Exhibit 10.9
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MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (the "Agreement") is made and entered
into this 24th day of June, 1999, by and between UNITED INTERNATIONAL HOLDINGS,
INC., a Delaware corporation doing business as UnitedGlobalCom ("United"), and
AUSTAR UNITED COMMUNICATIONS LIMITED, a New South Wales corporation (the
"Company"). This Agreement amends and replaces in its entirety the Management
Services Agreement dated the 16th day of June, 1999.
Recitals
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A. United indirectly owns interests in multi-channel television,
programming and telecommunications operating companies throughout the world. The
Company is acquiring from certain subsidiaries of United ownership interests in
certain operating companies that are engaged in such activities in Australia and
New Zealand and desires to engage the Company to provide certain services to the
Company and its subsidiaries and affiliates. The Company will benefit from the
services United performs for, and expenses United incurs on behalf of, the
Company.
B. United has incurred, directly and through its subsidiaries and
affiliates, overhead and other expenses on behalf of the operating companies
that are being acquired by the Company and will continue to incur such overhead
and other expenses on behalf of the Company and such operating companies under
this Agreement. These include expenses incurred in relation to services to be
provided to the Company and its subsidiaries and controlled affiliates,
including legal, accounting, financial reporting, investor relations, human
resources, information technology, equipment procurement and testing services,
corporate finance activities and administration of expatriate employee
relationships and benefits (the "General Services").
C. United provides and will continue to provide, under this Agreement, to
the Company and its subsidiaries and affiliates certain technical, marketing and
management assistance with respect to their respective businesses as required by
the Company from time to time and agreed to by United (the "Business Services"
and, together with the General Services, the "Services").
D. The parties have agreed on an equitable allocation and reimbursement of
such expenses and the payment for services to be performed by United and its
subsidiaries and affiliates.
Agreement
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1. PERFORMANCE OF SERVICES.
1.1 SERVICES. United will perform the Services for the Company in a
manner consistent with the Services previously performed for the subsidiaries
being acquired by the Company from other subsidiaries of United. United shall
provide to the Company such other services as are requested from time to time by
the Company's Board of Directors and agreed to by United.
1.2 BUSINESS SERVICES.
1.2.1 APPOINTMENT. The Company hereby engages United as its a
technical advisor and business consultant to provide services with respect to
the design, construction, operation, maintenance, administration, marketing and
programming of the satellite direct to home ("DTH"), multi-point distribution
systems ("MMDS") and cable television systems ("Cable") and the provision of
internet and other telecommunication services ("Telecom"), and United hereby
accepts such engagement pursuant to the terms of this Agreement.
1.2.2 GENERAL DUTIES OF UNITED.
1.2.2.1 From time to time United may, through its
officers, employees, agents and other personnel, provide technical assistance
and consulting services to the Company in accordance with the terms of this
Agreement. The extent, amount and timing of services provided by United under
this Agreement may be determined by United in its discretion based on United's
assessment of the Company's requirements after consultation with the Company.
1.2.2.2 United shall devote its best efforts to carrying
out the advisory and consultancy functions, and performing the duties specified
in this Agreement in a professional, expert and diligent manner in accordance
with the standards United customarily applies in the operation or management of
companies engaged in the DTH, MMDS, Cable and Telcom businesses otherwise owned
or managed by United.
1.2.2.3 United shall provide such personnel (whether
employed by United or any of its affiliates) as are reasonably required to
fulfill its obligations under this Agreement. To the extent appropriate, such
personnel shall provide the services specified in this Agreement on-site at the
offices of the Company. Any key executives seconded by United to the Company
pursuant to the Secondment Agreement (as hereinafter defined) shall, subject to
the oversight and supervision of the Company's Board of Directors, be
responsible for the general management and administration of the business of the
Company and shall further assume and discharge the following specific
operational and functional tasks: (i) negotiate programming agreements; (ii)
determine product pricing; (iii) interact with subscribers; (iv) manage and
develop technology used in the Company's business; (v) manage any joint ventures
to which the Company or its subsidiaries is party; and (vi) provide advice and
services in relation to the financing, management, administration and operation
of investments made by the Company.
1.2.2.4 United shall at all times perform its duties under
this Agreement for the benefit of the Company and act in accordance with the
provisions of any business plan adopted by the Company.
1.2.3 SPECIFIC DUTIES OF UNITED. United shall provide, through
advice, consultation and other means, technical assistance to the Company with
respect to the matters described below:
1.2.3.1 DESIGN AND CONSTRUCTION OF THE DTH, MMS AND CABLE
SYSTEMS.
