EXHIBIT 48
AMENDED AND RESTATED LIMITED LIABILITY LIMITED PARTNERSHIP
AGREEMENT
of
VIVENDI UNIVERSAL ENTERTAINMENT LLLP
dated as of May 7, 2002,
by and among
USI ENTERTAINMENT INC.,
USANI HOLDING XX, INC.,
UNIVERSAL PICTURES INTERNATIONAL HOLDINGS BV,
UNIVERSAL PICTURES INTERNATIONAL HOLDINGS 2 BV,
NYCSPIRIT CORP. II,
USA NETWORKS, INC.,
USANi SUB LLC,
NEW-U STUDIOS HOLDINGS, INC.
and
XXXXX XXXXXX
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Usage
SECTION 1.01. Definitions..................................................2
SECTION 1.02. Terms and Usage Generally...................................11
ARTICLE II
The Partnership
SECTION 2.01. Effectiveness of this Agreement.............................12
SECTION 2.02. Continuation................................................12
SECTION 2.03. Name........................................................13
SECTION 2.04. Term........................................................13
SECTION 2.05. Registered Agent and Registered Office......................13
SECTION 2.06. Purposes....................................................13
SECTION 2.07. Treatment as Partnership....................................13
ARTICLE III
Capital Contributions; Partners
SECTION 3.01. Initial Capital Contributions...............................14
SECTION 3.02. Admission of Partners.......................................14
SECTION 3.03. Substitute Partners and Additional
Partners..................................................14
ARTICLE IV
Reports
SECTION 4.01. Reports to Partners.........................................15
SECTION 4.02. Tax Information.............................................16
ARTICLE V
Preferred Interests
SECTION 5.01. General.....................................................17
SECTION 5.02. Ranking.....................................................17
SECTION 5.03. PIK Accretion...............................................17
SECTION 5.04. Consent Right. ............................................18
SECTION 5.05. Negative Covenants..........................................18
SECTION 5.06. No Other Consent Rights.....................................21
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ARTICLE VI
Common Interests
SECTION 6.01. General.....................................................21
SECTION 6.02. Issuances of Common Interests After
the Closing Date..............................22
SECTION 6.03. Preemptive Rights...........................................23
SECTION 6.04. Other Issuances of Common Interests.........................24
SECTION 6.05. Contribution of Assets or Capital Stock
by Universal Sub..............................25
SECTION 6.06. Consent Right...............................................25
ARTICLE VII
Capital Accounts, Allocations of
Profit and Loss and Tax Matters
SECTION 7.01. Capital Accounts............................................27
SECTION 7.02. Allocations of Net Income and Net Loss......................28
SECTION 7.03. Allocations of Net Income and Net Loss
for Federal Income Tax Purposes...............31
SECTION 7.04. Allocation of the Partnership Debt.......................31
SECTION 7.05. Elections...................................................31
SECTION 7.06. Fiscal Year.................................................31
SECTION 7.07. Withholding Requirements....................................32
SECTION 7.08. Tax Matters Partner.........................................32
ARTICLE VIII
Distributions
SECTION 8.01. Distributions...............................................33
SECTION 8.02. Tax Distributions...........................................33
SECTION 8.03. General Limitations.........................................34
SECTION 8.04. Distributions in Kind.......................................34
SECTION 8.05. Closing Date Distribution...................................34
SECTION 8.06. Distribution Upon Maturity of Class A
Preferred Interests.......................................34
SECTION 8.07. Put/Call Rights with Respect to Class B
Preferred Interests.......................................34
ARTICLE IX
Management of the Partnership
SECTION 9.01. General Partner.............................................35
SECTION 9.02. Board; Representatives; Chairman............................36
SECTION 9.03. Expenses....................................................37
SECTION 9.04. Agreement Not To Compete....................................37
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ARTICLE X
Transfers of Interests
SECTION 10.01. Restrictions on Transfers..................................39
SECTION 10.02. Transfers Permitted at any Time............................39
SECTION 10.03. Put/Call...................................................40
SECTION 10.04. Tag-Along for Limited Partners for
Transfers by Universal...................................45
ARTICLE XI
Limitation on Liability,
Exculpation
SECTION 11.01. Limitation on Liability....................................47
SECTION 11.02. Exculpation................................................47
SECTION 11.03. Partnership Opportunities..................................47
SECTION 11.04. Indemnification............................................49
ARTICLE XII
Events of Withdrawal; Bankruptcy of a General Partner
SECTION 12.01. Events of Withdrawal.......................................50
SECTION 12.02. Bankruptcy of a General Partner............................50
ARTICLE XIII
Dissolution and Termination
SECTION 13.01. Dissolution................................................51
SECTION 13.02. Winding Up of the Partnership..............................52
SECTION 13.03. Distribution of Property...................................53
SECTION 13.04. Claims of Partners.........................................53
SECTION 13.05. Termination................................................53
ARTICLE XIV
Miscellaneous
SECTION 14.01. Notices....................................................53
SECTION 14.02. No Third Party Beneficiaries...............................54
SECTION 14.03. Waiver.....................................................54
SECTION 14.04. Integration................................................54
SECTION 14.05. Headings...................................................55
SECTION 14.06. Counterparts...............................................55
SECTION 14.07. Severability...............................................55
SECTION 14.08. Applicable Law.............................................55
SECTION 14.09. Jurisdiction...............................................55
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Schedules
Schedule A - Partners
Schedule B - Initial Capital Contributions
AMENDED AND RESTATED LIMITED LIABILITY
LIMITED PARTNERSHIP AGREEMENT of VIVENDI UNIVERSAL
ENTERTAINMENT LLLP (the "Partnership") dated as of
May 7, 2002, by and among USI ENTERTAINMENT INC., a
Delaware corporation ("Universal Sub"), as general
partner, USANI HOLDINGS XX, INC., a Delaware
corporation ("USANI XX"), UNIVERSAL PICTURES
INTERNATIONAL HOLDINGS BV, a corporation organized
under the laws of The Netherlands ("UPI Holdings"),
UNIVERSAL PICTURES INTERNATIONAL HOLDINGS 2 BV, a
corporation organized under the laws of The
Netherlands ("UPI Holdings 2"), NYCSPIRIT CORP. II, a
Delaware corporation ("NYCSpirit"), USA NETWORKS,
INC., a Delaware corporation ("USAi"), USANi SUB LLC,
a Delaware limited liability company ("USANi Sub"),
NEW-U STUDIOS HOLDINGS, INC., a Delaware corporation
("New-U Studios"), and Xxxxx Xxxxxx ("Xxxxxx"), as
limited partners , for purposes of Sections 10.03(f)
and 10.04(d) only, VIVENDI UNIVERSAL, S.A., a societe
anonyme organized under the laws of France
("Vivendi"), for purposes of Sections 8.07 and 10.03
only, UNIVERSAL STUDIOS, INC., a Delaware corporation
("Universal"), and, for purposes of Section 8.07
only, SUB I - USA Holding LLC, a Delaware limited
liability company ("SUB I-USA"), USI - USA Holding
LLC, a Delaware limited liability company ("USI-
USA"), XXXX - USA Holding LLC, a Delaware limited
liability company ("XXXX-USA"), and V - USA Holding
LLC, a Delaware limited liability company ("V-USA").
Preliminary Statement
WHEREAS, the parties hereto (or Affiliates thereof) are parties to
the Amended and Restated Transaction Agreement (the "Transaction Agreement")
dated as of December 16, 2001, by and among Vivendi, Universal, USAi, USANi
LLC, a Delaware limited liability company, Liberty and Xxxxxx;
WHEREAS, Universal Sub and USI Interim LP Inc. (the "Initial Limited
Partner") are parties to the Agreement of Limited Liability Limited
Partnership of the Partnership
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(the "Original Partnership Agreement") dated as of April 15,
2002;
WHEREAS, Universal Sub, as general partner of the Partnership, has
duly executed and filed with the Secretary of State of the State of Delaware
(i) a statement of qualification as a limited liability limited partnership
and (ii) a certificate of limited partnership;
WHEREAS, the parties hereto desire to continue the Partnership and
to amend and restate the terms and provisions of the Original Partnership
Agreement in the form hereof; and
WHEREAS, immediately upon the admission of at least one additional
Limited Partner as a limited partner of the Partnership, the Initial Limited
Partner shall withdraw from the Partnership.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
Definitions and Usage
SECTION 1.01. Definitions. The terms shall have the following
meanings for purposes of this Agreement:
"Additional Partner" means any Person admitted as a Partner of the
Partnership pursuant to Section 3.03 in connection with the new issuance of a
Common Interest to such Person.
"Affiliate" of any specified Person means any other Person directly
or indirectly Controlling, Controlled by or under direct or indirect common
Control with such specified Person. For purposes of the foregoing, (i) USANi
Sub and its Affiliates shall be deemed to be Affiliates of USAi, (ii) none of
USAi, Universal or Xxxxxx, or any of their respective Affiliates, shall be
deemed to be Affiliates of one another, and (iii) none of USAi, Universal or
Xxxxxx, or any of their respective Affiliates, shall be deemed to be an
Affiliate of the Partnership.
"Agreement" means this Amended and Restated Limited Liability
Limited Partnership Agreement, as the same may be amended or restated from
time to time.
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"Appraised Value" of a Common Interest means (x) the Participation
Percentage of such Common Interest multiplied by (y) the private market value
of the Partnership taken as a whole; provided, however, that such valuation
shall not assume the value of the Partnership in an "auction" proceeding, and
any valuation methodology shall exclude any acquisition of similar assets or
businesses at a uniquely high valuation due to a purchaser's strategic need to
acquire such assets or businesses.
"Assignment Agreement" means the Assignment Agreement dated as of
the Closing Date, by and among Vivendi, Universal, SUB I-USA, USI-USA,
XXXX-USA, V-USA and USAi.
"Bankrupt Partner" is defined in Section 12.02(a).
"Bankruptcy" of a Person means (i) the filing by such Person of a
voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under Title 11 of the United States
Code (or corresponding provisions of future laws) or any other bankruptcy or
insolvency law, whether foreign or domestic, or such Person's filing an answer
consenting to or acquiescing in any such petition, (ii) the making by such
Person of any assignment for the benefit of its creditors or the admission by
such Partner in writing of its inability to pay its debts as they mature or
(iii) the expiration of 60 days after the filing of an involuntary petition
under Title 11 of the United States Code (or corresponding provisions of
future laws), an application for the appointment of a receiver for the assets
of such Person, or an involuntary petition seeking liquidation,
reorganization, arrangements, composition, dissolution or readjustment of its
debts or similar relief under any bankruptcy or insolvency law, provided that
the same shall not have been vacated, set aside or stayed within such 60-day
period. This definition of "Bankruptcy" is intended to replace the bankruptcy
related events set forth in Sections 17-402(a)(4) and (a)(5) of the Delaware
Act.
"Bankruptcy Code" means the United States Bankruptcy Code of 1978,
as amended.
"Beneficial Owner" and "Beneficial Ownership" have the meanings set
forth in Rule 13d-3 and Rule 13d-5 under the Securities Exchange Act of 1934,
as amended, except that a Person shall be deemed to have Beneficial Ownership
of all securities that such Person has the right to acquire, whether such
right is currently exercisable or is exercisable only upon the occurrence of a
subsequent event.
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"Board" is defined in Section 9.02(b).
"Business" means any of the programming, television distribution,
cable network, film and theme park businesses.
"Business Day" means any day other than a Saturday, a Sunday or a
U.S. Federal holiday.
"Call" means the USAi Call or the Xxxxxx Call.
"Capital Account" is defined in Section 7.01(a).
"Capital Contribution" means, with respect to any Partner, any
capital contribution made by such Partner to the Partnership pursuant to
Section 3.01 or 6.02.
"Cause" means (i) the conviction of, or pleading guilty to, any
felony, or (ii) the willful, continued and complete failure to attend to
managing the business affairs of the Partnership, after written notice of such
failure from the General Partner and reasonable opportunity to cure.
"Chairman" is defined in Section 9.02(b).
"Class A Preferred Interests" is defined in Section 5.01(a).
"Class B Preferred Consideration" is defined in Section 8.07.
"Class B Preferred Interests" is defined in Section 5.01(b).
"Closing" means the closing of the transactions contemplated by the
Transaction Agreement.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Interest" means a partnership interest in the Partnership
that is not a Preferred Interest.
"Consolidated Tangible Net Worth" means total assets of the
Partnership and its consolidated subsidiaries, determined in accordance with
U.S. generally accepted accounting principles, giving effect to purchase
accounting, and deducting therefrom consolidated current liabilities and, to
the extent otherwise included, goodwill, patents,
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trademarks, service marks, trade names, copyrights, licenses and other
intangible items.
"Control", with reference to any Person, means the Beneficial
Ownership of a majority of the outstanding voting power (or equivalent) of
such Person and the terms "Controlling" and "Controlled" have meanings
correlative to the foregoing.
"Covered Person" means (i) each Partner, (ii) each Affiliate of a
Partner, (iii) each Representative and each officer, director, shareholder,
partner, employee, member, manager, representative, agent or trustee of a
Partner or of an Affiliate of a Partner and (iv) each officer of USAi serving
as an employee of the Partnership.
"Delaware Act" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del. C.ss.ss.17-101 et seq., as amended from time to time
or any successor statute.
"Xxxxxx" is defined in the Preamble.
"Xxxxxx Call" is defined in Section 10.03(b).
"Xxxxxx Put" is defined in Section 10.03(b).
"Disabled" means the disability of Xxxxxx after the expiration of
more than 180 consecutive days after its commencement which is determined to
be total and permanent by a physician selected by the Partnership and
reasonably acceptable to Xxxxxx; provided that Xxxxxx shall be deemed to be
disabled only following the expiration of 90 days following receipt of a
written notice from the Partnership and such physician specifying that a
disability has occurred if within such 90-day period he fails to return to
managing the business affairs of the Partnership. A total disability shall
mean mental or physical incapacity that prevents Xxxxxx from managing the
business affairs of the Partnership.
"DRUPA" is defined in Section 2.02.
"Effective Time" means the Closing.
"Face Value" of a Preferred Interest, as of any time, means the
amount equal to the initial Capital Contribution attributable to such
Preferred Interest as adjusted from time to time pursuant to Section 5.03.
"Fiscal Year" is defined in Section 7.06.
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"General Partner" means Universal Sub, any Substitute Partner that
is admitted as the general partner of the Partnership or any Person appointed
as such pursuant to Section 12.02(a), in each case, for so long as such Person
continues to be the general partner of the Partnership.
