[EXHIBIT 50]
Amended and Restated
Agreement of Limited Partnership
of
MADISON SQUARE GARDEN, L.P.
(formerly MSG Holdings, L.P.),
a Delaware limited partnership
Dated as of April 15, 1997
among
MSG EDEN CORPORATION,
ITT MSG INC.
and
GARDEN L.P. HOLDING CORP.
TABLE OF CONTENTS
Page No.
--------
ARTICLE 1 Construction.................................................2
1.1 Defined Terms................................................2
1.2 Interpretation..............................................12
ARTICLE 2 General Provisions..........................................12
2.1 Formation...................................................12
2.2 Nature of the Partnership...................................12
2.3 Name........................................................12
2.4 Purposes....................................................13
2.5 Place of Business...........................................13
2.6 Partners' Names and Addresses...............................13
2.7 Title to Partnership Property...............................13
2.8 Registered Office and Registered Agent......................13
2.9 Organization Certificates...................................14
2.10 Duration of the Partnership.................................14
ARTICLE 3 Capital of the Partnership..................................14
3.1 Capital Contributions to the Partnership....................14
3.2 Loans by Partners...........................................16
3.3 Contribution of SportsChannel New York;
Contribution of Aircraft....................................17
ARTICLE 4 Management of the Partnership...............................17
4.1 Management..................................................17
4.2 Transactions with Related Persons; Fiduciary
Duties; Partnership Opportunities...........................18
4.3 Right of Public to Rely on Authority of the
General Partner.............................................19
4.4 Liability of the General Partner;
Indemnification.............................................19
4.5 Limitations on Limited Partners.............................20
4.6 Rights of Partners..........................................21
4.7 Liability of Limited Partners...............................21
ARTICLE 5 Capital Accounts, Distributions and
Allocations.................................................21
5.1 Establishment of Capital Accounts...........................21
5.2 Distributions...............................................24
5.3 Allocations.................................................24
5.4 Conformity with Tax Regulations.............................26
5.5 Negative Capital Accounts...................................28
-i-
ARTICLE 6 Transfer of Interests; Additional Partners..................28
6.1 Transfer of a Limited Partner's Interest;
Substitution................................................28
6.2 Bankruptcy or Dissolution of a Limited
Partner.....................................................31
6.3 Transfer of the General Partner's Interest..................31
6.4 Deemed Withdrawal of the General Partner....................32
6.5 Right of First Refusal......................................33
ARTICLE 7 Dissolution and Liquidation.................................35
7.1 Events of Dissolution.......................................35
7.2 Priority on Liquidation.....................................36
7.3 Statements on Liquidation...................................36
7.4 Return of Capital; Partition................................36
ARTICLE 8 Records and Accounting......................................37
8.1 Books and Records...........................................37
8.2 Required Reports to Partners................................37
8.3 Annual Tax Returns..........................................38
8.4 Actions in Event of Audit...................................38
8.5 Costs.......................................................39
ARTICLE 9 Miscellaneous...............................................39
9.1 Notices.....................................................39
9.2 Power of Attorney...........................................40
9.3 Amendment...................................................41
9.4 Entire Agreement............................................41
9.5 Effectiveness...............................................41
9.6 No Third Party Beneficiaries................................41
9.7 Creditors...................................................41
9.8 Agreement in Counterparts...................................41
9.9 Captions....................................................42
9.10 Governing Law...............................................42
9.11 Partial Invalidity..........................................42
9.12 Confidential Information....................................42
9.13 Equitable Remedies..........................................42
-ii-
Schedules
Schedule I Names and Addresses of the General Partner
and Limited Partners
Schedule II Capital Contributions and Profit Percentages
-iii-
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of
April 15, 1997, by and among MSG EDEN CORPORATION, a Delaware corporation (the
"General Partner"), as general partner, and ITT MSG INC., a Delaware corporation
("ITT Partner"), and GARDEN L.P. HOLDING CORP., a Delaware corporation ("Rainbow
Partner"), as limited partners.
RECITALS
Pursuant to the Bid Agreement (as amended from time to time, the
"Bid Agreement"), dated August 15, 1994, by and among ITT Corporation, a
Delaware corporation, Cablevision Systems Corporation, a Delaware corporation
("Cablevision"), and Rainbow Programming Holdings, Inc., a New York corporation,
the parties agreed to form a Delaware limited partnership named Madison Square
Garden, L.P. (formerly named MSG Holdings, L.P. and herein called the
"Partnership") for the purpose, among others, of acquiring and operating the
business theretofore conducted by Madison Square Garden Corporation, a Delaware
corporation.
The Partnership was formed as a Delaware limited partnership under
the Act by the filing of a Certificate of Limited Partnership with the Secretary
of State of the State of Delaware on August 19, 1994. The Amended and Restated
Certificate of Limited Partnership as in force on the date of execution hereof
was filed with the Secretary of State of the State of Delaware on April 11,
1995.
On the date hereof, ITT Corporation, a Nevada corporation ("ITT
Corporation"), ITT Eden Corporation, a Delaware corporation ("ITT Eden"), ITT
Partner, Cablevision, Rainbow Garden Corp., a Delaware corporation ("RGC"),
Rainbow Partner and the Partnership are entering into a certain Partnership
Interest Transfer Agreement (the "Transfer Agreement") pursuant to which, among
other matters, (i) ITT Eden shall sell to RGC, or at RGC's election, to the
General Partner, and RGC shall purchase, or at RGC's election, cause the General
Partner to redeem, from ITT Eden all of the capital stock that ITT Eden
beneficially owns in the General Partner, (ii) ITT Partner shall sell to Rainbow
Partner, or at Rainbow Partner's election, cause the Partnership to redeem, and
Rainbow Partner shall purchase, or at Rainbow Partner's election, cause the
Partnership to redeem, from ITT Partner certain Limited Partner Interests, (iii)
ITT Partner shall have a first option to require Cablevision to purchase, or at
Cablevision's election, permit the Partnership to redeem, a portion of ITT
Partner's remaining Limited Partner Interest on the terms and subject to the
conditions set forth in the Transfer Agreement, (iv)
ITT Partner shall have a second option to require Cablevision to purchase, or at
Cablevision's election, permit the Partnership to redeem, ITT Partner's
remaining Limited Partner Interest on the terms and subject to the conditions
set forth in the Transfer Agreement, and (v) Cablevision shall have the right to
require ITT Partner to sell to Cablevision, or at Cablevision's election,
require the Partnership to redeem, ITT Partner's remaining Limited Partner
Interest, if any, on the terms and subject to the conditions set forth in the
Transfer Agreement.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
Construction
1.1 Defined Terms. As used herein, the following terms shall have
the following meanings:
Acceleration Event: shall have the meaning set forth in the Transfer
Agreement.
Accountants: KPMG Peat Marwick LLP or such other firm of nationally
recognized independent public accountants as the General Partner may from time
to time designate as the independent accountants of the Partnership, provided
that such firm of nationally recognized independent public accountants is
independent of the Partnership within the meaning of Rule 2-01 of Regulation S-X
promulgated by the Securities and Exchange Commission.
Act: the Delaware Revised Uniform Limited Partnership Act, as it may
be amended from time to time, and any successor to such Act.
Adjusted Basis: at any relevant time, the Partnership's adjusted
basis in any Partnership asset, as determined for Federal income tax purposes
pursuant to Section 1011 of the Code.
Affiliate: with respect to a specified Person, an officer or
director of such Person, or a Person who, directly or indirectly through one or
more intermediaries, owns, Controls, is owned or Controlled by, or is under
common ownership or Control with, the Person specified; provided, that none of
the Partnership and its subsidiaries shall be an Affiliate.
-2-
Agreement: this Amended and Restated Agreement of Limited
Partnership, as it may be amended and in force from time to time.
Aircraft: shall have the meaning set forth in the Aircraft
Contribution Agreement.
Aircraft Contribution Agreement: shall mean the Aircraft
Contribution Agreement, dated as of April 15, 1997, among Rainbow Partner, MSG
Eden Corporation ITT Partner, the Partnership and ITT Flight Operations, Inc.
Allocated Interest Offer Price: In the case of any proposed sale of
an Offered Interest (as defined in Section 6.5) in conjunction with other
property owned by ITT Partner or an Affiliate of ITT Partner, an amount equal to
the product of the purchase price for all such property and a fraction, the
numerator of which is equal to the Fair Market Value of the Offered Interest and
the denominator of which is equal to the Fair Market Value of all such property
to be sold.
Appraiser: an investment banking firm chosen by ITT Partner from a
list of three investment banking firms chosen by Rainbow Partner from the
following: Bear, Xxxxxxx & Co. Inc., Xxxxxxx, Sachs & Co., Lazard Freres & Co.
LLC, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, Xxxxxx Xxxxxxx & Co.
Incorporated and Salomon Brothers Inc or, in each case, their respective
successors. Each of the parties hereto shall provide to any Appraiser providing
services pursuant to any provision of this Agreement reasonable access and
duplicating rights during normal business hours and upon reasonable advance
notice, subject to appropriate confidentiality provisions, to all information
within the possession or control of such party reasonably requested by such
Appraiser.
Arm's-length basis: As to any transaction, agreement or other
arrangement, being on terms that would be reached by unrelated parties not under
any compulsion to contract.
Bankruptcy: with respect to the Partnership or any Partner,
(i) the Partnership or such Partner, pursuant to or within the
meaning of Xxxxx 00, Xxxxxx Xxxxxx Code, or any similar Federal or state
law for the relief of debtors (a "Bankruptcy Law"),
(a) commencing a voluntary case;
-3-
(b) consenting to the entry of an order for relief against it
in an involuntary case;
(c) consenting to the appointment of a custodian of it or for
any substantial part of its property;
(d) making a general assignment for the benefit of its
creditors; or
(e) taking any comparable action under any foreign laws
relating to insolvency; or
(ii) a court of competent jurisdiction entering an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Partnership or such Partner in
an involuntary case;
(b) appoints a custodian of the Partnership or such Partner or
for any substantial part of its property;
(c) orders the winding up or liquidation of the Partnership or
such Partner; or
(d) any similar relief is granted under any foreign laws and
the order or decree remains unstayed and in effect for 60 days.
Bona Fide Offer: shall have the meaning assigned to such term in
Section 6.5(b).
Capital Account: the account for each Partner on the books of the
Partnership established and maintained as provided in Section 5.1.
Capital Contribution: the amount reflected on Schedule II as the
Capital Contribution of each Partner immediately prior to the Initial Closing
Date, as such amount may be adjusted from time to time in accordance with
Section 3.1(a).
Capital Deficit: with respect to any Partner, the amount of the
negative balance, if any, in its Capital Account.
