EXHIBIT 10.115
AGREEMENT OF LIMITED PARTNERSHIP OF
CENTURY-TCI CALIFORNIA COMMUNICATIONS, L.P., DATED AS
OF DECEMBER 7, 1999
-iv-
AGREEMENT OF LIMITED PARTNERSHIP OF
CENTURY-TCI CALIFORNIA COMMUNICATIONS, L.P., DATED AS
OF DECEMBER 7, 1999
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS.............................................................................................1
1.1 Terms Defined in This Section...................................................................1
1.2 Terms Defined Elsewhere in This Agreement......................................................11
1.3 Terms Generally................................................................................13
ARTICLE 2 FORMATION AND PURPOSE..................................................................................13
2.1 Formation......................................................................................13
2.2 Name...........................................................................................13
2.3 Principal and Registered Office................................................................14
2.4 Term...........................................................................................14
2.5 Purposes of Partnership........................................................................14
2.6 Authority of Partnership.......................................................................15
2.7 Certificate....................................................................................16
2.8 Addresses of the Partners......................................................................16
2.9 Foreign Qualification..........................................................................16
2.10 Tax Classification.............................................................................16
ARTICLE 3 PARTNERSHIP CAPITAL....................................................................................16
3.1 Contributions..................................................................................16
3.2 Additional Capital Contributions...............................................................18
3.3 Other Contributions............................................................................21
3.4 Return of Contributions........................................................................22
3.5 Financing......................................................................................22
ARTICLE 4 DISTRIBUTIONS; ALLOCATIONS OF PROFIT AND LOSS..........................................................22
4.1 Distributions..................................................................................22
4.2 Allocations of Net Profit and Net Loss.........................................................24
4.3 Special Provisions Regarding Allocations of Profit and Loss....................................24
4.4 Tax Allocations: Code Section 704(c)..........................................................27
4.5 Allocation in Event of Transfer................................................................27
4.6 Alternative Allocations........................................................................28
ARTICLE 5 MANAGEMENT.............................................................................................28
5.1 Authority of Managing Partner..................................................................28
5.2 Advisory Committee.............................................................................34
5.3 No Management by Limited Partner...............................................................35
5.4 Operating and Capital Expenditure Budgets......................................................35
5.5 No Personal Liability..........................................................................36
5.6 Management Agreement...........................................................................36
5.7 Tax Matters Partner............................................................................36
5.8 Consolidation..................................................................................38
5.9 Management of Subsidiaries.....................................................................38
ARTICLE 6 STATUS OF LIMITED PARTNERS.............................................................................38
6.1 Limited Liability..............................................................................38
6.2 Return of Distributions of Capital.............................................................39
6.3 Specific Limitations...........................................................................39
6.4 Issuance of Partnership Interests..............................................................39
ARTICLE 7 WITHDRAWAL OF GENERAL PARTNER..........................................................................40
7.1 Withdrawal.....................................................................................40
7.2 Removal of Century as Managing Partner.........................................................41
7.3 Effect of Withdrawal or Removal of Managing Partner............................................42
7.4 No Dissolution.................................................................................42
ARTICLE 8 ASSIGNMENT OF PARTNERSHIP INTERESTS....................................................................42
8.1 Assignments by Century.........................................................................42
8.2 Assignments by Other Partners..................................................................42
8.3 Exceptions.....................................................................................43
8.4 Assignee.......................................................................................43
8.5 Other Consents and Requirements................................................................44
8.6 Assignment Not in Compliance...................................................................44
8.7 Division of Partnership Interests..............................................................44
8.8 Substitute Partners............................................................................44
8.9 Consent........................................................................................45
8.10 Covenants of Parents...........................................................................45
8.11 Impact of Code Section 708.....................................................................46
ARTICLE 9 RIGHT OF FIRST OFFER...................................................................................48
9.1 Proposed Sale and Negotiations With TCI........................................................48
9.2 Sale to Third Party; Re-Offer to TCI...........................................................48
9.3 Seller's Election Not to Sell..................................................................49
ARTICLE 10 OTHER BUSINESSES AND INVESTMENT OPPORTUNITIES.........................................................50
10.1 Prohibited Cross-Interests.....................................................................50
10.2 Wireline All Distance Communications Services..................................................52
10.3 No Other Restrictions..........................................................................53
ARTICLE 11 DISSOLUTION AND LIQUIDATION OF PARTNERSHIP............................................................54
11.1 Events of Dissolution..........................................................................54
11.2 Liquidation....................................................................................54
11.3 Distribution in Kind...........................................................................56
11.4 No Action for Dissolution......................................................................56
11.5 No Further Claim...............................................................................56
ARTICLE 12 INDEMNIFICATION.......................................................................................56
12.1 General........................................................................................56
12.2 Exculpation....................................................................................57
12.3 Persons Entitled to Indemnity..................................................................57
ARTICLE 13 BOOKS, RECORDS, ACCOUNTING, AND REPORTS...............................................................58
13.1 Books and Records..............................................................................58
13.2 Delivery to Partner and Inspection.............................................................58
13.3 Annual Statements..............................................................................59
13.4 Quarterly Financial Statements.................................................................60
13.5 Monthly Statements.............................................................................60
13.6 Other Information..............................................................................61
13.7 Tax Matters....................................................................................61
13.8 Other Filings..................................................................................61
13.9 Non-Disclosure.................................................................................61
ARTICLE 14 REPRESENTATIONS BY TCI................................................................................62
14.1 Investment Intent..............................................................................62
14.2 Securities Regulation..........................................................................63
14.3 Knowledge and Experience.......................................................................63
14.4 Economic Risk..................................................................................63
14.5 Binding Agreement..............................................................................63
14.6 Tax Position...................................................................................63
14.7 Information....................................................................................64
ARTICLE 15 AMENDMENTS AND WAIVERS................................................................................64
15.1 Amendments to Partnership Agreement............................................................64
15.2 Waivers........................................................................................64
ARTICLE 16 MISCELLANEOUS.........................................................................................65
16.1 Additional Documents...........................................................................65
16.2 Inspection.....................................................................................65
16.3 General........................................................................................65
16.4 Notices, Etc...................................................................................65
16.5 Execution of Papers............................................................................65
16.6 Disputed Matters...............................................................................66
16.7 No Third-Party Beneficiaries...................................................................66
16.8 @Home Matters..................................................................................66
16.9 Programming Matters............................................................................68
TABLE OF SCHEDULES AND EXHIBIT
Schedule Description
Schedule I Addresses of the Partners
Schedule II Advisory Committee Members
Schedule III Five-year Operating Plan
Schedule IV Programming Services
Schedule V Certain Agreements
Exhibit Description
Exhibit A Form of Management Agreement
AGREEMENT OF LIMITED PARTNERSHIP
OF
CENTURY-TCI CALIFORNIA COMMUNICATIONS, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP is made and entered into as of
December 7, 1999, by and among Century Exchange LLC, a Delaware limited
liability company, as a general partner, and TCI California Holdings, LLC, a
Colorado limited liability company, as a limited partner.
PRELIMINARY STATEMENT
TCI and Century own interests in the Century-TCI California, L.P., a
Delaware limited partnership ("Century-TCI California").
Concurrently with the execution and delivery of this Agreement, the
Partners agreed to contribute 99% of their interests in Century-TCI California
to the Partnership. Immediately thereafter, the Partnership will contribute a 1%
limited partner interest in Century-TCI California to Century-TCI Holdings, LLC.
Upon completion of this contribution, the Partners will contribute their
remaining 1% interest in Century-TCI California to the Partnership. Ultimately,
the Partnership will hold a 99% general partner interest in Century-TCI
California on the date hereof.
The parties to this Agreement desire to enter into this Agreement to
provide for the formation of the Partnership, the allocation of profits and
losses, cash flow, and other proceeds of the Partnership between the Partners,
the respective rights, obligations, and interests of the Partners to each other
and to the Partnership, and certain other matters.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1.........
DEFINITIONS
1.1 Terms Defined in This Section.
-----------------------------
For purposes of this Agreement, the following terms shall have the
following meanings (all terms used in this Agreement that are not defined in
this Section 1.1 shall have the meanings set forth elsewhere in this Agreement
as indicated in Section 1.2, except as otherwise provided in this Agreement):
"Act" means the Delaware Revised Uniform Limited Partnership Act.
"Adelphia" means Adelphia Communications Corporation, a Delaware
corporation, and any successor (by merger, consolidation, sale of assets, or
other similar transaction) to all or substantially all of its business and
assets.
"Adjusted Capital Account Deficit" means, with respect to either
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Fiscal Year, after:
(a)......crediting to such Capital Account any amounts that
such Partner is obligated to restore to the Partnership pursuant to Treasury
Regulations Section 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore
pursuant to the penultimate sentences of Treasury Regulations Sections
1.704-2(g)(1)and 1.704-2(i)(5); and
(b)......debiting from such Capital Account the items
described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Treasury Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Advisory Committee" means the Advisory Committee established by
Section 5.2.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by, or under common control with such Person. For
purposes of this definition, the term "control" means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of equity interests, by
contract, or otherwise, and the terms "controlled by" and "under common control
with" have meanings corresponding to the meaning of "control." Notwithstanding
the foregoing, neither the Partnership nor any Person controlled by the
Partnership shall be deemed to be an Affiliate of either Partner or of any
Affiliate of either Partner, or vice versa, solely as a result of such Partner's
Partnership Interest.
"Agreement" means this Agreement of Limited Partnership, as it may be
amended from time to time.
"Assignee" means a Person that has acquired a direct beneficial
interest in a Partnership Interest in accordance with the provisions of Article
8 but has not become a substitute Partner in accordance with the provisions of
Section 8.8.
"Business Day" means any day (other than a Saturday or a Sunday) on
which banks are permitted to be open for business in the State of New York.
"Capital Account" means a separate account to be maintained for each
Partner in accordance with the Code, which, subject to any contrary requirements
of the Code, shall equal such Partner's initial Capital Account balance as
provided in Section 3.1(b), increased by: (a) the amount of money contributed by
such Partner to the Partnership, if any; (b) the fair-market value without
regard to Code Section 7701(g) of property, if any, contributed by such Partner
to the Partnership (net of liabilities that are secured by such contributed
property or that the Partnership or any other Partner is considered to assume or
take subject to under Code Section 752); (c) allocations to the Partner of Net
Profit and items of income and gain pursuant to Article 4; and (d) other
additions made in accordance with the Code; and decreased by: (a) the amount of
cash distributed to such Partner by the Partnership; (b) allocations to the
Partner of Net Loss and items of loss and deduction pursuant to Article 4; (c)
the fair-market value without regard to Code Section 7701(g) of property
distributed to such Partner by the Partnership (net of liabilities that are
secured by such distributed property or that such Partner is considered to
assume or take subject to under Code Section 752); and (d) other deductions made
in accordance with the Code. The foregoing provisions and the other provisions
of this Agreement relating to the maintenance of Capital Accounts are intended
to comply with Treasury Regulations under Code Section 704(b) and, to the extent
not inconsistent with the provisions of this Agreement, shall be interpreted and
applied in a manner consistent with such Treasury Regulations.
"Capital Contributions" means, with respect to either Partner, the
amount of money and the net fair-market value of property contributed by such
Partner to the Partnership pursuant to this Agreement.
"Capital Lease" means a lease which shall have been, or should be, in
accordance with generally accepted accounting principles, recorded as a capital
lease.
"Century" means Century Exchange LLC, a Delaware limited liability
company, or any other Person that succeeds to its Partnership Interest and is
admitted as a Partner in accordance with the provisions of this Agreement.
"Century Appraiser" means an appraiser designated by Century pursuant
to Section 3.2(f)(2).
"Century/Texas" means Century Communications Corp., a Texas
corporation, and any successor (by merger, consolidation, sale of assets, or
other similar transaction) to all or substantially all of its cable television
business and assets.
"Certificate" means the certificate of limited partnership to be filed
with respect to the Partnership pursuant to the Act.
"Closing" means the consummation of the contribution of assets to
Century-TCI California in accordance with Section 9 of the Contribution
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any subsequent federal law of similar import, and, to the extent
applicable, the Treasury Regulations.
"Consolidated" refers to the consolidation of accounts of the
Partnership with the accounts of its Subsidiaries, all in accordance with
generally accepted accounting principles, including principles of consolidation.
"Contribution Agreement" means the Contribution Agreement, dated as of
November 18, 1998, among Century-TCI California, Century, TCI, and the other
parties named therein, as it may be amended from time to time in accordance with
its terms.
"Commercial Paper" means one or more unsecured instruments of
indebtedness issued from time to time having a maturity of 270 days or less and
denominated in U.S. Dollars (including, without limitation, euronotes,
eurobonds, domestic notes, domestic bonds, and other types of commercial paper).
"Controlled Affiliate" means, with respect to any Person, such Person's
Parent and any other Person that, at such time, is either (a) controlled
directly or indirectly by such Person's Parent and of which such Person's Parent
owns, directly or indirectly, at least fifty percent of the outstanding equity
interests or (b) controlled directly or indirectly by such Person.
Notwithstanding the foregoing, neither Centennial Cellular Corp., Citizens
Utilities Company, nor any Person controlled, directly or indirectly, by
Centennial Cellular Corp. or Citizens Utilities Company shall be deemed to be a
Controlled Affiliate of Century.
"Depreciation" means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such Fiscal Year, Depreciation shall be determined in the
manner described in Treasury Regulations Section 1.704-1(b)(2)(iv)(g)(3) or
Treasury Regulations Section 1.704-3(d)(2), as applicable.
"EBIDT" means, for any period, the sum of the Consolidated net income
or loss for such period, excluding gains or losses from extraordinary items, of
the Partnership and its Subsidiaries plus the sum of interest expense,
depreciation and amortization expense and provision for income taxes to the
extent deducted in computing such net income or loss (but excluding from the
calculation of such Consolidated net income or loss, (i) that percentage of the
accounts of each Minority Entity equal to the percentage ownership interest of
such Minority Entity which is not owned by the Partnership or any Subsidiary and
(ii) interest income and interest expense in respect of any advance made by the
Partnership to any Subsidiary, by any Subsidiary to the Partnership, or by any
Subsidiary to any other Subsidiary).
..................(i)......If the Partnership or any Subsidiary has made an
acquisition during any Fiscal Period for which EBIDT is to be computed, then
EBIDT shall be computed as if such system had been owned by the Partnership or
such Subsidiary throughout such Fiscal Period. Each computation of EBIDT for
such system shall be based on the following financial statements to the extent
available on the date on which the computation is made:
(a) The most recent Qualified annual statements of operations and cash
flows for such system, or
(b) If such annual statements are not available, the statements described
in (I) or (II) below, whichever is applicable, annualized for such Fiscal
Period,
..................(I) the most recent Qualified statements of
operations and cash flows for such system, if such statements cover at least
three consecutive months out of the twelve months preceding the date as of which
EBIDT is to be computed, or
..................(II) if none of the foregoing statements is
available, pro forma statements of the operations and cash flows of such system
for the then most recent Fiscal Period prepared by the Partnership so as to be
Qualified,
.........where the term "Qualified" means financial statements which
reflect the expenses and income of such system in a manner consistent with that
used in financial reports of the Partnership for systems it has then been
operating for at least one Fiscal Period.
..................(ii).....if the Partnership or any subsidiary has sold or
otherwise disposed of any cable television system during any Fiscal Quarter or
Fiscal Period for which EBIDT is to be computed, EBIDT shall be computed as if
such system had not been owned by the Partnership or such Subsidiary during any
part of such Fiscal Quarter or Fiscal Period, as the case may be.
"Equity Value" means, with respect to any Partnership Interest, for
purposes of any provision of this Agreement that refers to the Equity Value of
such Partnership Interest, the amount that would be distributed to the holder of
such Partnership Interest in liquidation of the Partnership, with respect to
such Partnership Interest, if the Partnership Value (determined in the manner
specified in such provision) were distributed to the Partners in liquidation in
accordance with Section 11.2(d), without reduction for liabilities pursuant to
Section 11.2(d)(1) or reserves pursuant to Section 11.2(d)(2) except as
specifically provided in this definition of "Partnership Value."
"FCC" means the Federal Communications Commission.
"Fiscal Period" means the period of four consecutive Fiscal Quarters
ended on the last day of March, June, September or December, as the case may be.
"Fiscal Quarter" means the period of three calendar months ending on
the last day of March, June, September or December, as the case may be.
"Fiscal Year" means the fiscal year of the Partnership as required
under Code Section 706.
"General Partner" means Century and any other Person admitted as a
general partner in accordance with the provisions of this Agreement.
"Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a)......The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross fair-market value
of such asset, as determined in accordance with Section 3.1(c)(1) or Section
3.1(d), as applicable;
(b)......The Gross Asset Values of all assets of the
Partnership shall be adjusted to equal their respective gross fair-market
values, as agreed to by the Partners as of the following times: (1) the
acquisition of an additional interest in the Partnership by any new or existing
Partner in exchange for more than a de minimis Capital Contribution; (2) the
distribution by the Partnership to a Partner of more than a de minimis amount of
property of the Partnership as consideration for an interest in the Partnership;
and (3) the liquidation of the Partnership within the meaning of Treasury
Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, that the
adjustments pursuant to clauses (1) and (2) above shall be made only if the
Partners agree that such adjustments are necessary or appropriate to reflect the
relative economic interests of the Partners in the Partnership;
(c)......The Gross Asset Value of any asset of the Partnership
distributed to either Partner shall be the gross fair-market value of such asset
on the date of distribution; and
(d)......The Gross Asset Value of the assets of the
Partnership shall be increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m) and Section 4.3(g); provided, however, that Gross Asset
Value shall not be adjusted pursuant to this paragraph (d) to the extent that
the Partners agree that an adjustment pursuant to paragraph (c) of this
definition is necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this paragraph (d).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to paragraph (a), (b), or (d) of this definition, the Gross Asset Value
of such asset shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Net Profit and Net
Loss.
"Indebtedness" has the meaning specified below:
(a)......if the Partnership is not subject to any loan
agreement that limits the ratio of the Partnership's indebtedness to its cash
flow, then "Indebtedness" means (i) indebtedness for borrowed money or for the
deferred purchase price of property or services in respect of which such Person
is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in
respect of which such Person otherwise assures a creditor against loss, (ii)
obligations evidenced by bonds, debentures, notes or other similar instruments,
including, but not limited to, Commercial Paper, (iii) obligations, contingent
or otherwise, under acceptance, letter of credit or similar facilities, (iv)
obligations as lessee under Capital Leases, and (v) obligations under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to in
clauses (i) through (iv) above; provided that Indebtedness shall not include
trade accounts payable unless payment thereof has been deferred by agreement
beyond the customary period in the industry, and
(b)......if the Partnership is subject to a loan agreement
that limits the ratio of the Partnership's indebtedness to its cash flow, then
"Indebtedness" means any indebtedness that is required to be taken into account
under that loan agreement to which the Partnership is subject that includes the
most restrictive covenant regarding the ratio of the Partnership's indebtedness
to its cash flow.
"Limited Partner" means TCI and any other Person admitted as a limited
partner in accordance with the provisions of this Agreement.
"Managing Partner" means Century and any General Partner selected as
successor Managing Partner pursuant to Section 7.1(b) or Section 7.2(b).
"Minority Entity" means any corporation less than 50% of the Voting
Rights of which corporation are at the time directly or indirectly owned by the
Partnership, by the Partnership and one or more of its Subsidiaries, or by one
or more other Subsidiaries.
"Net Profit and Net Loss" means, for each Fiscal Year or other period,
an amount equal to the Partnership's taxable income or loss for such Fiscal Year
or other period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a)......Any income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in computing Net Profit
or Net Loss shall be added to such taxable income or loss;
(b)......Code Section 705(a)(2)(B) expenditures of the
Partnership that are not otherwise taken into account in computing Net Profit or
Net Loss shall be subtracted from such taxable income or loss;
(c)......If the Gross Asset Value of any asset of the
Partnership is adjusted pursuant to paragraph (b) or (c) of the definition of
Gross Asset Value, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of computing Net
Profit or Net Loss;
(d)......Gain or loss resulting from any disposition of
property of the Partnership with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Gross Asset
Value of the property disposed of, notwithstanding that the adjusted tax basis
of such property differs from its Gross Asset Value;
(e)......In lieu of the depreciation, amortization, and other
cost recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such Fiscal Year or
other period;
(f)......Notwithstanding anything to the contrary in the
definition of the terms "Net Profit" and "Net Loss," any items that are
specially allocated pursuant to Section 4.3 of this Agreement shall not be taken
into account in computing Net Profit or Net Loss; and
(g)......For purposes of this Agreement, any deduction for a
loss on a sale or exchange of property of the Partnership that is disallowed to
the Partnership under Code Section 267(a)(1) or Code Section 707(b) shall be
treated as a Code Section 705(a)(2)(B) expenditure.
"Nonrecourse Deductions" means losses, deductions, or Code Section
705(a)(2)(B) expenditures attributable to Partnership Nonrecourse Liabilities.
The amount of Nonrecourse Deductions shall be determined pursuant to Treasury
Regulations Section 1.704-2(c), which provides generally that the amount of
Nonrecourse Deductions for a Fiscal Year shall equal the net increase, if any,
in Partnership Minimum Gain during that Fiscal Year, reduced (but not below
zero) by the aggregate distributions made during that Fiscal Year of proceeds of
a Nonrecourse Liability that are allocable to an increase in Partnership Minimum
Gain.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulations Section 1.752-1(a)(2).
"Operating Cash Flow Ratio" has the meaning specified below:
(a)......if the Partnership is not subject to any loan
agreement that limits the ratio of the Partnership's indebtedness to its cash
flow, then "Operating Cash Flow Ratio" means the ratio of (i) the Total Debt as
of such date to (ii) EBIDT for the most recent Fiscal Period which ends on or
before such date, and
(b)......if the Partnership is subject to a loan agreement
that limits the ratio of the Partnership's indebtedness to its cash flow, then
"Operating Cash Flow Ratio" means the ratio of the Partnership's indebtedness to
its cash flow as calculated for purposes of that loan agreement to which the
Partnership is subject that includes the most restrictive covenant regarding the
ratio of the Partnership's indebtedness to its cash flow.
"Ownership Restriction" means any provision of the Communications Act
of 1934, as amended, or any other law subsequently enacted, or any rule,
regulation, or policy of the FCC promulgated thereunder restricting the
ownership and control of communications properties (including cable television
systems, television broadcast stations, radio broadcast stations, telephone
companies, and newspapers), including those relating to cross-ownership and
cross-interest, as those terms are commonly understood in the communications
industry.
"Parent" has the meaning specified below:
(a)......so long as Tele-Communications owns a controlling
interest, directly or indirectly, in TCI, "Parent" means, with respect to TCI,
Tele-Communications;
(b)......so long as either Century/Texas or Adelphia owns a
controlling interest, directly or indirectly, in Century, "Parent" means, with
respect to Century, Century/Texas; and
(c)......with respect to any other Person (including TCI, if
paragraph (a) of this definition does not apply, and Century, if paragraph (b)
of this definition does not apply), "Parent" means the ultimate parent entity
(as determined in accordance with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976 and the rules and regulations promulgated thereunder) of such Person
(or such Person if it is its own ultimate parent entity).