"Good Reason" means the assignment to Xxxxxx of any duties
inconsistent in any respect with his position as Chairman and chief executive
officer of the Partnership, authority, duties or responsibilities (including
status, offices, title and direct reporting relationship to the chief
executive officer of Vivendi), or any diminution in such positions (or removal
from such positions), authority, duties or responsibilities or requiring him
to be based at any location other than his current locations; it being
understood that the chief executive officer of the Partnership shall have the
same authority and duties as a corresponding officer of a Delaware corporation
would have to act for a Delaware corporation.
"Indebtedness" of any Person means, without duplication, (i) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such Person
upon which interest charges are customarily paid, (iv) all obligations of such
Person in respect of the deferred purchase price of property or services
(excluding current accounts payable incurred in the ordinary course of
business), and (v) all capital lease obligations of such Person; provided that
the Indebtedness of any Persons shall include (A) the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except
to the extent the terms of such Indebtedness provide that such Person is not
liable therefor, (B) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on property owned or acquired by such Person, whether
or not the Indebtedness secured thereby has been assumed and (C) all
guarantees by such Person of Indebtedness of others; and provided, further,
that Indebtedness shall not include any Permitted Liens.
"Initial Limited Partner" is defined in the Preamble.
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"Interests" means the entire partnership interest of a Partner in
the Partnership, including its Common Interests and its Preferred Interests.
"Investment Bank" means an independent, nationally recognized
investment bank.
"Liberty" means Liberty Media Corporation, a Delaware corporation.
"Lien" means any pledge, encumbrance, security interest, purchase
option, call or similar right.
"Limited Partner" means USAi, USANi Sub, New-U Studios, Xxxxxx,
XXXXX XX, UPI Holdings, UPI Holdings 2, NYCSpirit and any Additional Partner
or Substitute Partner that is admitted as a limited partner of the
Partnership, in each case for so long as such Person continues to be a limited
partner of the Partnership.
"Market Value" of a stock means the amount equal to the average of
the daily volume weighted averages of such stock on the primary exchange on
which it trades, as reported by Bloomberg, for the 15 consecutive trading days
ending on the day immediately preceding the date of determination. For the
avoidance of doubt, the Market Value of USAi Common Shares shall be determined
based on the price of USAi Common Stock.
"Maturity Date" is defined in Section 8.06.
"Net Income" or "Net Losses", as appropriate, means, for any period,
the taxable income or tax loss of the Partnership for such period for Federal
income tax purposes, taking into account any separately stated tax items and
increased by the amount of any tax-exempt income of the Partnership during
such period and decreased by the amount of any Section 705(a)(2)(B)
expenditures (within the meaning of Treasury Regulation Section
1.704-1(b)(2)(iv)(i)) of the Partnership; provided, however, that Net Income
or Net Losses of the Partnership shall be computed without regard to the
amount of any items of gross income, gain, loss or deduction that are
specially allocated pursuant to Section 7.02(c), (d) or (e). With respect to
any property contributed to the Partnership at a time when its adjusted tax
basis differs from its fair market value, and with respect to all Partnership
property after any adjustment to the Capital Accounts pursuant to Section
7.01(c), the Net Income or Net Losses of the Partnership (and the constituent
items of income, gain, loss and deduction) shall be computed
8
in accordance with the principles of Treasury Regulation Section
1.704-1(b)(2)(iv)(g).
"New-U Studios" is defined in the Preamble.
"Non-U.S. Participation Percentage" is defined in Section 6.01(a).
"Non-U.S. Source Items" means, for any period, each item of gross
income, gain, loss or deduction of the Partnership attributable to the
Non-U.S. Subsidiaries.
"Non-U.S. Subsidiaries" means any subsidiaries of the Partnership
organized outside of the United States.
"NYCSpirit" is defined in the Preamble.
"Original Partnership Agreement" is defined in the Preamble.
"Participation Percentage" is defined in Section 6.01(a).
"Partner" means the General Partner or a Limited Partner.
"Partnership" is defined in the Preamble.
"Partnership Debt" means the debt incurred by the Partnership to
fund the distribution under Section 8.05, pursuant to Section 2.04(ii) of the
Transaction Agreement.
"Permitted Liens" means, collectively, (i) all statutory or other
liens for taxes or assessments which are not yet due or the validity of which
is being contested in good faith by appropriate proceedings, (ii) all
mechanics', materialmen's, carriers', workers' and repairers' liens, and other
similar liens imposed by law, incurred in the ordinary course of business,
which allege unpaid amounts that are less than 30 days delinquent or which are
being contested in good faith by appropriate proceedings, and (iii) all other
Liens which do not materially detract from or materially interfere with the
marketability, value or present use of the asset subject thereto or affected
thereby.
"Person" means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, governmental authority or
other entity.
"Preferred Interests" means the Class A Preferred Interests and the
Class B Preferred Interests, collectively.
9
"Purchasing Party" means the party purchasing Common Interests-
pursuant to the exercise of a Put or a Call.
"Put" means the USAi Put or the Xxxxxx Put.
"Representative" is defined in Section 9.02(b).
"Restricted Business" has the same meaning as the term "Business" in
the Transaction Agreement.
"Sale Transaction" means any merger, consolidation, tender or
exchange offer, reclassification, compulsory share exchange, liquidation or
similar transaction, in which all or substantially all of the assets or the
outstanding equity securities of the ultimate parent of a Partner are
transferred, converted into or exchanged for stock, other securities, cash or
assets of another entity.
"Section 704(c) Property" means "Section 704(c) property" as defined
in Treasury Regulation Section 1.704-3(a)(3) and property that is revalued
pursuant to Section 7.01(c) hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Selected Appraisal" is defined in Section 10.03(d).
"Selling Party" means the party selling Common Interests pursuant to
the exercise of a Put or a Call.
"Substitute Partner" means any Person admitted as a Partner of the
Partnership pursuant to Section 3.03 in connection with the Transfer of a
then-existing Interest of a Partner to such Person.
"SUB I-USA" is defined in the Preamble.
"Tag-Along Interests" is defined in Section 10.04(a).
"Tag-Along Notice" is defined in Section 10.04(a).
"Tag-Along Offeree" is defined in Section 10.04(a).
"Tax Detriment" means, with respect to any taxes incurred as a
result of the recognition of income or gain by
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an indemnified party in taxable period(s) earlier than the taxable period(s)
in which such income or gain would otherwise have been recognized by such
party solely as a result of an action or inaction by an indemnifying party,
the excess, if any, of (i) the net present value of such taxes incurred by the
indemnified party in such earlier taxable period(s) over (ii) the net present
value of the taxes that would otherwise have been incurred in such later
taxable period, assuming (i) a discount rate equal to USAi's borrowing rate in
effect as of the time such net present values are calculated and (ii) that for
all taxable years, the indemnified party is fully taxable at the highest
applicable marginal Federal income tax rate and the highest applicable
marginal income and franchise tax rates of the state, local and foreign
jurisdictions in which the Partnership or any of its subsidiaries conducts
business (assuming full deductibility of state and local taxes, and full
creditability and deductibility of foreign taxes, for Federal (and if
applicable state and local) income tax purposes).
"Tax Matters Partner" is defined in Section 7.08.
"Transaction Agreement" is defined in the Preamble.
"Transfer" means any sale, assignment, transfer, exchange, gift,
bequest, pledge, hypothecation, distribution, spin-off, split-off,
disposition, encumbrance or other cessation of interest, direct or indirect,
in whole or in part, by operation of law or otherwise, and shall include all
matters deemed to constitute a Transfer under Section 10.01(a); provided,
however, that a Transfer shall not include a Sale Transaction. The terms
"Transferred", "Transferring", "Transferor" and "Transferee" have meanings
correlative to the foregoing.
"Universal" is defined in the Preamble.
"Universal Limited Partners" means USANI XX, UPI Holdings, UPI
Holdings 2, NYCSpirit and their permitted transferees, in each case for so
long as such Person continues to be a limited partner of the Partnership.
"Universal Partners" initially means the Universal Limited Partners
and the General Partner.
"Universal Sub" is defined in the Preamble.
"UPI Holdings" is defined in the Preamble.
11
"UPI Holdings 2" is defined in the Preamble.
"U.S. Participation Percentage" is defined in Section 6.01(a).
"U.S. Source Items" means, for any period, each item of gross
income, gain, loss or deduction of the Partnership other than Non-U.S. Source
Items.
"USAi" is defined in the Preamble.
"USAi Call" is defined in Section 10.03(a).
"USAi Class B Common Stock" means shares of Class B common stock of
USAi, par value $.01 per share.
"USAi Common Shares" means shares of USAi Common Stock and USAi
Class B Common Stock, collectively.
"USAi Common Stock" means shares of common stock of USAi, par value
$.01 per share.
"USAi Limited Partners" means USAi, USANi Sub, New-U Studios, Xxxxxx
and their permitted transferees, in each case for so long as such Person
continues to be a limited partner of the Partnership.
"USAi Preferred Call" is defined in Section 8.07.
"USAi Preferred Put" is defined in Section 8.07.
"USAi Put" is defined in Section 10.03(a).
"USANi Sub" is defined in the Preamble.
"USANI XX" is defined in the Preamble.
"USI-USA" is defined in the Preamble.
"XXXX-USA" is defined in the Preamble.
"V-USA" is defined in the Preamble.
"Vivendi" is defined in the Preamble.
"Vivendi Ordinary Shares" means ordinary shares of Vivendi, par
value (U) 5.5 per share, or, in the event that all or substantially all of the
shares of Vivendi are exchanged for or converted into equity securities of
another Person after the Effective Time, such other equity securities as such
shares may be exchanged for or converted
12
into after the Effective Time, so long as such equity securities are listed or
quoted on the New York Stock Exchange, the Nasdaq Stock Market, the London
Stock Exchange, the Paris Bourse or the Frankfurt Stock Exchange and the
average monthly trading volume of such equity securities on any such exchange
immediately after such share exchange or conversion (and after giving effect
to all of the transactions contemplated in connection with such exchange or
conversion) is substantially equivalent to or greater than that of the Vivendi
Ordinary Shares on its primary exchange immediately prior to such share
exchange or conversion.
SECTION 1.02. Terms and Usage Generally. (a) The definitions in
Section 1.01 shall apply equally to both the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. All references herein to
Articles, Sections, Annexes, Exhibits and Schedules shall be deemed to be
references to Articles and Sections of, and Annexes, Exhibits and Schedules
to, this Agreement unless the context shall otherwise require. All Annexes,
Exhibits and Schedules attached hereto shall be deemed incorporated herein as
if set forth in full herein. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The words
"hereof", "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to a Person are also to its
permitted successors and permitted assigns. Unless otherwise expressly
provided herein, any agreement, instrument or statute defined or referred to
herein or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver
or consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments
incorporated therein.
(b) As used in this Agreement, unless otherwise expressly specified
herein, any allocation or distribution to be made among Interests or Partners
"on a pro rata basis" or "ratably" shall be made in proportion to the relative
Participation Percentages or Face Values of, or Capital Contributions
attributable to, such Interests, or of such Interests owned by such Partners,
in each case determined immediately prior to the transaction with respect to
which such allocation is being made.
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ARTICLE II
The Partnership
SECTION 2.01. Effectiveness of this Agreement.- This Agreement
constitutes the partnership agreement (as defined in the Delaware Act) of the
parties hereto. This Agreement shall become effective at the Effective Time.
SECTION 2.02. Continuation. The parties hereto agree to continue the
Partnership as a limited partnership qualified as a limited liability limited
partnership under and pursuant to Section 17-214 of the Delaware Act and
Section 15-1001 of the Delaware Revised Uniform Partnership Act (6 Del.
X.xx.xx. 15-101 et seq.), as amended from time to time or any successor
statute ("DRUPA"). The General Partner shall, on request, provide any Partner
with copies of each document filed with the Secretary of State of the State of
Delaware.
SECTION 2.03. Name. The name of the Partnership is Vivendi Universal
Entertainment LLLP. The General Partner may change the name of the Partnership
or adopt such trade or fictitious names as it may determine, in each case
consistent with the requirements of the Delaware Act, including Sections
17-102 and 17-214 thereof, and all other applicable law (e.g., fictitious name
statutes). The General Partner will give all Partners prompt written notice of
any such name change (or adoption of any such trade or fictitious name).
SECTION 2.04. Term. The term of the Partnership began on the date
the certificate of limited partnership of the Partnership became effective,
and the Partnership shall have perpetual existence unless sooner dissolved as
provided in Article XIII.
SECTION 2.05. Registered Agent and Registered Office. The name of
the registered agent for service of process is The Corporation Trust Company,
and the address of the registered agent and the address of the registered
office in the State of Delaware is 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000. Such office and such agent may be changed from time to time by the
General Partner consistent with the requirements of the Delaware Act,
including Sections 17-104 and 17-202 thereof.
SECTION 2.06. Purposes. The Partnership was formed for the object
and purpose of, and the nature of the business to be conducted and promoted by
the Partnership is, engaging in the filmed entertainment, television,
14
recreation, programming, distribution and cable businesses and any other
lawful act or activity that the General Partner may from time to time
determine for which limited partnerships may be formed under the Delaware Act,
including engaging in the Business, and engaging in any and all activities
necessary or incidental to the foregoing.
SECTION 2.07. Treatment as Partnership. Except as otherwise required
pursuant to a determination within the meaning of Section 1313(a)(1) of the
Code, the parties shall treat the Partnership as a partnership for United
States federal income tax purposes and agree not to take any action or fail to
take any action which action or inaction would be inconsistent with such
treatment.
ARTICLE III
Capital Contributions; Partners
SECTION 3.01. Initial Capital Contributions. (a) On the Closing
Date, USAi, USANi Sub, New-U Studios, Universal Sub, USANI XX, UPI Holdings,
UPI Holdings 2 and NYCSpirit shall make their respective initial Capital
Contributions, in property, in accordance with Section 2.03 of the Transaction
Agreement.
(b) In return for such initial Capital Contributions, Common
Interests and/or Preferred Interests shall be issued to the Partners as
provided in Articles V and VI hereof. Schedule B indicates the amount of
Capital Contributions attributable to Common Interests and Preferred
Interests, respectively, for each Partner.
(c) The parties shall treat the Capital Contributions described in
this Section 3.01 as contributions pursuant to Section 721 of the Code in
which no gain or loss is recognized to any extent, except as otherwise
required pursuant to a determination within the meaning of Section 1313(a)(1)
of the Code.
SECTION 3.02. Admission of Partners. At the Effective Time, without
the need for any further action of any Person, (i) Universal Sub shall
continue to be a general partner of the Partnership, and (ii) the other
Persons set forth on Schedule A attached hereto who have executed this
Agreement shall be admitted as Partners, and each such Person shall be shown
as such in the books and records of the Partnership. Following the Effective
Time, no Person shall be admitted as a Partner and no additional Common
15
Interests or Preferred Interests shall be issued except as expressly provided
herein.
