[CLASSIC COMMUNICATIONS, INC. LOGO]
Classic Communications, Inc.
515 Congress Avenue
Suite 2626
Austin, Texas 78701
May 12, 2000
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend
Classic Communications, Inc.'s annual stockholders' meeting. The meeting
will be held on Wednesday, June 28, 2000, at 9:00 a.m. CST at the Omni
Austin Hotel - Downtown located at 700 San Jacinto Blvd. Austin, Texas 78701.
At the meeting, stockholders will vote on a number of important matters.
Please take the time to carefully read each of the proposals described in
the attached proxy statement. Your vote is important, regardless of the
number of shares you own. On behalf of the Board of Directors, I urge you
to mark, sign and return the enclosed proxy card as soon as possible, even
if you plan to attend the annual meeting. You may, of course, revoke your
proxy by notice in writing to the Corporate Secretary at any time before
the proxy is voted.
Thank you for your support of Classic Communications, Inc.
Sincerely,
J. Merritt Belisle
Chief Executive Officer
- -----------------------------------------------------------------------------
THIS PROXY STATEMENT AND THE ACCOMPANYING PROXY CARD
ARE BEING MAILED TO OUR STOCKHOLDERS BEGINNING ABOUT
MAY 12, 2000.
[CLASSIC COMMUNICATONS, INC. LOGO]
CLASSIC COMMUNICATIONS, INC.
515 CONGRESS AVENUE, SUITE 2626
AUSTIN, TEXAS 78701
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON JUNE 28, 2000
Dear Stockholder:
The 2000 annual meeting of stockholders of Classic Communications, Inc.
will be held on Wednesday, June 28, 2000 at 9:00 a.m. CST at the Omni
Austin Hotel - Downtown located at 700 San Jacinto Blvd. Austin, Texas
78701.
At the meeting, stockholders will be asked to
o elect one Class I director,
o ratify the selection of our independent auditors for 2000, and
o consider any other business properly brought before the meeting.
Stockholders who owned shares of our voting common stock at the close of
business on May 1, 2000 are entitled to vote at the annual meeting. A list
of these stockholders will be available during regular business hours at
our corporate offices, 515 Congress Avenue, Suite 2626, Austin, Texas
before the annual meeting.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE.
By order of the Board of Directors
Bryan D. Noteboom
Corporate Secretary
May 12, 2000
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT
THE PROXY MATERIALS AND
THE ANNUAL MEETING..................................................4
HOW WE HAVE DONE.........................................................6
Cumulative total return.............................................6
STOCK OWNERSHIP..........................................................7
ELECTION OF DIRECTOR.....................................................8
The nominee..........................................................8
The remainder of our
Board of Directors................................................9
OUR GOVERNANCE .........................................................12
Meetings of the Board of
Directors........................................................12
Committees of the Board
of Directors.....................................................12
Compensation committee
interlocks and insider
participation....................................................13
Directors' compensation.............................................13
EXECUTIVE COMPENSATION..................................................14
Report of the compensation
committee........................................................14
Compensation tables
and stock plans..................................................16
Employment agreements and
1999 non-qualified stock option
grants...........................................................22
Certain relationships and related
transactions.....................................................23
RATIFICATION OF INDEPENDENT
AUDITORS............................................................25
SUBMISSION OF FUTURE
STOCKHOLDER PROPOSALS...............................................25
COST OF ANNUAL MEETING AND
PROXY SOLICITATION..................................................26
SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING.................................................26
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND
THE ANNUAL MEETING
WHO IS SOLICITING MY VOTE?
Our Board of Directors is soliciting your vote at the 2000 annual meeting
of our stockholders.
WHAT WILL I BE VOTING ON?
o The election of one Class I director (see page 8).
o Ratification of PricewaterhouseCoopers LLP as our independent auditors
for 2000 (see page 25).
HOW MANY VOTES DO I HAVE?
You will have one vote for every share of our Class A voting common stock
and ten votes for every share of our Class B voting common stock you owned
on May 1, 2000 (the record date). Because holders of our nonvoting common
stock are not generally entitled to vote and no resolution is proposed for
the meeting for which a vote of our nonvoting common stock is required by
law, holders of the nonvoting common stock are not entitled to vote at the
meeting. The enclosed proxy statement is being sent to holders of nonvoting
common stock for information purposes only.
HOW MANY VOTES CAN BE CAST BY ALL STOCKHOLDERS?
Approximately 83,778,124, consisting of
o one vote for each of our approximately 10,192,214 shares of Class A
voting common stock that were outstanding and
o ten votes for each of our approximately 7,358,591 shares of Class B
voting common stock that were outstanding.
Our Class A voting common stock and our Class B voting common stock will
vote as a single class on all matters scheduled to be voted on at the
annual meeting. There is no cumulative voting.
HOW MANY VOTES MUST BE PRESENT TO HOLD THE MEETING?
A majority of the votes that can be cast, or approximately 41,889,063
votes. We urge you to vote by proxy even if you plan to attend the annual
meeting, so that we will know as soon as possible that enough votes will be
present for us to hold the meeting.
DOES ANY SINGLE STOCKHOLDER CONTROL AS MUCH AS 5% OF ANY CLASS OF CLASSIC'S
STOCK?
Yes. Brera Classic, LLC, owns approximately 37.0% of our outstanding voting
common stock, representing an approximate 77.5% voting interest.
Additionally, J. Merritt Belisle, our Chief Executive Officer, and Steven
E. Seach, our President and Chief Financial Officer, each have an
approximate 5.4% voting interest.
HOW DO I VOTE?
You can vote either in person at the annual meeting or by proxy without
attending the annual meeting.
To vote by proxy, you must fill out the enclosed proxy card, date and sign
it, and return it in the enclosed postage-paid envelope.
If you want to vote in person at the annual meeting, and you hold your
Classic stock through a securities broker (that is, in street name), you
must obtain a proxy from your broker and bring that proxy to the meeting.
CAN I CHANGE MY VOTE?
Yes. Just send in a new proxy card with a later date or send a written
notice of revocation to our Corporate Secretary at the address on the cover
of this proxy statement. If you attend the annual meeting and want to vote
in person, you can request that your previously submitted proxy not be
used.
WHAT IF I DON'T VOTE FOR SOME OF THE MATTERS LISTED ON MY PROXY CARD?
If you return a signed proxy card without indicating your vote, your shares
will be voted for the nominee listed on the card and for PricewaterhouseCoopers
LLP as our auditors for 2000.
WHAT IF I VOTE TO "ABSTAIN"?
A vote to "abstain" on any matter will have the effect of a vote against
the matter.
CAN MY SHARES BE VOTED IF I DON'T RETURN MY PROXY CARD AND DON'T ATTEND THE
ANNUAL MEETING?
If you don't vote your shares held in street name, your broker can vote
your shares on any of the matters scheduled to come before the meeting.
