EXHIBIT 10.01.3
AMENDED AND RESTATED
MANAGEMENT AGREEMENT
AND
JOINT VENTURE AGREEMENT
OF CENTURY/ML CABLE VENTURE
January 1, 1994
The
parties to this agreement (referred to as the "Venturers") are
Century Communications Corp., a Texas corporation ("Century"), and
ML Media Partners, L. P., a Delaware limited partnership ("ML
Media").
RECITALS
A. Pursuant
to an agreement dated July 2, 1986, Century and ML Media
formed a joint venture (the "Joint Venture") for the purpose of
acquiring at least ninety percent of the outstanding shares of
common stock of Cable Television Company of Greater San
Juan, Inc. (the "Company"), a California corporation that
owned and operated a cable television system (the "Original
System") in San Juan, Puerto Rico. The Joint Venture, in turn,
organized as a wholly-owned subsidiary Century-ML Cable
Corporation, a Delaware corporation (the "Subsidiary").
B. Pursuant
to a Management Agreement and Joint Venture Agreement dated
December 16, 1986 (the "1986 Agreement"), the Venturers
provided for the continuance and governance of the Joint Venture,
the contributions to the Joint Venture that were required for the
acquisition by the Subsidiary of the Company's shares, the
liquidation of the Company into the Subsidiary, and the ownership
and operation of the Original System by the Subsidiary, including
the appointment of Century as manager of the Original
System.
C. On
September 21, 1987, the Joint Venture acquired cable
television systems serving Toa Alta, Catano and Toa Baja, Puerto
Rico (together with the Original System, the "Systems") and amended
the 1986 Agreement to appoint Century as the manager of those
systems.
D. On
February 15, 1989, Century and ML Media formed a joint venture
known as Century-ML Radio Venture (the "Radio Venture") to acquire
Acosta Broadcasting Corp. ("Acosta"), Fidelity Broadcasting Corp.
("FideLity") and Broadcasting & Background Systems
Consultants, Corporation ("Broadcasting"), which were subsequently
liquidated into the Radio Venture. Acosta owned radio station WUNO
(AM), San Juan, Puerto Rico ("WUNO") and NotiUno News and
distributed NotiUno News to the NotiUno News Network (the "News
Network"), Fidelity owned radio station WFID (FM), Rio Piedras,
Puerto Rico ("WFID"), and Broadcasting owned "Beautiful Music
Services". WUNO and WFID are sometimes referred to as the
"Stations" and WUNO, WFID, the News Network and Beautiful Music
Services are sometimes referred to as the "Radio
Businesses".
E. Pursuant
to a Management Agreement and Joint Venture Agreement dated as of
February l5, 1989 (the "Radio Venture Agreement"), the
Venturers provided for the formation and governance of the Radio
Venture, the contributions to the Radio Venture necessary for the
acquisition of Acosta, Fidelity and Broadcasting, and the ownership
and operation of the Stations and Radio Businesses by the Radio
Venture, including the appointment of ML Media as manager of the
Stations and the Radio Businesses.
F. The
Joint Venture and the Subsidiary are parties to separate Note
Agreements, each dated as of December 1, 1992, which provided
for the issuance and sale to certain purchasers of the Subsidiary's
$100,000,000 9.47% Senior Secured Notes due November 30, 2002
(the "Note Agreements"), and a Second Restated Credit Agreement
dated as of December 1, 1992 with Citibank, N.A. as agent, and
the banks named therein, which provided to the Subsidiary a
revolving and term loan credit facility in a principal amount not
to exceed $20,000,000 (the "Credit Facility"). Under the Note
Agreements, the Credit Facility and certain related documents, the
Radio Venture is required to transfer all of its assets
to the Joint Venture and the
Joint Venture is required to assume all of the liabilities of the
Radio Venture (the "Asset Transfer").
