Charter 2003 Annual Report Download - page 88

‚ 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.
Charter Operating and its restricted subsidiaries are not permitted to grant liens senior to the liens
securing the Charter Operating notes, other than permitted liens, on their assets to secure indebtedness, or
other obligations, if, after giving eÅect to such incurrence, the senior secured leverage ratio (generally, the
ratio of obligations secured by Ñrst priority liens to four times EBITDA, as deÑned, from the most recent Ñscal
quarter for which internal Ñnancial reports are available) would exceed 3.75 to 1.0. Permitted liens include
liens securing indebtedness and other obligations under permitted credit facilities, liens securing the purchase
price of new assets, liens securing amounts up to $50 million and liens incurred in the ordinary course of
business.
Charter Operating and Charter Communications Operating Capital Corp., 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 Operating and its subsidiaries could incur $1.00 of new debt under the 4.25 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 Operating notes.
Charter Operating and its restricted subsidiaries generally may 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 Operating 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 Operating notes with any remaining
proceeds.
Charter Operating and its restricted subsidiaries may generally not engage in sale and leaseback
transactions unless, at the time of the transaction, Charter Operating could have incurred secured indebted-
ness 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 Operating's restricted subsidiaries may generally not enter into restrictions on their ability to
make dividends or distributions or transfer assets to Charter Operating on terms that are materially more
restrictive than those governing their debt, lien, asset sale, lease and similar agreements existing when Charter
Operating entered into the indenture governing the Charter Operating Senior second lien notes unless those
restrictions are on customary terms that will not materially impair Charter Operating's ability to repay the
Charter Operating notes.
The restricted subsidiaries of Charter Operating are generally not permitted to guarantee or pledge assets
to secure debt of Charter Operating, unless the guarantying subsidiary issues a guarantee of the notes of
comparable priority and tenor, and waives any rights of reimbursement, indemnity or subrogation arising from
the guarantee transaction for at least one year.
The indenture also restricts the ability of Charter Operating and its restricted subsidiaries to enter into
certain transactions with aÇliates involving consideration in excess of $15 million without a determination by
the board of directors that the transaction is on terms no less favorable than arms-length, or transactions with
aÇliates involving over $50 million without receiving an independent opinion as to the fairness of the
transaction to the holders of the Charter Operating notes.
Charter Operating and its restricted subsidiaries are generally not permitted to transfer equity interests in
restricted subsidiaries unless the transfer is of all of the equity interests in the restricted subsidiary or the
restricted subsidiary remains a restricted subsidiary and net proceeds of the equity sale are applied in
accordance with the asset sales covenant.
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