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SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
Current
Report
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): February
24, 2006
Charter
Communications, Inc.
(Exact
name of registrant as specified in its charter)
Delaware
(State
or Other Jurisdiction of Incorporation or Organization)
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000-27927
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43-1857213
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(Commission
File Number)
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(I.R.S.
Employer Identification
Number)
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12405
Powerscourt Drive
St.
Louis, Missouri 63131
(Address
of principal executive offices including zip code)
(314)
965-0555
(Registrant's
telephone number, including area code)
Not
Applicable
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act
(17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR
240.13e-4(c))
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ITEM
1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
(a)
On
February 27, 2006, Charter Communications Operating, LLC ("Charter Operating"),
an indirect subsidiary of Charter Communications, Inc. ("Charter"), entered
into
a definitive agreement (the "Agreement") with Cebridge Acquisition Co.
LLC
("Cebridge") to sell certain cable television systems (the "Systems")
in West
Virginia, Virginia, Kentucky and Ohio for approximately $770 million
(the
"Purchase Price"). The systems being sold pursuant to the Agreement serve
approximately 240,000 analog video, 116,000 digital video and 78,000
high-speed
Internet customers. The Purchase Price is subject to adjustment as provided
in
the Agreement, and the Agreement includes representations, warranties
and
covenants from both parties that are typical in cable television industry
transactions.
Cebridge
has agreed to deposit approximately 1.5% of the Purchase Price, and has
agreed
to make an additional deposit equal to approximately 1.5% of the Purchase
Price
if certain conditions are not met by May 15, 2006, all as provided in
the
Agreement. If Cebridge terminates the Agreement, other than upon a breach
of the
Agreement by Charter Operating, it will forfeit such deposit.
Charter
Operating has agreed, during time periods specified in the Agreement,
not to
offer for sale, solicit proposals relating to alternative transactions
with
respect to, or participate in discussions regarding, the Systems, or
make
information about the Systems available to any person in connection with
a
possible sale of the Systems.
The
closing of the transactions contemplated by the Agreement is expected
to occur
in the third quarter of 2006, following the satisfaction or waiver of
customary
closing conditions and the receipt of regulatory approvals.
A
press
release announcing the transaction is attached as Exhibit 99.1.
(b)
Charter and Michael J. Lovett, Charter's Executive Vice President and
Chief
Operating Officer, have entered into a new employment agreement, effective
as of
February 28, 2006 (the "Agreement"), whereby Mr. Lovett will serve as
its
Executive Vice President and Chief Operating Officer at a salary of $700,000
per
year which is to be reviewed annually, and will perform such duties and
responsibilities set forth in the Agreement. The Agreement amends, supersedes
and replaces Mr. Lovett's prior employment agreement dated March 31,
2005.
The term of the Agreement is three years from the effective date and
will be
reviewed and considered for extension at 18-month intervals during Mr.
Lovett's
employment. Under the Agreement, Mr. Lovett will be entitled to receive
cash
bonus payments in an amount per year targeted at 100% of salary in accordance
with the senior management plan and to participate in all employee benefit
plans
as are offered to other senior executives. Mr. Lovett will also receive
a grant
of 150,000 restricted shares of Charter's Class A common stock on the
effective
date of the Agreement, vesting in equal installments over a three-year
period
from employment date; an award of 300,000 restricted shares of Charter's
Class A
common stock on the first anniversary of the Agreement, vesting in equal
installments over a three-year period; an award of options to purchase
432,000
shares of Charter's Class A common stock under terms of the stock incentive
plan
on the effective date of the Employment Agreement; an award of options
to
purchase 864,000 shares of Charter's Class A common stock under the terms
of the
stock incentive plan on the first anniversary of the Agreement; an award
of
259,200 performance shares under the stock incentive plan on the effective
date
of the Agreement and will be eligible to earn these shares over a performance
cycle from January 2006 to December 2006; and an award of 518,400 performance
shares under the stock incentive plan on the first anniversary of the
Agreement
and will be eligible to earn these shares over a three-year performance
cycle
January 2007- December 2009.
If
terminated other than for "cause," as such term is defined in the Agreement,
prior to March 31, 2007, Mr. Lovett will receive relocation expenses
to the city
of his choice in the 48 contiguous states in accordance with Charter's
relocation policy. In the event that Mr. Lovett is terminated by Charter
without
"cause,'' for "good reason'' or by Mr. Lovett within 60 days following
a "change
in control," as those terms are defined in the employment agreement,
Mr. Lovett
will receive his salary for the remainder of the term of the agreement;
a pro
rata bonus for the year of termination; and the immediate vesting of
options,
restricted stock and performance shares. The Agreement also contains
a two-year
non-solicitation clause.
A
copy of
the Agreement is attached as Exhibit 99.2.
ITEM
1.02 TERMINATION OF MATERIAL DEFINITIVE AGREEMENT.
See
the
description set forth in Item 1.01(b) above.
ITEM
8.01 OTHER EVENTS.
On
February 24, 2006, Charter Operating entered into a definitive agreement
with
New Wave Communications to sell certain cable television systems in Southern
Illinois and Kentucky for approximately $126 million. The systems being
sold
serve approximately 76,000 analog video, 26,000 digital video and 13,000
high-speed Internet customers. This transaction is subject to customary
closing
conditions, potential price adjustments and regulatory review approval.
The
closing is expected to occur in the third quarter of 2006.
A
press
release announcing the transaction is attached as Exhibit 99.1.
ITEM
9.01 FINANCIAL STATEMENTS AND EXHIBITS.
The
following exhibit is filed pursuant to Item 1.01:
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99.1
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Press
Release dated February 28 2006. *
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| 99.2 | Employment Agreement dated February 28, 2006.* |
*
filed
herewith
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, Charter
Communications, Inc. has duly caused this Current Report to be signed on
its
behalf by the undersigned hereunto duly authorized.
CHARTER
COMMUNICATIONS, INC.
