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EXHIBIT 10.2
OPERATING MANAGEMENT AGREEMENT
This Agreement is made and shall be deemed effective as of August 23,
1994, by and between NORTHLAND CABLE TELEVISION, INC., a Washington corporation
("NCTV") and NORTHLAND TELECOMMUNICATIONS CORPORATION, a Washington corporation
("NTC").
WHEREAS, NCTV owns and operates the cable television systems described
in Exhibit A attached hereto and incorporated herein by reference, which Exhibit
may be amended from time to time (collectively, the "Systems"); and
WHEREAS, NTC is the corporate parent of NCTV, as well as the corporate
parent of other entities affiliated with NCTV, and has significant experience in
the operation of cable television systems; and
WHEREAS, NCTV desires to engage the services of a managing agent to
supervise the affairs and operations of the Systems, and to share an office site
to conduct the administration of the Systems; and
WHEREAS, NTC is capable and willing to serve as such managing agent;
NOW, THEREFORE, in consideration of the agreements and covenants of the
parties contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree and
covenant as follows:
1. Managing Agent. NCTV hereby engages NTC, and NTC hereby agrees to
serve as the managing agent for NCTV in connection with the overall affairs and
operations of the Systems.
2. Term. NTC shall serve as said managing agent until such time as
either party shall terminate this Agreement upon thirty days' (30) written
notice to the other party.
3. Duties. As managing agent, NTC shall perform (in accordance with the
policies and procedures established from time to time by its wholly-owned
subsidiary, Northland Communications Corporation) the following for NCTV in
connection with its ownership of the Systems:
A. Supervise the affairs, management and operations of the
Systems.
B. Supervise the accounting and other financial books and
records of NCTV.
C. Select, employ, instruct, and generally supervise all
employees who work on the Systems.
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D. Oversee the fulfillment of various contractual obligations
undertaken by NCTV in connection with its ownership of the
Systems.
4. Other management services and activities. NCTV acknowledges that NTC
may provide management services to other cable systems and to provide a variety
of services to other companies as well as with respect to its own activities.
The parties hereby agree that all such services and activities, and income
derived therefrom, are permitted under this Agreement, provided the same shall
not unreasonably interfere with the performance of services rendered to NCTV.
5. Direct costs. Wherever possible NCTV is to pay all direct costs for the
operation of the Systems. Separate purchase orders are to be used for the
Systems and all operating equipment and materials to be used by the Systems will
be kept as physically segregated as reasonably possible from NTC's operating
equipment and materials. The following list represents those types of costs that
generally are to be paid directly by NCTV:
System maintenance; Travel expenses; Drop materials; Dues and
subscriptions; Pole and site rental; Marketing expenses; Lease
payments; Sales commissions; Copyright fees; Legal expenses; Franchise
fees; Billing expense - postage; Accounting services; Audit and tax
fees; Collection expenses; Insurance; Governmental fees and licenses;
Headquarters supplies and expenses; Satellite expense; Bank and service
charges; Pay television expense; Property taxes; Program guides;
Equipment usage charge (vehicles and other equipment); Office usage
charge (billing equipment and office rent); Systems utilities; Operating
salaries and benefits; Vehicle operating expenses; Administrative
salaries and benefits; Billing expense - processing; Direct office
postage; Office supplies; Telephone; Copying/printing; and Office
maintenance.
6. Management fees and payment terms. For its performance of the
management duties hereunder, NTC shall be entitled to receive from NCTV a fee
equal to 5% of NCTV's gross revenues (the "Management Fee"). NCTV shall pay NTC
the Management Fee in cash for the first two months of any fiscal quarter (and
in September 1994 only). Payment of the Management Fee shall be deferred for the
third month of any fiscal quarter (except for September 1994) until NCTV has
delivered to its lenders quarterly financial statements for such fiscal quarter
and has made such adjustments as necessary to reflect differences between actual
and estimated gross revenues for prior months in accordance with the actual
gross revenues set forth in such quarterly financial statements. The Management
Fee may
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be calculated based on estimated revenues as determined by NCTV in good faith.
Any differences between estimated and actual revenues shall be reflected as an
adjustment to the Management Fee paid for the third month of any quarter. No
Management Fee shall be payable to NTC if, before or after giving effect
thereto, NCTV has defaulted on, or has committed an unmatured default of, its
credit agreement with its lenders. Any such Management Fee which may not be paid
shall be deferred; the Management Fee so deferred shall be paid only as may be
permitted under NCTV's credit agreement with its lenders.