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(4), which generally defines "Partner Nonrecourse
Debt" as any Partnership liability to the extent such liability is nonrecourse
and a Partner (or related Person) bears the economic risk of loss pursuant to
Treasury Regulations Section 1.752-2.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulations Section 1.704-2(i)(2), which generally defines "Partner
Nonrecourse Debt Minimum Gain" as the Partnership Minimum Gain attributable to
Partner Nonrecourse Debt. The amount of Partner Nonrecourse Debt Minimum Gain
shall be determined in accordance with Treasury Regulations Section
1.704-2(i)(3).
"Partner Nonrecourse Deductions" means losses, deductions, or Code
Section 705(a)(2)(B) expenditures attributable to Partner Nonrecourse Debt. The
amount of Partner Nonrecourse Deductions shall be determined pursuant to
Treasury Regulations Section 1.704-2(i)(2), which provides generally that the
amount of Partner Nonrecourse Deductions for a Fiscal Year shall equal the net
increase, if any, in Partner Nonrecourse Debt Minimum Gain during that Fiscal
Year, reduced (but not below zero) by the proceeds of Partner Nonrecourse Debt
distributed during the Fiscal Year to the partner bearing the economic risk of
loss for such Partner Nonrecourse Debt that are both attributable to such
Partner Nonrecourse Debt and allocable to an increase in Partner Nonrecourse
Debt Minimum Gain.
"Partners" means each General Partner and each Limited Partner.
"Partnership" means the partnership created by this Agreement.
"Partnership Interest" means the entire ownership interest of a Partner
in the Partnership at any particular time, including all of its rights and
obligations hereunder and under the Act.
"Partnership Minimum Gain" means the excess of the Partnership
Nonrecourse Liabilities over the adjusted tax basis of property securing such
Partnership Nonrecourse Liabilities. The amount of Partnership Minimum Gain
shall be determined in accordance with Treasury Regulations Section 1.704-2(d),
which provides generally that the amount of Partnership Minimum Gain shall be
determined by first computing for each Nonrecourse Liability any gain the
Partnership would realize if it disposed of the property subject to that
Nonrecourse Liability for no consideration other than full satisfaction of such
Nonrecourse Liability, and then aggregating the separately computed gains.
"Partnership Value" means the amount that would be available to be
distributed to the Partners in liquidation of the Partnership, if the
Partnership were liquidated in the following manner:
(a)......with respect to each Subsidiary, either the assets of
such Subsidiary would be sold for the fair-market value of such assets, and the
Subsidiary would be liquidated in a manner comparable to that described in
paragraphs (b) and (c) below and the definition of "Equity Value," or all equity
interests in such Subsidiary owned, directly or indirectly, by the Partnership
would be sold for the fair-market value of such equity interests, whichever
would produce the greater net proceeds to the Partnership;
(b)......the assets of the Partnership (other than any equity
interest in any Subsidiary that would have been liquidated under paragraph (a)
above) would be sold for the fair-market value of such assets; and
(c)......the Partnership would pay any liabilities that would
be required by generally accepted accounting principles to be reflected on a
balance sheet of the Partnership (other than any such liabilities relating to
the operations of the Partnership's business that would be assumed by a
purchaser of the Partnership's assets) and would establish reserves in the
amount of any reserves required by generally accepted accounting principles to
be reflected on a balance sheet of the Partnership.
"Percentage Interest" means (a) as of any date prior to the date
hereof, with respect to Century, seventy-five percent, and, with respect to TCI,
twenty-five percent, and (b) as of any date on or after the date hereof, with
respect to either Partner, a fraction the numerator of which is the net
fair-market value of all Capital Contributions made by such Partner and the
denominator of which is the net fair-market value of all Capital Contributions
made by both Partners, with all such net fair-market values being determined in
the manner specified in Section 3.1(b), subject to subsequent adjustment
pursuant to Section 3.2(e) and Section 4.1(d).
"Person" means an individual, partnership, joint venture, association,
corporation, trust, estate, limited liability company, limited liability
partnership, or any other legal entity.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means, at any time, any Person that is controlled by the
Partnership at such time.
"TCI" means TCI California Holdings, LLC, or any other Person that
succeeds to its Partnership Interest and is admitted as a Partner in accordance
with the provisions of this Agreement.
"TCI Appraiser" means an appraiser designated by TCI pursuant to
Section 3.2(f)(2).
"TCI Members" means the members of TCI.
"Tele-Communications" means Tele-Communications, Inc., a Delaware
corporation, and any successor (by merger, consolidation, sale of assets, or
other similar transaction) to all or substantially all of its business and
assets.
"Territory" means the following counties in California: Los Angeles,
Orange, San Bernardino, Ventura, San Diego, Riverside, Santa ▇▇▇▇▇▇▇, and ▇▇▇▇.
"Third Appraiser" means an appraiser designated by the TCI Appraiser
and the Century Appraiser pursuant to Section 3.2(f)(4).
"Total Debt" means, as of any date, the Consolidated Debt of the
Partnership and its Subsidiaries, including, without limitation, Capital Leases,
guaranties, obligations with respect to letters of credit and trade accounts
payable for which payment has been deferred by agreement beyond the customary
period in the industry.
"Treasury Regulations" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"Voting Rights" means, as to any corporation, ordinary voting power
(whether associated with outstanding common stock or outstanding preferred
stock, or both) to elect members of the Board of Directors of such corporation
(irrespective of whether or not at the time capital stock of any class or
classes of such corporation shall or might have voting power or additional
voting power upon the occurrence of any contingency).
"Wholly Owned Subsidiary" means, at any time, any Subsidiary all of the
outstanding equity interests of which are owned at such time, directly or
indirectly, by the Partnership.
1.2 Terms Defined Elsewhere in This Agreement.
-----------------------------------------
For purposes of this Agreement, the following terms have the meanings
set forth in the sections indicated:
Term Section
---- -------
@Home Distribution Agreement Section 16.8(c)(2)
Additional Income Tax Amount Section 8.11(a)(2)
Adjusted Prior Value Section 3.2(f)(2)
Adjustment Value Section 3.2(f)(6)
All Distance Services Section 10.2(a)
AT&T Section 10.2(a)
Average Adjustment Value Section 3.2(f)(6)
Capital Call Section 3.2(a)
Century Distribution Agreement Section 16.8(c)(1)
Deemed Distribution Section 4.1(c)(2)
Deferred Assignment Section 8.11(c)
First Assigning Partner Section 8.11(d)
First Offer Notice Section 9.1(a)
Formal Determination Section 10.1(b)
Indemnified Persons Section 12.1
Liquidator Section 11.2(b)
Negotiation Period Section 10.2(b)
Non-Exclusive Service Section 16.8(a)
Notice Section 10.2(a)
Offered Interest Section 9.1(a)
Other Financial Terms Section 9.1(a)
Other Terms Section 9.1(a)
Partnership Territory Section 10.2(a)
Programming Supply Agreement Section 16.9(c)
Purchase Price Section 9.1(a)
Regulatory Allocations Section 4.3(i)
Re-Offer Notice Section 9.2(c)
Second Assigning Partner Section 8.11(d)
Secretary Section 5.7(b)
Seller Section 9.1(a)
SSI Section 16.9(c)
SSI Administrative Fee Section 16.9(c)
Termination Section 8.11(a)(1)
TCI Systems Section 16.8(a)
1.3 Terms Generally.
---------------
The definitions in Section 1.1 and elsewhere in this Agreement shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context requires, any pronoun includes the corresponding masculine,
feminine, and neuter forms. The words "include," "includes," and "including" are
not limiting. Any reference in this Agreement to a "day" or number of "days"
(without the explicit qualification of "Business") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action or notice
is to be taken or given on or by a particular calendar day, and such calendar
day is not a Business Day, then such action or notice shall be deferred until,
or may be taken or given on, the next Business Day.
ARTICLE 2.........
FORMATION AND PURPOSE
2.1 Formation.
---------
The Partners hereby form the Partnership as a limited partnership
pursuant to the Act. The rights and liabilities of the Partners shall be
determined pursuant to the Act and this Agreement. To the extent that the rights
or obligations of either Partner are different by reason of any provision of
this Agreement than they would be in the absence of such provision, this
Agreement shall, to the extent permitted by the Act, control.
2.2 Name.
----
(a) The name of the Partnership is Century-TCI California Communications, L.P.
Except as provided in Section 2.2(b), the business of the Partnership may be
conducted under that name or, upon compliance with applicable laws, any other
name that the Managing Partner deems appropriate or advisable, including any
name that includes the name "Century," except that the Partnership shall not
conduct business under any name that includes the name "Century" without the
approval of Century. The Partnership shall file any assumed name certificates
and similar filings, and any amendments thereto, that the Managing Partner
considers appropriate or advisable.
(b) Neither the Partnership nor any Subsidiary shall conduct business under the
name "Tele-Communications, Inc., "TCI," or any variation thereof without the
approval of TCI, except that any asset contributed to the Partnership by TCI may
continue to bear any name borne by such asset at the time of its contribution to
the Partnership for a period of ninety days after its contribution. The parties
agree that "Communications" is not a variation of "Tele-Communications, Inc."
for purposes of this Section 2.2(b).
2.3 Principal and Registered Office.
-------------------------------
The office required to be maintained by the Partnership in the State of
Delaware pursuant to Section 17-104 of the Act shall initially be located at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The resident
agent of the Partnership pursuant to Section 17-104 of the Act shall initially
be The Corporation Trust Company. The Partnership may, upon compliance with the
applicable provisions of the Act, change its resident agent from time to time in
the discretion of the Managing Partner. The principal office of the Partnership
shall be located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or
at such other place as the Managing Partner shall from time to time designate by
written notice to the Partners. The Partnership may conduct business at such
additional places as the Managing Partner shall deem advisable.
2.4 Term
The term of the Partnership shall commence on the date of the filing of
the Certificate with the Secretary of State of Delaware and shall continue until
December 31, 2023, unless sooner terminated as provided in this Agreement.
2.5 Purposes of Partnership.
-----------------------
The purposes of the Partnership are:
(a) to engage in the business, directly or indirectly through interests in one
or more Subsidiaries, of acquiring, developing, owning, operating, managing, and
selling the cable television systems and other assets currently owned by
Century-TCI California;
(b) to acquire, develop, own, operate, manage, and sell additional cable
television systems in the Territory and businesses providing high-speed data
service and telephony services in the Territory;
(c) to acquire, develop, own, operate, manage, and sell, or invest in,
businesses in the Territory related to and ancillary to those referred to above;
and
(d) to engage in other businesses in the Territory as agreed to between
Century and TCI.
2.6 Authority of Partnership.
------------------------
The Partnership shall be empowered and authorized, for itself or on
behalf of any Subsidiary, to the extent necessary, appropriate, proper,
advisable, incidental to, or convenient for the furtherance and accomplishment
of the purposes described in Section 2.5:
(a) to possess, transfer, mortgage, pledge, or otherwise deal in, and to
exercise all rights, powers, privileges, and other incidents of ownership or
possession with respect to securities or other assets held or owned by the
Partnership, and to hold securities or assets in the name of a nominee or
nominees;
(b) to borrow or raise money, and from time to time to issue, accept, endorse,
and execute promissory notes, loan agreements, options, stock purchase
agreements, contracts, documents, checks, drafts, bills of exchange, warrants,
bonds, debentures, and other negotiable or nonnegotiable instruments and
evidences of indebtedness, and to secure the payment of any thereof and of the
interest thereon by mortgage upon or pledge, conveyance, or assignment in trust
of the whole or any part of the property of the Partnership whether at the time
owned or thereafter acquired and to guarantee the obligations of others and to
sell, pledge, or otherwise dispose of such bonds or other obligations of the
Partnership for its purposes;
(c) to guarantee the obligations of others in connection with the purchase
or acquisition by the Partnership of securities or assets;
(d) to maintain an office or offices in such place or places as the Managing
Partner shall determine and in connection therewith to rent or acquire office
space, engage personnel, and do such other acts and things as may be necessary
or advisable in connection with the maintenance of such office, and on behalf of
and in the name of the Partnership to pay and incur reasonable expenses and
obligations for legal, accounting, investment advisory, consultative and
custodial services, and other reasonable expenses including taxes, travel,
insurance, rent, supplies, interest, salaries and wages of employees, and all
other reasonable costs and expenses incident to the operation of the
Partnership;
(e) to form and own one or more corporations, trusts, or partnerships (but no
entity so formed or owned, while it is a Subsidiary, may do what the Partnership
is prohibited by this Agreement from doing); and
(f) to own, lease, or otherwise acquire any and all assets and services
related to the purposes described in Section 2.5.
2.7 Certificate.
-----------
The Managing Partner shall cause the Certificate to be filed with the
Secretary of State of Delaware and shall cause the Certificate to be filed or
recorded in any other public office where filing or recording is required or is
deemed by the Managing Partner to be advisable.
2.8 Addresses of the Partners.
-------------------------
The respective addresses of the Partners are set forth on Schedule I.
2.9 Foreign Qualification.
---------------------
The Managing Partner shall take all necessary actions to cause the
Partnership to be authorized to conduct business legally in all appropriate
jurisdictions, including registration or qualification of the Partnership as a
foreign limited partnership in those jurisdictions that provide for registration
or qualification and the filing of a certificate of limited partnership in the
appropriate public offices of those jurisdictions that do not provide for
registration or qualification.
2.10 Tax Classification.
------------------
Notwithstanding any other provision of this Agreement, no Partner or
employee of the Partnership may take any action (including the filing of a U.S.
Treasury Form 8832 Entity Classification Election) that would cause the
Partnership or any Subsidiary which is a partnership or limited liability
company to be characterized as an entity other than a partnership for federal
income tax purposes without the affirmative unanimous consent of the Partners. A
determination of whether any action would cause the Partnership to be
characterized as an entity other than a partnership for federal income tax
purposes will be based upon a declaratory judgment or similar relief obtained
from a court of competent jurisdiction, a favorable ruling from the Internal
Revenue Service, or the receipt of an opinion of counsel reasonably satisfactory
to the Partners.
ARTICLE 3.........
PARTNERSHIP CAPITAL
3.1 Contributions.
-------------
(a) Initial Contributions. Simultaneously with the execution of this Agreement,
the Partners shall each contribute to the Partnership their interests in
Century-TCI California pursuant to the Contribution and Assignment (99%
Interest) and the Contribution and Assignment (1% Interest).
(b) Capital Account Balances. The Capital Accounts of the Partners
immediately after the initial contributions shall be the net
fair-market value of the initial contributions, determined as follows:
(1) In the case of Century, (A) the Aggregate Gross Fair-Market Value of the
Century Assets (as defined in the Contribution Agreement) minus (B) the amount
of Century Permitted Debt (as defined in the Contribution Agreement) assumed by
Century-TCI California at the Closing pursuant to Section 3.1 of the
Contribution Agreement.
(2) In the case of TCI, (A) the Aggregate Gross Fair-Market Value of the TCI
Assets (as defined in the Contribution Agreement) minus (B) the amount of TCI
Permitted Debt (as defined in the Contribution Agreement) assumed by Century-TCI
California at the Closing pursuant to Section 3.1 of the Contribution Agreement.
(c) Allocation of Gross Fair-Market Value; Subsequent Contributions.
------------------------------------------------------------------------
(1) TCI and Century will negotiate in good faith to reach agreement within
thirty days after the Closing on the allocation of the Aggregate Gross
Fair-Market Value of the Century Assets and the Aggregate Gross Fair-Market
Value of the TCI Assets to the assets contributed or to be contributed to
Century-TCI California by TCI and Century pursuant to the Contribution Agreement
. If TCI and Century do not agree on such allocation within ninety days after
the Closing, then such allocation shall be determined by an appraisal to be
conducted by an independent appraisal firm agreed to by Century and TCI and
retained by the Partnership, at the Partnership's expense, with experience in
the valuation and appraisal of assets similar to such asset. Neither TCI nor
Century will take a position that is inconsistent with such allocation, either
as agreed to by them or as determined by such appraiser.
(2) The value of any payment or other transfer of assets required to be made by
either Partner to Century-TCI California under the Contribution Agreement after
the Closing, including any contribution of cash or property pursuant to Section
7.23 of the Contribution Agreement, is reflected in the Aggregate Gross
Fair-Market Value of the Century Assets or the Aggregate Gross Fair-Market Value
of the TCI Assets, as applicable, which is reflected in such Partner's Capital
Account immediately after the Closing as provided in Section 3.1(b), and any
such payment or other transfer of assets shall be deemed to have been made at
Closing and shall not increase such Partner's Capital Account above the amount
provided in Section 3.1(b).
(d) Determining Fair-Market Value of Other Contributed Assets. Except as
otherwise agreed to between the Partners, the fair-market value of any asset
contributed by a Partner to the Partnership, other than pursuant to Section
3.1(a), shall be determined for purposes of this Agreement as follows:
(1) The Partner contributing such asset shall determine the fair-market value of
such asset and send a written notice to the other Partner setting forth its
determination.
(2) Within ten Business Days after its receipt of the contributing Partner's
notice pursuant to Section 3.1(d)(1), the other Partner may send a written
notice to the contributing Partner accepting or rejecting the contributing
Partner's determination of the fair-market value of such asset. If the other
Partner accepts the contributing Partners determination, the fair-market value
of such asset for purposes of this Agreement shall be as determined by the
contributing Partner.
(3) If the other Partner does not send a written notice to the contributing
Partner accepting the contributing Partner's determination of the fair-market
value of any asset within ten Business Days after its receipt of the
contributing Partner's notice pursuant to Section 3.1(d)(1), the fair-market
value of such asset for purposes of this Agreement shall be determined by an
appraisal to be conducted by an independent appraisal firm agreed to by Century
and TCI and retained by the Partnership, at the Partnership's expense, with
experience in the valuation and appraisal of assets similar to such asset.
3.2 Additional Capital Contributions.
--------------------------------
(a) So long as Century is the Managing Partner, the Managing Partner may request
additional cash Capital Contributions by the Partners pursuant to this Section
3.2 by delivering a written notice (each such notice, a "Capital Call") to each
other Partner specifying (1) the amount of cash being requested, (2) the
purposes for which the Capital Contributions are required, (3) the date on which
the Capital Contributions are requested to be made (which shall not be less than
fifteen days after the date on which the Managing Partner delivers the Capital
Call to each other Partner), and (4) the bank account of the Partnership to
which the Capital Contributions are to be made.
(b) To the extent that the amount of additional Capital Contributions requested
in all Capital Calls pursuant to this Section 3.2 does not exceed $10,000,000,
each Partner shall make additional Capital Contributions in cash in accordance
with each Capital Call in an amount equal to the product of the Percentage
Interest of such Partner as of the date of the contribution multiplied by the
amount of Capital Contributions requested in such Capital Call.
(c) To the extent that the amount of additional Capital Contributions requested
in all Capital Calls pursuant to this Section 3.2 exceeds $10,000,000, then each
Partner may elect whether or not to make additional Capital Contributions in
response to a Capital Call by delivering written notice of its election to the
other Partner within ten days after its receipt of the Capital Call; provided,
however, that the Managing Partner must elect to make additional Capital
Contributions in response to any Capital Call. A Partner that does not deliver a
notice of its election to the other Partner within ten days after its receipt of
a Capital Call shall be deemed to have elected to make additional Capital
Contributions in response to the Capital Call. A Partner that elects to make
additional Capital Contributions in response to a Capital Call shall be
obligated to contribute to the Partnership in cash, in accordance with such
Capital Call, an amount equal to the product of the Percentage Interest of such
Partner as of the date of the contribution multiplied by the amount of Capital
Contributions requested in such Capital Call. (d) If one Partner elects to make
additional Capital Contributions in response to a Capital Call and the other
Partner elects not to make additional Capital Contributions in response to such
Capital Call, then the Partner that elected to make additional Capital
Contributions may also elect, by delivering written notice of its election to
the other Partner within ten days after the last day for the other Partner's
delivery of an election pursuant to Section 3.2(c), to make an additional
Capital Contribution to the Partnership, in accordance with such Capital Call,
up to an amount equal to the product of the Percentage Interest of the other
Partner as of the date of the contribution multiplied by the amount of Capital
Contributions requested in such Capital Call. A Partner that elects to make
additional Capital Contributions pursuant to this Section 3.2(d) shall be
obligated to contribute to the Partnership in cash the amount specified in its
election, in accordance with the Capital Call, in addition to the amount such
Partner is obligated to contribute pursuant to Section 3.2(c).
(e) If one Partner elects to make an additional Capital Contribution in response
to a Capital Call and the other Partner elects not to make an additional Capital
Contribution in response to such Capital Call (regardless of whether the
contributing Partner also elected to make an additional Capital Contribution
pursuant to Section 3.2(d)) or if a Partner makes a Capital Contribution
pursuant to any other agreement between the Partners (except as otherwise agreed
to between the Partners), then, effective as of the date on which the
contributing Partner makes such Capital Contribution, the Percentage Interests
of each Partner shall be adjusted to equal (1) the sum of (A) the Equity Value
of such Partner's Partnership Interest plus (B) the amount, if any, of Capital
Contributions then being made by such Partner in response to such Capital Call
pursuant to Section 3.2(c) and Section 3.2(d) or pursuant to such agreement
between the Partners (taking into account Section 3.1(d)), divided by (2) the
sum of (A) the Equity Value of such Partner's Partnership Interest plus (B) the
Equity Value of the other Partner's Partnership Interest, plus (C) the amount of
Capital Contributions then being made by the contributing Partner, where the
Partnership Value for purposes of calculating each such Equity Value shall be as
agreed to between TCI and Century pursuant to Section 3.2(f)(1) or, if TCI and
Century failed to agree on the Partnership Value, then the Partnership Value for
purposes of calculating each such Equity Value shall be the Average Adjustment
Value determined in accordance with Section 3.2(f)(6).
(f) The Partnership Value for purposes of calculating each Equity Value under
Section 3.2(e) and Section 4.1(d) shall be determined in accordance with the
following provisions:
(1) TCI and Century shall negotiate in good faith to reach an agreement on such
Partnership Value within thirty days after the election by one Partner to make
an additional Capital Contribution pursuant to Section 3.2(c) or the execution
of an agreement between the Partners regarding Capital Contributions to be made
by a Partner or noncash distributions to be made to a Partner, as applicable.