If you don't vote your shares held in street name, and your broker doesn't
vote them, the votes will be broker nonvotes, which will have no effect on
the vote for any matter scheduled to be considered at the annual meeting.
If you don't vote your shares held in your name, your shares will not be
voted.
COULD OTHER MATTERS BE DECIDED AT THE ANNUAL MEETING?
We don't know of any other matters that will be considered at the annual
meeting. If a stockholder proposal that was excluded from this proxy
statement is brought before the meeting, we will vote the proxies against
the proposal. If any other matters arise at the annual meeting, the proxies
will be voted at the discretion of the proxy holders.
WHAT HAPPENS IF THE MEETING IS POSTPONED OR ADJOURNED?
Your proxy will still be valid and may be voted at the postponed or
adjourned meeting. You will still be able to change or revoke your proxy
until it is voted.
---------------------------
HOW WE HAVE DONE
CUMULATIVE TOTAL RETURN
The following performance graph compares the cumulative total stockholder
return of our Class A voting common stock with the Standard and Poor's 500
Stock Index, otherwise referred to as the S&P 500 Index and a Peer Index
from market close on December 7, 1999, the date of our initial public
offering. The S&P 500 tracks the aggregate price performance of the equity
securities of 500 United States companies selected by Standard & Poor's
Index Committee to include leading companies in leading industries and to
reflect the United States stock market. The Peer Index, included to reflect
more accurately our peers in the cable television industry, is comprised of
Cox Communications, Charter Communications, Adelphia Communications and
Insight Communications.
The following graph is based on the assumption that $100 was invested in
each of our Class A voting common stock, the S&P 500 Index and the Peer
Index on December 7, 1999. The comparisons in this graph are set forth in
response to Securities and Exchange Commission disclosure requirements, and
therefore are not intended to forecast or be indicative of future
performance of our Class A voting common stock.
COMPARISON OF CUMULATIVE TOTAL RETURN ON INVESTMENT
FROM DECEMBER 7, 1999 THROUGH DECEMBER 31, 1999
[Graph Appears Here]
12/8/99 12/31/99
Classic Communications, Inc. . . . . . . . 100 121
Peer Index . . . . . . . . . . . . . . . . 100 111
S&P 500 . . . . . . . . . . . . . . . . . 100 105
STOCK OWNERSHIP
The following table shows the beneficial ownership of our Class A voting
common stock and our Class B voting common stock held by (1) our current
directors and the nominee for director, (2) certain executive officers, (3)
all of our current directors and officers as a group and (4) holders known
to us of at least 5% of any class of our common stock.
<TABLE>
<CAPTION>
PERCENT OF VOTE
CLASS A VOTING CLASS B VOTING AS A SINGLE
BENEFICIAL OWNERS (1) COMMON STOCK COMMON STOCK CLASS (2)
- ---------------------- -------------- -------------- ---------------
<S> <C> <C> <C>
Brera Classic............................... -- 6,490,734 73.3%
Janus Capital Corporation (3)............... 600,200 -- *
Capital Group International, Inc. and
Capital Guardian Trust Company (4)........ 1,087,500 -- *
T. Rowe Price Associates, Inc. (5).......... 789,200 -- *
J. Merritt Belisle (6)...................... -- 475,175 5.4
Steven E. Seach (7)......................... -- 475,175 5.4
Dale R. Bennett............................. -- -- *
Ronald W. Martin............................ 1,000 -- *
Elizabeth Kay Monigold...................... 3,000 -- *
Lisa A. Hook................................ -- -- *
Alberto Cribiore (8)........................ -- 6,490,734 73.3
David Webb.................................. -- -- *
Jeffery C. Garvey (9)....................... -- 46,888 *
James Kofalt................................ -- -- *
Martin Payson............................... 5,000 -- *
All directors and executive officers as a group (11
persons).................................. 9,000 7,487,972 84.5%
- ------------
* Less than 1%
(1) The address for Brera Classic and Alberto Cribiore is 712 Fifth
Avenue, 34th Floor, New York, New York 10019. The address for J.
Merritt Belisle, Steven E. Seach, Dale R. Bennett, Ronald W. Martin,
Elizabeth Kay Monigold, Jeffery C. Garvey, Lisa A. Hook, James Kofalt,
Martin Payson and David Webb is c/o Classic Cable, Inc., 515 Congress
Ave., Suite 2626, Austin, Texas 78701. Unless otherwise indicated
below, the persons and entities named in the table above have sole
voting and sole investment power with respect to all shares
beneficially owned, subject to community property laws, where
applicable.
(2) Each share of Class A voting common stock entitles its holder to one
vote and each share of Class B voting common stock entitles its holder
to ten votes. Holders of both classes of voting common stock will vote
together as a single class on all matters to be presented for a vote
of stockholders, unless otherwise required by law. Excludes nonvoting
common stock.
(3) As reported by Janus Capital Corporation in its Schedule 13G filed
with the SEC on February 16, 2000. The address for Janus Capital
Corporation is 100 Fillmore Street, Denver, Colorado 80206.
(4) As reported by Capital Group International, Inc and Capital Guardian
Trust Company, collectively referred to as Capital, in their Schedule
13G/A filed with the SEC on March 10, 2000. The address for Capital is
11100 Santa Monica Blvd., Los Angeles, CA 90025.
(5) As reported by T. Rowe Price Associates, Inc. i its Schedule 13G filed
with the SEC on February 4, 2000. The address for T. Rowe Price
Associates, Inc. is 100 E. Pratt Street, Baltimore, Maryland 21202.
(6) Mr. Belisle's totals include 230,313 shares of Class B voting common
stock purchasable within 60 days of April 10, 2000 pursuant to the
exercise of options.
(7) Mr. Seach's totals include an option to purchas 230,313 shares of
Class B voting common stock purchasable within 60 days of April 10,
2000 pursuant to the exercise of options.
(8) Alberto Cribiore is a director of Classic and a manager of Brera
Classic. Mr. Cribiore is not the registered holder of any shares and
disclaims the beneficial ownership of the shares listed above except
to the extent of his indirect interest in the assets of the nominal
stockholder, if any.
(9) Jeffery C. Garvey is a general partner of Austin Ventures, L.P., a
stockholder of Classic holding 46,888 shares of Class B voting common
stock and a party to the 1999 Stockholders' Agreement. Mr. Garvey is
not the registered holder of any shares and disclaims the beneficial
ownership of the shares listed above except to the extent of his
indirect interest in the assets of the nominal stockholder, if any.
---------------------------
</TABLE>
ELECTION OF DIRECTOR
THE NOMINEE
The Board of Directors has nominated Steven E. Seach, a current Class I
director, for re-election at the 2000 annual meeting. The initial term of
both of Classic's Class I directors expire at the annual meeting. One Class
I vacancy will exist after the annual meeting. Due to policies of Mr.
Webb's current employer regarding serving as an outside director, Mr. Webb
was not re- nominated to serve as a Class I director.
