XXXXX PROGRMMING PARTNERS 2
LIMITED PARTNERSHIP AGREEMENT
This Limited Partnership Agreement made and entered into, as of this 10th day of
March, 1992, by and among Xxxxx Entertainment Group, Ltd., a Colorado
corporation, as general partner (hereinafter called the "General Partner") and
the limited partners listed on the detachable Subscription Agreements annexed
hereto and such additional limited partners as may individually be called
"Limited Partner" and collectively called "Limited Partners".
In consideration of the mutual promises contained herein, the parties agree as
follows with such changes or variations thereof as may be convenient or
necessary to comply with law:
ARTICLE 1
THE LIMITED PARTNERSHIP
1.1 NAME OF LIMITED PARTNERSHIP. The name of the Limited Partnership formed
hereunder is Xxxxx Programming Partners 2-A, Ltd. (hereinafter called the
"Partnership").
1.2 CHARACTER OF BUSINESS. The character of the business to be conducted by the
Partnership shall be to acquire, develop, produce and exploit programming (the
"Programming"), to own Programming rights, and to conduct, without limitation,
such other activities and businesses which are incidental or necessary to the
foregoing.
1.3 PRINCIPAL PLACE OF BUSINESS. The location of the principal place of
business of the Partnership shall initially be 0000 Xxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000. The General Partner may change such place of business
in its discretion and may maintain such other offices at any other place or
places as it deems advisable.
1.4 PARTNERS' NAMES AND RESIDENCES. The name and mailing address of the General
Partner is Xxxxx Entertainment Group, Ltd., 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx 00000, and the name and mailing address of each Limited Partner is as
designated on the detachable Subscription Agreements annexed hereto and such
additional detachable Subscription Agreements as may hereafter be added in
connection with additional Limited Partners.
1.5 TERM. The term of the Partnership shall commence on the date of filing of
the Certificate of Limited Partnership in accordance with the Colorado Uniform
Limited
Partnership Act of 1981 (the "Act"), and shall expire on the twenty-fifth
anniversary of such filing, unless sooner terminated as provided hereinafter.
1.6 FORMATION. The Partnership created hereunder shall be formed pursuant to
the Act. The General Partner and the Limited Partners, acting directly or
through an attorney-in-fact, shall promptly sign and acknowledge under the Act a
Certificate of Limited Partnership, shall cause the Certificate of Limited
Partnership to be filed for record in the office of the Secretary of State of
Colorado, and shall thereafter, from time to time, execute such further
documents and take such further action as shall be deemed appropriate by the
General Partner to comply with requirements of law for the formation and
operation of a limited partnership in all other counties, states and other
jurisdictions where the Partnership may elect to do business. The General
Partner shall not be required to furnish copies of the Certificate of Limited
Partnership to the Limited Partners.
1.7 FISCAL YEAR. The fiscal year of the Partnership shall be the calendar year.
1.8 NAMES AND IDENTIFYING MARKS, SOFTWARE. The names "Xxxxx," "21st Century,"
"Xxxxx 21st Century," "Xxxxx Entertainment," and Xxxxx Entertainment Group,
Ltd.'s identifying marks and all other Xxxxx 21st Century, Inc. and Xxxxx
Entertainment Group, Ltd.'s and affiliates' identification marks and logos of
all kinds and descriptions, used now or hereafter, including those used on
marketing materials are owned by Xxxxx International, Ltd. or its affiliates and
shall remain exclusively so, regardless of the termination of this Agreement or
the removal of the General Partner or otherwise and shall not be used without
written permission. In addition, any computer software developed by the General
Partner or its affiliates which is used by the Partnership is, and shall remain,
the exclusive property of the General Partner, or its affiliates, regardless of
the termination of this Agreement, the removal of the General Partner or
otherwise and shall not be used without written permission. The expenses of
developing such software will be paid solely by the General Partner or its
affiliates.
ARTICLE 2
THE GENERAL PARTNER
2.1 MANAGEMENT CONTROL. Subject to the provisions of the Act and except as
otherwise expressly herein provided, the General Partner shall have complete and
unrestricted power and authority to manage the business, properties and
activities of the Partnership in its sole and exclusive discretion.
2.2 SPECIFIC POWERS OF THE GENERAL PARTNER. Without limiting the rights and
powers given the General Partner under the Act or otherwise by law or this
Agreement, the General Partner shall have the following specific powers:
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(a) To pay or cause to be paid or reimbursed from Partnership funds all
costs and expenses in seeking, acquiring, developing, producing and
exploiting the Programming; and to pay or cause to be paid or
reimbursed from Partnership funds all costs and expenses in connection
therewith;
(b) To maintain, at the expense of the Partnership, complete and accurate
financial records for the Partnership; and to furnish at Partnership
expense the Limited Partners with reports called for by Section 3.7 of
this Agreement, together with all tax reporting information which
reasonably may be important to the Limited Partners;
(c) To maintain, at the expense of the Partnership, adequate records of
all operations of the Partnership;
(d) To provide, at the expense of the Partnership, for the operations and
management of the Partnership, including the acquisition, production
and distribution activities for the Programming and, subject to the
limitations contained in Section 2.2(n) and 2.3 hereof, to enter into
agreements with others, including the General Partner and its
affiliates or enterprises in which the General Partner or its
affiliates has an interest by ownership, or otherwise, including Xxxxx
21st Century, Inc.;
(e) To purchase, at the expense of the Partnership, liability and other
insurance to protect the Partnership's properties and business;
(f) To execute on behalf of the Partnership any and all documents,
contracts or instruments of any kind which the General Partner may
deem necessary or appropriate in carrying out the business and
purposes of the Partnership, and all other agreements, documents or
instruments of any kind or character whatsoever, or amendments
thereto, which in any manner relate to the business and purposes of
the Partnership;
(g) To purchase, sell or lease property, including real property, for
Partnership use;
(h) To make all payments required of the Partnership pursuant to this
Agreement and for all direct and indirect costs and expenses incurred
in the conduct of its business, including, without limitation, all
costs and expenses for legal, audit, accounting and other technical
and professional services, reports and other communications to, and
costs of maintaining relations with, the Limited Partners, printing,
postage, telephone and telegraph, travel, insurance, interest,
messengers, office supplies, data processing, taxes, permits and
licenses;
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(i) To borrow money from banks, other lending institutions or other
sources, for Partnership purposes, and in connection therewith to
mortgage, pledge or create other security interests on any or all of
the Partnership properties, Programming and income therefrom and to
secure or provide for the repayment of such borrowing;
(j) To hold Partnership assets in the name of the Partnership, or (except
for Partnership funds) the name of the General Partner or the name of
a nominee chosen by the General Partner;
(k) To license, lease or sell any assets of the Partnership for any
Partnership purpose, including, but not by way of limitation, the
Programming or any portion thereof and any rights in the Programming
or any portion thereof, including sales to the General Partner and its
affiliates as provided in this Agreement;
(l) To make or revoke tax elections on behalf of the Partnership,
including the election provided by Section 754 of the Internal Revenue
Code of 1954, as amended (the "Code");
(m) To select and employ with Partnership funds such legal counsel,
certified public accountants or other consultants as are deemed by the
General Partner to be appropriate for carrying on the business of the
Partnership;
(n) To enter into contracts and other transactions for all Partnership
purposes, including, but not limited to:
(i) contracts with Xxxxx International Securities, Ltd., an affiliate
of the General Partner, for securities brokerage services,
contracts with the General Partner or affiliates of the General
Partner for the distribution of Programming, on terms and for
fees which are comparable to those which are customary in the
industry, and the licensing of Programming to affiliates of the
General Partner on competitive terms;
(ii) contracts and other transactions with other affiliates of the
General Partner, including the development of educational
programming therefor, provided, however, that any such contract
or other transaction with such other affiliates of the General
Partner shall be on terms which are comparable to those which are
customary in the industry. All contracts with other affiliates of
the General Partner will be in writing and will be terminable
without penalty by the Partnership upon sixty days' notice;
(o) On behalf of the Partnership, to enter into joint ventures or general
partnerships and other participation with affiliated or unaffiliated
entities for
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the purpose of acquiring, developing, producing and exploiting
Programming or rights therein;
(i) In joint venture arrangements between Partnerships or between a
Partnership and the General Partner or between the Partnership
and another public partnership formed by the General Partner:
The Partnership must have a right of first refusal to buy if
the other program wishes to sell property held in the joint
venture; and
The venturers must have substantially identical investment
objectives, no duplicate fees shall be involved and the
compensation to the General Partner must be substantially
identical to that described in the prospectus for the
Interests.
