Charter 2003 Annual Report Download - page 73

In addition, Charter Holdings may make distributions or restricted payments, so long as no default exists
or would be caused by transactions:
‚ to repurchase management equity interests in amounts not to exceed $10 million per Ñscal year,
‚ regardless of the existence of any default, to pay pass-through tax liabilities in respect of ownership of
equity interests in Charter Holdings or its restricted subsidiaries, or
‚ to make other speciÑed restricted payments including merger fees up to 1.25% of the transaction value,
repurchases using concurrent new issuances, and certain dividends on existing subsidiary preferred
equity interests.
‚ Charter Holdings and its restricted subsidiaries may not make investments except permitted invest-
ments if there is a default under the indentures or if Charter Holdings could not incur $1.00 of new
debt under the 8.75 to 1.0 leverage ratio test described above after giving eÅect to the transaction.
Permitted investments include:
‚ investments by Charter Holdings in restricted subsidiaries or by restricted subsidiaries in Charter
Holdings,
‚ investments in productive assets (including through equity investments) up to $150 million,
‚ investments aggregating up to 100% of new cash equity proceeds received by Charter Holdings since
March 1999 and not allocated to the debt incurrence or restricted payments covenant, and
‚ other investments up to $50 million.
Charter Holdings 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 Charter Holdings.
Charter Holdings and Charter Capital, 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 Charter Holdings
and its subsidiaries could incur $1.00 of new debt under the 8.75 to 1.0 leverage ratio test described above after
giving eÅect to the transaction, no default exists, and the surviving entity is a U.S. entity that assumes the
Charter Holdings notes.
Charter Holdings 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. Charter Holdings 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 Charter Holdings notes with any remaining proceeds.
Charter Holdings and its restricted subsidiaries may generally not engage in sale and leaseback
transactions unless, at the time of the transaction, Charter Holdings 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.
Charter Holdings' restricted subsidiaries may generally not enter into restrictions on their ability to make
dividends or distributions or transfer assets to Charter Holdings 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 Charter
Holdings' ability to repay the high-yield notes.
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