EXHIBIT 3.4
THIRD AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
MUZAK LIMITED PARTNERSHIP
(formerly, MLP Operating, L.P.)
THE LIMITED PARTNERSHIP INTERESTS IN THE PARTNERSHIP REFERRED TO IN THIS
LIMITED PARTNERSHIP AGREEMENT HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS, INCLUDING THE SECURITIES ACT OF
WASHINGTON CHAPTER 21.20 RCW, AS AMENDED, THE ILLINOIS SECURITIES LAW OF
1953, AS AMENDED, CHAPTER 815, AND THE SECURITIES ACT OF COLORADO CHAPTER
11-51. THE SALE OR OTHER DISPOSITION OF THE LIMITED PARTNERSHIP INTERESTS
IS RESTRICTED, AS STATED IN THE LIMITED PARTNERSHIP AGREEMENT. BY ACQUIRING
THE LIMITED PARTNERSHIP INTERESTS REPRESENTED BY THIS LIMITED PARTNERSHIP
AGREEMENT, EACH LIMITED PARTNER REPRESENTS THAT HE HAS ACQUIRED SUCH
INTERESTS FOR INVESTMENT AND THAT HE WILL NOT SELL OR OTHERWISE DISPOSE OF
SUCH LIMITED PARTNERSHIP INTERESTS WITHOUT REGISTRATION OR OTHER COMPLIANCE
WITH THE AFORESAID ACT AND THE RULES AND REGULATIONS THEREUNDER.
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS................................................... 2
ARTICLE II ORGANIZATION.................................................. 24
Section 2.01 Formation of the Partnership....................... 24
Section 2.02 Initial Contributions.............................. 25
Section 2.03 Additional Capital Contributions................... 25
Section 2.04 Name............................................... 26
Section 2.05 Place of Business.................................. 26
Section 2.06 Registered Office and Registered Agent............. 27
ARTICLE III PURPOSES...................................................... 27
Section 3.01 Purposes and Business.............................. 27
Section 3.02 Powers............................................. 27
Section 3.03 Changes in the Tax Laws............................ 28
ARTICLE IV TERM OF THE PARTNERSHIP....................................... 31
ARTICLE V CAPITAL ACCOUNTS.............................................. 31
Section 5.01 Capital Contributions.............................. 31
Section 5.02 Capital Accounts................................... 31
Section 5.03 Negative Capital Accounts.......................... 35
Section 5.04 General Partners Not Liable
for Return of Capital.............................. 35
ARTICLE VI PROFITS AND LOSSES; DISTRIBUTIONS............................. 36
Section 6.01 Fiscal Year; Fiscal Period;
Taxable Year....................................... 36
Section 6.02 Accounting Method.................................. 36
Section 6.03 Allocations for Capital Account Purposes........... 36
Section 6.04 Allocations for Tax Purposes....................... 42
Section 6.05 Distributions...................................... 44
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ARTICLE VII MANAGEMENT.................................................... 52
Section 7.01 Management and Control of
the Partnership.................................... 52
Section 7.02 Powers of the Managing General Partner............. 53
Section 7.03 Title to Assets of the Partnership................. 55
Section 7.04 Other Business Activities of Partners.............. 56
Section 7.05 Transactions with the General Partners
or Affiliates...................................... 56
Section 7.06 Exculpation; Indemnification....................... 56
Section 7.07 Other Matters Concerning the
General Partners................................... 59
Section 7.08 Resolution of Conflicts of Interest................ 60
ARTICLE VIII LIMITED PARTNERS.............................................. 61
Section 8.01 Liability of Limited Partners...................... 61
Section 8.02 No Management by Limited Partners.................. 61
Section 8.03 No Mention of Limited Partners..................... 62
Section 8.04 Employees, Agents or Officers
of the Partnership or a General
Partner............................................ 62
ARTICLE IX COMPENSATION AND EXPENSES..................................... 62
Section 9.01 Compensation to the General Partners............... 62
Section 9.02 Direct and Indirect Expenses; Expenses
in Connection with the Organization
and Operation of Partnership....................... 62
ARTICLE X FINANCIAL MATTERS............................................ 63
Section 10.01 Books and Records.................................. 63
Section 10.02 Financial Statements and Information............... 64
Section 10.03 Accounting Decisions............................... 65
Section 10.04 Place Maintained................................... 65
Section 10.05 Preparation of Tax Returns......................... 65
Section 10.06 Tax Elections...................................... 65
Section 10.07 Tax Matters Partner................................ 66
Section 10.08 Confidentiality.................................... 66
ARTICLE XI TRANSFER OF UNITS OF GENERAL PARTNER
INTEREST AND LIMITED PARTNER INTEREST;
ADMISSION OF NEW PARTNERS.................................... 67
Section 11.01 Transfer of Units of General
Partner Interest................................... 67
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Section 11.02 Admission of an Additional or
Successor General Partner......................... 68
Section 11.03 Transfer of Units of Limited Partner
Interest.......................................... 71
Section 11.04 Rights of First Refusal for Units of
Partner Interest Owned by Class A
Limited Partners, the Managing General
Partner, Preferred Interest Limited
Partners, holders of Class B Conversion
Units or Class C-1 Limited Partners............... 75
Section 11.05 Rights of First Refusal for Units of
Partner Interest (other than Class B
Conversion Units) Owned by Class B
Limited Partners or the Administrative
General Partner................................... 78
Section 11.06 Bring Along....................................... 83
Section 11.07 Put Option........................................ 86
Section 11.08 Right to Purchase on Termination of
Employment........................................ 90
Section 11.09 Allocations and Distributions Subsequent
to Assignment..................................... 93
Section 11.10 Admission of Substituted Limited
Partners; Assignees............................... 94
Section 11.11 Admission of Additional Partners.................. 96
Section 11.12 Purchase of Additional Units Upon the
Cash Settlement of Performance Options............ 100
Section 11.13 Participation by Barclays with respect
to Put/Call Units................................. 100
Section 11.14 Ownership of the Administrative
General Partner................................... 101
Section 11.15 Certain Adjustments............................... 102
ARTICLE XII DISSOLUTION AND LIQUIDATION................................. 102
Section 12.01 No Dissolution.................................... 102
Section 12.02 Events Causing Dissolution........................ 102
Section 12.03 Dissolution....................................... 103
Section 12.04 Liquidation....................................... 103
Section 12.05 Termination of Partnership........................ 105
ARTICLE XIII AMENDMENTS.................................................. 105
Section 13.01 Amendments To Be Adopted Solely by
the Managing General Partner...................... 105
Section 13.02 Amendment Procedures.............................. 107
Section 13.03 Amendment Restrictions............................ 108
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CAPTION>
Section 13.04 Limitations on Voting Rights of
Preferred Interest Limited Partners,
Class C Limited Partners and Class C-1
Limited Partners ........................ 108
Section 13.05 Further Amendment Restrictions........... 110
ARTICLE XIV POWER OF ATTORNEY ............................ 111
ARTICLE XV REGISTRATION RIGHTS .......................... 113
Section 15.01 Required Registration by Holdings;
Partnership Registration ................ 113
Section 15.02 Limitation on Registration .............. 119
Section 15.03 Limitations on Sales Before or
After Registration ...................... 120
Section 15.04 Cooperation by Holders .................. 120
Section 15.05 Indemnification ......................... 121
Section 15.06 Registration Rights upon Incorporation
of the Partnership ...................... 125
ARTICLE XVI INCORPORATION OF THE PARTNERSHIP;
THE CLASS C LIMITED PARTNER INTEREST ......... 126
Section 16.01 Incorporation of the Partnership ........ 126
Section 16.02 Exchange or Retirement of the Class C
Limited Partner Interests ............... 128
Section 16.03 Designation by Class C Limited
Partners ................................ 129
Section 16.04 Covenants ............................... 130
Section 16.05 Debt Financing Agreements ............... 133
ARTICLE XVII THE CLASS C-1 LIMITED PARTNER INTEREST ....... 134
Section 17.01 Incorporation of the Partnership ........ 134
Section 17.02 Exchange or Retirement of the Class C-1
Limited Partner Interests ............... 135
Section 17.03 Designation by Class C-1 Limited
Partners ................................ 138
Section 17.04 Covenants ............................... 138
Section 17.05 Debt Financing Agreements ............... 141
Section 17.06 Notice of Election; Class C-1
Participation Event; Class C-1 Accrual
Event ................................... 142
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ARTICLE XVIII MISCELLANEOUS PROVISIONS ..................... 144
Section 18.01 Additional Actions and Documents......... 144
Section 18.02 Notices.................................. 144
Section 18.03 Severability............................. 145
Section 18.04 Survival................................. 145
Section 18.05 Waivers.................................. 145
Section 18.06 Exercise of Rights....................... 146
Section 18.07 Binding Effect........................... 146
Section 18.08 Consent of Limited Partners.............. 146
Section 18.09 Entire Agreement......................... 146
Section 18.10 Pronouns................................. 147
Section 18.11 Headings................................. 147
Section 18.12 Governing Law............................ 147
Section 18.13 Execution in Counterparts................ 147
ARTICLE XIX PREFERRED LIMITED PARTNER INTERESTS .......... 148
Section 19.01 Incorporation of the Partnership......... 148
Section 19.02 Priority to Distributions................ 148
Section 19.03 Bring Along.............................. 149
Section 19.04 Redemption............................... 150
Section 19.05 Conversion............................... 152
ARTICLE XX EXECUTION..................................... 154
Schedule I - Unit Register (which includes Partners
and Capital Contributions) as of
November 4, 1994
Exhibit A - Form of Limited Partner Interest Certificate
Exhibit B - Form of General Partner Interest Certificate
Exhibit C - Form of Unit Register
Exhibit D - Form of Class C Exchange Note
Exhibit E - Form of Confidentiality Agreement
Exhibit F - Form of Class C-1 Exchange Note
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THIRD AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
MUZAK LIMITED PARTNERSHIP
(formerly, MLP Operating, L.P.)
This THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
MUZAK LIMITED PARTNERSHIP (formerly, MLP Operating, L.P.) (the "Partnership"),
dated as of November 4, 1994, is made and entered into by and among MLP
Acquisition, L.P., a Delaware limited partnership, as managing general partner
(the "Managing General Partner"), MLP Administration Corp., a Delaware
corporation, as administrative general partner (the "Administrative General
Partner"), MLP Holdings L.P., a Delaware limited partnership ("Holdings"), as
the Class A-1 Limited Partner, those Persons listed on Schedule I hereto as
Class A-2 Limited Partners, those Persons listed on Schedule I hereto as Class B
Limited Partners, those Persons listed on Schedule I hereto as Preferred
Interest Limited Partners, MLP Sales Limited Partnership, a Delaware limited
partnership ("MLP Sales"), as the Class C Limited Partner, Comcast Sound
Communications, Inc., a Colorado corporation, and Comcast Sound Communications,
Inc., an Illinois corporation (the "Contributing Parties"), as the Class C-1
Limited Partners, and all other Persons who shall in the future become Partners,
in accordance with the provisions hereof, and who are listed as such on the
books and records of the Partnership;
W I T N E S S E T H:
WHEREAS, the Managing General Partner heretofore has formed the
Partnership by filing a Certificate of Limited Partnership with the office of
the Secretary of State of the State of Delaware on February 18, 1992 and
entering into an agreement of limited partnership of the Partnership dated as of
February 18, 1992 (the "Original Agreement"), by and between the Managing
General Partner and Centre Capital Investors L.P., as the initial limited
partner;
WHEREAS, an Amended and Restated Agreement of Limited Partnership of
the Partnership was entered into as of September 4, 1992 (the "First Restated
Agreement"), and a Second Amended and Restated Agreement of Limited Partnership
was entered into as of January 31, 1994 (the "Second Restated Agreement");
WHEREAS, the Partners desire to admit the Preferred Interest Limited
Partners as additional Partners by issuance of
Preferred Limited Partner Interests to the Preferred Interest Limited Partners;
and
WHEREAS, the Partners desire to amend and restate in its entirety the
Second Restated Agreement as hereinafter set forth;
NOW, THEREFORE, for and in consideration of the foregoing and the
mutual covenants hereinafter set forth, the Partners hereby amend and restate
the Second Restated Agreement in its entirety, and it is hereby agreed as
follows:
ARTICLE I
DEFINITIONS
Unless the context otherwise specifies or requires, the terms defined
in this Article I shall, for the purposes of this Agreement, have the meanings
herein specified.
Adjusted Capital Account Deficit: Adjusted Capital Account Deficit
shall mean, with respect to any Units, the deficit balance, if any, in the
Capital Account maintained for such Units as of the end of the relevant Fiscal
Year (or as of any other relevant determination date), after giving effect to
the following adjustments solely for this purpose:
(i) Increase such Capital Account by the sum of (x) any amounts
which are required to be contributed to the Partnership (pursuant to the
terms of this Agreement or otherwise) with respect to such Units or which
are deemed to be required to be contributed as provided in Section 1.704-
1(b)(2)(iv)(c) or Section 1.704-1(b)(2)(iv)(d)(2) of the Treasury
Regulations with respect to such Units, plus (y) the share of Minimum Gain
allocable to such Units at the time of determination computed as provided
in Section 1.704-2(g)(1) or Section 1.704-2(i)(5), as applicable, of the
Treasury Regulations; and
(ii) Reduce such Capital Account by the amount of any
Partnership items described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and
(6) of the Treasury Regulations.
Affiliate: Any Person that directly or indirectly controls, is
controlled by, or is under common control with, the Person in question. As used
in this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies
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of a Person, whether through ownership of voting securities, by contract or
otherwise.
Agreed Value: The Agreed Value, with respect to any Contributed
Property, means the fair market value of such property (taking into account
Section 7701(g) of the Code) when contributed or when revalued for purposes of
maintaining Capital Accounts as provided in Section 5.02(c) hereof, in either
case as determined by the Managing General Partner using such reasonable method
of valuation as may be adopted by the Managing General Partner. The aggregate
initial Agreed Value of the Contributed Properties transferred to the
Partnership by the Class C Limited Partner was the sum of Eight Million Dollars
($8,000,000). The aggregate initial Agreed Value of the Contributed Properties
contributed to the Partnership by the Class C-1 Limited Partners is the sum of
Five Million Dollars ($5,000,000). The Managing General Partner shall allocate
the Agreed Value of any Contributed Properties among each separate item of
property constituting a Contributed Property by whatever method the Managing
General Partner deems reasonable.
Agreement: This Third Amended and Restated Agreement of Limited
Partnership, as it may be further amended, supplemented or restated from time to
time.
Assignee: A Person to whom a Partner shall have Transferred Units of
its Partner Interest and who has not become a Partner by reason of at least one
General Partner's refusal (and, with respect to the admission of an additional
or successor General Partner, the refusal of the Partners, by a Majority Vote)
to consent to the admission of such Person to the Partnership as a Substituted
Limited Partner or additional or successor General Partner, as the case may be,
of the Partnership.
Bankruptcy: The Bankruptcy of a Partner shall mean (i) the filing by
a Partner of a voluntary petition seeking liquidation, reorganization,
arrangement or readjustment, in any form, of its debts under Title 11 of the
United States Code (or corresponding provisions of future laws) or any other
federal or state insolvency law, or the filing by a Partner of an answer
consenting to or acquiescing in any such petition, (ii) the making by a Partner
of any assignment for the benefit of his creditors or the admission by a Partner
in writing of his inability to pay his debts as they mature, (iii) the
expiration of 60 days after the filing of an involuntary petition under Title 11
of the United States Code (or corresponding provisions of future laws), seeking
an application for the appointment of a receiver for the assets of a Partner, or
an involuntary readjustment of his debts under any other federal or state
insolvency law, provided that the same
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shall not have been vacated, set aside or stayed within such 60-day period, or
(iv) the entry against a Partner of a final and nonappealable order for relief
under any bankruptcy, insolvency or similar law now or hereafter in effect.