Carrying Value: as of the time of determination, (i) with respect to
Contributed Property, and such other Partnership property whose value is
restated pursuant to Section 5.1(d), the Fair Market Value of such property
-4-
(calculated for this purpose without regard to any outstanding indebtedness
secured by or relating to such property) on the date of its contribution reduced
(but not below zero) by all depreciation, depletion, amortization and similar
expense charged to the Capital Accounts pursuant to Section 5.1(b) with respect
to such property, and (ii) with respect to any other property, the Adjusted
Basis of such property.
Code: the United States Internal Revenue Code of 1986, as amended
from time to time.
Consent: the written consent of a Person, and a correlative meaning
when used as a verb. Whenever this Agreement requires the Consent of a Person,
such Consent may be given or withheld in the sole and absolute discretion of
such Person and any fraudulently obtained Consent shall be invalid.
Contributed Property: any property or other asset (other than money)
contributed as a Capital Contribution by a Partner to the Partnership in
accordance with the terms hereof.
Control (including, with correlative meaning, the terms "Controlled
by" and "under common Control with"): with respect to a specified Person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
ownership of voting securities or partnership inter ests, by contract or
otherwise.
Fair Market Value: with respect to any property, business or other
asset, the price at which a willing seller would sell and a willing buyer would
buy such property, business or other asset having full knowledge of the facts,
and assuming each party acts on an Arm's-length basis with the expectation of
concluding the purchase or sale within a reasonable time but neither of which is
under compulsion to complete the transaction. Unless expressly indicated herein
to the contrary, any determination of Fair Market Value shall reflect any
outstanding indebtedness secured by or relating to such property, business or
other asset. In all cases where this Agreement requires the determination of
Fair Market Value, the General Partner shall notify each Partner of its proposal
for the Fair Market Value within ten business days after the requirement for a
Fair Market Value determination arises. Any Partner may object to such
determination within five business days of the receipt thereof by giving the
General Partner written notice of such objection, including in such notice such
Partner's proposal
-5-
for the Fair Market Value. Upon receipt of such notice, (i) for so long as ITT
Partner is a Partner, Fair Market Value shall be determined by an Appraiser and
(ii) at any time that ITT Partner is not a Partner, Fair Market Value shall be
determined by an independent investment banking firm selected by the General
Partner. If no notice of objection is received by the General Partner within the
time period specified above, the General Partner's proposed Fair Market Value
shall constitute the Fair Market Value for all purposes hereof. All fees and
expenses of an Appraiser (including fees and expenses of counsel) related to its
determination of Fair Market Value shall be paid by the Partnership unless the
General Partner's proposal for the Fair Market Value is closer to the Fair
Market Value determined by the Appraiser than the proposal of the objecting
Partner in which case the fees and expenses of the Appraiser shall be borne 50%
by the General Partner and 50% by the objecting Partner. The Fair Market Value
of SportsChannel New York and the Aircraft, if contributed pursuant to the
SportsChannel Contribution Agreement or the Aircraft Contribution Agreement,
respectively, shall be as provided in Section 3.3.
Financing Document: any loan agreement, security agreement,
mortgage, indenture, bond, note, debenture or other instrument or agreement
relating to indebtedness of the Partnership for borrowed money or for an
obligation which is represented by one or more securities issued by the
Partnership.
Fiscal Year: the taxable year of the Partnership for Federal income
tax purposes determined under Section 706 of the Code and the Tax Regulations,
including any portion of a calendar year with respect to which the Partnership
is required to file a Federal income tax return.
Gain or Loss on Disposition: the gain or loss for Federal income tax
purposes arising from a sale, exchange or other taxable disposition of any
capital asset, or any material portion thereof (excluding, however, any gain or
loss from sales of services or property in the ordinary course of the business
of the Partnership).
General Partner: MSG Eden Corporation and any other Person now or
hereafter admitted to the Partnership as a general partner in accordance with
this Agreement, for so long as MSG Eden Corporation or such other Person remains
so admitted as a general partner.
Governmental Authority: any Federal, state, local or other body,
whether administrative, legislative,
-6-
executive or judicial, or any quasi-governmental body, having jurisdiction over
the Partnership's assets, a Partner or the Partnership.
Initial Closing Date: shall have the meaning assigned to such term
in the Transfer Agreement.
Initial Liquidation Payment Date: shall have the meaning assigned to
such term in Section 7.3.
Interest: shall have the meaning assigned to the term "partnership
interest" in Section 17-101(12) of the Act and shall include a Partner's share
of the income, loss and capital of the Partnership and at any date shall be
equal to the Partner's initial Interest as set forth on Schedule II, adjusted
through that date as set forth in this Agreement.
ITT Corporation: ITT Corporation, a Nevada corporation, and its
successors and permitted assigns.
ITT Eden: ITT Eden Corporation, a Delaware corporation.
ITT Partner: ITT MSG Inc., a Delaware corporation, and any Person
who is substituted for ITT Partner pursuant to this Agreement or the Transfer
Agreement.
ITT Sheraton Corporation: ITT Sheraton Corporation, a Delaware
corporation, and currently a wholly-owned subsidiary of ITT Corporation, and its
successors and permitted assigns.
Limited Partner: Rainbow Partner, ITT Partner and any other Person
now or hereafter admitted to the Partnership as a limited partner in accordance
with this Agreement, for so long as Rainbow Partner, ITT Partner or such other
Person remains so admitted as a limited partner.
Limited Partner Interest: the Interest of a Limited Partner in its
capacity as a limited partner of the Partnership.
Loan Notice: shall have the meaning assigned to such term in Section
3.2(b).
Loss: see definition of Profit or Loss.
Loss on Disposition: see definition of Gain or Loss on Disposition.
-7-
Loss Percentage: with respect to each Limited Partner, a percentage
that is equal to that Limited Partner's Profit Percentage.
Merger: the merger pursuant to the certain Agreement and Plan of
Merger, dated as of August 27, 1994, among the Partnership, Viacom, Inc., a
Delaware corporation, Paramount Communications Realty Corporation, a Delaware
corporation, ITT Corporation, a Delaware corporation, and RGC, on March 10,
1995, pursuant to which the Partnership succeeded to the assets and business of
Madison Square Garden Corporation from Paramount Communications Realty
Corporation.
Minimum Gain Attributable to Partner Nonrecourse Debt: with respect
to any Partner Nonrecourse Debt, an amount equal to the Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability
of the Partnership, as determined in accordance with ss.l.704-2(i)(3) of the Tax
Regulations.
Minimum Gain: shall have the meaning set forth in ss.l.704-2(d) of
the Tax Regulations.
Net Agreed Value: (i) in the case of Contributed Property, its Fair
Market Value at the time of its contribution to the Partnership and (ii) in the
case of any property distributed to a Partner, its Fair Market Value at the time
of such distribution.
Nonrecourse Deductions: shall have the meaning set forth in
ss.l.704-2(b)(1) and (c) of the Tax Regulations.
Nonrecourse Liability: any liability of the Partnership treated as a
nonrecourse liability under ss.l.704- 2(b)(3) of the Tax Regulations.
Offer Notice: shall have the meaning assigned to such term in
Section 6.5(b).
Offered Interest: shall have the meaning assigned to such term in
Section 6.5(a).
Offered Interest Closing Date: shall have the meaning assigned to
such term in Section 6.5(c).
Parent: shall mean any Person that has a Parent Percentage equal to
or greater than 67%.
Parent Transfer: shall have the meaning assigned to such term in
Section 6.5(a).
-8-
Parent Percentage: shall mean (i) the Partner Interest Fair Market
Value of any Interest held directly or indirectly by any Person divided by (ii)
the Fair Market Value of such Person, expressed as a percentage. Solely for the
purposes of calculating Fair Market Value in clause (ii) of this definition,
SportsChannel New York shall be treated as if it had never been contributed to
the Partnership.
Partner Interest Fair Market Value: as to any Interest, the product
of (i) the Profit Percentage attributable to such Interest times (ii) the
difference between (a) the Fair Market Value of the Partnership and (b) on any
date on or after the date on which SportsChannel New York has been contributed
to the Partnership, the Fair Market Value of SportsChannel New York at the time
of its contribution to the Partnership, as calculated pursuant to Section 3.3
hereof.
Partner Loan: any loan made by a Partner or an Affiliate of a
Partner to the Partnership pursuant to Section 3.2.
Partner Nonrecourse Debt: shall have the meaning set forth in
ss.l.704-2(b)(4) of the Tax Regulations.
Partner Nonrecourse Deductions: the overall amount and particular
items determined in accordance with ss.l.704-2(i)(2) of the Tax Regulations.
Partners: the General Partner and the Limited Partners collectively,
and, in the singular form, any one of them.
Partnership: Madison Square Garden, L.P. (formerly MSG Holdings,
L.P.), the limited partnership that is continued pursuant to this Agreement.
Permitted ITT Transferee: ITT Corporation, ITT Sheraton Corporation,
or any majority-owned subsidiary of either of them that is not Controlled by any
entity other than either of them.
Person: an individual, firm, corporation, trust, partnership
(whether general or limited), limited liability company or other entity or any
governmental body or subdivision, agency, commission or authority thereof.
Profit Percentage: with respect to each Partner, a fraction having a
numerator equal to the Total Capital Contributions made to the Partnership with
respect to the Interest of such Partner, as adjusted from time to time
-9-
pursuant to Section 3.1(a), and a denominator equal to the Total Capital
Contribution, as adjusted from time to time pursuant to Section 3.1(a),
expressed as a percentage; provided, however, that for purposes of computing
Profit Percentage hereunder, Rainbow Partner's Capital Contribution shall be
deemed to be increased to the extent that ITT Partner's and the General
Partner's Capital Contributions are reduced pursuant to Section 3.1(a) by any
redemption pursuant to Section 2.01, 2.03 or 2.04 of the Transfer Agreement.
Profit or Loss: the income or loss of the Partnership for Federal
income tax purposes, other than Gain or Loss on Disposition.
Put Obligation Breach: shall have the meaning set forth in the
Transfer Agreement.
Put Obligation Failure: shall have the meaning set forth in the
Transfer Agreement.
Rainbow: Rainbow Media Holdings, Inc., a Delaware corporation, and
an entity which immediately following the Initial Closing will indirectly own
the General Partner and Rainbow Partner, and its successors and permitted
assigns.
Rainbow Partner: Garden L.P. Holding Corp., a Delaware corporation,
and any Person who is substituted for Rainbow Partner pursuant to this Agreement
or the Transfer Agreement.
Recapture Income: any gain recognized upon the disposition of a
partnership asset that is not capital gain because such gain represents the
recapture (under Section 1245 or Section 1250 of the Code or otherwise) of
deductions previously taken for federal income tax purposes with respect to such
asset.
Regulatory Allocations: shall have the meaning assigned to such term
in Section 5.4(h).
Related Person: as to each Partner, (i) such Partner, (ii) each
Affiliate of such Partner, (iii) each director, officer or general partner of,
or any stockholder or limited partner owning an equity interest greater than 10%
in, such Partner or any Affiliate of such Partner, or (iv) each Person other
than the Partnership in which such Partner or any Affiliate of such Partner has
an equity interest greater than 10%.
