EXHIBIT 2.2
CONFORMED COPY
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AGREEMENT
OF
LIMITED PARTNERSHIP
OF
MTVN ONLINE L.P.
DATED AS OF JULY 15, 1999
AMONG
MTVN ONLINE PARTNER I LLC,
IMAGINE RADIO, INC.,
SONICNET, INC.
AND
THE BOX WORLDWIDE, INC.
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS AND CONSTRUCTION
Section 1.01. Certain Definitions....................................... 1
Section 1.02. Additional Definitions.................................... 11
Section 1.03. Terms Generally........................................... 13
ARTICLE II FORMATION, NAME AND TERM OF PARTNERSHIP
Section 2.01. Formation of the Partnership.............................. 13
Section 2.02. Name of Partnership....................................... 13
Section 2.03. Term of Partnership....................................... 14
Section 2.04. Principal Office.......................................... 14
Section 2.05. Residences................................................ 14
Section 2.06. Delaware Office; Agent for Service of Process............. 14
Section 2.07. Purpose................................................... 14
Section 2.08. Property Ownership........................................ 15
ARTICLE III PARTNERSHIP CAPITAL
Section 3.01. Percentage Interests...................................... 15
Section 3.02. Contribution of Partnership Assets........................ 16
Section 3.03. Additional Capital Contributions.......................... 16
Section 3.04. Partnership Funds......................................... 17
Section 3.05. Partner Loans; Other Borrowings........................... 17
ARTICLE IV DISTRIBUTIONS
ARTICLE V CAPITAL ACCOUNTS; TAX ALLOCATIONS
Section 5.01. Capital Accounts.......................................... 18
Section 5.02. Capital Account Allocations............................... 19
Section 5.03. Allocations for Federal Income Tax Purposes............... 21
Section 5.04. Prorated Allocations...................................... 21
Section 5.05. Taxation.................................................. 21
Section 5.06. Fiscal Year............................................... 21
Section 5.07. Interest.................................................. 22
ARTICLE VI MANAGEMENT OF THE PARTNERSHIP
Section 6.01. Management Committee...................................... 22
Section 6.02. Meetings of the Management Committee...................... 23
Section 6.03. Officers of the Partnership............................... 23
Section 6.04. Budget and Business Plan.................................. 24
Section 6.05. Actions Requiring Approval by a Majority of the
Management Committee.................................... 26
Section 6.06. Actions Requiring Approval by a Majority of the Management
Committee Including the Representative of Tune.......... 27
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Section 6.07. Limitation of Agency...................................... 27
Section 6.08. Liability of Partners and Representatives................. 28
Section 6.09. Indemnification........................................... 28
Section 6.10. Right of Partners Against Partnership and General
Partner in Certain Events............................... 29
Section 6.11. Temporary Right to Direct Management Committee............ 29
ARTICLE VII BOOKS, RECORDS, REPORTS AND ACCOUNTINGS
Section 7.01. Books and Records......................................... 30
Section 7.02. Financial Statements...................................... 30
Section 7.03. Tax Returns and Information............................... 31
ARTICLE VIII DISPOSITIONS, ADMISSIONS, WITHDRAWALS
Section 8.01. Prohibition on Dispositions of Partnership Interests;
Withdrawals; Admissions................................. 32
Section 8.02. Dispositions of Partnership Interests to a Permitted
Transferee.............................................. 32
Section 8.03. Dispositions After the Restricted Period.................. 32
Section 8.04. Right of First Offer...................................... 33
Section 8.05. Tag Along; Drag Along..................................... 33
Section 8.06. Additional Provisions Relating to Disposition............. 35
Section 8.07. Distributions After Disposition........................... 38
ARTICLE IX EVENTS OF DEFAULT; CONSEQUENCES AND REMEDIES
Section 9.01. Events of Default......................................... 38
Section 9.02. General Consequences; Remedies of Non-Defaulting Partner.. 39
ARTICLE X TERMINATION AND LIQUIDATION OF THE PARTNERSHIP
Section 10.01. Events of Termination..................................... 39
Section 10.02. Winding-Up................................................ 40
ARTICLE XI RELATED PARTY TRANSACTIONS
Section 11.01. Related Party Transactions Generally...................... 41
Section 11.02. Related Party Transactions in Excess of $1,000,000........ 42
Section 11.03. Basis of Evaluation....................................... 43
Section 11.04. No Breach................................................. 43
ARTICLE XII CERTAIN PROVISIONS RELATING TO INTERESTS
Section 12.01. Adjustment of Tune's Percentage Interest.................. 43
Section 12.02. Preemptive Rights......................................... 44
Section 12.03. Put and Call.............................................. 45
ARTICLE XIII REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE PARTNERS
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ARTICLE XIV [Intentionally Left Blank]
ARTICLE XV MISCELLANEOUS
Section 15.01. Notices................................................... 48
Section 15.02. Table of Contents; Headings............................... 49
Section 15.03. Governing Law............................................. 49
Section 15.04. Severability.............................................. 49
Section 15.05. Amendments................................................ 50
Section 15.06. Counterparts.............................................. 50
Section 15.07. Entire Agreement.......................................... 50
Section 15.08. Parties in Interest; Limitation on Rights of Others....... 50
Section 15.09. Waivers; Remedies......................................... 50
Section 15.10. Further Assurances........................................ 50
Section 15.11. Jurisdiction; Consent to Service of Process............... 51
Section 15.12. Reliance on Officer's Certificate......................... 51
Section 15.13. Public Announcements...................................... 51
Section 15.14. Confidential and Proprietary Information.................. 52
Section 15.15. No Presumption............................................ 53
Section 15.16. Freedom of Action......................................... 53
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AGREEMENT OF LIMITED PARTNERSHIP
AGREEMENT OF LIMITED PARTNERSHIP, dated as of July 15, 1999 among MTVN
ONLINE PARTNER I LLC, a Delaware limited liability company ("VLLC"), IMAGINE
RADIO, INC., a California corporation ("Imagine", and together with VLLC,
"MTVNS"), SONICNET, INC., a Delaware corporation ("SonicNet"), and THE BOX
WORLDWIDE, INC., a Florida corporation ("Box", and together with SonicNet,
"Tune").
The parties desire to form a Delaware limited partnership to be named "MTVN
Online, L.P." (the "Partnership") for the purpose of (a) developing, operating,
managing, marketing, promoting, distributing and licensing text, audio and/or
video music, music-related and/or music-themed services online and (b) engaging
in activities reasonably related thereto, including e-commerce applications and
consumer oriented commercial transactions related thereto.
The parties desire to set forth herein the terms and conditions of the
foregoing.
In consideration of the premises and other covenants and conditions
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
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Section 1.01. Certain Definitions. As used in this Agreement, the
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following terms shall have the meanings specified below:
"Accountants" means PricewaterhouseCoopers LLP or such other firm of
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nationally recognized independent certified public accountants that, as of any
time, have been appointed by the Management Committee as the accountants for the
Partnership.
"Act" means the Delaware Revised Uniform Limited Partnership Act.
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"Additional Agreements" means the Related Party Agreements, the
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Organization Agreement, the Contribution Agreements and the Parent Agreement and
Guaranty.
"Adjusted Capital Account" of a Partner, as of the end of any fiscal year
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of the Partnership, shall mean the Capital Account maintained for such Partner,
as of the end of such fiscal year, (a) increased by any amounts that such
Partner is treated as obligated to restore pursuant to Regulations Section
1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore under Regulations
Sections 1.704-2(g) and 1.704-2(i)(5)) and (b) decreased by (i) the amount of
all losses and deductions that, as of the end of such fiscal year, are
reasonably expected to be allocated to such Partner in subsequent years under
Sections 704(e)(2) and 706(d) of the Code and Regulations Section 1.751-
1(b)(2)(ii), and (ii) the amount of all distributions that, as of the end of
such fiscal year, are reasonably expected to be made to such Partner in
subsequent years in accordance with the terms of this Agreement or otherwise to
the extent they exceed offsetting increases to such Partner's Capital Account
that are reasonably expected to occur during (or prior to) the year in which
such distributions are reasonably expected to be made (other than increases as a
result of a minimum gain chargeback pursuant to Section 5.02(b) or (c)). The
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foregoing
definition of Adjusted Capital Account is intended to comply with the provisions
of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
"Affiliate", when used with respect to a specified Person, means any other
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Person that directly, indirectly or through one or more intermediaries Controls,
is Controlled by or is under common Control with, such Person. Notwithstanding
the foregoing, (i) neither the Partnership nor any Person Controlled by the
Partnership shall be deemed to be an "Affiliate" of any Partner or of any
Affiliate of any Partner, (ii) no Partner or any Affiliate thereof shall be
deemed to be an "Affiliate" of any other Partner or any Affiliate thereof solely
by virtue of its Partnership Interest, (iii) no Person other than Viacom Inc.
and its Controlled Affiliates shall be deemed to be an "Affiliate" of MTVNS,
Viacom Inc. or any Controlled Affiliate of Viacom Inc. and (iv) no Person other
than TCI Music and its Controlled Affiliates shall be deemed to be an Affiliate
of Tune, TCI Music or any Controlled Affiliate of TCI Music.
"Agreed Value" shall be (i) with respect to all property other than cash
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transferred to the Partnership as a Capital Contribution, the Fair Market Value
of the property on the date that it is contributed to the Partnership as agreed
upon by the Partners (it being understood that the Agreed Value of the assets
transferred pursuant to Section 3.02 and the assets to be transferred pursuant
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to Section 2.6 and 2.7 of the Organization Agreement is set forth in Schedule 1
hereto), (ii) with respect to all property distributed by the Partnership to a
Partner, the Fair Market Value of the property on the date of distribution as
reasonably determined in good faith by the Chief Executive Officer, subject to
review hereunder as a Related Party Transaction, if applicable, and (iii) with
respect to any revaluation of Partnership property pursuant to Section 5.01(b),
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the Fair Market Value of such Partnership property at the time of the event
requiring such revaluation as reasonably determined in good faith by the Chief
Executive Officer.
"Agreement" means this Agreement of Limited Partnership, including all
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Schedules and Exhibits hereto, as the same may be amended or modified from time
to time.
The "Bankruptcy" of any Partner shall be deemed to have occurred upon the
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happening of any of the following: (i) the filing of an application by such
Person for, or a consent to, the appointment of a trustee of its assets; (ii)
the filing by such Person of a voluntary petition in bankruptcy or seeking
relief under Title 11 of the United States Code, or the filing of a pleading in
any court of record admitting in writing its inability to pay its debts as they
come due; (iii) the filing by a third party of an involuntary petition in
bankruptcy or seeking relief under Title 11 of the United States Code, which
petition is not dismissed within 60 days of the filing thereof; (iv) the making
by such Person of a general assignment for the benefit of creditors; (v) the
filing by such Person of an answer admitting the material allegations of, or
consenting to, or defaulting in answering, a bankruptcy petition filed against
it in any bankruptcy proceeding or a petition seeking relief under Title 11 of
the United States Code; or (vi) the entry of an order, judgment or decree by any
court of competent jurisdiction adjudicating such Person a bankrupt or for
relief in respect of such Person or appointing a trustee of its assets, and such
order, judgment or decree continues unstayed and in effect for any period of 60
consecutive days.
"Box License Agreement" means an agreement containing, among other things,
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the economic terms set forth in the Term Sheet attached to the letter agreement
dated as of May 19, 1999 among Viacom, Liberty and TCI Music under the heading
"Box License Agreement".
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"Budget" means, for Fiscal Year 1999, the Initial Budget, and for each
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subsequent Fiscal Year, the budget, prepared by the Chief Executive Officer and
approved by the Management Committee for such Fiscal Year in accordance with
Section 6.04(b), except as otherwise provided in Section 6.04(c).
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"Business Day" means any day (other than a day which is a Saturday, Sunday
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or legal holiday in the State of New York) on which banks are open for business
in the City of New York.
"Business Plan" means, for Fiscal Year 1999, the Initial Business Plan, and
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for each subsequent Fiscal Year, the business plan, prepared by the Chief
Executive Officer and approved by the Management Committee for such Fiscal Year
in accordance with Section 6.04(b), except as otherwise provided in Section
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6.04(d).
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"Capital Call" means a request for additional Capital Contributions given
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by the Chief Executive Officer to the Partners setting forth in reasonable
detail the purposes for which such capital is required, the amount of the
additional Capital Contribution requested to be made by each Partner, whether
the additional Capital Contribution is a Required Contribution or a Non-Required
Contribution (together with the calculations showing how such determination was
made), the Payment Date and the account of the Partnership to which payment is
to be made.
"Capital Contributions" means the Pre-Closing Capital Contributions, the
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Closing Capital Contributions and contributions made by each Partner to the
capital of the Partnership pursuant to Article III; provided, however, that no
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amount of capital which, in accordance with Section 3.03(c) or otherwise,
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constitutes a Partner Loan shall constitute a Capital Contribution.
"Chief Executive Officer" means the chief executive officer of the
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Partnership.
"Closing" means the closing of the transactions contemplated by the
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Organization Agreement on the Closing Date.
"Closing Date" has the meaning set forth in the Organization Agreement.
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"Code" means the Internal Revenue Code of 1986.
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"Consumer Price Index" means the Consumer Price Index "All Urban Consumers:
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U.S. city average, all items" (1982-1984 = 100) published by the Bureau of Labor
Statistics of the United States Department of Labor, or any equivalent successor
or substitute index published by the Bureau of Labor Statistics or a successor
or substitute governmental agency.
"Contribution Agreements" means, collectively, the Contribution, Assignment
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and Assumption Agreement dated as of the date hereof between VLLC and the
Partnership, the Contribution, Assignment and Assumption Agreement dated as of
the date hereof between Imagine and the Partnership, the Contribution,
Assignment and Assumption Agreement dated as of the date hereof between SonicNet
and the Partnership and the Contribution, Assignment and Assumption Agreement
dated as of the date hereof between Box and the Partnership.
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"Control" (including its correlative meanings, "controlled by" and "under
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common control with") as to any Person means the possession, directly or
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indirectly, of the affirmative power to direct or cause the direction of the
management and policies of such Person (whether through ownership of securities,
partnership interests or other ownership interests, by contract, by membership
or involvement in the board of directors, management committee or other
management structure of such Person, or otherwise).
"Controlled Affiliate" means, when used with respect to a specified Person,
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any Affiliate as to which such Person possesses, directly or indirectly, the
affirmative power to direct or cause the direction of the management and
policies of such Affiliate (whether through ownership of securities, partnership
interests or other ownership interests, by contract, by membership or
involvement in the board of directors, management committee or other management
structure of such affiliate, or otherwise).
"Database Agreement" means the Database and Software License Agreement
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dated as of the date hereof, between MTVN and the Partnership.
"Dispose" (including its correlative meanings, "Disposed of", "Disposition"
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and "Disposed"), with respect to any Partnership Interest, means to directly or
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indirectly Transfer, pledge, hypothecate or otherwise dispose of such
Partnership Interest or any interest therein, except that such term shall not
include any pledge or hypothecation of, or granting of a security interest in, a
Partnership Interest to secure indebtedness for money borrowed so long as the
applicable pledgee has taken no action to foreclose on such pledge,
hypothecation or security interest and so long as the Partner retains full
voting rights, subject to no proxy or voting agreement, with respect to such
Partnership Interest; provided, however, that (i) a change of control of TCI
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Music, Liberty, MTVN, Viacom or Viacom Inc. (ii) any issuance of capital stock
or other equity securities of TCI Music, Liberty, MTVN, Viacom or Viacom Inc.
(iii) a contribution of the assets or business of Liberty to Liberty Management
Group LLC, pursuant to a Contribution Agreement dated March 9, 1999, among
Liberty, AT&T and certain other persons, (iv) a spinoff, split off, redemption,
distribution or other transaction which results in any of TCI Music, Liberty,
Viacom Inc., Viacom or MTVN (or any successor of any of such Persons) ceasing to
be a Subsidiary or division of its current parent entity or (v) a sale of all or
substantially all of the assets of TCI Music, Liberty, Viacom, MTVN or Viacom
Inc. shall not constitute a Disposition of a Partnership Interest.
"Excluded Tune Assets" has the meaning set forth in the Organization
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Agreement.
"Fair Market Value" means, with respect to any securities or other
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property, the price at which a willing seller would sell and a willing buyer
would buy such property having full knowledge of the facts, in an arm's-length
auction transaction without time constraints, and without being under any
compulsion to buy or sell. Fair Market Value, in the case of the Partnership,
shall be determined on a going concern or liquidation basis, whichever yields
the highest value. In determining the Fair Market Value of any Partnership
Interest, there shall be no discount due to lack of liquidity of such
Partnership Interest because of the absence of a significant public market or
due to the minority ownership position in the Partnership represented by such
Partnership Interest, nor any premium due to the majority or control ownership
position in the Partnership represented by such Partnership Interest.
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"GAAP" means United States generally accepted accounting principles as in
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effect from time to time.
"General Partner" means VLLC (with respect to its interest as a General
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Partner) or any of its Permitted Transferees who has been admitted as a
successor or additional General Partner in accordance with the provisions of
this Agreement and any other Person who becomes a General Partner in accordance
with the provisions of this Agreement.
"Governmental Entity" means any nation or government, and state or other
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political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Income" with respect to the Partnership means all revenues attributable to
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the Business.
"Initial Budget" means the Budget for the 1999 Fiscal Year attached hereto
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as Schedule 3.
"Initial Business Plan" means the Business Plan for the 1999 Fiscal Year
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attached hereto as Schedule 4.
"IPO" has the meaning set forth in the Parent Agreement and Guaranty.
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"Liberty" means Liberty Media Corporation, a Delaware corporation and any
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entity into which it may be merged or with which it may be consolidated or to
which it may transfer all or substantially all of its assets, including in
connection with a redemption of the AT&T Liberty Media Group Common Stock in
exchange for capital stock in a subsidiary of AT&T in accordance with AT&T's
Certificate of Incorporation, as amended (the "AT&T Charter"), or as a result of
the transactions contemplated by the Contribution Agreement, dated March 9,
1999, among Liberty Group, LLC, Liberty and certain of their respective
Affiliates.
"LIBOR" means the rate per annum equal to (i) the arithmetic average
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(rounded upwards or downwards, if necessary, to the nearest 1/16th of one
percent with the midpoint being rounded upwards) of the offered rates for U.S.
dollar deposits for a period of three months which appear on the LIBO page of
the Reuters Monetary Money Rates Service (or such other page as may replace that
page on that service for the purpose of displaying rates comparable to those
displayed on the LIBO page) at approximately 11:00 A.M. (London Time) on the
date of determination or (ii) or if no such offered rates appear on the LIBO
Page (or such other page as may replace that page on that service for the
purpose of displaying rates comparable to those displayed on the LIBO page), the
offered rate for U.S. dollar deposits for a period of three months which appears
on the display page currently designated as page 3750 of the Dow Xxxxx Telerate
Service (or such other page as may replace that page on that service for the
purpose of displaying rates comparable to those displayed on page 3750) as of
11:00 A.M. (London Time) on the date of determination.