G. Contemporaneously
with the execution of this agreement, the Venturers are causing the
Asset Transfer to occur. The Venturers wish to provide in this
agreement for the continuation of the Joint Venture and their
respective rights and obligations under the 1986 Agreement, as
amended, and the Radio Venture Agreement (each of which is being
superseded by this agreement), including the continuation of the
appointment of Century as manager of the Systems and of ML Media as
manager of the Stations and Radio Businesses. Accordingly, it is
the intention of the Venturers that (1) the assets and
business of the Systems shall constitute the "Cable Division" of
the Joint Venture and the Subsidiary, (ii) the assets and
business of the Stations and Radio Businesses shall constitute the
"Radio Division" of the Joint Venture, (iii) the Cable
Division and the Radio Division (each of which is sometimes
referred to as a "Division") shall be operated and managed as
though each was a separate business under separate management, and
(iv) Century shall be the manager of the Cable Division and ML
Media shall be the manager of the Radio Division, with the rights
and obligations as manager of those businesses that each possessed
prior to the Asset Transfer and as are set forth herein.
It
is therefore agreed as follows:
1.
Continuation of Joint Venture; Interests
in the Joint Venture. The Venturers
shall continue the Joint Venture in accordance with the terms of
this agreement. The name of the Joint Venture shall continue to be
Century/ML Cable Venture and the Joint Venture from time to time
may adopt and conduct business under such fictitious or trade names
as the management board of the Joint Venture (created pursuant to
section 7.1) determines appropriate. The Joint Venture shall
have such places of business as the management board of the Joint
Venture from time to time may establish. Interests in the Joint
Venture shall be evidenced by a certificate in the form of
Exhibit A, which shall bear a legend evidencing the
restrictions on transfer in section 9.
2.
Purpose of the Joint Venture.
The purposes of the Joint Venture are to
(a) own and operate, and subsequently dispose of, the Systems,
(b) own and operate, and subsequently dispose of, the Stations
and the Radio Businesses, and (c) conduct all activities
incidental to the ownership and operation of the Systems, the
Stations and the Radio Businesses. The Joint Venture may also
engage in such other business activity as the management board may
determine. Each of the Venturers shall cause the Joint Venture and
the Subsidiary to perform any remaining obligations for which they
may be responsible under the purchase agreements pursuant to which
the assets of the Joint Venture, the Radio Venture or the
Subsidiary were acquired. Each of the Venturers confirms its
guaranty of any remaining obligations of the purchaser heretofore
undertaken and to be undertaken under the purchase agreement
relating to the acquisition of the Original System.
3.
Term of Joint Venture.
The Joint Venture shall continue until the
earlier of (a) December 31, 2035 and (b) the date
the Joint Venture is dissolved in accordance with
section 10.
4.
Capital Contributions.
4.1
Capital Contributions;
Reimbursement. Each of the Venturers
has contributed its required percentage of the amount required,
together with the proceeds of any bank financing obtained by the
Joint Venture or the Subsidiary, to consummate the acquisition of
the assets of the Joint Venture and the Subsidiary and to pay all
expenses relating to the acquisition of those assets, including,
but not limited to, brokers' fees. If ML Media or Century (the
"Paying Party") pays (or has paid) more than fifty percent of any
liability, cost or expense arising in connection with the
acquisition of those assets, or in connection with the operations
of the Systems, the Station or the Radio Businesses or the
management of the Cable Division or the Radio Division, the other
Venturer promptly shall reimburse the Paying Party for the excess,
together with interest on the
2
excess at the rate of interest equal
to the reference rate of Citibank, N.A., in effect from time to
time, from the date the payment by the Paying Party was
made.
4.2
No Other Mandatory Contributions; No
Withdrawals. Except as provided in
section 4.1, neither Venturer shall be required to make any
capital contribution to the Joint Venture. Neither Venturer shall
be entitled to withdraw any part of its capital contributions or to
receive any distributions from the Joint Venture, except as
expressly provided in this agreement.
4.3
No Liability for Capital
Contributions. Neither Venturer shall
be personally liable for the return of any portion of the capital
contribution of either of the Venturers; the return of those
capital contributions shall be made solely from the Joint Venture's
assets. Neither Venturer shall have the right to demand or receive
property other than cash for its interest in the Joint Venture or
to receive cash for that interest otherwise than as expressly
provided in this agreement.