-10-
RGC: Rainbow Garden Corp., a Delaware corporation.
SportsChannel Contribution Agreement: that certain SportsChannel
Contribution Agreement, dated as of April 15, 1997, by and among SportsChannel
New York Holding Partnership, SportsChannel Associates Holding Corporation, ITT
Partner, the Partnership and the other parties named therein.
SportsChannel New York: SportsChannel Associates, a New York general
partnership, and its successors and assigns.
Tax Regulations: the Income Tax Regulations promulgated under the
Code from time to time.
Total Capital Contribution: the aggregate of all Capital
Contributions, as adjusted from time to time pursuant to this Agreement.
Transfer: any sale, transfer, delegation, exchange, assignment,
hypothecation, pledge, encumbrance, creation of an option or right to purchase
or other disposition of any kind, of an Interest in the Partnership or of any
direct interest in a Partner or any direct equity interest in the Parent of a
Partner (voluntarily, involuntarily or by operation of law) and correlative
meanings when used as a verb.
Transfer Agreement: that certain Partnership Interest Transfer
Agreement, dated as of April 14, 1997, by and among ITT Eden Corporation, a
Delaware corporation, ITT Partner, Cablevision, RGC, Rainbow Partner, the
Partnership and the other parties named therein.
Transferee: the Person who acquires all or part of an Interest by
means of a Transfer.
Transferor: the Person who Transfers all or part of an Interest.
Unrealized Gain: the excess, if any, of the Fair Market Value of
property (calculated for this purpose without regard to any outstanding
indebtedness secured by or relating to such property) as of the date of
determination of such value over the Carrying Value of such property as of such
date.
Unrealized Loss: the excess, if any, of the Carrying Value of
property as of the date of determination
-11-
of such value over the Fair Market Value of such property (calculated for this
purpose without regard to any outstanding indebtedness secured by or relating to
such property) as of such date.
1.2 Interpretation. When the context in which words are used in this
Agreement indicates that such is the intent, singular words shall include the
plural and vice versa and masculine words shall include the feminine and the
neuter genders and vice versa. References to Articles, Sections, Exhibits,
Schedules or other subdivisions are to the appropriate subdivisions of this
Agreement unless the context otherwise requires. The words "herein", "hereof",
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section, Exhibit, Schedule or other
subdivision.
ARTICLE 2
General Provisions
2.1 Formation. The Partnership was formed as a Delaware limited
partnership under the Act by the filing of a Certificate of Limited Partnership
with the Secretary of State of the State of Delaware on August 19, 1994. The
Amended and Restated Certificate of Limited Partnership as in force on the date
of execution hereof was filed with the Secretary of State of the State of
Delaware on April 11, 1995.
2.2 Nature of the Partnership. It is intended that the Partnership
continue to be a limited partnership meeting the definition of "Partnership"
contained in Section 7701 of the Code and the Tax Regulations. All rights,
liabilities and obligations of the General Partner and the Limited Partners,
both as among themselves and as to Persons not parties to this Agreement, shall
be as provided in the Act, except to such extent as may be otherwise expressly
provided herein.
2.3 Name. The name of the Partnership shall continue to be "Madison
Square Garden, L.P." (formerly MSG Holdings, L.P.). The Partnership may conduct
business under any other or additional name or names and variations thereof as
the General Partner may from time to time determine. The General Partner shall
execute and cause to be filed on behalf of the Partnership such partnership or
assumed or fictitious name certificates as may from time to time be required by
law to be published or filed in connection with the continuation, qualification
and operation of the
-12-
Partnership. Notwithstanding anything to the contrary contained in this
Agreement, the parties hereto acknowledge that this Agreement provides ITT
Partner with limited rights and, except as provided herein, nothing herein shall
be construed as a waiver of the General Partner's responsibilities to ITT
Partner as a fiduciary under relevant Delaware law.
2.4 Purposes. The purposes of the Partnership shall be to own,
operate, manage, finance, expand, develop, sell and otherwise deal with the
assets and businesses owned and conducted by Madison Square Garden Corporation
prior to the Merger and such others as may be incidental thereto or as otherwise
determined by the General Partner. Subject to Section 4.1, in connection
therewith, the Partnership may acquire, finance, mortgage, pledge and assign any
assets, enter into such merger agreements, acquisition agreements, franchise
agreements, licensing agreements, broadcasting agreements, assignments,
financing agreements, security agreements and other instruments and agreements
of any kind, enter into partnerships and joint ventures, and do any and all
other acts and things that the General Partner may deem to be necessary or
useful for the conduct of the Partnership's business or the winding up thereof.
2.5 Place of Business. The principal place of business of the
Partnership shall be at Xxx Xxxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. The
General Partner may, at any time and from time to time, change the location of
the Partnership's principal place of business, upon written notice of such
change to the other Partners, and may establish such additional place or places
of business of the Partnership as the General Partner may from time to time
determine.
2.6 Partners' Names and Addresses. The names and addresses of the
General Partner and the Limited Partners are set forth on Schedule I.
2.7 Title to Partnership Property. All property owned by the
Partnership, whether real or personal, tangible or intangible, shall be deemed
owned by the Partnership as an entity, and no Partner, individually, shall have
any ownership of such property. The Partnership may hold any of its assets in
its own name or in the name of any other Person as its nominee.
2.8 Registered Office and Registered Agent. The address of the
registered office of the Partnership in the State of Delaware is c/o Corporation
Service Company, 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000. The registered
-13-
agent for service of process in the State of Delaware is Corporation Service
Company, 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000. The General Partner may
at any time change such office or agent, upon notice to the other Partners and
the taking of any other action, including the execution and filing of an
amendment to the Amended and Restated Certificate of Limited Partnership, as may
be required by the Act.
2.9 Organization Certificates. The General Partner shall cause to be
executed and filed:
(a) all such amendments or supplements to the Partnership's Amended
and Restated Certificate of Limited Partnership as from time to time may be
required by the Act; and
(b) all such further certificates, notices, statements or other
instruments as may be required by law for the formation, qualification or
operation of a limited partnership in all jurisdictions where the Partnership
may elect to do business, or otherwise necessary to carry out the purposes of
this Agreement.
2.10 Duration of the Partnership. The Partnership shall continue
until December 31, 2093, unless it is sooner dissolved in accordance with this
Agreement.
ARTICLE 3
Capital of the Partnership
3.1 Capital Contributions to the Partnership. (a) The Capital
Contribution and Profit Percentage of each Partner and the Total Capital
Contribution and the aggregate of all Profit Percentages immediately prior to
the Initial Closing Date and the aggregate of all Profit Percentages shall be
set forth on Schedule II. Schedule II shall be amended by the General Partner
from time to time, without further Consent of the Limited Partners, in
accordance with this Agreement as necessary to reflect any changes in the
Capital Contributions of the Partners and their Profit Percentages as set forth
below. The General Partner shall cause a copy of each amended Schedule II to be
dated and sent to each Partner. The amount of the Capital Contribution in
respect of any Partner and the Total Capital Contribution set forth on Schedule
II shall be adjusted as follows:
-14-
(i) the amount of the Capital Contribution of any Partner shall be
increased by the amount of money and the Net Agreed Value of any property
(other than money) contributed to the Partnership by such Partner, as
determined in accordance with the terms hereof, and the Total Capital
Contribution shall be increased by a like amount;
(ii) in the event of a redemption by the Partnership of a Partner's
Interest, the Capital Contribution of such Partner shall be reduced by an
amount equal to the amount of such Partner's Capital Contribution
immediately prior to such redemption multiplied by the amount (expressed
as a decimal) that the Profit Percentage represented by the Interest so
redeemed bears to the Profit Percentage represented by all of such
Partner's Interests immediately prior to such redemption, and the Total
Capital Contribution shall be reduced by a like amount;
(iii) in the event of a Transfer of an Interest, the Capital
Contribution of the Transferor shall be reduced by an amount equal to the
amount of such Partner's Capital Contribution immediately prior to such
Transfer multiplied by the amount (expressed as a decimal) that the Profit
Percentage represented by the Interest so Transferred bears to the Profit
Percentage represented by all of such Partner's Interests immediately
prior to such Transfer, and the Transferee's Capital Contribution shall be
increased by (or established in, in the case of a new Partner) a like
amount.
Contemporaneously with any change to the amounts of any Capital
Contribution pursuant to the foregoing, the General Partner shall make
appropriate changes to the Profit Percentages set forth on Schedule II, in
accordance with this Agreement.
(b) The General Partner shall in its sole and absolute discretion be
permitted to (i) make additional Capital Contributions, (ii) request, but not
require, a Limited Partner to make additional Capital Contributions in
accordance with this Agreement, (iii) cause the Partnership to issue additional
Limited Partner Interests, which in no event shall be senior to the Limited
Partner Interests of ITT Partner, (iv) redeem any Capital Contributions or make
distributions in accordance with this Agreement (except as may be provided for
in the Transfer Agreement, there shall be no redemptions of Capital
Contributions unless each Partner is redeemed on a pro rata basis), and (v)
admit any
-15-
Person as a Limited Partner in accordance with this Agreement. In the case of an
admission of a person as a new Limited Partner other than pursuant to a
Transfer, such person shall not be admitted as a Partner until it has executed a
written instrument satisfactory to the General Partner agreeing to become a
party hereto and to be bound by the provisions hereof.
(c) Other than pursuant to Section 3.3, a Partner shall not be (i)
permitted to make a Capital Contribution, without the Consent of the General
Partner, or (ii) required to make a Capital Contribution.
(d) Interest shall not accrue on any Capital Contribution or on
amounts in any Capital Account. A Partner may not withdraw or require repayment
of any Capital Contribution, except as herein expressly provided. A Partner
shall not have the right to demand or receive property other than money upon any
distribution in respect of its Interest or Capital Contributions and shall not
have priority over any other Partner either as to the return of Capital
Contributions or as to Profits, Losses or distributions, except as herein
expressly provided.
3.2 Loans by Partners. (a) A Partner shall not be required to lend
any money to the Partnership.
(b) If the Partnership's funds are insufficient to meet its costs,
expenses, obligations, liabilities or charges, or to make any expenditure
authorized by this Agreement, upon written request made by the General Partner
to all of the Partners (a "Loan Notice"), specifying the aggregate amount of the
requested Partner Loan and the terms and conditions of the requested Partner
Loan, including the date on which the Partner Loan must be made, any Limited
Partner or General Partner may (but shall not be required to) advance such funds
to the Partnership. ITT Partner shall have the right and option by written
notice delivered to the General Partner within 10 business days of the delivery
of the Loan Notice to commit to advance the entire principal amount of any
requested Partner Loan on the terms and conditions specified by the General
Partner. If ITT Partner does not exercise its right to advance requested Partner
Loan, each Partner agreeing to make a Partner Loan shall have the right, but not
the obligation, to participate in the total Partner Loan according to the ratio
that its Profit Percentage bears to the Profit Percentage of all Partners
participating in the Partner Loan. All amounts advanced to the Partnership as
Partner Loans shall be evidenced by a note or other instrument. No loans to the
Partnership (including guarantees of loans to the
-16-
Partnership) may be made by any Partner or any Affiliate of a Partner except
pursuant to this Section 3.2.