"License Agreement" means the Trademark License Agreement dated as of the
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date hereof between MTVN and VLLC.
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"Limited Partner" means VLLC (with respect to its interest as a Limited
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Partner), Imagine, SonicNet or Box or their respective Permitted Transferees who
has been admitted as a successor or additional Limited Partner in accordance
with the provisions of this Agreement and any other Person who becomes a Limited
Partner in accordance with the provisions of this Agreement.
"LMA" means the Local Marketing Arrangement dated as of the date hereof,
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between VJN LPTV Corp. and Box LLC.
"MTVN" means MTV Networks, a division of Viacom.
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"Material Deviations" means unbudgeted items which for any Budget are
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singly or in the aggregate more than $1.0 million.
"Maximum Capital Contribution Obligation" means (a) with respect to MTVNS,
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the excess of (x) $90 million over (y) the aggregate amount of the Pre-Closing
Capital Contributions and Closing Capital Contribution, if any, made by MTVNS,
and (b) with respect to Tune, the excess of (w) $10 million over (z) the
aggregate amount of the Pre-Closing Capital Contributions and Closing
Contribution, if any, made by Tune.
"Net Income" or "Net Loss" of the Partnership for any Fiscal Year shall
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mean the taxable Income or tax loss of the Partnership for federal income tax
purposes for such year, determined in accordance with Code Section 703(a) (for
this purpose, all items required to be separately stated pursuant to Section
703(a)(1) shall be includable in taxable income and tax loss) increased by the
amount of any tax-exempt income of the Partnership during such year and
decreased by the amount of any Section 705(a)(2)(B) expenditures or treated as
such pursuant to Regulations Section 1.704-1(b)(2)(iv)(i) (any such
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expenditures, "Section 705(a)(2)(B) Expenditures") of the Partnership during
such Fiscal Year; provided, however, that (A) the depreciation (or amortization)
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for such Fiscal Year with respect to any Section 704(c) Property shall be
calculated in accordance with Regulations Section 1.704-3(d), (B) for purposes
of calculating the gain or loss arising from any sale or other disposition of
any Section 704(c) Property, the basis of such Section 704(c) Property shall be
deemed to be its fair market value on the date of its contribution (or
revaluation) less the accumulated depreciation or amortization (calculated in
accordance with clause (A) above) arising after that date with respect to such
Section 704(c) Property, and (C) an amount of gain or loss that would have been
recognized by the Partnership if property distributed by the Partnership to a
Partner had instead been sold in a taxable disposition for its Agreed Value at
the time of distribution shall be taken into account.
"Nonrecourse Deductions" shall have the meaning set forth in Regulations
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Section 1.704-2(b)(1). The amount of Nonrecourse Deductions shall be determined
in accordance with Regulations Section 1.704-2(c).
"Nonrecourse Liability" shall have the meaning set forth in Regulations
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Section 1.704-2(b)(3) (and Regulations Section 1.752-1(a)(2)).
"Non-Required Contribution" means, with respect to any Partner, a Capital
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Contribution requested from such Partner by the Partnership pursuant to a
Capital Call issued after the Closing
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in accordance with the provisions of Section 3.03, which, if made, would, when
aggregated with (i) the Pre-Closing Contributions and Closing Contribution, if
any, made by such Partner's Stockholder Group and (ii) all Capital Contributions
made by such Partner's Stockholder Group after the date of this Agreement and
prior to such Capital Call, exceed the Maximum Capital Contribution Obligation
of Tune, if such Partner is a member of the Tune Stockholder Group, or MTVNS, if
such Partner is a member of the MTVN Stockholder Group.
"Offering Expiration Date" means the date two years from the Closing Date,
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as such date may be extended for up to 60 days upon the written advice of a
nationally recognized investment banking firm then engaged to underwrite the
sale of shares in the IPO.
"Organization Agreement" means the Organization Agreement dated as of the
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date hereof among Liberty, TCI Music, MTVN, VLLC, MTV Europe, a general
partnership, MTVN Online Inc., a Delaware corporation, Imagine, SonicNet, Box
and the Partnership.
"Parent" means (i) with respect to Tune, TCI Music, and (ii) with respect
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to MTVNS, MTVN or Viacom, Inc.
"Parent Agreement and Guaranty" means the Parent Agreement and Guaranty
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dated as of the date hereof among TCI Music, MTVN, Liberty, SonicNet, Box and
the Partnership.
"Partner" means a General Partner or Limited Partner.
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"Partner Nonrecourse Debt" shall have the meaning set forth in Regulations
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Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" shall have the meaning set forth in
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Regulations Section 1.704-2(i)(2). The amount of Partner Nonrecourse Debt
Minimum Gain shall be determined in accordance with Regulations Section 1.704-
2(i)(3).
"Partner Nonrecourse Deductions" shall have the meaning set forth in
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Regulations Section 1.704-2(i)(1). The amount of Partner Nonrecourse Deductions
shall be determined in accordance with Regulations Section 1.704-2(i)(2).
"Partnership Costs" means all costs necessary or appropriate for the
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Partnership to incur, including (i) all costs of operating and administering the
Partnership and (ii) all other costs reflected in each Budget and/or Business
Plan or otherwise associated with any agreement, obligation or other matter
either approved by the Management Committee or which does not require the
approval of the Management Committee.
"Partnership Interest" means, as to each Partner, all of the interest of
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such Partner in the Partnership, including such Partner's (i) right to a
distributive share of the Income, gain, losses and deductions of the Partnership
in accordance herewith, (ii) right to a distributive share of Partnership
assets, (iii) obligations as a Partner, and (iv) rights with respect to the
management of the business and affairs of the Partnership, as provided herein or
by law.
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"Partnership Minimum Gain" with respect to the Partnership shall have the
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meaning set forth in Regulations Section 1.704-2(b)(2). The amount of
Partnership Minimum Gain shall be determined in accordance with Regulations
Section 1.704-2(d).
"Payment Date" means, with respect to any Capital Call, the date on which
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the Capital Contributions requested by such Capital Call are to be made, which
date shall not be less than 15 days nor more than 45 days after the date of such
Capital Call.
"Permitted Transferee" of any Partner means, with respect to such Partner,
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any member of such Partner's Stockholder Group; provided that Imagine shall not
be a Permitted Transferee with respect to MTVNS or any other member of the MTVN
Stockholders Group unless and until Viacom or a wholly owned Subsidiary of
Viacom owns 100% of the outstanding equity interests of Imagine.
"Person" means any individual, firm, corporation, general or limited
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partnership, joint venture, limited liability company, trust, association,
division, unincorporated entity of any kind or Governmental Entity.
"Pre-Closing and Closing Capital Contributions" shall have the meanings set
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forth in the Organization Agreement.
"Prime Rate" means the rate of interest publicly announced from time to
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time by CitiBank, N.A. as its prime rate in effect at its principal office in
the City of New York.
"Programming License Agreement" means the Programming License Agreement
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dated as of the date hereof between MTVN and VLLC.
"Promotion Agreement" means the Promotion Agreement dated as of the date
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hereof between MTVN and VLLC.
"Regulation(s)" means United States Treasury Regulations issued under the
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Code.
"Related Party Agreements" mean the Services Agreement, the License
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Agreement, the Technology Sharing and License Agreement, the Box License
Agreement, the Programming License Agreement, the Database Agreement and the
Promotion Agreement, as any such agreement may be amended from time to time in
accordance with or not in violation of this Agreement.
"Related Party Transaction" means any transaction between the Partnership
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or any of its Controlled Affiliates, on the one hand, and Viacom Inc. or any of
its Controlled Affiliates, on the other hand, including the provision of
advertising sales and the issuance of any equity interests in the Partnership to
any employees of Viacom or of any Affiliates of Viacom or the determination by
the Chief Executive Officer of the Partnership of the Fair Market Value of any
property distributed by the Partnership to a Partner; provided, however, that
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for purposes of this Agreement, (i) any transactions pursuant to and in
accordance with a Related Party Agreement shall not be considered to be Related
Party Transactions (except that this exception shall not apply to any amendment
to any such Related Party Agreement which was required to be
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approved pursuant to Section 6.06 but was not so approved); and (ii) the
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issuance of Partnership Interests or options to purchase Partnership Interests
to employees of Viacom Inc. or any of its Controlled Affiliates, which, in the
aggregate, do not exceed 10% of the outstanding Partnership Interests, shall not
constitute a Related Party Transaction unless such Partnership Interests are
issued to any such employee in lieu of regular compensation, it being understood
that the issuance of any such Partnership Interests in lieu of regular
compensation shall be a Related Party Transaction.
"Reorganization" has the meaning set forth in the Parent Agreement and
--------------
Guaranty.
"Representative" means any representative of a Partner on the Management
--------------
Committee.
"Required Contribution" means, with respect to each Partner, a Capital
---------------------
Contribution requested from such Partner by the Partnership pursuant to a
Capital Call issued after the Closing in accordance with the provisions of
Section 3.03, to the extent such Capital Contribution, when aggregated with all
------------
Capital Contributions made by such Partner's Stockholder Group after the date of
the Closing and prior to such Capital Call, but excluding the Capital
Contribution made pursuant to Section 3.02, the transfers required pursuant to
------------
Sections 2.6 and 2.7 of the Organization Agreement, and the Pre-Closing and
Closing Capital Contribution, would not exceed the Maximum Capital Contribution
Obligation of Tune, if such Partner is a member of the Tune Stockholder Group,
or MTVN, if such Partner is a member of the MTVN Stockholder Group.
"Restricted Period" shall mean that period commencing on the Closing and
-----------------
ending on the first to occur of (x) the third anniversary of the Closing or (y)
the initial closing of the IPO.
"Section 704(c) Property" means any property contributed to the Partnership
-----------------------
by a Partner that has an adjusted tax basis for federal income tax purposes to
the contributing Partner on the date of its contribution that differs from its
fair market value on such date and any Partnership property that is revalued
pursuant to Section 5.01(b).
---------------
"Services Agreement" means the Mutual Services Agreement dated as of the
------------------
date hereof between Viacom and the Partnership.
"Shares" has the meaning set forth in the Parent Agreement and Guaranty.
------
"Stockholder Group" shall mean, with respect to Tune, Liberty and its
-----------------
wholly-owned Subsidiaries and TCI Music and its wholly-owned Subsidiaries
(provided that for this purpose Liberty Media Group LLC shall be deemed a wholly
owned subsidiary of Liberty), and with respect to MTVNS, Viacom Inc. and its
wholly-owned Subsidiaries (including, for purposes of this definition, Imagine
for so long as its performance hereunder is guaranteed by MTVN pursuant to the
Parent Agreement and Guaranty or otherwise, provided that Imagine shall not be
deemed a member of the MTVN Stockholder Group for purposes of making Transfers
of Partnership Interests to it unless and until Viacom or a wholly-owned
Subsidiary of Viacom owns 100% of the outstanding equity interests of Imagine),
in each case so long as such member of a Stockholder Group remains a wholly-
owned direct or indirect Subsidiary (including, for purposes of this definition,
Imagine) of TCI Music, Liberty or Viacom Inc., as applicable.
-9-
"Subsidiary" of any Person means a corporation, company or other entity (i)
----------
more than fifty percent (50%) of whose outstanding shares or securities are, now
or hereafter, owned or controlled, directly or indirectly through one or more
Subsidiaries, by such Person, and the shares or securities so owned entitle such
Person and/or Subsidiaries to elect at least a majority of the members of the
board of directors or other managing authority of such corporation, company or
other entity or (ii) which does not have outstanding shares or securities, as
may be the case in a partnership, limited liability company, joint venture or
unincorporated association, but more than fifty percent (50%) of whose ownership
interest is, now or hereafter, owned or controlled, directly or indirectly
through one or more Subsidiaries, by such Person, and the ownership interest so
owned entitles such Person and/or Subsidiaries to make the decisions for such
corporation, company or other entity; provided, in each case, that such
corporation, or company or other entity shall be deemed to be a Subsidiary only
so long as such ownership or control exists.
"Target Value" means the sum of (x) $175 million and (y) the amount of any
------------
Non-Required Contributions made by Tune in excess of $5 million of Non-Required
Contributions; provided, however, that the Target Value shall not exceed $185
-------- -------
million.
"TCI Music" means TCI Music, Inc., a Delaware corporation, and any entity
---------
into which it may be merged or with which it may be consolidated or to which it
may transfer all or substantially all of its assets.
"Technology Sharing and License Agreement" means the Technology Sharing and
----------------------------------------
License Agreement dated as of the date hereof between MTVN and VLLC.
"Transfer" means to sell, exchange, assign or transfer.
--------
"Tune Partnership Interest Value" means the amount determined pursuant to
-------------------------------
the following procedure, which determination shall be final and binding on the
parties hereto. Upon receipt by MTVNS of the written notice from (i) Tune
provided for in Section 12.01 or (ii) Tune or a Subject Transferee provided for
-------------
in Section 12.03(a), or receipt by Tune or a Subject Transferee of the written
----------------
notice from MTVNS under Section 12.03(b), MTVNS and Tune and/or any Subject
----------------
Transferee shall attempt to mutually agree on the Fair Market Value of the Tune
Partnership Interest as of the applicable date. If such Persons are unable to
reach agreement within 60 days after the date of such notice, each of Tune (and
any such Subject Transferee), on the one hand, and MTVNS, on the other hand,
shall, within 30 days thereafter, retain an investment bank to determine the
Fair Market Value of the Tune Partnership Interest held by Tune and/or any
Subject Transferee as of the applicable date. If any such Person fails to
retain an investment bank within such 30-day period, the investment bank
retained shall be the sole investment bank to make such determination. Each
investment bank (or, in the event any Person fails to retain one, the sole
investment bank) shall submit its estimation as of the applicable date of the
Fair Market Value within 45 days from the date of its selection. If the
determination of such Fair Market Value by the investment banks differ by less
than 10% of the average of the two determinations, the Fair Market Value shall
be the average of the two determinations. If such determinations vary by more
than 10% of the average of such two determinations, the two investment banks
shall promptly designate a third investment bank which shall be unaffiliated
with any of the first two investment banks and shall not have had any
significant affiliation with,
-10-
or engagement for, any of the Partners (or any such Subject Transferee) or any
Affiliate of any of the Partners (or any such Subject Transferee) during the two
years prior to its selection. The third investment bank shall select one of the
two determinations as the Fair Market Value as of the applicable date of the
Tune Partnership Interest within 30 days from the date of its selection. In
determining the Tune Partnership Interest Value, the investment bank or banks
shall be instructed to assume the continuation of the Promotion Agreement in
accordance with its then current terms.
"Viacom" means Viacom International, Inc., a Delaware corporation and any
------
entity into which it may be merged or with which it may be consolidated or to
which it may transfer all or substantially all its assets.
"Viacom Inc." means Viacom Inc., a Delaware corporation and any entity into
-----------
which it may be merged or with which it may be consolidated or to which it may
transfer all or substantially all its assets.
Section 1.02. Additional Definitions.
----------------------
The following additional terms have the meaning ascribed thereto in the
Section or Schedule indicated below next to such term:
Defined Term Section Defined In
------------ ------------------
Acceptance Period 12.02
Agents 15.14
Appraiser 11.02
Appraiser Dispute Notice 11.02
Appraiser Notifying Party 11.02
Appraiser Receiving Party 11.02
Appraiser's Findings 11.02
Audit Costs 11.01
Auditor 11.01
Auditor's Findings 11.01
Box Preamble
Budget 6.04
Business 2.07
Business Plan 6.04
Call Closing Date 12.03
Call Notice 12.03
Call Purchase Price 12.03
Capital Account 5.01
Certificate 2.01
Committee Decision 6.05
Confidential Information 15.14
Damages 9.02
Defaulting Partner 9.01
Discount Amount 8.05
-11-
Defined Term Section Defined In
------------ ------------------
Dispute Notice 11.01
Drag Along Notice 8.05
Drag Along Transfer Fraction 8.05
Electing Partners 12.02
Event of Default 9.01
Event of Termination 10.01
Excess Interests 12.02
Extraordinary Decision 6.06
Fiscal Year 5.06
Imagine Preamble
Issuance Notice 12.02
Management Committee 6.01
MTVN Stockholder Group 1.01
MTVNS Preamble
MTVNS Partnership Interest 3.01
Negotiation Period 8.04
Non-Defaulting Partner 9.02
Notifying Party 11.01
Offered Interests 12.02
Officers 6.03
Other Partner 8.05
Partner Loan 3.05
Partnership Preamble
Percentage Interest 3.01
Premium Amount 8.05
Proposed Budget 6.04
Proposed Business Plan 6.04
Proprietary Information 15.14
Put/Call Closing 12.03
Put Closing Date 12.03
Put Interest 12.03
Put Notice 12.03
Put Purchase Price 12.03
Receiving Party 11.01
Related Party Transaction Notice 11.02
SonicNet Preamble
Subject Transaction 11.01
Subject Transferee 12.03
Tag Along Notice 8.05
Tag Along Transfer Fraction 8.05
Tax Matters Partner 7.03
Transferring Partner 8.05
Tune Preamble
Tune Minimum Condition 6.01
-12-
Defined Term Section Defined In
------------ ------------------
Tune Notice 12.01
Tune Partnership Interest 3.01
Tune Stockholder Group 1.01
VLLC Preamble
Section 1.03. Terms Generally. The definitions in Sections 1.01 and
--------------- -------------
1.02 shall apply equally to both the singular and plural forms of the terms
----
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". The words "herein", "hereof" and "hereunder" and words of similar
import refer to this Agreement (including the Exhibits and Schedules) in its
entirety and not to any part hereof unless the context shall otherwise require.
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Unless the context
shall otherwise require, any references to any agreement or other instrument or
statute or regulation are to it as amended and supplemented from time to time
(and, in the case of a statute or regulation, to any successor provisions). Any
reference in this Agreement to a "day" or number of "days" (without the explicit
qualification of "Business") shall be interpreted as a reference to a calendar
day or number of calendar days. If any action or notice is to be taken or given
on or by a particular calendar day, and such calendar day is not a Business Day,
then such action or notice shall be deferred until, or may be taken or given on,
the next Business Day.
ARTICLE II
FORMATION, NAME AND TERM OF PARTNERSHIP
---------------------------------------
Section 2.01. Formation of the Partnership. The Partners agree that the
----------------------------
Partnership shall be a limited partnership pursuant to the Act, for the purposes
and upon the terms and conditions set forth in this Agreement. The General
Partner shall file and record a Certificate of Limited Partnership of the
Partnership (the "Certificate") in the office of the Secretary of State of the
State of Delaware and provide a copy as filed to each of the Partners. The
General Partner shall also file and record all other such certificates and
documents including amendments to the Certificate, as may be required or
appropriate to comply with all requirements for the formation and operation of
the Partnership as a limited partnership, the ownership of property and the
conduct of business under the laws of the State of Delaware and of any other
jurisdictions in which the Partnership may own property or conduct business.
The General Partner shall provide the Partners with certified copies of each
such document as filed and recorded.