Directors will be elected by a plurality of the votes cast. Since only one
nominee has been named, proxies cannot be voted for more than one person.
The resulting Class I director vacancy will be filled in the future
pursuant to and in accordance with our By- Laws.
The following table gives information-- provided by the nominee--about his
principal occupation, business experience and other matters.
<TABLE>
<CAPTION>
THE BOARD RECOMMENDS THAT YOU
VOTE FOR THE FOLLOWING NOMINEE.
NAME AND AGE AT RECORD DATE POSITION, PRINCIPAL OCCUPATION, BUSINESS
EXPERIENCE AND DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------------
<S> <C>
STEVEN E. SEACH, 43 Mr. Seach, our President and Chief Financial
Officer and a director, assisted Mr. Belisle in our
founding in March 1992. Mr. Seach became a
member of our Board of Directors in 1998. Mr.
Seach became our President in October 1996 and,
through August 1998, was substantially
responsible for our operations. From March 1992
to June 1994, Mr. Seach served as an advisor to us
and our Board of Directors for strategic,
operational and financial matters. Mr. Seach
became our Chief Financial Officer in July 1994.
Prior to his association with us, Mr. Seach spent 12
years in the corporate banking and investment
banking industries, primarily with Texas
Commerce Bank, N.A., Houston, Texas. Mr.
Seach received a BBA in finance from the
University of Houston in 1980. He is currently a
director of The Keller Group and serves as one of
our directors pursuant to our 1999 Stockholders'
Agreement.
</TABLE>
THE REMAINDER OF OUR BOARD OF DIRECTORS
The following table gives information -- provided by the directors -- about
their principal occupation, business experience and other matters.
<TABLE>
<CAPTION>
NAME AND AGE AT RECORD DATE POSITION, PRINCIPAL OCCUPATION, BUSINESS
EXPERIENCE AND DIRECTORSHIP
- ----------------------------------------------------------------------------------------------------------
<S> <C>
ALBERTO CRIBIORE, 54 Mr. Cribiore is the founder and Managing
Principal of Brera Capital Partners, and was
appointed Chairman of our Board of Directors
upon the closing of an equity investment in us by
Brera Classic, a subsidiary of Brera Capital
Partners. Prior to forming Brera in 1997, Mr.
Cribiore was Co-President and Partner at Clayton,
Dubilier & Rice, Inc. which he joined in 1985 as
one of three principal shareholders. He had
previously been a Senior Vice President at Warner
Communications, where he was responsible for
mergers, acquisitions and divestitures. Mr.
Cribiore is a cum laude graduate of Bocconi
University in Milan, Italy and holds degrees in
Business Administration and Economics. He is
currently a Director of Riverwood International
Corporation and Hansberger Group, Inc. Mr.
Cribiore also serves as the Chairman of the Board
of Directors of Global Decisions Group, LLC, the
parent company of Cambridge Energy Research
Associates, MCM Group, Inc. and Brera GAB
Robbins, LLC. He is also currently Co-Chairman
of the Board of Directors of B-G Western, Inc., the
parent of Western Industries, Inc., and a member
of the Board of Directors of Western Industries,
Inc. Mr. Cribiore serves as one of Brera Classic's
designees to our Board of Directors.
J. MERRITT BELISLE, 44 Mr. Belisle is our Chief Executive Officer and a
director, and founded our company in March 1992.
From January 1988 through August 1991, he was a
Vice President at Texas Commerce Investment
Banking, a division of Texas Commerce Bank,
N.A., Houston, Texas. From April 1985 to
January 1988, Mr. Belisle was Chief Executive
Officer of Community Cable Incorporated, a small
multi-system cable television operator based in
Austin, Texas. Community Cable was sold to a
cable television subsidiary of Time Warner, Inc.
Prior to founding Community Cable, Mr. Belisle
was a corporate and securities attorney with the
Houston office of Baker & Botts. Mr. Belisle
received a BBA in 1977, an MPA in 1980, and a
JD in 1981 from The University of Texas at
Austin. Mr. Belisle serves as one of our directors
pursuant to his position as our Chief Executive
Officer.
LISA A. HOOK, 42 Ms. Hook was appointed as one of our directors
upon the closing of the Brera Classic equity
investment. Since April 2000, Ms. Hook has been
President of the Wireless Business Unit of
America Online, Inc. She was a principal of Brera
Capital Partners from May 1998 to April 2000.
Prior to joining Brera Capital Partners in 1998,
Ms. Hook was a Managing Director of Alpine
Capital Group, a telecommunications and media
venture capital firm. From 1989 to 1996, Ms.
Hook served in a number of senior executive level
positions at Time Warner Inc., including Executive
Vice President/Chief Operating Officer of Time
Warner Telecom and Special Advisor to the Vice
Chairman. From 1987 to 1989, Ms. Hook served
as the Legal Advisor to the Chairman of the
Federal Communications Commission. From 1985
to 1987, Ms. Hook served as a senior attorney at
Viacom International, responsible for Viacom
Cable. Prior to joining Viacom, Ms. Hook was an
attorney with the law firm of Hogan & Hartson.
Ms. Hook received her BA from Duke University
and her JD from the Dickinson School of Law. Ms.
Hook serves as one of Brera Classic's designees to
our Board. She is currently a director of Time
Warner Telecom, Inc. and Roberts Radio LLC.
MARTIN D. PAYSON, 64 Until April 2000, Mr. Payson was the Chairman of
Latin Communications Group, Inc., a privately-
held Spanish language media company, and was
appointed as one of our directors upon the closing
of the Brera Classic equity investment. Previously,
Mr. Payson was Vice Chairman of Time Warner
Inc. and a member of its Board of Directors.
Before the merger of Warner Communications Inc.
and Time, Inc., Mr. Payson held the position of
Office of the President and General Counsel of
Warner Communications. Mr. Payson is a director
of Delta Financial Corp. and Panavision Inc., as
well as several privately-held companies and
philanthropic organizations. Mr. Payson received
his AB from Cornell University and his LLB cum
laude from New York University School of Law.
Mr. Payson serves as one of Brera Classic's
designees to our Board.
JEFFERY C. GARVEY, 51 Mr. Garvey is a general partner of Austin
Ventures, L.P., and was appointed as one of our
directors in November 1999. He was also one of
our directors from July 1992 to July 28, 1999. Mr.
Garvey has been general partner of Austin
Ventures, L.P. since 1984. Mr. Garvey is currently
a director of CelPage and Kirtland Capital
Partners. From 1979 through 1986, Mr. Garvey
was the Executive Vice President and President of
Rust Capital, Ltd, a small business investment
company. Prior to that, Mr. Garvey was an officer
with PNC Bank in Philadelphia. Mr. Garvey
received his BA with honors from St. Lawrence
University in 1971.
