1
EXHIBIT 3.3
Execution Copy
INTERMEDIA CAPITAL PARTNERS IV, L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of March 31, 1998
2
TABLE OF CONTENTS
Page
----
ARTICLE 1 General Provisions.........................................................2
1.1 Formation of the Partnership...............................................2
1.2 Name.......................................................................2
1.3 Principal Place of Business................................................2
1.4 Agent for Service of Process...............................................3
1.5 Business of the Partnership................................................3
1.6 Term of the Partnership....................................................4
ARTICLE 2 Capital Contributions, Withdrawals and Capital Accounts....................4
2.1 Contributions of Capital...................................................4
(a) In General..........................................................4
(b) General Partner as Limited Partner..................................4
(c) Additional Limited Partners.........................................4
(d) Additional Contributions by Limited Partners........................5
(e) Additional Contributions by General Partner.........................5
(f) Payment of Capital Contributions....................................5
(g) General Partner Obligations.........................................6
(h) Limited Partner Obligations.........................................6
(i) Return of Certain Distributions.....................................6
2.2 Withdrawals of Capital Accounts............................................7
(a) Withdrawals in General..............................................7
(b) Required Withdrawals................................................8
(c) Effective Date of Withdrawal........................................8
(d) Effect of Withdrawal................................................8
(e) Limitations on Withdrawal of Capital Account........................9
(f) Interest on Capital Accounts........................................9
2.3 Capital Accounts...........................................................9
ARTICLE 3 Profits and Losses; Distributions........................................ 10
3.1 Profits and Losses....................................................... 10
3.2 Partnership Expenses..................................................... 15
3.3 Distributions............................................................ 15
ARTICLE 4 Management of Partnership................................................ 17
4.1 Management Generally..................................................... 17
4.2 Specific Authority of the General Partner................................ 18
4.3 Reports.................................................................. 20
4.4 Valuation of Assets...................................................... 20
4.5 Revaluation of Partnership Assets........................................ 21
4.6 Administration Fee and Expenses.......................................... 21
(a) Administration Fee................................................ 21
(b) General Partner Expenses.......................................... 22
-i-
3
Page
----
4.7 Rights of the Limited Partners........................................... 22
(a) No Control........................................................ 22
(b) Consents.......................................................... 22
(c) Annual Operating Plan............................................. 25
(d) Advisory Committee................................................ 25
(e) Dissolution or Bankruptcy of a Limited Partner.................... 27
4.8 Successor General Partner................................................ 27
(a) Removal of the General Partner.................................... 27
(b) Withdrawal of the General Partner................................. 29
(c) Hindery's Return to the Partnership............................... 30
(d) General Provision Regarding Approvals by the Limited Partners..... 30
(e) Right To Recover Damages.......................................... 30
4.9 Sale Initiation Rights................................................... 30
4.10 Nonvoting Interests...................................................... 33
ARTICLE 5 Tax Matters and Reports.................................................. 34
5.1 Filing of Tax Returns.................................................... 34
5.2 Tax Reports to Current and Former Partners............................... 34
5.3 Restriction on General Partner Activity with Respect to Publicly
Traded Partnerships...................................................... 34
5.4 Duties and Obligations of the General Partner with Respect to Publicly
Traded Partnerships...................................................... 35
5.5 Books and Records........................................................ 35
5.6 Fiscal Year.............................................................. 35
5.7 Method of Accounting..................................................... 35
ARTICLE 6 Conflicts of Interest; Indemnification; Exculpation...................... 35
6.1 Outside Activities....................................................... 35
6.2 Contracts with the General Partner, Affiliates and Limited Partners...... 37
6.3 Indemnification of the Partners.......................................... 37
6.4 Exculpation.............................................................. 38
ARTICLE 7 Termination and Dissolution.............................................. 39
7.1 No Dissolution........................................................... 39
7.2 Events of Dissolution.................................................... 39
7.3 Winding-Up............................................................... 39
7.4 Order of Liquidating Payments and Distributions.......................... 40
7.5 Termination.............................................................. 40
7.6 Government Regulation.................................................... 41
7.7 Orderly Methods of Liquidating Payments.................................. 43
-ii-
4
Page
----
ARTICLE 8 Transfer of Interest, Failure To Pay Capital Contributions, Beneficial
Owners................................................................... 43
8.1 Transfer of Partnership Interest......................................... 43
8.2 Transfer of IP Holdings Affiliates' Interests............................ 44
8.3 Indemnification.......................................................... 44
8.4 Failure To Pay Capital Contributions..................................... 45
8.5 Increase in Beneficial Owners............................................ 46
ARTICLE 9 Miscellaneous............................................................ 46
9.1 Notices.................................................................. 46
9.2 Governing Law............................................................ 46
9.3 Amendments............................................................... 46
9.4 Entire Agreement......................................................... 47
9.5 Waiver of Partition...................................................... 47
9.6 Consents................................................................. 47
9.7 Successors............................................................... 47
9.8 Confidentiality of Investors............................................. 47
9.9 Counterparts............................................................. 47
9.10 Severability............................................................. 47
9.11 Affiliate................................................................ 47
9.12 Power of Attorney........................................................ 48
9.13 Nonrecourse.............................................................. 48
9.14 Foreign Person........................................................... 48
-iii-
5
DEFINITIONS
Term Section
---- -------
1933 Act............................................................ Legend No. 1
Abandonment Date.................................................... 4.9(d)
Act................................................................. 1.1
Adjacent Systems.................................................... 6.1
Administration Fee.................................................. 4.6(a)
Adverse Regulatory Development ..................................... 7.6(b)
Advisory Committee.................................................. 4.7(d)
Affected Partner.................................................... 7.6(b)
Agreement........................................................... Preamble
AVR................................................................. Exhibit 2
BHC LP ............................................................. 4.10
Capital Account..................................................... 2.3
Capital Contributions............................................... 2.1(a)
Code................................................................ 2.3
FRB ................................................................ 4.10
GECC................................................................ Preamble
General Partner..................................................... Preamble
Greenville/Spartanburg Contribution Agreement....................... Exhibit 1 Note 4
ICM-IV.............................................................. Preamble
ICM LLC............................................................. Preamble
IMI................................................................. 6.2
Income Tax Regulations.............................................. 2.3
Indemnified Person ................................................. 8.2(a)
Indemnifying Person ................................................ 8.2(a)
Interests........................................................... Legend No. 1
Investing Partnership............................................... 1.5(a)
Investment Company Act.............................................. 2.2(b)
IP.................................................................. Exhibit 1 Note 2
IP-I................................................................ 4.9(b)
IP-IV............................................................... 1.5(a)
IPSE................................................................ Exhibit 2
IPWT................................................................ Exhibit 1 Note 2
IPWT Contribution Agreement......................................... Exhibit 1 Note 2
Junior Preferred Limited Partner ................................... Preamble
Junior Preferred Return ............................................ 3.3(d)(2)
Limited Partners.................................................... Preamble
Net Loss............................................................ 3.1(j)(4)
New Partner......................................................... 2.1(f)
Nonvoting Interests ................................................ 4.10
Notice Date......................................................... 4.9(d)
Override Tax Distributions.......................................... 2.1(i)(B)
Partnership......................................................... 1.1
-iv-
6
Term Section
---- -------
Partnership Interest................................................ 3.1(a)
Preferred Limited Partner .......................................... Preamble
Preferred Return ................................................... 3.3(d)(1)
Regulatory Change................................................... 7.6(b)
Retrievable Tax Benefit............................................. 2.1(i)(B)
RMG................................................................. Exhibit 2
Shortfall........................................................... 2.1(i)
Systems............................................................. Exhibit 1 Note 4
TCI................................................................. 4.9(a)
TCI Entities........................................................ Exhibit 1 Note 4
The Cablevision Company............................................. Exhibit 2
-v-
7
INTERMEDIA CAPITAL PARTNERS IV, L.P.
AGREEMENT OF LIMITED PARTNERSHIP
THE LIMITED PARTNERSHIP INTERESTS ("INTERESTS") HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). SUCH INTERESTS
ARE BEING OFFERED AND SOLD UNDER THE EXEMPTION PROVIDED BY SECTION 4(2) OF THE
1933 ACT AND/OR PURSUANT TO RULE 506 OF REGULATION D THEREUNDER.
A PURCHASER OF ANY INTEREST MUST BE PREPARED TO BEAR THE ECONOMIC RISK
OF THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME BECAUSE THE INTERESTS HAVE
NOT BEEN REGISTERED UNDER THE 1933 ACT AND, THEREFORE, CANNOT BE SOLD UNLESS
THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THERE IS NO OBLIGATION OF THE PARTNERSHIP TO REGISTER THE INTERESTS UNDER THE
1933 ACT.
THE AGREEMENT RESTRICTS TRANSFER OF THE INTERESTS. ACCORDINGLY, PURCHASE
OF THE INTERESTS IS ONLY SUITABLE FOR INVESTORS WILLING AND ABLE TO ACCEPT THE
ECONOMIC RISK OF THE INVESTMENT AND LACK OF LIQUIDITY.
* * *
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this
"Agreement"), originally entered into and effective as of March 19, 1996 by and
among INTERMEDIA CAPITAL MANAGEMENT IV, L.P., a California limited partnership,
as general partner ("ICM-IV"), GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation ("GECC"), as the preferred limited partner (the "Preferred Limited
Partner") with respect to, and only with respect to, a portion of its interest
and as a limited partner with respect to the remainder of its interest, all as
set forth on EXHIBIT 1 hereto, and the limited partners listed on the signature
pages hereto, who together with such other persons or entities who hereafter
shall be admitted as additional or substituted limited partners pursuant to the
terms hereof, all of which shall be listed on EXHIBIT 1 hereto, collectively
shall be referred to as the "Limited Partners," as amended as of November 27,
1996, and amended and restated in its entirety as of August 5, 1997, by and
among INTERMEDIA CAPITAL MANAGEMENT, LLC, a Delaware limited liability company,
as general partner ("ICM LLC" or the "General Partner"), ICM-IV, as a Limited
Partner, GECC and the other Limited Partners listed on EXHIBIT 1 hereto, as
amended August 5, 1997 and December 19, 1997, is hereby amended and restated in
its entirety as of March 31, 1998, by and among the General Partner, GECC, TCI
OF PIEDMONT, INC., a Delaware corporation, as the junior preferred limited
partner (the "Junior Preferred Limited Partner"), and the other
-1-
8
Limited Partners listed on EXHIBIT 1 hereto. Unless otherwise specifically set
forth herein, the term Limited Partners shall include the Preferred Limited
Partner and the Junior Preferred Limited Partner. The General Partner and the
Limited Partners are collectively referred to as the Partners and individually
as a Partner.
W I T N E S S E T H:
WHEREAS, the Partners desire to (i) create a junior preferred limited
partnership interest subordinate to the preferred limited partnership interest
held by the Preferred Limited Partner and (ii) convert the limited partnership
interest held by TCI of Piedmont, Inc. to such junior preferred limited
partnership interest; and
WHEREAS, the Partners desire to admit TCI of Piedmont, Inc. to the
Partnership as the Junior Preferred Limited Partner; and
WHEREAS, the Partners consented to the preceding actions in that certain
Consent of Partners of InterMedia Capital Partners IV, L.P. dated as of February
27, 1998; and
WHEREAS, the Partners desire to amend and restate this Agreement to
reflect the preceding actions, other related amendments and certain corrections:
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein made and intending to be legally bound, the Partners hereby agree as
follows:
ARTICLE 1
General Provisions
1.1 Formation of the Partnership. The Partners hereby admit TCI of
Piedmont, Inc. as the Junior Preferred Limited Partner of the Partnership and
continue a limited partnership (the "Partnership") pursuant to the California
Revised Limited Partnership Act (the "Act"). The Partnership shall continue
without interruption as a limited partnership pursuant to the Act. The persons
and entities listed as Limited Partners on EXHIBIT 1 to this Agreement shall
continue as Limited Partners upon execution of this Agreement.
1.2 Name. The name of the Partnership shall be: InterMedia Capital
Partners IV, L.P. The name of the Partnership may be changed by the General
Partner upon compliance with applicable laws and after notice by the General
Partner to the Limited Partners.
1.3 Principal Place of Business. The principal place of business of the
Partnership shall be 000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000. The principal place of business of the Partnership may be changed by the
General Partner after notice to the Limited Partners.
-2-
9
1.4 Agent for Service of Process. The agent for service of process for
the Partnership and his address shall be Xxxxxx X. Xxxxx, 000 Xxxxxxxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxxxxxxx, XX 00000. The agent for service of process of the
Partnership may be changed by the General Partner upon notice to the Limited
Partners.
1.5 Business of the Partnership.
(a) The Partnership was organized for and continues to exist for the
purpose of directly or indirectly making equity and debt investments in,
including acting as a general partner and/or a limited partner of InterMedia
Partners IV, L.P., a California limited partnership ("IP-IV") and various
partnerships which operate cable television systems (each an "Investing
Partnership"), and operating cable television systems and to engage in all
necessary and appropriate activities and transactions as the General Partner may
deem necessary, appropriate or advisable in connection therewith, provided,
however, the Partnership will not make any investments, nor maintain any offices
outside of the United States. Prior to January 1, 1996, the Partnership had no
material assets or liabilities and had not engaged in any material business
activities.
(b) Pending the investment of Partnership funds as described in Section
1.5(a), and the distribution of funds as described in Section 3.3, the
Partnership may invest in certificates of deposit and overnight time deposits in
commercial banks with capital and surplus over five hundred million dollars
($500,000,000), commercial paper, money market funds, repurchase agreements and
U.S. Treasury bills and other government obligations and any other short-term,
investment grade highly liquid investments.
(c) The Partnership may enter into, deliver and perform all contracts,
agreements and other undertakings and engage in all activities and transactions
that are necessary or appropriate to carry out the foregoing purposes. Without
limiting the foregoing, the Partnership may:
(i) exercise all rights, powers, privileges, and other incidents
of ownership or possession with respect to Partnership property and
investments;
(ii) borrow or raise money and secure the payment of any
obligations of the Partnership, IP-IV or an Investing Partnership by
mortgage upon, or pledge or hypothecation of, all or any part of the
assets of the Partnership, IP-IV or an Investing Partnership;
(iii) engage personnel, whether part-time or full-time and do
such other acts as the General Partner may reasonably deem necessary or
advisable in connection with the maintenance and administration of the
Partnership, IP-IV or an Investing Partnership and their investments;
and
(iv) engage attorneys, independent accountants, investment
bankers, consultants or such other persons for the Partnership, IP-IV or
an Investing Partnership as the General Partner may deem necessary or
advisable.
-3-
10
1.6 Term of the Partnership. The term of the Partnership shall be from
the date the Certificate of Limited Partnership was filed with the California
Secretary of State until December 31, 2007, unless the Partnership is earlier
dissolved pursuant to Article 7.
ARTICLE 2
Capital Contributions, Withdrawals and Capital Accounts
2.1 Contributions of Capital.
(a) In General. The committed capital contributions ("Capital
Contributions") of the Partners shall be contributed in cash, in the respective
amounts set forth next to each Partner's name on EXHIBIT 1 attached hereto in
the manner provided by Section 2.1(f). Notwithstanding the foregoing, committed
Capital Contributions shall be contributed in the form of property pursuant to
the Greenville/Spartanburg Contribution Agreement and the IPWT Contribution
Agreement (both as defined on EXHIBIT 1 hereto). The General Partner shall
contribute an amount of capital to the Partnership such that the General
Partner's Capital Contribution will be at least one one-thousandth of one
percent (.001%) of the aggregate Capital Contributions of all of the Partners
(for the purposes of this calculation the original amount of the Capital
Contribution of the Junior Preferred Limited Partner set forth in footnote 6 of
EXHIBIT 1 shall be used), a portion of which may be contributed in the form of a
note as set forth on EXHIBIT 1 hereto.
(b) General Partner as Limited Partner. The General Partner shall also
be a Limited Partner to the extent that it purchases an interest as a Limited
Partner or it purchases or becomes a transferee of all of or any part of the
interest of a Limited Partner, and to such extent shall be treated in all
respects as a Limited Partner, and the consent of the Limited Partners to such a
purchase or transfer and admission of the General Partner as a Limited Partner
need not be obtained; provided, however, the General Partner shall not be
entitled to consent as a Limited Partner on those matters set forth in Section
4.7(b)(iv). The General Partner's capital contributions referred to in Sections
2.1(a) and 2.1(e) hereof will be made in its capacity as the General Partner and
such capital contribution as the General Partner will not entitle the General
Partner to any rights of a Limited Partner.
(c) Additional Limited Partners. Until the aggregate committed capital
contributions to the Partnership total three hundred thirty-five million dollars
($335,000,000) (not including the preferred limited partner interest of the
Preferred Limited Partner), and subject to the condition that each new Limited
Partner shall execute a signature page of this Agreement, which execution shall
be deemed to represent the execution of a counterpart of this Agreement, and
certain other agreements in connection with its subscription, and such Limited
Partner meets the suitability requirements imposed on the original Limited
Partners pursuant to the subscription agreements, the General Partner may admit
one or more additional Limited Partners and may appropriately amend this
Agreement to reflect such admissions, only with the consent of seventy percent
(70%) in interest of the Limited Partners. Admission of a new Limited Partner
shall not be a cause for dissolution of the
-4-
11
Partnership. Upon the aggregate committed capital contributions to the
Partnership equaling three hundred thirty-five million dollars ($335,000,000)
(not including the preferred limited partner interest of the Preferred Limited
Partner), the General Partner may admit any additional Limited Partners to
increase the aggregate committed capital contributions beyond three hundred
thirty-five million dollars ($335,000,000) only with the consent of one hundred
percent (100%) in interest of the Limited Partners or accept any additional
commitment to make capital contributions from the Limited Partners only with the
consent of ninety percent (90%) in interest of the Limited Partners; provided,
however, that the General Partner shall offer, on a pro rata basis, preemptive
rights in connection with any additional cash capital contributions to the
existing Limited Partners and any such additional commitments to make cash
capital contributions shall be on terms no more favorable than those offered to
the existing Limited Partners. The Limited Partners will have fifteen (15) days
from the date of the written notice to exercise such preemptive rights.
(d) Additional Contributions by Limited Partners. Until the aggregate
committed capital contributions to the Partnership total three hundred
thirty-five million dollars ($335,000,000) (not including the preferred limited
partner interest of the Preferred Limited Partner), the General Partner shall
permit one or more Limited Partners to make additional contributions to the
Partnership until July 31, 1997 and may appropriately amend this Agreement to
reflect such additional contributions, without the consent of any Limited
Partner. A Partner which desires to make such additional contributions during
such period shall notify the General Partner of its desire to do so not later
than fifteen (15) days before such proposed contribution.
(e) Additional Contributions by General Partner. The General Partner
shall from time to time make additional capital contributions to the extent
required to cause its aggregate capital contributions to equal at least one
one-thousandth of one percent (.001%) of the aggregate Capital Contributions of
all Partners (for the purposes of this calculation the original amount of the
Capital Contribution of the Junior Preferred Limited Partner set forth in
footnote 6 of EXHIBIT 1 shall be used). Any such additional capital contribution
required of the General Partner shall be made within ten (10) days of the
capital contribution of the Limited Partner(s) giving rise to such requirement.
