AGREEMENT OF LIMITED PARTNERSHIP OF
CENTURY-TCI CALIFORNIA, L.P., DATED AS
OF NOVEMBER 18, 1998
AGREEMENT OF LIMITED PARTNERSHIP OF
CENTURY-TCI CALIFORNIA, L.P., DATED AS
OF NOVEMBER 18, 1998
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS
1.1 Terms Defined in this Section.......................................................................1
1.2 Terms Defined Elsewhere in this Agreement..........................................................10
1.3 Terms Generally....................................................................................11
ARTICLE 2 FORMATION AND PURPOSE
2.1 Formation..........................................................................................11
2.2 Name...............................................................................................12
2.3 Principal and Registered Office....................................................................12
2.4 Term...............................................................................................12
2.5 Purposes of Partnership............................................................................12
2.6 Authority of Partnership...........................................................................13
2.7 Limitations on Activities of the Partnership.......................................................14
2.8 Certificate........................................................................................14
2.9 Addresses of the Partners..........................................................................14
2.10 Foreign Qualification.............................................................................14
2.11 Tax Classification................................................................................14
ARTICLE 3 PARTNERSHIP CAPITAL
3.1 Contributions Pursuant to the Contribution Agreement...............................................15
3.2 Additional Capital Contributions...................................................................16
3.3 Other Contributions................................................................................20
3.4 Assumption of Liabilities..........................................................................20
3.5 Return of Contributions............................................................................20
3.6 Financing..........................................................................................20
ARTICLE 4 DISTRIBUTIONS; ALLOCATIONS OF PROFIT AND LOSS
4.1 Distributions......................................................................................21
4.2 Allocations of Net Profit and Net Loss.............................................................22
4.3 Special Provisions Regarding Allocations of Profit and Loss........................................23
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4.4 Tax Allocations: Code Section 704(c)..............................................................25
4.5 Allocation in Event of Transfer....................................................................25
4.6 Alternative Allocations............................................................................26
ARTICLE 5 MANAGEMENT
5.1 Authority of Managing Partner......................................................................26
5.2 Partnership Committee..............................................................................31
5.3 No Management by Limited Partner...................................................................32
5.4 Operating and Capital Expenditure Budgets..........................................................33
5.5 No Personal Liability..............................................................................33
5.6 Management Agreement...............................................................................33
5.7 Tax Matters Partner................................................................................33
5.8 Consolidation......................................................................................35
5.9 Management Prior to Closing........................................................................35
ARTICLE 6 STATUS OF LIMITED PARTNERS
6.1 Limited Liability..................................................................................36
6.2 Return of Distributions of Capital.................................................................36
6.3 Specific Limitations...............................................................................36
6.4 Issuance of Partnership Interests..................................................................36
ARTICLE 7 WITHDRAWAL OF GENERAL PARTNER
7.1 Withdrawal.........................................................................................37
7.2 Removal of Century as Managing Partner.............................................................38
7.3 Effect of Withdrawal or Removal of Managing Partner................................................39
7.4 No Dissolution.....................................................................................39
ARTICLE 8 ASSIGNMENT OF PARTNERSHIP INTERESTS
8.1 Assignments by Century.............................................................................39
8.2 Assignments by Other Partners......................................................................40
8.3 Exceptions.........................................................................................40
8.4 Assignee...........................................................................................40
8.5 Other Consents and Requirements....................................................................41
8.6 Assignment Not In Compliance.......................................................................41
8.7 Division of Partnership Interests..................................................................41
8.8 Substitute Partners................................................................................41
8.9 Consent............................................................................................42
8.10 Covenants of Parents..............................................................................42
8.11 Impact of Code Section 708........................................................................43
ARTICLE 9 RIGHT OF FIRST OFFER
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9.1 Proposed Sale and Negotiations with TCI............................................................45
9.2 Sale to Third Party; Re-offer to TCI...............................................................45
9.3 Seller's Election Not to Sell......................................................................46
ARTICLE 10 OTHER BUSINESSES AND INVESTMENT OPPORTUNITIES
10.1 Prohibited Cross-Interests........................................................................47
10.2 Wireline All Distance Communications Services.....................................................49
10.3 No Other Restrictions.............................................................................50
ARTICLE 11 DISSOLUTION AND LIQUIDATION OF PARTNERSHIP
11.1 Events of Dissolution.............................................................................51
11.2 Liquidation.......................................................................................51
11.3 Distribution in Kind..............................................................................53
11.4 No Action for Dissolution.........................................................................53
11.5 No Further Claim..................................................................................53
ARTICLE 12 INDEMNIFICATION
12.1 General...........................................................................................53
12.2 Exculpation.......................................................................................54
12.3 Persons Entitled to Indemnity.....................................................................54
ARTICLE 13 BOOKS, RECORDS, ACCOUNTING, AND REPORTS
13.1 Books and Records.................................................................................54
13.2 Delivery to Partner and Inspection................................................................55
13.3 Annual Statements.................................................................................55
13.4 Quarterly Financial Statements....................................................................56
13.5 Monthly Statements................................................................................57
13.6 Other Information.................................................................................57
13.7 Tax Matters.......................................................................................57
13.8 Other Filings.....................................................................................58
13.9 Non-Disclosure....................................................................................58
ARTICLE 14 REPRESENTATIONS BY TCI
14.1 Investment Intent.................................................................................59
14.2 Securities Regulation.............................................................................59
14.3 Knowledge and Experience..........................................................................60
14.4 Economic Risk.....................................................................................60
14.5 Binding Agreement.................................................................................60
14.6 Tax Position......................................................................................60
14.7 Information.......................................................................................60
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ARTICLE 15 AMENDMENTS AND WAIVERS
15.1 Amendments to Partnership Agreement...............................................................60
15.2 Waivers...........................................................................................61
ARTICLE 16 MISCELLANEOUS
16.1 Additional Documents..............................................................................61
16.2 Inspection........................................................................................61
16.3 General...........................................................................................61
16.4 Notices, Etc......................................................................................62
16.5 Execution of Papers...............................................................................62
16.6 Disputed Matters..................................................................................62
16.7 No Third-Party Beneficiaries......................................................................63
16.8 @Home Matters.....................................................................................63
16.9 Programming Matters...............................................................................64
TABLE OF SCHEDULES AND EXHIBIT
Schedule Description
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Schedule I Addresses of the Partners
Schedule II Partnership Committee Members
Schedule III Five-year Operating Plan
Schedule IV Programming Services
Schedule V Certain Agreements
Exhibit Description
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Exhibit A Form of Management Agreement
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AGREEMENT OF LIMITED PARTNERSHIP
OF
CENTURY-TCI CALIFORNIA, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP is made and entered into as of
November 18, 1998, by and among Century Exchange LLC, a Delaware limited
liability company, as a general partner and limited partner, and TCI California
Holdings, LLC, a Colorado limited liability company, as a general partner.
PRELIMINARY STATEMENT
TCI, together with its Affiliates, owns and operates certain cable
television systems located in the Territory.
Century, together with its Affiliates, owns and operates certain cable
television systems located in the Territory.
Century also owns certain cable television systems outside the
Territory that are intended to be contributed to the Partnership and exchanged
by the Partnership for certain cable television systems in the Territory that
are owned and operated by an Affiliate of TCI.
Concurrently with the execution and delivery of this Agreement, the
Partners, together with certain of their Affiliates, are entering into the
Contribution Agreement, pursuant to which TCI has agreed to contribute or cause
to be contributed to the Partnership substantially all the assets of certain
cable television systems, subject to certain liabilities being assumed by the
Partnership, and Century has agreed to contribute or cause to be contributed to
the Partnership substantially all the assets of certain cable television systems
and the Orange County Newschannel, subject to certain liabilities being assumed
by the Partnership.
The parties to this Agreement desire to enter into this Agreement to
provide for the formation of the Partnership, the allocation of profits and
losses, cash flow, and other proceeds of the Partnership between the Partners,
the respective rights, obligations, and interests of the Partners to each other
and to the Partnership, and certain other matters.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Terms Defined in this Section.
For purposes of this Agreement, the following terms shall have the
following meanings (all terms used in this Agreement that are not defined in
this Section 1.1 shall have the meanings set forth elsewhere in this Agreement
as indicated in Section 1.2, except as otherwise provided in this Agreement):
"Act" means the Delaware Revised Uniform Limited Partnership Act.
"Adjusted Capital Account Deficit" means with respect to either
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Fiscal Year, after:
(a) crediting to such Capital Account any amounts that such
Partner is obligated to restore to the Partnership pursuant to Treasury
Regulations Section 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore
pursuant to the penultimate sentences of Treasury Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(b) debiting from such Capital Account the items described in
Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),
and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Treasury Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by, or under common control with such Person. For
purposes of this definition, the term "control" means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of equity interests, by
contract, or otherwise, and the terms "controlled by" and "under common control
with" have meanings corresponding to the meaning of "control." Notwithstanding
the foregoing, neither the Partnership nor any Person controlled by the
Partnership shall be deemed to be an Affiliate of either Partner or of any
Affiliate of either Partner, or vice versa, solely as a result of such Partner's
Partnership Interest.
"Agreement" means this Agreement of Limited Partnership, as it may be
amended from time to time.
"Assignee" means a Person that has acquired a direct beneficial
interest in a Partnership Interest in accordance with the provisions of Article
8 but has not become a substitute Partner in accordance with the provisions of
Section 8.8.
"Business Day" means any day (other than a Saturday or a Sunday) on
which banks are permitted to be open for business in the State of New York.
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"Capital Account" means a separate account to be maintained for each
Partner in accordance with the Code, which, subject to any contrary requirements
of the Code, shall equal such Partner's initial Capital Account balance
immediately after the Closing as provided in Section 3.1(b), increased by: (a)
the amount of money contributed by such Partner to the Partnership, if any; (b)
the fair market value without regard to Code Section 7701(g) of property, if
any, contributed by such Partner to the Partnership (net of liabilities that are
secured by such contributed property or that the Partnership or any other
Partner is considered to assume or take subject to under Code Section 752), but
excluding contributions of property pursuant to the Contribution Agreement; (c)
allocations to the Partner of Net Profit and items of income and gain pursuant
to Article 4; and (d) other additions made in accordance with the Code; and
decreased by (a) the amount of cash distributed to such Partner by the
Partnership; (b) allocations to the Partner of Net Loss and items of loss and
deduction pursuant to Article 4; (c) the fair market value without regard to
Code Section 7701(g) of property distributed to such Partner by the Partnership
(net of liabilities that are secured by such distributed property or that such
Partner is considered to assume or take subject to under Code Section 752); and
(d) other deductions made in accordance with the Code. The foregoing provisions
and the other provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Treasury Regulations under Code
Section 704(b) and, to the extent not inconsistent with the provisions of this
Agreement, shall be interpreted and applied in a manner consistent with such
Treasury Regulations.
"Capital Contributions" means, with respect to either Partner, the
amount of money and the net fair market value of property contributed by such
Partner to the Partnership pursuant to this Agreement. For purposes of this
Agreement, including calculation of the Partners' Capital Accounts, any payment
by a Partner pursuant to Section 3 of the Contribution Agreement with respect to
Closing Adjustments (as defined in the Contribution Agreement) shall not be
deemed to be a Capital Contribution.
"Century" means Century Exchange LLC, a Delaware limited liability
company, or any other Person that succeeds to its Partnership Interest and is
admitted as a Partner in accordance with the provisions of this Agreement.
"Century Appraiser" means an appraiser designated by Century pursuant
to Section 3.2(f)(2).
"Century/New Jersey" means Century Communications Corp., a New Jersey
corporation, and any successor (by merger, consolidation, sale of assets, or
other similar transaction) to all or substantially all of its business and
assets.
"Century/Texas" means Century Communications Corp., a Texas
corporation, and any successor (by merger, consolidation, sale of assets, or
other similar transaction) to all or substantially all of its cable television
business and assets.
"Certificate" means the certificate of limited partnership to be filed
with respect to the Partnership pursuant to the Act.
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"Closing" means the consummation of the contribution of assets to the
Partnership in accordance with Section 9 of the Contribution Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any subsequent federal law of similar import, and, to the extent
applicable, the Treasury Regulations.
"Contribution Agreement" means the Contribution Agreement, dated as of
November 18, 1998, among the Partnership, the Partners, and the other parties
named therein, as it may be amended from time to time in accordance with its
terms.
"Controlled Affiliate" means, with respect to any Person, such Person's
Parent and any other Person that, at such time, is either (a) controlled
directly or indirectly by such Person's Parent and of which such Person's Parent
owns, directly or indirectly, at least fifty percent of the outstanding equity
interests or (b) controlled directly or indirectly by such Person.
Notwithstanding the foregoing, neither Centennial Cellular Corp., Citizens
Utilities Company, nor any Person controlled, directly or indirectly, by
Centennial Cellular Corp. or Citizens Utilities Company shall be deemed to be a
Controlled Affiliate of Century.
"Depreciation" means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such Fiscal Year, Depreciation shall be determined in the
manner described in Treasury Regulations Section 1.704-1(b)(2)(iv)(g)(3) or
Treasury Regulations Section 1.704-3(d)(2), as applicable.
"Equity Value" means, with respect to any Partnership Interest, for
purposes of any provision of this Agreement that refers to the Equity Value of
such Partnership Interest, the amount that would be distributed to the holder of
such Partnership Interest in liquidation of the Partnership, with respect to
such Partnership Interest, if the Partnership Value (determined in the manner
specified in such provision) were distributed to the Partners in liquidation in
accordance with Section 11.2(d), without reduction for liabilities pursuant to
Section 11.2(d)(1) or reserves pursuant to Section 11.2(d)(2) except as
specifically provided in this definition of "Partnership Value."
"FCC" means the Federal Communications Commission.
"Fiscal Year" means the fiscal year of the Partnership as required
under Code Section 706.
"General Partner" means Century, in its capacity as a general partner
of the Partnership and not as the limited partner of the Partnership, TCI, and
any other Person admitted as a general partner in accordance with the provisions
of this Agreement.
"Gross Asset Value" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
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(a) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be the gross fair market value of such asset,
as determined in accordance with Section 3.1(c)(1) or Section 3.1(d), as
applicable;
(b) The Gross Asset Values of all assets of the Partnership
shall be adjusted to equal their respective gross fair market values, as agreed
to by the Partners as of the following times: (1) the acquisition of an
additional interest in the Partnership by any new or existing Partner in
exchange for more than a de minimis Capital Contribution; (2) the distribution
by the Partnership to a Partner of more than a de minimis amount of property of
the Partnership as consideration for an interest in the Partnership; and (3) the
liquidation of the Partnership within the meaning of Treasury Regulations
Section 1.704-1(b)(2)(ii)(g); provided, however, that the adjustments pursuant
to clauses (1) and (2) above shall be made only if the Partners agree that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership;
(c) The Gross Asset Value of any asset of the Partnership
distributed to either Partner shall be the gross fair market value of such asset
on the date of distribution; and
(d) The Gross Asset Value of the assets of the Partnership
shall be increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but
only to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)
and Section 4.3(g); provided, however, that Gross Asset Value shall not be
adjusted pursuant to this paragraph (d) to the extent that the Partners agree
that an adjustment pursuant to paragraph (c) of this definition is necessary or
appropriate in connection with a transaction that would otherwise result in an
adjustment pursuant to this paragraph (d).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to paragraph (a), (b), or (d) of this definition, the Gross Asset Value
of such asset shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Net Profit and Net
Loss.
"Indebtedness" has the meaning specified below:
(a) if the Partnership is not subject to any loan agreement
that limits the ratio of the Partnership's indebtedness to its cash flow, then
"Indebtedness" has the same meaning as "Debt" as defined in the Credit
Agreement, dated as of June 30, 1994, among CCC - II, Inc., Citibank, N.A., as
managing agent, the Banks (as defined in such Credit Agreement), and the
Co-Agents (as defined in such Credit Agreement), and
(b) if the Partnership is subject to a loan agreement that
limits the ratio of the Partnership's indebtedness to its cash flow, then
"Indebtedness" means any indebtedness that is required to be taken into account
under that loan agreement to which the Partnership is subject that
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includes the most restrictive covenant regarding the ratio of the Partnership's
indebtedness to its cash flow.
"Limited Partner" means Century, in its capacity as a limited partner
of the Partnership and not as the general partner of the Partnership, and any
other Person admitted as a limited partner in accordance with the provisions of
this Agreement.
"Managing Partner" means Century and any General Partner selected as
successor Managing Partner pursuant to Section 7.1(b) or Section 7.2(b).
"Net Profit and Net Loss" means for each Fiscal Year or other period,
an amount equal to the Partnership's taxable income or loss for such Fiscal Year
or other period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net Profit or Net
Loss shall be added to such taxable income or loss;
(b) Code Section 705(a)(2)(B) expenditures of the Partnership
that are not otherwise taken into account in computing Net Profit or Net Loss
shall be subtracted from such taxable income or loss;
(c) If the Gross Asset Value of any asset of the Partnership
is adjusted pursuant to paragraph (b) or (c) of the definition of Gross Asset
Value, the amount of such adjustment shall be taken into account as gain or loss
from the disposition of such asset for purposes of computing Net Profit or Net
Loss;
(d) Gain or loss resulting from any disposition of property of
the Partnership with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Gross Asset Value of
the property disposed of, notwithstanding that the adjusted tax basis of such
property differs from its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year or other
period;
(f) Notwithstanding anything to the contrary in the definition
of the terms "Net Profit" and "Net Loss," any items that are specially allocated
pursuant to Section 4.3 of this Agreement shall not be taken into account in
computing Net Profit or Net Loss; and
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(g) For purposes of this Agreement, any deduction for a loss
on a sale or exchange of property of the Partnership that is disallowed to the
Partnership under Code Section 267(a)(1) or Code Section 707(b) shall be treated
as a Code Section 705(a)(2)(B) expenditure.
"Nonrecourse Deductions" means losses, deductions, or Code Section
705(a)(2)(B) expenditures attributable to Partnership Nonrecourse Liabilities.
The amount of Nonrecourse Deductions shall be determined pursuant to Treasury
Regulations Section 1.704-2(c), which provides generally that the amount of
Nonrecourse Deductions for a Fiscal Year shall equal the net increase, if any,
in Partnership Minimum Gain during that Fiscal Year, reduced (but not below
zero) by the aggregate distributions made during that Fiscal Year of proceeds of
a Nonrecourse Liability that are allocable to an increase in Partnership Minimum
Gain.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulations Section 1.752- 1(a)(2).
"Operating Cash Flow Ratio" has the meaning specified below:
(a) if the Partnership is not subject to any loan agreement
that limits the ratio of the Partnership's indebtedness to its cash flow, then
"Operating Cash Flow Ratio" has the same meaning as the "ratio of Total Debt to
EBIDT" for purposes of Section 5.01(i) of the Credit Agreement, dated as of June
30, 1994, among CCC - II, Inc., Citibank, N.A., as managing agent, the Banks (as
defined in such Credit Agreement), and the Co-Agents (as defined in such Credit
Agreement), and
(b) if the Partnership is subject to a loan agreement that
limits the ratio of the Partnership's indebtedness to its cash flow, then
"Operating Cash Flow Ratio" means the ratio of the Partnership's indebtedness to
its cash flow as calculated for purposes of that loan agreement to which the
Partnership is subject that includes the most restrictive covenant regarding the
ratio of the Partnership's indebtedness to its cash flow.
"Ownership Restriction" means any provision of the Communications Act
of 1934, as amended, or any other law subsequently enacted, or any rule,
regulation, or policy of the FCC promulgated thereunder restricting the
ownership and control of communications properties (including cable television
systems, television broadcast stations, radio broadcast stations, telephone
companies, and newspapers), including those relating to cross-ownership and
cross-interest, as those terms are commonly understood in the communications
industry.