Registrant
Dated:
March 3, 2006
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By:/s/
Grier C. Raclin
Name:
Grier C. Raclin
Title:
Executive
Vice President and General
Counsel
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EXHIBIT
INDEX
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99.1
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Press
Release dated February 28 2006. *
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| 99.2 | Employment Agreement dated February 28, 2006.* |
*
filed
herewith
Exhibit
99.1
NEWS
FOR
RELEASE: February 28, 2006
Charter Communications
Announces Agreements to Sell Systems
Serving
Approximately 316,000 Customers
Cebridge
and New Wave Communications to Purchase Charter Assets
ST.
LOUIS
- Charter Communications, Inc. (Nasdaq: CHTR) (the “Company” or
‘‘Charter”) today announced the signing of two separate definitive agreements
to
sell certain cable television systems serving a total of approximately 549,000
revenue generating units (“RGUs”) including 316,000 analog video, 142,000
digital video and 91,000 high-speed Internet customers, for an aggregate of
approximately $896 million. Charter’s cable systems located in West Virginia and
Virginia are being sold to Cebridge Acquisition Co., LLC, while the Company’s
systems located in Illinois and Kentucky are being sold to New Wave
Communications.
“The
sale
of these systems is consistent with our strategy to divest of geographically
non-strategic assets. We will continue to assess opportunities to optimize
our
portfolio to enhance overall operating efficiency,” Charter President and CEO
Neil Smit said. "Proceeds from this sale will increase the Company’s liquidity
for reinvestment in our business for future growth," he said.
These
transactions are subject to customary closing conditions, potential price
adjustments and regulatory review. Closings are expected to occur in the third
quarter of 2006. Daniels & Associates and JPMorgan Securities Inc. are
serving as advisors to Charter for these transactions.
West
Virginia and Virginia Sale Agreement
Charter
signed a definitive agreement with Cebridge Acquisition Co., LLC, a company
managed by Cequel III, LLC, for the sale of certain cable television systems
in
West Virginia and Virginia. The systems being sold represent approximately
434,000 RGUs, including 240,000 analog video, 116,000 digital video and 78,000
high-speed Internet customers. GS Capital Partners (the private equity arm
of
The Goldman Sachs Group, Inc.) and Oaktree Capital Management, LLC, are the
majority investors in Cebridge and the primary equity partners in this
transaction with Cebridge.
Illinois
and Kentucky Sale Agreement
Charter
signed a definitive agreement with New Wave Communications for the sale of
certain cable television systems in Southern Illinois and Kentucky. The systems
being sold represent approximately 115,000 RGUs, including 76,000 analog video,
26,000 digital video customers and 13,000 high-speed Internet customers.
About
Charter Communications
Charter
Communications, Inc., a leading broadband communications company, provides
a
full range of advanced broadband services to the home, including cable
television on an advanced digital video programming platform via Charter
Digital™, Charter High-Speed™ Internet service and Charter Telephone™. Charter
Business™ provides scalable, tailored and cost-effective broadband
communications solutions to organizations of all sizes through
business-to-business Internet, data networking, video and music services.
Advertising sales and production services are sold under the Charter Media®
brand. More information about Charter can be found at www.charter.com.
About
Cebridge Connections
Cebridge
Connections is a major operator of cable TV systems, providing basic cable,
digital cable, and high-speed Internet services. Today, the company serves
approximately 400,000 customers in more than 20 states. Cebridge is run by
Cequel III, LLC, a St. Louis-based telecommunications management
firm.
About
New Wave
New
Wave
is a cable television provider primarily in small and mid-sized communities
in
the Midwest and Southeast United States that offers a wide range of products
including cable television, high speed data services and telephone service.
NewWave currently serves nearly 20,000 customers and is headquartered in
Sikeston, Missouri. Wachovia Capital Partners back the company as financial
partners. Wachovia Capital Partners is the principal investing arm of Wachovia
Corporation and has invested more than $2.7 billion of capital since inception.
Waller Capital Corp. assisted NewWave in the acquisition of these
properties.
Cautionary
Statement Regarding Forward-Looking Statements:
This
release includes forward-looking statements within the meaning of Section 27A
of
the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
regarding, among other things, our plans, strategies and prospects, both
business and financial. Although we believe that our plans, intentions and
expectations reflected in or suggested by these forward-looking statements
are
reasonable, we cannot assure you that we will achieve or realize these plans,
intentions or expectations. Forward-looking statements are inherently subject
to
risks, uncertainties and assumptions. Many of the forward-looking statements
contained in this release may be identified by the use of forward-looking words
such as “believe,” “expect,” “anticipate,” “should,” “planned,” “will,” “may,”
“intend,” “estimated” and “potential,” among others. Important factors that
could cause actual results to differ materially from the forward-looking
statements we make in this release are set forth in reports or documents that
we
file from time to time with the SEC.
All
forward-looking statements attributable to us or any person acting on our behalf
are expressly qualified in their entirety by this cautionary statement. We
are
under no duty or obligation to update any of the forward-looking statements
after the date of this release.
Exhibit
99.2
EMPLOYMENT
AGREEMENT
This
Employment Agreement (the “Agreement”), made and entered into as of February 28,
2006 (the “Effective Date”), is by and between CHARTER
COMMUNICATIONS, INC,
a
Delaware corporation (“Corporation”), and MICHAEL
J. LOVETT,
an
individual resident of Missouri (the “Executive”).
RECITALS
The
Corporation desires to employ the Executive as its Executive Vice President
and
Chief Operating Officer effective as of the Effective Date, and the Executive
desires to accept such employment effective as of the Effective Date, on
the
terms and conditions set forth herein.
AGREEMENT
The
parties, intending to be legally bound, agree as follows:
Section
1. Employment.
The
Corporation hereby employs the Executive, and the Executive hereby accepts
employment, all on the terms and conditions herein. This Agreement amends,
supersedes and replaces the Employment Agreement, dated March 31, 2005, by
and
between Charter Communications, Inc. and Michael J. Lovett.
Section
2. Services;
Extent of Services.
(a) Duties
and Responsibilities.