JAMES A. KOFALT, 57 Mr. Kofalt was appointed as one of our directors in
November 1999. Mr. Kofalt has held various
management positions at Cablevision Systems
Corporation, including Chief Operating Officer
from 1990 to 1992 and President and Chief
Operating Officer from 1992 to 1994. He is a
former Chairman of the Boards of Directors of
Campuslink Communications Systems, Inc., from
1995 to 1999, and Optel, Inc., from 1995 to 1996.
Mr. Kofalt is currently a director of PaeTec Corp.
and Correctnet Global Information Solutions, Inc.
and a member of the Board of Visitors of the
Lineberger Comprehensive Cancer Research
Center at the University of North Carolina. Mr.
Kofalt received his B.S. from the United States
Military Academy at West Point.
</TABLE>
---------------------------
OUR GOVERNANCE
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met two times in 1999. Each director attended at
least 75 percent of the total number of meetings of the Board of Directors
and Board committees of which he or she was a member in 1999.
COMMITTEES OF THE BOARD OF DIRECTORS
The standing committees of the Board of Directors are:
The audit committee, which reviews the internal accounting procedures and
considers and reports to the Board of Directors with respect to other
auditing and accounting matters, including the selection of independent
auditors, the scope of annual audits, fees to be paid to independent
auditors and the performance of independent auditors. The audit committee
is currently comprised of Mr. Webb, Mr. Payson and Mr. Kofalt.
The compensation committee, which reviews and recommends to the Board of
Directors the salaries, benefits and stock option grants of all employees,
consultants, directors and other individuals compensated by us. The
compensation committee also administers the stock option and other employee
benefit plans. The compensation committee is currently comprised of Ms.
Hook, Mr. Garvey and Mr. Payson.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Historically, all compensation decisions relating to our executive officers
have been made by our Board of Directors as a whole. J. Merritt Belisle,
our Chief Executive Officer, and Steven E. Seach, our President and Chief
Financial Officer, as Board members, historically participated in
deliberations of the Board of Directors with respect to compensation of all
executive officers. In the future, our compensation committee will make all
compensation decisions regarding our executive officers. No interlocking
relationship exists between the compensation committee and the Board of
Directors or compensation committee of any other company, and no such
relationship existed in the past.
DIRECTORS' COMPENSATION
Our directors who are not executive officers will each be paid $15,000 as
compensation for their service as members of our Board of Directors for the
year 2000. In August 1999, Mr. Martin Payson, who is currently a member of
our Board of Directors, was granted an option to purchase 7,000 shares of
our Class A voting common stock at an exercise price of $20 per share. Mr.
James A. Kofalt, who was appointed to our Board in November 1999, was
granted an option on December 7, 1999 to purchase 8,000 shares of our Class
A voting common stock at an exercise price of $25 per share, which was the
initial offering price to the public per share of our Class A voting common
stock in our initial public offering. In February 2000, each of Mr. Jeffery
C. Garvey, who is currently a member of our Board of Directors, Mr. Kofalt
and Mr. Payson were granted options to purchase 3,000 shares of our Class A
voting common stock at an exercise price of $20.875 per share, which was
the closing price per share of our Class A voting common stock on March 3,
2000. These options have a 10- year term and vest in 25% increments on each
anniversary date of the grant over four years.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
COMMITTEE RESPONSIBILITIES. The compensation committee of the Board of
Directors is responsible for making recommendations to the Board of
Directors on issues relating to the compensation of executive officers.
During the five months ended December 31, 1999, the compensation committee
was composed of one non- employee director, Lisa Hook, and two "outside
directors" (as defined in Section 162(m) of the Internal Revenue Code),
Martin Payson and James Kofalt.
COMPENSATION PHILOSOPHY AND ELEMENTS. The compensation committee recognizes
that the compensation of executive officers should be established at levels
which are consistent with Classic's objectives and achievements. However,
no part of executive compensation is strictly tied to statistical operating
performance criteria. The principal forms of executive compensation used by
Classic are base salary, bonuses, and stock options, and, for certain
executives, split-dollar (whole) life insurance policies. Classic seeks to
achieve a mix of these various forms of compensation which will properly
compensate and motivate its executives on an individual basis commensurate
with their relative levels of responsibility.
In July 1999, each of Merritt Belisle, Classic's Chief Executive Officer,
Steven Seach, Classic's Chief Financial Officer, Ronald Martin, Classic's
Executive Vice President of Operations, and Elizabeth Kay Monigold, our
Executive Vice President of Administration entered into an employment
agreement with Classic, which fixed the initial annual base salary of each
executive. Under the employment agreements, the compensation committee has
the ability to increase the base salary as the compensation committee deems
appropriate to adequately reflect the scope and success of Classic's
operations. Under the agreements, the executives may also be granted bonus
compensation in amounts to be determined by the compensation committee from
time to time, and for certain de minimis fringe benefits. For more
information relating to these employment agreements, see the text under the
caption "Employment Agreements and 1999 Non-Qualified Stock Option Grants."
PRINCIPAL EXECUTIVE COMPENSATION. With respect to compensation of executive
officers of Classic other than the Chief Executive Officer (the "Principal
Executives"), the compensation committee receives and accords significant
weight to the input of the Chief Executive Officer. The compensation
committee believes that the annual base salaries and bonuses of the
principal executives have been consistent with the annual base salaries and
bonuses paid to corresponding principal executives of most other
publicly-held cable system operators and other telecommunications firms,
and remain relatively constant compared to increases made in the annual
base salaries of principal executives of such other corporations over the
past five years. Increases in annual base salary from fiscal 1998 were
immaterial with respect to the Principal Executives. The compensation
committee believes that the annual base salaries and overall compensation
packages of the Principal Executives continue to be set consistent with
those paid to corresponding Principal Executives of other publicly-held
cable system operators and telecommunications firms.
The compensation committee has recognized the success of the Principal
Executives in accomplishing Classic's various strategic objectives. Classic
has continued to refinance its shorter-term debt at the level of the
operating subsidiaries with longer-term fixed rate debt and new equity
infusions at the parent level, and with new revolving credit facilities and
public fixed rate debt at the operating subsidiary level. These actions
extend the maturities of Classic's long-term debt and increase
Classic's overall longer-term liquidity and flexibility to obtain
financing, which in turn will assist Classic in meeting the challenges of
achieving growth while facing increased competition and regulation within
the telecommunications industry. In addition, Classic has made strategic
acquisitions of existing cable systems, contributing to increases in cash
flow, and has continued to develop and expand its other product and service
offerings, such as digital video and high-speed data services. Classic has
also continued to focus its efforts on other methods of increasing cash
flow and on providing superior customer service while realizing operating
efficiencies and cost- savings. Based upon its evaluation of these and
other relevant factors, the compensation committee is satisfied that the
Principal Executives have contributed positively to Classic's long-term
financial performance, and the compensation committee, in consultation with
Classic's Chief Executive Officer, has set compensation under the
employment agreements accordingly.