SECTION 3.03. Substitute Partners and Additional Partners. (a) No
Transferee of an Interest or Person to whom an Interest is issued after the
Effective Time pursuant to this Agreement shall be admitted as a Partner
hereunder or acquire any rights hereunder, including any voting rights or the
right to receive distributions and allocations in respect of the Transferred
or issued Interest, as applicable, unless (i) such Interest is Transferred or
issued in compliance with the provisions of this Agreement and (ii) such
Transferee or recipient shall have executed and delivered to the Partnership
such customary instruments as the General Partner may reasonably require, to
effectuate the admission of such Transferee or recipient as a Partner and to
confirm the agreement of such Transferee or recipient to be bound by all the
terms and provisions of this Agreement (including Section 10.03). Upon
complying with clauses (i) and (ii) above, without the need for any further
action of any Person, a Transferee or recipient shall be deemed admitted to
the Partnership as a Partner. A Substitute Partner shall enjoy the same
rights, and be subject to the same obligations, as the Transferor; provided
that, unless expressly provided otherwise herein, such Transferor shall not be
relieved of any obligation or liability hereunder arising prior to the
consummation of such Transfer. As promptly as practicable after the admission
of any Person as a Partner, the books and records of the Partnership shall be
changed to reflect such admission. In the event of any admission of a
Substitute Partner or Additional Partner pursuant to this Section 3.03(a),
this Agreement shall be deemed amended to reflect such admission, and any
formal amendment of this Agreement (including Schedules A and B hereto) in
connection therewith shall only require execution by the General Partner and
such Substitute Partner or Additional Partner, as applicable, to be effective.
(b) If a Partner shall Transfer all (but not less than all) its
Interests, the Partner shall thereupon cease to be a Partner of the
Partnership; provided, however, that any such Partner shall not cease to be a
Partner until a Transferee of such Partner's Interests is admitted to the
Partnership as a Substitute Partner pursuant to Section 3.03(a).
SECTION 3.04. Withdrawal of Initial Limited Partner. Immediately
upon the admission of at least one additional Limited Partner as a limited
partner of the Partnership, the Initial Limited Partner shall be deemed to
16
have withdrawn from the Partnership as a limited partner of the Partnership,
and, upon such withdrawal, the Initial Limited Partner shall have no further
interest in the Partnership.
ARTICLE IV
Reports
SECTION 4.01. Reports to Partners. (a) Within 30 days after the end
of each of the first three fiscal quarters of a Fiscal Year, the Partnership
shall deliver to each Partner (i) unaudited consolidated balance sheets of the
Partnership and its consolidated subsidiaries as at the end of such quarter
and the related consolidated statements of income, statements of cash flow and
changes in financial position of the Partnership for the period from the
beginning of such quarter to the end of such quarter, prepared on a basis
consistent with the audited financial statements of the Partnership and its
consolidated subsidiaries, subject to changes resulting from audit and normal
year-end adjustments and (ii) a certificate executed by the chief financial
officer and Tax Matters Partner of the Partnership certifying compliance by
the Partnership with the provisions set forth in Section 5.05.
(b) Within 80 days after the end of each Fiscal Year, the
Partnership shall deliver to each Partner audited consolidated balance sheets
of the Partnership and its consolidated subsidiaries as at the end of such
Fiscal Year and the related consolidated statements of income, statements of
cash flow and changes in financial position of the Partnership for such Fiscal
Year, all in reasonable detail and accompanied by a report thereon of the
Partnership's independent auditors as to such consolidated financial
statements presenting fairly the financial position of the Partnership and its
consolidated subsidiaries as at the dates indicated, and as to such audit
having been made in accordance with generally accepted auditing standards.
Concurrently with the delivery of such annual financial statements, the
General Partner shall deliver (i) a statement to each Partner of the balance
of each Partner's Capital Account and (ii) a certificate executed by the chief
financial officer and Tax Matters Partner of the Partnership certifying
compliance by the Partnership with the provisions set forth in Section 5.05.
SECTION 4.02. Tax Information. The General Partner shall timely
cause to be prepared, at the expense of the Partnership, all Federal, state,
local and foreign tax
17
returns (including information returns) of the Partnership and its subsidiaries,
which may be required by a jurisdiction in which the Partnership or its
subsidiaries operate or conduct business for each year or period for which such
returns are required to be filed, and the General Partner shall cause such
returns to be timely filed. As soon as practicable after the end of each Fiscal
Year, the General Partner shall furnish to each Partner (and each Person to whom
Xxxxxx has assigned a beneficial interest pursuant to Section 2.07 of the
Transaction Agreement) an Internal Revenue Service Schedule K-1 and such other
information in the possession of the General Partner as is reasonably requested
by such Partner to file any required Federal, state, local and foreign tax
returns.
SECTION 4.03. Other Information. The Partnership shall make
available, on a reasonable basis, the chief financial officer of the
Partnership and other officers of the Partnership, as appropriate, to respond
to questions of the Limited Partners relating to the financial condition of
the Partnership.
ARTICLE V
Preferred Interests
SECTION 5.01. General. As of the Effective Time, USANi Sub shall
receive the following Preferred Interests:
(a) a preferred partnership interest in the Partnership with an
initial Face Value of $750,000,000, having special rights as set forth in
this Article V and a preference with respect to distributions (as set
forth in Section 8.06) and liquidation (as set forth in Section 13.02)
(the "Class A Preferred Interests"), and
(b) a perpetual (subject to Section 8.07) preferred partnership
interest in the Partnership with an initial Face Value of $1,750,000,000,
having special rights as set forth in this Article V and a preference
with respect to distributions (as set forth in Section 8.01(a)) and
liquidation (as set forth in Section 13.02) (the "Class B Preferred
Interests").
SECTION 5.02. Ranking. (a) Except as otherwise provided herein, with
respect to periodic distribution rights and rights upon liquidation,
dissolution or winding up, the Preferred Interests shall rank (i) junior to
the Partnership Debt and any other of the Partnership's future indebtedness
and other obligations not incurred in violation
18
of this Agreement, (ii) on parity with one another and (iii) senior to the
Common Interests.
(b) Other than the Class A Preferred Interests and the Class B
Preferred Interests issued pursuant to this Agreement on the Effective Date,
no Class A Preferred Interests or Class B Preferred Interests shall be issued.
(c) Subject to Section 5.05(a)(i), the Preferred Interests shall be
the most senior preferred equity interests in the Partnership. The Preferred
Interests shall have no Participation Percentage, and shall not be entitled to
participate in distributions made pursuant to Section 8.01(b).
SECTION 5.03. PIK Accretion. (a) The Face Value of the Class A
Preferred Interests shall accrete at a rate of 5.0% per annum and (b) the Face
Value of the Class B Preferred Interests shall accrete at a rate of 1.4% per
annum, in each case beginning on the Closing Date, and the Face Value of each
such Preferred Interest shall increase accordingly on the last day of each
calendar quarter.
SECTION 5.04. Consent Right. The consent of the Partners who hold
the majority of the aggregate amount of a class of Preferred Interests,
determined based on the Face Value thereof, voting as a separate class, shall
be required for any amendment, alteration or repeal of the provisions of this
Agreement (including by merger, consolidation or otherwise) that would have an
adverse effect on the rights of such class or that would be materially adverse
to the rights of such Partners under this Agreement.
SECTION 5.05. Negative Covenants. (a) For so long as the Class A
Preferred Interests are outstanding, the Partnership shall not, and shall not
permit any subsidiary of the Partnership, without the prior consent of the
Partners holding the Class A Preferred Interests to:
(i) issue any equity interests in the Partnership that rank
senior to, or pari passu with, the Preferred Interests, or issue any
security that is exchangeable for or convertible into any such
equity interest;
(ii) issue any other preferred equity interests in the
Partnership redeemable or exchangeable for or convertible into any
equity security of the Partnership or any subsidiary thereof (other
than Common Interests), or issue any security that is exchangeable
for or convertible into cash, cash equivalents or any
19
such preferred equity interest described in this clause (ii);
(iii) Transfer any assets other than in the ordinary course of
business of the Partnership unless, (x) at least 50% of the net
proceeds of such sale, transfer or disposition are retained or
otherwise redeployed by the Partnership or its subsidiaries and (y)
at the time of such Transfer the Partnership has a Consolidated
Tangible Net Worth of at least $4,000,000,000;
(iv) create, incur, assume, guarantee or permit to exist any
Indebtedness other than (A) the Partnership Debt, and any extension,
renewal, refinancing or replacement of all or any part of the
Partnership Debt (whether or not incurred in accordance with Section
5.05(b)(iii)) that does not increase the outstanding principal
amount thereof and (B) Indebtedness in an aggregate outstanding
principal amount not to exceed $800,000,000 at any time;
(v) merge with or into or consolidate with (in each case within
the meaning of Treasury Regulation Section 1.708-1(c)), or convert
into or otherwise become, by any statutory mechanism, any other
Person (other than a wholly owned subsidiary of the Partnership), if
immediately after giving effect to such merger, consolidation or
conversion, the Partnership would be in violation of clause (i) or,
unless such covenants shall be inapplicable as provided below,
clause (ii), (iii) or (iv) above, or any other provision of this
Agreement relating to the Class A Preferred Interests;
(vi) liquidate, dissolve or wind up the Partnership; or
(vii) become an "investment company" as defined in the
Investment Company Act of 1940, as amended.
The covenants set forth in this Section 5.05(a), other than those set forth in
clause (i), (v), (vi) and (vii) shall not be applicable at a particular time, if
at such time the Partnership shall have posted an irrevocable letter of credit
in a form that is reasonably acceptable to the Partner holding the Class A
Preferred Interests in favor of such Partner (1) in an amount equal to the
expected Face Value of the Class A Preferred Interests at maturity and (2) with
an expiration date falling no earlier than the maturity date of the Class A
Preferred Interests.
20
(b) Unless Vivendi shall have made the election described in Section
7.02(b)(ii) of the Transaction Agreement, for a period of 15 years following
the Effective Time, or if a shorter period is set forth in this Section
5.05(b), then for such shorter period, without the consent of USAi, the
Partnership shall not:
(i) sell or otherwise dispose of all or any part of the assets
set forth on Schedule 5.05(b) other than in the ordinary course of
business and other than sales or other dispositions of assets the
fair market values of which, as of the Effective Time, do not,
individually or in the aggregate, exceed $5,000,000;
(ii) notwithstanding anything in Sections 8.04 and 13.03 to the
contrary, for a period of seven years following the Effective Time,
distribute any assets in kind to USAi or USANi Sub, or distribute
any of the assets set forth on Schedule 5.05(b);
(iii) pay (whether voluntarily or involuntarily) all or any
part of the principal amount of the Partnership Debt; provided,
however, that from time to time the Partnership may discharge all,
or any part of, the Partnership Debt using the proceeds of third
party debt (on terms reasonably satisfactory to USAi, and so long as
no more than three such third party debts may be in existence at any
time) (each, a "Refinancing Debt") if the proceeds of such
Refinancing Debt are allocable under the rules of Treasury
Regulation Section 1.163-8T (or any successor section) to the
payment discharging the Partnership Debt, and from and after the
date of such discharge references to the Partnership Debt in this
Agreement (other than in Section 5.05(a)(iv)) shall, to the extent
that the Partnership Debt is discharged with the proceeds of a
Refinancing Debt, be deemed to include such Refinancing Debt;
provided, further, however, that beginning 2 years after the
Effective Time, the Partnership may, from time to time, pay a part
of the principal amount of the Partnership Debt; provided that no
such payment shall be permitted to the extent such payment would
exceed USANi Sub's tax basis in its interest in the Partnership;
and, provided, further, that, notwithstanding the foregoing, any
payment of the principal amount of the Partnership Debt or any
acceleration of payment thereof shall be preceded by written notice
by the Partnership to USAi of such payment or acceleration, which
notice shall indicate the amount and anticipated date of such
payment or acceleration and the event giving rise to such payment or
acceleration;
21
(iv) for a period of two years following the Effective Time,
make any distributions to USAi or USANi Sub other than distributions
permitted under Section 8.01(a) or Section 8.02 or which constitute
operating cash flow distributions within the meaning of Treasury
Regulation Section 1.707-4(b) (unless the facts and circumstances
would clearly establish that any such distribution is part of a
sale);
(v) change the organizational structure with respect to any
Person set forth on Schedule 5.05(b), including, for the avoidance
of doubt, taking any action or failing to take any action which
action or inaction would cause USA Cable or Studios USA (each as
defined in the Transaction Agreement) to be treated as other than a
partnership for U.S. federal income tax purposes;
(vi) cause or permit any Partner or any Person related to a
Partner (within the meaning of Treasury Regulation Section
1.752-4(b)) to bear the "economic risk of loss" (within the meaning
of Treasury Regulation Section 1.752-2(b)) with respect to the
Partnership Debt; or
(vii) take any action, or fail to take any action, which action
or inaction would cause the Partnership to cease to be qualified as
a limited liability limited partnership under and pursuant to the
Delaware Act and DRUPA (including any failure to make the annual
filings provided under Section 17-214(a)(1) of the Delaware Act and
Section 15-1003 of DRUPA).
Nothing in this Section 5.05 shall prohibit the pledge of interests in
subsidiaries of the Partnership by the Partnership or by any subsidiary of the
Partnership that is properly treated as an entity disregarded from the
Partnership for U.S. Federal income tax purposes if such pledge is required by
the terms of the Partnership Debt.
SECTION 5.06. No Other Consent Rights. Except as provided in
Sections 5.04 and 5.05, holders of Preferred Interests shall have no voting,
approval or consent rights, including with respect to any merger, conversion
or consolidation of the Partnership.
22
ARTICLE VI
Common Interests
SECTION 6.01. General. (a) As of the Effective Time, the
participation percentage (the "Participation Percentage") of each Partner's
Common Interest and the non-U.S. participation percentage (the "Non-U.S.
Participation Percentage") and the U.S. participation percentage (the "U.S.
Participation Percentage") of each Universal Partner's Common Interest shall
be as set forth below:
U.S. Non-U.S.
Participation Participation Participation
Partner Percentage Percentage Percentage
Universal Sub 74.77% 86.16% 53.36%
USANI XX 5.46% 7.14% --
UPI Holdings 6.52% -- 39.46%
UPI Holdings 2 1.18% -- 7.18%
NYCSpirit 5.13% 6.70% --
USAi 0.54% -- --
USANi Sub 4.59% -- --
New-U Studios 0.31% -- --
Xxxxxx 1.50% -- --
(b) Such initial Participation Percentages, Non- U.S. Participation
Percentages and U.S. Participation Percentages, as applicable, shall be
subject to adjustment as provided in this Article VI. The aggregate
outstanding Participation Percentages, the aggregate outstanding Non- U.S.