(ii) In joint venture arrangements with third parties:
The Partnership will endeavor to obtain a right of first
refusal to buy if the other party wishes to sell its
property held in the joint venture but there is no assurance
the Partnership will be able to obtain such right.
The foregoing subsections (i) and (ii) shall not apply to typical
industry co-production arrangements, domestic or foreign.
(p) On behalf of the Partnership, to arrange for the sale of any
Programming (or rights therein) to the General Partner or any
affiliate of the General Partner. The sale price shall be determined
by the average of three separate independent appraisals (the cost of
which shall be borne by the General Partner or its affiliate and not
by the Partnership). In addition, the General Partner may purchase a
Programming project (or rights therein) in its own name or in the name
of a nominee, an affiliate of the General Partner, or otherwise and
temporarily holding it for the purpose of facilitating the acquisition
thereof by the Partnership, provided that such Programming project is
purchased by the Partnership for a purchase price no greater than the
cost (including as costs any expenses incurred by the General Partner
or an affiliate in so holding the Programming project) of such
Programming to the General Partner or an affiliate thereof.
(q) To engage in any other activity customary or incident to any of the
foregoing;
(r) To admit Partners after the formation of the Partnership;
(s) To purchase, on its own behalf or on behalf of the Partnership,
Interests in the Partnership from Limited Partners on terms agreed
upon by the parties.
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The above enumeration of specific powers of the General Partner in Sections
2.2(a) through (s) shall not require the exercise of any such power by the
General Partner except in its sole discretion or as otherwise required by this
Agreement. The General Partner and its affiliates shall not be liable to the
Partnership or to the Limited Partners for any loss suffered by the Partnership
which arises out of any action or inaction of the General Partner or its
affiliates if the General Partner or its affiliates, in good faith, determined
that such course of conduct was in the best interest of the Partnership and such
course of conduct did not constitute negligence or misconduct of the General
Partner or its affiliates.
2.3 LIMITATIONS ON POWERS OF GENERAL PARTNER. The General Partner shall not
cause the Partnership to do any of the following:
(i) commingle its funds with those of any other person;
(ii) make loans to the General Partner or affiliates of the General
Partner;
(iii) underwrite securities of other issuers;
(iv) acquire property in exchange for Limited Partnership Interests;
(v) permit the General Partner or any affiliate thereof to receive any
insurance brokerage fee or write any insurance policy covering the
Partnership or any of its property;
(vi) permit the General Partner or any affiliate thereof to receive any
rebate or give-up or permit the participation of such entities in
any reciprocal business arrangements to circumvent restrictions
contained herein with regard to the Partnership's dealings with the
General Partner or its affiliates except as otherwise herein
provided;
(vii) obtain permanent financing from the General Partner or, with regard
to nonpermanent financing made available to the Partnership by the
General Partner or an affiliate thereof, permit the receipt of
interest or other financing charges or fees other than in amounts
equal to the General Partner's weighted average cost of all debt
financing from unaffiliated parties or permit a prepayment charge or
penalty on any such loan;
(viii) purchase limited partnership interests in any other limited
partnership; and
(ix) contract away or abridge the fiduciary duty owed by the General
Partner to the Limited Partners under the common law.
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2.4 OTHER ACTIVITIES. The General Partner may devote only so much time to the
business of the Partnership as deemed necessary by the General Partner.
2.5 WITHDRAWAL. The General Partner may, at any time upon ninety days' written
notice, and with the consent of Limited Partners holding a majority of the
Limited Partnership Interests, retire or resign from the Partnership. On such
retirement or resignation, the General Partner may, at its option, remain the
General Partner for the sole purpose of winding up the Partnership, or the
General Partner may apply to a court of proper jurisdiction for the appointment
of a receiver for this purpose. On such retirement or resignation, if the
Limited Partners have elected a new general partner as provided in Section
3.2(n) of this Agreement, the Partnership shall purchase the General Partner's
interest in the Partnership as provided in Section 2.7 of this Agreement.
2.6 CAPITAL CONTRIBUTION. The General Partner shall initially contribute $1,000
to the capital of the Partnership and, at its sole option, may from time to time
contribute an additional sum or sums or purchase Limited Partnership Interest to
meet various blue sky law requirements or for other purposes. A capital account
shall be maintained for the General Partner, which account shall be credited
with the General Partner's contributions to the Partnership and with its share
of Partnership net profits and debited with the General Partner's share of
Partnership net losses and distributions to the General Partner and otherwise
maintained in accordance with Treasury regulations published under Section
704(b) of the Code.
2.7 RIGHTS OF THE GENERAL PARTNER UPON REMOVAL, RETIREMENT OR RESIGNATION. If,
pursuant to Section 3.2(l), the General Partner is removed and a new general
partner is elected by the Limited Partners or if the General Partner retires or
resigns pursuant to Section 2.5 and a new general partner is elected pursuant to
Section 3.2(n), the Partnership shall purchase the interest in the Partnership
of, and, if requested by the General Partner, any Limited Partnership Interests
owned by, the removed, retiring or resigning General Partner. The purchase price
shall be determined as if the Partnership had dissolved and sold its assets and
made the distributions as set forth in Section 7.2 of this Agreement, with all
such events being deemed to have occurred on the date of the removal, retirement
or resignation of the General Partner. The value of the assets of the
Partnership for this purpose shall be determined by agreement between the
Partnership and the removed, retiring or resigning General Partner; provided, if
they cannot so agree, then each shall appoint an appraiser and such appraisers
shall select a third appraiser. The fair market value shall be the average of
the three appraisals and the three appraisals shall value the assets of the
Partnership on a going concern basis, without consideration for any increase or
decrease in value attributable to or resulting from any proceedings related to
the removal, retirement or resignation of the General Partner. The Partnership
and the removed, retiring or resigning General Partner shall bear the respective
costs of the appraiser selected by each of them and they shall each bear 1/2 of
the costs of the appraiser selected by the other two appraisers. The purchase
price shall be payable in the form of a three-year promissory note bearing
interest on
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the unpaid principal amount at the stated prime rate of interest of the Central
Bank of Denver, in effect from time to time. Such note shall be payable in equal
annual installments of principal, plus interest thereon. The Partnership shall
be obligated to make the scheduled payments on the three-year promissory note
only if, in the judgment of the new general partner, such payments do not
materially impair the solvency of the Partnership; provided, however, that in
any event all payments under the promissory note shall be paid within five years
of the date of the removal of the General Partner. If the Partnership sells any
Programming, any cash therefrom shall be applied to any accrued interest on such
note, and then to the unpaid principal thereof.