CEO COMPENSATION. The annual base salary of J. Merritt Belisle, the Chief
Executive Officer, is determined by the compensation committee in
accordance with Mr. Belisle's employment agreement. Over the past five
months, the compensation committee has recognized Mr. Belisle's success in
achieving the strategic objectives mentioned above with respect to the
Principal Executives, and has also recognized Mr. Belisle's leadership and
vision in formulating strategies for responding to the challenges of
increased regulation and increasing competition, and for positioning
Classic for growth in a regulated environment. Based on its survey of
compensation data for other companies, the compensation committee believes
that Mr. Belisle's annual base salary and overall compensation package is
consistent with the compensation packages (including salary, bonus, options
and deferred compensation) paid to chief executive officers of many other
publicly-held cable system operators and other telecommunications firms.
DEDUCTIBILITY OF CERTAIN EXECUTIVE COMPENSATION. During 1999, the
compensation committee awarded stock options to each of the named executive
officers. Such option grants were generally based on a proportional
relationship to the recipients' base salary and were generally consistent
with options granted at the same time to other Principal Executives.
Section 162(m) of the Internal Revenue Code limits the deductibility of
compensation in excess of $1 million paid to the executive officers named
in this proxy statement, unless certain requirements are met. It is the
present intention of the compensation committee to preserve the
deductibility of compensation under Section 162(m) to the extent the
committee believes that doing so would be consistent with the best
interests of stockholders. As such, bonus payments and long-term incentive
compensation awards, particularly stock options, generally are designed to
meet the requirements for deductibility under Section 162(m).
The compensation committee:
Lisa A. Hook
Jeffery C. Garvey
Martin D. Payson
COMPENSATION TABLES AND STOCK PLANS
The tables on pages 17 to 18 profile our compensation for the Chief
Executive Officer, and our two other most highly compensated executive
officers whose total compensation exceeded $100,000 in the years indicated,
including salaries and bonuses paid during the last two years and 1999
option grants and exercises. The form of the tables is set by SEC
regulations.
SUMMARY EXECUTIVE COMPENSATION TABLE
The following table shows the compensation of the covered executives for
1998 and 1999.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------------------- --------------------------------------------------
RESTRICTED SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS ($) COMPENSATION AWARDS(S)(1)(2) OPTIONS(#) COMPENSATION($)(3)
- -------- ---- --------- --------- ------------ --------------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Merritt Belisle 1999 $298,077 $ 2,305,782(4) (5) $ 0 559,748 $4,317
Chief Executive 1998 $200,000 $ 361,539(6) (5) $ 49,609 0 $4,286
Officer
Steven E. Seach 1999 $350,000 $ 2,200,000(7) (5) $ 0 559,748 $5,000
President and Chief 1998 $277,084 $ 258,302(8) (5) $659,471 0 $5,000
Financial Officer
Kevin McCabe (9) 1999 $142,500 $ 0 (5) $ 0 0 $2,825
Executive Vice 1998 $ $ 0 (5) $ 0 0 $ 0
President and Chief
Accounting Officer
- -------------------
(1) Our executive officers received restricted stock during 1996
under the 1996 Stock Restricted Plan. On July 29, 1998, Messrs.
Belisle and Seach held 229,050 shares and 67,283 shares of
restricted stock, respectively, and each of Messrs. Belisle and
Seach exchanged their existing shares of restricted stock for
242,209 new shares of restricted stock under the 1998 Restricted
Stock Plan with revised vesting terms and other restrictions.
Long-term compensation amounts are calculated by multiplying the
number of 1998 restricted shares issued by the per share value
of our unrestricted stock as of the date of issuance, less an
amount equal to the number of 1996 restricted shares exchanged
therefor multiplied by the per share value of our unrestricted
stock on the date of issuance.
(2) As of December 31, 1999, Messrs. Belisle and Seach each owned
242,209 restricted shares of our common stock. The total value
of all restricted stock owned by Messrs. Belisle and Seach was
approximately $8.9 million each, computed without taking into
consideration any of the restrictions. These shares vested upon
the consummation of the Brera Classic equity investment. Messrs.
Belisle and Seach are entitled to dividends in respect of these
shares in the same manner as the holders of common stock, but
only to the extent that such dividends exceed the distribution
thresholds applicable thereto.
(3) Represents our contribution under our 401(k) plan.
(4) Includes (a) $780,000 paid to Mr. Belisle under his former
employment agreement in connection with the consummation of the
Brera Classic equity investment, (b) $1.5 million paid to Mr.
Belisle under such agreement in connection with the consummation
of the Buford acquisition and (c) $25,782 paid to Mr. Belisle
under such agreement in connection with a smaller acquisition.
(5) Such executive officer did not receive personal benefits during
the listed years in excess of the lesser of $50,000 or 10% of
his annual salary and bonus.
(6) Includes a transaction fee of $300,000 paid pursuant to a
pre-existing employment agreement in connection with the
acquisition of certain properties from Cable One in July 1998,
and the related financings.
(7) Includes (a) $700,000 paid to Mr. Seach under his former
employment agreement in connection with the consummation of the
Brera Classic equity investment and (b) $1.5 million paid to Mr.
Seach under such agreement in connection with the consummation
of the Buford acquisition in July 1999.
(8) Includes a transaction fee of $250,000 paid pursuant to a
pre-existing employment agreement in connection with the
acquisition of certain properties from Cable One in July 1998,
and the related financings.
(9) Mr. McCabe joined us on February 1, 1999 and resigned effective
October 15, 1999.
</TABLE>
- -------------------
STOCK OPTIONS GRANTED TABLE
The following table shows 1999 stock option grants to the covered
executives. The value of stock options depends upon a long-term increase in
the market price of the common stock: if the stock price does not increase,
the options will be worthless; if the stock price does increase, the
increase will benefit all stockholders.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(3)
--------------------------------------------------- --------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED (#) FISCAL YEAR PRICE($) DATE 5% 10%
- ---- ----------- ------------- -------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
J. Merritt Bellisle..... 279,874(1) 16.3% $14.57 7/28/09 $2,564,484 $ 6,498,906
279,874(2) 16.3% $25.00 7/28/09 $4,400,281 $11,151,177
Steven E. Seach......... 279,874(1) 16.3% $14.57 7/28/09 $2,564,484 $ 6,498,906
279,874(2) 16.3% $25.00 7/28/09 $4,400,281 $11,151,177
Kevin McCabe............ -- -- $ -- -- $ -- $ --
- --------------------
(1) Option is for Class B voting common stock. Options vest monthly
over a three-year period which began July 28, 1999. In addition,
all of the shares will vest in full immediately upon the closing
of (a) the sale of all of our common stock for cash, by merger,
tender offer, stock purchase or otherwise or (b) the sale of all
or substantially all of our assets for cash. Upon the closing of
our initial public offering, 139,937 of these shares vested and
the remaining shares continue to vest as described in the previous
two sentences. Options granted are incentive stock options or
nonqualified stock options and have exercise prices equal to the
fair market value of common stock on the date of grant, as
determined by the Board of Directors on the date of grant.