Barclays: Barclays Bank PLC, New York Branch, except with respect to
171,281 Put/Call Units as to which Barclays shall mean Exeter. Notwithstanding
the foregoing, (a) in the event that Barclays Bank PLC, New York Branch shall
transfer its rights with respect to any or all of its Put/Call Units under the
Put and Call Option Agreement to Barclays Capital Corporation or any other
Affiliate of Barclays Bank PLC, New York Branch which is a permitted transferee
of Barclays Bank PLC, New York Branch under the Put and Call Option Agreement,
any reference in this Agreement with respect to Barclays Bank PLC, New York
Branch in its capacity as a party to the Put and Call Option Agreement shall,
with respect to such Units, thereafter mean such transferee, and (b) in the
event that Exeter shall transfer its rights with respect to any or all of its
Put/Call Units under the Exeter Option Agreement, dated as of the date hereof,
between the Partnership and Exeter (the "Exeter Option Agreement"), to any
Affiliate of Exeter which is a permitted transferee of Exeter under the Exeter
Option Agreement, any reference in this Agreement with respect to Exeter in its
capacity as a party to the Exeter Option Agreement shall, with respect to such
Units, thereafter mean such transferee.
Barclays Bank PLC: Barclays Bank PLC, New York Branch.
Barclays Letter Agreement: That certain letter agreement, dated as of
September 4, 1992, among Barclays Bank PLC, the Partnership, and the Managing
General Partner with respect to the registration rights and certain other
matters pertaining to the Put/Call Units, as such letter agreement may be
amended, supplemented or restated from time to time.
Book-Tax Disparity: Book-Tax Disparity shall mean the difference
between a Capital Account balance, as maintained pursuant to Section 5.02
hereof, and such balance had the Capital Account been maintained strictly in
accordance with tax accounting principles (such disparities reflecting the
differences between the Carrying Values of Contributed Properties, as adjusted
from time to time, and the adjusted basis thereof for federal income tax
purposes).
Capital Account: Capital Account shall have the meaning ascribed to
such term in Section 5.02 hereof.
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Capital Contribution: Capital Contribution, with respect to any
Partner, shall mean the cumulative amount of cash and cash equivalents and the
Net Agreed Value of any Contributed Property contributed to the Partnership with
respect to the interest held by such Partner in the Partnership. The aggregate
Capital Contribution of the Class C Limited Partners is the Net Agreed Value of
the Contributed Properties transferred to the Partnership by MLP Sales in
consideration for the receipt of the Class C Limited Partner Interests; and the
Capital Contribution of the Class C-1 Limited Partners is the Net Agreed Value
of the Contributed Properties transferred to the Partnership by such Limited
Partners in consideration for the receipt of the Class C-1 Limited Partner
Interests.
Carrying Value: The Carrying Value shall mean (a) in the case of any
Contributed Property, the Agreed Value of such Contributed Property, reduced
(but not below zero) by all deductions for depreciation, cost recovery or
amortization (in each case computed as set forth in clause (iv) of the
definition of "Net Income or Net Loss") that are reflected on the Partnership's
books with respect to such Contributed Property as of the time of determination,
and (b) in the case of any other property of the Partnership, the adjusted basis
of such property for federal income tax purposes as of the time of
determination.
Cause: Cause in connection with a termination of employment of a
Class B Limited Partner or Preferred Interest Limited Partner by the Partnership
shall mean, except as otherwise provided in any employment agreement between
such Class B Limited Partner or Preferred Interest Limited Partner and the
Partnership (in which case the term Cause as used herein with respect to such
Partner shall have the meaning ascribed to it therein), (i) the willful and
continued failure by such Partner to perform substantially his duties to the
Partnership (other than any such failure resulting from his Disability) within
thirty days after a written demand for substantial performance is delivered to
such Partner by the Partnership or the Managing General Partner, which demand
specifically identifies the manner in which the Partnership or the Managing
General Partner believes that such Partner has not substantially performed his
duties, (ii) the conviction by a court of competent jurisdiction of such Partner
of any offense, regardless of classification, related to such Partner's duties
and responsibilities to the Partnership, (iii) the negligent performance by such
Partner of his duties to the Partnership if such negligent performance is
reasonably determined by the Partnership or the Managing General Partner to have
had or to be reasonably likely to have a material adverse effect on the
business, assets, prospects or financial condition of the Partnership, or (iv)
the conviction of such Partner by a
5
court of competent jurisdiction of a felony. It is expressly agreed and
understood that any participation by or involvement of a Class B Limited Partner
or Preferred Interest Limited Partner in the decision of the Administrative
General Partner to withhold its consent to the admission of a Substituted
Limited Partner shall not constitute any grounds for cause in connection with a
termination of employment of such Partner.
Certificate of Limited Partnership: The Certificate of Limited
Partnership and any and all amendments thereto and restatements thereof filed on
behalf of the Partnership with the office of the Secretary of State of the State
of Delaware, as required under the Delaware RULPA.
Class A Limited Partner Interests or Class A Limited Partner Interest:
The issued and outstanding Limited Partner Interests owned as of a given date by
the Class A Limited Partners.
Class A Limited Partners: The Limited Partners, as of a given date,
who are identified in the Partnership's books and records as Class A-1 and A-2
Limited Partners.
Class A Preferred Stock: Class A Preferred Stock shall have the
meaning set forth in Section 19.01 hereof.
Class A-1 Limited Partner Interests or Class A-1 Limited Partner
Interest: The issued and outstanding Limited Partner Interests owned as of a
given date by the Class A-1 Limited Partners.
Class A-1 Limited Partners: The Limited Partners, as of a given date,
who are identified in the Partnership's books and records as Class A-1 Limited
Partners.
Class A-2 Limited Partner Interests or Class A-2 Limited Partner
Interest: The issued and outstanding Limited Partner Interests owned as of a
given date by the Class A-2 Limited Partners.
Class A-2 Limited Partners: The Limited Partners, as of a given date,
who are identified in the Partnership's books and records as Class A-2 Limited
Partners.
Class B Conversion Units: Class B Conversion Units shall mean Units
of Class B Limited Partner Interest issued upon a conversion of Units of
Preferred Limited Partner Interest.
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Class B Limited Partner Interests or Class B Limited Partner Interest:
The issued and outstanding Limited Partner Interests owned as of a given date by
the Class B Limited Partners.
Class B Limited Partners: The Limited Partners, as of a given date,
who are identified in the Partnership's books and records as Class B Limited
Partners.
Class C Exchange Notes: Class C Exchange Notes shall have the meaning
set forth in Section 16.02(a).
Class C Exchange Note Subordination Agreement: The Exchange Note
Subordination Agreement, dated as of September 4, 1992, among the Partnership,
Barclays Bank PLC, UBS-NY and Muzak Limited Partnership (now known as MLP Sales
Limited Partnership), as such agreement may be amended, supplemented or restated
from time to time.
Class C Limited Partner Interests or Class C Limited Partner Interest:
The issued and outstanding Limited Partner Interests owned as of a given date by
the Class C Limited Partners.
Class C Limited Partners: The Limited Partners, as of a given date,
who are identified in the Partnership's books and records as Class C Limited
Partners.
Class C Liquidation Preference: Class C Liquidation Preference as at
any time shall mean an amount equal to the sum of (A) Eight Million Dollars
($8,000,000) and (B) the then accrued Class C Return. It is acknowledged that
the Class C Liquidation Preference is subject to setoff to the extent provided
in Article X of the Asset Purchase Agreement and the "Setoff Procedure" referred
to in the Asset Purchase Agreement. Class C Liquidation Preference per Unit at
any time shall mean an amount equal to the then Class C Liquidation Preference
divided by the number of outstanding Units of Class C Limited Partner Interest.
Class C Preferred Stock: Class C Preferred Stock shall have the
meaning set forth in Section 16.02(b).
Class C Return: Class C Return shall mean a return computed and
compounded annually (with appropriate daily proration in the event of
calculation in respect of partial years) at the annual rate of 7% on the then
Class C Liquidation Preference, provided that in the event that the Class C
Liquidation Preference shall not be paid at the required time, pursuant to the
7
provisions of Section 16.02(c), then such annual rate shall thereafter be
increased to 9%. Notwithstanding anything herein to the contrary, the Class C
Return shall be computed and shall compound from and including August 31, 1992.
Class C-1 Accrual Event: Class C-1 Accrual Event shall have the
meaning set forth in Section 17.06(c) hereof.
Class C-1 Exchange Notes: Class C-1 Exchange Notes shall have the
meaning set forth in Section 17.02(a).
Class C-1 Exchange Note Subordination Agreement: The Exchange Note
Subordination Agreement, dated as of January 31, 1994, among the Partnership,
UBS-NY, Internationale Nederlanden (U.S.) Capital Corporation, Barclays Bank PLC
and the Contributing Parties, as such agreement may be amended, supplemented or
restated from time to time.