2.8 NEW GENERAL PARTNER. A new General Partner elected under Section 3.2(l) by
the Limited Partners shall purchase from the Partnership no later than the time
of the payment to the removed General Partner under Section 2.7, the interest
(and any Limited Partnership Interests) which the Partnership purchased from the
removed General Partner. The new General Partner shall pay for such interest
(and any Limited Partnership Interests) a price agreed to by the Partnership and
the new General Partner; provided, that if the parties are not able to agree on
the price, the price shall be the same amount as the Partnership pays for the
interest (and any Limited Partnership Interests) of the removed General Partner
as set forth in Section 2.7 and the price shall be paid in cash, unless
otherwise agreed to by the parties.
2.9 FUNDS AND ASSETS. The General Partner has a fiduciary responsibility for
the proper use of all funds and assets of the Partnership and it shall not
employ or permit another to employ such funds or assets in any manner except for
the benefit of the Partnership.
ARTICLE 3
THE LIMITED PARTNERS
3.1 SINGLE CLASS; USE OF PROCEEDS. There shall be only one class of Limited
Partners. Each person desiring to become a Limited Partner shall execute a
detachable Subscription Agreement in the form attached hereto or shall authorize
his registered representative to execute and submit the Subscription Agreement
on his behalf and shall contribute cash to the Partnership in the amount stated
on such Subscription Agreement. The participation of the Limited Partners in the
Partnership shall be divided into limited partnership interests (hereinafter
called "Limited Partnership Interests" or "Interests") and each Limited Partner
shall have one Interest for each $500 of capital contributions to the
Partnership. The participation of each Limited Partner in the Limited Partners'
share of the Partnership assets, profits, losses and distributions shall be the
proportion which the number of Interests owned by him bears to the total number
of Interests owned by all Limited Partners in the Partnership at the time when a
determination of participation is made. At a minimum, the General Partner must
commit a percentage of the Limited Partners' capital contributions to an
investment in Programming acquisition, development, production and distribution
that is equal to the greater of (i)
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80% of the Limited Partners' capital contributions reduced by .1625% for each 1%
of permanent financing of the Partnership's assets, or (ii) 67% of the Limited
Partners' capital contributions. In the event that the net proceeds of the
offering of the Interests are not invested in, or have not been committed for,
the acquisition or development of Programming or the establishment of a working
capital reserve by the Partnership within two years after the close of the
offering of Interests for the Partnership, all funds not so invested or
committed will be returned to the Limited Partners along with a proportionate
share of the organization and offering costs and sales commissions.
3.2 RIGHTS, POWERS, AND OBLIGATIONS. Limited Partners shall have the following
rights, powers and obligations:
(a) No Limited Partner, as such, shall be personally liable for any of the
debts of the Partnership or any of the losses of the Partnership
beyond the amount committed by him to the capital of the Partnership
and his share of undistributed profits of the Partnership. A Limited
Partner shall have the obligation to the Partnership for the amount of
any portion of the contribution returned to him as set forth in
section 7-62-608 of the Act.
(b) No Limited Partner, as such, shall take part in the control of the
business or shall transact any business for the Partnership.
(c) No Limited Partner, as such, shall have the power to sign for or bind
the Partnership.
(d) No Limited Partner shall be obligated to make any contribution to the
Partnership beyond the amount set forth on his Subscription Agreement
to this Agreement.
(e) Except as provided in Article 7 with respect to dissolution, no
Limited Partners shall be entitled to withdraw from the Partnership or
be entitled to return of all or any part of his capital contribution.
(f) No Limited Partner shall be entitled to demand or receive property
other than cash in return for his contribution.
(g) No Limited Partner, as such, shall be entitled to interest on his
capital contribution.
(h) A Limited Partner may, with the consent of the General Partner,
transact other business with the Partnership.
(i) Upon reasonable request, any Limited Partner or his duly authorized
representative shall have the right to inspect and copy any of the
Partnership books. A Limited Partner shall pay any actual cost of
copying of any of said
9
books, and shall pay any special costs, such as enlargement from
microfilm or computer printout, which may be required in connection
with such inspection. Such inspection shall be conducted at a time and
in a manner so as not to interfere with the operation of the business
of the Partnership. In no event shall the General Partner be compelled
to prepare compilations or summaries which are not customarily
maintained in the conduct of the business of the Partnership. In the
event a Limited Partner wishes to inspect records which are not
maintained at the principal place of business, such as records on a
shared or rented computer system, the General Partner shall have a
reasonable time to produce such records at the principal place of
business of the Partnership. Any Limited Partner shall also have the
right to secure a list of the names, addresses and related interest
holdings of all of the Limited Partners. Such requesting Limited
Partner shall prepay the costs of preparation of such list.
(j) The Limited Partners may, at a meeting of the Partnership, by vote of
Limited Partners holding a majority of the Limited Partnership
Interests, dissolve the Partnership at any time.
(k) The Limited Partners may vote to amend this Agreement pursuant to
Section 6.2 hereof.
(l) The Limited Partners may remove the General Partner by a vote of
Limited Partners holding a majority of the Limited Partnership
Interests. The Limited Partners shall also have the right, by a vote
of Limited Partners holding a majority of the Limited Partnership
Interests, to elect a new General Partner within 90 days after the
vote to remove the General Partner.
(m) The Limited Partners may, by a vote of the Limited Partners holding a
majority of Limited Partnership Interests, vote to approve the sale of
all or substantially all of the assets of the Partnership, provided
that the sale or other disposition of Programming rights in the
ordinary course of business shall not be deemed to be a sale under
this provision.
(n) The Limited Partners may, by a vote of Limited Partners holding a
majority of the Limited Partnership Interests, elect a new general
partner within ninety days after written notice is given by the
General Partner pursuant to Section 2.5 of this Agreement of its
intent to retire or resign, provided that Limited Partners holding a
majority of the Limited Partnership Interests consent to the
resignation or retirement.
3.3 GENERAL PARTNER AS LIMITED PARTNER. The General Partner, or any affiliate
of the General Partner, may at any time invest in or acquire Interests in the
Partnership. With respect to Interests so acquired, the General Partner, or its
affiliates, will acquire the same rights and obligations as other Limited
Partners, however Interests owned by the
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General Partner will not be voted on removal of the General Partner, the
election of a new General Partner, or any amendments to the Limited Partnership
Agreement which would adversely affect the General Partner.