Participation Percentages and the aggregate outstanding U.S. Participation
Percentages, respectively, at all times shall equal 100%, and Participation
Percentages, Non-U.S. Participation Percentages and U.S. Participation
Percentages, as applicable, shall be adjusted from time to time, pro rata, as
necessary to maintain the foregoing.
SECTION 6.02. Issuances of Common Interests After the Closing Date.
(a) After the Closing Date the Partnership, at the discretion of the Board
(or, if no Board shall then be constituted, the General Partner), may issue
additional Common Interests in return for additional Capital Contributions.
(b) In connection with the issuance of a Common Interest after the
Closing Date, the Board shall designate the Participation Percentage and, if
applicable, the Non- U.S. Participation Percentage and the U.S. Participation
Percentage associated with such issuance and any other
23
material terms thereof. Upon such issuance, the Participation Percentages and,
if applicable, the Non-U.S. Participation Percentages and the U.S. Participation
Percentages, respectively, of all Common Interests outstanding immediately
before such issuance shall be reduced in the aggregate by an amount equal to the
Participation Percentage and, if applicable, the Non-U.S. Participation
Percentage and the U.S. Participation Percentage, respectively, so designated,
in proportion to their relative Participation Percentages and, if applicable,
their relative Non-U.S. Participation Percentages and their relative U.S.
Participation Percentages, respectively, immediately before such issuance.
SECTION 6.03. Preemptive Rights. (a) For so long as USAi and its
Affiliates shall have an aggregate Participation Percentage of greater than 1%
(or at least 1% in the event that USAi and its Affiliates shall have an
aggregate Participation Percentage of no less than 1% due to any reason other
than a failure by USAi to exercise its right under this Section 6.03), in
connection with any issuance of additional Common Interests by the Partnership
to Universal Sub or an Affiliate thereof under Section 6.02(a) prior to the
exercise of an USAi Put or an USAi Call, USAi (or USANi Sub) shall have the
right to purchase, at the same time, on the same terms and at the same
purchase price per Participation Percentage point (or in the event Common
Interests are being issued in exchange for property, an amount of cash equal
to the fair market value of the property being contributed), an amount of
Common Interests (x) equal to a portion of the Common Interests being issued
by the Partnership that is in proportion to the relative Participation
Percentages of USAi and its Affiliates and Universal Sub and its Affiliates,
in each case immediately prior to the issuance giving rise to USAi's rights
under this Section 6.03, or (y) such that, after giving effect to such
issuance, USAi and its Affiliates would have an aggregate Participation
Percentage equal to 1%.
(b) In connection with any issuance of additional Common Interests
by the Partnership to Universal Sub or an Affiliate thereof under Section
6.02(a) after the exercise of an USAi Put or an USAi Call, if USAi and its
Affiliates shall have an aggregate Participation Percentage of at least 1%,
USAi (or USANi Sub) shall have the right to purchase, at the same time, on the
same terms of such issuance and at the same price per Participation Percentage
point (or in the event Common Interests are being issued in exchange for
property, an amount of cash equal to the fair market value of the property
being contributed), an amount of Common
24
Interests such that, after giving effect to such issuance, USAi and its
Affiliates would have an aggregate Participation Percentage equal to 1%.
(c) The Partnership shall deliver written notice to USAi of any
proposed issuance of Common Interests by the Partnership to Universal Sub and
its Affiliates, including the applicable purchase price, the amount offered,
the proposed closing date, the place and time for the issuance thereof (which
shall be no less than 20 days from the date of such notice) and any other
material terms and conditions of the issuance. Within 15 days from the date of
receipt of such notice, USAi shall deliver written notice to the Partnership
if it intends to exercise its right under Section 6.03(a) or (b). Upon
exercising such right, USAi shall be entitled and obligated to purchase the
amount of Common Interests determined in accordance with Section 6.03(a) on
the terms and conditions of such issuance, and Universal Sub shall be entitled
and obligated to purchase (or cause its Affiliates to purchase) the remaining
amount of Common Interests in such issuance. Thereafter, the Participation
Percentages of all the Partners and the Non-U.S. Participation Percentages and
U.S. Participation Percentages of the Universal Partners shall be adjusted in
accordance with Section 6.02(b).
SECTION 6.04. Other Issuances of Common Interests. (a) For so long
as USAi and its Affiliates shall have an aggregate Participation Percentage of
at least 1%, in the event that any issuance under Section 6.02(a) to a Person
other than Universal Sub or an Affiliate thereof would result in USAi and its
Affiliates having an aggregate Participation Percentage of less than 1%, USAi
(or USANi Sub) shall have the right to purchase, on the same terms of such
issuance and at the same price per Participation Percentage point (or in the
event Common Interests are being issued in exchange for property, an amount of
cash equal to the fair market value of the property being contributed), an
amount of Common Interests such that, after giving effect to such issuance to
such Person and to USAi, USAi and its Affiliates would have an aggregate
Participation Percentage equal to 1%.
(b) The Partnership shall deliver written notice to USAi of such
proposed issuance, including the applicable purchase price, the amount
offered, the proposed closing date, the place and time for the issuance
thereof (which shall be no less than 20 days from the date of such notice) and
any other material terms and conditions of the issuance. Within 15 days from
the date of receipt of such notice, USAi shall deliver written notice to the
Partnership if it
25
intends to exercise its right under Section 6.04(a). Upon exercising such right,
USAi shall be entitled and obligated to purchase the amount of Common Interests
determined in accordance with Section 6.04(a) on the terms and conditions of
such issuance and the third party shall be entitled and obligated to purchase
the remaining amount of Common Interests in such issuance. Thereafter, the
Participation Percentages of all the Partners and the Non-U.S. Participation
Percentages and U.S. Participation Percentages of the Universal Partners shall
be adjusted in accordance with Section 6.02(b).
SECTION 6.05. Contribution of Assets or Capital Stock by Universal
Sub. In connection with an acquisition by Universal Sub or an Affiliate
thereof of equity securities or assets of one or more third parties engaged in
the Business or any related business in which Universal Sub or its Affiliate
issued shares of capital stock or paid cash or other consideration to such
third party, Universal Sub or its Affiliate may, in its sole discretion and
upon the approval of the Board (or, if no Board shall then be constituted, the
General Partner), either (i) contribute such acquired equity securities or
assets to the Partnership in return for cash or, to the extent permitted under
Section 5.05, a promissory note with a principal amount equal to the aggregate
value (determined as set forth below) of the consideration paid by Universal
Sub or its Affiliate for such equity securities or assets or (ii) contribute
such acquired equity securities or assets to the Partnership in return for
Common Interests in the Partnership in accordance with Section 6.02(a),
subject to the provisions of Section 6.03. The "purchase price" for any such
Common Interests shall be deemed to be (i) in the case of a contribution of
equity securities or assets to the Partnership on or prior to the first
anniversary of the acquisition by Universal Sub or an Affiliate of such equity
securities or assets, the value of the consideration paid by Universal Sub or
its Affiliate for such equity securities or assets, which consideration shall
be valued at the same time it was valued under the terms of the agreement with
the applicable third party, and (ii) in the case of a contribution of equity
securities or assets to the Partnership following the first anniversary of the
acquisition by Universal Sub or an Affiliate of such equity securities or
assets, the fair market value of such contributed equity securities or assets.
SECTION 6.06. Consent Right. Except for the General Partner, no
holder of Common Interests shall have any voting, approval or consent rights,
including with respect to any merger, conversion or consolidation of the
26
Partnership; provided, however, that (i) at all times a USAi Limited Partner
holding Common Interests shall have the right to consent to any amendment,
alteration or repeal of this Agreement that would have an adverse effect on the
rights of such USAi Limited Partner hereunder and (ii) for so long as an USAi
Put or an USAi Call has not been exercised and USAi has not exercised its rights
under Section 6.03(a)(y), the consent of USAi shall be required prior to: (x)
the entering into, terminating, modifying or extending of any agreement,
transaction or relationship between the Partnership and any Affiliate of Vivendi
that is not on an arm's-length basis, and (y) the making of distributions in
respect of, redeeming, repurchasing or otherwise acquiring any Common Interests
of Universal Sub or any of its Affiliates, other than pro rata distributions,
redemptions, repurchases and acquisitions.
SECTION 6.07. Assignees of Xxxxxx Common Interests. Any holder of a
beneficial interest in Common Interests that shall have received such interest
as an assignee of Xxxxxx pursuant to Section 2.07 of the Transaction Agreement
hereby irrevocably appoints Xxxxxx (or his executor, administrator or trustee,
as the case may be) as its or his designated representative for all purposes
under this Agreement and agrees (except to the extent otherwise provided in
Section 4.02) that (a) any action taken or waived by, or binding upon, Xxxxxx
(or his executor, administrator or trustee, as the case may be) with respect
to Xxxxxx'x Common Interests (including the provisions set forth in Section
10.03) shall be deemed taken or waived by, and binding upon, such assignee
with respect to such assignee's beneficial interest in Xxxxxx'x Common
Interests, (b) such assignee shall have no right to deal directly with the
Partnership or its Partners and the Partnership and its Partners shall deal
solely with Xxxxxx in respect of all matters relating to such assignee's
interest in the Partnership, as if such assignment had never occurred,
including in respect of the provision of information, the giving of notices
and the payment of money, (c) such assignee shall have no right to attend
Partnership meetings, (d) all rights of a holder of Common Interests under
this Agreement or otherwise in connection with the Partnership shall be
exercisable only by Xxxxxx (or his executor, administrator or trustee, as the
case may be) and (e) such assignee shall in all respects be subject to the
same terms under this Agreement (other than Section 9.04) as Xxxxxx is subject
to hereunder. The General Partner shall treat any holder of a beneficial
interest in Common Interests who received such interest as an assignee of
Xxxxxx pursuant to Section 2.07 of the Transaction Agreement as a Partner in
the Partnership for income tax purposes with
27
an interest in the Partnership corresponding to such beneficial interest.
ARTICLE VII
Capital Accounts, Allocations of
Profit and Loss and Tax Matters
SECTION 7.01. Capital Accounts. (a) The Partnership shall establish
a separate capital account (a "Capital Account") in respect of each Common
Interest and Preferred Interest held by each Partner on the books of the
Partnership. The Capital Account of a Partner shall be increased by (i) the
amount of money contributed by that Partner to the Partnership, (ii) the fair
market value of property contributed by that Partner to the Partnership (net
of liabilities related to such contributed property that the Partnership is
considered to assume or take subject to under Section 752 of the Code) and
(iii) allocations to that Partner pursuant to Section 7.02 of profit, income
and gain (or items thereof). The Capital Account of a Partner shall be
decreased by (i) the amount of money distributed to that Partner by the
Partnership, (ii) the fair market value of property distributed to that
Partner by the Partnership (net of liabilities related to such distributed
property that such Partner is considered to assume or take subject to under
Section 752 of the Code) and (iii) allocations to that Partner pursuant to
Section 7.02 of loss, expense and deduction (or items thereof).
(b) In the event that a Partner Transfers its Interest in accordance
with the provisions of this Agreement, the Transferee of such Interest shall
succeed to the Capital Account of the Transferor attributable to such
Interest.
(c) Upon the occurrence of any event specified in Treasury
Regulation Section 1.704-1(b)(2)(iv)(f), the Capital Accounts of the Partners
shall be adjusted to reflect the fair market value of the Partnership's
property at such time and in such manner as provided in such Regulation.
(d) No Partner shall be entitled to withdraw capital or receive
distributions except as specifically provided herein. No Partner shall have
any obligation to the Partnership, to any other Partner or to any creditor of
the Partnership to restore any negative balance in the Capital Account of such
Partner.
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(e) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to
comply with the Treasury Regulations promulgated under Section 704(b) of the
Code and shall be interpreted and applied in a manner consistent with such
Treasury Regulations.
SECTION 7.02. Allocations of Net Income and Net Loss. (a) General.
(i) Except as otherwise provided in this Section 7.02, Net Income shall be
allocated to the extent thereof:
(A) first, if any Net Loss has been allocated to the holders of
Preferred Interests under Section 7.02 (a)(ii)(B), to the holders of
Preferred Interests pro rata in proportion to the amount of Net Loss
so allocated until the aggregate Net Income allocated under this
paragraph (A) shall equal the aggregate amount of such Net Loss;
(B) second, to the holders of Preferred Interests pro rata
until the aggregate amount allocated under this paragraph (B) equals
a return of 5% per annum on the Face Value of their Preferred
Interests;
(C) third, if any Net Loss has been allocated to the holders of
Common Interests under Section 7.02(a)(ii)(A) or (C), to the holders
of Common Interests pro rata in proportion to the amount of Net Loss
so allocated until the aggregate Net Income allocated under this
paragraph (C) shall equal the aggregate amount of such Net Loss; and
(D) fourth, to the Partners in accordance with their
Participation Percentages.
(ii) Net Loss shall be allocated to the extent thereof:
(A) first, to the holders of Common Interests pro rata to the
extent of their respective Capital Accounts;
(B) second, to the holders of Preferred Interests pro rata to
the extent of their respective Capital Accounts; and
(C) third, to the Partners in accordance with their
Participation Percentages.
29
(b) Allocations Among Universal Partners. (i) If any Net Income or
Net Loss, or any items thereof, allocable to the Universal Partners pursuant
to Section 7.02(a) is attributable to Non-U.S. Source Items, such Non-U.S.
Source Items shall be allocated to the Universal Partners in accordance with
their Non-U.S. Participation Percentages, and if any Net Income or Net Loss,
or any items thereof, allocable to the Universal Partners pursuant to Section
7.02(a) is attributable to U.S. Source Items, such U.S. Source Items shall be
allocated to the Universal Partners in accordance with their U.S.
Participation Percentages; provided, however, that to the extent an allocation
of Non- U.S. Source Items, on the one hand, or U.S. Source Items, on the other
hand, consists of deduction or loss and that would cause the Capital Account
balance of any Universal Partner to be reduced below zero, such Non-U.S.
Source Items or U.S. Source Items, as the case may be, shall instead be
allocated to the other Universal Partners, pro rata, based upon their relative
positive Capital Account balances (determined after allocation of all other
items for such taxable period); and provided, further, if any items are
specially allocated to a Universal Partner pursuant to the immediately
preceding proviso, such Universal Partner will be specially allocated Non-U.S.
