-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IYGW8KkwAIQtsk0gS3tK8y8WsnbfE6NNbQ+aRqEbnZNdIlfg3Zvjz0NdIOx1h6Ho S2W03oR10SrFCf4+fFDBQg== 0000895345-05-000425.txt : 20050407 0000895345-05-000425.hdr.sgml : 20050407 20050407171958 ACCESSION NUMBER: 0000895345-05-000425 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050401 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050407 DATE AS OF CHANGE: 20050407 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELEWEST GLOBAL INC CENTRAL INDEX KEY: 0001270400 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 593778247 FISCAL YEAR END: 1204 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50886 FILM NUMBER: 05739878 BUSINESS ADDRESS: STREET 1: C/O CT CORPORATION SYSTEM STREET 2: 1209 ORANGE STREET CITY: WILMINGTON STATE: DE ZIP: 19801 BUSINESS PHONE: 442072995000 MAIL ADDRESS: STREET 1: 160 GREAT PORTLAND STREET CITY: LONDON STATE: X0 ZIP: W1W 5QA 8-K 1 jl8k.txt ================================================================================ UNITED STATES 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 ------------------- APRIL 1, 2005 Date of Report (Date of Earliest Event Reported) ------------------- TELEWEST GLOBAL, INC. (Exact name of registrant as specified in its charter) DELAWARE 000-50886 59-3778247 (State or other (Commission File Number) (I.R.S. Employer jurisdiction of Identification No.) incorporation or organization) 160 GREAT PORTLAND STREET LONDON W1W 5QA, UNITED KINGDOM (Address of principal executive offices) +44-20-7299-5000 (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: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT 1. Employment and Equity Agreements with Barry Elson. On April 5, 2005, Telewest Global, Inc. (the "Company") entered into definitive employment and equity agreements with Barry Elson, its Acting Chief Executive Officer. The employment agreement is for a term of 9 months commencing on July 19, 2004 and ending on April 19, 2005. During the term of the agreement: o Mr. Elson will serve as the Company's Acting Chief Executive Officer and a member of the Company's Board of Directors; o Mr. Elson will receive an annual base salary of $700,000, subject to periodic review, and will initially be entitled to earn an annual cash bonus of $200,000 for achievement of "budget" levels; o Mr. Elson will be entitled to receive the same employee benefits as similarly situated executives of the Company receive, as well as expatriate benefits such as tax equalization and housing benefits; and o If (1) prior to April 19, 2005, the Company does not offer to appoint Mr. Elson permanent Chief Executive Officer on substantially the terms set forth in the employment agreement or (2) the Company terminates Mr. Elson's employment without cause, then, subject to Mr. Elson's execution of a general release of claims, Mr. Elson would be entitled to a lump sum severance payment of $700,000, as well as payment of any accrued compensation and earned but unpaid bonuses. The agreement also contains a perpetual confidentiality covenant as well as non-competition and non-solicitation covenants that continue during Mr. Elson's employment and for two years following Mr. Elson's termination. Currently, the Company is still considering whether it intends to appoint Mr. Elson as permanent Chief Executive Officer. However, until that decision is made, Mr. Elson has indicted his willingness to continue to serve as the Company's Acting Chief Executive Officer subject to all of the rights and obligations under his employment agreement, including Mr. Elson's right to terminate his employment for any reason and receive the severance pay and benefits specified in his employment agreement. In connection with the execution of the employment agreement, Mr. Elson and the Company also agreed to substitute an award of 245,000 stock appreciation rights for the 245,000 shares of restricted common stock previously granted to Mr. Elson on July 16, 2004. The stock appreciation rights vest quarterly in arrears over a 3-year period commencing on July 1, 2004. On July 19, 2008 or Mr. Elson's termination of employment, whichever is earlier, each vested stock appreciation right shall be converted into a stock unit and Mr. Elson will be paid, for each stock unit, an amount of cash equal to the fair market value of a share of the Company's common stock on the payment date. Upon the grant of the stock appreciation rights, the grant of restricted stock made to Mr. Elson on July 16, 2004 was cancelled. In addition, in connection with the execution of the employment agreement, Mr. Elson and the Company entered into a non-qualified stock option agreement evidencing the option to purchase 980,000 shares of common stock granted to Mr. Elson on July 16, 2004. 