3.4 CAPITAL ACCOUNTS. A capital account shall be maintained for each Limited
Partner. A Limited Partner's capital account will be credited initially with his
contribution to the Partnership capital and thereafter with his share of
Partnership net profits, debited with his share of Partnership net losses and
distributions to him, and otherwise maintained in accordance with Treasury
Regulations published under Section 704(b) of the Code. The foregoing provisions
and the other provisions of this Agreement relating to the maintenance of
capital accounts are intended to comply with Treasury Regulation Section
1.704-1(b), and shall be interpreted and applied in a manner consistent with
such regulations. In the event the General Partner shall determine 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
General Partner may make such modification, provided that it is not likely to
have a material effect on the amounts distributable to Limited Partners pursuant
to Article 7 upon the dissolution of the Partnership. The General Partner shall
also make appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with the Treasury Regulations under
Section 704(b) of the Code. The General Partner shall adjust the amounts debited
or credited to capital accounts with respect to (a) any property contributed to
the Partnership or distributed to the General Partner and Limited Partners, and
(b) any liabilities that are secured by such contributed or distributed property
or that are assumed by the Partnership or the General Partner and Limited
Partners in the event the General Partner shall determine that such adjustments
are necessary or appropriate pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv).
3.5 TRANSFER OF LIMITED PARTNERSHIP INTERESTS.
(a) Subject to compliance with applicable state securities (blue sky)
laws, Limited Partnership Interests may be transferred only in whole
interests and only in accordance with the following terms: (1)
Interests may be assigned only with the consent of the General Partner
in its sole discretion; (2) the transfer of the Interests shall be
accomplished by an instrument in writing, in form and substance
satisfactory to the General Partner, which writing may include a power
of attorney and which shall set forth the intention that the purchaser
is to be an additional Limited Partner and the stock ownership, if
any, of the purchaser in the General Partner or any affiliate thereof;
(3) a counterpart of the instrument of transfer, executed and
acknowledged by the transferor Limited Partner shall be delivered to
the General Partner; (4) any assignment of interests must be in
compliance with applicable state securities (blue sky) laws; (5) no
assignments will be permitted if such assignments would result in 49%
or more of the interests being transferred within a twelve-month
period; (6) the purchaser must agree that he will not directly or
indirectly make or
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operate a secondary market or the substantial equivalent thereof in
the Interests of the Partnership; (7) the General Partner may refuse
to consent to any transfer if, in the sole discretion and judgment of
the General Partner, the transfer would be transacted on or treated as
transacted on a secondary market or the substantial equivalent thereof
or would cause the aggregate transfer to exceed permissible safe
harbor limits under administrative interpretations; (8) no assignments
will be permitted if such assignments would cause the assets of the
Partnership to be treated as "plan assets" as defined in regulations
promulgated by the Department of Labor; (9) the Partnership may charge
the transferor Limited Partner a fee not exceeding $50 to defray the
costs of effecting the transfer of his Interests in the Partnership;
(10) the transferor and the purchaser shall execute and deliver to the
General Partner an amended Limited Partnership Agreement; and (11) the
purchaser shall become a Limited Partner only upon amendment of this
Agreement. Notwithstanding the foregoing, an economic interest in the
Partnership can be transferred without compliance with (1) and (2)
above.
(b) The death, legal disability, bankruptcy or dissolution of a Limited
Partner or the assignment by any Limited Partner of all or a part of
any Limited Partnership Interests owned by him (whether or not in
compliance with the terms of this Agreement) shall not dissolve the
Partnership. The successor in interest of such Limited Partner shall
have the rights of such Limited Partner for the purpose of settling
the estate or business of such Limited Partner, including the rights
as defined above to transfer such Interests or to become an additional
Limited Partner with respect thereto.
3.6 MEETINGS. Meetings of the Partnership may be called by the General Partner
or Limited Partners holding more than 10% of the outstanding Limited Partnership
Interests, for purposes of voting by the Limited Partners on any matters for
which the Limited Partners are specifically given voting rights in this
Agreement. At any such meeting a Limited Partner may also advise the General
Partner of his wishes and advisory votes may be taken to poll or ascertain
preferences of other Limited Partners, but no such expression of opinion by such
advisory vote shall be binding on the General Partner or constitute any exercise
of control of the business of the Partnership. Upon receipt of a proper written
request, either in person or by registered or certified mail stating the purpose
of the meeting, the General Partner shall call a meeting to be held not less
than 15 nor more than 60 days after receipt of the request. Written notice
stating the time and place of the meeting shall be delivered by first class mail
not less than 10 nor more than 60 days prior to the meeting.
3.7 REPORTS. The General Partner shall cause to be prepared and distributed to
Limited Partners the following reports:
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(a) Within 60 days after each complete calendar quarter of the
Partnership's operations, a report containing a summary of pertinent
information regarding the Partnership's activities during the quarter
covered by the report.
(b) Within 75 days after the end of each taxable year of the Partnership,
a report containing information necessary for the preparation of the
Limited Partners' Federal income tax returns; and
(c) Within 120 days after the end of each fiscal year of the Partnership,
an annual report containing (i) a statement of financial condition as
of the year then ended, an operating statement for the year then ended
and a statement of changes in financial position for the year then
ended, all of which shall be prepared according to generally accepted
accounting principles and shall be audited by independent certified
public accountants; if an opinion of independent certified public
accountants is not obtainable, the report shall include such
qualified, limited or other advice from independent certified public
accountants as may then be available; (ii) a summary of the activities
of the Partnership during the period covered by the report; (iii) a
summary of distributions to the Limited Partners for the period
covered, including a description of the source or sources of such
distributions; and (iv) a detailed statement of fees, commissions and
compensation paid or to be paid to the General Partner and its
affiliates for the fiscal period just completed. Such statement will
identify separately the amount paid to each recipient and the services
giving rise to each such payment and will include a statement showing
the actual computation of each fee, commission or compensation.
Upon written request, the Limited Partners will be furnished a copy of each Form
10-Q Quarterly Report of the Partnership, which is required to be filed with the
Securities and Exchange Commission.
3.8 PURCHASE OF STOCK OF GENERAL PARTNER OR AFFILIATES BY LIMITED PARTNERS.
Each Limited Partner shall consent to be restricted in his purchase of stock of
the General Partner and its affiliates as follows:
(a) Each Limited Partner shall, upon request, represent and warrant the
number of shares, if any, of the stock of the General Partner, or any
affiliate thereof, that such Limited Partner owns of record or
beneficially. Each Limited Partner shall further agree in subscribing
for Interests in the Partnership that in the event that the Limited
Partners of all the Partnerships organized under the XXXXX PROGRAMMING
PARTNERS 2 series of limited partnerships own, directly or indirectly,
individually or in the aggregate, more than 20% of any class of stock
of the General Partner or any affiliates as defined in Section 1504(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), on
request of the General Partner, such Limited Partner will immediately
divest himself or herself of all shares of the stock of the General
Partner or any
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affiliates that such Limited Partner owns. For the purpose of
determining stock ownership in the General Partner or its affiliates,
the attribution rules set forth in Section 318 of the Code are
applicable.
(b) In the event of the breach of the foregoing agreement by any Limited
Partner, the General Partner may, but shall not be required to, as an
alternative to the request for divestiture as provided in the next
preceding subsection (a), purchase the Interests of such Limited
Partner at an amount equal to the capital contribution of such Limited
Partner (or his predecessor) less all distributions paid on account of
the Interests being repurchased. In the event of such repurchase of
Interests by the General Partner, the General Partner shall be
substituted in the place of the Limited Partner as to such Interests.