(2) If TCI and Century fail to agree on such Partnership Value within the period
specified in Section 3.2(f)(1), then either Partner may elect to commence the
valuation process described below by sending written notice to the other Partner
either (A) designating an appraiser to be retained by the electing Partner to
make a determination of the Partnership Value or (B) if the Partnership Value
was previously determined for purposes of calculating Equity Value of the
Partners' Partnership Interests under Section 3.2(e) (either by agreement
between TCI and Century or as the Average Adjustment Value) with respect to any
Capital Contribution made no more than one year prior to the date on which the
Capital Contribution with respect to which the Equity Value of the Partners'
Partnership Interests is then being determined is to be made, electing to use
the Adjusted Prior Value as such Partner's Adjustment Value. If a Partner elects
to commence the valuation process pursuant to this Section 3.2(f)(2), the other
Partner shall, within ten Business Days after its receipt of notice of the
electing Partner's election, send a written notice to the electing Partner
either (A) designating an appraiser to be retained by such other Partner to make
a determination of the Partnership Value or (B) if the condition in clause (B)
of the preceding sentence is satisfied, electing to use the Adjusted Prior Value
as such Partner's Adjustment Value. For purposes of this Section 3.2(f), the
"Adjusted Prior Value" means the Partnership Value as most recently determined
for purposes of calculating Equity Value of the Partners' Partnership Interests
under Section 3.2(e), increased by the amount of Capital Contributions made by
the Partners since the date of such determination and decreased by the amount of
distributions to the Partners since the date of such determination.
(3) Any appraiser designated pursuant to Section 3.2(f)(2) shall be instructed
to complete its appraisal within thirty days after its designation pursuant to
Section 3.2(f)(2).
(4) If the difference between TCI's Adjustment Value and Century's Adjustment
Value is greater than three percent of the lower of such values, then the TCI
Appraiser (or TCI, if TCI elected to use the Adjusted Prior Value as its
Adjustment Value) and the Century Appraiser (or Century, if Century elected to
use the Adjusted Prior Value as its Adjustment Value) shall jointly designate an
appraiser to be retained by the Partnership to make a determination of the
Partnership Value. The Third Appraiser shall be instructed to complete its
appraisal within thirty days after its designation.
(5) In making its determination of the Partnership Value, each appraiser shall:
(A) assume that the fair-market value of the assets of the Partnership, the
fair-market value of the assets of any Subsidiary, or the fair-market value of
any equity interests in any Subsidiary, as applicable, is the price at which
such assets, as a going concern, or such equity interests would change hands in
a private market transaction between a single willing buyer and a single willing
seller, neither being under any compulsion to buy or sell and each having
reasonable knowledge of all relevant facts;
(B) assume the sale of all relevant assets occurred immediately prior to the
additional Capital Contribution with respect to which the Equity Value of the
Partners' Partnership Interests is then being determined;
(C) take into account liabilities of the Partnership and the Subsidiaries in
existence on such date;
(D) assume a sale of the assets of the Partnership and each Subsidiary for cash;
and
(E) use valuation techniques then prevailing in the cable television industry.
(6) The Partnership Value as determined by the appraiser designated by a
Partner, or, if the Partner so elected pursuant to Section 3.2(f)(2), the
Adjusted Prior Value, shall be such Partner's "Adjustment Value," the
Partnership Value determined by the Third Appraiser, shall be the Third
Appraiser's "Adjustment Value," and the "Average Adjustment Value" shall be:
(A) If the difference between TCI's Adjustment Value and Century's Adjustment
Value is less than or equal to three percent of the lower of such values, then
the Average Adjustment Value shall be the average of TCI's Adjustment Value and
Century's Adjustment Value;
(B) If Section 3.2(f)(6)(A) does not apply and the difference between the
highest of the three Adjustment Values (including the Adjustment Value of the
Third Appraiser) and the middle of the three Adjustment Values is equal to the
difference between the lowest of the three Adjustment Values and the middle of
the three Adjustment Values, then the Average Adjustment Value shall be the
middle Adjustment Value; and
(C) In all other cases, the Average Adjustment Value shall be the average of the
two closest of TCI's Adjustment Value, Century's Adjustment Value, and the Third
Appraiser's Adjustment Value.
(7) Each appraiser designated pursuant to this Section 3.2(f) shall be a
nationally recognized investment banking firm that is qualified and experienced
in the appraisal of cable television systems and shall not be an Affiliate of
either Partner. The fees and expenses of the TCI Appraiser shall be borne by
TCI, the fees and expenses of the Century Appraiser shall be borne by Century,
and the fees and expenses of the Third Appraiser shall be borne by the
Partnership, except that, if one Partner elects to use the Adjusted Prior Value
as its Adjustment Value, then the fees and expenses of the Third Appraiser shall
be borne by the other Partner.
3.3 Other Contributions.
-------------------
Except for Capital Contributions made pursuant to Section 3.1 or
Section 3.2 or as otherwise agreed to by the Partners, no additional Capital
Contributions shall be made by either Partner.
3.4 Return of Contributions.
-----------------------
Neither Partner shall have the right to demand a return of all or any
part of its Capital Contribution during the term of the Partnership, and any
return of the Capital Contribution of either Partner shall be made solely from
the assets of the Partnership and only in accordance with the terms of this
Agreement. No interest shall be paid to either Partner with respect to its
Capital Contribution to the Partnership.
3.5 Financing.
---------
To finance the business of the Partnership, subject to Section
5.1(b)(1) and Section 5.1(c)(10), the Managing Partner may arrange for the
obtaining of loans by the Partnership, including loans made by one or more
Affiliates of the Managing Partner. Any payment by the Partnership to any
Affiliate of the Managing Partner with respect to any such loans made by such
Affiliate shall not be treated as a distribution to the Managing Partner under
this Agreement.
ARTICLE 4.........
DISTRIBUTIONS; ALLOCATIONS OF PROFIT AND LOSS
4.1 Distributions.
-------------
(a) Amount and Timing of Cash Distributions. All cash of the Partnership
shall be distributed at such times and in such amounts
as the Managing Partner may determine in its sole discretion.
(b) Allocation of Cash Distributions. All distributions of cash pursuant
to Section 4.1(a) and Section 11.2(d)(3) shall be allocated between the Partners
in proportion to their Percentage Interests as of the date of the distribution.
(c) Tax Withholding.
(1) The Partnership shall, and shall cause each Subsidiary to, seek to qualify
for and obtain exemptions from any provision of the Code or any provision of
state, local, or foreign tax law that would otherwise require the Partnership or
a Subsidiary to withhold amounts from payments or distributions to the Partners
or the partners of such Subsidiary. If the Partnership or a Subsidiary does not
obtain any such exemption, the Partnership or such Subsidiary is authorized to
withhold from any payment or distribution to either Partner or the partners of
such Subsidiary any amounts that are required to be withheld pursuant to the
Code or any provision of any state, local, or foreign tax law that is binding on
the Partnership or such Subsidiary.
(2) If the Code or any provision of any state, local, or foreign tax law that is
binding on the Partnership requires that the Partnership remit to any taxing
authority any tax with respect to, or for the account of, either Partner in its
capacity as a Partner, as a result of any transaction by the Partnership or any
Subsidiary (other than a payment or distribution to a Partner), the Partnership
shall, to the extent that Partnership funds are available therefor, remit the
full required amount of such tax to the taxing authority and shall notify such
Partner in writing of the amount of such tax. The Partnership shall treat the
payment of such tax as a distribution pursuant to Section 4.1(a) (a "Deemed
Distribution"), and substantially simultaneously with the payment of such tax
the Partnership shall cause a distribution of cash to be made to the Partners so
as to cause the distributions pursuant to this Section 4.1(c) (including the
Deemed Distribution) to be in proportion to the Partners' Percentage Interests;
provided, however, that if the Partnership does not have sufficient funds to
make such cash distribution or if the Partnership is prohibited from making such
cash distribution, then each Partner agrees to contribute to the Partnership,
within fifteen Business Days after its receipt of written notice from the
Partnership, the amount of any such tax to the extent it exceeds such Partner's
proportionate share (based on Percentage Interests) of the distributions
pursuant to this Section 4.1(c) (including the Deemed Distribution), together
with interest from the date the Partnership remits such tax until it is paid by
such Partner, at an interest rate equal to that paid by the Partnership with
respect to its senior indebtedness. Interest paid by a Partner pursuant to this
Section 4.1(c) shall not be treated as Capital Contributions for any purposes
under this Agreement, including calculation of the Partners' Capital Accounts.
The Partnership is further authorized to withhold from any subsequent payment or
distribution to either Partner the amount of such Partner's obligation under the
preceding sentence.
(3) All amounts that are credited against payments or distributions to which a
Partner would otherwise be entitled pursuant to this Section 4.1(c) shall be
treated as amounts distributed to such Partner pursuant to Section 4.1(a) for
all purposes of this Agreement.
(d) Non-Cash Distributions.
-------------------------------
(1) Except as specifically agreed to by the Partners, the Partnership shall not
distribute any noncash asset to either Partner.
(2) The fair-market value of any asset distributed in kind to either Partner
shall either be a value agreed to by the Partners or a value determined by a
methodology agreed to by the Partners.
(3) The Partnership shall determine the gain or loss used in determining Net
Profit or Net Loss that would have resulted if any distributed noncash asset had
been sold for its fair-market value, such gain or loss shall be allocated
pursuant to Article 4, and the Partners' Capital Accounts shall be adjusted to
reflect such gain or loss. The amount distributed and charged to the Capital
Account of each Partner receiving an interest in a distributed asset shall be
the fair-market value of such interest (net of any liability secured by such
asset that such Partner assumes or takes subject to).
(4) If the Partners agree that any non-cash asset shall be distributed to either
Partner and the distributions of cash and noncash assets being made in
connection with the distribution of such non-cash asset are not allocated
between the Partners in proportion to their Percentage Interests as of the date
of the distribution, then, except as otherwise agreed to by the Partners,
effective as of the date on which such distributions are made, the Percentage
Interests of each Partner shall be adjusted to equal (A) the sum of (i) the
Equity Value of such Partner's Partnership Interest minus (ii) the amount of
cash and the fair-market value of any noncash asset then being distributed to
such Partner, divided by (B) the sum of (i) the Equity Value of such Partner's
Partnership Interest plus (ii) the Equity Value of the other Partner's
Partnership Interest, minus (iii) the amount of cash and the fair-market value
of any non-cash asset then being distributed to the Partners, where the
Partnership Value for purposes of calculating each such Equity Value shall be as
agreed to between TCI and Century pursuant to Section 3.2(f)(1) or, if TCI and
Century failed to agree on the Partnership Value, then the Partnership Value for
purposes of calculating each such Equity Value shall be the Average Adjustment
Value determined in accordance with Section 3.2(f)(6).
4.2 Allocations of Net Profit and Net Loss.
--------------------------------------
(a) Allocations of Net Profit and Net Loss. Except as provided in Section
4.2(b), Net Profit and Net Loss for each Fiscal Year (or portion thereof) shall
be allocated between the Partners in proportion to their Percentage Interests.
(b) Allocations of Net Profit and Net Loss Following Dissolution.
Notwithstanding Section 4.2(a), following the dissolution of the Partnership
pursuant to Section 11.1, beginning in the Fiscal Year in which such dissolution
occurs or beginning in any Fiscal Year prior to the Fiscal Year in which such
dissolution occurs if the Partnership's federal income tax return for such prior
Fiscal Year has not yet been required to be filed (not including extensions),
items of income and gain, loss, and deduction shall be allocated between the
Partners so as to cause the credit balances in the Partners' Capital Accounts to
be in proportion to their Percentage Interests.
4.3 Special Provisions Regarding Allocations of Profit and Loss.
-----------------------------------------------------------
(a) Minimum Gain Chargeback. Notwithstanding any other provision of this Article
4, if there is a net decrease in Partnership Minimum Gain for any Fiscal Year,
each Partner shall be specially allocated items of Partnership income and gain
for such Fiscal Year (and, if necessary, for succeeding Fiscal Years) in an
amount equal to such Partner's share of the net decrease in Partnership Minimum
Gain, determined in accordance with Treasury Regulations Section 1.704-2(g);
provided, however, that this Section 4.3(a) shall not apply to the extent the
circumstances described in Treasury Regulations Sections 1.704-2(f)(2),
1.704-2(f)(3), 1.704-2(f)(4), or 1.704-2(f)(5) exist. Allocations made pursuant
to the preceding sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto. The items of
Partnership income and gain to be allocated pursuant to this Section 4.3(a)
shall be determined in accordance with Treasury Regulations Section
1.704-2(f)(6). This Section 4.3(a) is intended to comply with the minimum gain
chargeback requirement in Treasury Regulations Section 1.704-2(f) and shall be
interpreted consistently therewith.
(b) Partner Minimum Gain Chargeback. Notwithstanding any other provision of this
Article 4 except Section 4.3(a), if during any Fiscal Year there is a net
decrease in Partner Nonrecourse Debt Minimum Gain, each Partner with a share of
that Partner Nonrecourse Debt Minimum Gain (determined in accordance with
Treasury Regulations Section 1.704-2(i)(5)) as of the beginning of such Fiscal
Year must be allocated items of Partnership income and gain for the Fiscal Year
(and, if necessary, for succeeding Fiscal Years) equal to that Partner's share
of the net decrease in the Partner Nonrecourse Debt Minimum Gain (determined in
accordance with Treasury Regulations Section 1.704-2(i)(4)); provided, however,
that this Section 4.3(b) shall not apply to the extent the circumstances
described in the third and fifth sentences of Treasury Regulations Section
1.704-2(i)(4) exist. Allocations pursuant to the preceding sentence shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items of Partnership income and gain to be
allocated pursuant to this Section 4.3(b) shall be determined in accordance with
Treasury Regulations Section 1.704-2(i)(4). This Section 4.3(b) is intended to
comply with the minimum gain chargeback requirement in Treasury Regulations
Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(c) Qualified Income Offset. If a Limited Partner unexpectedly receives any
adjustments, allocations, or distributions described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to such Limited Partner in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, the Adjusted
Capital Account Deficit of such Limited Partner as quickly as possible;
provided, however, that an allocation pursuant to this Section 4.3(c) shall be
made if and only to the extent that such Limited Partner would have an Adjusted
Capital Account Deficit after all other allocations provided for in this Article
4 have been tentatively made as if this Section 4.3(c) were not in this
Agreement. Allocations made pursuant to the preceding sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto.
(d) Gross Income Allocation. If a Limited Partner has a deficit Capital Account
at the end of any Fiscal Year that is in excess of the sum of (l) the amount
such Limited Partner is obligated to restore to the Partnership pursuant to
Treasury Regulations Section 1.704-1(b)(2)(ii)(c), (2) the amount such Limited
Partner is deemed to be obligated to restore pursuant to the penultimate
sentence of Treasury Regulations Section 1.704-2(g)(1), and (3) the amount such
Limited Partner is deemed to be obligated to restore pursuant to the penultimate
sentence of Treasury Regulations Section 1.704-2(i)(5), such Limited Partner
shall be specially allocated items of Partnership income and gain in the amount
of such excess as quickly as possible; provided, however, that an allocation
pursuant to this Section 4.3(d) shall be made if and only to the extent that
such Limited Partner would have a deficit Capital Account in excess of such sum
after all other allocations provided for in this Article 4 have been tentatively
made as if Section 4.3(c) and this Section 4.3(d) were not in this Agreement.
Allocations made pursuant to the preceding sentence shall be made in proportion
to the respective amounts required to be allocated to each Partner pursuant
thereto.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year or other
period shall be specially allocated between the Partners in proportion to their
Percentage Interests.
(f) Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions for any
Fiscal Year or other period shall be specially allocated to the Partner that
bears the economic risk of loss with respect to the Partner Nonrecourse Debt to
which such Partner Nonrecourse Deductions are attributable in accordance with
Treasury Regulations Section 1.704-2(i).
(g) Section 754 Adjustment. To the extent any adjustment to the adjusted tax
basis of any asset of the Partnership pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such section of the Treasury
Regulations.
(h) Excess Nonrecourse Liabilities. For purposes of determining a Partner's
proportionate share of the "excess nonrecourse liabilities" of the Partnership
within the meaning of Treasury Regulations Section 1.752-3(a)(3), each Partner's
interest in Partnership profits shall be deemed to be equal to such Partner's
Percentage Interest.
(i) Curative Allocations. The allocations set forth in this Article 4 (other
than Section 4.3(g), Section 4.3(h), and this Section 4.3(i)) (the "Regulatory
Allocations") are intended to comply with certain requirements of the Treasury
Regulations. The Partners intend that, to the extent possible, all Regulatory
Allocations shall be offset either with other Regulatory Allocations or with
special allocations of other items of Partnership income, gain, loss, or
deduction pursuant to this Section 4.3(i). Therefore, notwithstanding any other
provision of this Article 4 (other than the Regulatory Allocations), offsetting
special allocations of Partnership income, gain, loss, or deduction shall be
made so that, after such offsetting allocations are made, each Partner's Capital
Account balance is, to the extent possible, equal to the Capital Account balance
such Partner would have had if the Regulatory Allocations were not part of this
Agreement and all Partnership items were allocated pursuant to Section 4.2. In
making such offsetting special allocations, future Regulatory Allocations under
Section 4.3(a) and Section 4.3(b) that, although not yet made, are likely to
offset Regulatory Allocations made under Section 4.3(e) and Section 4.3(f) shall
be taken into account.
4.4 Tax Allocations: Code Section 704(c).
-------------------------------------
(a) In accordance with Code Section 704(c) and the Treasury Regulations
thereunder, income, gain, loss, and deduction with respect to any property
contributed to the capital of the Partnership shall, solely for tax purposes, be
allocated between the Partners so as to take account of any variation between
the adjusted basis of such property to the Partnership for federal income tax
purposes and its initial Gross Asset Value using the traditional allocation
method described in Treasury Regulations Section 1.704-3(b). If, however, tax
allocations made under Code Section 704(c) with respect to any contributed
property are limited by "the ceiling rule" as described in Treasury Regulations
Section 1.704-3(b)(1), the remedial allocation method as described in Treasury
Regulations Section 1.704-3(d) shall be used with respect to such property.
(b) If the Gross Asset Value of any asset of the Partnership is adjusted
pursuant to paragraph (b) of the definition of Gross Asset Value, subsequent
allocations of income, gain, loss, and deduction with respect to such asset
shall take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as
under Code Section 704(C) and the Treasury Regulations thereunder.
(c) Allocations pursuant to this Section 4.4 are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be taken into account
in computing, either Partner's Capital Account or share of Net Profit, Net Loss,
other items, or distributions pursuant to any provision of this Agreement.
4.5 Allocation in Event of Transfer.
-------------------------------
If an interest in the Partnership is transferred, the Net Profit and
Net Loss of the Partnership and each item thereof, and all other items
attributable to the transferred interest for such Fiscal Year, shall be divided
and allocated between the transferor and the transferee pursuant to any method
agreed to between the Partners that is permitted by the Treasury Regulations;
provided, however, that (a) except in the case of a transfer from a Partner to
an Affiliate of such Partner, if the Partners are unable to agree on the method
of dividing and allocating such items, such items shall be divided and allocated
between the transferor and the transferee pursuant to the interim closing of the
Partnership books method set forth in Treasury Regulation Section
1.706-1(c)(2)(ii), and (b) in the case of a transfer from a Partner to an
Affiliate of such Partner, if the Partners are unable to agree on the method of
dividing and allocating such items, such items shall be divided and allocated
between the transferor and the transferee pursuant to any method agreed to
between the transferor and the transferee so long as such method (1) does not
change the allocation of Net Profit and Net Loss or any item thereof to the non
transferor Partner, and (2) does not require an interim closing of the
Partnership books. This Section shall apply for purposes of computing a
Partner's Capital Account and for federal income tax purposes.
4.6 Alternative Allocations.
-----------------------
The Advisory Committee is authorized and directed to allocate items of
income, gain, loss, or deduction arising in any Fiscal Year differently from the
manner that is otherwise provided for in this Agreement if, and to the extent
that, the Advisory Committee determines that the allocation of items of income,
gain, loss, or deduction in the manner otherwise provided for in this Agreement
would cause the credit balances in the Partners' Capital Accounts not to be in
proportion to their Percentage Interests immediately prior to any distributions
pursuant to Section 11.2(d)(3) if the Partnership was dissolved and terminated
on the last day of such Fiscal Year. Any allocation that is made pursuant to
this Section 4.6 shall be deemed to be a complete substitute for any allocation
that is otherwise provided for in this Agreement and no amendment to this
Agreement shall be required.
ARTICLE 5.........
MANAGEMENT
5.1 Authority of Managing Partner.
-----------------------------
(a) Generally. Except as expressly provided otherwise in this Agreement, the
Managing Partner shall have the exclusive authority to manage the business,
operations, and affairs of the Partnership (including internal matters) and the
exclusive right to exercise all rights incident to the ownership of all
partnership or corporate interests held by the Partnership, and shall have all
authority, rights, and powers conferred by law and those required or appropriate
for the management of the Partnership's business.
(b) Certain Limitations and Restrictions. Notwithstanding any provision in this
Agreement to the contrary, and in addition to any other consent or approval that
may be required by the express terms of this Agreement, but subject to Section
5.1(e), the Partnership shall not, and the Managing Partner shall have no
authority to cause the Partnership to, do any of the following without the
approval of TCI:
(1) incur or permit any Subsidiary to incur any Indebtedness if, immediately
after the incurring of such Indebtedness, the Operating Cash Flow Ratio of the
Partnership or such Subsidiary would exceed 6.5 to 1; or
(2) sell or otherwise dispose of, or cause or permit any Subsidiary to sell or
otherwise dispose of, in any one transaction (or series of mutually contingent
transactions), assets of the Partnership or any Subsidiary having an aggregate
value in excess of $50,000,000, except upon the liquidation and dissolution of
the Partnership in accordance with Article 11; provided, however, that the
limitations of this paragraph shall not apply to any pledging of assets by any
Person to secure any indebtedness of such Person permitted by this Agreement or
to any disposition of assets upon the exercise of any rights granted by such a
pledge; or
(3) merge with or consolidate into any Person, or cause or permit any Subsidiary
to merge with or consolidate into any Person (except that, without the approval
of TCI, (A) a Subsidiary may merge with another Subsidiary so long as the
survivor of such merger is a Subsidiary; (B) a Wholly Owned Subsidiary may merge
with the Partnership; and (C) a Subsidiary may merge with a Person other than a
Subsidiary as a means of effecting any acquisition or disposition of assets that
is otherwise permitted by this Agreement so long as the consummation of such
acquisition or disposition would not have adverse tax consequences to TCI or the
TCI Members); or
(4) purchase or otherwise acquire, or cause or permit any Subsidiary to purchase
or otherwise acquire, any assets, business, or equity interest in another
Person, if, after giving effect to such purchase or other acquisition, the
aggregate value of all property purchased or otherwise acquired by the
Partnership and all Subsidiaries in any period of twelve consecutive calendar
months would exceed $50,000,000; provided, however, that the limitations of this
paragraph shall not apply to any acquisition of assets by a Wholly Owned
Subsidiary from the Partnership or from another Wholly Owned Subsidiary; or
(5) enter into any transaction with either Partner or any Affiliate of either
Partner or permit any Subsidiary to enter into any transaction with either
Partner or any Affiliate of either Partner if the transaction contemplates
payments to or by the Partnership or any Subsidiary in any twelve month period
in excess of $1,000,000, in the aggregate; provided, however, that the
limitations of this paragraph shall not apply to any loan described in Section
5.1(c)(10), and TCI agrees not to withhold unreasonably its approval of any
transaction that requires its approval under this Section 5.1 (b)(5); or
(6) issue any Partnership Interest or other equity interest in the Partnership
or any option, warrant, or other instrument convertible into or evidencing the
right to acquire (whether or not for additional consideration) any Partnership
Interest or other equity interest in the Partnership; or
(7) permit any Subsidiary to issue any equity interest in such Subsidiary or any
option, warrant, or other instrument convertible into or evidencing the right to
acquire (whether or not for additional consideration) any equity interest in
such Subsidiary, other than an equity interest or option, warrant, or other
instrument issued to the Partnership or to a Wholly Owned Subsidiary; or
(8) commence, institute, or settle, or permit any Subsidiary to commence,
institute, or settle, any claim or lawsuit (or series of related claims or
lawsuits) on behalf of the Partnership or any Subsidiary (except as provided in
the Contribution Agreement with respect to claims arising thereunder), or
confess a judgment against the Partnership or any Subsidiary, not in the
ordinary course of business and for any amount in excess of $5,000,000 or
involving the potential granting of equitable relief that, if granted, would
have a material adverse effect on the business of the Partnership and the
Subsidiaries, taken as a whole; provided, however, that notwithstanding any
other provision in this Agreement to the contrary, (A) TCI may, without the
separate consent of Century or Century's representatives, cause Century-TCI
California to make a good faith claim against Century and its Affiliates
pursuant to the indemnification provisions of the Contribution Agreement or
against Century and its Affiliates pursuant to the Management Agreement
described in Section 5.6, and provided, further, that without the separate
consent of TCI, Century may not cause Century-TCI California to waive any such
claim against Century and its Affiliates pursuant to the indemnification
provisions of the Contribution Agreement or against Century and its Affiliates
pursuant to the Management Agreement described in Section 5.6, and (B) Century
may, without the separate consent of TCI or TCI's representatives, cause
Century-TCI California to make a good faith claim against TCI and its Affiliates
pursuant to the indemnification provisions of the Contribution Agreement or the
Exchange Agreement; or
(9) purchase, redeem, retire, or otherwise acquire any Partnership Interests or
other equity interest in the Partnership or Century-TCI California, except for
the purchase, redemption, retirement, or other acquisition of any equity
interest where the terms of such interest, as approved in accordance with
Section 5.1(b)(6) or (7), permit or require such purchase, redemption,
retirement, or other acquisition.