Source Items or U.S. Source Items, as the case may be, consisting of income or
gain allocable to the Universal Partners pursuant to Section 7.02(a) in
subsequent taxable periods in an amount sufficient to reverse, to the extent
practicable and as quickly as possible, the special allocation of deduction or
loss items to such Universal Partner pursuant to the immediately preceding
proviso; and
(ii) notwithstanding anything to the contrary in Section 7.02(b)(i),
any items of interest expense allocable to the Universal Partners pursuant to
Section 7.02(a) shall be allocated among the Universal Partners consistent
with the allocation of deduction or loss pursuant to this Section 7.02(b);
provided, however, that to the extent an allocation of any interest expense
items pursuant to this clause (ii) would cause or increase a deficit in the
Capital Account balance of any Universal Partner, such interest expense items
shall instead be allocated to the other Universal Partners, pro rata, based
upon the relative allocations of deduction or loss to such other Universal
Partners pursuant to this Section 7.02(b); provided, further, if any items of
interest expense are specially allocated to a Universal Partner pursuant to
the immediately preceding proviso, the other Universal Partners will be
specially allocated items of deduction or loss allocable to the Universal
Partners pursuant to Section 7.02(a) in subsequent taxable periods in an
amount sufficient to reverse, to the extent practicable and as quickly as
possible, the special allocation of
30
interest expense items to such Universal Partner pursuant to the immediately
preceding proviso.
(c) Minimum Gain Charge Back. The Partnership shall allocate items
of profit among the Partners at such times and in such amounts as necessary to
satisfy the minimum gain charge back requirements of Treasury Regulation
Sections 1.704-2(f) and 1.704-2(i)(4).
(d) Allocation of Deductions Attributable to Partner Nonrecourse
Liabilities. Any nonrecourse deductions attributable to a "partner nonrecourse
liability" (as defined in Treasury Regulation Section 1.704-2(b)(4)) shall be
allocated among the Partners that bear the economic risk of loss for such
Partner's nonrecourse liability under Treasury Regulation Section 1.752-2 in
accordance with the ratios in which such Partners share such economic risk of
loss and in a manner consistent with the requirements of Treasury Regulation
Sections 1.704-2(c), 1.704-2(i)(2) and 1.704-2(j)(1).
(e) Qualified Income Offset. The Partnership shall specially
allocate items of profit and loss when and to the extent required to satisfy
the "qualified income offset" requirement within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d).
(f) Curative Allocations. The allocations set forth in Sections 7.02
(b), (c) and (d) (the "Regulatory Allocations") are intended to comply with
certain requirements of the Treasury Regulations. It is the intent of the
Partners that, to the extent possible, the Partnership shall make such special
allocations of Partnership income, gain, loss or deduction so that, after such
allocations are made, each Partner's Capital Account balance is, to the
greatest extent possible, equal to the Capital Account balance such Partner
would have had if the Regulatory Allocations were not part of the Agreement
and all Partnership items were allocated pursuant to Section 7.02(a) and (f)
hereof.
(g) Allocations in Liquidation and upon Maturity of Class A
Preferred Interests. Upon a dissolution of the Partnership in accordance with
Article XIII, the Net Income or Net Loss (or items of profit, income, gain,
loss, deduction and expense) of the Partnership shall be allocated to the
Partners so that the balance in each Partner's Capital Account as of the date
of dissolution shall equal the amount distributable to such Partner pursuant
to Section 13.02(b)(ii) through (iv) (determined without regard to the
provisos thereto); provided, however, that for these
31
purposes the Universal Partners, collectively, shall be treated as a single
Partner. In the case of any distribution made at the maturity of a Class A
Preferred Interest in accordance with Section 8.06, Net Income or Net Loss (or
items of profit, income, gain, loss, deduction and expense) for the taxable
period of the Partnership in which such distribution is made shall be allocated
so that the Capital Account of each holder of such Class A Preferred Interest
shall, as of the date of distribution, equal the amount to be distributed to
such holder pursuant to Section 8.06.
SECTION 7.03. Allocations of Net Income and Net Loss for Federal
Income Tax Purposes. Except as provided in the following sentence, profit,
income, gain, loss, deduction and expense as determined for Federal income tax
purposes shall be allocated among the Partners in the same proportions as the
corresponding items of "book" profit, income, gain, loss, deduction and
expense are allocated among such Partners pursuant to Section 7.02.
Notwithstanding the foregoing sentence, Federal income tax items relating to any
Section 704(c) Property shall be allocated among the Partners in accordance with
Section 704(c) of the Code and Treasury Regulation Section 1.704-3(c) to take
into account the difference between the fair market value and the tax basis of
such Section 704(c) Property as of the date of its contribution to the
Partnership or its revaluation pursuant to Section 7.01(c) using the
"traditional method" as described in Treasury Regulation Section 1.704-3(b).
Items described in this Section 7.03 shall neither be credited nor charged to
the Partners' Capital Accounts.
SECTION 7.04. Allocation of the Partnership Debt. The Partners
acknowledge that, for purposes of Section 752 of the Code and in accordance
with Treasury Regulation 1.752-3(a)(3), and consistent with allocations of
other significant items of Partnership income or gain, 100% of the Partnership
Debt shall be allocated pro rata among the Partners holding the Preferred
Interests.
SECTION 7.05. Elections. Except as otherwise expressly provided
herein, all elections required or permitted to be made by the Partnership
under the Code or other applicable tax law (including any election under
Section 754 of the Code), and all material decisions with respect to the
calculation of its taxable income or tax loss for tax purposes under the Code
or other applicable tax law, shall be made in such manner as may be determined
by the General Partner.
32
SECTION 7.06. Fiscal Year. The fiscal year of the Partnership for
tax and accounting purposes ("Fiscal Year") shall be the 12-month (or shorter)
period ending on December 31 of each year, unless otherwise determined by the
Board.
SECTION 7.07. Withholding Requirements. Notwithstanding any
provision herein to the contrary, the General Partner is authorized to take
any and all actions that are necessary or appropriate to ensure that the
Partnership satisfies any and all withholding and tax payment obligations
under Section 1441, 1445, 1446 or any other provision of the Code or other
applicable law. Without limiting the generality of the foregoing, the General
Partner may withhold any amount that it determines is required to be withheld
from amounts otherwise distributable to any Partner pursuant to this
Agreement; provided, however, that such amount shall be deemed to have been
distributed to such Partner for purposes of applying this Agreement. Each
Partner will timely provide any certification or file any agreement that is
required by any taxing authority in order to avoid any withholding obligation
that would otherwise be imposed on the Partnership.
SECTION 7.08. Tax Matters Partner. The General Partner shall act as
the "Tax Matters Partner" of the Partnership within the meaning of Section
6231(a)(7) of the Code and in any similar capacity under applicable state or
local tax law. The Tax Matters Partner shall not be liable in its capacity as
such to the Partnership or the Partners for any losses, claims or damages. All
reasonable out-of- pocket expenses incurred by the Tax Matters Partner while
acting in such capacity shall be paid or reimbursed by the Partnership.
33
ARTICLE VIII
Distributions
SECTION 8.01. Distributions. (a) The Partnership shall make
cumulative preferential distributions to holders of the Class B Preferred
Interests at a rate of 3.6% per annum of the Face Value of such holder's
Preferred Interests (without taking into account any adjustments thereto made
on the date of such distribution), which distributions shall begin to accrue
on the Closing Date. Distributions shall be payable in cash in quarterly
installments on the last Business Day of each calendar quarter. Any delay or
deferral of distributions required by this Section 8.01 or Section 8.02,
including upon a breach of this Section 8.01(a), shall accrue interest
commencing on the applicable due date and continuing through to the date of
payment at an annual rate equal to USAi's effective cost of borrowing,
expressed as a percentage, as of the applicable due date.
(b) At the times and in the amounts determined by the General
Partner, subject to Section 5.05(b), the Partnership may make distributions to
holders of Common Interests pro rata in accordance with the respective
Participation Percentages of such Common Interests; provided that no
distributions may be made with respect to the Common Interests unless all past
due distributions on the Preferred Interests have been made as of the date of
payment.
(c) To the extent any distribution to a Partner provided herein in
respect of a Common Interest or a Preferred Interest would exceed the balance
of such Partner's Capital Account relating to such Common Interest or
Preferred Interest, the distribution of such excess shall be deferred and
shall be made (prior to any other distribution pursuant to this Section 8.01)
when and to the extent that the balance of such Capital Account is increased.
SECTION 8.02. Tax Distributions. The Partnership shall, as soon as
practicable after the close of each taxable year, make cash distributions to
each Partner in an amount equal to the product of (a) the amount of taxable
income allocated to such Partner for such taxable year pursuant to Section
7.02, reduced by the amount of taxable loss allocated to such Partner for all
prior taxable years (except to the extent such taxable losses have previously
been taken into account under this sentence) and (b) the highest aggregate
marginal statutory Federal, state, local and foreign income tax rate
(determined taking into account
34
the deductibility of state and local income taxes for Federal income tax
purposes and the creditability or deductibility of foreign income taxes for
Federal income tax purposes) applicable to any Partner.
SECTION 8.03. General Limitations. (a) Notwith standing anything in
this Agreement to the contrary, the Partnership, and the General Partner on
behalf of the Partnership, is not required to make any distributions except to
the extent permitted under the Delaware Act.
(b) Holders of Preferred Interests shall not be entitled to any
distributions in excess of the distributions set forth in this Article VIII
and Article XIII.
SECTION 8.04. Distributions in Kind. The Partnership shall not
distribute any assets in kind, except as provided in Section 13.03.
SECTION 8.05. Closing Date Distribution. At the Effective Time, the
Partnership shall use the net proceeds of the Partnership Debt to make a cash
distribution to USANi Sub in the amount of $1,618,710,396.
SECTION 8.06. Distribution Upon Maturity of Class A Preferred
Interests. On the twentieth anniversary of the Closing Date (the "Maturity
Date"), the Class A Preferred Interests shall be redeemed by the Partnership
by payment to the holder thereof of a distribution in cash equal to the Face
Value thereof as of such date (after taking into account any accretion in the
Face Value pursuant to Section 5.03 through and including the date of
redemption). Following such payment, the Class A Preferred Interests shall
cease to be outstanding and all the rights of the holders thereof shall cease.
SECTION 8.07. Put/Call Rights with Respect to Class B Preferred
Interests. (a) Beginning on the twentieth anniversary of the Closing Date, (i)
subject to Section 160 of the Delaware General Corporation Law, Vivendi,
Universal, USI-USA, XXXX-USA, V-USA and/or SUB I-USA shall have the right to
purchase all (but not less than all) of the Class B Preferred Interests of
USAi and its Affiliates (the "USAi Preferred Call"), and (ii) USAi shall have
the right to require Universal, USI-USA, XXXX-USA, V-USA and/or SUB I-USA to
purchase all (but not less than all) of its and its Affiliates' Class B
Preferred Interests (the "USAi Preferred Put"), in each case at a purchase
price equal to (A) a number of shares of USAi Common Shares equal to the
lesser of (x) the number of shares (rounded up to the nearest whole share) of
USAi Common Shares having a Market Value equal to
35
the Face Value as of such date (after taking into account any accretion in the
Face Value pursuant to Section 5.03 through and including such date) of the
Class B Preferred Interests or (y) 56,611,308 USAi Common Shares (as adjusted
for any stock splits, stock dividends or other similar transactions after the
Effective Time), and (B) cash equal to any accrued and unpaid distributions
pursuant to Section 8.01(a) (collectively, the "Class B Preferred
Consideration"). The terms and provisions of Section 4.17 of the Transaction
Agreement are hereby expressly incorporated herein by reference. Universal,
USI-USA, XXXX- USA, V-USA and/or SUB I-USA shall have the right to substitute
cash for the portion of the USAi Common Shares deliverable in the form of USAi
Common Stock as set forth in Section 4.17 of the Transaction Agreement, based
on the Market Value of such USAi Common Stock. To the extent two or more
entities purchase the Class B Preferred Interests under this Section 8.07, the
Face Value thereof shall be allocated among such entities pro rata based on
the purchase price.
Each of Universal, USI-USA, XXXX-USA, V-USA and SUB I-USA hereby
agrees that it is jointly and severally liable for the full and prompt payment
and performance of the obligations with respect to the USAi Preferred Put, and
that such obligations are continuing obligations of payment and performance
and not of collection, and that its obligations under this Section 8.07 shall
not be discharged until payment and performance, in full, of such obligations
has occurred, and that its obligations under this Section 8.07 shall be
absolute and unconditional, irrespective of, and unaffected by, (1) the
genuineness, validity, regularity, enforceability or any future amendment of,
or change in, this Agreement or the Transaction Agreement, (2) the absence of
any action to enforce this Agreement (including this Section 8.07) or the
Transaction Agreement, (3) the insolvency of any party to this Agreement or
the Transaction Agreement; or (4) any other action or circumstances that might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor. Notwithstanding the forgoing, the obligations of USI-USA, XXXX-USA,
V-USA and SUB I-USA shall be limited to such portion of the purchase price
that may be satisfied by the transfer to USAi (or USAi's designee) of the
Committed Common Equity (as defined in the Transaction Agreement) received by
it pursuant to the Assignment Agreement.
(b) In the event that USAi Common Shares cease to be outstanding
following the Effective Time, references to each USAi Common Share in this
Section 8.07 shall refer instead to the cash (plus interest accruing at an
annual rate equal to USAi's effective cost of borrowing, expressed
36
as a percentage, as of the applicable date on which such cash is delivered in
such exchange or conversion) or other securities or property into which each
such USAi Common Share was exchanged for or converted into after the Effective
Time, including any successive exchange or conversion.
(c) Upon consummation of the USAi Preferred Put or the USAi
Preferred Call, the maturity of the Class B Preferred Interests shall be
immediately accelerated, and the Class B Preferred Interests shall be redeemed
by the Partnership by payment to the holder (or holders) thereof of a
distribution in cash equal to the Face Value thereof as of such date (after
taking into account any accretion in the Face Value pursuant to Section 5.03
through and including the date of redemption). Following such payment, the
Class B Preferred Interests shall cease to be outstanding and all the rights
of the holders thereof (or holders thereof on a pro rata basis) shall cease.
ARTICLE IX
Management of the Partnership
SECTION 9.01. General Partner. (a) The business and affairs of the
Partnership shall be managed exclusively by the General Partner in a manner
consistent with this Agreement, without the need for, except as set forth in
Section 5.04, 5.05 or 6.06, any consent or approval of any other Partner.
Subject to Section 9.02 and the terms of this Agreement, the General Partner
shall have the exclusive power and authority, on behalf of the Partnership, to
collect and distribute funds in accordance with Article VIII to make
allocations and adjustments in accordance with Article VII and to take any
action of any kind not inconsistent with this Agreement and to do anything and
everything it deems necessary or appropriate to carry on the business and
purposes of the Partnership in a manner consistent with this Agreement. No
other Partner shall participate in the management and control of the business
of the Partnership, and in no event shall any Partner other than the General
Partner have any authority to bind the Partnership for any purpose. Persons
dealing with the Partnership are entitled to rely conclusively upon the power
and authority of the General Partner.
