MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made and entered into on the 30th day of
October, 1998, by and between Insight Communications of Indiana, LLC, a Delaware
limited liability company (the "Company") and Insight Communications Company,
L.P., a Delaware limited partnership (the "Manager").
RECITALS
A. Pursuant to an Operating Agreement dated as of May 14, 1998 (as the
same may be amended or modified from time to time, the "Operating Agreement"),
the Company has been formed to own and operate certain cable television systems
and certain other assets, as more fully described in the Operating Agreement.
The business and operations of the Company, as the same may be conducted from
and after the date hereof, are hereinafter referred to as the "Business."
B. Manager has the experience and ability to manage the Business and is
willing to do so, and the Company desires to enter into this Agreement with
Manager providing for the management of the Business on the terms and conditions
set forth herein.
AGREEMENTS
In consideration of the covenants and agreements contained herein, the
Company and Manager agree as follows:
SECTION 1 DEFINITIONS. Except as otherwise defined herein, the
following terms shall have the following meanings when used in this Agreement:
Affiliate. With respect to either the Company or Manager, any other
Person that directly or indirectly through one or more intermediaries controls
or is controlled by or under direct or indirect common control with such party.
Applicable Law. Any statute, ordinance, law, rule or regulation of any
Governmental Authority, or any order, decree, injunction, writ, judgment or
award of any court, arbitrator or other Governmental Authority, applicable to
the Company or the Business.
Authorizations. Any governmental or non-governmental license, permit,
franchise or other authorization, and applications therefor, which are necessary
to conduct the Business.
GAAP. Generally accepted accounting principles as in effect from time
to time.
Governmental Authority. Any governmental authority or regulatory body,
or any department, agency, division, bureau or other legal body thereof having
jurisdiction over the Company, the Business, or general jurisdiction over all
Persons.
Person. Any individual, corporation, partnership, firm, limited
liability company, joint venture, association, trust, joint stock company,
unincorporated organization or other entity, or a government or any agency or
political subdivision thereof.
Capitalized terms not otherwise defined herein shall have the meanings
given such terms in the Operating Agreement.
SECTION 2 APPOINTMENT. On the terms and conditions hereinafter
provided, the Company hereby appoints Manager, and Manager hereby accepts such
appointment, as manager for all of the operations and conduct of the Business
for a period commencing on the date of Closing, as defined in the Asset
Contribution Agreement dated as of May 14, 1998, as the same may be amended from
time to time in accordance with its terms, by and among the Company and the
other parties thereto, and expiring as provided in Section 5 hereof.
SECTION 3. MANAGEMENT AUTHORITY; MANAGEMENT SERVICES.
3.1 Authority and Services To Be Performed By Manager. (a)(i) Subject
to the limitations set forth in Section 3.1(b) below, Manager shall have full
and exclusive authority to do all such acts and things as may be incidental to,
or necessary, proper or advisable in the furtherance of, the management of the
day-to-day operations and conduct of the Business. Subject to the terms and
conditions of this Agreement, Manager shall provide the Company with such
services as may, from time to time, be appropriate or reasonably required for
the proper and efficient operation and conduct of the Business in accordance
with sound business principles and practices customary in the cable television
industry (collectively, the "Management Services"). The Management Services
shall be provided both at such times as Manager may reasonably deem appropriate
and at such times as the Company may reasonably request.