(c) In the event that any Partner or any of its Affiliates shall
guarantee any obligation of the Partnership and shall be required to make
payment pursuant to such guaranty, such payment shall constitute a Partner Loan
pursuant to Section 3.2(b) from the date of such payment. Such Partner Loan
shall be payable on demand, on such terms and conditions specified by the
General Partner in a Loan Notice and subject to the provisions of Section 3.2(b)
permitting (i) ITT Partner to advance all of such Partner Loan and (ii) each
Partner to participate in the total Partner Loan according to the ratio that its
Profit Percentage bears to the Profit Percentage of all Partners participating
in the Partner Loan.
(d) The proceeds of a Partner Loan shall not be added to, or
otherwise affect, the Capital Account or Capital Contribution of any Partner.
(e) Unless a Partner Consents, each Partner Loan shall be without
recourse to such Partner and Affiliates of such Partner.
3.3 Contribution of SportsChannel New York; Contribution of
Aircraft.
(a) Notwithstanding anything in this Agreement to the contrary, on
or after the Initial Closing Date, Rainbow Partner or any of its Affiliates
shall have the right to cause to be contributed to the Partnership as a Capital
Contribution all of the interests in, or all of the assets and liabilities of,
SportsChannel New York in accordance with the terms of the SportsChannel
Contribution Agreement. The amount of such Capital Contribution shall be as
provided in the SportsChannel Contribution Agreement. If the provisions of
Section 2(b) of the SportsChannel Contribution Agreement apply, the Fair Market
Value of SportsChannel New York shall be $170,000,000.
(b) Notwithstanding anything in this Agreement to the contrary,
following the Initial Closing Date, ITT Partner or any of its Affiliates shall
have the right to cause to be contributed to the Partnership as a Capital
Contribution all of the ownership rights in the Aircraft in accordance with the
terms of the Aircraft Contribution Agreement. The amount of such Capital
Contribution shall be $0 until the expiration unexercised of the Third-Year Call
Right (as defined in the Transfer Agreement) and $38 million thereafter.
-17-
(c) At the time of a contribution under Section 3.3(a) or Section
3.3(b), Schedule II hereto shall be appropriately adjusted.
ARTICLE 4
Management of the Partnership
4.1 Management. (a) Subject to the requirements of the Act and this
Agreement, the General Partner shall have exclusive management and control of
the business of the Partnership and all decisions regarding the affairs of the
Partnership shall be made by the General Partner. Except as otherwise provided
herein, the General Partner shall have all the rights and powers of a general
partner as provided in the Act or otherwise by law and any action taken by the
General Partner on behalf of the Partnership shall constitute the act of the
Partnership.
(b) In furtherance of the purposes of the Partnership as set forth
in this Agreement, the General Partner shall have the right, power and authority
to do on behalf of the Partnership all things which, in its judgment, are
necessary, proper or desirable to carry out its duties and responsibilities
hereunder. Without limiting the foregoing, the General Partner shall be
permitted to cause the Partnership to be a party to any merger or consolidation
without the approval or Consent of the Limited Partners. The General Partner
shall not perform any act that would reasonably be expected to subject any
Limited Partner to liability as a general partner in respect of the Partnership
in any jurisdiction. With respect to the exercise of its powers as General
Partner, the General Partner shall act in good faith and shall treat the Limited
Partners in a manner that is at all times fair to them, taking into account
their rights and obligations under this Agreement.
(c) With respect to all of its obligations, powers and
responsibilities under this Agreement, the General Partner is authorized to
execute and deliver, for and on behalf of the Partnership, such notes and other
evidences of indebtedness, contracts, agreements, assignments, deeds, leases,
loan agreements, mortgages, security instruments, certificates and other
instruments, agreements or documents as it deems proper, all on such terms and
conditions as it deems proper, subject only to the limitations contained herein.
4.2 Transactions with Related Persons; Fiduciary Duties; Partnership
Opportunities. (a) With respect to
-18-
Partnership affairs, the General Partner shall always act as a fiduciary for the
benefit of the Partnership and in accordance with applicable law. Without
limiting the generality of the foregoing, an agreement or transaction between
the Partnership and any Partner or Related Person shall not be void or voidable
solely for this reason.
(b) Neither the Partnership nor any Partner shall have any right by
virtue of this Agreement or the partnership relationship created hereby in or to
any other ventures or activities engaged in by any Partner or Affiliate of any
Partner or to the income or proceeds derived therefrom, and the pursuit of such
ventures or activities by any Partner or its Affiliate shall not be deemed
wrongful or improper. No Partner or Affiliate of a Partner shall be obligated to
present any particular business opportunity to the Partnership, even if related
or potentially related to the Partnership's business and even if such
opportunity is of a character which, if presented to the Partnership, could be
availed of by the Partnership, and each of them shall have the right to take or
exploit for its own account and benefit (individually or otherwise) or to
recommend to others any such particular business opportunity.
4.3 Right of Public to Rely on Authority of the General Partner. No
Person dealing with the Partnership shall be required to determine the authority
of the General Partner to undertake any act or execute any contract on behalf of
the Partnership. Documents to be executed on behalf of the Partnership may be
executed by the General Partner or by any individual designated by the General
Partner as an officer of the Partnership and duly authorized by the General
Partner to sign such documents on behalf of the Partnership.
4.4 Liability of the General Partner; Indemnification. (a) Neither
the General Partner nor any of its Affiliates, employees or agents (in each
case, only if and to the extent acting in connection with the business of the
Partnership or on behalf of the Partnership) shall be liable to the Partnership
or to any Partner for any loss suffered by the Partnership or any Partner which
arises out of any action taken or omitted by the General Partner or its
Affiliates, employees or agents (in each case, only if and to the extent acting
in connection with the business of the Partnership or on behalf of the
Partnership) if the General Partner or its Affiliates, employees or agents in
good faith believed that such course of conduct was in the best interests of the
Partnership (and, in the case of any affirmative action taken on behalf of the
Partnership, the
-19-
action was within the scope of the authority granted to the General Partner by
this Agreement) and such course of conduct did not constitute gross negligence,
willful misconduct or breach of fiduciary duty of the General Partner or a
breach of this Agreement by the General Partner.
(b) The General Partner and its Affiliates, employees and agents (in
each case, only if and to the extent acting in connection with the business of
the Partnership or on behalf of the Partnership) shall be indemnified by the
Partnership against any liability, loss or expense, including, without
limitation, reasonable attorney's fees incurred in investigating or defending
any claim or any proceeding with respect to a claim, litigation costs,
settlement amounts and judgments, incurred by any of them as a result of any
action taken or omitted by the General Partner in good faith within the scope of
the authority granted under this Agreement, unless the taking or omission of
such action constituted gross negligence, willful misconduct or a breach of
fiduciary duty of the General Partner or a breach of this Agreement by the
General Partner. Any indemnity under this Section 4.4(b) shall be paid from, and
only to the extent of, the assets of the Partnership and no Partner shall have
any personal liability therefor.
4.5 Limitations on Limited Partners. No Limited Partner, in its
capacity as a Limited Partner, shall (i) be permitted to take part in the
management or control of the business or affairs of the Partnership; (ii) have
any voice in the management or operation of any Partnership assets; (iii) have
the authority or power in its capacity as a Limited Partner to act as agent for
or on behalf of the Partnership or any other Partner, to do any act which would
be binding on the Partnership or any other Partner or to incur any expenditures
on behalf of or with respect to the Partnership; or (iv) hold itself out as
having any status other than that of a Limited Partner or as having rights,
powers or privileges other than those provided by this Agreement or the Transfer
Agreement. Any Limited Partner which acts in contravention of this Agreement and
thereby causes itself to be deemed a general partner for liability purposes
shall under no circumstances be construed as receiving a grant of power or
authority to act in such capacity under any provision of this Agreement. The
exercise by any Limited Partner of any rights granted pursuant to any provision
of this Agreement or the Transfer Agreement shall not be deemed to constitute
management or control of the Partnership business or otherwise to contravene the
provisions of the preceding sentence.
-20-
4.6 Rights of Partners. (a) In addition to those rights provided by
this Agreement, the Partners shall have those rights specifically provided to
them in Section 17-305 of the Act with respect to access to the records and
other information at reasonable times and upon reasonable terms.
(b) The current representative of the Partnership to the Board of
Governors of the National Basketball Association shall continue to serve as such
until the end of the 1998-1999 NBA season, subject to the earlier termination of
such term at the pleasure and discretion of the General Partner or such
individual.
4.7 Liability of Limited Partners. The debts, obligations and
liabilities of the Partnership, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Partnership, and
no Limited Partner shall be obligated personally for any such debt, obligation
or liability of the Partnership; provided, however, that a Limited Partner may
be liable to the Partnership to the extent of previous distributions made to it
in the event that the Partnership does not have sufficient assets to discharge
its liabilities, but only to the extent that such liability is mandated by
applicable law. The Limited Partners shall not be obligated to make additional
contributions to the Partnership in respect of any such debts, obligations or
liabilities.
ARTICLE 5
Capital Accounts, Distributions and Allocations
5.1 Establishment of Capital Accounts. (a) A separate Capital
Account shall be maintained for each Partner. The Capital Account of each
Partner shall be (i) credited with the total of such Partner's Capital
Contributions (as adjusted pursuant to Section 3.1) plus all Profit and Gain on
Disposition computed in accordance with Section 5.1(b) and allocated to the
Partner in the manner provided in Section 5.3 (but without regard to Section
5.3(c)) or 5.4, and (ii) debited with the sum of (A) all Loss and Loss on
Disposition computed in accordance with Section 5.1(b) and allocated to the
Partner in the same manner as provided in Section 5.3 (but without regard to
Section 5.3(c)) or 5.4 and (B) all cash and the Net Agreed Value of any property
distributed by the Partnership to such Partner pursuant to Sections 5.2 (except
that in the case of a redemption of a Partner's Interest that has reduced such
Partner's Capital Contribution pursuant to Section 3.1(a)(ii), such Partner's
Capital Account shall be debited
-21-
only by the excess, if any, of the amount distributed to such Partner upon such
redemption over the amount by which such Partner's Capital Contribution was so
reduced) and 7.2. Notwithstanding anything to the contrary contained herein, the
Capital Account of a Partner shall be determined in all events in accordance
with the rules set forth in ss.l.704- 1(b)(2)(iv) of the Tax Regulations. Any
reference in this Agreement to the Capital Account of a Partner shall be deemed
to refer to such Capital Account as the same may be credited or debited from
time to time in accordance herewith.