(f) Payment of Capital Contributions. The Capital Contributions to be
contributed in the form of property pursuant to the Greenville/Spartanburg
Contribution Agreement or the IPWT Contribution Agreement shall be made at the
time and in the manner set forth in those agreements which in the case of the
Partners contributing assets pursuant to those agreements shall represent their
entire commitment. In no event shall the TCI Entities be required to contribute
more than forty-five percent (45%) of the total Capital Contributions to the
Partnership (excluding from both the numerator and the denominator of such
calculation the Capital Contributions of the Preferred Limited Partner with
respect to the preferred limited partnership interest and the Capital
Contributions of the Junior Preferred Limited Partner with respect to the junior
preferred limited partnership interest). Except as otherwise agreed to by the
Partnership and any Partner, the provisions of this Section 2.1(f) shall apply
to all committed Capital Contributions to be made in cash. Included in the first
capital call by the Partnership, the Partners will pay the portion of their
committed Capital
-5-
12
Contributions necessary to pay the organizational expenses of the Partnership up
to a maximum of three hundred thousand dollars ($300,000) (in aggregate). The
committed Capital Contributions of the Limited Partners shall be paid on fifteen
(15) business days written notice in the following manner: (i) as the General
Partner determines is necessary or appropriate for meeting the funding
requirements of the Partnership or to comply with the Partnership's obligations
to make capital contributions to IP-IV or any Investing Partnership, (ii)
commencing on January 1, 1996, on the first day of each calendar quarter of each
year to the extent determined necessary by the General Partner for the payment
of Partnership expenses or the reimbursement of the General Partner for
Partnership expenses described in Section 3.2; and (iii) as necessary to pay the
Administration Fee as set forth in Section 4.6. The amount to be paid by each
Partner in respect of each such capital call shall be determined by first
requiring any additional Partner admitted to the Partnership pursuant to Section
2.1(c) (and any other Partner to the extent of any non-pro rata increase in its
capital commitment pursuant to Section 2.1(d)) ("New Partner") to pay an amount
such that the proportion of capital contributions paid by such New Partner in
relation to the committed capital contributions of such New Partner is the same
as the proportion of Capital Contributions previously made by the other
Partners, other than Partners who contributed property pursuant to the
Greenville/Spartanburg Contribution Agreement and the IPWT Contribution
Agreement, in relation to the committed Capital Contributions of such other
Partners, and then by dividing each Partner's committed Capital Contribution by
the aggregate committed Capital Contributions of all the Partners and
multiplying such fraction by the total remaining amount of capital to be called.
In the event a Partner executes and contributes a promissory note in respect of
its capital commitment, any payment of principal pursuant to such note shall
constitute a funding of its Capital Contribution. No Capital Contributions for
the Partnership or for investments in Investing Partnerships will be called by
the General Partner after December 31, 2000. References herein to a Partner's
Capital Contribution shall mean the amount of cash or the principal amount of
any note contributed by the General Partner or the value of property contributed
as set forth in the Greenville/ Spartanburg Contribution Agreement or the IPWT
Contribution Agreement.
(g) General Partner Obligations. The General Partner shall not be
personally obligated to contribute cash or other assets to the Partnership to
make up any reduction in the Capital Accounts of the Limited Partners either
during the term of the Partnership or upon dissolution, subject to the
obligation of the General Partner to return to the Partnership certain
distributions as provided in the Act.
(h) Limited Partner Obligations. Limited Partners shall not be
personally obligated for the debts, liabilities and obligations of the
Partnership or of any other Partner, except that, any other provision of this
Agreement to the contrary notwithstanding, each Limited Partner shall only be
obligated to make its full Capital Contribution to the Partnership in the amount
set forth in EXHIBIT 1 hereto to the extent required by this Section 2.1, and
each Limited Partner (and any former Limited Partner) shall be obligated to
return to the Partnership distributions only to the extent provided in section
15666 of the Act.
(i) Return of Certain Distributions. If upon the liquidation of the
Partnership pursuant to Section 7.3 hereof, the Partners have not received the
full amount described in
-6-
13
Sections 3.3(d)(1), 3.3(d)(2), 3.3(d)(3) and 3.3(d)(4) hereof (such deficiency
being referred to as the "Shortfall"), then notwithstanding anything in this
Agreement to the contrary, including Section 2.1(g), ICM-IV shall be obligated
to contribute to the Partnership the lesser of:
(A) the amount necessary to provide the Partnership with
sufficient funds to allow the Partnership to make distributions in an
amount equal to the Shortfall; and
(B) an amount equal to the sum of all distributions made to
ICM-IV pursuant to Section 3.3(a) which are attributable to allocations
of income and gain pursuant to Section 3.1(k)(6)(A) ("Override Tax
Distributions"), but not in excess of the Retrievable Tax Benefit.
For purposes of this Section 2.1(i), the term "Retrievable Tax Benefit" means an
amount equal to the excess, if any, of the Override Tax Distributions over
ICM-IV's net aggregate actual tax liability arising out of allocations of income
and gain pursuant to Section 3.1(k)(6)(A). Such tax liability shall be computed
by taking into account any offsets, allowable for Federal income tax purposes,
against such allocations for (y) allocations of loss and deduction to ICM-IV
pursuant to Section 3.1(j)(4)(A) and (z) any loss or deduction arising out of
any payment to be made under this Section 2.1(i).
2.2 Withdrawals of Capital Accounts. No Partner shall be entitled to
withdraw any amount from its Capital Account, other than as provided in this
Section 2.2.
(a) Withdrawals in General. A Limited Partner may not withdraw from the
Partnership in whole or in part prior to dissolution of the Partnership, except
(i) as required by Section 2.2(b), or (ii) with the unanimous written consent of
all of the Partners. In the event a Limited Partner elects to withdraw with the
consent of the Partners, or upon withdrawal of a Limited Partner pursuant to
Section 2.2(b), the Partnership Interest of such Limited Partner shall be
withdrawn in its entirety and shall be valued pursuant to Section 4.4 as of the
date of withdrawal. Notwithstanding the foregoing, (i) the value of the
preferred limited partnership interest shall be deemed to be the amount of
Preferred Limited Partner's Capital Contribution plus the Preferred Return (as
defined in Subsection 3.3(d)(1)), reduced by any distributions received by the
Preferred Limited Partner prior to such valuation and (ii) the value of the
Junior Preferred Limited Partner's interest shall be deemed to be the amount of
such Partner's Capital Contribution plus the Junior Preferred Return (as defined
in Subsection 3.3(d)(2)), reduced by any distributions received by the Junior
Preferred Limited Partner prior to such valuation. The Capital Account of such
withdrawing Limited Partner shall be paid for in the manner provided in this
Section 2.2(a) as expeditiously as possible, at a time determined by the General
Partner. The General Partner shall not be required to sell, liquidate, pledge or
encumber any Partnership asset or security to effect such withdrawal. The
General Partner shall have sole discretion to make the payment in respect of the
Capital Account of any withdrawing Limited Partner in cash or, at the option of
the General Partner, with a promissory note bearing interest at a rate per annum
equal to the rate announced from time to time by Bank of America NT&SA as its
-7-
14
prime rate. The promissory note will be payable only after the payment of
all third party debt and payment of preferred returns to the Preferred Limited
Partner and the Junior Preferred Limited Partner and any payments on such
promissory notes will be paid pari passu with payments due to the other Partners
(excluding the Preferred Limited Partner and the Junior Preferred Limited
Partner) with respect to the event giving rise to such payment to the
withdrawing Limited Partner upon the earlier of (i) final dissolution of the
Partnership, (ii) sale of all or substantially all of the Partnership's assets,
or (iii) December 31, 2007. For purposes of the foregoing, the amount to be paid
pari passu shall be determined by treating the amount that would have been paid
to each Partner if no payment were made to the withdrawing Partner as if it also
were represented by a promissory note and pro rating the amount available for
distribution to each Partner and withdrawing Partner on that basis. Any portion
of any payments made to a withdrawing Limited Partner in kind pursuant to this
Section 2.2 shall be made, based upon the balance in a Partner's Capital Account
as of the date of withdrawal, ratably in proportion to the value that each
security or asset then held by the Partnership, including any interest in an
Investing Partnership, determined pursuant to Section 4.4, bears to the value of
all assets of the Partnership determined pursuant to Section 4.4.
(b) Required Withdrawals. The General Partner may terminate the interest
of any Limited Partner in the Partnership, with cause, at the end of any
calendar month upon fifteen (15) days prior written notice. For purposes of this
Agreement, "cause" shall be determined by the General Partner and shall mean the
following: (i) the continued participation of such Limited Partner is likely, in
the sole judgment of the General Partner, to cause the Partnership or the
General Partner to register as an investment company or elect to be a "business
development company" under the Investment Company Act of 1940 (the "Investment
Company Act"), the General Partner or any of its partners to register as an
investment adviser under the Investment Advisers Act of 1940, or the Partnership
or any Partner to violate any law, or (ii) such Limited Partner fails to make a
required capital contribution and the General Partner requires withdrawal
pursuant to Section 8.4(b). Notwithstanding the foregoing, termination of the
Partnership Interest of any Limited Partner as the result of an Adverse
Regulatory Development (as defined in Section 7.6(b)) shall be treated as set
forth in Section 7.6.
(c) Effective Date of Withdrawal. For purposes of this Agreement, the
effective date of a Partner's withdrawal shall mean the last day of the calendar
month in which the General Partner consents to such withdrawal pursuant to
Section 2.2(a) or such Partner's notice period lapses pursuant to Section
2.2(b).
(d) Effect of Withdrawal. In the event of the withdrawal of any Limited
Partner pursuant to this Section 2.2, the withdrawing Limited Partner shall not
otherwise share in the income, gains and losses of the Partnership from the
valuation date of its Partnership Interest and shall not have any other rights
under this Agreement other than payment to it of its Capital Account as revalued
pursuant to Section 4.5. The interest of a Limited Partner who withdraws
pursuant to this Section 2.2 shall not thereafter be included in calculating the
percentage in interest of the Limited Partners required to take any action under
this Agreement.
-8-
15
(e) Limitations on Withdrawal of Capital Account. The right of any
withdrawn Partner or its legal representatives to have distributed the Capital
Account of such Partner pursuant to this Section 2.2 is subject to the provision
by the General Partner for all Partnership liabilities in accordance with
section 15666 of the Act, and for estimates for contingencies and expenses. The
unused portion of any such estimates shall be distributed after the General
Partner shall have determined that the need therefor shall have ceased.
(f) Interest on Capital Accounts. No interest or compensation shall be
paid on or with respect to the Capital Account or capital contributions of any
of the Partners, except as otherwise expressly provided herein.
2.3 Capital Accounts. The Partnership shall maintain for each Partner a
separate capital account (a "Capital Account") in accordance with the capital
accounting rules of section 704(b) of the Internal Revenue Code of 1986 (the
"Code"), and the regulations thereunder (the "Income Tax Regulations")
(including particularly section 1.704-1(b)(2)(iv) of the Income Tax
Regulations).
(a) In general, under such capital accounting rules (but subject to any
contrary requirements of the Code and the Income Tax Regulations), a Partner's
Capital Account shall be (i) increased by the amount of money and the fair
market value (determined in accordance with Section 4.4 or as otherwise provided
in the Greenville/Spartanburg Contribution Agreement or the IPWT Contribution
Agreement) of other property (net of liabilities secured by such contributed
property that the Partnership is considered to take subject to or assume under
section 752 of the Code) contributed by the Partner to the Partnership and
allocations to the Partner of Partnership income and gain (or items thereof),
including income and gains exempt from tax, and (ii) decreased by the amount of
money and the fair market value (determined in accordance with Section 4.4) of
other property distributed (net of liabilities secured by such distributed
property that the Partner is considered to take subject to or assume under
section 752 of the Code) to the Partner by the Partnership and allocations to
the Partner of Partnership loss and deduction (or items thereof), including
Partnership expenditures not deductible in computing its taxable income and not
properly chargeable to Capital Account. For purposes of making allocations of
all items of income, gain, loss and deduction and for purposes of crediting or
charging distributions to Capital Accounts, the Preferred Limited Partner shall
be considered to have a Capital Account separate and distinct from its Capital
Account attributable to its additional interest as a Limited Partner.
(b) When Partnership property is revalued by the General Partner
pursuant to Section 4.5 or distributed in kind (whether in connection with
dissolution and liquidation of the Partnership or otherwise), the Capital
Accounts of the Partners first shall be adjusted to reflect the manner in which
the unrealized income, gain, loss or deduction inherent in such property (that
has not previously been allocated to Capital Accounts) would be allocated among
the Partners if there were a taxable disposition of such property for its fair
market value (determined in accordance with Section 4.4 and taking into account
section 7701(g) of the Code) and such income, gain, loss or deduction had been
recognized for federal income tax purposes immediately upon such distribution or
the event requiring such revaluation.
-9-
16
(c) Where section 704(c) of the Code applies to Partnership property or
when Partnership property is revalued pursuant to section 1.704-1(b)(2)(iv)(f)
of the Income Tax Regulations, Capital Accounts of the Partners shall be
adjusted in accordance with section 1.704-1(b)(2)(iv)(g) of the Income Tax
Regulations as to allocations to the Partners of depreciation, depletion,
amortization and gain or loss, as computed for book purposes with respect to
such property.
(d) The General Partner shall direct the Partnership's accountant to
make all necessary adjustments in each Partner's Capital Account as required by
the rules of section 704(b) of the Code and the regulations thereunder.
ARTICLE 3
Profits and Losses; Distributions
3.1 Profits and Losses. A Partner's distributive share of the
Partnership's total income, gain, loss, deduction or credit (or items thereof),
which total shall be as shown on the annual federal income tax return prepared
by the Partnership's accountants or as finally determined by the Internal
Revenue Service or the courts, and as modified by the capital accounting rules
of section 704(b) of the Code and the Income Tax Regulations thereunder as
implemented by Section 2.3, as applicable, shall be determined as provided in
this Section 3.1.
(a) Except as otherwise provided in this Section 3.1, items of
Partnership income, gain, loss, deduction and credit shall be allocated among
the Partners in proportion to their respective actual Capital Contributions
(each, a "Partnership Interest").
(b) Solely for tax purposes, in determining each Partner's allocable
share of the taxable income or loss of the Partnership, depreciation, depletion,
amortization and gain or loss with respect to any contributed property, or with
respect to revalued property where Partnership property is revalued pursuant to
section 1.704-1(b)(2)(iv)(f) of the Income Tax Regulations, shall be allocated
to the Partners under the remedial method as provided in section 1.704-3(d) of
the Income Tax Regulations.
(c) Notwithstanding anything to the contrary in this Section 3.1, if
there is a net decrease in Partnership Minimum Gain or Partner Nonrecourse Debt
Minimum Gain (as such terms are defined in sections 1.704-2(b) and
1.704-2(i)(2), respectively, of the Income Tax Regulations) during a Partnership
taxable year, then each Partner shall be allocated items of Partnership income
and gain for such year (and, if necessary, for subsequent years), to the extent
required by, and in the manner provided in, section 1.704-2 of the Income Tax
Regulations. This provision is intended to be a "minimum gain chargeback" within
the meaning of sections 1.704-2(f) and 1.704-2(i)(4) of the Income Tax
Regulations and shall be interpreted and implemented as therein provided.
-10-
17
(d) Subject to the provisions of Section 3.1(c), but otherwise
notwithstanding anything to the contrary in this Section 3.1, if any Partner's
Capital Account has a deficit balance in excess of such Partner's obligation to
restore its Capital Account balance, computed in accordance with the rules of
section 1.704-1(b)(2)(ii)(d) of the Income Tax Regulations (including such
Partner's share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum
Gain as provided in sections 1.704-2(g) and 1.704-2(i)(5) of the Income Tax
Regulations), then sufficient amounts of income and gain (consisting of a pro
rata portion of each item of Partnership income, including gross income, and
gain for such year) shall be allocated to such Partner in an amount and manner
sufficient to eliminate such deficit as quickly as possible. This provision is
intended to be a "qualified income offset" within the meaning of section
1.704-1(b)(2)(ii)(d) of the Income Tax Regulations and shall be interpreted and
implemented as therein provided.
(e) Solely for tax purposes, gain recognized (or deemed recognized under
the provisions hereof) upon the sale or other disposition of Partnership
property, which is subject to depreciation recapture, shall be allocated among
the Partners as provided in section 1.1245-1(e) of the Income Tax Regulations.
(f) Except as otherwise provided in Section 3.1(j), if and to the extent
any Partner is deemed to recognize income as a result of any loans described
herein pursuant to the rules of sections 1272, 1273, 1274, 1274A, 7872, 482 or
483 of the Code, or any similar provision now or hereafter in effect, any
corresponding resulting deduction of the Partnership shall be allocated to the
Partner who is charged with the income. Subject to the provisions of section
704(c) of the Code and Sections 3.1(b) through 3.1(d) hereof, if and to the
extent the Partnership is deemed to recognize income as a result of any loans
described herein pursuant to the rules of sections 1272, 1273, 1274, 1274A,
7872, 482 or 483 of the Code, or any similar provision now or hereafter in
effect, such income shall be allocated to the Partner who is entitled to any
corresponding resulting deduction.
(g) Except as otherwise required by law, tax credits shall be allocated
among the Partners pro rata in accordance with the manner in which Partnership
profits are allocated to the Partners under this Section 3.1, as of the time the
credit property is placed in service or if no property is involved, as of the
time the credit is earned. Recapture of any tax credit required by the Code
shall be allocated to the Partners in the same proportion in which such tax
credit was allocated.
(h) Except as provided in Sections 3.1(f) and 3.1(g) or as otherwise
required by law, if the Partnership Interests of the Partners are changed
hereunder during any taxable year, all items to be allocated to the Partners for
such entire taxable year shall be prorated on the basis of the portion of such
taxable year which precedes each such change and the portion of such taxable
year on and after each such change according to the number of days in each such
portion, and the items so allocated for each such portion shall be allocated to
the Partners in the manner in which such items are allocated as provided in this
Section 3.1 during each such portion of the taxable year in question.
-11-
18
(i) Any special allocation of income or gain pursuant to Section 3.1(d)
shall be taken into account in computing subsequent allocations of income and
gain pursuant to this Section 3.1 so that the net amount of all such allocations
to each Partner shall, to the extent possible, be equal to the net amount that
would have been allocated to each such Partner pursuant to the provisions of
this Section 3.1 if such special allocations of income or gain under Section
3.1(d) had not occurred.
(j) (1) Items of deduction and loss attributable to recourse liabilities
of the Partnership (within the meaning of section 1.752-1(a)(1) of the
Income Tax Regulations but excluding Partner nonrecourse debt within the
meaning of section 1.704-2(b)(4) of the Income Tax Regulations) shall be
allocated among the Partners in accordance with the ratio in which the
Partners share the economic risk of loss (within the meaning of section
1.752-2 of the Income Tax Regulations) for such liabilities.