"Parent" has the meaning specified below:
(a) so long as either TCIC or Tele-Communications owns a
controlling interest, directly or indirectly, in TCI, "Parent" means, with
respect to TCI, TCIC;
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(b) so long as either Century/Texas or Century/New Jersey owns
a controlling interest, directly or indirectly, in Century, "Parent" means, with
respect to Century, Century/Texas; and
(c) with respect to any other Person (including TCI, if
paragraph (a) of this definition does not apply, and Century, if paragraph (b)
of this definition does not apply), "Parent" means the ultimate parent entity
(as determined in accordance with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976 and the rules and regulations promulgated thereunder) of such Person
(or such Person if it is its own ultimate parent entity).
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulations Section 1.704- 2(b)(4), which generally defines "Partner Nonrecourse
Debt" as any Partnership liability to the extent such liability is nonrecourse
and a partner (or related Person) bears the economic risk of loss pursuant to
Treasury Regulations Section 1.752-2.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulations Section 1.704-2(i)(2), which generally defines "Partner
Nonrecourse Debt Minimum Gain" as the Partnership Minimum Gain attributable to
Partner Nonrecourse Debt. The amount of Partner Nonrecourse Debt Minimum Gain
shall be determined in accordance with Treasury Regulations Section
1.704-2(i)(3).
"Partner Nonrecourse Deductions" means losses, deductions, or Code
Section 705(a)(2)(B) expenditures attributable to Partner Nonrecourse Debt. The
amount of Partner Nonrecourse Deductions shall be determined pursuant to
Treasury Regulations Section 1.704-2(i)(2), which provides generally that the
amount of Partner Nonrecourse Deductions for a Fiscal Year shall equal the net
increase, if any, in Partner Nonrecourse Debt Minimum Gain during that Fiscal
Year, reduced (but not below zero) by the proceeds of Partner Nonrecourse Debt
distributed during the Fiscal Year to the partner bearing the economic risk of
loss for such Partner Nonrecourse Debt that are both attributable to such
Partner Nonrecourse Debt and allocable to an increase in Partner Nonrecourse
Debt Minimum Gain.
"Partners" means each General Partner and each Limited Partner.
"Partnership" means the partnership created by this Agreement.
"Partnership Committee" means the Partnership Committee established by
Section 5.2.
"Partnership Interest" means the entire ownership interest of a Partner
in the Partnership at any particular time, including all of its rights and
obligations hereunder and under the Act.
"Partnership Minimum Gain" means the excess of the Partnership
Nonrecourse Liabilities over the adjusted tax basis of property securing such
Partnership Nonrecourse Liabilities. The amount of Partnership Minimum Gain
shall be determined in accordance with Treasury Regulations
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Section 1.704-2(d), which provides generally that the amount of Partnership
Minimum Gain shall be determined by first computing for each Nonrecourse
Liability any gain the Partnership would realize if it disposed of the property
subject to that Nonrecourse Liability for no consideration other than full
satisfaction of such Nonrecourse Liability, and then aggregating the separately
computed gains.
"Partnership Value" means the amount that would be available to be
distributed to the Partners in liquidation of the Partnership, if the
Partnership were liquidated in the following manner:
(a) with respect to each Subsidiary, either the assets of such
Subsidiary would be sold for the fair market value of such assets, and the
Subsidiary would be liquidated in a manner comparable to that described in
paragraphs (b) and (c) below and the definition of "Equity Value," or all equity
interests in such Subsidiary owned, directly or indirectly, by the Partnership
would be sold for the fair market value of such equity interests, whichever
would produce the greater net proceeds to the Partnership;
(b) the assets of the Partnership (other than any equity
interest in any Subsidiary that would have been liquidated under paragraph (a)
above) would be sold for the fair market value of such assets; and
(c) the Partnership would pay any liabilities that would be
required by generally accepted accounting principles to be reflected on a
balance sheet of the Partnership (other than any such liabilities relating to
the operations of the Partnership's business that would be assumed by a
purchaser of the Partnership's assets) and would establish reserves in the
amount of any reserves required by generally accepted accounting principles to
be reflected on a balance sheet of the Partnership.
"Percentage Interest" means (a) as of any date prior to the date on
which the Closing occurs, with respect to Century, seventy-five percent, and,
with respect to TCI, twenty-five percent, and (b) as of any date on or after the
date on which the Closing occurs, with respect to either Partner, a fraction the
numerator of which is the net fair market value of all Capital Contributions
made by such Partner pursuant to the Contribution Agreement and the denominator
of which is the net fair market value of all Capital Contributions made by both
Partners pursuant to the Contribution Agreement, with all such net fair market
values being determined in the manner specified in Section 3.1(b), subject to
subsequent adjustment pursuant to Section 3.2(e) and Section 4.1(d).
"Person" means an individual, partnership, joint venture, association,
corporation, trust, estate, limited liability company, limited liability
partnership, or any other legal entity.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means, at any time, any Person that is controlled by the
Partnership at such time.
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"TCI" means TCI California Holdings, LLC, or any other Person that
succeeds to its Partnership Interest and is admitted as a Partner in accordance
with the provisions of this Agreement.
"TCI Appraiser" means an appraiser designated by TCI pursuant to
Section 3.2(f)(2).
"TCI Members" means the members of TCI.
"TCIC" means TCI Communications, Inc., a Delaware corporation, and any
successor (by merger, consolidation, sale of assets, or other similar
transaction) to all or substantially all of its cable television business and
assets.
"Tele-Communications" means Tele-Communications, Inc., a Delaware
corporation, and any successor (by merger, consolidation, sale of assets, or
other similar transaction) to all or substantially all of its business and
assets.
"Territory" means the following counties in California: Los Angeles,
Orange, San Bernardino, Ventura, San Diego, Riverside, Santa Xxxxxxx, and Xxxx.
"Third Appraiser" means an appraiser designated by the TCI Appraiser
and the Century Appraiser pursuant to Section 3.2(f)(4).
"Treasury Regulations" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary all of the
outstanding equity interests of which are owned at such time, directly or
indirectly, by the Partnership.
1.2 Terms Defined Elsewhere in this Agreement.
For purposes of this Agreement, the following terms have the meanings
set forth in the sections indicated:
Term Section
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@Home Distribution Agreement Section 16.8(c)(2)
Additional Income Tax Amount Section 8.11(a)(2)
Adjusted Prior Value Section 3.2(f)(2)
Adjustment Value Section 3.2(f)(6)
All Distance Services Section 10.2(a)
AT&T Section 10.2(a)
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Term Section
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Average Adjustment Value Section 3.2(f)(6)
Capital Call Section 3.2(a)
Century Distribution Agreement Section 16.8(c)(1)
Deemed Distribution Section 4.1(c)(2)
Deferred Assignment Section 8.11(c)
First Assigning Partner Section 8.11(d)
First Offer Notice Section 9.1(a)
Formal Determination Section 10.1(b)
Indemnified Persons Section 12.1
Liquidator Section 11.2(b)
Negotiation Period Section 10.2(b)
Non-Exclusive Service Section 16.8(a)
Notice Section 10.2(a)
Offered Interest Section 9.1(a)
Other Financial Terms Section 9.1(a)
Other Terms Section 9.1(a)
Partnership Territory Section 10.2(a)
Programming Supply Agreement Section 16.9(c)
Purchase Price Section 9.1(a)
Regulatory Allocations Section 4.3(i)
Re-Offer Notice Section 9.2(c)
Second Assigning Partner Section 8.11(d)
Secretary Section 5.7(b)
Seller Section 9.1(a)
SSI Section 16.9(c)
SSI Administrative Fee Section 16.9(c)
Termination Section 8.11(a)(1)
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Term Section
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TCI Systems Section 16.8(a)
1.3 Terms Generally.
The definitions in Section 1.1 and elsewhere in this Agreement shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context requires, any pronoun includes the corresponding masculine,
feminine, and neuter forms. The words "include," "includes," and "including" are
not limiting. Any reference in this Agreement to a "day" or number of "days"
(without the explicit qualification of "Business") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action or notice
is to be taken or given on or by a particular calendar day, and such calendar
day is not a Business Day, then such action or notice shall be deferred until,
or may be taken or given on, the next Business Day.
ARTICLE 2
FORMATION AND PURPOSE
2.1 Formation.
The Partners hereby form the Partnership as a limited partnership
pursuant to the Act. The rights and liabilities of the Partners shall be
determined pursuant to the Act and this Agreement. To the extent that the rights
or obligations of either Partner are different by reason of any provision of
this Agreement than they would be in the absence of such provision, this
Agreement shall, to the extent permitted by the Act, control.
2.2 Name.
(a) The name of the Partnership is Century-TCI California,
L.P. Except as provided in Section 2.2(b), the business of the Partnership may
be conducted under that name or, upon compliance with applicable laws, any other
name that the Managing Partner deems appropriate or advisable, including any
name that includes the name "Century," except that the Partnership shall not
conduct business under any name that includes the name "Century" without the
approval of Century. The Partnership shall file any assumed name certificates
and similar filings, and any amendments thereto, that the Managing Partner
considers appropriate or advisable.
(b) The Partnership shall not conduct business under the name
"Tele-Communications, Inc.," "TCI," or any variation thereof without the
approval of TCI, except that any asset contributed to the Partnership by TCI may
continue to bear any name borne by such asset at the time of its contribution to
the Partnership for a period of ninety days after its contribution. The parties
agree that "Communications" is not a variation of "Tele-Communications, Inc."
for purposes of this Section 2.2(b).
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2.3 Principal and Registered Office.
The office required to be maintained by the Partnership in the State of
Delaware pursuant to Section 17-104 of the Act shall initially be located at
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000. The resident
agent of the Partnership pursuant to Section 17-104 of the Act shall initially
be The Corporation Trust Company. The Partnership may, upon compliance with the
applicable provisions of the Act, change its resident agent from time to time in
the discretion of the Managing Partner. The principal office of the Partnership
shall be located at 00 Xxxxxx Xxxxxx, Xxx Xxxxxx, Xxxxxxxxxxx 00000, or at such
other place as the Managing Partner shall from time to time designate by written
notice to the Partners. The Partnership may conduct business at such additional
places as the Managing Partner shall deem advisable.
2.4 Term.
The term of the Partnership shall commence on the date of the filing of
the Certificate with the Secretary of State of Delaware and shall continue until
December 31, 2023, unless sooner terminated as provided in this Agreement.
2.5 Purposes of Partnership.
Subject to Section 2.7, the purposes of the Partnership are:
(a) to engage in the business, directly or indirectly through
interests in one or more Subsidiaries, of acquiring, developing, owning,
operating, managing, and selling the cable television systems and other assets
to be contributed to the Partnership by the Partners pursuant to the
Contribution Agreement;
(b) to acquire, develop, own, operate, manage, and sell
additional cable television systems in the Territory and businesses providing
high-speed data service and telephony services in the Territory;
(c) to acquire, develop, own, operate, manage, and sell, or
invest in, businesses in the Territory related to and ancillary to those
referred to above;
(d) to engage in other businesses in the Territory as agreed
to between Century and TCI.
2.6 Authority of Partnership.
The Partnership shall be empowered and authorized, for itself or on
behalf of any Subsidiary, to the extent necessary, appropriate, proper,
advisable, incidental to, or convenient for the furtherance and accomplishment
of the purposes described in Section 2.5:
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(a) to possess, transfer, mortgage, pledge, or otherwise deal
in, and to exercise all rights, powers, privileges, and other incidents of
ownership or possession with respect to securities or other assets held or owned
by the Partnership, and to hold securities or assets in the name of a nominee or
nominees;
(b) to borrow or raise money, and from time to time to issue,
accept, endorse, and execute promissory notes, loan agreements, options, stock
purchase agreements, contracts, documents, checks, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or non-negotiable instruments
and evidences of indebtedness, and to secure the payment of any thereof and of
the interest thereon by mortgage upon or pledge, conveyance, or assignment in
trust of, the whole or any part of the property of the Partnership whether at
the time owned or thereafter acquired and to guarantee the obligations of others
and to sell, pledge, or otherwise dispose of such bonds or other obligations of
the Partnership for its purposes;
(c) to guarantee the obligations of others in connection with
the purchase or acquisition by the Partnership of securities or assets;
(d) to maintain an office or offices in such place or places
as the Managing Partner shall determine and in connection therewith to rent or
acquire office space, engage personnel, and do such other acts and things as may
be necessary or advisable in connection with the maintenance of such office, and
on behalf of and in the name of the Partnership to pay and incur reasonable
expenses and obligations for legal, accounting, investment advisory,
consultative and custodial services, and other reasonable expenses including
taxes, travel, insurance, rent, supplies, interest, salaries and wages of
employees, and all other reasonable costs and expenses incident to the operation
of the Partnership;
(e) to form and own one or more corporations, trusts, or
partnerships (but no entity so formed or owned, while it is a Subsidiary, may do
what the Partnership is prohibited by this Agreement from doing); and
(f) to own, lease, or otherwise acquire any and all assets and
services related to the purposes described in Section 2.5.
2.7 Limitations on Activities of the Partnership.
Notwithstanding any provision of Section 2.5 to the contrary, prior to
the Closing, the Partnership will not engage in any business activities except
as may be appropriate to facilitate the consummation of the transactions to
occur at the Closing in accordance with the Contribution Agreement and the
Exchange Agreement.
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2.8 Certificate.
The Managing Partner shall cause the Certificate to be filed with the
Secretary of State of Delaware and shall cause the Certificate to be filed or
recorded in any other public office where filing or recording is required or is
deemed by the Managing Partner to be advisable.
2.9 Addresses of the Partners.
The respective addresses of the Partners are set forth on Schedule I.
2.10 Foreign Qualification.
The Managing Partner shall take all necessary actions to cause the
Partnership to be authorized to conduct business legally in all appropriate
jurisdictions, including registration or qualification of the Partnership as a
foreign limited partnership in those jurisdictions that provide for registration
or qualification and the filing of a certificate of limited partnership in the
appropriate public offices of those jurisdictions that do not provide for
registration or qualification.
2.11 Tax Classification.
Notwithstanding any other provision of this Agreement, no Partner or
employee of the Partnership, may take any action (including the filing of a U.S.
Treasury Form 8832 Entity Classification Election) that would cause the
Partnership to be characterized as an entity other than a partnership for
federal income tax purposes without the affirmative unanimous consent of the
Partners. A determination of whether any action would cause the Partnership to
be characterized as an entity other than a partnership for federal income tax
purposes will be based upon a declaratory judgment or similar relief obtained
from a court of competent jurisdiction, a favorable ruling from the Internal
Revenue Service, or the receipt of an opinion of counsel reasonably satisfactory
to the Partners.
ARTICLE 3
PARTNERSHIP CAPITAL
3.1 Contributions Pursuant to the Contribution Agreement.
(a) Contributions at Closing. At the Closing, and pursuant to
the terms of the Contribution Agreement:
(1) TCI will contribute or cause to be contributed to
the Partnership, free and clear of any claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges, or encumbrances of any nature
whatsoever (other than liabilities and liens specified in the
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Contribution Agreement), the assets specified in Section 2 of the
Contribution Agreement as being contributed by TCI; and
(2) Century will contribute or cause to be
contributed to the Partnership, free and clear of any claims, liabilities,
security interests, mortgages, liens, pledges, conditions, charges, or
encumbrances of any nature whatsoever (other than liabilities and liens
specified in the Contribution Agreement), the assets specified in Section 2 of
the Contribution Agreement as being contributed by Century and, if Century so
elects, cash in accordance with Section 2 of the Contribution Agreement.
(b) Capital Account Balances. The Capital Accounts of the
Partners immediately after the Closing shall be as follows:
(1) In the case of Century, (A) the Aggregate Gross
Fair Market Value of the Century Assets (as defined in the Contribution
Agreement) minus (B) the amount of Century Permitted Debt (as defined in the
Contribution Agreement) assumed by the Partnership at the Closing pursuant to
Section 3.1 of the Contribution Agreement.
(2) In the case of TCI, (A) the Aggregate Gross Fair
Market Value of the TCI Assets (as defined in the Contribution Agreement) minus
(B) the amount of TCI Permitted Debt (as defined in the Contribution Agreement)
assumed by the Partnership at the Closing pursuant to Section 3.1 of the
Contribution Agreement.
(c) Allocation of Gross Fair Market Value; Subsequent
Contributions.
(1) TCI and Century will negotiate in good faith to
reach agreement within thirty days after the Closing on the allocation of the
Aggregate Gross Fair Market Value of the Century Assets and the Aggregate Gross
Fair Market Value of the TCI Assets to the assets contributed or to be
contributed to the Partnership by TCI and Century pursuant to Section 3.1(a). If
TCI and Century do not agree on such allocation within ninety days after the
Closing, then such allocation shall be determined by an appraisal to be
conducted by an independent appraisal firm agreed to by Century and TCI and
retained by the Partnership, at the Partnership's expense, with experience in
the valuation and appraisal of assets similar to such asset. Neither TCI nor
Century will take a position that is inconsistent with such allocation, either
as agreed to by them or as determined by such appraiser.
(2) The value of any contribution required to be made
by either Partner under the Contribution Agreement after the Closing, including
any contribution of cash or property pursuant to Section 7.23 of the
Contribution Agreement, is reflected in the Aggregate Gross Fair Market Value of
the Century Assets or the Aggregate Gross Fair Market Value of the TCI Assets,
as applicable, which is reflected in such Partner's Capital Account immediately
after the Closing as provided in Section 3.1(b), and any such contribution shall
be deemed to have been made at Closing and shall not increase such Partner's
Capital Account above the amount provided in Section 3.1(b).
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(d) Determining Fair Market Value of Other Contributed Assets.
Except as otherwise agreed to between the Partners, the fair market value of any
asset contributed by a Partner to the Partnership, other than pursuant to
Section 3.1(a), shall be determined for purposes of this Agreement as follows:
(1) The Partner contributing such asset shall
determine the fair market value of such asset and send a written notice to the
other Partner setting forth its determination.
(2) Within ten Business Days after its receipt of the
contributing Partner's notice pursuant to Section 3.1(d)(1), the other Partner
may send a written notice to the contributing Partner accepting or rejecting the
contributing Partner's determination of the fair market value of such asset. If
the other Partner accepts the contributing Partner's determination, the fair
market value of such asset for purposes of this Agreement shall be as determined
by the contributing Partner.
(3) If the other Partner does not send a written
notice to the contributing Partner accepting the contributing Partner's
determination of the fair market value of any asset within ten Business Days
after its receipt of the contributing Partner's notice pursuant to Section
3.1(d)(1), the fair market value of such asset for purposes of this Agreement
shall be determined by an appraisal to be conducted by an independent appraisal
firm agreed to by Century and TCI and retained by the Partnership, at the
Partnership's expense, with experience in the valuation and appraisal of assets
similar to such asset.
3.2 Additional Capital Contributions.
(a) So long as Century is the Managing Partner, the Managing
Partner may request additional cash Capital Contributions by the Partners
pursuant to this Section 3.2 by delivering a written notice (each such notice, a
"Capital Call") to each other Partner specifying (1) the amount of cash being
requested, (2) the purposes for which the Capital Contributions are required,
(3) the date on which the Capital Contributions are requested to be made (which
shall not be less than fifteen days after the date on which the Managing Partner
delivers the Capital Call to each other Partner), and (4) the bank account of
the Partnership to which the Capital Contributions are to be made.
(b) To the extent that the amount of additional Capital
Contributions requested in all Capital Calls pursuant to this Section 3.2 does
not exceed $10,000,000, each Partner shall make additional Capital Contributions
in cash in accordance with each Capital Call in an amount equal to the product
of the Percentage Interest of such Partner as of the date of the contribution
multiplied by the amount of Capital Contributions requested in such Capital
Call.
(c) To the extent that the amount of additional Capital
Contributions requested in all Capital Calls pursuant to this Section 3.2
exceeds $10,000,000, then each Partner may elect whether or not to make
additional Capital Contributions in response to a Capital Call by delivering
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written notice of its election to the other Partner within ten days after its
receipt of the Capital Call; provided, however, that the Managing Partner must
elect to make additional Capital Contributions in response to any Capital Call.
A Partner that does not deliver a notice of its election to the other Partner
within ten days after its receipt of a Capital Call shall be deemed to have
elected to make additional Capital Contributions in response to the Capital
Call. A Partner that elects to make additional Capital Contributions in response
to a Capital Call shall be obligated to contribute to the Partnership in cash,
in accordance with such Capital Call, an amount equal to the product of the
Percentage Interest of such Partner as of the date of the contribution
multiplied by the amount of Capital Contributions requested in such Capital
Call.
(d) If one Partner elects to make additional Capital
Contributions in response to a Capital Call and the other Partner elects not to
make additional Capital Contributions in response to such Capital Call, then the
Partner that elected to make additional Capital Contributions may also elect, by
delivering written notice of its election to the other Partner within ten days
after the last day for the other Partner's delivery of an election pursuant to
Section 3.2(c), to make an additional Capital Contribution to the Partnership,
in accordance with such Capital Call, up to an amount equal to the product of
the Percentage Interest of the other Partner as of the date of the contribution
multiplied by the amount of Capital Contributions requested in such Capital
Call. A Partner that elects to make additional Capital Contributions pursuant to
this Section 3.2(d) shall be obligated to contribute to the Partnership in cash
the amount specified in its election, in accordance with the Capital Call, in
addition to the amount such Partner is obligated to contribute pursuant to
Section 3.2(c).
(e) If one Partner elects to make an additional Capital
Contribution in response to a Capital Call and the other Partner elects not to
make an additional Capital Contribution in response to such Capital Call
(regardless of whether the contributing Partner also elected to make an
additional Capital Contribution pursuant to Section 3.2(d)) or if a Partner
makes a Capital Contribution pursuant to any other agreement between the
Partners (except as otherwise agreed to between the Partners), then, effective
as of the date on which the contributing Partner makes such Capital
Contribution, the Percentage Interests of each Partner shall be adjusted to
equal (1) the sum of (A) the Equity Value of such Partner's Partnership Interest
plus (B) the amount, if any, of Capital Contributions then being made by such
Partner in response to such Capital Call pursuant to Section 3.2(c) and Section
3.2(d) or pursuant to such agreement between the Partners (taking into account
Section 3.1(d)), divided by (2) the sum of (A) the Equity Value of such
Partner's Partnership Interest plus (B) the Equity Value of the other Partner's
Partnership Interest, plus (C) the amount of Capital Contributions then being
made by the contributing Partner, where the Partnership Value for purposes of
calculating each such Equity Value shall be as agreed to between TCI and Century
pursuant to Section 3.2(f)(1) or, if TCI and Century failed to agree on the
Partnership Value, then the Partnership Value for purposes of calculating each
such Equity Value shall be the Average Adjustment Value determined in accordance
with Section 3.2(f)(6).
(f) The Partnership Value for purposes of calculating each
Equity Value under Section 3.2(e) and Section 4.1(d) shall be determined in
accordance with the following provisions:
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(1) TCI and Century shall negotiate in good faith to
reach an agreement on such Partnership Value within thirty days after the
election by one Partner to make an additional Capital Contribution pursuant to
Section 3.2(c) or the execution of an agreement between the Partners regarding
Capital Contributions to be made by a Partner or non-cash distributions to be
made to a Partner, as applicable.
(2) If TCI and Century fail to agree on such
Partnership Value within the period specified in Section 3.2(f)(1), then either
Partner may elect to commence the valuation process described below by sending
written notice to the other Partner either (A) designating an appraiser to be
retained by the electing Partner to make a determination of the Partnership
Value or (B) if the Partnership Value was previously determined for purposes of
calculating Equity Value of the Partners' Partnership Interests under Section
3.2(e) (either by agreement between TCI and Century or as the Average Adjustment
Value) with respect to any Capital Contribution made no more than one year prior
to the date on which the Capital Contribution with respect to which the Equity
Value of the Partners' Partnership Interests is then being determined is to be
made, electing to use the Adjusted Prior Value as such Partner's Adjustment
Value. If a Partner elects to commence the valuation process pursuant to this
Section 3.2(f)(2), the other Partner shall, within ten Business Days after its
receipt of notice of the electing Partner's election, send a written notice to
the electing Partner either (A) designating an appraiser to be retained by such
other Partner to make a determination of the Partnership Value or (B) if the
condition in clause (B) of the preceding sentence is satisfied, electing to use
the Adjusted Prior Value as such Partner's Adjustment Value. For purposes of
this Section 3.2(f), the "Adjusted Prior Value" means the Partnership Value as
most recently determined for purposes of calculating Equity Value of the
Partners' Partnership Interests under Section 3.2(e), increased by the amount of
Capital Contributions made by the Partners since the date of such determination
and decreased by the amount of distributions to the Partners since the date of
such determination.
(3) Any appraiser designated pursuant to Section
3.2(f)(2) shall be instructed to complete its appraisal within thirty days after
its designation pursuant to Section 3.2(f)(2).
(4) If the difference between TCI's Adjustment Value
and Century's Adjustment Value is greater than three percent of the lower of
such values, then the TCI Appraiser (or TCI, if TCI elected to use the Adjusted
Prior Value as its Adjustment Value) and the Century Appraiser (or Century, if
Century elected to use the Adjusted Prior Value as its Adjustment Value) shall
jointly designate an appraiser to be retained by the Partnership to make a
determination of the Partnership Value. The Third Appraiser shall be instructed
to complete its appraisal within thirty days after its designation.
(5) In making its determination of the Partnership
Value, each appraiser shall:
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(A) assume that the fair market value of the
assets of the Partnership, the fair market value of the assets of any
Subsidiary, or the fair market value of any equity interests in any Subsidiary,
as applicable, is the price at which such assets, as a going concern, or such
equity interests would change hands in a private market transaction between a
single willing buyer and a single willing seller, neither being under any
compulsion to buy or sell and each having reasonable knowledge of all relevant
facts;
(B) assume the sale of all relevant assets
occurred immediately prior to the additional Capital Contribution with respect
to which the Equity Value of the Partners' Partnership Interests is then being
determined;
(C) take into account liabilities of the
Partnership and the Subsidiaries in existence on such date;
(D) assume a sale of the assets of the
Partnership and each Subsidiary for cash; and
(E) use valuation techniques then prevailing
in the cable television industry.
(6) The Partnership Value as determined by the
appraiser designated by a Partner, or, if the Partner so elected pursuant to
Section 3.2(f)(2), the Adjusted Prior Value, shall be such Partner's "Adjustment
Value," the Partnership Value determined by the Third Appraiser, shall be the
Third Appraiser's "Adjustment Value," and the "Average Adjustment Value" shall
be:
(A) If the difference between TCI's
Adjustment Value and Century's Adjustment Value is less than or equal to three
percent of the lower of such values, then the Average Adjustment Value shall be
the average of TCI's Adjustment Value and Century's Adjustment Value;
(B) If Section 3.2(f)(6)(A) does not apply
and the difference between the highest of the three Adjustment Values (including
the Adjustment Value of the Third Appraiser) and the middle of the three
Adjustment Values is equal to the difference between the lowest of the three
Adjustment Values and the middle of the three Adjustment Values, then the
Average Adjustment Value shall be the middle Adjustment Value; and
(C) In all other cases, the Average
Adjustment Value shall be the average of the two closest of TCI's Adjustment
Value, Century's Adjustment Value, and the Third Appraiser's Adjustment Value.
(7) Each appraiser designated pursuant to this
Section 3.2(f) shall be a nationally recognized investment banking firm that is
qualified and experienced in the appraisal of cable television systems and shall
not be an Affiliate of either Partner. The fees and expenses of the
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TCI Appraiser shall be borne by TCI, the fees and expenses of the Century
Appraiser shall be borne by Century, and the fees and expenses of the Third
Appraiser shall be borne by the Partnership, except that, if one Partner elects
to use the Adjusted Prior Value as its Adjustment Value, then the fees and
expenses of the Third Appraiser shall be borne by the other Partner.
3.3 Other Contributions.
Except for Capital Contributions made pursuant to Section 3.1 or
Section 3.2 or as otherwise agreed to by the Partners, no additional Capital
Contributions shall be made by either Partner.
3.4 Assumption of Liabilities.
In accordance with the terms and conditions of the Contribution
Agreement, the Partnership will, at the Closing, assume and undertake to pay,
discharge, and perform, according to their respective terms, those obligations
and liabilities of TCI, Century, and their respective Affiliates that are
specified in Section 4.1 of the Contribution Agreement.
3.5 Return of Contributions.
Neither Partner shall have the right to demand a return of all or any
part of its Capital Contribution during the term of the Partnership, and any
return of the Capital Contribution of either Partner shall be made solely from
the assets of the Partnership and only in accordance with the terms of this
Agreement. No interest shall be paid to either Partner with respect to its
Capital Contribution to the Partnership.
3.6 Financing.
To finance the business of the Partnership, subject to Section
5.1(b)(1) and Section 5.1(c)(9), the Managing Partner may arrange for the
obtaining of loans by the Partnership, including loans made by one or more
Affiliates of the Managing Partner. Any payment by the Partnership to any
Affiliate of the Managing Partner with respect to any such loans made by such
Affiliate shall not be treated as a distribution to the Managing Partner under
this Agreement.
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ARTICLE 4
DISTRIBUTIONS; ALLOCATIONS OF PROFIT AND LOSS
4.1 Distributions.
(a) Amount and Timing of Cash Distributions. All cash of the
Partnership shall be distributed at such times and in such amounts as the
Managing Partner may determine in its sole discretion.
(b) Allocation of Cash Distributions. All distributions of
cash pursuant to Section 4.1(a) and Section 11.2(d)(3) shall be allocated
between the Partners in proportion to their Percentage Interests as of the date
of the distribution.
(c) Tax Withholding.
(1) The Partnership shall seek to qualify for and
obtain exemptions from any provision of the Code or any provision of state,
local, or foreign tax law that would otherwise require the Partnership to
withhold amounts from payments or distributions to the Partners. If the
Partnership does not obtain any such exemption, the Partnership is authorized to
withhold from any payment or distribution to either Partner any amounts that are
required to be withheld pursuant to the Code or any provision of any state,
local, or foreign tax law that is binding on the Partnership.
(2) If the Code or any provision of any state, local,
or foreign tax law that is binding on the Partnership requires that the
Partnership remit to any taxing authority any tax with respect to, or for the
account of, either Partner in its capacity as a Partner, as a result of any
transaction by the Partnership or any Subsidiary (other than a payment or
distribution to a Partner), the Partnership shall, to the extent that
Partnership funds are available therefor, remit the full required amount of such
tax to the taxing authority and shall notify such Partner in writing of the
amount of such tax. The Partnership shall treat the payment of such tax as a
distribution pursuant to Section 4.1(a) (a "Deemed Distribution"), and
substantially simultaneously with the payment of such tax the Partnership shall
cause a distribution of cash to be made to the Partners so as to cause the
distributions pursuant to this Section 4.1(c) (including the Deemed
Distribution) to be in proportion to the Partners' Percentage Interests;
provided, however, that if the Partnership does not have sufficient funds to
make such cash distribution or if the Partnership is prohibited from making such
cash distribution, then each Partner agrees to contribute to the Partnership,
within fifteen Business Days after its receipt of written notice from the
Partnership, the amount of any such tax to the extent it exceeds such Partner's
proportionate share (based on Percentage Interests) of the distributions
pursuant to this Section 4.1(c) (including the Deemed Distribution), together
with interest from the date the Partnership remits such tax until it is paid by
such Partner, at an interest rate equal to that paid by the Partnership with
respect to its senior indebtedness. Interest paid by a Partner pursuant to this
Section 4.1(c) shall not be treated as Capital Contributions for any purposes
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under this Agreement, including calculation of the Partners' Capital Accounts.
The Partnership is further authorized to withhold from any subsequent payment or
distribution to either Partner the amount of such Partner's obligation under the
preceding sentence.
(3) All amounts that are credited against payments or
distributions to which a Partner would otherwise be entitled pursuant to this
Section 4.1(c) shall be treated as amounts distributed to such Partner pursuant
to Section 4.1(a) for all purposes of this Agreement.
(d) Non-Cash Distributions.
(1) Except as specifically agreed to by the Partners,
the Partnership shall not distribute any non-cash asset to either Partner.
(2) The fair market value of any asset distributed in
kind to either Partner shall either be a value agreed to by the Partners or a
value determined by a methodology agreed to by the Partners.
(3) The Partnership shall determine the gain or loss
used in determining Net Profit or Net Loss that would have resulted if any
distributed non-cash asset had been sold for its fair market value, such gain or
loss shall be allocated pursuant to Article 4, and the Partners' Capital
Accounts shall be adjusted to reflect such gain or loss. The amount distributed
and charged to the Capital Account of each Partner receiving an interest in a
distributed asset shall be the fair market value of such interest (net of any
liability secured by such asset that such Partner assumes or takes subject to).
(4) If the Partners agree that any non-cash asset
shall be distributed to either Partner and the distributions of cash and
non-cash assets being made in connection with the distribution of such non-cash
asset are not allocated between the Partners in proportion to their Percentage
Interests as of the date of the distribution, then, except as otherwise agreed
to by the Partners, effective as of the date on which such distributions are
made, the Percentage Interests of each Partner shall be adjusted to equal (A)
the sum of (i) the Equity Value of such Partner's Partnership Interest minus
(ii) the amount of cash and the fair market value of any non-cash asset then
being distributed to such Partner, divided by (B) the sum of (i) the Equity
Value of such Partner's Partnership Interest plus (ii) the Equity Value of the
other Partner's Partnership Interest, minus (iii) the amount of cash and the
fair market value of any non-cash asset then being distributed to the Partners,
where the Partnership Value for purposes of calculating each such Equity Value
shall be as agreed to between TCI and Century pursuant to Section 3.2(f)(1) or,
if TCI and Century failed to agree on the Partnership Value, then the
Partnership Value for purposes of calculating each such Equity Value shall be
the Average Adjustment Value determined in accordance with Section 3.2(f)(6).
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4.2 Allocations of Net Profit and Net Loss.
(a) Allocations of Net Profit and Net Loss. Except as provided
in Section 4.2(b), Net Profit and Net Loss for each Fiscal Year (or portion
thereof) shall be allocated between the Partners in proportion to their
Percentage Interests.
(b) Allocations of Net Profit and Net Loss Following
Dissolution. Notwithstanding Section 4.2(a), following the dissolution of the
Partnership pursuant to Section 11.1, beginning in the Fiscal Year in which such
dissolution occurs or beginning in any Fiscal Year prior to the Fiscal Year in
which such dissolution occurs if the Partnership's Federal income tax return for
such prior Fiscal Year has not yet been required to be filed (not including
extensions), items of income and gain, loss, and deduction shall be allocated
between the Partners so as to cause the credit balances in the Partners' Capital
Accounts to be in proportion to their Percentage Interests.
4.3 Special Provisions Regarding Allocations of Profit and Loss.
(a) Minimum Gain Chargeback. Notwithstanding any other
provision of this Article 4, if there is a net decrease in Partnership Minimum
Gain for any Fiscal Year, each Partner shall be specially allocated items of
Partnership income and gain for such Fiscal Year (and if necessary for
succeeding Fiscal Years) in an amount equal to such Partner's share of the net
decrease in Partnership Minimum Gain, determined in accordance with Treasury
Regulations Section 1.704-2(g); provided, however, that this Section 4.3(a)
shall not apply to the extent the circumstances described in Treasury
Regulations Sections 1.704-2(f)(2), 1.704-2(f)(3), 1.704-2(f)(4), or
1.704-2(f)(5) exist. Allocations made pursuant to the preceding sentence shall
be made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items of Partnership income and gain to be
allocated pursuant to this Section 4.3(a) shall be determined in accordance with
Treasury Regulations Section 1.704-2(f)(6). This Section 4.3(a) is intended to
comply with the minimum gain chargeback requirement in Treasury Regulations
Section 1.704-2(f) and shall be interpreted consistently therewith.
(b) Partner Minimum Gain Chargeback. Notwithstanding any other
provision of this Article 4 except Section 4.3(a), if during any Fiscal Year
there is a net decrease in Partner Nonrecourse Debt Minimum Gain, each Partner
with a share of that Partner Nonrecourse Debt Minimum Gain (determined in
accordance with Treasury Regulations Section 1.704-2(i)(5)) as of the beginning
of such Fiscal Year must be allocated items of Partnership income and gain for
the Fiscal Year (and, if necessary, for succeeding Fiscal Years) equal to that
Partner's share of the net decrease in the Partner Nonrecourse Debt Minimum Gain
(determined in accordance with Treasury Regulations Section 1.704-2(i)(4));
provided, however, that this Section 4.3(b) shall not apply to the extent the
circumstances described in the third and fifth sentences of Treasury Regulations
Section 1.704-2(i)(4) exist. Allocations pursuant to the preceding sentence
shall be made in proportion to the respective amounts required to be allocated
to each Partner pursuant thereto. The items of Partnership income and gain to be
allocated pursuant to this Section 4.3(b) shall be determined in
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accordance with Treasury Regulations Section 1.704-2(i)(4). This Section 4.3(b)
is intended to comply with the minimum gain chargeback requirement in Treasury
Regulations Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(c) Qualified Income Offset. If a Limited Partner unexpectedly
receives any adjustments, allocations, or distributions described in Treasury
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to such Limited Partner in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, the Adjusted
Capital Account Deficit of such Limited Partner as quickly as possible;
provided, however, that an allocation pursuant to this Section 4.3(c) shall be
made if and only to the extent that such Limited Partner would have an Adjusted
Capital Account Deficit after all other allocations provided for in this Article
4 have been tentatively made as if this Section 4.3(c) were not in this
Agreement. Allocations made pursuant to the preceding sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto.
(d) Gross Income Allocation. If a Limited Partner has a
deficit Capital Account at the end of any Fiscal Year that is in excess of the
sum of (1) the amount such Limited Partner is obligated to restore to the
Partnership pursuant to Treasury Regulations Section 1.704-1(b)(2)(ii)(c), (2)
the amount such Limited Partner is deemed to be obligated to restore pursuant to
the penultimate sentence of Treasury Regulations Section 1.704-2(g)(1), and (3)
the amount such Limited Partner is deemed to be obligated to restore pursuant to
the penultimate sentence of Treasury Regulations Section 1.704-2(i)(5), such
Limited Partner shall be specially allocated items of Partnership income and
gain in the amount of such excess as quickly as possible; provided, however,
that an allocation pursuant to this Section 4.3(d) shall be made if and only to
the extent that such Limited Partner would have a deficit Capital Account in
excess of such sum after all other allocations provided for in this Article 4
have been tentatively made as if Section 4.3(c) and this Section 4.3(d) were not
in this Agreement. Allocations made pursuant to the preceding sentence shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any
Fiscal Year or other period shall be specially allocated between the Partners in
proportion to their Percentage Interests.
(f) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Fiscal Year or other period shall be specially allocated to
the Partner that bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable
in accordance with Treasury Regulations Section 1.704-2(i).
(g) Section 754 Adjustment. To the extent any adjustment to
the adjusted tax basis of any asset of the Partnership pursuant to Code Section
734(b) or Code Section 743(b) is required, pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment shall be treated as an item of gain
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(if the adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such section of the Treasury
Regulations.
(h) Excess Nonrecourse Liabilities. For purposes of
determining a Partner's proportionate share of the "excess nonrecourse
liabilities" of the Partnership within the meaning of Treasury Regulations
Section 1.752-3(a)(3), each Partner's interest in Partnership profits shall be
deemed to be equal to such Partner's Percentage Interest.
(i) Curative Allocations. The allocations set forth in this
Article 4 (other than Section 4.3(g), Section 4.3(h), and this Section 4.3(i))
(the "Regulatory Allocations") are intended to comply with certain requirements
of the Treasury Regulations. The Partners intend that, to the extent possible,
all Regulatory Allocations shall be offset either with other Regulatory
Allocations or with special allocations of other items of Partnership income,
gain, loss, or deduction pursuant to this Section 4.3(i). Therefore,
notwithstanding any other provision of this Article 4 (other than the Regulatory
Allocations), offsetting special allocations of Partnership income, gain, loss,
or deduction shall be made so that, after such offsetting allocations are made,
each Partner's Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Partner would have had if the Regulatory
Allocations were not part of this Agreement and all Partnership items were
allocated pursuant to Section 4.2. In making such offsetting special
allocations, future Regulatory Allocations under Section 4.3(a) and Section
4.3(b) that, although not yet made, are likely to offset Regulatory Allocations
made under Section 4.3(e) and Section 4.3(f), shall be taken into account.
4.4 Tax Allocations: Code Section 704(c).
(a) In accordance with Code Section 704(c) and the Treasury
Regulations thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Partnership shall, solely for tax
purposes, be allocated between the Partners so as to take account of any
variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and its initial Gross Asset Value using the
traditional allocation method described in Treasury Regulations Section
1.704-3(b). If, however, tax allocations made under Code Section 704(c) with
respect to any contributed property are limited by "the ceiling rule" as
described in Treasury Regulations Section 1.704-3(b)(1), the remedial allocation
method as described in Treasury Regulations Section 1.704-3(d) shall be used
with respect to such property.
(b) If the Gross Asset Value of any asset of the Partnership
is adjusted pursuant to paragraph (b) of the definition of Gross Asset Value,
subsequent allocations of income, gain, loss, and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the same
manner as under Code Section 704(c) and the Treasury Regulations thereunder.
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(c) Allocations pursuant to this Section 4.4 are solely for
purposes of federal, state, and local taxes and shall not affect, or in any way
be taken into account in computing, either Partner's Capital Account or share of
Net Profit, Net Loss, other items, or distributions pursuant to any provision of
this Agreement.
4.5 Allocation in Event of Transfer.
If an interest in the Partnership is transferred, the Net Profit and
Net Loss of the Partnership and each item thereof, and all other items
attributable to the transferred interest for such Fiscal Year, shall be divided
and allocated between the transferor and the transferee pursuant to any method
agreed to between the Partners that is permitted by the Treasury Regulations;
provided, however, that (a) except in the case of a transfer from a Partner to
an Affiliate of such Partner, if the Partners are unable to agree on the method
of dividing and allocating such items, such items shall be divided and allocated
between the transferor and the transferee pursuant to the interim closing of the
Partnership books method set forth in Treasury Regulation Section
1.706-1(c)(2)(ii), and (b) in the case of a transfer from a Partner to an
Affiliate of such Partner, if the Partners are unable to agree on the method of
dividing and allocating such items, such items shall be divided and allocated
between the transferor and the transferee pursuant to any method agreed to
between the transferor and the transferee so long as such method (1) does not
change the allocation of Net Profit and Net Loss or any item thereof to the
non-transferor Partner, and (2) does not require an interim closing of the
Partnership books. This Section shall apply for purposes of computing a
Partner's Capital Account and for federal income tax purposes.
4.6 Alternative Allocations.
The Partnership Committee is authorized and directed to allocate items
of income, gain, loss, or deduction arising in any Fiscal Year differently from
the manner that is otherwise provided for in this Agreement if, and to the
extent that, the Partnership Committee determines that the allocation of items
of income, gain, loss, or deduction in the manner otherwise provided for in this
Agreement would cause the credit balances in the Partners' Capital Accounts not
to be in proportion to their Percentage Interests immediately prior to any
distributions pursuant to Section 11.2(d)(3) if the Partnership were dissolved
and terminated on the last day of such Fiscal Year. Any allocation that is made
pursuant to this Section 4.6 shall be deemed to be a complete substitute for any
allocation that is otherwise provided for in this Agreement and no amendment to
this Agreement shall be required.
ARTICLE 5
MANAGEMENT
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5.1 Authority of Managing Partner.
(a) Generally. Except as expressly provided otherwise in this
Agreement, the Managing Partner shall have the exclusive authority to manage the
business, operations, and affairs of the Partnership (including internal
matters) and the exclusive right to exercise all rights incident to the
ownership of all partnership or corporate interests held by the Partnership, and
shall have all authority, rights, and powers conferred by law and those required
or appropriate for the management of the Partnership's business.
(b) Certain Limitations and Restrictions. Notwithstanding any
provision in this Agreement to the contrary, and in addition to any other
consent or approval that may be required by the express terms of this Agreement,
but subject to Section 5.1(e), the Partnership shall not, and the Managing
Partner shall have no authority to cause the Partnership to, do any of the
following without either the unanimous vote of all members of the Partnership
Committee who are present or represented by proxy at a meeting of the
Partnership Committee at which a quorum is present, or, so long as Century is
the Managing Partner, the approval of TCI:
(1) incur or permit any Subsidiary to incur any
Indebtedness if, immediately after the incurring of such Indebtedness, the
Operating Cash Flow Ratio of the Partnership would exceed 6.5 to 1; or
(2) sell or otherwise dispose of, or cause or permit
any Subsidiary to sell or otherwise dispose of, in any one transaction (or
series of mutually contingent transactions), assets of the Partnership or any
Subsidiary having an aggregate value in excess of $50,000,000, except upon the
liquidation and dissolution of the Partnership in accordance with Article 11;
provided, however, that the limitations of this paragraph shall not apply to any
pledging of assets by any Person to secure any indebtedness of such Person
permitted by this Agreement or to any disposition of assets upon the exercise of
any rights granted by such a pledge; or
(3) merge with or consolidate into any Person, or
cause or permit any Subsidiary to merge with or consolidate into any Person
(except that, without the approval of the Partnership Committee, (A) a
Subsidiary may merge with another Subsidiary so long as the survivor of such
merger is a Subsidiary; (B) a Wholly-Owned Subsidiary may merge with the
Partnership; and (C) a Subsidiary may merge with a Person other than a
Subsidiary as a means of effecting any acquisition or disposition of assets that
is otherwise permitted by this Agreement so long as the consummation of such
acquisition or disposition would not have adverse tax consequences to TCI or the
TCI Members); or
(4) purchase or otherwise acquire, or cause or permit
any Subsidiary to purchase or otherwise acquire, any assets, business, equity
interest in another Person, if, after giving effect to the such purchase or
other acquisition, the aggregate value of all property purchased or otherwise
acquired by the Partnership and all Subsidiaries in any period of twelve
consecutive calendar months would exceed $50,000,000; provided, however, that
the limitations of this
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paragraph shall not apply to any acquisition of assets by a Wholly-Owned
Subsidiary from the Partnership or from another Wholly-Owned Subsidiary or to
the contribution of assets to the Partnership pursuant to the Contribution
Agreement; or
(5) enter into any transaction with either Partner or
any Affiliate of either Partner or permit any Subsidiary to enter into any
transaction with either Partner or any Affiliate of either Partner if the
transaction contemplates payments to or by the Partnership in any twelve month
period in excess of $1,000,000, in the aggregate; provided, however, that the
limitations of this paragraph shall not apply to any loan described in Section
5.1(c)(9), and TCI agrees not to withhold unreasonably its approval of any
transaction that requires its approval under this Section 5.1(b)(5); or
(6) issue any Partnership Interest or other equity
interest in the Partnership or any option, warrant, or other instrument
convertible into or evidencing the right to acquire (whether or not for
additional consideration) any Partnership Interest or other equity interest in
the Partnership; or
(7) permit any Subsidiary to issue any equity
interest in such Subsidiary or any option, warrant, or other instrument
convertible into or evidencing the right to acquire (whether or not for
additional consideration) any equity interest in such Subsidiary, other than an
equity interest or option, warrant, or other instrument issued to the
Partnership or to a Wholly-Owned Subsidiary; or
(8) commence, institute, or settle, or permit any
Subsidiary to commence, institute, or settle, any claim or lawsuit (or series of
related claims or lawsuits) on behalf of the Partnership or any Subsidiary
(except as provided in the Contribution Agreement with respect to claims arising
thereunder), or confess a judgment against the Partnership or any Subsidiary,
not in the ordinary course of business and for any amount in excess of
$5,000,000 or involving the potential granting of equitable relief that, if
granted, would have a material adverse effect on the business of the Partnership
and the Subsidiaries, taken as a whole; provided, however, that notwithstanding
any other provision in this Agreement to the contrary, (A) TCI may, without the
separate consent of Century or Century's representatives, cause the Partnership
to make a good faith claim against Century and its Affiliates pursuant to the
indemnification provisions of the Contribution Agreement or against Century and
its Affiliates pursuant to the Management Agreement described in Section 5.6,
and provided, further, that without the separate consent of TCI, Century may not
cause the Partnership to waive any such claim against Century and its Affiliates
pursuant to the indemnification provisions of the Contribution Agreement or
against Century and its Affiliates pursuant to the Management Agreement
described in Section 5.6, and (B) Century may, without the separate consent of
TCI or TCI's representatives, cause the Partnership to make a good faith claim
against TCI and its Affiliates pursuant to the indemnification provisions of the
Contribution Agreement or the Exchange Agreement; or
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(9) purchase, redeem, retire, or otherwise acquire
any Partnership Interests or other equity interest in the Partnership, except
for the purchase, redemption, retirement, or other acquisition of any equity
interest where the terms of such interest, as approved in accordance with
Section 5.1(b)(6), permit or require such purchase, redemption, retirement, or
other acquisition.
(c) Additional Limitations and Restrictions. Notwithstanding
any provision in this Agreement to the contrary, and in addition to any other
consent or approval that may be required by the express terms of this Agreement,
the Partnership shall not, and the Managing Partner shall have no authority to
cause the Partnership to, do any of the following without either the unanimous
vote of all members of the Partnership Committee who are present or represented
by proxy at a meeting of the Partnership Committee at which a quorum is present,
or, so long as Century is the Managing Partner, the approval of TCI:
(1) sell or otherwise dispose of, or cause or permit
any Subsidiary to sell or otherwise dispose of, any assets of the Partnership or
any Subsidiary, if such sale or other disposition would result in the allocation
of income or gain to TCI pursuant to Section 4.4 and Code Section 704(c), except
upon the liquidation and dissolution of the Partnership in accordance with
Article 11; provided, however, that the limitations of this paragraph shall not
apply to any pledging of assets by any Person to secure any indebtedness of such
Person permitted by this Agreement (but such limitations shall nevertheless
apply to any disposition of assets upon the exercise of any rights granted by
such a pledge); or
(2) liquidate or dissolve except in accordance with
Article 11; or
(3) issue any Partnership Interest or other equity
interest in the Partnership or any option, warrant, or other instrument
convertible into or evidencing the right to acquire (whether or not for
additional consideration) any Partnership Interest or other equity interest in
the Partnership, except on terms that are fair, from an economic standpoint, to
the Partnership and the Partners; or
(4) admit any additional Partners to the Partnership
except in accordance with Section 6.4 or Section 8.8; or
(5) convert the Partnership to corporate form or to
any other form of business organization; or
(6) purchase, redeem, retire, or otherwise acquire
any Partnership Interests or other equity interest in the Partnership, except
for the purchase, redemption, retirement, or other acquisition of any equity
interest where the terms of such interest, as approved in accordance with
Section 5.1(b)(6) or Section 5.1(c)(3), permit or require such purchase,
redemption, retirement, or other acquisition; or
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(7) merge with or consolidate into any Person, or
cause or permit any Subsidiary to merge with or consolidate into any Person,
unless the terms under which any equity interest in the Partnership or any
Subsidiary is issued to any Person (other than the Partnership or any
Wholly-Owned Subsidiary) are fair, from an economic standpoint, to the
Partnership and the Partners; or
(8) enter into any transaction with either Partner or
any Affiliate of either Partner or permit any Subsidiary to enter into any
transaction with either Partner or any Affiliate of either Partner if the
transaction is not on terms that are no less favorable to the Partnership or
Subsidiary than could have been obtained in a comparable arm's-length
transaction with a Person that is not a Partner or an Affiliate of a Partner;
provided, however, that the limitations shall not apply to any loan described in
Section 5.1(c)(9); or
(9) incur or permit any Subsidiary to incur any
Indebtedness to any Affiliate of the Managing Partner unless (A) the financial
terms of such Indebtedness are the same as either (1) the financing obtained by
such Affiliate of the Managing Partner the proceeds of which are used to fund
its loan to the Partnership by which such Indebtedness is created, or (2) any
similar financing obtained by the Partnership from any Person that is not an
Affiliate of the Managing Partner, and (B) such Indebtedness would not result in
any adverse tax consequences to TCI or the TCI Members; or
(10) except as provided in Section 10.2, enter into
any transaction with either Partner or any Affiliate of either Partner or permit
any Subsidiary to enter into any transaction with either Partner or any
Affiliate of either Partner pursuant to which such Partner or its Affiliate
would be authorized or permitted to use the Partnership's cable television
system distribution facilities to engage in any business that is ancillary to
the ownership or operation of cable television systems, including the ancillary
businesses of providing high-speed data service and telephony services described
in Section 2.5, unless the Partnership Committee failed to approve unanimously a
resolution authorizing the Partnership or a Subsidiary to engage in such
business at a meeting at which all members of the Partnership Committee
designated by such Partner voted in favor of such resolution; or
(11) commence any bankruptcy or insolvency
proceeding, acquiesce in the appointment of a referee, trustee, custodian, or
liquidator, or admit to the material allegations of a petition filed against the
Partnership in any bankruptcy proceeding; or
(12) amend the Management Agreement described in
Section 5.6 (and TCI agrees not to withhold unreasonably its approval of any
amendment that requires its approval under this Section 5.1(c)(12)); or
(13) engage in any business not described in Section
2.5 or engage in any business outside the Territory.
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(d) Consideration of Certain Transactions. The Managing
Partner will consult with the Partnership Committee before entering into any
agreement or causing any Subsidiary to enter into any agreement providing for
any material transaction outside the ordinary course of the Partnership's
business, but the Managing Partner shall not be required under this Section
5.1(d) or otherwise (except as specifically provided in Section 5.1(b) or
Section 5.1(c)) to obtain the approval of the Partnership Committee in
connection with any such transaction.
(e) Expiration of Certain Approval Rights. The limitations in
Section 5.1(b) shall not apply at any time if:
(1) TCI's Percentage Interest is less than five
percent at such time, and
(2) either:
(A) more than six months have elapsed since
TCI's Percentage Interest fell below five percent, unless at such time (1) TCI
and Century have agreed on an additional Capital Contribution to be made by TCI
that would cause TCI's Percentage Interest to be at least five percent, and the
agreement between TCI and Century with respect to such additional Capital
Contribution is in full force and effect, and (2) if the additional Capital
Contribution contemplated by such agreement would consist of any cable
television system to be acquired by TCI, TCI shall have entered into a letter of
intent, memorandum of understanding, or other similar document with respect to
its acquisition of such cable television system; or
(B) more than nine months have elapsed since
TCI's Percentage Interest fell below five percent, unless at such time (1) TCI
and Century have agreed on an additional Capital Contribution to be made by TCI
that would cause TCI's Percentage Interest to be at least five percent, and the
agreement between TCI and Century with respect to such additional Capital
Contribution is in full force and effect, and (2) if the additional Capital
Contribution contemplated by such agreement would consist of any cable
television system to be acquired by TCI, TCI shall have entered into a binding,
definitive agreement with respect to its acquisition of such cable television
system, and such binding, definitive agreement shall be in full force and
effect.
5.2 Partnership Committee.
(a) Membership. The Partnership shall have a Partnership
Committee consisting of five individual representatives of the Partners. Three
members of the Partnership Committee shall be designated from time to time by
Century in its sole discretion. Two members of the Partnership Committee shall
be designated from time to time by TCI in its sole discretion. The members of
the Partnership Committee, as designated by Century and TCI, as of the date of
this Agreement, are set forth on Schedule II.
(b) Removal and Replacement of Members.
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(1) Each Partner shall use its good faith efforts to
designate its representatives as promptly as is reasonably practicable so that
the Partnership Committee shall at all times contain the number of members
provided for in Section 5.2(a).
(2) Any member of the Partnership Committee
designated pursuant to Section 5.2(a) may be removed and replaced at any time,
and from time to time, by the Partner that originally designated such member in
accordance with Section 5.2(a). No member shall be removed from office, with or
without cause, without the consent of the Partner that designated him.
(3) The Partnership shall reimburse each member of
the Partnership Committee for expenses, including travel and legal expenses,
reasonably incurred in connection with such member's performance of his duties
as a member of the Partnership Committee.
(c) Meetings of the Partnership Committee. The Partnership
Committee shall hold one regular meeting each quarter at such time and place as
shall be determined by the Partnership Committee. Special meetings of the
Partnership Committee may be called at any time by any member upon not less than
three Business Days' prior notice. Except as otherwise determined by the
Partnership Committee, all special and regular meetings of the Partnership
Committee shall be held at the principal office of the Partnership. Members of
the Partnership Committee may participate in any meeting of the Partnership
Committee by means of conference telephone or similar communications equipment
through which all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at the meeting.
(d) Procedural Matters.
(1) Each member shall have one vote in all matters
presented to the Partnership Committee for decision or approval. Except as
otherwise expressly provided in this Agreement, all actions of the Partnership
Committee shall require the affirmative vote of a majority of the Partnership
Committee.
(2) Unless waived in writing by all of the members
(before or after a meeting) at least three Business Days' prior notice of any
meeting shall be given to each member. Such notice shall state the purpose for
which such meeting has been called.
(3) Any action required or permitted to be taken by
the Partnership Committee may be taken without a meeting if all members of the
Partnership Committee consent in writing to such action. Such consent shall have
the same effect as a vote of the Partnership Committee.
(4) At all meetings of the Partnership Committee, a
majority of the members of the Partnership Committee, including at least one
member designated by TCI, shall constitute a quorum for the transaction of
business, except that, if notice was given of two prior
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meetings called for the purpose of taking the same action (as specified in the
notices) and no member designated by TCI attended or was represented by proxy at
either of the meetings called by such notices, but a quorum would have been
present at each of such meetings had a member designated by TCI attended or been
represented by proxy, then at any subsequent meeting called for the purpose of
taking the same action, a majority of the members of the Partnership Committee
(without regard to whether any member designated by TCI is present or
represented by proxy) shall constitute a quorum for the transaction of business.
In determining the number of meetings called for the purpose of taking any
action under this Section 5.2(d)(4), any meeting adjourned for lack of a quorum
and each adjournment of such meeting shall be considered a separate meeting, so
long as a quorum would have been present had a member designated by TCI attended
or been represented by proxy.
(5) A member of the Partnership Committee may give
his proxy to another member of the Partnership Committee with respect to any
matter to be voted on at a meeting of the Partnership Committee so long as such
proxy is in writing and signed by the member who gave it.
(6) The Partnership Committee shall cause to be kept
a book of minutes of all of its meetings in which there shall be recorded the
time and place of each such meeting, whether regular or special, and if special,
by whom called, the notice thereof given, the names of those present, and the
proceedings thereof.
5.3 No Management by Limited Partner.
Except as expressly provided in this Agreement, no Limited Partner, in
its capacity as a limited partner of the Partnership, shall take part in or
interfere in any manner with the control, conduct, or operation of the
Partnership or have any right or authority to act for or bind the Partnership or
to vote on matters relating to the Partnership.
5.4 Operating and Capital Expenditure Budgets.
A five-year operating plan for the Partnership is attached to this
Agreement as Schedule III for informational purposes only. After consultation
with TCI, the Managing Partner shall prepare and distribute to each Partner for
informational purposes only an operating budget and a capital expenditure budget
for the Partnership for each Fiscal Year.
5.5 No Personal Liability.
Neither General Partner shall have any personal liability for the
repayment of the Capital Contributions of any other Partner, but each General
Partner shall return to the Partnership any distributions received by such
General Partner in excess of those to which such General Partner is entitled
under this Agreement.
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5.6 Management Agreement.
At the Closing, the Partnership and Century (or an Affiliate of Century
designated by Century) shall enter into a Management Agreement substantially in
the form of Exhibit A. Century (or an Affiliate of Century designated by
Century) shall be entitled to the payments and reimbursements set forth in such
Management Agreement, as it may be amended from time to time in accordance with
its terms.
5.7 Tax Matters Partner.
(a) Century is hereby designated as the Tax Matters Partner of
the Partnership, as provided in Treasury Regulations pursuant to Code Section
6231 and analogous provisions of state and local law. Each Partner, by the
execution of this Agreement, consents to such designation of the Tax Matters
Partner and agrees to execute, certify, acknowledge, deliver, swear to, file,
and record at the appropriate public offices such documents as may be necessary
or appropriate to evidence such consent.
(b) To the extent and in the manner provided by applicable law
and Treasury Regulations, the Tax Matters Partner shall furnish the name,
address, profits interest, and taxpayer identification number of each Partner
and any Assignee to the Secretary of the Treasury or his delegate (the
"Secretary").
(c) The Tax Matters Partner shall notify each Partner of any
audit that is brought to the attention of the Tax Matters Partner by notice from
the Internal Revenue Service or any state or local taxing authority and shall
forward to each Partner copies of any written notices, correspondence, reports,
or other documents received by the Tax Matters Partner in connection with such
audit within ten Business Days following its receipt thereof from the Internal
Revenue Service or other state or local taxing authority. The Tax Matters Member
shall provide TCI with reasonable advance notice of administrative proceedings
with the Internal Revenue Service or any state or local taxing authority,
including any closing conference with the examiner and any appeals conference.
(d) The Tax Matters Partner shall give the Partners thirty
days' advance written notice of its intent to initiate judicial review, file a
request for administrative adjustment on behalf of the Partnership, extend the
period of limitations for making assessments of any tax against a Partner with
respect to any Partnership item, or enter into any agreement with the Internal
Revenue Service or any state or local taxing authority that would result in the
settlement of any alleged tax deficiency or other tax matter, or to any
adjustment of taxable income or loss or any item included therein, affecting the
Partnership or either Partner.
(e) Subject to the foregoing provisions of this Section 5.7,
the Tax Matters Partner is hereby authorized, upon thirty days' advance written
notice to TCI, to take any of the actions specified below:
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(1) to enter into any settlement with the Internal
Revenue Service or the Secretary or any state or local taxing authority with
respect to any tax audit or judicial review, in which agreement the Tax Matters
Partner may expressly state that such agreement shall bind the other Partners,
except that such settlement agreement shall not bind either Partner that (within
the time prescribed pursuant to the Code and Treasury Regulations thereunder)
files a statement with the Secretary or such state or local taxing authority
providing that the Tax Matters Partner shall not have the authority to enter
into a settlement agreement on the behalf of such Partner;
(2) if a notice of a final administrative adjustment
at the Partnership level of any item required to be taken into account by a
Partner for tax purposes (a "final adjustment") is mailed to the Tax Matters
Partner, to seek judicial review of such final adjustment, including the filing
of a petition for readjustment with the Tax Court, the District Court of the
United States for the district in which the Partnership's principal place of
business is located, or elsewhere as allowed by law, or the United States Court
of Federal Claims;
(3) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(4) to file a request for an administrative
adjustment with the Secretary at any time and, if any part of such request is
not allowed by the Secretary, to file a petition for judicial review with
respect to such request;
(5) to enter into an agreement with the Internal
Revenue Service or any state or local taxing authority to extend the period for
assessing any tax that is attributable to any item required to be taken into
account by a Partner for tax purposes, or an item affected by such item; and
(6) to take any other action on behalf of the
Partners (with respect to the Partnership) or the Partnership in connection with
any administrative or judicial tax proceeding to the extent permitted by
applicable law or Treasury Regulations.
(f) The Tax Matters Partner shall consult in good faith with
TCI before taking any of the actions specified in Section 5.7(e).
(g) The Partnership shall indemnify and reimburse the Tax
Matters Partner for all reasonable expenses (including legal and accounting
fees) incurred pursuant to this Section 5.7 in connection with any
administrative or judicial proceeding with respect to the tax liability of the
Partners. The payment of all such reasonable expenses shall be made before any
distributions are made to the Partners. The taking of any action and the
incurring of any expense by the Tax Matters Partner in connection with any such
proceeding, except to the extent provided herein or required by law, is a matter
in the sole discretion of the Tax Matters Partner and the provisions on
limitations of liability of a General Partner and indemnification set forth in
Article 12 shall be fully applicable to Century in its capacity as the Tax
Matters Partner.
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(h) Any Partner that receives a notice of an administrative
proceeding under Code Section 6223 relating to the Partnership shall promptly
notify the Tax Matters Partner of the treatment of any Partnership item on such
Partner's federal income tax return that is or may be inconsistent with the
treatment of that item on the Partnership's return.
(i) Either Partner that enters into a settlement agreement
with the Secretary with respect to any Partnership item shall notify the Tax
Matters Partner of such agreement and its terms within sixty days after its
date, and the Tax Matters Partner shall notify the other Partners of the
settlement agreement within thirty days of such notification.
5.8 Consolidation.
It is the express intent and agreement of the Partners that Century
controls the Partnership for purposes of consolidating the operations of the
Partnership with Century/New Jersey, under generally accepted accounting
principles and applicable Securities and Exchange Commission rules, regulations,
and guidelines and that the limitations provided for in Section 5.1(b) and
elsewhere in this Agreement are designed to provide TCI with protection as a
minority partner, but are not intended to affect such control by Century. This
Section 5.8 shall not be construed as affecting in any way the rights of TCI
under this Agreement.
5.9 Management Prior to Closing.
Notwithstanding any other provision of this Agreement, prior to the
Closing, all authority to manage the business, operations, and affairs of the
Partnership shall be vested in both Partners jointly, to be exercised only as
agreed to between the Partners, and neither Partner, including the Managing
Partner, shall have any right or authority individually to act for or bind the
Partnership, other than as expressly delegated to such Partner by agreement
between the Partners, except that Century shall have authority on behalf of the
Partnership to take any actions that are necessary or appropriate to permit the
Partnership to obtain, effective as of and subject to the Closing, the financing
contemplated by Section 7.22 of the Contribution Agreement.
ARTICLE 6
STATUS OF LIMITED PARTNERS
6.1 Limited Liability.
No Limited Partner, in its capacity as a limited partner of the
Partnership, shall be bound by or personally liable for the expenses,
liabilities, or obligations of the Partnership. In no event shall any Limited
Partner, in its capacity as a limited partner of the Partnership, be required to
make up a deficiency in its Capital Account upon the dissolution and termination
of the Partnership.
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6.2 Return of Distributions of Capital.
A Limited Partner may, under certain circumstances, be required by law
to return to the Partnership, for the benefit of the Partnership's creditors,
amounts previously distributed. No Limited Partner shall be obligated by this
Agreement to pay those distributions to or for the account of the Partnership or
any creditor of the Partnership. However, if any court of competent jurisdiction
holds that, notwithstanding the provisions of this Agreement, any Limited
Partner must return or pay over any part of those distributions, the obligation
shall be that of such Limited Partner alone and not of any other Partner. Any
payment returned to the Partnership by a Partner or made directly by a Partner
to a creditor of the Partnership shall be deemed a Capital Contribution by such
Partner.
6.3 Specific Limitations.
No Limited Partner shall have the right or power to: (a) withdraw or
reduce its Capital Contribution except as a result of the dissolution of the
Partnership or as otherwise provided by law or in this Agreement, (b) bring an
action for partition against the Partnership or any assets of the Partnership,
(c) cause the termination and dissolution of the Partnership, except as set
forth in this Agreement, or (d) demand or receive property other than cash in
return for its Capital Contribution. Except as otherwise set forth in this
Agreement or in any agreement permitted to be entered into under this Agreement
with respect to the purchase, redemption, retirement, or other acquisition of
Partnership Interests, no Limited Partner shall have priority over any other
Limited Partner either as to the return of its Capital Contribution or as to Net
Profit, Net Loss, or distributions. Other than upon the termination and
dissolution of the Partnership as provided by this Agreement, there has been no
time agreed upon when the Capital Contribution of any Limited Partner will be
returned.
6.4 Issuance of Partnership Interests.
Subject to obtaining the approval required under Section 5.1(b)(6) and
Section 5.1(c)(3) and in accordance with the terms thereof, the Managing Partner
may issue additional Partnership Interests to any Person and may admit to the
Partnership as additional Partners the Persons acquiring such Partnership
Interests, if such Persons were not previously admitted as Partners. The Persons
acquiring such Partnership Interests shall have the rights and be subject to the
obligations attributable to such Partnership Interests in the form issued to
them. A Person admitted as a new Partner shall only be entitled to distributions
and allocations of Net Profit and Net Loss attributable to the period beginning
on the effective date of its admission to the Partnership, and the Partnership
shall attribute Net Profit and Net Loss to the period before the effective date
of the admission of a new Partner and to the period beginning on the effective
date of the admission of a new Partner by any method agreed to between the
Partners that is permitted by the Treasury Regulations; provided, however, that
(a) upon the issuance of a Partnership Interest to a Person other than a Partner
or an Affiliate of a Partner, if the Partners are unable to agree on the method
of attributing Net Profit and Net Loss to such periods, the Partnership shall
attribute Net Profit and Net Loss to such periods by the interim closing of the
Partnership books method set forth in Treasury Regulation Section
1.706-1(c)(2)(ii), and (b) upon the issuance of a Partnership Interest to a
Partner or an Affiliate of a Partner, if the
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Partners are unable to agree on the method of attributing Net Profit and Net
Loss to such periods, the Partnership shall attribute Net Profit and Net Loss to
such periods pursuant to any method agreed to between the Partnership and the
new Partner so long as such method (1) does not change the allocation of Net
Profit and Net Loss or any item thereof to any Partner other than the new
Partner and its Affiliates and (2) does not require an interim closing of the
Partnership books.
ARTICLE 7
WITHDRAWAL OF GENERAL PARTNER
7.1 Withdrawal.
(a) Century may retire or withdraw from the Partnership only
with the prior written consent of TCI.
(b) If Century withdraws from the Partnership while it is the
Managing Partner, the Partnership shall dissolve in accordance with the
provisions of Article 11, unless, within ninety days after the withdrawal of
Century:
(1) TCI elects to continue the business of the
Partnership and elects to become the successor Managing Partner; or
(2) Either:
(A) if Century withdrew from the Partnership
with the prior written consent of TCI, TCI and Century elect to continue the
business of the Partnership and either (i) agree to appoint an existing General
Partner to be the successor Managing Partner or (ii) agree to admit a new
General Partner and to the appoint such new General Partner to be the successor
Managing Partner; or
(B) if Century withdrew from the Partnership
without the prior written consent of TCI, TCI elects to continue the business of
the Partnership and either (i) elects to appoint an existing General Partner to
be the successor Managing Partner or (ii) elects to admit an Assignee of part of
its Partnership Interest as a new General Partner and to appoint such new
General Partner to be the successor Managing Partner.
(c) Any successor Managing Partner appointed pursuant to
Section 7.1(b) (including TCI) shall be entitled to exercise all rights and
shall have all duties and obligations of the Managing Partner under this
Agreement. The appointment of a successor Managing Partner pursuant to Section
7.1(b) shall be effective as of the date of the withdrawal of Century, subject
to the receipt of all necessary governmental approvals and other material
third-party consents.
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(d) If Century withdrew from the Partnership without the prior
written consent of TCI, then, if TCI so elects, subject to the receipt of all
necessary governmental approvals and other material third-party consents, all of
the members of the Partnership Committee designated by Century shall be removed
and Century shall have no further right to designate any representatives.
(e) No successor to Century as Managing Partner may retire or
withdraw from the Partnership.
(f) For purposes of this Agreement, the term "withdrawal"
means the happening of any event described in Section 17-402(a) of the Act
(other than subsections (c) and (d) thereof).
(g) TCI may retire or withdraw from the Partnership only with
the prior written consent of Century.
7.2 Removal of Century as Managing Partner.
(a) The provisions of Section 7.2(b) shall apply if:
(1) a court of competent jurisdiction finds that
Century has engaged in conduct while acting as Managing Partner that constitutes
either (A) a felony involving moral turpitude that resulted in material harm to
the Partnership or TCI or (B) fraud against the Partnership or TCI, and
(2) the finding described in Section 7.2(a) has not
been reversed, stayed, enjoined, set aside, annulled, or suspended, and is not
the subject of any pending request for judicial review, reconsideration, appeal,
or stay, and
(3) the time for filing any further request for
judicial review, reconsideration, appeal, or stay of the finding described in
Section 7.2(a) has expired.
(b) If each of the conditions specified in Section 7.2(a) is
satisfied, then, if TCI so elects by written notice to Century, upon the receipt
of all necessary governmental approvals and other material third-party consents,
(1) all of the members of the Partnership Committee
designated by Century shall be removed and Century shall have no further right
to designate any representatives; and
(2) Century shall be removed as Managing Partner and
either (as specified by TCI in its election pursuant to this Section 7.2(b)):
(A) TCI shall become the successor Managing
Partner; or
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(B) an existing General Partner appointed by
TCI shall become the successor Managing Partner; or
(C) an Assignee of part of TCI's Partnership
Interest shall be admitted as a new General Partner and shall become the
successor Managing Partner.
(c) Any successor Managing Partner appointed pursuant to
Section 7.2(b) (including TCI) shall be entitled to exercise all rights and
shall have all duties and obligations of the Managing Partner under this
Agreement. The appointment of a successor Managing Partner pursuant to Section
7.2(b) shall be effective as of the date of the removal of Century as Managing
Partner.
7.3 Effect of Withdrawal or Removal of Managing Partner.
If the Partnership is continued pursuant to Section 7.1 following the
withdrawal of Century, or if Century is removed as Managing Partner pursuant to
Section 7.2, then the entire Partnership Interest of Century shall be converted
to that of a Limited Partner unless such conversion would have adverse tax
consequences to TCI or the TCI Members. The withdrawal or removal of any
Managing Partner shall not alter the allocations and distributions to be made to
the Partners pursuant to this Agreement.
7.4 No Dissolution.
The withdrawal of a General Partner other than the Managing Partner
shall not cause the dissolution of the Partnership or alter the allocations and
distributions to be made to the Partners pursuant to this Agreement.
ARTICLE 8
ASSIGNMENT OF PARTNERSHIP INTERESTS
8.1 Assignments by Century.
Except as provided in Section 8.3, Century shall not assign (whether by
sale, exchange, gift, contribution, distribution, or other transfer, including a
pledge or other assignment for security purposes) all or any part of its
interest in the Partnership without the prior written consent of TCI.
8.2 Assignments by Other Partners.
Except as provided in Section 8.3, a Partner may not assign (whether by
sale, exchange, gift, contribution, distribution, or other transfer, including a
pledge or other assignment for security purposes) all or any part of its
Partnership Interest without the prior written consent of the Managing Partner.
Notwithstanding the consent of the Managing Partner to any assignment by a
Partner of all
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or any part of its Partnership Interest, the rights of any Assignee shall be
subject at all times to the limitations set forth in Section 8.4.
8.3 Exceptions.
The provisions of Section 8.1 and Section 8.2 shall not apply and no
consent of the Managing Partner or TCI, as applicable, shall be required for:
(a) any assignment of Partnership Interests by Century that is
permitted by Article 9; or
(b) an assignment by a Partner or an Assignee of a Partner to
a Controlled Affiliate of such Partner; or
(c) in the case of an assignment by TCI or an Assignee of TCI,
an assignment to any Person controlled directly or indirectly by
Tele-Communications and of which Tele-Communications owns, directly or
indirectly, at least fifty percent of the outstanding equity interests; or
(d) in the case of an assignment by Century or an Assignee of
Century, an assignment to any Person controlled directly or indirectly by
Century/New Jersey and of which Century/New Jersey owns, directly or indirectly,
at least fifty percent of the outstanding equity interests; or
(e) an assignment by TCI pursuant to Section 7.1(b)(2)(B) or
Section 7.2(b)(2)(C) to a Person who will become a successor Managing Partner.
8.4 Assignee.
If the provisions of this Article 8 have been complied with, an
Assignee shall be entitled to receive distributions of cash or other property,
and allocations of Net Profit and Net Loss and of items of income, deduction,
gain, loss, or credit, from the Partnership attributable to the assigned
Partnership Interests from and after the effective date of the assignment, and
shall have the right to receive a copy of the quarterly and annual financial
statements required herein to be provided the Partners, but an Assignee shall
have no other rights of a Partner herein, such as rights to any other
information, an accounting, inspection of books or records, or voting as a
Partner on matters required by law, unless and until such Assignee is admitted
as a substitute Partner pursuant to the provisions of Section 8.8. The
Partnership and the Managing Partner shall be entitled to treat the assignor as
the absolute owner of the Partnership Interests in all respects, and shall incur
no liability for distributions, allocations of Net Profit or Net Loss, or
transmittal of reports and notices required to be given to Partners that are
made in good faith to the assignor until the effective date of the assignment,
or, in the case of the transmittal of reports (other than the financial
statements referred to above) or notices, until the Assignee is so admitted as a
substitute Partner. The effective date of
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an assignment shall be the first day of the calendar month following the month
in which the Managing Partner has received an executed instrument of assignment
in compliance with this Article 8 or such other date specified in the executed
instrument of assignment. The Assignee shall be deemed an Assignee on the
effective date, and shall be only entitled to distributions and allocations of
Net Profit and Net Loss attributable to the period beginning on the effective
date of assignment. The Partnership shall attribute Net Profit and Net Loss to
the period before the effective date of assignment and to the period beginning
on the effective date of assignment as provided in Section 4.5. Each Assignee
will inherit the balance of the Capital Account, as of the effective date of
assignment, of the assignor with respect to the Partnership Interests assigned.
8.5 Other Consents and Requirements.
Any assignment of any Partnership Interests in the Partnership must be
in compliance with any requirements imposed by any state securities
administrator having jurisdiction over the assignment and the United States
Securities and Exchange Commission and must not cause the Partnership or any
Subsidiary to be in violation of any Ownership Restriction.
8.6 Assignment Not In Compliance.
Any assignment in contravention of any of the provisions of this
Article 8 shall be void and of no effect, and shall neither bind nor be
recognized by the Partnership.
8.7 Division of Partnership Interests.
The several rights and obligations inherent in the Capital Account and
the Percentage Interest attributable to a Partner's Partnership Interest are
indivisible except in equal proportions, such that the assignment of a specified
percentage of a Partner's Partnership Interest may only represent an equal
percentage of the total Capital Account and the Percentage Interest that were
attributable to such Partner's Partnership Interest prior to the assignment.
8.8 Substitute Partners.
An Assignee may not become a substitute Partner unless all of the
following conditions are first satisfied:
(a) A duly executed and acknowledged written instrument of
assignment shall have been filed with the Partnership, specifying the
Partnership Interests being assigned and setting forth the intention of the
assignor that the Assignee succeed to the assignor's interest as a substitute
Partner;
(b) The Assignee shall be an Accredited Investor;
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(c) The assignor and Assignee shall have executed and
acknowledged any other instruments that the Managing Partner deems necessary or
desirable for substitution, including the written acceptance and adoption by the
Assignee of the provisions of this Agreement and shall have executed,
acknowledged, and delivered to the Managing Partner a special power of attorney
as provided in Section 16.5(b);
(d) Except in the case of an assignment permitted by Section
8.3, the non-assigning Partner shall have consented in writing to the admission
of the Assignee as a substitute Partner, the granting of which may be withheld
by the non-assigning Partner in its sole and absolute discretion;
(e) The Assignee shall have paid to the Partnership a transfer
fee sufficient to cover all reasonable expenses connected with the substitution;
and
(f) The assignment to the Assignee shall have complied with
the other provisions of this Article 8.