(b) The General Partner is, to the extent of its rights and powers
set forth in this Agreement, an agent of the Partnership for the purpose of
the Partnership's business, and the actions of the General Partner taken in
37
accordance with such rights and powers shall bind the
Partnership.
SECTION 9.02. Board; Representatives; Chairman. (a) The General
Partner shall be responsible for the establishment of policy and operating
procedures with respect to the business and affairs of the Partnership and
shall appoint agents or employees, with such titles as the General Partner may
select, including a chief executive officer, as officers of the Partnership to
act on behalf of the Partnership, with such power and authority as the General
Partner may designate from time to time to any such Person. The initial chief
executive officer shall serve at his will and at the pleasure of the General
Partner, shall report directly to the chief executive officer of the General
Partner who shall be the chief executive officer of Vivendi and shall have the
same authority to act for the Partnership as a corresponding officer of a
Delaware corporation would have to act for a Delaware corporation. Xxxxxx
shall be the initial chief executive officer of the Partnership. The other
officers of the Partnership shall report to the General Partner or the chief
executive officer, as determined by the General Partner; provided that, as of
the Effective Date and for so long as Xxxxxx is the chief executive officer,
officers of the Partnership shall report to the chief executive officer.
(b) The General Partner may, at its election, appoint a Board of
Directors or other governing body (a "Board") to oversee the policy and
operating procedures with respect to the business and affairs of the
Partnership, provided, however, that the appointment of a Board shall not
alter in any respect the reporting obligations of the chief executive officer.
In the event that the General Partner appoints a Board, it shall appoint all
of the members of the Board (the "Representatives"), which shall include
Xxxxxx as a Representative for so long as he remains an officer of the
Partnership and otherwise, one Person designated by USAi and reasonably
satisfactory to the General Partner as a Representative for so long as USAi
and its Affiliates shall have a Participation Percentage in excess of 1%,
provided that an USAi Put or an USAi Call has not been exercised and USAi has
not exercised its rights under Section 6.03(a)(y). For so long as Xxxxxx is
chief executive officer of the Partnership, Xxxxxx shall also be Chairman of
the Board ("Chairman"). The General Partner, in consultation, with the chief
executive officer, shall establish whatever procedures it deems necessary and
appropriate for operating and governing the business of the Partnership.
38
(c) No Representative shall be entitled to any fee, remuneration,
compensation or expense reimbursement in connection with their service at
Board meetings.
SECTION 9.03. Expenses. (a) The Partnership shall pay or reimburse
the General Partner for all out-of- pocket expenses reasonably incurred by the
General Partner in performing its duties as the General Partner. Except as
provided in Section 7.08 and this Section 9.03, the General Partner shall not
be entitled to any salary or other compensation for its services to the
Partnership as General Partner.
(b) The Partnership shall pay or reimburse Xxxxxx and any other USAi
employee who is an officer of the Partnership for all out-of-pocket expenses
directly related to the performance by Xxxxxx or such other Person of his
duties as an officer of the Partnership.
SECTION 9.04. Agreement Not To Compete. (a) Xxxxxx understands that
the Partnership shall be entitled to protect and preserve the going concern
value of USAi's Existing Business (as "Existing Business" is defined in the
Transaction Agreement) and the Partnership to the extent permitted by law and
that Universal would not have entered into this Agreement absent the
provisions of this Section 9.04 and, therefore, for a period from the Closing
Date until the date that is the earlier of (A) the later of (1) 18 months
after the Closing Date and (2) six calendar months after the date upon which
Xxxxxx ceases to be the chief executive officer of the Partnership and (B)
three years after the Closing Date, Xxxxxx shall not, and shall cause each of
its Affiliates not to, directly or indirectly:
(i) engage in the Restricted Business or acquire any interest
in any Person engaged in the Restricted Business; and
(ii) (A) solicit, recruit or hire any employees of USAi's
Existing Business or the Partnership or Persons who have worked for
USAi's Existing Business or the Partnership, in each case other than
employees who perform solely clerical functions for such Persons,
(B) solicit or encourage any employee of USAi's Existing Business or
the Partnership to leave the employment of USAi's Existing Business
or the Partnership, in each case other than employees who perform
solely clerical functions for such Persons, and (C) disclose or
furnish to anyone any confidential information relating to USAi's
Existing Business or the Partnership or otherwise use such
confidential
39
information for its own benefit or the benefit of any other Person;
provided that the non-solicitation provisions of clauses (A) and (B)
shall be deemed not breached by any advertisement or general
solicitation that is not specifically targeted at the employees or
Persons referred to therein;
provided that, if at any time after 18 months after the Closing
Date, Xxxxxx resigns as chief executive officer of the Partnership
for Good Reason or Xxxxxx'x employment is terminated without Cause,
then the restrictions set forth in this Section 9.04(a) shall cease
to apply on and from the effective date of such resignation or
termination.
(b) This Section 9.04 shall be deemed not breached as a result of
(i) the ownership by Xxxxxx or any of his Affiliates of interests in the
Partnership, or of investments in any class of stock of any entity, public or
private, engaged, directly or indirectly, in the Restricted Business so long
as Xxxxxx does not serve as a director, an officer, a consultant or as an
employee of such entity and is not otherwise engaged in the management or
operations of such entity, (ii) Xxxxxx'x engagement in not-for-profit or
charitable activities related to the Business, whether on boards or otherwise,
(iii) ownership of Vivendi Ordinary Shares as the result of the exercise of a
Put or a Call or (iv) Xxxxxx'x position as a member of any board of directors
(including on any committees thereof) on which he is a board member on the
date hereof.
(c) Xxxxxx agrees that the covenant in Section 9.04(a) is reasonable
with respect to its duration and scope. If, at the time of enforcement of this
Section 9.04, a court holds that the restrictions stated herein are
unreasonable under the circumstances then existing, the parties hereto agree
that the period and scope legally permissible under such circumstances will be
substituted for the period and scope stated herein.
ARTICLE X
Transfers of Interests
SECTION 10.01. Restrictions on Transfers. (a) Except as permitted in
this Article X, without the prior written consent of the General Partner,
neither USAi or any of its Affiliates nor Xxxxxx shall directly or indirectly
Transfer all or any part of their respective Interests, or any rights to
receive capital, profits or
40
distributions of the Partnership pursuant thereto. To the fullest extent
permitted by law, any such Transfer in violation of this Agreement shall be null
and void.
(b) It shall be a condition to any Transfer not prohibited by this
Article X that such Transfer shall comply with the provisions of the
Securities Act and applicable state securities laws. Until any Interest has
been registered under the Securities Act, such Interest may not be offered or
sold except pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and applicable state
securities laws.
(c) It shall also be a condition to any Transfer not prohibited by
this Article X that no applicable law or judgment issued by any governmental
entity shall be in effect, and all consents of, or declarations or filings
with, or expirations of waiting periods imposed by, any governmental entity
necessary for the consummation of such Transfer shall have been obtained or
filed or shall have occurred, and each Partner agrees to cooperate with the
other Partners to provide such information and make such filings as shall be
necessary to satisfy as promptly as practicable the foregoing conditions in
connection with a proposed Transfer.
SECTION 10.02. Transfers Permitted at any Time. (a) At any time and
from time to time, so long as such Transfer would not reasonably be expected
to result in any materially adverse tax consequences to any other Partners,
(i) USAi or any of its Affiliates may Transfer all, but not less than all, of
its Interest to USAi or a direct or indirect wholly owned subsidiary of USAi
(including any subsidiary that is not wholly owned solely as a result of the
fact that Home Shopping Network, Inc. is not a wholly owned subsidiary of
USAi, so long as Liberty and USAi remain the only shareholders of Home
Shopping Network, Inc. and Light's ownership percentage of Home Shopping
Network, Inc. does not increase materially from its interest as of the Closing
Date) and (ii) USAi or any of its Affiliates may pledge or grant a security
interest in, or place in trust, its Preferred Interests in connection with a
bona fide indebtedness or hedging transactions; provided, however, that the
terms of such indebtedness or hedge shall not permit or enable under any
circumstance, including in the event of a default thereunder, the pledgee of
such indebtedness or party to such hedge to foreclose upon or otherwise
acquire any Preferred Interests, it being understood that USAi, USANi Sub
and/or one of their wholly
41
owned subsidiaries shall in all cases be the only holder(s)
of the Preferred Interests.
(b) In respect of holders of Interests that are individuals, a
Transfer may be made upon or subsequent to the death of such holder to the
executors, administrators, legatees or beneficiaries of such deceased holder,
provided that such transferees shall (i) in aggregate be treated as a single
Partner for all purposes under this Agreement and (ii) upon such Transfer,
sign a counterpart to this Agreement or other similar document of accession,
in each case in a customary form, agreeing to be bound by the terms of this
Agreement (other than Section 9.04) to the same extent that the transferor was
so bound.
SECTION 10.03. Put/Call Rights. (a)(i) At any time, and from time to
time, after the fifth anniversary of the Closing Date, Universal shall have
the right to purchase all (but not less than all) the Common Interests of USAi
and its Affiliates (the "USAi Call"), and (ii) at any time, and from time to
time, after the eighth anniversary of the Closing Date, USANi Sub shall have
the right to require Universal to purchase all (but not less than all) its and
its Affiliates' Common Interests (the "USAi Put"), in each case at a purchase
price equal to the Appraised Value thereof. Notwithstanding the foregoing, for
so long as USAi or its Affiliates shall be the holder of any Preferred
Interests, at the election of USANi Sub, any Call or Put under this Section
10.03(a) shall only be applicable to a portion of the Common Interests of
USANi Sub and its Affiliates such that upon the consummation of the applicable
purchase and sale USAi and its Affiliates would retain a Participation
Percentage of 1%, and in such event the determination of Appraised Value shall
only apply to the portion of the Common Interests of USAi and its Affiliates
subject to such Call or Put.
(b)(i) At any time after the first anniversary of the Closing Date,
Xxxxxx (or his executor, administrator or trustee, as the case may be) shall
have the right to sell all (but not less than all) its Common Interests to
Universal (the "Xxxxxx Put"), and (ii) at any time after the later of (A) the
second anniversary of the Closing Date and (B) such time that Xxxxxx is no
longer chief executive officer of the Partnership, Universal shall have the
right to purchase all (but not less than all) the Common Interests of Xxxxxx
(the "Xxxxxx Call"), in each case at a purchase price equal to the greater of
(x) the Appraised Value thereof and (y) $275,000,000. In the event that
Xxxxxx'x employment is terminated without Cause or as a result of his death,
Xxxxxx terminates his employment for Good Reason or
42
Xxxxxx becomes Disabled, the Xxxxxx Put shall become thereafter exercisable (by
Xxxxxx, or his executor, administrator, or trustee, as the case may be)
immediately upon such termination or upon becoming Disabled.
(c) A Call or a Put may be exercised by the applicable party by
providing notice to Universal in the case of a Put, USA in the case of a USAi
Call, or Xxxxxx in the case of a Xxxxxx Call, in each case in accordance with
Section 14.01. The purchase and sale of the Selling Party's Common Interests
shall be consummated at a closing the date and time of which shall be selected
by the Purchasing Party and provided in writing at least seven days prior
thereto; provided that such date shall not be later than the 20th Business Day
following the date of the determination of the Appraised Value. Except as set
forth in Section 10.03(e), at such closing, the Purchasing Party shall cause
to be paid to the Selling Party the applicable purchase price, by wire
transfer of immediately available funds, against delivery by the Selling Party
of one or more duly executed assignments and bills of sale (in form and
substance reasonably satisfactory to the Purchasing Party, but in any event
which shall not include any provision for indemnification) assigning its
Common Interests to the Purchasing Party, free and clear of any Liens.
(d) The Appraised Value shall be determined as follows:
(i) subject to clause (iii) below, within 15 days from the date
of notice given pursuant to Section 10.03(c), the Selling Party and
the Purchasing Party shall each notify the other and the Partnership
in writing of their respective selection of an Investment Bank;
provided that if either such party fails to notify the other of its
selection within such period, the determination of the Appraised
Value of such Common Interests shall be rendered by the single
Investment Bank already selected, within 45 days from the date of
its selection, by notice to all the foregoing parties, and such
determination shall be deemed to be the Appraised Value of such
Common Interests and shall be final for purposes hereof;
(ii) within 45 days from the date of their selection, the
Selling Party's Investment Bank and the Purchasing Party's
Investment Bank shall jointly notify the Selling Party and the
Purchasing Party in writing of their determination of the Appraised
Value of such Common Interests (determined as set forth in the
definition thereof), or, if such Investment Banks are
43
unable to agree on such a value (unless the lower individual
valuation is within 10% of the higher individual valuation, in which
case the two valuations shall be averaged), of their selection of a
third Investment Bank, in which case such Investment Banks shall
notify such third Investment Bank in writing of their respective
determinations of the Appraised Value concurrently with the delivery
of the notice described above, following which such third Investment
Bank shall, within 30 days, notify all of the foregoing parties of
its selection of one of the two original determinations of the
Appraised Value, (the "Selected Appraisal"), which Selected
Appraisal shall be chosen by such third Investment Bank based on its
determination that the Selected Appraisal more closely reflected the
Appraised Value of such Common Interests (determined as set forth in
the definition thereof) than the other original determination. The
Selected Appraisal shall be deemed to be the Appraised Value of such
Common Interests and shall be final for purposes hereof. The costs
of such determination process shall be borne equally by the
Purchasing Party and the Selling Party; and
(iii) if at any time prior to the second anniversary of the
Closing Date Xxxxxx ceases to serve as the chief executive officer
of the Partnership, Universal and Xxxxxx shall promptly initiate the
process set forth in clauses (i) and (ii) above to determine the
Appraised Value of the Partnership as of the time of such cessation,
and such Appraised Value shall be deemed to be the Appraised Value
of the Partnership with respect to the subsequent exercise of a
Xxxxxx Put or a Xxxxxx Call.
(e) At the election of the Purchasing Party, payment of the purchase
price upon the exercise of a Call or a Put may be made in Vivendi Ordinary
Shares having a Market Value at the time of closing equal to the applicable
purchase price set forth in Section 10.03(a) or Section 10.03(b), in which
case the Selling Party shall be entitled to the rights set forth in Section
10.03(f) and 10.03(g). At the closing of any Put or Call pursuant to this
Section 10.03(e), Universal shall deliver to USAi or its Affiliates or Xxxxxx,
as the case may be, validly issued Vivendi Ordinary Shares (or, if Xxxxxx
requests, other common equity securities of Vivendi listed on an exchange
other than that on which the Vivendi Ordinary Shares are listed and
representing an equivalent number of Vivendi Ordinary Shares) free and clear
of all Liens (other than Permitted Liens). The ability of any successor or new
44
parent entity to Vivendi to issue shares hereunder shall be subject to (i)
satisfaction of the trading volume provisions of the definition of Vivendi
Ordinary Shares and (ii) the Selling Party receiving less than 5% of the
outstanding common stock or ordinary shares of such successor or new parent
entity in such issuance.