(2) Items of deduction and loss attributable to Partner
nonrecourse debt within the meaning of section 1.704-2(b)(4) of the
Income Tax Regulations shall be allocated to the Partners bearing the
economic risk of loss with respect to such debt in accordance with
section 1.704-2(i) of the Income Tax Regulations.
(3) Items of deduction and loss attributable to Partnership
nonrecourse liabilities within the meaning of section 1.704-2(b)(1) of
the Income Tax Regulations shall be allocated among the Partners
proportionately in accordance with their Partnership Interests.
(4) All other items of deduction or loss ("Net Loss") shall be
allocated (A) First, if allocations of items of income or gain have been
made to any Partner under Section 3.1(k)(6)(A), then to such Partner in
the amount of, and proportionate to, the amount of such items of income
or gain; (B) Second, among any New Partners (as defined in Section
2.1(f)), an amount of Net Loss sufficient to reduce its Capital Account
balance to what it would have been had all Partners been admitted to the
Partnership as of the date hereof, with losses so allocated to each New
Partner in the proportion which such New Partner's capital contribution
bears to the capital contributions of all New Partners; and (C) Third,
among (i) the Partners (other than the Preferred Limited Partner and the
Junior Preferred Limited Partner), proportionately in accordance with
their Partnership Interests, except that Net Loss shall not be allocated
to any Partner to the extent it would create a deficit balance in excess
of such Partner's obligation to restore its capital account balance,
computed in accordance with the rules of section 1.704-1(b)(2)(ii)(d) of
the Income Tax Regulations and including such Partner's share of
Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain as
provided in sections 1.704-2(g) and 1.704-2(i)(5) of the Income Tax
Regulations; (ii) next to the Junior Preferred Limited Partner to
-12-
19
the extent of its Capital Account balance until the balance of its
Capital Account is equal to zero (but never reduced below zero); and
(iii) thereafter to the Preferred Limited Partner to the extent of its
Capital Account balance until the balance of its Capital Account is
equal to zero (but never reduced below zero). Any Net Loss which cannot
be allocated to a Partner because of the limitation set forth in the
previous sentence shall be allocated first to the other Partners to the
extent such other Partners would not be subject to such limitation and
second any remaining amount to the Partners in the manner required by
the Code and the Income Tax Regulations.
(k) Subject to the provisions of Sections 3.1(c) through 3.1(j), items
of income and gain shall be allocated to the Partners in the following priority:
(1) First, to the Preferred Limited Partner, (i) first, in an
amount equal to the excess of the amount of losses previously allocated
to it pursuant to Section 3.1(j)(4) over the amount of income previously
allocated to it pursuant to this clause (i) of Section 3.1(k)(1) and
(ii) thereafter in the amount of any distributions of the Preferred
Return made to it pursuant to Section 3.3(d)(1)(i).
(2) Second, to the Junior Preferred Limited Partner, (i) first,
in an amount equal to the excess of the amount of losses previously
allocated to it pursuant to Section 3.1(j)(4) over the amount of income
previously allocated to it pursuant to this clause (i) of Section
3.1(k)(2) and (ii) thereafter in the amount of any distributions of the
Junior Preferred Return made to it pursuant to Section 3.3(d)(2)(i).
(3) Third, to those Partners who have had items of loss or
deductions allocated to them under section 3.1(j)(1), in the amount of,
and proportionate to, the amount of such items of loss or deduction
(provided, however, that no such allocation shall be made with respect
to previously allocated items of loss or deduction to the extent of any
income and gains previously deemed recognized under Section 2.3(b)).
(4) Fourth, if allocations of Net Loss have been made to the
Partners under Section 3.1(j)(4)(C)(i), then in the amount of, and
proportionate to, the amount of such Net Loss (provided, however, that
no such allocation shall be made with respect to previously allocated
Net Loss to the extent of any income and gains previously deemed
recognized under Section 2.3(b)).
(5) Fifth, to the Partners (other than the Preferred Limited
Partner and the Junior Preferred Limited Partner), in amounts
sufficient, after taking into account all amounts previously distributed
to such Partner and including such Partner's actual Capital
Contributions, to yield a pre-tax internal rate of return of fifteen
percent (15%), on such Partner's actual Capital Contributions and in
proportion to the amount required for each Partner.
-13-
20
(6) Sixth, (A) twenty percent (20%) of the balance to ICM-IV;
and (B) eighty percent (80%) of the balance among the Partners (other
than the Preferred Limited Partner and the Junior Preferred Limited
Partner) in proportion to their relative Partnership Interests;
(l) Notwithstanding Section 3.1(k), but subject to the provisions of
Section 3.1(c) through 3.1(j), gain which is recognized (or deemed to be
recognized) upon the sale, exchange or other disposition of all or substantially
all of the assets of the Partnership or upon the dissolution of the Partnership
shall be allocated in the following order:
(1) First, to the Preferred Limited Partner, in an amount
sufficient to bring its Capital Account balance (computed in the same
manner as provided parenthetically in subparagraph 3 below) to an amount
equal to the amount of its accrued and unpaid Preferred Return and its
unrepaid Capital Contribution.
(2) Second, to the Junior Preferred Limited Partner, in an
amount sufficient to bring its Capital Account balance (computed in the
same manner as provided parenthetically in subparagraph (3) below) to an
amount equal to the amount of its accrued and unpaid Junior Preferred
Return and its unrepaid Capital Contribution.
(3) Third, to the Partners (other than the Preferred Limited
Partner and the Junior Preferred Limited Partner) having deficit
balances in their Capital Accounts (computed after giving effect to all
contributions, distributions, allocations and other Capital Account
adjustments for all taxable years, including the year during which such
liquidation or dissolution occurs and including each Partner's share of
Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain as
provided in sections 1.704-2(g) and 1.704- 2(i)(5) of the Income Tax
Regulations), to the extent of, and in proportion to, those deficits;
and
(4) Thereafter, so as to cause the credit balance in each
Partner's (other than the Preferred Limited Partner and the Junior
Preferred Limited Partner) Capital Account (computed in the same manner
as provided parenthetically in the preceding subparagraph (3)), to equal
as nearly as possible, the amount such Partner would receive in a
distribution, if the distribution were made in accordance with the
provisions of Section 3.3(d).
(m) Unless otherwise specified by the instruments of transfer, any
Partner transferring part of its interest pursuant to this Agreement shall be
deemed to be transferring that portion of its share in future allocations of the
Partnership attributable to the portion of its total Capital Account transferred
by it.
(n) All matters not expressly provided for by the terms of this
Agreement concerning the valuation of assets of the Partnership, the allocation
of profits, gains, deductions, losses and
credits among the Partners, including taxes thereon, and accounting
-14-
21
procedures shall be reasonably determined by the General Partner, whose
determination shall be final and conclusive as to all of the Partners, provided
that such action does not materially decrease the amount or postpone the timing
of any distributions, including distributions upon liquidation, that any Partner
would otherwise be entitled to receive pursuant to this Agreement.
(o) Any financing or refinancing of TCI Debt (as defined in section
2.3(b) of the Greenville/Spartanburg Contribution Agreement) shall be a
"non-recourse" liability of the Partnership as such term is used in Section
1.752-1(a)(ii) of the Income Tax Regulations.
3.2 Partnership Expenses. To the extent not paid by IP-IV or an
Investing Partnership, the Partnership shall pay (or reimburse the General
Partner or ICM-IV for) all expenses relating to the Partnership's business,
investments or reports not required to be borne by the General Partner or ICM-IV
pursuant to Section 4.6(b), including, without limitation, the following
expenses: organization and offering expenses, placement fees, interest, legal,
accounting, consulting and investment banking fees and expenses of the
Partnership in connection with its investments, preparation of federal and state
tax returns, cost of Partnership meetings (if any), all costs of acquisition and
disposition of assets, securities or investments (including legal, overhead
expenses, accounting, banking and advisory fees, expenses and commissions), all
costs of research, market and statistical information which are paid to
unrelated third parties in connection with a potential transaction, directors
and advisers fees paid to unrelated third parties, fees and expenses incurred in
connection with investigation, prosecution, or defense of any claims by or
against the Partnership, all costs of insurance and any extraordinary or other
expenses which the General Partner reasonably determines should properly be
considered related to the investment of the Partnership's assets or the
operations of the Partnership or its assets or investments.
3.3 Distributions.
(a) Subject to Section 3.3(e), prior to dissolution of the Partnership,
the General Partner shall, to the extent of available cash, distribute in cash,
no later than ninety (90) days after the close of each fiscal year, the excess,
if any, of (i) forty percent (40%) of an amount equal to the excess, if any, of
the cumulative items of income and gain over the cumulative items of deduction,
loss and credit (grossed up to a deduction equivalent at a forty percent (40%)
tax rate) of the Partnership as shown on the federal income tax returns of the
Partnership for all periods over (ii) the sum of amounts previously distributed
pursuant to Section 3.3(a), 3.3(b) or 3.3(c), provided that the General Partner
shall make such distributions on a quarterly basis as soon as possible to
address any Partner's quarterly payments of estimated tax if such early
distribution is feasible in terms of available cash and accurate anticipation of
the fiscal year's net tax position. The General Partner, in its reasonable
discretion, may adjust the rate of distribution provided in this Section 3.3(a)
to reflect any changes made to the ordinary income and capital gains tax rates
of the Code which may have the effect of requiring the Partners to pay more or
less taxes on ordinary income or capital gains generated by Partnership
activities. Distributions pursuant to this Section 3.3(a) shall be made to the
Partners ratably in the proportions in which the net recognized income and gains
(but not income and gains deemed recognized under Section
-15-
22
2.3(b)) for such fiscal periods have been allocated to them for federal income
tax purposes pursuant to Section 3.1. For purposes of this Section 3.3(a), in
the case of property contributed to the capital of the Partnership, items of
income, gain, deduction and loss shall be computed as if the tax basis of such
property were equal to its fair market value at the time of such contribution as
determined in the Greenville/Spartanburg Contribution Agreement or the IPWT
Contribution Agreement, or as otherwise provided herein.
(b) Subject to Sections 3.3(a) and 3.3(e), prior to dissolution of the
Partnership, the General Partner shall distribute the net proceeds from the sale
or other disposition of any investment, after payment of all indebtedness with
respect thereto and less reasonable estimates for the Partnership's expenses,
liabilities, contingencies and working capital requirements, no later than
ninety (90) days after the close of such sale.
(c) Subject to the mandatory distribution provisions set forth in
Sections 3.3(a) and 3.3(b) and to Section 3.3(e), prior to dissolution of the
Partnership, the General Partner shall distribute to the Partners no less
frequently than on a quarterly basis cash received by the Partnership from
operations, any transaction not described in Section 3.3(b), and any dividends,
interest or other cash distributions from any corporation or other entity in
which the Partnership has invested and which is not necessary in the reasonable
judgment of the General Partner for the payment of Partnership expenses or debt
or the maintenance of reasonable reserves for the Partnership's expenses,
liabilities, contingencies and working capital requirements. With the consent of
seventy percent (70%) in interest of the Limited Partners, and with the consent
of the Preferred Limited Partner with respect to distributions to such Partner
and the consent of the Junior Preferred Limited Partner with respect to
distributions to such Partner, distributions may be made in assets of the
Partnership other than those described in the preceding sentence.
(d) Distributions pursuant to Sections 3.3(b) and 3.3(c) shall be made
as follows:
(1) First, to the Preferred Limited Partner (i) in payment of
its accrued Preferred Return until it has received the full amount
thereof, and (ii) then in payment of its unrepaid Capital Contribution.
For purposes of this Agreement, the "Preferred Return" shall be an
amount equal to eleven and three quarters percent (11.75%), per annum,
compounded semi-annually, multiplied by its unrepaid Capital
Contributions; for purposes of calculating Preferred Return for a
subsequent period, any accrued and unpaid Preferred Return shall be
added to the principal amount of the unrepaid Capital Contribution; and
(2) Second, to the Junior Preferred Limited Partner (i) in
payment of its accrued Junior Preferred Return until it has received the
full amount thereof, and (ii) then in payment of its unrepaid Capital
Contribution. For purposes of this Agreement, the "Junior Preferred
Return" shall be an amount equal to twelve and three quarters percent
(12.75%), per annum, compounded annually, multiplied by the Junior
Preferred Limited Partner's unrepaid Capital Contribution; for purposes
of calculating Junior Preferred Return for a
-16-
23
subsequent period, any accrued and unpaid Junior Preferred Return shall
be added to the principal amount of the unrepaid Capital Contribution;
and
(3) Third, to those Partners (other than the Preferred Limited
Partner and the Junior Preferred Limited Partner) that have not received
distributions pursuant to this Section 3.3 equal to their actual Capital
Contributions, in proportion to their relative actual Capital
Contributions until the Partners (other than the Preferred Limited
Partner and the Junior Preferred Limited Partner) have received
distributions pursuant to this Section 3.3 equal to their actual Capital
Contributions; and
(4) Fourth, to those Partners (other than the Preferred Limited
Partner and the Junior Preferred Limited Partner) that have not received
distributions pursuant to this Section 3.3 of amounts sufficient to
yield a pre-tax internal rate of return of fifteen percent (15%) on
their actual Capital Contributions, until such time that they have each
received distributions pursuant to this Section 3.3 of amounts
sufficient to yield a pre-tax internal rate of return of fifteen percent
(15%) on their actual Capital Contributions and in proportion to the
amount required for each such Partner; and
(5) Fifth, twenty percent (20%) of the balance to ICM-IV and
eighty percent (80%) of the balance to the Partners (other than the
Preferred Limited Partner and the Junior Preferred Limited Partner) in
proportion to their relative Partnership Interests.
All distributions made pursuant to this Section 3.3 (other than pursuant to
Subsections 3.3(d)(1) and 3.3(d)(2)) shall be treated as a return of Partners'
Capital Contributions until their respective actual Capital Contributions are
returned in full. Except as otherwise provided herein, no Partner shall have a
priority over any other Partner as to returns of Capital Contributions or as to
compensation as a Partner by way of income.
(e) Any other provision of this Agreement to the contrary
notwithstanding, no distribution shall be made which would render the
Partnership insolvent or which is prohibited by the terms of any indebtedness of
the Partnership, IP-IV or an Investing Partnership, provided, however, that the
General Partner shall use its reasonable best efforts to obtain the right to
make tax distributions pursuant to Section 3.3(a) above under the terms of any
such indebtedness.
ARTICLE 4
Management of Partnership
4.1 Management Generally. Except as otherwise provided herein, the
business of the Partnership shall be conducted and managed exclusively by the
General Partner and administered by ICM-IV under the supervision of the General
Partner. The General Partner
-17-
24
will not be obligated to do or perform any act in connection with the business
of the Partnership not expressly set forth in this Agreement. The General
Partner (including Xxxxxx X. Xxxxx as chief executive officer of the managing
member of the General Partner) shall devote such time, effort and skill to the
business and affairs of the Partnership, IP-IV and any Investing Partnerships
and their management as may be reasonable and necessary or appropriate for the
welfare and success of the Partnership, IP-IV and the Investing Partnerships.
The General Partner shall have the rights and powers and be subject to all the
restrictions and liabilities of a partner in a partnership without limited
partners.
4.2 Specific Authority of the General Partner. Except as otherwise
provided in this Agreement, the General Partner shall have full power and
authority to do all things and to perform all acts that it reasonably deems
necessary or advisable to conduct the business affairs of the Partnership, IP-IV
and the Investing Partnerships, or incidental thereto, without the consent of
any Limited Partner, including, without limitation, full power and authority to
take any of the following actions, each of which is hereby expressly authorized
by the parties hereto:
(a) Enter into contracts and perform the obligations of the Partnership
undertaken in such contracts, including, without limitation, any contract
entered into with the General Partner or a Limited Partner pursuant to Section
6.2;
(b) Make all decisions with respect to the investigation, selection,
negotiation, structure, acquisition, operation and disposition of the assets of
the Partnership, IP-IV or any Investing Partnership; and employ such agents,
consultants, advisers, directors, attorneys, accountants, investment bankers and
other personnel as may be necessary or appropriate for the business of the
Partnership, IP-IV or the Investing Partnerships on such terms and conditions as
the General Partner shall determine are reasonable; provided, however, that
concurrent with the formation of a new Investing Partnership or any partnership
which provides financing to any Investing Partnership, the General Partner will
obtain an opinion of counsel, reasonably satisfactory to the Advisory Committee,
that such Investing Partnership is taxable as a partnership.
(c) Open, maintain and close bank accounts and draw checks and other
orders for the payment of money;
(d) Collect accounts receivable, income and other payments due to the
Partnership, IP-IV or any Investing Partnership;
(e) Keep the books and records of the Partnership and hire independent
certified public accountants;
(f) Pay accounts payable and other expenses of the Partnership;
(g) Transfer, hypothecate, compromise or release any Partnership claim;
-18-
25
(h) Administer the financial affairs of the Partnership, IP-IV and any
Investing Partnership, make tax and accounting elections, including an election
or elections under section 754 of the Code (which election shall be made upon
the request of any Limited Partner), file all required tax returns relating to
the Partnership, pay the liabilities of the Partnership and distribute the
profits of the Partnership to the Partners;
(i) Borrow money on behalf of the Partnership, IP-IV or any Investing
Partnership and make, issue, accept, endorse and execute promissory notes,
drafts, bills of exchange, guarantees, and other instruments and evidences of
indebtedness in the name of the Partnership, IP-IV or any Investing Partnership,
including, without limitation, in connection with and as part of purchasing
assets and securities for the Partnership, IP-IV or any Investing Partnership
and mortgage, pledge, assign or grant security interests in all or any part of
the assets then owned or thereafter acquired by the Partnership, IP-IV or any
Investing Partnership in connection therewith;
(j) Cause the Partnership, IP-IV and any Investing Partnership to
purchase and maintain any insurance, in amounts and on terms customary in the
industry, covering the potential liabilities of the Partnership, the General
Partner and its members, partners, employees and agents, and the officers,
directors and employees of the members of the General Partner, as well as the
potential liabilities of any person serving at the request of the Partnership,
IP-IV or any Investing Partnership as a director, officer, employee, agent,
partner, consultant or adviser of any corporation or other entity in which the
Partnership, IP-IV or any Investing Partnership has an investment; provided,
however, the General Partner shall cause the Partnership to purchase insurance
for the liabilities of directors and officers to the extent such insurance is
available on commercially reasonable terms;
(k) Commence or defend litigation that pertains to the Partnership,
IP-IV or any Investing Partnership or any assets of the Partnership, IP-IV or
any Investing Partnership and investigate potential claims;
(l) Execute and file fictitious business name statements and similar
documents;
(m) Admit additional Limited Partners and permit additional capital
contributions as provided in Sections 2.1(c) and 2.1(d) (and appropriately amend
this Agreement to reflect such admissions and additional capital contributions)
without the consent of any Limited Partner except as provided in Section 2.1(c)
and admit an assignee of a Limited Partner's interest to be a substituted
Limited Partner in the Partnership (and appropriately amend this Agreement and
the Partnership records to reflect such assignment), without the consent of any
Limited Partner;
(n) Terminate the Partnership pursuant to Section 7.2(vi), (vii) or
(viii); and
(o) Execute and deliver all documents and instruments necessary or
advisable to carry out the foregoing.