(2) Option is for Class B voting common stock. Options vest monthly
over a three-year period which began December 8, 1999. In
addition, all of the shares will vest in full immediately upon the
closing of (a) the sale of all of our common stock for cash, by
merger, tender offer, stock purchase or otherwise or (b) the sale
of all or substantially all of our assets for cash. Options
granted are incentive stock options or nonqualified stock options
and have exercise prices equal to the fair market value of common
stock on the date of grant, as determined by the Board of
Directors on the date of grant.
(3) The 5% and 10% rates of appreciation are specified by the rules of
the SEC and do not represent our estimates or projections of our
future stock prices.
</TABLE>
- -------------------
YEAR-END OPTION VALUES
The following table shows the value at year-end of outstanding options for
the covered executives, whether or nor exercisable. Also reported are
values for "in-the-money" options, which represent the positive spread
between the respective exercise prices of outstanding stock options and the
fair market value of our stock as of December 31, 1999. No options were
exercised during the year ended December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE
UNDERLYING UNEXERCISED OPTIONS MONEY OPTIONS AT
AT FISCAL YEAR-END (#) FISCAL YEAR-END($)(1)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
J. Merritt Belisle............. 174,435 105,439 $3,836,349 $2,318,920
0 279,874 $ 0 $3,236,183
Steven E. Seach................ 174,435 105,439 $3,836,349 $2,318,920
0 279,874 $ 0 $3,236,183
Kevin McCabe................... 0 0 $ 0 $ 0
- -------------------
(1) Market value of underlying securities based on the closing price
of our Class A voting common stock on December 31, 1999 (the last
trading day of fiscal 1999) on the Nasdaq National Market of
$36.563 minus the exercise price.
</TABLE>
- -------------------
1996 RESTRICTED STOCK PLAN
Certain current and former members of management own our restricted stock
subject to the terms of our 1996 Restricted Stock Plan. Pursuant to the
1996 Plan, we may, from time to time, grant restricted stock to our
officers and other key employees or our subsidiaries upon the terms,
conditions and provisions of the 1996 Plan. Concurrent with the adoption of
the 1996 Plan, we granted a total of 517,626 shares of common stock as of
such date, of which only 144,940 shares were outstanding as of December 31,
1999. These shares vested upon the consummation of the Brera Classic equity
investment. One-half of such shares of common stock is subject to a
distribution threshold equal to $9.93 per share, i.e., the first $9.93 of
distributions with respect to such shares is to be withheld. One-fourth of
the shares is subject to a distribution threshold of $19.06 per share and
one-fourth to a distribution threshold of $29.78 per share.
1998 RESTRICTED STOCK PLAN
We have adopted the 1998 Restricted Stock Plan. The terms of the 1998 Plan
are similar in all material respects to the 1996 Plan. In July 1998, each
of Messrs. Seach and Belisle exchanged all of his existing shares under the
1996 Plan for 242,209 shares of our common stock pursuant to the 1998 Plan.
These shares vested upon the consummation of the Brera Classic equity
investment. All of such shares of common stock are subject to a
distribution threshold equal to $3.77 per share, i.e., the first $3.77 of
distributions with respect to such shares is to be withheld.
1999 OMNIBUS STOCK INCENTIVE PLAN
The following description of our 1999 Omnibus Stock Incentive Plan is a
summary and is qualified in its entirety by reference to the text of the
1999 Omnibus Stock Incentive Plan, which is filed as an exhibit to our
annual report on Form 10-K.
Our 1999 Omnibus Stock Incentive Plan was adopted by our Board of Directors
in October 1999 for the benefit of and our subsidiaries' officers,
directors, key employees, advisors and consultants. An aggregate of
2,000,000 shares of our Class A voting common stock is reserved for
issuance under the plan. The plan provides for the issuance of stock-based
incentive awards, including stock options, stock appreciation rights,
restricted stock, deferred stock and performance shares. An award may
consist of one or any combination of benefits. Under this plan, awards
covering no more than 80% of the shares reserved for issuance under the
plan may be granted to any participant in any one year.
The plan is administered by the compensation committee of our Board of
Directors, although it may be administered by either our Board of Directors
or by any committee of our Board of Directors. Our Board or a committee of
our Board, acting as the plan administrator, may interpret this plan, may
prescribe, amend and rescind rules governing the plan, and may otherwise
supervise the administration of this plan. This plan permits the plan
administrator to select the officers, directors, key employees, advisors
and consultants, including directors who are also employees, who will
receive awards and generally to determine the terms and conditions of those
awards. Notwithstanding the foregoing, the grant of any award intended to
qualify as performance-based compensation under Section 162(m) of the
Internal Revenue Code, and any administrative determinations made in
connection therewith, must be carried out by a committee of the Board or a
Board committee, consisting of at least two "outside directors," as defined
under Section 162(m), in a manner consistent with the rules governing
performance-based compensation under Section 162(m).
We may issue two types of stock options under this plan: incentive stock
options or ISO's, which are intended to qualify for favorable tax treatment
under the Code, and non-qualified stock options. The option price of each
ISO granted under this plan must be at least equal to the fair market value
of a share of our Class A voting common stock on the date the ISO is
granted.
Stock appreciation rights, or SARs, may be granted under this plan either
alone or in conjunction with all or part of any stock option granted under
this plan. An SAR granted under this plan entitles its holder to receive,
at the time of exercise, an amount per share equal to the excess of the
fair market value, at the date of exercise, of a share of our Class A
voting common stock over a specified price fixed by the plan administrator.
Restricted stock, deferred stock and performance shares may be granted
under this plan. The plan administrator will determine the purchase price,
performance period and performance goals, if any, for any grant of
restricted stock, deferred stock and performance shares. Participants with
restricted stock and performance shares generally have all of the rights of
a stockholder. For deferred stock, during the deferral period and subject
to the terms and conditions that the plan administrator imposes, the
deferred stock units may be credited with dividend equivalent rights. The
plan administrator may, in its discretion, provide for the lapse of these
restrictions in installments and may accelerate or waive these
restrictions, in whole or in part, based on such facts as the attainment of
performance goals or the participant's termination of employment or
service, death or disability.
In the event of a merger, consolidation, reorganization, recapitalization,
stock dividend or other change in corporate structure affecting the number
of issued shares of our Class A voting common stock, the plan administrator
may make an equitable substitution or proportionate adjustment in the
number and type of shares authorized by this plan, and the number and
exercise price of shares subject to outstanding awards. In addition, the
plan administrator, in its discretion, may terminate all awards providing
for payment of cash or in-kind consideration.