Section 2.02. Name of Partnership. The name of the Partnership shall be
-------------------
"MTVN Online, L.P." The business of the Partnership shall be the Business,
which may be conducted under such other name and/or names and variations thereof
as the Management Committee may from time to time select. Except as set forth
in any of the Additional Agreements, the name and any trade or service names,
marks, emblems or logos used by the Partnership shall be the exclusive property
of the Partnership, and no Partner shall have the right
-13-
to use, and each Partner agrees not to use, any of said names, marks, emblems or
logos other than on behalf of the Partnership unless otherwise agreed to in
writing among the Partners. Nothing in this Section 2.02 or elsewhere in this
-----------
Agreement is intended to, nor shall it, grant to the Partnership any right to
use any trade name, trademark, service xxxx, design or logo proprietary to any
Partner or any Affiliate of a Partner or otherwise to infringe upon the
intellectual property rights of a Partner or any Affiliate of a Partner. The
parties acknowledge that certain provisions of the Additional Agreements grant
certain intellectual property rights of certain of the Partners and/or their
Affiliates to the Partnership.
Section 2.03. Term of Partnership. The term of the Partnership shall
-------------------
commence upon the filing of the Certificate in the office of the Secretary of
State of the State of Delaware and shall continue unless terminated in
accordance with the terms of this Agreement.
Section 2.04. Principal Office. The principal executive office of the
----------------
Partnership shall be located at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx or such other
place as the Management Committee shall designate, provided that such principal
executive office shall be located in New York City.
Section 2.05. Residences. The place of residence of each Partner is its
----------
address set forth in Section 15.01.
-------------
Section 2.06. Delaware Office; Agent for Service of Process. The
---------------------------------------------
address of the Partnership's registered office in the State of Delaware is in
care of The Xxxxxxxx-Xxxx Corporation System, Inc., 0000 Xxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxxx Xxxxxx, Xxxxxxxx 00000, and the name of the registered
agent for service of process of the Partnership is The Xxxxxxxx-Xxxx Corporation
System, Inc. The Management Committee may from time to time appoint a new
registered agent for the Partnership.
Section 2.07. Purpose. Subject to, and upon the terms and conditions
-------
of, this Agreement, the purposes and business of the Partnership (the
"Business"), directly or through subsidiaries, will be to (a) develop, operate,
manage, market, promote, distribute and license text, audio and/or video music,
music-related and/or music-themed services online and (b) engage in activities
reasonably related thereto, including e-commerce applications and consumer
oriented commercial transactions related thereto. Services that are intended
principally to be delivered to internet browsers or software with browser
functionality, even if such browsers or browser functionality are operating
through a set-top box or a television set and/or are used to deliver video clips
or video programs, shall be included in the Business. The terms "browsers" and
"browser functionality" for purposes of the foregoing shall refer to software
consisting of or containing a graphical user interface which provides the
capability for the user to exercise substantial control over the selection,
timing, sequence and configuration of content being viewed, when such software
is used to view content that has been specifically adapted to be subject to such
user controls, and is not primarily intended to be viewed in a linear,
sequential manner. Notwithstanding anything to the contrary contained herein,
businesses that are substantially similar to the businesses traditionally
conducted by television, cable and satellite television program services, and
businesses presently described as "near video on demand" and "video on demand"
shall not be considered to be within the Business. The Partnership shall have
all the powers now or hereafter conferred by the laws of the State of Delaware
on limited
-14-
partnerships formed under the Act and, subject to the limitations of this
Agreement, may do any and all lawful acts or things that are necessary,
appropriate, incidental or convenient for the furtherance and accomplishment of
the purposes and businesses of the Partnership. Notwithstanding the foregoing,
the Partnership may, in addition to the Business, acquire and take any action it
deems appropriate with respect to any assets relating to the programming service
owned by Box or Box LLC and any FCC Licenses relating thereto.
Section 2.08. Property Ownership. Subject to Section 2.02 and except as
------------------ ------------
otherwise expressly provided herein, all assets and property, whether real,
personal or mixed, tangible or intangible, including contractual rights, owned
or possessed by the Partnership shall be held or possessed in the name of the
Partnership; all such assets, property and rights shall be deemed to be owned or
possessed by the Partnership as an entity, and none of the Partners individually
shall have any separate ownership in such assets, property or rights. Each
Partner's Partnership Interest is personal property for all purposes.
ARTICLE III
PARTNERSHIP CAPITAL
-------------------
Section 3.01. Percentage Interests.
--------------------
(a) The "Percentage Interest" of each Partner as of any date
shall be equal to the percentage obtained by dividing (i) the aggregate amount
of all Capital Contributions made by such Partner in cash and the Agreed Value
of all Capital Contributions made by such Partner other than in cash as of such
date by (ii) the aggregate amount of all Capital Contributions made by all the
Partners in cash and the Agreed Value of all Capital Contributions made by all
the Partners other than in cash as of such date. The Percentage Interest of a
Stockholder Group shall be the percentage equal to the sum of the Percentage
Interests of all the Partners in such Stockholder Group. The initial Percentage
Interest of each Partner as of the date of this Agreement is as follows:
VLLC ........................................................ 1%
interest as the General Partner
........................................................ 69%
interest as a Limited Partner
Imagine ..................................................... 20%
interest as a Limited Partner
SonicNet .................................................... 8.75%
interest as a Limited Partner
Box ......................................................... 1.25%
interest as a Limited Partner
(b) For purposes of this Agreement, (i) VLLC is treated as
though it holds a single Partnership Interest, even though it holds a portion of
its Partnership Interest as a General Partner, (ii) the combined Partnership
Interest of VLLC and Imagine and their Permitted Transferees may be referred to
as the "MTVNS Partnership Interest" and (iii) the combined Partnership Interest
of SonicNet and Box and their Permitted Transferees may be referred to as
-15-
the "Tune Partnership Interest." Whenever this Agreement requires that notice be
given to, or any rights be given to, Tune or MTVNS, they shall be given to both
SonicNet and Box and their Permitted Transferees or to both VLLC and Imagine and
their Permitted Transferees, respectively. Whenever this Agreement permits
rights to be exercised by Tune, on the one hand, or MTVNS, on the other hand,
SonicNet or Box (or both) and their Permitted Transferees, on the one hand, or
VLLC or Imagine (or both) and their Permitted Transferees, on the other hand,
may exercise such rights, respectively. Notwithstanding anything in this
Agreement to the contrary, the Partners intend that MTVNS shall hold one
ninetieth (1/90) of its Partnership Interest as a General Partner and eighty-
nine ninetieths (89/90) of its Partnership Interest as a Limited Partner.
Accordingly, the amount of any Capital Contributions made by MTVNS pursuant to
Article III and any allocations and distributions to MTVNS pursuant to Article
----------- -------
IV or Article V shall, except as otherwise provided therein, be allocated one
-- ---------
ninetieth (1/90) to the Partnership Interest held by MTVNS as a General Partner
and eighty-nine ninetieths (89/90) to the Partnership Interest held by MTVNS as
a Limited Partner. In the event that the Partnership Interest of a Partner is
otherwise increased or decreased pursuant to this Agreement, the amount of the
increase or decrease, as the case may be, shall be allocated in accordance with
the intent of this paragraph.
Section 3.02. Contribution of Partnership Assets. On the Closing Date,
----------------------------------
each Partner shall transfer to the Partnership those assets specified in the
Contribution Agreement to which such Partner is a party, and the Agreed Value of
such assets shall be as set forth on Schedule 1; such assets shall be
----------
transferred to the Partnership in accordance with the applicable Contribution
Agreement. As a result of such transfer, the Capital Accounts of each Partner
will be credited with an amount equal to the Agreed Value of the assets
contributed by such Partner. Prior to the Closing Date, each Partner has made
Pre-Closing Capital Contributions in an amount equal to the amount set forth
opposite such Partner's name in Schedule 1, and the Capital Accounts will be
----------
credited with the amounts of such Capital Contributions. At the Closing each
Partner shall make a Closing Capital Contribution in the amount set forth
opposite its name on Schedule 1, and the Capital Accounts will be credited with
----------
the amounts of such Capital Contributions.
Section 3.03. Additional Capital Contributions.
--------------------------------
(a) Each Budget shall set forth any Capital Contributions
which are expected to be necessary to fund Partnership Costs during the Fiscal
Year covered by such Budget, which Capital Contributions shall be designated as
Required Contributions and/or Non-Required Contributions, depending upon whether
such Partner has made Capital Contributions in excess of its Maximum Capital
Contribution Obligations. All Capital Contributions shall be deemed to be
Required Capital Contributions until such time as the applicable Partner has
contributed an amount in cash or property (excluding its Pre-Closing Capital
Contribution, Closing Capital Contribution, and contributions under the
applicable Contribution Agreement) having an Agreed Value equal to its Maximum
Capital Contribution Obligation, and thereafter all such Capital Contributions
with respect to such Partner will be Non-Required Capital Contributions. Each
Partner shall make all such Capital Contributions within 30 days of the date
provided for in the Budget, so long as a Capital Call is given therefor, except
that either Partner may elect not to make all or any portion of a Non-Required
Contribution. All such Capital Contributions shall be made pro-rata in
accordance with the Partners' Percentage Interests,
-16-
except to the extent a Partner elects not to make all or any portion of a Non-
Required Contribution.
(b) Subject to the limitations of this Agreement, if the Management
Committee determines that additional Capital Contributions are necessary from
time to time to fund Partnership Costs in excess of that provided for in any
then relevant Budget or pursuant to any prior Capital Call, the Management
Committee shall cause the Chief Executive Officer to deliver a Capital Call to
each Partner. Subject to the election of any Partner not to make all or any
portion of a Non-Required Contribution, the Partners shall make all additional
Capital Contributions pro rata in proportion to their Percentage Interests on
the Payment Date specified in the Capital Call requesting such additional
Capital Contributions; provided, however, that no Partner shall be required to
-------- -------
make an additional Capital Contribution in an amount in excess of the amount
which, when taken together with the aggregate amount of all previous Capital
Contributions (excluding, without duplication, those made pursuant to Section
-------
3.02 and the Pre-Closing and Closing Capital Contribution) made by such Partner,
----
exceeds such Partner's Maximum Capital Contribution Obligation.
(c) In the event that Tune elects not to make any portion of a
Capital Contribution or fails to do so on or before the relevant Payment Date,
MTVNS and/or any other Person(s) designated by MTVNS may make such portion of
Capital Contribution (or any portion thereof) and, thereafter the Percentage
Interests of each Partner shall be adjusted so that they are in proportion to
the relative cumulative Capital Contributions by each Partner; provided,
--------
however, that no such additional Non-Required Capital Contribution shall be made
-------
if such additional Non-Required Capital Contribution and the related adjustment
to the Percentage Interests would, on a pro forma basis, cause the Percentage
Interest for the Tune Partnership Interest to be less than the lesser of (i) 5%
and (ii) the percentage equal to one-half of the excess of (x) ten percent over
(y) the Percentage Interest of any portion of the Tune Partnership Interest
Transferred to a Person other than a Permitted Transferee. In the event the
circumstances described in the proviso of the preceding sentence apply, MTVNS
and/or any other Person(s) designated by MTVNS may loan the Partnership the
amount of such Capital Contribution (or portion thereof), in which event such
loan(s) shall be subject to Section 3.05.
------------
Section 3.04. Partnership Funds. The funds of the Partnership shall be
-----------------
deposited in such bank accounts or invested in such investments as shall be
designated by the Management Committee. Partnership funds shall not be
commingled with those of any other Person without the consent of the Management
Committee. The Partnership shall not lend or advance funds to, or guarantee any
obligation of, a Partner or any Affiliate thereof without the prior written
consent of the Management Committee.
Section 3.05. Partner Loans; Other Borrowings. Subject to any
-------------------------------
applicable approval required by Article VI, in order to satisfy the
----------
Partnership's financial needs, the Partnership may, if so determined by the
Management Committee, (i) borrow from banks, lending institutions or other
unrelated third parties, and may pledge Partnership properties or the production
of income therefrom to secure and provide for the repayment of such loans and
(ii) borrow funds from any Partner or an Affiliate of a Partner on an unsecured
basis and on market terms. Loans made by a Partner or an Affiliate of a Partner
(a "Partner Loan") shall be
-17-
evidenced by a promissory note of the Partnership on the terms and in the form
approved by the lending Partner and the Management Committee. Unless a Partner
declines to make such loan, Partner Loans shall be made pro rata in accordance
with the respective Percentage Interests of the Partners (or in such other
proportion as the Partners may agree). Partner Loans shall be repaid to the
Partners at such times as the Partnership has sufficient funds to permit such
repayment without jeopardizing the Partnership's ability to meet its other
obligations on a timely basis. Nothing contained in this Agreement or in any
promissory note issued by the Partnership hereunder shall require the
Partnership or any Partner to pay interest or any amount as a penalty at a rate
exceeding the maximum amount of interest permitted to be collected from time to
time under applicable usury laws. If the amount of interest or of such penalty
payable by the Partnership or any Partner on any date would exceed the maximum
permissible amount, it shall be automatically reduced to such amount, and
interest or the amount of the penalty for any subsequent period, to the extent
less than that permitted by applicable usury laws, shall, to that extent, be
increased by the amount of such reduction.
ARTICLE IV
DISTRIBUTIONS
-------------
No Partner shall have the right to withdraw any amount from its Capital
Account, or to receive any distribution other than in accordance with this
Article IV, without the approval of the Management Committee. No Partner shall
----------
have the right to demand or, except as otherwise provided in Section 10.02 or
-------------
Section 12.01, receive a distribution of property other than cash from the
-------------
Partnership. The Management Committee, in its sole discretion, shall determine
the timing and amounts of any cash distributions, provided, however, that
-------- -------
distributions shall not be made to the extent that they would result in any
Partner having a negative Adjusted Capital Account balance. The Partnership
shall pay in full all Partner Loans (in accordance with the order of payment
contemplated by Section 10.02(c)(iii)) prior to making any cash distributions to
---------------------
the Partners. Except as otherwise contemplated by Section 10.02 or Section
------------- -------
12.01, distributions to the Partners shall be made pro rata in accordance with
-----
each Partner's Percentage Interests.
ARTICLE V
CAPITAL ACCOUNTS; TAX ALLOCATIONS
---------------------------------
Section 5.01. Capital Accounts.
----------------
(a) There shall be established for each Partner on the books
of the Partnership a capital account (a "Capital Account"). The Capital Account
of each Partner shall be credited with (i) the amount of any Capital
Contributions of cash (including Pre-Closing Capital Contributions and Closing
Capital Contributions) made by such Partner to the Partnership, (ii) the Agreed
Value of any Capital Contributions made in property other than cash (net of any
liabilities secured by such property that the Partnership is considered to
assume or take subject to under Section 752 of the Code) and (iii) the amount of
any Net Income or items thereof allocated to such Partner pursuant to Section
-------
5.02. The Capital Account of each Partner shall be decreased by (i) the amount
----
of any Net Losses or items thereof allocated to such Partner pursuant to Section
-------
5.02 and (ii) the amount of cash and the Agreed Value of any property (net of
----
-18-
any liabilities secured by such property that such Partner is considered to
assume or take subject to under Section 752 of the Code) distributed to such
Partner. The Capital Account of a Partner also shall be adjusted appropriately
to reflect any other adjustments required pursuant to Regulations Sections 1.
704-1(b) and 1.704-2.
(b) Upon the occurrence of any event specified in Regulations
Section 1.704-1(b)(2)(iv)(f), the Chief Executive Officer may cause the Capital
Accounts of the Partners to be adjusted to reflect the Agreed Value of the
Partnership's property at such time as provided in such Regulation.
Section 5.02. Capital Account Allocations.
---------------------------
(a) Allocations of Net Income, Net Loss, Business Sale Gain and
-----------------------------------------------------------
Business Sale Loss. Except as otherwise provided in Sections 5.02(b), (c), (d),
------------------ ---------------------------
(e), (f), (g) and (h), the Net Income or Net Loss, as applicable, of the
---------------------
Partnership for each Fiscal Year shall be allocated to the Partners pro rata in
accordance with their respective Percentage Interests.
(b) Minimum Gain Chargeback. Notwithstanding any other provision
-----------------------
of this Agreement, if for any Fiscal Year there is a net decrease in Partnership
Minimum Gain, each Partner shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, for succeeding years) in an
amount equal to such Partner's share of the net decrease in Partnership Minimum
Gain, determined in accordance with Regulations Section 1.704-2(g), except as
otherwise provided in Regulations Sections 1.704-2(f)(2), 1.704-2(f)(3), 1.704-
(2)(f)(4), and 1.704-2(f)(5). Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Partner pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulations Section 1.704-2(f)(6). This Section
-------
5.02(b) is intended to comply with the minimum gain chargeback requirement of
-------
Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.
(c) Partner Minimum Gain Chargeback. Notwithstanding any other
-------------------------------
provision of this Agreement, if during a Fiscal Year there is a net decrease in
Partner Nonrecourse Debt Minimum Gain, each Partner who has a share of that
Partner Nonrecourse Debt Minimum Gain (determined in accordance with Regulations
Section 1.704-2(i)(5)) as of the beginning of such year shall be specially
allocated items of Partnership income and gain for such year (and, if necessary,
for succeeding years) in an amount equal to such Partner's share of the net
decrease in Partner Nonrecourse Debt Minimum Gain, determined in accordance with
Regulations Section 1.704-2(i)(4) (and taking into account the exceptions
provided therein). Allocations pursuant to the previous sentence shall be made
in proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(i)(4). This Section 5.02(c) is
---------------
intended to comply with the minimum gain chargeback requirement in Regulations
Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(d) Partner Nonrecourse Deductions. Any Partner Nonrecourse
------------------------------
Deductions for any Fiscal Year or other period shall be specially allocated to
the Partner who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable
in accordance with Regulations Section 1.704-
-19-
2(i). If more than one Partner bears the economic risk of loss with respect to
the Partner Nonrecourse Debt, then the Partner Nonrecourse Deductions
attributable to that Partner Nonrecourse Debt shall be allocated among the
Partners based upon the ratio in which they bear the economic risk of loss.
(e) Qualified Income Offset. In the event that any Partner
-----------------------
unexpectedly receives any adjustments, allocations or distributions described in
Regulations Section 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), items of Partnership income and gain shall be specifically
allocated to such Partner in an amount and manner sufficient to eliminate, to
the extent required by the Regulations promulgated under Section 704(b) of the
Code, the deficit balance, if any, in its Adjusted Capital Account created by
such adjustments, allocations or distributions as quickly as possible. This
provision is intended to be a "qualified income offset" described in Regulations
Section 1.704-1(b)(2)(ii)(d) and is to be interpreted in a manner consistent
therewith.