2. Adoption of the Telewest Global, Inc. Long-Term Incentive Plan. On April 1, 2005, the Compensation Committee approved the definitive form of the Telewest Global, Inc. Long-Term Incentive Plan (the "LTIP"). The following summary is qualified in its entirety by reference to the text of the LTIP, a copy of which is attached hereto as Exhibit 10.1. The LTIP provides for the creation of a bonus pool if the Company meets certain performance objectives with respect to the 3-year period ending December 31, 2007. The performance objectives under the LTIP are set in relation to simple cash flow (defined as EBITDA less capital expenditures) during the measurement period. Participants who are employed on the payment date will be eligible to receive an equal share of the bonus pool created (pro rata for individuals selected to participate after February 3, 2005). However, if the employment of a participant terminates for any reason prior to the payment date, he or she will not receive a bonus payment and his or her share of the bonus pool will be forfeited to the Company. Currently, 21 key management employees participate in the LTIP, including the Company's executive officers. The Compensation Committee may designate additional participants in the future. Generally, bonus payments will be made under the LTIP on or prior to March 15, 2008. Bonus payments will be made, at the discretion of the Compensation Committee, in cash and/or in shares of common stock. A maximum of 1,000,000 shares of common stock may be issued in aggregate pursuant to the LTIP (subject to shareholder approval). If payments are to be paid in the form of shares of common stock, then the number of such shares will be determined by dividing the portion of the payment to be so paid by the arithmetic mean of the fair market value of a share of common stock for the trading days in December of 2007. The LTIP is administered by the Compensation Committee. In addition to the other administrative authority that the Compensation Committee has under the LTIP, the Compensation Committee also has the sole and absolute discretion to determine the effect of an "acceleration event" on the plan. The Compensation Committee may amend or terminate the LTIP at any time in its discretion but, except as permitted in connection with an acceleration event, the amendment or termination of the LTIP may not affect the rights of any LTIP participant as of the date of such action. 3. Annual Base Salary of Neil Smith. The annual base salary of Neil Smith, our Vice President and Chief Financial Officer, has been increased to GBP 315,000, retroactive to January 1, 2005. ITEM 9.01. EXHIBITS Exhibit 10.1 Telewest Global, Inc. Long-Term Incentive Plan SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 7, 2005 TELEWEST GLOBAL, INC. By: /s/ Clive Burns --------------------------------- Name: Clive Burns Title: Company Secretary EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - -------------- ---------------------------------------------- 10.1 Telewest Global, Inc. Long-Term Incentive Plan EX-10.1 2 exhibit10_1.txt Exhibit 10.1 TELEWEST GLOBAL, INC. LONG-TERM INCENTIVE PLAN 1. Purpose. The purpose of the Telewest Global, Inc. Long-Term Incentive Plan (the "Plan") is to enhance the ability of the Company to attract, motivate, reward, and retain key employees, to strengthen their commitment to the success of the Company and to align their interests with those of the Company's shareholders by providing additional compensation to designated key employees of the Company and its subsidiaries based on the achievement of Performance Objectives. To this end, the Plan provides a means of rewarding Participants based on the performance of the Company during the Performance Period. 2. Administration. The Plan shall be administered by the Committee. The Committee shall have full authority: (i) to establish the rules and regulations relating to the Plan; (ii) to interpret the Plan and those rules and regulations; (iii) to select Participants in the Plan; (iv) to determine the Performance Objectives; (v) to calculate the total amount of the bonus pool and the amounts to be received by Participants in the Plan (rounding such amounts as it deems appropriate); (vi) to decide the facts in any case arising under the Plan; and (vii) to make all other determinations and to take all other actions necessary or appropriate for the proper administration of the Plan, including the delegation of such authority or power, where appropriate. The Committee's administration of the Plan, including all such rules and regulations, interpretations, selections, determinations, approvals, decisions, delegations, amendments, terminations and other actions, shall be final, binding and conclusive on the Company, its stockholders and all persons having or claiming an interest under the Plan. No member of the Committee shall be liable for any action, failure to act, determination or interpretation made with respect to the Plan or any transaction hereunder, and the Company hereby agrees to indemnify each member of the Committee, to the maximum extent permitted by applicable law, for any such action, failure to act, determination or interpretation. 