(ii) Without limiting the generality of the preceding
paragraph, the Management Services shall include the following, but subject to
any applicable limitations set forth in this Agreement:
(1) (A) Evaluation of new equipment, materials and techniques
and making recommendations in accordance with its evaluations, (B) establishment
of general technical
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standards and procedures and directing their implementation, and (C)
establishment of programs for preventive maintenance and monitoring their
effectiveness;
(2) Supervision of all construction and development arising
out of or related to the operation of the Business, including, without
limitation, the selection and appointment of all subcontractors, equipment
suppliers and vendors;
(3) Supervision of the purchasing of property, real, personal
or mixed, and all materials and supplies, if any, necessary to complete any
construction and development arising out of or related to the Business;
(4) Sale, lease, trade, exchange or other disposition of the
Company's assets in the ordinary course of business and the negotiation of, and
entrance into, in the name of and on behalf of the Company, of all agreements
relating to any of the foregoing;
(5) Negotiation of, and entrance into, in the name of and on
behalf of the Company, of all, contracts, leases, deeds, releases, assignments
and any other agreements on behalf of the Company for the purchase, lease,
license or use of such properties and rights as may be necessary or reasonably
desirable in connection with the Business;
(6) Formulation and supervision of all advertising, marketing
and sales programs and engagement and appointment on behalf of the Company of
advertising, marketing and public relations agencies and consultants for such
purposes;
(7) Subject to the provisions of all Authorizations,
Applicable Law and applicable agreements to which the Company is a party, the
selection and pricing of all services to be provided to the customers of the
cable television systems included in the Business;
(8) Supervision of performance of all aspects of the daily
operation and maintenance of the Business, instruction and supervision of all
personnel necessary to conduct daily operations of the Business and the setting
of salaries and wages for such personnel (with all such employees to be paid by
the Company);
(9) Entrance into, in the name of and on behalf of the
Company, of any agreements arising out of or related to the Business, including,
without limitation, cable television franchises or collective bargaining
agreements with employees of the Company;
(10) Supervision of the maintenance of all accounting,
bookkeeping, billing, collections and other financial systems and records
relating to the Business;
(11) Engagement of, on behalf of the Company, attorneys,
accountants, engineers, consultants and other qualified professionals;
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(12) Preparation and filing, or causing to be prepared and
filed, all necessary applications, filings, reports, statements and other
documents as are required in connection with the Business with Governmental
Authorities (including any income tax filings);
(13) Purchase of such policies of insurance (including
Manager's blanket coverage) as Manager may from time to time consider necessary
and appropriate in accordance with normal industry practice, with such policy
naming both the Company and Manager (and any other Member of the Company) as
insured thereunder as their interests may appear;
(14) Representation of the Company before all Governmental
Authorities with respect to any matter necessary or desirable to the management
of the Business; and
(15) Taking of any other action in connection with the
construction, development, operation and maintenance of the Business in the
ordinary course of business which is commercially reasonable, appropriate and
necessary.
(b) Notwithstanding the foregoing in Section 3.1(a), the
Manager acknowledges that (i) the Manager shall be subject to the direction and
control of the Management Committee of the Company and (ii) the Manager shall be
subject to all express limitations of the Operating Agreement requiring
approvals of the members of the Management Committee of the Company or the
members of the Company prior to taking of certain actions by the Company and
shall otherwise be subject to the terms of the Operating Agreement, including
Section 16.1 thereof.
3.2 Standard of Care. Manager will use reasonable commercial efforts in
managing the Business; provided, however, that notwithstanding anything
contained herein or Applicable Law to the contrary, neither Manager (nor any of
its direct or indirect partners, shareholders, members, officers, directors,
Affiliates, employees or agents) shall have any liability, express or implied,
for any action taken or omitted to be taken by Manager or for any failure or
delay in performing or exercising any obligation, duty, right, power or
authority possessed by Manager under this Agreement, or any other document
related hereto except for actual losses, if any, suffered by the Company that
are proximately caused either by Manager's gross negligence, willful misconduct
or willful breach of this Agreement.
3.3 Compliance with Authorizations. Notwithstanding anything in this
Agreement to the contrary, the Company shall continue to be the franchisee,
licensee and permittee, as applicable, of all Authorizations of any nature
whatsoever issued by any Governmental Authority in connection with the operation
of the Business and shall retain ultimate control over the Business. The Company
shall also retain ultimate responsibility for compliance with all Applicable Law
and the terms of any applicable Authorizations.
3.4 Payment of Expenses. The Company shall be responsible for the
payment of all costs, expenses and liabilities of any nature whatsoever in
connection with the construction,
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development, operation, maintenance, repair and ownership of the Business and
the Company shall be the responsible party under all agreements entered into on
behalf of the Company by Manager pursuant hereto.