(f) (i) Vivendi shall provide the Selling Party with, and the
Selling Party shall be entitled to, customary registration rights relating to
any Vivendi Ordinary Shares received pursuant to Section 10.03(e) (including
the ability to transfer registration rights (but not to exceed in the
aggregate the total number of registration rights to which the Selling Party
is entitled under Section 10.3(f)(ii) in connection with the sale or other
disposition of all or a portion of its Vivendi Ordinary Shares). In the event
Vivendi Ordinary Shares are listed or quoted on more than one national
securities exchange (or Nasdaq), whether in the form of shares, depositary
shares or receipts therefor, the Selling Party may elect the type of security
(or combination of securities) to be issued to it (such securities sometimes
being referred to in paragraph (g) or this paragraph (f) of Section 10.03 as
"Vivendi Ordinary Shares") and such securities shall be issued in an aggregate
amount representing the amount of the Vivendi Ordinary Shares that would
otherwise have been issued. Vivendi, each of the Partners and the Partnership
each hereby agrees to cooperate and use its reasonable best efforts to provide
for the prompt marketability of the Vivendi Ordinary Shares to be received
hereunder, including, if requested by USAi or Xxxxxx, as applicable, through
the advance preparation and filing by Vivendi of (x) a registration statement
in order that such registration statement may become effective simultaneously
with the closing of the Put or Call giving rise to the registration rights
under this paragraph (f), and (y) any other regulatory filings or notices.
(ii) If requested by a Selling Party, Vivendi shall be required
promptly to cause the Vivendi Ordinary Shares owned by such Selling Party or
its Affiliates to be registered under the Securities Act and/or any applicable
securities laws of any foreign jurisdiction in order to permit such Selling
Party or such Affiliate to sell such shares in one or more (but not more than,
in the case of USAi, three, and in the case of Xxxxxx, two) registered public
offerings (each, a "Demand Registration"). Each Selling Party shall also be
entitled to customary piggyback registration rights and, except pursuant to
agreements in effect on the date hereof, no other Person shall be entitled to
piggyback registration rights with respect to a Selling Party's Demand
Registration, without such Selling Party's
45
consent. If the amount of shares sought to be registered by a Selling Party and
its Affiliates pursuant to any Demand Registration is reduced by more than 25%
pursuant to any underwriters' cutback, then such Selling Party may elect to
request Vivendi to withdraw such registration, in which case, such registration
shall not count as one of such Selling Party's Demand Registrations. If a
Selling Party requests that any Demand Registration be an underwritten offering,
then such Selling Party shall select the underwriter(s) to administer the
offering, provided that such underwriter(s) shall be reasonably satisfactory to
Vivendi. If a Demand Registration is an underwritten offering and the managing
underwriter advises the Selling Party initiating the Demand Registration in
writing that in its opinion the total number or dollar amount of securities
proposed to be sold in such offering is such as to materially and adversely
affect the success of such offering, then Vivendi will include in such
registration, first, the securities of the initiating Selling Party, and,
thereafter, any securities to be sold for the account of others who are
participating in such registration (as determined on a fair and equitable basis
by Vivendi). In connection with any Demand Registration or inclusion of a
Selling Party's or its Affiliate's shares in a piggyback registration, Vivendi,
such Selling Party and/or its Affiliates shall enter into an agreement
containing terms (including representations, covenants and indemnities by
Vivendi and such Selling Party), and shall be subject to limitations,
conditions, and blackout periods, customary for a secondary offering by a
selling stockholder. The costs of the registration (other than underwriting
discounts, fees and commissions, except as provided herein) shall be paid by
Vivendi. Vivendi shall pay up to 1% of gross proceeds in the aggregate of any
underwriting discounts, fees and commissions related to the registration of
shares on the behalf of Xxxxxx.
(iii) If Vivendi and a Selling Party cannot agree as to what
constitutes customary terms within 10 days of such Selling Party's request for
registration (whether in a Demand Registration or a piggyback registration),
then such determination shall be made by a law firm of national reputation
mutually acceptable to Vivendi and such Selling Party. In no event shall the
inability of the parties to come to agreement on customary terms delay in any
way the registration of a Selling Party's Vivendi Ordinary Shares hereunder.
SECTION 10.04. Tag-Along for USAi Limited Partners for Transfers by
Universal. (a) If Universal Sub, any Universal Limited Partner or any of their
respective
46
Affiliates (each, a "Transferring Entity") shall desire to Transfer in one
transaction or a series of related transactions Common Interests beneficially
owned by such entity, other than to (w) Vivendi, (x) Universal Studios Holding I
Corp., (y) Centenary Holding N.V. or (z) Universal Pictures International B.V.,
or to a direct or indirect wholly owned subsidiary of any of the foregoing (such
Transfer being referred to as a "Tag-Along Event"), such Transferring Entity
shall give not less than 10 Business Days' prior written notice to each of the
USAi Limited Partners (each, a "Tag-Along Offeree") of such intended Tag-Along
Event. Such notice (the "Tag-Along Notice") shall set forth the terms and
conditions of such proposed Tag-Along Event, including the name of the proposed
transferee or resulting holder of such Common Interests (the "Resulting
Holder"), the amount of Common Interests (and the aggregate Participation
Percentage represented thereby) proposed to be Transferred in the Tag-Along
Event (including the number of securities previously or proposed to be
Transferred to the Resulting Holder or its Affiliates in a related transaction)
(the "Tag-Along Interests"), the purchase price or consideration per Common
Interest on an equivalent basis proposed to be paid and received therefor (or if
part of a larger transaction, the fair value allocable portion of the total
purchase price or consideration) and the payment terms and type of Tag-Along
Event to be effectuated.
(b) Within 10 Business Days after delivery of the Tag-Along Notice
by the Transferring Entity to the Tag-Along Offerees, each Tag-Along Offeree
shall, by written notice to such Transferring Entity, have the opportunity and
right to sell to the Resulting Holder in such proposed Tag-Along Event (upon
the same terms and conditions as the Transferring Entity and/or its
Affiliates, including the same representations and warranties, covenants,
indemnities, holdback and escrow provisions, if any) up to that number of
Common Interests beneficially owned by such Tag-Along Offeree as shall
represent a Participation Percentage equal to the product of (x) a fraction,
(A) the numerator of which is the aggregate Participation Percentage
represented by the Tag-Along Interests and (B) the denominator of which is the
aggregate Participation Percentage represented by the Common Interests
beneficially owned as of the date of the Tag-Along Notice by Universal Sub,
the Universal Limited Partners and their respective Affiliates, multiplied by
(y) the aggregate Participation Percentage represented by the Common Interests
beneficially owned by such Tag-Along Offeree and its Affiliates as of the date
of the Tag-Along Notice (the "Tag-Along Amount"). In the event that the
proposed transferee is unwilling to purchase all of the Common
47
Interests that the Transferring Entity and the USAi Limited Partners propose to
Transfer hereunder, the amount of Common Interests to be Transferred by the
Transferring Entity and/or its Affiliates and each of the USAi Limited Partners
shall be reduced proportionately. The right of the Tag-Along Offerees shall
terminate with respect to that proposed Tag-Along Event if not exercised within
the period specified in the first sentence of this clause (b).
(c) At the closing of any proposed Tag-Along Event in respect of
which a Tag-Along Notice has been delivered, each Tag-Along Offeree shall
deliver to the proposed Resulting Entity the Common Interests to be sold
hereby duly endorsed, or accompanied by written instruments of transfer in
form satisfactory to the proposed Resulting Entity, free and clear of all
Liens (other than Permitted Liens), and shall receive in exchange therefor the
consideration to be paid by the proposed Resulting Entity in respect of such
Common Interests.
(d) If, for any reason, the rights of a Tag-Along Offeree, as set
forth in this Section 10.04, are unenforceable or otherwise unavailable to
such Tag-Along Offeree upon the occurrence of a Tag-Along Event, such
Tag-Along Offeree shall have the right to require Vivendi to purchase an
amount of Common Interests equal to the Tag-Along Amount from such Tag-Along
Offeree upon the same terms and conditions as would have applied had the
Tag-Along Offeree's rights under this Section 10.04 been fully enforceable and
available.
ARTICLE XI
Limitation on Liability,
Exculpation
SECTION 11.01. Limitation on Liability. Except as expressly provided
herein or in the other Transaction Documents, 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 Covered Person shall be obligated personally for any such
debt, obligation or liability of the Partnership; provided, however, that the
foregoing shall not alter each Partner's obligation under the Delaware Act to
return funds wrongfully distributed to it.
SECTION 11.02. Exculpation of Covered Persons. (a) Except as
expressly provided herein or in the Transaction Agreement, no Covered Person
shall be liable,
48
including under any legal or equitable theory of fiduciary duty or
other theory of liability, to the Partnership or to any other Covered Person
for any losses, claims, damages or liabilities incurred by reason of any act
or omission performed or omitted by such Covered Person except for any loss,
claims, damages or liabilities arising from such Covered Person's fraud.
Whenever in this Agreement a Covered Person is permitted or required to make
decisions such Covered Person shall make such decisions in good faith having
regard to the best interests of the Partnership and shall not be subject to
any other or different standard (including any legal or equitable standard of
fiduciary or other duty) imposed by this Agreement or any relevant provisions
of law or in equity or otherwise.
(b) A Covered Person shall be fully protected in relying in good
faith upon the records of the Partnership and upon such information, opinions,
reports or statements presented to the Partnership, Board or management by any
Person as to matters the Covered Person reasonably believes are within such
Person's professional or expert competence.
SECTION 11.03. Partnership Opportunities. (a) If any of Universal
Sub, USAi, Xxxxxx or any officer, director, agent, stockholder, member,
manager, partner or Affiliate of any of the foregoing acquires knowledge of a
potential transaction or matter which may be a Partnership Opportunity (as
defined below) or otherwise is then exploiting any Partnership Opportunity,
the Partnership shall have no interest in such Partnership Opportunity and no
expectancy that such Partnership Opportunity be offered to the Partnership,
any such interest or expectancy being hereby renounced, so that, as a result
of such renunciation, and for the avoidance of doubt, such Person (i) shall
have no duty to communicate or present such Partnership Opportunity to the
Partnership, (ii) subject to Section 9.04, shall have the right to hold any
such Partnership Opportunity for its (and/or its officers', directors',
agents', stockholders', members', managers', partners' or Affiliates') own
account or to recommend, sell, assign or transfer such Partnership Opportunity
to Persons other than the Partnership or any subsidiary of the Partnership and
(iii) subject to Section 9.04, shall not breach any fiduciary or other duty to
the Partnership, in such Person's capacity as a Partner or otherwise, by
reason of the fact that such Person pursues or acquires such Partnership
Opportunity for itself, directs, sells, assigns or transfers such Partnership
Opportunity to another Person, or does not communicate information regarding
such Partnership Opportunity to the Partnership.
49
(b) Notwithstanding the provisions of this Section 11.03, the
Partnership does not renounce any interest or expectancy it may have in any
Partnership Opportunity that is offered to an officer of the Partnership and
who is also a director or officer of Universal Sub, USAi or the respective
Affiliates of Vivendi or USAi if such opportunity is expressly offered to such
person in his or her capacity as an officer of the Partnership.
(c) For purposes of this Section 11.03 only, the terms (i)
"Partnership" shall mean the Partnership and, except where the context
requires otherwise, shall also include all corporations, partnerships, joint
ventures, associations and other entities in which the Partnership
beneficially owns (directly or indirectly) 50% or more of the outstanding
voting stock, voting power, partnership or membership interests or similar
voting interests, and (ii) "Partnership Opportunity" shall mean an investment
or business opportunity or prospective economic advantage in which the
Partnership could, but for the provisions of this Section 11.03, have an
interest or expectancy.
(d) Except as otherwise expressly provided in Section 9.04, in
Section 4.13 of the Transaction Agreement or in any other agreement to which
the Partners may be a party, (i) the Partners and their officers, directors,
agents, stockholders, members, managers, partners and Affiliates may engage or
invest in, independently or with others, any business activity of any type or
description, including those that might be the same as or similar to the
Partnership's business or the business of any subsidiary of the Partnership,
(ii) none of the Partnership, any subsidiary of the Partnership or any Person
beneficially owning Common Interests shall have any right in or to such
business activities or ventures or to receive or share in any income or
proceeds derived therefrom and (iii) to the extent required by applicable law
in order to effectuate the purpose of this Section 11.03, the Partnership
shall have no interest or expectancy, and specifically renounces any interest
or expectancy, in any such business activities or ventures.
SECTION 11.04. Indemnification. (a) The Partnership shall, to the
fullest extent authorized under the Delaware Act as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Partnership to provide broader
indemnification rights than said law permitted the Partnership to provide
prior to such amendment), indemnify and hold harmless any Covered Person who
was or is a party or is threatened to be made a party to
50
any threatened, pending or completed action, suit, investigation or proceeding,
whether civil, criminal or administrative by reason of the fact that he or a
Covered Person of whom he is the legal representative is or was a Representative
or officer of the Partnership, or is or was a Representative or officer of the
Partnership serving at the request of the Partnership as a Representative,
officer or employee of another partnership, corporation, joint venture, trust or
other enterprise (whether the basis of such proceeding is alleged action in an
official capacity as a Representative or officer or in any other capacity while
serving as a Representative or officer) against all expenses, liability and loss
(including attorneys' fees, judgments, fines or penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by him in connection
therewith, except in a case where such expenses, liabilities or losses resulted
from the fraud of such indemnified Person. The right to indemnification
conferred in this Agreement shall be a contract right and shall include the
right to be paid by the Partnership the expenses incurred in defending any such
proceeding in advance of its final disposition, such advances to be paid by the
Partnership within 20 days after the receipt by the Partnership of a statement
or statements from the claimant requesting such advance or advances from time to
time.
(b) At all times from and after the Effective Time, the Partnership
shall either maintain directors' and officers' liability insurance covering
the officers and Representatives entitled to indemnification under this
Section 11.04 or ensure that such officers and Representatives are covered in
policies maintained by Vivendi, Universal Sub or their Affiliates, in each
case providing coverage for reasonable amounts and on customary terms.
ARTICLE XII
Events of Withdrawal; Bankruptcy of a General Partner
SECTION 12.01. Events of Withdrawal. Except as otherwise provided in
this Agreement, no Partner shall withdraw from the Partnership.
SECTION 12.02. Bankruptcy of a General Partner. (a) In the event of
the Bankruptcy of the General Partner (the "Bankrupt Partner"), then the
Partnership shall be dissolved unless it is continued without dissolution in
accordance with Section 13.01(c)(iii).
