THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT FOR CC VIII, LLC, A DELAWARE LIMITED LIABILITY COMPANY DATED AS OF OCTOBER 31, 2005
Exhibit
10.20
THIRD
AMENDED AND RESTATED
FOR
CC
VIII,
LLC,
A
DELAWARE LIMITED LIABILITY COMPANY
DATED
AS
OF OCTOBER 31, 2005
THE
MEMBERSHIP INTERESTS REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, OR REGISTERED OR QUALIFIED UNDER ANY STATE
SECURITIES LAWS. SUCH MEMBERSHIP INTERESTS MAY NOT BE OFFERED FOR SALE, SOLD,
DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED
AND
REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN
THE
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, SUCH QUALIFICATION AND
REGISTRATION IS NOT REQUIRED. ANY TRANSFER OF THE MEMBERSHIP INTERESTS
REPRESENTED BY THIS AGREEMENT IS FURTHER SUBJECT TO OTHER RESTRICTIONS, TERMS,
AND CONDITIONS WHICH ARE SET FORTH HEREIN.
Page
| ARTICLE I |
DEFINITIONS
|
2
|
|
ARTICLE
II
|
ORGANIZATIONAL MATTERS |
12
|
|
2.1
|
Formation
|
12
|
|
2.2
|
Name
|
12
|
|
2.3
|
Term
|
12
|
|
2.4
|
Principal
Office; Registered Agent
|
12
|
|
2.5
|
Purpose
of Company
|
12
|
|
ARTICLE
III
|
CAPITAL
CONTRIBUTIONS AND UNITS
|
13
|
|
3.1
|
Capital
Contributions
|
13
|
|
3.2
|
Initial
Capital Accounts
|
13
|
|
3.3
|
Capital
Accounts
|
14
|
|
3.4
|
No
Interest
|
14
|
|
3.5
|
No
Withdrawal
|
15
|
|
3.6
|
Units
|
15
|
|
ARTICLE
IV
|
MEMBERS
|
15
|
|
4.1
|
Limited
Liability
|
15
|
|
4.2
|
Admission
of Additional Members
|
15
|
|
4.3
|
Meetings
of Members
|
16
|
|
4.4
|
Voting
by Members
|
17
|
|
4.5
|
Members
Are Not Agents
|
17
|
|
4.6
|
No
Withdrawal
|
17
|
|
ARTICLE
V
|
MANAGEMENT
AND CONTROL OF THE COMPANY
|
17
|
|
5.1
|
Management
of the Company by Manager
|
17
|
|
5.2
|
Fiduciary
Obligations
|
18
|
|
5.3
|
Indemnification
and Expenses
|
19
|
|
5.4
|
Devotion
of Time
|
20
|
|
5.5
|
Competing
Activities
|
20
|
|
5.6
|
Certain
Related Transactions
|
21
|
|
5.7
|
Remuneration
for Management or Other Services
|
22
|
|
5.8
|
Reimbursement
of Expenses
|
22
|
|
ARTICLE
VI
|
ALLOCATIONS
OF NET PROFITS AND NET LOSSES AND DISTRIBUTIONS
|
23
|
|
6.1
|
Allocations
of Net Profits
|
23
|
|
6.2
|
Allocations
of Net Losses
|
23
|
|
6.3
|
Special
Allocations
|
24
|
|
6.4
|
Curative
Allocations
|
25
|
|
6.5
|
Tax
Allocations
|
26
|
|
6.6
|
Other
Allocation Rules
|
27
|
|
6.7
|
Obligations
of Members to Report Consistently
|
27
|
-i-
TABLE
OF CONTENTS
(continued)
Page
|
6.8
|
Distributions
by the Company to Members
|
27
|
|
6.9
|
Form
of Distributions
|
28
|
|
6.10
|
Return
of Distributions
|
28
|
|
6.11
|
Limitation
on Distributions
|
28
|
|
6.12
|
Withholding
|
28
|
|
ARTICLE
VII
|
TRANSFER
OF INTERESTS
|
29
|
|
7.1
|
Transfers
by CII
|
29
|
|
7.2
|
Transfer
of Control of CII/Successor
|
30
|
|
7.3
|
Tag-Along
Rights
|
30
|
|
7.4
|
Drag-Along
Rights
|
31
|
|
7.5
|
Put
and Call Rights
|
33
|
|
7.6
|
Admission
of Member
|
34
|
|
7.7
|
Other
Transfers of Units Not Valid
|
35
|
|
7.8
|
Recognition
of Transferee Members
|
35
|
|
7.9
|
Elections
Under the Code
|
35
|
|
ARTICLE
VIII
|
BOOKS
AND RECORDS; ACCOUNTING; TAX MATTERS
|
36
|
|
8.1
|
Books
and Records
|
36
|
|
8.2
|
Delivery
to Members and Inspection
|
36
|
|
8.3
|
Financial
Statements
|
36
|
|
8.4
|
Tax
Returns
|
36
|
|
8.5
|
Other
Filings
|
37
|
|
8.6
|
Bank
Accounts
|
37
|
|
8.7
|
Accounting
Decisions and Reliance on Others
|
37
|
|
8.8
|
Tax
Matters
|
37
|
|
ARTICLE
IX
|
DISSOLUTION
AND WINDING UP
|
37
|
|
9.1
|
Dissolution
|
37
|
|
9.2
|
Winding
Up
|
38
|
|
9.3
|
Distributions
in Kind
|
38
|
|
9.4
|
Determination
of Fair Market Value
|
38
|
|
9.5
|
Order
of Distributions Upon Dissolution
|
38
|
|
9.6
|
Limitations
on Payments Made in Dissolution
|
39
|
|
9.7
|
Certificate
of Cancellation
|
39
|
|
9.8
|
Termination
|
39
|
|
9.9
|
No
Action for Dissolution
|
39
|
|
ARTICLE
X
|
MISCELLANEOUS
|
39
|
|
10.1
|
Complete
Agreement
|
39
|
|
10.2
|
Amendments
|
40
|
|
10.3
|
Binding
Effect
|
40
|
|
10.4
|
Parties
in Interest
|
40
|
|
10.5
|
Statutory
References
|
41
|
-ii-
TABLE
OF CONTENTS
(continued)
Page
|
10.6
|
Headings
|
41
|
|
10.7
|
References
to this Agreement
|
41
|
|
10.8
|
Interpretation
|
41
|
|
10.9
|
Governing
Law
|
41
|
|
10.10
|
Severability
|
41
|
|
10.11
|
Additional
Documents and Acts
|
41
|
|
10.12
|
Notices
|
42
|
|
10.13
|
No
Interest in Company Property; Waiver of Action for
Partition
|
43
|
|
10.14
|
Multiple
Counterparts
|
43
|
|
10.15
|
Remedies
Cumulative
|
43
|
|
10.16
|
Investment
Representation
|
43
|
|
10.17
|
Specific
Enforcement; Attorney’s Fees
|
43
|
-iii-
THIRD
AMENDED AND RESTATED
FOR
CC
VIII,
LLC,
A
DELAWARE LIMITED LIABILITY COMPANY
This
Third Amended and Restated Limited Liability Company Agreement for CC VIII,
LLC, a Delaware limited liability company ("Company"),
is
made and entered into effective as of October 31, 2005, by and among CCV
Holdings, LLC, a Delaware limited liability company ("CCV"), CCHC,
LLC, a Delaware limited liability company
("CCHC"),
Charter Investment, Inc. ("CII"),
and
the other Persons signatories hereto.
A. The
Company was organized as a limited liability company pursuant to a Certificate
of Formation of the Company filed with the Delaware Secretary of State on August
6, 1999 and the Limited Liability Company Agreement of the Company entered
into
and made effective as of February 14, 2000 (such Agreement, the "Initial
Agreement").
B. The
Initial Agreement was amended and restated by the Amended and Restated Limited
Liability Company Agreement of the Company entered into and made effective
as of
January 1, 2002, which in turn was amended and restated by the Amended and
Restated Limited Liability Company Agreement of the Company entered into and
made effective as of March 31, 2003 (the "Existing
LLC Agreement").
C. On
January 2, 2001, July 10, 2001, August 31, 2001, and January 14, 2002, CCV
made
additional contributions of cash and assets to the capital of the Company but
did not at that time receive additional Class B Units (as hereinafter defined)
in exchange for such contributions.
D. On
June
6, 2003, CII acquired by purchase all the Class A Preferred Units (as
hereinafter defined) of the Company.
E. As
of the
date hereof, pursuant to the Settlement Agreement (as hereinafter defined),
CII
has transferred 1,788,997 Class A Preferred Units to CCHC and CII has
transferred 15,202,763 Class A Preferred Units to Charter Communications Holding
Company, LLC ("Charter
HoldCo"),
which
has transferred such Class A Preferred Units to CCHC (together, such transferred
Class A Preferred Units, the "Transferred
Units").
F. Pursuant
to the Settlement Agreement, the Company is required to issue additional Class
B
Units to CCV in consideration for the contributions made by CCV to the capital
of the Company as described in Recital C.
G. The
parties hereto desire to enter into this Third Amended and Restated Limited
Liability Company Agreement to provide for, inter
alia,
the
admission of CCHC as a member of the Company, the issuance of additional Class
B
Units to CCV, and the amendment and restatement of the respective rights,
obligations, and interests of the parties hereto to each other and to the
Company.
NOW,
THEREFORE, the Existing LLC Agreement is hereby amended and restated in its
entirety as follows:
ARTICLE
I
DEFINITIONS
When
used
in this Agreement, unless the context otherwise requires, the following terms
shall have the meanings set forth below:
1.1 "Act"
means
the Delaware Limited Liability Company Act, 6 Del. C. § 18-101 et seq., as the
same may be amended from time to time.
1.2 "Adjusted
Capital Account Deficit"
means,
with respect to any Member, the deficit balance, if any, in such Member’s
Capital Account as of the end of the relevant Fiscal Year, after giving effect
to the following adjustments:
1.2.1 Credit
to
such Capital Account any amounts that such Member is obligated to restore
pursuant to any provision of this Agreement or is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5);
1.2.2 Credit
to
such Capital Account the amount of the deductions and losses referable to any
outstanding recourse liabilities of the Company owed to or guaranteed by such
Member (or a related person within the meaning of Regulations Section
1.752-4(b)) to the extent that no other Member bears any economic risk of loss
and the amount of the deductions and losses referable to such Member’s share
(determined in accordance with the Member’s Percentage Interest) of outstanding
recourse liabilities owed by the Company to non-Members to the extent that
no
Member bears any economic risk of loss; and
1.2.3 Debit
to
such Capital Account the items described in 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 Regulations Section 1.704-1(b)(2)(ii)(d)
and
shall be interpreted consistently therewith.
1.3 "Adjusted
Priority Capital"
means,
with respect to any Class A Member as of any date, the amount, if any, of such
Member’s Initial Priority Capital, reduced by the aggregate amount distributed
to such Member by the Company pursuant to Section 9.5(b)
hereof.
In the event any Class A Member transfers all or any portion of such Member’s
Class A Preferred Units in accordance with the terms of this Agreement, such
Member’s transferee shall succeed to the Adjusted Priority Capital of the
transferor to the extent it relates to the transferred portion of such Member’s
Class A Preferred Units.
1.4 "Affiliate"
of any
Person shall mean any other Person that, directly or indirectly, Controls,
is
under common Control with or is Controlled by that Person.
-2-
1.5 "Agreement"
means
this Amended and Restated Limited Liability Company Agreement, as originally
executed and as amended or restated from time to time.
1.6 "Xxxxx
Members"
has the
meaning set forth in Section 7.3.1
hereof.
1.7 "Appraiser"
means a
nationally-recognized investment bank or other appraiser experienced in the
cable television industry.
1.8 "Approval
of the Members"
means
the affirmative vote, approval or consent of the Member(s) holding more than
50 percent of the Class B Units.
1.9 "Available
Cash"
means
all cash and cash equivalents of the Company on hand from time to time
(including without limitation bank and deposit accounts and short-term cash
investments), excluding any portion thereof, as determined by the Manager in
its
sole discretion, necessary or advisable to pay expenses or liabilities or
establish reserves, for purposes of operating, developing, maintaining, or
otherwise providing for the Company and its business and affairs.
1.10 "Basis"
means
the adjusted basis of an asset for federal income tax purposes.
1.11 "Cable
Transmission Business"
has the
meaning set forth in Section 2.5
hereof.
1.12 "Call
Notice"
has the
meaning set forth in Section 7.5.3
hereof.
1.13 "Capital
Account"
means
with respect to any Member the capital account that the Company establishes
and
maintains for such Member pursuant to Section 3.2
hereof.
1.14 "Capital
Contribution"
means,
with respect to any Member, the amount of money and the Gross Asset Value of
any
property (other than money) contributed to the Company with respect to the
interest in the Company held by such Person. The principal amount of a
promissory note which is not readily traded on an established securities market
and which is contributed to the Company by the maker of the note (or a Person
related to the maker of the note within the meaning of Regulations Section
1.704-1(b)(2)(ii)(c))
shall
not be included in the Capital Account of any Person until the Company makes
a
taxable disposition of the note or until (and to the extent) principal payments
are made on the note, all in accordance with Regulations Section
1.704-1(b)(2)(iv)(d)(2).
1.15 "CCI"
means
Charter Communications, Inc., a Delaware corporation.
1.16 "CCV"
has the
meaning set forth in the recitals to this Agreement.
-3-
1.17 "Certificate"
means
the Certificate of Formation of the Company originally filed with the Delaware
Secretary of State, as amended and/or restated from time to time.
1.18 "Change
of Control"
means,
with respect to any Person, a reorganization, merger, consolidation or other
transaction or transactions, , other than with Xx. Xxxxx or one or more of
his
Affiliates and other than in connection with any transactions with CCI or one
or
more of its subsidiaries, (whether or not CCI is a party thereto and
specifically including, without limitation, open market purchases of
securities), as a result of which any person or entity or "group" of persons
or
entities (other than Xx. Xxxxx, any of his Affiliates or CCI or any Charter
Affiliate) becomes the "beneficial owner" (as those terms are defined in and
construed by judicial authority under Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended, as that Rule may be amended from
time to time) of common stock or options, warrants or other rights to acquire
common stock or any convertible securities representing in the aggregate at
least 50 percent of the ordinary voting power of such Person in the
election of directors or managing members.