Class C-1 Limited Partners: The Limited Partners, as of a given
date, who are identified in the Partnership's books and records as Class C-1
Limited Partners.
Class C-1 Limited Partner Interests or Class C-1 Limited Partner
Interest: The issued and outstanding Limited Partner Interests owned as of a
given date by the Class C-1 Limited Partners.
Class C-1 Liquidation Preference: Class C-1 Liquidation Preference
as at any time shall mean an amount equal to the sum of (A) Five Million Dollars
($5,000,000) and (B) the then accrued Class C-1 Return; provided, however, that
at any time when the Capital Account balances of the Class C-1 Limited Partners
are less than Five Million Dollars ($5,000,000), the Class C-1 Liquidation
Preference shall mean an amount equal to the sum of (1) the Capital Account
balances of the Class C-1 Limited Partners at that time and (B) the then accrued
Class C-1 Return; provided further, however, that the Class C-1 Liquidation
Preference shall become zero and shall be eliminated (but this shall not affect
the Capital Account balances of the Class C-1 Limited Partners), and the portion
thereof consisting of the then accrued Class C-1 Return shall be cancelled,
extinguished and forfeited, in each case without any further action by the
Partnership or the Class C-1 Limited Partner, upon the occurrence of the Class
C-1 Participation Event. Class C-1 Liquidation Preference per Unit at any time
shall mean an amount equal to the then Class C-1 Liquidation Preference divided
by the number of outstanding Units of Class C-1 Limited Partner Interest.
8
Class C-1 Participation Amount: Class C-1 Participation Amount
shall mean 1,429,933 Units of Class C-1 Limited Partner Interest (representing
the difference of (i) a fraction the numerator of which is 16,444,232
(representing the sum of the number of Units of Class A Partner Interests, Class
B Partner Interests and Put/Call Units outstanding as of the date of the Second
Restated Agreement and the number of Protected Units (as defined in the Second
Restated Agreement) issued as of the date hereof) and the denominator of which
is 0.92, and (ii) 16,444,232. If prior to the occurrence of a Class C-1
Participation Event there has been a distribution on Units of Partner Interest
payable in Units or a split-up or a recombination of Units of Partner Interest
or other similar transaction, the Class C-1 Participation Amount shall be
appropriately adjusted, in the same manner as the Units of Class A Limited
Partner Interest and Class B Limited Partner Interest, to give effect to such
transaction.
Class C-1 Participation Event: Class C-1 Participation Event shall
mean the Partnership not having received the Notice of Election from the Class
C-1 Limited Partner pursuant to Section 17.06(a) hereof on or before the Class
C-1 Preference Election Date following the Partnership giving its first notice
to the Class C-1 Limited Partners pursuant to Section 15.01(a)(i) hereof.
Class C-1 Participation Option: Class C-1 Participation Option shall
have the meaning set forth in Section 17.02(c)(iii).
Class C-1 Preference Election Date: Class C-1 Preference Election
Date shall mean the date which is thirty (30) days after the first time notice
is given by the Partnership to the Class C-1 Limited Partner pursuant to Section
15.01(a)(i) hereof.
Class C-1 Preferred Stock: Class C-1 Preferred Stock shall have the
meaning set forth in Section 17.02(b).
Class C-1 Return: Class C-1 Return shall mean a return computed and
compounded annually (with appropriate daily proration in the event of
calculation in respect of partial years) at the annual rate of 7% on the then
Class C-1 Liquidation Preference which, solely for this purpose, shall be
determined as the sum of (A) Five Million Dollars ($5,000,000) and (B) the then
accrued Class C-1 Return, irrespective of the then Capital Account balances of
the Class C-1 Limited Partners, provided that in the event that the Class C-1
Liquidation Preference shall not be paid at the required time pursuant to the
provisions of
9
Section 17.02(c) hereof, then such annual rate shall thereafter be increased to
10%. Notwithstanding the preceding sentence, the Class C-1 Return shall cease
to accrue, and any amount theretofore added to the Class C-1 Liquidation
Preference in respect of the Class C-1 Return shall be cancelled, extinguished
and forfeited, in each case without any further action by the Partnership or the
Class C-1 Limited Partner, upon the occurrence of the Class C-1 Participation
Event.
Code: The Internal Revenue Code of 1986, as amended and in effect
from time to time, or the applicable corresponding provision or provisions of
any successor law.
Comcast Agreement: The Asset Purchase and Contribution Agreement
dated as of November 24, 1993 among the Partnership, Comcast Corporation,
Comcast Sound Communications, Inc., a Delaware corporation, Comcast Sound
Communications, Inc., a California corporation, Comcast Sound Communications,
Inc., a Connecticut corporation, Comcast Sound Communications, Inc., a Florida
corporation, Comcast Sound Communications, Inc., a Texas corporation, Comcast
Sound Communications, Inc., a Michigan corporation, Comcast Sound
Communications, Inc., a New York corporation, Comcast Sound Communications,
Inc., a Pennsylvania corporation, Comcast Sound Communications, Inc., an
Illinois corporation, Comcast Sound Communications, Inc., an Indiana
corporation, Comcast Sound Management, Inc., Comcast sound Communications, and
Comcast Real Estate Holdings, Inc., as it may be amended, supplemented or
restated from time to time.
Contributed Property: Contributed Property shall mean each Partner's
interest in each property or other consideration, in such forms as may be
permitted by the Delaware RULPA, including without limitation promissory notes
of the Partnership but excluding cash and cash equivalents, contributed to the
Partnership by such Partner (or deemed contributed to the Partnership in
connection with a revaluation of Partnership property for capital account
purposes pursuant to Section 5.02(c) hereof).
Conversion Units: shall mean up to 5,000,000 Units (subject to
adjustment as provided in the Guaranteed Note) of Class A-2 Partner Interest to
be issued to UBS-NY (or an Affiliate thereof to whom assignment of the
Guaranteed Note is permitted in accordance with the terms thereof (a "UBS
Holder")) if the Guaranteed Loan is converted pursuant to Section 8.1(a) of the
Guaranteed Note or Holdings if the Guaranteed Loan is converted pursuant to
Section 8.1(c) of the Guaranteed Note.
10
Delaware RULPA: The Delaware Revised Uniform Limited Partnership Act,
6 Del. C. (S) 17-101, et seq., as amended and in effect from time to time, or
the applicable corresponding provision or provisions of any successor law.
Disability: Disability, with respect to a Class B Limited Partner,
shall mean, except as otherwise provided in any employment agreement between
such Class B Limited Partner and the Partnership (in which case the term
Disability as used herein with respect to such Class B Limited Partner shall
have the meaning ascribed to it therein), the inability of such Class B Limited
Partner to perform substantially his duties and responsibilities to the
Partnership by reason of a physical or mental disability or infirmity (i) for a
continuous period of four months or (ii) at such earlier time as such Class B
Limited Partner submits satisfactory medical evidence that such Class B Limited
Partner has a physical or mental disability or infirmity that will likely
prevent such Class B Limited Partner from substantially performing his duties
and responsibilities for four months or longer. The date of such Disability
shall be on the last day of such four-month period or the day on which such
Class B Limited Partner submits such evidence, as the case may be.
Earn-Out Note: Earn-Out Note shall have the meaning ascribed to such
term in the Field Agreement.
Earn-Out Payment: Earn-Out Payment shall have the meaning ascribed to
such term in the Field Agreement.
Encumbrances: Encumbrances shall mean any and all liens, claims,
charges, security interests, options or other legal or equitable encumbrances.
Exchange Act: The Securities Exchange Act of 1934, as amended and in
effect from time to time, or the applicable corresponding provision or
provisions of any successor law.
Exeter: Exeter Venture Lenders, L.P.