The General Partner shall notify any such Limited Partner in writing
of its election to repurchase such Interests within 30 days after the
General Partner has actual knowledge of any such breach.
3.9 ADMISSION OF LIMITED PARTNERS. Admission of Limited Partners to the
Partnership shall be subject to the following:
Upon the original sale of Interests by the Partnership, the purchasers
shall be admitted as Limited Partners not later than 15 days after the
release from escrow of the purchasers' funds to the Partnership, and
thereafter purchasers shall be admitted not later than the last day of the
calendar month following the day their subscription was accepted by the
General Partner. Subscriptions shall be accepted or rejected by the General
Partner within 30 days of their receipt; if rejected, all funds shall be
returned to the subscriber within 10 business days.
ARTICLE 4
PRODUCTION AND OVERHEAD FEE; PARTNERSHIP EXPENSES;
REIMBURSEMENT OF PARTNERSHIP EXPENSES
4.1 PRODUCTION AND OVERHEAD FEE. The General Partner shall receive a fee for
its services to the Partnership (the "Production and Overhead Fee") of 12% of
the lower of Direct Costs or Budgeted Direct Costs of each Programming project.
Such fee shall be calculated and be payable at the time the principal
photography commences on each particular Programming project and in the case of
a series, such fee is payable on a per episode basis. The General Partner may
temporarily defer collection of all or a portion of such fee, in its discretion.
4.2 PARTNERSHIP EXPENSES; REIMBURSEMENT OF EXPENSES INCURRED ON BEHALF OF THE
PARTNERSHIP. The Partnership shall pay all of its own operating, overhead and
administrative expenses of every kind, including all expenses involved with all
aspects of its Programming activities. The General Partner shall be entitled to
reimbursement from the Partnership for its general overhead and administrative
expenses, which shall
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include, but not be limited to, all direct and indirect expenses (such as home
office rent, supplies, telephone, travel and copying charges) and salaries of
full and part-time employees allocable to the operation of the Partnership.
ARTICLE 5
ALLOCATION OF PROFITS AND LOSSES;
DISTRIBUTION OF FUNDS
5.1 ALLOCATION OF PROFITS. Except as otherwise provided in Sections 5.2(e), 5.3
and 5.4, Profits for any taxable year shall be allocated in the following order
and priority:
(a) first, 99% to the Limited Partners and 1% to the General Partner until
the cumulative Profits allocated pursuant to this Section 5.1(a) are
equal to the cumulative Losses allocated pursuant to Section 5.2(a)
hereof for all prior taxable years;
(b) second, 99% to the Limited Partners and 1% to the General Partner
until the Limited Partners have been allocated cumulative Profits
pursuant to this Section 5.1(b) in an amount equal to the sum of the
syndication expenses for the current and all prior taxable years. For
this purpose, syndication expenses shall be as defined in Treasury
regulation Section 1.709-2;
(c) third, 99% to the Limited Partners and 1% to the General Partner until
the Limited Partners have been allocated cumulative Profits pursuant
to this Section 5.1(c) in an amount equal to a 12% per annum,
cumulative and noncompounded, return on the capital contributions of
the Limited Partners (such amount to be reduced by all previous
distributions to the Limited Partners made in accordance with Section
5.5(a) of this Agreement). For purposes of computing the 12% per annum
cumulative and noncompounded return, the capital contributions of the
Limited Partners, as determined for any particular year or portion
thereof, shall be reduced by the amount of all prior distributions to
the Limited Partners made in accordance with Section 5.5(b); and
(d) The balance, if any, 80% to the Limited Partners and 20% to the
General Partner.
(e) For purposes of this Section 5.1, Profits shall be equal to the net
income from the Partnership, if any, including all items of income,
gain, loss and deduction required to be separately stated by Section
703(a)(1) of the Code and also including any tax-exempt income and
nondeductible expenses (other than syndication expenses) of the
Partnership.
15
(f) For purposes of this Section 5.1, the calculation of cumulative
Profits with respect to a Limited Partner shall commence no later than
the end of the calendar quarter in which the investment by such
Limited Partner was made.
5.2 ALLOCATION OF LOSSES. Losses for any taxable year shall be allocated in the
following order and priority:
(a) Except as provided in Section 5.2(b), Losses shall be allocated 99% to
the Limited Partners and 1% to the General Partner; and
(b) To the extent Profits have been allocated pursuant to Sections 5.1(b),
5.1(c) or 5.1(d), Losses shall be allocated first to offset any
Profits allocated pursuant to Section 5.1(d), next to offset any
Profits allocated pursuant to Section 5.1(c), and then to offset any
Profits allocated pursuant to Section 5.1(b). To the extent any
allocations of Profits are offset pursuant to this Section 5.2(b),
such allocation of Profits shall be disregarded for purposes of
computing subsequent allocations pursuant to this Section 5.2(b).
(c) For purposes of this Section 5.2, Losses shall be equal to the net
loss from the Partnership, if any, including all items of income,
gain, loss and deduction required to be separately stated by Section
703(a)(1) of the Code and also including any tax-exempt income and
nondeductible expenses (other than syndication expenses) of the
Partnership.
(d) Losses allocated to Limited Partners pursuant to this Section 5.2
shall not exceed an amount which would cause the capital accounts of
the Limited Partners to be in deficit at the end of a taxable year
except to the extent that any such deficit is attributable to
nonrecourse debt, as permitted by Treasury regulations under Section
704 of the Code. Any amount of Loss which cannot be allocated to
Limited Partners as a result of this restriction shall be allocated
100% to the General Partner.
(e) If Losses are allocated to the General Partner as a result of the
operation of Section 5.2(d), Profits in any subsequent taxable year(s)
shall be allocated 100% to the General Partner until the cumulative
Profits allocated pursuant to this Section 5.2(e) are equal to the
cumulative Losses allocated pursuant to Section 5.2(d) hereof for all
prior taxable years.
5.3 ALLOCATION OF MINIMUM GAIN AND OTHER MATTERS. Notwithstanding the other
provisions contained herein,
(a) To the extent that any Limited Partner has a negative capital account
balance as of the end of any taxable year of the Partnership after
giving effect to any distributions made or to be made with respect to
such taxable year, and such negative balance exceeds such Partner's
share of "minimum gain" (as defined
16
in regulations promulgated under Section 704 of the Code) allocable to
such Limited Partner as of the end of such taxable year, then an
amount of income equal to such excess will be allocated to such
Limited Partner. This Section 5.3(a) is intended to constitute a
minimum gain chargeback within the meaning of the Treasury regulations
under Section 704 of the Code and shall be construed in accordance
with such intention. To the extent this minimum gain chargeback would
distort the allocations of Profits and Losses as detailed in Sections
5.1 and 5.2, the General Partner is hereby authorized to make
subsequent allocations of Profits and Losses in any reasonable manner
so as to eliminate any such distortion.
(b) In the event any Partner unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation Section
1.704-l(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be
specially allocated to such Partner in an amount and manner sufficient
to eliminate the deficit balances in their capital accounts created by
such adjustments, allocations or distributions as quickly as possible.
