Charter 2003 Annual Report Download - page 78

In addition, CCO Holdings may make distributions or restricted payments, so long as no default exists or
would be caused by the transaction:
‚ 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;
‚ to pay, regardless of the existence of any default, interest when due on Charter Holdings notes and
CCH II notes;
‚ to pay, so long as there is no default, interest on the Charter convertible notes;
‚ to purchase, redeem or reÑnance Charter Holdings notes, CCH II notes, Charter notes, and other
direct or indirect parent company notes, so long as CCO Holdings could incur $1.00 of indebtedness
under the 4.5 to 1.0 leverage ratio test referred to above and there is no default; 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.
The indenture governing the CCO Holdings senior notes restricts CCO Holdings and its restricted
subsidiaries from making investments, except speciÑed permitted investments, or creating new unrestricted
subsidiaries, if there is a default under the indenture or if CCO Holdings could not incur $1.00 of new debt
under the 4.5 to 1.0 leverage ratio test described above after giving eÅect to the transaction.
Permitted investments include:
‚ investments by CCO Holdings and its restricted subsidiaries in CCO Holdings and in other restricted
subsidiaries, or entities that become restricted subsidiaries as a result of the investment,
‚ investments aggregating up to 100% of new cash equity proceeds received by CCO Holdings since
November 10, 2003 to the extent the proceeds have not been allocated to the restricted payments
covenant described above,
‚ other investments up to $750 million outstanding at any time, and
‚ certain speciÑed additional investments, such as investments in customers and suppliers in the ordinary
course of business and investments received in connection with permitted asset sales.
CCO 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 CCO Holdings.
CCO Holdings and CCO Holdings 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 CCO
Holdings and its subsidiaries could incur $1.00 of new debt under the 4.50 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 CCO Holdings senior notes.
CCO 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. CCO 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 CCO Holdings senior notes with any remaining proceeds.
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