-19-
26
4.3 Reports. The General Partner will distribute annual audited
financial statements of the Partnership, prepared by a "big six" accounting
firm, to the Limited Partners within ninety (90) days after the end of each
Partnership fiscal year. The General Partner will distribute unaudited quarterly
progress reports on the Partnership's investment activities to the Limited
Partners within forty-five (45) days of the end of the first three fiscal
quarters. The General Partner will distribute monthly income statements of the
Partnership to the Limited Partners as soon as practicable after such statements
are prepared, but in no event more than twenty-five (25) days after the end of
such month. The General Partner will distribute any default notices with respect
to the debt of the Partnership, IP-IV or any Investing Partnership to the
Limited Partners within five (5) days of the receipt thereof from a lender or
the delivery thereof by the Partnership, IP-IV or any Investing Partnership to a
lender.
4.4 Valuation of Assets.
(a) The General Partner shall value the assets of the Partnership
whenever the General Partner may, in its sole discretion, deem appropriate, and
whenever else required by this Agreement or under the Code, and on any date
provided for in this Agreement on which valuation is required due to the
withdrawal of a Limited Partner pursuant to Section 2.2 or Section 7.6, and
shall within ninety (90) days of each such date furnish to each Limited Partner
a statement showing the value of each system and the net worth of the
Partnership. If the Partnership is dissolved and the assets are not sold, the
General Partner shall value the assets of the Partnership as of the date of
dissolution and shall as promptly as practicable thereafter furnish the Limited
Partners with the statement showing the value of each system and the net worth
of the Partnership. The value of any system of the Partnership determined by the
General Partner pursuant to this Section 4.4(a) shall be conclusive and binding
on all of the Partners and all parties claiming through or under them except as
provided in Section 4.4(c).
(b) In the event of the withdrawal of a Limited Partner from the
Partnership pursuant to Section 2.2 or Section 7.6, the General Partner shall
within a reasonable period of time notify the Limited Partners in writing of the
valuation of the total amount of the assets of the Partnership attributable to
the withdrawing Limited Partner.
(c) If (i) any of the Limited Partners object in writing to the
valuation of the systems and/or net worth of the Partnership made pursuant to
Section 4.4(a) by the General Partner or (ii) the withdrawing Limited Partner
objects in writing to the valuation of the systems and/or net worth of the
Partnership made pursuant to Section 4.4(b) by the General Partner, in either
case, within thirty (30) days after the General Partner has furnished the
Limited Partners with the statement provided by Section 4.4(a) or 4.4(b) as of
such date, the General Partner shall give notice to all the Limited Partners of
such objection and the General Partner shall attempt to determine an alternative
value for the systems and net worth of the Partnership (with respect to a
valuation pursuant to Section 4.4(a)) or the assets of the Partnership
attributable to the withdrawing Partner (with respect to a valuation pursuant to
Section 4.4(b)). If the General Partner and (i) seventy percent (70%) in
interest of the Limited Partners (with respect to a valuation pursuant to
4.4(a)) or (ii) the withdrawing
-20-
27
Limited Partner (with respect to a valuation pursuant to Section 4.4(b)) are
unable to determine an alternative value for the systems and/or net worth of the
Partnership within sixty (60) days after such objections, the matter in dispute
shall be submitted to three appraisers of which one shall be chosen by the
General Partner, one by (x) seventy percent (70%) in interest of the Limited
Partners (with respect to a valuation pursuant to Section 4.4(a)) or (y) the
withdrawing Limited Partner (with respect to a valuation pursuant to Section
4.4(b)) and the third by means of the written agreement of the two appraisers
selected by such Partners, provided that such third individual is not associated
with any of the Partners. Each appraiser appointed in accordance with this
paragraph shall complete its appraisal within sixty (60) days of its
appointment. The two appraisals closest to one another shall be averaged and
such valuation shall be final and binding on the Partners. If performed in
connection with Section 4.4(a), the Partnership shall bear all of the costs and
expenses of such appraisal. The Partnership and the withdrawing Limited Partner
shall each bear one-half (1/2) of the costs and expenses of such appraisal if
performed in connection with Section 4.4(b).
4.5 Revaluation of Partnership Assets. The General Partner shall revalue
Partnership property to its fair market value (determined as provided in Section
4.4) as of the date when any additional or existing Partner makes a non-pro rata
contribution of money or property to the Partnership in exchange for an interest
in the Partnership or when the Partnership distributes money or property to a
withdrawing or continuing Partner in exchange for all or part of its interest in
the Partnership.
4.6 Administration Fee and Expenses.
(a) Administration Fee. The Partnership will pay to ICM-IV in cash
during the period the Partnership is in existence, as full payment for
administrative services rendered to the Partnership, an annual administration
fee (the "Administration Fee") equal to one percent (1%) per annum of the total
Capital Contributions that have been funded by Partners to the Partnership
(other than with respect to the preferred limited partner interest of the
Preferred Limited Partner but including the original amount of the Capital
Contribution of the Junior Preferred Limited Partner as set forth in footnote 6
to EXHIBIT 1) determined as of the beginning of each calendar quarter in each
fiscal year of the Partnership; provided, however, if the acquisition of a cable
system by the Partnership, IP-IV or an Investing Partnership is made with debt
financing of more than two-thirds of the purchase price of such cable system,
capital contributions of one-third of such purchase price shall be deemed to
have been made and the Administration Fee shall be paid on such deemed
contributions. At such time as any such debt financing is replaced with actual
Capital Contributions of the Partners, the Administration Fee shall be based on
such actual Capital Contributions rather than a deemed contribution for such
amount. Notwithstanding the foregoing, in no event shall an Administration Fee
be payable on any amounts in excess of the total capital commitments to the
Partnership. Except with respect to acquisitions of cable systems with debt
financing as set forth above, ICM-IV agrees that it will not receive an
administration fee from the Investing Partnerships of the Partnership greater
than one percent (1%) of the capital contributions to the Investing Partnerships
and the Partnership. The Administration Fee for the first year on any capital
contribution shall be paid in advance upon payment of such
-21-
28
capital contribution and shall begin to accrue from the closing of the first
cable television system purchased by the Partnership. The Administration Fee for
all subsequent periods shall be paid quarterly, in advance, one-fourth of one
percent (.25%) per quarter, on the first business day of each calendar quarter,
beginning with the first calendar quarter that begins after the first
anniversary of the payment of such capital contribution. Any Administration Fee
due for the period from the expiration of such first year and the next scheduled
payment of the Administration Fee shall be paid at such next payment date. The
Administration Fee shall be offset, on a cumulative basis, by any administration
fee received by ICM-IV or any affiliate of ICM-IV from IP-IV or any Investing
Partnership. The Administration Fee for the Partnership's last annual fiscal
year, if less than a full year, shall be prorated based upon the number of days
in such period.
(b) General Partner Expenses. The General Partner and ICM-IV will bear
and be charged with the following expenses: salaries and other expenses
(including bonuses and health, welfare, retirement and other benefits) and
overhead expenses (including rents, travel and costs) of the General Partner,
ICM-IV, and the chief operating officer and the directors of development,
finance and accounting of ICM-IV and their related staffs.
4.7 Rights of the Limited Partners.
(a) No Control. The Limited Partners shall not take part in the control,
management, direction or operation of the business of the Partnership, nor,
except as specified in Section 4.7(b) and Section 4.9, have the right, power or
authority to be consulted with respect to investment decisions or the other
affairs of the Partnership nor have the power to sign documents for or otherwise
bind the Partnership and shall have no right to consent on any matter except
those expressly set forth in this Agreement or otherwise specified in Section
4.7(b) and Section 4.9.
(b) Consents. The Limited Partners shall have a right to consent only
with respect to those matters expressly set forth in this Agreement and the
matters listed below, which actions may be taken only with the written consent
of the General Partner (except with respect to item (iv) which action may be
taken without the consent of the General Partner and except to the extent
provided in Section 4.9) and the affirmative consent of the percent in interest
of the Limited Partners so indicated. The Preferred Limited Partner and the
Junior Preferred Limited Partner shall not be entitled to consent, initiate or
cause any sale of the Partnership's cable systems or otherwise vote on or take
action with respect to any matters in this Agreement, including without
limitation Section 4.9 hereof, unless required by law and the preferred limited
partnership interest of the Preferred Limited Partner and the junior preferred
limited partnership interest of the Junior Preferred Limited Partner shall not
be included in either the numerator or the denominator of any computation of the
required percentage in interest of the Limited Partners hereunder for all such
purposes (except where the consent of the Preferred Limited Partner or the
Junior Preferred Limited Partner is required); provided, that the Preferred
Limited Partner and the Junior Preferred Limited Partner shall be entitled to
consent on any matter which requires the unanimous consent of the Limited
Partners and provided further that the Preferred Limited Partner's and the
Junior Preferred Limited Partner's consents shall be required for any settlement
with a tax authority
-22-
29
which would affect the income, gain, loss, deductions or credits allocated to
it. For any matters on which the Preferred Limited Partner and the Junior
Preferred Limited Partner are not entitled to consent, the required consent
shall be the required percent of interest of the Limited Partners other than the
preferred limited partnership interest of the Preferred Limited Partner and
junior preferred limited partnership interest of the Junior Preferred Limited
Partner. In the event one Limited Partner holds seventy percent (70%) of the
interests of the Limited Partners, all references in this Agreement to seventy
percent (70%) shall be changed to seventy-five percent (75%). For purposes of
this Agreement a Limited Partner's interest in the Partnership shall be
determined on the basis of its actual Capital Contributions. The Limited
Partners shall be entitled to consent on the following matters:
(i) The amendment of this Agreement pursuant to Section 9.3
hereof upon the affirmative consent of seventy percent (70%) in interest
of the Limited Partners; provided, however, that this Agreement may not
be amended without the approval of the Partner being affected if the
amendment would change the allocation to any Partner of any income or
loss or distribution of cash or property from that which is provided or
contemplated herein (other than as a result of any dilution in their
Partnership Interests resulting from the admission of any new Limited
Partners as contemplated by Section 2.1(c) or additional contributions
by Partners pursuant to Section 2.1(d) or 2.1(e) hereof, as Section
2.1(c), Section 2.1(d) or 2.1(e) may be amended from time to time);
(ii) The amendment of the allocations and distributions to the
Limited Partners other than as permitted by Section 3.1 upon the
affirmative consent of each Partner adversely affected;
(iii) The admission of a new general partner where there is an
existing General Partner upon the affirmative consent of seventy percent
(70%) in interest of the Limited Partners;
(iv) The approval of a transaction in which the General Partner
or any of its affiliates has an actual or potential conflict of interest
with the Limited Partners or the Partnership and which is not permitted
by Section 6.1 or 6.2 or otherwise expressly permitted by the terms of
this Agreement, upon the affirmative consent of seventy percent (70%) in
interest of the disinterested Limited Partners; provided, however, the
transactions set forth on EXHIBIT 2 hereto may be consummated by the
Partnership, IP-IV or any Investing Partnership without any further
consent of the Limited Partners;
(v) The continuation of the Partnership to effect an orderly
dissolution of the Partnership in accordance with Article 7 upon the
affirmative consent of seventy percent (70%) in interest of the Limited
Partners;
(vi) The agreement to enter into any Investing Partnership or
make any investments in excess of fifteen million dollars ($15,000,000)
upon the
-23-
30
affirmative consent of seventy percent (70%) in interest of the Limited
Partners; provided, however, each of the acquisitions set forth on
EXHIBIT 2 hereto may be consummated by the Partnership, IP-IV or any
Investing Partnership without any further consent of the Limited
Partners;
(vii) The merger of or consolidation of the Partnership with any
other entity upon the affirmative consent of each Partner;
(viii) The taking of any act that would make it impossible to
carry on the business of the Partnership except upon the dissolution of
the Partnership in accordance with this Agreement upon the affirmative
consent of each Partner;
(ix) Confessing a judgment against the Partnership, IP-IV or any
Investing Partnership in excess of one hundred fifty thousand dollars
($150,000) or settling a judgment against the Partnership, IP-IV or any
Investing Partnership in excess of three hundred thousand dollars
($300,000) upon the affirmative consent of each Partner;
(x) Using any funds or assets of the Partnership other than for
the benefit of the Partnership upon the affirmative consent of each
Partner;
(xi) Taking any action that would subject the Limited Partners
to personal liability as a general partner in any jurisdiction upon the
affirmative consent of each Partner;
(xii) The making of, execution of, or delivery of any general
assignment for the benefit of the Partnership's creditors upon the
affirmative consent of each Partner;
(xiii) Any matter in the partnership agreement of IP-IV or any
Investing Partnership that requires the consent of the Limited Partners
or of the limited partner or a general partner other than the managing
general partner of IP-IV or an Investing Partnership; provided, however,
that the consent required under this clause (xiii) shall require the
approval of the applicable percentage of Limited Partners that would
have been required if such consent were required under this Agreement or
if no percentage is specified hereunder, seventy percent (70%); and
provided further, that the amount or timing of any distributions to the
Partnership from any Investing Partnership or IP-IV may not be changed
in a manner inconsistent with the amount or timing of distributions
under this Agreement without the unanimous consent of the Limited
Partners and the General Partner;
(xiv) The approval of a transaction with Tele-Communications,
Inc. or any of its affiliates in an amount greater than five hundred
thousand dollars ($500,000) or transactions less than five hundred
thousand dollars ($500,000),
-24-
31
which exceed an aggregate of two million dollars ($2,000,000), in any
twelve (12) month period, upon the affirmative consent of a majority in
interest of the Limited Partners (other than TCI or any of its
affiliates); provided, however, that purchases of programming and
equipment on no less favorable to the Partnership than arms'-length
terms and in the ordinary course of business shall not require any
approval by the Limited Partners; and provided further, that the
transactions set forth on EXHIBIT 2 hereto may be consummated by the
Partnership, IP-IV or any Investing Partnership without any further
consent of the Limited Partners;
(xv) The approval of any waiver of rights of the Partnership
under the IPWT Contribution Agreement if such waiver would result in the
Partnership forgoing rights valued in excess of five percent (5%) of the
total consideration paid by the Partnership for the contribution of
partnership interests and debt transferred under such agreement; and
(xvi) The designation of management personnel by the managing
general partner of ICM-IV for allocation of the "IRR Bonus" provided for
in the Incentive Bonus Program for management employees of the general
partner of ICM-IV upon the affirmative consent of seventy percent (70%)
in interest of the Limited Partners, which consent shall not
unreasonably be withheld, in the event that the Limited Partners have
not received a fifteen percent (15%) cumulative internal rate or return
on their investment upon termination of the Partnership (calculated in
accordance with Section 3.3(d)(4)); provided, however, that if TCI or an
affiliate of TCI votes against such designation and a majority in
interest of the Limited Partners (excluding TCI) agree to the
designation, then such designation will be deemed approved.
(c) Annual Operating Plan. The General Partner shall prepare and submit
to the Limited Partner having the largest interest as a Limited Partner in the
Partnership for approval (which approval shall not be unreasonably withheld)
each year an annual operating plan for the Partnership (including IP-IV and the
Investing Partnerships) which shall also set forth the amounts to be expended by
the Partnership, IP-IV or any Investing Partnership for capital expenditures in
the following categories: system rebuild, plant extensions, converters and
related equipment, plant maintenance and miscellaneous expenditures. A copy of
the final approved operating plan shall be sent to each Limited Partner.
Notwithstanding any provision of this Agreement to the contrary, the General
Partner, as general partner of IP-IV and each Investing Partnership shall cause
IP-IV and each Investing Partnership not to make any expenditures which would
cause expenditures in any enumerated category of the annual operating plan to
exceed the approved amount for such category by more than ten percent (10%)
without the consent of the largest Limited Partner as set forth above.
(d) Advisory Committee. The Partnership will form an Advisory Committee
(the "Advisory Committee") consisting of one representative from each of the
seven (7) Limited Partners with the largest aggregate interests in the
Partnership (for purposes of selection of the Advisory Committee, (i) each of
the interests of GECC as a Preferred Limited Partner and a Limited Partner shall
be aggregated, (ii) each of the interests of NationsBanc
-25-
32
Investment Corp. and Atlantic Equity Corporation as Limited Partners shall be
aggregated, (iii) each of the interests of Mellon Bank, N.A., as Trustee for
Third Plaza Trust and the interests of Mellon Bank, N.A., as Trustee for Fourth
Plaza Trust as Limited Partners shall be aggregated, and (iv) each of the
interests of the IP Holdings Affiliates (as that term is defined in EXHIBIT 1
hereto) shall be aggregated). For purposes of this Agreement, the determination
of aggregate Limited Partner interests in the Partnership shall be based on the
aggregate Limited Partner interests in the Partnership held by a Limited Partner
and any affiliates thereof, which aggregate holdings shall entitle such Limited
Partner and affiliates, if any, to one representative on the Advisory Committee.
The General Partner will be responsible for administration of the Advisory
Committee and shall have the right to attend any meeting of the Advisory
Committee, but shall be excluded from Advisory Committee membership. The General
Partner will distribute to the Advisory Committee monthly profit and loss
statements of the Partnership and any other monthly financial statements
prepared for management personnel. The General Partner will distribute to the
Advisory Committee quarterly profit and loss statements, balance sheets and
statements of cash flow of the Partnership. The General Partner will distribute
to the Advisory Committee the proposed annual operating plan at the same time
that it is submitted pursuant to Section 4.7(c) to the Limited Partner having
the largest interest in the Partnership, and each member of the Advisory
Committee shall have the right to consult with the General Partner regarding
such plan for ten (10) days after receipt. In addition, the General Partner will
distribute the foregoing reports to any Limited Partner that would be entitled
to be on the Advisory Committee but due to regulatory requirements is precluded
from membership on the Advisory Committee. The Advisory Committee (including any
Limited Partner that because of regulatory requirements is precluded from
membership on the Advisory Committee) will meet quarterly in a location approved
by the General Partner and a majority of the members of the Advisory Committee,
and will consult with and advise the General Partner with respect to the
business of the Partnership and perform such other advisory functions as may be
requested by the General Partner from time to time; provided, however, that the
Advisory Committee shall not perform any functions or duties, which, if
performed by a Limited Partner, would constitute participation in the control of
the business of the Partnership under the Act. The doing of any act or the
failure to do any act by any member of the Advisory Committee, acting in its
capacity as such, the effect of which may cause or result in loss, liability,
damage or expense to the Partnership or any Partner, shall not subject such
member to any liability to the Partnership or to any Partner, except that such
member may be so liable if it acted fraudulently or in bad faith or was guilty
of willful misconduct or a breach of this Agreement. The Partnership shall pay
all reasonable expenses of each member of the Advisory Committee incurred in
connection with attendance at Advisory Committee meetings or otherwise in the
performance of his or her duties as a member of the Advisory Committee. In the
event that interests in the Partnership are converted into or exchanged for
interests in a corporation (other than in connection with a sale of interests in
the Partnership), the General Partner will take all actions necessary to cause a
director of such corporation at all times to be a person designated by each
Limited Partner entitled to a representative on the Advisory Committee, so long
as such Limited Partner owns an interest in such corporation.