Fair Market Value: Fair Market Value shall mean, with respect to a
Partner Interest, (a) in the case of the Class C Limited Partner Interests, the
Class C Liquidation Preference, (b) in the case of the Class C-1 Limited Partner
Interests, the Class C-1 Liquidation Preference until the occurrence of the
Class C-1 Participation Event, (c) in the case of Preferred Limited Partner
Interests, the Preferred Interest Liquidation Preference, and (d) in the case of
any other Partner Interest (other than the Managing General Partner's Partner
Interest), including Class B Conversion Units and the Class C-1 Partner
11
Interests after the occurrence of the Class C-1 Participation Event, the fair
market value thereof as determined in good faith by the Managing General
Partner; provided, however, that in the event any Partner disagrees with any
such valuation, such Partner shall, within twenty business days, submit to the
Managing General Partner his or its proposed valuation and the Managing General
Partner and such Partner shall in good faith attempt to agree upon a valuation
for the Partner Interest. In the event that the Managing General Partner and
such Partner shall be unable to agree within twenty business days, the Managing
General Partner and such Partner shall mutually agree upon the selection of an
investment banking or appraisal firm (which shall not be Lazard Freres & Co.)
that shall provide its valuation of the Partner Interest, which valuation shall
be final and binding upon such Partner and the Partnership. The fees and
expenses of any such investment banking or appraisal firm shall be borne (i) by
the Partnership, if the Partner's proposed valuation for the Partner Interest
was closer to the investment banking or appraisal firm's valuation thereof or
(ii) by the Partner, if the Managing General Partner's proposed valuation was
closer to the investment banking or appraisal firm's valuation. The Fair Market
Value of the Managing General Partner's Partner Interest shall be such fair
market value thereof as to which the Managing General Partner and Administrative
General Partner shall agree in good faith and in accordance with the provisions
of Sections 11.06(e) and 11.07(e) hereof; or if the Managing General Partner and
Administrative General Partner shall be unable to agree within twenty business
days, the Fair Market Value of the Managing General Partner's Partner Interest
shall be the valuation furnished by an investment banking or appraisal firm
jointly selected by the Managing General Partner and the Administrative General
Partner, which valuation shall be final and binding upon the Managing General
Partner and the Partnership, and the fees and expenses of such investment
banking or appraisal firm shall be borne by the Partnership.
Field Agreement: The Asset Purchase Agreement dated as of March 11,
1992, by and among the Partnership, MLP Sales, Field/Muzak, Inc. and The Field
Corporation, as amended pursuant to Section 6.08 thereof by MLP Sales' letters
dated April 22, 1992 and August 20, 1992, Amendment No. 1 thereto dated as of
June 26, 1992, Amendment No. 2 thereto dated July 31, 1992 and Amendment No. 3
thereto dated as of August 26, 1992, and as it may be further amended,
supplemented or restated from time to time.
Fiscal Period: Fiscal Period shall have the meaning set forth in
Section 6.01 hereof.
12
Fiscal Year: Fiscal Year shall have the meaning set forth in Section
6.01 hereof.
General Partners: The Managing General Partner and Administrative
General Partner or any additional or successor general partner or general
partners of the Partnership in their capacity as general partners of the
Partnership.
General Partner Interests: The issued and outstanding General Partner
Interests owned as of a given date by the General Partners.
Group A Partners: The Managing General Partner and the Class A
Limited Partners.
Guaranteed Note: Guaranteed Note shall have the meaning ascribed to
such term in the Second Restated Agreement.
Indebtedness: Indebtedness, with respect to any Person, shall mean
all liabilities or obligations, direct and contingent, which in accordance with
Generally Accepted Accounting Principles would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person at
the date as of which Indebtedness is to be determined.
Indemnification Agreement: That certain indemnification agreement (as
it may be amended, supplemented or restated from time to time), dated as of
September 4, 1992, between the Partnership and Barclays Bank PLC with respect to
the Put/Call Units.
Initial Partners: The Managing General Partner and the Class A-1
Limited Partners.
Involuntary Termination: Involuntary Termination shall mean the
Partnership's termination of a Class B Limited Partner's employment with the
Partnership, which termination is not for Cause or the result of a Class B
Limited Partner's Voluntary Resignation, Retirement, death or Disability.
Limited Partner: Any Person who, as of a given date, is identified in
the Partnership's books and records as a limited partner, including without
limitation a Class A Limited Partner, Class B Limited Partner, Preferred
Interest Limited Partner, Class C Limited Partner or Class C-1 Limited Partner.
13
Limited Partner Interests or Limited Partner Interest: The issued and
outstanding Limited Partner Interests owned as of a given date by the Limited
Partners.
Majority Vote: The written approval of, or affirmative vote by,
holders of a majority of the aggregate number of outstanding Units of General
Partner Interest and Limited Partner Interest (other than Units of Preferred
Limited Partner Interest, Units of the Class C Limited Partner Interest and
Units of the Class C-1 Limited Partnership Interests prior to the Class C-1
Participation Event), voting together and not as separate classes, with each
Unit of General Partner Interest and each Unit of Limited Partner Interest
(other than Units of Preferred Limited Partner Interest, Units of Class C
Limited Partner Interest and Units of Class C-1 Limited Partner Interest prior
to the Class C-1 Participation Event) having one vote, provided, that for
purposes of Section 11.02, Majority Vote shall mean the written approval of, or
affirmative vote by, a majority in interest of the remaining Partners, including
the Preferred Interest Limited Partners, Class C Limited Partners and the Class
C-1 Limited Partners, with such majority in interest being determined with
reference to the Units held by the remaining Partners, with each such Unit
having one vote; and provided, further, that Units of Class A-2 Limited Partner
Interest, Units of Preferred Limited Partner Interest and/or Class B Conversion
Units owned by Restricted Partners shall not, except as provided below and in
Section 13.03 hereof, be deemed to be outstanding for the purposes of
determining the aggregate number of outstanding Units of Partner Interests
required to constitute a Majority Vote and the Restricted Partners shall not,
except as provided below and in Section 13.03 and Section 13.05 hereof, have any
voting rights under this Agreement; and provided, further, that Units of Class
A-2 Limited Partner Interest, Units of Preferred Limited Partner Interest and/or
Class B Conversion Units owned by Restricted Partners shall be deemed to be
outstanding for the purposes of determining the aggregate number of outstanding
Units of Partner Interests required to constitute a Majority Vote, and the votes
of such Restricted Partners shall be included in determining (i) whether the
unanimous vote of the General Partners and the Limited Partners has been
obtained in accordance with Section 13.03 hereof and (ii) whether a Majority
Vote has been obtained, solely with respect to the following:
(a) any action referred to in Section 12.02(b) of this Agreement,
provided that no Restricted Partner shall be deemed to own more than
4.9% of the outstanding Units of Limited Partner Interest (and Units
owned by such Restricted Partner in excess thereof shall not be deemed
to be outstanding) for purposes of any action by
14
the Partners pursuant to Section 12.02(b) of this Agreement; or
(b) the dissolution of the Partnership under Section 12.02(c) of this
Agreement.
Management Option Plan: The Management Option Plan of the
Partnership, dated as of September 4, 1992, as it may be amended, supplemented
or restated from time to time.
Minimum Gain: Minimum Gain shall refer to the amount determined by
first computing with respect to each Partnership Nonrecourse Liability and each
Partner Nonrecourse Liability, respectively, the excess from time to time of the
outstanding balance of such indebtedness over the adjusted income tax basis of
the Partnership's assets subject to such indebtedness. The Minimum Gain with
respect to Partnership Nonrecourse Liabilities and Partner Nonrecourse
Liabilities, respectively, shall be separately determined for each Partnership
Nonrecourse Liability and each Partner Nonrecourse Liability. In the case of
Contributed Property, Minimum Gain shall be determined by using the Carrying
Value of such Contributed Property rather than the adjusted income tax basis of
such Property.
Net Agreed Value: The Net Agreed Value shall mean (a) in the case of
the Contributed Properties transferred by MLP Sales to the Partnership pursuant
to the Field Agreement in consideration for the Class C Limited Partner
Interest, the aggregate sum of Eight Million Dollars ($8,000,000), (b) in the
case of the Contributed Properties transferred by the Class C-1 Limited Partners
to the Partnership pursuant to the Comcast Agreement, the aggregate sum of Five
Million Dollars ($5,000,000), and (c) thereafter, in the case of any Contributed
Property, the Agreed Value of such property reduced by any indebtedness that is
assumed by the transferee of such property or to which such property is subject.