(b) For purposes of computing the amount of any item of income,
gain, loss or deduction to be reflected in Capital Accounts (including, without
limitation, all Profit, Loss and Gain or Loss on Disposition), the
determination, recognition and classification of each such item shall be the
same as its determination, recognition and classification for Federal income tax
purposes, except that:
(i) any deductions for depreciation, depletion, amortization or
similar expense attributable to a Partnership asset that is Contributed
Property or property the value of which is restated pursuant to Section
5.1(d) shall be determined as if the Adjusted Basis of the asset on the
date it was acquired by the Partnership was equal to the Carrying Value of
the asset as of such date;
(ii) any income, gain or loss attributable to the taxable
disposition of any Partnership asset shall be determined by the
Partnership as if the Adjusted Basis of such asset as of the date of its
disposition was equal to the amount of the Carrying Value of such asset as
of such date;
(iii) if the General Partner determines to make any distribution to
Partners (including a liquidating distribution pursuant to Section 7.2)
other than in money, the Capital Account of each Partner, immediately
prior to such distribution, shall be appropriately adjusted upward or
downward to reflect the portion of any Unrealized Gain or Unrealized Loss
attributable to the distributed property that would be allocated to such
Partner if the distributed property were sold for its Fair Market Value
(calculated for this purpose without regard to any outstanding
indebtedness secured by or relating to such property) on the date of the
distribution in a taxable disposition;
-22-
(iv) all fees and other expenses incurred by the Partnership to
promote the sale of (or to sell) an Interest in the Partnership that can
neither be deducted nor amortized under Section 709 of the Code shall be
treated as items of deduction; and
(v) the computation of all items of income, gain, loss and deduction
shall be made without regard to any election under Section 754 of the Code
which may be made by the Partnership (except to the extent required by
ss.1.704-1(b)(2)(iv)(m) of the Tax Regulations) and, as to those items
described in Section 705(a)(1)(B) or Section 705(a)(2)(B) of the Code,
without regard to the fact that such items are not includible in gross
income or are neither currently deductible nor capitalizable for Federal
income tax purposes.
(c) A Transferee of an Interest shall succeed to the Capital Account
attributable to the transferred Interest, and there shall be no adjustment to
Capital Accounts as a result of the Transfer except as otherwise required under
ss.1.704-1 of the Tax Regulations. Nevertheless, as long as the version of Tax
Regulation ss. 1.708-1 published May 23, 1956 remains effective, (i) if the
Transfer causes a termination of the Partnership under Section 708(b)(1)(B) of
the Code, Partnership property shall be deemed to have been distributed in
liquidation of the Partnership to the Partners immediately subsequent to the
Transfer and recontributed by them in reconstitution of the Partnership; and
(ii) upon such recontribution, the Partnership property shall be treated as
Contributed Property and the Capital Accounts of the Partners in the
reconstituted Partnership shall be maintained in accordance with the principles
of this Article 5.
(d) Immediately prior to (i) a Capital Contribution as consideration
for an Interest or (ii) a distribution in excess of $1,000,000 of money or other
property by the Partnership to a Partner (including a Person withdrawing as a
Partner) as consideration for an Interest, the Carrying Value of the Partnership
Assets and the Capital Account of each Partner shall each be increased or
decreased, as the case may be, to reflect the Fair Market Value of all the
Partnership property (calculated for this purpose without regard to any
outstanding indebtedness secured by or relating to such property). Such
adjustment of the Capital Accounts shall reflect the manner in which the
unrealized income, gain, loss or deduction inherent in the Partnership property
(that has not previously been reflected in the Capital Accounts) would be
allocated among
-23-
the Partners if there were a taxable disposition of all the Partnership property
for its Fair Market Value (calculated for this purpose without regard to any
outstanding indebtedness secured by or relating to such property) on the date of
the contribution or distribution. Thereafter, for tax purposes, the Partners'
shares of depreciation and gain or loss shall be determined in the manner
described in Tax Regulation ss. 1.704-1(b)(2)(iv)(f)(4).
5.2 Distributions.
(a) The Partnership may, from time to time, distribute cash or other
property to the Partners in amounts determined by the General Partner to the
extent such amounts are in excess of the amounts reasonably necessary for the
continued efficient operation of the business of the Partnership. Any such
distributions (other than any distribution that constitutes a redemption of any
portion of a Partner's Interest) shall be distributed among the Partners in
accordance with their respective Profit Percentages. The Partnership shall repay
principal and accrued interest on any Partner Loan prior to making any cash
distributions to the Partners.
(b) Subject to the terms of any Bank Credit Agreement (as defined in
the Transfer Agreement), the Partnership shall distribute in cash to ITT MSG any
amount that the Partnership becomes obligated to remit to ITT MSG pursuant to
Section 2.07(b) of the Transfer Agreement as a result of a transfer of assets by
the Partnership (or any of the Partnership's subsidiaries) (a "Remittance
Amount").
5.3 Allocations. (a) Subject to Section 5.4(b), Profits and Gain on
Disposition shall be allocated as follows:
(i) first, to Partners having Capital Deficits, in proportion
to and to the extent of their Capital Deficits;
(ii) in the case of any Gain on Disposition arising from a
transfer of assets by the Partnership (or any of the Partnership's
subsidiaries) in respect of which the Partnership is obligated to remit to
ITT MSG a Remittance Amount, a portion of such Gain on Disposition equal
to such Remittance Amount shall be allocated to ITT MSG (with any
remainder being allocated pursuant to clause (iii) hereof); and
(iii) then, among the Partners in accordance with their
respective Profit Percentages.
-24-
(b) Subject to Section 5.4(b), Losses and Loss on Disposition shall
be allocated among the Partners in accordance with their respective Loss
Percentages.
(c) All items of income, gain, loss or deduction attributable to
Contributed Property (including depreciation on, and gain or loss with respect
to the disposition of, Contributed Property) shall be allocated for Federal
income tax purposes first, among the Partners in a manner that takes into
account the difference between the Fair Market Value of such property at the
time of its contribution (calculated for this purpose without regard to any
outstanding indebtedness secured by or relating to such property) and its
Adjusted Basis at that time (in accordance with Section 704(c) of the Code) and
second, any balance of such items in accordance with Section 5.3(a), 5.3(b) or
5.4, as appropriate. Each Partner that contributes Contributed Property to the
Partnership shall at the time of such contribution notify the Partnership of its
Adjusted Basis in the Contributed Property at such time.
(d) To the extent of any Recapture Income resulting from the sale or
other taxable disposition of a Partnership asset, the amount of any gain from
such disposition allocated to each of the Partners pursuant to the foregoing
provisions shall be deemed to be Recapture Income to the extent such Partner (or
a predecessor in interest) has been allocated or has claimed any deduction
directly or indirectly giving rise to the treatment of such gain as Recapture
Income.
(e) Subject to the requirements of Section 706 of the Code, all
allocations pursuant to Sections 5.3(a) and 5.3(b) shall be made by applying
each Partner's Profit or Loss Percentage on each day of the Fiscal Year to the
portion of the annual Profit or Loss of the Partnership allocated to each such
day under the daily pro rata method (excepting extraordinary asset dispositions,
the gain or loss from which will be allocated to the Partners in accordance with
their Interests on the date of the disposition).
(f) If at any time both Profit and Gain on Disposition are allocable
to the Partners, the aggregate amount of Profit and Gain on Disposition
allocated to each Partner shall, in each instance, include a pro rata portion of
each item of Profit and Gain on Disposition so allocable. If Profit, Gain on
Disposition, Loss or Loss on Disposition allocable at any time consists of more
than one kind of income, gain or loss in any instance (for example, ordinary
income or loss, long-term gain or loss, short-term gain or
-25-
loss, or Section 1231 gain or loss), then, subject to Section 5.3(d), the
aggregate amount of Profit or Loss and Gain or Loss on Disposition allocated to
each Partner shall, in each instance, include a pro rata portion of each of the
constituent items so allocable.
5.4 Conformity with Tax Regulations. (a) Solely for purposes of
determining a Partner's Capital Account (and for purposes of determining the
amount of Capital Deficit that a Partner is obligated to restore on a
liquidation of the Partnership or such Partner's Interest under this Section
5.4), in applying the provisions of this Section 5.4 the anticipated
adjustments, allocations and distributions described in
ss.l.704-1(b)(2)(ii)(d)(4)-(6) of the Tax Regulations shall be taken into
account, and each Partner (including each General Partner) shall be deemed
obligated to restore its Capital Deficit to the extent of, and only to the
extent of, the sum of its share of Minimum Gain, as determined pursuant to
ss.l.704-2(g) of the Tax Regulations, and its share of Minimum Gain Attributable
to Partner Nonrecourse Debt, as determined pursuant to ss.l.704-2(i) of the Tax
Regulations.
(b) Notwithstanding the provisions of Section 5.3, Loss or Loss on
Disposition shall not be allocated to a Limited Partner (which is not also a
General Partner) to the extent the allocation would create or increase a Capital
Deficit of such Limited Partner that exceeds the amount such Limited Partner is
deemed to be obligated to restore on a liquidation of the Partnership pursuant
to Section 5.4(a). Any Loss which cannot be allocated to a Limited Partner
pursuant to the foregoing restriction shall be allocated to the other Partners
in the ratio of their Profit Percentages. Notwithstanding the provisions of
Section 5.3, in the event that at any time any Loss or Loss on Disposition has
been allocated to any Partner pursuant to this Section 5.4(b), all Profits and
Gain on Disposition arising thereafter shall first be specially allocated to the
Partners who received allocations of Loss and Loss on Disposition pursuant to
this Section 5.4(b) (in proportion to the maximum allocation to which each such
Partner is then entitled under this Section 5.4(b)) until the aggregate amount
of Profits and Gain on Disposition specially allocated to each such Partner
pursuant to this Section 5.4(b) equals the aggregate amount of Loss and Loss on
Disposition theretofore allocated to such Partner pursuant to this Section
5.4(b).
(c) Notwithstanding the provisions of Section 5.3, if any Limited
Partner (which is not also a General Partner) unexpectedly receives an
adjustment, allocation or distribution described in clause (4), (5) or (6) of
ss.l.704-
-26-
1(b)(2)(ii)(d) of the Tax Regulations that creates or increases a Capital
Deficit of such Limited Partner that exceeds the amount such Limited Partner is
deemed to be obligated to restore on a liquidation of the Partnership or such
Partner's interest in the Partnership pursuant to Section 5.4(a), income and
gain (consisting of a pro rata portion of each item of Partnership income,
including gross income, and gain for such year) shall thereafter first be
allocated to such Partner in such amount and manner as will eliminate such
excess as quickly as possible.