The
Executive is hereby employed as the Executive Vice President and Chief Operating
Officer of the Corporation, the authority, duties and responsibilities of
which
will be as follows: the Executive will (i) manage, review and supervise the
operations and support functions under his direct control; (ii) report to
the
Chief Executive Officer; and (iii) comply with the various policies, procedures
and codes of conduct of the Corporation in effect from time to time which
apply
to other employees and executive officers.
(b) Full
Business Attention.
The
Executive will devote his full business attention and energies to the business
of the Corporation during the Term (as defined below) and unless otherwise
mutually agreed will physically report and will render all the Executive’s
services contemplated hereunder to the Corporation at its offices in the
St
Louis, Missouri area; provided,
however,
that
the foregoing requirement to render services in St Louis shall not apply
when
the Executive is traveling on company business.
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(c) Other
Activities.
Notwithstanding anything to the contrary contained in Section 2(b),
the
Executive will be permitted to engage in the following activities, provided
that
such activities do not materially interfere or conflict with the Executive’s
duties and responsibilities to the Corporation:
(i) the
Executive may serve on the governing boards of, or otherwise participate
in, a
reasonable number of trade associations and charitable organizations whose
purposes are not inconsistent with the activities and the image of the
Corporation;
(ii) the
Executive may engage in a reasonable amount of charitable activities and
community affairs; and
(iii) subject
to the prior approval of the Nominating / Corporate Governance Committee
of the
Board of Directors of the Corporation, the Executive may serve on the board
of
directors of up to one business corporation or other for-profit entity (other
than boards on which Executive serves at the Corporation’s request), provided
that they do not provide services to or compete, directly or indirectly,
with
the Corporation or otherwise violate the Corporation’s conflict of interest
policies.
Section
3. Compensation.
(a) Base
Salary.
In
consideration of the services provided hereunder, the Corporation shall pay
the
Executive during the Term a salary at an annual rate of $700,000 per year
(the
“Base Salary”) in regular installments in accordance with the Corporation’s pay
practices for executive officers generally. This Base Salary will be reviewed
on
an annual basis and may be adjusted upward at the discretion of the
Board.
(b) Bonus.
During
the Term, the Executive will be entitled to receive cash bonus payments in
an
amount per year targeted at 100% of the amount of the Base Salary in accordance
with the senior management bonus plan. If the Executive is terminated for
any
reason other than Cause, he shall receive a pro-rated bonus no later than
thirty
(30) days following the date of termination in accordance with the level
of
payout for the bonus plan and subject to approval by the board. The pro-rated
bonus will be calculated based upon financial results for the fiscal year
in
question as of the end of the month immediately prior to the month in which
employment terminated.
(c) Benefits.
During
the Term, the Executive will be entitled to the following benefits:
(i) Employee
Benefit Plans.
The
Executive will be entitled to participate in all employee benefit plans of
the
Corporation (including
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incentive
or equity compensation plans) on such terms as are offered for the general
benefit of other senior executive officers of the Corporation, subject to
the
provisions of such plans as may be in effect from time to time.
(ii) Vacation;
Sick Leave.
The
Executive will be entitled to vacation and sick leave on such terms as are
offered for the benefit of other senior executives of the Corporation in
accordance with and upon the terms of Corporation policies.
(d) Expense
Reimbursement.
The
Corporation shall reimburse the Executive, in accordance with the Corporation’s
policies, for all reasonable business expenses incurred by the Executive
in
connection with the performance of the Executive’s obligations
hereunder.
(e) Taxes.
All
payments made by the Corporation under this Agreement will be subject to
withholding of such amounts as is required pursuant to any applicable law
or
regulation.
(f) Equity
Awards.
(i) Restricted
Stock.
As of
the Effective Date, Executive shall be granted an award of 150,000 restricted
shares of the Corporation’s common stock pursuant to the terms of the Charter
Communications, Inc. 2001 Stock Incentive Plan (the “Stock Incentive Plan”) and
the standard restricted stock agreement issued under that Stock Incentive
Plan,
except that the agreement shall provided that all restricted shares shall
vest,
and all restrictions thereon shall lapse in the event that (x) Executive’s
employment with the Corporation terminates for any reason, other than for
“Cause”, Death or Disability, within sixty (60) days following a “Change in
Control”, (y) Executive’s employment is lawfully terminated by the Corporation
without Cause pursuant to Section 5 (b), or (z) Executive’s employment is
lawfully terminated for Good Reason pursuant to Section 5 (d) . Except as
provided above, these restricted shares will vest, during Executive’s
employment, annually in equal installments as follows: one-third on the first
anniversary of the Effective Date, an additional one-third on the second
anniversary of the Effective Date and the remaining one-third on the third
anniversary of the Effective Date. In addition, on the first anniversary
of the
Effective Date, if Executive has been continuously employed by the Corporation,
Executive shall be granted an award of 300,000 restricted shares of the
Corporation’s common stock pursuant to the terms of the Stock Incentive Plan and
the standard restricted stock agreement issued under that Stock Incentive
Plan,
except that the agreement shall provide that all restricted shares shall
vest,
and all restrictions thereon shall lapse in the event that (x) Executive’s
employment with the Corporation terminates for any reason, other than for
“Cause”, Death or Disability, within sixty (60) days following a “Change in
Control”, (y) Executive’s employment is lawfully terminated by the Corporation
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without
Cause pursuant to Section 5 (b), or (z) Executive’s employment is lawfully
terminated for Good Reason pursuant to Section 5 (d). Except as provided
above,
these restricted shares will vest, during Executive’s employment, annually in
equal installments as follows: one-third on the second anniversary of the
Effective Date, an additional one-third on the third anniversary of the
Effective Date and the remaining one-third on the fourth anniversary of
the
Effective Date.
(ii) Stock
Options.