Net Income or Net Loss: "Net Income" or "Net Loss" for any Fiscal
Year or Fiscal Period means an amount equal to the Partnership's taxable income
or loss for such year or period, determined in accordance with Section 703(a) of
the Code (for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to Section 703(a)(1) of the Code shall
be included in taxable income or loss), with the following adjustments:
(i) Any income of the Partnership that is exempt from federal income
tax and is not otherwise taken into account in computing Net Income or
Net Loss pursuant to
15
this definition will be added to such taxable income or loss;
(ii) Any expenditures of the Partnership that are not deductible in
computing taxable income or loss, not properly chargeable to capital
accounts and not otherwise taken into account in computing Net Income
or Net Loss pursuant to this definition shall be subtracted from such
taxable income or loss;
(iii) Any income, gain or loss attributable to a taxable disposition
of any Contributed Property will be determined by the Partnership as
if the adjusted basis of such property as of the date of disposition
was equal in amount to the Carrying Value of such property as of such
date, notwithstanding that the adjusted tax basis of such property
differs from its Carrying Value;
(iv) Any deductions for depreciation, amortization or cost recovery
attributable to Contributed Property shall be an amount which bears
the same ratio to the Carrying Value of such property as of the
beginning of such Fiscal Year or Fiscal Period as the federal income
tax depreciation, amortization, or cost recovery deduction for such
period bears to the adjusted income tax basis of such property at the
beginning of such Fiscal Year or Fiscal Period; provided, however,
that if such property has an adjusted income tax basis equal to zero,
depreciation, amortization or cost recovery deductions, as the case
may be, shall be determined using any reasonable method that the
Managing General Partner has adopted;
(v) In the event the Agreed Values of the Partnership's assets are
adjusted pursuant to Section 5.02(c) hereof, the amount of such
adjustment shall be taken into account as gain or loss on disposition
of such assets in computing Net Income or Net Loss; and
(vi) Except as otherwise provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain,
loss, and deduction shall be made without regard to any election under
Section 754 of the Code which may be made by the Managing General
Partner on behalf of the Partnership.
1933 Act: The Securities Act of 1933, as amended and in effect from
time to time, or the applicable corresponding provision or provisions of any
successor law.
16
Nonrecourse Deductions: The Nonrecourse Deductions of the Partnership
for any Fiscal Year shall equal the net increase in the Minimum Gain during such
Fiscal Year with respect to all Partnership Nonrecourse Liabilities, reduced
(but not below zero) by the aggregate distributions made by the Partnership
during such Fiscal Year out of the proceeds of a Partnership Nonrecourse
Liability.
Notice of Election: Notice of Election shall have the meaning set
forth in Section 17.06(a).
Option Exercise Price: Option Exercise Price shall have the meaning
set forth in Section 17.02(c)(iii).
Partner: Any Person who is a General Partner, Limited Partner or such
other partner admitted pursuant to the provisions of Section 11.11 hereof;
Partners means two or more of such Persons.
Partner Interests or Partner Interest: The issued and outstanding
interests in the Partnership owned as of a given date by the Partners, including
without limitation Units acquired upon the exercise of Performance Options.
References in this Agreement to a Partner in connection with a specified class
of Partner Interest are references to the Person solely in its capacity as the
holder of the specified class of Partner Interest and not in its capacity, if
applicable, as a Partner holding a class of Partner Interest other than the
specified class of Partner Interest.
Partner Nonrecourse Deductions: The Partner Nonrecourse Deductions of
the Partnership for any Fiscal Year shall be determined in the same manner as
the Partnership's Nonrecourse Deductions for such Fiscal Year, except that
Partner Nonrecourse Deductions shall be computed based on the increase in
Minimum Gain, less any related distributions, during such Fiscal Year with
respect to only Partner Nonrecourse Liabilities.
Partner Nonrecourse Liabilities: The Partner Nonrecourse Liabilities
of the Partnership for any Fiscal Year shall mean the aggregate outstanding
principal balance of those of the Partnership's nonrecourse liabilities with
respect to which a Partner (or related person, within the meaning of Treasury
Regulation Section 1.752-4(b)) bears the economic risk of loss under Treasury
Regulation Section 1.752-2.
Partnership Nonrecourse Liabilities: The Partnership Nonrecourse
Liabilities for any Fiscal Year shall mean the aggregate outstanding principal
balance of the Partnership's
17
nonrecourse liabilities other than Partner Nonrecourse Liabilities.
Percentage Interest: The Percentage Interest of a General Partner or
Limited Partner (other than a Preferred Interest Limited Partner as to Units of
Preferred Limited Partner Interest held by such Limited Partner, a Class C
Limited Partner and, except as hereinafter provided, other than a Class C-1
Limited Partner) in the Partnership at a given time shall mean the percentage in
Partnership profits and losses represented by such Partner's Units of Partner
Interest expressed as a fraction, the numerator of which shall be the number of
such Partner's Units of Partner Interest and the denominator of which shall be
the total number of issued and outstanding Units of Partner Interest excluding
the Units of Preferred Limited Partner Interest, the Units of Class C Limited
Partner Interest and, prior to the occurrence of the Class C-1 Participation
Event, also excluding the Units of Class C-1 Limited Partner Interest.
Notwithstanding the foregoing, for purposes of Articles V and VI and Section
16.01 of this Agreement, prior to the admission of Barclays as a Class A-2
Limited Partner, the Percentage Interest represented by the Put/Call Units, and
the Percentage Interests of the Partners, shall be determined as if the Put/Call
Units were actually issued and outstanding. The Class C Limited Partners'
Percentage Interest shall be zero. The Percentage Interest of a Preferred
Interest Limited Partner as to Units of Preferred Limited Partner Interest held
by such Preferred Interest Limited Partner shall be zero until such Units are
converted, at which time the following adjustments to Percentage Interests shall
be made: (1) the Percentage Interests represented by all outstanding Units
(other than Units of Preferred Limited Partner Interest, Units of Class C
Limited Partner Interest and, prior to the Class C-1 Participation Event, Units
of Class C-1 Limited Partner Interest), including the Class B Conversion Units
issued in the conversion, shall be determined by including in the denominator
referred to in the first sentence of this definition, the Class B Conversion
Units so issued; and (2) the Percentage Interest of such Limited Partner shall
be increased by the Percentage Interest determined pursuant to clause (1) for
the Class B Conversion Units issued in the conversion. The Percentage Interest
of the Class C-1 Limited Partners shall be zero unless the Class C-1
Participation Event shall occur, in which event the Percentage Interest of the
Class C-1 Limited Partners shall automatically be increased to a percentage
determined as a fraction, the numerator of which is the Class C-1 Participation
Amount, and the denominator of which is the amount that is used to calculate the
Percentage Interest of a Partner (other than the Class C Limited Partners)
immediately after such increase. Upon the occurrence of the Class C-1
Participation Event, (a) the
18
number of Units of Class C-1 Limited Partner Interest shall be adjusted to be
equal in number to the Class C-1 Participation Amount and (b) the Percentage
Interests of all Partners (other than the Class C Limited Partners), including
the Class C-1 Limited Partners, and the Percentage Interests represented by the
Put/Call Units, respectively, shall be redetermined by including in the
denominator referred to in the first sentence of this definition, the Units of
Class C-1 Limited Partner Interest held by the Class C-1 Limited Partners
immediately after the Class C-1 Participation Event.
Performance Option: Performance Option shall mean an option granted
pursuant to the Management Option Plan.
Permitted Securities: Permitted Securities shall have the meaning set
forth in Section 6.05(a)(ii).
Person: Any individual, corporation, association, partnership,
business trust, joint stock company, joint venture, trust, estate or other
entity or organization of whatever nature.
Preferential Return: Preferential Return shall mean a return computed
and compounded quarterly (with appropriate daily proration in the event of
calculation in respect of partial quarters) at the annual rate of 8% on the then
Preferred Interest Liquidation Preference.
Preferred Interest Liquidation Preference: Preferred Interest
Liquidation Preference per Unit at any time shall mean an amount equal to the
sum of (A) $1.75 and (B) the then accrued and unpaid Preferential Return on such
Unit. The aggregate Preferred Interest Liquidation Preference at any time shall
mean an amount equal to the then Preferred Interest Liquidation Preference per
Unit multiplied by the number of the then outstanding Units of Preferred Limited
Partner Interest.
Preferred Interest Limited Partners: The Limited Partners, as of a
given date, who are identified in the Partnership's books and records as
Preferred Interest Limited Partners.