(c) Additional Limitations and Restrictions. Notwithstanding any provision in
this Agreement to the contrary, and in addition to any other consent or approval
that may be required by the express terms of this Agreement, the Partnership
shall not, and the Managing Partner shall have no authority to cause the
Partnership to, do any of the following without the approval of TCI:
(1) sell or otherwise dispose of, or cause or permit any Subsidiary to sell or
otherwise dispose of, any assets of the Partnership or any Subsidiary, if such
sale or other disposition would result in the allocation of income or gain to
TCI pursuant to Section 4.4 and Code Section 704(c), except upon the liquidation
and dissolution of the Partnership in accordance with Article 11; provided,
however, that the limitations of this paragraph shall not apply to any pledging
of assets by any Person to secure any indebtedness of such Person permitted by
this Agreement (but such limitations shall nevertheless apply to any disposition
of assets upon the exercise of any rights granted by such a pledge); or
(2) liquidate or dissolve the Partnership except in accordance with Article 11
or liquidate or dissolve Century-TCI California or Century-TCI Holdings, LLC; or
(3) issue any Partnership Interest or other equity interest in the Partnership
or any option, warrant, or other instrument convertible into or evidencing the
right to acquire (whether or not for additional consideration) any Partnership
Interest or other equity interest in the Partnership, except on terms that are
fair, from an economic standpoint, to the Partnership and the Partners; or
(4) permit any Subsidiary to issue any equity interest in such Subsidiary or any
option, warrant, or other instrument convertible into or evidencing the right to
acquire (whether or not for additional consideration) any equity interest in
such Subsidiary, except on terms that are fair, from an economic standpoint, to
the Partnership and its Partners, other than an equity interest or option,
warrant, or other instrument issued to the Partnership or to a Wholly Owned
Subsidiary; or
(5) admit any additional Partners to the Partnership or Century-TCI California
except in accordance with Section 6.4 or Section 8.8; or
(6) convert the Partnership or any Subsidiary that is a partnership or a limited
liability company to corporate form or to any other form of business
organization; or
(7) purchase, redeem, retire, or otherwise acquire any Partnership Interests or
other equity interest in the Partnership or Century-TCI California or
Century-TCI Holdings, LLC, except for the purchase, redemption, retirement, or
other acquisition of any equity interest where the terms of such interest, as
approved in accordance with Section 5.1(b)(6) or (7) or Section 5.1(c)(3),
permit or require such purchase, redemption, retirement, or other acquisition;
or
(8) merge with or consolidate into any Person, or cause or permit any Subsidiary
to merge with or consolidate into any Person, unless the terms under which any
equity interest in the Partnership or any Subsidiary is issued to any Person
(other than the Partnership or any Wholly Owned Subsidiary) are fair, from an
economic standpoint, to the Partnership and the Partners; or
(9) enter into any transaction with either Partner or any Affiliate of either
Partner or permit any Subsidiary to enter into any transaction with either
Partner or any Affiliate of either Partner if the transaction is not on terms
that are no less favorable to the Partnership or Subsidiary than could have been
obtained in a comparable arm's-length transaction with a Person that is not a
Partner or an Affiliate of a Partner; provided, however, that the limitations
shall not apply to any loan described in Section 5.1(c)(10); or
(10) incur or permit any Subsidiary to incur any Indebtedness to any Affiliate
of the Managing Partner unless (A) the financial terms of such Indebtedness are
the same as either (1) the financing obtained by such Affiliate of the Managing
Partner the proceeds of which are used to fund its loan to the Partnership by
which such Indebtedness is created, or (2) any similar financing obtained by the
Partnership from any Person that is not an Affiliate of the Managing Partner,
and (B) such Indebtedness would not result in any adverse tax consequences to
TCI or the TCI Members; or
(11) except as provided in Section 10.2, enter into any transaction with either
Partner or any Affiliate of either Partner or permit any Subsidiary to enter
into any transaction with either Partner or any Affiliate of either Partner
pursuant to which such Partner or its Affiliate would be authorized or permitted
to use the Partnership's or a Subsidiary's cable television system distribution
facilities to engage in any business that is ancillary to the ownership or
operation of cable television systems, including the ancillary businesses of
providing high-speed data service and telephony services described in Section
2.5; or
(12) commence any bankruptcy or insolvency proceeding, acquiesce in the
appointment of a referee, trustee, custodian, or liquidator, or admit to the
material allegations of a petition filed against the Partnership or any
Subsidiary in any bankruptcy proceeding; or
(13) amend the Management Agreement described in Section 5.6 or the partnership
agreement of Century-TCI California or the operating agreement of Century-TCI
Holdings, LLC (and TCI agrees not to withhold unreasonably its approval of any
amendment that requires its approval under this Section 5.1(c)(13)); or
(14) engage in or permit any Subsidiary to engage in any business not described
in Section 2.5 or engage in any business outside the Territory; or
(15) sell, assign or otherwise transfer any equity interest in Century-TCI
California or Century-TCI Holdings, LLC; or
(16) make any determination of "Gross Asset Value" with respect to Century-TCI
California or Century-TCI Holdings, LLC, any determination that an adjustment to
"Gross Asset Value" with respect to Century-TCI California or Century-TCI
Holdings, LLC should be made or any determination of the fair market value of
any asset contributed to such entity; or
(17) withdraw as the general partner or member of Century-TCI California or
Century-TCI Holdings, LLC; or
(18) prior to the second anniversary of the Closing, (1) take, or permit any
Subsidiary to take, any action that results in the principal amount of the
outstanding indebtedness for borrowed money of Century-TCI California being
reduced below an amount equal to the sum of the principal amount of the TCI
Permitted Debt and the Century Permitted Debt assumed by Century-TCI California
at Closing (the "Initial Debt"); (2) take, or permit any Subsidiary to take, any
action that would cause Century-TCI California not to have non-recourse debt
outstanding in an amount at least equal to the Initial Debt, it being agreed
that both non-recourse incurred indebtedness for borrowed money and committed
available non-recourse indebtedness for borrowed money that may be used to pay
down any Affiliate indebtedness for borrowed money on which Century-TCI
California is the obligor constitute non-recourse debt for this purpose; or (3)
refinance or otherwise change the terms of the indebtedness for borrowed money
of Century-TCI California that is in effect as of the Closing Date; provided,
that TCI may not withhold its consent unless the refinancing or other change in
terms would have adverse tax consequences to TCI or the TCI Members, as
reasonably determined by TCI.
It is the intent of this Section 5.1(c)(18) to define the relative rights of the
Partners among themselves, and not to affect the rights of the holders of any
indebtedness of Century-TCI California that are not affiliates of Century-TCI
California, or the obligations of Century-TCI California, under any instrument
pursuant to which any such indebtedness is issued. Without limiting the
generality of the foregoing, it is agreed that as to the holders of any such
indebtedness nothing in this Section 5.1(c)(18) shall affect:
..................(A) the obligations of Century-TCI California under
the Credit Agreement (including, without limitation, under Sections 2.04 or 2.05
thereof) dated as of December 3, 1999 (the "Credit Agreement") among Century-TCI
California, as borrower, the guarantors party thereto, the lenders party thereto
(the "Lenders"), and Citibank, N.A. as administrative agent (the "Administrative
Agent"), as such agreement may from time to time be amended, nor the rights of
the Lenders, or the effect of any action taken by Century-TCI California, under
the Credit Agreement (including without limitation, under Sections 2.03, 2.04,
or 2.05 thereof, or otherwise); or
..................(B) the validity or enforceability of any amendment
or modification to the Credit Agreement (or any of the Loan Documents referred
to therein) entered into by Century-TCI California with any of the Lenders or
the Administrative Agent, any of the Lenders and the Administrative Agent being
entitled to conclusively presume that any agreements or amendments executed by
the Partnership in its capacity as general partner of Century-TCI California is
valid, binding and enforceable and has been entered into after obtaining any
necessary consent from TCI required by this Section 5.1(c)(18).
(d) Consideration of Certain Transactions. The Managing Partner will consult
with the Advisory Committee before entering into any agreement or causing any
Subsidiary to enter into any agreement providing for any material transaction
outside the ordinary course of the Partnership's or such Subsidiary's business,
but the Managing Partner shall not be required under this Section 5.1(d) or
otherwise (except as specifically provided in Section 5.1(b) or Section 5.1(c))
to obtain the approval of the Advisory Committee in connection with any such
transaction.
(e) Expiration of Certain Approval Rights. The limitations in Section 5.1(b)
shall not apply at any time if:
(1) TCI's Percentage Interest is less than five percent at such time, and
(2) either:
(A) more than six months have elapsed since TCI's Percentage Interest fell below
five percent, unless at such time (1) TCI and Century have agreed on an
additional Capital Contribution to be made by TCI that would cause TCI's
Percentage Interest to be at least five percent, and the agreement between TCI
and Century with respect to such additional Capital Contribution is in full
force and effect, and (2) if the additional Capital Contribution contemplated by
such agreement would consist of any cable television system to be acquired by
TCI, TCI shall have entered into a letter of intent, memorandum of
understanding, or other similar document with respect to its acquisition of such
cable television system; or
(B) more than nine months have elapsed since TCI's Percentage Interest fell
below five percent, unless at such time (1) TCI and Century have agreed on an
additional Capital Contribution to be made by TCI that would cause TCI's
Percentage Interest to be at least five percent, and the agreement between TCI
and Century with respect to such additional Capital Contribution is in full
force and effect, and (2) if the additional Capital Contribution contemplated by
such agreement would consist of any cable television system to be acquired by
TCI, TCI shall have entered into a binding, definitive agreement with respect to
its acquisition of such cable television system, and such binding, definitive
agreement shall be in full force and effect.
5.2 Advisory Committee.
------------------
(a) Membership. The Partnership shall have an Advisory Committee consisting of
five individual representatives of the Partners. Three members of the Advisory
Committee shall be designated from time to time by Century in its sole
discretion. Two members of the Advisory Committee shall be designated from time
to time by TCI in its sole discretion. The members of the Advisory Committee, as
designated by Century and TCI, as of the date of this Agreement, are set forth
on Schedule II. The function of the Advisory Committee shall be to consult with
and advise the Managing Partner regarding significant decisions relating to the
Partnership, its Subsidiaries and their business and to make recommendations to
the Managing Partner with respect thereto; provided that ultimate decision
making power is vested in the Managing Partner, subject to the rights of TCI
specified elsewhere in this Agreement and provided further that the Advisory
Committee will 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.
(b) Removal and Replacement of Members.
-------------------------------------------
(1) Each Partner shall use its good-faith efforts to designate its
representatives as promptly as is reasonably practicable so that the Advisory
Committee shall at all times contain the number of members provided for in
Section 5.2(a).
(2) Any member of the Advisory Committee designated pursuant to Section 5.2(a)
may be removed and replaced at any time, and from time to time, by the Partner
that originally designated such member in accordance with Section 5.2(a). No
member shall be removed from office, with or without cause, without the consent
of the Partner that designated him.
(3) The Partnership shall reimburse each member of the Advisory Committee for
expenses, including travel and legal expenses, reasonably incurred in connection
with such member's performance of his duties as a member of the Advisory
Committee.
(c) Meetings of the Advisory Committee. The Advisory Committee shall hold one
regular meeting each quarter at such time and place as shall be determined by
the Advisory Committee. Special meetings of the Advisory Committee may be called
at any time by any member upon not less than three-Business-Days' prior notice.
Except as otherwise determined by the Advisory Committee, all special and
regular meetings of the Advisory Committee shall be held at the principal office
of the Partnership. Members of the Advisory Committee may participate in any
meeting of the Advisory Committee by means of conference telephone or similar
communications equipment through which all persons participating in the meeting
can hear each other, and such participation shall constitute presence in person
at the meeting.
(d) Procedural Matters.
(1) Unless waived in writing by all of the members (before or after a meeting)
at least three-Business-Days' prior notice of any meeting shall be given to each
member. Such notice shall state the purpose for which such meeting has been
called.
(2) At all meetings of the Advisory Committee, a majority of the members of the
Advisory Committee, including at least one member designated by TCI, shall
constitute a quorum for the transaction of business, except that, if notice was
given of two prior meetings called for the purpose of taking the same action (as
specified in the notices) and no member designated by TCI attended or was
represented by proxy at either of the meetings called by such notices, but a
quorum would have been present at each of such meetings had a member designated
by TCI attended or been represented by proxy, then at any subsequent meeting
called for the purpose of taking the same action, a majority of the members of
the Advisory Committee (without regard to whether any member designated by TCI
is present or represented by proxy) shall constitute a quorum for the
transaction of business. In determining the number of meetings called for the
purpose of taking any action under this Section 5.2(d)(2), any meeting adjourned
for lack of a quorum and each adjournment of such meeting shall be considered a
separate meeting, so long as a quorum would have been present had a member
designated by TCI attended or been represented by proxy.
(3) The Advisory Committee shall cause to be kept a book of minutes of all of
its meetings in which there shall be recorded the time and place of each such
meeting, whether regular or special, and if special, by whom called, the notice
thereof given, the names of those present, and the proceedings thereof.
5.3 No Management by Limited Partner.
--------------------------------
Except as expressly provided in this Agreement, no Limited Partner, in
its capacity as a limited partner of the Partnership, shall take part in or
interfere in any manner with the control, conduct, or operation of the
Partnership or have any right or authority to act for or bind the Partnership or
to vote on matters relating to the Partnership.
5.4 Operating and Capital Expenditure Budgets.
-----------------------------------------
A five-year operating plan for the Partnership is attached hereto as
Schedule III for informational purposes. After consultation with TCI, the
Managing Partner shall prepare and distribute to each Partner for informational
purposes only an operating budget and a capital expenditure budget for the
Partnership for each Fiscal Year.
5.5 No Personal Liability.
---------------------
No General Partner shall have any personal liability for the repayment
of the Capital Contributions of any other Partner, but each General Partner
shall return to the Partnership any distributions received by such General
Partner in excess of those to which such General Partner is entitled under this
Agreement.
5.6 Management Agreement.
--------------------
On the date hereof, Century-TCI California and Century (or an Affiliate
of Century designated by Century) shall enter into a Management Agreement
substantially in the form of Exhibit A. Century (or an Affiliate of Century
designated by Century) shall be entitled to the payments and reimbursements set
forth in such Management Agreement, as it may be amended from time to time in
accordance with its terms.
5.7 Tax Matters Partner.
-------------------
(a) Century is hereby designated as the Tax Matters Partner of the Partnership,
as provided in Treasury Regulations pursuant to Code Section 6231 and analogous
provisions of state and local law. Each Partner, by the execution of this
Agreement, consents to such designation of the Tax Matters Partner and agrees to
execute, certify, acknowledge, deliver, swear to, file, and record at the
appropriate public offices such documents as may be necessary or appropriate to
evidence such consent.
(b) To the extent and in the manner provided by applicable law and Treasury
Regulations, the Tax Matters Partner shall furnish the name, address, profits
interest, and taxpayer identification number of each Partner and any Assignee to
the Secretary of the Treasury or his delegate (the "Secretary").
(c) The Tax Matters Partner shall notify each Partner of any audit that is
brought to the attention of the Tax Matters Partner by notice from the Internal
Revenue Service or any state or local taxing authority and shall forward to each
Partner copies of any written notices, correspondence, reports, or other
documents received by the Tax Matters Partner in connection with such audit
within ten Business Days following its receipt thereof from the Internal Revenue
Service or other state or local taxing authority. The Tax Matters Member shall
provide TCI with reasonable advance notice of administrative proceedings with
the Internal Revenue Service or any state or local taxing authority, including
any closing conference with the examiner and any appeals conference.
(d) The Tax Matters Partner shall give the Partners thirty-days' advance written
notice of its intent to initiate judicial review, file a request for
administrative adjustment on behalf of the Partnership, extend the period of
limitations for making assessments of any tax against a Partner with respect to
any Partnership item, or enter into any agreement with the Internal Revenue
Service or any state or local taxing authority that would result in the
settlement of any alleged tax deficiency or other tax matter, or to any
adjustment of taxable income or loss or any item included therein, affecting the
Partnership or either Partner.
(e) Subject to the foregoing provisions of this Section 5.7, the Tax Matters
Partner is hereby authorized, upon thirty-days' advance written notice to TCI,
to take any of the actions specified below:
(1) to enter into any settlement with the Internal Revenue Service or the
Secretary or any state or local taxing authority with respect to any tax audit
or judicial review, in which agreement the Tax Matters Partner may expressly
state that such agreement shall bind the other Partners, except that such
settlement agreement shall not bind either Partner that (within the time
prescribed pursuant to the Code and Treasury Regulations thereunder) files a
statement with the Secretary or such state or local taxing authority providing
that the Tax Matters Partner shall not have the authority to enter into a
settlement agreement on the behalf of such Partner;
(2) if a notice of a final administrative adjustment at the Partnership level of
any item required to be taken into account by a Partner for tax purposes (a
"final adjustment") is mailed to the Tax Matters Partner, to seek judicial
review of such final adjustment, including the filing of a petition for
readjustment with the Tax Court, the District Court of the United States for the
district in which the Partnership's principal place of business is located, or
elsewhere as allowed by law, or the United States Court of Federal Claims;
(3) to intervene in any action brought by any other Partner for judicial review
of a final adjustment;
(4) to file a request for an administrative adjustment with the Secretary at any
time and, if any part of such request is not allowed by the Secretary, to file a
petition for judicial review with respect to such request;
(5) to enter into an agreement with the Internal Revenue Service or any state or
local taxing authority to extend the period for assessing any tax that is
attributable to any item required to be taken into account by a Partner for tax
purposes, or an item affected by such item; and
(6) to take any other action on behalf of the Partners (with respect to the
Partnership) or the Partnership in connection with any administrative or
judicial tax proceeding to the extent permitted by applicable law or Treasury
Regulations.
(f) The Tax Matters Partner shall consult in good faith with TCI before taking
any of the actions specified in Section 5.7(e).
(g) The Partnership shall indemnify and reimburse the Tax Matters Partner for
all reasonable expenses (including legal and accounting fees) incurred pursuant
to this Section 5.7 in connection with any administrative or judicial proceeding
with respect to the tax liability of the Partners. The payment of all such
reasonable expenses shall be made before any distributions are made to the
Partners. The taking of any action and the incurring of any expense by the Tax
Matters Partner in connection with any such proceeding, except to the extent
provided herein or required by law, is a matter in the sole discretion of the
Tax Matters Partner and the provisions on limitations of liability of a General
Partner and indemnification set forth in Article 12 shall be fully applicable to
Century in its capacity as the Tax Matters Partner.
(h) Any Partner that receives a notice of an administrative proceeding under
Code Section 6223 relating to the Partnership shall promptly notify the Tax
Matters Partner of the treatment of any Partnership item on such Partner's
federal income tax return that is or may be inconsistent with the treatment of
that item on the Partnership's return.
(i) Either Partner that enters into a settlement agreement with the Secretary
with respect to any Partnership item shall notify the Tax Matters Partner of
such agreement and its terms within sixty days after its date, and the Tax
Matters Partner shall notify the other Partners of the settlement agreement
within thirty days of such notification.
5.8 Consolidation.
-------------
It is the express intent and agreement of the Partners that Century
controls the Partnership for purposes of consolidating the operations of the
Partnership with Adelphia, under generally accepted accounting principles and
applicable Securities and Exchange Commission rules, regulations, and
guidelines, and that the limitations provided for in Section 5.1(b) and
elsewhere in this Agreement are designed to provide TCI with protection as a
minority partner, but are not intended to affect such control by Century. This
Section 5.8 shall not be construed as affecting in any way the rights of TCI
under this Agreement.
5.9 Management of Subsidiaries.
--------------------------
The Partnership shall not take any action as the sole or managing
member or sole or managing general partner of any Subsidiaries without the
approval of TCI if such action could not be taken by the Partnership without the
approval of TCI.
ARTICLE 6.........
STATUS OF LIMITED PARTNERS
6.1 Limited Liability.
-----------------
No Limited Partner, in its capacity as a limited partner of the
Partnership, shall be bound by or personally liable for the expenses,
liabilities, or obligations of the Partnership. In no event shall any Limited
Partner, in its capacity as a limited partner of the Partnership, be required to
make up a deficiency in its Capital Account upon the dissolution and termination
of the Partnership.
6.2 Return of Distributions of Capital.
----------------------------------
A Limited Partner may, under certain circumstances, be required by law
to return to the Partnership, for the benefit of the Partnership's creditors,
amounts previously distributed. No Limited Partner shall be obligated by this
Agreement to pay those distributions to or for the account of the Partnership or
any creditor of the Partnership. However, if any court of competent jurisdiction
holds that, notwithstanding the provisions of this Agreement, any Limited
Partner must return or pay over any part of those distributions, the obligation
shall be that of such Limited Partner alone and not of any other Partner. Any
payment returned to the Partnership by a Partner or made directly by a Partner
to a creditor of the Partnership shall be deemed a Capital Contribution by such
Partner.