As of
the Effective Date, Executive shall be granted options to purchase 432,000
shares of the Corporation’s common stock pursuant to the terms of the Stock
Incentive Plan and the standard stock option agreement issued under that
plan,
except that the agreement shall provide that all granted options shall vest
and
become immediately exercisable in the event that during the Term (x) Executive’s
employment with the Corporation terminates for any reason, other than for
“Cause”, Death or Disability, within sixty (60) days following a “Change in
Control”, (y) Executive’s employment is lawfully terminated by the Corporation
without Cause pursuant to Section 5 (b), or (z) Executive’s employment is
lawfully terminated for Good Reason pursuant to Section 5 (d). In addition,
on
the first anniversary of the Effective Date, if Executive has been continuously
employed by the Corporation, Executive shall be granted options to purchase
864,000 shares of the Corporation’s common stock pursuant to the terms of the
Stock Incentive Plan and the standard stock option agreement issued under
that
plan, except that the agreement shall provide that all granted options shall
vest and become immediately exercisable in the event that during the Term
(x)
Executive’s employment with the Corporation terminates for any reason, other
than for “Cause”, Death or Disability, within sixty (60) days following a
“Change in Control”, (y) Executive’s employment is lawfully terminated by the
Corporation without Cause pursuant to Section 5 (b), or (z) Executive’s
employment is lawfully terminated for Good Reason pursuant to Section 5 (d).
The
option price shall be the fair market value for the shares as of the grant
date
as determined according to the Corporation’s standard practices.
(iii) Performance
Units.
As of
the Effective Date, Executive shall be granted an award of 259,200 Performance
Units pursuant to the terms of the Stock Incentive Plan, which Executive
will be
eligible to earn on the same terms that apply to other of the Corporation’s
executives generally under that plan, except that the applicable agreement
shall
provide that the Executive shall be entitled to full vesting and
nonforfeitability, as of the termination date, of any right to receive Shares
in
satisfaction of the Performance Units, with the number (if any), and the
timing
of delivery, of Shares determined as if the Executive’s employment with the
Corporation had continued indefinitely, in the event that during the Term
(x)
Executive’s employment with the Corporation terminates for any reason, other
than for “Cause”, Death or Disability within sixty (60) days following a “Change
in Control”, (y) Executive’s employment is lawfully terminated by the
Corporation without Cause pursuant to Section 5 (b), or (z) Executive’s
employment is lawfully terminated for Good Reason pursuant to
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Section
5
(d). For purposes of this participation, Executive will be eligible to
earn
these shares over a one (1) year performance cycle January 2006-December
2006,
based on performance against objective performance criteria established
by the
Board and applicable to other senior executive participants. In addition,
on the
first anniversary of the Effective Date, if Executive has been continuously
employed by the Corporation, Executive shall be granted an award of 518,400
Performance Units pursuant to the terms of the Stock Incentive Plan, which
Executive will be eligible to earn on the same terms that apply to other
of the
Corporation’s executives generally under that plan, except that the applicable
agreement shall provide that the Executive shall be entitled to full vesting
and
nonforfeitability, as of the termination date, of any right to receive
Shares in
satisfaction of the Performance Units, with the number (if any), and the
timing
of delivery, of Shares determined as if the Executive’s employment with the
Corporation had continued indefinitely, in the event that during the Term
(x)
Executive’s employment with the Corporation terminates for any reason, other
than for “Cause”, Death or Disability within sixty (60) days following a “Change
in Control”, (y) Executive’s employment is lawfully terminated by the
Corporation without Cause pursuant to Section 5 (b), or (z) Executive’s
employment is lawfully terminated for Good Reason pursuant to Section 5
(d). For
purposes of this participation, Executive will be eligible to earn these
shares
over a three (3) year performance cycle January 2007-December 2009, based
on
performance against objective performance criteria established by the Board
and
applicable to other senior executive participants.
(iv) Accelerated
Vesting.
In the
event that Executive’s employment with the Corporation terminates for any
reason, other than for “Cause”, Death or Disability, within sixty (60) days
following a “Change in Control”, or if Executive’s employment is lawfully
terminated by the Corporation without Cause pursuant to Section 5 (b), or
if
Executive’s employment is lawfully terminated for Good Reason pursuant to
Section 5 (d), then the Equity Awards the Executive has received under this
Agreement shall vest as described above to the extent permitted by applicable
law and the applicable plans and award agreements. In addition, to the extent
permitted by applicable law and the applicable plans and award agreements,
all
restricted shares received by Executive prior to the Effective Date of this
Agreement, shall also vest as described in Section 3(f)(i) above; all stock
options received by Executive prior to the Effective Date of this Agreement,
shall also vest and become immediately exercisable as described in Section
3(f)(ii) above; all performance shares received by the Executive prior to
the
Effective Date of this Agreement, shall also vest as described in Section
3(f)(iii) above.
(g) Relocation.
The
Corporation has previously reimbursed the Executive for expenses incurred
by the
Executive in connection with relocating his family to a new primary residence
in
the St Louis Missouri metropolitan area in accordance with and upon the terms
of
the Corporation’s relocation policy in effect at the time. If the Executive’s
employment is terminated for any reason
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other
than Cause prior to March 31, 2007, he will receive reasonable relocation
expenses back to the city of his choice within the 48 contiguous states
in
accordance with and upon the terms of the Corporation’s relocation policy at the
time.
Section
4. Term.
The
term
of this Agreement will commence on the Effective Date and will continue for
a
term of three (3) years following the Effective Date (the “Term”), unless
earlier terminated pursuant to the provisions of Section 5 below. This contract
will be reviewed and considered for extension at 18-month intervals during
Executive’s employment during the Term.
The
provisions of Sections 8-10 and any other provisions relating to their
enforcement survive termination of employment and termination of this
Agreement.
Section
5. Termination
of Employment.
(a) Termination
by Corporation for Cause.