8.9 Consent.
Each Partner consents to the admission of substitute Partners by the
Managing Partner and to any Assignee of its Partnership Interests becoming a
substituted Partner in accordance with the terms and conditions of this
Agreement.
8.10 Covenants of Parents.
(a) By executing this Agreement, TCIC agrees that it will not
cause or permit to occur any transaction or series of transactions unless, after
giving effect to such transaction or series of transactions, at least fifty
percent of all the outstanding equity interests in TCI would be owned, directly
or indirectly, by one of the following Persons, and TCI would be controlled,
directly or indirectly, by one of the following Persons:
(1) TCIC; or
(2) Tele-Communications; or
(3) any other Person that directly or indirectly owns
either:
(A) cable television systems serving at
least one million subscribers (excluding cable television systems owned directly
or indirectly by the Partnership) that were owned, directly or indirectly, by
TCIC prior to the transaction or series of transactions; or
(B) substantially all the cable television
systems that were owned, directly or indirectly, by TCIC prior to the
transaction or series of transactions.
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(b) By executing this Agreement, Century/Texas agrees that,
except for a transaction permitted by Article 9, it will not cause or permit to
occur any transaction or series of transactions unless, after giving effect to
such transaction or series of transactions, at least fifty percent of all the
outstanding equity interests in Century would be owned, directly or indirectly,
by one of the following Persons, and Century would be controlled, directly or
indirectly, by one of the following Persons:
(1) Century/Texas; or
(2) Century/New Jersey; or
(3) any other Person that directly or indirectly owns
either:
(A) cable television systems serving at
least one million subscribers (excluding cable television systems owned directly
or indirectly by the Partnership) that were owned, directly or indirectly, by
Century/Texas prior to the transaction or series of transactions; or
(B) substantially all the cable television
systems that were owned, directly or indirectly, by Century/Texas prior to the
transaction or series of transactions.
8.11 Impact of Code Section 708.
(a) If the assignment by a Partner of all or part of its
Partnership Interest results in the Termination of the Partnership, the Partner
causing such Termination (as determined in accordance with this Section 8.11)
will indemnify the other Partner for its Additional Income Tax Amount and
reimburse the Partnership for any reasonable fees and expenses of accountants
and attorneys that are incurred by the Partnership as a result of such
Termination. For purposes of this Section 8.11:
(1) "Termination" means, with respect to the
Partnership, a technical termination of the Partnership under Code Section
708(b)(1)(B); and
(2) "Additional Income Tax Amount" means, with
respect to any Partner, an amount equal to the excess of (A) the net present
value on the date of Termination of the federal and state income tax benefit
attributable to such Partner's shares of the Partnership's future tax
depreciation expense (taking into account all allocations made with respect to
depreciable property under Code Section 704(c)), computed without regard to Code
Section 168(i)(7) over (B) the net present value on the date of Termination of
the federal and state income tax benefit attributable to such Partner's shares
of the Partnership's future tax depreciation expense (taking into account all
allocations made with respect to depreciable property under Code Section
704(c)), computed with regard to Code Section 168(i)(7). In determining a
Partner's "Additional Income Tax Amount," net present value shall be calculated
using a discount rate equal to the interest rate paid by the
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Partnership on the date of Termination with respect to its senior indebtedness
and the highest federal and California corporate income tax rates in effect on
the date of Termination shall apply.
(b) Except as provided in Section 8.11(c) and Section 8.11(d),
the Partner whose assignment of all or part of its Partnership Interest resulted
in the Termination of the Partnership shall be treated as the Partner causing
such Termination for purposes of Section 8.11(a).
(c) If a Partner desires to assign all or part of its
Partnership Interest in a transaction that, if consummated at one time, would
result in the Termination of the Partnership, such Partner may elect (1) to
assign immediately as much of its Partnership Interest as may then be assigned
without resulting in the Termination of the Partnership and (2) to assign the
remaining portion of its Partnership Interest that it desires to assign as soon
thereafter as such subsequent assignment would not result in the Termination of
the Partnership. If a Partner notifies the other Partner that it has elected to
assign all or part of its Partnership Interest in accordance with this Section
8.11(c), specifying in its notice the portion of its Partnership Interest to be
assigned immediately in accordance with clause (1) of the preceding sentence and
the portion of its Partnership Interest to be assigned subsequently in
accordance with clause (2) of the preceding sentence (the assignment of such
portion, the "Deferred Assignment"), then, if the other Partner assigns all or
any part of its Partnership Interest prior to the Deferred Assignment by the
notifying Partner and the Deferred Assignment therefore results in the
Termination of the Partnership, the other Partner and not the notifying Partner
shall be treated as the Partner causing such Termination for purposes of Section
8.11(a).
(d) If a Partner (the "First Assigning Partner") fails to
notify another Partner (the "Second Assigning Partner") in writing of an
assignment of any part of its Partnership Interest (including any assignment of
a direct or indirect ownership interest in the First Assigning Partner to which
Section 8.11(e) applies), and an assignment by the Second Assigning Partner of
any part of its Partnership Interest (including any assignment of a direct or
indirect ownership interest in the Second Assigning Partner to which Section
8.11(e) applies) after the assignment by the First Assigning Partner and before
the Second Assigning Partner has notice of the prior assignment by the First
Assigning Partner results in a Termination of the Partnership that would not
have occurred if the assignment by the First Assigning Partner had not occurred,
then the First Assigning Partner and not the Second Assigning Partner shall be
treated as the Partner causing such Termination for purposes of Section 8.11(a).
(e) Each Partner agrees that, solely for purposes of this
Section 8.11, any assignment of a direct or indirect ownership interest in a
Partner that has the same effect as an assignment of such Partner's Partnership
Interest for purposes of determining whether a Termination of the Partnership
has occurred shall be treated as an assignment of such Partner's Partnership
Interest. Each Partner shall notify the Partnership and the other Partner in
writing not less than five days prior to any assignment of its Partnership
Interest (including any assignment of a direct or indirect ownership interest in
such Partner to which this Section 8.11(e) applies).
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ARTICLE 9
RIGHT OF FIRST OFFER
9.1 Proposed Sale and Negotiations with TCI.
(a) If, at any time after the fifth anniversary of the
Closing, Century or any Affiliate of Century (such Person, the "Seller")
proposes to assign (whether by sale, exchange, gift, contribution, distribution,
or other transfer) all of Century's Partnership Interest or all of the
outstanding equity interests in one or more Persons (including Century) that
collectively own, directly or indirectly, all of Century's Partnership Interest
(other than an assignment permitted by Section 8.3(b), Section 8.3(d), or
Section 8.10(b)), then Century shall send a written notice (the "First Offer
Notice") to TCI specifying the Partnership Interest or other equity interests
proposed to be sold (the "Offered Interest") and the following terms of the
sale: (1) purchase price and any adjustments thereto, including any adjustments
based on the number of customers or operating cash flow (the "Purchase Price"),
(2) other financial terms, such as the type and structure of consideration to be
paid (which shall not include consideration other than cash or promissory notes)
and the timing of payments (the "Other Financial Terms"), and (3) any other
material terms, such as any non-standard representations, covenants, or closing
conditions, any material limitations on the purchaser's right to
indemnification, and the "upset date" (the "Other Terms").
(b) Within ten Business Days after its receipt of the First
Offer Notice, TCI shall send a written notice to Century specifying whether TCI
desires to begin negotiations with the Seller concerning a purchase by TCI of
the Offered Interest on the terms specified in the First Offer Notice. If TCI
sends a timely notice to Century pursuant to this Section 9.1(b) specifying that
TCI desires to begin such negotiations, TCI and the Seller will undertake in
good faith to reach a binding, definitive agreement for the purchase and sale of
the Offered Interest, incorporating the terms specified in the First Offer
Notice, with any changes thereto that may be agreed to between TCI and the
Seller, and any other terms and conditions that may be agreed to between TCI and
the Seller. If TCI and the Seller reach a binding, definitive agreement for the
purchase and sale of the Offered Interest, such agreement shall govern the
rights and obligations of TCI and the Seller with respect to the purchase and
sale of the Offered Interest, and the Seller shall be permitted to consummate
the sale of the Offered Interest substantially in accordance with terms of such
agreement.
9.2 Sale to Third Party; Re-offer to TCI.
(a) If TCI does not send a timely written notice to Century
pursuant to Section 9.1(b) specifying that TCI desires to begin negotiations
with the Seller concerning a purchase by TCI of the Offered Interest, or if TCI
and the Seller commence such negotiations but are unable to enter into a
binding, definitive agreement for the sale of the Offered Interest within ninety
days after TCI's notice to Century pursuant to Section 9.1(b), then the Seller
may undertake to sell the Offered Interest to any Person in accordance with this
Section 9.2.
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(b) The Seller may agree to sell the Offered Interest to any
Person so long as (1) the terms and conditions of such sale are not materially
different from the terms specified in the First Offer Notice and (2) the
binding, definitive agreement between the Seller and the purchaser of the
Offered Interest is entered into within one year after (A) if TCI elected to
commence negotiations pursuant to Section 9.1(b), the sixtieth day after TCI's
receipt of the First Offer Notice, or (B) in all other events, the tenth
Business Day after TCI's receipt of the First Offer Notice. For purposes of this
Section 9.2, the terms and conditions of a proposed sale of the Offered Interest
will be materially different from the terms specified in the First Offer Notice
if, and only if, (1) the Purchase Price is less than that specified in the First
Offer Notice, or (2) the Other Financial Terms are different from those
specified in the First Offer Notice, or (3) any of the Other Terms are different
from those specified in the First Offer Notice in any respect that materially
reduces the value of the transaction to the Seller.
(c) If the Seller desires to sell the Offered Interest to any
Person on terms and conditions that are materially different from the terms
specified in the First Offer Notice, then Century may send a written notice (the
"Re-Offer Notice") to TCI specifying all material terms and conditions on which
the Seller proposes to sell the Offered Interest (which terms shall not include
the receipt by the Seller of consideration other than cash or promissory notes)
and including an offer from the Seller to sell the Offered Interest to TCI on
such terms and conditions. TCI may accept the offer included in the Re-Offer
Notice by sending a written notice of acceptance to Century within three
Business Days after TCI's receipt of the Re-Offer Notice, and such offer and
acceptance shall constitute a binding agreement between TCI and the Seller
concerning the sale of the Offered Interest on the terms and conditions
specified in the Re-Offer Notice. If Century sends a Re-Offer Notice and TCI
does not timely accept the offer included in the Re-Offer Notice, the Seller may
agree to sell the Offered Interest to any Person on the terms and conditions
specified in the Re-Offer Notice so long as the binding, definitive agreement
between the Seller and the purchaser of the Offered Interest is entered into
within sixty days after TCI's receipt of the Re-Offer Notice.
(d) The Seller shall be permitted to consummate the sale of
the Offered Interest substantially in accordance with terms of any agreement
entered into pursuant to this Section 9.2. If any agreement entered into
pursuant to this Section 9.2 is terminated prior to the sale of the Offered
Interest, then the terms of this Article 9 shall apply to any subsequent
proposal to sell such Offered Interest.
(e) If the Seller proposes to undertake to sell the Offered
Interest in accordance with this Section 9.2 through an auction or similar
process, TCI agrees that neither TCI nor any of its Controlled Affiliates will
participate in such auction or similar process. The provisions of Section 9.1
and Section 9.2 shall apply to any proposed sale by the Seller of the Offered
Interest through an auction or similar process.
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9.3 Seller's Election Not to Sell.
Subject to the terms of any binding agreement entered into pursuant to
this Article 9 and the Seller's obligation to negotiate with TCI in good faith
pursuant to Section 9.1(b), the Seller may, at any time and in its sole
discretion, terminate its efforts to sell the Offered Interest and rescind any
notice or offer delivered to TCI pursuant to this Article 9. If the Seller
terminates its efforts to sell the Offered Interest, the terms of this Article 9
shall apply to any subsequent efforts by the Seller to sell such Offered
Interest.
ARTICLE 10
OTHER BUSINESSES AND INVESTMENT OPPORTUNITIES
10.1 Prohibited Cross-Interests.
(a) Each Partner agrees that, during the term of this
Agreement, neither such Partner nor any Controlled Affiliate of such Partner
shall, directly or indirectly, acquire any interest in any business or in any
Person if the acquisition of such interest would cause the Partnership or any
Subsidiary to be in violation of any Ownership Restriction.
(b) If, during the term of this Agreement, there is a Formal
Determination that either Partner's holding of a Partnership Interest causes the
Partnership or any Subsidiary to be in violation of any Ownership Restriction,
then the following provisions of this Section 10.1(b) shall apply. For purposes
of this Section 10.1(b), a "Formal Determination" means (1) an agreement between
Century and TCI, (2) a written determination by the FCC (including a
determination by staff employees of the FCC acting under delegated authority),
regardless of whether such determination is subject to administrative or
judicial review, reconsideration, or appeal (except to the extent that, so long
as a stay of any enforcement action by the FCC against the Partnership or any
Subsidiary as a result of any such violation of an Ownership Restriction is
effective, the Partner that caused the violation specifies that any such
determination will not constitute a Formal Determination during the pendency of
any review, reconsideration, or appeal), or (3) a decision of any court of
competent jurisdiction, regardless of whether such decision is subject to
administrative or judicial review, reconsideration, or appeal (except to the
extent that Century and TCI agree that any such decision will not constitute a
Formal Determination during the pendency of any review, reconsideration, or
appeal). Century and TCI will use their respective good faith efforts, after
consultation with legal counsel, to reach an agreement as to whether either
Partner's holding of a Partnership Interest causes the Partnership or any
Subsidiary to be in violation of any Ownership Restriction.
(1) The Partnership will use reasonable efforts to
obtain a stay of any enforcement action by the FCC against the Partnership or
any Subsidiary as a result of any such violation of an Ownership Restriction
(and the agreement of the Partners shall be required for the Partnership to act
otherwise), and the Partners will cooperate reasonably with the Partnership in
such
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efforts, to the extent necessary to prevent such violation from having a
material adverse effect on the Partnership and the Subsidiaries before it is
cured. For purposes of this Section 10.1(b), a material adverse effect on the
Partnership and the Subsidiaries includes the loss of any license or licenses
issued by the FCC that, in the aggregate, are material to the conduct of the
business of the Partnership and the Subsidiaries, the imposition of any fines or
forfeitures that, in the aggregate, are material in amount, and limitations on
the ability of the Partnership or any Subsidiary to conduct its business in the
ordinary course consistent with its past practices.
(2) The Partnership and the Partners will cooperate
reasonably with each other and negotiate in good faith with the FCC to obtain a
determination by the FCC (including a determination by staff employees of the
FCC acting under delegated authority) that certain actions proposed to be taken
by a Partner or its Affiliates would cure any such violation of an Ownership
Restriction. The actions proposed to be taken by a Partner or its Affiliates to
cure such violation may be those that, in such Partner's judgment, are least
detrimental to such Partner and its Affiliates, and may include the divestiture
of any asset or the restructuring of any investment.
(3) If there is a Formal Determination that TCI's
holding of a Partnership Interest causes the Partnership or any Subsidiary to be
in violation of any Ownership Restriction, TCI agrees to take all reasonable
actions necessary to cure any such violation of an Ownership Restriction;
provided, however, that:
(A) if the Partnership and the Partners
receive a determination by the FCC (including a determination by staff employees
of the FCC acting under delegated authority) that certain actions proposed to be
taken by TCI or its Affiliates would cure such violation, then, if TCI and its
Affiliates take such actions, TCI shall not be required to take any other action
under this Section 10.1(b) to cure such violation until such time, if any, that
there is a subsequent Formal Determination that such actions did not cure such
violation; and
(B) TCI shall not be required to take any
action to cure such violation prior to the time that such violation would have a
material adverse effect on the Partnership and the Subsidiaries.
(4) The actions that TCI may be required to take
pursuant to Section 10.1(b)(3) (it being agreed by TCI that the following
actions shall be deemed reasonable for purposes of Section 10.1(b)(3)), subject
to the limitations in Section 10.1(b)(3)(A) and Section 10.1(b)(3)(B), shall
include, to the extent necessary to cure such violation, executing amendments to
this Agreement to eliminate any right of TCI under this Agreement (other than
its right to allocations of income, its right to distributions, its rights under
Section 5.1(c)(1), and its right to approve any other action by the Partnership
and the Subsidiaries if such action (A) in the case of an action that does not
uniquely affect either Partner, such as an acquisition or disposition of assets
or a financing, would have material adverse economic effect on TCI or (B) in the
case of an action that uniquely affects either Partner, such as a transaction
between the Partnership and an Affiliate of a Partner, would have an adverse
economic effect on TCI).
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(5) If there is a Formal Determination that Century's
holding of a Partnership Interest causes the Partnership or any Subsidiary to be
in violation of any Ownership Restriction, Century will use its best efforts to
cure any such violation; provided, however, that:
(A) if the Partnership and the Partners
receive a determination by the FCC (including a determination by staff employees
of the FCC acting under delegated authority) that certain actions proposed to be
taken by Century or its Affiliates would cure such violation, then, if Century
and its Affiliates take such actions, Century shall not be required to take any
other action under this Section 10.1(b) to cure such violation until such time,
if any, that there is a subsequent Formal Determination that such actions did
not cure such violation;
(B) Century shall not be required to take
any action to cure such violation prior to the time that such violation would
have a material adverse effect on the Partnership and the Subsidiaries; and
(C) Century shall not be required by this
Section 10.1(b)(5) to convert the Partnership Interest of Century to that of a
Limited Partner or to eliminate any right of Century under this Agreement.
(c) Neither Partner will approve the acquisition, directly or
indirectly, by the Partnership or any Subsidiary of any interest in any business
or in any Person if such Partner has actual knowledge that consummating such
acquisition would cause either Partner or any Affiliate of either Partner to be
in violation of any Ownership Restriction; provided that if the Managing Partner
desires to cause the Partnership or a Subsidiary to acquire assets or an
interest in a business or any Person, and the Managing Partner does not have
actual knowledge that such acquisition would cause the Partnership or a
Subsidiary, either Partner or any Affiliate of either Partner to be in violation
of any Ownership Restriction, then the Managing Partner shall provide prior
written notice to TCI of such proposed acquisition at least 30 days prior to
entering into a binding agreement to effect such acquisition and if TCI notifies
the Managing Partner within fifteen days of receiving such notice that such
acquisition would cause the Partnership or a Subsidiary or TCI to be in
violation of any Ownership Restriction, the Managing Partner shall not proceed
with such acquisition without first complying with this Section 10.1(c) again,
it being understood that if TCI does not so notify the Managing Partner within
such fifteen day period then the Managing Partner shall be presumed not to have
knowledge that such acquisition would cause the Partnership or a Subsidiary,
either Partner or any Affiliate of either Partner to be in violation of any
Ownership Restriction.