6.3 Specific Limitations.
--------------------
No Limited Partner shall have the right or power to: (a) withdraw or
reduce its Capital Contribution except as a result of the dissolution of the
Partnership or as otherwise provided by law or in this Agreement, (b) bring an
action for partition against the Partnership or any assets of the Partnership,
(c) cause the termination and dissolution of the Partnership, except as set
forth in this Agreement, or (d) demand or receive property other than cash in
return for its Capital Contribution. Except as otherwise set forth in this
Agreement or in any agreement permitted to be entered into under this Agreement
with respect to the purchase, redemption, retirement, or other acquisition of
Partnership Interests, no Limited Partner shall have priority over any other
Limited Partner either as to the return of its Capital Contribution or as to Net
Profit, Net Loss, or distributions. Other than upon the termination and
dissolution of the Partnership as provided by this Agreement, there has been no
time agreed upon when the Capital Contribution of any Limited Partner will be
returned.
6.4 Issuance of Partnership Interests.
---------------------------------
(1) Subject to obtaining the approval required under Section 5.1(b)(6) and
Section 5.1(c)(3) and in accordance with the terms thereof, the Managing Partner
may issue additional Partnership Interests to any Person and may admit to the
Partnership as additional Partners the Persons acquiring such Partnership
Interests, if such Persons were not previously admitted as Partners. The Persons
acquiring such Partnership Interests shall have the rights and be subject to the
obligations attributable to such Partnership Interests in the form issued to
them. A Person admitted as a new Partner shall only be entitled to distributions
and allocations of Net Profit and Net Loss attributable to the period beginning
on the effective date of its admission to the Partnership, and the Partnership
shall attribute Net Profit and Net Loss to the period before the effective date
of the admission of a new Partner and to the period beginning on the effective
date of the admission of a new Partner by any method agreed to between the
Partners that is permitted by the Treasury Regulations; provided, however, that
(a) upon the issuance of a Partnership Interest to a Person other than a Partner
or an Affiliate of a Partner, if the Partners are unable to agree on the method
of attributing Net Profit and Net Loss to such periods, the Partnership shall
attribute Net Profit and Net Loss to such periods by the interim closing of the
Partnership books method set forth in Treasury Regulation Section
1.706-1(c)(2)(ii), and (b) upon the issuance of a Partnership Interest to a
Partner or an Affiliate of a Partner, if the Partners are unable to agree on the
method of attributing Net Profit and Net Loss to such periods, the Partnership
shall attribute Net Profit and Net Loss to such periods pursuant to any method
agreed to between the Partnership and the new Partner so long as such method (1)
does not change the allocation of Net Profit and Net Loss or any item thereof to
any Partner other than the new Partner and its Affiliates and (2) does not
require an interim closing of the Partnership books.
ARTICLE 7.........
WITHDRAWAL OF GENERAL PARTNER
7.1 Withdrawal.
----------
(a) Century may retire or withdraw from the Partnership only with the prior
written consent of TCI.
(b) If Century withdraws from the Partnership while it is the Managing Partner,
the Partnership shall dissolve in accordance with the provisions of Article 11,
unless, within ninety days after the withdrawal of Century:
(1) TCI elects to continue the business of the Partnership and elects to convert
all or a portion of its limited partner interest to a general partner interest
and becomes the successor Managing Partner; or
(2) Either:
(A) if Century withdrew from the Partnership with the prior written consent of
TCI and at least one General Partner remains, TCI and Century elect to continue
the business of the Partnership and either (i) agree to appoint an existing
General Partner to be the successor Managing Partner or (ii) agree to admit a
new General Partner and to appoint such new General Partner to be the successor
Managing Partner; or
(B) if Century withdrew from the Partnership without the prior written consent
of TCI, TCI elects to continue the business of the Partnership and either (i) if
at least one General Partner remains elects to appoint an existing General
Partner to be the successor Managing Partner or (ii) elects to admit an Assignee
of part of its Partnership Interest as a new General Partner and to appoint such
new General Partner to be the successor Managing Partner.
(c) Any successor Managing Partner appointed pursuant to Section 7.1(b)
(including TCI) shall be entitled to exercise all rights and shall have all
duties and obligations of the Managing Partner under this Agreement. The
appointment of a successor Managing Partner pursuant to Section 7.1(b) shall be
effective as of the date of the withdrawal of Century, subject to the receipt of
all necessary governmental approvals and other material third-party consents.
(d) If Century withdrew from the Partnership without the prior written consent
of TCI, then, if TCI so elects, subject to the receipt of all necessary
governmental approvals and other material third-party consents, all of the
members of the Advisory Committee designated by Century shall be removed and
Century shall have no further right to designate any representatives.
(e) No successor to Century as Managing Partner may retire or withdraw from the
Partnership without the consent of the other Partners.
(f) For purposes of this Agreement, the term "withdrawal" means the happening of
any event described in Section 17-402(a) of the Act (other than subsections (4)
and (5) thereof).
(g) TCI may retire or withdraw from the Partnership only with the prior written
consent of Century.
7.2 Removal of Century as Managing Partner.
--------------------------------------
(a) The provisions of Section 7.2(b) shall apply if:
(1) a court of competent jurisdiction finds that Century has engaged in conduct
while acting as Managing Partner that constitutes either (A) a felony involving
moral turpitude that resulted in material harm to the Partnership or TCI or (B)
fraud against the Partnership or TCI, and
(2) the finding described in Section 7.2(a) has not been reversed, stayed,
enjoined, set aside, annulled, or suspended, and is not the subject of any
pending request for judicial review, reconsideration, appeal, or stay, and
(3) the time for filing any further request for judicial review,
reconsideration, appeal, or stay of the finding described in Section 7.2(a) has
expired.
(b) If each of the conditions specified in Section 7.2(a) is satisfied, then, if
TCI so elects by written notice to Century, upon the receipt of all necessary
governmental approvals and other material third-party consents:
(1) all of the members of the Advisory Committee designated by Century shall be
removed and Century shall have no further right to designate any
representatives; and
(2) Century shall be removed as Managing Partner and either (as specified by TCI
in its election pursuant to this Section 7.2(b)):
(A) TCI shall convert all or a portion of its limited partner interest to a
general partner interest and become the successor Managing Partner; or
(B) an existing General Partner appointed by TCI shall become the successor
Managing Partner; or
(C) an Assignee of part of TCI's Partnership Interest shall be admitted as a new
General Partner and shall become the successor Managing Partner.
(c) Any successor Managing Partner appointed pursuant to Section 7.2(b)
(including TCI) shall be entitled to exercise all rights and shall have all
duties and obligations of the Managing Partner under this Agreement. The
appointment of a successor Managing Partner pursuant to Section 7.2(b) shall be
effective as of the date of the removal of Century as Managing Partner.
7.3 Effect of Withdrawal or Removal of Managing Partner.
---------------------------------------------------
If the Partnership is continued pursuant to Section 7.1 following the
withdrawal of Century, or if Century is removed as Managing Partner pursuant to
Section 7.2, then the entire Partnership Interest of Century shall be converted
to that of a Limited Partner unless such conversion would have adverse tax
consequences to TCI or the TCI Members. The withdrawal or removal of any
Managing Partner shall not alter the allocations and distributions to be made to
the Partners pursuant to this Agreement.
7.4 No Dissolution.
--------------
The withdrawal of a General Partner other than the Managing Partner
shall not cause the dissolution of the Partnership or alter the allocations and
distributions to be made to the Partners pursuant to this Agreement.
ARTICLE 8.........
ASSIGNMENT OF PARTNERSHIP INTERESTS
8.1 Assignments by Century.
----------------------
Except as provided in Section 8.3, Century shall not assign (whether by
sale, exchange, gift, contribution, distribution, or other transfer, including a
pledge or other assignment for security purposes) all or any part of its
interest in the Partnership without the prior written consent of TCI.
8.2 Assignments by Other Partners.
-----------------------------
Except as provided in Section 8.3, a Partner may not assign (whether by
sale, exchange, gift, contribution, distribution, or other transfer, including a
pledge or other assignment for security purposes) all or any part of its
Partnership Interest without the prior written consent of the Managing Partner.
Notwithstanding the consent of the Managing Partner to any assignment by a
Partner of all or any part of its Partnership Interest, the rights of any
Assignee shall be subject at all times to the limitations set forth in Section
8.4.
8.3 Exceptions.
----------
The provisions of Section 8.1 and Section 8.2 shall not apply and no
consent of the Managing Partner or TCI, as applicable, shall be required for:
(a) any assignment of Partnership Interests by Century that is permitted by
Article 9; or
(b) an assignment by a Partner or an Assignee of a Partner to a Controlled
Affiliate of such Partner; or
(c) in the case of an assignment by TCI or an Assignee of TCI, an assignment to
any Person controlled directly or indirectly by Tele-Communications and of which
Tele-Communications owns, directly or indirectly, at least fifty percent of the
outstanding equity interests; or
(d) in the case of an assignment by Century or an Assignee of Century, an
assignment to any Person controlled directly or indirectly by Adelphia and of
which Adelphia owns, directly or indirectly, at least fifty percent of the
outstanding equity interests; or
(e) an assignment by TCI pursuant to Section 7.1(b)(2)(B) or Section
7.2(b)(2)(C) to a Person who will become a successor Managing Partner.
8.4 Assignee.
--------
If the provisions of this Article 8 have been complied with, an
Assignee shall be entitled to receive distributions of cash or other property,
and allocations of Net Profit and Net Loss and of items of income, deduction,
gain, loss, or credit, from the Partnership attributable to the assigned
Partnership Interests from and after the effective date of the assignment, and
shall have the right to receive a copy of the quarterly and annual financial
statements required herein to be provided the Partners, but an Assignee shall
have no other rights of a Partner herein, such as rights to any other
information, an accounting, inspection of books or records, or voting as a
Partner on matters required by law, unless and until such Assignee is admitted
as a substitute Partner pursuant to the provisions of Section 8.8. The
Partnership and the Managing Partner shall be entitled to treat the assignor as
the absolute owner of the Partnership Interests in all respects, and shall incur
no liability for distributions, allocations of Net Profit or Net Loss, or
transmittal of reports and notices required to be given to Partners that are
made in good faith to the assignor until the effective date of the assignment,
or, in the case of the transmittal of reports (other than the financial
statements referred to above) or notices, until the Assignee is so admitted as a
substitute Partner. The effective date of an assignment shall be the first day
of the calendar month following the month in which the Managing Partner has
received an executed instrument of assignment in compliance with this Article 8
or such other date specified in the executed instrument of assignment. The
Assignee shall be deemed an Assignee on the effective date, and shall be only
entitled to distributions and allocations of Net Profit and Net Loss
attributable to the period beginning on the effective date of assignment. The
Partnership shall attribute Net Profit and Net Loss to the period before the
effective date of assignment and to the period beginning on the effective date
of assignment as provided in Section 4.5. Each Assignee will inherit the balance
of the Capital Account, as of the effective date of assignment, of the assignor
with respect to the Partnership Interests assigned.
8.5 Other Consents and Requirements.
-------------------------------
Any assignment of any Partnership Interests in the Partnership must be
in compliance with any requirements imposed by any state securities
administrator having jurisdiction over the assignment and the United States
Securities and Exchange Commission and must not cause the Partnership or any
Subsidiary to be in violation of any Ownership Restriction.
8.6 Assignment Not in Compliance.
----------------------------
Any assignment in contravention of any of the provisions of this
Article 8 shall be void and of no effect, and shall neither bind nor be
recognized by the Partnership.
8.7 Division of Partnership Interests.
---------------------------------
The several rights and obligations inherent in the Capital Account and
the Percentage Interest attributable to a Partner's Partnership Interest are
indivisible except in equal proportions, such that the assignment of a specified
percentage of a Partner's Partnership Interest may only represent an equal
percentage of the total Capital Account and the Percentage Interest that was
attributable to such Partner's Partnership Interest prior to the assignment.
8.8 Substitute Partners.
-------------------
An Assignee may not become a substitute Partner unless all of the
following conditions are first satisfied:
(a) A duly executed and acknowledged written instrument of assignment shall have
been filed with the Partnership, specifying the Partnership Interests being
assigned and setting forth the intention of the assignor that the Assignee
succeed to the assignor's interest as a substitute Partner;
(b) The Assignee shall be an Accredited Investor;
(c) The assignor and Assignee shall have executed and acknowledged any other
instruments that the Managing Partner deems necessary or desirable for
substitution, including the written acceptance and adoption by the Assignee of
the provisions of this Agreement, and shall have executed, acknowledged, and
delivered to the Managing Partner a special power of attorney as provided in
Section 16.5(b);
(d) Except in the case of an assignment permitted by Section 8.3, the non
assigning Partner shall have consented in writing to the admission of the
Assignee as a substitute Partner, the granting of which may be withheld by the
nonassigning Partner in its sole and absolute discretion;
(e) The Assignee shall have paid to the Partnership a transfer fee sufficient to
cover all reasonable expenses connected with the substitution; and
(f) The assignment to the Assignee shall have complied with the other provisions
of this Article 8.
8.9 Consent.
-------
Each Partner consents to the admission of substitute Partners by the
Managing Partner and to any Assignee of its Partnership Interests becoming a
substituted Partner in accordance with the terms and conditions of this
Agreement.
8.10 Covenants of Parents.
--------------------
(a) By executing this Agreement, Tele-Communications agrees that it will not
cause or permit to occur any transaction or series of transactions unless, after
giving effect to such transaction or series of transactions, at least fifty
percent of all the outstanding equity interests in TCI would be owned, directly
or indirectly, by one of the following Persons, and TCI would be controlled,
directly or indirectly, by one of the following Persons:
(1) Tele-Communications; or
(2) any other Person that directly or indirectly owns either:
(A) cable television systems serving at least one million subscribers (excluding
cable television systems owned directly or indirectly by the Partnership) that
were owned, directly or indirectly, by Tele-Communications prior to the
transaction or series of transactions; or
(B) substantially all the cable television systems that were owned, directly or
indirectly, by Tele-Communications prior to the transaction or series of
transactions.
(b) By executing this Agreement, Century/Texas agrees that, except for a
transaction permitted by Article 9, it will not cause or permit to occur any
transaction or series of' transactions unless, after giving effect to such
transaction or series of transactions, at least fifty percent of all the
outstanding equity interests in Century would be owned, directly or indirectly,
by one of the following Persons, and Century would be controlled, directly or
indirectly, by one of the following Persons:
(1) Century/Texas; or
(2) Adelphia; or
(3) any other Person that directly or indirectly owns either:
(A) cable television systems serving at least one million subscribers (excluding
cable television systems owned directly or indirectly by the Partnership) that
were owned, directly or indirectly, by Century/Texas prior to the transaction or
series of transactions; or
(B) substantially all the cable television systems that were owned, directly or
indirectly, by Century/Texas prior to the transaction or series of transactions.
8.11 Impact of Code Section 708.
--------------------------
(a) If the assignment by a Partner of all or part of its Partnership Interest
results in the Termination of the Partnership, the Partner causing such
Termination (as determined in accordance with this Section 8.11) will indemnify
the other Partner for its Additional Income Tax Amount and reimburse the
Partnership for any reasonable fees and expenses of accountants and attorneys
that are incurred by the Partnership as a result of such Termination. For
purposes of this Section 8.11:
(1) "Termination" means, with respect to the Partnership, a technical
termination of the Partnership under Code Section 708(b)(1)(B); and
(2) "Additional Income Tax Amount" means, with respect to any Partner, an amount
equal to the excess of (A) the net present value on the date of Termination of
the federal and state income tax benefit attributable to such Partner's shares
of the Partnership's future tax depreciation expense (taking into account all
allocations made with respect to depreciable property under Code Section
704(c)), computed without regard to Code Section 168(i)(7) over (B) the net
present value on the date of Termination of the federal and state income tax
benefit attributable to such Partner's shares of the Partnership's future tax
depreciation expense (taking into account all allocations made with respect to
depreciable property under Code Section 704(c)), computed with regard to Code
Section 168(i)(7). In determining a Partner's "Additional Income Tax Amount,"
net present value shall be calculated using a discount rate equal to the
interest rate paid by the Partnership on the date of Termination with respect to
its senior indebtedness and the highest federal and California corporate income
tax rates in effect on the date of Termination shall apply.
(b) Except as provided in Section 8.11(c) and Section 8.11(d), the Partner whose
assignment of all or part of its Partnership Interest resulted in the
Termination of the Partnership shall be treated as the Partner causing such
Termination for purposes of Section 8.11(a).
(c) If a Partner desires to assign all or part of its Partnership Interest in a
transaction that, if consummated at one time, would result in the Termination of
the Partnership, such Partner may elect (1) to assign immediately as much of its
Partnership Interest as may then be assigned without resulting in the
Termination of the Partnership and (2) to assign the remaining portion of its
Partnership Interest that it desires to assign as soon thereafter as such
subsequent assignment would not result in the Termination of the Partnership. If
a Partner notifies the other Partner that it has elected to assign all or part
of its Partnership Interest in accordance with this Section 8.11(c), specifying
in its notice the portion of its Partnership Interest to be assigned immediately
in accordance with clause (1) of the preceding sentence and the portion of its
Partnership Interest to be assigned subsequently in accordance with clause (2)
of the preceding sentence (the assignment of such portion, the "Deferred
Assignment"), then, if the other Partner assigns all or any part of its
Partnership Interest prior to the Deferred Assignment by the notifying Partner
and the Deferred Assignment therefore results in the Termination of the
Partnership, the other Partner and not the notifying Partner shall be treated as
the Partner causing such Termination for purposes of Section 8.11(a).
(d) If a Partner (the "First Assigning Partner") fails to notify another Partner
(the "Second Assigning Partner") in writing of an assignment of any part of its
Partnership Interest (including any assignment of a direct or indirect ownership
interest in the First Assigning Partner to which Section 8.11(e) applies), and
an assignment by the Second Assigning Partner of any part of its Partnership
Interest (including any assignment of a direct or indirect ownership interest in
the Second Assigning Partner to which Section 8.11(e) applies) after the
assignment by the First Assigning Partner and before the Second Assigning
Partner has notice of the prior assignment by the First Assigning Partner
results in a Termination of the Partnership that would not have occurred if the
assignment by the First Assigning Partner had not occurred, then the First
Assigning Partner and not the Second Assigning Partner shall be treated as the
Partner causing such Termination for purposes of Section 8.11(a).
(e) Each Partner agrees that, solely for purposes of this Section 8.11, any
assignment of a direct or indirect ownership interest in a Partner that has the
same effect as an assignment of such Partner's Partnership Interest for purposes
of determining whether a Termination of the Partnership has occurred shall be
treated as an assignment of such Partner's Partnership Interest. Each Partner
shall notify the Partnership and the other Partner in writing not less than five
days prior to any assignment of its Partnership Interest (including any
assignment of a direct or indirect ownership interest in such Partner to which
this Section 8.11(e) applies).
ARTICLE 9.........
RIGHT OF FIRST OFFER
9.1 Proposed Sale and Negotiations With TCI.
---------------------------------------
(a) If, at any time after the fifth anniversary of the date hereof, Century or
any Affiliate of Century (such Person, the "Seller") proposes to assign (whether
by sale, exchange, gift, contribution, distribution, or other transfer) all of
Century's Partnership Interest or all of the outstanding equity interests in one
or more Persons (including Century) that collectively own, directly or
indirectly, all of Century's Partnership Interest (other than an assignment
permitted by Section 8.3(b), Section 8.3(d), or Section 8.10(b)), then Century
shall send a written notice (the "First Offer Notice") to TCI specifying the
Partnership Interest or other equity interests proposed to be sold (the "Offered
Interest") and the following terms of the sale: (1) purchase price and any
adjustments thereto, including any adjustments based on the number of customers
or operating cash flow (the "Purchase Price"), (2) other financial terms, such
as the type and structure of consideration to be paid (which shall not include
consideration other than cash or promissory notes) and the timing of payments
(the "Other Financial Terms"), and (3) any other material terms, such as any
nonstandard representations, covenants, or closing conditions, any material
limitations on the purchaser's right to indemnification, and the "upset date"
(the "Other Terms").
(b) Within ten Business Days after its receipt of the First Offer Notice, TCI
shall send a written notice to Century specifying whether TCI desires to begin
negotiations with the Seller concerning a purchase by TCI of the Offered
Interest on the terms specified in the First Offer Notice. If TCI sends a timely
notice to Century pursuant to this Section 9.1(b) specifying that TCI desires to
begin such negotiations, TCI and the Seller will undertake in good faith to
reach a binding, definitive agreement for the purchase and sale of the Offered
Interest, incorporating the terms specified in the First Offer Notice, with any
changes thereto that may be agreed to between TCI and the Seller, and any other
terms and conditions that may be agreed to between TCI and the Seller. If TCI
and the Seller reach a binding, definitive agreement for the purchase and sale
of the Offered Interest, such agreement shall govern the rights and obligations
of TCI and the Seller with respect to the purchase and sale of the Offered
Interest, and the Seller shall be permitted to consummate the sale of the
Offered Interest substantially in accordance with terms of such agreement.
9.2 Sale to Third Party; Re-Offer to TCI.
------------------------------------
(a) If TCI does not send a timely written notice to Century pursuant to Section
9.1(b) specifying that TCI desires to begin negotiations with the Seller
concerning a purchase by TCI of the Offered Interest, or if TCI and the Seller
commence such negotiations but are unable to enter into a binding, definitive
agreement for the sale of the Offered Interest within ninety days after TCI's
notice to Century pursuant to Section 9.1(b), then the Seller may undertake to
sell the Offered Interest to any Person in accordance with this Section 9.2.
(b) The Seller may agree to sell the Offered Interest to any Person so long as
(1) the terms and conditions of such sale are not materially different from the
terms specified in the First Offer Notice and (2) the binding, definitive
agreement between the Seller and the purchaser of the Offered Interest is
entered into within one year after (A) if TCI elected to commence negotiations
pursuant to Section 9.1 (b), the sixtieth day after TCI's receipt of the First
Offer Notice, or (B) in all other events, the tenth Business Day after TCI's
receipt of the First Offer Notice. For purposes of this Section 9.2, the terms
and conditions of a proposed sale of the Offered Interest will be materially
different from the terms specified in the First Offer Notice if, and only if,
(1) the Purchase Price is less than that specified in the First Offer Notice, or
(2) the Other Financial Terms are different from those specified in the First
Offer Notice, or (3) any of the Other Terms are different from those specified
in the First Offer Notice in any respect that materially reduces the value of
the transaction to the Seller.