3.5 Inspection of Records. Originals or copies of all books and records
related to this Management Agreement shall be maintained at the principal office
of Manager and shall be open to the inspection and examination of the Company
and its Members during normal business hours upon reasonable notice.
SECTION 4 COMPENSATION AND EXPENSES.
4.1 Management Fee. As compensation to Manager for the performance of
its services hereunder, the Company shall pay to Manager a management fee
("Management Fee") for each twelve month period during the term of this
Agreement, commencing on the date hereof, equal to three percent (3%) of the
total Gross Operating Revenues of the Company for that year.
4.2 Gross Operating Revenues. The term "Gross Operating Revenues" means
all revenues arising out of or in connection with the operation of the Business,
but exclusive of all proceeds from the sale of assets or from other
extraordinary or non-recurring items and exclusive of all interest, dividends,
royalties, and other similar types of investment income that do not arise from
the operation of the Business in the ordinary course.
4.3 Quarterly Statement. Within 30 days after the end of each fiscal
quarter, the Manager shall submit to the Company a quarterly and a cumulative
year-to-date Gross Operating Revenues statement indicating the quarterly
Management Fee payable and the cumulative year-to-date Management Fee payable to
Manager together with appropriate supporting documentation. Each quarterly
Management Fee payable hereunder shall be adjusted to reflect any cumulative
year-to-date adjustments in Gross Operating Revenues. The Management Fee shall
be payable each quarter within 10 days after the Management Fee statement for
such quarter has been received by the Company.
4.4 Annual Statement. Within 90 days after the end of each fiscal year,
the Company shall cause its independent public accountants to determine the
Gross Operating Revenues of the Company for that year and the amount of the
Management Fee payable to Manager for that year and deliver a copy to Manager.
Manager shall have the right to consult with the accountants regarding the
determination of Gross Operating Revenues prior to the final determination of
Gross Operating Revenues by the accountants. The accountants' determination
shall be final and binding on the Company and Manager.
4.5 Expense Reimbursement. The Management Fee described above shall be
exclusive of reimbursement by the Company to Manager for all direct,
out-of-pocket expenditures incurred by or on behalf of Manager relating to its
obligations under this Agreement
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as provided for herein, including without limitation, reimbursement for travel
expenses. Manager shall be entitled to reimbursement by the Company for services
that would ordinarily be direct expenditures of the Company. Manager shall act
in good faith and in a reasonable manner in making determinations of
reimbursement. It is understood and agreed that the intent of the expense
reimbursement provisions contained in this Section 4.5 is to reimburse Manager
only for expenses incurred that are directly related to the operation of the
Business and not to reimburse Manager for any corporate overhead (including
bonuses and health, welfare, retirement and other benefits and overhead expenses
of its corporate office management, development, internal accounting and finance
management personnel), which shall be paid out of the Management Fee. Payment of
expense reimbursement shall be made monthly by the Company to Manager within
five days after receipt by the Company of a statement (the "Monthly Expense
Statement") of Manager's estimated reimbursable expenses for the preceding
month. The Monthly Expense Statement shall include an adjustment to reflect the
amount by which actual reimbursable expenses incurred during the month
immediately preceding the month of payment exceeded, or were exceeded by,
Manager's estimated reimbursable expenses with respect to such month.
4.6 Subordination. Manager acknowledges and agrees that notwithstanding
anything else contained herein, payment of the Management Fee may be limited by
the provisions of loan agreements of the Company and that the Management Fee
shall be paid if and only to the extent that such payment will not create a
default under such loan agreements. To the extent that all or any portion of the
Management Fee may not be paid because of the terms of the loan agreements, any
portion of the Management Fee that is deferred shall be paid as soon as the same
may be paid without violating the provisions of the loan agreements. Payments of
any outstanding Management Fees (whether or not deferred) shall be paid prior to
payment of any members distributions or similar payments to the members of the
Company.
SECTION 5 DEFAULT AND TERMINATION.
5.1 A default by Manager or the Company shall occur under this
Agreement if Manager or the Company shall willfully breach in any material
respect any material covenant of this Agreement to be kept and performed by it.