The
Executive’s employment by the Corporation will terminate immediately upon
written notice to the Executive if the Corporation elects to discharge the
Executive for Cause. For purposes hereof, “Cause” means:
(i) the
Executive’s act of fraud, misappropriation, or embezzlement with respect to the
Corporation;
(ii) the
Executive’s indictment for, conviction of, or plea of guilt or no contest to,
any felony;
(iii) the
Executive’s admission of liability of, or finding of liability for, the
violation of any “Securities Laws.” As used herein, the term “Securities Laws”
means any federal or state law, rule or regulation governing the issuance
or
exchange of securities, including without limitation the Securities Act of
1933,
the Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder; or
(iv) a
determination by any agency or instrumentality of any state or the United
States
of America, including but not limited to the United States Department of
Justice, the United States Securities and Exchange Commission or any committee
of the United States Congress, that the Executive’s employment impairs or
impedes the ability of such agency or instrumentality to conduct investigations,
and/or prosecute proceedings, into the actions or in-actions of any current
or
former employee of the Corporation (collectively, the
“Investigations”);
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(v) the
Executive’s failure after reasonable prior written notice to comply with any
valid and legal directive of the Chief Executive Officer or the Board of
Directors of the Corporation; or
(vi) Other
than as provided in Sections 5(a)(i) - (v) above, the Executive’s material
breach of any provision of this Agreement that is not remedied within fifteen
(15) days of the Executive being provided written notice thereof from the
Corporation.
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Repeated
breaches of a similar nature shall not require additional notices
as
provided Section 5(a)(v) or (vi).
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(b) Termination
by Corporation Without Cause.
The
Corporation may terminate the Executive’s employment without Cause upon at least
thirty (30) days’ prior written notice to the Executive.
(c) Death
or Disability.
The
Executive’s employment by the Corporation will immediately terminate upon the
Executive’s death and, at the option of either the Executive or the Corporation,
exercisable upon written notice to the other party, may terminate upon the
Executive’s Disability. For purposes of this Agreement, “Disability”
will
occur if (i) the Executive becomes eligible for full benefits under a long-term
disability policy provided by the Corporation, if any, or (ii) the Executive
has
been unable, due to physical or mental illness or incapacity, to perform
the
essential duties of his employment with reasonable accommodation for a
continuous period of ninety (90) days or an aggregate of one-hundred eighty
(180) days during any consecutive 12-month period.
(d) Termination
by the Executive for Good Reason.
The
Executive may terminate the Executive’s employment at any time upon at least
thirty (30) days’ written notice to the Corporation specifying the basis for the
claim of Good Reason (if the Corporation fails to cure such event or rectify
the
basis for the claim of Good Reason within such thirty-day period) (any such
termination referenced in clauses (i)-(v) below, constituting termination
for
“Good Reason”):
(i) if
the
Corporation fails to make the payments or offer the benefits required by
Section
3 hereof within thirty (30) days after any such payments or benefits are
due;
(ii) if
the
Executive’s duties, authority or responsibilities as Chief Operating Officer are
substantially diminished, regardless of whether such diminution of duties
is
accompanied by a change in the Executive’s title;
(iii) if
the
Corporation requires the Executive to change the Executive’s principal place of
business from the greater metropolitan St. Louis, Missouri area without the
Executive’s consent (it being understood
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19
that
required travel from such location shall not be a change in such principal
place
of business); or
(iv) except
as
otherwise set forth in clauses (i), (ii) and (iii) above, if the Corporation
materially breaches any of its other duties hereunder.
(e) Termination
by the Executive without Good Reason.
The
Executive may terminate the Executive’s employment without Good Reason upon at
least thirty (30) days’ prior written notice to the Corporation.
(f) Change
in Control.
The
Executive may terminate the Executive’s employment within the sixty (60) day
period immediately following a “Change in Control” for any reason. For purposes
of this Agreement, a “Change in Control” will be deemed to have taken place if,
whether in a single transaction or a series of transactions:
(ii) as
the
result of, or in connection with, any cash tender or exchange offer, merger
or
other business combination, or any combination of the foregoing transactions,
the holders of all the Corporation’s securities entitled to vote generally in
the election of directors of the Corporation immediately prior to such
transaction constitute, following such transaction, less than a majority
of the
combined voting power of the then-outstanding securities of the surviving
entity
(or in the event each entity survives, the surviving entity that is the parent
entity) entitled to vote generally in the election of the directors of such
surviving entity (or in the event each entity survives, the surviving entity
that is the parent entity) after such transactions; or
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(iii) the
Corporation sells, transfers or leases all or substantially all of the assets
of
the Corporation and its subsidiaries, collectively. This does not include,
and a
Change in Control does not result from, a sale, lease or transfer to a
Controlling Shareholder or to an entity majority-owned, controlled by or
under
common control with a Controlling Shareholder.
Section
6. Effect
of Termination.
(a) Termination
by the Corporation for Cause; Termination by the Executive Without Good
Reason.
Upon
termination of Executive’s employment (i) by the Corporation for Cause pursuant
to Section 5(a) above, or (ii) by the Executive without Good Reason pursuant
to
Section 5(e) above, the Executive only will be entitled to receive (i) base
salary and bonus payments, payments in respect of accrued but unpaid vacation
and reimbursement for business expenses, in each case due, accrued or payable
as
of the date of such termination, and (ii) such vested stock options and other
benefits as the Executive may be entitled to receive under any stock option
or
other employee benefit plan, but will not be entitled to receive the Severance
Payment (as defined in Section 6(c) below).
(b) Other
Termination. Upon termination of the Executive’s employment (i) by the
Corporation without Cause pursuant to Section 5(b) above (including termination
without Cause following a Change in Control), (ii) by the Corporation or
the
Executive as the result of the death or Disability of the Executive pursuant
to
Section 5(c) above, (iii) by the Executive within the sixty (60) day period
immediately following a Change in Control pursuant to Section 5 (f), or (iv)
by
the Executive for Good Reason pursuant to Section 5(d) above, the Executive
only
will be entitled to receive (1) base salary and any outstanding bonus payments
due in accordance with Section 3 (b) and payments in respect of accrued but
unpaid vacation and reimbursement for business expenses, in each case due,
accrued or payable as of the date of such termination), (2) such vested
stock options and other benefits as Executive may be entitled to receive
under
any equity incentive plan or any other stock option or other employee benefit
plan, and (3) the Severance Payment (as determined pursuant to Section 6(c)
below and subject to the conditions spelled out in this Agreement). Fifty
percent (50%) of the Severance Payment will be payable within fifteen (15)
days
after termination of employment and satisfaction of all conditions to payment,
and the balance of the Severance Payment will be payable in equal instalments
on
the Corporation’s regular paydays over the balance of the Term.
