PARTNERSHIP MANAGEMENT AGREEMENT
THIS PARTNERSHIP MANAGEMENT AGREEMENT (the "Agreement") dated September 8,
1997, is entered into by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY LEASING, INC., an
Iowa corporation ("Leasing") and TELECOMMUNICATIONS INCOME FUND XI, L.P. and
Iowa limited partnership ("TIFXI").
WHEREAS, Leasing is the general partner of TIFXI, and as such, pursuant to
the Agreement of Limited Partnership of TIFXI (the "Partnership Agreement") has
full, complete and exclusive discretion and authority to manage and control the
business of the TIFXI, subject to the limitations contained in the Partnership
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and subject to the terms and conditions set
forth herein, the parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Partnership Agreement.
2. SERVICES. TIFXI hereby retains the services of Leasing, and Leasing
hereby accepts and undertakes to provide to TIFXI such services as TIFXI shall
require pertaining to the management of TIFXI, including but not limited to,
such services as are set forth in the Partnership Agreement, and on behalf of
TIFXI, such services as TIFXI shall require pertaining to the management of
TIFXI, including but not limited to, such services as are set forth in the
Partnership Agreement.
3. STAFF. During the term of this Agreement, Leasing shall maintain in
its employ, or have otherwise available to it, personnel sufficient in number
and adequate in ability to perform all services that it may be called upon to
perform under this Agreement.
4. FEES AND REIMBURSEMENTS TO LEASING. In consideration of the
services and activities to be performed by Leasing pursuant to this
Agreement, during the term of this Agreement, TIFXI shall pay Leasing fees,
and reimburse Leasing expenses, in amounts and for the purposes as set forth
in the Partnership Agreement, particularly Articles IX and X (and, with
respect to distributions and allocations, Articles XI and XII), including the
following:
(a) The Front-End Fees of the offering will not exceed eighteen and
one-half percent (18.5%) of Gross Proceeds. Leasing will bear all
Organization and Offering Expenses, Selling Commissions, Equipment
Acquisition Fees and Acquisition Expenses which in the aggregate are in
excess of eighteen and one-half percent (18.5%) of Gross Proceeds.
(b) The Managing Sales Agent shall be ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company Financial
Services, Inc., an affiliate of Leasing. TIFXI will pay a Managing Sales Agent
Fee to the Managing Sales Agent equal to 9.0% of the Gross Proceeds.
(c) TIFXI will pay a maximum of three and one-half percent (3.5%) of Gross
Proceeds of the offering for actual expenses incurred by Leasing in connection
with the formation of TIFXI, and in qualifying Units under applicable federal
and state law and any other expenses actually incurred and directly related to
the qualification, registration, advertising, offering and sale of Units. Such
expenses include (i) fees and expenses paid by TIFXI to any counsel or
accountants, (ii) registration fees, filing fees and taxes, (iii) the costs of
printing, amending, supplementing and distributing the Prospectus and
Registration Statement, (iv) the costs of producing, qualifying, printing and
distributing advertising and sales materials used in connection with the
issuance of Units, (v) the costs of "due diligence" activities (including
meetings
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and seminars), and (vi) accounting and legal fees incurred in connection with
any of the foregoing, but does not include Acquisition Fees. The total of
Organization and Offering Expenses plus the nine percent (9.0%) Selling
Commission will not exceed twelve and one-half percent (12.5%) of the Gross
Proceeds. The twelve and one-half percent (12.5%) limitation is without
recourse to, or reimbursement by, TIFXI.
