SERVICES AGREEMENT WITH CHARTER INVESTMENT. Upon the closing of Charter
Communications, Inc.'s initial public offering, Charter Communications, Inc.
intends to enter into a services agreement with Charter Investment. The services
agreement will provide that Charter Investment will provide to Charter
Communications, Inc. the personnel and services it requires to fulfill Charter
Communications, Inc.'s obligations as the sole manager of Charter Communications
Holding Company and its subsidiaries pursuant to the Charter Communications,
Inc. management agreement and the Charter Operating management agreement.
Charter Investment will not receive a fee for providing the personnel and
services, but it will be entitled to reimbursement of all of its expenses in
connection with its performance under the services agreements.
On March 10, 1999, Charter Holdings entered into a consulting agreement
with Vulcan Northwest and Charter Investment. Pursuant to the terms of the
consulting agreement, we retained Vulcan Northwest and Charter Investment to
provide advisory, financial and other consulting services with respect to
acquisitions of the business, assets or stock of other companies by us or by any
of our subsidiaries. Such services include participation in the evaluation,
negotiation and implementation of these acquisitions. The agreement expires on
December 31, 2000, and automatically renews for successive one-year terms unless
All reasonable out-of-pocket expenses incurred by Vulcan Northwest and
Charter Investment are our responsibility and must be reimbursed. We must also
pay Vulcan Northwest and Charter Investment a fee for their services rendered
for each acquisition made by us or any of our subsidiaries. This fee equals 1%
of the aggregate value of such acquisition. Neither Vulcan Northwest nor Charter
Investment will receive a fee in connection with the American Cable,
Renaissance, Greater Media, Helicon, Vista, Cable Satellite, InterMedia and
Rifkin acquisitions. No such fee is planned to be paid to either Vulcan
Northwest or Charter Investment in connection with other acquisitions being made
by our affiliates. We have also agreed to indemnify and hold harmless Vulcan
Northwest and Charter Investment, and their respective officers, directors,
stockholders, agents, employees and affiliates, for all claims, actions, demands
and expenses that arise out of this consulting agreement and the services they
Mr. Allen owns 100% of Vulcan Northwest and is the Chairman of the Board.
William D. Savoy, another of our directors, is the President and a director of
In the second quarter of 1999, we loaned $50.0 million to Charter
Communications Holding Company, maturing on April 14, 2006. The promissory note
bears interest at 7.5% compounded annually. For the six months ended June 30,
1999, Charter Holdings recognized $0.5 million of interest income pertaining to
this promissory note.
TRANSACTIONS WITH PAUL G. ALLEN
On December 21, 1998, Mr. Allen contributed approximately $431 million to
Charter Investment and received non-voting common stock of Charter Investment.
Such non-voting common stock was converted to voting common stock on December
On December 23, 1998, Mr. Allen contributed approximately $1.3 billion to
Charter Investment and received voting common stock of Charter Investment.