3. Eligible Employees. Participation in the Plan shall be limited to those key management employees of the Company and its subsidiaries selected by the Committee to participate in the Plan. The Committee may designate any of such employees to participate in the Plan at the Effective Date and from time to time thereafter, and, upon such designation, an employee so designated shall become a Participant. 4. Determination of Performance Objectives. The Committee shall establish the Performance Objectives not later than the Effective Date. 5. Payments Pursuant to the Bonus Pool. (a) Creation of Bonus Pool. The satisfaction of the Performance Objectives shall result in the creation of a bonus pool. The Committee shall establish minimum criteria below which no bonus pool shall be created and may (but shall not be obligated to) establish a maximum bonus pool. (b) Entitlement to Payment; Effect of Termination of Employment. Unless the Committee determines otherwise, (i) in order to receive any payment under the Plan, a Participant must remain continuously employed by the Company or one or more of its subsidiaries from the date on which he or she becomes a Participant in the Plan through the Payment Date, and (ii) upon termination of a Participant's employment, the Participant shall cease to be a Participant in the Plan. (c) Timing of Payment. As soon as practicable after December 31, 2007, the Committee shall review the Company's performance and certify in writing the extent to which the Performance Objectives have been achieved and the total amount of the bonus pool. Payments under the Plan, less applicable withholding taxes, shall be made as soon as practicable following the Committee's certification described in the preceding sentence but in no event later than March 15, 2008 (the "Payment Date"). (d) Amount of Payment. The amount of the payment to each Participant entitled to receive payment under the Plan shall be determined as follows: Step 1: The amount of a full share of the bonus pool (each such ------ share, a "Full Bonus Pool Share") shall be determined by dividing the total amount of the bonus pool by the total number of employees who have ever been designated as Participants in the Plan (determined without regard to the actual number of Participants in the Plan as of the Payment Date). Step 2: Each Participant in the Plan who remains a Participant from ------ the Effective Date through the Payment Date shall be entitled to receive a Full Bonus Pool Share. Step 3: Each Participant in the Plan who becomes a Participant in ------ the Plan after the Effective Date and who remains a Participant from the date of commencement of participation through the Payment Date shall be entitled to receive a Pro Rata Bonus Pool Share; provided, that the Committee may, in its sole and absolute discretion, elect to pay any such Participant a Full Bonus Pool Share rather than a Pro Rata Bonus Pool Share. The amount of any such Participant's "Pro Rata Bonus Pool Share" shall be determined by multiplying the amount of a Full Bonus Pool Share by a fraction, the numerator of which is the total number of days from the Participant's commencement of participation in the Plan through December 31, 2007, and the denominator of which is 1,095 (such fraction, the "Pro-Ration Factor"). Step 4: The excess of the amount of a Full Bonus Pool Share over the ------ amount of each Pro Rata Bonus Pool Share shall be calculated separately and then aggregated (such aggregate excess amount, the "Aggregate Excess Amount"), and each Participant who is entitled to receive a Full Bonus Pool Share or a Pro Rata Bonus Pool Share shall also be entitled to receive a portion of the Aggregate Excess Amount determined by multiplying the Aggregate Excess Amount by a fraction, (x) the numerator of which is (A) in the case of a Participant who receives a Full Bonus Pool Share, one, and (B) in the case of a Participant who receives a Pro Rata Bonus Pool Share, the Pro-Ration Factor used to determine his or her Pro Rata Bonus Pool Share, and (y) the denominator of which is the sum of (A) the total number of Participants entitled to receive a Full Bonus Pool Share and (B) the Pro-Ration Factors determined pursuant to Step 3 with respect to each Participant who is entitled to receive a Pro Rata Bonus Pool Share. Step 5: Any amount of the bonus pool in excess of the aggregate ------ amount payable to the Participants pursuant to Steps 2, 3 and 4 shall not be paid under the Plan but shall