(d) Leasing will receive an Acquisition Fee for reimbursement of its
Acquisition Expenses and for rendering of its services in connection with the
research, evaluation and negotiation of available acquisition and financing
opportunities. The Acquisition Fee shall be in an amount equal to five percent
(5%) of the cost of Equipment purchased by TIFXI, all or a portion of which will
be payable when the Equipment is purchased by TIFXI (or Leasing as nominee) and
five percent (5%) of the amount of financings placed by TIFXI, payable upon the
closing of a financing transaction. The total Acquisition Fee including all
fees and commissions paid by all parties to all parties in connection with the
initial acquisition or manufacturer of Equipment will not exceed the lesser of
five percent (5%) of the cost of Equipment purchased by TIFXI and financings
placed by the TIFXI, or an amount which is competitive with that charged for
Affiliates of Leasing. Included in such fee will be any leasing commission,
selection fee, construction supervision fee, financing fee, remarketing fee,
nonrecurring management fee, or any fee of a similar nature, however designated,
and Acquisition Expenses.
(e) During the Operating Phase and Liquidating Phase of TIFXI, Leasing is
entitled to receive, to the extent available, (i) the General Partner's Expense
Allowance, (ii) the Management Fee, (iii) twenty percent (20%) of certain
Liquidating Distributions, as provided in Articles XI and XII of the Partnership
Agreement, (iv) its distributions as owner of the General Partner interest
(equivalent to 10 Units), and (v) the Re-Leasing fee described in Section 9.3.2
of the Partnership Agreement.
(f) As compensation for providing re-leasing services to TIFXI, Leasing
will receive a fee equal to the lesser of the competitive rate for comparable
services for similar equipment or 2.0% of the gross rental payments derived
from the re-lease of such equipment after the time that the re-lease has been
consummated as a result of the efforts of Leasing. Leasing will not be paid
for re-leasing services where Equipment is re-leased to a previous lessee of
such Equipment or to an affiliate of such previous lessee. Payment for
re-leasing services shall be paid as each rental payment is made over the
term of the re-lease. This fee will not be paid on a current basis if TIFXI
has not paid the Limited Partners Operating Distributions equal to 9.6% of
Adjusted Capital Contributions for the year. In such case, the fee will be
accrued as a debt TIFXI payable out of future revenues.
(g) TIFXI will reimburse Leasing or its Affiliates for (i) Organization
and Offering Expenses reimbursed pursuant to Section 9.2.3 of the Partnership
Agreement; (ii) loans made pursuant to Section 9.4 of the Partnership Agreement;
(iii) the actual cost to Leasing or its Affiliates of goods and materials used
for or by TIFXI and obtained from persons who are not Affiliates of Leasing;
(iv) expenses incurred by TIFXI or its Affiliates related to the purchase,
operations, financing and acquisition of Equipment incurred prior to the time
that TIFXI has funds available to pay such expenses directly; and (v)
administrative services provided by Leasing or any of its Affiliates, such as
legal, accounting, computer, transfer agent, mailings to Limited Partners and
other similar services. However, reimbursement for administrative expenses will
be at the lesser of cost or the competitive rate that is charged by persons who
are not Affiliates of Leasing for comparable administrative services in the same
geographic area.
The reimbursement for administrative expenses will be for administrative
expenses that are necessary for the prudent operation of TIFXI, and will not be
for time expended by Controlling Persons of Leasing or its Affiliates, or for
salaries, fringe benefits, travel expenses, and other administrative items
incurred or allocated to any Controlling Person of a Sponsor. No general or
administrative overhead incurred by Leasing in connection with the
administration of TIFXI will be charged to TIFXI. Such general or
administrative overhead includes, but is not limited to, salaries, rent, travel
expenses, utilities, capital
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expenditures and other items generally falling under the category of overhead.
No payment will be made for services to which Leasing or its Affiliates are
entitled by way of a separate fee.