(c) Severance
Payment. For purposes of this Agreement, “Severance Payment”
means:
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(i) in
the
event of any termination by the Corporation without Cause pursuant to Section
5(b) above (including termination without Cause following a Change in Control),
an amount equal to the Executive’s Base Salary for the number of months
remaining in the Term at the date of termination;
(ii) in
the
event of any termination by the Executive for Good Reason pursuant to Section
5(d),
or in
the event of a termination by Executive within sixty (60) days following
a
Change in Control, an amount equal to the Executive’s Base Salary for the number
of months remaining in the Term at the date of termination;
(iii) in
the
event of any termination by the Corporation or the Executive as the result
of
the death or Disability of the Executive pursuant to Section 5(c) above,
an
amount equal to the Executive’s Base Salary for a period of three (3) full
months (which payment shall be in addition to and not in lieu of any benefits
payable to the Executive under any group long-term or short-term disability
insurance plan of the Corporation in which the Executive
participates).
Notwithstanding
any provision of this Agreement to the contrary, the Severance Payment (or
any
other payment called for by this Agreement to be paid following termination
of
employment) will not be made within the period of time following termination
of
employment that would result in the application of Section 409A of the Internal
Revenue Code, and the Severance Payment is subject to forfeiture for violations
of Section 8 or 9 of this Agreement (in addition to any other remedies available
to the Corporation for a breach of such provisions). The amount of Severance
Payment to be forfeited shall be prorated based upon the date of the
violation.
(d) Excise
Tax Limitation.
(1)
To
the
extent that any payment, distribution, or acceleration of vesting to or for
the
benefit of the Executive by the Corporation (within the meaning of Section
280G
of the Code and regulations thereunder), whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement, an incentive stock
plan, a cash award plan, or otherwise (the "Total Payments") is or will be
subject to the excise tax imposed under Section 4999 of the Code (the "Excise
Tax"), then the Total Payments shall be reduced (but not below zero) if and
to
the extent that a reduction in the Total Payments would result in the Executive
retaining a larger amount, on an after-tax basis (taking into account federal,
state and local income taxes and the Excise Tax), than if the Executive received
the entire amount of such Total Payments. Unless the Executive shall have
given
prior written notice specifying a different order to the Corporation to
effectuate the foregoing, Charter shall reduce or eliminate the Total Payments
by first reducing or eliminating the portion of the Total Payments which
are
payable in cash and then by reducing or eliminating
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non-cash
payments, in each case in reverse order beginning with payments or benefits
which are to be paid the farthest in time from the Determination (as hereinafter
defined). Any notice given by the Executive pursuant to the preceding sentence
shall take precedence over the provisions of any other plan, arrangement
or
agreement governing the Executive's rights and entitlements to any benefits
or
compensation.
(2)
The
determination of whether the Total Payments shall be reduced as provided
in
Section 6 (d)(1), and what the amount of such reduction should be, shall
be made
at the Corporation's expense by an accounting firm selected by the Executive
from among the six largest accounting firms in the United States or at the
Executive's expense by an attorney selected by the Executive. Such accounting
firm or attorney (the "Determining Party") shall provide its determination
(the
"Determination"), together with detailed supporting calculations and
documentation to the Corporation and the Executive within ten (10) days of
the
termination of Executive's employment. If the Determining Party determines
that
no Excise Tax is payable by the Executive with respect to the Total Payments,
it
shall furnish the Executive with an opinion reasonably acceptable to the
Executive that no Excise Tax will be imposed with respect to any such payments
and, absent manifest error, such Determination shall be binding, final and
conclusive upon the Corporation and the Executive. If the Determining Party
determines that an Excise Tax would be payable, the Corporation shall have
the
right to accept the Determination of the Determining Party as to the extent
of
the reduction, if any, pursuant to Section 5.7 (a), or to have such
Determination reviewed by an accounting firm selected by the Corporation,
at the
Corporation's expense. If Charter's accounting firm and the Determining Party
do
not agree, a third accounting firm shall be jointly chosen by the Determining
Party and the Corporation, in which case the determination of such third
accounting firm shall be binding, final and conclusive upon the Corporation
and
the Executive.
Section
7. Miscellaneous.
(a) Notices.
All
notices, consents, waivers, and other communications under this Agreement
must
be in writing and will be deemed to have been duly given when (i) delivered
by
hand (with written confirmation of receipt), (ii) sent by facsimile with
confirmation of transmission by the transmitting equipment, (iii) received
by
the addressee, if sent by certified mail, return receipt requested, or (iv)
received by the addressee, if sent by a nationally recognized overnight delivery
service, return receipt requested, in each case to the appropriate addresses,
or
facsimile numbers set forth below (or to such other addresses, or facsimile
numbers as a party may designate by notice to the other parties):
the
Executive: Michael
J.
Lovett
964
Greenridge Lane
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Castle
Rock, Colorado
80104
the
Corporation: Charter
Communications
Charter
Plaza
112405
Powerscourt Drive
St
Louis,
MO 63131-3674
Attention:
Chief Executive Officer
with
a
copy to: Charter
Communications
Charter
Plaza
112405
Powerscourt Drive
St
Louis,
MO 63131-3674
Attention:
Lynne Ramsey
Senior
Vice President Human Resources
Fax:
(205) 969-4732
(b) Power
and Authority.
Each
party warrants and represents that it has full power and authority to enter
into
and perform this Agreement, and the person signing this Agreement on behalf
of
such party has been properly authorized and empowered to enter into this
Agreement.
(c) Remedies.
The
rights and remedies of the parties to this Agreement are cumulative and not
alternative.
(d) Waiver.
No
failure to exercise, and no delay in exercising, on the part of either party,
any privilege, any power or any right hereunder will operate as a waiver
thereof, nor will any single or partial exercise of any privilege, right
or
power hereunder preclude further exercise of any other privilege, right or
power
hereunder.
(e) Entire
Agreement and Modification.
