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EXHIBIT 10.80
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
PEAK CABLEVISION, LLC
September 25, 1997
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AMENDED AND RESTATED
OPERATING AGREEMENT
OF
PEAK CABLEVISION, LLC
This AMENDED AND RESTATED OPERATING AGREEMENT is made as of this 25th
day of September, 1997 by TCI American Cable Holdings III, L.P., a Colorado
limited partnership ("TCI"), and Xxxxxx Communications Associates, L.L.C., a
Colorado limited liability company ("Xxxxxx"). In consideration of the mutual
promises and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties hereto agree as
follows with respect to the administration and regulation of the affairs of the
Company:
ARTICLE 1: FORMATION AND DEFINITIONS
1.1 FORMATION. The Company was formed on September 25, 1997, by
filing Articles of Organization with the Colorado Secretary of State pursuant
to the Act and on behalf of the initial Members of the Company.
1.2 COMPANY NAME. The business of the Company will be conducted
under the name "Peak Cablevision" or any other name determined by the Company
in accordance with applicable law.
1.3 OFFICE AND AGENT. The initial registered office of the Company
in Colorado is located at 0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000,
and its initial registered agent is CT Corporation System. The Company may
subsequently change its registered office or registered agent in Colorado in
accordance with the Act.
1.4 FOREIGN QUALIFICATION. After formation of the Company under the
Act, the Company will apply for any required certificate of authority to do
business in any other state or jurisdiction where it conducts business, as
appropriate.
1.5 TERM. The Company begins its existence on the date its Articles
of Organization are filed with the Colorado Secretary of State and continues
until its Dissolution.
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1.6 DEFINITIONS. Terms used with initial capital letters will have
the meanings specified in EXHIBIT A, applicable to both singular and plural
forms, for all purposes of this Agreement.
ARTICLE 2: PURPOSES AND POWERS
2.1 PURPOSES. The purposes of the Company shall be, to the extent
permitted under applicable law, to engage in the business, directly or
indirectly, through interests in one or more subsidiaries, of: (a) acquiring,
developing, owning, operating, managing, and selling the cable television
systems and other assets to be contributed to the Company by the Members
pursuant to the Contribution Agreement; (b) acquiring, developing, owning,
operating, managing and selling, or investing in, additional cable television
systems; (c) acquiring, developing, owning, operating, managing and selling, or
investing in, businesses related to the operation of cable television systems;
(d) managing cable television systems; (e) conducting other businesses as
determined by the unanimous Vote of the Members; and (f) engaging in all
activities and transactions incidental to the foregoing (including owning or
leasing real property and incurring debt).
2.2 POWERS. The Company has all of the powers granted to a limited
liability company under the Act, as well as all powers necessary or convenient
to achieve its purposes and to further its business.
2.3 EFFECT ON COMPANY POWERS. The listing of the purposes of the
Company in Section 2.1 shall not be construed to limit or impair the
limitations on actions that may be taken by the Company as set forth in Section
4.4 or any of the other limitations expressly set forth in this Agreement.
ARTICLE 3: MANAGERS
3.1 MANAGEMENT. Except as specifically provided in Sections 4.3 and
4.4 (relating to the retained voting rights of the Members) or in the
Management Agreement, all management rights are vested in the Managers. These
management rights may be delegated, in whole or in part, to other Persons
(including delegation of day-to-day management authority).
3.2 NUMBER AND APPOINTMENT OF MANAGERS. Until this Agreement is
amended by the Members, there will be four Managers. The four initial Managers
are Xxxxxxx X. Xxxxxxxxxx and Xxxxxx Xxxxx (who are elected by the Class A
Ownership Interests) and Xxxxxxx X. Xxxxxx and Xxxxx X. Xxxxxx (who are elected
by the Class B Ownership Interests).
3.3 MAJORITY ACTION. Except as specifically provided in Section 4.4,
all decisions required to be made by the Managers shall require majority Vote
of the Managers. All such decisions may be made with or without a meeting and
the Managers may act in person, by
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telephone or any other method of communication by which all Managers
participating in the meeting can hear each other at the same time. Any
decision made by the Managers may, but need not, be set forth in writing.
3.4 ELECTION. Two Managers shall be elected by the affirmative Vote
of Members owning a majority of the Class A Ownership Interests held by all
Members, and two Managers shall be elected by the affirmative Vote of Members
owning a majority of the Class B Ownership Interests held by all Members. Each
Manager shall hold office until any one of the following occurs: (a) pursuant
to Section 4.3, another individual is elected as a Manager by the Class A or
Class B Ownership Interests (as the case may be) either at a meeting or by
written consent; (b) the Manager becomes legally incapacitated or dies; or (c)
the Manager is removed pursuant to Section 3.9.
3.5 QUALIFICATIONS. A Manager must be a natural person who is 18
years of age or older, but need not be a Member. In addition, the Managers
shall be persons whose appointment will not cause the Ownership Interests to be
deemed "voting securities" for purposes of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
3.6 DUTIES. Each Manager will perform all duties as a Manager in
good faith, in a manner reasonably believed to be in the best interests of the
Company, and with such care as an ordinarily prudent person in a like position
would use under similar circumstances. Unless a Manager has knowledge that
would cause such reliance to be unwarranted, a Manager in performing managerial
duties on behalf of the Company may rely on information, opinions, reports or
statements of the following: (a) one or more employees or agents of the
Company whom the Manager reasonably believes to be reliable and competent in
the matters presented; (b) any attorney, public accountant or other person as
to matters which the Manager reasonably believes to be within such Person's
professional or expert competence; and (c) any committee authorized by the
Act.
3.7 AUTHORITY. Each Manager is an agent of the Company for the
purpose of the Company's business. The act of a Manager binds the Company,
including acts for apparently carrying on in the usual way the business of the
Company, unless (a) such act is in contravention of the Articles; (b) such act
is in contravention of this Agreement; or (c) the Manager otherwise lacks
authority to act for the Company and the Person with whom the Manager is
dealing has knowledge of this lack of authority. A Manager has no authority
to do any act in contravention of the Articles or this Agreement.
3.8 REIMBURSEMENT. Upon compliance with such policies and
procedures as the Company may from time to time adopt, a Manager will be
reimbursed by the Company for all
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reasonable expenses incurred on behalf of the Company in connection with the
Company's business.
3.9 REMOVAL. A Manager elected by a Class may only be removed at
any time, with or without cause, by the affirmative Vote of Members of that
Class owning a majority of the Class A or Class B Ownership Interests (as the
case may be) held by all Members. Accordingly, the Members holding Class A
Ownership Interests elect (and may remove) two Managers, and the Members
holding Class B Ownership Interests may elect (and may remove) two Managers.
ARTICLE 4: MEMBERS
4.1 INITIAL MEMBERS. The initial Members of the Company are TCI and
Xxxxxx.
4.2 OWNERSHIP INTERESTS. Upon making the Formation Contributions
set forth in Section 5.1, TCI will have an initial Ownership Interest of 66.7%
and Xxxxxx will have an initial Ownership Interest of 33.3%. The Ownership
Interests in the Company are divided into two classes, Class A and Class B.
All of the Class A Ownership Interests are initially held by TCI, and all of
the Class B Ownership Interests are initially held by Xxxxxx. The Class A and
Class B Ownership Interests are identical in all respects except that each
Class votes as a separate voting group on the election and removal of Managers.
Subsequently, upon any Transfer of an Ownership Interest or otherwise, the
Ownership Interests will be determined in accordance with this Agreement and
the Company will amend Exhibit B by a written instrument placed in the Company
records.
4.3 CLASS RIGHTS. Notwithstanding the powers granted to a Manager
under the Act, the appointment and removal of a Manager as provided in Section
3.4 is reserved to the Members acting as separate classes, requiring the
affirmative action of Members owning a majority of the Class A or Class B
Ownership Interests (as the case may be) held by all Members.
4.4 UNANIMOUS APPROVAL. Notwithstanding any provision in this
Agreement to the contrary, the following actions by the Company will require
the affirmative approval of all Members:
(a) the adoption of the annual operating and capital
plans and budgets;
(b) a fundamental change in the Company's business from
that set forth in Section 2.1;
(c) the acquisition or disposition of cable systems, or
other material assets;
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(d) becoming a party to any consolidation, merger,
recapitalization or other form of reorganization;
(e) the liquidation, dissolution or filing for bankruptcy
of the Company;
(f) amending the Articles or this Agreement;
(g) initiating or settling any material litigation that
is not in the ordinary course of business (for purposes of this clause,
material means an amount equal to at least 10% of the total Fair Market Value
of the assets of the Company at the time of the proposed taking of such
action);
(h) entering into any transaction with any Affiliate or
any Member unless the transaction is on terms no less favorable to the Company
than could have been obtained in a comparable arms'-length transaction with a
Person that is not an Affiliate of a Member;
(i) the redemption or repurchase of Ownership Interests
in the Company;
(j) incurring any Indebtedness, or consummating any
transaction, including, the execution of any loan agreement or issuance of any
note or other debt instrument (whether secured or unsecured), such that
immediately after the incurrence of such Indebtedness or consummation of such
transaction, the Company's Operating Cash Flow Ratio would exceed 6.5 to 1;
(k) making a call for Additional Contributions;
(l) changing the Company's outside audit and accounting
firm from KPMG Peat Marwick to any other accounting firm; and
(m) any indirect action that would require such approval
if taken directly by the Company.
4.5 DUTIES. Each Member agrees to exercise the management rights
retained under this Article in good faith, in a manner reasonably believed to
be in the best interests of the Company, and with such care as an ordinarily
prudent person in a like position would use under similar circumstances.
4.6 REIMBURSEMENT. Upon compliance with such policies and procedures
as the Company may from time to time adopt, the Members will be reimbursed by
the Company for all
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reasonable expenses incurred on behalf of the Company in connection with the
Company's business.
4.7 NO COMPENSATION. Except pursuant to the Management Agreement or
upon the affirmative Vote of all of the Members, no Member (including any
Member who is also a Manager) or Affiliate of a Member shall be paid
compensation for services rendered to the Company other than the Preferred
Return or such Member's share of Profits.
4.8 EFFORTS OF MEMBERS. Each Member shall devote such time and effort
to the affairs of the Company as such Member determines to be necessary or
desirable to promote the successful operation of the Company.
4.9 OTHER ACTIVITIES. The Members may engage in or possess interests
in other business ventures of any nature and description, independently or with
others, and whether or not such businesses are in competition with the business
of the Company, and neither the Company nor any other Member will have any
right by virtue of this Agreement in such independent ventures.
4.10 RELATED-PARTY CONTRACTS. The Members acknowledge and agree that
the Company will enter into a management agreement with Xxxxxx or an Affiliate
of Xxxxxx. Any other related-party contract (including any agreement with a
Member or an Affiliate of a Member) is permitted under this Agreement (and does
not violate any conflict-of-interest or other legal restriction) as long as any
such contract is approved by the unanimous Vote of the Members. While TCI and
Xxxxxx are the only Members, such approval may be evidenced by their or their
Affiliates' joint signature on any such related-party contract.
4.11 ADDITIONAL MEMBERS. Additional Members of the Company may be
admitted incident to the contribution of money or other property to the Company
(or otherwise) only upon the affirmative Vote of all Members, effective upon a
date specified.