(f) Offsetting Allocations. In the event that any item of Partnership
----------------------
income, gain, loss, deduction or Section 705(a)(2)(B) Expenditure is allocated
pursuant to Section 5.02(b), (c), (d) or (e), subsequent items of Partnership
--------------------------------
income, gain, loss, deduction or Section 705(a)(2)(B) Expenditure (as determined
for purposes of computing Net Income or Net Loss) shall, to the extent
consistent with Sections 5.02(b), (c), (d) and (e), be allocated among the
----------------------------------
Partners so as to eliminate as quickly as possible on a proportionate basis,
with respect to each Partner, any disparity between (i) the sum of (x) such
Partner's Capital Account balance and (y) such Partner's share of Partnership
Minimum Gain and Partner Nonrecourse Debt Minimum Gain determined in accordance
with Regulations Section 1.704-2(g) and (i)(5) and (ii) the Capital Account
which such Partner would have had if all Partnership Minimum Gain and Partner
Nonrecourse Debt Minimum Gain had been realized and all allocations of Net
Income and Net Loss had been made pursuant to Section 5.02(a) (without giving
---------------
effect to the reference therein to Section 5.02 (b), (c), (d), (e) and (f)).
---------------------------------------
(g) Reallocations. Notwithstanding the foregoing provisions, to the
-------------
extent that any item of income, gain, deduction, or loss of any Partner (or any
Affiliate thereof) is required to be reallocated to the Partnership pursuant to
Code Section 482 or otherwise, or any item of income, gain, deduction or loss is
imputed to the Partnership as a result of a transaction between the Partnership
and any Partner (or any Affiliate thereof), such item shall be allocated in its
entirety to such Partner.
(h) IPO. Notwithstanding the foregoing provisions, in the event that
---
the Partnership is liquidated in conjunction with an IPO as described in Section
1.2 of the Parent Agreement and Guaranty and the number of Shares to be
distributed to the Tune Partners is increased pursuant to Section 1.2 of the
Parent Agreement and Guaranty, Net Income and Net Loss for the Fiscal Year in
which the liquidation occurs shall be allocated in such a manner that the
Capital Account balances of the Partners immediately prior to the distribution
of Shares in such liquidation (but after taking into account distribution of any
other assets and recognition of gain or loss with respect to the Shares pursuant
to clause (C) of the proviso in the definition of Net Income or Net Loss) shall
be in proportion to the number of Shares to be distributed to the Partners
pursuant to Section 1.2 of the Parent Agreement and Guaranty.
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Section 5.03. Allocations for Federal Income Tax Purposes. The
-------------------------------------------
Partnership's ordinary income and losses, capital gains and losses and other tax
items as determined for federal income tax purposes shall be allocated to the
Partners in the same manner as the corresponding "book" items are allocated
pursuant to Section 5.02. Notwithstanding the foregoing sentence, federal
------------
income tax items relating to Section 704(c) Property shall be allocated among
the Partners in accordance with Section 704(c) of the Code or Regulations
Section 1.704-1(b)(2)(iv)(f), as applicable, using the remedial method of
regulations Section 1.704-3(d) to take into account the difference between the
fair market value and the tax basis of such Section 704(c) Property as of the
date of its contribution to the Partnership or revaluation pursuant to Section
-------
5.01(b). Credits shall be allocated in accordance with the allocation of the
-------
deduction for the Partnership expenditure which gave rise to the credit. Items
described in this Section 5.03 shall neither be credited nor charged to the
------------
Capital Accounts of the Partners.
Section 5.04. Prorated Allocations. In the event of a Transfer of any
--------------------
Partnership Interest, regardless of whether the transferee is already a Partner
or becomes an additional, substitute or successor Partner, all items of income,
gain, loss and deduction attributable to such Partnership Interest for the
Fiscal Year in which the Transfer occurs shall be allocated between the
transferor and the transferee on the basis of the ownership of such Partnership
Interest during such Fiscal Year. Subject to Section 706 of the Code, such
allocation shall be made either by prorating items of income, gain, loss and
deduction for such year based upon the number of days that such Partnership
Interest was owned by the transferor and the transferee, respectively, or in
accordance with a closing of the books on an interim basis on the date on which
the Transfer occurred, as determined by the Management Committee.
Section 5.05. Taxation.
--------
(a) The Partners intend that the Partnership shall be treated
as a "partnership" for federal, state and local income and franchise tax
purposes, and each Partner agrees to take all actions reasonably necessary to
achieve such intent.
(b) In the event of a Transfer of all or part of a Partner's
Partnership Interest, the Chief Executive Officer shall at the request of the
transferee cause the Partnership to elect, pursuant to Section 754 of the Code,
to adjust the basis of the Partnership's property; provided, however, that the
-------- -------
tax items attributable to any such basis adjustment shall be allocated solely to
such transferee and such transferee shall reimburse the Partnership promptly for
all costs associated with such basis adjustment, including bookkeeping,
appraisal and other similar costs.
(c) Except as otherwise expressly provided herein, all other
elections required or permitted to be made by the Partnership under the Code (or
applicable state or local tax law) shall be made in such manner as may be
determined by the Chief Executive Officer to be in the best interests of the
Partners as a group.
Section 5.06. Fiscal Year. The fiscal year of the Partnership ("Fiscal
-----------
Year") for tax and accounting purposes shall end on the last day of December of
each year.
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Section 5.07. Interest. No Partner shall be entitled to interest on its
--------
Capital Contributions or on the positive balance in its Capital Account and no
such interest shall be accrued or paid.
ARTICLE VI
MANAGEMENT OF THE PARTNERSHIP
-----------------------------
Section 6.01. Management Committee.
--------------------
(a) There is hereby established a Management Committee for the
Partnership (the "Management Committee"). Prior to the initial closing of the
IPO, the Management Committee shall consist of nine Representatives, (i) with
one Representative designated by Tune so long as (x) the Percentage Interest of
the Tune Partnership Interest (including Partnership Interests held by the Tune
Stockholder Group) is at least 5% (excluding any Partnership Interests issued or
granted (including Partnership Interests issued upon exercise of any option,
warrant or other right to acquire Partnership Interests) in any transaction or
transactions with respect to which Tune has no preemptive rights pursuant to
Section 12.02 hereof), (y) neither Tune, TCI Music nor any of their Controlled
-------------
Affiliates is in material default under this Agreement or any of the Additional
Agreements to which it is a party and (z) none of the Tune Stockholder Group has
Transferred any portion of its Partnership Interest to any Person that is not a
Permitted Transferee (the satisfaction of the foregoing clauses (x), (y) and
(z), the "Tune Minimum Condition"), and (ii) with the remaining Representatives
designated by MTVNS. One Representative designated by MTVNS shall be chairperson
of the Management Committee. The Persons selected to be the initial
Representatives of each Partner, effective as of the date hereof are listed on
Schedule 2 hereto. The Representatives of each Partner shall at all times be
----------
executive officers or other full-time employees of either such Partner or an
Affiliate of such Partner. Each Representative shall have one vote on all
matters, which vote may be cast in person or by proxy.
(b) Any Partner may, at any time, by written notice to the other
Partner, remove any or all of its Representatives, with or without cause, and
appoint substitute Representative(s) to serve in their stead. Each Partner shall
be entitled to name an alternate Representative to serve in the place of any
Representative appointed by such Partner should any such Representative not be
able to attend a meeting or meetings. Each Partner shall bear the costs incurred
by each Representative or alternate designated by it to serve on the Management
Committee, and no Representative or alternate shall be entitled to compensation
from the Partnership for serving in such capacity.
(c) In the event any Representative dies or is unwilling or unable to
serve as such or is removed from office by the Partner that designated him or
her, such Partner shall promptly designate a successor to such Representative.
Such successor shall be appointed as soon as possible, but in no event later
than 30 days after the day such vacancy first occurs.
(d) The written notice of a Partner's appointment of a Representative
or alternate shall in each case set forth such Representative's or alternate's
business and residence addresses and business telephone number. Each Partner
shall promptly give written
-22-
notice to the other Partner of any change in the business or residence address
or business telephone number of any of its Representatives.
(e) Each Partner shall cause its Representative(s) on the Management
Committee to comply with the terms of this Agreement. In the absence of prior
written notice to the contrary, any action taken by a Representative shall, so
far as the other Partner is concerned, be deemed to have been duly authorized by
the Partner that appointed such Representative.
Section 6.02. Meetings of the Management Committee.
------------------------------------
(a) The initial meeting of the Management Committee shall take place
on such date and at such time and place as the Partners agree. The Management
Committee shall hold a regular meeting in the fourth quarter of each year to
approve the Proposed Budgets and Proposed Business Plans and otherwise at the
call of the Chief Executive Officer or any Representative. The Management
Committee may meet by means of telephone, conference telephone or similar
communications equipment. Unless a longer notice period is established by the
Management Committee, at least seven Business Days prior notice of any regular
meeting and at least three Business Days' prior notice of a special meeting
shall be given. Any Representative of a Partner may waive notice to such Partner
of any meeting in writing before, at or after such meeting. The attendance of
any Representative of a Partner at a meeting shall constitute a waiver by such
Partner of notice of such meeting, except when such Representative attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting was not properly called. Except as otherwise determined by
the Management Committee, all regular meetings of the Management Committee shall
be held at the principal office of the Partnership.
(b) At any meeting of the Management Committee, the presence or
participation of at least one Representative for each Partner, in person or by
proxy, shall constitute a quorum for the taking of any action, provided that (i)
--------
all Partners have received prior written notice of such meeting or have waived
such notice as provided in Section 6.02(a); and (ii) no Representative can
---------------
refrain from attending a meeting of the Management Committee in order to deny
the establishment of a quorum. All actions required or permitted to be taken by
the Management Committee may be taken, in lieu of a meeting, by written consent
(which may be executed in counterparts) of the Representatives of the Partners;
copies of all written consents shall be provided to all Representatives. All
actions to be taken by the Management Committee shall be by the votes (or
written consent) required in Section 6.05 or 6.06. Each Representative entitled
--------------------
to vote at a meeting of the Management Committee may authorize another Person to
act for him by proxy, provided that such proxy must be signed by the
--------
Representative and shall be revocable by such Representative at any time prior
to such meeting. Minutes of each meeting of the Management Committee shall be
prepared and circulated to the Representatives. Written consents to any action
taken by the Management Committee shall be filed with the minutes.
Section 6.03. Officers of the Partnership. The Partnership shall have
---------------------------
such officers (the "Officers") as the Management Committee may determine from
time to time, it being agreed by the Partners that MTVNS will appoint the Chief
Executive Officer, subject to consultation with Tune so long as Tune is entitled
to designate a Representative on the Management Committee pursuant to Section
-------
6.01. The initial Chief Executive Officer shall be
----
-23-
Xxxx Xxxxxxx. The Chief Executive Officer shall be responsible for and exercise
control over the Partnership, except for those matters referred to as Committee
Decisions or Extraordinary Decisions. Except as provided above or as otherwise
determined by the Management Committee, the Chief Executive Officer shall (x)
have such powers as are usually exercised by a comparably designated officer of
a Delaware corporation and (y) have the power to bind the Partnership through
the exercise of such powers to the extent consistent with the terms of this
Agreement. The Chief Executive Officer (or his or her designee) shall attend the
meetings of the Management Committee unless otherwise requested by the
Management Committee and shall provide such reports with respect to the business
of the Partnership as may be requested by the Management Committee. The Chief
Executive Officer may be removed with or without cause, subject, however, to
obligations under any employment agreement with the Chief Executive Officer, by
vote of a majority of the Management Committee.
Section 6.04. Budget and Business Plan.
------------------------
(a) The Initial Budget and Initial Business Plan are attached hereto
as Schedules 3 and 4, respectively. The Initial Budget includes an income
-----------------
statement prepared on an accrual basis which shall generally detail the revenues
and expenses projected for the Partnership's Business through the end of 1999
and a cash flow statement which shall generally detail the receipts and
disbursements projected for the Partnership's business through the end of 1999
and the amount of any corresponding cash deficiency or surplus, together with
any contemplated additional Capital Contributions or contemplated borrowings of
the Partnership.
(b) The Chief Executive Officer shall submit annually to the
Management Committee no later than November 1, commencing November 1, 1999 (i) a
proposed Budget (each a "Proposed Budget"), which shall include any anticipated
Capital Calls for the forthcoming Fiscal Year in substantially the same detail
as the Initial Budget and (ii) a proposed Business Plan (a "Proposed Business
Plan") for the Fiscal Year covered by the Proposed Budget or a longer period.
Such Proposed Budget shall be prepared on a basis consistent with the Initial
Budget and, when available, the Partnership's audited financial statements. If
any Proposed Budget, Proposed Business Plan, Initial Budget or Initial Business
Plan, as the case may be, is approved by the Management Committee, then such
Proposed Budget, Proposed Business Plan, Initial Budget or Initial Business
Plan, as the case may be, shall be considered approved and shall constitute the
"Budget" or the "Business Plan," as the case may be, for all purposes of this
Agreement and shall supersede any previously approved Budget or Business Plan,
as the case may be. If a Proposed Budget, Proposed Business Plan, Initial Budget
or Initial Business Plan, as the case may be, is not approved by the Management
Committee within 21 days of its receipt thereof, then the Partners shall cause
their Representatives on the Management Committee to cooperate in good faith and
confer with the Chief Executive Officer for the purpose of attempting to arrive
at a Budget or Business Plan, as the case may be, that can secure the approval
of the Management Committee.
(c) If, notwithstanding the foregoing procedures, on January 1 of any
Fiscal Year no Proposed Budget has been approved by the Management Committee for
such Fiscal Year, then the Budget for the prior Fiscal Year, adjusted (without
duplication) to reflect (a) increases in the Consumer Price Index during the
prior year and (b) increases or decreases
-24-
resulting from the following events, shall govern until such time as the
Management Committee approves a new Proposed Budget:
(i) the operation of escalation, de-escalation or other
provisions in contracts in effect at the time of approval of the prior
Fiscal Year's Budget solely as a result of the passage of time or the
occurrence of events beyond the control of the Partnership to the extent
such contracts are still in effect and have not been terminated;
(ii) elections made in any prior Fiscal Year under contracts
contemplated by the Budget for such prior Fiscal Year regardless of which
party to such contracts makes such election;
(iii) increases or decreases in expenses annualized effect of
employee additions or reductions during the prior Fiscal Year contemplated
by the Budget for such prior Fiscal Year;
(iv) interest expense attributable to any loans made to the
Partnership (including Partner Loans);
(v) increases in overhead expenses in an amount equal to the
total of overhead expenses reflected in the Budget for the prior Fiscal
Year multiplied by the increase in the Consumer Price Index for the prior
year, but in no event more than 5%;
(vi) the anticipated incurrence of costs during such Fiscal
Year for any legal, accounting and other professional fees or disbursements
in connection with events or changes not contemplated at the time of
preparation of the Budget for the prior Fiscal Year;
(vii) the continuation of the effects of a decision made by
the Management Committee or the Partners in the prior Fiscal Year with
respect to any of the matters referred to in Section 6.05 or 6.06 that are
------------ ----
not reflected in the Budget for the prior Fiscal Year; provided, however,
-------- -------
that no matter for which approval pursuant to Section 6.06 was required and
------------
obtained in one Fiscal Year shall be extended to the next Fiscal Year,
except to the extent such matter was not fully executed during the first
Fiscal Year, unless such matter is specifically approved pursuant to
Section 6.06 for the year in question; and
(viii) decreases in expense attributable to non-recurring
items reflected in the prior Fiscal Year's Budget.
Except as otherwise provided herein, any Budget established pursuant to
this Section 6.04(c) shall be deemed to have been approved by the Management
---------------
Committee.
(d) If a Business Plan is submitted for approval pursuant to this
Section 6.04 and is not approved by the Management Committee, the Business Plan
------------
most
-25-
recently approved by the Management Committee pursuant to Section 6.04(b) shall
---------------
remain in effect as the Business Plan; provided, that, if a Proposed Budget is
--------
approved pursuant to Section 6.04(b) (as opposed to a Budget that is deemed
---------------
approved pursuant to Section 6.04(c)), the Business Plan then in effect
----------------
(including the aggregate amount of additional Capital Contributions contemplated
for the applicable Fiscal Year) shall be deemed to be amended so that the Fiscal
Year therein corresponding to the Fiscal Year for which such Budget has been
approved shall be consistent with such Budget.
Section 6.05. Actions Requiring Approval by a Majority of the Management
----------------------------------------------------------
Committee. Subject to Section 6.06, except to the extent expressly provided for
--------- ------------
in the then-applicable Budget (which Budget shall not be a Budget which has been
deemed approved pursuant to Section 6.04(c)), the Partnership may not take any
---------------
action with respect to any of the following matters (each, a "Committee
Decision") without the prior approval by a majority of the Management Committee:
(i) the consent or implementation of any amendment to this
Agreement or the Certificate of Limited Partnership which is not required
to be approved as specified in Section 6.06(i);
---------------
(ii) the acquisition of any assets by the Partnership in any
single transaction or series of related transactions for consideration, in
cash or otherwise, of a fair value of $500,000 or more;
(iii) the adoption or amendment of any plan to compensate any
employees with any form of equity interests in the Partnership or the
granting to employees of any options therefor;
(iv) the making of distributions to the Partners;
(v) the making of any Capital Calls, including any Capital
Call expressly provided for in the then-applicable Budget;
(vi) subject to Sections 6.04(c) and (d), the approval and
---------------- ---
adoption of a Budget, and Material Deviations therefrom, and approval and
adoption of a Business Plan, and any material modifications thereto;
(vii) the incurrence of any indebtedness for borrowed money
with an aggregate principal amount outstanding at any one time in excess of
$250,000 (or such greater or lesser amount as may from time to time be
approved by a majority of the Management Committee pursuant to this Section
-------
6.05), other than Partner Loans, provided that all Partners are offered the
----
opportunity to participate (pro rata based on their respective Percentage
Interests) in making such Partner Loans and the total principal amount of
all such Partner Loans outstanding does not at any time exceed $1 million
(or such greater or lesser amount as may from time to time be approved by a
majority of the Management Committee pursuant to this Section 6.05);
------------
(viii) any change in the Accountants for the Partnership;
-26-
(ix) the appointment or termination of the Chief Executive
Officer or the determination of the compensation of the Chief Executive
Officer;
(x) the making of any change in the size, composition or
organization of the Management Committee; provided, that the Tune
Stockholder Group shall always have at least one Representative on the
Management Committee to the extent provided in Section 6.01(a); or
---------------
(xi) the making of any offering or sale of securities of or
interests in the Partnership.
Section 6.06. Actions Requiring Approval by a Majority of the Management
----------------------------------------------------------
Committee Including the Representative of Tune. So long as Tune is entitled to
----------------------------------------------
designate a Representative on the Management Committee pursuant to Section
-------
6.01(a), the Partnership may not take any action with respect to any of the
-------
following matters (each, an "Extraordinary Decision") without the prior approval
of a majority of the Management Committee, which majority shall include the
Representative of Tune:
(i) the consent to or implementation of any amendment to this
Agreement in such a way as may adversely affect the rights of Tune and
Affiliates who are Partners hereunder; provided, however, that without
-------- -------
limiting the foregoing or any other provision of this Agreement, the
issuance of Partnership Interests or options to purchase Partnership
Interests and the amendment of this Agreement to admit new Limited Partners
shall not be deemed to adversely affect the rights of Tune and any
Permitted Transferee which becomes a Partner;
--------------------------------------------
(ii) the entry into any business other than the Business;
(iii) the liquidation, dissolution or winding up the
Partnership except as otherwise provided in Article X; provided, however,
--------- -------- -------
that Tune shall cause its Representative not to unreasonably withhold
approval thereof;
(iv) the entry into any material amendment to any of the
Related Party Agreements;
(v) the issuance or sale to MTVNS or any of its Affiliates of
any equity interest in the Partnership other than for cash; or
(vi) the admission, during the Restricted Period, of a new,
additional or substitute general partner that is not an Affiliate of Viacom
Inc., but only in the event that such new, additional or substitute general
partner would have a right to designate more Representatives to the
Management Committee than MTVNS or, through contractual or other
arrangements, assert greater control over the Partnership than MTVN.
Section 6.07. Limitation of Agency. No Partner shall have any authority
--------------------
to act for or to assume any obligation or responsibility on behalf of the
Partnership except (i) as approved by the Management Committee, (ii) as approved
by written agreement between the
-27-
Partners, or (iii) as provided herein. No Partner shall have any authority to
act for or assume any obligation or responsibility on behalf of another Partner
except as approved in writing by such other Partner. In addition to the other
remedies specified herein, each Partner agrees to indemnify and hold the
Partnership and the other Partner or any Affiliate thereof or any partner,
shareholder, director, officer, employee or agent of any of the foregoing
harmless from and against any claim, demand, loss, damage, liability or expense
(including reasonable attorneys' fees and disbursements and amounts paid in
settlement, but excluding any indirect, special or consequential damages)
incurred by or against such other Partner or the Partnership and arising out of
or resulting from any action taken by the indemnifying Partner in violation of
this Section 6.07.
------------
Section 6.08. Liability of Partners and Representatives. Without
-----------------------------------------
limiting the duty of the General Partner under Delaware law to act in good
faith, except as set forth in Section 6.10, no Partner, former Partner or
------------
Representative or former Representative, no Affiliate of any thereof, nor any
partner, shareholder, director, officer, employee or agent of any of the
foregoing, shall be liable, in damages or otherwise, to the Partnership or any
Partner for any act or failure to act in such Person's capacity as a Partner or
Representative or otherwise on behalf of the Partnership unless such act or
omission constituted fraudulent or willful misconduct, was performed or omitted
in bad faith or constituted gross negligence or in violation of this Agreement.
Each Partner, former Partner and Representative or former Representative, each
Affiliate of any thereof, and each partner, shareholder, director, officer,
employee and agent of any of the foregoing, shall be indemnified and held
harmless by the Partnership from and against any liability for damages and
expenses, including reasonable attorneys' fees and disbursements and amounts
paid in settlement, resulting from any threatened, pending or completed action,
suit or proceeding relating to or arising out of such Person's acts or omissions
in such Person's capacity as a Partner or Representative or (except as provided
in Section 6.07) otherwise involving such Person's activities on behalf of the
------------
Partnership, except to the extent that such damages or expenses result from the
bad faith, gross negligence, fraud or willful misconduct of such indemnified
Person or a violation by such Person of this Agreement or an agreement between
such Person and the Partnership. Any indemnity by the Partnership under this
Section 6.08 shall be provided out of and to the extent of Partnership assets
------------
only. Notwithstanding anything to the contrary set forth in this Agreement,
except as otherwise expressly required by law, a Limited Partner, in its
capacity as such, shall have no liability in excess of (i) the amount of its
Capital Contribution, (ii) its share of any undistributed profits and assets of
the Partnership and (iii) the amount of any distributions wrongfully distributed
to it.
Section 6.09. Indemnification. Any Person asserting a right to
---------------
indemnification under Section 6.07 or 6.08 shall so notify the Partnership or
------------ ----
the other Partners, as the case may be, in writing. The indemnified Person's
failure to so notify the indemnifying Person of any such matter shall not
release the indemnifying Person, in whole or in part, from its obligations to
indemnify under this Section 6.09, except to the extent the indemnified Person's
------------
failure to so notify actually prejudices the indemnifying Person's ability to
defend such action. If the facts giving rise to such indemnification shall
involve any actual or threatened claim or demand by or against a third party,
the indemnifying Person shall be entitled to control the defense or prosecution
of such claim or demand in the name of the indemnified Person, with counsel
satisfactory to the indemnified Person, if it notifies the indemnified Person in
writing of its
-28-
intention to do so within 20 days of its receipt of such notice, without
prejudice, however, to the right of the indemnified Person to participate
therein through counsel of its own choosing, which participation shall be at the
indemnified Person's expense unless (i) the indemnified Person shall have been
advised by its counsel that use of the same counsel to represent both the
indemnifying Person and the indemnified Person would present a conflict of
interest (which shall be deemed to include any case where there may be a legal
defense or claim available to the indemnified Person which is different from or
additional to those available to the indemnifying Person), or (ii) the
indemnifying Person shall fail vigorously to defend or prosecute such claim or
demand within a reasonable time, in which case the reasonable fees of counsel
for the indemnified Person shall be for the account of the indemnifying Person
and the indemnifying Person shall not have the right to direct the defense of
such action on behalf of the indemnified Person. Whether or not the indemnifying
Person chooses to defend or prosecute such claim, the Partnership and the
parties hereto shall cooperate in the prosecution or defense of such claim and
shall furnish such records, information and testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as may
reasonably be requested in connection therewith. The indemnifying Person shall
not settle or permit the settlement of any such third party claim or action in
which any relief other than the payment of money damages is sought against the
indemnified Person without the prior written consent of the indemnified Person
which consent shall not be unreasonably withheld. The indemnified Person shall
not settle or permit the settlement of any claim or action for which it is
entitled to indemnification without the prior written consent of the
indemnifying Person, unless the indemnifying Person shall have failed to assume
the defense thereof after the notice referred to in the first sentence of this
Section 6.09, and in the manner provided above.
------------
Section 6.10. Right of Partners Against Partnership and General Partner
---------------------------------------------------------
in Certain Events. Notwithstanding anything herein to the contrary, so long as
-----------------
the Tune Minimum Condition is met and MTVNS owns a majority of the Partnership
Interests, in the event that the Partnership defaults under any of the
Programming License Agreement, the Trademark License Agreement or the Technology
Sharing and License Agreement, and, as a result of any such breach, MTVN or any
Controlled Affiliate seeks to terminate any such agreement pursuant to its
rights as Licensor thereunder, Tune shall have the right to bring and maintain
an action against the Partnership and/or the General Partner with respect to
such breach and, if applicable, a related breach of the duty of good faith; in
the event of any liability of the Partnership or the General Partner in any such
action, the General Partner shall not be entitled to any indemnification
hereunder from the Partnership. Tune shall be entitled to be reimbursed its
costs and reasonable expenses in bringing and maintaining such action without
regard to the outcome of such action.
Section 6.11. Temporary Right to Direct Management Committee. In the
----------------------------------------------
event of any breach by the Partnership of any of the Programming License
Agreement, the Trademark License Agreement or the Technology Sharing and License
Agreement in the circumstances set forth in Section 6.10 and the Partnership's
failure to cure such breach during the initial applicable cure period, then MTVN
shall take such actions, for a period of 30 days following the expiration of
such initial cure period, as may be reasonably requested by Tune to cause such
breach to be cured, including directing the Management Committee to take action,
subject to its fiduciary duties, to cause the Partnership to cure such breach as
requested by Tune.
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ARTICLE VII
BOOKS, RECORDS, REPORTS AND ACCOUNTINGS
---------------------------------------
Section 7.01. Books and Records. The Chief Executive Officer shall keep
-----------------
or cause to be kept current and complete books of account and records which
shall fully and accurately reflect all transactions of the Partnership and other
matters and include all documents and other materials with respect to the
Partnership's business as are usually entered and maintained by Persons engaged
in similar businesses. The books of the Partnership shall be kept on an accrual
basis of accounting and in accordance with GAAP consistently applied, and shall
be audited annually by the Accountants at the Partnership's cost. The books of
the Partnership shall at all times be maintained at the principal executive
office of the Partnership. Each Partner and its duly authorized representatives
shall have the right, during normal business hours and at such Partner's sole
cost and expense, to examine and audit the Partnership's books, records and
documents, to copy any of such books, records and documents and to inspect the
properties and operations of the Partnership, for any lawful purpose related to
the affairs of the Partnership or the investment in the Partnership by such
Partner. The Partnership's books of account, records and documents shall be
filed and preserved for such period as may be required by law or reasonably
requested by either Partner.
Section 7.02. Financial Statements. The Chief Executive Officer shall
--------------------
cause to be delivered to each Partner the financial statements listed in clauses
(i) and (ii) below, prepared, in each case, in accordance with GAAP consistently
applied (and, if required by any Partner for purposes of reporting under the
Securities and Exchange Act of 1934, Regulation S-X), and such other reports as
any Partner may reasonably request from time to time. Such financial statements
shall be accompanied by an analysis, in reasonable detail, of the variance
between the financial condition and result of operations reported therein and
the corresponding amounts for the applicable period or periods in the Business
Plan. The quarterly financial statements referred to in clause (ii) below may
be subject to normal year-end audit adjustments.
(i) As soon as practicable following the end of each Fiscal Year
(and in any event not later than 75 days after the end of such Fiscal
Year), a balance sheet of the Partnership as of the end of such Fiscal Year
and the related statements of operations, Partners' capital (deficiency)
and cash flows for such Fiscal Year, together with appropriate notes to
such financial statements and supporting schedules, all of which shall be
audited and certified by the Accountants, and in each case to the extent
the Partnership was in existence, setting forth in comparative form the
corresponding figures for the immediately preceding Fiscal Year (in the
case of the balance sheet) and the two immediately preceding Fiscal Years
(in the case of the statements).
(ii) As soon as practicable following the end of each fiscal
quarter (and in any event not later than 30 days after the end of such
fiscal quarter), a balance sheet of the Partnership as of the end of such
fiscal quarter and the related statements of operations, Partners' capital
(deficiency) and cash flows for such fiscal quarter and for the Fiscal Year
to date, in each case to the extent the Partnership was in existence,
setting forth in comparative form the corresponding figures for the prior
year's
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fiscal quarter and interim period corresponding to the fiscal quarter and
interim period just completed.
Section 7.03. Tax Returns and Information.
---------------------------
(a) The General Partner shall act as the "tax matters partner"
of the Partnership within the meaning of Section 6231(a)(7) of the Code (and in
any similar capacity under applicable state or local law) (the "TAX MATTERS
PARTNER"). The Tax Matters Partner shall take reasonable action to cause each
other Partner to be treated as a "notice partner" within the meaning of Section
6231(a)(8) of the Code. All reasonable expenses incurred by the General Partner
while acting in its capacity as Tax Matters Partner (pursuant to the Agreement
or applicable law) shall be paid or reimbursed by the Partnership. Each Partner
shall have the right to participate in (i) any administrative proceeding
relating to the determination of Partnership items at the Partnership level and
(ii) any discussions with the Internal Revenue Service relating to the
allocations pursuant to Section 5.03 or Section 5.04. The Tax Matters Partner
------------ ------------
shall from time to time upon request of any other Partner confer, and cause the
Partnership's tax attorneys and accountants to confer, with such other Partner
and its attorneys and accountants on any matters relating to a Partnership tax
return or any tax election.
(b) The Tax Matters Partner shall cause all federal, state,
local and other tax returns and reports (including amended returns) required to
be filed by the Partnership to be prepared and timely filed with the appropriate
authorities and shall cause all income or franchise tax returns or reports
required to be filed by the Partnership to be sent to each Partner for review at
least 15 Business Days prior to filing. All such income or franchise tax returns
of the Partnership shall be prepared by MTVN pursuant to the Services Agreement
unless the Management Committee otherwise determines.
(c) The Tax Matters Partner shall cause to be provided to each
Partner as soon as possible after the close of each Fiscal Year (and, in any
event, no later than March 15 of each year), a schedule setting forth an
estimate of such Partner's distributive share of the Partnership's income, gain,
loss, deduction and credit as determined for federal income tax purposes and any
other information relating to the Partnership that is reasonably required by
such Partner to prepare its own federal, state, local and other tax returns. At
any time after such schedule and information have been provided, upon at least
two Business Days' notice from a Partner, the Partnership shall also provide
each Partner with a reasonable opportunity during ordinary business hours to
review and make copies of all work papers related to such schedule and
information or to any return provided under Section 7.03(b). The Tax Matters
---------------
Partner will provide or cause to be provided to each Partner, concurrently with
the returns provided under Section 7.03(b), a schedule explaining any variances
---------------
between the schedule and information provided under this Section 7.03(c) and the
---------------
information included in the returns provided under Section 7.03(b). The Tax
---------------
Matters Partner shall also cause to be provided to each Partner, at the time
that the quarterly financial statements are required to be delivered pursuant to
Section 7.02(ii), an estimate of each Partner's share of all items of income,
----------------
gain, loss, deduction and credit of the Partnership for the fiscal quarter just
completed and for the Fiscal Year to date for federal income tax purposes.
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ARTICLE VIII
DISPOSITIONS, ADMISSIONS, WITHDRAWALS
-------------------------------------
Section 8.01. Prohibition on Dispositions of Partnership Interests;
-----------------------------------------------------
Withdrawals; Admissions. Except for Dispositions made pursuant to and in
-----------------------
compliance with the terms and conditions of this Article VIII or with the prior
------------
written consent of the other Partner, no Partner shall Dispose of all or any
part of its Partnership Interest. A purported Disposition of all or any part of
a Partnership Interest in violation of this Agreement shall be void and of no
force or effect. After any Dispositions of a Partnership Interest permitted by
this Agreement, the transferred Partnership Interest shall continue to be
subject to all the provisions of this Agreement, including the provisions of
this Article VIII, except that no transferee of the Tune Partnership Interest
------------
(other than a Permitted Transferee which is a member of the Tune Stockholder
Group) shall be entitled to any rights under Section 12.01. (In the event of
-------------
any Disposition of all or any portion of the Tune Partnership Interest after the
Offering Expiration Date, the Tune Stockholder Group shall be entitled to all
distributions, if any, to be made under Section 12.01.) No Partner shall
---------------
withdraw from the Partnership, except with the prior written consent of the
other Partners. Unless otherwise expressly agreed by the other Partners, the
withdrawal of a Partner, whether or not permitted, shall not relieve the
withdrawn Partner of its obligations under Section 6.09, Section 12.03 or
------------ -------------
Section 15.14 and shall not relieve such Partner or any of its Affiliates of its
-------------
obligations under, or result in a termination of or otherwise affect, any
Additional Agreement or any agreement between the Partnership and such Partner
or Affiliate then in effect, except to the extent provided therein. Upon
completion of any Disposition made pursuant to this Article VIII, the transferee
------------
of the Partnership Interest (if not already a Partner) shall be admitted as a
Partner without any further action upon compliance with the provisions of
Section 8.06.
------------
Section 8.02. Dispositions of Partnership Interests to a Permitted
----------------------------------------------------
Transferee. A Partner may Dispose of all or any portion of its Partnership
----------
Interest to a Permitted Transferee of such Partner without the consent of the
other Partners, provided that, unless otherwise agreed by the nontransferring
Partners, such Disposition (whether considered alone or taken together with
prior Dispositions) would not cause the Partnership to lose its status as a
Partnership for federal income tax purposes and would not result in the
violation of any applicable law.
Section 8.03. Dispositions After the Restricted Period. At any time
----------------------------------------
after the end of the Restricted Period, (i) MTVNS and any Permitted Transferee
of MTVNS may Dispose of any or all of its Partnership Interest without
restriction hereby, except as provided in Section 8.06(a), but only so long as
---------------
it complies with Section 8.05(a) to the extent applicable and (ii) Tune and any
---------------
Permitted Transferee of Tune may Dispose of any or all of its Partnership
Interest without restriction hereby, except as provided in Section 8.06(a), but
---------------
only so long as it complies with Section 8.04; provided, however, that,
------------ -------- -------
notwithstanding anything to the contrary contained herein, any successor to Tune
or MTVNS or any Permitted Transferee of Tune or MTVNS shall be subject to the
provisions of this Agreement, including, without limitation, Sections 8.05 and
-----------------
8.06.
----
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Section 8.04. Right of First Offer.
--------------------
In the event that Tune or any Permitted Transferee of Tune desires to
Dispose of any or all of the Tune Partnership Interest at any time or from time
to time after the end of the Restricted Period to a Person other than a
Permitted Transferee, it shall notify MTVNS in writing of such desire at least
30 days prior to making any such Disposition. MTVNS or its designee may, at any
time during such 30-day period prior to any such desired Disposition make an
offer to purchase such portion of the Tune Partnership Interest that Tune or its
Permitted Transferee has indicated it desires to Dispose of, which offer, if
accepted, shall constitute a valid and binding agreement subject to the
applicable provisions of Section 8.06. Tune or any Permitted Transferee of Tune
shall, if requested by MTVNS, negotiate in good faith for a 30-day period
following the delivery of such notice by MTVNS or its designee (the "Negotiation
Period") to reach an agreement for the sale of the Tune Partnership Interest to
MTVNS. If no such agreement is reached, MTVNS may confirm its prior offer or
make a new offer to Tune regarding the purchase of such portion of the Tune
Partnership Interest, which reconfirmed or new offer, if made, shall, if
accepted, constitute a valid and binding agreement subject to the applicable
provisions of Section 8.06. If Tune or its Permitted Transferee elects to
accept such offer, it shall do so on the terms and subject to the conditions
specified in such offer (but MTVNS or its designee shall be obligated to pay
interest on the purchase price for any period from 90 days after acceptance of
such offer until the consummation thereof at an annual rate equal to LIBOR plus
1% unless the delay in such consummation is primarily attributable to any act or
failure to take a required action on the part of Tune or such Permitted
Transferee); if it elects not to accept such offer or if MTVNS fails to make any
such offer, Tune or its Permitted Transferee may, for a period of 180 days (or
270 days, if pursuant to a binding agreement entered into within 100 days) after
the earlier of (i) the receipt of the last bona fide offer from MTVNS or its
designee or (ii) the expiration of the Negotiation Period or the 30 day prior
notice period, if MTVNS does not request it to negotiate, Dispose of or agree to
Dispose of any or all of its Partnership Interest to any Person other than MTVNS
or its designee (x) if no such offer was made by MTVNS or its designee, at any
price or on any terms or conditions subject to compliance with the applicable
provisions of this Agreement, or (y) if any such offer was made, on terms
(including price (evaluated on an after-tax basis)) and other terms and
conditions, taken as a whole, which are no more favorable to the transferee than
those set forth in the last bona fide offer made by MTVNS or its designee.
Section 8.05. Tag Along; Drag Along.
---------------------
(a) If at any time after the end of the Restricted Period and
prior to the sixth anniversary thereof, MTVNS and/or its Permitted Transferee(s)
(the "Transferring Partner") receives a bona fide third party offer (other than
in connection with a Disposition to a Permitted Transferee) to purchase or
otherwise acquire, in a single transaction or series of related transactions, an
aggregate amount of Partnership Interests such that the prospective
transferee(s) (together with their Affiliates) would beneficially own more than
50% of the total Capital Accounts of the Partners which such Transferring
Partner desires to accept, then such Transferring Partner shall offer to Tune
and/or its Permitted Transferee(s) (the "Other Partner(s)") the right to
participate in the proposed sale by written notice (the "Tag Along Notice")
delivered within 10 days after its tentative decision to accept such offer and
specifying
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in reasonable detail the identity of the prospective transferee(s) and the terms
and conditions of such transaction(s). The Other Partner(s) may elect to
participate in the contemplated transaction(s) by delivering written notice to
the Transferring Partner within 15 days after delivery of the Tag Along Notice.
Each Other Partner shall be entitled to transfer the same fraction of its
interest in the Partnership as is transferred by the Transferring Partner (the
"Tag Along Transfer Fraction") and to receive an amount therefor which shall be
equal to (x) the product of (i) the Tag Along Transfer Fraction and (ii) such
Other Partner's Capital Account, plus (y) the "Premium Amount," if any, and
minus (z) the "Discount Amount," if any. The Premium Amount shall be equal to
the product of (i) (a) the excess, if any, of the purchase price for the
Transferred Interest over the Capital Account attributable to such Transferred
Interest divided by (b) the Percentage Interest in the Partnership represented
by such Transferred Interest, and (ii) the Percentage Interest in the
Partnership represented by the fraction of the Other Partner's interest in the
Partnership that is to be transferred pursuant to this Section. The Discount
Amount shall be equal to the product of (i)(a) the excess, if any, of the
Capital Account attributable to such Transferred Interest over the purchase
price for the Transferred Interest divided by (b) the Percentage Interest in the
Partnership represented by such Transferred Interest, and (ii) the Percentage
Interest in the Partnership represented by the fraction of the Other Partner's
interest in the Partnership that is to be transferred pursuant to this Section.
For this purpose, "Transferred Interest" means the interest in the Partnership
to be sold by the Transferring Partner. If the Disposition of the Transferring
Partner's Partnership Interest is pursuant to a series of related transactions,
then the purchase price for the interest of the Other Partner(s) shall be
determined as above by using the weighted average of the amounts offered to the
Transferring Partner. Each Transferring Partner shall use reasonable efforts to
obtain the agreement of the prospective transferee(s) to the participation of
the Other Partner(s) in any such contemplated transaction(s), and no
Transferring Partner shall transfer any of its Partnership Interests to any
prospective transferee if such prospective transferee(s) declines to allow the
participation of the Other Partner(s).
(b) If at any time after the end of the Restricted Period and
prior to the sixth anniversary thereof, the Transferring Partner receives a bona
fide third party offer to purchase or otherwise acquire, in a single transaction
or series of transactions, an aggregate amount of Partnership Interests such
that the prospective transferee(s) (together with their Affiliates) would
beneficially own more than 50% of the total Capital Accounts of the Partners and
otherwise control the Partnership through control of a majority of the
Representatives which such Transferring Partner desires to accept, then the
Transferring Partner shall provide each of the Other Partner(s) with notice of
such offer, and, if the Transferring Partner so elects, notice that the
Transferring Partner requires the Other Partner(s) to participate in such sale
with respect to the same percentage of its or their Partnership Interests as are
proposed to be sold by the Transferring Partner (the "Drag Along Notice")
delivered within 10 days after its tentative decision to accept such offer and
specifying in reasonable detail the identity of the prospective transferee(s)
and the terms and conditions of such transaction(s). The Other Partner(s) will
thereafter be required to include its or their Partnership Interests in such
sale and to use its or their reasonable efforts to cooperate in such sale. If
the Transferring Partner elects to exercise its rights under this Section
-------
8.05(b), it may require each Other Partner to transfer up to the same fraction
-------
of its or their interest in the Partnership as is transferred by the
Transferring Partner in such transaction or series of related transactions (the
"Drag Along Transfer Fraction"), and to
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receive an amount therefor which shall be equal to (x) the product of (i) the
Drag Along Transfer Fraction and (ii) such Other Partner's Capital Account, plus
(y) the Premium Amount, if any, and minus (z) the Discount Amount, if any. The
Premium Amount shall be equal to the product of (i) (a) the excess, if any, of
the purchase price for the Transferred Interest over the Capital Account
attributable to such Transferred Interest divided by (b) the Percentage Interest
in the Partnership represented by such Transferred Interest, and (ii) the
Percentage Interest in the Partnership represented by the fraction of the Other
Partner's interest in the Partnership that is to be transferred pursuant to this
Section. The Discount Amount shall be equal to the product of (i)(a) the excess,
if any, of the Capital Account attributable to such Transferred Interest over
the purchase price for the Transferred Interest divided by (b) the Percentage
Interest in the Partnership represented by such Transferred Interest, and (ii)
the Percentage Interest in the Partnership represented by the fraction of the
Other Partner's interest in the Partnership that is to be transferred pursuant
to this Section. For this purpose, "Transferred Interest" means the interest in
the Partnership to be sold by the Transferring Partner. If the Disposition of
the Transferring Partner's interest in the Partnership is pursuant to a series
of related transactions, then the purchase price for the interest of the Other
Partner(s) shall be determined as above by using the weighted average of the
amounts offered to the Transferring Partner. Notwithstanding the foregoing,
MTVNS shall have no rights to require Tune to participate in a sale pursuant to
this Section 8.05(b) if MTVNS Disposes of less than all of its Partnership
---------------
Interest in a transaction or series of transactions that will result in, by
agreement or arrangement with the applicable transferee of such Partnership
Interest, Viacom Inc. and its Affiliates holding a 50% or greater interest in
the Partnership or otherwise controlling the Partnership, either directly or
through the acquisition or ownership of a direct or indirect interest in the
transferee of such Partnership Interest, within twelve months of such
Disposition.
(c) In connection within any purchase and sale of an Other
Partner's Partnership Interest pursuant to Section 8.05(a) or 8.05(b), such
--------------- -------
Other Partner shall become a party to any agreement with the purchaser but shall
not be required to make any representation and warranty other than
representations and warranties that (i) upon payment of the applicable purchase
price therefor, the applicable purchaser shall own such Partnership Interest
free and clear of any Liens other than any Liens created by this Agreement, any
Additional Agreement, MTVNS or such purchaser, (ii) such Other Partner has the
necessary corporate, partnership or limited liability company (as applicable)
power and authority to Dispose of such Partnership Interest and (iii) such
Disposition has been duly and validly authorized by all necessary corporate,
partnership or limited liability company (as applicable) action on the part of
such Other Partner and is not in violation of any laws, agreements or decrees
applicable to such Other Partner. The rights set forth in Sections 8.05(a) and
----------------
8.05(b) shall survive any purported exercise of such rights with respect to any
------
proposed acquisition in the event such proposed acquisition is not consummated.
Section 8.06. Additional Provisions Relating to Disposition.
---------------------------------------------
(a) In the case of any Disposition of a Partnership Interest
under this Article VIII:
------------
-35-
(i) any and all filing and recording fees, fees of counsel and
accountants and other costs and expenses reasonably incurred by the
Partnership as a result of such Disposition shall be paid by the transferee
of a Partnership Interest;
(ii) the transferee of a Partnership Interest shall, by written
instrument in form and substance reasonably satisfactory to the
nontransferring Partners (and, in the case of clause (C) below, the
transferor Partner), (A) make representations and warranties to the
nontransferring Partners equivalent to those set forth in Article XIII, (B)
accept and adopt the terms and provisions of this Agreement and, in the
event of a Disposition of any portion of the Tune Partnership Interest, the
Parent Agreement and (C) assume the obligations of the transferor Partner
under this Agreement with respect to the transferred Partnership Interest,
whereupon the transferor Partner shall be released from all such
obligations and unless expressly assumed by the transferee with the consent
of the Management Committee, except for (x) those obligations or
liabilities of the transferor Partner arising out of a breach of this
Agreement prior to the date of such Disposition or pursuant to Section
-------
6.09, Section 8.06(b), Section 12.03, and Section 15.14 and (y) those
---- --------------- ------------- -------------
obligations or liabilities of the transferor Partner based on events
occurring, arising or maturing prior to the date of Disposition (other
than, in the case of a Disposition or Transfer of a Partnership Interest by
one Partner to another Partner or its designee, any such obligation or
liability referred to in this clause (y) that is taken into account in the
determination of the purchase price for the transferor Partner's
Partnership Interest);
(iii) if required by the Management Committee, the transferee
shall deliver to the Management Committee evidence of the authority of such
Person to become a Partner and to be bound by all of the terms and
conditions of this Agreement and the transferee and transferor shall each
execute and deliver such other instruments and such opinions of counsel as
the Management Committee reasonably deem necessary or appropriate to
effect, and as a condition to, such Disposition, including amendments to
the Certificate or any instrument filed with the State of Delaware or any
other state or governmental agency;
(iv) no Disposition shall result in termination of, relieve the
Partnership, the transferor Partner or any of its Affiliates from or
otherwise affect any of the obligations or liabilities of the Partnership,
the transferor Partner or any of its Affiliates under, any agreement
between the transferor Partner or such Affiliate and the Partnership
(including any Additional Agreement), except to the extent otherwise
provided therein or otherwise agreed by the Management Committee;
(v) if required by the Management Committee, the transferee
shall deliver to the Partnership an opinion, satisfactory in form and
substance to the nontransferring Partners, of counsel reasonably
satisfactory to the Management Committee to the effect that the Disposition
of the Partnership Interest would not cause the Partnership to lose its
status as a Partnership for federal income tax purposes; and
-36-
(vi) the Disposition of a Partnership Interest shall comply
with all applicable state and federal securities laws and regulations and
all other applicable laws.
(b) Any such Disposition of a Partner's Partnership Interest to
another Partner (or such Partner's designee) in accordance with this Article
VIII or Article XII shall be consummated as soon as practicable. If any
Disposition of a Partner's Partnership Interest in accordance with this Article
-------
VIII or Article XII requires the consent, approval, waiver, or authorization of
---- -----------
any Governmental Entity, or the filing with any Governmental Entity and the
expiration of any waiting period, as a condition to the valid Disposition of
such Partner's Partnership Interest to the proposed transferee thereof, then
each of the time periods provided in this Article VIII or Article XII, as
------------ -----------
applicable, shall be suspended for the period of time during which any such
consent, approval, waiver, or authorization is being diligently pursued or until
any such waiting period expires; provided, however, that in no event shall the
-------- -------
suspension of any time period pursuant to this Section 8.06 exist for more than
------------
180 days. Subject to Section 8.06(c), each of the Partners agrees to use its
---------------
diligent efforts to obtain, or to assist the affected Partner or Partnership in
obtaining, any such consent, approval, waiver, or authorization and shall
cooperate and use its diligent efforts to respond as promptly as practicable to
all inquiries received by it, by the affected Partner or by the Partnership from
any Governmental Entity for initial or additional information or documentation
in connection therewith. In the event any such consent, approval, waiver or
authorization is not obtained or the expiration of any such waiting period does
not occur within such 180-day period, then if the proposed Disposition is to
MTVNS or its designee pursuant to Section 12.03 or Section 8.04, MTVNS shall,
------------- ------------
within 20 days of the earlier of the expiration of such 180 day period or such
date as it becomes probable that such consent or approval will not be received,
designate another Person to purchase the Partnership Interests proposed to be
acquired (which Person MTVNS shall in good faith believe would be an acceptable
purchaser of such Partnership Interest for purposes of obtaining such consent,
approval or expiration) at the same purchase price required to be paid for such
Partnership Interest, or at a lower price, in which case MTVNS shall pay to Tune
and/or its Permitted Transferees, as applicable, the excess of the specified
purchase price over such lower price. Such sale to such a designee shall be
consummated as soon as practicable, but in no case more than 90 days following
the appointment of such alternate purchaser.
(c) Notwithstanding any provisions hereof to the contrary, nothing
contained in this Agreement shall obligate any of the Partners or any of their
respective Affiliates to take any action to consummate the Disposition of a
Partnership Interest and the other transactions contemplated hereby, the
consummation of which is dependent or conditioned on the receipt of any
governmental or regulatory approval or consent, in the event that the approval
or consent so received specifically includes conditions or restrictions in
addition to those imposed by laws and regulations of general applicability as in
effect from time to time (including conditions in addition to those imposed by
existing laws and regulations which require the prior approval of any
Governmental Entity to the taking of any action or the consummation of any
transaction), the direct or indirect effect of which is or would be, to
restrict, limit or otherwise subject to penalty any of the Partners or their
respective Affiliates in the ownership of their respective assets or the conduct
of their respective businesses. For purposes of the foregoing, a condition,
restriction or limitation arising out of any such approval or consent shall be
deemed to
-37-
be a restriction or limitation on any such Person (regardless of whether such
Person is a party to or otherwise legally obligated by such consent or approval)
to the extent that the taking of an action or the consummation of a transaction
by such Person would result in any such Person or its Affiliates being in breach
or violation of such consent or approval or otherwise causing such consent or
approval to terminate or expire.
Section 8.07. Distributions After Disposition. Distributions made on or
-------------------------------
after the effective date of the Disposition of a Partnership Interest shall be
made to the transferee, regardless of when such distributions accrued on the
books of the Partnership, except as otherwise provided with respect to Section
-------
12.01.
-----
ARTICLE IX
EVENTS OF DEFAULT; CONSEQUENCES AND REMEDIES
--------------------------------------------
Section 9.01. Events of Default. An "Event of Default" shall be
-----------------
considered to have occurred with respect to a Partner (the "Defaulting Partner")
if:
(i) Such Partner Disposes of all or any part of its
Partnership Interest, or suffers such Disposition to occur, except as
permitted by this Agreement; provided, however, that, so long as no
-------- -------
foreclosure action has commenced with respect to such Partnership Interest,
no Event of Default shall be considered to have occurred for 30 days
following the involuntary encumbrance of all or any part of such
Partnership Interest if during such 30-day period such Partner acts
diligently to, and does, remove any such encumbrance, including effecting
the posting of a bond to prevent foreclosure where necessary;
(ii) any Partner fails to make all or any portion of any
Required Contribution when due and such failure continues for more than
five days following notice thereof from the Chief Executive Officer or
MTVNS;
(iii) Such Partner or any Affiliate of such Partner willfully
fails to perform or violates any other material term or condition of this
Agreement (except to the extent any such failure to perform or violation
results from or arises out of a good faith dispute with respect to this
Agreement) and such failure or violation continues for 30 days after
written notice thereof has been given by the other Partner (or if such
failure or violation is not a failure to pay money and is of such a nature
that it cannot reasonably be cured within such 30-day period, but it is
curable and such Partner in good faith begins efforts to cure it within
such 30-day period and continues diligently to do so, such reasonable
additional period thereafter to effect the cure (but no more than an
additional 30 days)); or
(iv) Such Partner otherwise causes the dissolution of the
Partnership in contravention of the terms of this Agreement (other than
solely by virtue of the Bankruptcy of such Partner).
-38-
Section 9.02. General Consequences; Remedies of Non-Defaulting Partner.
--------------------------------------------------------
(a) Upon the occurrence and during the continuance of an Event
of Default, (i) the Defaulting Partner shall have no right to designate any
Representatives pursuant to Section 6.01 and (ii) any appointment of any
------------
Representatives previously designated by the Defaulting Partner to the
Management Committee shall be void and of no effect until such time as such
Event of Default is cured in full or waived by each Non-Defaulting Partner (as
defined below), and no other Event of Default with respect to such Defaulting
Partner has occurred and is continuing. In all other respects a Defaulting
Partner shall continue to have all of the rights and obligations of a Non-
Defaulting Partner under this Agreement and applicable law. Commencing on the
date that any Partner loses its right to designate Representatives pursuant to
this Section 9.02 until the earlier of the date that such Partner (i) regains
------------
the right to designate Representatives under this Agreement or (ii) Disposes of
all of its Partnership Interest in accordance with this Agreement, such Partner
shall be permitted to send one representative to act as an observer to each
meeting of the Management Committee. Such observer shall not be permitted to
vote or participate in such meeting and may be asked to leave the meeting at any
point during which the Management Committee is discussing matters relating to
such Partner. In such event the quorum requirements for the Management
Committee shall be appropriately revised to the extent necessary to carry on the
business of the Partnership.
(b) Upon the occurrence and during the continuance of an Event
of Default, with respect to a Defaulting Partner, the other Partner (assuming no
Events of Default are continuing with respect to it) (the "Non-Defaulting
Partner"), in addition to any other rights it may have hereunder or under any
applicable law, may elect to seek to enjoin such default or to obtain specific
performance of a Defaulting Partner's obligations or Damages (as defined below)
in respect of such Event of Default. The foregoing remedies shall not be deemed
mutually exclusive, and selection or resort to any thereof shall not preclude
selection or resort to the others. The resort to any remedy pursuant to this
ection 9.02(b) shall not for any purpose be deemed to be a waiver of any other
--------------
remedy available hereunder or under applicable law and the failure to elect a
remedy within the time period provided in the preceding paragraph shall not be
presumed to be a waiver of such Event of Default.
(c) Unless an Event of Default or resort to such remedy has
been waived as set forth in the immediately preceding paragraph, the Partnership
or the Non-Defaulting Partner shall be entitled to recover from the Defaulting
Partner in an appropriate proceeding any and all damages, losses and expenses
(including reasonable attorneys' fees and disbursements) (collectively,
"DAMAGES") suffered or incurred by the Partnership or the Non-Defaulting Partner
as a result of such Event of Default.
ARTICLE X
TERMINATION AND LIQUIDATION OF THE PARTNERSHIP
----------------------------------------------
Section 10.01. Events of Termination. The Partnership shall be
---------------------
dissolved and its affairs wound up pursuant to Section 10.02 upon the first to
-------------
occur of any of the following (each, an "Event Of Termination"):
-39-
(i) the unanimous written consent of the Partners to
dissolution; or
(ii) the transfer of all the assets of the Partnership
pursuant to the Reorganization or otherwise; or
(iii) the Bankruptcy of a Partner, unless the Management
Committee, by the unanimous vote of the Representatives of the Partners
other than the Bankrupt Partner, has determined to continue the Partnership
with the successor of such Partner admitted as a new Partner.
Section 10.02. Winding-Up. Upon the occurrence of an Event of
----------
Termination, the Partnership affairs shall be wound up as follows:
(a) The Management Committee shall cause to be prepared a
statement of the assets and liabilities of the Partnership as of the date of
dissolution.
(b) Except in connection with the Reorganization, the assets
and properties of the Partnership shall be liquidated as promptly as possible,
and receivables collected, all in an orderly and business-like manner so as not
to involve undue sacrifice. Notwithstanding the foregoing, the Management
Committee may determine not to sell, or authorize the sale of, all or any
portion of the assets and properties of the Partnership, in which event such
assets and properties shall be distributed in kind pursuant to Section 10.02(c).
----------------
(c) The proceeds of liquidation under Section 10.02(b) and
----------------
all other assets and properties of the Partnership shall be applied and
distributed as follows in the following order of priority:
(i) to the payment of the debts and liabilities of the
Partnership (except for Partner Loans and any other amounts which may be
owed to any Partner) and the expenses of liquidation;
(ii) to establish any reserves as the Management Committee,
in accordance with sound business judgment, deems reasonably necessary for
any contingent or unforeseen liabilities or obligations of the Partnership,
which reserves may be paid over by the Management Committee to an escrow
agent selected by it to be held by such agent for the purpose of (x)
distributing such reserves in payment of the aforementioned contingencies
and (y) upon the expiration of such period as the Management Committee may
deem advisable, distributing the balance thereof in the manner provided in
this Section 10.02(c );
----------------
(iii) to the payment of all other amounts owed to any Partner
other than in respect of the Capital Accounts and other than Partner Loans
and then to pay first the accrued and unpaid interest on and then the
unpaid principal amount of the Partner Loans on a pro rata basis to each
Partner and its Affiliates (considered as a group) in proportion to the
respective amounts owed to each Partner and its Affiliates (considered as a
group);
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(iv) to the Partners in amounts proportional to the
total amount in each Partner's Capital Account (as adjusted in accordance
with Section 5.01) to reflect allocations of Net Income and Net Loss
------------
(including any items thereof resulting from distributions of assets in
kind). Any distribution pursuant to this Section 10.02(c)(iv) shall be made
-------------------
prior to the later of (A) the end of the Partnership taxable year in which
the liquidation of the Partnership occurs or (B) 90 days after the date of
such liquidation. Distributions pursuant to this Section 10.02(c)(iv) may
--------------------
be distributed to a trust established for the benefit of the Partners for
the purposes of liquidating Partnership assets, collecting amounts owed to
the Partnership and paying any contingent or unforeseen liabilities or
obligations of the Partnership or of any Partner arising out of or in
connection with the Partnership. The assets of any such trust shall be
distributed to the Partners from time to time, in the reasonable discretion
of the Management Committee, in the same proportions as the amount
distributed to such trust by the Partnership would otherwise have been
distributed to the Partners pursuant to this Agreement.
(d) Except with respect to the Reorganization, nothing
contained in this Section 10.02 shall be construed to limit the Management
-------------
Committee's discretion to attempt to sell the Partnership's business and assets
as a going concern following the occurrence of an Event of Termination, provided
that the proceeds of such sale shall be applied and distributed as provided in
Section 10.02(c), and provided, further, that if such a sale cannot be effected
--------------- -------- -------
within six months after the occurrence of an Event of Termination (or such
longer or shorter period as the Partners may agree) then the Management
Committee shall promptly proceed to wind-up the affairs of the Partnership as
provided above in this Section 10.02.
-------------
ARTICLE XI
RELATED PARTY TRANSACTIONS
--------------------------
Section 11.01. Related Party Transactions Generally.
------------------------------------
(a) Prior to consummation of the IPO, any Related Party
Transaction(s) shall be undertaken and conducted on an arm's length basis and on
terms, in the aggregate, no less favorable to the Partnership than could be
obtained from an unaffiliated third party. Tune shall have the right,
exercisable no more than once during a twelve-month period, to designate a
Person who is not an Affiliate of any Partner (the "Auditor"), subject to the
approval of MTVNS, which approval shall not be unreasonably withheld, to audit
any Related Party Transaction(s) conducted during the period since any previous
such audit. If the Auditor determines that (i) the Related Party Transactions
undertaken or conducted during such period were, in the aggregate, not on arm's
length terms and on terms which were less favorable to the Partnership than
those that could be obtained from an unaffiliated third party and (ii) the
difference between (x) the economic value of each such Related Party Transaction
and (y) the economic value of such transaction had it been entered into on an
arm's length basis with an unaffiliated third party, in the aggregate, exceeds
the greater of (1) 10% of the aggregate economic value of each Related Party
Transaction whose economic value exceeds that of the economic value of such
transaction had it been entered into with an unaffiliated third party (each such
Related Party Transaction, a "Subject Transaction") and (2) $1,000,000, then the
terms of each such Subject Transaction shall be modified such that, for all
future periods covered by such
-41-
transaction, such Related Party Transaction will be on terms no less favorable
than those which could be obtained from an unaffiliated third party and the
Affiliates of MTVNS which were parties to such Related Party Transaction shall
reimburse the Partnership retroactively to the time such Subject Transaction(s)
was implemented for the full economic value by which such Related Party
Transaction exceeded the value of an arm's-length transaction with an
unaffiliated third party, in each case as determined by the Auditor ("Auditor's
Findings") and MTVNS shall pay the costs and expenses associated with such audit
(the "Audit Costs"). If the Auditor determines that no such payment or
modification is required, Tune shall pay for such Audit Costs.
(b) If any Partner disagrees with the Auditor's Findings,
such Partner (the "Notifying Party") shall deliver a written notice thereof (the
"Dispute Notice") to the other Partners (the "Receiving Party") within 30 days
after receipt of the Auditor's Findings. If no Dispute Notice is received within
such 30-day period, the Auditor's Findings shall be final and binding on the
Partners and the Partnership. Upon receipt by the Receiving Party of the Dispute
Notice, MTVNS and Tune shall negotiate in good faith to resolve any disagreement
with respect to the Auditor's Findings. If MTVNS and Tune are unable to agree
with respect to the Auditor's Findings within 30 days after receipt by the
Receiving Party of the Dispute Notice, MTVNS and Tune shall promptly submit
their dispute to an arbitrator with no material relationship to MTVNS or Tune or
their respective Affiliates, selected by the Notifying Party and reasonably
satisfactory to the Receiving Party, for a binding resolution. The cost of the
arbitration will be borne as determined by the arbitrator.
Section 11.02. Related Party Transactions in Excess of $1,000,000.
--------------------------------------------------
(a) Prior to consummation of the IPO, in the event that the
Partnership or any Controlled Affiliate thereof proposes to engage in a Related
Party Transaction(s) which involves in the aggregate amounts (or has economic
value) (in any one transaction or in a series of related transactions) in excess
of $1,000,000, the Partnership shall, prior to entering into or engaging in such
Related Party Transaction, deliver written notice to Tune of its intent to enter
into such Related Party Transaction, which notice will contain an accurate and
complete description of such Related Party Transaction (a "Related Party
Transaction Notice"). Within ten days after its receipt of such notice, Tune may
either (x) approve such transaction in writing by notice to the Partnership
(with such approval deemed granted in the event Tune fails to raise an objection
to such Related Party Transaction within 10 days following receipt of such
notice of the Related Party Transaction) or (y) object in writing to such
Related Party Transaction. If Tune so approves (or such approval is deemed
granted), then the Partnership may engage in such Related Party Transaction on
the terms set forth in its notice to Tune. If Tune so objects, it shall
thereafter promptly designate a Person who is not an Affiliate of any Partner
(the "Appraiser"), subject to the approval of MTVNS, which approval shall not be
unreasonably withheld, to review the financial terms of such proposed Related
Party Transaction(s). If the Appraiser determines (the "Appraiser's Findings")
that the difference between (x) the economic value of such proposed Related
Party Transaction and (y) the economic value of such transaction if entered into
on an arm's length basis with an unaffiliated third party, equals or exceeds 10%
of the net present value (using a 10% discount rate) of the economic value of
such proposed Related Party Transaction, then the Partnership and the other
party to such Related Party Transaction shall elect either not to engage in the
proposed Related Party Transaction(s) or to modify its financial terms
-42-
such that, for all future periods covered by such transaction, such Related
Party Transaction will be on terms no less favorable than those which could be
obtained from an unaffiliated third party. The cost and expenses associated with
such Appraisal shall be borne by Tune unless the Partnership determines not to
enter into the transaction or the transaction requires adjustment as specified
above, in which case such costs and expenses shall be borne by MTVNS.
(b) If any Partner disagrees with the Appraiser's Findings,
such Partner (the "Appraiser Notifying Party") shall deliver a written notice
thereof ("Appraiser Dispute Notice") to the other Partners (the "Appraiser
Receiving Party") within 30 days after receipt of the Appraiser's Findings. If
no Appraiser Dispute Notice is received within such 30-day period, the
Appraiser's Findings shall be final and binding on the Partners and the
Partnership. Upon receipt by the Appraiser Receiving Party of the Appraiser
Dispute Notice, MTVN and Tune shall negotiate in good faith to resolve any
disagreement with respect to the Appraiser's Findings. If MTVN and Tune are
unable to agree with respect to the Appraiser's Findings within 30 days after
receipt by the Appraiser Receiving Party of the Appraiser Dispute Notice, MTVN
and Tune shall promptly submit their dispute to an arbitrator with no material
relationship to MTVN or Tune or their respective Affiliates selected by the
Appraiser Notifying Party and reasonably satisfactory to the Appraiser Receiving
Party for a binding resolution. The cost of the arbitration will be borne as
determined by the arbitrator.
Section 11.03. Basis of Evaluation. In evaluating the economic value
-------------------
of a Related Party Transaction as compared to a transaction with an unaffiliated
third party, the Auditor or Appraiser, as the case may be, shall determine the
economic value of a transaction with an unaffiliated third party based upon a
transaction with respect to the same or a reasonably similar service or product
(regardless of whether such service or product is unique, it being understood,
however, that the Auditor or Appraiser is entitled to assign a premium to the
unique aspects of a product or service), to be provided by Persons which are
similarly situated or comparable to the Persons which are to be parties to the
Related Party Transaction.
Section 11.04. No Breach. If the terms of any Related Party
---------
Transaction are modified as provided in this Article XI and any obligations
----------
arising from such modification are satisfied, no party to such Related Party
Transaction shall be in breach of any obligation hereunder solely by reason of
having entered into such Related Party Transaction on the original terms.
ARTICLE XII
CERTAIN PROVISIONS RELATING TO INTERESTS
----------------------------------------
Section 12.01. Adjustment of Tune's Percentage Interest. If, by the
----------------------------------------
Offering Expiration Date, the IPO has not been consummated, Tune may, by written
notice to the Partnership (the "Tune Notice"), within the six-month period
commencing on the Offering Expiration Date, require that the Tune Partnership
Interest Value as of the Offering Expiration Date be determined. If the Tune
Partnership Interest Value as of the Offering Expiration Date is determined to
be less than the Target Value and provided that neither TCI Music nor Tune nor
any of their Controlled Affiliates is in material default of its obligations
under this Agreement or the Additional Agreements, then the Partnership, without
any additional consideration (other
-43-
than any nominal consideration required by law) from Tune, shall (subject to the
last sentence of this Section 12.01) increase (in the same proportions) Tune's
-------------
Percentage Interest and Capital Account balance (and correspondingly reduce
MTVN's Percentage Interest and Capital Account balance) so the Tune Partnership
Interest Value (based on Tune's Percentage Interest as increased pursuant to
this Section 12.01) as of the Offering Expiration Date shall be equal to the
-------------
Target Value (as reduced proportionally to reflect any Disposition of any
portion of the Tune Partnership Interest prior to the Offering Expiration Date);
provided, however, that such Percentage Interest shall in no event exceed 15%
-------- -------
(or such lesser percentage which equals 150% of Tune's Percentage Interest on
the Offering Expiration Date); and provided, further, however, that Tune may
-------- ------- --------
elect to defer receipt and the effectiveness of such increase until the first to
occur of (x) the IPO, (y) such date as Tune shall request such increase or (z)
the first anniversary of the Offering Expiration Date.
Section 12.02. Preemptive Rights. MTVNS and Tune, so long as Tune is
-----------------
permitted to designate one Representative to the Management Committee pursuant
to Sections 6.01(a), shall have certain preemptive rights as follows:
----------------
(a) If the Partnership wishes to issue any Partnership
Interests or rights to acquire such Partnership Interests (in either case, the
"Offered Interests") after the date hereof to any Person, the Partnership shall
give each Partner at least 15 days prior written notice of any proposed
issuance, which notice shall disclose in reasonable detail the proposed terms
and conditions of such issuance (the "Issuance Notice"). Upon receipt of the
Issuance Notice, each Partner shall have the right to elect to purchase, at the
same price and on the terms stated in the Issuance Notice, a percentage of
Offered Interests equal to the product of (x) such Partner's Percentage
Interest, multiplied by (y) the total Percentage Interest represented by all of
the Offered Interests to be issued. Those Partners electing to purchase Offered
Interests shall be referred to as "Electing Partners". Such election is to be
made by each Partner by delivering written notice to the Partnership and the
other Partners within 15 days after receipt by such Partner of the Issuance
Notice (the "Acceptance Period"). The delivery of such notice by an Electing
Partner shall constitute a binding offer by such Electing Partner to purchase
that portion of the Offered Interest specified in such notice on the terms set
forth in the Issuance Notice, which offer shall be irrevocable for a period of
90 days following its delivery to the Partnership. The Partnership shall be
required to accept any such offer from an Electing Partner and issue such
Partnership Interests to it so long as such Electing Partner has offered to
purchase its proportionate share of the Offered Interests as provided above.
(b) If Tune and its Permitted Transferees have not elected to
purchase their percentage of the Offered Interests, MTVNS and its Permitted
Transferees shall have the right to elect to purchase such percentage of the
Offered Interests (the "Excess Interests"), by giving written notice of such
election to the Partnership within 10 days after the Acceptance Period, so long
as all of the Excess Interests are to be purchased by the Electing Partners.
(c) If Tune does not elect to purchase its share of the
Offered Interests pursuant to Section 12.02(a), then Tune and its Permitted
----------------
Transfereesshall have no right to purchase any Offered Interests pursuant to
this Section 12.02, and/or if MTVNS fails to purchase its Offered Interests (or
-------------
all Offered Interests, if Tune is not an Electing Partner) the Partnership
-44-
may, at its election, during a period of 90 days following the expiration of the
Acceptance Period, sell and issue such Offered Interests not elected to be
purchased to such other Person at a price and upon terms no more favorable to
such Person than those stated in the Issuance Notice; provided that as a
condition to such sale, such Person acquiring the Offered Interests becomes a
party to this Agreement and the ultimate parent entity of such Person becomes a
party to the Parent Agreement and Guaranty on such terms as the Management
Committee shall reasonably approve. In the event the Partnership has not so sold
the Offered Interests within such 90-day period, the Partnership shall not
thereafter issue or sell any of such Offered Interests or any other additional
Partnership Interests without first offering such securities to each Partner in
the manner provided in this Section 12.02.
-------------
(d) If Tune and its Permitted Transferees and/or MTVNS and
its Permitted Transferees give the Partnership notice, pursuant to the
provisions of this Section 12.02, that Tune and its Permitted Transferees and/or
-------------
MTVNS and its Permitted Transferees (as the case may be) desire to purchase all
of the Offered Interests as to which they have the right to purchase pursuant to
this Section 12.02, such sale shall be consummated within ten days after the
-------------
Acceptance Period. In the event that any proposed issuance is for a
consideration other than cash, the Partners will be entitled to pay cash for
each share or other unit, in lieu of such other consideration, in the amount
determined in good faith by the Management Committee in accordance with Section
-------
6.06 (to the extent a purchaser is an Affiliate of Viacom) to constitute the
----
Fair Market Value of such consideration other than cash to be paid per share or
other unit or, to the extent Tune and the Partnership so agree, to deliver
property or securities having an Agreed Value equal to such Fair Market Value.
(e) The preemptive rights contained in this Section 12.02
-------------
shall not apply to (i) the grant or sale of Partnership Interests or rights to
acquire Partnership Interests to officers, directors, consultants,
Representatives or employees of the Partnership or its Controlled Affiliates
approved after the date hereof by the Management Committee in accordance with
Sections 6.05 and 6.06 or to the sale or issuance of Partnership Interests to
------------ ----
directors, employees or consultants of MTVN or Viacom pursuant to an employee,
consultant or director option plan in compliance with this Agreement or (ii) the
issuance of Partnership Interests to the public in the IPO or thereafter;
provided, however, that after the IPO Tune shall have preemptive rights with
-------- -------
respect to any offering of Partnership Interests or rights to acquire
Partnership Interests made to MTVN or its Affiliates.
Section 12.03. Put and Call.
------------
(a) At any time during the 60-day period commencing on the
fifth anniversary of the Closing Date, each Subject Transferee may, by written
notice to MTVNS (the "Put Notice"), require MTVNS to purchase all, but not less
than all, of the Tune Partnership Interest held by such Subject Transferee. Any
such purchase or sale shall be effected, for cash, on the date which is the
120th day following the fifth anniversary of this Agreement, or (if not a
Business Day) the next following Business Day (the "Put Closing Date") and at a
price equal to the product of (x) the Tune Partnership Interest Value with
respect to the aggregate amount of the Tune Partnership Interests covered by the
Put Notices (the "Put Interest") as of the fifth anniversary of the date hereof
and (y) a fraction, the numerator of which is the Percentage
-45-
Interest of the Put Interest on the Put Closing Date and the denominator of
which is the Percentage Interest of the Put Interest on such fifth anniversary
(excluding, in each case, any changes in such Percentage Interest resulting
other than from a Disposition of any portion of the Put Interest during such
period) (the "Put Purchase Price"). The Put Purchase Price will be allocated
proportionately among all Subject Transferees electing to exercise the Put and
selling their Tune Partnership Interests to MTVNS. The Put Purchase Price shall
bear interest at an annual rate of LIBOR plus 1% for any period from the date
which is 90 days after the date of the Put Notice until the Put Closing Date
unless the delay in such consummation is primarily attributable to any act or
failure to take a required action on the part of Tune or such subject
Transferee. A "Subject Transferee" shall mean each of (i) Tune or its Permitted
Transferees or (ii) a transferee of any or all of the Tune Partnership Interest
which acquired such Tune Partnership Interest in accordance with the terms of
this Agreement; provided, that no transferee acquiring any or all of the Tune
--------
Partnership Interest in a public market transaction (so long as such sale to
such transferee in such public market transaction was made in accordance with
this Agreement) shall be a Subject Transferee; provided, further, that a Subject
-------- -------
Transferee holding Tune Partnership Interests acquired both (A) pursuant to this
Agreement (other than in a public market transaction) and (B) in a public market
transaction, shall be a Subject Transferee only as to the Tune Partnership
Interests not acquired in a transaction referred to in clause (B) above.
(b) At any time during the 60-day period commencing on the
sixth anniversary of the Closing Date, MTVNS (whether or not it is then a
Partner) may, by written notice to each Subject Transferee (the "Call Notice"),
require each Subject Transferee to sell to MTVNS all, but not less than all, of
the Tune Partnership Interest. Any such purchase or sale shall be effected, for
cash, on the date which is the 120th day following the sixth anniversary of this
Agreement, or (if not a Business Day) the next following Business Day (the "Call
Closing Date"), and at a price equal to the product of (x) the Tune Partnership
Interest Value as of the sixth anniversary of the date hereof and (y) a
fraction, the numerator of which is the Percentage Interest of the Tune
Partnership Interest on the Call Closing Date and the denominator of which is
the Percentage Interest of the Tune Partnership Interest on such sixth
anniversary (excluding, in each case, any changes in such Percentage Interest
resulting other than from a Disposition of any portion of the Tune Partnership
Interest during such period) (the "Call Purchase Price"). The Call Purchase
Price shall bear interest at an annual rate of LIBOR plus 1% for any period from
the date which is 90 days after the date of the Call Notice until the Call
Closing Date unless the delay in such consummation is primarily attributable to
any act or failure to take a required action on the part of Tune or such Subject
Transferee.
(c) If a Put Notice or Call Notice is delivered, as the case
may be, then MTVNS and Tune shall proceed with the closing of the purchase (the
"PUT/CALL CLOSING") in accordance with Section 8.06(b) as follows:
---------------
(i) The Put/Call Closing shall be held at the principal
office of the Partnership on the Put Closing Date or Call Closing Date, as
the case may be, or at such other place or on such other date as MTVNS and
Tune may agree, provided that MTVNS shall have the right to designate
another reasonably convenient location to avoid stamp duty or other
transfer taxes to the extent that it is not unlawful to do so.
-46-
(ii) At the Put/Call Closing, MTVNS shall purchase (or
cause its designee to purchase) all but not less than all of the applicable
Tune Partnership Interest for the Put Purchase Price or the Call Purchase
Price, as the case may be, and against payment of such price in cash, the
Subject Transferee(s) shall deliver all such documents and instruments as
are reasonably necessary to transfer, and shall be deemed to have
transferred and to have represented and warranted to MTVNS that it has
transferred, good title to the Partnership Interests being sold to MTVNS,
free and clear of all liens, other than those created by this Agreement or
any Additional Agreement or created by MTVNS.
(iii) Subject to Section 8.06(b), the obligation of MTVNS
---------------
and Tune to proceed with the Put/Call Closing shall be conditioned upon, and the
scheduled Put Closing Date or Call Closing Date, as the case may be, shall be
extended to 10 days following the last to occur of, the receipt of all material
governmental and regulatory consents, approvals or waivers that may be required
in connection with the purchase and sale of the Tune Partnership Interest (other
than any such consent or approval which has, if permitted by law, been waived by
MTVNS or Tune, as applicable, in which case MTVNS or Tune, as applicable, shall
indemnify and hold harmless Tune or MTVNS, as applicable, for all losses,
damages and expenses incurred by Tune or MTVNS, as applicable, their respective
Affiliates and their respective partners, shareholders, members, directors,
officers, employees and agents as a result of MTVNS' or Tune's (as the case may
be) decision to so proceed with the Put/Call Closing pursuant to an instrument
reasonably satisfactory to Tune or MTVNS, as applicable); provided, however,
--------- --------
that Tune shall not be obligated to sell, and MTVNS shall not be obligated to
purchase, such interest to the extent that proceeding in such transaction would
violate any law, rule or regulation applicable to TCI Music or MTVN or their
respective Controlled Affiliates or their respective businesses or assets, or
subject any of the foregoing to any injunction, or other equitable remedy of any
court or government entity. MTVNS and Tune shall each use all reasonable efforts
in cooperation with each other promptly to make all filings, give all notices
and secure all consents, approvals and waivers that may be required in
connection with the purchase and sale of the Tune Partnership Interests.
(iv) Upon consummation of the purchase of all of the Tune
Partnership Interest, Tune shall cease to be a Partner or to have any
right, title or interest in or to the Partnership.
ARTICLE XIII
REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE PARTNERS
------------------------------------------------------------
Each Partner hereby makes the following representations and warranties to
each other, each with respect to itself only:
(i) It is, and at all times material to this Agreement
shall be, duly incorporated or organized, validly existing and in good
standing under the laws of its state of incorporation or organization and
duly qualified or registered to do business in
-47-
each state or jurisdiction in which failure to so qualify or register would
have a material adverse effect upon such Partner or the Partnership.
(ii) It has, and at all times material to this Agreement
shall continue to have, the full power and authority to take all actions
contemplated by this Agreement.
(iii) The execution, delivery and performance of this
Agreement and the transaction contemplated hereby has been duly authorized
by all necessary action on its part.
(iv) This Agreement constitutes a valid and binding
obligation of it enforceable against it in accordance with the terms
hereof, subject as to enforceability to limits imposed by bankruptcy,
insolvency or similar laws affecting creditors' rights (including, without
limitation, laws relating to fraudulent conveyances) generally and the
availability of equitable remedies.
(v) The execution, delivery and performance of this
Agreement does not violate any provision of law applicable to it or of its
organizational documents which violation could reasonably be expected to
have a material adverse effect on such Partner or the Partnership.
(vi) The execution, delivery and performance of this
Agreement does not violate or cause a breach or default under any agreement
or obligation to which it is a party or is otherwise subject, except for
such violations, breaches or defaults as would not have a material adverse
effect on such Partner or the Partnership.
(vii) Except with respect to consents, approvals and
authorizations relating to Tune and MTVNS and their respective Controlled
Affiliates and the Tune Contribution and the MTVN Contribution, no consent,
approval or authorization of, or registration or filing with, any Person
(governmental or private) is required in connection with the execution,
delivery and performance by it of this Agreement or the consummation by it
of the transactions contemplated hereby except for such consents,
approvals, authorizations, registrations or filings which have been
obtained or filed.
ARTICLE XIV
[Intentionally Left Blank]
------------------------
ARTICLE XV
MISCELLANEOUS
-------------
Section 15.01. Notices. Except as expressly provided herein, notices
-------
and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed (certified or registered
mail, postage prepaid, return receipt requested) or sent by facsimile copier of
the sending Partner, as follows:
-48-
(a) If to MTVN to:
MTVN Online Partner I LLC and Imagine Radio, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxx Xxxxxxx
with a copy to:
Viacom International Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: General Counsel
(b) If to Tune to:
SonicNet, Inc. and The Box Worldwide Inc.
c/o TCI Music, Inc.
00 Xxxxxx Xxxxx Xxxxx, Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxx Xxxxxxx
or to such other address or attention of such other Partner or Person as any
Partner shall advise the other Partner in writing. All notices and other
communications given to a Partner in accordance with the provisions of this
Agreement shall be deemed to have been given (i) three Business Days after the
same are sent by certified or registered mail, postage prepaid, return receipt
requested, (ii) when delivered by hand or transmitted by facsimile (confirmation
received) unless delivered on a day which is not a Business Day or after 5:00
p.m., local time, at the place of receipt, in which case such notice shall be
deemed to have been given on the next succeeding Business Day or (iii) one
Business Day after the same are sent by a reliable overnight courier service,
with acknowledgment of receipt.
Section 15.02. Table of Contents; Headings. The table of contents and
---------------------------
headings of the Articles, Sections and other subdivisions of this Agreement are
for convenience of reference only and shall not modify, define or limit any of
the terms or provisions of this Agreement.
Section 15.03. Governing Law. This Agreement shall be construed in
-------------
accordance with, and governed by, the internal laws of the State of Delaware
without regard to principles of conflict of laws.
Section 15.04. Severability. If any provision of this Agreement shall
------------
be held to be illegal, invalid or unenforceable, that provision will be enforced
to the maximum extent
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permissible so as to effect the intent of the Partners and the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby. If necessary to effect the intent of the Partners,
the Partners will negotiate in good faith to amend this Agreement to replace the
unenforceable language with enforceable language which as closely as possible
reflects such intent.
Section 15.05. Amendments. This Agreement may be modified or amended
----------
only by a written amendment signed by each party hereto.
Section 15.06. Counterparts. This Agreement may be executed in one or
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more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts shall have been signed
by each Partner and delivered to the other Partner.
Section 15.07. Entire Agreement. The provisions of this Agreement and
----------------
the Additional Agreements set forth the entire agreement and understanding
between the Partners as to the subject matter hereof and supersede all prior
agreements, oral or written, and other communications between the Partners
relating to the subject matter hereof, including the Memorandum of Understanding
dated May 19, 1999 among MTVN, TCI Music, Inc. and Liberty.
Section 15.08. Parties in Interest; Limitation on Rights of Others.
---------------------------------------------------
The terms of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and, except as provided herein, their respective successors
and permitted assigns. Any assignment of rights hereunder in violation hereof
shall be null and void ab initio. Nothing in this Agreement, whether express or
-- ------
implied, shall be construed to give any Person (other than the parties hereto
and their permitted successors and assigns) any legal or equitable right, remedy
or claim under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
Section 15.09. Waivers; Remedies. The observance of any term of this
-----------------
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the party or parties entitled to enforce such
term, but any such waiver shall be effective only if it is in a writing signed
by the party or parties against which such waiver is to be asserted and only in
the specific instance and for the specific purpose for which it is given.
Except as otherwise provided herein, no failure or delay of any Partner in
exercising any power or right under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.
Section 15.10. Further Assurances. Upon reasonable request from time to
------------------
time, each Partner shall execute and deliver all documents and instruments and
do all other acts that may be reasonably necessary or desirable to carry out the
intent and purposes of this Agreement and give effect to the exercise by a party
of its rights hereunder.
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Section 15.11. Jurisdiction; Consent to Service of Process.
-------------------------------------------
(a) Each Partner hereby irrevocably and unconditionally
submits, for itself and its property, to the exclusive jurisdiction of any New
York State court sitting in the County of New York or any federal court of the
United States of America sitting in the Southern District of New York, as the
party instituting suit shall elect in its sole discretion, and any appellate
court from any such court, in any suit, action or proceeding arising out of or
relating to the Partnership or this Agreement, or for recognition or enforcement
of any judgment relating hereto. Each Partner hereby irrevocably and
unconditionally agrees that any suit, action or proceeding against it by any
other Partner with respect to the Partnership or this Agreement may be
instituted, and that any suit, action or proceeding shall be instituted only in
any New York State court sitting in the County of New York or any federal court
sitting in the Southern District of New York, and any appellate court from any
such court, as the Partner instituting such suit, action or proceeding may elect
in its sole discretion. Each Partner also hereby irrevocably and unconditionally
agrees that a final judgment in any such suit, action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(b) Each Partner hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to the Partnership or this Agreement in
any New York State court sitting in the County of New York or any federal court
sitting in the Southern District of New York, and any affiliate court for such
court. Each Partner hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in any such court and further waives the right to object,
with respect to such suit, action or proceeding, that such court does not have
jurisdiction over such Partner. Each Partner hereby irrevocably waives the right
to a jury trial in any suit, action or proceeding arising out of or relating to
the Partnership or this Agreement.
(c) Each Partner hereby irrevocably and unconditionally
consents to service of process in the manner provided for the giving of notices
pursuant to this Agreement. Nothing in this Agreement shall affect the right of
either party to serve process in any other manner permitted by law.
Section 15.12. Reliance on Officer's Certificate. Persons dealing
---------------------------------
with the Partnership shall be entitled to rely on a certificate of the
secretary, any assistant secretary or any other officer of the Partnership as
conclusive evidence of the incumbency of any officer of the Partnership and his
or her authority to take action on behalf of the Partnership and shall be
entitled to rely on a copy of any resolution or other action taken by the
Management Committee, certified by the secretary, any assistant secretary or any
other officer of the Partnership, as conclusive evidence of such action and of
the authority of the officer referred to in such resolution or other action to
bind the Partnership to the extent set forth therein.
Section 15.13. Public Announcements. No Partner shall make or shall
--------------------
permit any of its Affiliates to make any public announcement about the
Partnership and its formation or activities without the prior written consent of
the other Partners, which consent shall not be
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unreasonably withheld or delayed. Notwithstanding the foregoing or any other
provision contained herein, any Partner or Affiliate of such Partner may at any
time make announcements which are required by applicable law or the rules of any
national stock exchange or stock association so long as the Partner or Affiliate
so required to make the announcement, promptly upon learning of such
requirement, notifies the other Partners of such requirement and discusses with
the other Partner in good faith the exact wording of any such announcement.
Section 15.14. Confidential and Proprietary Information. Except as
----------------------------------------
otherwise provided in the Contribution Agreements, all Proprietary Information
(as defined below) of any Partner or its Affiliates shall remain the property of
such Partner or its Affiliates (other than the Partnership and its
Subsidiaries), and all Proprietary Information of the Partnership shall remain
the property of the Partnership. Each of the Partners and their respective
Affiliates (i) shall use any and all Confidential Information (as defined below)
only for purposes of the Partnership and shall not use such Confidential
Information for the benefit of or in connection with any other business or
enterprise of such Partner or any of its Affiliates and (ii) shall, and shall
use its reasonable best efforts to cause its and their respective officers,
directors, employees, attorneys, accountants, and agents (collectively,
"Agents") to, keep secret and retain in strictest confidence any and all
Confidential Information, and shall not disclose such Confidential Information,
and shall use its reasonable best efforts to cause its Agents not to disclose
such Confidential Information, to any Person other than such Partner, its
Affiliates, the Partnership or their respective Agents, except for (i) such
disclosures as may be required by law or legal process, disclosures to such
Partner's counsel, or disclosures pursuant to any listing agreement with, or the
rules or regulations of, any securities exchange on which securities of such
Partner or any such Affiliate are listed or traded (in which event the Partner
making such disclosure or whose Affiliates or Agents are making such disclosure
shall so notify the other Partners as promptly as practicable (and if possible,
prior to making such disclosure) and shall seek confidential treatment of such
information); (ii) as may be necessary to establish or enforce its rights
hereunder; (iii) as part of the normal review or reporting procedure to its
Parent, its auditors and its attorneys; provided, that such Partner shall be
--------
liable for any breach by such Parent, auditors or attorneys of any provision of
this Section 15.14; (iv) disclosures to an Affiliate of, or a professional
-------------
advisor to, such Partner in connection with the performance by such Partner of
its obligations hereunder, under the Additional Agreements or under an agreement
with the Partnership; provided, that such Partner shall be liable for any breach
--------
by such Affiliate or professional advisor of any provision of this Section
-------
15.14; (v) disclosures to a prospective third party purchaser pursuant to
-----
Article VIII or a prospective third party purchaser (by merger, stock
acquisition or otherwise) of all or substantially all of the assets of the
Parent of such Partner so long as such prospective purchaser executes and
delivers a confidentiality agreement in form and substance acceptable to the
Partnership; provided that such Partner shall be liable for any breach by such
prospective third party purchaser of any provision of this Section 15.14; and
-------------
(vi) with the prior written consent of the nondisclosing Partners.
Notwithstanding the foregoing, MTVN and its Affiliates shall be permitted to use
Confidential Information of the Partnership for the benefit of or in connection
with their respective businesses, except that MTVN and its Affiliates shall not
have the right to use Confidential Information of the Partnership which
constitutes, is set forth in, or concerns architecture or design of data
processing or communications systems, information or data processing algorithms,
and source code, flow charts and internal technical documentation relating to
the design or operation of computer programs. The obligations under
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this Section 15.14 shall survive the termination of this Agreement, the
-------------
withdrawal of any Partner and any Person ceasing to be an Affiliate of a Partner
for a period of five years after the occurrence of such event. For purposes of
this Section 15.14:
-------------
"Confidential Information" shall mean (i) the terms of this Agreement and
the Additional Agreements and (ii) all Proprietary Information; provided,
--------
however, that such Confidential Information shall not include, with respect to
-------
any Partner, any information that (A) is or has become generally available to
the public other than as a result of a disclosure by such Partner, its
Affiliates or its Agents, (B) has been independently developed by such Partner
or an Affiliate or Parent of such Partner or (C) is, or becomes available to
such Partner or an Affiliate or Parent of such Partner on a non-confidential
basis from a third party having no obligation of confidentiality to a Partner or
the Partnership known to the receiving party and which has not itself received
such information directly or indirectly in breach of any such obligation of
confidentiality.
"Proprietary Information" means any proprietary ideas, plans or
information, including, without limitation, information of a technological or
business nature (including, without limitation, all trade secrets, proposed
trade names, proposed slogans, computer software, technology, data, summaries,
reports, or mailing lists, whether written or oral and if written, however
produced or reproduced) (i) belonging to any Partner or any of its Affiliates or
(ii) developed by or for the Partnership, that is marked proprietary or
confidential, or bears a marking of like import, or that such Partner or
Affiliate or the Partnership, as the case may be, states in writing within 30
days of disclosure thereof is to be considered proprietary or confidential
except for computer source code internal software technical documentation,
machine readable databases or customer lists, which shall be deemed proprietary
whether or not so marked or designated), in each case other than any such
information that is already known to the party receiving the same or its
Affiliates at the time of receipt from the party disclosing the same, as
evidenced by written records made prior to such receipt, or is independently
developed or formulated by such receiving party or its Affiliates, or is
provided to such receiving party or its Affiliates by a third party not as a
result of any breach of any obligation of confidentiality to such disclosing
party or that otherwise becomes publicly available through no fault of such
receiving party or its Affiliates.
Section 15.15. No Presumption. This Agreement shall be construed without
--------------
regard to any presumption or rule requiring construction or interpretation
against the party drafting or causing any instrument to be drafted.
Section 15.16. Freedom of Action. Except as otherwise expressly provided
-----------------
herein or in the Parent Agreement and Guaranty or in any Additional Agreement to
which such Partner is or will be a party or bound, no Partner shall have any
obligation to the Partnership or its Partners not to (i) engage in the same or
similar activities or lines of business as the Partnership or develop or market
any products or services that compete, directly or indirectly, with those of the
Partnership or (ii) invest or own any interest publicly or privately in, or
develop a business relationship with, any corporation, partnership or other
entity engaged in the same or similar activities or lines of business as, or
otherwise in competition with, the Partnership or (iii) do business with any
client or customer of the Partnership or (iv) employ or otherwise engage any
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former officer or employee of the Partnership. Except as otherwise expressly
provided herein or in the Parent Agreement and Guaranty or in any Additional
Agreement to which such Partner is or will be a party or bound, no Partner shall
be obligated to present or offer to the Partnership any particular investment or
business opportunity, regardless of whether the Partnership could take advantage
of such opportunity if it were presented to the Partnership, but may, subject to
the terms of any agreement between the Partners other than this Agreement, avail
itself of any such opportunity for its own benefit or direct such opportunity to
another Person. For purposes of this Section 15.16, any reference to a Partner
-------------
shall include its Affiliates, including its Parent, and the Affiliates of such
Parent.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
General Partner:
MTVN ONLINE PARTNER I LLC
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Sr. Vice President, General
Counsel and Assistant Secretary
Limited Partners:
MTVN ONLINE PARTNER I LLC
/s/ Xxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Sr. Vice President, General
Counsel and Assistant Secretary
IMAGINE RADIO, INC.
/s/ Xxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Sr. Vice President, General
Counsel and Assistant Secretary
SONICNET, INC.
By: /s/ Xxxxx Xxxx
---------------------------------------
Name: Xxxxx Xxxx
Title: Vice President
THE BOX WORLDWIDE, INC.
By: /s/ Xxxxx Xxxx
---------------------------------------
Name: Xxxxx Xxxx
Title: Vice President