This
Agreement constitutes the entire agreement between the parties with respect
to
the subject matter of this Agreement and supersedes all prior agreements,
whether written or oral, between the parties with respect to its subject
matter
and constitutes a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may
not
be amended or waived except by a written agreement signed by the party to
be
charged with the amendment.
(f) Assignment.
This
Agreement may not be assigned by any party hereto without the prior written
consent of the non-assigning party; provided,
however,
that
the Corporation may assign this Agreement without the consent of the Executive
in connection with any transaction which constitutes a Change of Control.
Subject to the foregoing, this Agreement will be binding upon and shall
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inure
to
the benefit of (i) in the case of the Executive, his heirs, executors,
administrators and legal representatives, and (ii) in the case of the
Corporation, its permitted successors and assigns.
(g) Severability.
If any
provision of this Agreement is held invalid or unenforceable by any court
of
competent jurisdiction, the other provisions of this Agreement will remain
in
full force and effect. The parties further agree that if any provision contained
herein is, to any extent, held invalid or unenforceable in any respect under
the
laws governing this Agreement, they shall take any actions necessary to render
the remaining provisions of this Agreement valid and enforceable to the fullest
extent permitted by law and, to the extent necessary, shall amend or otherwise
modify this Agreement to replace any provision contained herein that is held
invalid or unenforceable with a valid and enforceable provision giving effect
to
the intent of the parties.
(h) Section
Headings, Construction.
The
headings of Sections in this Agreement are provided for convenience only
and
will not affect its construction or interpretation. All references to “Section”
or “Sections” refer to the corresponding Section or Sections of this Agreement
unless otherwise specified. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word “including” does not limit the preceding words or
terms. The language used in the Agreement will be construed, in all cases,
according to its fair meaning, and not for or against any party hereto. The
parties acknowledge that each party has reviewed this Agreement and that
rules
of construction to the effect that any ambiguities are to be resolved against
the drafting party will not be available in the interpretation of this
Agreement.
(i) Governing
Law.
This
Agreement will be governed by and construed in accordance with the laws of
the
State of Missouri, without regard to the conflict of law provisions thereof.
It
is deemed to be entered into and accepted in the State of Missouri.
(j) Counterparts.
This
Agreement may be executed in one or more counterparts, each of which will
be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
(k) Attorneys’
Fees.
The
parties agree that in the event it becomes necessary to seek judicial remedies
for the breach or threatened breach of this Agreement, the prevailing party
will
be entitled, in addition to all other remedies, to recover from the
non-prevailing party all costs of such judicial action, including but not
limited to, costs of investigation and defense and reasonable attorneys’ fees
and expenses, and also including all such expenses related to any
appeal.
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(l) Further
Assurances.
Each
party hereto shall perform such further acts and execute and deliver such
further documents as may be reasonably necessary to carry out the provisions
of
this Agreement.
(m) No
Third Party Beneficiary.
This
Agreement shall not confer any rights or remedies upon any person or entity
other than the parties hereto and their respective successors and
assigns.
Section
8. Non-Competition.
(a) The
Executive acknowledges and recognizes the highly-competitive nature of the
business conducted by the Corporation and its subsidiaries and affiliates
and
accordingly agrees that, in consideration of this Agreement and the premises
contained herein, he shall not, for his own benefit or for the benefit of
any
other person or entity other than the Corporation, during the period commencing
on the Effective Date hereof and terminating on the second anniversary of
the
expiration or termination of the Term hereof (or termination of employment,
if
later than the expiration of the Term) for any reason whatsoever:
(i) contact,
solicit or service any person or entity that was a customer or prospective
customer of the Corporation or any of its subsidiaries or affiliates at any
time
during the Term hereof (or the termination of the Executive’s employment, if
later) (a prospective customer being one to which the Corporation had made
a
written financial proposal within twelve (12) months prior to the time of
the
termination of the Term); or directly solicit or encourage any customer or
subscriber of the Corporation to purchase any service or product of a type
offered by or competitive with any product or service provided by the
Corporation, or to reduce the amount or level of business purchased by such
customer from the Corporation; or take away or procure for the benefit of
any
competitor of the Corporation, any business of a type provided by or competitive
with a product or service offered by the Corporation; or
(ii) solicit
or recruit for employment, or as a director, any person or persons who are
employed by the Corporation or who were at any time (within a period of six
(6)
months immediately prior to the date of the termination of the Term) employed
by
the Corporation, otherwise interfere with the relationship between such persons
and the Corporation; nor will the Executive assist anyone else in recruiting
any
such employee to work for another company or business or discuss with any
such
person his or her leaving the employ of the Corporation or engaging in a
business activity in competition with the Corporation; or
(iii)
perform any work as an employee, consultant, contractor, or in any other
capacity with, directly or indirectly own any interest in, or directly or
indirectly provide any services or advice to Cequel III (or any
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of
its
affiliates, or any entity invested in or owned or controlled by Cequel
III or
any of its principals, excluding publicly traded corporations in which
such
person(s) or entities own or control less than a 5% interest), or any company
or
business in which Cequel III or any of Cequel III’s principals own an interest
(other than a publicly traded corporation in which such person(s) and entities
own or control less than a 5% interest). It is understood that the principals
of
Cequel III are Jerry Kent and Howard Wood.
(b) The
Executive understands that the foregoing restrictions may limit his ability
to
earn a similar amount of money in a business similar to the business of the
Corporation or its subsidiaries or affiliates, but he nevertheless believes
that
he has received and will receive sufficient consideration and other benefits
as
an employee of the Corporation and as otherwise provided hereunder to clearly
justify such restrictions which, in any event (given his education, skills
and
ability), the Executive does not believe would prevent him from earning a
living.
(c) It
is
agreed that the Executive’s services hereunder are special, unique, unusual and
extraordinary giving them peculiar value, the loss of which cannot be reasonably
or adequately compensated for by damages, and in the event of the Executive’s
breach of this Section, the Corporation shall be entitled to equitable relief
by
way of injunction or otherwise. If the period of time or area herein specified
should be adjudged unreasonable in any court proceeding, then the period
of time
shall be reduced by such number of months or the area shall be reduced by
elimination of such portion thereof as deemed unreasonable, so that this
covenant may be enforced during such lesser period of time and in such lesser
areas and scope as will grant the Corporation the maximum restriction on
the
Executive’s activities permitted by applicable law in such circumstances.