ARTICLE 5: CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
5.1 INITIAL CONTRIBUTION. Simultaneously with the execution of this
Agreement, the Members shall each contribute to the Company its respective
Formation Contribution (the "Formation Contributions") in cash in the amount
set forth in Exhibit C attached hereto. At the Closing (as defined in the
Contribution Agreement), the Members shall each contribute to the Company its
respective Initial Contributions (the "Initial Contributions"). Exhibit C sets
forth the Fair Market Value of the Initial Contributions of the Members,
subject to adjustment pursuant to the provisions of the Contribution Agreement.
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5.2 ADDITIONAL CONTRIBUTIONS. Except upon the affirmative Vote of
all Members and upon such terms and conditions as all Members may agree to in
writing, no Additional Contribution will be required from any Member unless
otherwise required by law.
5.3 NO WITHDRAWAL. Except as specifically provided in this
Agreement, no Member will be entitled to withdraw all or any part of such
Member's capital from the Company or, when such withdrawal of capital is
permitted, to demand a distribution of property other than money.
5.4 NO INTEREST ON CAPITAL. Except for the Preferred Return, no
Member will be entitled to receive interest on such Member's Capital
Contribution or Capital Account.
5.5 LOANS BY MEMBERS. If the Company borrows money from any Member
or any Affiliate of a Member, such amount shall be repaid with Interest on
demand, or with Interest and upon such other terms as the Company and such
Member or Affiliate may agree; provided that, the terms of such loan may not be
less favorable to the Company than the terms available from an unrelated
lender. Any such advance or loan will be treated as Indebtedness of the
Company, and will not be treated as a Capital Contribution by a Member. If any
Member or Affiliate pays money pursuant to any letter of credit, guarantee or
other surety arrangement for the benefit of the Company, such payment of money
will be deemed to be a loan made by such Person to the Company.
5.6 NO DRAWING ACCOUNTS. The Company will not maintain a drawing
account for any Member. All Distributions to Members will be governed by
Article 7 (relating to Distributions) and by Article 14 (relating to
Liquidation).
5.7 CAPITAL ACCOUNTS. The Company will maintain a separate Capital
Account for each Member. Credits and charges to capital accounts will be made
in accordance with the ?704(b) Regulations. The initial balance of each
Member's Capital Account shall equal the Initial Contributions.
5.8 TRANSFER. If all or any part of an Ownership Interest is
transferred in accordance with this Agreement, the Capital Account of the
Transferor that is attributable to the transferred interest will carry over to
the Transferee.
ARTICLE 6: ALLOCATION OF PROFITS AND LOSSES
6.1 GENERAL ALLOCATION RULE.
(a) Except as provided in Section 6.2, and after giving
effect to the special allocations set forth in Section 6.3 below, the Profits
or Losses of the Company, including items
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of income, gain, loss and deduction for each Fiscal Year, will be allocated to
the Members in proportion to their Ownership Interests.
(b) Notwithstanding Section 6.1(a), no Member shall be
allocated Losses or items of loss or deduction pursuant to Section 6.1(a) to
the extent such allocation would cause such Member to have an Adjusted Capital
Account Deficit at the end of any fiscal year. In the event Losses or items of
loss or deduction cannot be allocated pursuant to Section 6.1(a) as a result of
the limitation contained in this Section 6.1(b), then such Losses or items of
loss or deduction shall be allocated to the other Members in proportion to
their Ownership Interests, to the maximum amount permissible under this Section
6.1(b).
6.2 ALLOCATIONS UPON DISSOLUTION. Upon the Dissolution of the
Company or upon the sale of all or substantially all of the Company's assets,
but subject to Section 6.3, (a) Profits shall be allocated to the Members as
follows and in the following order of priority: (i) until no Member has a
deficit Capital Account; (ii) in proportion to the Members' Unrecovered
Contributions until each Member's Capital Account is equal to the sum of its
Unrecovered Contribution; (iii) in proportion to the Members' Unpaid Preferred
Returns until each Member's Capital Account is equal to its Unrecovered
Contribution and Unpaid Preferred Return; and (iv) any remaining Profits shall
be allocated ninety percent (90%) to the Members (in proportion to their
Ownership Interests) and ten percent (10%) to Xxxxxx; and (b) Losses shall be
allocated to the Members as follows and in the following order of priority: (i)
until each Member's Capital Account is equal to the sum of its Unpaid Preferred
Return and Unrecovered Contribution; (ii) in proportion to the Members'
Unrecovered Contribution until each Member's Capital Account is equal to its
unpaid Preferred Return; (iii) in proportion to the Members' Unpaid Preferred
Return until each Member's Capital Account is equal to zero; and (iv) to the
Members in proportion to their Ownership Interests.
6.3 SPECIAL ALLOCATIONS. The following special allocations shall be
made in the following order:
(a) MINIMUM GAIN CHARGEBACK. If, during the Company's
fiscal year, there is a net decrease in the Company's minimum gain (as
determined under Section 1.704-2(d) of the Regulations), then items of income
and gain of the Company shall be allocated to each Member in an amount equal to
such Member's share of the net decrease in partnership minimum gain determined
in accordance with Section 1.704-2(g) of the Regulations, at the end of such
fiscal year in accordance with Section 1.704-2(f) of the Regulations. This
provision is intended to comply with the "minimum gain chargeback" requirement
in the above referenced Regulations Sections and shall, to the extent possible,
be interpreted consistently therewith. If during a Company taxable year there
is a net decrease in partner nonrecourse debt minimum gain (as defined in
Section 1.704-2(g) of the Regulations), then any Member with a share of that
partner nonrecourse minimum debt gain (determined under Section 1.704-2(i)(5)
of the Regulations) as of the beginning of the year must be allocated items of
income and gain of the Company for the year equal to that Member's share of the
net decrease in the partner
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nonrecourse debt minimum gain in compliance with Section 1.704-2(i)(4) of the
Regulations.
(b) QUALIFIED INCOME OFFSET. If any Member unexpectedly
receives any adjustments, allocations, or distributions described in sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of
the Regulations, items of Company income and gain shall be specially allocated
to each such Member in an amount and manner sufficient to eliminate, to the
extent required by the Regulations, the Adjusted Capital Account Deficit of
such Member as quickly as possible, provided that an allocation pursuant to
this Section 6.3(b) shall be made if and only to the extent that such Member
would have Adjusted Capital Account Deficit after all other allocations
provided for in this Article 6 have been tentatively made as if this Section
6.3(b) were not in the Agreement.
(c) GROSS INCOME ALLOCATION. If any Member has an
Adjusted Capital Account Deficit at the end of any Company Fiscal Year, each
such Member shall be specially allocated items of Company income and gain in
the amount of such excess as quickly as possible; provided, however, that an
allocation pursuant to this Section 6.3(c) shall be made if and only to the
extent that such Member would have an Adjusted Capital Account Deficit after
all other allocations provided for in this Article 6 have been tentatively made
as if this Section 6.3(c) and Section 6.3(b) hereof were not in the Agreement.
(d) MEMBER NONRECOURSE DEDUCTIONS. Notwithstanding the
general rule on allocation of Losses, any Member Nonrecourse Deductions of the
Company attributable to any Member nonrecourse liability (which is nonrecourse
to the Company, but for which one or more Members or related parties bear the
economic risk of loss) will be determined and allocated (in accordance with the
Section 752 Regulations and the Section 704(b) Regulations) to those Members
bearing the economic risk of loss for the liability.
(e) NONRECOURSE DEDUCTIONS. Notwithstanding the general
rule on allocation of Losses, any Nonrecourse Deductions of the Company
attributable to any nonrecourse liability (as defined in Section 1.704-2(b)(3)
of the Regulations) will be determined and allocated (in accordance with the
Section 752 Regulations and the Section 704(b) Regulations) to the Members in
proportion to their Ownership Interests.
6.4 INTENTIONS OF THE MEMBERS. It is the intent of the Members
that the allocations provided in Article 6 of this Agreement will result in
their respective positive Capital Account balances being equal to the
distributions required pursuant to Section 14.2 of the Agreement. However, if
after giving effect to the allocations required in Article 6, the Capital
Account
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balances of the Members are not equal to the distributions required under
Section 14.2 of the Agreement and notwithstanding anything herein to the
contrary, (i) all distributions required under Section 14.2 of the Agreement
shall be made to the Members pursuant to Section 14.2; and (ii) the allocation
provisions of Article 6 shall be amended by the Managers if and to the extent
necessary to produce positive Capital Account balances equal to the
distributions required pursuant to Section 14.2 of the Agreement.
6.5 ECONOMIC EFFECT. Notwithstanding any other provision herein
to the contrary, no allocation of Profits, Losses, or items of income, gain,
loss and deduction will be made to a Member if the allocation would not have
"economic effect" under section 1.704-1(b)(2)(ii) of the Regulations or
otherwise would not be in accordance with the Members? interests in the Company
within the meaning of section 1.704-1(b)(3) or section 1.704-2(b)(1) of the
Regulations. A majority of the Managers will have the authority to reallocate
any item in accordance this Section 6.5; provided, however, that (a) no such
change shall have a material adverse effect upon the amount of cash or other
property distributable to any Member, (b) each Member shall have 30 days prior
notice of such proposed modification and (c) the Company shall have received an
opinion of tax counsel to the Company that such modification is necessary to
comply with section 704(b) of the Code.
6.6 TAX ALLOCATIONS. Allocation of items of income, gain, loss and
deduction of the Company for Federal income tax purposes for a Fiscal Year will
be allocated, as nearly as is practicable, in accordance with the manner in
which such items are reflected in the allocations of Profits and Losses among
the Members for such Fiscal Year. To the extent possible, principles identical
to those that apply to allocations for Federal income tax purposes will apply
for state and local income tax purposes.
6.7 TRANSFER. If any Transfer of an Ownership Interest occurs
during any Fiscal Year, the books of the Company will be closed as of the
effective date of Transfer. The Profits or Losses allocable to the transferred
Ownership Interest which are attributed to the period from the first day of
such Fiscal Year through the effective date of Transfer will be allocated to
the Transferor, and the Profits or Losses attributed to the period commencing
on the effective date of Transfer will be allocated to the Transferee. In lieu
of an interim closing of the books of the Company and with the agreement of the
Transferor and Transferee, the Company may agree to allocate Profits and Losses
for such Fiscal Year between the Transferor and Transferee based on a daily
proration of items for such Fiscal Year or any other reasonable method of
allocation (including an allocation of extraordinary Company items, as
determined by the Company, based on when such items are recognized for Federal
income tax purposes).
6.8 CONTRIBUTED PROPERTY. As required by the Code, all items of
income, gain, loss and deduction with respect to property (other than cash or
cash equivalents) contributed or
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deemed contributed to the Company will, solely for tax purposes, be allocated
among the Members so as to take into account the variation between the tax
basis of the property and its Fair Market Value at the time of contribution.
All tax allocations made under this provision will be made in accordance with
Section 704(c) of the Code and Regulations Section 1.704- 3(b).
6.9 TAX CREDITS. Any tax credit, and any tax credit recapture, will
be allocated to the Members in the same ratio that the Federal income tax basis
of the asset (to which such tax credit relates) is allocated to the Members
under the Section 46 Regulations, and if no basis is allocated, in the same
manner as Profits are allocated to the Members under Section 6.1(a).