Preferred Limited Partner Interests or Preferred Limited Partner
Interest: The issued and outstanding Limited Partner Interests owned as of a
given date by the Preferred Interest Limited Partners.
Pro Rata Share: Pro Rata Share shall mean the percentage of Transfer
Units, Class B Transfer Units or Treasury Units (as such terms are defined in
Article XI hereof) being offered by
19
a Transferring Group A Partner or a Class B Transferring Partner or with respect
to the purchase of Termination Units from a Terminated Limited Partner (as such
terms are defined in this Article I or Article XI hereof) that each other
Partner (other than the Class C Limited Partners and, prior to the Class C-1
Participation Event, the Class C-1 Limited Partners) shall be entitled to
purchase, if any, upon any particular offer made pursuant to Article XI hereof.
Such percentages as to each other Partner shall be determined by dividing the
number of Units owned by such Partner by the aggregate number of Units owned by
all Partners (other than the Class C Limited Partners and, prior to the Class C-
1 Participation Event, the Class C-1 Limited Partners) entitled to participate
in the purchase of such Transfer Units, Class B Transfer Units or Treasury
Units.
Promissory Note: Promissory Note shall mean the promissory note(s),
if any, that a Class B Limited Partner or Preferred Interest Limited Partner
delivers to the Partnership pursuant to a Subscription Agreement.
Put and Call Option Agreement: The Option Agreement (as it may be
amended, supplemented or restated from time to time), dated as of September 4,
1992, between the Partnership and Barclays Bank PLC.
Put/Call Units: Put/Call Units shall have the meaning set forth in
Section 2.03(c).
Restricted Partner: Restricted Partner shall mean any Limited Partner
which is (i) subject to regulation as a bank holding company or a subsidiary of
a bank holding company under Regulation Y of the Board of Governors of the
Federal Reserve System (including, without limitation, by virtue of the
International Banking Act of 1978), (ii) otherwise prohibited under applicable
law relating to banks or bank holding companies from owning a Partner Interest
which has the voting rights granted to the holder of such Partner Interests
(without regard to any limitation applicable to Restricted Partners), or (iii)
any Person who has been admitted as a Substituted Limited Partner with respect
to a Restricted Partner's Limited Partner Interest and has not notified the
Partnership that it has elected to become a Limited Partner (without regard to
the limitations applicable to Restricted Partners).
Retirement: Retirement shall mean with respect to a Class B Limited
Partner or Preferred Interest Limited Partner, except as otherwise provided in
any employment agreement between such Partner and the Partnership (in which case
the term Retirement as used herein with respect to such Partner shall have
20
the meaning ascribed to it therein), such Partner's termination of employment
after attainment of age 65 and after having been continuously employed by the
Partnership for at least one year.
Sale: Sale shall mean the sale of all or substantially all of the
Partnership's assets in one transaction or a series of related transactions.
Specified C-1 Event: Specified C-1 Event shall have the meaning set
forth in Section 6.05(f) hereof.
Specified Debt: The credit facility provided to the Partnership by
Union Bank of Switzerland, New York Branch ("UBS-NY") pursuant to the Credit
Agreement, dated September 4, 1992, among the Partnership, UBS-NY, other
Lenders, and UBS-NY, as agent, as amended and restated as of January 31, 1994
and as such agreement may be further amended, supplemented or restated from time
to time, and the loan made by Barclays Bank PLC to the Partnership, as of the
date of the First Restated Agreement, pursuant to the Subordinated Loan
Agreement between the Partnership and Barclays Bank PLC, as amended as of
January 31, 1994, as further amended as of the date hereof to provide for, among
other things, an additional loan made from Barclays Bank PLC to the Partnership
as of the date hereof, and as such agreement may be further amended,
supplemented or restated from time to time, and any refinancing of such credit
facility or loans.
Specified Debt Agreements: The agreements (as they may be amended,
supplemented or restated from time to time) governing the Specified Debt,
including without limitation the Earn-Out Note Subordination Agreement dated as
of September 4, 1992, among the Partnership, Barclays Bank PLC, UBS-NY and Muzak
Limited Partnership (now known as MLP Sales Limited Partnership) the Class C
Exchange Note Subordination Agreement, and the Class C-1 Exchange Note
Subordination Agreement, as such agreements may be amended, supplemented or
restated from time to time.
Specified Event: Specified Event shall have the meaning set forth in
Section 6.05(a)(ii) hereof.
Specified Partner: Specified Partner shall have the meaning set forth
in Section 11.04(a) hereof.
Subscription Agreement: The subscription agreement of a Limited
Partner with respect to its purchase of its Limited Partner Interest.
21
Subsidiary: Subsidiary shall mean a Person in which the Partnership
has a direct or indirect ownership interest that either (i) entitles the
Partnership directly or indirectly to cast a majority of the votes, consents or
other approvals cast by holders of ownership interests in such Person generally
or (ii) entitles the Partnership directly or indirectly to exercise control over
the management or policies of such Person.
Substituted Limited Partner: A Person who is admitted to the
Partnership as a Limited Partner pursuant to Section 11.10 of this Agreement (i)
in place of a Limited Partner who has Transferred all of his Units of Limited
Partner Interest to such Person, (ii) in place of a Limited Partner who has
Transferred some of his Units of Limited Partner Interest to such Person and has
Transferred the remainder of his Units of Limited Partner Interest to other
Partners, in accordance with the terms of Article XI hereof, or (iii) in
addition to a Limited Partner who has Transferred a portion of his Units of
Limited Partner Interest to such Person, and who is listed as a Limited Partner
on the books and records of the Partnership. Such Person shall have all the
rights of a Limited Partner.
Third Party: Third Party shall mean any Person excluding each of the
following: (i) the Class B Limited Partners; (ii) the Partnership, the General
Partners and any officer, director, affiliate or associate (as such terms are
defined in the rules and regulations under the Exchange Act) of the Partnership
or any General Partner; (iii) the Class A-1 Limited Partners, any of Holdings'
affiliates or associates (as such terms are defined in the rules and regulations
under the Exchange Act), any of Holdings' partners and their officers',
directors', affiliates', associates' and partners' respective affiliates and
associates (as such terms are defined in the rules and regulations under the
Exchange Act); (iv) the Class A-2 Limited Partners and any affiliate or
associate (as such terms are defined in the rules and regulations under the
Exchange Act) of any Class A-2 Limited Partner; and (v) the Preferred Interest
Limited Partners.
Transfer: Transfer shall mean any transfer, assignment, sale, lease,
pledge, hypothecation or other disposition of the asset in question or of any
interest in such asset.
Transfer Event: Transfer Event shall mean (i) a Transfer of
substantially all of the assets of the Partnership, (ii) a change in control of
the board of directors of the general partner of the Managing General Partner
(or if the Partnership is incorporated, of the board of directors of the
successor corporation) pursuant to which any single Person other than an
Affiliate
22
of the Partnership acquires control of such board of directors or (iii) the
Transfer of more than 50% of the voting equity interests in the Partnership (or
any parent of the Partnership) and with respect to a Class C-1 Limited Partner
only, the Transfer of more than 50% of the general partnership interests in the
Managing General Partner or more than 50% of the voting equity interests in the
general partner of the Managing General Partner, in each case other than to an
Affiliate of Holdings, the Managing General Partner or Centre Partners L.P., in
either case whether by sale, merger or consolidation to any single Person or two
or more Affiliated Persons (provided that such two or more Affiliated Persons
would be considered to be acting in concert as a "group" for purposes of Section
13(d) of the Exchange Act, for purposes hereof treating such voting equity
interests as if such voting equity interests were equity securities in respect
to which a Schedule 13D would be required to be filed with the Securities and
Exchange Commission as if the requisite percentage and other threshold
conditions to such filing were satisfied) (other than a pledge of such interests
to (x) the Partnership to secure the Promissory Notes and/or (y) the holders of
the Specified Debt); provided, however, that a "Transfer Event" shall not
include (i) a change of control of Holdings or Centre Partners L.P. or their
successors (unless at the time of such change of control, substantially all the
operating assets of Holdings or Centre Partners L.P. directly or indirectly,
consist of assets of the Partnership), (ii) any Transfer of the voting
partnership interests in the Partnership of Holdings or the Managing General
Partner to each other and/or to an Affiliate or one or more partners of
Holdings, the Managing General Partner or Centre Partners L.P., or (iii) a
Transfer of substantially all of the assets of the Partnership in connection
with an incorporation of the Partnership and its business and assets in
accordance with the provisions of this Agreement. For purposes of the foregoing
definition, Preferred Limited Partner Interests shall not be deemed to be voting
equity interests in the Partnership.