(d) In accordance with and pursuant to ss.l.704- 2(f) and (i)(4) of
the Tax Regulations, if there is a net decrease in the Partnership's Minimum
Gain or its Minimum Gain Attributable to Partner Nonrecourse Debt or both during
any Fiscal Year, then before any other allocation is made of Partnership items
for such Fiscal Year, there shall be allocated to each Partner (including each
General Partner) items of income and gain for such year (and, if necessary,
subsequent years) in amount equal to such Partner's share of the net decrease in
Minimum Gain or Minimum Gain Attributable to Partner Nonrecourse Debt or both,
as determined pursuant to ss.1.704-2(g) and (i)(4) of the Tax Regulations. To
the extent that the Partnership has insufficient income and gain in any Fiscal
Year to make all of the allocations required under this Section 5.4(d), the
insufficiency shall be attributed first to the decrease in Minimum Gain
Attributable to Partner Nonrecourse Debt and second to the decrease in Minimum
Gain.
(e) The chargeback provisions, the qualified income offset and the
limitation on loss allocations provided herein are intended to satisfy the
"allocation of nonrecourse deductions" rules provided in ss.l.704-2 of the Tax
Regulations and the requirements of ss.l.704- 1(b)(2)(ii)(d) of the Tax
Regulations relating to the alternate test for economic effect and "qualified
income offset". The allocations under this Article 5 are further intended to
effect allocations for Federal income tax purposes in a manner consistent with
Sections 704(b) and 704(c) of the Code and to comply with any limitations or
restrictions therein. If for any reason the allocations contained in this
Agreement conflict with the allocation rules of the Tax Regulations under
Section 704 of the Code, such Tax Regulations shall control, except that if the
application of the Tax Regulations would cause distributions on liquidation of
the Partnership to differ from those that would otherwise have been made
pursuant to Section 5.2, the Partnership shall make special allocations of gross
income, as promptly as possible, to cause liquidating distributions, when made,
to correspond to the requirements of Section 5.2.
-27-
(f) Nonrecourse Deductions shall be allocated to the Partners in
accordance with their respective Loss Percentages.
(g) Partner Nonrecourse Deductions for any taxable period shall be
allocated to the Partner or Partners bearing the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable, in accordance with the provisions of ss.1.704-2(i)
of the Tax Regulations.
(h) The allocations set forth in Sections 5.4(d), (f) and (g) (the
"Regulatory Allocations") are intended to comply with certain requirements of
ss.l.704-2 of the Tax Regulations. Notwithstanding the provisions of Section 5.3
and the other provisions of Section 5.4, the Regulatory Allocations shall be
taken into account in allocating other items of income (including gross income),
gain, loss and deduction among the Partners so that, to the extent possible, the
net result of such allocations of other items and the Regulatory Allocations to
each Partner shall be equal to the net amount that would have been allocated to
each such Partner if the Regulatory Allocations had not occurred.
5.5 Negative Capital Accounts. Notwithstanding anything to the
contrary in Sections 3.1(c) and 7.4, upon liquidation of the Partnership the
General Partner shall be obligated to pay to the Partnership (within the time
prescribed under ss.l.704-1(b)(2)(ii)(b)(3) of the Tax Regulations) any Capital
Deficit in its Capital Account (as determined after the allocation of items
provided for in this Article 5). A Limited Partner which is not also a General
Partner shall not be required to pay to the Partnership or to any other Partner
any Capital Deficit in its Capital Account at any time for any reason
whatsoever.
ARTICLE 6
Transfer of Interests; Additional Partners.
6.1 Transfer of a Limited Partner's Interest; Substitution. (a)
Except as provided herein, no Limited Partner may Transfer all or any part of
its Interest, except with the General Partner's prior Consent. Notwithstanding
the foregoing and subject to Sections 6.1(b) and 6.5, (i) at any time, Rainbow
Partner or any Affiliate of Rainbow Partner may Transfer all or any part of its
Interest without the General Partner's Consent and (ii) after the earliest of
(A) the third anniversary of the Initial Closing Date, (B)
-28-
the date of any Put Obligation Breach (provided, that ITT Partner's right to
Transfer all or any part its Interest pursuant to this clause (B) shall
terminate upon the cure of such Put Obligation Breach), (C) the occurrence of
any Acceleration Event (provided, that ITT Partner's right to Transfer all or
any part its Interest pursuant to this clause (C) shall terminate upon the
waiver or cure of such Acceleration Event), or (D) the date of any Put
Obligation Failure (provided, that ITT Partner's right to Transfer all or any
part its Interest pursuant to this clause (D) shall terminate upon the cure of
such Put Obligation Failure), all or any part of ITT Partner's Interest may be
transferred without the General Partner's Consent. Notwithstanding anything to
the contrary contained in this Agreement and subject to Section 6.1(b), (I) all
or any part of ITT Partner's Interest may be transferred at any time to ITT or
any Permitted ITT Transferee without the Consent of the General Partner and
without compliance with Section 6.5; provided that if such Transfer is a direct
transfer of an Interest that such Transferee agrees in writing to be bound by
all of the provisions of this Agreement and the Transfer Agreement and upon such
Transfer, the Transferee will be deemed to be ITT Partner for all purposes of
this Agreement, (II) no Consent of the General Partner shall be required for any
Transfer of a Limited Partner Interest by ITT Partner pursuant to Sections 2.03,
2.04, 2.08, 2.09 or 2.10 of the Transfer Agreement, and (III) ITT Partner may
Transfer all or any part of its Interest without the Consent of the General
Partner and without compliance with Section 6.5 from and after any time that (x)
Cablevision shall cease to Control Rainbow and (y) a person that is not an
Affiliate of Cablevision does Control Rainbow, other than any changes in Control
that occur after a public offering of the equity securities of Rainbow or a
spin-off (or similar transaction or series of related transactions) by
Cablevision of equity securities of Rainbow.
(b) Notwithstanding anything herein to the contrary, a direct
transfer of a Limited Partner Interest shall not be made, recognized, Consented
to, or otherwise deemed effective in any respect unless in the opinion of
nationally recognized counsel chosen by the General Partner and reasonably
acceptable to the Transferee such transfer (i) may be effected without
registration under the Securities Act of 1933, as amended, and (ii) would not
result in the violation of any applicable state securities laws.
(c) Unless a transferee of a directly transferred Interest is
substituted as a Limited Partner in accordance with this Section 6.1(c), the
transferee shall not be
-29-
entitled to any of the rights of a Limited Partner hereunder with respect to the
Interest transferred, other than the right to receive the allocations of
Profits, Losses, cash distributions and returns of capital to which its
transferor would otherwise be entitled with respect to such Interest. The
transferee of all or part of the Interest of a Limited Partner shall be
substituted as a Limited Partner with respect to the Interest transferred and
shall be entitled to all the rights of a Limited Partner with respect to such
Interest, only if and when:
(i) the transferor gives the transferee such right;
(ii) if Consent of the General Partner with respect to such transfer
is required, the General Partner Consents to the substitution;
(iii) the transferee pays to the Partnership all reasonable
out-of-pocket costs and expenses incurred by the Partnership in connection
with such substitution, including any costs incurred in amending the
Amended and Restated Certificate of Limited Partnership or any other
document filed with respect to the Partnership in any jurisdiction; and
(iv) the transferee executes and delivers such instruments, in form
and substance reasonably satisfactory to the General Partner, as the
General Partner reasonably deems necessary or desirable to effect such
substitution and to confirm the agreement of the Transferee to be bound by
all of the terms and provisions of this Agreement as a Partner and, to the
extent required therein, any other agreements between its Transferor and
any of its Affiliates on the one hand and Rainbow Partner or the
Partnership or any of their respective Affiliates on the other hand.
(d) The Partnership and the General Partner shall be entitled to
treat the record owner of any Interest as the absolute owner thereof in all
respects, and shall incur no liability for distributions of cash or other
property in good faith to such owner until such time as a direct transfer of
such Interest is completed in accordance with the provisions of this Agreement
and a written assignment of such Interest has been received by the General
Partner and recorded on the books of the Partnership (which recordation shall be
accomplished promptly by the General Partner upon its receipt of such written
assignment). In no
-30-
event shall any Interest be Transferred to a Person which is the subject of
Bankruptcy, and any attempt to effect a Transfer to such a Person shall be void
and of no effect and shall not bind the Partnership or the General Partner.
(e) No Transfer of an Interest by a Limited Partner which requires
the Consent of the General Partner pursuant to this Section 6.1 shall be
effective without the prior written Consent of the General Partner and any such
purported Transfer shall be void and of no legal force or effect. Upon any
direct transfer pursuant to which the transferee has satisfied the conditions to
becoming a substituted Partner hereunder, such transferee shall be deemed
admitted to the Partnership and immediately and thereafter the transferor shall
be deemed withdrawn with respect to the Interest so transferred.
6.2 Bankruptcy or Dissolution of a Limited Partner. (a) The
Bankruptcy, dissolution or legal incapacity of a Limited Partner shall not
dissolve or terminate the Partnership.
(b) Upon the Bankruptcy, dissolution or other cessation of existence
of a Person that is a Limited Partner, an authorized representative of such
Person shall have all the rights of a Partner for the purpose of effecting the
orderly winding up and disposition of the business of such Person and such power
as such Person possessed hereunder to designate a successor as a Transferee of
its Interest and to join with such Transferee in making application to
substitute such Transferee as a Partner in accordance with the terms of this
Agreement.
6.3 Transfer of the General Partner's Interest. (a) Subject to
paragraph (c) of this Section 6.3, the General Partner shall have the absolute
right to Transfer all or any part of its Interest at any time in its sole and
absolute discretion.
(b) Upon 30 days prior notice to the other Partners, the General
Partner may voluntarily withdraw from the Partnership or Transfer its Interest,
but only if:
(i) there is or will be at least one remaining or successor General
Partner upon such withdrawal or Transfer;
(ii) any successor has satisfied the conditions set forth in
paragraph (c) of this Section 6.3;
-31-
(iii) in the opinion of counsel acceptable to the General Partner,
such withdrawal or Transfer will not result in the treatment of the
Partnership as an association taxable as a corporation under the Code; and
(iv) such withdrawal or Transfer will not result in a violation of
or default under any Financing Document or other material agreement to
which the Partnership or the General Partner is a party.
(c) In the case of a direct transfer of the Interest of a General
Partner, the transferee may be admitted as a successor General Partner only if:
(i) such Person has accepted and agreed to be bound by all the terms
and provisions of this Agreement by executing a counterpart hereof and
such other documents and instruments as may be required or appropriate to
effect its admission as a General Partner;
(ii) a certificate evidencing the admission of such Person as a
General Partner has been filed or recorded in all places required by law;
(iii) if such Person is a corporation, it has provided to the
Partnership a certified copy of a resolution of its Board of Directors
authorizing it to become a General Partner and to execute and deliver this
Agreement and the documents and instruments referred to in clause (i)
above; and
(iv) it has delivered to the Partnership an opinion of counsel
satisfactory to all of the Limited Partners (in the reasonable exercise of
their judgment) to the effect set forth in clause (iii) of Section 6.1(c)
and further to the effect that it possesses all requisite corporate and
other power and authority to be a General Partner.