5.2 Subject to Section 5.3 hereof, this Agreement shall be terminated
automatically upon the termination of the Company and may be terminated as
follows:
(a) by either the Company or Manager on written notice to the
other party in the event of any default (as defined in Section 5.1 hereof) by
the other party, as provided in Section 5.1, which is not cured within 90 days
after written notice thereof is received by the defaulting party (or if not
curable within that time period, within a reasonable time thereafter);
(b) by either the Company or Manager on written notice to the
other party upon a sale or other disposition of all or substantially all of the
assets of the Company.
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(c) Upon the resignation or removal of Insight as Managing
Member pursuant to and in accordance with the terms of the Operating Agreement,
other than in connection with a transfer by Insight of its Membership Interest
to an Affiliate of Insight that is permitted under the terms of the Operating
Agreement.
5.3 In the event of termination of this Agreement pursuant to the terms
hereof, Manager shall be entitled to receive promptly following termination, and
in any event within 30 days thereafter, the amount of any accrued but unpaid
Management Fees and any expense reimbursements.
SECTION 6 INDEMNIFICATION.
6.1 Indemnification by the Company. The Company will indemnify and hold
harmless Manager, its Affiliates, and all direct and indirect officers,
directors, employees, stockholders, partners, members and agents of Manager and
its Affiliates (individually, a "Manager Indemnitee") from and against any and
all claims, demands, costs, damages, losses, liabilities, joint and several,
expenses of any nature (including reasonable attorneys', accountants' and
experts' fees and disbursements, all of which shall be paid by the Company as
incurred by the Manager Indemnitee(s)), judgments, fines, settlements and other
amounts (collectively, "Damages") arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative, or investigative
(collectively "Claims") in which a Manager Indemnitee may be involved or
threatened to be involved, as a party or otherwise, arising out of Manager's
performance of its obligations under this Agreement or arising out of, related
to or in connection with, the Business regardless of whether this Agreement
continues to be in effect or such Manager Indemnitee continues to be an
Affiliate, or an officer, director, employee, stockholder, partner or agent of
Manager, at the time any such Claims are made or Damages incurred, provided that
in respect of any matter in which indemnification is sought, to the extent
applicable: (i) the Manager Indemnitee acted in good faith and in a manner it
reasonably believed to be in the best interest of the Company and, with respect
to any criminal proceeding, had no reasonable cause to believe its conduct was
unlawful, and (ii) the Manager Indemnitee's conduct for which indemnification is
sought did not constitute gross negligence, willful misconduct or a willful
breach of this Agreement. Any indemnification hereunder will be satisfied solely
out of the assets of the Company.
6.2 Indemnification by Manager. Manager will indemnify and hold
harmless the Company, its Affiliates, and all officers, directors, employees,
stockholders, partners, members and agents of the Company and its Affiliates
(individually, a "Company Indemnitee") from and against all Damages arising from
any Claim in which a Company Indemnitee may be involved or threatened to be
involved, as a party or otherwise, arising out of Manager's gross negligence,
willful misconduct or willful breach of this Agreement.
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6.3 Right to Indemnification Not Exclusive Remedy. The indemnification
rights contained in this Section 6 will be cumulative of and in addition to any
and all other rights, remedies and recourse to which a Manager Indemnitee or a
Company Indemnitee, its heirs, successors, assigns and administrators are
entitled, whether pursuant to some other provision of this Agreement, at law or
in equity; provided, however, it is understood and agreed that notwithstanding
anything contained herein to the contrary, neither Manager (nor any of its
shareholders, officers, directors, employees or agents) shall have any liability
with respect to a breach of, or non-performance under this Agreement except as
expressly specified in this Agreement. The indemnification provided in this
Section 6 will inure to the benefit of the heirs, successors, assigns and
administrators of each Manager Indemnitee and Company Indemnitee.
6.4 Insurance. Manager may purchase, at the Company's expense, and
maintain insurance on behalf of Manager and such other persons as Manager may
reasonably determine against any liability that may be asserted against it or
them in connection with the performance of Manager's obligations under this
Agreement; provided, however, that Manager will not purchase or maintain
insurance against liabilities of Manager or any other person arising out of acts
or omissions which were not made in good faith or which constituted gross
negligence, willful misconduct or a willful breach of this Agreement.