(h) Subject to Section 10.1 of the Partnership Agreement, TIFXI shall pay
all expenses of TIFXI, which expenses shall be billed directly to TIFXI from
unrelated third parties and not from Leasing and may include, but are not
limited to: (i) all costs (excluding rent, depreciation, utilities, capital
equipment and other overhead items) of personnel employed full or part-time by
TIFXI and involved in the business of TIFXI, and such personnel may include
employees of Leasing or its Affiliates (other than Controlling Persons); (ii)
all costs of borrowed money, taxes and assessments on Equipment and other taxes
applicable to TIFXI; (iii) legal, audit, accounting, data processing,
programming, brokerage and other fees; (iv) printing, engraving and other
expenses and taxes incurred in connection with the issuance, distribution,
transfer, registration and recording of documents evidencing ownership of an
interest in TIFXI or in connection with the business of TIFXI; (v) fees and
expenses paid to independent contractors, bankers, brokers and servicers,
consultants and other Equipment management personnel, insurance brokers and
other agents; (vi) expenses in connection with the disposition, replacement,
alteration, repair, refurbishment, leasing, re-leasing, financing, refinancing
and operation of Equipment (including the costs and expenses of insurance
premiums and of maintenance of such Equipment); (vii) expenses of organizing,
revising, amending, converting, modifying or terminating TIFXI; (viii) expenses
in connection with distributions made by TIFXI to, and communications,
bookkeeping and clerical work necessary in maintaining relations with its
Limited Partners, including the costs of printing and mailing to such persons
any evidence of ownership of Units and reports of meetings of the Limited
Partners, and of preparation of proxy statements and solicitations of proxies in
connection therewith; (ix) expenses in connection with preparing and mailing
reports required to be furnished to Limited Partners for investor, tax reporting
or other purposes, and reports which Leasing deems to be in the best interests
of TIFXI to furnish to the Limited Partners; (x) any accounting, computer
(including, but not limited to, terminals, controllers, leased lines, and CPUs),
statistical, data processing, programming or bookkeeping costs necessary for the
maintenance of the books and records of TIFXI (including an allocable portion of
Leasing's costs of acquiring and owning computer equipment primarily used in
connection with the operations and reporting activities of TIFXI and any other
investment entities sponsored or administered by Leasing or any of its
Affiliates), and (xi) the cost of preparation and dissemination of the
informational material and documentation relating to the potential lease,
re-lease, sale, financing or other disposition of Equipment.
5. SERVICES OF LEASING NOT EXCLUSIVE. The services of Leasing to TIFXI
hereunder are not to be deemed exclusive and Leasing shall be free to render
similar services to others and to conduct its own business.
6. TERMINATION. Subject to the terms and provisions of this Agreement,
upon the earliest to occur of any of the following events, this Agreement shall
be terminated:
(a) by either party without penalty, upon not less than 60 days prior
written notice of its intention to so terminate;
(b) upon the withdrawal or removal of Leasing as general partner of TIFXI;
or
(c) upon the liquidation of TIFXI and the cancellation of its Certificate
of Limited Partnership.
7. INDEMNIFICATION OF LEASING BY TIFXI. To the extent that Leasing were
to seek any indemnification from TIFXI, it would be subject to the limitations
on indemnification contained in Article XXIII of the Partnership Agreement.
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8. AMENDMENTS. This Agreement may not be amended or modified except by
an instrument in writing executed by all of the parties hereto, and upon the
vote of a majority of the then outstanding Units.
9. ASSIGNABILITY. This Agreement may not be assigned to any party hereto
without the express written consent of the other parties.
10. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
11. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto with respect to the matters to which it pertains and
supersedes all prior oral and written agreements and understandings between the
parties with respect thereto.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Iowa without giving effect to any
conflicts of law or choice of law provisions.
13. NOTICES. All notices and other communications required or permitted
hereunder shall be delivered, telefaxed, cabled or mailed (by registered or
certified mail, postage prepaid, or by Federal Express or similar express mail
service) to the parties hereto at their respective addresses set forth below:
(a) If to Leasing: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY LEASING, INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
(b) If to TIFXI: TELECOMMUNICATIONS INCOME FUND XI, L.P.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Any party may, by notice given as aforesaid, change its address for notices
hereunder.
IN WITNESS WHEREOF, Leasing and TIFXI have caused this Agreement to be duly
executed as of the date first above written by their respective officers and
representatives.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY LEASING, INC. TELECOMMUNICATIONS INCOME FUND XI, L.P.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY LEASING,
By INC., its General Partner
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By
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