Upon any direct transfer pursuant to which the transferee has
satisfied the conditions to becoming a substituted Partner hereunder, such
transferee shall be deemed admitted to the Partnership immediately and
thereafter the Transferor shall be deemed withdrawn with respect to the Interest
so transferred.
6.4 Deemed Withdrawal of the General Partner. (a) Upon the
Bankruptcy of the General Partner or the occurrence with respect to the General
Partner of any event
-32-
which under the Act causes the dissolution of a limited partnership, the General
Partner shall be deemed to have offered its resignation as a General Partner
and, unless a majority in interest of the remaining Partners shall otherwise
Consent within 30 days of such Bankruptcy or other occurrence, the General
Partner shall be deemed to have withdrawn as a General Partner.
(b) Upon the deemed withdrawal of a Person as a General Partner
pursuant to Section 6.4(a), the Interest of such Person as a General Partner
shall be forthwith converted into that of a Limited Partner, except that such
Person shall share in Profits and Losses in the same proportions as if such
Person had not withdrawn as a General Partner.
6.5 Right of First Refusal. (a) In addition to the restrictions on
Transfer pursuant to Section 6.1(a), after the earliest of (A) the third
anniversary of the Initial Closing Date, (B) the date of any Put Obligation
Breach, (C) the occurrence of any Acceleration Event or (D) the date of any Put
Obligation Failure, ITT Partner shall not have the right to Transfer all or any
part of its Interest to any Person that is not an ITT Permitted Transferee
without first offering to the Partnership a right of first refusal to purchase
all but not less than all of the Interest that is proposed to be so Transferred
or, in the case of a direct Transfer of any equity interest in ITT Partner or a
Parent of ITT Partner (a "Parent Transfer"), all of the equity interest proposed
to be Transferred (the "Offered Interest"), all on the terms hereinafter set
forth. This Section 6.5 shall not apply to any Transfer that is a hypothecation,
pledge or encumbrance whereby operating control of the asset Transferred remains
with the Transferee and which is primarily designed as a financing mechanism for
the benefit of the Transferee or its Affiliates, but this provision shall apply
to any attempt by the Transferee to realize upon such hypothecation, pledge or
encumbrance.
(b) The Offered Interest must be offered by means of a written
notice (an "Offer Notice") delivered to the Partnership in which ITT Partner
shall specify a price and related terms no less favorable to the Partnership
than those which ITT Partner or such Parent or the entity selling an interest in
a Parent, is willing to accept from a bona fide third party purchaser pursuant
to an offer from such third party purchaser (a "Bona Fide Offer"). The Offer
Notice shall include therein a statement setting forth the identity of, and the
price and terms offered by, such third party for the purchase of the Offered
Interest. In any case where a Bona Fide Offer has been made in respect of an
-33-
Offered Interest in conjunction with other property, the price in respect of the
Offered Interest shall be the Allocated Interest Offer Price. In the case of an
Allocated Interest Offer Price, Rainbow Partner will furnish the selection of
three investment banking firms to act as Appraiser to ITT Partner within five
business days following receipt of the Offer Notice. The Appraiser shall be
instructed to determine the Allocated Interest Offer Price within 10 days of its
appointment.
(c) The Offered Interest must first be offered (in whole and not in
part) to the Partnership, (i) after the date of any Put Obligation Breach, Put
Obligation Failure or Acceleration Event (in each case, that has not been
cured), for a period of five business days, and (ii) in all other events, for a
period of 45 days. Within five days or 45 days, as applicable, after receipt of
the Offer Notice, the Partnership shall accept or reject such offer for the
Offered Interest by delivering a notice in writing to ITT Partner. If pursuant
to this Section 6.5, the Partnership has agreed to purchase the Offered
Interest, then such Offered Interest shall be purchased by the Partnership in
accordance with the terms offered by ITT Partner in the Offer Notice within 10
days (in the case of events in clause (i) of the first sentence of this Section
6.5) or 90 days (in the case of events in clause (ii) of the first sentence of
this Section 6.5), as applicable, of the Offer Notice or, if all required
third-party consents and approvals have not been obtained by such date, such
later date when all such required consents and approvals have been obtained
(such date, the "Offered Interest Closing Date"). If the Offered Interest has
not been accepted by the Partnership or if the Offered Interest has been
accepted by the Partnership but the Partnership shall not have purchased such
Offered Interest on or prior to the Offered Interest Closing Date or, in any
event, within 180 days of the Offer Notice, then ITT Partner may, within 180
days thereafter, Transfer the Offered Interest to such third party at a price
not less than the price at which, and on terms no more favorable to the third
party than those contained in the Bona Fide Offer (or, in the case of a Parent
Transfer, may complete such Parent Transfer within such period). If the Offered
Interest is not so disposed of within such 180-day period, then ITT Partner
shall, before disposing of all or any portion of its Interest (or permitting the
completion of a subsequent Parent Transfer), again be obligated to provide the
right of first refusal contained in this Section 6.5 to the Partnership. The
Partnership, Rainbow Partner and ITT Partner shall use all reasonable efforts to
obtain all required consents and approvals to permit the purchase of the Offered
Interest.
-34-
(d) If the Partnership is unable to purchase any Offered Interest
because of the provisions of any Financing Document or other agreement to which
it is a party, the Partnership may assign its right to acquire the Offered
Interest to either General Partner or Rainbow Partner.
ARTICLE 7
Dissolution and Liquidation
7.1 Events of Dissolution. (a) The Partnership shall be dissolved
upon the earliest to occur of any of the following:
(i) a date designated by a General Partner by written notice given
to the other Partners at least 30 days prior to such date, informing them
of the General Partner's election to dissolve the Partnership as of such
date;
(ii) the sale or other disposition of all of the Partnership's
capital assets, other than money and money equivalents, except that if
non-monetary consideration is received upon such disposition the
Partnership shall not be dissolved until such consideration is converted
into money or money equivalents;
(iii) the Bankruptcy or withdrawal of a General Partner, unless
within 90 days thereafter each of the remaining Partners Consents to
continue the Partnership and, if there is no remaining General Partner,
all of the Limited Partners appoint a substitute or successor General
Partner; or
(iv) the expiration of the term of the Partnership set forth in
Section 2.10.
(b) Dissolution of the Partnership shall be effective on the day on
which the event giving rise to the dissolution occurs (or in the case of clause
(iii) above, 90 days after the Bankruptcy or withdrawal of a General Partner,
unless the Partnership is continued as specified in such clause (iii)), but the
Partnership shall not terminate until the assets of the Partnership have been
distributed and the Partnership's Amended and Restated Certificate of Limited
Partnership has been cancelled as provided herein. Notwithstanding a dissolution
of the Partnership, until the termination of the Partnership, the business of
the Partnership and the affairs of the Partners, as such, shall continue to be
governed by this Agreement. Upon a
-35-
dissolution, the General Partner (or a liquidating trustee if there shall not be
a surviving General Partner) shall proceed to liquidate the assets of the
Partnership, apply and promptly distribute the proceeds thereof as contemplated
hereby and cause the cancellation of the Partnership's Amended and Restated
Certificate of Limited Partnership.
7.2 Priority on Liquidation. Upon dissolution of the Partnership,
the General Partner shall, to the extent feasible, proceed to wind up the
affairs and liquidate the assets of the Partnership, allowing a reasonable time
for the process of winding up and liquidation so as to minimize the losses that
would normally be incidental to such a process. The proceeds of such liquidation
shall be applied first, to the payment of the matured debts and liabilities of
the Partnership (other than amounts owing in respect of Partner Loans) and the
costs and expenses of dissolution and liquidation of the Partnership; second, to
the payment of amounts owing in respect of Partner Loans; third, to the setting
up of any reserves which the General Partner may deem reasonably necessary for
contingent, unmatured or unforeseen liabilities of the Partnership; and fourth,
to pay distributions to the Partners in proportion and to the extent of any
positive balances in their Capital Accounts (after crediting or charging each
Partner's Capital Account for the Partner's share of all Profit or Loss and Gain
or Loss on Disposition accrued through the date of such payment).
7.3 Statements on Liquidation. The General Partner shall furnish
each of the Partners with a statement setting forth (i) the assets and
liabilities of the Partnership as of the date of the dissolution and as of the
date of complete liquidation, specifying the amount of Partner Loans, (ii) the
share of each Partner thereof, (iii) the amounts in the Capital Accounts of each
Partner (determined after reflecting all allocations for such year pursuant to
Sections 5.3 and 5.4 and the revaluation of the Partnership's assets pursuant to
Section 5.1(d)), and (iv) a report in reasonable detail of the manner of
disposition of the assets. The General Partner shall furnish such statement to
each Limited Partner ten business days' prior to the first liquidation
distribution (the "Initial Liquidation Payment Date").
7.4 Return of Capital; Partition. No Partner shall have any right to
receive its Capital Contribution or any profit of the Partnership, or to seek or
obtain partition of assets of the Partnership, other than as provided in this
Agreement. The General Partner shall not be personally liable for the return of
the Capital
-36-
Contributions of the Limited Partners or any portion thereof, and any such
return shall be made solely from Partnership assets.
ARTICLE 8
Records and Accounting
8.1 Books and Records. The General Partner or a representative
appointed by the General Partner shall maintain at the principal place of
business of the Partnership full, correct and complete copies of this Agreement,
the Transfer Agreement and the Partnership's Amended and Restated Certificate of
Limited Partnership and all amendments and supplements hereto and thereto, full,
true and correct copies of each material agreement of the Partnership, and
copies of all amendments thereof, any business or operating plan or budget of
the Partnership, and complete and accurate books of the Partnership showing all
receipts and expenditures, assets and liabilities, profits and losses, and all
other books, records and information required by the Act as necessary for
recording the Partnership's business and affairs, together with a current list
of the full name and last known business address of each Partner, executed
copies of all powers of attorney pursuant to which the Partnership's Amended and
Restated Certificate of Limited Partnership or any certificate of amendment
thereto has been executed, and copies of the Partnership's Federal, state and
local income tax returns and reports, if any. The Partnership's general ledger
shall be maintained on an accrual basis in accordance with generally accepted
accounting principles, and books and records shall be maintained at such office
until six years after the termination of the Partnership. Each Partner and its
duly authorized representative(s) shall have the right, at such Partner's
expense, at all reasonable times during normal business hours and upon at least
one day's prior notice but without unreasonable interference with the conduct of
the Partnership's business, to inspect and make copies of and take extracts from
all of the Partnership's documents, books and records.