ARTICLE 7: DISTRIBUTIONS
7.1 CASH RESERVES. The Company will establish and maintain
reasonable cash reserves for (a) operating expenses (other than depreciation,
amortization or similar non-cash allowances); (b) capital improvements; and (c)
debt service. The amount of such reserves will be as the Company may from time
to time determine, and such amount will be allowed as a deduction in
determining Net Operating Cash Flow.
7.2 PRORATA DISTRIBUTIONS. The Company will make all Distributions
of Net Operating Cash Flow and Net Sales Cash to the Members as follows and in
the following order of priority:
(a) to the Members pro rata in proportion to their
respective Unrecovered Contribution amounts until each of their Unrecovered
Contribution amounts is reduced to zero;
(b) to the Members pro rata in proportion to their
respective Unpaid Preferred Return amounts until each of their Unpaid Preferred
Return amounts is reduced to zero; and
(c) to the Members pro rata in proportion to their
Ownership Interests.
Any available amount of Net Operating Cash Flow and Net Sales Cash may be
distributed to the Members on or before the 10th day of the month following its
receipt, subject to any restrictions imposed by any credit facilities entered
into by the Company. The Company will make Distributions to the Members in
each Fiscal Year, pro rata in an amount equal to each Members income tax
liability related to its Ownership Interest.
7.3 NONPRORATA DISTRIBUTIONS. The Members intend that all
Distributions will be made to the Members in proportion to their Ownership
Interests. In the event any Distribution is not made in proportion to their
Ownership Interests, any excess Distribution to a Member will be treated as an
advance or loan made by the Company to such Member, payable to the Company with
Interest and on demand.
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7.4 PAYMENT. Any Distribution will be made to a Member only if such
Person owns an Ownership Interest on the date of Distribution, as reflected on
the books of the Company.
7.5 WITHHOLDING. If required by the Code or by state or local law,
the Company will withhold any required amount from Distributions to a Member
for payment to the appropriate taxing authority. Any amount so withheld from a
Member will be treated as a Distribution by the Company to such Member. Each
Member agrees to timely file any agreement that is required by any taxing
authority in order to avoid any withholding obligation that would otherwise be
imposed on the Company.
7.6 IN KIND DISTRIBUTIONS. Any property (other than cash or cash
equivalents) distributed in kind will be deemed sold at its Fair Market Value
on the date of such Distribution, with any gain or loss on such deemed sale
allocated to the Members and credited or charged to Capital Accounts in
accordance with the provisions of Articles 5 and 6.
7.7 DISTRIBUTION LIMITATION. Notwithstanding any other provision of
this Agreement, the Company will not make any Distribution to the Members if,
after the Distribution, the liabilities of the Company (other than liabilities
to Members on account of their Ownership Interests) would exceed the Fair
Market Value of the Company's assets. With respect to any property subject to
a liability for which the recourse of creditors is limited to the specific
property, such property will for this purpose be included in assets only to the
extent the property's Fair Market Value exceeds its associated liability, and
such liability will be excluded from the Company's liabilities.
ARTICLE 8: RESTRICTIONS ON SALE AND TRANSFER OF PARTNERSHIP
INTERESTS AND OTHER MATTERS
8.1 LIMITATION ON TRANSFERS. Except as set forth below, no Member
may sell, assign, transfer or otherwise dispose of, or pledge, hypothecate or
otherwise encumber all or any part of its Ownership Interest, the Profits and
Losses and Distributions therefrom, or any part thereof (whether voluntarily,
involuntarily or by operation of law) unless approved by each Member, provided
however, that TCI may sell or transfer any of its Ownership Interest to Tele-
Communications, Inc., or any of its Affiliates and Xxxxxx may transfer any of
its Ownership Interests to Xxxxxx Capital Partners, Ltd. or any of its
Affiliates, including its partners or lineal descendants of such partners,
provided that each such Transferee, prior to such sale or transfer, becomes a
party to this Agreement and agrees to be bound by the terms and conditions
hereof. Upon becoming a party to this Agreement in compliance with the terms
hereof, any Transferee shall be substituted fully for, and shall enjoy the same
rights and be subject to the same obligations as, its predecessor hereunder.
Any attempt to transfer or encumber any Ownership
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Interest or Profits and Losses and Distributions therefrom (whether
voluntarily, involuntarily or by operation of law), other than as provided for
above, without the approval of each Member shall be void.
8.2 BUY-SELL AGREEMENT. At any time after the seventh anniversary of
the formation of the Company, either TCI or Xxxxxx (as applicable, the
"Initiating Member") shall have the right to initiate a buy-sell procedure by
giving written notice (the "Offer Notice") to the other party (the
"Non-Initiating Member") that it desires to purchase the Non-Initiating
Member's Ownership Interest for a price equal to the Non-Initiating Member's
Adjusted Capital Account Value or sell its Ownership Interest to the
Non-Initiating Member for a price equal to the Initiating Member's Adjusted
Capital Account Value. Within thirty (30) days of the Offer Date (the
"Election Date"), the Non-Initiating Member shall elect either (a) to buy the
Initiating Member's Ownership Interest, for an amount equal to the Initiating
Member's Adjusted Capital Account Value, (b) to sell the Non-Initiating
Member's Ownership Interest to the Initiating Member, for an amount equal to
the Non-Initiating Member's Adjusted Capital Account Value, or (c) neither
purchase the Initiating Member's Ownership Interest or sell its Ownership
Interest. If the Non-Initiating Member elects to purchase the Initiating
Member's Ownership Interest, the Ownership Interest of the Initiating Member
shall be purchased by the Non- Initiating Member at the price and upon the
terms and conditions set forth in the Offer Notice. If the Non-Initiating
Member elects to sell its Ownership Interest, the Ownership Interest of the
Non-Initiating Member shall be purchased by the Initiating Member at the price
and upon the terms and conditions set forth in the Offer Notice. Any sale and
purchase of Ownership Interests in accordance with the provisions of this
Section 8.2 shall be closed at the principal office of the Company at 2:00
p.m., Mountain Standard Time, within twelve months after the Offer Date, and
all requisite documents, instruments and papers shall be signed at the offices
of the Company on the day fixed for such closing. All expenses and fees,
including legal fees, incurred in connection with any such closing shall be
paid ratably by the selling and purchasing Members. The parties will use good
faith efforts to effect any transaction pursuant to the procedures set forth in
this Section in a tax-efficient manner, such as a tax-deferred reorganization.
8.3 SALE OR SPLIT-UP PROCEDURE. If the Non-Initiating Member does not
elect to be either a buyer or a seller pursuant to Section 8.2, within 30 days
of the Election Date, the Initiating Member has the right to initiate a
procedure for (a) the sale of all, but not less than all, of the Company
systems pursuant to clause 8.3.1 below (the "Sale"), or (b) the distribution of
the Company assets to the Members pursuant to clause 8.3.2 below (the "Split-Up
Procedure").
8.3.1 SALE. If the Initiating Member chooses the Sale
option, it shall deliver written notice thereof to the Non-Initiating Member
within 30 days after the Election Date ("Sale Notice"). Thereafter, the
Initiating Member shall seek offers for all, but not less than all, of the
systems from Third Parties. The Non-Initiating Member shall have the right to
match any Third
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Party Offer that is at or below the Stated Value. Once an offer has been
accepted by the Initiating Member (on behalf of the Company), the parties will
work together to sell the systems to the Third Party buyer (or the
Non-Initiating Member if it can and does match an offer) and then liquidate the
Company pursuant to Article 14. The sale must be completed within twelve
months from the date of the Sale Notice. All costs relating to the Sale,
including brokers and attorneys fees, shall be borne by the Initiating Member.
8.3.2 SPLIT-UP PROCEDURE. If the Initiating Member
chooses the Split-Up Procedure it shall give written notice thereof to the
Non-Initiating Member within thirty (30) days after the Election Date (the
"Split-Up Notice"). Thereafter, within sixty (60) days of the Split-Up Notice,
the Non-Initiating Member shall divide the assets and liabilities (including
expenses of liquidation) of the Company into two (2) equal groups. In order to
equalize the two groups, the Non-Initiating Member shall add cash, notes
payable to the Company, or stock to one group. The Initiating Member will
select the group of assets and liabilities it desires to take within ninety
(90) days of the Split-Up Notice, and the Non-Initiating Member will receive
the remaining group of assets and liabilities. The debt associated with the
assets of the Company shall be used to adjust the equal group of assets in
order to reflect the actual Ownership Interests of the Members, which Ownership
Interests shall equal the applicable Member's Capital Account balance adjusted
by restating the Capital Accounts of the Members to reflect the Fair Market
Value of the assets of the Company and allocating the unrealized profits and
losses in accordance with the provisions of Article 6. The Company will then
be dissolved pursuant to Article 13.
8.4 ASSIGNMENT OF INTEREST IN DISTRIBUTIONS. Notwithstanding the
provisions of Section 8.1, and except as required by law, a Member may assign
all or a portion of its interest in its right to receive Distributions to any
Person without the consent of the other Member. An assignee of an interest in
Distributions does not become an additional or a substituted Member.
8.5 CALCULATION OF FAIR MARKET VALUE. For purposes of this Article
8, Fair Market Value shall be calculated in the following manner. For a period
not to exceed 30 days, the Members shall negotiate in good faith with each
other to determine the Fair Market Value of the Company. If the parties fail
to agree upon the Fair Market Value then each Member shall select a nationally
recognized investment banking firm to evaluate the Company assets and to
determine the gross fair market value of the Company's assets as of the
immediately preceding quarter ending prior to the Offer Notice. If the
difference between the two values is 3% or less of the lower value, then the
Fair Market Value of the Company will be the average of the two appraisal
values. If the difference between the two values is more than 3% of the lower
value, the two appraisers selected by the Members will select a third qualified
appraiser who will determine the gross fair market value of the Company's
assets as of the immediately preceding quarter ending prior to the Offer
Notice. The Fair Market Value of the Company will be equal to the average of
the two appraisals that are closest to one another. If the highest and lowest
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appraisals are equidistant from the middle appraisal, then such Fair Market
Value of the Company shall be equal to the middle appraisal. Each Member will
bear the expenses of the investment banking firm that it selects, and if a
third investment banking firm is used, the Members will share the expense of
the third firm equally.
ARTICLE 9: MEETINGS OF MEMBERS
9.1 ANNUAL MEETING. Unless the Company determines (whether by Vote
or otherwise) that an annual meeting is not necessary or desirable, the annual
meeting of the Members will be held on the first Monday in March in each year
at 10:00 a.m. (local time) or at such other time as determined by any Member or
Members owning eighty percent (80%) of the Ownership Interests held by all
Members by Notice to all other Members. The purpose of the annual meeting is
to review the Company's operations for the preceding Fiscal Year and to
transact such business as may come before the meeting. The failure to hold any
annual meeting has no adverse effect on the continuance of the Company.
9.2 SPECIAL MEETINGS. Special meetings of the Members, for any
purpose or purposes, may be called by any Member or Members owning at least 10%
of the Ownership Interests held by all Members by Notice to all other Members.
9.3 PLACE. The place of meeting for any meeting of the Members will
be as determined by the affirmative vote of Members owning at least 80% of the
Ownership Interests held by all Members. If no designation is made, or if a
special meeting is otherwise called, the place of meeting will be the Company's
registered office in Colorado.
9.4 NOTICE. Notice of any annual meeting determined by resolution of
the Members or of any special meeting must be given not less than five days nor
more than 30 days before the date of the meeting. Such Notice must state the
place, day, and hour of the meeting and, in the case of a special meeting, the
purpose for which the meeting is called.