Any special allocations of items of income or gain pursuant to this
Section 5.3(b) shall be taken into account in computing subsequent
allocations of income pursuant to this Section 5, so that the net
amount and character of any items so allocated and the income or gain
allocated to each Partner pursuant to this Section 5 shall, to the
extent possible, be equal to the net amount and character of the items
that would have been allocated to each such Partner pursuant to the
provisions of this Section 5 if such unexpected adjustments,
allocations or distributions had not occurred. This Section 5.3(b) is
intended to be a qualified income offset within the meaning of the
Treasury regulations under Section 704(b) of the Code and shall be
construed in accordance with such intention.
(c) The allocations of income and loss as detailed in Sections 5.1, 5.2,
5.3 and 5.4 are intended to comply with the regulations under Section
704 of the Code which require that partnership allocations have
substantial economic effect. The General Partner is authorized in
Section 6.1(e) to adjust the allocations in Section 5 of this
Agreement to comport with the requirements of the Code, regulations or
interpretations of the law, including the requirements of Section 704.
5.4 ALLOCATION OF INCOME AND GAIN UPON LIQUIDATION OF THE PARTNERSHIP. In the
final taxable year of the Partnership, gain from the sale of Programming
projects and income and gain from other sources shall be allocated as follows:
(a) To the extent that the capital accounts of the Limited Partners are
negative, income or gain shall first be allocated 99% to the Limited
Partners and 1% to the General Partner until the capital accounts of
the Limited Partners equal zero;
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(b) To the extent that the General Partner has any remaining negative
balance in its capital account, that amount of income or gain shall
next be allocated to the General Partner until the capital account of
the General Partner equals zero;
(c) Income or gain shall next be allocated 99% to the Limited Partners and
1% to the General Partner to the extent necessary to make the
aggregate balance of the capital accounts of the Limited Partners an
amount equal to a 12% per annum, cumulative and noncompounded, return
on the capital contributions of the Limited Partners (such amount to
be reduced by all previous distributions to the Limited Partners made
in accordance with Section 5.5(a) of this Agreement). For purposes of
computing the 12% per annum cumulative and noncompounded return, the
capital contributions of the Limited Partners, as determined for any
particular year or portion thereof, shall be reduced by the amount of
all prior distributions to the Limited Partners made in accordance
with Section 5.5(b);
(d) Income or gain shall next be allocated 99% to the Limited Partners and
1% to he General Partner to the extent necessary to make the aggregate
balance of the capital accounts of the Limited Partners an amount
equal to the amount of their initial capital contributions (less all
previous distributions to the Limited Partners made in accordance with
Section 5.5(b) of this Agreement);
(e) Income or gain shall next be allocated to the capital account of the
General Partner to the extent necessary to make the aggregate balance
thereof an amount equal to the amount of its initial capital
contribution (less all previous distributions to the General Partner
made in accordance with Section 5.5(b) of this Agreement);
(f) The balance of any income or gain shall next be allocated to the
capital accounts of the Limited Partners and the General Partner in
amounts that shall cause the capital accounts of the Limited Partners
to equal 80% of the total capital accounts of the Limited Partners and
the General Partner after such allocations and after all allocations
and distributions have been made pursuant to Sections 5.5(a) and
5.5(b). However, in the event that there are no distributions to be
made to the General Partner pursuant to Section 5.5(c) of this
Agreement, all remaining income or gain to be allocated pursuant to
this Section 5.4(f) shall be allocated to the Limited Partners.
5.5 ORDER OF DISTRIBUTION. Partnership distributions shall be made as follows:
(a) first, 99% to the Limited Partners and 1% to the General Partner until
the Limited Partners have been allocated an amount equal to a 12% per
annum, cumulative and noncompounded, return on the capital
contributions of the Limited Partners (such amount to be reduced by
all previous distributions to
18
the Limited Partners in accordance with this Section 5.5(a)). For
purposes of computing the 12% per annum cumulative and noncompounded
return, the capital contributions of the Limited Partners, as
determined for any particular year or portion thereof, shall be
reduced by the amount of all prior distributions to the Limited
Partners made in accordance with Section 5.5(b);
(b) second, 99% to the Limited Partners and 1% to the General Partner
until the Limited Partners have received cumulative distributions in
an amount equal to the amount of their initial capital contributions
(less all previous distributions made to the Limited Partners in
accordance with this Section 5.5(b));
(c) The balance, if any, 80% to the Limited Partners and 20% to the
General Partner;
(d) Any distribution of Partnership funds available for distribution shall
be made or not made in the sole discretion of the General Partner. If
any distribution is made, the General Partner shall at the time of
such distribution, or in the quarterly report next following the
distribution, notify the Limited Partners as to the source or sources
of such distribution. The General Partner shall not be obligated to
distribute funds at any time if in the sole discretion of the General
Partner such funds are needed, or may reasonably be expected to be
needed, for Partnership purposes.
5.6 TRANSFER OF LIMITED PARTNERSHIP INTERESTS. In the case of a transfer of a
Limited Partnership Interest during any taxable year of the Partnership, every
item of partnership income, loss, deduction and credit attributable to such
Limited Partnership Interest shall be divided and allocated proportionately
between the transferor and transferee based upon the number of months during
such taxable year for which each such Limited Partner is recognized as such in
accordance with Section 3.5. For purposes of accounting simplicity in the case
of a transfer of a Limited Partnership Interest, the Partnership will treat the
party who is the recognized owner of the Limited Partnership Interest as of the
close of business on the last day of any calendar month as the owner of the
Limited Partnership Interest for the entire month. The General Partner is
authorized to alter this accounting convention to conform with any regulation or
administrative rulings issued by the Treasury Department or the IRS.
5.7 GENERAL PARTNER'S CAPITAL ACCOUNT. Except as may be required by Section 7.2
below, in connection with winding up the Partnership, a deficit may be carried
in the capital account of the General Partner without the General Partner being
required to make a contribution to the capital of the Partnership, unless such
contribution is necessary in order to meet obligations to creditors of the
Partnership other than Partners as Partners.
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ARTICLE 6
AMENDMENTS TO LIMITED PARTNERSHIP AGREEMENT
6.1 ROUTINE AMENDMENTS. Amendments to this Agreement and to any Certificate of
Limited Partnership may be made by the General Partner through the use of the
power of attorney granted by each Limited Partner in this Agreement if such
Amendments:
(a) in the opinion of the General Partner, with advice of counsel, may be
necessary to preserve the limited liability of Limited Partners; or
(b) in the opinion of the General Partner, with advice of counsel, may be
necessary to preserve the status of the Partnership as a partnership,
and not an association taxable as a corporation, for Federal income
tax purposes; or
(c) are required or contemplated by this Agreement in connection with
substitution or addition or Limited Partners; or
(d) are necessary or appropriate to cure any ambiguity or to correct or
supplement any provision hereof which may be inconsistent with any
other provision hereof; or
(e) are necessary or appropriate to change the allocations of partnership
income, gain, losses, deductions, distributions or credits in Article
5 hereof to comport with the requirements of the Internal Revenue Code
of 1986, as amended, regulations or interpretations of the law
applicable to allocations or to conform the allocations to the order
of distributions described in Section 5.5, if the General Partner
concludes in good faith that such amendments are in the overall best
interests of the Partners; provided, however, that the General Partner
shall be authorized to amend such provisions only to the minimum
extent which in good faith it judges to be necessary or advisable,
based upon advice of counsel or accountants, to make the Partnership's
allocations of these items effective for Federal income tax purposes;
and provided further, that the General Partner shall be under no
obligation to make any such amendment; or
(f) are necessary to comply with federal or state securities or blue sky
laws, and do not adversely affect the rights and obligations of the
Limited Partners hereunder.