6.5 Interested Transactions. A Manager Indemnitee will not be denied
indemnification in whole or in part under this Section 6 solely because the
Manager Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
SECTION 7 MISCELLANEOUS.
7.1 Relationship Among the Parties. Nothing herein contained shall be
deemed to make Manager a partner, co-venturer or other participant in the
business or operations of the Company or in any manner to render Manager liable
as a principal, surety, guarantor, agent or otherwise for any of the debts,
obligations or liabilities of the Company, whether incurred directly by the
Company or by Manager on behalf of the Company in accordance with this
Agreement.
7.2 Other Activities of Manager. Nothing in this Agreement shall limit
or restrict the right of Manager to engage in any other business or to devote
its time and attention to the management or other aspects of any other business
or to render services of any kind. The Company acknowledges that Manager and its
Affiliates own, manage or operate cable television systems throughout the United
States. Manager will devote such of its attention, time, efforts and resources
to the Business as shall be reasonably necessary for it to carry out its duties
hereunder.
7.3 Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or made as of the
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date delivered if delivered by hand, by telecopier device (confirmed by hand
delivery or overnight courier service) or by overnight courier service to the
parties at the following address (or at such other address for a party as shall
be specified by like notice):
if to the Company, to:
c/o Insight Communications Company, L.P.
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
c/o TCI-Communications, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
if to Manager, to:
Insight Communications Company, L.P.
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
7.4 Assignability; Benefit and Binding Effect. The Company agrees that
Manager may assign this Agreement, without the consent of the Company, to any
Affiliate of Manager, or any successor to Manager by merger, consolidation or
otherwise. Except as set forth in the preceding sentence, neither party hereto
may assign this Agreement without the prior written consent of the other party.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
7.5 Governing Law. This Agreement shall be governed by the laws of the
State of Delaware as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies (without giving effect
to the principles of conflicts of law thereof).
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7.6 Headings. The headings preceding the text of sections and
subsections of this Agreement are included for ease of reference only and shall
not be deemed part of this Agreement.
7.7 Gender and Number. Words used herein, regardless of the gender and
number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine or neuter, and any other number, singular or plural,
as the context requires.
7.8 Entire Agreement. This Agreement represents the entire
understanding and agreement between the Company and Manager with respect to the
specific subject matter hereof. This Agreement supersedes all prior negotiations
between the parties and cannot be amended, supplemented or changed except by an
agreement in writing which makes specific reference to this Agreement or an
agreement delivered pursuant hereto, as the case may be, and which is signed by
the party against which enforcement of any such amendment, supplement or
modification is sought.
7.9 Further Assurances. The parties shall take any actions and execute
any other documents that may be necessary or desirable to the implementation and
consummation of this Agreement or that may be reasonably requested by any other
party hereto. Each party will cooperate with the other party and provide any
assistance reasonably requested by the other party to effectuate the intent of
this Agreement.
7.10 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be held invalid or
unenforceable to any extent by any court of competent jurisdiction, the
remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
7.11 Counterparts. This Agreement may be signed in counterparts, each
of which shall be deemed to be an original but which, when taken together, shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, this Management Agreement has been executed by the
parties hereto as of the date first above written.
THE COMPANY:
INSIGHT COMMUNICATIONS OF
INDIANA, LLC
By: Insight Communications Company,
L.P., Member
By: ICC Associates, L.P., its General
Partner
By: Insight Communications, Inc.,
General Partner
By:
----------------------------------
Name: Xxx X. Xxxxx
Title: Executive Vice President, Chief
Operating Officer and Chief
Financial Officer
MANAGER:
INSIGHT COMMUNICATIONS
COMPANY, L.P.
By: ICC Associates, L.P., its General
Partner
By: Insight Communications, Inc.,
General Partner
By:
----------------------------------
Name: Xxx X. Xxxxx
Title: Executive Vice President, Chief
Operating Officer and Chief
Financial Officer
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