instead be forfeited to the Company. An example of a calculation pursuant to this Section 5(d) is attached to the Plan for illustrative purposes only (and based on the assumptions contained therein). (e) Form of Payment. Payments under the Plan shall be paid in the form of cash or Common Stock, or a combination thereof, in the discretion of the Committee. If payments under the Plan are to be paid in the form of Common Stock, then the number of such shares shall be determined by dividing the portion of the payment to be so paid by the arithmetic mean of the Fair Market Value of a share of Common Stock for the trading days in December, 2007. A maximum of 1,000,000 shares of Common Stock may be issued under the Plan, and, in the event that the number of shares of Common Stock authorized to be issued hereunder is insufficient to make payments under the bonus pool in full, any amount of the bonus pool not satisfied in shares of Common Stock shall be satisfied in cash. Prior to the issuance of any shares of Common Stock under the Plan, the Company shall obtain the approval of the share issuance by the stockholders of the Company. 6. Effect of Acceleration Event. The Committee shall have the sole and absolute discretion to determine the effect of an Acceleration Event under the Plan. Such effect may include, but shall not be limited to, (i) termination of the Plan without making any payments hereunder, (ii) establishment of, and payment under, a bonus pool based on the satisfaction of the Performance Objectives through the date of the Acceleration Event (using such assumptions and approximations as the Committee shall select), (iii) adjustment of the Performance Objectives pursuant to Section 7 and continuation of the Plan following the Acceleration Event, (iv) limitation on the number of Participants who may be added to the Plan after the Acceleration Event and (v) modifying the provisions of the Plan relating to termination of employment. For avoidance of doubt, the Committee may terminate the Plan without making any payments hereunder even if the Performance Objectives have been satisfied in whole or in part as of the date of the Acceleration Event. Any action taken pursuant to this Section 6 shall be taken prior to the consummation of the Acceleration Event and shall be final, binding and conclusive on all persons having or claiming an interest under the Plan. 7. Adjustments. The Committee may provide for the manner in which performance will be measured against the Performance Objectives to reflect the impact of specified corporate transactions (such as (i) a stock split or stock dividend or other change in capitalization or (ii) the acquisition or disposition of one or more business units), special charges, accounting or tax law changes, restatements or other extraordinary or nonrecurring events. Such provision may be made at any time prior to the final determination as to whether the Performance Objectives have been satisfied. 8. Amendment or Termination. The Committee may amend or terminate the Plan at any time in its discretion; provided, however, that, (i) except as set forth in Section 6, no amendment or termination of the Plan may affect the rights of any Participant in the Plan as of the date of such action and (ii) any increase in the number of shares of Common Stock authorized to be issued hereunder, and any other amendment of the Plan for which stockholder approval is required, shall be subject to the approval of the stockholders of the Company. 9. Miscellaneous Provisions (a) This Plan shall inure to the benefit of and be binding upon the Company and all Participants and their respective heirs, executors, personal representatives, estates, successors (including, without limitation, by way of merger) and permitted assigns. The rights of Participants under the Plan shall not be sold, transferred or otherwise disposed of other than by will or by the laws of descent and distribution. (b) The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund, or to make any other segregation of assets, to assure payment hereunder. (c) The Company shall have the right to deduct from payments hereunder any taxes or other amounts required by law to be withheld. Each Participant entitled to any payment hereunder shall make arrangements satisfactory to the Company to pay all tax liabilities arising hereunder. (d) Nothing contained in the Plan shall limit or affect in any manner or degree the normal and usual powers of management, exercised by the officers and the Board or committees thereof, to change the duties or the character of employment of any employee of the Company or any of its subsidiaries or to remove the individual from the employment of the Company or any of its subsidiaries at any time, all of which rights and powers are expressly reserved. (e) Nothing in