In the event we undergo a change of control, unless otherwise determined by
the administrator of the plan or our Board of Directors before the change
of control:
o any stock appreciation rights outstanding for at least six
months and any stock options awarded under the plan not
previously vested will vest in full;
o the restrictions applicable to any restricted stock,
deferred stock or performance share awards under the plan
shall lapse and such shares and awards will vest in full;
and
o any loans by us to a participant of the plan to purchase or
exercise awards under the plan will be forgiven and the
collateral pledged in connection with any such loan shall be
released.
For purposes of the plan, a change of control will be deemed to have
occurred if:
o any person (other than us or any of our subsidiaries, or
certain other related parties as specified in the plan) is
or becomes after the effective date of the plan the
beneficial owner of securities (not including securities
acquired directly from us or our affiliates) representing
50% or more of our voting power;
o upon completion of a merger or consolidation of us with any
other corporation or entity (other than (1) a merger or
consolidation whereby the holders of at least 50% of our
voting power prior to the merger or consolidation continue
to own at least 50% of our voting power or the surviving
entity after the merger or consolidation or (2) a merger or
consolidation that implements a recapitalization of our
capital structure and no person (other than existing
stockholders) acquires more than 50% of our voting power);
or
o upon completion of a plan of complete liquidation of us or
an agreement for the sale or disposition by us of all or
substantially all of our assets.
The terms of this plan provide that our Board of Directors may amend,
suspend or terminate this plan at any time, provided that some amendments
require approval of our stockholders under the Internal Revenue Code of
1986, as amended. Furthermore, no action may be taken that adversely
affects any rights under outstanding awards without the holder's consent.
EMPLOYMENT AGREEMENTS AND 1999 NON-QUALIFIED STOCK OPTION GRANTS
At the closing of the Brera Classic equity investment, J. Merritt Belisle
and Steven E. Seach each entered into an employment agreement with us on
substantially similar terms as their former employment agreements. In
connection with the consummation of the Brera Classic equity investment,
Mr. Belisle was paid $780,000 and Mr. Seach was paid $700,000 under their
former employment agreements. Each of the new employment agreements
provides for their employment with us for a continuing two year period.
Messrs. Belisle and Seach are each to be paid an annual salary of $350,000
per year. Each new employment agreement provides that upon termination by
us without "good cause" (as defined in each agreement) or termination by
the employee for certain reasons, the employee will be entitled to two
years' worth of base compensation and benefits. In addition, Messrs.
Belisle and Seach's employment agreements contain provisions under which we
may be required to purchase and they may be required to sell to us their
shares if their employment is terminated. Each employment agreement also
prohibits the employee from competing with us during his term of employment
and for a period of two years thereafter.
The employment agreements of Messrs. Belisle and Seach in effect prior to
the consummation of the Brera Classic equity investment provided for a
transaction fee of 1% to be paid on the value of all mergers, acquisitions,
or dispositions of assets or subsidiaries by us that were consummated
during their term of employment. Messrs. Belisle and Seach each received a
transaction fee of $1.5 million related to the consummation of the
acquisition of Buford Group, Inc., which occurred on July 28, 1999. The new
employment agreements do not contain a provision for transaction fees to be
paid to Messrs. Belisle and Seach.
Under their option agreements entered into in connection with their
employment agreements, Messrs. Belisle and Seach were each granted a stock
option with a 10-year exercise period to purchase 279,874 shares of our
Class B voting common stock at an exercise price of $14.57 per share, which
will vest monthly over a three-year period which began July 28, 1999. In
addition, all of the shares will vest in full immediately upon the closing
of (1) the sale of all of our common stock for cash, by merger, tender
offer, stock purchase or otherwise or (2) the sale of all or substantially
all of our assets for cash. Upon the closing of our initial public offering
in December 1999, 139,937 of these shares vested and the remaining shares
continue to vest as described in the previous two sentences.
In addition, upon the closing of our initial public offering in December
1999, Messrs. Belisle and Seach each also received a second stock option
with a 10-year exercise period to purchase 279,874 shares of Class B voting
common stock. This option is vesting monthly over a three-year period
commencing on the date of the closing of the initial public offering. In
addition, all of the shares will vest in full immediately upon the closing
of (1) the sale of all of our common stock for cash, by merger, tender
offer, stock purchase or otherwise or (2) the sale of all or substantially
all of our assets. The exercise price of the second option is $25 per
share, which is the initial offering price to the public per share of Class
A voting common stock in our initial public offering.
In addition, we have entered into employment agreements with Ronald W.
Martin and Elizabeth Kay Monigold. These employment agreements relate to
their employment by us as our Executive Vice President of Operations and
the Executive Vice President of Administration, respectively, and each are
for a continuing one-year period. Ronald W. Martin is to be paid an annual
salary of $175,000 and Elizabeth Kay Monigold is to be paid an annual
salary of $120,000. Each employment agreement provides that upon
termination by us without "good cause," as defined in each agreement, the
employee will be entitled to one year's worth of base compensation and
benefits. Each employment agreement also prohibits the employee from
competing with us during the term of employment and for a period of two
years thereafter.
In addition, we granted stock options to purchase 589,500 shares of our
Class A voting common stock at an exercise price of $20 per share. The
options were granted in August 1999 to Martin Payson, a director, and to
Ronald W. Martin, Elizabeth Kay Monigold and several of our other officers
and key employees. These options, which have 10-year terms, vest in 25%
increments over each of the first four anniversaries of the grants.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
1999 STOCKHOLDERS' AGREEMENT
Effective July 28, 1999, Classic, Brera Classic, BT Capital Partners, Inc.,
Austin Ventures, L.P., BA Capital Company, L.P., as the successor in
interest to NationsBanc Capital Corp., J. Merritt Belisle, Steven E. Seach
and certain of our other stockholders entered into a stockholders'
agreement. The agreement was amended as of December 13, 1999 to provide
that the parties will be obligated to vote their shares of Class B voting
common stock in favor of the election to our Board of (1) up to six
nominees chosen by Brera Classic, (2) our chief executive officer, (3)
Steven Seach for as long as he is employed by us and (4) two nominees who
are independent directors (as defined by the rules of the Nasdaq National
Market) chosen by a majority vote of our Board of Directors. These voting
arrangements will terminate when these stockholders hold less than 30% of
all of our common stock on a fully diluted basis.
The amendment to the stockholders' agreement also provides, among other
things, that a party to the agreement will not be able to participate in
the nominating of directors under the agreement if such party holds less
than 2% of the outstanding common stock on a fully diluted basis, although
such party will be obligated to vote for the nominees under the agreement
as long as it holds at least 1% of our outstanding common stock on a fully
diluted basis. The parties to the agreement other than Brera are not
entitled to nominate directors under the agreement if such parties, in the
aggregate, hold less than 4% of our outstanding common stock on a fully
diluted basis. As a result of the sales made by the parties to the
stockholders' agreement in our initial public offering in December, 1999,
the parties to the agreement other than Brera, hold less than 4% of our
outstanding common stock on a fully-diluted basis and no longer have the
right to nominate directors under the agreement.