(c) If the Seller desires to sell the Offered Interest to any Person on terms
and conditions that are materially different from the terms specified in the
First Offer Notice, then Century may send a written notice (the "Re-Offer
Notice") to TCI specifying all material terms and conditions on which the Seller
proposes to sell the Offered Interest (which terms shall not include the receipt
by the Seller of consideration other than cash or promissory notes) and
including an offer from the Seller to sell the Offered Interest to TCI on such
terms and conditions. TCI may accept the offer included in the Re-Offer Notice
by sending a written notice of acceptance to Century within three Business Days
after TCI's receipt of the Re-Offer Notice, and such offer and acceptance shall
constitute a binding agreement between TCI and the Seller concerning the sale of
the Offered Interest on the terms and conditions specified in the Re-Offer
Notice. If Century sends a Re-Offer Notice and TCI does not timely accept the
offer included in the Re-Offer Notice, the Seller may agree to sell the Offered
Interest to any Person on the terms and conditions specified in the Re-Offer
Notice so long as the binding, definitive agreement between the Seller and the
purchaser of the Offered Interest is entered into within sixty days after TCI's
receipt of the Re-Offer Notice.
(d) The Seller shall be permitted to consummate the sale of the Offered Interest
substantially in accordance with terms of any agreement entered into pursuant to
this Section 9.2. If any agreement entered into pursuant to this Section 9.2 is
terminated prior to the sale of the Offered Interest, then the terms of this
Article 9 shall apply to any subsequent proposal to sell such Offered Interest.
(e) If the Seller proposes to undertake to sell the Offered Interest in
accordance with this Section 9.2 through an auction or similar process, TCI
agrees that neither TCI nor any of its Controlled Affiliates will participate in
such auction or similar process. The provisions of Section 9.1 and Section 9.2
shall apply to any proposed sale by the Seller of the Offered Interest through
an auction or similar process.
9.3 Seller's Election Not to Sell.
-----------------------------
Subject to the terms of any binding agreement entered into pursuant to
this Article 9 and the Seller's obligation to negotiate with TCI in good-faith
pursuant to Section 9.1(b), the Seller may, at any time and in its sole
discretion, terminate its efforts to sell the Offered Interest and rescind any
notice or offer delivered to TCI pursuant to this Article 9. If the Seller
terminates its efforts to sell the Offered Interest, the terms of this Article 9
shall apply to any subsequent efforts by the Seller to sell such Offered
Interest.
ARTICLE 10........
OTHER BUSINESSES AND INVESTMENT OPPORTUNITIES
10.1 Prohibited Cross-Interests.
--------------------------
(a) Each Partner agrees that, during the term of this Agreement, neither such
Partner nor any Controlled Affiliate of such Partner shall, directly or
indirectly, acquire any interest in any business or in any Person if the
acquisition of such interest would cause the Partnership or any Subsidiary to be
in violation of any Ownership Restriction.
(b) If, during the term of this Agreement, there is a Formal Determination that
either Partner's holding of a Partnership Interest causes the Partnership or any
Subsidiary to be in violation of any Ownership Restriction, then the following
provisions of this Section 10.1(b) shall apply. For purposes of this Section
10.1(b), a "Formal Determination" means (1) an agreement between Century and
TCI, (2) a written determination by the FCC (including a determination by staff
employees of the FCC acting under delegated authority), regardless of whether
such determination is subject to administrative or judicial review,
reconsideration, or appeal (except to the extent that, so long as a stay of any
enforcement action by the FCC against the Partnership or any Subsidiary as a
result of any such violation of an Ownership Restriction is effective, the
Partner that caused the violation specifies that any such determination will not
constitute a Formal Determination during the pendency of any review,
reconsideration, or appeal), or (3) a decision of any court of competent
jurisdiction, regardless of whether such decision is subject to administrative
or judicial review, reconsideration, or appeal (except to the extent that
Century, and TCI agree that any such decision will not constitute a Formal
Determination during the pendency of any review, reconsideration, or appeal).
Century and TCI will use their respective good faith efforts, after consultation
with legal counsel, to reach an agreement as to whether either Partner's holding
of a Partnership Interest causes the Partnership or any Subsidiary to be in
violation of any Ownership Restriction.
(1) The Partnership will use reasonable efforts to obtain a stay of any
enforcement action by the FCC against the Partnership or any Subsidiary as a
result of any such violation of an Ownership Restriction (and the agreement of
the Partners shall be required for the Partnership to act otherwise), and the
Partners will cooperate reasonably with the Partnership in such efforts, to the
extent necessary to prevent such violation from having a material adverse effect
on the Partnership and the Subsidiaries before it is cured. For purposes of this
Section 10.1(b), a material adverse effect on the Partnership and the
Subsidiaries includes the loss of any license or licenses issued by the FCC
that, in the aggregate, are material to the conduct of the business of the
Partnership and the Subsidiaries, the imposition of any fines or forfeitures
that, in the aggregate, are material in amount, and limitations on the ability
of the Partnership or any Subsidiary to conduct its business in the ordinary
course consistent with its past practices.
(2) The Partnership and the Partners will cooperate reasonably with each other
and negotiate in good faith with the FCC to obtain a determination by the FCC
(including a determination by staff employees of the FCC acting under delegated
authority) that certain actions proposed to be taken by a Partner or its
Affiliates would cure any such violation of an Ownership Restriction. The
actions proposed to be taken by a Partner or its Affiliates to cure such
violation may be those that, in such Partner's judgment, are least detrimental
to such Partner and its Affiliates, and may include the divestiture of any asset
or the restructuring of any investment.
(3) If there is a Formal Determination that TCI's holding of a Partnership
Interest causes the Partnership or any Subsidiary to be in violation of any
Ownership Restriction, TCI agrees to take all reasonable actions necessary to
cure any such violation of an Ownership Restriction; provided, however, that:
(A) if the Partnership and the Partners receive a determination by the FCC
(including a determination by staff employees of the FCC acting under delegated
authority) that certain actions proposed to be taken by TCI or its Affiliates
would cure such violation, then, if TCI and its Affiliates take such actions,
TCI shall not be required to take any other action under this Section 10.1(b) to
cure such violation until such time, if any, that there is a subsequent Formal
Determination that such actions did not cure such violation; and
(B) TCI shall not be required to take any action to cure such violation prior to
the time that such violation would have a material adverse effect on the
Partnership and the Subsidiaries.
(4) The actions that TCI may be required to take pursuant to Section 10.1(b)(3)
(it being agreed by TCI that the following actions shall be deemed reasonable
for purposes of Section 10.1(b)(3)), subject to the limitations in Section
10.1(b)(3)(A) and Section 10.1(b)(3)(B), shall include, to the extent necessary
to cure such violation, executing amendments to this Agreement to eliminate any
right of TCI under this Agreement (other than its right to allocations of
income, its right to distributions, its rights under Section 5.1(c)(1), and its
right to approve any other action by the Partnership and the Subsidiaries if
such action (A) in the case of an action that does not uniquely affect either
Partner, such as an acquisition or disposition of assets or a financing, would
have a material adverse economic effect on TCI or (B) in the case of an action
that uniquely affects either Partner, such as a transaction between the
Partnership and an Affiliate of a Partner, would have an adverse economic effect
on TCI).
(5) If there is a Formal Determination that Century's holding of a Partnership
Interest causes the Partnership or any Subsidiary to be in violation of any
Ownership Restriction, Century will use its best efforts to cure any such
violation; provided, however, that:
(A) if the Partnership and the Partners receive a determination by the FCC
(including a determination by staff employees of the FCC acting under delegated
authority) that certain actions proposed to be taken by Century or its
Affiliates would cure such violation, then, if Century and its Affiliates take
such actions, Century shall not be required to take any other action under this
Section 10.1(b) to cure such violation until such time, if any, that there is a
subsequent Formal Determination that such actions did not cure such violation;
(B) Century shall not be required to take any action to cure such violation
prior to the time that such violation would have a material adverse effect on
the Partnership and the Subsidiaries; and
(C) Century shall not be required by this Section 10.1(b)(5) to convert the
Partnership Interest of Century to that of a Limited Partner or to eliminate any
right of Century under this Agreement.
(c) Neither Partner will approve the acquisition, directly or indirectly, by the
Partnership or any Subsidiary of any interest in any business or in any Person
if such Partner has actual knowledge that consummating such acquisition would
cause either Partner or any Affiliate of either Partner to be in violation of
any Ownership Restriction; provided that if the Managing Partner desires to
cause the Partnership or a Subsidiary to acquire assets or an interest in a
business or any Person, and the Managing Partner does not have actual knowledge
that such acquisition would cause the Partnership or a Subsidiary, either
Partner, or any Affiliate of either Partner to be in violation of any Ownership
Restriction, then the Managing Partner shall provide prior written notice to TCI
of such proposed acquisition at least 30 days prior to entering into a binding
agreement to effect such acquisition and, if TCI notifies the Managing Partner
within fifteen days of receiving such notice that such acquisition would cause
the Partnership or a Subsidiary or TCI to be in violation of any Ownership
Restriction, the Managing Partner shall not proceed with such acquisition
without first complying with this Section 10.1(c) again, it being understood
that if TCI does not so notify the Managing Partner within such fifteen-day
period then the Managing Partner shall be presumed not to have knowledge that
such acquisition would cause the Partnership or a Subsidiary, either Partner, or
any Affiliate of either Partner to be in violation of any Ownership Restriction.
10.2 Wireline All Distance Communications Services.
---------------------------------------------
(a) The Partnership will deliver a notice in writing (a "Notice") to AT&T Corp.
("AT&T") if the Partnership or any Subsidiary desires to offer consumer
residential wireline all-distance communications services ("All Distance
Services") in the Territory or in any other geographic area served by a cable
television system owned by the Partnership or any of its Subsidiaries
(collectively, with the Territory, the "Partnership Territory") accessible from
the Partnership's hybrid fiber coaxial infrastructure. AT&T will deliver a
Notice to the Partnership if AT&T desires to offer All Distance Services in the
Partnership Territory accessible from the hybrid fiber coaxial infrastructure of
an operator of a cable television system or an operator of a multichannel video
programming service. Any Notice or other notice to AT&T pursuant to this Section
10.2 shall be sent in the manner specified in Section 16.4 to AT&T Corp.,
Attention: Vice President-Law and Secretary, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or to such other address as AT&T shall have furnished
to the Partnership in writing.
(b) The Partnership and AT&T will negotiate in good-faith for a period of 90
days from the receipt of a Notice (a "Negotiation Period") regarding the terms
and conditions upon which the Partnership and AT&T would offer, promote and make
available All Distance Services in the Partnership Territory accessible from the
Partnership's hybrid fiber coaxial infrastructure. The Partnership and AT&T
acknowledge that this Section 10.2 constitutes a statement of their good-faith
intention to negotiate during the Negotiation Period with respect to All
Distance Services in the Partnership Territory accessible from the Partnership's
hybrid fiber coaxial infrastructure and does not itself constitute an agreement,
agreement to agree, or a binding commitment by any party with respect thereto.
Any agreements between the Partnership and AT&T with respect to the offer of All
Distance Services in the Partnership Territory accessible from the Partnership's
hybrid fiber coaxial infrastructure shall be set forth in a definitive agreement
and any other necessary documentation with respect thereto, subject to the
conditions expressed therein.
(c) There will be only one Negotiation Period pursuant to this Section 10.2. The
obligations of the Partnership and AT&T under this Section 10.2 will terminate
on the earliest to occur of the following: (i) if a Negotiation Period ends
without the Partnership and AT&T having executed and delivered a definitive
agreement with respect to All Distance Services; or (ii) on the fifth
anniversary of the date hereof.
(d) Nothing in this Section 10.2 will require the Partnership to terminate any
agreement or arrangement that is described on Schedule V before the end of the
current term thereof or to take any action that would constitute a breach or
default by the Partnership in the performance of its obligations under any such
agreement or arrangement. Nothing in this Section 10.2 will require AT&T to
terminate any existing agreement or arrangement before the end of the current
term thereof or to take any action that would constitute a breach or default by
AT&T in the performance of its obligations under any such agreement or
arrangement.
10.3 No Other Restrictions.
---------------------
Except as specifically provided above in this Article 10, nothing in
this Agreement shall limit the ability of either Partner, or any partner,
Affiliate, Controlled Affiliate, agent, or representative of either Partner, to
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, whether currently existing or
hereafter created and whether or not competitive with or advanced by the
business of the Partnership. Neither the Partnership nor the other Partner shall
have any rights in or to the income or profits derived therefrom, nor shall
either Partner have any obligation to the other Partner with respect to, any
such enterprise or related transaction.
ARTICLE 11........
DISSOLUTION AND LIQUIDATION OF PARTNERSHIP
11.1 Events of Dissolution.
---------------------
The Partnership shall be dissolved upon the happening of any of the
following events:
(a) the failure of the Partners to select a successor Managing Partner in
accordance with the provisions of Section 7.1(b) after the withdrawal of Century
as Managing Partner;
(b) the expiration of the term of the Partnership as set forth in Section 2.4;
(c) the sale, exchange, involuntary conversion, or other disposition or transfer
of all or substantially all of the assets of the Partnership;
(d) subject to any restriction in any agreement to which the Partnership is a
party, an election to liquidate and dissolve the Partnership made by Century
with the approval of TCI; or
(e) subject to any provision of this Agreement that limits or prevents
dissolution, the happening of any event that, under applicable law, causes the
dissolution of a limited partnership.
11.2 Liquidation.
-----------
(a) Upon dissolution of the Partnership for any reason, the Partnership shall
immediately commence to wind up its affairs. A reasonable period of time shall
be allowed for the orderly termination of the Partnership business, discharge of
its liabilities, and distribution or liquidation of the remaining assets so as
to enable the Partnership to minimize the normal losses attendant to the
liquidation process.
(b) Liquidation of the assets of the Partnership shall be managed on behalf of
the Partnership by the "Liquidator," which shall be (1) if the Partnership is
being liquidated pursuant to Section 11.1(a), a liquidating trustee selected by
the Partners other than a Partner that has withdrawn and (2) in all other
events, the Managing Partner. The Liquidator shall be responsible for soliciting
offers to purchase the entirety of the Partnership's assets (including equity
interests in other Persons) or portions or clusters of assets of the
Partnership.
(c) The Liquidator shall cause a full accounting of the assets and liabilities
of the Partnership to be taken and a statement thereof to be furnished to each
Partner within thirty days after the distribution of all of the assets of the
Partnership.
(d) The property and assets of the Partnership and the proceeds from the
liquidation thereof shall be applied in the following order of priority:
(1) first, to payment of the debts and liabilities of the Partnership, in the
order of priority provided by law (including any loans by either Partner to the
Partnership) and payment of the expenses of liquidation;
(2) second, to setting up of such reserves as the Liquidator may deem reasonably
necessary for any contingent or unforeseen liabilities or obligations of the
Partnership or any obligation or liability not then due and payable; provided,
however, that any such reserve shall be paid over by the Liquidator to an escrow
agent, to be held by such escrow agent for the purpose of disbursing such
reserves in payment of such liabilities, and, at the expiration of such escrow
period as the Liquidator shall deem advisable, to distribute the balance
thereafter remaining in the manner hereinafter provided; and
(3) finally, to payment to the Partners, in accordance with Section 4.1(b). The
distributions pursuant to this Section 11.2(d)(3) shall, to the extent possible,
be made prior to the later of the end of the Fiscal Year in which the
dissolution occurs or the ninetieth day after the date of dissolution, or such
other time period which may be permitted under Treasury Regulations Section
1.704-1(b)(2)(ii)(b).
(e) If in the course of the liquidation and dissolution of the Partnership
pursuant to this Article 11 the Liquidator determines that a sale by all the
Partners to any Person of their Partnership Interests, instead of a sale by the
Partnership and the Subsidiaries of their respective assets, would more
efficiently effect the liquidation of the Partners' economic interests in the
Partnership or would reduce negative tax consequences to the Partners and the
Partnership, but would not adversely affect the rights and obligations of either
Partner (including the tax consequences to either Partner), then each Partner
agrees to sell its Partnership Interest to such Person, and the Liquidator shall
have the authority, pursuant to the power of attorney granted in Section
16.5(b), to execute, acknowledge, deliver, swear to, file, and record all
agreements, instruments, and other documents that may be necessary or
appropriate to effect the sale of such Partner's Partnership Interest.
(f) Following the dissolution of the Partnership pursuant to Section 11.1, the
Partners will use commercially reasonable efforts to structure the liquidation
of the Partnership in a manner that minimizes negative tax consequences to the
Partners and the Partnership to the extent doing so would not materially
adversely affect either Partner (except to the extent such Partner is adequately
compensated by the other Partner for such adverse effect). Any structure agreed
to by the Partners pursuant to this Section 11.2(f) shall supersede the other
provisions of this Article 11 to the extent it is inconsistent with such other
provisions, but nothing in this Section 11.2(f) shall modify or otherwise affect
the other provisions of this Article 11 if the Partners are unable to agree on
such a structure.
11.3 Distribution in Kind.
--------------------
The distribution to either Partner of a noncash asset in connection
with the liquidation of the Partnership shall be subject to Section 4.1(d). The
fair-market value of any noncash asset distributed in connection with the
liquidation of the Partnership shall be determined by an independent appraiser
(any such appraiser must be nationally recognized as an expert in valuing the
type of asset involved) selected by the Liquidator.
11.4 No Action for Dissolution.
-------------------------
The Partners acknowledge that irreparable damage would be done to the
goodwill and reputation of the Partnership if either Partner should bring an
action in court to dissolve the Partnership under circumstances where
dissolution is not required by Section 11.1. This Agreement has been drawn
carefully to provide fair treatment of all parties and equitable payment in
liquidation of the Partnership Interests of the Partners. Accordingly, except
where liquidation and dissolution are required by Section 11.1, each Partner
hereby waives and renounces its right to initiate legal action to seek
dissolution or to seek the appointment of a receiver or trustee to liquidate the
Partnership.
11.5 No Further Claim.
----------------
Upon dissolution, each Limited Partner shall look solely to the assets
of the Partnership for the return of its investment, and if the property of the
Partnership remaining after payment or discharge of the debts and liabilities of
the Partnership, including debts and liabilities owed to one or more of the
Partners, is insufficient to return the aggregate capital contributions of a
Limited Partner, such Limited Partner shall have no recourse against any other
Partner.
ARTICLE 12........
INDEMNIFICATION
12.1 General.
-------
The Partnership shall indemnify, defend, and hold harmless the Managing
Partner, the Managing Partner's officers, directors, shareholders, employees,
and agents, the employees, officers, and agents of the Partnership, the members
of the Advisory Committee, and either Partner that has designated a member of
the Advisory Committee (but only to the extent such Partner suffers any
liability, loss, or damage as a result of the actions of such member of the
Advisory Committee) (all indemnified persons being referred to as "Indemnified
Persons" for purposes of this Article 12) from any liability, loss, or damage
incurred by the Indemnified Person by reason of any act performed or omitted to
be performed by the Indemnified Person in connection with the business of the
Partnership, including costs and attorneys' fees (which attorneys' fees may be
paid as incurred) and any amounts expended in the settlement of any claims of
liability, loss, or damage; provided, however, that, if the liability, loss,
damage, or claim arises out of any action or inaction of an Indemnified Person,
indemnification under this Section 12.1 shall be available only if (a) either
(1) the Indemnified Person, at the time of such action or inaction, determined,
in good faith, that its or his course of conduct was in, or not opposed to, the
best interests of the Partnership, or (2) in the case of inaction by the
Indemnified Person, the Indemnified Person did not intend its or his inaction to
be harmful or opposed to the best interests of the Partnership, and (b) the
action or inaction did not constitute fraud, gross negligence, breach of
fiduciary duty (which shall not be construed to encompass mistakes in judgment
or any breach of any Indemnified Person's duty of care that did not constitute
gross negligence), or willful misconduct by the Indemnified Person; and
provided, further, however, that indemnification under this Section 12.1. I
shall be recoverable only from the assets of the Partnership and not from any
assets of the Partners. The Partnership may pay for insurance covering liability
of the Indemnified Persons for negligence in operation of the Partnership's
affairs.
12.2 Exculpation.
-----------
No Indemnified Person shall be liable, in damages or otherwise, to the
Partnership or to either Partner for any loss that arises out of any act
performed or omitted to be performed by it or him pursuant to the authority
granted by this Agreement if (a) either (1) the Indemnified Person, at the time
of such action or inaction, determined, in good faith, that its or his course of
conduct was in, or not opposed to, the best interests of the Partnership, or (2)
in the case of inaction by the Indemnified Person, the Indemnified Person did
not intend its or his inaction to be harmful or opposed to the best interests of
the Partnership, and (b) the conduct of the Indemnified Person did not
constitute fraud, gross negligence, breach of fiduciary duty (which shall not be
construed to encompass mistakes in judgment or any breach of any Indemnified
Person's duty of care that did not constitute gross negligence), or willful
misconduct by such Indemnified Person.
12.3 Persons Entitled to Indemnity.
-----------------------------
Any Person who is within the definition of "Indemnified Person" at the
time of any action or inaction in connection with the business of the
Partnership shall be entitled to the benefits of this Article 12 as an
"Indemnified Person" with respect thereto, regardless of whether such Person
continues to be within the definition of "Indemnified Person" at the time of his
or its claim for indemnification or exculpation hereunder.
ARTICLE 13........
BOOKS, RECORDS, ACCOUNTING, AND REPORTS
13.1 Books and Records.
-----------------
The Partnership shall maintain at its principal office all of the
following:
(a) A current list of the full name and last-known business or residence address
of each Partner together with the Capital Contributions and Partnership Interest
of each Partner;
(b) A copy of the Certificate, this Agreement, and any and all amendments to
either thereof, together with executed copies of any powers of attorney pursuant
to which any certificate or amendment has been executed;
(c) Copies of the Partnership's federal, state, and local income tax or
information returns and reports;
(d) The audited financial statements of the Partnership and its Subsidiaries for
the six most recent Fiscal Years; and
(e) The Partnership's books and records (including its Subsidiaries) for at
least the current and past three Fiscal Years and any necessary supporting
information for any tax or information returns and reports for any prior taxable
year for which the statute of limitations has not expired (taking into account
any extensions).
13.2 Delivery to Partner and Inspection.
----------------------------------
(a) Upon the request of a Partner, the Managing Partner shall promptly deliver
to the requesting Partner, at the expense of the Partnership, a copy of the
information required to be maintained by Section 13.1 except for Section
13.1(e).
(b) Each Partner, or its duly authorized representative, has the right, upon
reasonable request, to inspect and copy during normal business hours any of the
Partnership records.
13.3 Annual Statements.
-----------------
(a) The Managing Partner shall cause to be prepared for each Partner at least
annually, at Partnership expense, audited financial statements of the
Partnership and a consolidated audited financial statement for the Partnership
and the Subsidiaries (other than any Subsidiary the financial statements of
which cannot, under generally accepted accounting principles, be consolidated
with the financial statements of the Partnership), along with supplemental
information for the Partnership and each Subsidiary included in the consolidated
financial statements, all prepared in accordance with generally accepted
accounting principles and accompanied by a report thereon containing the opinion
of a nationally recognized accounting firm chosen by the Managing Partner. The
financial statements will include a balance sheet, statement of income or loss,
statement of cash flows, and statement of Partners' equity, including
appropriate notes required by generally accepted accounting principles. The
supplemental information will consist of a consolidating balance sheet and a
consolidating statement of operations and Partners' equity for the preceding
Fiscal Year. The Partnership shall distribute the financial statements or
portions thereof to each Partner as follows:
(1) the Managing Partner shall distribute to each Partner a statement setting
forth the net income or loss of the Partnership for each Fiscal Year within
forty-five days after the close of such Fiscal Year;
(2) the Managing Partner shall distribute to each Partner the balance sheet,
statement of income or loss, statement of cash flows, and statement of Partners'
equity (including appropriate notes required by generally accepted accounting
principles) to be included in the financial statements for each Fiscal Year
within forty-five days after the close of such Fiscal Year;
(3) the Managing Partner shall distribute to each Partner a preliminary draft of
the complete financial statements for each Fiscal Year as soon as practicable
after the close of such Fiscal Year; and
(4) the Managing Partner shall distribute to each Partner the complete audited
financial statements for each Fiscal Year as soon as practicable after the close
of such Fiscal Year and, in any event, by March 15 of the year following such
Fiscal Year.