(a) United shall assist in the management of all aspects of the design
and construction of the DTH, MMDS, Cable and Telcom operations and shall advise
on the implementation of any design and construction plan. The issues to be
considered by United in developing and implementing the design and construction
of should include, without limitation, the following matters: (i) the type of
equipment to be used in the construction; (ii) recommendations as to
manufacturers of equipment and the equipment to be provided by them; (iii)
appropriate costs and expenditures; (iv) terms of contracts for the purchase and
installation of equipment; (v) mapping of the franchise areas using in-house
computerized design techniques; (vi) the use of electronics/fibretronics for
both above-ground and underground installations; (vii) advice in selecting
contractors; (viii) recommendations on methods to be used by contractors to
build the networks; (ix) the acceptability of prices and bids for construction;
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(x) policies for supervision of construction work and scheduling of construction
work; (xi) techniques and methods for conduit and cable placement; and (xii)
advice on the location and installation of head-end and other transmission or
reception equipment and the selection and purchase of that equipment.
(b) United shall investigate and assist the Company with the
conclusion of, financial and credit arrangements with manufacturers, suppliers,
contractors and the like. United shall make available, if appropriate and
practicable, use of United's purchasing services and contracts, including bulk
purchasing and discount rights available to United or its affiliates where it
has the right to do so.
(c) United shall assist the Company with the filling of the television
channels of the network through the selection of programming offered by
international sources.
1.2.3.2 MARKETING FOR THE COMPANY. United shall assist in
the management of the marketing, selling and advertising functions of the
Company, including assistance and advice in relation to (i) the development of
sales procedures and reporting functions, (ii) incentive programs, (iii)
training of sales personnel, (iv) brochures and advertising programs, (v) advice
on selection and packaging of basic and pay channels, (vi) customer complaint
handling, (vii) billing and rates and (viii) promotional offers and other sales
techniques.
1.2.3.3 SUBSCRIBER MANAGEMENT AND INFORMATION SYSTEMS.
United shall assist in the management of the design, planning, acquisition,
implementation, operation and monitoring of all phases of the information
technology associated with the networks including, but not limited to, the
following: (i) an addressable control system which directly controls the
converters and head-end equipment attached to the networks; (ii) computer aided
design and drafting which assists network designers to engineer the networks;
(iii) a project management system which tracks materials, time and money
associated with the construction phase of the project; (iv) a purchasing and
material acquisition system which functions to control material acquisitions,
handling and issuance; (v) an accounting system including a nominal ledger,
payables, receivables, payroll, budgeting, fixes assets and management
reporting; (vi) office systems, including word processing, planning, graphics,
and electronic mail systems; (vii) a subscriber management and billing system
which controls all daily real-time operations of the cable system including
marketing, new installation, changes of service, pay-per-view event
authorization, disconnections, automatic addressable control system interaction,
sales material, service calls, technician work force management, converter
inventory, billing, plant statistics reporting, homes passed management,
subscriber accounts receivable, point-of-sale cashier stations, subscriber
demographic information and the like; and (viii) miscellaneous related systems
such as vehicle management, advertising sales and tracking systems, automated
telephone response units, status monitoring systems, and other systems which
directly connect and interact with the various systems mentioned above.
1.2.3.4 PERSONNEL AND TRAINING.
(a) United shall provide advice on the establishment of standards and
methods for the selection, training, monitoring and work safety of the personnel
involved in the operation or administration of the networks.
(b) United shall: (i) provide training for officers, employees and
agents of the Company; (ii) subject to the direct supervision of the Company or
its representatives, assign personnel to undertake advisory, training and
operational duties in the Company; and (iii) assist the Company in the
identification and evaluation of candidates with the relevant experience for
senior management positions.
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(c) The Company shall at all times and at the cost of the Company
maintain relevant personal damages and third party liability insurance for all
employees and personnel of United providing on-site services.
(d) Each person selected by the Board of Directors of the Company or
any of its significant subsidiaries to serve as an executive officer of the
Company or such subsidiary (or otherwise designated or permitted to serve as
such) first shall be nominated to serve as such by United in accordance with
this Section 1.2.3.4. The Company shall notify United whenever it has determined
that a person should be considered for election or designation as an executive
officer of the Company or any such subsidiary, including persons to be
reappointed as such. Upon receipt of such a notification, United shall consult
with the Company, including its Board of Directors if appropriate, as to the
requirements of such position, possible candidates and the like. United shall
either nominate for election or designation by the Board of Directors of the
Company or such subsidiaries candidates for such positions or, as to any such
position, shall indicate that it does not intend to propose a candidate. If a
candidate nominated by United is not approved by the applicable Board of
Directors, the Company shall promptly notify United and United may nominate for
election or designation by the Board of Directors of the Company or such
subsidiary a different person to serve in such position. If United indicates
that it does not intend to propose a candidate, the Board of Directors of the
Company or such subsidiary may appoint a person to serve that has not been
nominated by United.
(e) For purposes of this Section 1.2.3.4, an "executive officer" of an
entity shall include its chief executive officer, president, chief operating
officer, chief financial officer, any vice president in charge of a principal
business unit, division or function (such as engineering, sales, administration
or finance) and other officer or other person who performs a policy making
function for the entity.
1.3 INDEPENDENT CONTRACTOR/OTHER ASSISTANCE.
(a) In the performance of its duties and responsibilities under this
Agreement, United is and will act solely as an independent contractor and
nothing contained in this Agreement or in the relationship between the Company
and United constitutes, or may be construed to be or to create, a partnership or
joint venture between the Company and United.