51
(b) In the event a new General Partner is appointed, the Bankrupt
Partner shall become a Limited Partner and shall have (x) no right to
participate in the management of the Partnership or the business and affairs
of the Partnership, and (y) the same interest in all items of income, gain,
loss, deduction or credit of the Partnership to the same extent as if such
Bankruptcy had not occurred. Upon the occurrence of the Bankruptcy of any
General Partner, (i) the Bankrupt Partner and the other Partners shall execute
such documents as may be necessary or appropriate to carry out the provisions
of this Article XII, and (ii) the USAi Limited Partners are, without necessity
of any further action or documentation, hereby appointed attorneys-in-fact of
the Bankrupt Partner and the Universal Limited Partners for the purpose of
carrying out the provisions of this Article XII and taking any action and
executing any documents which such Partners may deem necessary or advisable to
accomplish the purposes hereof, such appointment being irrevocable and coupled
with an interest.
(c) In the event that the General Partner shall become a "debtor" as
defined in the Bankruptcy Code in any case commenced thereunder and at any
time during the pendency of such case there shall be appointed (i) a trustee
with respect to the Bankrupt Partner under Section 701, 702 or 1104 of the
Bankruptcy Code (or any successor provisions thereto), or (ii) an examiner
having expanded powers beyond those specifically enumerated in Section 1104(b)
of the Bankruptcy Code, then the USAi Limited Partners may, at any time
thereafter, so long as such condition exists, unanimously elect to dissolve
the Partnership, in which event the affairs of the Partnership shall be wound
up as provided in Article XIII.
ARTICLE XIII
Dissolution and Termination
SECTION 13.01. Dissolution. (a) The Partnership shall not be
dissolved by the admission of Additional Partners or Substitute Partners
pursuant to Section 3.03.
(b) Subject to Section 12.01, no Partner shall withdraw from the
Partnership and, to the fullest extent permitted by applicable law, no Partner
shall take any action to dissolve, terminate or liquidate the Partnership or
to require apportionment, appraisal or partition of the Partnership or any of
its assets, or to file a xxxx for an accounting, except as specifically
provided in this
52
Agreement, and each Partner, to the fullest extent permitted by applicable law,
hereby waives any rights to take any such actions (or have such actions taken on
its behalf) under applicable law, including any right to petition a court for
judicial dissolution under Section 17-802 of the Delaware Act.
(c) The Partnership shall be dissolved and its business wound up
upon the earliest to occur of any one of the following events:
(i) at the time there are no Limited Partners unless the
Partnership is continued without dissolution in accordance with the
Delaware Act;
(ii) the written agreement of all the Partners;
(iii) the occurrence of any event that causes the General
Partner to cease to be a general partner of the Partnership, unless
(i) there is a remaining General Partner who is hereby authorized to
and shall continue the business of the Partnership without
dissolution or (ii) the USAi Limited Partners agree in writing,
within 90 days after such event occurs, to continue the business of
the Partnership without dissolution and to appoint, effective as of
the date of such event, a new General Partner;
(iv) a decision to dissolve the Partnership in accordance with
Section 12.02(c); and
(v) the entry of a decree of judicial dissolution under Section
17-802 of the Delaware Act, in contravention of this Agreement.
(d) Except as provided herein, the resignation, Bankruptcy,
insolvency or dissolution of a Partner or the occurrence of any other event
that terminates the continued membership of a Partner of the Partnership shall
not in and of itself cause a dissolution of the Partnership.
SECTION 13.02. Winding Up of the Partnership. (a) Upon dissolution,
the Partnership's business shall be liquidated in an orderly manner. The
General Partner shall be the liquidator to wind up the affairs of the
Partnership pursuant to this Agreement. If there shall be no General Partner,
the remaining Partners may approve one or more liquidators to act as the
liquidator in carrying out such liquidation. In performing its duties, the
liquidator is authorized to sell, distribute, exchange or otherwise dispose of
the assets of the Partnership in accordance with
53
the Delaware Act and in any reasonable manner that the liquidator shall
determine to be in the best interest of the Partners.
(b) The proceeds of the liquidation of the Partnership shall be
distributed in the following order and priority:
(i) first, to the creditors (including any Partners or their
respective Affiliates that are creditors) of the Partnership in
satisfaction of all of the Partnership's liabilities (whether by
payment or by making reasonable provision for payment thereof,
including the setting up of any reserves which are, in the judgment
of the liquidator, reasonably necessary therefor);
(ii) second, to the Partners holding Preferred Interests pro
rata up to the amount of the Face Value of such Preferred Interests;
third, to the Partners holding Common Interests pro rata based
on the amount of Capital Contributions attributable thereto, up to
the amount of such Capital Contributions; and
(iv) fourth, to the Partners holding Common Interests pro rata
in accordance with their respective Participation Percentages;
provided, however, that in the event that distributions pursuant to clauses (ii)
through (iv) above would not otherwise be identical to distribution in
accordance with the positive balances in the Partners' Capital Accounts, such
distributions shall instead be made in accordance with such positive balances
and; provided, further, that the aggregate amount distributable to the Universal
Partners, collectively, pursuant to clauses (ii) through (iv) above or the
preceding proviso shall be further distributed among the Universal Partners pro
rata based on their relative positive Capital Account balances (determined
taking into account any allocations incident to liquidation pursuant to Section
7.02(g)).
SECTION 13.03. Distribution of Property. In the event it becomes
necessary in connection with the liquidation of the Partnership to make a
distribution of property in kind, subject to the priority set forth in Section
13.02, the liquidator shall have the right to compel each Partner to accept a
distribution of any asset in kind, so long as the portion of such asset to be
distributed is
54
determined based upon the amount of cash that would be distributed to such
Partners if such property were sold for an amount of cash equal to the fair
market value of such property, as determined by the liquidator in good faith.
SECTION 13.04. Claims of Partners. The Partners shall look solely to
the Partnership's assets for the return of their Capital Contributions, and if
the assets of the Partnership remaining after payment of or reasonable
provision for the payment of all liabilities of the Partnership are
insufficient to return such Capital Contributions, the Partners shall have no
recourse against the Partnership or any Partner.
SECTION 13.05. Termination. The Partnership shall terminate when all
of the assets of the Partnership, after payment of or reasonable provision for
the payment of all debts and liabilities of the Partnership, shall have been
distributed to the Partners in the manner provided for in this Article XIII
and when permitted by this Agreement, and the certificate of limited
partnership of the Partnership shall have been canceled in the manner required
by the Delaware Act.
ARTICLE XIV
Miscellaneous
SECTION 14.01. Notices. Except as otherwise expressly provided in
this Agreement, all notices, requests and other communications to any party
hereunder shall be in writing (including a facsimile or similar writing) and
shall be given to such party at the address or facsimile number set forth for
such party in Schedule A hereto or as such party shall hereafter specify for
the purpose by notice to the other parties. Each such notice, request or other
communication shall be effective (i) if given by facsimile, at the time such
facsimile is transmitted and the appropriate confirmation is received (or, if
such time is not during a Business Day, at the beginning of the next such
Business Day), (ii) if given by mail, five Business Days (or, (x) if by
overnight courier, one Business Day, or (y) if to an address outside the
United States, seven Business Days) after such communication is deposited in
the mails with first-class postage prepaid, addressed as aforesaid, or (iii)
if given by any other means, when delivered at the address specified pursuant
to this Section 14.01.
SECTION 14.02. No Third Party Beneficiaries.
55
Except as provided in Sections 10.02(b), 10.03 and 11.04, this Agreement is not
intended to confer any rights or remedies hereunder upon, and shall not be
enforceable by, any Person other than the parties hereto.
SECTION 14.03. Waiver. No failure by any party to insist upon the
strict performance of any covenant, agreement, term or condition of this
Agreement or to exercise any right or remedy consequent upon a breach of such
or any other covenant, agreement, term or condition shall operate as a waiver
of such or any other covenant, agreement, term or condition of this Agreement.
Any Partner by notice given in accordance with Section 14.01 may, but shall
not be under any obligation to, waive any of its rights or conditions to its
obligations hereunder, or any duty, obligation or covenant of any other
Partner. No waiver shall affect or alter the remainder of this Agreement but
each and every covenant, agreement, term and condition hereof shall continue
in full force and effect with respect to any other then existing or subsequent
breach. The rights and remedies provided by this Agreement are cumulative and
the exercise of any one right or remedy by any party shall not preclude or
waive its right to exercise any or all other rights or remedies.
SECTION 14.04. Integration. This Agreement and the Transaction
Documents constitute the entire agreement among the parties hereto pertaining
to the subject matter hereof and supersede all prior agreements and
understandings of the parties in connection herewith, and no covenant,
representation or condition not expressed in this Agreement or in any
Transaction Document shall affect, or be effective to interpret, change or
restrict, the express provisions of this Agreement. Notwithstanding the
foregoing, the parties hereto agree to be bound by the terms and provisions of
the Letter Agreement (the "Letter Agreement") dated as of the Closing Date, by
and among the Universal Partners and the USAi Limited Partners relating to the
clarification of certain matters in this Agreement, and the terms and
provisions of the Letter Agreement are hereby expressly incorporated herein by
reference.
SECTION 14.05. Headings. The titles of Articles and Sections of this
Agreement are for convenience only and shall not be interpreted to limit or
amplify the provisions of this Agreement.
SECTION 14.06. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original and all of
which, taken together, shall constitute one and the same instrument.
56
SECTION 14.07. Severability. Each provision of this Agreement shall
be considered separable and if for any reason any provision or provisions
hereof are determined to be invalid and contrary to any existing or future
law, such invalidity shall not impair the operation of or affect those
portions of this Agreement which are valid.
SECTION 14.08. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
giving effect to the conflicts of law principles thereof.
SECTION 14.09. Jurisdiction. Each of the Partners (i) consents to
and submits itself and its property to the personal jurisdiction of any
Federal or state court located in the State of Delaware in the event of any
dispute arising out of or relating to this Agreement, (ii) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that it will not bring any
action relating to this Agreement in any court other than a Federal or state
court sitting in the State of Delaware and (iv) hereby waives any rights such
Partner may have to personal service of summons, complaint or other process in
connection therewith, and agrees that service may be made by registered or
certified mail addressed to such Partner and sent in accordance with the
provisions of Article XIV hereof.
SECTION 14.10. Attorney-in-Fact. Each Universal Limited Partner
hereby appoints Universal Sub as its attorney-in-fact, with full power and
authority, for the purpose of taking any action and executing any instrument
necessary for carrying out the respective voting, approval and consent rights
of such Person pursuant to this Agreement.
SECTION 14.11. Limited Partner Voting Rights. The Partners hereby
agree that (i) no Limited Partner other than the USAi Limited Partners shall
have any voting or consent rights under this Agreement or the Delaware Act and
(ii) when any vote or consent of the Limited Partners is to be given under
this Agreement or, subject to Section 6.06 hereof, the Delaware Act, the vote
or consent of the USAi Limited Partners shall control; provided, however, that
in the event that the General Partner becomes a Limited Partner pursuant to
Section 12.02, then such Limited Partner shall have the right bestowed upon
the USAi Limited Partners in Section 6.06(i).
57
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of the day and year first above written.
USI ENTERTAINMENT, INC.,
by /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Executive Vice President
and General Counsel
USANI HOLDING XX, INC.,
by /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Executive Vice President
and General Counsel
UNIVERSAL PICTURES INTERNATIONAL
HOLDINGS BV,
by /s/ Ad Heskes
-------------------------------
Name: Ad Heskes
Title: Director
UNIVERSAL PICTURES INTERNATIONAL
HOLDINGS 2 BV,
by /s/ J.R. Van der Eijnden
-------------------------------
Name: J.R. Van der Eijnden
Title: Director
NYCSPIRIT CORP. II,
by /s/ Xxxxxx X. Xxxxxxxx III
-------------------------------
Name: Xxxxxx X. Xxxxxxxx III
Title: Vice President and
Secretary
58
USA NETWORKS, INC.,
by /s/ Xxxxxx Xxxxxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxxxxx
Title: Executive Vice President
USANi SUB LLC,
by /s/ Xxxx XxXxxx
-------------------------------
Name: Xxxx XxXxxx
Title: Vice President
NEW-U STUDIOS HOLDINGS, INC.,
by /s/ Xxxxxx Xxxxxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxxxxx
Title: Vice President
XXXXX XXXXXX,
/s/ Xxxxx Xxxxxx
-----------------------------
Initial Limited Partner,
solely to reflect its withdrawal
from the Partnership
USI INTERIM LP INC.,
by /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Executive Vice President
General Counsel
59
Only for purposes of Sections
8.07 and 10.03:
UNIVERSAL STUDIOS, INC.
by /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
Only for purposes of Sections 10.03(f) and 10.04(d):
VIVENDI UNIVERSAL, S.A.,
by /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President
Only for purposes of Section 8.07:
USI - USA HOLDING LLC
by /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Authorized Person
XXXX - USA HOLDING LLC
by /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Authorized Person
60
V - USA HOLDING LLC
by /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Authorized Person
SUB I - USA HOLDING LLC
by /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Authorized Person
SCHEDULE A
Partners
1. Vivendi, Universal, Universal Sub, USANI XX, UPI Holdings, UPI
Holdings 2, NYCSpirit, SUB I-USA, USI-USA, XXXX-USA and V-USA
Address for Notices:
c/o Universal Studios, Inc.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Facsimile: 000-000-0000
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Facsimile: 000-000-0000
2. USAi, USANi Sub, New-U Studios, SUB I-USA, USI- USA, XXXX-USA and
V-USA
Address for Notices:
c/o USA Networks, Inc.
Carnegie Hall Tower
000 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Facsimile: 000-000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
Facsimile: 000-000-0000
2
3. Xxxxx Xxxxxx
Address for Notices:
Xxxxx Xxxxxx
Chairman and Chief Executive Officer
USA Networks, Inc.
Carnegie Hall Tower
000 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
with a copy to:
c/o USA Networks, Inc.
Carnegie Hall Tower
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
Facsimile: 000-000-0000
3
SCHEDULE B
Initial Capital Contributions1
Initial Capital Initial Capital
Initial Capital Contribution Contribution
Partner Contribution Attributable to Attributable to
Attributable to Class A Preferred Class B Preferred
Common Interests Interests Interests
Universal Sub $13,538,862,300 $0 $0
USANI XX $989,084,736 $0 $0
UPI Holdings $1,180,133,000 $0 $0
UPI Holdings 2 $214,530,000 $0 $0
NYCSpirit $928,679,568 $0 $0
USAi $100,000,000 $0 $0
USANi Sub $842,450,000 $750,000,000 $1,750,000,000
New-U Studios $57,550,000 $0 $0
Xxxxxx $0 $0 $0
--------
1 After giving effect to the distribution pursuant to
Section 8.05.