(b) The Managing Partner shall have prepared at least annually, at Partnership
expense, Partnership information necessary for the preparation of each Partner's
federal and state income tax returns. The Partnership shall send the information
described in this paragraph to each Partner within seventy-five days after the
end of each Fiscal Year and shall use commercially reasonable efforts to send
such information to each Partner within sixty-five days after the end of each
Fiscal Year.
(c) The Managing Partner shall also cause to be distributed to each Partner,
within ten days after delivery to the Partnership, any audited financial
statements that are prepared with respect to any Subsidiary the financial
statements of which are not consolidated with the financial statements of the
Partnership.
(d) The Managing Partner shall distribute to each Partner, promptly after they
become available, copies of the Partnership's federal, state, and local income
tax or information returns for each taxable year.
13.4 Quarterly Financial Statements.
------------------------------
(a) At the close of each of the first three quarters of any Fiscal Year, the
Managing Partner shall cause to be distributed to each Partner a quarterly
report covering each fiscal quarter of the operations of the Partnership and
each Subsidiary, consisting of unaudited financial statements (comprising a
balance sheet, a statement of income or loss, and a statement of cash flows),
and a statement of other pertinent information regarding the Partnership and
each such Subsidiary and their activities. The Managing Partner shall cause
copies of the statements and other pertinent information (including a summarized
statement of operations data of the Partnership that complies with the
requirements of APB Opinion No. 18 and Rule 4-08(g) of Regulation S-X under the
Securities Act) to be distributed to each Partner within thirty days after the
close of the fiscal quarter to which the statements relate. The Managing Partner
shall also cause to be distributed to each Partner, within ten days after
delivery to the Managing Partner, any quarterly report that is prepared with
respect to any Subsidiary the operating results of which are not included in the
quarterly report of the Partnership.
(b) The Managing Partner shall also distribute to each Partner (1) a preliminary
draft of a statement setting forth the net income or loss of the Partnership for
each calendar quarter within twenty-one days after the close of such calendar
quarter, and (2) a final statement setting forth the net income or loss of the
Partnership for each calendar quarter (including each Partner's share of all
items of income, gain, loss, and deduction of the Partnership for such calendar
quarter and the Fiscal Year to date) within thirty days after the close of such
calendar quarter.
(c) The Managing Partner shall also distribute to each Partner, at least five
Business Days before the due date for each Federal estimated tax payment
required to be made by a calendar year corporate taxpayer, a statement
reflecting all information concerning Partnership income, gain, loss, and
deduction that is reasonably necessary to enable such Partner or any Affiliate
of such Partner to calculate its estimated tax payments.
13.5 Monthly Statements.
------------------
The Managing Partner shall cause to be distributed to each Partner a
monthly report covering each calendar month of the operations of the Partnership
and each Subsidiary, consisting of unaudited statements of income and loss for
the Partnership and each Subsidiary. The Managing Partner shall cause copies of
the statements to be distributed to each Partner as soon as practicable and, in
any event, within thirty days after the close of the calendar month covered by
such report. The Managing Partner shall also cause to be distributed to each
Partner, within ten days after delivery to the Managing Partner, any monthly
report that is prepared with respect to any Subsidiary the operating results of
which are not included in the monthly report of the Partnership.
13.6 Other Information.
-----------------
The Partnership shall provide to each Partner any other information and
reports relating to any cable television systems or other businesses owned by,
and the financial condition of, the Partnership, each Subsidiary, and any other
Person in which the Partnership owns, directly or indirectly, a partnership or
other equity interest, the Partner may reasonably request. The Partnership shall
distribute to each Partner, promptly after the receipt thereof by the
Partnership, any financial or other information with respect to any Person in
which the Partnership owns, directly or indirectly, a partnership or other
equity interest, but which is not a Subsidiary, that is received by the
Partnership or any Subsidiary with respect to any equity interest of the
Partnership or any Subsidiary in such Person.
13.7 Tax Matters.
-----------
The Partnership shall be treated as a partnership for federal and state
income tax and franchise tax purposes. The Partnership, at Partnership expense,
shall prepare and timely file with the appropriate authorities all tax returns
or reports for the Partnership required to be filed by the Partnership. The
Managing Partner shall cause a draft of any material federal or California
income tax return required to be filed by the Partnership to be sent to each
Partner for review at least thirty Business Days prior to filing, and the
Managing Partner shall afford each Partner a reasonable opportunity to comment
on any such return prior to filing. The Managing Partner shall cause the
workpapers supporting allocations of Partnership income, gain, loss, and
deduction pursuant to Code Section 704(c) to be sent to each Partner for review
at least thirty Business Days prior to the filing of the Partnership's federal
income tax return containing such Code Section 704(c) allocations, and the
Managing Partner shall afford each Partner a reasonable opportunity to comment
on any such workpapers prior to the filing of such income tax return.
13.8 Other Filings.
-------------
The Partnership shall also prepare and timely file, with appropriate
federal and state regulatory and administrative bodies, all reports required to
be filed by the Partnership with those entities under then current applicable
laws, rules, and regulations. The reports shall be prepared on the accounting or
reporting basis required by the regulatory bodies. Upon written request, each
Partner shall be provided with a copy of any of the reports without expense to
the requesting Partner.
13.9 Non-Disclosure.
--------------
Each Partner agrees that, except as otherwise consented to by the other
Partner, all nonpublic information furnished to it or to which it has access
pursuant to this Agreement (including information relating to any dispute or the
resolution thereof pursuant to Section 16.6) will be kept confidential and will
not be disclosed by such Partner, or by any of its agents, representatives, or
employees, in any manner whatsoever, in whole or in part, except that:
(a) each Partner shall be permitted to disclose such information to those of its
agents, representatives, and employees who need to be familiar with such
information in connection with such Partner's investment in the Partnership,
(b) each Partner shall be permitted to disclose such information to its
Affiliates,
(c) each Partner shall be permitted to disclose information to the extent
required by law, including federal or state securities laws or regulations, or
by the rules and regulations of any stock exchange or association on which
securities of such Partner or any of its Affiliates are traded, so long as such
Partner shall have first afforded the Partnership with a reasonable opportunity
to contest the necessity of disclosing such information,
(d) each Partner shall be permitted to disclose information to the extent
necessary for the enforcement of any right of such Partner arising under this
Agreement,
(e) each Partner shall be permitted to disclose information to a permitted
Assignee, so long as (1) such Partner shall first have provided to the other
Partner written notice thereof and of the identity of the Person to whom the
disclosure is to be made and (2) such Person agrees (in a writing which provides
the Partnership with an independent right of enforcement) to be bound by the
provisions of this Section 13.9,
(f) each Partner shall be permitted to disclose information that is or becomes
generally available to the public other than as a result of a disclosure by such
Partner, its agents, representatives, or employees, and
(g) each Partner shall be permitted to disclose information that becomes
available to such Partner on a nonconfidential basis from a source (other than
the Partnership, any other Partner, or their respective agents, representatives,
and employees) that, to the best of such Partner's knowledge, is not prohibited
from disclosing such information to such Partner by a legal, contractual, or
fiduciary obligation to the Partnership or any other Partner.
ARTICLE 14........
REPRESENTATIONS BY TCI
TCI represents and warrants to, and agrees with, Century and the
Partnership as follows:
14.1 Investment Intent.
-----------------
It is acquiring its Partnership Interest with the intent of holding the
same for investment for its own account and without the intent or a view to
participating directly or indirectly in, or for resale in connection with, any
distribution of such Partnership Interest within the meaning of the Securities
Act or any applicable state securities laws, and it does not intend to divide
its participation with others, nor to resell, assign, or otherwise dispose of
all or any part of its Partnership Interest. In making such representation, TCI
acknowledges that a purchase now with an intent to resell by reason of any
foreseeable specific contingency, some predetermined event, or an anticipated
change in market value or in the condition of the Partnership would represent a
purchase with an intent inconsistent with the foregoing representation.
14.2 Securities Regulation.
---------------------
(a) It acknowledges and agrees that the Partnership Interest is being issued and
sold in reliance on the exemption from registration contained in Section 4(2) of
the Securities Act and exemptions contained in applicable state securities laws,
and that it cannot and will not be sold or transferred except in a transaction
that is exempt under the Securities Act and those state acts or pursuant to an
effective registration statement under those acts or in a transaction that is
otherwise in compliance with the Securities Act and those state acts.
(b) It understands that it has no contract right for the registration under the
Securities Act of the Partnership Interest for public sale and that, unless such
Partnership Interest is registered or an exemption from registration is
available, such Partnership Interest may be required to be held indefinitely.
14.3 Knowledge and Experience.
------------------------
It has such knowledge and experience in financial, tax, and business
matters as to enable it to evaluate the merits and risks of its investment in
the Partnership and to make an informed investment decision with respect
thereto.
14.4 Economic Risk.
-------------
It is able to bear the economic risk of an investment in its
Partnership Interest.
14.5 Binding Agreement.
-----------------
This Agreement is and will remain its valid and binding agreement,
enforceable in accordance with its terms (subject, as to the enforcement of
remedies, to any applicable bankruptcy, insolvency, or other laws affecting the
enforcement of creditor's rights).
14.6 Tax Position.
------------
Unless it provides prior written notice to the Partnership, it will not
take a position on its federal income tax return, on any claim for refund, or in
any administrative or legal proceedings that is inconsistent with any
information return filed by the Partnership or with the provisions of this
Agreement.
14.7 Information.
-----------
It has received all documents, books, and records pertaining to an
investment in the Partnership requested by it. It has had a reasonable
opportunity to ask questions of and receive answers concerning the Partnership,
and all such questions have been answered to its satisfaction.
ARTICLE 15........
AMENDMENTS AND WAIVERS
15.1 Amendments to Partnership Agreement.
-----------------------------------
(a) This Agreement may only be modified or amended with the consent of Century
and TCI, except that, so long as Century is the Managing Partner, this Agreement
may be amended from time to time by the Managing Partner without the consent or
approval of TCI:
(1) to reflect the rights and obligations of any Person admitted as a Partner
upon the issuance of Partnership Interests pursuant to Section 6.4 and any
change in the rights and obligations of any existing Partner upon the issuance
to any Person (including any existing Partner) of Partnership Interests pursuant
to Section 6.4; or
(2) to change the Partnership's principal office or other place of business.
(b) TCI may elect at any time to cause this Agreement to be amended to eliminate
any right of TCI under this Agreement.
(c) The Managing Partner shall cause to be prepared and filed any amendment to
the Certificate that may be required to be filed under the Act as a consequence
of any amendment to this Agreement.
15.2 Waivers.
-------
The observance or performance of any term or provision of this
Agreement may be waived (either generally or in a particular instance, and
either retroactively or prospectively) by the party entitled to the benefits of
such term or provision.
ARTICLE 16........
MISCELLANEOUS
16.1 Additional Documents.
--------------------
At any time and from time to time after the date of this Agreement,
upon the request of the other Partner, each Partner shall do and perform, or
cause to be done and performed, all such additional acts and' deeds, and shall
execute, acknowledge, and deliver, or cause to be executed, acknowledged, and
delivered, all such additional instruments and documents as may be required to
best effectuate the purposes and intent of this Agreement.
16.2 Inspection.
----------
Each Partner shall have the right at reasonable times to inspect the
books and records of the Partnership.
16.3 General.
-------
This Agreement: (a) shall be binding on the executors, administrators,
estates, heirs, and legal successors of the Partners; (b) be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to conflicts of law principles thereunder; (c) may be executed in more than one
counterpart as of the day and year first above-written; and (d) together with
the Contribution Agreement contains the entire contract between the Partners as
to the subject matter of this Agreement. The waiver of any of the provisions,
terms, or conditions contained in this Agreement shall not be considered as a
waiver of any of the other provisions, terms, or conditions of this Agreement.
16.4 Notices, Etc.
All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed effectively given upon personal
delivery, confirmation of telex or telecopy, or receipt (which may be evidenced
by a return receipt if sent by registered mail), addressed (a) if to either
Partner, at the address of such Partner set forth on Schedule I or at such other
address as such Partner shall have furnished to the Partnership in writing, (b)
if to the Partnership, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
16.5 Execution of Papers.
-------------------
(a) The Partners agree to execute such instruments, documents, and papers as the
Managing Partner deems necessary or appropriate to carry out the intent of this
Agreement.
(b) Each Partner, including each additional and substituted Partner, by the
execution of this Agreement, irrevocably constitutes and appoints the Liquidator
its true and lawful attorney-in-fact with full power and authority in its name,
place, and stead to execute, acknowledge, deliver, swear to, file, and record
all agreements, instruments, and other documents that may be necessary or
appropriate to effect the sale of such Partner's Partnership Interest pursuant
to Section 11.2(e).
(c) The power of attorney granted pursuant to Section 16.5(b) shall be deemed to
be a power coupled with an interest, in recognition of the fact that each of the
Partners under this Agreement will be relying upon the power of the Liquidator
to act as contemplated by this Agreement in any filing and other action by it on
behalf of the Partnership, and shall survive the bankruptcy, death, adjudication
of incompetence or insanity, or dissolution of any Person hereby giving such
powers and the transfer or assignment of all or any part of such Person's
Partnership Interest; provided, however, that in the event of an assignment by a
Partner, the powers of attorney given by the transferor shall survive such
assignment only until such time as the Assignee shall have been admitted to the
Partnership as a substituted Partner and all required documents and instruments
shall have been duly executed, filed, and recorded to effect such substitution.
(d) Each Partner agrees to be bound by any actions taken by the Liquidator
acting in good faith pursuant to the power of attorney granted pursuant to
Section 16.5(b) that are consistent with and subject to the provisions of this
Agreement and hereby waives any and all defenses that may be available to
contest, negate, or disaffirm any action of the Liquidator taken in good faith
under the power of attorney granted pursuant to Section 16.5(b) that are
consistent with and subject to the provisions of this Agreement.
16.6 Disputed Matters.
----------------
If a dispute arises out of or relates to this Agreement or any alleged
breach thereof, the Partners will attempt in good faith to resolve such dispute
through negotiation.
16.7 No Third-Party Beneficiaries.
----------------------------
This Agreement is not intended to, and shall not be construed to,
create any right enforceable by any Person not a party hereto, including any
member of either Partner or any creditor of the Partnership or of either of the
Partners.
16.8 @Home Matters.
-------------
(a) With respect to the cable television systems contributed to Century-TCI
California by TCI and the cable television systems transferred to Century-TCI
California pursuant to the Exchange Agreement between an Affiliate of TCI and
Century-TCI California (collectively, the "TCI Systems"), the Partnership will
cause Century-TCI California to (i) comply with the Cable Parent Exclusivity
Provisions in accordance with the terms thereof, as if the TCI Systems continued
to be operated by a Controlled Affiliate of Tele-Communications following the
contribution or transfer of the TCI Systems to Century-TCI California and (ii)
except as otherwise required by clause (i), manage the TCI Systems in accordance
with the provisions of the Century Distribution Agreement. For purposes of the
foregoing and notwithstanding anything in the @Home Distribution Agreement to
the contrary, compliance with the Cable Parent Exclusivity Provisions shall not
prohibit the provision by the Partnership (including to subscribers located in
the service areas of the TCI Systems) of any Internet Service which is not a
High Speed Residential Internet Service (any such service, a "Non-Exclusive
Service"), whether or not such Non-Exclusive Service entails the provision of an
Internet Backbone Service; provided, however, that if the provision of such
Non-Exclusive Service entails the provision of, or connection to, an Internet
Backbone Service, the foregoing shall be conditioned upon the Partnership having
complied with the provisions of Section 4 of the Century Distribution Agreement.
(b) TCI will promptly furnish the Partnership with a copy of any amendment to
the @Home Distribution Agreement that amends or changes the Cable Parent
Exclusivity Provisions. If the Cable Parent Exclusivity Provisions of the @Home
Distribution Agreement are amended and (1) such provisions as so amended do not
conform in all material respects to the Cable Parent Exclusivity Provisions as
in effect for purposes of this Agreement prior to such amendment, and (2) the
Partnership did not give its prior written consent to such amendment (which
consent shall be deemed to have been given to the extent that the Partnership
has agreed to substantially similar terms with respect to any of its cable
television systems other than the TCI Systems), and (3) the Partnership
reasonably determines that its compliance with such provisions as so amended
would have a material adverse effect on the operation of the TCI Systems, and
(4) the Partnership gives written notice to such effect to TCI, including a
detailed explanation of such material adverse effect, within twenty days after
the Partnership's receipt of the amendment to such provisions, then TCI, by
written notice delivered to the Partnership within twenty days after its receipt
of the Partnership's notice pursuant to clause (4), shall elect either (A) to
terminate the Partnership's obligations under Section 16.8(a) or (B) to require
that the Partnership's obligations under Section 16.8(a) continue, but such
amendment shall not be given effect for purposes of the definition of "Cable
Parent Exclusivity Provisions" in Section 16.8(c)(3). If TCI furnishes the
Partnership with a copy of an amendment to the @Home Distribution Agreement but
all of the conditions set forth in clauses (1) through (4) of the second
sentence of this Section 16.8(b) are not satisfied with respect to such
amendment, then the definition of Cable Parent Exclusivity Provisions" in
Section 16.8(c)(3) shall be amended to be the definition set forth in such
amendment.
(c) For purposes of this Section 16.8:
(1) "Century Distribution Agreement" means the @Home Network Distribution
Agreement, dated May 1, 1998, between At Home Corporation and Century/Texas;
(2) "@Home Distribution Agreement" means, collectively, the Master Distribution
Agreement Term Sheet and the Term Sheet for Form of LCO Agreement, each of which
are exhibits to the letter agreement, dated as of May 15, 1997, among At Home
Corporation and Tele-Communications, Inc., Comcast Corporation, ▇▇▇ Enterprises,
Inc., Kleiner, Perkins, Caulfield & ▇▇▇▇▇ and certain of their respective
affiliates, as each such term sheet has been amended by the letter agreement,
dated as of October 2, 1997, as amended as of October 10, 1997, among the
parties to the May 15, 1997 letter agreement and Cablevision Systems Corporation
and certain of its affiliates; provided, that, subject to Section 16.8(b), the
term "@Home Distribution Agreement" will include any definitive agreement
entered into by the parties with respect to the distribution of the @Home
service as contemplated by the May 15, 1997 letter agreement.
(3) "Cable Parent Exclusivity Provisions" has the meaning assigned to it in the
@Home Distribution Agreement, as amended by any amendment to the Cable Parent
Exclusivity Provisions that is required to be given effect pursuant to Section
16.8(b).
(4) "Controlled Affiliate," "Internet Service," and "Internet Backbone Service"
have the meanings assigned to them in the @Home Distribution Agreement; and
(5) "High Speed Residential Internet Service" has the meaning assigned to it in
the Century Distribution Agreement.
16.9 Programming Matters.
(a) After the date hereof, the Partnership will cause Century-TCI California to
continue to carry Starz! and Encore (including Encore Plex) on the cable
television systems contributed to Century-TCI California by TCI on the terms and
conditions applicable to such systems at the time of the Closing, and the
Partnership will use commercially reasonable efforts to cause Century-TCI
California to carry Starz! and Encore (including Encore Plex) on the cable
television systems contributed to Century-TCI California by Century and the
cable television systems transferred to Century-TCI California pursuant to the
Exchange Agreement between an Affiliate of TCI and Century-TCI California.
(b) To the extent that, as of the date hereof, any programming service listed on
Schedule IV is carried on any of the cable television systems contributed to
Century-TCI California by TCI, Century-TCI California will continue to carry
such service on such systems until the termination of TCI's present affiliation
agreement for such service, on the terms and conditions applicable to such
systems at the time of the Closing.
(c) After the date hereof, if requested by the Partnership, TCI agrees that it
will cause its Affiliate, Satellite Services, Inc. ("SSI"), to enter into an
agreement (the "Programming Supply Agreement") to provide programming to
Century-TCI California, in consideration of an annual fee equal to 1.5% (the
"SSI Administrative Fee") of the annual cost of any programming purchased by
Century-TCI California through SSI. The other terms and conditions of the
Programming Supply Agreement will be negotiated between SSI and Century-TCI
California and will be no less favorable to Century-TCI California in the
aggregate than the terms and conditions of similar programming supply agreements
then in effect between SSI and similarly situated SSI affiliates. In order for
Century-TCI California to obtain a favorable provision in the Programming Supply
Agreement that was made available to a similarly situated SSI affiliate, SSI may
require that Century-TCI California accept the other terms and conditions upon
which such favorable provision was made available to such similarly situated SSI
affiliate, so long as the terms and conditions offered to Century-TCI California
are not less favorable to Century-TCI California in the aggregate than the terms
and conditions of the programming supply agreement with such similarly situated
SSI affiliate. In no event will the "most favored nation" provisions of this
Section 16.9(c) be applicable to the SSI Administrative Fee, which is a fixed
percentage fee that will change only as mutually agreed to by Century-TCI
California and SSI. For purposes of this Section 16.9(c), a "similarly situated
SSI affiliate" is a Person that meets each of the following criteria:
(1) such Person has entered into a programming supply agreement with SSI; and
(2) TCI or an Affiliate of TCI owned an equity interest in such Person on that
date such programming supply agreement was entered into; and
(3) the equity interest in such Person that was owned by TCI and its Affiliates,
collectively, on that date such programming supply agreement was entered into,
expressed as a percentage of all outstanding equity interests in such Person,
was not more than five percent greater than TCI's Percentage Interest on the
date of the Partnership's request pursuant to this Section 16.9(c); and
(4) the number of subscribers served by the cable television systems that were
owned by such Person on that date such affiliation agreement was entered into
was not more than five percent greater than the number of subscribers served by
the cable television systems owned, directly or indirectly, by the Partnership
on the date of the Partnership's request pursuant to this Section 16.9(c).