4.4
No Interest.
Neither Venturer shall receive any interest
on its capital contributions.
4.5
No Additional Venturers.
No additional venturers shall be admitted
to the Joint Venture.
5.
Cash Distributions.
5.1
Time of Distributions.
Distributions of cash from any source
(other than pursuant to section 10) shall be made at the time
or times determined by the management board.
5.2
Allocations of Cash Distributions.
All distributions of cash shall be
allocated equally between the Venturers.
6.
Tax Allocations.
For federal income tax purposes, all items
of income, gain, loss, deduction and credit shall be allocated
equally between the Venturers.
7.
Management.
7.1
Management Board.
The business and affairs of the Joint
Venture shall be under the general supervision of a management
board consisting initially of Dr. Leonard Tow ("Tow") and one
other designee of Century and two members designated from time to
time by ML Media. Upon the death, insolvency, adjudication of
incompetence or disability of Tow (but only during the period of
Tow's disability or incompetence), the management board shall
consist of two members designated from time to time by each of
Century and ML Media. The management board shall hold regular
meetings not less frequently than quarterly, shall act by unanimous
vote of its members (except as otherwise provided in this
agreement), and shall adopt such rules of procedure as it may from
time to time determine. The Joint Venture shall vote the stock of
the Subsidiary in accordance with the determination of the
management board. All matters relating to the purchase agreements
under which the Joint Venture, the Radio Venture or the Subsidiary
acquired its assets shall be determined by the management board. As
used in this agreement, the term "disability" means the inability,
by reason of physical or mental illness, to perform substantially
all of the duties of chief executive officer of Century for a
period of 180 consecutive days, it being understood and agreed that
Tow shall once again be entitled to membership on such board on the
termination of his incompetence or disability.
7.2
Board of Directors of the
Subsidiary. Subject to the provisions
of section 7.3, the board of directors of the Subsidiary shall
consist of the four members of the management board of the Joint
Venture, and the Joint Venture shall vote the stock of the
Subsidiary to elect those persons as directors. In addition to
supervising the management of the Original System, before the
beginning of each year the board of directors of the Subsidiary
shall establish for the following year an operations budget, a
capital expense budget, a cash management budget and such other
budgets and operational objectives as it shall determine
appropriate. The Subsidiary's certificate of
3
incorporation and bylaws shall provide for
unanimous vote of the directors with respect to the matters
referred to in section 7.4.
7.3
Manager of the Systems.
(a) Century
shall be engaged by the Joint Venture and the Subsidiary as the
manager of the Systems in perpetuity, subject to termination as
provided herein or upon the sale of the Systems, and, subject to
the general supervision of the management board of the Joint
Venture and the board of directors of the Subsidiary and to the
provisions of this section 7.3 and the provisions of
section 7.4, Century shall be responsible for the day-to-day
operations of the Systems and for the supervision of the
Subsidiary's business. Century shall provide to the Joint Venture
and the Subsidiary the services of Tow (so long as he is employed
by Century and is not disabled or incompetent) and any other
officers or employees of Century that Century may reasonably
determine are required to perform its obligations as manager of the
Systems. Century shall perform its responsibilities as manager of
the Systems diligently, to the best of its ability and in the best
interests of the Joint Venture and the Subsidiary. If Century is
removed (as provided in section 7.3(d)) as manager of the
Systems, ML Media shall become the manager of the Systems, with the
duties and responsibilities previously held by Century, and shall
be entitled to a management fee in the same amount (or equal to its
out-of-pocket expenses in managing the Systems, if greater) and
payable in the same manner as the management fee payable to
Century.
Century's
responsibilities as manager of the Systems shall include, without
limitation, the following, and Century shall have the power and
authority, subject to the general supervision of the management
board of the Joint Venture and the board of directors of the
Subsidiary, to take any acts and execute any instruments necessary
to perform the following:
(1) Causing
the Systems to purchase, or enter into purchase agreements with
respect to, any and all materials, supplies, machinery and
equipment necessary for the operation and maintenance of the
Systems and for the construction or installation of any additions
to or replacements thereof;
(2) Causing
the Systems to enter into any and all agreements with third parties
to supply services required for the operation, maintenance,
construction, expansion or replacement of the Systems, including,
but not limited to, agreements with program suppliers, data
processing organizations, advertising agencies, marketing and/or
sales persons or organizations, installers, general and other
contractors, subcontractors, or others as are deemed by Century to
be necessary for the proper operation, maintenance or improvement
of the Systems, and overseeing all performances under such
agreements;
(3) Keeping
or causing to be kept all necessary books and records;
(4) Causing
to be timely filed all Federal, state and local reports as may be
required, including, without limitation, all reports and returns
for income taxes, unemployment compensation, workmen's
compensation, copyright fees, and property taxes and all other FCC
and Puerto Rico Public Service Commission ("PSC") and other
regulatory reports;
(5) Selecting,
employing, instructing, discharging, and otherwise supervising the
General Manager of the Systems, and, acting through and with the
General Manager of the Systems, selecting and employing,
supervising, instructing, discharging, and otherwise managing all
employees of the Systems and any agents or independent contractors
considered by Century or the General Manager to be necessary for
the proper operation, maintenance or improvement of the
Systems;
(6) Causing
the Systems to be maintained and serviced at all times in
conformance with applicable franchises;
4
(7) Causing
to be purchased and maintained in effect such policies of insurance
as is customary in the cable television industry;
(8) To
the full extent it is able to do so, making available to the
Systems its buying power upon any purchase which may be made or
contracts which may be entered into by Century as agent for or
otherwise on behalf of the Systems;
(9) With
the assistance of the General Manager and other employees of the
Systems, developing and submitting to the management board of the
Joint Venture and the board of directors of the Subsidiary for its
approval operating and capital improvements budgets (the "Budgets")
covering the System's next fiscal year;
(10) Providing
programming services, such as:
(a) periodic
evaluation of the programming activities of the Systems and
recommendations for the improvement or modification of program
offerings or alignments; and
(b) programming
contract administration, including the authority and responsibility
(i) to negotiate with program suppliers the terms of
programming contracts for programming to be supplied to and
telecast over the Systems, (ii) to enter into programming
contracts on behalf of the Systems, (iii) for the billing of
subscribers for programming services, (iv) for the processing
of programming billings of programming suppliers and (v) for
acting as agent for the Systems with respect to programming
matters;
(11) Carrying
out all negotiations with unions, whether relating to elections,
contracts, grievances or other matters and assisting the attorneys
for the Joint Venture and the Subsidiary in the preparation of
union contracts if any are required;
(12) Representing
the Joint Venture and the Subsidiary before all governmental
authorities with respect to any matter necessary or desirable and
relating to the Systems (such representation to be made jointly
with ML Media if the relevant matter also relates to the Stations
or the Radio Businesses);
(13) Performing
all other management services which Century may deem necessary or
desirable for the efficient operation of the Systems;
and
(14) Preparing
and delivering all reports required of the Cable Division, the
Joint Venture and the Subsidiary pursuant to the Note Agreements,
the Credit Facility and all related agreements, it being understood
and agreed that ML Media shall cooperate in furnishing all this
information.
(b) Century
shall be entitled to receive from the Subsidiary for its services
as manager of the Systems a management fee in an amount equal to
five percent of the total Net Gross Revenues of the Systems. The
following provisions shall apply with respect to the management
fee:
(i) The
term "Net Gross Revenues" means the gross revenues of the Systems
from all sources less the aggregate amount paid by the Systems to
suppliers of pay television product ( e.g. , HBO, Cinemax,
Disney and Showtime).
(ii) Payments
with respect to the management fee shall be made monthly in
arrears, not more than 30 days after the end of each month,
based on a determination by the chief financial officer of the
Cable Division of the Net Gross Revenues for that month.