1.19
"Change
of Control Event"
has the
meaning set forth in Section 7.5.1
hereof.
1.20 "Charter
Affiliate"
means
any Person Controlled by CCI or Charter HoldCo.
1.21 "Charter
Members"
means
CCHC and CCV and any of their successors.
1.22 "CCHC"
has the
meaning set forth in the recitals to this Agreement.
1.23 "Charter
Permitted Transferee"
means
any transferee of all or any portion of the Membership Interest of any Charter
Member.
1.24 "CII"
has the
meaning set forth in the recitals to this Agreement.
1.25 "CII
Class A Preferred Units"
means
the Class A Preferred Units owned by CII immediately following the consummation
of the transfers by CII contemplated under the Settlement
Agreement.
1.26 "CII
Permitted Transferee"
has the
meaning set forth in Section 7.1.2
hereof.
1.27 "CII/Successor"
means
CII and any Person that succeeds to all or any portion of CII’s interest in the
CII Class A Preferred Units.
1.28 "Class
A Member"
means
any Member holding and to the extent it holds Class A Preferred
Units.
1.29 "Class
A Preferred Units"
means
any Unit denominated "Class A Preferred."
-4-
1.30 "Class
B Member"
means
any Member holding and to the extent it holds Class B Units.
1.31 "Class
B Units"
means
any Unit denominated "Class B."
1.32 "COC
Notice"
has the
meaning set forth in Section 7.5.1
hereof.
1.33 "Code"
means
the Internal Revenue Code of 1986, as amended from time to time, the provisions
of succeeding law, and to the extent applicable, the Regulations.
1.34 "Company"
has the
meaning set forth in the recitals to this Agreement.
1.35 "Company
Minimum Gain"
has the
meaning ascribed to the term "Partnership Minimum Gain" in Regulations Section
1.704-2(d).
1.36 "Control"
including, with its correlative meanings, the terms "controlled by" and "under
common control with", as used with respect to any Person, shall mean the
possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
1.37 "Depreciation"
means,
for each Fiscal Year, an amount equal to the federal income tax 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 Basis at the beginning of such Fiscal Year, Depreciation shall
be an amount which bears the same ratio to such beginning Gross Asset Value
as
the federal income tax depreciation, amortization, or other cost recovery
deduction for such Fiscal Year bears to such beginning Basis; provided, however,
that if the Basis of an asset at the beginning of such Fiscal Year is zero,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any reasonable method selected by the Manager.
1.38 "Drag-Along
Notice"
has the
meaning set forth in Section 7.4.2
hereof.
1.39 "Drag
Contract"
has the
meaning set forth in Section 7.4.2
hereof.
1.40 "Drag-Offered
Interest"
has the
meaning set forth in Section 7.4.1
hereof.
1.41 "Dragged
Interest"
has the
meaning set forth in Section 7.4.1
hereof.
1.42 "Fiscal
Year"
means
the Company’s fiscal year, which shall be the calendar year, or any portion of
such period for which the Company is required to allocate Net Profits, Net
Losses, or other items of Company income, gain, loss, or deduction pursuant
hereto.
-5-
1.43 "Gross
Asset Value"
means,
with respect to any asset, the asset’s Basis, except as follows:
1.43.1 The
initial Gross Asset Value of the Property of the Company on the date hereof
is
the Gross Asset Value of such Property shown on the books and records of the
Company as of the date hereof.
1.43.2 The
initial Gross Asset Value of any asset contributed by a Member to the Company
after the date hereof shall be the gross fair market value of such asset, as
determined by the contributing Person and the Manager;
1.43.3 The
Gross
Asset Values of all Company assets shall be adjusted to equal their respective
gross fair market values (taking into account Code Section 7701(g)), as
determined by the Manager, as of the following times: (a) the acquisition of
an
additional interest in the Company by any new or existing Member in exchange
for
more than a de
minimis
Capital
Contribution after the date hereof; (b) the distribution by the Company to
a
Member of more than a de
minimis
amount
of Property as consideration for an interest in the Company after the date
hereof; (c) the grant of an interest in the Company (other than a de
minimis
interest) as consideration for the provision of services to or for the benefit
of the Company; and (d) the liquidation of the Company within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g);
provided, however, that adjustments pursuant to clauses (a) and (b) above shall
be made only if the Manager reasonably determines that such adjustments are
necessary or appropriate to reflect the relative economic interests of the
Members in the Company.
1.43.4 The
Gross
Asset Value of any Company asset distributed to any Member shall be adjusted
to
equal the gross fair market value of such asset on the date of distribution
as
determined by the distributee and the Manager; and
1.43.5 The
Gross
Asset Values of Company assets shall be increased (or decreased) to reflect
any
adjustments to the Basis of such assets pursuant to Code Section 734(b)
or Code
Section 743(b) after the date hereof, but only to the extent that such
adjustments are taken into account in determining Capital Accounts pursuant
to
Regulation Section 1.704-1(b)(2)(iv)(m)
and
Section 1.56.6
hereof,
provided, however, that Gross Asset Values shall not be adjusted pursuant to
this Section 1.43.5
to the
extent the Manager determines that an adjustment pursuant to Section
1.43.3
hereof
is necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this Section 1.43.5.
If
the
Gross Asset Value of an asset has been determined or adjusted pursuant to
Section 1.43.1,
Section
1.43.2,
Section
1.43.3,
or
Section 1.43.5
hereof,
such Gross Asset Value shall thereafter be adjusted by the Depreciation taken
into account with respect to such asset for purposes of computing Net Profits
and Net Losses
1.44 "Implied
CC VIII Value"
means
(i) the value of the business conducted by CC VIII (directly or indirectly
through Subsidiaries) as of the Valuation Date (as determined by the process
described in Section 7.5.4),
plus
(ii) to the extent not included
-6-
in
the
amount described in clause (i), the aggregate value of all current assets
of
CC VIII, calculated as of the Valuation Date (as determined by the
process
described in Section 7.5.4).
1.45 "Initial
Agreement"
has the
meaning set forth in the recitals to this Agreement.
1.46 "Initial
Capital Account"
means,
with respect to any Member, the capital account of such Member as of the Tax
Effective Date, as calculated pursuant to Section 3.2.
1.47 "Initial
Members"
means
CCV, CCHC, and CII.
1.48 "Initial
Priority Capital"
means,
with respect to each Class A Member, the amount, if any, set forth opposite
such
Member’s name on Schedule
A.
1.49 "Manager"
means
one or more managers who are designated from time to time as provided in Section
5.1
hereof.
1.50 "Member"
means
each Person who (a) is an Initial Member, has been admitted to the Company
as a
Member in accordance with this Agreement, or is an assignee who has become
a
Member in accordance with Article VII, and (b) has not retired, resigned,
withdrawn, been expelled or removed, or, if other than an individual,
dissolved.
1.51 "Member
Nonrecourse Debt"
has the
meaning ascribed to the term "Partner Nonrecourse Debt" in Regulations Section
1.704-2(b)(4).
1.52 "Member
Nonrecourse Debt Minimum Gain"
means
an amount, with respect to each Member Nonrecourse Debt, equal to the Company
Minimum Gain that would result if such Member Nonrecourse Debt were treated
as a
Nonrecourse Liability, determined in accordance with Regulations Section
1.704-2(i)(3).
1.53 "Member
Nonrecourse Deductions"
means
items of Company loss, deduction, or Code Section 705(a)(2)(B) expenditures
that
are attributable to Member Nonrecourse Debt or to other liabilities of the
Company owed to or guaranteed by a Member (or a related person within the
meaning of Regulations Section 1.752-4(b)) to the extent that no other Member
bears the economic risk of loss.
1.54 "Membership
Interest"
means a
Member’s entire interest in the Company including the Member’s right to share in
income, gains, losses, deductions, credits, or similar items of, and to receive
distributions from, the Company pursuant to this Agreement and the Act, the
right to vote or participate in the management of the Company to the extent
herein provided or as specifically required by the Act, and the right to receive
information concerning the business and affairs of the Company.
1.55 "Xx.
Xxxxx"
means
Xxxx X. Xxxxx.
-7-
1.56 "Net
Profits"
and
"Net
Losses"
mean,
for each Fiscal Year, an amount equal to the Company’s taxable income or loss
for such Fiscal Year, 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:
1.56.1 Any
income of the Company that is exempt from federal income tax and not otherwise
taken into account in computing Net Profits or Net Losses pursuant to this
definition shall be added to such taxable income or loss;
1.56.2 Any
expenditures of the Company described in Code Section 705(a)(2)(B) or treated
as
Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i),
and
not otherwise taken into account in computing Net Profits or Net Losses pursuant
to this definition shall be subtracted from such taxable income or
loss;
1.56.3 In
the
event the Gross Asset Value of any Company asset is adjusted as a result of
the
application of Regulations Section 1.704-1(b)(2)(iv)(e)
or
Regulations Section 1.704-1(b)(2)(iv)(f),
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 Profits or Net
Losses;
1.56.4 Gain
or
loss resulting from any disposition of Property 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 Basis of such Property differs from its Gross Asset Value;
1.56.5 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 in accordance with Section 1.37
hereof;
1.56.6 To
the
extent an adjustment to the Basis of any Company asset pursuant to Code Section
734(b) or Code Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4)
to be
taken into account in determining Capital Accounts, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases
the
Basis of the asset) or loss (if the adjustment decreases the Basis of the asset)
from the disposition of the asset and shall be taken into account for purposes
of computing Net Profits or Net Losses; and
1.56.7 Notwithstanding
any other provision of this definition, any items that are specially allocated
pursuant to Section 6.3
or
Section 6.4hereof
shall not be taken into account in computing Net Profits or Net Losses (the
amounts of the items of Company income, gain, loss, or deduction available
to be
specially allocated pursuant to any provision of this Agreement shall be
determined by applying rules analogous to those set forth in Sections
1.56.1
through
1.56.6
above).
The
foregoing definition of Net Profits and Net Losses is intended to comply with
the provisions of Regulations Section 1.704-1(b) and shall be interpreted
consistently
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therewith.
In the event the Manager determines that it is prudent to modify the manner
in
which Net Profits and Net Losses are computed in order to comply with such
Regulations, the Manager may make such modification.
1.57 "Nonrecourse
Deductions"
has the
meaning set forth in Regulations Section 1.704-2(b)(1).
1.58 "Nonrecourse
Liability"
has the
meaning set forth in Regulations Section 1.704-2(b)(3).
1.59 "Participating
Xxxxx Member"
has the
meaning set forth in Section 7.3.3
hereof.
1.60 "Percentage
Interest"
means,
with respect to each Member, the percentage equal to the number of Units held
by
such Member divided by the total number of Units held by all
Members.
1.61 "Person"
means
any individual, general partnership, limited partnership, limited liability
company, limited liability partnership, corporation, trust, estate, real estate
investment trust, association, or other entity.
1.62 "Pre-Closing
Sharing Period"
means
the period beginning June 7, 2003 and ending on December 31, 2004.
1.63 "Priority
Rate"
means,
with respect to any period for which Priority Return is being determined,
2 percent per annum.
1.64 "Priority
Return"
means,
with respect to each Class A Member, an amount determined by applying the
Priority Rate to the average daily balance of such Member’s Adjusted Priority
Capital from time to time during the period to which the Priority Return
relates, determined on the basis of a year of 365 or 366 days, as the case
may
be, for the actual number of days in the period for which the Priority Return
is
being determined. Priority Return shall commence as of February 14, 2000 and
shall be cumulative but not compounded. In the event any Class A Member
transfers all or any portion of such Member’s Class A Preferred Units in
accordance with the terms of this Agreement, such Member’s transferee shall
succeed to the Priority Return of the transferor Class A Member to the extent
it
relates to the transferred portion of such Class A Member’s Class A Preferred
Units.
1.65 "Property"
means
all real and personal property, including in each case tangible and intangible
property, that has been acquired by or contributed to the Company and its
Subsidiaries and any improvements thereto.
1.66 "Put/Call
Price"
has the
meaning set forth in Section 7.5.4
hereof.
1.67 "Put
Notice"
has the
meaning set forth in Section 7.5.2(a)
hereof.
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1.68 "Regulations"
means
the regulations currently in force and in force from time to time as final
or
temporary that have been issued by the U.S. Department of the Treasury pursuant
to its authority under the Code. If a word or phrase is defined in this
Agreement by cross-referencing the Regulations, then to the extent the context
of this Agreement and the Regulations require, the term "Member" shall be
substituted in the Regulations for the term "partner", the term "Company" shall
be substituted in the Regulations for the term "partnership," and other similar
conforming changes shall be deemed to have been made for purposes of applying
the Regulations.
1.69 "Regulatory
Allocations"
has the
meaning set forth in Section 6.4
hereof.
1.70 "Related
Party"
means
(a) any
individual who is (i) Xx. Xxxxx, or the parent or sibling of Xx. Xxxxx, or
(ii)
any lineal or adopted descendant of Xx. Xxxxx or of his sibling, or (iii) any
lineal or adopted descendant of any individual described in clause (ii) of
this
subsection 1.70(a), and (iv) any spouse of any individual described in clauses
(i), (ii) and (iii) of this subsection 1.70(a), and any lineal or adopted
descendant of any such spouse,
(b) the
estate of any individual described in subsection 1.70(a),
(c) a
trust
in which (i) one or more individuals described in subsection 1.70(a) have a
majority of the beneficial interests (determined actuarially),
and (ii)
of which the majority of the trustees are individuals described in subsection
1.70(a),
(d) a
split
interest trust (i.e.,
a
charitable remainder trust or charitable lead trust) (i) of which the sole
beneficiaries are Xx. Xxxxx and/or individuals described in subsection 1.70(a)
and a charitable institution qualified under Section 501(c)(3) of the U.S.
Internal Revenue Code of 1986, as amended, and (ii) of which the sole trustees
are one or more individuals described in subsection 1.70(a),
(e) any
general partnership, limited partnership, limited liability company, limited
liability partnership, corporation, real estate investment trust, or association
at least 80 percent of the equity interests in which are, at the time of a
transfer to such entity, owned, directly or indirectly (through any entity
described in subsections 1.70(b), 1.70(c), 1.70(d) or this subsection 1.70(e)),
by any individual described in subsection 1.70(a),
or
(f) any
general partnership, limited partnership, limited liability company, limited
liability partnership, corporation, real estate investment trust, or association
(i) at least 50 percent of the equity interests in which are, at the time of
a
transfer to such entity, owned by Xx. Xxxxx and (ii) the management and policies
of which are directed by Xx. Xxxxx, directly or indirectly, whether through
the
ownership of voting securities or by contract or otherwise.
1.71 "Settlement
Agreement"
means
the Settlement Agreement and Mutual Releases, dated as of even date herewith,
by
and among CCI, Charter HoldCo, Charter
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Communications
Holdings, LLC, CCV, CCHC, CII, Vulcan Cable III, Inc., Xx. Xxxxx, and the
Company.
1.72 "Subsidiary"
means,
with respect to any Person, any corporation, limited liability company,
partnership, association, joint venture or other business entity of which
(a)
if a
corporation, (i)
10 percent or more of the total voting power of shares of stock entitled
to
vote in the election of directors thereof or (ii)
10 percent or more of the value of the equity interests is at the time
owned or controlled, directly or indirectly, by the Person or one or more of
its
Subsidiaries, or (b)
if a
limited liability company, partnership, association or other business entity,
10 percent or more of the partnership or other similar ownership interests
thereof is at the time owned or controlled, directly or indirectly, by the
Person or one or more of its subsidiaries. The Person shall be deemed to have
a
10 percent or greater ownership interest in a limited liability company,
partnership, association or other business entity if the Person is allocated
10 percent or more of the limited liability company, partnership,
association or other business entity gains or losses or shall be or control
the
Person managing such limited liability company, partnership, association or
other business entity.
1.73 "Tag
Acceptance Notice"
has the
meaning set forth in Section 7.3.3
hereof.
1.74 "Tag-Along
Interest"
has the
meaning set forth in Section 7.3.3
hereof.
1.75 "Tag-Along
Notice"
has the
meaning set forth in Section 7.3.1
hereof.
1.76 "Tag
Contract"
has the
meaning set forth in Section 7.3.1
hereof.
1.77 "Tag-Offered
Interest"
has the
meaning set forth in Section 7.3.1
hereof.
1.78 "Target
Capital Account"
has the
meaning set forth in Section 6.4
hereof.
1.79 "Tax
Effective Date"
means
January 1, 2005.
1.80 "Traditional
Method"
means
the "traditional method" of making Code Section 704(c) allocations described
in
Regulations Section 1.704-3(b).
1.81 "Transaction
Documents"
has the
meaning set forth in Section 10.1
hereof.
1.82 "Transfer"
means
any direct or indirect sale, transfer, assignment, hypothecation, encumbrance
or
other disposition, whether voluntary or involuntary, by operation of law or
otherwise, whether by gift, bequest or otherwise. In the case of hypothecation,
the Transfer shall be deemed to occur both at the time of the initial pledge
and
at the time of any pledgee’s sale or a sale by any secured creditor.
1.83 "Transferred
Units"
has the
meaning set forth in the recitals to this Agreement.
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1.84
"Units"
means
the units of Membership Interests issued by the Company to its Members, which
entitle the Members to certain rights as set forth in this Agreement.
1.85 "Valuation
Date"
means
the last day of the calendar month immediately preceding the date of the binding
agreement for the applicable Change of Control Event or, if there is no such
agreement, the last day of the calendar month immediately preceding the Change
of Control Event.
ARTICLE
II
ORGANIZATIONAL
MATTERS
2.1 Formation.
Pursuant to the Act, the Company was formed as a Delaware limited liability
company under the laws of the State of Delaware. The rights and liabilities
of
the Members shall be determined pursuant to the Act and this Agreement. To
the
extent that the rights or obligations of any Member 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.
The
name of the Company is "CC VIII, LLC". The business and affairs of the
Company may be conducted under that name or, upon compliance with applicable
laws, any other name that the Manager may deem appropriate or advisable. The
Manager shall file any fictitious name certificates and similar filings, and
any
amendments thereto, that may be appropriate or advisable.
2.3 Term.
The
term of the Company commenced on the date of the filing of the Certificate
with
the Delaware Secretary of State and shall continue until the Company is
dissolved in accordance with the provisions of this Agreement.
2.4 Principal
Office; Registered Agent.
The
principal office of the Company shall be as determined by the Manager. The
Company shall continuously maintain a registered agent and office in the State
of Delaware as required by the Act. The registered agent and office shall be
as
stated in the Certificate or as otherwise determined by the
Manager.
2.5 Purpose
of Company.
The
Company may carry on any lawful business, purpose, or activity that may be
carried on by a limited liability company under applicable law; provided,
however, that, until all outstanding shares of class B common stock of CCI
have
been converted into shares of class A common stock of CCI in accordance with
Clause (b)(viii) of Article Fourth of CCI’s certificate of incorporation as
constituted as of November 12, 1999, without Approval of the Members, the
Company shall not engage directly or indirectly, including without limitation
through any Subsidiary, in any business other than the Cable Transmission
Business and as member of, and subscriber to, the portal joint venture with
Broadband Partners. "Cable
Transmission Business"
means
the transmission of video, audio (including telephony) and data over cable
television systems owned, operated or managed by the Company or
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its
Subsidiaries; provided, that the business of RCN Corporation and its
Subsidiaries shall not be deemed to be a Cable Transmission
Business.
ARTICLE
III
CAPITAL
CONTRIBUTIONS AND UNITS
3.1 Capital
Contributions.
No
Member shall be required to make any Capital Contributions after the date
hereof. Subject to the approval of the Manager, a Member may be permitted from
time to time to make additional Capital Contributions if the Manager determines
that such additional Capital Contributions are necessary or appropriate for
the
conduct of the Company’s business and affairs, including without limitation
expansion or diversification. The Manager shall approve all aspects of any
such
additional Capital Contribution, such as the amount and nature of the Capital
Contribution, the terms and other aspects of such Capital Contribution, the
economic and other rights of the additional Membership Interests issued to
the
contributing Member (including without limitation any priority with respect
to
distributions of cash or other property from the Company) and the resulting
dilution to be incurred by the other Members. Each Member acknowledges that
(a)
the
contribution by a Member of additional capital, and the terms of additional
Membership Interests issued therefor (including without limitation rights to
distributions from the Company that are superior to other Members’ rights) shall
be determined solely by the Manager without the consent or approval of any
Member other than the contributing Member, except as may be required pursuant
to
Section 10.2.2
hereof,
and (b)
the
issuance of additional Membership Interests to a contributing Member may dilute
the Percentage Interests and other rights of the other Members, and that such
Member shall have no right to vote on such issuance of additional Membership
Interests except as provided in Section 10.2.2
hereof.
3.2 Initial
Capital Accounts.
The
capital account of each Member as of the Tax Effective Date (the "Initial
Capital Account"
of such
Member) shall
equal (a)
the
total Capital Contributions of such Member or such Member’s predecessor prior to
the Tax Effective Date (reduced by the amount of any liabilities of such Member
or such Member’s predecessor assumed by the Company prior to the Tax Effective
Date or which were secured by such Capital Contributions), as set forth on
Schedule
B,
plus
(b)
the
aggregate Net Profits and any items in the nature of income or gain, if any,
allocated to such Member or such Member’s predecessor with respect to all Fiscal
Years or portions thereof ending prior to the Tax Effective Date (as may be
adjusted after the date hereof upon audit of the Company’s books and records),
minus (c)
the
aggregate Net Losses and any items in the nature of expenses or losses allocated
to such Member or such Member’s predecessor with respect to all Fiscal Years or
portions thereof ending prior to the Tax Effective Date (as may be adjusted
after the date hereof upon audit of the Company’s books and records), minus (d)
the amount of cash and the fair market value of any Property, if any,
distributed to such Member or such Member’s predecessor prior to the Tax
Effective Date (reduced by the amount of any Company liabilities assumed by
such
Member or such Member’s predecessor prior to the Tax Effective Date or which are
secured by any Property distributed to such Member or such Member’s predecessor
prior to the Tax Effective Date). The Initial Capital Accounts shall also
include any other
-13-
adjustments
required under Section 3.3 of the Existing LLC Agreement prior to the Tax
Effective Date.
3.3 Capital
Accounts.
The
Company shall determine and maintain a Capital Account for each Member in
accordance with Regulations Section 1.704-1(b)(2)(iv) and, in pursuance thereof,
the following provisions shall apply:
3.3.1 To
each
Member’s Initial Capital Account there shall be credited (a)
Capital
Contributions by such Member on or after the Tax Effective Date, (b)
Net
Profits and any items in the nature of income or gain that are allocated to
such
Member with respect to all Fiscal Years beginning on or after the Tax Effective
Date, and (c)
the
amount of any Company liabilities assumed by such Member on or after the Tax
Effective Date or which are secured by any Property distributed to such Member
on or after the Tax Effective Date;
3.3.2 To
each
Member’s Capital Account there shall be debited (a)
the
amount of cash and the fair market value of any Property distributed to such
Member pursuant to any provision of this Agreement on or after the Tax Effective
Date, (b)
Net
Losses and any items in the nature of expenses or losses that are allocated
to
such Member with respect to all Fiscal Years beginning on or after the Tax
Effective Date, and (c)
the
amount of any liabilities of such Member assumed by the Company on or after
the
Tax Effective Date or which are secured by any property contributed by such
Member to the Company on or after the Tax Effective Date;
3.3.3 In
connection with the conveyance of the Transferred Units, CCHC shall succeed
to
the percentage of the Capital Account of CII determined as of the date hereof
(in the manner described in Section 6.6.2) equal to the percentage determined
by
dividing the number of Transferred Units by the total number of Units held
by
CII immediately prior to entering into the Settlement Agreement;
3.3.4 In
the
event all or a portion of a Membership Interest in the Company is transferred
in
accordance with the terms of this Agreement after the date hereof, the
transferee shall succeed to the Capital Account of the transferor to the extent
it relates to the transferred Membership Interest; and
3.3.5 In
determining the amount of any liability for purposes of Sections 3.3.1
and
3.3.2
hereof,
there shall be taken into account Code Section 752(c) and any other applicable
provisions of the Code and Regulations.
The
foregoing provisions and the other provisions of this Agreement relating to
the
maintenance of Capital Accounts are intended to comply with Regulations Section
1.704-1(b), and shall be interpreted and applied in a manner consistent with
such Regulations. In the event the Manager determines that it is prudent to
modify the manner in which the Capital Accounts, or any debits or credits
thereto, are computed in order to comply with such Regulations, the Manager
may
make such modification.
3.4 No
Interest.
No
Member shall be entitled to receive any interest on such Member’s Capital
Contributions.
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3.5 No
Withdrawal.
No
Member shall have the right to withdraw such Member’s Capital Contributions or
to demand and receive Property of the Company or any distribution in return
for
such Member’s Capital Contributions, except as may be specifically provided in
this Agreement or required by law.
3.6 Units.
3.6.1 Units
shall consist of (i) Class A Preferred Units, (ii) Class B Units, and any other
classes of Units issued upon the approval of the Manager. Subject to the terms
of this Agreement, the Company may issue up to one billion (1,000,000,000)
units
of each class of Units.
3.6.2 As
of the
date hereof, the Company has issued 49,365,952 additional Class B Units to
CCV,
and the ownership of the Class A Preferred Units and Class B Units is as set
forth on Schedule
A.
ARTICLE
IV
MEMBERS
4.1 Limited
Liability.
Except
as required under the Act or as expressly set forth in this Agreement, no Member
shall be personally liable for any debt, obligation, or liability of the
Company, whether that debt, obligation, or liability arises in contract, tort
or
otherwise.
4.2 Admission
of Additional Members.
Without
the need for any additional act or consent of any Person, the Initial Members
shall continue to be Members of the Company. Except as set forth in Article
VII,
no Person shall be admitted as an additional Member unless the terms of such
admission have been approved by the Manager. Such terms of admission shall
include without limitation the amount and nature of any Capital Contribution
by
such Person, the terms and other aspects of such Capital Contribution, the
economic and other rights of the additional Membership Interests issued to
the
additional Member (including without limitation any priority with respect to
distributions of cash or other property from the Company), and the resulting
dilution of interest to be incurred by the other Members. Each Member
acknowledges that (a)
the
contribution of capital by a Person and the admission of such Person as an
additional Member, and the terms of additional Membership Interests issued
to
such Person (including without limitation rights to distributions from the
Company that are superior to other Members’ rights) shall be determined solely
by the Manager without the consent or approval of any Member, except as may
be
required pursuant to Section 10.2.2
hereof,
and (b)
the
admission of such Person as an additional Member and issuance of additional
Membership Interests to such Person may dilute the Percentage Interests and
other rights of the other Members, and such Member shall have no right to vote
on the admission of such Person or the issuance of additional Membership
Interests to such Person except as provided in Section 10.2.2
hereof.
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4.3 Meetings
of Members.
4.3.1 No
annual
or regular meetings of the Members as such shall be required; if convened,
however, meetings of the Members may be held at such date, time, and place
as
the Manager may fix from time to time. At any meeting of the Members, the
Manager or a person appointed by the Manager shall preside at the meeting and
shall appoint another person to act as secretary of the meeting. The secretary
of the meeting shall prepare written minutes of the meeting, which shall be
maintained in the books and records of the Company.
4.3.2 A
meeting
of the Members may be called at any time by the Manager, or by any Member or
Members holding more than 20 percent of all Units, for the purpose of
addressing any matter on which the Approval of the Members is required or
permitted under this Agreement.
4.3.3 Notice
of
any meeting of the Members shall be sent or otherwise given by the Manager
to
the Members in accordance with this Agreement not less than 10 nor more than
60
days before the date of the meeting. The notice shall specify the place, date,
and hour of the meeting and the general nature of the business to be transacted.
Except as the Members may otherwise agree, no business other than that described
in the notice may be transacted at the meeting.
4.3.4 Attendance
in person of a Member at a meeting shall constitute a waiver of notice of that
meeting, except when the Member objects, at the beginning of the meeting, to
the
transaction of any business because the meeting is not duly called or convened,
and except that attendance at a meeting is not a waiver of any right to object
to the consideration of matters not included in the notice of the meeting if
that objection is expressly made at the meeting. Neither the business to be
transacted nor the purpose of any meeting of Members need be specified in any
written waiver of notice. The Members may participate in any meeting of the
Members by means of conference telephone or similar means as long as all Members
can hear one another. A Member so participating shall be deemed to be present
in
person at the meeting.