(d) Notwithstanding the provisions of Section 16.9(c), if TCI hereafter desires
its Partnership Interest to be "non-attributable" (within the meaning of all
relevant rules of the FCC), then:
(1) If the Partnership is not party to a Programming Supply Agreement as of such
time, the provisions of Section 16.9(c) will terminate and be of no further
force or effect;
(2) If the Partnership is party to a Programming Supply Agreement as of such
time, the Programming Supply Agreement will provide that SSI may terminate the
Programming Supply Agreement under such circumstances and upon such termination,
the provisions of Section 16.9(c) will be of no further force or effect;
(3) The Partners will negotiate in good faith with respect to any other
amendments to this Agreement or any other agreement (e.g., the Management
Agreement) that may be required in order for TCI's Partnership Interest to be
"non-attributable;" and
(4) If the Partnership is party to a Programming Supply Agreement that is
terminated at such time, the Partners will negotiate in good faith with respect
to any payments to be made to the Partnership or Century to compensate it for
any increased costs the Partnership incurs as a result of the Partnership taking
over programming supply management for the Partnership.
[AGREEMENT OF LIMITED PARTNERSHIP
OF
CENTURY-TCI CALIFORNIA COMMUNICATIONS, L.P.]
IN WITNESS WHEREOF, the Partners have hereunto set their hands as of
the day first heretofore mentioned.
CENTURY EXCHANGE LLC
By: Century Southwest Cable Television, Inc., its manager
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
TCI CALIFORNIA HOLDINGS, LLC
By: TCI Cablevision of California, Inc., its manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: authorized officer
FOR PURPOSES OF SECTION 8.10(a) ONLY:
TELE-COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized officer
[AGREEMENT OF LIMITED PARTNERSHIP
OF
CENTURY-TCI CALIFORNIA COMMUNICATIONS, L.P.]
FOR PURPOSES OF SECTION 8.10(B) AND ARTICLE 9 ONLY:
CENTURY COMMUNICATIONS CORP., A TEXAS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
FOR PURPOSES OF SECTION 10.2, SECTION 10.3, AND SECTION 16.3 ONLY:
AT&T CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Exec.Vice Pres. and CFO
SCHEDULE I
TO
AGREEMENT OF LIMITED PARTNERSHIP
ADDRESSES OF THE PARTNERS
Century Exchange, LLC
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TCI California Holdings, LLC
c/o Tele-Communications, Inc.
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SCHEDULE II
TO
AGREEMENT OF LIMITED PARTNERSHIP
INITIAL MEMBERS OF THE ADVISORY COMMITTEE
1. Members designated by Century pursuant to Section 5.2(a):
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2. Members designated by TCI pursuant to Section 5.2(a):
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SCHEDULE III
TO
AGREEMENT OF LIMITED PARTNERSHIP
FIVE-YEAR OPERATING PLAN
SCHEDULE IV
TO
AGREEMENT OF LIMITED PARTNERSHIP
PROGRAMMING SERVICES
American Movie Classics
American Sports Classics or its successor
Animal Planet
Bravo
Discovery Channel
DMX
ESPN
Fox News
Home and Garden
Home Shopping Network (the home shopping service)
Home Team Sports
MSNBC
Showtime
The Movie Channel
Romance Classics
The Learning Channel
SCHEDULE V
TO
AGREEMENT OF LIMITED PARTNERSHIP
CERTAIN AGREEMENTS
1. Facilities Agreement among Century Cable of Southern California, Century Cable of Northern California, Century Southwest
Cable Television, and TCG Los Angeles.
2. TCG Express Master Agreement among Century Cable of Southern California, Century Cable of Northern California, Century
Southwest Cable Television, and TCG Los Angeles.
3. Letter, dated November 23, 1994, from J. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
4. @Home Network Distribution Agreement, dated May 1, 1998, between At Home Corporation and Century Communications Corp.
5. Any agreement to which Century, the Partnership or Century-TCI
California is or becomes a party pursuant to which Centuryor the
Partnership agrees to license fiber optic facilities to or from a third
party which agreement is not prohibited by the provisions of Section
10.2.
EXHIBIT A
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made and entered into on the _____ day of
_________________, by and between Century-TCI California, L.P., a Delaware
limited partnership company (the "Partnership"), and Century
______________________, a __________________ corporation (the "Manager").
RECITALS
A. Pursuant to the Agreement of Limited Partnership (as the same may be
amended or modified from time to time, the "Partnership Agreement"), the
Partnership has been formed to own and operate certain cable television systems
and certain other assets, as more fully described in the Partnership Agreement.
The business and operations of the Partnership, as the same may be conducted
from and after the date hereof, are hereinafter referred to as the "Business."
B. Manager has the experience and ability to manage the Business and is
willing to do so, and the Partnership desires to enter into this Agreement with
Manager providing for the management of the Business on the terms and conditions
set forth herein.
AGREEMENTS
In consideration of the covenants and agreements contained herein, the
Partnership and Manager agree as follows:
SECTION 1. DEFINITIONS.
Except as otherwise defined herein, the following terms shall have the following
meanings when used in this Agreement:
Affiliate. With respect to either the Partnership or Manager, any other
Person that directly or indirectly through one or more intermediaries controls
or is controlled by or under direct or indirect common control with such party.
Applicable Law. Any statute, ordinance, law, rule or regulation of any
Governmental Authority, or any order, decree, injunction, writ, judgment or
award of any court, arbitrator or other Governmental Authority, applicable to
the Partnership or the Business.
Authorizations. Any governmental or nongovernmental license, permit,
franchise or other authorization, and applications therefor, which are necessary
to conduct the Business.
GAAP. Generally accepted accounting principles as in effect from time
to time.
Governmental Authority. Any governmental authority or regulatory body,
or any department, agency, division, bureau or other legal body thereof having
jurisdiction over the Partnership, the Business, or general jurisdiction over
all Persons.
Person. Any individual, corporation, partnership, firm, limited
liability company, joint venture, association, trust, joint stock company,
unincorporated organization or other entity, or a government or any agency or
political subdivision thereof.
Capitalized terms not otherwise defined herein shall have the meanings
given such terms in the Partnership Agreement.
SECTION 2. APPOINTMENT. On the terms and conditions hereinafter
provided, the Partnership hereby appoints Manager, and Manager hereby accepts
such appointment, as manager for all of the operations and conduct of the
Business for a period commencing on the date of Closing, as defined in the Asset
Contribution Agreement dated November 18, 1998, as the same may be amended from
time to time in accordance with its terms, by and among the Partnership and the
other parties thereto, and expiring as provided in Section 5 hereof.
SECTION 3. MANAGEMENT AUTHORITY; MANAGEMENT SERVICES.
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3.1 Authority and Services to Be Performed by Manager. (a)(i) Subject
to the limitations set forth in Section 3.1(b) below, Manager shall have full
and exclusive authority to do all such acts and things as may be incidental to,
or necessary, proper or advisable in the furtherance of, the management of the
day-to-day operations and conduct of the Business, including, without
limitation, all rights accorded the Managing Partner under the Partnership
Agreement. Subject to the terms and conditions of this Agreement, Manager shall
provide the Partnership with such services as may, from time to time, be
appropriate or reasonably required for the proper and efficient operation and
conduct of the Business in accordance with sound business principles and
practices customary in the cable television industry (collectively, the
"Management Services"). The Management Services shall be provided both at such
times as Manager may reasonably deem appropriate and at such times as the
Partnership may reasonably request.
(ii) Without limiting the generality of the preceding
paragraph, the Management Services shall include the following, but subject to
any applicable limitations set forth in this Agreement:
(1) (A) Evaluation of new equipment, materials and techniques
and making recommendations in accordance with its evaluations, (B) establishment
of general technical standards and procedures and directing their
implementation, and (C) establishment of programs for preventive maintenance and
monitoring their effectiveness;
(2) Supervision of all construction and development arising
out of or related to the operation of the Business, including, without
limitation, the selection and appointment of all subcontractors, equipment
suppliers and vendors;
(3) Supervision of the purchasing of property, real, personal
or mixed, and all materials and supplies, if any, necessary to complete any
construction and development arising out of or related to the Business;
(4) Sale, lease, trade, exchange or other disposition of the
Partnership's assets in the ordinary course of business and the negotiation of,
and entrance into, in the name of and on behalf of the Partnership, all
agreements relating to any of the foregoing;
(5) Negotiation of, and entrance into, in the name of and on
behalf of the Partnership, all contracts, leases, deeds, releases, assignments
and any other agreements on behalf of the Partnership for the purchase, lease,
license or use of such properties and rights as may be necessary or reasonably
desirable in connection with the Business;
(6) Formulation and supervision of all advertising, marketing
and sales programs and engagement and appointment on behalf of the Partnership
of advertising, marketing and public relations agencies and consultants for such
purposes;
(7) Subject to the provisions of all Authorizations,
Applicable Law and applicable agreements to which the Partnership is a party,
the selection and pricing of all services to be provided to the customers of the
cable television systems included in the Business;
(8) Supervision of performance of all aspects of the daily
operation and maintenance of the Business, instruction and supervision of all
personnel necessary to conduct daily operations of the Business and the setting
of salaries and wages for such personnel (with all such employees to be paid by
the Partnership);
(9) Entrance into, in the name of and on behalf of the
Partnership, any agreements arising out of or related to the Business,
including, without limitation, cable television franchises or collective
bargaining agreements with employees of the Partnership;
(10) Supervision of the maintenance of all accounting,
bookkeeping, billing, collections and other financial systems and records
relating to the Business;
(11) Engagement of, on behalf of the Partnership, attorneys,
accountants, engineers, consultants and other qualified professionals;
(12) Preparation and filing, or causing to be prepared and
filed, all necessary applications, filings, reports, statements and other
documents as are required in connection with the Business with Governmental
Authorities (including any income tax filings);
(13) Purchase of such policies of insurance (including
Manager's blanket coverage) as Manager may from time to time consider necessary
and appropriate in accordance with normal industry practice, with such policy
naming both the Partnership and Manager (and any other Partner of the
Partnership) as insured thereunder as their interests may appear;
(14) Representation of the Partnership before all Governmental
Authorities with respect to any matter necessary or desirable to the management
of the Business; and
(15) Taking of any other action in connection with the
construction, development, operation and maintenance of the Business in the
ordinary course of business which is commercially reasonable, appropriate and
necessary.
(b) Notwithstanding the foregoing in Section 3.1(a), the
Manager acknowledges that the Manager shall be subject to all express
limitations of the Partnership Agreement requiring approvals of the Partners of
the Partnership prior to taking of certain actions by the Partnership and shall
otherwise be subject to the terms of the Partnership Agreement.
3.2. Compliance With Authorizations. Notwithstanding anything in this
Agreement to the contrary, the Partnership shall continue to be the franchisee,
licensee and permittee, as applicable, of all Authorizations of any nature
whatsoever issued by any Governmental Authority in connection with the operation
of the Business and shall retain ultimate control over the Business. The
Partnership shall also retain ultimate responsibility for compliance with all
Applicable Law and the terms of any applicable Authorizations.
3.3 Payment of Expenses. The Partnership shall be responsible
for the payment of all costs, expenses and liabilities of any nature whatsoever
in connection with the construction, development, operation, maintenance, repair
and ownership of the Business, and the Partnership shall be the responsible
party under all agreements entered into on behalf of the Partnership by Manager
pursuant hereto.
3.4 Inspection of Records. Originals or copies of all books
and records related to this Management Agreement shall be maintained at the
principal office of Manager and shall be open to the inspection and examination
of the Partnership and its Partners during normal business hours upon reasonable
notice.
SECTION 4. COMPENSATION AND EXPENSES.
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4.1 Management Fee. As compensation to Manager for the
performance of its services hereunder, the Partnership shall pay to Manager a
management fee ("Management Fee") for each twelve-month period during the term
of this Agreement, commencing on the date hereof, of three percent (3%) of the
total Gross Partnership Revenues of the Partnership for that year.
4.2 Gross Partnership Revenues. The term "Gross Partnership
Revenues" means all revenues arising out of or in connection with the operation
of the Business computed in accordance with GAAP, but exclusive of any taxes
imposed by law on subscribers or other persons which the Partnership passes on,
in full, to the applicable tax authority or authorities, late fee charges,
proceeds from the sale of assets or from other extraordinary or nonrecurring
items and exclusive of all interest, dividends, royalties and other similar
types of investment income that do not arise from the operation of the Business
in the ordinary course.
4.3 Quarterly Statement. Within 30 days after the end of each
fiscal quarter, the Manager shall submit to the Partnership a quarterly and a
cumulative year-to-date Gross Partnership Revenues statement indicating the
quarterly Management Fee payable and the cumulative year-to-date Management Fee
payable to Manager together with appropriate supporting documentation. Each
quarterly Management Fee payable hereunder shall be adjusted to reflect any
cumulative year-to-date adjustments in Gross Partnership Revenues. The
Management Fee shall be payable each quarter within 10 days after the Management
Fee statement for such quarter has been received by the Partnership.
4.4 Annual Statement. Within 90 days after the end of each
fiscal year, the Partnership shall cause its independent public accountants to
determine the Gross Partnership Revenues of the Partnership for that year and
the amount of the Management Fee payable to Manager for that year and deliver a
copy to Manager. Manager shall have the right to consult with the accountants
regarding the determination of Gross Partnership Revenues prior to the final
determination of Gross Partnership Revenues by the accountants. The accountants'
determination shall be final and binding on the Partnership and Manager.
4.5 Expense Reimbursement. The Management Fee described above
shall be exclusive of reimbursement by the Partnership to Manager for all
direct, out-of-pocket expenditures incurred by or on behalf of Manager relating
to its obligations under this Agreement as provided for herein, including,
without limitation, reimbursement for travel expenses. Manager shall be entitled
to reimbursement by the Partnership for services that would ordinarily be direct
expenditures of the Partnership. Manager shall act in good faith and in a
reasonable manner in making determinations of reimbursement. It is understood
and agreed that the intent of the expense reimbursement provisions contained in
this Section 4.5 is to reimburse Manager only for expenses incurred that are
directly related to the operation of the Business and not to reimburse Manager
for any corporate overhead (including bonuses and health, welfare, retirement
and other benefits and overhead expenses of its corporate office management,
development, internal accounting, human resource, legal and finance management
personnel), which shall be paid out of the Management Fee. Payment of expense
reimbursement shall be made monthly by the Partnership to Manager within ten
business days after receipt by the Partnership of a statement (the "Monthly
Expense Statement") of Manager's estimated reimbursable expenses for the
preceding month. The Monthly Expense Statement shall include an adjustment to
reflect the amount by which actual reimbursable expenses incurred during the
month immediately preceding the month of payment exceeded, or were exceeded by,
Manager's estimated reimbursable expenses with respect to such month.
4.6 Subordination. Manager acknowledges and agrees that,
notwithstanding anything else contained herein, payment of the Management Fee
may be limited by the provisions of loan agreements of the Partnership and that
the Management Fee shall be paid if and only to the extent that such payment
will not create a default under such loan agreements. To the extent that all or
any portion of the Management Fee may not be paid because of the terms of the
loan agreements, any portion of the Management Fee that is deferred shall be
paid as soon as the same may be paid without violating the provisions of the
loan agreements. Payments of any outstanding Management Fees (whether or not
deferred) shall be paid prior to payment of any partner's distributions or
similar payments to the partners of the Partnership.
SECTION 5. DEFAULT AND TERMINATION.
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5.1 A default by Manager or the Partnership shall occur under
this Agreement if Manager or the Partnership shall willfully breach in any
material respect any material covenant of this Agreement to be kept and
performed by it.
5.2 Subject to Section 5.3 hereof, this Agreement shall be
terminated automatically upon the termination of the Partnership and may be
terminated earlier as follows:
(a) by either the Partnership or Manager on written
notice to the other party in the event of any default (as defined in Section 5.1
hereof) by the other party, as provided in Section 5.1, which is not cured
within 60 days after written notice thereof is received by the defaulting party
(or, if not curable within that time period, within a reasonable time
thereafter); or
(b) by either the Partnership or Manager on written
notice to the other party upon a sale or other disposition of all or
substantially all of the assets of the Partnership.
5.3 In the event of termination of this Agreement pursuant to
the terms hereof, Manager shall be entitled to receive promptly following
termination, and in any event within 30 days thereafter, the amount of any
accrued but unpaid Management Fees and any expense reimbursements.
SECTION 6. INDEMNIFICATION.
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6.1 Indemnification by the Partnership. The Partnership will
indemnify and hold harmless Manager, its Affiliates, and all direct and indirect
officers, directors, employees, stockholders, partners, members and agents of
Manager and its Affiliates (individually, a "Manager Indemnitee"), from and
against any and all claims, demands, costs, damages, losses, liabilities, joint
and several, expenses of any nature (including reasonable attorneys',
accountants' and experts' fees and disbursements, all of which shall be paid by
the Partnership as incurred by the Manager Indemnitee(s)), judgments, fines,
settlements and other amounts (collectively, "Damages") arising from any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative
or investigative (collectively "Claims"), in which a Manager Indemnitee may be
involved or threatened to be involved, as a party or otherwise, arising out of
Manager's performance of its obligations under this Agreement or arising out of,
related to or in connection with the Business regardless of whether this
Agreement continues to be in effect or such Manager Indemnitee continues to be
an Affiliate, or an officer, director, employee, stockholder, partner or agent
of Manager, at the time any such Claims are made or Damages incurred, provided
that in respect of any matter in which indemnification is sought, to the extent
applicable: (i) the Manager Indemnitee acted in good faith and in a manner it
reasonably believed to be in the best interest of the Partnership and, with
respect to any criminal proceeding, had no reasonable cause to believe its
conduct was unlawful, and (ii) the Manager Indemnittee's conduct for which
indemnification is sought does not constitute gross negligence or willful
misconduct. Any indemnification hereunder will be satisfied solely out of the
assets of the Partnership.
6.2 Indemnification by Manager. Manager will indemnify and
hold harmless the Partnership, its Affiliates, and all officers, directors,
employees, stockholders, partners, members and agents of the Partnership and its
Affiliates (individually, a "Partnership Indemnitee"), from and against all
Damages arising from any Claim in which a Partnership Indemnitee may be involved
or threatened to be involved, as a party or otherwise, arising solely out of the
gross negligence or willful misconduct by Manager or of any of its officers,
agents or employees. All of the obligations of Manager hereunder have been
undertaken by Manager solely for the benefit of the Partnership and nothing set
forth in this Agreement shall (or shall be deemed to) grant to any other person
any interest (whether as a third-party beneficiary or otherwise) herein.
6.3 Right to Indemnification Not Exclusive Remedy. The
indemnification rights contained in this Section 6 will be cumulative of and in
addition to any and all other rights, remedies and recourse to which a Manager
Indemnitee or a Partnership Indemnitee, its heirs, successors, assigns and
administrators are entitled, whether pursuant to some other provision of this
Agreement, at law or in equity; provided, however, it is understood and agreed
that notwithstanding anything contained herein to the contrary, neither Manager
(nor any of its shareholders, officers, directors, employees or agents) shall
have any liability with respect to a breach of, or nonperformance under, this
Agreement except as expressly specified in this Agreement. The indemnification
provided in this Section 6 will inure to the benefit of the heirs, successors,
assigns and administrators of each Manager Indemnitee and Partnership
Indemnitee.
6.4 Insurance. Manager may purchase, at the Partnership's
expense, and maintain insurance on behalf of Manager and such other persons as
Manager may reasonably determine against any liability that may be asserted
against it or them in connection with the performance of Manager's obligations
under this Agreement. Provided, however, that the amount of the premium payments
that cover acts or omissions that were not made in good faith or which
constituted gross negligence or willful misconduct shall be borne by Manager.
6.5 Interested Transactions. A Manager Indemnitee will not be
denied indemnification in whole or in part under this Section 6 solely because
the Manager Indemnitee had an interest in the transaction with respect to which
the indemnification applies if the transaction was otherwise permitted by the
terms of this Agreement. Nothing in this Agreement shall preclude transactions
between Manager, or any affiliate of Manager acting in and for its own account,
and the Partnership, provided that any services performed by Manager, or any
affiliate of Manager, and any such transactions, are on terms which are not
prohibited by the Partnership Agreement.
SECTION 7. MISCELLANEOUS.
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7.1 Relationship Among the Parties. Nothing herein contained
shall be deemed to make Manager a partner, coventurer or other participant in
the business or operations of the Partnership or in any manner to render Manager
liable as a principal, surety, guarantor, agent or otherwise for any of the
debts, obligations or liabilities of the Partnership, whether incurred directly
by the Partnership or by Manager on behalf of the Partnership in accordance with
this Agreement.
7.2 Other Activities of Manager. Nothing in this Agreement
shall limit or restrict the right of Manager to engage in any other business or
to devote its time and attention to the management or other aspects of any other
business or to render services of any kind. The Partnership acknowledges that
Manager and its Affiliates own, manage or operate cable television systems
throughout the United States. Manager will devote such of its attention, time,
efforts and resources to the Business as shall be reasonably necessary for it to
carry out its duties hereunder.
7.3 Notices. All notices and other communications given or
made pursuant to this Agreement shall be in writing and shall be deemed to have
been duly given or made as of the date delivered if delivered by hand, by
telecopier device (confirmed by hand delivery or overnight courier service) or
by overnight courier service to the parties at the following address (or at such
other address for a party as shall be specified by like notice):
if to the Partnership, to:
c/o Century-TCI California, L.P.
Attention:
Telephone:
Telecopier:
with a copy to:
c/o Tele-Communications, Inc.
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to Manager, to:
Attention:
Telephone:
Telecopier:
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
7.4 Assignability; Benefit and Binding Effect. The Partnership
agrees that Manager may assign this Agreement, without the consent of the
Partnership, to any Affiliate of Manager, or any successor to Manager by merger,
consolidation or otherwise. Except as set forth in the preceding sentence,
neither party hereto may assign this Agreement without the prior written consent
of the other party. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
7.5 Governing Law. This Agreement shall be governed by the
laws of the State of Delaware as to all matters, including but not limited to
matters of validity, construction, effect, performance and remedies (without
giving effect to the principles of conflicts of law thereof).
7.6 Headings. The headings preceding the text of sections and
subsections of this Agreement are included for ease of reference only and shall
not be deemed part of this Agreement.
7.7 Gender and Number. Words used herein, regardless of the
gender and number specifically used, shall be deemed and construed to include
any other gender, masculine, feminine or neuter, and any other number, singular
or plural, as the context requires.
7.8 Entire Agreement. This Agreement represents the entire
understanding and agreement between the Partnership and Manager with respect to
the specific subject matter hereof. This Agreement supersedes all prior
negotiations between the parties and cannot be amended, supplemented or changed
except by an agreement in writing which makes specific reference to this
Agreement or an agreement delivered pursuant hereto, as the case may be, and
which is signed by the party against which enforcement of any such amendment,
supplement or modification is sought.
7.9 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement or that may be reasonably
requested by any other party hereto. Each party will cooperate with the other
party and provide any assistance reasonably requested by the other party to
effectuate the intent of this Agreement.
7.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to either party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner that is not invalid, illegal or against public policy, to the end that
transactions contemplated hereby are fulfilled to the greatest extent possible.
7.11 Counterparts. This Agreement may be signed in
counterparts, each of which shall be deemed to be an original but which, when
taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Management Agreement has been executed by the
parties hereto as of the date first above-written.
THE PARTNERSHIP
CENTURY-TCI CALIFORNIA, L.P.
By:
By:
By:
By:
Name:
Title:
MANAGER
By:
By:
By:
Name:
Title: