CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT AGREEMENTS RELATING TO THE CHARTER COMPANIES. Prior to March
18, 1999, pursuant to a series of management agreements with certain of the
Charter Companies (the "Previous Management Agreements"), CCI provided
management and consulting services to the Charter Companies. In exchange for
these services, CCI was entitled to receive management fees from 3% to 5% of the
gross revenues of all of the Charter Systems plus reimbursement of expenses.
However, our previous credit facilities limited such management fees to 3% of
gross revenues. The balance of management fees payable under the Previous
Management Agreements were accrued. Following the closing of the Credit
Facilities, the Previous Management Agreements were replaced by a new management
agreement (the "Existing Management Agreement").
The total management fees (including expenses) earned by CCI under the
Previous Management Agreements during the last three years were as follows:
FEES ACCRUED TOTAL FEES
YEAR FEES PAID BUT DEFERRED EARNED
- ---- --------- ------------ ----------
<S> <C> <C> <C>
1998............................... $17,073 $7,086 $24,159
1997............................... 14,772 5,518 20,290
1996............................... 11,792 3,651 15,443
Deferred portions of certain management fees bore interest at the rate of
10% per annum.
THE EXISTING MANAGEMENT AGREEMENT. On February 23, 1999, CCI entered into
the Existing Management Agreement with Charter Communications Operating, LLC,
which was amended as of March 17, 1999. Upon the closing of the Credit
Facilities on March 18, 1999, the Previous Management Agreements terminated and
the Existing Management Agreement became operative. The Existing Management
Agreement provides for the payment of management fees to CCI equal to 3.5% of
gross revenues, payable quarterly. The payment of such fees is permitted under
the Credit Facilities. Management fees payable to CCI under the Existing
Management Agreement have been reduced to the extent management fees were
already paid to CCI under the Previous Management Agreements or the Management
Consulting Agreement with Marcus (described below).
MANAGEMENT AGREEMENT RELATING TO THE MARCUS COMPANIES. On October 6, 1998,
Marcus entered into a Management Consulting Agreement with CCI pursuant to which
CCI agreed to provide certain management and consulting services to Marcus and
its subsidiaries, in exchange for a fee equal to 3% of the gross revenues of the
Marcus Systems plus reimbursement of expenses. Management fees expensed by
Marcus during the period from October 1998 to December 31, 1998 were
approximately $3.3 million, which were accrued and unpaid at December 31, 1998.
Upon the Marcus Combination and the closing of the Credit Facilities, this
agreement was terminated and the Marcus Companies now receive management and
consulting services under the Existing Management Agreement.