5
(iii) Net
Gross Revenues for each month shall be determined by the chief
financial officer of the Cable Division, subject to adjustment
based on the accountants' determination described below. Copies of
the determination by the chief financial officer of the Cable
Division shall be prepared as soon as practicable after the end of
each month and shall be delivered to and reviewed by the management
board of the Joint Venture and the board of directors of the
Subsidiary. Within 120 days after the end of each calendar
year, the Joint Venture and the Subsidiary shall cause their
independent public accountants to determine the Net Gross Revenues
of the Systems for that year and the management fee payable to
Century for that year and to deliver a copy to Century. Within
10 days after receipt by the Joint Venture and the Subsidiary
of the accountants' determination (which shall be final and binding
on the Joint Venture, the Subsidiary and Century), the Joint
Venture and the Subsidiary shall pay to Century (or Century shall
repay to the Joint Venture and the Subsidiary pro rata in
proportion to the number of subscribers served by their respective
Systems) the amount by which the management fee for the year
payable to Century as determined by the accountants exceeds (or is
less than) the amount paid to Century for that year.
(iv) If
the terms of any financing to which the Joint Venture or the
Subsidiary is a party require that Century subordinate its rights
to receive payment of any management fees, Century shall
subordinate its right but only to the extent required by any lender
and shall execute any instrument to evidence that subordination
that the lender may reasonably request; Century shall not be
required to subordinate such deferred management fees to any other
distributions.
(v) The
management fee shall not be payable, but shall be deferred, to the
extent cash is not available to pay the fee or payment of the fee
would result in a default under any credit agreement to which the
Joint Venture or the Subsidiary is a party (including, but not
limited to, the Note Agreements and the Credit
Facility).
(vi) If
in any year Century acts as manager of one or more of the Systems
for less than a full year, the management fee for that year shall
be determined by the chief financial officer of the Cable Division
based on the Net Gross Revenues of the respective Systems for the
period during which Century was manager of those
Systems.
(c) The
Joint Venture and the Subsidiary shall reimburse Century (pro rata
in proportion to the number of subscribers served by their
respective Systems) for out-of-pocket expenses for travel, hotels
and meals for Century's personnel and for out-of-pocket fees and
expenses to third parties ( e.g. , accountants and
attorneys) and similar expenses, but Century shall bear all other
expenses, including personnel and overhead costs incurred in
performing its services as manager of the Systems.
(d) The
designees of ML Media on the management board of the Joint Venture
and the board of directors of the Subsidiary may elect to remove
Century as manager of the Systems if Century breaches in any
material respect any material provision of this agreement and the
breach is not cured within 30 days after notice of breach from
ML Media (or if not curable within such time then within a
reasonable time thereafter) or if Tow sells his entire interest in
Century.
(e) If
the designees of ML Media on the management board of the Joint
Venture and the board of directors of the Subsidiary elect to
remove Century as manager of the Systems in accordance with
section 7.3(d), the Joint Venture shall take all such action
as may be necessary to cause the Joint Venture and the Subsidiary
to effect the removal.
6
(f) Century
shall use its best efforts to obtain the same rates for programming
for the Systems as it obtains for other systems owned or managed by
Century or an affiliate of Century, based on the number of
subscribers of all cable systems owned or managed by Century or an
affiliate of Century.
(g) The
Joint Venture shall cause the Subsidiary to carry out the
provisions of this section 7.3 to the extent that those
provisions apply to the Subsidiary.
7.4
Participation of Management Board and
Board of Directors of Subsidiary. The
limited partnership agreement of ML Media requires that ML Media
maintain "significant control" over any media property in which it
has less than 100 percent interest, which would include the
Systems. Accordingly, although Century, as the manager of the
Systems, shall have responsibility for the day-to-day operations of
the Systems, it is intended that the manager will consult with, and
obtain the approval of, the designees of ML Media on the management
board of the Joint Venture and the board of directors of the
Subsidiary on all significant matters relating to the Systems.
Without limiting the overall authority of the board of directors of
the Subsidiary, the following actions may be taken after the date
of this agreement only with the unanimous consent of the members of
the management board of the Joint Venture and the board of
directors of the Subsidiary:
(a) the
entry into any business activity other than the ownership and
operation of the Systems;
(b) the
sale or other disposition of the Systems