8.2 Required Reports to Partners. The General Partner shall prepare
and furnish or cause to be prepared and furnished to each of the Partners the
following reports and information:
(a) Within 45 days after the end of each of the first three fiscal
quarters of each Fiscal Year, an unaudited balance sheet as of the end of such
quarter, and
-37-
unaudited statements of profit and loss, changes in Partners' capital and
changes in cash flow of the Partnership for the quarter then ended and in the
case of the second and third such quarters, for the Fiscal Year to date, all
prepared in accordance with generally accepted accounting principles;
(b) Within 90 days after the end of each Fiscal Year, audited
financial statements of the Partnership for such Fiscal Year prepared in
accordance with generally accepted accounting principles and accompanied by the
Accountants' report on their examination of such financial statements;
(c) As soon as reasonably practicable after the end of each Fiscal
Year consistent with past practices, Form K-1 or any similar form required by
the Code or the Internal Revenue Service or any state or local taxing authority
for the preparation of the Partners' Federal income tax returns and their state
and local income tax returns for each jurisdiction in which the Partnership
conducts business; and
(d) Upon the request of any Partner, such other information relating
to the Partnership as such Partner may from time to time reasonably request.
8.3 Annual Tax Returns. (a) The General Partner is designated the
"Tax Matters Partner" for Federal income tax purposes pursuant to Section 6231
of the Code with respect to all taxable years of the Partnership and is
authorized to do whatever is necessary to qualify as such. The Tax Matters
Partner shall cause to be prepared by Accountants, and shall timely file or
cause to be filed, all tax returns of the Partnership required by any
Governmental Authority.
(b) The Tax Matters Partner shall do all acts, make all elections,
and take whatever reasonable steps are required to maximize, in the aggregate,
the Federal, state and local income tax advantages available to the Partnership
and shall defend all tax audits and litigation with respect thereto. The Tax
Matters Partner may make the election permitted by Section 754 of the Code if it
deems such election appropriate and in the best interests of the Partnership.
The Tax Matters Partner shall maintain the books, records and tax returns of the
Partnership in a manner consistent with the acts, elections and steps taken by
the Partnership.
8.4 Actions in Event of Audit. If an audit of any of the
Partnership's tax returns shall occur, the Tax
-38-
Matters Partner shall, at the expense of the Partnership, notify the Partners
thereof, participate in the audit and contest, settle or otherwise compromise
assertions of the auditing agent which may be adverse to the Partnership. ITT
Partner shall retain its rights under Sections 6224 and 6226 through 6228 of the
Code to participate in all administrative and judicial proceedings related to
the determination of Partnership items, and ITT Partner shall also retain its
rights to join or refuse to join in any settlement agreements with the Internal
Revenue Service regarding Partnership items.
8.5 Costs. The Partnership shall indemnify and reimburse the Tax
Matters Partner for all third-party costs and expenses, including legal and
accounting fees, claims, liabilities, losses and damages borne by the Tax
Matters Partner, which were incurred in connection with any of its duties under
Sections 8.3 and 8.4, except to the extent caused by the gross negligence or
willful misconduct of the Tax Matters Partner. The payment of expenses to which
this indemnification applies shall be deemed an expense of the Partnership.
Neither the Tax Matters Partner nor any other Person shall have any obligation
to provide funds for any of the actions required by Sections 8.3 and 8.4. The
taking of any action and the incurring of any expense by the Tax Matters Partner
in connection with any such proceeding, except to the extent required by law,
shall be subject to the reasonable discretion of the Tax Matters Partner.
ARTICLE 9
Miscellaneous
9.1 Notices. Any and all notices, requests, demands, consents and
other communications required or permitted under this Agreement shall be
effective only if in writing, signed by or on behalf of the party by which
given, and shall be considered to have been duly given when (i) delivered by
hand, (ii) sent by telecopier (with receipt confirmed), provided that a copy is
mailed (on the same date) by certified or registered mail, return receipt
requested, postage prepaid, or (iii) received by the addressee, if sent by
Express Mail, Federal Express or other reputable express delivery service
(receipt requested), or by first class certified or registered mail, return
receipt requested, postage prepaid, in each case to the party for which intended
at its address set forth in Schedule I (or to such other addresses and
telecopier numbers as a party may from time to time designate as to itself by
notice given to the other parties in accordance with this Section 9.1);
-39-
provided, however, that copies of all notices to ITT Partner shall also be sent
in the same manner to Cravath, Swaine & Xxxxx, Worldwide Plaza, 000 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telecopier (000) 000-0000, in each case to the
attention of Xxxxxx X. Xxxxxxx, Xx., and copies of all notices to the General
Partner or Rainbow Partner shall also be sent in the same manner to Xxxxxxxx &
Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telecopier (000) 000-0000,
in each case to the attention of Xxxx X. Xxxx. A notice of change of address
shall not be deemed given until received by the addressee.
9.2 Power of Attorney. (a) Each Limited Partner, including any
additional or substituted Limited Partner, by the execution of this Agreement or
any counterpart hereof, hereby irrevocably constitutes and appoints the General
Partner and its President and Vice Presidents, and each of them acting alone, in
each case with full power of substitution, its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place and stead, to
make, execute, sign, acknowledge, swear to, deliver, file and record at the
appropriate public offices such documents and instruments and only such
documents and instruments as may be necessary or appropriate to (i) amend this
Agreement and the Partnership's Amended and Restated Certificate of Limited
Partnership as are necessary to admit to the Partnership a substituted Limited
Partner pursuant to Section 6.1, (ii) cancel the Partnership's Amended and
Restated Certificate of Limited Partnership pursuant to Section 7.1, (iii)
permit the Partnership to become or to continue as a limited partnership or
partnership wherein the Limited Partners have limited liability in the
jurisdictions where the Partnership may be doing business in accordance with
this Agreement, and (iv) file all fictitious or assumed name certificates
required or permitted to be filed on behalf of the Partnership. Such
authorization shall extend, without limitation, to any restatement of this
Agreement as so amended.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and coupled with an interest, and it shall survive the Bankruptcy or
legal disability of any of the Partners to the fullest extent permitted by law
and the Transfer or assignment of all or any part of the Interest of such
Partner and extend to its successors and assigns; provided, however, that if any
Limited Partner Transfers all or any part of its Interest, the foregoing power
of attorney of the Transferor shall survive such Transfer as to the Interest or
portion so Transferred only until such time as the Transferee shall have been
admitted to the Partnership as a substitute Partner and all required
-40-
documents and instruments shall have been duly executed, filed and recorded to
effect such substitution.
9.3 Amendment. This Agreement may be changed or amended by the
General Partner without the Consent of the Limited Partners, provided, that a
change or amendment that adversely affects the rights of any Limited Partner
shall not be effective without the Consent of each Limited Partner so affected.
The power of attorney granted by Section 9.2 may be used by the General Partner
to execute on behalf of a Limited Partner any document evidencing or effecting
an amendment adopted in accordance with this Section 9.3.
9.4 Entire Agreement. Upon the effectiveness of this Agreement in
accordance with Section 9.5, this Agreement, the Transfer Agreement and the
Ancillary Agreements (as defined in the Transfer Agreement), including Exhibits,
Annexes, Appendixes and Schedules hereto and thereto, will constitute the entire
agreement, and supersede all other prior agreements, understandings,
representations and warranties, both written and oral, among the parties hereto
and thereto, with respect to the subject matter hereof and thereof.
9.5 Effectiveness. All of the terms and provisions of this Agreement
shall be effective only from and after the Initial Closing. Until the Initial
Closing, the rights, powers, and privileges and obligations of the parties with
respect to the Partnership and their interests therein shall be governed by the
Transfer Agreement, the Bid Agreement and any other agreements or understandings
between the parties then in effect. Nothing in this Agreement shall have any
effect whatsoever on the rights and obligations of the parties hereto or their
Affiliates that may have accrued prior to the Initial Closing under any
agreement between them or any of their Affiliates or be given any effect in the
interpretation of any such agreement.
9.6 No Third Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their successors and permitted assigns and
nothing herein express or implied shall give or be construed to give any Person,
other than the parties hereto and their successors and permitted assigns, any
legal or equitable rights hereunder.
9.7 Creditors. None of the provisions of this Agreement shall be for
the benefit of or enforceable by any creditor of any Partner or of the
Partnership.
9.8 Agreement in Counterparts. This Agreement may be executed in any
number of counterparts, and all
-41-
counterparts so executed shall together constitute one agreement binding on all
parties, notwithstanding that all parties are not signatories to the same
counterpart.
9.9 Captions. Captions contained in this Agreement are inserted as a
matter of convenience and in no way define, limit, extend or describe the scope
of this Agreement or the intent of any provision hereof.
9.10 Governing Law. This Agreement and the rights and obligations of
the Partners hereunder shall be governed by the laws of the State of Delaware,
without regard to the conflicts of laws principles of such state.
9.11 Partial Invalidity. If any provision of this Agreement is held
to be invalid, unlawful or incapable of being enforced by reason of rule of law
or public policy, all other conditions and provisions of this Agreement that can
be given effect without such invalid, unlawful or unenforceable provisions
shall, nevertheless, remain in full force and effect.
9.12 Confidential Information. Each Partner acknowledges that, in
connection with its relationship with the General Partner and the Partnership,
the officers, directors and/or employees of such Partner will have access to
trade secrets and confidential information pertaining to the business of the
Partnership. Accordingly, each Partner agrees that so long as it shall continue
to own an Interest and for a period of 12 months after it ceases to own an
Interest it will neither disclose nor use any of such trade secrets or
confidential information, and will use all reasonable efforts to prevent any of
its employees and Affiliates from doing so, without the prior Consent of the
General Partner; provided, however, that nothing herein shall be construed to
prevent any Partner from disclosing information pursuant to the order of any
Governmental Authority or subpoena, or in any action or proceeding between
parties to this Agreement, or as required to comply with its reporting
obligations under applicable law. For purposes of this Section 9.12,
confidential information shall not include any information that is now known by
or readily available to the general public or that becomes known by or readily
available to the general public other than as a result of any breach of this
Section 9.12.
9.13 Equitable Remedies. If any Partner breaches or threatens to
breach any provision of this Agreement, the General Partner and the Partnership
shall, in addition to any other remedies available to it at law or in equity, be
entitled to obtain specific performance or injunctive relief
-42-
against such Partner in any court of competent jurisdiction without the
necessity of proving irreparable injury or the inadequacy of remedies at law or
posting bond or other security.
-43-
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
MSG EDEN CORPORATION GARDEN L.P. HOLDING CORP.
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXX XXXXXXXXXX
--------------------------- --------------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxx Xxxxxxxxxx
Title: Executive Vice Title:
President
ITT MSG INC.
By: /s/ XXXXXXX X. XXXX
---------------------------
Name: Xxxxxxx X. Xxxx
Title: President
-44-