4.3.5 At
all
meetings of the Members, a majority of the Class B Members shall constitute
a
quorum for the transaction of business, and the act of a majority of the Class
B
Members present at any meeting at which there is a quorum shall be the action
of
the Members, except as may be otherwise specifically provided by statute, the
Certificate or this Agreement. If a quorum is not present at any meeting of
the
Members, the Class B Members present thereat may adjourn the meeting from time
to time until a quorum shall be present. Notice of such adjournment shall be
given to any Member not present at such meeting.
4.3.6 Any
action that can be taken at a meeting of the Members may be taken without a
meeting if a consent in writing setting forth the action so taken is signed
and
delivered to the Company by Members representing not less than the minimum
number of Units necessary under this Agreement to approve the action. The
Manager
-16-
shall
notify Members of all actions taken by such consents, and all such consents
shall be maintained in the books and records of the Company.
4.4 Voting
by Members.
The
Members, acting solely in their capacities as Members, shall have the right
to
vote on, consent to, or otherwise approve only those matters as to which this
Agreement or the Act specifically requires such approval. A Member may vote
in
person or by proxy executed in writing by the Member or by a duly authorized
attorney-in-fact. Except as otherwise specifically provided in this Agreement,
the Approval of the Members shall be all that is required as to all matters,
including merger, consolidation, and conversion, as to which the vote, consent,
or approval of the Members is required or permitted under this Agreement or
the
Act.
4.5 Members
Are Not Agents.
No
Member acting solely in the capacity of a Member is an agent of the Company,
nor
can any Member acting solely in the capacity of a Member bind the Company or
execute any instrument on behalf of the Company.
4.6 No
Withdrawal.
Except
as provided in Articles VII and IX hereof, no Member may withdraw, retire,
or
resign from the Company without the prior approval of the Manager.
ARTICLE
V
MANAGEMENT
AND CONTROL OF THE COMPANY
5.1 Management
of the Company by Manager.
The
Members hereby unanimously confirm the election of CCI, or its
successor-in-interest which acquires directly or indirectly substantially all
of
the assets or businesses of CCI, as the Company’s Manager. Without the Approval
of the Members, no Person may be elected as Manager in addition to or in
substitution of CCI, other than a Charter Affiliate or a successor-in-interest
to such Charter Affiliate which acquires directly or indirectly substantially
all of the assets or businesses of such Charter Affiliate. Except as otherwise
required by applicable law, the powers of the Company shall at all times be
exercised by or under the authority of, and the business, Property and affairs
of the Company shall be managed by, or under the direction of, the
Manager.
5.1.1 The
Manager shall have the right to appoint such officers, and to assign to them
such duties and responsibilities, as it may determine from time to time. Any
officer may be removed by the Manager, with or without cause, at any
time.
5.1.2 Except
as
otherwise required by applicable law, the Manager shall be authorized to execute
or endorse any check, draft, evidence of indebtedness, instrument, obligation,
note, mortgage, contract, agreement, certificate or other document on behalf
of
the Company. The Manager may delegate its authority under this Section
5.1.2
to the
officers of the Company.
5.1.3 No
annual
or regular meetings of the Manager are required. The Manager may, by written
consent and without prior notice (provided that prompt
-17-
subsequent
notice is given to the Members), take any action which it is otherwise required
to take at a meeting.
5.2 Fiduciary
Obligations.
5.2.1 As
provided in Section 18-1101 of the Act, each Member’s duty of care to each
other, and the Manager’s and the Company’s officers’ duty of care to the Company
and the Members is limited to the implied contractual covenant of good faith
and
fair dealing. Without limiting the foregoing, in no event shall any Member,
the
Manager or any officer be liable for breach of a fiduciary duty for such
individual’s good faith reliance on the provisions of this Agreement. The
Members expressly intend, and acknowledge and agree, that the provisions of
this
Agreement, including, without limitation, those in this Section 5.2,
shall
govern the rights, duties and obligations of the Members to one another and
the
rights, duties and obligations of the Manager and officers to the Company and
the Members and, in that connection, shall supplant entirely the default
fiduciary duties stated or implied by applicable law or equity, which might
otherwise apply.
5.2.2 Neither
the Manager, any Company officer, nor any Member, nor any of the partners or
shareholders, directors, officers, agents, employees or Affiliates of the
Manager, such officers or such Member, as applicable, shall be liable to the
Company, the Members, or to any Persons who have acquired interests in the
Units, assignees or otherwise, for errors in judgment or for any acts or
omissions taken in good faith.
5.2.3 The
Manager shall not be liable for the negligence, whether of omission or
commission, dishonesty or bad faith of any agent or employee of the Company
selected and supervised by the Manager with reasonable care. Any act or omission
of the Manager, if done in reliance upon the advice of legal counsel or public
accountants selected with the exercise of reasonable care by the Manager, shall
be conclusively presumed not to constitute willful misconduct, recklessness
or
gross negligence with respect to the activities and operations of the
Company.
5.2.4 Unless
otherwise expressly provided herein, whenever a conflict of interest exists
or
arises between the Manager or a Class B Member or any of the Affiliates of
either of them, on the one hand, and the Company, any Class A Member, or any
Persons who have acquired interests in the Units on the other hand, then the
Manager or such Class B Member shall resolve such conflict of interest, take
such action or provide such terms considering, in each case, the relative
interests of each party to such conflict, agreement, transaction or situation
and the benefits and burdens relating to such interests, any customary or
accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of a bad faith violation of the implied
contractual covenant of good faith and fair dealing by the Manager or such
Class
B Member, the resolution, action or terms so made, taken or provided by the
Manager or such Class B Member shall not constitute a breach of this Agreement
or any other agreement contemplated herein or therein.
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5.2.5 Whenever
in this Agreement the Manager is, or the Class B Members are, permitted or
required to make a decision (a)
in its
or their "sole discretion" or "discretion" or under a grant of similar authority
or latitude, the Manager or the Class B Members shall be entitled to consider
only such interests and factors as it or they desire, including its or their
own
interests, and shall have no duty or obligation to give any consideration to
any
interest of or factors affecting the Company, the other Members or any Persons
who have acquired interests in the Units, or (b)
in its
or their "good faith" or under another express standard, the Manager or the
Class B Members shall act under such express standard and shall not be subject
to any other or different standards imposed by this Agreement, or any other
agreement contemplated herein. Each Member hereby agrees that any standard
of
care or duty imposed in this Agreement, or any other agreement contemplated
herein, or under the Act or any other applicable law, rule or regulation, shall
be modified, waived or limited in each case as required to permit the Manager
or
the Class B Members to act under this Agreement or any other agreement
contemplated herein and to make any decision pursuant to the authority described
in this 5.2.5
so long
as (i)
such
action or decision does not constitute gross negligence or willful or wanton
misconduct or a bad faith violation of the implied contractual covenant of
good
faith and fair dealing and (ii)
the
Manager or the Class B Members, as appropriate, believe such action or decision
is consistent with the overall purposes of the Company.
5.3 Indemnification
and Expenses.
5.3.1 To
the
extent permitted by applicable law, a Member (and its respective officers,
directors, agents, employees, shareholders, members, partners, and Affiliates),
Manager (and its respective officers, directors, agents, employees,
shareholders, members, partners, and Affiliates), or officer of the Company
shall be entitled to indemnification from the Company for any loss, damage,
or
claim incurred by such Person by reason of any act or omission performed or
omitted by such Person in good faith on behalf of, or in connection with the
business and affairs of, the Company and in a manner reasonably believed to
be
within the scope of authority conferred on such Person by this Agreement and,
if
applicable, the Approval of the Members or authorizations of the Manager; except
that no Person shall be entitled to be indemnified in respect of any loss,
damage, or claim incurred by such Person by reason of such Person’s fraud,
deceit, reckless or intentional misconduct, or gross negligence; provided,
however, that any indemnity under this Section 5.3.1
shall be
provided out of and to the extent of Company assets only, no debt shall be
incurred by the Members in order to provide a source of funds for any indemnity,
and no Member shall have any personal liability (or any liability to make any
additional Capital Contributions) on account thereof.
5.3.2 To
the
extent permitted by applicable law, expenses (including reasonable legal fees)
incurred by a Member (and its respective officers, directors, agents, employees,
shareholders, members, partners or Affiliates), Manager (and its respective
officers, directors, agents, employees, shareholders, members, partners or
Affiliates), or officer of the Company in such Person’s capacity as such in
defending any claim, demand, action, suit, or proceeding shall, from time to
time, be advanced by the Company prior to the final disposition of such claim,
demand, action, suit, or proceeding
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upon
receipt by the Company of an undertaking by or on behalf of the Member (or
its
respective officers, directors, agents, employees, shareholders, members,
partners or Affiliates, as applicable), Manager (or its respective officers,
directors, agents, employees, shareholders, members, partners or Affiliates,
as
applicable), or officer to repay such amount if it shall be determined that
such
Person is not entitled to be indemnified as authorized in Section 5.3.1
hereof.
5.4 Devotion
of Time.
Except
as required by any individual contract and notwithstanding any provision to
the
contrary in this Agreement, no Manager or officer of the Company is obligated
to
devote all of such Person’s time or business efforts to the affairs of the
Company, but shall devote such time, effort, and skill as such Person deems
appropriate for the operation of the Company.
5.5 Competing
Activities.
5.5.1 Except
as
provided by any individual contract: (i) any Manager or Member (and their
respective officers, directors, agents, employees, shareholders, members,
partners or Affiliates) may engage or invest in, independently or with others,
any business activity of any type or description, including without limitation
those that might be the same as or similar to the Company’s business or the
business of any Subsidiary and that might be in direct or indirect competition
with the Company or any Subsidiary; (ii) neither the Company nor any Subsidiary
nor any Member shall have any right in or to such other ventures or activities
or to the income or proceeds derived therefrom; (iii) no Manager or Member
(and
their respective officers, directors, agents, employees, shareholders, members,
partners or Affiliates) shall be obligated to present any investment opportunity
or prospective economic advantage to the Company or any Subsidiary, even if
the
opportunity is of the character that, if presented to the Company or any
Subsidiary, could be taken by the Company or any Subsidiary; and (iv) any
Manager or Member (and their respective officers, directors, agents, employees,
shareholders, members, partners or Affiliates) shall have the right to hold
any
investment opportunity or prospective economic advantage for such Manager’s or
Member’s (and their respective officers’, directors’, agents’, employees’,
shareholders’, members’, partners’ or Affiliates’) own account or to recommend
such opportunity to Persons other than the Company or any
Subsidiary.
5.5.2 The
Company agrees that, until all outstanding shares of class B common stock of
CCI
have been converted into shares of class A common stock of CCI in accordance
with Clause (b)(viii) of Article Fourth of CCI’s certificate of incorporation as
constituted as of November 12, 1999, without the Approval of the Members, the
Company shall not engage directly or indirectly, including without limitation
through any Subsidiary, in any business other than the Cable Transmission
Business and as a member of and subscriber to, the portal joint venture with
Broadband Partners.
5.5.3 The
Company and each Member acknowledge that the other Members, the Manager (and
their respective officers, directors, agents, employees, shareholders, members,
partners or Affiliates) and the officers of the Company (to the extent expressly
permitted in their employment agreement) might own or manage other
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businesses,
including businesses that may compete with the Company or any Subsidiary
for the
time of the Member or Manager. Without limiting the generality of the foregoing,
the Company and each Member acknowledge that Vulcan Ventures Inc. (an Affiliate
of CCI and CCV) has entered into an agreement to purchase convertible preferred
stock of RCN Corporation, which may be deemed to be engaged in the cable
transmission business. The Company and each Member acknowledge that none
of them
shall have any interest in the securities of RCN Corporation to be acquired
by
Vulcan Ventures Inc. or any RCN Corporation common stock into which such
securities are convertible, and that Vulcan Ventures Inc. shall not have
any
obligation to them on account thereof. To the extent that, at law or at equity,
any Member or Manager (and their respective officers, directors, agents,
employees, shareholders, members, partners or Affiliates) or officers of
the
Company have duties (including fiduciary duties) and liabilities relating
to the
Company and the other Members, such Person shall not be liable to the Company
or
the other Members for its good faith reliance on the provisions of this
Agreement including this Section 5.5.
The
Company and each Member hereby waive any and all rights and claims that the
Company or such Member may otherwise have against the other Members and the
Manager (and their respective officers, directors, agents, employees,
shareholders, members, partners or Affiliates) or officers of the Company
as a
result of any such permitted activities. The provisions of this Agreement,
and
any agreement between the Company and any Member entered into in reliance
on
this Section 5.5,
to the
extent that they restrict the duties and liabilities of a Manager or Member
(and
their respective officers, directors, agents, employees, shareholders, members,
partners or Affiliates) or officers of the Company otherwise existing at
law or
in equity, are agreed by the Company and the Members to replace such other
duties and liabilities of such Person.
5.6 Certain
Related Transactions.
5.6.1 CII
acknowledges and agrees that the Company will engage in transactions with the
Charter Members and the Charter Affiliates and that so long as such transactions
are not entered into in bad faith and in accordance with Section 5.2,
the
Charter Members and the Charter Affiliates with which the Company engages in
transactions, the Manager, and the Company shall not be liable to the Company
or
to CII with respect to such transactions. The foregoing provision is not
intended to affect any of CCV and its Affiliates’ express contractual
obligations to the Company, Class A Members, or any of the Class A Members’
Affiliates under any contract entered into by and among such parties from time
to time.
5.6.2 Without
limiting any other provisions of this Agreement, CII acknowledges and agrees
that the Manager has the exclusive authority to manage the business and
operations of the Company and that, in its capacity as a Class A Member, CII
has
no right to vote on or otherwise participate in the management of the business
and operations of the Company or any transactions or financings that the Company
may undertake or participate in. CII further acknowledges and agrees that,
except for such rights as may be granted to CII pursuant to Section 10.2.2
and
pursuant to the Act, in its capacity as a Class A Member, CII has no right
to
vote on or object to:
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(a) any
financing, refinancing, restructuring, asset sale, or other transaction
undertaken by CCI, Charter HoldCo, CCHC, the Company, or any other Charter
Affiliates;
(b) any
issuance of debt or equity by CCI, Charter HoldCo, CCHC, the Company or any
other Charter Affiliate, including the issuance of equity that is senior to
the
Class A Preferred Units;
(c) any
issuance of debt or equity by CCHC, the Company or any other Charter Affiliate
in consideration for additional capital contributions, including without
limitation debt or equity issued in consideration for contributions of debt
previously issued by CCHC, the Company or any other Charter
Affiliate;
(d) subject
to Section 10.2
hereof,
any amendment to this Agreement as necessary to implement any of the
transactions contemplated by paragraphs (a) through (c) above;
(e) any
decision concerning the dissolution of the Company;
(f) any
decision concerning distributions by the Company or CCHC (other than with
respect to distributions in contravention of Section 6.8
or
Section 9.5);
or
(g) any
other
undertaking or transaction by CCI, Charter HoldCo, CCHC, the Company or any
other Charter Affiliate, and any decision by CCI, Charter HoldCo, CCHC, the
Company or any other Charter Affiliate not to implement any undertaking or
transaction.
For
the
avoidance of doubt, nothing in this Agreement will in any way affect Xx. Xxxxx
or his Affiliates or transferees’ rights as holders of any other interests in
CCI or Charter HoldCo or the rights of Xx. Xxxxx or any transferree to exercise
his other rights as a director or manager or member of CCI or Charter
HoldCo.
5.7 Remuneration
for Management or Other Services.
The
Manager and officers of the Company shall be entitled to reasonable remuneration
for providing management or other services to the Company, all as determined
by
the Manager.
5.8 Reimbursement
of Expenses.
The
Company shall reimburse the Manager and officers of the Company for the actual
and reasonable costs, fees, and expenses paid or incurred by any Person for
goods, materials, services, and activities acquired or used by or for the
benefit of the Company, or performed or undertaken for the benefit of the
Company, without duplication of any expense paid.
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ARTICLE
VI
ALLOCATIONS
OF NET PROFITS AND NET LOSSES
AND
DISTRIBUTIONS
6.1 Allocations
of Net Profits.
After
giving effect to the special allocations set forth in Sections 6.3
and
6.4
hereof,
Net Profits with respect to each Fiscal Year beginning on or after the Tax
Effective Date shall be allocated to the Members in the following order of
priority:
6.1.1 First,
Net Profits shall be allocated to each Member to the extent of and in accordance
with the aggregate amount of Net Losses previously allocated to such Member
pursuant to Section 6.2.2
hereof
with respect to each Fiscal Year beginning on or after the Tax Effective Date,
with respect to which Net Profits have not been previously allocated pursuant
to
this subsection.
6.1.2 Second,
Net Profits shall be allocated to each Member to the extent of and in accordance
with the aggregate amount of Net Losses previously allocated to each Member
(a)
with
respect to the Pre-Closing Sharing Period and (b)
pursuant
to Section 6.2.1
hereof
with respect to each Fiscal Year beginning on or after the Tax Effective Date,
with respect to which Net Profits have not been previously allocated pursuant
to
this subsection.
6.1.3 Third,
Net Profits shall be allocated to each Class B Member to the extent of the
Net
Losses previously allocated to such Class B Member with respect to all Fiscal
Years or portions thereof ended prior to June 7, 2003, with respect to which
Net
Profits have not been previously allocated pursuant to this
subsection.
6.1.4 Fourth,
the balance, if any, of Net Profits shall be allocated in accordance with the
Members’ Percentage Interests.
6.2 Allocations
of Net Losses.
After
giving effect to the special allocations set forth in Sections 6.3
and
6.4
hereof,
Net Losses with respect to each Fiscal Year beginning on or after the Tax
Effective Date shall be allocated to the Members as follows:
6.2.1 First,
except as provided in Section 6.2.3,
Net
Losses shall be allocated to the Class B Members in an amount equal to the
excess of (a)
the
aggregate Net Losses allocated with respect to the Class A Preferred Units
during the Pre-Closing Sharing Period multiplied by a fraction, the numerator
of
which is the aggregate Percentage Interests of the Class B Members and the
denominator of which is the aggregate Percentage Interests of the Class A
Members, over (b)
the
aggregate Net Losses allocated with respect to the Class B Units during the
Pre-Closing Sharing Period, with respect to which Net Losses have not been
previously allocated pursuant to this subsection.
-23-
6.2.2 Second,
except as provided in Section 6.2.3,
the
balance, if any, of Net Losses shall be allocated in accordance with the
Members’ Percentage Interests.
6.2.3 An
allocation of Net Losses under Sections 6.2.1
or
6.2.2
hereof
shall not be made to the extent it would create or increase an Adjusted Capital
Account Deficit for a Member or Members at the end of any Fiscal Year if any
other member has a positive Capital Account balance at such time. Any Net Losses
not allocated because of the preceding sentence shall be allocated to the other
Member or Members with positive Capital Account balances in proportion to such
Member’s or Members’ respective Percentage Interests; provided, however, that to
the extent such allocation would create or increase an Adjusted Capital Account
Deficit for another Member or Members at the end of any Fiscal Year, such
allocation shall instead be made to the remaining Member or Members in
proportion to the respective Percentage Interests of such Member or
Members.
6.3 Special
Allocations.
6.3.1 Member
Nonrecourse Deductions.
Any
Member Nonrecourse Deductions for any Fiscal Year shall be specially allocated
to the Member who bears the economic risk of loss with respect to the Member
Nonrecourse Debt or other liability to which such Member Nonrecourse Deductions
are attributable in accordance with Regulations Section 1.704-2(i) and
Regulations Section 1.704-1(b).
6.3.2 Nonrecourse
Deductions Referable to Liabilities Owed to Non-Members.
Any
Nonrecourse Deductions for any Fiscal Year and any other deductions or losses
for any Fiscal Year referable to a liability owed by the Company to a Person
other than a Member to the extent that no Member bears the economic risk of
loss
shall be specially allocated to the Members in accordance with their Percentage
Interests.
6.3.3 Member
Minimum Gain Chargeback.
Except
as otherwise provided in Regulation Section 1.704-2(i)(4), notwithstanding
any
other provision of this Article VI, if there is a net decrease in Member
Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during
any Fiscal Year, each Member who has a share of the Member Nonrecourse Debt
Minimum Gain attributable to such Member Nonrecourse Debt (which share shall
be
determined in accordance with Regulations Section 1.704-2(i)(5)) shall be
specially allocated items of Company income and gain for such Fiscal Year (and,
if necessary, subsequent Fiscal Years) in an amount equal to that portion of
such Member’s share of the net decrease in Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence
shall be made in proportion to the amounts required to be allocated to each
Member pursuant thereto. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(i)(4) and 1.704-2(j)(2). This
Section 6.3.3
is
intended to comply with the minimum gain chargeback requirement contained in
Regulations Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
-24-
6.3.4 Minimum
Gain Chargeback.
Except
as otherwise provided in Regulations Section 1.704-2(f), notwithstanding any
other provision of this Article VI, if there is a net decrease in Company
Minimum Gain during any Fiscal Year, each Member shall be specially allocated
items of Company income and gain for such Fiscal Year (and, if necessary,
subsequent Fiscal Years) in an amount equal to the portion of such Member’s
share of the net decrease in Company Minimum Gain which share of such net
decrease shall be determined in accordance with Regulations Section
1.704-2(g)(2). Allocations pursuant to the previous sentence shall be made
in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Section 1.704-2(0(6) and 1.704-2(j)(2). This Section
6.3.4
is
intended to comply with the minimum gain chargeback requirement contained in
Regulations Section 1.704-2(f) and shall be interpreted consistently
therewith.
6.3.5 Qualified
Income Offset.
In the
event any Member unexpectedly receives any adjustments, allocations, or
distributions described in Regulations Section 1.704-1(b)(2)(ii)(d)(4),
(5),
or
(6)
or any
other event creates an Adjusted Capital Account Deficit, items of Company income
and gain shall be specially allocated to each such Member in an amount and
manner sufficient to eliminate the Adjusted Capital Account Deficit of such
Member as quickly as possible, provided that an allocation pursuant to this
Section 6.3.5
shall be
made only if and to the extent that such Member would have an Adjusted Capital
Account Deficit after all other allocations provided for in this Article VI
have
been tentatively made as if this Section 6.3.5
were not
in the Agreement.
6.3.6 Section
754 Adjustments.
To the
extent an adjustment to the Basis of any Company asset pursuant to Code Section
734(b) or Code Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m),
to be
taken into account in determining Capital Accounts, the amount of such
adjustment to Capital Accounts shall be treated as an item of gain (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
Members in accordance with Regulations Section 1.704-1(b)(2)(iv)(m).
6.3.7 Priority
Return Allocations.
If any
Priority Return distributions have been made pursuant to Section 6.8.1(a)
or
Section 9.5(a)
hereof,
all or a portion of the remaining items of Company income and, to the extent
income is insufficient, gain shall be specially allocated to each Member in
proportion to and to the extent of the excess, if any, of (i) the cumulative
Priority Return distributions each such Member has received pursuant to Section
6.8.1(a)
or
Section 9.5(a)
hereof
from the commencement of the Company to a date 30 days after the end of such
Fiscal Year, over (ii) the cumulative income and gain allocated to such Member
pursuant to this Section 6.3.7
for all
prior Fiscal Years. If, in addition to items of income, items of gain are to
be
allocated pursuant to the foregoing sentence and the Company has items of both
short-term capital gain and long-term capital gain, all of the Company’s items
of short-term capital gain shall be allocated before any items of long-term
capital gain are allocated.
6.4 Curative
Allocations. The
allocations set forth in Sections 6.2.3
and
6.3
(other
than Section 6.3.7)
hereof
(collectively, the "Regulatory
Allocations")
are
intended
-25-
to
comply
with certain requirements of the Regulations. It is the intent of the Members
that, to the extent possible, the Regulatory Allocations shall be offset
either
with other Regulatory Allocations or with special allocations of other items
of
Company income, gain, loss, or deduction pursuant to this Section 6.4.
Therefore, notwithstanding any other provision of this Article VI (other
than
the Regulatory Allocations), the Manager shall make such offsetting special
allocations of Company income, gain, loss, or deduction in whatever manner
it
determines appropriate so that, after such offsetting allocations are made,
a
Member’s Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Member would have had (the "Target
Capital Account")
if the
Regulatory Allocations were not part of this Agreement and all Company items
were allocated pursuant to Sections 6.1,
6.2.1,
6.2.2
and
6.3.7.
In
exercising its discretion under this Section 6.4,
the
Manager shall take into account any future Regulatory Allocations under Sections
6.3.3
and
6.3.4
hereof
that, although not yet made, are likely to offset other Regulatory Allocations
previously made under Sections 6.3.1and
6.3.2.
6.5 Tax
Allocations
6.5.1 Code
Section 704(c) Allocations.
The
allocations specified in this Agreement shall govern the allocation of items
to
the Members for Code Section 704(b) book purposes, and the allocation of items
to the Members for tax purposes shall be in accordance with such book
allocations, except that solely for tax purposes and notwithstanding any other
provision of this Article VI:
(a) In
accordance with Code Section 704(c) and the Regulations thereunder, income,
gain, loss, and deduction with respect to any property contributed to the
capital of the Company shall be allocated among the Members (including Members
who succeed to the Membership Interest of any other Members or former members
of
the Company) so as to take account of any variation between the Basis of such
property to the Company and its initial Gross Asset Value.
(b) In
the
event the Gross Asset Value of any Company asset is adjusted pursuant to Section
1.43.3
hereof,
subsequent allocations of income, gain, loss, and deduction with respect to
such
asset shall take account of any variation between the Basis of such asset and
its Gross Asset Value in the same manner as under Code Section 704(c) and the
Regulations thereunder.
(c) The
allocations described in (a) and (b) above shall be made in accordance with
Regulations Section 1.704-3 using the Traditional Method
6.5.2 Tax
Credits.
Tax
credits, if any, shall be allocated among the Members in proportion to their
Percentage Interests.
6.5.3 Excess
Nonrecourse Liabilities.
To the
extent that the Company’s "excess nonrecourse liabilities" within the meaning of
Regulations Section 1.752-3(a)(3) are allocated among the Members in accordance
with their interests in Company profits,
-26-
the
Members’ interests in Company profits are, solely for purposes of making such
allocation, in proportion to their Percentage Interests.
6.6 Other
Allocation Rules.
6.6.1 Allocation
of Items Included in Net Profits and Net Losses.
Whenever a proportionate part of the Net Profits or Net Losses is allocated
to a
Member, every item of income, gain, loss, or deduction entering into the
computation of such Net Profits or Net Losses shall be credited or charged,
as
the case may be, to such Member in the same proportion.
6.6.2 Allocations
in Respect of a Transferred Membership Interest.
(a) Upon
the
transfer of the Transferred Units as of the date hereof, the income, gain,
loss,
deduction, and credit of the Company shall be calculated as if there were a
notional "closing of the books" of the Company as of the close of business
on
the date hereof. CII shall be allocated the income, gain, loss, deduction,
or
credit of the Company with respect to the Transferred Units for the portion
of
the Fiscal Year that ends on the date hereof pursuant to this Article VI, and
CCHC shall be allocated the income, gain, loss, deduction, or credit of the
Company with respect to the Transferred Units for the remainder of such Fiscal
Year.
(b) If
after
the date hereof any Membership Interest is transferred, or is increased or
decreased by reason of the admission of a new Member or otherwise, during any
Fiscal Year of the Company, (i) such transfer of or increase or decrease in
Membership Interest shall be deemed to have occurred as of the end of the day
on
which such transfer or increase or decrease occurs, and (ii) each item of
income, gain, loss, deduction, or credit of the Company for such Fiscal Year
shall be allocated among the Members, as determined by the Manager in accordance
with any method permitted by Code Section 706(d) and the Regulations promulgated
thereunder in order to take into account the Members’ varying interests in the
Company during such Fiscal Year.
6.7 Obligations
of Members to Report Consistently.
The
Members are aware of the income tax consequences of the allocations made by
this
Article VI and hereby agree to be bound by the provisions of this Article VI
in
reporting their shares of Company income and loss for income tax
purposes.
6.8 Distributions
by the Company to Members.
6.8.1 In
General.
Prior
to the occurrence of any event specified in Section 9.1,
and
subject to applicable law and any limitations contained elsewhere in this
Agreement, the Manager shall distribute the Company’s Available Cash, if any,
not later than the 30th day after the end of each calendar year in the following
order and priority:
(a) First,
to
Members having accrued and unpaid Priority Return as of the last day of the
calendar quarter preceding the date on which such distribution is made, pro
rata
in accordance with the respective amounts of such accrued
-27-
and
unpaid Priority Return, until each such Member shall have received an amount
equal to such Member’s accrued and unpaid Priority Return as of the last day of
such preceding calendar quarter;
(b) Second,
to
Members pro rata in accordance with their respective Percentage
Interests.
6.8.2 Advances
or Drawings.
Distributions of money and Property shall be treated as advances or drawings
of
money or Property against a Member’s distributive share of income and as current
distributions made on the last day of the Company’s taxable year with respect to
such Member.
6.8.3 Distributees;
Liability for Distributions.
All
distributions made pursuant to this Section 6.8
shall be
made only to the Persons who, according to the books and records of the Company,
hold the Membership Interests in respect of which such distributions are made
on
the actual date of distribution. Neither the Company nor any Member, Manager,
or
officer shall incur any liability for making distributions in accordance with
this Section 6.8.
6.9 Form
of Distributions.
A
Member, regardless of the nature of the Member’s Capital Contributions, has no
right to demand and receive any distribution from the Company in any form other
than money. No Member may be compelled to accept from the Company a distribution
of any asset in kind in lieu of a proportionate distribution of money being
made
to other Members.
6.10 Return
of Distributions.
Except
for distributions made in violation of the Act or this Agreement, or as
otherwise required by law, no Member shall be obligated to return any
distribution to the Company or pay the amount of any distribution for the
account of the Company or to any creditor of the Company. Notwithstanding any
provision of this Agreement to the contrary, a Member who receives a
distribution from the Company shall have no liability to return any portion
of
such distribution after the expiration of three (3) years from the date of
the
distribution pursuant to Section 18-607(c) of the Act.
6.11 Limitation
on Distributions.
Notwithstanding any provision to the contrary in this Agreement, the Company
shall not be required to make a distribution to any Member on account of such
Member’s interest in the Company if such distribution would violate Section
18-607 of the Act or other applicable law.
6.12 Withholding.
Any tax
required to be withheld with respect to any Member under Section 1446 or other
provisions of the Code, or under the law of any state or other jurisdiction,
shall be treated for all purposes of this Agreement (i) as a distribution of
cash to be charged against current or future distributions to which such Member
would otherwise have been entitled, or (ii) if determined by the Manager in
writing, as a demand loan to such Member bearing interest at a rate per annum
equal to the rate of interest then announced by The Bank of New York as its
prime commercial lending rate plus two hundred (200) basis points.
-28-
ARTICLE
VII
TRANSFER
OF INTERESTS
7.1 Transfers
by CII.
7.1.1 Neither
CII nor any CII Permitted Transferee shall Transfer all or any portion of the
Units held by it except as may be otherwise specifically provided in this
Article VII.
7.1.2 CII
and
the CII Permitted Transferees may Transfer Units, in whole or in part, to
the
following Persons (each a "CII
Permitted Transferee"):
(a) Any
Related Party,
(b) any
Person with the consent of CCV, which consent may be granted or withheld,
conditioned or delayed, as CCV may determine in its sole discretion,
or
(c) any
Person acquiring Units pursuant to Section 7.3,
Section
7.4,
or
Section 7.5
hereof.
7.1.3 In
the
event of the dissolution of CII or any CII Permitted Transferee, any transferee
of such Person who is a CII Permitted Transferee shall be admitted as a Member
of the Company upon compliance with the requirements of Section 7.6.
7.1.4 In
the
event of the death of any CII Permitted Transferee who is a natural person,
the
guardian, trustee or legal representative of such Person shall succeed to all
rights of such Person to receive allocations and distributions from the Company
but shall not be admitted as a Member of the Company. Upon the termination
of
the estate of a deceased Person who held some or all of the CII Class A
Preferred Units, the heirs and legatees of such Person who are CII Permitted
Transferees shall be admitted as Members of the Company upon compliance with
the
requirements of Section 7.6.
7.1.5 In
the
event of the adjudication of incompetency of a Person holding all or any part
of
the CII Class A Preferred Units who is a natural person, the guardian or legal
representative of such Person shall succeed to all rights of such Person to
receive allocations and distributions from the Company but shall not be admitted
as a Member of the Company.
7.1.6 In
the
event of the bankruptcy of a Person holding all or any part of the CII Class
A
Preferred Units, the trustee or legal representative of such Person shall
succeed to all rights of such Person to receive allocations and distributions
from the Company but shall not be admitted as a Member of the Company.
-29-
7.2 Transfer
of Control of CII/Successor.
7.2.1 So
long
as CII/Successor holds any Units, neither Xx. Xxxxx nor any other Person in
Control of CII/Successor shall Transfer Control of CII/Successor without the
prior written consent of HoldCo, which consent may be granted or withheld,
conditioned or delayed, as HoldCo may determine in its sole discretion;
provided, however, that Xx. Xxxxx and any Person in Control of CII/Successor
may
transfer Control of CII/Successor without the prior written consent of HoldCo
to
any Related Party; and provided further that the foregoing is not intended
to,
nor shall it, limit any rights of any person pursuant to the Exchange Agreement
dated as of November 12, 1999 among Xx. Xxxxx, CII, Vulcan Cable III, Inc.
and
CCI.
7.2.2 Upon
the
Transfer of Control of CII/Successor, such transferee shall become subject
to
this Section 7.2
and
shall execute an instrument satisfactory to the Manager accepting and adopting
the terms, provisions, and conditions of this Section 7.2.
7.3 Tag-Along
Rights.
7.3.1 At
any
time that one or more Charter Members proposes to sell all or any portion of
its
Membership Interests to any Person other than a Charter Affiliate or in
connection with an internal reorganization of CCI and its Affiliates, the
Manager shall provide written notice (the "Tag-Along
Notice")
to CII
and each CII Permitted Transferee (together, the "Xxxxx
Members")
of
(a)
the
aggregate number and type of Units to be sold by the Charter Members (the
"Tag-Offered
Interest")
pursuant to the contract for the sale of Membership Interests by the Charter
Members (such contract, a "Tag
Contract")
and
the number and type of all Units then owned by all Charter Members; (b)
the
identity of the prospective purchaser; (c)
the
aggregate purchase price for the Tag-Offered Interest, the form of such purchase
price, and any potential adjustments to such purchase price contained in the
Tag
Contract; (d)
the
purchase price for each Class A Preferred Unit of each Xxxxx Member electing
to
participate in a sale pursuant to this Section 7.3
(calculated with reasonable detail in accordance with the procedures set forth
in Section 7.3.4);
(e)
a
calculation (in accordance with Section 7.3.2)
of the
maximum number of Class A Preferred Units that each Xxxxx Member can elect
to
sell pursuant to this Section 7.3;
(f)
confirmation that the prospective purchaser has been informed of the Xxxxx
Members’ rights under this Section 7.3
and has
agreed to purchase Class A Preferred Units from the Xxxxx Members in accordance
with the terms of this Section 7.3;
(g)
a copy
of the Tag Contract; and (h)
an
estimate of the date on which the closing of Tag Contract will occur. The
Manager shall provide the Tag-Along Notice within 20 days after the signing
of
the Tag Contract and shall be provided at least 45 days prior to the
consummation of the sale contemplated by the Tag Contract.
7.3.2 Each
Xxxxx Member shall have the right to participate in such proposed sale with
respect to a number of Class A Preferred Units held by such Xxxxx Member that
is
the same percentage of all Class A Preferred Units held by such Xxxxx Member
as
the percentage of Class A Preferred Units and Class B Units held by all Charter
Members that are included in the Tag-Offered Interest.
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7.3.3 An
Xxxxx
Member desiring to participate in the sale pursuant to this Section 7.3
(each, a
"Participating
Xxxxx Member")
shall
exercise the rights granted pursuant to this Section 7.3
by
delivering written notice (the "Tag
Acceptance Notice")
to the
Manager within 30 days after the date of the Tag-Along Notice setting forth
the
number of Class A Preferred Units to be sold by such Xxxxx Member (which shall
not exceed the number of shares calculated pursuant to Section 7.3.2
hereof)
(the "Tag-Along
Interest").
The
right of an Xxxxx Member pursuant to this Section 7.3
shall
terminate with respect to the proposed sale if not exercised within such 30
day
period.
7.3.4 The
purchase price for any Tag-Along Interest shall equal the amount per Class
A
Preferred Unit that would be distributed with respect to each Class A Preferred
Unit in a hypothetical dissolution of the Company, determined by calculating
the
total amount that the Company would need to distribute in dissolution to all
Members pursuant to this Agreement to result in dissolution proceeds to the
Charter Members with respect to the Tag-Offered Interest equal to the aggregate
purchase price for the Tag-Offered Interest (as may be adjusted pursuant to
the
Tag Contract), assuming that the Company made a distribution of such total
amount pursuant to Section 9.5.
If all
or any portion of the purchase price for the Tag-Offered Interest consists
of
property or other noncash consideration, the purchase price for each Tag-Along
Interest shall comprise the same proportion of each item of property or other
noncash consideration as is paid for the Tag-Offered Interest.
7.3.5 At
the
closing of a sale pursuant to this Section 7.3,
each
Participating Xxxxx Member shall be entitled and obligated to give such consents
as are customary in similar transactions and to sell to the prospective
purchaser its Tag-Along Interest on the same terms and conditions (other than
price) as the Charter Members selling the Tag-Offered Interest (with such
Participating Xxxxx Member being subject to the same holdback, and escrow
provisions, if any, and any similar components of the Tag Contract to which
the
Charter Members selling the Tag-Offered Interest are subject), provided that
each Participating Xxxxx Member shall only be required to make customary
representations and warranties regarding its ownership of, and authority to
sell, the Tag-Along Interest.
7.3.6 If,
following delivery of a Tag-Along Notice, the 30 day period set forth in Section
7.3.2
shall
have expired without an Xxxxx Member’s exercise of its rights under this Section
7.3,
the
Charter Members shall have the right to sell to the prospective purchaser or
an
Affiliate thereof the Tag-Offered Interest but only on terms that are no more
favorable in any material respect (and in any case, with no increase in the
purchase price from that specified in the Tag-Along Notice) to the Charter
Members than provided in the Tag Contract without any further obligation to
such
Xxxxx Member under this Section 7.3.
If the
Charter Members do not consummate such sale, any subsequent sale of the
Tag-Offered Interest shall once again be subject to the terms of this Section
7.3.
7.4 Drag-Along
Rights.
7.4.1 At
any
time that one or more Charter Members propose to sell to any Person other than
a
Charter Affiliate or in connection with an internal reorganization
-31-
of
CCI
and its Affiliates (a)
a number
of Class A Preferred Units and Class B Units equal to more than 50 percent
of all Units held by all Charter Members and all Charter Affiliates, and
(b)
a
percentage of Class A Preferred Units held by all Charter Members and all
Charter Affiliates equal to the percentage of Class B Units proposed to be
sold
by all Charter Members and all Charter Affiliates (such Units proposed to
be
sold, the "Drag-Offered
Interest"),
the
Manager shall have the right to cause each holder of the CII Class A Preferred
Units to sell the Dragged Interest to the prospective purchaser. The
"Dragged
Interest"
of each
holder of the CII Class A Preferred Units shall equal the excess of (i) a
number
of Class A Preferred Units held by such holder that is the same percentage
of
all Class A Preferred Units held by such holder as the percentage of Class
A
Preferred Units and Class B Units held by all Charter Members and all Charter
Affiliates comprising the Drag-Offered Interest,
over
(ii) the number of Class A Preferred Units held by such holder that comprise
the
Tag-Along Interest of such holder, if any.
7.4.2 The
Manager shall exercise the rights set forth in this Section 7.4
by
providing notice (the "Drag-Along
Notice")
to
each holder of the CII Class A Preferred Units within 60 days after the
execution of the contract for the sale of the Drag-Offered Interest (the
"Drag
Contact")
and
not less than 45 days prior to the consummation of the sale contemplated by
the
Drag Contract. The Drag-Along Notice shall set forth (a)
the
number of Class A Preferred Units and Class B Units comprising the Drag-Offered
Interest, and the number and type of all Units then owned by all Charter Members
and all Charter Affiliates; (b)
the
identity of the prospective purchaser; (c)
the
aggregate purchase price for the Drag-Offered Interest, the form of such
purchase price, and any potential adjustments to such purchase price contained
in the Drag Contract; (d)
an
estimate of the purchase price for each Class A Preferred Unit comprising the
Drag-Offered Interest (calculated with reasonable detail in accordance with
the
procedures set forth in Section 7.4.3);
(e)
a
calculation of the number of Class A Preferred Units comprising the Dragged
Interest of each holder of the CII Class A Preferred Units, (calculated in
accordance with Section 7.4.1);
(f)
confirmation that the prospective purchaser has agreed to purchase Class A
Preferred Units in accordance with the terms of this Section 7.4;
(g) a
copy of the Drag Contract and (h) a reasonable estimate of the date on which
the
closing of the sale of the Drag Contract will occur.
7.4.3 The
purchase price for any Dragged Interest shall equal the amount per Class A
Preferred Unit that would be distributed with respect to each Class A Preferred
Unit in a hypothetical dissolution of the Company, determined by calculating
the
total amount that the Company would need to distribute in dissolution to all
Members pursuant to this Agreement to result in dissolution proceeds to the
Charter Members and Charter Affiliates with respect to the Drag-Offered Interest
equal to the aggregate purchase price of the Drag-Offered Interest (as may
be
adjusted pursuant to the Drag Contract), assuming that the Company made a
distribution of such total amount pursuant to Section 9.5.
If all
or any portion of the purchase price for the Drag-Offered Interest consists
of
property or other noncash consideration, the purchase price for each Dragged
Interest shall comprise the same proportion of each item of property or other
noncash consideration as is paid for the Drag-Offered Interest.
-32-
7.4.4 At
the
closing of a sale pursuant to this Section 7.4,
each
holder of the CII Class A Preferred Units shall be entitled and obligated to
give such consents as are customary in similar transactions and to sell to
the
prospective purchaser its Dragged Interest on the same terms and conditions
(other than price) as the Charter Members selling the Drag-Offered Interest
(with such holder being subject to the same holdback, and escrow provisions,
if
any, and any similar components of the Drag Contract to which the Charter
Members selling the Drag-Offered Interest are subject), provided that each
such
holder shall only be required to make customary representations and warranties
regarding its ownership of, and authority to sell, the Dragged Interest.
7.5 Put
and Call Rights.
7.5.1 In
the
event of a Change of Control of any of CCI, Charter HoldCo, or any Charter
Affiliate owning a Membership Interest in the Company (a "Change
of Control Event"),
the
Manager shall provide written notice of the Change of Control Event (the
"COC
Notice")
to
each holder of the CII Class A Preferred Units and provide reasonable detail
of
the events that constituted the Change of Control. The Manager shall provide
such COC Notice within 20 days after the execution of a binding agreement for
a
Change of Control Event or, if no such agreement is entered into, within 20
days
after a Change of Control Event.
7.5.2 If
a
Change of Control Event occurs, each Xxxxx Member shall have the right to sell
all (but not less than all) of its Class A Preferred Units to the Company (or
the Company’s designee) for cash in an amount equal to the Put/Call
Price.
(a) Each
Xxxxx Member shall exercise the rights granted pursuant to this Section
7.5.2
by
delivering written notice (the "Put
Notice")
to the
Manager within 30 days from the date of the COC Notice. The right of an Xxxxx
Member pursuant to this Section 7.5.2
shall
terminate if not exercised within such 30 day period.
(b) If
the 30
day period set forth in Section 7.5.2(a)
shall
have expired without an Xxxxx Member’s exercise of its rights under this Section
7.5.2,
then
such Xxxxx Member shall have no further rights under this Section 7.5.2;
provided, however, that if the COC Notice is attributable to the execution
of an
agreement for a Change of Control Event and such agreement is not closed, then
any other Change of Control Event shall once again be subject to the terms
of
this Section 7.5.
7.5.3 To
the
extent holders of the CII Class A Preferred Units do not exercise the right
to
sell Class A Preferred Units pursuant to Section 7.5.2,
the
Manager shall have the right to cause the Company (or the Company’s designee) to
acquire all (but not less than all) of the Class A Preferred Units of such
holders of the CII Class A Preferred Units for cash in an amount equal to the
Put/Call Price. The
Manager shall exercise the rights granted pursuant to this Section 7.5.3
by
delivering written notice (the "Call
Notice")
to
such holders within 30 days following the expiration of the 20 day period set
forth in Section 7.5.2(a).
-33-
7.5.4 The
purchase price for the Class A Preferred Units sold pursuant to this Section
7.5
(the
"Put/Call
Price")
shall
equal the amount per Class A Preferred Unit that would be distributed with
respect to each Class A Preferred Unit if the Company were to sell all of its
assets for the Implied CC VIII Value and dissolve in accordance with
Article IX. The Manager and Xxxxx Members holding a majority of the Class A
Preferred Units held by all Xxxxx Members shall attempt to reach an agreement
as
to the value of the business conducted by CC VIII as of the Valuation
Date
within the 20-day period following the later of the date of the Put Notice
or
the date of the Call Notice. If no such agreement is reached within such 20-day
period, the Manager shall select an Appraiser and Xxxxx Members holding a
majority of the Class A Preferred Units held by all Xxxxx Members shall select
another Appraiser. The two Appraisers shall independently determine the value
of
the businesses conducted by CC VIII as of the Valuation Date assuming
that
the value of such businesses is the cash price at which the assets of such
businesses as going concerns would change hands between a willing buyer and
a
willing seller (neither acting under compulsion) in an arms-length transaction,
on terms and subject to conditions and transaction costs applicable in the
cable
television industry. If the higher value determined by the two Appraisers is
not
more than 115 percent of the lower value determined by the two Appraisers,
then for purposes of clause (i) of Section 1.44
the
value of the businesses conducted by CC VIII shall be the average of
the
values determined by the two Appraisers. If the higher value determined by
the
two Appraisers is more than 115 percent of the lower value determined
by
the two Appraisers, then the two Appraisers shall select a third Appraiser
to
value the businesses conducted by CC VIII as of the Valuation Date,
and for
purposes of clause (i) of Section 1.44
the
value of the businesses conducted by CC VIII shall be the average of
the
two closest values determined by the three Appraisers.
7.5.5 At
the
closing of a sale pursuant to this Section 7.5,
each
seller of the CII Class A Preferred Units shall sell, transfer, convey, and
assign all of its Class A Preferred Units to the Company (or the Company’s
designee) free and clear of all liens, pursuant to written instruments of
transfer in form and substance reasonably satisfactory to the Company (or the
Company’s designee), against delivery of the Put/Call Price, provided that each
such seller shall only be required to make customary representations and
warranties regarding its ownership of, and authority to sell, the CII Class
A
Preferred Units.
7.6 Admission
of Member.
Notwithstanding the foregoing provisions of this Article VII, the transferee
of
a Membership Interest who is a CII Permitted Transferee or Charter Permitted
Transferee shall not become a Member of the Company unless all of the following
conditions have been met: (a)
the
Company shall (at its option) have received a written opinion from the Company’s
counsel, in form and substance reasonably satisfactory to the Company,
specifying the nature and circumstances of the proposed Transfer and any related
transactions of which the proposed Transfer is a part, and based on such facts
stating that the proposed Transfer and any related transactions will not be
in
violation of any of the registration provisions of the Securities Act, or any
applicable state securities laws; (b)
the
Transfer will not result in the loss of any license or regulatory approval
or
exemption that has been obtained by the Company and is materially useful in
the
conduct of its business as then being conducted or proposed to be
-34-
conducted;
(c)
the
Transfer will not result in a material and adverse limitation or restriction
on
the operations of Charter HoldCo taken as a whole; (d)
the
Transfer will not cause the Company to be treated as a "publicly traded
partnership" within the meaning of section 7704 of the Code; (e)
the
Transfer will not cause the Company to be treated as an "investment company"
within the meaning of section 3 of the Investment Company Act of 1940, as
amended;
and
(f)
the CII
Permitted Transferee or Charter Permitted Transferee, as applicable, has
executed an instrument satisfactory to the Manager accepting and adopting
the
terms, provisions, and conditions of this Agreement, including without
limitation Section 10.16
herein,
with respect to the acquired Membership Interest. The admission of a substitute
Member shall not result in the release of the Member who assigned the Membership
Interest from any liability that such Member may have to the
Company.
7.7 Other
Transfers of Units Not Valid.
Any
purported Transfer of all or any of the Membership Interests in any manner
except in accordance with the provisions of this Article VII shall be null
and
void, and neither the Company nor any other Member shall recognize any such
Transfer as passing any interest in such Membership Interests to any Person.
Notwithstanding the foregoing, if any CII Class A Preferred Units are
transferred in violation of this Article VII, such transferee shall nevertheless
be subject to Sections 7.4
and
7.5.3
hereof,
and the transferor of such CII Class A Preferred Units shall be liable to the
Company for all losses, damages, and costs incurred by the Company arising
from
the transferee’s failure to comply with such Sections.
7.8 Recognition
of Transferee Members.
7.8.1 After
a
Person has been admitted as a Member of the Company pursuant to Section
7.6
hereof,
the Manager shall cause an amendment to the Certificate to be prepared and
recorded promptly, if such amendment is required by the Act or other applicable
law. However, the Company shall recognize such Person as a Member of the Company
on the date on which such Person satisfies the conditions of Section
7.6
hereof,
even if such an amendment to the Certificate is not filed or is filed
subsequently.
7.8.2 After
the
effective date of any Transfer of any part of a Membership Interest in
accordance with this Agreement, the Membership Interest so Transferred shall
continue to be subject to the terms, provisions, and conditions of this
Agreement, and any further Transfers shall be required to comply with all of
the
terms, provisions, and conditions of this Agreement. Any transferee of all
or
any portion of a Membership Interest shall take subject to the restrictions
on
transfer imposed by this Agreement.
7.9 Elections
Under the Code.
In the
event of a Transfer of a Membership Interest in accordance with this Agreement,
the Company, at the request of the party acquiring such Transferred Membership
Interest, shall elect, pursuant to Section 754 of the Code and any like
provision of applicable state law, to adjust the basis of the Company Property;
each Member agrees to provide the Company with all information necessary to
give
effect to such election.
-35-
ARTICLE
VIII
BOOKS
AND RECORDS; ACCOUNTING; TAX MATTERS
8.1 Books
and Records.
The
Manager shall cause the books and records of the Company to be kept, and the
financial position and the results of its operations to be recorded, in
accordance with generally accepted accounting principles; provided, however,
that the Manager may, to the extent appropriate under applicable tax and
accounting principles, maintain separate and corresponding records for book
and
tax purposes. The books and records of the Company shall reflect all the Company
transactions and shall be appropriate and adequate for the Company’s
business.
8.2 Delivery
to Members and Inspection.
8.2.1 Upon
the
request of any Member, the Manager shall make reasonably available to the
requesting Member the Company’s books and records; provided, however, that the
Manager shall have the right to keep confidential from the Members, for such
period of time as the Manager deems reasonable, any information which the
Manager reasonably believes to be in the nature of trade secrets or other
information the disclosure of which the Manager in good faith believes is not
in
the best interest of the Company or could damage the Company or its business
or
which the Company is required by law or by agreement with a third party to
keep
confidential.
8.2.2 Any
request, inspection, or copying of information by a Member under this Section
8.2
may be
made by that Person or that Person’s agent or attorney.
8.3 Financial
Statements.
8.3.1 General.
The
Manager shall provide any Member with such periodic operating and financial
reports of the Company as such Member may from time to time reasonably
request.
8.3.2 Annual
Report.
The
Manager shall cause annual audited financial statements to be sent to each
Member holding more than 0.1 percent of all outstanding Units not later
than 90 days after the close of the Company’s Fiscal Year. The report shall
contain a balance sheet as of the end of the Company’s Fiscal Year and an income
statement and statement of cash flow for the Company’s Fiscal Year. Such
financial statements shall be prepared in accordance with generally accepted
accounting principles consistently applied and be accompanied by the report
thereon of the independent accountants engaged by the Company.
8.4 Tax
Returns.
The
Manager shall cause to be prepared information necessary for the preparation
of
the Members’ federal and state income tax and information returns, and for the
computation of the Members’ estimated income tax payments. The Manager shall
send or cause to be sent to each Member, or as soon as practicable following
the
end of each Fiscal Year, but in no event later than July 15, (a)
such
information as is necessary to complete such Member’s federal and state income
tax or information returns, and (b)
a
schedule setting forth each Member’s Capital Account
-36-
balance
as of the end of the most recent Fiscal Year. The Manager shall cause the
income
tax and information returns for the Company to be timely filed with the
appropriate authorities. If a Member requests, the Company shall provide
such
Member with copies of the Company’s federal, state, and local income tax or
information returns for that year, tax-related schedules, work papers,
appraisals, and other documents as reasonably required by such Member in
preparing its tax returns.
8.5 Other
Filings.
The
Manager also shall cause to be prepared and timely filed, with appropriate
federal and state regulatory and administrative bodies, amendments to, or
restatements of, the Certificate and all reports required to be filed by the
Company with those entities under the Act or other then current applicable
laws,
rules, and regulations.
8.6 Bank
Accounts.
The
Manager shall maintain the funds of the Company in one or more separate bank
accounts in the name of the Company, and shall not permit the funds of the
Company to be commingled in any fashion with the funds of any other
Person.
8.7 Accounting
Decisions and Reliance on Others.
All
decisions as to accounting matters, except as otherwise specifically set forth
herein, shall be made by the Manager. The Manager may rely upon the advice
of
the Company’s accountants as to whether such decisions are in accordance with
accounting methods followed for federal income tax purposes or financial
accounting purposes (as applicable).
8.8 Tax
Matters.
8.8.1 Taxation
as Partnership.
The
Company shall be treated as a partnership for tax purposes. The Company shall
avail itself of any election or procedure under the Code or the Regulations
and
under state and local tax law, including any "check-the-box" election, for
purposes of having an entity classified as a partnership for tax purposes,
and
the Members shall cooperate with the Company in connection therewith and hereby
authorize the Manager to take whatever actions and execute whatever documents
are necessary or appropriate to effectuate the foregoing.
8.8.2 Elections;
Tax Matters Partner.
Subject
to the provisions of this Agreement, the Manager shall from time to time cause
the Company to make such tax elections as it deems to be necessary or
appropriate. The Members designate CCV as the "tax matters partner" (within
the
meaning of Code Section 6231(a)(7)) to represent the Company in connection
with
all examinations of the Company’s affairs by tax authorities, including without
limitation resulting judicial and administrative proceedings, and shall expend
Company funds for professional services and costs associated
therewith.
ARTICLE
IX
DISSOLUTION
AND WINDING UP
9.1 Dissolution.
The
Company shall be dissolved, its assets shall be disposed of, and its affairs
shall be wound up on the first to occur of the following:
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(a) The
entry
of a decree of judicial dissolution pursuant to Section 18-802 of the Act;
or
(b) The
decision of the Manager, in its sole discretion.
9.2 Winding
Up.
Upon
the occurrence of any event specified in Section 9.1,
the
Company shall continue solely for the purpose of winding up its affairs in
an
orderly manner, liquidating its assets, and satisfying the claims of its
creditors. The Manager shall be responsible for overseeing the winding up and
dissolution of the Company, shall take full account of the assets and
liabilities of the Company, shall either cause its assets to be sold to any
Person or distributed to a Member, and if sold, as promptly as is consistent
with obtaining the fair market value thereof, shall cause the proceeds
therefrom, to the extent sufficient therefor, to be applied and distributed
as
provided in Section 9.5
hereof.
The Person(s) winding up the affairs of the Company shall give written notice
of
the commencement of winding up by mail to all known creditors and claimants
whose addresses appear on the records of the Company. All actions and decisions
required to be taken or made by such Person(s) under this Agreement shall be
taken or made only with the consent of all such Person(s).
9.3 Distributions
in Kind.
Any
non-cash asset distributed to one or more Members shall first be valued at
its
fair market value to determine the gain or loss that would have been included
in
the amounts allocated pursuant to Article VI if such asset were sold for such
value. Such gain or loss shall then be allocated pursuant to Article VI, and
the
Members’ Capital Accounts shall be adjusted to reflect such allocations. The
amount distributed and charged to the Capital Account of each Member receiving
an interest in such distributed asset shall be the fair market value of such
interest (net of any liability secured by such asset that such Member assumes
or
takes subject to).
9.4 Determination
of Fair Market Value.
For
purposes of Section 9.2
and
9.3,
the
fair market value of each asset of the Company shall be determined by the
Manager or, if a Member requests, by an independent, third-party appraiser
experienced in the valuation of businesses such as the Company’s business,
selected in good faith by the Manager. The Company shall bear the costs of
the
appraisal.
9.5 Order
of Distributions Upon Dissolution.
After
determining that all known debts and liabilities of the Company in the process
of winding up, including without limitation debts and liabilities to Members
who
are creditors of the Company, have been paid or adequately provided for, the
remaining assets shall be distributed to the Members in the following
order:
(a) First,
to
Members having accrued and unpaid Priority Return as of the date of
distribution, pro rata in accordance with the respective amounts of accrued
and
unpaid Priority Return, until each such Member shall have received an amount
equal to such Member’s accrued and unpaid Priority Return as of such date;
provided, however, that no distribution shall be made pursuant to this Section
9.5(a)
that
creates or increases a Capital Account deficit for any Member which exceeds
such
Member’s obligation deemed and actual to restore such deficit, determined as
follows:
-38-
Distributions
shall first be determined tentatively pursuant to this Section 9.5(a)
without
regard to the Members’ Capital Accounts, and then the allocation provisions of
Article VI shall be applied tentatively as if such tentative distributions
had
been made. If any Member shall thereby have a deficit Capital Account which
exceeds his obligation (deemed or actual) to restore such deficit, the actual
distribution to such Member pursuant to this Section 9.5(a)
shall be
equal to the tentative distribution to such Member less the amount of the
excess
to such Member; and
(b) Second,
to
Members in accordance with their positive Capital Account balances, after taking
into account income and loss allocations for the Company’s taxable year during
which liquidation occurs.
Such
liquidating distributions shall be made by the end of the Company’s taxable year
in which the Company is liquidated or, if later, within 90 days after the date
of such liquidation.
9.6 Limitations
on Payments Made in Dissolution.
Each
Member shall be entitled to look solely to the assets of the Company for the
return of such Member’s positive Capital Account balance. Notwithstanding that
the assets of the Company remaining after payment of or due provision for all
debts, liabilities, and obligations of the Company may be insufficient to return
the Capital Contributions or share of Net Profits reflected in such Member’s
positive Capital Account balance, a Member shall have no recourse against the
Company or any other Member.
9.7 Certificate
of Cancellation.
Upon
completion of the winding up of the affairs of the Company, the Manager, or
other Person(s) winding up the affairs of the Company, shall cause to be filed
in the office of, and on a form prescribed by, the Delaware Secretary of State,
a certificate of cancellation.
9.8 Termination.
The
Company shall terminate when all of the assets of the Company have been
distributed in the manner provided for in this Article IX, and the certificate
of cancellation is filed in accordance with Section 9.7
hereof.
9.9 No
Action for Dissolution.
Except
as expressly permitted in this Agreement, a Member shall not take any voluntary
action that directly causes a dissolution of the Company other than voting
in
favor of dissolution.
ARTICLE
X
MISCELLANEOUS
10.1 Complete
Agreement.
This
Agreement and any schedules and exhibits hereto, any document referenced in
this
Agreement and any schedules and exhibits thereto (including without limitation
the Settlement Agreement and any schedules and exhibits thereto) (together,
the
"Transaction
Documents"),
and
the Certificate contain the entire understanding of the parties with respect
to
the subject matter hereof. There are no restrictions, agreements, promises,
representations, warranties, covenants or undertakings with respect to the
subject matter hereof other than those expressly set forth or referred to
-39-
herein
or
in the Transaction Documents. Except for the Transaction Documents, this
Agreement supersedes all prior agreements and understandings between the
parties
with respect to its subject matter.
10.2 Amendments.
10.2.1 Solely
with the approval of the Manager, this Agreement may be modified or amended
in
any respect, including amendments or modifications contemplated under Sections
3.1
and
4.2
hereof
providing for the issuance of additional Membership Interests having such
relative rights, powers and duties as the Manager shall determine (including
without limitation rights, powers and duties senior to or different from
existing Membership Interests).
10.2.2 Notwithstanding
Section 10.2.1,
this
Agreement shall not be amended, including by way of merger, consolidation or
otherwise, (A) without the approval of Class A Members holding at least
80 percent of the Class A Preferred Units if the amendment would result
in
a greater reduction in the aggregate Percentage Interests of the Class A Members
(such reduction expressed as a percentage of the aggregate Percentage Interests
of the Class A Members prior to such amendment) than the reduction in the
aggregate Percentage Interests of the Class B Members (such reduction expressed
as a percentage of the aggregate Percentage Interests of the Class B Members
prior to such amendment)
and (B)
without the approval of each Class A Member if such amendment would adversely
affect the express terms or rights of the Class A Members and/or the Class
A
Units set forth in this Agreement.
10.2.3 Each
Member hereby irrevocably constitutes and appoints the Manager as its true
and
lawful attorney-in-fact, in its name, place, and stead, to make, execute,
acknowledge, and file any duly adopted amendment to or restatement of this
Agreement (solely to the extent that such Member’s consent is not required under
this Agreement). It is expressly intended by each Member that the power of
attorney granted by the preceding sentence is coupled with an interest, shall
be
irrevocable, and shall survive and not be affected by the subsequent disability
or incapacity of such Member (or if such Member is a corporation, partnership,
trust, association, limited liability company or other legal entity, by the
dissolution or termination thereof).
10.3 Binding
Effect.
Subject
to the provisions of this Agreement relating to transferability, this Agreement
shall be binding upon and inure to the benefit of the Members, and their
respective successors and assigns.
10.4 Parties
in Interest.
Except
as expressly provided in the Act, nothing in this Agreement shall confer any
rights or remedies under or by reason of this Agreement on any Persons other
than the Members and the Manager and their respective successors and assigns
nor
shall anything in this Agreement relieve or discharge the obligation or
liability of any third person to any party to this Agreement, nor shall any
provision give any third person any right of subrogation or action over or
against any party to this Agreement.
-40-
10.5 Statutory
References.
Any
reference to the Code, the Regulations, the Act, or other statutes or laws
or
any specific agreement shall include all amendments, modifications, or
replacements of the specific sections and provisions concerned.
10.6 Headings.
All
headings herein are inserted only for convenience and ease of reference and
shall not be considered in the construction or interpretation of any provision
of this Agreement.
10.7 References
to this Agreement.
Numbered or lettered articles, sections, and subsections herein contained refer
to articles, sections, and subsections of this Agreement unless otherwise
expressly stated.
10.8 Interpretation.
In this
Agreement, unless otherwise specified or where the context otherwise
requires:
10.8.1 Unless
otherwise expressly stated, a reference to a recital is to the relevant recital
to this Agreement, to a numbered or lettered article, section, subsection or
clause is to the relevant article, section, subsection or clause of this
Agreement, and to an Exhibit or Schedule is to the relevant Exhibit or Schedule
to this Agreement.
10.8.2 Words
importing any gender shall include other genders.
10.8.3 Words
importing the singular only shall include the plural and vice
versa.
10.8.4 The
words
"include", "includes" or "including" shall be deemed to be followed by the
words
"without limitation".
10.8.5 The
words
"hereof", "herein", "hereunder" and "herewith" and words of similar import
shall, unless otherwise stated, be construed to refer to this Agreement as
a
whole and not to any particular provision of this Agreement.
10.9 Governing
Law.
This
Agreement shall be enforced, governed by, and construed in accordance with
the
laws of the State of Delaware, regardless of the choice or conflict of laws
provisions of Delaware or any other jurisdiction.
10.10 Severability.
If any
provision of this Agreement or the application of such provision to any Person
or circumstance shall be held invalid, the remainder of this Agreement or the
application of such provision to Persons or circumstances other than those
to
which it is held invalid shall not be affected thereby.
10.11 Additional
Documents and Acts.
Each
Member agrees to execute and deliver, from time to time, such additional
documents and instruments and to perform such additional acts as may be
necessary or appropriate to effectuate, carry out, and perform all of the terms,
provisions, and conditions of this Agreement and the transactions contemplated
hereby.
-41-
10.12 Notices.
Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given (a)
upon
personal delivery to the party to be notified, (b)
on the
5th day after deposit with the United States Post Office, by registered or
certified mail, postage prepaid, (c)
on the
next business day after dispatch via nationally recognized overnight courier
or
(d)
upon
confirmation of transmission by facsimile, all addressed to the party to be
notified at the address indicated for such party below, or at such other address
as such party may designate by 10 days’ advance written notice to the other
parties. Notices should be provided in accordance with this Section at the
following addresses:
If
to Xx.
Xxxxx or CII, to such Person at:
c/o
Vulcan Inc.
000
Xxxxx
Xxxxxx X, Xxxxx 000
Xxxxxxx,
Xxxxxxxxxx 00000
Attention:
Xx. Xxxxxxx X. Xxxxxx, Executive Vice President and General Counsel
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
with
a
copy (which shall not constitute notice) to:
Xx.
Xxxxx
D. Xxxxxx
Xxxxxx
Pepper & Shefelman PLLC
0000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx,
Xxxxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
and
with
a copy (which shall not constitute notice) to:
Xx.
Xxxxxxxx X. Xxxxxxx
Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP
000
Xxxxx
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
If
to the
Company, CCV, CCHC, Charter Holdco or the Manager, to such Person
at:
Charter
Communications, Inc.
00000
Xxxxxxxxxxx Xxxxx
Xx.
Xxxxx, Xxxxxxxx 00000-0000
Attention:
General Counsel
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
with
a
copy (which shall not constitute notice) to:
-42-
Xx.
Xxxxxx Xxxxxxxx
Xxxxxx,
Xxxx & Xxxxxxxx LLP
000
Xxxx
Xxxxxx
Xxx
Xxxx
Xxx Xxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
10.13 No
Interest in Company Property; Waiver of Action for Partition.
No
Member has any interest in specific Property of the Company. Without limiting
the foregoing, each Member irrevocably waives during the duration of the Company
any right that such Member may have to maintain any action for partition with
respect to the Property of the Company.
10.14 Multiple
Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which shall constitute one and the same
instrument.
10.15 Remedies
Cumulative.
The
remedies under this Agreement are cumulative and shall not exclude any other
remedies to which any Person may be lawfully entitled.
10.16 Investment
Representation.
Each
Member hereby represents to, and agrees with, the other Members and the Company
that such Member has acquired the Membership Interest for investment purposes
for such Member’s own account only and not with a view to or for sale in
connection with any distribution of all or any part of the Membership Interest.
No other Person will have any direct or indirect beneficial interest in or
right
to the Membership Interest.
10.17 Specific
Enforcement; Attorney’s Fees.
The
Members agree that the remedy at law for damages upon violation of the terms
of
this Agreement would be inadequate because the Membership Interests and the
business of the Company are unique. Therefore, the Members agree that the
provisions of this Agreement may be specifically enforced by any court of
competent jurisdiction, and each Member and its respective transferees agree
to
submit to the jurisdiction of the court where any such action for specific
performance is brought. If any Member defaults in its performance of any of
the
terms and conditions of this Agreement and if, as a result of such default,
a
lawsuit seeking damages, specific performance, or any other remedy is filed
by
another Member, then, in that event, the prevailing party in such a lawsuit
shall be entitled to obtain attorney's fees from the losing party in such amount
as shall be determined by the court to be reasonable under the
circumstances.
-43-
IN
WITNESS WHEREOF, the Members have executed this Agreement, effective as of
the
date first written above.
CCV
Holdings, LLC
By: s/
Xxxx X. Xxxxxx
Name: Xxxx
X.
Xxxxxx
Title: Senior
Vice President, Interim
Chief
Financial Officer
CCHC
By: s/
Xxxx
X. Xxxxxx
Name: Xxxx
X.
Xxxxxx
Title: Senior
Vice President, Interim
Chief
Financial Officer
Charter
Investment, Inc.
By: s/
Xxxxxxx X. Xxxxxx
Name: Xxxxxxx
X. Xxxxxx
|
Title:
|
Executive
Vice President and
General
Counsel
|
CCI
has
executed this Agreement effective as of the date set forth above solely for
purposes of confirming (i) its continuation as the Manager of the Company under
and to the extent provided in Section 5.1
of this
Agreement, (ii) its consent to the amendment of the Existing LLC Agreement
by
this Agreement, and (iii) its consent to the provisions of Section 7.5
hereof.
Charter
Communications, Inc.
By: s/
Xxxx
X. Xxxxxx
Name: Xxxx
X.
Xxxxxx
Title: Senior
Vice President, Interim
Chief
Financial Officer
Charter
HoldCo has executed this Agreement effective as of the date set forth above
solely for purposes of confirming its consent to the provisions of Section
7.5
hereof.
Charter
Communications Holding Company, LLC
By: s/
Xxxx
X. Xxxxxx
Name: Xxxx
X.
Xxxxxx
Title: Senior
Vice President, Interim
Chief
Financial Officer
Xxxx
X.
Xxxxx has executed this Agreement effective as of the date set forth above
solely for purposes of confirming his consent to the provisions of Section
7.2
hereof.
s/
Xxxx
X. Xxxxx
Xxxx
X.
Xxxxx
SCHEDULE
A
Member;
Number of Units; Initial Priority Capital
|
Member/Address
|
Class
A Preferred Units
|
Number
of
Class
B Units
|
|
|
Number
of
Units
|
Initial
Priority Capital
|
||
|
CCV
Holdings, LLC
|
105,928,319
|
||
|
CCHC
|
16,991,760
|
$440,641,882
|
|
|
Charter
Investment, Inc.
|
7,282,183
|
$188,846,524
|
|
SCHEDULE
B
Prior
Capital Contributions
|
CCV
Holdings, LLC
|
CCHC
|
Charter
Investment, Inc.
|
|
|
Capital
Contributions, February 2000
|
$1,466,813,786
|
$440,641,884
|
$188,846,522
|
|
Contribution
of Avalon Systems, January 2001
|
$527,182,978
|
||
|
Contribution
of Cable USA Systems, August 2001
|
$3,179,000
|
||
|
Contribution
of Cash, 2001
|
$110,324,891
|
||
|
Contribution
of Cash, 2002
|
$108,966,528
|
||
|
Total
|
$2,216,467,183
|
$440,641,884
|
$188,846,522
|
