Exhibit 10.16
RETAINED FRANCHISE MANAGEMENT
AGREEMENT
This Retained Franchise Management
Agreement (this “ Agreement ”) is made and
entered into as of the 1st day of March, 2004, by and between
Hornell Television Service, Inc. (“Seller”), and
Atlantic Broadband Finance, LLC (“Buyer”).
W I T N E S S E T
H:
WHEREAS, Seller and Buyer are among
the parties to an Asset Purchase Agreement, dated as of September
3, 2003 (as amended, the “Purchase Agreement”;
capitalized terms used but not defined herein shall have the
respective meanings ascribed to them in the Purchase
Agreement);
WHEREAS, Section 6.14(a)(iii) of the
Purchase Agreement provides that, at the Closing, Seller and Buyer
shall enter into a management agreement pursuant to which Buyer
will provide day-to-day management services for Seller’s
cable television systems serving the Retained Consent Franchises
(the “Managed Systems”); and
WHEREAS, the Retained Consent
Franchises are identified on Exhibit A hereto.
NOW, THEREFORE, in consideration of
the foregoing and the mutual covenants and undertakings set forth
herein, the receipt and consideration of which hereby are
acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE 1
TERM OF AGREEMENT
1.1 Definition of Term . This
Agreement shall commence as of the date hereof and shall remain in
effect until the earlier of (i) the occurrence of a Subsequent
Consent Transfer with respect to each Retained Consent Franchise,
or (ii) August 31, 2004 (the period of effectiveness of this
Agreement is referred to herein as the
“Term”).
ARTICLE 2
MANAGEMENT RESPONSIBILITIES
2.1 Appointment . During the
Term, Seller hereby appoints Buyer, and Buyer hereby accepts such
appointment, to provide (or cause its Affiliate to provide) the
management services described in Section 2.2 hereof, subject to the
terms and conditions set forth in this Agreement.
2.2 Buyer’s Obligations
. Subject to the limitations set forth in Sections 2.3, 2.4 and 3.1
during the Term, Buyer shall be responsible for conducting the
day-to-day business and affairs of each Managed System. Without
limiting the generality of the foregoing, Buyer shall (or shall
cause its Affiliate to):
(a) maintain, construct and operate
each Managed System in the ordinary course, consistent with
Buyer’s operating budgets, if any, established for the period
covered by this Agreement on a basis consistent with Buyer’s
other cable systems;
(b) pay or cause to be paid all
ordinary course expenses, liabilities and charges arising from the
operation of any Managed System that are payable during the Term
(in each case so long as such expenses, liabilities and charges are
Assumed Liabilities or would have constituted Assumed Liabilities
had the Retained Consent Franchise and/or Retained LLC Consent
Franchise Assets to which such Managed System relates been included
among the Assets transferred to Buyer at the Closing), including
all franchise fees (if any), real and personal property taxes,
copyright royalties, programming fees, insurance premiums,
assessments and other impositions applicable to the operation of
any Managed System during the Term hereof;
(c) obtain, maintain and pay all
programming fees in connection with all programming to be
distributed by any Managed System during the Term, subject to
Section 2.3(c);
(d) prepare and file or cause to be
filed all reports and statements of account required to be filed
during the Term with respect to any Managed System with the U.S.
Copyright Office;
(e) maintain all books and records
relating to any Managed System; and
(f) coordinate the management and
operation of any Managed System, including the performance of such
functions as the collection of subscriber receivables and the
providing of repair, maintenance and equipment replacement, as well
as community and other services to be furnished by any Managed
System under any applicable agreement, license or other instrument
relating to the operation of any Managed System; provided in each
case, that certain of these activities may be performed by (i)
Seller pursuant to the Transition Services Agreement, or (ii) by a
third party contracted by Buyer or its subsidiary at its sole cost;
and provided further that Buyer may, but shall not be required to,
make capital expenditures for improvements to the Managed
Systems.
2.3 Negative Covenants .
Buyer shall (or shall cause its Affiliate to) operate each Managed
System, including the provision of the management services
described in Section 2.2, in the ordinary course consistent with
Buyer’s operation of the other cable television systems
acquired from Seller and the other Sellers pursuant to the Purchase
Agreement. Notwithstanding the generality of the foregoing or of
Section 2.2, without Seller’s prior written consent, Buyer
shall not:
(a) Sell or hypothecate any of the
assets used in any Managed System, other than (i) the sale or
abandonment of worn out or obsolete materials, supplies and
equipment for which suitable replacements have been made, if
necessary, (ii) the sale of equipment to subscribers of any Managed
System to be used by subscribers to receive services from such
Managed System, or (iii) Assets transferred to Buyer at the Closing
or LLC Assets owned by LLCs whose LLC Interests are transferred to
Buyer at the Closing;
(b) Change any of the rates charged
to subscribers of any Managed System ;
2
(c) Enter into, or cause Seller to
enter into or become subject to, any contract or other instrument
or understanding that will bind Seller, other than in the ordinary
course of business not inconsistent with any express term
hereof;
(d) Institute, defend or settle
litigation or other legal proceedings relating to any Managed
System, or apply for injunctive relief or give release and
discharges with respect to any of the foregoing, except (i) to the
extent relating to Assets transferred to Buyer at the Closing or
LLC Assets owned by LLCs whose LLC Interests are transferred to
Buyer at the Closing, (ii) pursuant to Section 10 of the Purchase
Agreement, to the extent applicable, or (iii) that Buyer will be
entitled to institute and prosecute collection proceedings and
legal actions incident thereto to enforce the collection of
payments due from subscribers of any Managed System;
(e) Cause Seller to enter into any
contract or understanding with Buyer or any affiliate of Buyer,
other than this Agreement, an asset purchase or like agreement
providing for Buyer’s acquisition of any Managed System and
any other agreement related thereto;
(f) Cause or permit any Managed
System to offer or provide, or cause Seller to enter into any
agreement for any Managed System to offer or provide, capacity of
any Managed System for a third person to provide any communications
services;
(g) Cause Seller to acquire any
cable tele