Section
9. Confidential
Information.
(a) The
Executive acknowledges that during the Term he will have access to and may
obtain, develop, or learn of Confidential Information (as defined
below).
(b) The
Executive agrees that he shall hold such Confidential Information in strictest
confidence and that the Executive shall not at any time, during or after
the
Term, in any manner, either directly or indirectly, use (for his own benefit
or
otherwise), divulge, disclose or communicate to any unauthorized person or
entity in any manner whatsoever any Confidential Information.
(c) Under
this Agreement, the term “Confidential Information” shall include, but not be
limited to, any of the following information relating to the Corporation
or its
affiliates learned by the Executive during the Term or as a result of his
employment with the Corporation:
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(i) information
regarding the Corporation’s business proposals, manner of the Corporation’s
operations, and methods of selling or pricing any products or
services;
(ii) the
identity of persons or entities actually conducting or considering conducting
business with the Corporation, and any information in any form relating to
such
persons or entities and their relationship or dealings with the Corporation
or
its affiliates;
(iii) any
trade
secret or confidential information of or concerning any business operation
or
business relationship;
(iv) computer
databases, software programs and information relating to the nature of the
hardware or software and how said hardware or software are used in combination
or alone;
(v) information
concerning Corporation personnel, confidential financial information, customer
or customer prospect information, information concerning subscribers, subscriber
and customer lists and data, methods and formulas for estimating costs and
setting prices, engineering design standards, testing procedures, research
results (such as marketing surveys, programming trials or product trials),
cost
data (such as billing, equipment and programming cost projection models),
compensation information and models, business or marketing plans or strategies,
deal or business terms, budgets, vendor names, programming operations, product
names, information on proposed acquisitions or dispositions, actual performance
compared to budgeted performance, long-range plans, results of internal
analyses, computer programs and programming information, techniques and designs,
and trade secrets; and
(vi)
any
other trade secret or information of a confidential or proprietary
nature.
(d) During
the Term, the Executive shall use, divulge, disclose or communicate Confidential
Information only in the scope of his employment with the Corporation and
only as
expressly directed or permitted by the Corporation. The Executive shall not,
at
any time following the expiration or termination of this Agreement for any
reason whatsoever, use, divulge, disclose or communicate for any purpose
any
Confidential Information. The Executive shall not make or use any notes or
memoranda relating to any Confidential Information except for the benefit
of the
Corporation, and will, at the Corporation’s request, return each original and
every copy of any and all notes, memoranda, correspondence, diagrams or other
records, in written or other form, that he may at any time have within his
possession or control that contain any Confidential Information.
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19
(e) Except
as
provided for herein below, the Executive agrees that he will treat the terms
of
this Agreement as confidential, and shall not directly or indirectly disclose
them in any manner except: (i) as mutually agreed upon in writing by the
parties
to this Agreement; (ii) in legal documents filed with the court or any
arbitrator in any action to enforce the terms of this Agreement; (iii) pursuant
to a valid order or regulation; (iv) as otherwise required by law or regulation;
or (v) to his attorney, financial advisors, accountant, and/or spouse, provided
that prior to any such disclosure, that individual must agree to treat as
confidential all information disclosed.
(f) It
is
agreed that in the event of the Executive’s breach of this Section, the
Corporation shall be entitled to equitable relief by way of injunction or
otherwise.
(g) Notwithstanding
the foregoing, Confidential Information shall not include information which
has
come within the public domain through no fault of or action by the Executive
or
which has become rightfully available to the Executive on a non-confidential
basis from any third party, the disclosure of which to the Executive does
not
violate any contractual or legal obligation such third party has to the
Corporation or its affiliates with respect to such Confidential
Information.
Section
10. Proprietary
Developments.
(a) Any
and
all inventions, products, discoveries, improvements, processes, methods,
computer software programs, models, techniques, or formulae (collectively,
hereinafter referred to as “Developments”), made, developed, or created by the
Executive (alone or in conjunction with others, during regular work hours
or
otherwise) during the Executive’s employment, which may be directly or
indirectly useful in, or relate to, the business conducted or to be conducted
by
the Corporation will be promptly disclosed by the Executive to the Corporation
and shall be the Corporation’s exclusive property. The term “Developments” shall
not be deemed to include inventions, products, discoveries, improvements,
processes, methods, computer software programs, models, techniques, or formulae
which were in the possession of the Executive prior to the Term. The Executive
hereby transfers and assigns to the Corporation all proprietary rights which
the
Executive may have or acquire in any Developments and the Executive waives
any
other special right which the Executive may have or accrue therein. The
Executive agrees to execute any documents and to take any actions that may
be
required, in the reasonable determination of the Corporation’s counsel, to
effect and confirm such assignment, transfer and waiver.
(b) The
Executive will execute any documents necessary or advisable, in the reasonable
determination of the Corporation’s counsel, to direct the
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issuance
of patents, trademarks, or copyrights to the Corporation with respect to
such
Developments as are to be the Corporation’s exclusive property or to vest in the
Corporation title to such Developments; provided, however, that the expense
of
securing any patent, trademark or copyright shall be borne by the
Corporation.
(c) The
parties agree that Developments shall constitute Confidential
Information.
[remainder
of page intentionally left blank]
18
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[signature
page of Employment Agreement]
IN
WITNESS WHEREOF, the undersigned parties have caused this Agreement to be
executed by themselves or by their duly authorized representatives as of
the day
and date first written above.
THE
CORPORATION:
CHARTER
COMMUNICATIONS
By: /s/
Lynne F. Ramsey
Name: Lynne
F.
Ramsey
Its:
Senior Vice President-Human Resources
THE
EXECUTIVE:
/s/
Michael J. Lovett
MICHAEL
J. LOVETT