10.2 Wireline All Distance Communications Services.
(a) The Partnership will deliver a notice in writing (a
"Notice") to AT&T Corp. ("AT&T") if the Partnership desires to offer consumer
residential wireline all-distance communications services ("All Distance
Services") in the Territory or in any other geographic area
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served by a cable television system owned by the Partnership or any of its
Subsidiaries (collectively, with the Territory, the "Partnership Territory")
accessible from the Partnership's hybrid fiber coaxial infrastructure. AT&T will
deliver a Notice to the Partnership if AT&T desires to offer All Distance
Services in the Partnership Territory accessible from the hybrid fiber coaxial
infrastructure of an operator of a cable television system or an operator of a
multichannel video programming service. Any Notice or other notice to AT&T
pursuant to this Section 10.2 shall be sent in the manner specified in Section
16.4 to AT&T Corp., Attention: Vice President-Law and Secretary, 000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxx Xxxxx, Xxx Xxxxxx 00000, or to such other address as AT&T shall
have furnished to the Partnership in writing.
(b) The Partnership and AT&T will negotiate in good faith for
a period of 90 days from the receipt of a Notice (a "Negotiation Period")
regarding the terms and conditions upon which the Partnership and AT&T would
offer, promote and make available All Distance Services in the Partnership
Territory accessible from the Partnership's hybrid fiber coaxial infrastructure.
The Partnership and AT&T acknowledge that this Section 10.2 constitutes a
statement of their good faith intention to negotiate during the Negotiation
Period with respect to All Distance Services in the Partnership Territory
accessible from the Partnership's hybrid fiber coaxial infrastructure and does
not itself constitute an agreement, agreement to agree, or a binding commitment
by any party with respect thereto. Any agreements between the Partnership and
AT&T with respect to the offer of All Distance Services in the Partnership
Territory accessible from the Partnership's hybrid fiber coaxial infrastructure
shall be set forth in a definitive agreement and any other necessary
documentation with respect thereto, subject to the conditions expressed therein.
(c) There will be only one Negotiation Period pursuant to this
Section 10.2. The obligations of the Partnership and AT&T under this Section
10.2 will terminate on the earliest to occur of the following: (i) if a
Negotiation Period ends without the Partnership and AT&T having executed and
delivered a definitive agreement with respect to All Distance Services; (ii) if
the Agreement and Plan of Restructuring and Merger dated as of June 23, 1998
among affiliates of TCI and AT&T, as the same may be amended, terminates prior
to the closing thereunder; or (iii) on the fifth anniversary of the date on
which the Closing occurs.
(d) Nothing in this Section 10.2 will require the Partnership
to terminate any agreement or arrangement that is described on Schedule V before
the end of the current term thereof or to take any action that would constitute
a breach or default by the Partnership in the performance of its obligations
under any such agreement or arrangement. Nothing in this Section 10.2 will
require AT&T to terminate any existing agreement or arrangement before the end
of the current term thereof or to take any action that would constitute a breach
or default by AT&T in the performance of its obligations under any such
agreement or arrangement.
10.3 No Other Restrictions.
Except as specifically provided above in this Article 10, nothing in
this Agreement shall limit the ability of either Partner, or any partner,
Affiliate, Controlled Affiliate, agent, or representative
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of either Partner, to engage in or possess an interest in other business
ventures of any nature or description, independently or with others, whether
currently existing or hereafter created and whether or not competitive with or
advanced by the business of the Partnership. Neither the Partnership nor the
other Partner shall have any rights in or to the income or profits derived
therefrom, nor shall either Partner have any obligation to the other Partner
with respect to any such enterprise or related transaction.
ARTICLE 11
DISSOLUTION AND LIQUIDATION OF PARTNERSHIP
11.1 Events of Dissolution.
The Partnership shall be dissolved upon the happening of any of the
following events:
(a) the failure of the Partners to select a successor Managing
Partner in accordance with the provisions of Section 7.1(b) after the withdrawal
of Century as Managing Partner;
(b) the expiration of the term of the Partnership as set forth
in Section 2.4;
(c) the sale, exchange, involuntary conversion, or other
disposition or transfer of all or substantially all of the assets of the
Partnership;
(d) subject to any restriction in any agreement to which the
Partnership is a party, an election to liquidate and dissolve the Partnership
made by Century with the approval of TCI;
(e) the termination of the Contribution Agreement in
accordance with its terms prior to the Closing; or
(f) subject to any provision of this Agreement that limits or
prevents dissolution, the happening of any event that, under applicable law,
causes the dissolution of a limited partnership.
11.2 Liquidation.
(a) Upon dissolution of the Partnership for any reason, the
Partnership shall immediately commence to wind up its affairs. A reasonable
period of time shall be allowed for the orderly termination of the Partnership
business, discharge of its liabilities, and distribution or liquidation of the
remaining assets so as to enable the Partnership to minimize the normal losses
attendant to the liquidation process.
(b) Liquidation of the assets of the Partnership shall be
managed on behalf of the Partnership by the "Liquidator," which shall be (1) if
the Partnership is being liquidated pursuant to
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Section 11.1(a), a liquidating trustee selected by the Partners other than a
Partner that has withdrawn and (2) in all other events, the Managing Partner.
The Liquidator shall be responsible for soliciting offers to purchase the
entirety of the Partnership's assets (including equity interests in other
Persons) or portions or clusters of assets of the Partnership.
(c) The Liquidator shall cause a full accounting of the assets
and liabilities of the Partnership to be taken and a statement thereof to be
furnished to each Partner within thirty days after the distribution of all of
the assets of the Partnership.
(d) The property and assets of the Partnership and the
proceeds from the liquidation thereof shall be applied in the following order of
priority:
(1) first, to payment of the debts and liabilities of
the Partnership, in the order of priority provided by law (including any loans
by either Partner to the Partnership) and payment of the expenses of
liquidation;
(2) second, to setting up of such reserves as the
Liquidator may deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Partnership or any obligation or liability not
then due and payable; provided, however, that any such reserve shall be paid
over by the Liquidator to an escrow agent, to be held by such escrow agent for
the purpose of disbursing such reserves in payment of such liabilities, and, at
the expiration of such escrow period as the Liquidator shall deem advisable, to
distribute the balance thereafter remaining in the manner hereinafter provided;
and
(3) finally, to payment to the Partners, in
accordance with Section 4.1(b). The distributions pursuant to this Section
11.2(d)(3) shall, to the extent possible, be made prior to the later of the end
of the Fiscal Year in which the dissolution occurs or the ninetieth day after
the date of dissolution, or such other time period which may be permitted under
Treasury Regulations Section 1.704-1(b)(2)(ii)(b).
(e) If in the course of the liquidation and dissolution of the
Partnership pursuant to this Article 11, the Liquidator determines that a sale
by all the Partners to any Person of their Partnership Interests, instead of a
sale by the Partnership and the Subsidiaries of their respective assets, would
more efficiently effect the liquidation of the Partners' economic interests in
the Partnership or would reduce negative tax consequences to the Partners and
the Partnership, but would not adversely affect the rights and obligations of
either Partner (including the tax consequences to either Partner), then each
Partner agrees to sell its Partnership Interest to such Person, and the
Liquidator shall have the authority, pursuant to the power of attorney granted
in Section 16.5(b), to execute, acknowledge, deliver, swear to, file, and record
all agreements, instruments, and other documents that may be necessary or
appropriate to effect the sale of such Partner's Partnership Interest.
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(f) Following the dissolution of the Partnership pursuant to
Section 11.1, the Partners will use commercially reasonable efforts to structure
the liquidation of the Partnership in a manner that minimizes negative tax
consequences to the Partners and the Partnership to the extent doing so would
not materially adversely affect either Partner (except to the extent such
Partner is adequately compensated by the other Partner for such adverse effect).
Any structure agreed to by the Partners pursuant to this Section 11.2(f) shall
supersede the other provisions of this Article 11 to the extent it is
inconsistent with such other provisions, but nothing in this Section 11.2(f)
shall modify or otherwise affect the other provisions of this Article 11 if the
Partners are unable to agree on such a structure.
11.3 Distribution in Kind.
The distribution to either Partner of a non-cash asset in connection
with the liquidation of the Partnership shall be subject to Section 4.1(d). The
fair market value of any non-cash asset distributed in connection with the
liquidation of the Partnership shall be determined by an independent appraiser
(any such appraiser must be nationally recognized as an expert in valuing the
type of asset involved) selected by the Liquidator.
11.4 No Action for Dissolution.
The Partners acknowledge that irreparable damage would be done to the
goodwill and reputation of the Partnership if either Partner should bring an
action in court to dissolve the Partnership under circumstances where
dissolution is not required by Section 11.1. This Agreement has been drawn
carefully to provide fair treatment of all parties and equitable payment in
liquidation of the Partnership Interests of the Partners. Accordingly, except
where liquidation and dissolution are required by Section 11.1, each Partner
hereby waives and renounces its right to initiate legal action to seek
dissolution or to seek the appointment of a receiver or trustee to liquidate the
Partnership.
11.5 No Further Claim.
Upon dissolution, each Limited Partner shall look solely to the assets
of the Partnership for the return of its investment, and if the property of the
Partnership remaining after payment or discharge of the debts and liabilities of
the Partnership, including debts and liabilities owed to one or more of the
Partners, is insufficient to return the aggregate capital contributions of a
Limited Partner, such Limited Partner shall have no recourse against any other
Partner.
ARTICLE 12
INDEMNIFICATION
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12.1 General.
The Partnership shall indemnify, defend, and hold harmless the Managing
Partner, the Managing Partner's officers, directors, shareholders, employees,
and agents, the employees, officers, and agents of the Partnership, the members
of the Partnership Committee, and either Partner that has designated a member of
the Partnership Committee (but only to the extent such Partner suffers any
liability, loss, or damage as a result of the actions of such member of the
Partnership Committee) (all indemnified persons being referred to as
"Indemnified Persons" for purposes of this Article 12), from any liability,
loss, or damage incurred by the Indemnified Person by reason of any act
performed or omitted to be performed by the Indemnified Person in connection
with the business of the Partnership, including costs and attorneys' fees (which
attorneys' fees may be paid as incurred) and any amounts expended in the
settlement of any claims of liability, loss, or damage; provided, however, that,
if the liability, loss, damage, or claim arises out of any action or inaction of
an Indemnified Person, indemnification under this Section 12.1 shall be
available only if (a) either (1) the Indemnified Person, at the time of such
action or inaction, determined, in good faith, that its or his course of conduct
was in, or not opposed to, the best interests of the Partnership, or (2) in the
case of inaction by the Indemnified Person, the Indemnified Person did not
intend its or his inaction to be harmful or opposed to the best interests of the
Partnership, and (b) the action or inaction did not constitute fraud, gross
negligence, breach of fiduciary duty (which shall not be construed to encompass
mistakes in judgment or any breach of any Indemnified Person's duty of care that
did not constitute gross negligence), or willful misconduct by the Indemnified
Person; and provided, further, however, that indemnification under this Section
12.1 shall be recoverable only from the assets of the Partnership and not from
any assets of the Partners. The Partnership may pay for insurance covering
liability of the Indemnified Persons for negligence in operation of the
Partnership's affairs.
12.2 Exculpation.
No Indemnified Person shall be liable, in damages or otherwise, to the
Partnership or to either Partner for any loss that arises out of any act
performed or omitted to be performed by it or him pursuant to the authority
granted by this Agreement if (a) either (1) the Indemnified Person, at the time
of such action or inaction, determined, in good faith, that its or his course of
conduct was in, or not opposed to, the best interests of the Partnership, or (2)
in the case of inaction by the Indemnified Person, the Indemnified Person did
not intend its or his inaction to be harmful or opposed to the best interests of
the Partnership, and (b) the conduct of the Indemnified Person did not
constitute fraud, gross negligence, breach of fiduciary duty (which shall not be
construed to encompass mistakes in judgment or any breach of any Indemnified
Person's duty of care that did not constitute gross negligence), or willful
misconduct by such Indemnified Person.
12.3 Persons Entitled to Indemnity.
Any Person who is within the definition of "Indemnified Person" at the
time of any action or inaction in connection with the business of the
Partnership shall be entitled to the benefits of this Article 12 as an
"Indemnified Person" with respect thereto, regardless of whether such Person
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continues to be within the definition of "Indemnified Person" at the time of his
or its claim for indemnification or exculpation hereunder.
ARTICLE 13
BOOKS, RECORDS, ACCOUNTING, AND REPORTS
13.1 Books and Records.
The Partnership shall maintain at its principal office all of the
following:
(a) A current list of the full name and last known business or
residence address of each Partner together with the Capital Contributions and
Partnership Interest of each Partner;
(b) A copy of the Certificate, this Agreement, and any and all
amendments to either thereof, together with executed copies of any powers of
attorney pursuant to which any certificate or amendment has been executed;
(c) Copies of the Partnership's federal, state, and local
income tax or information returns and reports;
(d) The audited financial statements of the Partnership for
the six most recent Fiscal Years; and
(e) The Partnership's books and records for at least the
current and past three Fiscal Years and any necessary supporting information for
any tax or information returns and reports for any prior taxable year for which
the statute of limitations has not expired (taking into account any extensions).
13.2 Delivery to Partner and Inspection.
(a) Upon the request of a Partner, the Managing Partner shall
promptly deliver to the requesting Partner, at the expense of the Partnership, a
copy of the information required to be maintained by Section 13.1 except for
Section 13.1(e).
(b) Each Partner, or its duly authorized representative, has
the right, upon reasonable request, to inspect and copy during normal business
hours any of the Partnership records.
13.3 Annual Statements.
(a) The Managing Partner shall cause to be prepared for each
Partner at least annually, at Partnership expense, audited financial statements
of the Partnership and a consolidated audited financial statement for the
Partnership and the Subsidiaries (other than any Subsidiary the
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financial statements of which cannot, under generally accepted accounting
principles, be consolidated with the financial statements of the Partnership),
along with supplemental information for the Partnership and each Subsidiary
included in the consolidated financial statements, all prepared in accordance
with generally accepted accounting principles and accompanied by a report
thereon containing the opinion of a nationally recognized accounting firm chosen
by the Managing Partner. The financial statements will include a balance sheet,
statement of income or loss, statement of cash flows, and statement of Partners'
equity, including appropriate notes required by generally accepted accounting
principles. The supplemental information will consist of a consolidating balance
sheet and a consolidating statement of operations and Partners' equity for the
preceding Fiscal Year. The Partnership shall distribute the financial statements
or portions thereof to each Partner as follows:
(1) the Managing Partner shall distribute to each
Partner a statement setting forth the net income or loss of the Partnership for
each Fiscal Year within forty-five days after the close of such Fiscal Year;
(2) the Managing Partner shall distribute to each
Partner the balance sheet, statement of income or loss, statement of cash flows,
and statement of Partners' equity (including appropriate notes required by
generally accepted accounting principles) to be included in the financial
statements for each Fiscal Year within forty-five days after the close of such
Fiscal Year;
(3) the Managing Partner shall distribute to each
Partner a preliminary draft of the complete financial statements for each Fiscal
Year as soon as practicable after the close of such Fiscal Year; and
(4) the Managing Partner shall distribute to each
Partner the complete audited financial statements for each Fiscal Year as soon
as practicable after the close of such Fiscal Year and, in any event, by March
15 of the year following such Fiscal Year.
(b) The Managing Partner shall have prepared at least
annually, at Partnership expense, Partnership information necessary for the
preparation of each Partner's federal and state income tax returns. The
Partnership shall send the information described in this paragraph to each
Partner within seventy-five days after the end of each Fiscal Year and shall use
commercially reasonable efforts to send such information to each Partner within
sixty-five days after the end of each Fiscal Year.
(c) The Managing Partner shall also cause to be distributed to
each Partner, within ten days after delivery to the Partnership, any audited
financial statements that are prepared with respect to any Subsidiary the
financial statements of which are not consolidated with the financial statements
of the Partnership.
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(d) The Managing Partner, shall distribute to each Partner,
promptly after they become available, copies of the Partnership's federal,
state, and local income tax or information returns for each taxable year.
13.4 Quarterly Financial Statements.
(a) At the close of each of the first three quarters of any
Fiscal Year, the Managing Partner shall cause to be distributed to each Partner
a quarterly report covering each fiscal quarter of the operations of the
Partnership and each Subsidiary, consisting of unaudited financial statements
(comprising a balance sheet, a statement of income or loss, and a statement of
cash flows), and a statement of other pertinent information regarding the
Partnership and each such Subsidiary and their activities. The Managing Partner
shall cause copies of the statements and other pertinent information (including
a summarized statement of operations data of the Partnership that complies with
the requirements of APB Opinion No. 18 and Rule 4-08(g) of Regulation S-X under
the Securities Act) to be distributed to each Partner within thirty days after
the close of the fiscal quarter to which the statements relate. The Managing
Partner shall also cause to be distributed to each Partner, within ten days
after delivery to the Managing Partner, any quarterly report that is prepared
with respect to any Subsidiary the operating results of which are not included
in the quarterly report of the Partnership.
(b) The Managing Partner shall also distribute to each Partner
(1) a preliminary draft of a statement setting forth the net income or loss of
the Partnership for each calendar quarter within twenty-one days after the close
of such calendar quarter, and (2) a final statement setting forth the net income
or loss of the Partnership for each calendar quarter (including each Partner's
share of all items of income, gain, loss, and deduction of the Partnership for
such calendar quarter and the Fiscal Year to date) within thirty days after the
close of such calendar quarter.
(c) The Managing Partner shall also distribute to each
Partner, at least five Business Days before the due date for each Federal
estimated tax payment required to be made by a calendar year corporate taxpayer,
a statement reflecting all information concerning Partnership income, gain,
loss, and deduction that is reasonably necessary to enable such Partner or any
Affiliate of such Partner to calculate its estimated tax payments.
13.5 Monthly Statements.
The Managing Partner shall cause to be distributed to each Partner a
monthly report covering each calendar month of the operations of the Partnership
and each Subsidiary, consisting of unaudited statements of income and loss for
the Partnership and each Subsidiary. The Managing Partner shall cause copies of
the statements to be distributed to each Partner as soon as practicable and, in
any event, within thirty days after the close of the calendar month covered by
such report. The Managing Partner shall also cause to be distributed to each
Partner, within ten days after delivery to the Managing Partner, any monthly
report that is prepared with respect to any Subsidiary the operating results of
which are not included in the monthly report of the Partnership.
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13.6 Other Information.
The Partnership shall provide to each Partner any other information and
reports relating to any cable television systems or other businesses owned by,
and the financial condition of, the Partnership, each Subsidiary, and any other
Person in which the Partnership owns, directly or indirectly, a partnership or
other equity interest, the Partner may reasonably request. The Partnership shall
distribute to each Partner, promptly after the receipt thereof by the
Partnership, any financial or other information with respect to any Person in
which the Partnership owns, directly or indirectly, a partnership or other
equity interest, but which is not a Subsidiary, that is received by the
Partnership or any Subsidiary with respect to any equity interest of the
Partnership or any Subsidiary in such Person.
13.7 Tax Matters.
The Partnership shall be treated as a partnership for federal and state
income tax and franchise tax purposes. The Partnership, at Partnership expense,
shall prepare and timely file with the appropriate authorities all tax returns
or reports for the Partnership required to be filed by the Partnership. The
Managing Partner shall cause a draft of any material federal or California
income tax return required to be filed by the Partnership to be sent to each
Partner for review at least thirty Business Days prior to filing, and the
Managing Partner shall afford each Partner a reasonable opportunity to comment
on any such return prior to filing. The Managing Partner shall cause the
workpapers supporting allocations of Partnership income, gain, loss, and
deduction pursuant to Code Section 704(c) to be sent to each Partner for review
at least thirty Business Days prior to the filing of the Partnership's federal
income tax return containing such Code Section 704(c) allocations, and the
Managing Partner shall afford each Partner a reasonable opportunity to comment
on any such workpapers prior to the filing of such income tax return.
13.8 Other Filings.
The Partnership shall also prepare and timely file, with appropriate
federal and state regulatory and administrative bodies, all reports required to
be filed by the Partnership with those entities under then current applicable
laws, rules, and regulations. The reports shall be prepared on the accounting or
reporting basis required by the regulatory bodies. Upon written request, each
Partner shall be provided with a copy of any of the reports without expense to
the requesting Partner.