-26-
33
(e) Dissolution or Bankruptcy of a Limited Partner. In the event of the
dissolution, liquidation, bankruptcy or insolvency of a Limited Partner, the
interest of such Limited Partner will continue at the risk of the Partnership
business until the dissolution and winding up of the Partnership. The legal
representative of a Limited Partner who has dissolved, liquidated or been
declared bankrupt or become insolvent will succeed to such Limited Partner's
interest in the Partnership, but will not be a substituted Limited Partner
without the prior written consent of the General Partner which consent may be
granted or denied in the sole and absolute discretion of the General Partner
without the consent of any Limited Partner.
4.8 Successor General Partner.
(a) Removal of the General Partner.
(i) Seventy percent (70%) in interest of the Limited Partners (or a
majority in interest of the non-TCI Limited Partners with respect to Section
4.8(a)(i)(D)) may initiate removal of the General Partner by delivering written
notice to the General Partner (x) specifying one or more grounds for removal
that the Limited Partners believe exist, and, (y) if the notice specifies
grounds for removal described in Section 4.8(a)(i)(A), selecting an individual
to arbitrate whether such grounds exist in accordance with Section 4.8(a)(ii).
For purposes of this Section 4.8(a), grounds for removal means any of the
following:
(A) conduct by or on behalf of the General Partner in connection
with the Partnership that constitutes willful misconduct, bad faith,
gross negligence, reckless disregard of its duties, criminal intent, or
a material breach of this Agreement;
(B) acceleration of the senior debt of the Partnership, IP-IV,
any Investing Partnership or any operating company for any reason;
(C) the occurrence of any event of default that permits
acceleration of the Partnership's, IP-IV's, any Investing Partnership's
or any operating company's senior debt, if such event of default has not
been waived or cured within sixty (60) days of the date the General
Partner knew or should have known of its occurrence; or
(D) the death or permanent disability of Xxx X. Xxxxxxx, Xx.
("Hindery"), or the refusal by Hindery, in the event that he ceases to
be employed by TCI or an affiliate of TCI at any time prior to the sale
of all or substantially all of the assets of the Partnership, to return
to a position with the Partnership such that his relationship with the
Partnership is substantially similar to the relationship he had with the
Partnership prior to February 7, 1997.
(ii) The existence of grounds for removal with respect to matters
described in Section 4.8(a)(i)(A) shall be determined by arbitration. Within ten
(10) business days after
-27-
34
its receipt of the Limited Partners' notice described in Section 4.8(a)(i), the
General Partner shall send a written notice to the Limited Partners selecting a
second individual to arbitrate whether grounds for removal exist. If the General
Partner fails to select a second arbitrator within the time period specified in
the preceding sentence, the existence of grounds for removal shall be determined
by the arbitrator selected by the Limited Partners (and such arbitrator shall be
deemed to be the "arbitration panel" for purposes of this Section 4.8(a)). If
the General Partner selects a second arbitrator within the specified time
period, the existence of grounds for removal shall be determined by an
arbitration panel consisting of the arbitrator selected by the Limited Partners,
the arbitrator selected by the General Partner, and a third arbitrator selected
by the two arbitrators previously selected. None of the arbitrators selected
pursuant to this Section 4.8(a) shall be associated or affiliated with any of
the Partners or with any member of the General Partner. The arbitration panel
shall conduct its proceedings in San Francisco in accordance with the commercial
rules of the American Arbitration Association then in effect and the
determination of such panel shall be final and binding upon and enforceable
against all Partners.
(iii) If the required percent of the Limited Partners (with respect to
matters described in Section 4.8(a)(i)(B), (C) or (D) or the arbitration panel
(with respect to matters described in Section 4.8(a)(i)(A)) determines that
grounds for removal exist, then:
(A) A successor general partner of the Partnership shall be
selected by seventy percent (70%) in interest of the Limited Partners.
If the Limited Partners are unable to agree on a successor general
partner within sixty (60) days after the determination under Section
4.8(a)(i)(B) or (C) that grounds for removal exist, the Partnership
shall be dissolved in accordance with Article 7. If the Limited Partners
are unable to agree on a successor general partner after the
determination under Section 4.8(a)(i)(D) that grounds for removal exist,
the General Partner shall continue to serve as general partner of the
Partnership until a successor general partner is selected.
(B) Promptly following the determination that grounds for
removal exist, or upon the designation of a successor general partner in
accordance with Section 4.8(c), the Partners and the members of the
General Partner shall undertake to obtain any government consents and
approvals necessary to permit the actions described in the following
paragraphs of this Section 4.8(a)(iii) to be taken. Such actions shall
be taken as soon as practicable after all such consents and approvals
have been obtained; provided, however, that if all such consents and
approvals shall not have been obtained within one (1) year after the
determination by the arbitration panel that grounds for removal exist,
the Partnership shall be dissolved in accordance with Article 7.
(C) The successor general partner designated in accordance with
Section 4.8(a)(iii)(A) or Section 4.8(c) shall be admitted as the
general partner of the Partnership and the General Partner shall be
converted into a limited partner of the Partnership as set forth in
Section 4.8(a)(iii)(D). The successor general partner shall, beginning
on the date of admission, have the same
-28-
35
authority and obligations that the removed general partner had and shall
have such rights to distributions and allocations as are determined by
the unanimous consent of the Limited Partners and the removed General
Partner. Upon the admission of the successor general partner, the rights
to distributions and allocations of the Partners shall be modified to
the extent required to reflect the rights accorded to the successor
general partner. The admission of a successor general partner to the
Partnership shall be deemed to have occurred prior to the effective date
of the conversion of the General Partner.
(D) Upon removal of the General Partner as general partner of
the Partnership, its interest in the Partnership shall be converted to a
limited partnership interest and the Partnership Agreement shall be
amended to reflect the events set forth in this Section 4.8.
(E) The removed General Partner shall remain liable for any
obligations and liabilities incurred by it as general partner prior to
the effective date of its removal but shall be free of any and all
obligations or liabilities incurred on account of the activities of the
general partner of the Partnership from and after that time.
(b) Withdrawal of the General Partner.
(i) For purposes of this Section 4.8(b), "withdrawal of the General
Partner" shall include the occurrence of any of the following:
(A) any event that causes the General Partner to cease to be the
General Partner;
(B) the bankruptcy, insolvency, or appointment of a trustee to
manage the affairs of the General Partner or Xxxxxx X. Xxxxx;
(C) the dissolution, whether or not required by operation of law
or judicial decree, of the General Partner;
(D) the death of Xxxxxx X. Xxxxx;
(E) the incapacity of Xxxxxx X. Xxxxx such that he is unable to
perform substantially all of his duties as chief executive officer of
the managing member of the General Partner for a period of nine (9)
months; or
(F) any other event that causes the General Partner to cease to
be controlled directly or indirectly through one or more intermediaries
by Xxxxxx X. Xxxxx
-29-
36
(ii) Upon the withdrawal of the General Partner, the provisions of
Section 4.8(a)(iii) shall be complied with, however, the time frames set forth
in Sections 4.8(a)(iii)(A) and (B) shall run from the date of withdrawal of the
General Partner.
(c) Hindery's Return to the Partnership. In the event that Hindery
ceases to be employed by TCI or an affiliate of TCI at any time prior to the
sale of all or substantially all of the assets of the Partnership, Hindery may
elect, in his sole discretion, directly or indirectly to return to a position
with the Partnership such that his relationship with the Partnership is
substantially similar to the relationship he had with the Partnership prior to
February 7, 1997. In the event that Hindery elects to return to such a position
with the Partnership and his return requires removal of the General Partner,
then Hindery shall designate a successor general partner and the Partners shall
comply with the provisions contained in Sections 4.8(a)(iii)(B) through
4.8(a)(iii)(E) to replace the General Partner (or any successor general partner
then in existence) with the successor general partner designated in accordance
with this Section 4.8(c) by Hindery.
(d) General Provision Regarding Approvals by the Limited Partners. For
purposes of any provision of this Section 4.8 that refers to the approval of a
specified interest of the Limited Partners, any Limited Partner that is an
affiliate of the General Partner shall not be entitled to consent or approve the
matter at issue and such Limited Partner's interest shall not be taken into
account in determining whether the matter at issue has been approved by Limited
Partners holding the requisite interest.
(e) Right To Recover Damages. (i) Removal of the General Partner
pursuant to this Section 4.8 shall not limit the right of the Partnership or any
Partner to recover any direct compensatory damages suffered by such person as a
result of any breach of this Agreement by the General Partner or any other
person.
(ii) Removal of the General Partner, except pursuant to the terms of
this Agreement, shall entitle the General Partner to receive, in cash
compensation, damages for all direct and indirect economic consequences of such
removal, including, but not limited to, damages for all lost profits. Such
removed General Partner's interest in the Partnership shall be converted to a
limited partnership interest pursuant to Section 4.8(a)(iii)(D).
4.9 Sale Initiation Rights.
(a) Any time after July 31, 1999, Partners (other than
Tele-Communications, Inc. or any directly or indirectly controlled affiliate
thereof which is a Partner (collectively "TCI")) comprising twenty percent (20%)
or more of the Interests in the Partnership may petition the General Partner to
review, report on and recommend (or not) a sale of some or all of the
Partnership's cable systems.
(b) Any time after July 31, 2001, (i) Partners (other than TCI, the
General Partner and InterMedia Partners, a California limited partnership
("IP-I")), comprising a majority or more of the Interests in the Partnership
(other than Interests in the Partnership held by TCI, the General Partner and
IP-I) may force a sale of one (1) or both of the Partnership's two
-30-
37
significant cable system clusters (i.e., (a) middle Tennessee and (b) eastern
Tennessee, eastern Georgia and western South Carolina), by sending a notice to
such effect (the "Sale Notice") to the General Partner; provided that TCI shall
have a "right of first offer" related thereto as provided in Section 4.9(d) and
the terms of any such sale shall be approved by Partners (other than TCI, the
General Partner and IP-I) comprising a majority or more of the Interests in the
Partnership (other than Interests in the Partnership held by TCI, the General
Partner and IP-I), provided that any Sale Notice must include the sale of all of
the systems in each cluster and shall include all significant clusters, or (ii)
Partners (including TCI, the General Partner and IP-I) comprising seventy
percent (70%) or more of the Interests in the Partnership may force a sale of
some or all of the Partnership's cable systems by sending a Sale Notice to the
General Partner and the terms of any such sale shall be approved by Partners
(including TCI, the General Partner and IP-I) comprising seventy percent (70%)
or more of the Interests in the Partnership unless such sale is to TCI in which
case the foregoing percentage required to approve the terms of the sale to TCI
shall be 75%. The Sale Notice shall indicate which cable television systems are
desired to be sold and any desired price. The General Partner shall promptly
respond to the Partners that sent the Sale Notice (the "Sale Partners") with a
good faith proposal for effectuating the sale of the assets specified in the
Sale Notice, such proposal to be approved by the Sale Partners. Immediately upon
approval of such proposal, the General Partner shall use its best efforts to
effect the sale on such terms as soon as is reasonably practicable and the
General Partner will provide the Partners with monthly progress reports on the
sale process.
(c) In addition to Section 4.9(b), at any time, the General Partner may
elect to (i) sell all or substantially all of the Partnership's cable systems
subject to obtaining the consent of Partners (other than TCI) comprising a
majority or more of the Partnership Interests (other than Partnership Interests
held by TCI); provided that, if the General Partner makes an election to sell
pursuant to this Section 4.9(c)(i) prior to July 31, 2001, TCI shall have a
"right of first refusal" related thereto in accordance with the procedures set
forth in Section 4.9(e) or (ii) sell some or all of the Partnership's cable
systems subject to obtaining the consent of Partners (including TCI) comprising
at least seventy percent (70%) of the Partnership Interests unless the sale is
to TCI in which case the foregoing percentage shall be seventy-five percent
(75%).
(d) Before the Partnership shall offer to sell any of the Partnership's
cable television systems pursuant to Section 4.9(b)(i), the General Partner
shall (i) first deliver a notice to TCI offering to sell all such assets to TCI
and specifying the purchase price and other terms on which the General Partner
would propose to sell such assets to any third party (the date of such notice
being the "Notice Date") and (ii) deliver to each Limited Partner a copy of an
appraisal of any such cable television system conducted by an independent
appraisal firm to be selected by the General Partner to the reasonable
satisfaction of the Advisory Committee, provided, that such appraisal firm has
no current or pre-existing relationship with the General Partner or any of its
Affiliates other than transactions in which the appraisal firm (i) represents
the General Partner or any of its Affiliates as a buyer or seller, (ii)
represents the other party to a transaction with the General Partner or any of
its Affiliates as a buyer or seller or (iii) any other transaction in the
ordinary course of business with such appraisal firm on arm's-length terms.
Within thirty (30) days after the Notice Date, TCI may, by
-31-
38
giving notice to the General Partner elect, to purchase all such assets for such
purchase price and on such other terms specified in such notice and shall enter
into an agreement binding it to such purchase within ninety (90) days after its
election to exercise the right under such notice. If TCI fails to notify the
General Partner of its agreement to purchase all of such assets as of the end of
such thirty (30) day period, fails to enter into a purchase agreement within
ninety (90) days of such election date, or fails to purchase the assets within
either (i) one hundred fifty (150) days after entering into a purchase agreement
or (ii) the earlier of ten (10) days after all regulatory and franchise
approvals have been obtained or three hundred sixty (360) days after the Notice
Date (each an "Abandonment Date"), TCI will not have the right to purchase any
of such assets except as provided in the subsequent provisions of this Section
4.9(d) or if the failure to purchase such assets is due to a breach of such
purchase agreement by the Partnership and, in the event of such abandonment, the
TCI affiliates who are Limited Partners will be deemed to have approved any
subsequent sale by the Partnership pursuant to the terms of this Section 4.9(d);
provided, however, that nothing contained herein shall preclude TCI and its
affiliates from participating in any auction of such assets by the Partnership.
If TCI elects not to or does not purchase such assets offered in accordance with
the terms of this Section 4.9(d), the General Partner may thereafter sell such
assets to any third party only at a price equal to or greater than the price and
on terms and conditions not materially more favorable to the purchaser than
those specified in the notice delivered pursuant to this Section 4.9(d),
provided that a binding agreement for such sale is executed within two hundred
ten (210) days after the Abandonment Date and such sale shall be consummated
within four hundred fifty (450) days of the Abandonment Date and, provided,
further that in the event TCI enters into a purchase agreement with respect to
such assets, but fails to close (other than due to a breach of the agreement by
the Partnership), then the Partnership will be free to sell such assets at a
price less than the price, and on terms and conditions materially more favorable
to the purchaser than those, agreed to with TCI, but TCI will be permitted to
participate in any auction by the Partnership for such assets. If a binding
agreement is not executed within such two hundred ten (210) day period or such
sale is not consummated within such four hundred fifty (450) day period, then
the Partnership shall be required to again offer such assets to TCI pursuant to
and must otherwise comply with the terms of this Section 4.9(d) unless the
Partnership had previously entered into an agreement with respect to such assets
and TCI had failed to close such agreement due to failure to obtain regulatory
or franchise consents or due to a breach by TCI. The rights of TCI pursuant to
this Section shall terminate if TCI enters into a binding agreement with respect
to any of the Partnership's cable television systems and fails to close such
purchase due to its breach; provided that TCI and its affiliates may participate
in any auction by the Partnership of its assets.
(e) If the Partnership desires to sell any of its cable systems as
provided in Section 4.9(c)(i) to a third party pursuant to a bona fide written
offer (which shall set forth all material terms of the proposed sale but may be
subject to reasonable and customary conditions in the cable television industry)
by such third party to purchase such cable systems for cash, then the
Partnership shall first offer to sell such cable systems to TCI at the price and
on the other terms stated in such bona fide written offer. The Partnership's
offer to TCI shall be in writing and shall be accompanied by a copy of the third
party bona fide offer. TCI shall have thirty (30) days from the date of receipt
of such offer in which to
-32-
39
accept it by giving written notice of such acceptance to the General Partner. If
TCI fails to accept the Partnership's offer within such thirty (30) day period,
the Partnership will be free to sell such cable systems for a period of three
hundred sixty (360) days after the end of the thirty (30) day right of first
refusal period, or such longer or shorter period as may be specified in the
original bona fide offer, but only at a price and on terms not more favorable to
the purchaser than those contained in the bona fide offer. If TCI timely accepts
the Partnership's offer, TCI must enter into an agreement binding it to such
purchase within ninety (90) days after its acceptance of such offer and must
purchase such cable systems within either (i) one hundred fifty (150) days after
entering into a purchase agreement or (ii) the earlier of ten (10) days after
all regulatory and franchise approvals have been obtained or three hundred sixty
(360) days after receipt of the Partnership's offer, or in either case, such
longer or shorter period as may have been specified in the original bona fide
offer. If TCI accepts the Partnership's offer but fails to enter into a purchase
agreement or fails to purchase the cable systems, in either case within the
respective periods specified in the preceding sentence, then the Partnership may
sell such cable systems at a price and on terms not more favorable to the
purchaser than those contained in the bona fide written offer within the time
period specified in such offer or, if no time period is specified in the offer,
within three hundred sixty (360) days and TCI will not have the right to
purchase any of such cable systems within such period. Any sale to any third
party pursuant to this Section 4.9(e) shall not be connected in any way with any
other transaction (including the sale of any other assets) under which
consideration of any kind is transferred to the third party by the Partnership
such that the price purported to be paid for the Partnership's cable systems (as
specified in the bona fide offer) could overstate the value assigned thereto by
the third party.
(f) For purposes of this Section 4.9, all references to the
Partnership's cable systems shall mean any cable system in which the Partnership
has an ownership interest either directly or indirectly through IP-IV or any
Investing Partnership.
4.10 Nonvoting Interests. Notwithstanding anything to the contrary in
this Agreement, if (i) a Limited Partner or any affiliate of such Limited
Partner is subject to the Bank Holding Company Act of 1956, as amended, and
Regulation Y of the Board of Governors of the Federal Reserve System (the "FRB")
promulgated thereunder (such Limited Partner and any of its affiliates
hereinafter collectively referred to as a "BHC LP"), (ii) the limited
partnership interests of the Partnership (the "Interests") held by the BHC LP
exceed five percent (5.0%) of the then total outstanding Interests (exclusive of
the Nonvoting Interests, as defined below); and (iii) the BHC LP has not
received the approval of the FRB to hold more than five percent (5.0%) of the
Interests, then the overline amount of the Interests in excess of five percent
(5.0%) shall constitute a separate class of limited partnership interests
hereinafter referred to as "Nonvoting Interests". In addition, the aggregate
amount of the Interests and Nonvoting Interests held by a BHC LP, that has not
received the approval of the FRB to hold more than five percent (5.0%) of the
Interests, shall at no time exceed twenty-four and nine-tenths percent (24.9%)
of the aggregate amount of all outstanding Interests and Nonvoting Interests.