the Plan shall be interpreted or construed to confer upon a Participant any right with respect to continuance of employment by the Company or any of its subsidiaries, nor shall the Plan interfere in any way with the right of the Company or any of its subsidiaries to terminate a Participant's employment at any time. The transfer of a Participant's employment from the Company to a subsidiary of the Company (or vice versa) shall not constitute a termination of employment for purpose of the Plan and shall have no effect on the rights and obligations of the Company and any Participant under the Plan. (f) Except as to matters of federal law, the Plan and the rights of all persons claiming hereunder shall be construed and determined in accordance with the laws of the State of Delaware without giving effect to conflicts of laws principles thereof. 10. Definitions. (a) "Acceleration Event" shall have the meaning set forth in the Company's 2004 Stock Incentive Plan. (b) "Board" shall mean the Board of Directors of the Company. (c) "Committee" shall mean the Compensation Committee of the Board or such other committee appointed by the Board from time to time to administer the Plan and to perform the functions set forth herein. (d) "Common Stock" shall mean the common stock, par value $0.01 per share, of the Company, and any other securities into which such shares are changed or for which such shares are exchanged. (e) "Company" shall mean Telewest Global, Inc. and any successor to Telewest Global, Inc. by merger, consolidation or otherwise. (f) "Effective Date" shall mean February 3, 2005. (g) "Fair Market Value" shall have the meaning set forth in the Company's 2004 Stock Incentive Plan. (h) "Participant" shall mean a key management employee of the Company or any of its subsidiaries selected by the Committee to participate in the Plan. (i) "Payment Date" shall have the meaning set forth in Section 5(c). (j) "Performance Objectives" shall mean those performance criteria in respect of the Performance Period as established by the Committee. (k) "Performance Period" shall mean the three-year period commencing on January 1, 2005 and ending on December 31, 2007. In addition, the following terms have the meaning set forth in Section 5(d): "Aggregate Excess Amount," "Full Bonus Pool Share," "Pro Rata Bonus Pool Share," and "Pro-Ration Factor." Example under the Telewest Global, Inc. Long-Term Incentive Plan ---------------------------------------------------------------- Assumptions: - ----------- o Eight employees are designated as Participants on the Effective Date, and, of these eight Participants, the employment of two Participants is terminated prior to the Payment Date. The remaining six Participants are employed on the Payment Date. o One employee is added as a Participant after the Effective Date but his or her employment is terminated prior to the Payment Date. o One employee ("Employee 10") is added as a Participant on January 1, 2006, and another employee ("Employee 11") is added as a Participant on July 1, 2007. Both of these Participants are employed on the Payment Date. o The total amount of the bonus pool is GBP 1.5 million. Calculations: - ------------ Based on the foregoing assumptions, payments of the bonus pool would be calculated as follows: Step 1: A Full Bonus Pool Share is equal to GBP 136,363 ------ (determined by dividing GBP 1.5 million by 11). Step 2: Each of the six Participants who remain employed from the ------ Effective Date through the Payment Date would be entitled to receive GBP 136,363, the amount of a Full Bonus Pool Share. Step 3: The amount of the Pro Rata Bonus Pool Share with respect to ------ Employee 10 would be GBP 90,909 (GBP 136,363 multiplied by a Pro-Ration Factor of 0.666667 (730/1095)). The amount of the Pro Rata Bonus Pool Share with respect to Employee 11 would be GBP 22,914 (GBP 136,363 multiplied by a Pro-Ration Factor of 0.168037 (184/1095)). Step 4: GBP 158,903, the sum of the excess of the amount of a ------ Full Bonus Pool Share over the amount of each of the Pro Rata Bonus Pool Shares payable to Employee 10 and Employee 11, would be reallocated as follows: GBP 23,249 to each of the six Participants who received Full Bonus Pool Shares (GBP 158,903 multiplied by (1 divided by 6.834704)) (6.834704 being the sum of 6, 0.666667, and 0.168037); GBP 15,500 to Employee 10 (GBP 158,903 multiplied by (0.666667 divided by 6.834704)); and GBP 3,907 to Employee 11 (GBP 158,903 multiplied by (0.168037 divided by 6.834704)). Step 5: GBP 409,096, the excess of the total bonus pool over the ------ amounts determined pursuant to Steps 2, 3 and 4, would be forfeited to the Company. (Note: The foregoing calculations do not take into account reductions for payment of all applicable withholding taxes.) -----END PRIVACY-ENHANCED MESSAGE-----