13.9 Non-Disclosure.
Each Partner agrees that, except as otherwise consented to by the other
Partner, all non-public information furnished to it or to which it has access
pursuant to this Agreement (including information relating to any dispute or the
resolution thereof pursuant to Section 16.6) will be kept confidential and will
not be disclosed by such Partner, or by any of its agents, representatives, or
employees, in any manner whatsoever, in whole or in part, except that:
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(a) each Partner shall be permitted to disclose such
information to those of its agents, representatives, and employees who need to
be familiar with such information in connection with such Partner's investment
in the Partnership,
(b) each Partner shall be permitted to disclose such
information to its Affiliates,
(c) each Partner shall be permitted to disclose information to
the extent required by law, including federal or state securities laws or
regulations, or by the rules and regulations of any stock exchange or
association on which securities of such Partner or any of its Affiliates are
traded, so long as such Partner shall have first afforded the Partnership with a
reasonable opportunity to contest the necessity of disclosing such information,
(d) each Partner shall be permitted to disclose information to
the extent necessary for the enforcement of any right of such Partner arising
under this Agreement,
(e) each Partner shall be permitted to disclose information to
a permitted Assignee, so long as (1) such Partner shall first have provided to
the other Partner written notice thereof and of the identity of the Person to
whom the disclosure is to be made and (2) such Person agrees (in a writing which
provides the Partnership with an independent right of enforcement) to be bound
by the provisions of this Section 13.9,
(f) each Partner shall be permitted to disclose information
that is or becomes generally available to the public other than as a result of a
disclosure by such Partner, its agents, representatives, or employees, and
(g) each Partner shall be permitted to disclose information
that becomes available to such Partner on a nonconfidential basis from a source
(other than the Partnership, any other Partner, or their respective agents,
representatives, and employees) that, to the best of such Partner's knowledge,
is not prohibited from disclosing such information to such Partner by a legal,
contractual, or fiduciary obligation to the Partnership or any other Partner.
ARTICLE 14
REPRESENTATIONS BY TCI
TCI represents and warrants to, and agrees with, Century and the
Partnership as follows:
14.1 Investment Intent.
It is acquiring its Partnership Interest with the intent of holding the
same for investment for its own account and without the intent or a view to
participating directly or indirectly in, or for resale in connection with, any
distribution of such Partnership Interest within the meaning of the Securities
Act or any applicable state securities laws, and it does not intend to divide
its participation with
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others, nor to resell, assign, or otherwise dispose of all or any part of its
Partnership Interest. In making such representation, TCI acknowledges that a
purchase now with an intent to resell by reason of any foreseeable specific
contingency, some predetermined event, or an anticipated change in market value
or in the condition of the Partnership would represent a purchase with an intent
inconsistent with the foregoing representation.
14.2 Securities Regulation.
(a) It acknowledges and agrees that the Partnership Interest
is being issued and sold in reliance on the exemption from registration
contained in Section 4(2) of the Securities Act and exemptions contained in
applicable state securities laws, and that it cannot and will not be sold or
transferred except in a transaction that is exempt under the Securities Act and
those state acts or pursuant to an effective registration statement under those
acts or in a transaction that is otherwise in compliance with the Securities Act
and those state acts.
(b) It understands that it has no contract right for the
registration under the Securities Act of the Partnership Interest for public
sale and that, unless such Partnership Interest is registered or an exemption
from registration is available, such Partnership Interest may be required to be
held indefinitely.
14.3 Knowledge and Experience.
It has such knowledge and experience in financial, tax, and business
matters as to enable it to evaluate the merits and risks of its investment in
the Partnership and to make an informed investment decision with respect
thereto.
14.4 Economic Risk.
It is able to bear the economic risk of an investment in its
Partnership Interest.
14.5 Binding Agreement.
This Agreement is and will remain its valid and binding agreement,
enforceable in accordance with its terms (subject, as to the enforcement of
remedies, to any applicable bankruptcy, insolvency, or other laws affecting the
enforcement of creditor's rights).
14.6 Tax Position.
Unless it provides prior written notice to the Partnership, it will not
take a position on its federal income tax return, on any claim for refund, or in
any administrative or legal proceedings that is inconsistent with any
information return filed by the Partnership or with the provisions of this
Agreement.
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14.7 Information.
It has received all documents, books, and records pertaining to an
investment in the Partnership requested by it. It has had a reasonable
opportunity to ask questions of and receive answers concerning the Partnership,
and all such questions have been answered to its satisfaction.
ARTICLE 15
AMENDMENTS AND WAIVERS
15.1 Amendments to Partnership Agreement.
(a) This Agreement may only be modified or amended with the
consent of Century and TCI, except that, so long as Century is the Managing
Partner, this Agreement may be amended from time to time by the Managing Partner
without the consent or approval of TCI:
(1) to reflect the rights and obligations of any
Person admitted as a Partner upon the issuance of Partnership Interests pursuant
to Section 6.4 and any change in the rights and obligations of any existing
Partner upon the issuance to any Person (including any existing Partner) of
Partnership Interests pursuant to Section 6.4; or
(2) to change the Partnership's principal office or
other place of business.
(b) TCI may elect at any time to cause this Agreement to be
amended to convert the Partnership Interest of TCI to that of a Limited Partner
or to eliminate any right of TCI under this Agreement.
(c) The Managing Partner shall cause to be prepared and filed
any amendment to the Certificate that may be required to be filed under the Act
as a consequence of any amendment to this Agreement.
15.2 Waivers.
The observance or performance of any term or provision of this
Agreement may be waived (either generally or in a particular instance, and
either retroactively or prospectively) by the party entitled to the benefits of
such term or provision.
ARTICLE 16
MISCELLANEOUS
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16.1 Additional Documents.
At any time and from time to time after the date of this Agreement,
upon the request of the other Partner, each Partner shall do and perform, or
cause to be done and performed, all such additional acts and deeds, and shall
execute, acknowledge, and deliver, or cause to be executed, acknowledged, and
delivered, all such additional instruments and documents, as may be required to
best effectuate the purposes and intent of this Agreement.
16.2 Inspection.
Each Partner shall have the right at reasonable times to inspect the
books and records of the Partnership.
16.3 General.
This Agreement: (a) shall be binding on the executors, administrators,
estates, heirs, and legal successors of the Partners; (b) be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to conflicts of law principles thereunder; (c) may be executed in more than one
counterpart as of the day and year first above written; and (d) together with
the Contribution Agreement contains the entire contract between the Partners as
to the subject matter of this Agreement. The waiver of any of the provisions,
terms, or conditions contained in this Agreement shall not be considered as a
waiver of any of the other provisions, terms, or conditions of this Agreement.
16.4 Notices, Etc.
All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed effectively given upon personal
delivery, confirmation of telex or telecopy, or receipt (which may be evidenced
by a return receipt if sent by registered mail), addressed (a) if to either
Partner, at the address of such Partner set forth on Schedule I or at such other
address as such Partner shall have furnished to the Partnership in writing, (b)
if to the Partnership, at 00 Xxxxxx Xxxxxx, Xxx Xxxxxx, Xxxxxxxxxxx 00000.
16.5 Execution of Papers.
(a) The Partners agree to execute such instruments, documents,
and papers as the Managing Partner deems necessary or appropriate to carry out
the intent of this Agreement.
(b) Each Partner, including each additional and substituted
Partner, by the execution of this Agreement, irrevocably constitutes and
appoints the Liquidator its true and lawful attorney-in-fact with full power and
authority in its name, place, and stead to execute, acknowledge, deliver, swear
to, file, and record all agreements, instruments, and other documents that may
be
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necessary or appropriate to effect the sale of such Partner's Partnership
Interest pursuant to Section 11.2(e).
(c) The power of attorney granted pursuant to Section 16.5(b)
shall be deemed to be a power coupled with an interest, in recognition of the
fact that each of the Partners under this Agreement will be relying upon the
power of the Liquidator to act as contemplated by this Agreement in any filing
and other action by it on behalf of the Partnership, and shall survive the
bankruptcy, death, adjudication of incompetence or insanity, or dissolution of
any Person hereby giving such powers and the transfer or assignment of all or
any part of such Person's Partnership Interest; provided, however, that in the
event of an assignment by a Partner, the powers of attorney given by the
transferor shall survive such assignment only until such time as the Assignee
shall have been admitted to the Partnership as a substituted Partner and all
required documents and instruments shall have been duly executed, filed, and
recorded to effect such substitution.
(d) Each Partner agrees to be bound by any actions taken by
the Liquidator acting in good faith pursuant to the power of attorney granted
pursuant to Section 16.5(b) that are consistent with and subject to the
provisions of this Agreement and hereby waives any and all defenses that may be
available to contest, negate, or disaffirm any action of the Liquidator taken in
good faith under the power of attorney granted pursuant to Section 16.5(b) that
are consistent with and subject to the provisions of this Agreement.
16.6 Disputed Matters.
If a dispute arises out of or relates to this Agreement or any alleged
breach thereof, the Partners will attempt in good faith to resolve such dispute
through negotiation.
16.7 No Third-Party Beneficiaries.
This Agreement is not intended to, and shall not be construed to,
create any right enforceable by any Person not a party hereto, including any
member of either Partner or any creditor of the Partnership or of either of the
Partners.
16.8 @Home Matters.
(a) With respect to the cable television systems contributed
to the Partnership by TCI and the cable television systems transferred to the
Partnership pursuant to the Exchange Agreement between an Affiliate of TCI and
the Partnership (collectively, the "TCI Systems"), the Partnership will (i)
comply with the Cable Parent Exclusivity Provisions in accordance with the terms
thereof, as if the TCI Systems continued to be operated by a Controlled
Affiliate of TCIC following the contribution or transfer of the TCI Systems to
the Partnership and (ii) except as otherwise required by clause (i), manage the
TCI Systems in accordance with the provisions of the Century Distribution
Agreement. For purposes of the foregoing and notwithstanding anything in the
@Home Distribution Agreement to the contrary, compliance with the Cable Parent
Exclusivity
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Provisions shall not prohibit the provision by the Partnership (including to
subscribers located in the service areas of the TCI Systems) of any Internet
Service which is not a High Speed Residential Internet Service (any such
service, a "Non-Exclusive Service"), whether or not such Non-Exclusive Service
entails the provision of an Internet Backbone Service; provided, however, that
if the provision of such Non-Exclusive Service entails the provision of, or
connection to, an Internet Backbone Service, the foregoing shall be conditioned
upon the Partnership having complied with the provisions of Section 4 of the
Century Distribution Agreement.
(b) TCI will promptly furnish the Partnership with a copy of
any amendment to the @Home Distribution Agreement that amends or changes the
Cable Parent Exclusivity Provisions. If the Cable Parent Exclusivity Provisions
of the @Home Distribution Agreement are amended and (1) such provisions as so
amended do not conform in all material respects to the Cable Parent Exclusivity
Provisions as in effect for purposes of this Agreement prior to such amendment,
and (2) the Partnership did not give its prior written consent to such amendment
(which consent shall be deemed to have been given to the extent that the
Partnership has agreed to substantially similar terms with respect to any of its
cable television systems other than the TCI Systems), and (3) the Partnership
reasonably determines that its compliance with such provisions as so amended
would have a material adverse effect on the operation of the TCI Systems, and
(4) the Partnership gives written notice to such effect to TCI, including a
detailed explanation of such material adverse effect, within twenty days after
the Partnership's receipt of the amendment to such provisions, then TCI, by
written notice delivered to the Partnership within twenty days after its receipt
of the Partnership's notice pursuant to clause (4), shall elect either (A) to
terminate the Partnership's obligations under Section 16.8(a) or (B) to require
that the Partnership's obligations under Section 16.8(a) continue, but such
amendment shall not be given effect for purposes of the definition of "Cable
Parent Exclusivity Provisions" in Section 16.8(c)(3). If TCI furnishes the
Partnership with a copy of an amendment to the @Home Distribution Agreement but
all of the conditions set forth in clauses (1) through (4) of the second
sentence of this Section 16.8(b) are not satisfied with respect to such
amendment, then the definition of "Cable Parent Exclusivity Provisions" in
Section 16.8(c)(3) shall be amended to be the definition set forth in such
amendment.
(c) For purposes of this Section 16.8:
(1) "Century Distribution Agreement" means the @Home
Network Distribution Agreement, dated May 1, 1998, between At Home Corporation
and Century/Texas;
(2) "@Home Distribution Agreement" means,
collectively, the Master Distribution Agreement Term Sheet and the Term Sheet
for Form of LCO Agreement, each of which are exhibits to the letter agreement,
dated as of May 15, 1997, among At Home Corporation and Tele-Communications,
Inc., Comcast Corporation, Xxx Enterprises, Inc., Kleiner, Perkins, Caulfield &
Xxxxx and certain of their respective affiliates, as each such term sheet has
been amended by the letter agreement, dated as of October 2, 1997, as amended as
of October 10, 1997, among the parties to the May 15, 1997 letter agreement and
Cablevision Systems Corporation and certain of its affiliates; provided, that,
subject to Section 16.8(b), the term "@Home Distribution Agreement" will
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include any definitive agreement entered into by the parties with respect to the
distribution of the @Home service as contemplated by the May 15, 1997 letter
agreement.
(3) "Cable Parent Exclusivity Provisions" has the
meaning assigned to it in the @Home Distribution Agreement, as amended by any
amendment to the Cable Parent Exclusivity Provisions that is required to be
given effect pursuant to Section 16.8(b).
(4) "Controlled Affiliate," "Internet Service," and
"Internet Backbone Service" have the meanings assigned to them in the @Home
Distribution Agreement; and
(5) "High Speed Residential Internet Service" has the
meaning assigned to it in the Century Distribution Agreement.
16.9 Programming Matters.
(a) Following the Closing, the Partnership will continue to
carry Starz! and Encore (including Encore Plex) on the cable television systems
contributed to the Partnership by TCI on the terms and conditions applicable to
such systems at the time of the Closing, and the Partnership will use
commercially reasonable efforts to carry Starz! and Encore (including Encore
Plex) on the cable television systems contributed to the Partnership by Century
and the cable television systems transferred to the Partnership pursuant to the
Exchange Agreement between an Affiliate of TCI and the Partnership.
(b) To the extent that, as of the Closing, any programming
service listed on Schedule IV is carried on any of the cable television systems
contributed to the Partnership by TCI, the Partnership will continue to carry
such service on such systems until the termination of TCI's present affiliation
agreement for such service, on the terms and conditions applicable to such
systems at the time of the Closing.
(c) After the Closing, if requested by the Partnership, TCI
agrees that it will cause its Affiliate, Satellite Services, Inc. ("SSI"), to
enter into an agreement (the "Programming Supply Agreement") to provide
programming to the Partnership, in consideration of an annual fee equal to 1.5%
(the "SSI Administrative Fee") of the annual cost of any programming purchased
by the Partnership through SSI. The other terms and conditions of the
Programming Supply Agreement will be negotiated between SSI and the Partnership
and will be no less favorable to the Partnership in the aggregate than the terms
and conditions of similar programming supply agreements then in effect between
SSI and similarly situated SSI affiliates. In order for the Partnership to
obtain a favorable provision in the Programming Supply Agreement that was made
available to a similarly situated SSI affiliate, SSI may require that the
Partnership accept the other terms and conditions upon which such favorable
provision was made available to such similarly situated SSI affiliate, so long
as the terms and conditions offered to the Partnership are not less favorable to
the Partnership in the aggregate than the terms and conditions of the
programming supply agreement with such similarly situated SSI affiliate. In no
event will the "most favored nation" provisions of this Section
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16.9(c) be applicable to the SSI Administrative Fee, which is a fixed percentage
fee that will change only as mutually agreed to by the Partnership and SSI. For
purposes of this Section 16.9(c), a "similarly situated SSI affiliate" is a
Person that meets each of the following criteria:
(1) such Person has entered into a programming supply
agreement with SSI; and
(2) TCI or an Affiliate of TCI owned an equity
interest in such Person on that date such programming supply agreement was
entered into; and
(3) the equity interest in such Person that was owned
by TCI and its Affiliates, collectively, on that date such programming supply
agreement was entered into, expressed as a percentage of all outstanding equity
interests in such Person, was not more than five percent greater than TCI's
Percentage Interest on the date of the Partnership's request pursuant to this
Section 16.9(c); and
(4) the number of subscribers served by the cable
television systems that were owned by such Person on that date such affiliation
agreement was entered into was not more than five percent greater than the
number of subscribers served by the cable television systems owned, directly or
indirectly, by the Partnership on the date of the Partnership's request pursuant
to this Section 16.9(c).
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IN WITNESS WHEREOF, the Partners have hereunto set their hands as of
the day first heretofore mentioned.
CENTURY EXCHANGE LLC
By: Century Southwest Cable Television, Inc., its
manager
By: _____________________________________________
Name:
Title:
TCI CALIFORNIA HOLDINGS, LLC
By: TCI Cablevision of California, Inc., its manager
By: _____________________________________________
Name:
Title:
FOR PURPOSES OF SECTION 8.10(a) ONLY:
TCI COMMUNICATIONS, INC.
By: _____________________________________________
Name:
Title:
FOR PURPOSES OF SECTION 8.10(B) AND ARTICLE
9 ONLY:
CENTURY COMMUNICATIONS CORP., A TEXAS
CORPORATION
By: _____________________________________________
Name:
Title:
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FOR PURPOSES OF SECTION 10.2, SECTION 10.3,
AND SECTION 16.3 ONLY:
AT&T CORP.
By: _____________________________________________
Name:
Title:
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SCHEDULE I
TO
AGREEMENT OF LIMITED PARTNERSHIP
ADDRESSES OF THE PARTNERS
Century Exchange, LLC
c/o Century Communications Corp.
00 Xxxxxx Xxxxxx
Xxx Xxxxxx, Xxxxxxxxxxx 00000
TCI California Holdings, LLC
c/o Tele-Communications, Inc.
Terrace Tower II
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
SCHEDULE II
TO
AGREEMENT OF LIMITED PARTNERSHIP
INITIAL MEMBERS OF THE PARTNERSHIP COMMITTEE
1. Members designated by Century pursuant to Section 5.2(a):
Xxxxxxx Xxx
Xxxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxxx
2. Members designated by TCI pursuant to Section 5.2(a):
Xxx X. Xxxxxxx, Xx.
Xxxxxxx X. Xxxxxxxxxx
SCHEDULE III
TO
AGREEMENT OF LIMITED PARTNERSHIP
FIVE-YEAR OPERATING PLAN
SCHEDULE IV
TO
AGREEMENT OF LIMITED PARTNERSHIP
PROGRAMMING SERVICES
American Movie Classics
American Sports Classics or its successor
Animal Planet
Bravo
Discovery Channel
DMX
ESPN
Fox News
Home and Garden
Home Shopping Network (the home shopping service)
Home Team Sports
MSNBC
Showtime
The Movie Channel
Romance Classics
The Learning Channel
SCHEDULE V
TO
AGREEMENT OF LIMITED PARTNERSHIP
CERTAIN AGREEMENTS
1. Facilities Agreement among Century Cable of Southern California,
Century Cable of Northern California, Century Southwest Cable
Television, and TCG Los Angeles.
2. TCG Express Master Agreement among Century Cable of Southern
California, Century Cable of Northern California, Century Southwest
Cable Television, and TCG Los Angeles.
3. Letter, dated November 23, 1994, from J. Xxxx Xxxxxxxxxx to Xxxxxx X.
Xxxxxx.
4. @Home Network Distribution Agreement, dated May 1, 1998, between At
Home Corporation and Century Communications Corp.
5. Any agreement to which Century or the Partnership is or becomes a party
pursuant to which Century or the Partnership agrees to license fiber
optic facilities to or from a third party which agreement is not
prohibited by the provisions of Section 10.2.