6.2 OTHER AMENDMENTS. Any other amendments to this Agreement shall be proposed
in writing by the General Partner or by Limited Partners holding not less than
10% of the Limited Partnership Interests. Following any proposal, whether by the
General Partner or Limited Partners, the General Partner shall mail each Limited
Partner a
20
verbatim statement of the proposed amendment and a statement of the General
Partner's recommendation as to whether the proposed amendment should be adopted.
A proposed amendment under this Section 6.2 shall become effective when it has
received due approval of the holders of a majority of the Interests; provided,
however, that any amendment affecting Sections 1.8, 2.2, 2.3, 2.6, 2.7, 2.8,
4.1, 4.2, 5.1, 5.2, 5.3, 5.4, 5.5, 6.2, 7.2 or 9.6, or otherwise affecting the
General Partner's interest in the Partnership and any amendment to Section 3.2
that would materially and adversely affect the General Partner's interest in the
Partnership shall also require the approval of the General Partner. No amendment
to this Agreement which requires an amendment to the Partnership's Certificate
of Limited Partnership shall become effective until such amendment to such
certificate is duly filed.
ARTICLE 7
DISSOLUTION; WINDING UP; TERMINATION
7.1 DISSOLUTION. The Partnership shall be dissolved on the expiration of its
term, or sooner upon the happening of any of the following events:
(a) the withdrawal of the General Partner pursuant to Section 2.5, unless
the Limited Partners elect a new general partner pursuant to Section
3.2(n) and continue the business of the Partnership;
(b) the vote to dissolve the Partnership by Limited Partners as provided
in Section 3.2(j);
(c) (i) the entry of an order for relief involving liquidation of the
Partnership or the General Partner under Chapter 7 of the bankruptcy
law in the United States; the filing by the Partnership or the General
Partner of a voluntary petition for liquidation under Chapter 7 of the
bankruptcy law of the United States; (ii) the general assignment by
the General Partner for the benefit of creditors under the laws of any
state; (iii) or the appointment of a receiver for all or substantially
all of the assets of the Partnership or the General Partner, unless
such receivership is dissolved within 30 days after the appointment of
such receiver; or (iv) the filing of a voluntary petition by the
General Partner under Chapter 11 of the bankruptcy law of the United
States. However, the filing of a voluntary petition under Chapter 11
of the bankruptcy law of the United States on behalf of the
Partnership, or the entry of an order for relief pursuant to a
voluntary or involuntary petition by or against the Partnership under
Chapter 11 of the bankruptcy law of the United States shall not, in
itself, cause dissolution of the Partnership;
(d) the disposition of substantially all of the assets of the Partnership;
21
(e) a final adjudication that the application of any provision of this
Agreement impairs the limited liability of the Limited Partners as
provided in Section 9.2;
(f) the happening of any event which makes it unlawful for the Partnership
business to be continued; or
(g) the removal of the General Partner, unless the Limited Partners elect
a new General Partner pursuant to Section 3.2(l) and continue the
business of the Partnership.
If the Partnership is dissolved for any of the above reasons, the remaining
Partners shall not have the power to continue its existence, except as provided
in (g) above.
7.2 WINDING UP. In the event of the dissolution of the Partnership, the General
Partner may wind up the affairs of the Partnership; sell all of its assets for
cash or other assets (which may include securities); and after paying all
liabilities, including all costs of dissolution and winding up, payment of all
fees and compensation otherwise due the General Partner, setting up of reserves
for contingencies, and repayment of loans of the Partnership, shall distribute
the remainder of the Partnership assets in accordance with the priorities set
forth in Section 5.5 and in the order prescribed thereby.
In such event, any distributions by the Partnership shall be made either by the
end of the taxable year of the "liquidation" of the Partnership or within 90
days of such "liquidation" as that term is defined by Treasury Regulations under
Section 704(b) of the Code, whichever is later, or within such other time period
as is permitted by Treasury Regulations under Section 704(b) of the Code.
In connection with distributions in winding up the affairs of the Partnership on
dissolution, the General Partner shall be required to account to the Partnership
for any deficit which may exist in the capital accounts of the General Partner
by contributing to the capital of the Partnership an amount equal to the lesser
of:
(i) the deficit which may exist in its capital account at such time; or
(ii) an amount equal to 1.01% of the initial capital contributions to the
Partnership by the Limited Partners, reduced by the capital
contributions to the Partnership by the General Partner.
7.3 TERMINATION. Upon completion of the dissolution, winding up, liquidation
and distribution of the liquidation proceeds, the Partnership shall terminate.
22
ARTICLE 8
POWER OF ATTORNEY
8.1 GRANT. The General Partner is hereby granted and authorized on behalf of
each Limited Partner to execute any and all instruments and to do or have done
all things deemed by the General Partner to be necessary or convenient to the
Partnership's business, and shall, to the extent necessary therefor, irrevocably
be and hereby is made, constituted and appointed for each Limited Partner, agent
and attorney-in-fact for all purposes relative to creation and continuation of
the Partnership as a limited partnership and for the conduct of business.
Without limitation of the foregoing, the General Partner shall have full power
and authority to act in the name of, and on behalf of, each Limited Partner in
the execution, acknowledgement, verification and filing of the following
documents:
(a) a Certificate of Limited Partnership, as well as certificates of
amendments thereto, under the Act and the laws of any other state in
which such certificates, affidavits and other documents creating,
evidencing or preserving the Partnership as a limited or special
partnership may or should, in the opinion of the General Partner, be
filed or recorded;
(b) any other instrument which may be required to be filed or recorded by
the Partnership under the laws of any state or by any governmental
agency, or which the General Partner deems it advisable to file or
record;
(c) any documents which may be required to effect the continuation of the
Partnership, the substitution or addition to a Limited Partner, the
amendment of the Certificate of Limited Partnership or the dissolution
and termination of the Partnership, provided such continuation,
substitution, addition, amendment or dissolution and termination are
in accordance with the terms of this Agreement.
8.2 NATURE OF POWER OF ATTORNEY. The Power of Attorney granted by each Limited
Partner to the General Partner pursuant to the preceding section:
(a) is a special power of attorney coupled with an interest, is
irrevocable, and shall survive the death, disability or dissolution of
the Limited Partner;
(b) may be exercised by the General Partner for all Limited Partners by a
single signature (and acknowledgement or verification, if required) of
the General Partner by one of its officers, acting as attorney-in-fact
for all the Limited Partners together, or by listing all of the
Limited Partners and executing any instrument with a single signature
(and acknowledgement or verification, if
23
required) of the General Partner by one of its officers, acting as
attorney-in-fact for all of the Limited Partners together; and
(c) shall survive the delivery of an assignment by a Limited Partner of
all or any portion of his Interests; and where the assignee thereof
has been approved by the General Partner for admission to the
Partnership as a substituted Limited Partner, shall survive such
admission and constitute a similar power of attorney from the
substituted Limited Partner.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1 NOTICES.