9.5 WAIVER OF NOTICE. Any Member may waive, in writing, any Notice
that is required to be given to such Member, whether before or after the time
stated in such Notice. Any Member who signs minutes of action (or written
consent or agreement) will be deemed to have waived any required Notice with
respect to such action.
9.6 RECORD DATE. For the purpose of determining Members entitled to
Notice of or to vote at any meeting of Members, the date on which Notice of the
meeting is first given will be the record date for the determination of
Members. Any such determination of Members entitled to vote at any meeting of
Members will apply to any adjournment of a meeting.
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9.7 QUORUM. A quorum at any meeting of Members shall consist of
Members owning at least 80% of the Ownership Interests held by all Members.
Any meeting at which a quorum is not present may adjourn the meeting to another
place, day and hour without further Notice.
9.8 MANNER OF ACTING. If a quorum is present, the affirmative Vote
of Members as set forth in Article 4 will be the act of the Company.
9.9 PROXIES. At meeting of Members, a Member may vote in person or
by written proxy given to another Member. Such proxy must be signed by the
Member or by a duly authorized attorney-in-fact and filed with the Company
before or at the time of the meeting. No proxy will be valid after eleven
months from the date of its signing unless otherwise provided in the proxy.
Attendance at the meeting by the Member giving the proxy will revoke the proxy
during the period of attendance.
9.10 MEETINGS BY TELEPHONE. The Members may participate in a meeting
by means of conference telephone or similar communications equipment by which
all Members participating in the meeting can hear each other at the same time.
Such participation will constitute presence in person at the meeting and waiver
of any required Notice.
9.11 ACTION WITHOUT A MEETING. Any action required or permitted to
be taken at a meeting of Members may be taken without a meeting if the action
is evidenced by one or more written consents describing the action taken,
signed by Members owning total Ownership Interests sufficient for the
particular action as set forth in Article 4. Action so taken is effective when
sufficient Members approving the action have signed the consent, unless the
consent specifies a later effective date.
ARTICLE 10: LIABILITY OF A MEMBER
10.1 LIMITED LIABILITY. As provided in the Act, no Member or Manager
of the Company (including any Person who formerly held such status) is liable
under a judgment, decree or order of a court, or in any other manner, for any
debt, obligation or liability of the Company.
10.2 CAPITAL CONTRIBUTION. Each Member is liable to the Company for
(a) the Initial Contribution agreed to be made under Section 5.1 and any
Additional Contribution agreed to be made under Section 5.2 and (b) any Capital
Contribution or Distribution that has been wrongfully or erroneously returned
or made to such Person in violation of the Act, the Articles or this Agreement.
10.3 CAPITAL RETURN. Any Member who has received the return of all
or any part of a Capital Contribution in violation of the Act or this Agreement
is liable to the Company for a
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period of six years from the date of such Distribution for the amount of the
Capital Contribution wrongfully returned.
ARTICLE 11: INDEMNIFICATION
11.1 GENERAL. The Company will indemnify each Member and Manager
from any Liability incurred in any Proceeding to which such Person is made a
party because such Person was a Member or Manager, or acted or failed to act
with respect to management of the Company, if such Person acted in good faith,
in a manner he or she reasonably believed to be in the best interests of the
Company and with such care as an ordinarily prudent person in a like position
would use under similar circumstances. Notwithstanding the preceding sentence,
and unless the Liability was reasonably incurred in the ordinary and proper
conduct of the Company's business or for the preservation of its business or
property, the Company may indemnify a Member or Manager only if the Company
authorizes the indemnification in the specific case after a determination that
such Person has met the standard of conduct described above.
11.2 EXCEPTION. Notwithstanding the general rule stated in Section
11.1, the Company will not indemnify any Member or Manager in connection with
any Proceeding by (or in right of) the Company in which such Person was
determined liable to the Company or determined to have received an improper
personal benefit.
11.3 EXPENSE ADVANCEMENT. With respect to the reasonable expenses
incurred by a Member or Manager who is a party to a Proceeding and unless the
Section 11.2 exception applies, the Company may provide funds to such Person in
advance of the final disposition of the Proceeding if such Person furnishes the
Company with his or her written affirmation of a good-faith belief that he or
she has met the standard of conduct described in Section 11.1, and such Person
agrees in writing to repay the advance if it is subsequently determined that he
or she has not met such standard of conduct.
11.4 INSURANCE. The indemnification provisions of this Article do
not limit a Member's or Manager's right to recover under any insurance policy
maintained by the Company. If, with respect to any Liability, any Member or
Manager receives an insurance policy indemnification payment which, together
with any indemnification payment made by the Company, exceeds the amount of
such Liability, then such Person will immediately repay such excess to the
Company.
11.5 INDEMNIFICATION OF OTHERS. To the same extent that the Company
will indemnify and advance expenses to a Member or Manager, the Company may
indemnify and advance expenses to any officer, employee or agent of the
Company. In addition, the Company, in its complete discretion, may indemnify
and advance expenses to any Company employee or agent to a greater extent than
a Member or Manager.
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ARTICLE 12: ACCOUNTING, REPORTING, PROGRAMMING AND OTHER DISCOUNTS
12.1 FISCAL YEAR. For income tax and accounting purposes, the Fiscal
Year of the Company will end on December 31 in each year (unless otherwise
required by the Code).
12.2 ACCOUNTING METHOD. For income tax and accounting purposes, the
Company will use the accrual receipts and disbursements method of accounting
(unless otherwise required by the Code).
12.3 TAX ELECTIONS. The Company will have the authority to make such
tax elections, and to revoke any such election, as a majority of the Managers
may from time to time determine. Notwithstanding the preceding sentence,
following any Transfer (within the meaning of ?754 of the Code) of a 10% or
more Ownership Interest in a single transaction, the Company will make the
election under ?754 of the Code upon the timely written request of either the
Transferor or the Transferee. In addition, the Company may make the ?754
election if a majority of the Managers determines that such election is in the
best interests of the Company or any Member.
12.4 RETURNS. The Company will cause the preparation and timely
filing of all tax returns required to be filed by the Company pursuant to the
Code, as well as all other tax returns required in each jurisdiction in which
the Company does business. Copies of the returns shall be furnished to the
Members for review and approval as soon as possible after the end of the Fiscal
Year. Information required for the preparation of each Member's income tax
returns shall be furnished to the Members as soon as possible after the close
of the Fiscal Year.
12.5 TAX MATTERS PARTNER. Xxxxxx is hereby designated Tax Matters
Partner for the Company. Each Member shall have the right to participate in
(a) any administrative proceeding relating to the determination of items at the
Company level and (b) any discussions with the Internal Revenue Service
relating to the allocations pursuant to Article 6 and no settlement or
compromise of any issue related to said allocations will be made without the
consent of all affected Members. The Tax Matters Partner shall not enter into
any extension of the period of limitations for making assessments on behalf of
the Members without first obtaining the consent of a majority of the Managers.
Any reasonable cost or expense incurred by the Tax Matters Partner in
connection with its duties, including the preparation for or pursuance of
administrative or judicial proceedings, shall be paid by the Company.
12.6 AUDITORS. KPMG Peat Marwick shall be the Company's outside audit
and accounting firm and shall handle all accounting functions for the Company.
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12.7 REPORTS. As soon as is practicable after the close of each
calendar month and quarter (in any event no later than the fifteenth day after
the end of such month or quarter, as applicable), the Managers shall provide
each Member with the consolidated profit and loss statements, balance sheets
and cash flow statements of the Company. In addition, the Managers shall
provide each Member with system statistical information (i.e., homes passed,
EBUs and premium subscribers by service) on or before the fifteenth day after
the end of such month. The Company books will be closed at the end of each
Fiscal Year and statements shall be prepared showing the financial condition of
the Company and its Profits or Losses from operations. As soon as practicable
after the close of each Fiscal Year (and in any event by March 15 following the
end of each Fiscal Year), the Managers shall provide each Member with audited
income statements, balance sheets and cash flow statements.
12.8 BOOKS AND RECORDS. The following records of the Company will be
kept at the Company's registered office in Colorado, and will be available for
inspection and copying by any Member at such Person's expense, during ordinary
business hours upon reasonable notice:
(a) A current list of the full name and last known
mailing address of each Member (and Manager, if any), both past and present;
(b) A copy of the Articles and of this Agreement, as
amended (as well as any signed powers of attorney pursuant to which any such
document was signed);
(c) Copies of the Company's Federal, state and local
income tax returns and reports, and copies of any Company financial statements,
for the three most recent years;
(d) Minutes, or minutes of action, of every annual and
special meeting of the Members; and
(e) To the extent not contained in this Agreement, any
agreement or understanding among the Members which concerns required or agreed
Capital Contributions, the agreed value and timing of such contributions, the
time or event which may terminate membership in the Company, the method for
determining Distributions, or any right to receive a return of any Capital
Contribution.
12.9 INFORMATION. Any Member has the right to inspect and copy the
Company books and records as provided in Section 12.8 and to have a formal
accounting of Company affairs whenever circumstances render it just and
reasonable. In addition, subject to reasonable standards as established by the
Company from time to time, and upon reasonable demand for any purpose
reasonably related to the Member's interest as a Member, any Member has the
right to
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obtain from the Company all information in the Company's possession relating to
the state of the Company's business and its financial condition.
12.10 BANKING. The Company may establish one or more bank or
financial accounts and safe deposit boxes. The Company may authorize one or
more individuals to sign checks on and withdraw funds from such bank or
financial accounts and to have access to such safe deposit boxes, and may place
such limitations and restrictions on such authority as the Company deems
advisable.
12.11 PROGRAMMING AND @ HOME.
(a) TCI will provide, or cause to be provided,
programming to the Company provided that the Company enters into a supply
agreement with Satellite Services, Inc. ("SSI"), an affiliate of TCI (the "SSI
Agreement"). For each of the systems contributed by TCI (the "TCI Systems"),
the Company commits to continued carriage of any programming services listed on
Exhibit D to the SSI Agreement which were carried by the TCI Systems on the
Closing Date. The Company commits to continued carriage of Starz and Encore on
the TCI Systems on the same terms and conditions set forth in the Agreement in
Principle dated May 21, 1997 between Liberty Media Corporation and
Tele-Communications, Inc. The Members shall use their reasonable best efforts
to cause the Company to carry Starz and Encore on the remaining systems. The
cost for receiving SSI programming shall be equal to 1.5% of the total cost of
programming purchased by the Company through SSI.
(b) Promptly following the Closing (but in any event not
later than the thirtieth day following the Closing), the Company shall create
two single-member limited liabilities companies; the sole member of each such
limited liability company shall be the Company. Upon such formation the
Company shall grant to one of such limited liability companies the sole and
exclusive right to offer, provide and distribute, and to conduct all operations
relating to, all residential and work-related internet services (the "Internet
Services") using the cable television plant and assets of the TCI Systems (the
"TCI Internet Company") and the other of such companies the sole and exclusive
right to offer, provide and distribute, and to conduct the operations relating
to the Internet Services using the cable television plant and assets of the
systems contributed by Xxxxxx (the "Xxxxxx Internet Company"). In connection
with the foregoing, the Company hereby grants to the TCI Internet Company and
the Xxxxxx Internet Company access to, and the right to use, all equipment,
plant and assets necessary to operate the Internet Services. Both the TCI
Internet Company and the Xxxxxx Internet Company shall be managed by TCI. In
connection with the foregoing, the Company hereby agrees that @Home will be the
exclusive internet provider for the TCI Systems and the Xxxxxx Systems.
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12.12 OTHER DISCOUNTS. To the extent allowable under the applicable
agreement, each Member shall use all reasonable efforts to make their
programming, equipment discounts and other contract arrangements, including,
without limitation, billing services, available to the Company on substantially
the same terms available to such Member. In connection with the foregoing, the
Company shall use CSG Systems, Inc. ("CSG") as its billing vendor and TCI shall
cause CSG to be the Company's billing vendor pursuant to the terms and rates
set forth in the Restated and Amended CSG Master Subscriber Management system
Agreement dated August 10, 1997 between CSG and TCI Cable Management
Corporation.
12.13 TELEPHONY RESTRICTIONS. Each Member represents and warrants
that, at the time of the contribution of its respective Systems, the Company is
not engaged in the wireless telephone business. For so long as TCI (or any of
its Affiliates) holds an interest in Sprint Spectrum Holdings Company, L.P.
(the "Sprint Partnership"), the Company will not conduct or market (i.e.,
"engage in" in its broadest sense) a wireless communications business. In
connection therewith, prior to January 31, 1999, (a) the Company will not offer
(or promote or package any of its products or services with or act as a sales
agent for) wireline services (local or long distance) under the brand name of
an incumbent LEC (all RBOCs, Frontier Corporation and GTE Corporation) or IXC
(AT&T Corp., MCI Communications Corporation, British Telecommunications plc,
Worldcom, Inc., Cable & Wireless plc, LCI International Inc. and Frontier
Corporation); (b) the Company will not make its distribution facilities
available to a third party in connection with offering local phone service to
residential customers without making the facilities similarly available to
Sprint Corporation ("Sprint"); however, the Company itself may offer local
phone service (subject to the restrictions in the preceding paragraph (a))
without offering its distribution facilities to Sprint; and (c) the Company
will not make its distribution facilities available to any incumbent LEC or IXC
for high speed data services without making its facilities similarly available
to Sprint; however, such facilities may be made available to other third
parties, including @Home, without such facilities being made available to
Sprint.
12.14 COOPERATION AS TO RATES AND FEES.
(a) If TCI is required following Closing pursuant to any Legal
Requirement, settlement or otherwise to reimburse to any subscribers of the
systems contributed by TCI any subscriber payments previously made by them,
including fees for cable television service, late fees and similar payments,
the Company agrees that it will make such reimbursement through the Company's
billing system on reasonable terms specified by TCI and TCI will provide such
funds for reimbursement to the Company for all such payments to be made by the
Company following Closing, along with the Company's reasonable costs and
expenses incurred in making such payments.
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(b) If TCI is permitted following Closing pursuant to any
Legal Requirement, settlement or otherwise to pass through to subscribers of
the systems contributed by TCI the amount of any "franchise fee on franchise
fee" or other amounts that TCI is required to pay with respect to the period
prior to Closing, the Company agrees that it will collect such amounts as
specified by TCI from subscribers of such systems and will promptly remit such
amounts to TCI, less the Company's reasonable costs and expenses incurred in
collecting such amounts.
ARTICLE 13: DISSOLUTION OF THE COMPANY
13.1 DISSOLUTION. Dissolution of the Company will occur upon
the earliest to occur of: (a) the sale of all or substantially all of the
Company's assets; (b) the bankruptcy, insolvency or appointment of a trustee or
receiver to manage the affairs of a Member; (c) the affirmative Vote of all of
the Members; and (d) December 31, 2012. Without the unanimous consent of all
Members, each Member agrees not to voluntarily withdraw as a Member and if any
such Member effects such a withdrawal in violation of this Agreement, the
Company may recover damages for breach of this Agreement.
ARTICLE 14: LIQUIDATION
14.1 LIQUIDATION. Upon Dissolution of the Company, the Company will
immediately proceed to wind up its affairs and liquidate. The Manager or
Managers, or if none, the Person owning the largest Ownership Interest, or if
such Person fails to act, any Person appointed by all of the Members, will act
as liquidating trustee or trustees. The winding up and Liquidation of the
Company will be accomplished in a businesslike manner as determined by the
liquidating trustee or trustees. A reasonable time will be allowed for the
orderly Liquidation of the Company and the discharge of liabilities to
creditors so as to enable the Company to minimize any losses attendant upon
Liquidation. Any gain or loss on disposition of any Company assets in
Liquidation will be allocated to Members and credited or charged to capital
accounts in accordance with the provisions of Articles 5 and 6. Any
liquidating trustee or trustees are entitled to reasonable compensation for
services actually performed, and may contract for such assistance in the
liquidation process as such Person or Persons deem necessary. As soon as
possible after Dissolution of the Company, the Company will file a statement of
intent to dissolve with the Colorado Secretary of State pursuant to the Act.
Until the filing of articles of dissolution as provided in Section 14.6, the
liquidating trustee or trustees may settle and close the Company's business,
prosecute and defend suits, dispose of its property, discharge or make
provision for its liabilities, and make distributions in accordance with the
priorities set forth in Section 14.2.
14.2 PRIORITY OF PAYMENT. The assets of the Company will be
distributed in Liquidation of the Company in the following order:
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(a) First, to creditors by the payment or provisions for
payment of the debts and liabilities of the Company (other than any loans or
advances that may have been made by any Member or Affiliate) and the expenses
of Liquidation.
(b) Second, to the setting up of any reserves that are
reasonably necessary for any contingent, conditional or unmatured liabilities
or obligations of the Company.
(c) Third, to the repayment of any loans or advances that
may have been made by any Member or Affiliate (proportionately if the amount
available for such repayment is insufficient for payment in full).
(d) Forth, to the Members in proportion to their
respective Unrecovered Contributions until their Unrecovered Contribution
amounts equal zero.
(e) Fifth, to the Members in proportion to their
respective Unpaid Preferred Returns until their Unpaid Preferred Return amounts
equal zero.
(f) Sixth, 90% to the Members (pro rata in proportion to
their respective Ownership Interests) and 10% to Xxxxxx.
14.3 DISTRIBUTION TO MEMBERS. Distributions in Liquidation due to the
Members may be made by either or a combination of the following methods:
selling the Company assets and distributing the net proceeds, or by
distributing the Company assets to the Members at their net Fair Market Value
in kind. Any liquidating Distribution in kind to the Members may be made
either by a pro rata Distribution of undivided interests or, upon the unanimous
Vote of all Members, by non pro rata Distribution of specific assets at Fair
Market Value on the effective date of Distribution. Any Distribution in kind
may be made subject to, or require assumption of, liabilities to which such
property may be subject, but in the case of any non pro rata Distribution only
upon the express written agreement of the Member receiving the Distribution.
Distributions will be made in accordance with the time requirements set forth
in the ?704(b) Regulations. Each Member hereby agrees to save and hold
harmless the other Members from such Member's share of any and all such
liabilities which are taken subject to or assumed. Appropriate and customary
prorations and adjustments shall be made incident to any Distribution in kind.
The Members acknowledge that Section 14.2 may establish Distribution priorities
different from those set forth in the provisions of the Act applicable to
Distributions upon Liquidation, and the Members agree that they intend, to that
extent, to vary those provisions by this Agreement.
14.4 NO DEFICIT RESTORATION OBLIGATION. Except as otherwise
specifically provided in Sections 10.2 or 10.3, nothing contained in this
Agreement imposes on any Member an
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obligation to make an Additional Contribution in order to restore a deficit
Capital Account upon Liquidation of the Company. Furthermore, each Member will
look solely to the assets of the Company for the return of such Member's
Capital Contribution and Capital Account, and if the assets of the Company
remaining after the payment or discharge of the debts and liabilities of the
Company are insufficient to return such contributions, they will have no
recourse against any other Member pursuant to this Agreement.
14.5 LIQUIDATING REPORTS. A report will be submitted with each
liquidating Distribution to Members, showing the collections, disbursements and
Distributions during the period which is subsequent to any previous report. A
final report, showing cumulative collections, disbursements and Distributions,
will be submitted upon completion of the liquidation process.
14.6 ARTICLES OF DISSOLUTION. Upon Dissolution of the Company and the
completion of the winding up of its business, the Company will file articles of
dissolution (to cancel its Articles of Organization) with the Colorado
Secretary of State pursuant to the Act. At such time, the Company will also
file an application for withdrawal of its certificate of authority in any
jurisdiction where it is then qualified to do business.
14.7 WAIVER OF CERTAIN RIGHTS. Each Member agrees that irreparable
damage would occur if any such Person should bring an action in court to
dissolve the Company. Accordingly, each Member accepts the provisions under
this Agreement as such Person's sole entitlement on Dissolution of the Company
and waives and renounces (to the fullest extent permitted by law) such Person's
right to seek a judicial dissolution under the Act or to seek the appointment
by a court of a liquidating trustee for the Company.
ARTICLE 15: DISPUTE RESOLUTION
15.1 DISPUTES. Except for the specific performance remedy set forth
in Section 16.5, in the event a dispute of any kind arises in connection with
this Agreement (including any dispute concerning its construction, performance
or breach), the parties to the dispute (who may be any combination of the
Company and any one or more of the Members) will attempt to resolve the dispute
as set forth in Section 15.2 before proceeding to arbitration as provided in
Section 15.3. Each Member and the Company waive all rights to seek remedies in
any court (including the right to seek Dissolution by decree of court), and the
right to jury trial. All documents, discovery and other information related to
any such dispute, and the attempts to resolve or arbitrate such dispute, will
be kept confidential to the fullest extent possible.
15.2 NEGOTIATION. If a dispute arises, any party to the dispute will
give Notice to each other party. If the Company is not a party to the dispute,
Notice will also be given to the
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Company. After Notice has been given, the parties in good faith will attempt
to negotiate a resolution of the dispute.
15.3 ARBITRATION. If, within 30 days after the Notice is provided in
Section 15.2, a dispute is not resolved through negotiation or mediation,
either party to the dispute may require that the dispute will be arbitrated by
giving Notice to each other party. The parties to the dispute agree to be
bound by the selection of an arbitrator, and to settle the dispute exclusively
by binding arbitration in accordance with the following provisions:
(a) All parties to the dispute will collectively select
one arbitrator. If they fail to do so within 45 days after the Notice provided
in Section 15.3, one or more parties will request the American Arbitration
Association to submit a panel of five arbitrators who are qualified in such
matters from which the choice will be made. The party requesting the
arbitration will strike first, followed by alternative striking until one name
remains. (A similar procedure will be followed if there are more than two
parties.) The parties may by agreement reject one entire list, and request a
second list. If selection by the above method is not completed within 90 days
after the Notice provided in Section 15.3, or if there are more than four
parties, then an arbitrator will be selected by the American Arbitration
Association. The arbitrator so selected will then arbitrate the dispute in the
Denver, Colorado metropolitan area, and issue an award.
(b) To the extent consistent with the provisions of this
Article, the arbitration will be conducted under the Commercial Arbitration
Rules of the American Arbitration Association and in accordance with the
Colorado Arbitration Act. The arbitrator's decision will be made pursuant to
the relevant substantive law of the State of Colorado. The award of the
arbitrator will be final, binding and non-appealable. Judgment on the award
may be entered in any court, state or federal, having jurisdiction.
(c) The fees and expenses of the arbitrator, and the
other direct costs of the arbitration, will be shared by the parties to the
dispute in equal proportions. Each party to the dispute will bear all other
costs and expenses as provided in Section 16.10. If one or more Members are
included in the arbitration because of their membership or former membership in
the Company, such group will collectively be treated as one party to the
dispute (through the Company as a party).
ARTICLE 16: GENERAL PROVISIONS
16.1 AMENDMENT. This Agreement may only be amended by the
affirmative Vote of all of the Members. Any amendment will become effective
upon such approval, unless otherwise provided. Notice of any proposed
amendment must be given at least five days in advance of the meeting at which
the amendment will be considered (unless the approval is evidenced by duly
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signed minutes of action). Any duly adopted amendment to this Agreement is
binding upon, and inures to the benefit of, each Person who holds an Ownership
Interest at the time of such amendment, without the requirement that such
Person sign the amendment or any republication or restatement of this
Agreement. Notwithstanding the general power to amend, the Members may not
amend this Agreement (a) to unreasonably restrict a Member's right of access to
the Company's books and records as provided in Sections 12.8 and 12.9; (b) to
unreasonably reduce the duties of good faith and care as provided in Sections
3.6 and 4.5; (c) to vary any filing requirement set forth in the Act; or (d) to
restrict rights of, or impose duties on, Persons other than the Company, its
Members and Transferees, without their consent.
16.2 UNREGISTERED INTERESTS. Each Member (a) acknowledges that the
Ownership Interests are being offered and sold without registration under the
Securities Act of 1933, as amended, or under similar provisions of state law;
(b) acknowledges that such Member is fully aware of the economic risks of an
investment in the Company, and that such risks must be borne for an indefinite
period of time; (c) represents and warrants that such Member is acquiring an
Ownership Interest for such Person's own account, for investment, and with no
view to the distribution of the Ownership Interest; and (d) agrees not to
Transfer, or to attempt to Transfer, all or any part of such Ownership Interest
without registration under the Securities Act of 1933, as amended, and any
applicable state securities laws, unless the Transfer is exempt from such
registration requirements.
16.3 WAIVER OF PARTITION RIGHT. Each Member waives and renounces any
right that such Person may have prior to Dissolution and Liquidation to
institute or maintain any action for partition with respect to any real
property owned by the Company.
16.4 WAIVERS GENERALLY. No course of dealing will be deemed to amend
or discharge any provision of this Agreement. No delay in the exercise of any
right will operate as a waiver of such right. No single or partial exercise of
any right will preclude its further exercise. A waiver of any right on any one
occasion will not be construed as a bar to, or waiver of, any such right on any
other occasion.
16.5 EQUITABLE RELIEF. If any Person proposes to Transfer all or any
part of such Person's Ownership Interest in violation of the terms of this
Agreement, the Company or any Member may apply to any court of competent
jurisdiction for an injunctive order prohibiting such proposed Transfer except
upon compliance with the terms of this Agreement, and the Company or any Member
may institute and maintain any action or proceeding against the Person
proposing to make such Transfer to compel the specific performance of this
Agreement. Any attempted Transfer in violation of this Agreement is null and
void, and of no force and effect. The Person against whom such action or
proceeding is brought waives the claim or defense that an adequate
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remedy at law exists, and such Person will not urge in any such action or
proceeding the claim or defense that such remedy at law exists.
16.6 REMEDIES FOR BREACH. The rights and remedies of the Members set
forth in this Agreement are neither mutually exclusive nor exclusive of any
right or remedy provided by law, in equity or otherwise. Subject to the
dispute resolution provisions of Article 16, the Members agree that all legal
remedies (such as monetary damages) as well as all equitable remedies (such as
specific performance) will be available for any breach or threatened breach of
any provision of this Agreement.
16.7 ORIGINAL. This Agreement is signed in three original documents,
one to be placed in the Company records and one to be delivered to each initial
Member. A photocopy of this Agreement, as signed, will be delivered to each
Member (whether substitute or additional), and each such photocopy will be
deemed to be an original document.
16.8 NOTICES. All Notices under this Agreement will be in writing
and will be either delivered or sent addressed as follows: (a) if to the
Company, at the Company's registered office in Colorado, and (b) if to any
Member, at such Person's home or business address as then appearing in the
records of the Company. In computing time periods, the day of Notice will be
included. A day means a calendar day.
16.9 DEEMED NOTICE. All Notices given to any Person in accordance
with this Agreement will be deemed to have been duly given: (a) on the date of
actual receipt; (b) three days after being sent by registered or certified
mail, postage prepaid, return receipt requested; (c) when sent by confirmed
electronic facsimile transfer; or (d) one business day after having been sent
by a nationally recognized overnight courier service.
16.10 COSTS. If the Company or any Member retains counsel for the
purpose of enforcing or preventing the breach or any threatened breach of any
provision of this Agreement or for any other remedy relating to it, then the
prevailing party will be entitled to be reimbursed by the nonprevailing party
for all costs and expenses so incurred (including reasonable attorney's fees,
costs of bonds, and fees and expenses for expert witnesses) unless the
arbitrator or other trier of fact determines otherwise in the interest of
fairness.
16.11 INDEMNIFICATION. Each Member hereby indemnifies and agrees to
hold harmless the Company and each other Member from any liability, cost or
expense arising from or related to any act or failure to act of such Member
which is in violation of this Agreement.
16.12 PARTIAL INVALIDITY. Wherever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law. However, if for any
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reason any one or more of the provisions of this Agreement are held to be
invalid, illegal or unenforceable in any respect, such action will not affect
any other provision of this Agreement. In such event, this Agreement will be
construed as if such invalid, illegal or unenforceable provision had never been
contained in it.
16.13 ENTIRE AGREEMENT. This Agreement contains the entire agreement
and understanding of the Members with respect to its subject matter, and it
supersedes all prior written and oral agreements. No amendment of this
Agreement will be effective for any purpose unless it is made in accordance
with Section 16.1.
16.14 BENEFIT. The contribution obligations of each Member will
inure solely to the benefit of the other Members and the Company, without
conferring on any other Person any rights of enforcement or other rights.
16.15 BINDING EFFECT. This Agreement is binding upon, and inures to
the benefit of, the Members and their permitted successors and assigns.
16.16 FURTHER ASSURANCES. Each Member agrees, without further
consideration, to sign and deliver such other documents of further assurance as
may reasonably be necessary to effectuate the provisions of this Agreement.
16.17 HEADINGS. Article and section titles have been inserted for
convenience of reference only. They are not intended to affect the meaning or
interpretation of this Agreement.
16.18 TERMS. Terms used with initial capital letters will have the
meanings specified, applicable to both singular and plural forms, for all
purposes of this Agreement. All pronouns (and any variation) will be deemed to
refer to the masculine, feminine or neuter, as the identity of the Person may
require. The singular or plural include the other, as the context requires or
permits. The word include (and any variation) is used in an illustrative sense
rather than a limiting sense.
16.19 GOVERNING LAW. This Agreement will be governed by, and
construed in accordance with, the laws of the State of Colorado. Any conflict
(or apparent conflict) between this Agreement and the Act will be resolved in
favor of this Agreement except as otherwise required by the Act.
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In Witness Whereof, all of the initial Members have signed this Amended
and Restated Operating Agreement of Peak Cablevision, LLC, to be effective upon
formation of the Company, notwithstanding the actual date of signing.
January ___, 1998 TCI AMERICAN CABLE HOLDINGS III, L.P.
By: Cablevision of Arizona Partner,
Inc., its general partner
By: /s/ XXXXXXX X. XXXXXXXXXX
-----------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Its: Vice President
January ___, 1998 XXXXXX COMMUNICATIONS ASSOCIATES, L.L.C.
By: Xxxxxx Capital Partners, Ltd.
Its: Member
By: Xxxxxx Capital Corporation
Its: General Partner
By: /s/ XXXXXXX X. XXXXXX
-----------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Vice President
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EXHIBIT A
DEFINITIONS
Act: the Colorado Limited Liability Company Act, as amended from time to time.
Additional Contribution: a capital contribution (other than the Initial Contribution) that a
Member makes to the Company, as described in Section 5.2.
Adjusted Capital Account Deficit shall mean, with respect to any Member, the deficit balance, if any, of
such Member?s Capital Account as of the end of the relevant fiscal year,
after giving effect to the following adjustments:
(a) Crediting to such Capital Account any amounts which such
Member is obligated to restore or is deemed to be obligated to
restore pursuant to the next to last sentence of section 1.704-
2(g)(1) of the Regulations and the next to last sentence of section
1.704-2(i)(5) of the Regulations; and
(b) Debiting to such Capital Account the items described in
paragraphs (4), (5) and (6) of section 1.704-1(b)(2)(ii)(d) of the
Regulations.
Adjusted Capital Account Value: equal to the applicable Member's Capital Account balance adjusted by
restating the Capital Accounts of the Members to reflect the Stated Value
of the assets of the Company and allocating the unrealized profits and
losses based on such Stated Value in accordance with the provisions of
Article 6.
Agreement: this Operating Agreement, as amended from time to time.
Affiliate: with respect to any Person, any Person controlling, controlled by or
under common control with such Person, including a Person controlled
separately by a Member or collectively by the Members; control means the
ownership, directly or indirectly, of at least 50% of the voting power or
equity ownership (whether beneficially or of record) of a Person.
A-1
32
Articles: the Articles of Organization of the Company as filed under the Act, as
amended from time to time.
Book Value: with respect to any asset of the Company, is the asset's adjusted tax
basis for federal income tax purposes, except as follows:
(a) The initial Book Value of any asset contributed to the Company by
a Member shall be the Fair Market Value of the asset as of the date
of contribution.
(b) The Book Value of each asset shall be its respective Fair Market
Value, as of (i) the issuance of an Ownership Interest in the Company
to a new or existing Member in exchange for a Capital Contribution,
(ii) the distribution by the Company to a Member in liquidation of
the Member's interest in the Company, and (iii) the liquidation of
the Company within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(g).
(c) The Book Value of each asset distributed to any Member will be
the Fair Market Value of the asset as of the date of distribution.
(d) The Book Value of each asset will be increased or decreased to
reflect any adjustment to the adjusted basis of the asset under Code
Section 734(b) or 743(b), but only to the extent that the adjustment
is taken into account in determining Capital Accounts under section
1.704-1(b)(2)(iv)(m) of the Regulations, provided that the Book Value
will not be adjusted under this paragraph (d) to the extent that an
adjustment under paragraph (b) is necessary or appropriate in
connection with a transaction that would otherwise result in an
adjustment under this paragraph (d).
If the Book Value of an asset has been determined or adjusted pursuant to
paragraphs (a), (b) or (d) above, such Book Value shall thereafter be
adjusted by the depreciation taken into account with respect to such
asset for purposes of computing Profits and Losses, in
A-2
33
accordance with section 1.704-1(b)(2)(iv)(g) of the Regulations.
Capital Account: shall mean an account established and maintained by the Company for each
of the Members in accordance with section 1.704-1(b)(2)(iv) of the
Regulations.
Capital Contribution: any contribution by a Member to the Company which is either a Formation
Contribution, an Initial Contribution or an Additional Contribution.
Capital Transaction: any sale, exchange, condemnation (including any eminent domain or similar
transaction), casualty, financing, refinancing or other disposition with
respect to any real or personal property owned by the Company or any
issuance of equity interests in the Company which is not in the ordinary
course of business.
Class A Ownership Interests: the Ownership Interests initially representing 66.7% of the Ownership
Interests in the Company initially held by TCI, which elects two
Managers; the term includes all Transferees of the Ownership Interests
initially held by TCI.
Class B Ownership Interests: the Ownership Interests initially representing 33.3% of the Ownership
Interests in the Company initially held by Xxxxxx, which elects two
Managers; the term includes all Transferees of the Ownership Interests
initially held by Xxxxxx.
Code: the Internal Revenue Code of 1986, as amended from time to time
(including corresponding provisions of subsequent revenue laws).
Company: the limited liability company formed under the Articles and operated
under this Agreement.
Contribution Agreement: the Asset Contribution Agreement, dated as of the date hereof between
Xxxxxx Communications Associates, L.L.C., Tempo Cable, Inc.,
Communications Services, Inc., TCI Cablevision of Oklahoma, Inc., TCI of
Kansas, Inc., Wentronics, Inc., TCI Cablevision of Utah, Inc., TCI
Cablevision of Arizona, Inc., Tulsa Cable Television, Inc., TCI American
Cable Holdings III, L.P. and Peak Cablevision, LLC.
A-3
34
Dissolution: any of the events set forth in Section 13.1 which causes the Company to
dissolve.
Distribution: a distribution of money or other property made by the Company with
respect to an Ownership Interest.
Fair Market Value: as to any property, the price at which a willing seller would sell and a
willing buyer would buy such property having full knowledge of the
relevant facts, in an arm's-length transaction without time constraints,
and without being under any compulsion to buy or sell.
Fiscal Year: the fiscal and taxable year of the Company as determined under this
Agreement, including both 12-month and short taxable years.
Indebtedness: without duplication, all indebtedness of the Company for borrowed money
and all obligations of the Company as lessee under any capitalized lease.
Initial Contribution: the initial capital contribution that a Member makes to the Company, as
described in 5.1.
Interest: an amount determined at the prime rate quoted in the "Money Rates"
section of The Wall Street Journal, adjusted as of the day of any change
based on a 365-day year and compounded quarterly; provided that, if such
information is unavailable, the prime rate reference will be determined
by the selection by the Company of a reasonably comparable rate.
Liability: the obligation to pay any judgment, settlement, penalty, fine or
reasonable expense (including attorney's fees) incurred with respect to
any Proceeding.
Liquidation: the process of terminating the Company and winding up its business under
Article 14 after its Dissolution.
Management Agreement: the Management Agreement between the Company and Xxxxxx, the form of
which is attached hereto as Exhibit D.
Managers: the Persons elected by the Members to manage the Company.
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35
Member: a Person who is an initial Member of the Company, or who is subsequently
admitted as a substitute or an additional Member as provided in this
Agreement.
Member Nonrecourse Deductions: shall have the meaning ascribed to the term "partner nonrecourse
deductions" in Section 1.704-2(i) of the Regulations.
Net Operating Cash Flow: cash receipts of the Company from other than a Capital Transaction, less
payment of (a) operating expenses (other than depreciation, amortization
or similar non-cash allowances), (b) capital improvements and (c) debt
service, as adjusted for additions to (or reductions of) cash reserves
for any of the foregoing.
Net Sales Cash: cash receipts of the Company from a Capital Transaction, less payment or
reasonable reserves for commissions and other costs related to the
transaction and, in the case of a sale or other disposition, the payment
of all debt secured by such property that is not taken subject to or
assumed by the purchaser.
Nonrecourse Deductions: shall have the meaning ascribed to such term in Section 1.704-2(b)(1) of
the Regulations.
Notice: written notice, actually or deemed given pursuant to Section 16.9.
Offer Date: the date of the Offer Notice.
Operating Cash Flow Ratio: on any applicable date, the ratio of (i) the aggregate amount of
Indebtedness of the Company on such date to (ii) four times Net Operating
Cash Flow of the Company for the most recent fiscal quarter.
Ownership Interest: with respect to each Member or Transferee owning an interest in the
Company, all of the interests of such Person in the Company (including,
without limitation, an interest in Profits and Losses of the Company, a
capital account interest, and all other rights and obligations of such
Person under this Agreement), expressed as a percentage (carried to the
nearest one-thousandth of a percent if other than an even number),
divided into Class A and Class B Ownership Interests
A-5
36
as initially set forth on the attached Exhibit B, and as subsequently
changed in accordance with this Agreement.
Person: an individual, corporation, trust, partnership, limited liability
company, limited liability association, unincorporated organization,
association or other entity.
Preferred Return: a 12% non-compounded annual preferred return on each Members net Capital
Contribution.
Proceeding: any threatened, pending or completed action, suit or proceeding, whether
formal or informal, and whether civil, administrative, investigative or
criminal.
Profit and Loss shall mean, for each fiscal year of the Company (or other period for
which Profit or Loss must be computed), the Company's taxable income or
loss (not including items of income or loss or deduction specially
allocated pursuant to Section 6.3) determined in accordance with Code
Section 703(a), with the following adjustments:
(a) all items of income, gain, loss and deduction required to be
stated separately pursuant to Code Section 703(a)(1) shall be
included in computing taxable income or loss;
(b) any tax-exempt income of the Company, not otherwise taken into
account in computing Profit or Loss, shall be included in computing
taxable income or loss;
(c) any expenditures of the Company described in Code Section
705(a)(2)(B) (or treated as such pursuant to section
1.704-1(b)(2)(iv)(i) of the Regulations) and not otherwise taken into
account in computing Profit or Loss, shall be subtracted from taxable
income or loss;
(d) gain or loss resulting from any disposition of Company property
shall be computed by reference to the Book Value of the property;
(e) in lieu of the depreciation, amortization, or cost
A-6
37
recovery deductions allowable in computing taxable income or loss,
there shall be taken into account depreciation computed in accordance
with section 1.704-1(b)(2)(iv)(g) of the Regulations; and
(f) if the Book Value of an asset of the Company is adjusted pursuant
to paragraphs (b) or (d) of the definition of Book Value, the amount
of such adjustment shall be treated as gain or loss, respectively,
from the disposition of the asset and shall be taken into account in
computing Profits or Losses.
Regulations: the Treasury Regulations (including temporary regulations) promulgated
under the Code, as amended from time to time (including corresponding
provisions of succeeding regulations).
Stated Value: the price at which the Initiating Member will buy the Ownership Interests
of the Non-Initating Member or sell its Ownership Interest to the Non-
Initiating Member, such price to be stated in terms of one hundred
percent of the assets of the Company.
Tax Matters Partner: as defined in Code Section 6231(a)(7).
Third Party: with respect to any Member, a Person other than an Affiliate.
Third Party Offer: a bona fide, non-collusive, binding, arms'-length written offer from a
Third Party stated in terms of U.S. dollars.
Transfer: a sale, exchange, assignment or other disposition, whether voluntary or
by operation of law.
Transferee: a Person to whom an Ownership Interest is transferred in compliance with
this Agreement.
Transferor: a Person who transfers an Ownership Interest in compliance with this
Agreement.
Unpaid Preferred Return: shall mean, as to any Member as of any date, such Member's Preferred
Return reduced (but not below zero) by the Distributions to such Member
pursuant to Sections 7.2(b) and 14.2(e).
A-7
38
Unrecovered Contribution: shall mean, with respect to any Member, the aggregate amount of such
Member's Capital Contributions reduced (but not below zero) by the
Distributions to such Member pursuant to Sections 7.2(a) and 14.2(a).
Vote: the action of the Company by its Members, either in meeting assembled or
by written consent without a meeting.
A-8
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EXHIBIT B
INITIAL OWNERSHIP INTERESTS
OWNER STATUS CLASS OWNERSHIP
----- ------ ----- ---------
INTEREST
---------
TCI American Cable Holdings III, Member A 66.7%
X.X.
Xxxxxx Communications Associates, Member B 33.3%
L.L.C. -----
100%
40
EXHIBIT C
CAPITAL CONTRIBUTIONS
Formation Contributions:
TCI $ 66.70
Xxxxxx 33.30
-------
$100.00
II. Fair Market Value of Initial Contributions:
TCI Xxxxxx
Asset Value $123,677,730 $34,033,932
Assumed Debt* <93,000,000> <18,750,000>
------------ -----------
Total: 30,677,730 15,283,932
*Subject to adjustment as set forth in the Contribution Agreement
41
EXHIBIT D
MANAGEMENT AGREEMENT
FOR
PEAK CABLEVISION, LLC
THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of
______________, 1998, by and between Peak Cablevision, LLC, a Colorado limited
liability company ("Company"), and Xxxxxx Communications Associates, LLC
("Xxxxxx"), a Colorado limited liability company ("Manager").
The Company, of which TCI American Cable Holdings III, L.P. ("TCI")
and Xxxxxx are Members, was formed to acquire, own and operate cable television
systems, fiber optic and related digital communication systems (collectively,
"Systems") and engage in related business activities, pursuant to the terms of
that certain Operating Agreement dated as of September 25, 1997 (the "Operating
Agreement").
The Company desires to enter into a Management Agreement with the
Manager in order to acquire, supervise, administer, manage and operate the
Systems and the Company's business, affairs and operations pursuant to and in
accordance with the terms and provisions of this Agreement and the Operating
Agreement.
THEREFORE, it is agreed as follows:
1. Appointment. The Company hereby appoints the Manager to supervise and
manage the financing, acquisition and operation of the Systems and the
Company's business, affairs and operations on the terms and conditions set
forth herein and in the Operating Agreement. It is expressly agreed that the
Manager's rights, duties and obligations shall be governed by both this
Agreement and the Operating Agreement. The Operating Agreement is expressly
made a part of this Agreement and is hereby incorporated by reference. Any
capitalized terms used herein and not defined shall have the meanings assigned
to them in the Operating Agreement.
2. Term. The term of this Agreement shall commence as of the date
hereof and continue until the dissolution and liquidation of the Company,
unless terminated earlier pursuant to the terms of this Agreement.
3. Duties of the Manager.
42
3.1 The Manager is hereby granted authority to perform or cause to
be performed, on behalf of the Company, all acts related to the Systems, the
Company's business and operations, and any related properties and assets,
subject to the limitations set forth in Section 4 below. The Manager is hereby
authorized and agrees to use its commercially reasonable best efforts to take
any action consistent with and in furtherance of the terms of this Agreement or
the Operating Agreement, or any law or administrative enactment, which may be
required to supervise and manage the financing, acquisition and operation of
the Systems and the Company's business and operations.
3.2 The Manager shall be responsible for all administrative and
managerial matters affecting the Systems and the Company's business and
operations. Without limiting the generality of the provisions of Section 3.1 or
the previous sentence, the Manager is expressly authorized on behalf of the
Company to:
(a) prepare annual capital and operating budgets and
business plans for the Company and expend the capital and revenues of the
Company, pursuant to such annual operating and capital budgets and business
plans;
(b) cause the Company to make investments in
interest-bearing and noninterest-bearing bank deposits, money market funds,
government obligations, short term debt securities and short term commercial
paper, pending disbursement of the Company's funds or to provide a source
from which to meet contingencies;
(c) cause the Company to enter into all agreements and
contracts with third parties in the ordinary course of business, including
Affiliates of the Members, and terminate such agreements pursuant to the terms
thereof;
(d) maintain, at the expense of the Company, adequate
records and accounts of all operations and expenditures and furnish the Members
with the reports described in the Operating Agreement;
(e) cause the Company to incur debt to the Company's
trade creditors in the ordinary course of business;
(f) subject to Section 4.1(a) below, sell, lease, trade,
exchange or otherwise dispose of Company property in the ordinary course of
business;
(g) cause the Company to employ KPMG Peat Marwick to be
the Company's accountants and cause the Company to employ such other
consultants, attorneys, engineers, employees, escrow agents and others as may
be necessary for the Company's business and cause the Company to terminate such
employment in accordance with law;
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(h) subject to any other restrictions contained herein or
in the Operating Agreement, cause the Company to execute and deliver deeds,
deeds of trust, notes, leases, subleases, mortgages, bills of sale, financing
statements, security agreements and any and all other instruments necessary or
incidental to the conduct of the business and operations of the Company;
(i) render to the Members, at the Company's expense,
unaudited balance sheets and unaudited statements of the Company's profits and
losses for each fiscal month and quarter, prepared in accordance with generally
accepted accounting principals and procedures consistently applied;
(j) at the end of each fiscal year, cooperate with, and
cause the books and records of the Company to be made available to the
independent certified public accountants selected by the Manager to audit the
Company's books at the Company's expense, in accordance with, and pursuant to
the time frames set forth in, the Operating Agreement;
(k) prepare or cause to be prepared, at the Company's
expense, for review and filing by the Company, all national, federal, state and
local fiscal and tax reports as may be required, including, without limitation,
income tax withholding, social security and FICA reports, and cause all
payments and related professional service fees required therefor to be made on
behalf of the Company, all in accordance with the Operating Agreement and
applicable law;
(l) prepare or cause to be prepared by professionals
retained by the Company all applications, reports, statements and other
documents with appropriate national, federal, state and local regulatory
agencies or departments (including but not limited to the Federal
Communications Commission, Federal Aviation Administration, Equal Employment
Opportunity Commission, and national, federal and state agencies having similar
jurisdictions) as are necessary or required for operation of the Systems;
provided however, that the Company shall be responsible for all fees and
expenses of counsel, accountants and other outside consultants who prepare or
help prepare such applications, reports, statements and other documents;
(m) cause the Company to take out such insurance
policies, bonds or other sureties as are required by national, federal, state
or local law, by the requirements of the franchises of the Systems, as required
by any Company loan agreements or contracts, or as are customary in the normal
course of business in the cable television industry;
(n) cause the Company to collect all receipts and make
all disbursements, including payment of all taxes and franchise fees;
(o) cause the Company to make all repairs and
improvements to the Systems as are, in the reasonable opinion of the Manager,
desirable for the proper expansion and maintenance thereof;
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(p) cause the Company to enter into the necessary
franchise agreements, license agreements, pole attachment contracts, leases,
easements, rights of way, programming agreements, or other obligations
necessary for the operation of the Systems;
(q) cause the Company to maintain its franchises and
where appropriate, to renew its franchises and obtain all authorizations and
permits necessary or appropriate for the operation of the Systems;
(r) cause the Company to pay all employees of the
Company; and
(s) cause the Company to make all copyright filings.
4. Limitations on the Power of the Manager
4.1 The Manager shall not, without prior authorization of the
Members (with the vote for such actions determined pursuant to the terms of the
Operating Agreement):
(a) cause the Company to acquire any Systems or related
businesses or any other company, or sell, transfer or dispose of the Company's
assets, other than in accordance with the terms of the Operating Agreement;
(b) cause the Company to merge, consolidate, dissolve or
wind up, except as specifically provided for in the Operating Agreement;
(c) cause the Company to borrow from banks or other
lending institutions for any purpose of the Company except, as specifically
provided for in the Operating Agreement;
(d) execute and deliver on behalf of the Company any loan
agreements, except as specifically provided for in the Operating Agreement;
(e) cause the Company to issue any notes, debentures or
other debt instruments or grant any mortgage, pledge, encumbrance or
hypothecation of Company assets to secure repayment of borrowed sums or
replace, modify, extend or consolidate any mortgage, pledge, encumbrance or
hypothecation, except as may be in accordance with the terms of this Agreement
or the Operating Agreement;
(f) cause the Company to institute, defend or settle
litigation involving the Company or apply for injunctive relief or give
releases and discharges with respect to any of the foregoing, and any matters
incident thereto, except as specifically provided for in the Operating
Agreement;
(g) employ on behalf of the Company or cause the Company
to employ any brokers or finders;
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(h) cause the Company to enter into any contract with an
Affiliate of a Member, except as specifically provided for in the Operating
Agreement; and
(i) perform any other act which requires the unanimous
vote of the Members pursuant to Section 4.4 of the Operating Agreement.
4.2 The Manager shall not knowingly take any action which would
cause the Company to default in its obligations under any loan agreements.
4.3 In no event shall the Manager cause or permit the Company to
(a) commingle its funds with those of any other Person; (b) make loans to any
Member or to an Affiliate of any Member, except as provided for in the
Operating Agreement; or (c) pay expenses of the Members in connection with any
other business enterprise or transaction, or otherwise use Company funds for
other than a Company purpose, except as specifically provided for in the
Operating Agreement or in this Agreement.
5. Indemnification.
(a) Company. The Company shall indemnify and hold harmless the
Manager and its owners, agents and employees of and from any claims, losses,
liabilities and demands of every kind and nature whatsoever, including, without
limitation, the costs of defending any such claims, liabilities and demands,
including, without limitation, attorneys' and accountants' fees therefor,
arising in connection with the Manager's authorized activities set forth
herein; provided, however, that the Company shall not be required to indemnify
or hold harmless the Manager from any claims, losses, liabilities or demands
which arise from actions (or failures to act) which are performed in bad faith
and which arise out of willful misconduct, gross negligence or fraud by the
Manager, or any of its owners, agents or employees.
(b) Manager. The Manager shall indemnify and hold harmless the
Company and its owners, agents and employees of and from any claims, losses,
liabilities and demands of every kind and nature whatsoever, including, without
limitation, the costs of defending any such claims, liabilities and demands,
including, without limitation, attorneys' and accountants' fees therefore,
arising in connection with the Manager's actions (or failure to act) which are
performed in bad faith and which arise out of willful misconduct, gross
negligence or fraud by the Manager, or any of its owners, agents or employees.
6. Removal of Manager. The Manager may be removed by the Members and this
Agreement terminated by a majority of the Members upon the occurrence of any of
the following events (an "Event of Removal"):
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(a) the occurrence of an "Event of Default" under
any of the Company's loan agreements, as that term is defined in such loan
agreements (subject to any rights to cure time limits contained in such
agreements);
(b) the Manager breaches any of the terms of this
Agreement (subject to the right of the Manager to cure within 15 days after
notice of such breach is received by the Manager from any Member);
(c) the Manager violates any of the terms of the
Operating Agreement in its capacity as the Manager (subject to the right of the
Manager to cure within 15 days after notice of such breach is received by the
Manager from any Member);
(d) the Manager commits any act constituting
gross negligence or willful misconduct, or makes a material misrepresentation
to the Company or the Members; or
(e) the bankruptcy or dissolution of the Manager.
In the event of the Manager's removal, the Members shall select a new manager
of the Company, but the Manager or its successors in interest shall continue as
a Member of the Company in accordance with the terms of the Operating
Agreement.
7. Termination. This Agreement will be terminated upon the first to occur
of any of the following events: (a) the written consent to terminate of all
parties to this Agreement; or (b) an Event of Removal of the Manager if the
Members exercise their option to remove the Manager upon such Event of Removal.
In the event this Agreement is terminated pursuant to this Section 7, the
Company shall be relieved from any further obligation to pay the Manager
compensation hereunder, other than compensation and reimbursable expenses
accrued up to the date of such termination.
8. Compensation of Manager; Expenses.
8.1 As compensation for services rendered under this Agreement,
and subject to the provisions of any financing documents of the Company, the
Manager shall be paid an annual management fee, payable on a monthly basis,
equal to the gross revenues derived from the Systems, multiplied by three
percent (3.0%). Such fee shall be suspended and accrued during any period in
which the Company is in default under or has breached any of the terms of its
loan agreements, including but not limited to any default or breach with
respect to the payment of principal or interest under any such loan agreement,
or would be in default or breach of any of its loan agreements if the
management fee were paid. Accrued and unpaid management fees hereunder shall
be payable at such time as such default or breach has been cured or waived.
Such monthly portion of the management fee shall be due and payable on or
before the fifteenth day of the month following the month of service.
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8.2 All expenses incurred by the Manager in connection with the
performance of its duties hereunder shall be the responsibility of and borne by
the Company. All such expenses shall be due and payable on or before the
fifteenth day of the month following the incurrence of such expenses.
9. Miscellaneous.
9.1 All notices and communications hereunder shall be in writing
and shall be deemed to have been duly given to a party hereunder when delivered
in person, via messenger service or by telecopy to such party, or three (3)
business days after being deposited in the U.S. Mail, registered or certified,
with postage prepaid, addressed as follows (or such other address as the
parties may designate in writing):
If to the Manager: Xxxxxx Communications Associates, L.L.C.
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Telecopy: 000-000-0000
with a copy to: Jenkens & Xxxxxxxxx, P.C.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: 000-000-0000
If to the Company: Peak Cablevision, LLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Telecopy: 000-000-0000
with a copy to: Tele-Communications, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxx
Telecopy: 000-000-0000
with a copy simultaneously addressed to the attention of the Legal Department.
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9.2 No party hereto shall have the right to assign this Agreement
without the written consent of all other parties.
9.3 This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.
9.4 This Agreement may not be modified, altered or amended in any
manner except by an agreement in writing, duly executed by all parties hereto.
9.5 The Manager and the Company shall not, by virtue of this
Agreement, be deemed partners or joint venturers, nor shall the Manager be
deemed to be the agent or employee of the Company. The Manager shall not, by
entering into and performing this Agreement, incur any liability for any of the
existing obligations, liabilities or debts of the Company, and the Manager
shall not, by acting hereunder assume or become liable for any of the future
obligations, debts, or liabilities of the Company.
9.6 All matters affecting the interpretation of this Agreement and
the rights of the parties hereto shall be governed by the laws of the State of
Colorado, without regard to its conflict of law principles.
9.7 Each of the respective rights and obligations of the parties
hereunder shall be deemed independent and may be enforced independently
irrespective of any of the other rights and obligations set forth herein. No
waivers, express or implied, by either party of any breach of any of the
covenants, agreements or duties hereunder of the other party shall be deemed to
be a waiver of any other breach thereof or the waiver of any other covenant
agreement or duty.
9.8 This Agreement and the Operating Agreement contain the entire
understanding of the parties with respect to the subject matter hereof and
thereof, and the parties hereto hereby acknowledge that there have not been and
are no representations, warranties, covenants or understandings other than
those expressly set forth herein and therein which relate to the subject matter
hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Management Agreement as of the date first written above.
XXXXXX COMMUNICATIONS ASSOCIATES,
L.L.C.
By:
----------------------------------
Name:
-------------------------------
Title:
-------------------------------
PEAK CABLEVISION, LLC
By: TCI American Cable Holdings III,
L.P., its Member
By: Cablevision of Arizona Partner,
Inc., its general partner
By:
-------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Its: Vice President
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