The rights, privileges, benefits and liabilities appertaining to the Nonvoting
Interests shall be identical in all respects to the rights, privileges, benefits
and liabilities appertaining to the Interests, except that (i) holders
-33-
40
of Nonvoting Interests shall not be entitled to vote upon or give consents in
respect of any action by the Partners, except those matters that, in the
judgment of the BHC LP, acting upon advice of legal counsel, would significantly
and adversely affect the rights or preference of its Interests or Nonvoting
Interests, including but not limited to the issuance of additional Interests or
Nonvoting Interests; any modification or amendment relating to the terms of its
Interests, Nonvoting Interests or this Agreement; or the dissolution of the
Partnership and (ii) the Nonvoting Interests (other than such Nonvoting
Interests that are subject to the exception set forth in the immediately
preceding clause (i)) shall not be included in either the numerator or the
denominator of any computation of the required percentage in interest of the
Limited Partners hereunder for all such purposes (except where the consent of
the holders of the Nonvoting Interests is required).
ARTICLE 5
Tax Matters and Reports
5.1 Filing of Tax Returns. The General Partner, at the expense of the
Partnership, shall prepare and file, or cause the accountants of the Partnership
to prepare and file, all required tax returns, including a federal information
tax return in compliance with section 6031 of the Code and any required state
and local income tax and information returns for each tax year of the
Partnership. The General Partner shall act as the Tax Matters Partner of the
Partnership as that term is defined in section 6231(a)(7) of the Code.
5.2 Tax Reports to Current and Former Partners. Within ninety (90) days
of the end of each fiscal year, the Partnership shall prepare and mail, or cause
its accountants to prepare and mail, to each Partner and, to the extent
necessary, to each former Partner (or its legal representatives), a report
setting forth in sufficient detail such information as is required to be
furnished to the Partners by law (e.g., section 6031(b) of the Code and
regulations thereunder) and as shall enable such Partner or former Partner (or
his or its legal representatives) to prepare their respective federal and state
income tax or informational returns in accordance with the laws, rules and
regulations then prevailing. Partners subject to ERISA will receive information
necessary for them to calculate the fair market value of their Partnership
Interests (determined in accordance with Section 4.4).
5.3 Restriction on General Partner Activity with Respect to Publicly
Traded Partnerships. Without the consent of all of the Limited Partners, the
General Partner shall not have the authority on behalf of the Partnership to:
(a) list, recognize, or facilitate the trading of partnership interests
(or any interest therein) on any "established securities market" within the
meaning of section 7704 of the Code, or permit any of its affiliates to take
such actions, if as a result thereof the Partnership might be taxed for federal
income tax purposes as an association taxable as a corporation; or
(b) create for the partnership interests (or any interest therein) a
"secondary market (or the substantial equivalent thereof)" within the meaning of
section 7704 of the Code or
-34-
41
otherwise permit, recognize or facilitate the trading of such interests (or any
interest therein) on any such market, or permit any of its affiliates (or to the
extent the General Partner has rights with respect thereto, the selling agents
or any of their affiliates) to take such actions, if as a result thereof the
Partnership might be taxed for federal income tax purposes as an association
taxable as a corporation.
5.4 Duties and Obligations of the General Partner with Respect to
Publicly Traded Partnerships. The General Partner shall monitor the transfers of
partnership interests to determine if such interests are being traded on an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of section 7704 of the Code, and shall
take (and cause its affiliates to take) all steps within its power and authority
as are reasonably necessary or appropriate to prevent any such trading of
interests.
5.5 Books and Records. Complete books and records accurately reflecting
the accounts, business, transactions and Partners of the Partnership shall be
maintained and kept by the General Partner at the Partnership's principal place
of business. The books and records of the Partnership required to be maintained
by section 15615 of the Act shall be open at reasonable business hours on prior
appointment for inspection and copying by the Partners. Notwithstanding anything
to the contrary in this Agreement, the General Partner shall have the right to
keep confidential from the Limited Partners for such period of time as the
General Partner deems reasonable, any information which the Partnership is
required by law or by agreement with a third party to keep confidential and any
information which relates to its purchasing of individual items of programming,
plant or equipment which it reasonably deems confidential.
5.6 Fiscal Year. Except as may otherwise be required by the federal tax
laws, the fiscal year of the Partnership for both financial and tax reporting
purposes shall end on December 31.
5.7 Method of Accounting. The books and accounts of the Partnership
shall be maintained using the accrual method of accounting for financial
reporting purposes and for tax purposes and shall be annually audited by a "Big
Six" accounting firm (or a successor thereof). Those documents relating to
allocations of items of Partnership income, gain, loss, deduction or credit and
Capital Accounts shall be kept under federal income tax accounting principles as
provided herein.
ARTICLE 6
Conflicts of Interest; Indemnification; Exculpation
6.1 Outside Activities. Without the consent of seventy percent (70%) in
interest of the Limited Partners, the General Partner (and its members,
partners, employees, agents and affiliates, including, but not limited to,
Xxxxxx X. Xxxxx) may not begin the offer and sale of interests in other
enterprises with the purpose of investing in cable television systems until
-35-
42
the earlier of July 31, 1997 or such time as sixty-six and two-thirds percent
(66-2/3%) of the committed capital contributions to the Partnership shall be
invested or committed for investment. Without the consent of a majority in
interest of the Limited Partners, the General Partner (and its members,
partners, employees, agents and affiliates, including, but not limited to,
Xxxxxx X. Xxxxx) may not begin to actively supervise the investment of capital
of such other enterprises or partnerships until the earlier of July 31, 1997 or
such time as ninety-five percent (95%) of the committed capital contributions to
the Partnership shall be invested or committed for investment. The General
Partner shall first offer any investment opportunities within the scope of the
Partnership, IP-IV's and the Investing Partnerships' business purpose and for
which the Partnership, IP-IV or the Investing Partnerships have adequate
resources to take advantage of the opportunity to the Partnership, IP-IV and the
Investing Partnerships and, to the extent that the Partnership and the Investing
Partnerships, after good faith consideration by the General Partner, do not
invest in such opportunity or take all of such opportunity, the General Partner
may elect to give or share such investment opportunity to or with one or more of
the following: any Partner, any officer, director, shareholder, member, partner,
employee or affiliate of a Partner, any enterprise or partnership in which the
General Partner has an interest, or any nonaffiliated person. Notwithstanding
the foregoing, in the event the General Partner is permitted under the
provisions of this Section 6.1 to begin the offer and sale of interests in other
enterprises with the purpose of investing in cable television systems, and the
General Partner believes such enterprises may invest in cable television systems
in areas contiguous to those owned by the Partnership, IP-IV or any Investing
Partnership, the General Partner will offer the Limited Partners an opportunity
to invest in such enterprise. Except as set forth in this Section 6.1, the
General Partner or its members, partners, employees, agents or affiliates shall
not be prohibited from engaging directly or indirectly in other activities, or
from directly or indirectly purchasing, selling and holding securities or assets
in cable television systems or corporations for their account or for the
accounts of others. Any Limited Partner (and their members, partners, employees,
agents and affiliates) may engage in any other enterprises, including
enterprises in competition or in conflict with the Partnership. The Partnership
shall not have any right to any income or profit derived by any Partner, or its
members, partners, officers, directors, employees, agents or affiliates from any
enterprise, opportunity or transactions permitted by this paragraph. Each
Limited Partner shall have the right to transact business with the Partnership,
IP-IV or the Investing Partnerships. Neither the General Partner nor any of its
affiliates shall sell securities or assets to or purchase securities or assets
from the Partnership without the unanimous consent of the Limited Partners;
provided that the transactions set forth in EXHIBIT 2 hereto may be consummated
by the Partnership, IP-IV or any Investing Partnership without any further
consent of the Limited Partners. The General Partner may, on behalf of the
Partnership or cable systems of IP-IV or any Investing Partnership, enter into
cost and revenue sharing agreements with cable systems adjacent to those owned
by the Partnership, IP-IV or any Investing Partnership including those systems
purchased by any enterprise or partnership in which the General Partner, any
affiliate of the General Partner or the Partnership or any member of the General
Partner has an interest (the "Adjacent Systems"), to operate the Adjacent
Systems as a single system with the cable systems of the Partnership, IP-IV or
any Investing Partnership with costs equitably allocated between the various
systems as the General Partner and the owner or operator of such Adjacent System
shall determine based on the relative costs associated
-36-
43
with such systems and, if determined by the General Partner and the owner or
operator of such Adjacent System to be in the best interests of the Partnership,
IP-IV, the Investing Partnerships and the Adjacent Systems, to sell such systems
as a single system and allocate the sales revenues in such manner as such
parties deem appropriate based on the relative values of such systems; provided,
however, the terms of any such arrangement are disclosed to the Limited Partners
and are on arm's-length terms and conditions. The parties hereto hereby waive,
and covenant not to xxx on the basis of, any law (statutory, common law or
otherwise) respecting the rights and obligations of the Partners inter se which
is or may be inconsistent with this Section 6.1 with respect to the matters
covered by this Section 6.1, but in no event shall the foregoing be construed as
limiting any rights or remedies with respect to a breach of this Section 6.1.
6.2 Contracts with the General Partner, Affiliates and Limited Partners.
The General Partner may, on behalf of the Partnership, IP-IV or portfolio
companies of the Investing Partnerships, enter into contracts with itself or any
of its members, partners, employees, agents or affiliates, including but not
limited to InterMedia Management, Inc. ("IMI"), a corporation wholly owned by
Xxxxxx X. Xxxxx; provided, however, that such transactions shall be on terms no
less favorable to the Partnership than are generally afforded from unrelated
third parties or shall require the approval of seventy percent (70%) in interest
of the Limited Partners, excluding any interest as a Limited Partner owned or
controlled directly or indirectly by the General Partner, which approval shall
not be unreasonably withheld. The validity of any transaction, agreement or
payment involving the Partnership, IP-IV or an Investing Partnership and the
General Partner or any affiliate of the General Partner or a Limited Partner
shall not be affected by reason of (a) the relationship between the Partnership,
IP-IV or portfolio companies of an Investing Partnership, and the General
Partner or such member, partner, employee, agent or affiliate of the General
Partner or a Limited Partner or the relationship between such member, partner,
employee, agent or affiliate of the General Partner or a Limited Partner and the
General Partner or (b) the absence of approval of said transaction, agreement or
payment by the Limited Partners if the proceeds therefrom offset but do not
exceed the Administration Fee.
6.3 Indemnification of the Partners. The Partnership shall indemnify and
hold harmless the General Partner, any Limited Partner, any Advisory Committee
member and any member, partner, employee or agent of the General Partner, any
Limited Partner or any Advisory Committee member and any employee or agent of
the Partnership and/or the legal representatives of any of them, and each other
person who may incur liability as a general partner in connection with the
management of the Partnership or any corporation or other entity in which the
Partnership has an investment, against all liabilities and expenses (including
amounts paid in satisfaction of judgments, in compromise, and as counsel fees)
reasonably incurred by him or it in connection with the defense or disposition
of any civil action, suit or other proceeding, in which he or it may be involved
or with which he or it may be threatened, while a general partner or serving in
such other capacity or thereafter, by reason of its being or having been a
general partner, or by serving in such other capacity, except with respect to
any matter which constitutes willful misconduct, bad faith, gross negligence or
reckless disregard of the duties of its office, or material breach of this
Agreement. The Partnership shall advance, in the sole discretion of the General
Partner, to
-37-
44
the General Partner, any Limited Partner, any Advisory Committee member and any
member, partner, employee or agent of the General Partner, any Limited Partner,
any Advisory Committee member or the Partnership reasonable attorneys' fees and
other costs and expenses incurred in connection with the defense of any such
action or proceeding. The General Partner hereby agrees, and each member,
partner, employee or agent of the General Partner and the Partnership shall
agree in writing prior to any such advancement, that in the event he or it
receives any such advance, such indemnified party shall reimburse the
Partnership for such fees, costs and expenses to the extent that it shall be
determined that he or it was not entitled to indemnification under this Section.
The rights accruing to a General Partner, any Limited Partner and each member,
partner, employee or agent of the General Partner, any Limited Partner or the
Partnership under this paragraph shall not exclude any other right to which it
or they may be lawfully entitled; provided, that any right of indemnity or
reimbursement granted in this paragraph or to which any indemnified party may be
otherwise entitled may only be satisfied out of the assets of the Partnership,
and no withdrawn General Partner, and no Limited Partner, shall be personally
liable with respect to any such claim for indemnity or reimbursement.
Notwithstanding any of the foregoing to the contrary, the provisions of this
Section 6.3 shall not be construed so as to provide for the indemnification of
the General Partner, any Limited Partner, and Advisory Committee member or any
member, partner, employee or agent of the General Partner, any Limited Partner
or Advisory Committee member for any liability to the extent (but only to the
extent) that such indemnification would be in violation of applicable law or
such liability may not be waived, modified or limited under applicable law, but
shall be construed so as to effectuate the provisions of this Section 6.3 to the
fullest extent permitted by law.
6.4 Exculpation. The General Partner and any member, partner, employee
or agent of the General Partner or the Partnership shall not be liable to any
Limited Partner or the Partnership for mistakes of judgment or for action or
inaction which the General Partner or any such member, partner, employee or
agent of the General Partner or the Partnership reasonably believed to be in the
best interests of the Partnership unless such action or inaction constitutes
willful misconduct, bad faith, gross negligence, reckless disregard of its
duties or material breach of this Agreement. The General Partner may consult
with counsel, accountants and other experts in respect of Partnership affairs
and be fully protected and justified in any action or inaction which is taken in
accordance with the advice or opinion of such counsel, accountants or other
experts, provided that they shall have been selected with reasonable care.
Notwithstanding any of the foregoing to the contrary, the provisions of this
Section 6.4 shall not be construed so as to relieve (or attempt to relieve) the
General Partner and any member, partner, employee or agent of the General
Partner or the Partnership of any liability, to the extent (but only to the
extent) that such liability may not be waived, modified or limited under
applicable law, but shall be construed so as to effectuate the provisions of
this Section 6.4 to the fullest extent permitted by law.
-38-
45
ARTICLE 7
Termination and Dissolution
7.1 No Dissolution. The Partnership shall not be dissolved by the
admission of substituted Limited Partners or by the admission of a new General
Partner in accordance with the terms of this Agreement. The dissolution or
bankruptcy of a Limited Partner shall not cause a dissolution of the
Partnership.
7.2 Events of Dissolution. The Partnership shall dissolve upon the first
to occur of the following: (i) expiration of the term of the Partnership
specified in Section 1.6 hereof, (ii) the bankruptcy, insolvency or appointment
of a trustee or receiver to manage the affairs of the General Partner, (iii) the
voluntary resignation of Xxxxxx X. Xxxxx as chief executive officer of the
managing member of the General Partner if a successor general partner has not
been appointed in accordance with Section 4.8 hereof, (iv) the removal of the
General Partner pursuant to Section 4.8(a) if a successor general partner of the
Partnership is not appointed pursuant to Section 4.8 hereof, (v) dissolution
being required by operation of law or judicial decree including, without
limitation, the withdrawal of the General Partner where there is no remaining or
surviving general partner, (vi) the determination by the General Partner with
the affirmative consent of seventy percent (70%) in interest of the Limited
Partners, (vii) the Partnership becoming taxable as a corporation for federal
tax purposes or, (viii) the determination by the General Partner, based upon
advice of counsel, that the Partnership would be required to register as an
investment company under the Investment Company Act and there is no reasonably
practicable means of avoiding such requirement. Notwithstanding anything to the
contrary in this Section 7.2, without the unanimous consent of the Limited
Partners, the General Partner agrees not to voluntarily withdraw as a general
partner of the Partnership, and Xxxxxx X. Xxxxx agrees not to voluntarily resign
as chief executive officer of the managing member of the General Partner, and
the General Partner and Xxxxxx X. Xxxxx each agrees that it or he will not
voluntarily take or permit any action that would cause the Partnership to cease
to be controlled directly or indirectly by Xxxxxx X. Xxxxx and if any of such
persons effects such withdrawal or cessation of control in violation of this
Agreement, the Partnership may recover damages for breach of this Agreement.
7.3 Winding-Up. Upon the occurrence of an event of dissolution, the
Partnership shall be wound up and liquidated. The General Partner or, if there
is no general partner or if the General Partner or the managing member of the
General Partner wrongfully caused the dissolution of the Partnership, a
liquidator appointed by a majority in interest of the Limited Partners, shall
proceed with the dissolution and the final distribution. In the dissolution, the
General Partner or such liquidator shall use its best efforts to reduce to cash
and cash equivalent items such assets of the Partnership as the General Partner
or such liquidator shall deem it advisable to sell, subject to obtaining fair
value for such assets and any tax or other legal considerations. A reasonable
time shall be allowed for the orderly winding up of the business and affairs of
the Partnership and the liquidation of its assets in order to minimize any
losses otherwise attendant upon such a winding up, provided that the liquidation
is carried out in conformity with the requirements of Section 7.4 and section
1.704-1(b)(2)(ii)(b)(2) and (3) of the Income Tax Regulations.
-39-
46
7.4 Order of Liquidating Payments and Distributions. In settling
accounts after dissolution, the assets of the Partnership shall be distributed
as expeditiously as possible in the following order not later than the end of
the taxable year of the liquidation (i.e., the date upon which the Partnership
ceases to be a going concern as provided in section 1.704-1(b)(2)(ii)(g) of the
Income Tax Regulations) or if later, within ninety (90) days after the date of
such liquidation:
(a) To creditors, including the Partners to the extent of any unpaid
expenses or any outstanding loan or advance;
(b) To the payment of the costs of winding up the affairs of,
liquidating and dissolving the Partnership including, without limitation,
expenses of selling assets of the Partnership, discharging the liabilities of
the Partnership, distributing the assets of the Partnership and terminating the
Partnership in accordance with Section 7.3 hereof;
(c) To the establishment of reasonable reserves to provide for
obligations to creditors;
(d) To the Partners with respect to which any other debts of the
Partnership are owing, other than debts arising out of the expulsion or
withdrawal of a Partner;
(e) To the Preferred Limited Partner in an amount equal to the positive
balance in its Capital Account as determined after all adjustments to such
account for the taxable year of the Partnership during which the liquidation
occurs as are required by this Agreement and section 1.704-1(b) of the Income
Tax Regulations, such adjustments to be made within the time specified in such
Regulations;
(f) To the Junior Preferred Limited Partner in an amount equal to the
positive balance in its Capital Account as determined after all adjustments to
such account for the taxable year of the Partnership during which the
liquidation occurs as are required by this Agreement and section 1.704-1(b) of
the Income Tax Regulations, such adjustments to be made within the time
specified in such Regulations;
(g) To the Partners (other than the Preferred Limited Partner and the
Junior Preferred Limited Partner) in the proportion of their respective Capital
Accounts as those accounts are determined after all adjustments to such accounts
for the taxable year of the Partnership during which the liquidation occurs as
are required by this Agreement and section 1.704-1(b) of the Income Tax
Regulations, such adjustments to be made within the time specified in such
Regulations.
