Charter Communications, Inc.,
Charter Communications Holding Company and Mr. Allen, will be free to manage
other entities, including other cable companies. If we do not fulfill our
obligations to you under the notes, you will have no recourse against those
other entities or their assets.
THE 11.75% DISCOUNT NOTES WILL BE ISSUED WITH ORIGINAL ISSUE DISCOUNT.
CONSEQUENTLY, HOLDERS OF THE 11.75% DISCOUNT NOTES WILL GENERALLY BE REQUIRED TO
INCLUDE AMOUNTS IN GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES IN ADVANCE OF
The 11.75% discount notes will be issued at a substantial discount from
their stated principal amount. As a result, purchasers of the 11.75% discount
notes generally will be required to include the accrued portion of this discount
in gross income, as interest, for United States federal income tax purposes in
advance of the receipt of cash payments of this interest.
IF A BANKRUPTCY PETITION WERE FILED BY OR AGAINST US, YOU MAY RECEIVE A LESSER
AMOUNT FOR YOUR CLAIM THAN YOU WOULD BE ENTITLED TO RECEIVE UNDER THE INDENTURE
GOVERNING THE 11.75% DISCOUNT NOTES, AND YOU MAY REALIZE TAXABLE GAIN OR LOSS
UPON PAYMENT OF YOUR CLAIM.
If a bankruptcy petition were filed by or against us under the U.S.
Bankruptcy Code after the issuance of the 11.75% discount notes, the claim by a
holder of the 11.75% discount notes for the principal amount of the 11.75%
discount notes may be limited to an amount equal to the sum of:
(1) the initial offering price for the 11.75% discount notes; and
(2) that portion of the original issue discount that does not
constitute "unmatured interest" for purposes of the U.S. Bankruptcy Code.
Any original issue discount that was not amortized as of the date of the
bankruptcy filing would constitute unmatured interest. Accordingly, holders of
11.75% discount notes under these circumstances may receive a lesser amount than
they would be entitled to receive under the terms of the indenture governing the
11.75% discount notes, even if sufficient funds are available. In addition, to
the extent that the U.S. Bankruptcy Code differs from the Internal Revenue Code
in determining the method of amortization of original issue discount, a holder
of 11.75% discount notes may realize taxable gain or loss upon payment of that
holder's claim in bankruptcy.