(a) Any notice or document required or desired to be given to any Partner
or his transferee or to the Partnership shall be in writing and shall
be deemed given:
(i) to the Partnership or the General Partner when deposited in the
United States Mail, registered and certified, postage prepaid,
addressed to the Partnership or the General Partner at its
principal offices at 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx 00000 (or such other address as the General Partner
shall notify Limited Partners in writing in the manner set forth
herein); and
(ii) to any Limited Partner or his transferee when delivered
personally to that person (or his personal representative or
successor in interest) or when deposited in the United States
Mail, postage prepaid, addressed to that person (or his personal
representative or successor in interest) at his mailing address
set forth in the records of the Partnership.
(b) The General Partner shall maintain a record of names and addresses of
all Limited Partners and any notice given Limited Partners shall be
given according to the names and addresses on such record.
(c) If any Limited Partnership Interest is held on the records of the
Partnership in more than one name for the beneficial interest of
another, notice only to the first named person in the records of the
Partnership shall be sufficient.
9.2 SEVERANCE OF ANY PROVISION TO THE EXTENT INVALID. If any provision in 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; provided, however, if any provision of
this Agreement is so applied as
24
to impair the limited liability of the Limited Partners, the Partnership shall
dissolve and be wound up and terminated as provided in Article 7.
9.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the parties
thereto, their successors, heirs, devisees, assigns, legal representatives,
executors and administrators; but no interest in the Partnership may be
transferred except in conformity with other provisions of this Agreement.
9.4 COMPETING OR RELATED BUSINESS. The General Partner (and any affiliate of
the General Partner), any officer or director of any of the foregoing or any
Limited Partner may acquire programming or interests therein for his or its own
account, or engage in the acquisition, development, financing, distribution or
exploitation of programming or related businesses on behalf of other enterprises
formed by him or it or in which he or it may have an interest, including,
without limitation, business ventures similar to, related to or in direct or
indirect competition with any business of the Partnership. Neither the
Partnership nor any Partner shall have any right by virtue of this Agreement in
or to such other business venture or income or profits derived therefrom.
9.5 CONFLICTS OF INTEREST. The fact that any Partner, including the General
Partner or any affiliate of the General Partner, is employed by, or is directly
or indirectly interested in or affiliated or connected with, any enterprise
employed by the Partnership to render or perform services shall not prohibit the
General Partner from employing such enterprise or from otherwise dealing with it
in any way not specifically prohibited by this Agreement. Neither the
Partnership nor any Partner shall have any right in or to any income of profits
derived from any such employment or other dealing by any such enterprise.
9.6 INDEMNIFICATION. The Partnership shall indemnify and save harmless the
General Partner and its Affiliate and any agent or officer or director thereof
against any losses, judgments, liabilities, expenses, including any legal
expenses, and amounts paid in settlement of any claims, sustained by them in
connection with the Partnership, provided that (i) the General Partner has
determined, in good faith, that the course of conduct which cause the loss or
liability was in the best interests of the Partnership; and (ii) the General
Partner or its Affiliates will not be indemnified for negligence or misconduct
and provided further that only Affiliates acting within the scope of the General
Partner's authority will be indemnified hereunder. Indemnification shall be from
the assets of the Partnership and not from the Limited Partners.
Notwithstanding the foregoing, the General Partner and its Affiliates and any
person acting as a broker-dealer shall not be indemnified by the Partnership for
any losses, liabilities or expenses arising from or out of an alleged violation
of Federal or state securities laws unless (a) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the particular indemnity and a court of competent jurisdiction
has approved such indemnification, or (b) such claims have been dismissed with
prejudice on the merits by a court of competent jurisdiction as
25
to the particular indemnitee, or (c) a court of competent jurisdiction has
approved a settlement of the claims against the particular indemnitee. In any
claim for indemnification for Federal or state securities law violations, the
party seeking indemnification will place before the court the positions of the
Securities and Exchange Commission, the California Department of Corporations
and other state securities administrators with respect to the issue of
indemnification for securities law violations.
The Partnership shall not incur the cost of that portion of any insurance, other
than public liability insurance, which insures the General Partner and its
Affiliates against any liability the indemnification of which is herein
prohibited.
Expenses incurred by the General Partner or any Affiliate in defending any claim
with respect to which the General Partner or an Affiliate may be entitled to
indemnification by the Partnership may be advanced by the Partnership prior to
final disposition of such claim provided (a) the claim relates to the
performance of duties or services by the General Partner or the Affiliate on
behalf of the Partnership, (b) the claim is initiated by a third party who is
not a Limited Partner of the Partnership, and (c) the General Partner or the
Affiliate undertake to repay the advanced funds to the Partnership if it is
determined ultimately that the General Partner or the Affiliate is not entitled
to indemnification by the Partnership. The advance shall be evidenced by a
full-recourse promissory note. For purposes of this Section 9.6, the term
"Affiliate" shall mean any person performing services on behalf of the
Partnership who: (1) directly or indirectly controls, is controlled by or is
under common control with the General Partner; (2) owns or controls 10% or more
of the outstanding voting securities of the General Partner; (3) is an officer,
director, partner or trustee, is any company for which the General Partner acts
in any such capacity.
9.7 NONRECOURSE CREDITORS. A creditor who makes a nonrecourse loan to the
Partnership must not have or acquire, at any time as a result of making the
loan, any direct or indirect interest in the profits, capital or property of the
Partnership other than as a secured creditor.
9.8 COUNTERPARTS. This Agreement may be executed in counterparts or with
detachable signature pages and shall constitute one agreement, binding upon all
parties thereto as if all parties signed the same document.
9.9 CAPTIONS. Captions to and headings of the Articles, Sections, Subsections,
Paragraphs or Subparagraphs of this Agreement are solely for convenience, are
not a part of the Agreement, and shall not be used for the interpretation or
determination of the validity of this Agreement or any provision hereof.
9.10 GOVERNING LAW. The Partnership will be formed and will be governed under
the laws of the State of Colorado. All questions concerning the intention,
validity and meaning of this Agreement relating to the rights and obligations of
the Partners with respect to performance under this Agreement shall be construed
and resolved according
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to the laws of the State of Colorado. The General Partner is subject to the
liabilities of a partner in a partnership without limited partners. Neither the
Partnership Agreement nor the Certificate of Limited Partnership will be amended
to limit such liability of the General Partner.
9.11 DEFINITIONS. Unless a term is otherwise defined herein, the definitions in
the Glossary of definitive Prospectus for the XXXXX PROGRAMMING PARTNERS 2
offering shall be considered as the definitions of the terms used herein for
purposes of this Agreement.
9.12 RECORDS. The General Partner shall maintain a record of the information
obtained to indicate that a Limited Partner meets the suitability standards
employed in connection with the offering and sale of the Interests and the
representation of the Limited Partner that he or she is purchasing for his or
her own account or, in lieu of such representation, information indicating that
the Limited Partner for whose account the purchase is made meets such
suitability standards.
Xxxxx Entertainment Group, Ltd.,
a Colorado corporation, as general partner
By: /s/ Xxxxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxxxx X. Xxxxxxxxx
Vice President
The Limited Partners
By: Xxxxx Entertainment Group, Ltd.,
as attorney-in-fact pursuant to
Article 8 hereof
By: /s/ Xxxxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxxxx X. Xxxxxxxxx
Vice President
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