Charter 2008 Annual Report Download - page 53

Table of Contents
issuance of $479 million original principal amount of a 6.50% mirror convertible senior note due 2027 of
Charter Holdco to Charter.
Allocation of Business Opportunities with Mr. Allen
As described under “— Third Party Business Relationships in which Mr. Allen has or had an Interest” in
this section, Mr. Allen and a number of his affiliates have interests in various entities that provide services or
programming to our subsidiaries. Given the diverse nature of Mr. Allen’s investment activities and interests,
and to avoid the possibility of future disputes as to potential business, Charter and Charter Holdco, under the
terms of their respective organizational documents, may not, and may not allow their subsidiaries, to engage
in any business transaction outside the cable transmission business except for the Digeo, Inc. joint venture; a
joint venture to develop a digital video recorder set-top terminal; an existing investment in Cable Sports
Southeast, LLC, a provider of regional sports programming; an investment in @Security Broadband Corp., a
company developing broadband security applications; and incidental businesses engaged in as of the closing
of Charter’s initial public offering in November 1999. This restriction will remain in effect until all of the
shares of Charter’s high-vote Class B common stock have been converted into shares of Charter’s Class A
common stock due to Mr. Allen’s equity ownership falling below specified thresholds.
Charter or Charter Holdco or any of their subsidiaries may not pursue, or allow their subsidiaries to
pursue, a business transaction outside of this scope, unless Mr. Allen consents to Charter or its subsidiaries
engaging in the business transaction. In any such case, the restated certificate of incorporation of Charter and
the limited liability company agreement of Charter Holdco would need to be amended accordingly to modify
the current restrictions on the ability of such entities to engage in any business other than the cable
transmission business. The cable transmission business means the business of transmitting video, audio,
including telephone, and data over cable systems owned, operated or managed by Charter, Charter Holdco or
any of their subsidiaries from time to time.
Under Delaware corporate law, each director of Charter, including Mr. Allen, is generally required to
present to Charter, any opportunity he or she may have to acquire any cable transmission business or any
company whose principal business is the ownership, operation or management of cable transmission
businesses, so that we may determine whether we wish to pursue such opportunities. However, Mr. Allen and
the other directors generally will not have an obligation to present other types of business opportunities to
Charter and they may exploit such opportunities for their own account.
Also, conflicts could arise with respect to the allocation of corporate opportunities between us and
Mr. Allen and his affiliates in connection with his investments in businesses in which we are permitted to
engage under Charter’s restated certificate of incorporation. Certain of the indentures of Charter and its
subsidiaries require the applicable issuer of notes to obtain, under certain circumstances, approval of the
board of directors of Charter and, where a transaction or series of related transactions is valued at or in excess
of $50 million, a fairness opinion with respect to transactions in which Mr. Allen has an interest. Related
party transactions are approved by our Audit Committee in compliance with the listing requirements
applicable to NASDAQ national market listed companies. We have not instituted any other formal plan or
arrangement to address potential conflicts of interest.
Third Party Business Relationships in which Mr. Allen has or had an Interest
As previously noted, Mr. Allen has and has had extensive investments in the areas of media and
technology. We have a number of commercial relationships with third parties in which Mr. Allen has an
interest. Mr. Allen or his affiliates own equity interests or warrants to purchase equity interests in various
entities with which we do business or which provide us with products, services or programming. Mr. Allen
owns 100% of the equity of Vulcan Ventures Incorporated and Vulcan Inc. and is the president of Vulcan
Ventures. Ms. Jo Allen Patton is a director and the President and Chief Executive Officer of Vulcan Inc. and
is a director and Vice President of Vulcan Ventures. Mr. Lance Conn is Executive Vice President of Vulcan
Inc. and Vulcan Ventures. The various cable, media, Internet and telephone companies in which Mr. Allen
has invested may mutually benefit one another. We can give no assurance, nor should you expect, that any of
these business relationships will be successful, that we will realize any benefits from these relationships or
that we will enter into any business relationships in the future with Mr. Allen’s affiliated companies.
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Source: CHARTER COMMUNICATIO, DEF 14A, March 17, 2008