MANAGEMENT AND ADVISORY FEE AGREEMENT
As part of the Brera Classic equity investment, we and Brera Classic
entered into an agreement pursuant to which Brera Classic was paid a
transaction fee of $3 million upon closing of the Brera Classic equity
investment in consideration for arranging the equity investment. The
agreement further provided that we would pay Brera Classic an annual fee of
$250,000 in consideration for transactional assistance and advice provided
to us until we completed an initial public offering, payment of which was
made at the closing of the Buford acquisition. Brera Classic was paid a
transaction fee of $1.3 million upon the closing of our acquisition of Star
Cable Associates, which occurred on February 16, 1999 in consideration for
transactional advisory services.
BRERA CLASSIC INVESTMENT AGREEMENt
We and Brera Classic entered into an Investment Agreement whereby we agreed
to issue and sell 6,490,734 shares of our Class B voting common stock for
an aggregate purchase price of $100 million. Pursuant to the Investment
Agreement, we agreed to pay all fees and expenses of Brera Classic's legal
counsel, financial advisors, accountants and third party consultants in an
amount up to $750,000. In addition to the $750,000 paid to Brera Classic at
the closing of the Buford acquisition for its fees and expenses of counsel,
accountants, advisors and consultants, we reimbursed Brera for $252,000 of
closing costs incurred by Brera on our behalf.
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP as our
independent auditors for 2000.
Arrangements have been made for a representative of PricewaterhouseCoopers
LLP to attend the annual meeting. The representative will have an
opportunity to make a statement if he or she desires to do so, and will be
available to respond to appropriate stockholder questions. The selection of
PricewaterhouseCoopers LLP as our auditors must be ratified by a majority
of the votes cast at the annual meeting.
On October 4, 1999, we dismissed Ernst & Young LLP and engaged
PricewaterhouseCoopers LLP as our independent public accountants. The
decision to dismiss Ernst & Young LLP and to engage PricewaterhouseCoopers
LLP was approved by our Board of Directors on October 18, 1999.
We believe, and have been advised by Ernst & Young LLP that it concurs with
such belief, that, for the years ended December 31, 1997 and December 31,
1998, and for the six-month period ended June 30, 1999, we and Ernst &
Young LLP did not have any disagreement on any matter of accounting
principles or practices, financial statement disclosure or auditing scope
or procedure, which disagreement, if not resolved to the satisfaction of
Ernst & Young LLP would have caused it to make reference in connection with
its report on our financial statements to the subject matter of the
disagreement.
The report of Ernst & Young LLP on our financial statements for the years
ended December 31, 1997 and December 31, 1998 did not contain an adverse
opinion or a disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope or accounting principles. During that period,
there were no "reportable events" within the meaning of Item 304(a)(1)(v)
of Regulation S-K promulgated under the Securities Act of 1933.
Ernst & Young LLP has furnished a letter addressed to the Securities and
Exchange Commission stating whether Ernst & Young LLP agrees with the above
statements.
THE BOARD RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF
PRICEWATERHOUSECOOPERS, LLC AS OUR INDEPENDENT AUDITORS FOR 2000.
SUBMISSION OF FUTURE STOCKHOLDER PROPOSALS
Under SEC rules, a stockholder who intends to present a proposal at the
next annual meeting of stockholders and who wishes the proposal to be
included in the proxy statement for that meeting must submit the proposal
in writing to our Secretary, at the address on the cover of this proxy
statement. The proposal must be received no later than January 12, 2001.
Stockholders who do not wish to follow the SEC rules in proposing a matter
for action at the next annual meeting must notify us in writing of the
information required by the provisions of our by-laws dealing with
stockholder proposals. The notice must be delivered to our Corporate
Secretary between February 28, 2001 and March 30, 2001. You can obtain a
copy of our by-laws by writing the Corporate Secretary at the address shown
on the cover of this proxy statement.
COST OF ANNUAL MEETING AND PROXY SOLICITATION
We pay the cost of the annual meeting and the cost of soliciting proxies.
In addition to soliciting proxies by mail, we may solicit proxies by
personal interview, telephone and similar means. None of our directors,
officers or employees will be specially compensated for these activities.
We also intend to request that brokers, banks and other nominees solicit
proxies from their principals and will pay the brokers, banks and other
nominees certain expenses they incur for such activities.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Exchange Act requires our executive officers and
directors and persons who own more than ten percent of a registered class
of our equity securities, to file reports of ownership and changes in
ownership with the SEC and to furnish Classic with copies of the forms. Due
to difficulties in obtaining SEC identification numbers, the Form 3s for
Messrs. Belisle, Garvey, Kofalt, Martin, Noteboom, Payson and Seach and Ms.
Monigold were accepted for filing by the SEC on the date immediately
following the effective date of the registration statement in connection
with our intitial public offering. Based on our review of the copies of the
ownership forms received, or written representations from reporting
persons, other than as noted above, we believe that, during 1999, each of
our officers, directors and greater than ten percent stockholders complied
with all such filing requirements.
[CLASSIC COMMUNICATIONS, INC. LOGO]
CLASSIC COMMUNICATIONS, INC.
515 CONGRESS AVENUE, SUITE 2626
AUSTIN, TEXAS 78701
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON JUNE 28, 2000
The 2000 annual meeting of stockholders of Classic Communications, Inc.
will be held on Wednesday, June 28, 2000 at 9:00 a.m. CST at the Omni
Austin Hotel - Downtown located at 700 San Jacinto Blvd. Austin, Texas
78701.
Stockholders who owned shares of our voting common stock at the close of
business on May 1, 2000 are entitled to vote at the annual meeting. A list
of stockholders will be available during regular business hours at our
corporate offices, 515 Congress Avenue, Suite 2626, Austin, Texas 78701
before the annual meeting.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE.
(CONTINUED ON REVERSE SIDE)
FOLD AND DETACH HERE
- ------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3
1. Election of Class I Director
|_| FOR the nominee listed to the right (except as marked to the contrary)
|_| WITHHOLD AUTHORITY to vote for the nominee listed to the right
Nominee: Steven E. Seach
WITHHELD FOR: (Write that nominee's name in the space provided below.)
- --------------------------------------------------------------------------
2. To ratify the selection of our independent auditors for 2000, and
|_| FOR |_| AGAINST |_| ABSTAIN
3. To consider any other business properly brought before the meeting.
Dated _______________________, 2000
___________________________________
___________________________________
Signature of Stockholder
PLEASE SIGN EXACTLY AS NAME APPEARS.
IF ACTING AS ATTORNEY, EXECUTOR,
TRUSTEE OR IN OTHER REPRESENTATIVE
CAPACITY, SIGN NAME AND TITLE.
FOLD AND DETACH HERE
- ------------------------------------------------------------------------------