7. Bank accounts. NCTV will maintain separate Managers' Accounts and
separate depository accounts.
8. Assignment. This Agreement may not be assigned by either party hereto
without the prior written consent of the other party.
9. Miscellaneous. This Agreement contains the entire agreement between the
parties and no modification, extension, termination, or waiver of this Agreement
or any of the provisions hereof shall be binding upon the parties hereto unless
made in writing and signed by the parties hereto. The captions hereof are for
convenience only and shall not control or affect the meaning or construction of
any of the provisions of this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of Washington.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed as of the date first written above.
"NTC" NORTHLAND TELECOMMUNICATIONS CORPORATION
By /s/ XXXXX X. XXXXXX
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Its Vice President
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"NCTV" NORTHLAND CABLE TELEVISION, INC.
By /s/ XXXXX X. XXXXXX
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Its Vice President
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REPLACEMENT EXHIBIT A
This is Replacement Exhibit A to that certain Operating Management
Agreement dated as of August 23, 1994 by and between Northland Cable Television,
Inc. and Northland Telecommunications Corporation.
OWNED CABLE TELEVISION SYSTEMS
CALIFORNIA
o The Oakhurst cable television system serves Oakhurst, Ahwanee, Bass lake
and Cedar Valley.
o The Coarsegold cable television system serves Coarsegold.
o The Fish Camp cable television system serves Fish Camp and nearby
unincorporated Madera County.
o The Mariposa cable television system serves Mariposa.
o The Lush Xxxxxxx cable television system serves Lush Xxxxxxx and nearby
unincorporated Mariposa County.
o The Yreka cable television system serves Yreka, Montague and nearby
unincorporated Siskiyou County.
GEORGIA
o The Statesboro cable television system serves Statesboro, Brooklet and
nearby unincorporated Xxxxxxx County.
OREGON
o The Woodburn cable television system serves Woodburn, Hubbard, Gervais and
nearby unincorporated Xxxxxx County.
SOUTH CAROLINA
o The Liberty cable television system serves Liberty, Pickens, Norris, Six
Mile and nearby unincorporated Xxxxxxx County.
o The Seneca cable television system serves Seneca, Clemson, Central,
Xxxxxxxxx, Walhalla, Westminster, West Union and nearby unincorporated
counties of Xxxxxxx, Xxxxxxxx and Oconee.
o The "Five Points" cable television system serves unincorporated Oconee
County near Westminster.
TEXAS
o The Crockett cable television system serves Crockett.
o The Madisonville cable television system serves Madisonville and nearby
unincorporated Madison County.
o The Waterwood cable television system serves unincorporated San Jacinto
County known as Waterwood.
o The Stephenville cable television system serves Stephenville.
o The Dublin cable television system serves Dublin.
o The Hico cable television system serves Hico.
o The Marble Falls cable television system serves Marble Falls, Meadowlakes,
Horseshoe Bay (Burnet County and Xxxxx Xxxxxx), Xxxxxxxxxx Xxxxxx xxx Xxx
Xxxxx Xxxxxxx.
o The Burnet cable television system serves Burnet.
o The Kingsland cable television system serves Kingsland, Granite Shoals,
Lake X. X. Xxxxxxx (Burnet County and LIano County), Sunrise Beach and
Highland Haven.
o The Llano cable television system serves Llano.
Replacement Exhibit A
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o The West Lake Xxxxxxxx cable television system serves West Lake Xxxxxxxx
and Inks Lake (Llano County and Burnet County).
o The Mexia cable television system serves Mexia, Lake Mexia, Tehuacana and
Groesbeck.
o The Xxxxxxxx cable television system serves Xxxxxxxx.
o The Fairfield cable television system serves Fairfield and Xxxxxx.
o The Xxxxxxx cable television system serves Xxxxxxx.
o The Xxxxxx cable television system serves Xxxxxx.
o The Buffalo system serves Buffalo.
o The Xxxxxx system serves Xxxxxx.
o The Navasota cable television system serves Navasota.
WASHINGTON
o The Bainbridge Island cable television system serves Bainbridge Island,
Suquamish, Indianola and Xxxxx Hook.
o The Moses Lake cable television system serves Moses Lake and nearby
unincorporated Grant County.
o The Ephrata cable television system serves Ephrata, Soap Lake and nearby
unincorporated Grant County.
o The Othello cable television system serves Othello and nearby
unincorporated Xxxxx County.
o The Port Angeles cable television system serves Port Angeles and nearby
unincorporated Clallam County.
Replacement Exhibit A
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