(b) The Company shall make available to United's personnel who are
performing services under this Agreement access to all records, equipment and
areas within the control of the Company as may be reasonably requested by the
personnel. United undertakes not to use any facilities or assistance provided by
the Company under this Agreement other than for the sole purpose of performing
its obligations pursuant to this Agreement.
2. FEES AND EXPENSES.
2.1 FEE. For its Services under this Agreement, United shall receive a
fixed amount monthly, which amount shall be adjusted on or before January 1 of
each year for the subsequent year by the board of directors of United in its
reasonable discretion to allocate otherwise unallocated corporate overhead
expenses among United's operating companies, including the Company, taking into
account the relative size of the operating companies and their estimated use of
United resources. United shall provide background information supporting any
adjustment in the monthly fee upon request of the Board of Directors of the
Company. The fixed amount payable by the Company for calendar year 1999 shall be
US$200,000 per month, and may not be increased by more than 15% in any one year.
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2.2 EXPENSES. During the period of this Agreement, the Company shall
reimburse United for all direct and other expenses reasonably incurred by United
and its employees and other personnel in the provision of Services under this
Agreement. Such expenses will be reimbursed at cost upon receipt of the related
invoice and shall include (i) travel, meal, lodging and entertainment expenses,
(ii) salary and reasonable administrative expenses and (iii) fees and expenses
of advisors, consultant and independent contractors (such as accountants, market
consultants and legal advisors) engaged by United with the consent of the
Company. United may second employees to the Company and its subsidiaries upon
consultation with the Company. If so, the relationship between the Company and
United with respect to such employees and the reimbursement of related costs
shall be governed by the Master Seconded Employee Services Agreement between
United and the Company of even date herewith (the "Secondment Agreement").
3. LIABILITY AND INDEMNIFICATION. Neither United nor any of its directors,
officers, employees, agents or legal representatives shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company or
any of its directors or officers (or their affiliates) for any loss, claim or
damage asserted against or incurred by the Company or any of its directors or
officers (or any affiliate thereof) arising out of or in connection with the
provision by United of the Services, except to the extent such loss, claim or
damage is caused by gross negligence or willful misconduct of United. The
Company, to the maximum extent permitted by law, shall indemnify and keep United
fully indemnified from and against any loss, claim or damage incurred by United
as a result of any action or claim brought against it by any third party in
respect of the provision by United of the services stipulated under this
Agreement, except to the extent caused by the gross negligence or willful
misconduct of United.
4. TERM. This Agreement shall be effective upon the date hereof and shall
continue until December 31, 2010. This Agreement may be terminated by either the
Company or United (i) upon 30 days prior written notice to the other at any time
after the aggregate direct or indirect ownership by United of the Company's
ordinary shares is below 10 percent or (ii) upon a material breach by the other
party of any of its respective obligations under this Agreement and such breach
remaining uncured for a period of (A) 30 days, in the case of payment
obligations under this Agreement, or (B) 90 days, in the case of all other
obligations under this Agreement. The obligation of either party for matters
accruing prior to any termination of this Agreement shall not be affected by any
such termination.
5. MISCELLANEOUS.
5.1 WAIVER. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by law or otherwise afforded, will he cumulative and not
alternative.
5.2 AMENDMENT. This Agreement shall not be amended or modified, nor
rights hereunder waived, except by a writing, signed by both parties.
5.3 NO THIRD-PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties hereto to confer third-party beneficiary rights upon any person.
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5.4 INVALID PROVISIONS. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a legal
valid and enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
5.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The parties acknowledge
that the persons named below have the requisite authority to execute this
Agreement and bind their respective principals.
5.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Colorado.
5.7 NOTICES. All notices, demands or other communications to be given
under or by reason of this Agreement shall be in writing and shall be deemed to
have been received when delivered personally, or when transmitted by facsimile
or by overnight delivery service, addressed as follows:
(i) If to United, to it at:
United International Holdings, Inc.
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000, X.X.X.
Facsimile: (000) 000-0000
Attention: President
Copy to:Legal Department
(ii) If to Austar United Communications Limited, to it at:
Austar United Communications Limited
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000, X.X.X.
Facsimile: (000) 000-0000
Attention: President
Copy to:Legal Department
Either party hereto may change its address for notices, demands and other
communications hereunder by giving notice of such change to the other party in
accordance with this Section 6.7.
5.8 ASSIGNMENT; BINDING EFFECT. This Agreement may not be assigned by
either party without the prior written consent of the other, except that United
may assign this Agreement to any affiliate of United without such prior written
consent. This Agreement shall bind the parties hereto and their assigns and
successors in interest.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date set forth above.
UNITED INTERNATIONAL HOLDINGS, INC., a
Delaware corporation
By: /S/Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: President
AUSTAR UNITED COMMUNICATIONS LIMITED, a
New South Wales corporation
By: /S/Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: President
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