7.5 Termination. The Partnership shall terminate following its
dissolution and liquidation pursuant to this Article 7 when all of the
Partnership assets as to which it is practicable to do so in the sole discretion
of the General Partner or the liquidator shall have been converted into cash,
the net proceeds therefrom, as well as any other assets of the Partnership,
after payment of or due provision for all debts, liabilities and obligations of
the
-40-
47
Partnership, shall have been distributed to the Partners as provided for herein
and the Partnership shall have been terminated in the manner required by the
Act.
7.6 Government Regulation.
(a) The General Partner shall use its best efforts to insure that it and
the Partnership are in substantial compliance with those provisions, if any, of
ERISA with which they are obligated by that statute to comply, and to qualify as
a venture capital operating company (as defined in the Department of Labor
regulations promulgated under ERISA) subject to the following provisions of this
Section 7.6.
(b) In the event that at any time after its admission to the
Partnership, (i) any Limited Partner delivers to the General Partner a written
opinion of counsel, reasonably satisfactory to the General Partner, to the
effect that, by reason of the adoption of any law, rule or regulation or the
issuance of any order or directive by any governmental authority (a "Regulatory
Change"), such Limited Partner's continued participation in the Partnership or
the making by such Limited Partner of any additional capital contribution to the
Partnership would violate any law, rule, regulation, license, permit or other
regulatory requirement binding upon or required of such Limited Partner or would
subject such Limited Partner to any penalty or tax to which it was not subject
at the time of its admission to the Partnership and which is, in the reasonable
judgment of such Limited Partner, material in relation to its investment in the
Partnership and is not applicable to such Limited Partner's investments
generally or (ii) the General Partner delivers to any Limited Partner an opinion
of the Partnership's counsel to the same effect or to the effect that, by reason
of a Regulatory Change, such Limited Partner's continued participation in the
Partnership would materially restrict the continued conduct of the Partnership's
business (any such event described in clause (i) or (ii) of this paragraph (b)
is referred to as an "Adverse Regulatory Development" and the Limited Partner
affected thereby is referred to as the "Affected Partner"), then the General
Partner and the Affected Partner shall cooperate with each other in taking or
causing to be taken such action as shall eliminate such Adverse Regulatory
Development. Any such opinion of counsel shall describe the applicable
Regulatory Change and its effect on the Affected Partner and the Partnership
and, insofar as practicable, the actions which would eliminate such Adverse
Regulatory Development.
(c) If an Adverse Regulatory Development cannot otherwise be resolved to
the mutual satisfaction of the Affected Partner and the General Partner, the
General Partner and the Affected Partner shall each use its best efforts to find
a purchaser for all the Affected Partner's interest in the Partnership, or such
part thereof as shall be sufficient to eliminate the Adverse Regulatory
Development, on terms and conditions reasonably acceptable to the Affected
Partner, and if acceptable to the Affected Partner, the General Partner shall
consent to the sale of such interest as long as, in the reasonable judgment of
the General Partner, the purchaser thereof has sufficient financial resources to
satisfy any remaining obligation to contribute capital to the Partnership to be
assumed by such purchaser from the Affected Partner with respect to the interest
in the Partnership to be purchased by it and meets the requirements for transfer
set forth in Section 8.1.
-41-
48
(d) If, within thirty (30) business days after the delivery of an
opinion referred to in paragraph (b) above or such later time as the General
Partner and the Affected Partner shall agree, the General Partner and the
Affected Partner have not resolved to their mutual satisfaction the Adverse
Regulatory Development, then the Partnership may take any of the following
actions with respect to the Affected Partner's interest in the Partnership, but
only upon the delivery to the Affected Partner of an opinion of the
Partnership's counsel (which opinion shall be reasonably acceptable to the
Affected Partner) to the effect that the taking of such action should eliminate
the Adverse Regulatory Development: (i) release the Affected Partner from making
any capital contribution with respect to any new investment by the Partnership
(and appropriate provisions shall be made in this Agreement to preserve such
Affected Partner's interest in all existing investments and to eliminate such
Affected Partner's participation in future investments); (ii) redeem the
Affected Partner's interest in the Partnership in exchange for the assignment to
the Affected Partner of the percentage share of the Partnership's cash and
short-term investments which the Affected Partner would receive if all such
assets were then distributed to the Partners plus the percentage share in each
of the Partnership's other investments and any other assets of the Partnership
equal to the share of all such assets it would receive if the Partnership were
dissolved at such time and all such assets were liquidated for their then value
as determined in accordance with Section 4.4(b), or a cash payment in lieu
thereof in an amount equal to the fair market value (as determined pursuant to
Section 4.4) of their Partnership Interest as of the date of the determination
of an Adverse Regulatory Development; or (iii) terminate and dissolve the
Partnership and, if in the judgment of the General Partner it is prudent to do
so, distribute all or any portion of the Partnership's investments to the
Partners in kind so that, as nearly as practicable, each Partner receives an
equal portion of its total distribution in each investment distributed in kind,
in which event the General Partner shall offer to establish a successor
partnership on terms and conditions in all material respects the same as this
Partnership by contributing the property distributed to them by this
Partnership. The Partnership shall seek to take the foregoing actions in the
order stated and shall take an action subsequently stated only if, in accordance
with the opinion of counsel referred to above, none of the actions previously
stated should eliminate the Adverse Regulatory Development.
(e) If, within sixty (60) business days after the delivery of the
opinion referred to in paragraph (b) above or such later time as the General
Partner and the Affected Partner shall agree upon, the General Partner and the
Affected Partner have not resolved to their mutual satisfaction the Adverse
Regulatory Development or the Partnership has not taken any of the actions
permitted by paragraph (d) above to eliminate the Adverse Regulatory
Development, the Affected Partner, by notice to the Partnership, may require the
Partnership to take any of such actions but only upon the delivery to the
Partnership of an opinion of counsel (which opinion and counsel shall be
reasonably acceptable to the General Partner) to the effect that the taking of
such action should eliminate the Adverse Regulatory Development; provided that
the Affected Partner shall require the Partnership to take any of the actions
stated in paragraph (d) only if, in the opinion of counsel delivered pursuant to
this paragraph (e), none of the actions stated in paragraph (d) before the
action proposed to be taken would likely eliminate the Adverse Regulatory
Development; and provided further that the Partnership shall not be required to
take the actions referred to in clause (iii) of
-42-
49
paragraph (d) if the Regulatory Change is the imposition on the Affected Partner
of a penalty or tax of the type referred to in paragraph (b) and the General
Partner reasonably determines that such action would have an effect on the other
Limited Partners that is material and adverse in relation to their investment in
the Partnership.
(f) The Partnership and the Affected Partner shall each bear all
expenses it may respectively incur in connection with taking any of the actions
permitted or required of it by paragraphs (b) through (e) of this Section 7.6,
including the costs of providing any opinions of counsel it is required to
provide.
(g) Whenever the General Partner proposes to make any cash payment to an
Affected Partner as permitted by paragraph (d) or as may otherwise be agreed
upon by the Affected Partner and the General Partner or to take any other action
pursuant to this Section 7.6 which would adversely and materially affect the
interest of the other Limited Partners in relation to their investment in the
Partnership, the General Partner shall first obtain the approval of seventy
percent (70%) of such Limited Partners for such payment or action.
(h) The Partnership or an Affected Partner may take the actions
contemplated by this Section 7.6 either (i) in advance of any Regulatory Change
coming into effect if all necessary governmental action has occurred to cause
such Regulatory Change to come into effect or (ii) prior to expiration of the
time periods provided hereunder for the taking of such actions if in the opinion
of counsel referred to herein doing so is necessary to avoid an Adverse
Regulatory Development coming into effect with respect to an Affected Partner.
7.7 Orderly Methods of Liquidating Payments. Notwithstanding anything to
the contrary in this Article 7, if required to maximize the proceeds of
liquidation, the General Partner (or the liquidator chosen in accordance with
Section 7.3) may, with the consent of seventy percent (70%) in interest of the
Limited Partners, implement the distribution provisions of Section 7.4(g) hereof
by transfer, on behalf of the Partners, of the assets of the Partnership to a
liquidating trustee or trustees.
ARTICLE 8
Transfer of Interest, Failure To Pay
Capital Contributions, Beneficial Owners
8.1 Transfer of Partnership Interest. No Limited Partner shall sell,
assign, mortgage, encumber, hypothecate or otherwise transfer, whether
voluntarily or involuntarily, its interest in the Partnership or any part
thereof, unless (x) any such transferee entity meets the suitability
requirements originally imposed under the subscription agreement on the
transferring Limited Partner and (y) such assignment or transfer will not (and,
upon request of the General Partner, the transferring Limited Partner provides
an opinion of counsel in form and substance satisfactory to the General Partner
that such assignment or transfer will not) (A) violate any applicable federal or
state securities laws or regulations, subject the
-43-
50
Partnership to registration as an investment company or election as a "business
development company" under the Investment Company Act; (B) require the General
Partner or any of its members to register as an investment adviser under the
Investment Advisers Act of 1940; (C) violate any other federal, state or local
laws; (D) effect a termination of the Partnership under section 708 of the Code;
or (E) cause the Partnership to be treated as an association taxable as a
corporation for federal income tax purposes, or violate this Agreement.
Notwithstanding the preceding sentence, a Partner may assign or transfer its
interest in the Partnership if any such assignment or transfer effects a
termination of the Partnership under section 708 of the Code so long as the
transferring Partner agrees to indemnify and hold harmless the Partnership and
all other Partners against any and all costs and expenses incurred as a direct
result of a termination of the Partnership under section 708 of the Code. No
transferee or assignee of all or any part of a Limited Partner's interest shall
become a Limited Partner without the prior written consent of the General
Partner which consent shall not be unreasonably withheld so long as such Partner
sells the lesser of all its Partnership Interests or a Partnership Interest
representing an initial contribution of at least five million dollars
($5,000,000) and in no event shall the substitution of an assignee or transferee
as a Limited Partner require the consent of any Limited Partner. Any purported
transfer of any interest of a Limited Partner in the Partnership or any part
thereof not in compliance with this Section 8.1 shall be void and of no force or
effect and the transferring Partner shall be liable to the other Partners and
the Partnership for all liabilities, obligations, damages, losses, costs and
expenses (including reasonable attorneys' fees and court costs) arising as a
result of such noncomplying transfer.
8.2 Transfer of IP Holdings Affiliates' Interests. Notwithstanding the
provisions of Section 8.1, any IP Holdings Affiliate (as that term is defined in
EXHIBIT 1 hereto) may transfer any or all of its interest in the Partnership to
any other IP Holdings Affiliate at any time, provided that such transfer is made
in compliance with clauses (x) and (y) of Section 8.1.
8.3 Indemnification. (a) Each Limited Partner and substituted Limited
Partner (each an "Indemnifying Person") shall indemnify and hold harmless the
Partnership, the General Partner and every other Limited Partner (each an
"Indemnified Person") who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of or arising from
(including without limitation from any actual or alleged misrepresentation or
misstatement of facts or omission to represent or state facts made by such
Limited Partner in connection with) (i) any assignment, transfer, encumbrance or
other disposition of all or any part of such Limited Partner's Partnership
Interest, or (ii) the admission of such substituted Limited Partner, against
losses, liabilities and expenses for which the Partnership or other person has
not otherwise been reimbursed (including attorneys' fees, judgments, fines and
amounts paid in settlement) actually and reasonably incurred by it in connection
with such action, suit or proceeding.
(b) Each Indemnifying Person agrees that no Indemnifying Person will,
without the prior written consent of the Indemnified Person, settle, compromise
or consent to the entry of any judgment in any pending or threatened action in
respect of which indemnification
-44-
51
may be sought under this Agreement unless such settlement includes an
unconditional release of the Indemnified Person from all liability arising
therefrom. Any Indemnifying Person shall have no indemnification obligations
with respect to any such claim or demand which has been settled by an
Indemnified Person without the prior written consent of such Indemnifying
Person, which consent will not be unreasonably withheld or delayed.
8.4 Failure To Pay Capital Contributions. The parties hereto agree that
prompt payment of the installments of required capital contributions hereunder
is of the essence and that failure of any Partner to make such payments as
provided herein will cause substantial injury to the Partnership and the other
Partners; further, the amount of damages caused by such injury will be difficult
to calculate. Accordingly, the parties hereto agree that in the event that any
Limited Partner fails to pay any installment of its required capital
contribution to the Partnership promptly when due, the General Partner shall
give such defaulting Limited Partner written notice thereof, and if such
defaulting Limited Partner shall fail to make such required payment in full
within fifteen (15) days following the mailing of such notice or such other
longer period as the General Partner may elect, the General Partner may elect,
in its sole discretion, either of the following alternatives:
(a) to commence legal proceedings against such defaulting Limited
Partner to collect the due and unpaid payment, plus interest from the date due
at the reference rate as announced from time to time by Bank of America NT&SA,
plus two (2) percentage points, plus the expenses of collection, including
attorneys' fees; or
(b) to rescind and terminate all of the defaulting Limited Partner's
interest in the Partnership. In such event, the defaulting Limited Partner will
receive, upon termination of the Partnership, the lesser of (1) its paid-in
capital or (2) seventy-five percent (75%) of its Capital Account at the time of
default (reduced by what its Partnership Interest in subsequent deductions and
losses would have been had it remained a Partner in the Partnership) and in such
event the remaining amount that would have been distributed to such Limited
Partners shall be available for distribution to the remaining Partners in
accordance with Article 3.
Notwithstanding the foregoing, without the consent of the Limited
Partner having the largest interest as a Limited Partner (other than with
respect to a default by such Limited Partner) or if the defaulting Limited
Partner has not then paid to the Partnership at least one-third of its
commitment of equity to the Partnership as in effect on the date hereof, the
General Partner shall not have the option to pursue remedies against the
defaulting Limited Partner under the terms of clause 8.3(b) above, but instead
may only pursue remedies against such Limited Partner pursuant to clause 8.3(a)
above or as otherwise provided herein, at law or in equity.
The foregoing alternatives, to the extent available as provided above,
are in addition to and not in limitation of any other right or remedy of the
Partnership under this Agreement, at law or in equity. Losses attributable to a
defaulting Limited Partner pursuant to Section 3.1 shall be calculated as if
such installment had been paid when due.
-45-
52
8.5 Increase in Beneficial Owners. Notwithstanding any other provision
of this Agreement, no Limited Partner shall increase the number of its
beneficial owners if (a) at such time, such Limited Partner owns more than ten
percent (10%) of the Partnership Interests in the Partnership and has more than
ten percent (10%) of its assets invested in private investment companies which
are not registered under the Investment Company Act of 1940, as amended, because
such companies have less than one hundred (100) beneficial owners and do not
presently propose to make a public offering of their interests, or (b) such
Limited Partner was formed for the purpose of investing in a Partnership
Interest.
ARTICLE 9
Miscellaneous
9.1 Notices. All notices, approvals, consents and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be hand delivered (including by messenger or recognized commercial
delivery or courier service), sent by facsimile transmission or sent by
registered or certified mail, postage prepaid, addressed to the Partner intended
at the address set forth below its name on EXHIBIT 1 hereto or at such other
address as such Partner may designate by notice given to the other Partners in
the manner aforesaid and shall be deemed given and received on the date it is
delivered, in the case of delivery by hand or by facsimile (if sent on a
business day, or if not sent on a business day, the next business day
thereafter) or, in the case of delivery by mail, actual delivery as shown by the
addressee's return receipt. Rejection or other refusal to accept or inability to
deliver because of a change of address of which no notice was given shall be
deemed to be receipt of the notice.
9.2 Governing Law. This Agreement and this limited partnership continued
hereby shall be governed by and construed in accordance with the laws of the
State of California.
9.3 Amendments. This Agreement may be modified or amended only by an
instrument in writing signed by the General Partner and by seventy percent (70%)
in interest of the Limited Partners (or such other percentage as required by
Section 4.7(b)); provided that, in addition to any amendments otherwise
authorized herein, this Agreement may be amended from time to time by the
General Partner without the consent of any of the Limited Partners to (i) add to
the representations, duties or obligations of the General Partner or surrender
any right or power granted to the General Partner herein, (ii) add to the rights
or powers granted to the Limited Partners, (iii) clarify any inconsistency
between sections hereof and correct any printing, stenographic or clerical
errors or omissions; and (iv) to comply with legal or tax requirements provided
such compliance does not materially decrease the amount or timing of any
distributions, including distributions upon liquidation, or materially change
allocations of income or losses, that the Limited Partners would otherwise be
entitled to receive pursuant to this Agreement, provided however, that nothing
herein shall be construed to permit the General Partner to add to the rights or
powers of the Limited Partners if such addition could reasonably be expected to
cause the Limited Partners to have liability as general partners or to cause any
Limited Partner to be required to
-46-
53
consolidate the Partnership for financial reporting purposes, and provided that
the General Partner shall not relinquish any rights or powers if such
relinquishment could reasonably be expected to prevent it from performing its
duties and obligations hereunder or to cause any Limited Partner to be required
to consolidate the Partnership for financial purposes.
9.4 Entire Agreement. This instrument together with the Subscription
Agreements of the Partners constitute the entire agreement between the Partners
with respect to the Partnership and supersede all prior agreements,
understandings, offers and negotiations, oral or written.
9.5 Waiver of Partition. Each Partner hereby irrevocably waives any and
all rights that it may have to maintain an action for partition of the
Partnership or any of the Partnership's property.
9.6 Consents. All consents, agreements and approvals required or
permitted by this Agreement shall be in writing and a signed copy thereof shall
be filed and kept with the books of the Partnership.
9.7 Successors. Subject to Article 8, all rights and duties of the
Partners hereunder shall inure to the benefit of and be binding upon their
respective successors and assigns.
9.8 Confidentiality of Investors. Neither the General Partner nor the
Partnership shall disclose to any person or entity (other than to another
Partner or potential partner or to lenders or potential lenders to the
Partnership) the fact that a Limited Partner is an investor in the Partnership
except to the extent (a) required by law or legal process upon prior written
notice to such Limited Partner or (b) authorized by any such Limited Partner in
writing.
9.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
9.10 Severability. Each provision of this Agreement shall be considered
severable and if for any reason any provision which is not essential to the
effectuation of the basic purposes of the Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable and contrary to the Act or
existing or future applicable law, such invalidity shall not impair the
operation of or affect those provisions of this Agreement which are valid. In
that case, this Agreement shall be construed so as to limit any term or
provision so as to make it enforceable or valid within the requirements of any
applicable law, and in the event such term or provision cannot be so limited,
this Agreement shall be construed to omit such invalid or unenforceable
provisions.
9.11 Affiliate. For purposes of this Agreement, an affiliate of any
person shall mean any other person that (i) directly or indirectly through one
or more intermediaries controls, is controlled by, or is under common control
with, the specified person; (ii) is a director or officer of, partner in, member
of, or trustee of, or serves in a similar capacity
-47-
54
with respect to, the specified person or of which the specified person is a
director, officer, partner, or trustee, or with respect to which the specified
person serves in a similar capacity; (iii) directly or indirectly through one or
more intermediaries is the beneficial owner of ten percent (10%) or more of any
class of equity securities of the specified person or of which the specified
person is directly or indirectly through one or more intermediaries the owner of
ten percent (10%) or more of any class of equity securities; (iv) directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, a person described in clause (iii), (v) is acting at
the direction and primarily in furtherance of the interests of the specified
person or (vi) is an immediate family member of the specified person.
Notwithstanding the foregoing, for purposes of Sections 4.7(d), 4.8, 4.9, 6.1
and 6.2 of this Agreement in no event shall any person that is under the direct
or indirect control of Xxxxxx X. Xxxxx be deemed to be an affiliate of
Tele-Communications, Inc. or its related entities and for purposes of Sections
4.7(d), 4.8 and 6.1, IP-I shall not be deemed to be an affiliate of the General
Partner, the Partnership, ICM-IV, IP-IV or any Investing Partnership.
9.12 Power of Attorney. Each Limited Partner, including any additional
or substituted Limited Partner, hereby irrevocably constitutes and appoints the
General Partner, and each member of the General Partner, and each of them acting
singly, its true and lawful agent and attorney-in-fact, with full power and
authority of substitution, to make, amend, execute, acknowledge, swear to,
deliver, file and record for and on behalf of such Limited Partner, such
documents and instruments as may be reasonably necessary to carry out the
provisions of, and which is permitted by, this Agreement, including a
Certificate of Limited Partnership and any amendments thereto required by law,
any amendments to this Agreement by reason of admissions, substitutions or
withdrawals of Limited Partners or any amendments to give effect to the voting
of the Partners and any amendments permitted by Section 9.3 without the consent
of the Limited Partners.
The foregoing power of attorney, being coupled with an interest, is
hereby declared to be irrevocable, and shall survive the death, dissolution or
incapacity of any Limited Partner.
9.13 Nonrecourse. Neither the Partnership nor the Partners shall have
recourse to any member, partner, officer, director or shareholder of any Partner
or to the assets of any member, partner, officer, director or shareholder of any
Partner with respect to the obligations and liabilities of such Partner under
this Agreement, except that this Section 9.13 shall not limit or impair the
exercise or enforcement of rights and remedies in respect of any agreement to
which such person is a party in accordance with the terms and provisions of such
agreement.
-48-
55
9.14 Foreign Person. Should any Partner be subject to withholding
pursuant to the Code or any applicable state, local or foreign law, the
Partnership may withhold all amounts otherwise distributable to such Partner or
otherwise under this Agreement or such other amount as may be required by law
and any amounts so withheld shall be deemed to have been distributed to the
Partner under this Agreement. If any sums are withheld pursuant to this
provision, the Partnership shall remit the sums so withheld to and file the
required forms with the Internal Revenue Service or other applicable government
agency and, in the event of any claimed over-withholding, the Partner shall be
limited to an action against the Internal Revenue Service or other applicable
government agency for refund and hereby waives any claim or right of action
against the Partnership on account of such withholding. Moreover, if the amounts
required to be withheld exceed the amounts which would otherwise have been
distributed to such Partner, such Partner shall contribute any deficiency to the
Partnership within five (5) days after receipt of notice from the General
Partner.
-49-
56
IN WITNESS WHEREOF, the General Partner has executed this Amended and
Restated Agreement of Limited Partnership on behalf of the Partners as
attorney-in-fact as of the date first hereinabove written.
GENERAL PARTNER
INTERMEDIA CAPITAL MANAGEMENT, LLC
By InterMedia Management, Inc.,
---------------------------------
Its managing member
By /s/ XXXXXX X. XXXXX
---------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive
Officer
PREFERRED LIMITED PARTNER
GENERAL ELECTRIC CAPITAL CORPORATION
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
JUNIOR PREFERRED LIMITED PARTNER
TCI OF PIEDMONT, INC.
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
-50-
57
LIMITED PARTNERS
PACIFIC CENTURY FINANCIAL
CORPORATION fka Bancorp Hawaii, Inc.
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
THE BANK OF NEW YORK COMPANY, INC.
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
CABLE PARTNERS, an Illinois general
partnership
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
-51-
58
THE CHASE MANHATTAN BANK, solely in
its capacity AS TRUSTEE FOR THIRD
PLAZA TRUST (as directed by General
Motors Investment Management
Corporation), and not in its
individual capacity
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
THE CHASE MANHATTAN BANK, solely in
its capacity AS TRUSTEE FOR THIRD
PLAZA TRUST (as directed by General
Motors Investment Management
Corporation), and not in its
individual capacity
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
XXXXXXX X. XXXXXXX TRUST U/A DATED
8/29/84, AS AMENDED
By /s/ XXXXXXX X. XXXXXXX
---------------------------------
Name Xxxxxxx X. Xxxxxxx
-------------------------------
Title Trustee
------------------------------
-52-
59
INDOSUEZ IMC PARTNERS
By Indosuez XX XX, Inc.,
Its Managing General Partner
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
***
------------------------------------
THIERRY DEVERGNES
INTER CABLE INVESTORS, a California
limited partnership
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
INTERMEDIA CAPITAL MANAGEMENT IV,
L.P.
By InterMedia Management, Inc.,
Its General Partner
By /s/ XXXXXX X. XXXXX
---------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
-53-
60
ICM-IV CAPITAL PARTNERS, LLC
By Intermedia Management, Inc., its
managing member
By /s/ XXXXXX X. XXXXX
---------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
INTERMEDIA PARTNERS, a California
limited partnership
By InterMedia
Capital Management, LLC,
Its General Partner
By InterMedia Management, Inc.,
Its managing member
By /s/ XXXXXX X. XXXXX
---------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
IP HOLDINGS L.P.,
By Centre Partners, L.P.,
Its General Partner
By Park Road Corporation,
Its General Partner
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
-54-
61
CENTRE CAPITAL INVESTORS II, L.P.
and
CENTRE CAPITAL TAX-EXEMPT INVESTORS
II, L.P.
By Centre Partners II, L.P., as
general partner of such partnerships
By Centre Partners Management LLC,
attorney-in fact
By ***
---------------------------------
Xxxxx X. Xxxxxxx
Managing Director
CENTRE PARTNERS COINVESTMENT, L.P.
CENTRE PARALLEL MANAGEMENT
PARTNERS, L.P.
By Centre Partners II, LLC, a
general partner
By ***
---------------------------------
Xxxxx X. Xxxxxxx
Managing Director
SBA CABLE CORP.
By ***
---------------------------------
Xxxxx X. Xxxxxxx
Treasurer
OVERSEAS CABLE CORP.
By ***
---------------------------------
Xxxxx X. Xxxxxxx
Xxxxxxxxx
-00-
00
XXX LIMITED PARTNERSHIP
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
NATIONSBANC INVESTMENT CORP.
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
ROYAL BANK OF CANADA
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
SUMITOMO CORPORATION
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
SCOA CAPITAL L.L.C.
By Sumitomo Corporation of America
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
-56-
63
TCI OF GREENVILLE, INC.
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
TCI OF SPARTANBURG, INC.
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
TORONTO DOMINION INVESTMENTS, INC.
By ***
---------------------------------
Name
-------------------------------
Title
------------------------------
WLD TRUST
By /s/ XXXXXXX X. XXXXXXX
---------------------------------
Name Xxxxxxx X. Xxxxxxx
-------------------------------
Title Trustee
------------------------------
INTERMEDIA CAPITAL MANAGEMENT, LLC,
a Delaware limited liability company, as
attorney-in-fact for each Limited Partner
marked with ***
By InterMedia Management, Inc.,
Its managing member
/s/ XXXXXX X. XXXXX
----------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
-57-
64
Exhibit 1
Aggregate
Names and Addresses Committed Capital Admission
of Partners Contribution Date
----------- ------------ ----
General Partner
INTERMEDIA CAPITAL MANAGEMENT, LLC $ 3,600(1)
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx,
Member
Limited Partners
PACIFIC CENTURY FINANCIAL CORPORATION fka 2,124,902(1)
Bancorp Hawaii, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
THE BANK OF NEW YORK COMPANY, INC. 1,699,921(1)
Xxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxxx III
CABLE PARTNERS 2,124,902(1)
c/o JMB Real Estate Investment Group
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxx
GENERAL ELECTRIC CAPITAL CORPORATION 13,000,000(2)
0000 Xxxxxxxxx Xxxx, X.X., Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
THE CHASE MANHATTAN BANK, AS TRUSTEE FOR 10,624,507(1)
THIRD PLAZA TRUST
THE CHASE MANHATTAN BANK, AS TRUSTEE FOR 10,624,508(1)
FOURTH PLAZA TRUST
c/o General Motors Investment Management
Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: S. Xxxxxxxx Xxxxxx
-1-
65
Aggregate
Names and Addresses Committed Capital Admission
of Partners Contribution Date
----------- ------------ ----
XXXXXXX X. XXXXXXX TRUST 727,2508,10
u/a Dated 8/29/84, as amended
c/o Xxxxxxx X. Xxxxxxx
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000
INDOSUEZ IMC PARTNERS 4,970,000
THIERRY DEVERGNES 30,000
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx
INTER CABLE INVESTORS 674,9801
c/o Transcontinental Capital Partners
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxxx
INTERMEDIA CAPITAL MANAGEMENT IV, L.P. 3,760,343
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
ICM-IV CAPITAL PARTNERS, LLC 4,800,000
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
INTERMEDIA PARTNERS, A 12,000,0002
CALIFORNIA LIMITED PARTNERSHIP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
IP HOLDINGS L.P. 8,500,000(1,3)
CENTRE CAPITAL INVESTORS II, L.P. 5,974,320(1,3)
CENTRE PARTNERS COINVESTMENT, L.P.
CENTRE PARALLEL MANAGEMENT PARTNERS, L.P. 862,503(1,3)
OVERSEAS CABLE CORP.
CENTRE CAPITAL TAX-EXEMPT INVESTORS II, L.P. 78,115(1,3)
SBA CABLE CORP. 1,183,813(1,3)
(each of IP Holdings L.P. through SBA Cable
Corp., collectively, the "IP Holdings Affiliates") 667,882(1,3)
c/o Centre Partners Management L.L.C. 7,733,367(1,3)
00 Xxxxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
-2-
66
Aggregate
Names and Addresses Committed Capital Admission
of Partners Contribution Date
----------- ------------ ----
LJR LIMITED PARTNERSHIP 8,549,882(1,8)
c/o Moreland Management Company
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxx
NATIONSBANC INVESTMENT CORP. 30,000,000
NationsBank Corporate Center
7th Floor
000 Xxxxx Xxxxx Xxxxxx
XX0-000-00-00
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx III
ROYAL BANK OF CANADA 5,000,000
Financial Square
00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxx Xxxxx
SUMITOMO CORPORATION 19,178,747(1)
Sumitomo Kanda Building
0-0-0, Xxxxxxxxxxxx, Xxxxxxx-xx
Xxxxx, 000 Xxxxx
Attn: Tsuguhito Aoki
SCOA CAPITAL L.L.C. 4,358,806(1,7)
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
TCI OF GREENVILLE, INC. 101,773,000(1,4,5)
c/o Tele-Communications, Inc.
0000 XXX Xxxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxx
TCI OF SPARTANBURG, INC. 39,520,500(1,4,5)
c/o Tele-Communications, Inc.
0000 XXX Xxxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxx
TORONTO DOMINION INVESTMENTS, INC. 10,000,000
c/o The Toronto-Dominion Bank
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxx X. Xxxx
-3-
67
Aggregate
Names and Addresses Committed Capital Admission
of Partners Contribution Date
----------- ------------ ----
WLD TRUST 6,397,652(1,8,9)
c/o WLD Enterprises, Inc.
Xxxxxxx Bank Building
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxx
Subtotal: $316,943,500
============
Preferred Limited Partner
GENERAL ELECTRIC CAPITAL CORPORATION 25,000,000(2)
0000 Xxxxxxxxx Xxxx, X.X., Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Subtotal: $341,943,500
============
Junior Preferred Limited Partner
TCI OF PIEDMONT, INC. 26,457,628(1,4,5,6)
c/o Tele-Communications, Inc.
0000 XXX Xxxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxx
Total Capital Contributions: 368,401,128
1 Includes all of such investors' interest in IP-IV which was contributed;
provided, however, that the General Partner retained a .01% interest in IP-IV as
the managing general partner thereof.
2 Paid pursuant to the terms of that certain Contribution Agreement dated as of
April 30, 1996 (as amended, the "IPWT Contribution Agreement") among the
Partnership, InterMedia Partners, a California limited partnership ("IP") and
GECC pursuant to which (i) IP and GECC agreed to contribute partnership
interests in InterMedia Partners of West Tennessee, L.P., a California limited
partnership ("IPWT"), and (ii) GECC agreed to transfer a debt obligation of IPWT
to the Partnership. GECC was credited with a $13,000,000 initial contribution as
a Limited Partner and a $25,000,000 initial contribution as the Preferred
Limited Partner, and IP-I was credited with a $12,000,000 initial contribution
as a Limited Partner. The limited partnership interests of IP and GECC were
subject to adjustment, up or down, pursuant to the terms of the IPWT
Contribution Agreement for working capital adjustments upon closing. The
preferred limited partnership interest was subject to reduction to the extent
GECC was liable under the indemnification provisions of the IPWT Contribution
Agreement.
3 Initial contribution were $8,500,000 by IP Holdings L.P., and the aggregate
Capital Contribution by IP Holdings L.P. or one or more affiliates or successor
funds of Centre Partners and its affiliates became
-4-
68
$25,000,000 upon the acquisition by the Partnership of the assets of Viacom
Cable in Nashville, Tennessee. If the increased commitment of sixteen million
five hundred thousand dollars ($16,500,000) was contributed more than five (5)
business days from the initial capital contribution of eight million five
hundred thousand dollars ($8,500,000), then eight million two hundred and
fifteen thousand dollars ($8,215,000) of such increased commitment would bear
interest payable to the Partnership pro rata by the IP Holdings L.P. affiliates
making such contributions at a rate of eight percent (8%) per annum from the
date capital was originally contributed to the Partnership until such additional
amount was contributed to the Partnership. IP Holdings L.P. agreed that the
Partnership may call its existing commitment of eight million five hundred
thousand dollars ($8,500,000) in full upon the first capital call made by the
Partnership.
4. Paid to the Partnership as assignee pursuant to the terms of that certain
Contribution Agreement dated as of March 4, 1996 (as amended, the
"Greenville/Spartanburg Contribution Agreement"), among TCI of Greenville, Inc.
and TCI of Spartanburg Inc. (together, the "TCI Entities"), IP-IV and TCI of
Piedmont, Inc. pursuant to which the TCI Entities and TCI of Piedmont, Inc.
agreed to contribute certain cable television systems in and around the areas of
Greenville, Piedmont and Spartanburg, South Carolina (the "Systems"), subject to
the right to substitute alternate systems with the consent of the General
Partner in the event the necessary regulatory approvals for the contribution of
the Systems had not been obtained.
5. As set forth in the Greenville/Spartanburg Contribution Agreement, in no
event shall the TCI Entities contribute more than forty-five percent (45%) of
the total Capital Contributions to the Partnership (excluding the Capital
Contributions of the Preferred Limited Partner with respect to the preferred
limited partnership interest and the Capital Contributions of the Junior
Preferred Limited Partner with respect to the junior preferred limited
partnership interest).
6. The Junior Preferred Limited Partner's original capital contribution of
eighteen million fifty-six thousand five hundred dollars ($18,056,500) revalued
as of March 31, 1998.
7. Interest transferred to SCOA Capital, L.L.C. by Sumitomo Corporation of
America pursuant to that certain Assignment, Acceptance and Consent, entered
into and made effective as of April 7, 1998.
8. Includes, with respect to (a) the Xxxxxxx X. Xxxxxxx Trust u/a Dated 8/29/84,
as amended (formerly Xxxxxxx X. Xxxxxxx, individually), $227,250; (b) LJR
Limited Partnership, $2,500,000; and (c) the WLD Trust (formerly WLD Xxxxxx
Partners), $2,272,750, such interests transferred by RMS Limited Partnership
pursuant to that certain Assignment, Acceptance and Consent, entered into and
made effective as of April 30, 1998.
9. Interest transferred to the WLD Trust by WLD Xxxxxx Partners pursuant to that
certain Assignment, Acceptance and Consent, made effective as of July 1, 1998.
10. Interest transferred to the Xxxxxxx X. Xxxxxxx Trust u/a dated 8/29/84, as
amended, by Xxxxxxx X. Xxxxxxx, individually, pursuant to that certain
Assignment, Acceptance and Consent, made effective as of September 1, 1998.
-5-
69
Exhibit 2
Approved Investments
(i) Acquisition of the assets of Viacom Cable in Nashville, TN
(ii) Acquisition of the assets of Time Warner Cable in Kingsport, TN
(iii) Acquisition of the assets of Par Cable, Inc. in Hendersonville, Waverley
and Monterey, TN and Ft. Xxxxxxxx, KY
(iv) Acquisition of the assets of Annox, Inc., in Xxxxxxx County et al., TN
(v) Acquisition of the assets of Xxxxxxxx Realty ("The Cablevision Company")
in Davidson and Xxxxxxxxxx Counties, TN
(vi) Acquisition of the assets of Tellico Cable, Inc. in Monroe County, TN
(vii) Acquisition of the assets of Mid-South Cable TV, Inc. in Cumberland,
Xxxxxxxxxx and Xxxxxxxxxx Counties, TN
(viii) Acquisition of the assets of Prime Cable Partners, Inc. in Xxxxxxx
County, TN
(ix) Acquisition of the assets of Xxxxx Media Group, Inc. ("RMG") (Nashville,
TN; Knoxville, TN; Gainesville, GA). RMG is an affiliate of the General
Partner and will be represented by the same counsel as counsel to the
Partnership.(1)
(x) Acquisition of the assets of InterMedia Partners of West Tennessee, L.P.
("IPWT") Dickson, McKenzie, Union City, Savannah, Louisburg, TN). IPWT
is an affiliate of the General Partner and will be represented by the
same counsel as counsel to the Partnership.(2)
(xi) Contribution of the assets of Greenville, Spartanburg and Piedmont,
South Carolina by TCI of Greenville, Inc., TCI of Piedmont, Inc. and TCI
of Spartanburg, Inc.(3)
Approved Sales
(xii) Sale of RMG's 14.99% limited partnership interest in AVR of Tennessee,
L.P., a California limited partnership ("AVR"). One one-hundredth of one
percent (.01%) of RMG's interest will be retained.
(xiii) The sale by InterMedia Partners Southeast ("IPSE") of a 55.01% general
partnership interest in AVR upon the acquisition of the Viacom assets.
IPSE will retain a 4.99% interest.
--------
1 Pursuant to the terms of that certain Stock Purchase Agreement between
InterMedia Capital Management V, L.P. and IP-IV.
2 Pursuant to the terms of the IPWT Contribution Agreement.
3 Pursuant to the terms of the Greenville/Spartanburg Contribution
Agreement.
-1-