Treasury Regulations: Treasury Regulations promulgated in final,
temporary or proposed form under the Code, as such Treasury Regulations may be
amended from time to time. Any reference herein to a specific Treasury
Regulation provision shall be deemed to include a reference to the corresponding
provision of any successor provision.
UBS: UBS Holdings Inc.
UBS-NY: Union Bank of Switzerland, New York Branch.
UBS Entity: Any corporation or other entity of which at least 75% of
its outstanding securities (both by vote and by
23
value) are directly or indirectly owned by Union Bank of Switzerland and in
which no Person (other than Union Bank of Switzerland or another UBS Entity) has
a controlling interest.
Unit: Unit shall mean the unit for measurement of the Partner
Interest of each Partner. Each General Partner's Partner Interest shall be
represented by Units of General Partner Interest. Each Limited Partner's
Partner Interest shall be represented by Units of Limited Partner Interest.
Notwithstanding the foregoing, for purposes of Articles V, VI and X and Sections
12.04(c), 16.01 and 18.02 of this Agreement, prior to the admission of Barclays
as a Class A-2 Limited Partner, the Put/Call Units shall be treated as if they
were actually issued and outstanding Units of Limited Partner Interest. All
Units of Limited Partner Interest and General Partner Interest shall be
evidenced by certificates substantially in the form of Exhibits A and B,
respectively. References in this Agreement to a specific Partner's Units of a
specified class of Partner Interest are references to the Units of the Person
solely of such class and not, if applicable, of any other class of Partner
Interest.
Unit Register: Unit Register shall have the meaning set forth in
Section 10.01(c).
Voluntary Resignation: Voluntary Resignation shall mean the
termination of a Class B Limited Partner's or Preferred Interest Limited
Partner's employment with the Partnership by such Partner, other than for
Retirement, death, Disability, Cause or Involuntary Termination.
ARTICLE II
ORGANIZATION
Section 2.01. Formation of the Partnership. The Managing General
Partner and Centre Capital Investors L.P. formed the Partnership on February 18,
1992, pursuant to the provisions of the Delaware RULPA, upon the filing of the
Certificate of Limited Partnership with the office of the Secretary of State of
the State of Delaware. If the laws of any jurisdiction in which the Partnership
transacts business so require, the Managing General Partner shall file with the
appropriate office in that jurisdiction any documents necessary for the
Partnership to qualify to transact business in such jurisdiction and shall use
its best efforts to file with the appropriate office in that jurisdiction any
documents necessary for the Partnership to qualify to transact business in such
jurisdiction and shall use its best efforts to file with the appropriate office
in that
24
jurisdiction any documents necessary to establish and maintain the Limited
Partners' limited liability in such jurisdiction. The Partners further agree and
obligate themselves to execute, acknowledge and cause to be filed for record, in
the place or places and manner prescribed by law, any amendments and/or
restatements to the Certificate of Limited Partnership as may be required,
either by the Delaware RULPA, by the laws of a jurisdiction in which the
Partnership transacts business or by this Agreement, to reflect changes in the
information contained therein or otherwise to comply with the requirements of
law for the continuation, preservation and operation of the Partnership as a
limited partnership under the Delaware RULPA.
Section 2.02. Initial Contributions. On March 11, 1992, (i) the
Managing General Partner contributed $100 to the capital of the Partnership in
consideration for 100 Units of General Partner Interest and (ii) the Managing
General Partner acting on behalf of the Partnership accepted as a contribution
to the capital of the Partnership $9,900 from Centre Capital Investors L.P. in
consideration for 9,900 Units of Limited Partner Interest.
Section 2.03. Additional Capital Contributions.
(a) Concurrently with the execution of the First Restated Agreement,
the Managing General Partner made an additional Capital Contribution for such
number of Units, at a price of $1.00 per Unit, so that its total number of Units
and total Capital Contribution was as set forth opposite its name in Schedule I
to the First Restated Agreement.
(b) Concurrently with the execution of the First Restated Agreement,
each of the Persons listed in Schedule I to the First Restated Agreement who had
not theretofore been admitted as a partner of the Partnership made a Capital
Contribution or, in the case of the Class B Limited Partners, made a Capital
Contribution and, if applicable, delivered a Promissory Note for the number of
Units, at a price of $1.00 per Unit, as set forth opposite its respective name
in Schedule I to the First Restated Agreement. Each of such Persons who had not
theretofore been admitted as a partner of the Partnership was at such time
admitted as a partner of the Partnership with the status as set forth on
Schedule I to the First Restated Agreement.
(c) Pursuant to the Put and Call Option Agreement and the Exeter
Option Agreement, the Partnership has agreed to authorize the issuance of an
additional 1,529,898 Units (subject to adjustment as provided therein) of Class
A-2 Limited Partner
25
Interests (the "Put/Call Units"), and to transfer ownership of the Put/Call
Units to Barclays under the circumstances described in the Put and Call Option
Agreement and/or the Exeter Option Agreement for a total subscription price of
$10.00. Upon the issuance of the Put/Call Units to Barclays under the
circumstances described in the Put and Call Option Agreement and the Exeter
Option Agreement, Barclays shall be admitted as a Class A-2 Limited Partner at
the time (i) this Agreement or a counterpart hereof is executed by or on behalf
of Barclays, and (ii) Barclays is listed as a Class A-2 Limited Partner of the
Partnership on the books and records of the Partnership. Upon the admission of
Barclays as a Class A-2 Limited Partner, the Capital Account of the Put/Call
Units shall be deemed to be the Capital Account of Barclays.
(d) Concurrently with the execution of the Second Restated Agreement,
the Class C-1 Limited Partners contributed to the capital of the Partnership
Contributed Properties with an aggregate Net Agreed Value of $5,000,000, and
received the number of Units of Class C-1 Limited Partner Interest set forth
opposite their respective names set forth in Schedule I to the Second Restated
Agreement.
(e) Concurrently with the execution of this Agreement, each Preferred
Interest Limited Partner made a Capital Contribution for the number of Units of
Preferred Limited Partner Interest, at a price of $1.75 per Unit, set forth
opposite each such Preferred Interest Limited Partner's name in Schedule I
hereto, and each such Person was admitted to the Partnership as a Preferred
Interest Limited Partner.
Section 2.04. Name. The name of the Partnership is Muzak Limited
Partnership. The Managing General Partner shall promptly execute, file and
record any assumed or fictitious name certificates required by the laws of any
state in which the Partnership transacts business. The words "Limited
Partnership" (or an abbreviation thereof) shall be included in the name to the
extent required to comply with the laws of any jurisdiction that so requires.
The Managing General Partner may change the name of the Partnership at any time
or from time to time. The Partnership's business may be conducted under any
other name or names deemed advisable by the Managing General Partner, including
the name of the Managing General Partner or any Affiliate thereof.
Section 2.05. Place of Business. The principal place of business of
the Partnership shall be at 400 North 34th Street, Seattle, Washington 98103.
The Managing General Partner may hereafter change the principal place of
business of the Partner-
26
ship to such other place or places as the Managing General Partner may determine
from time to time upon prior notice to the other parties hereto.
Section 2.06. Registered Office and Registered Agent. The registered
office of the Partnership in the State of Delaware is c/o United Corporate
Services, Inc., 15 East North Street, Dover, Kent County, Delaware 19901, and
the name and address of the registered agent for service of process on the
Partnership in the State of Delaware is United Corporate Services, Inc., 15 East
North Street, Dover, Kent County, Delaware 19901.
ARTICLE III
PURPOSES
Section 3.01. Purposes and Business. The principal purposes and
business of the Partnership shall be to engage in the business of on-location
and broadcast business services, which include without limitation producing,
marketing and distributing programmed music, music video services, data
communications services, electronic publication and information distribution
services, video communications services, in-store advertising and promotion
services, related equipment and ancillary communications and other related
services, and in any activities which may lawfully be conducted by a limited
partnership formed pursuant to the Delaware RULPA.
Section 3.02. Powers.
(a) The Partnership shall have the power to do any and all acts
necessary, appropriate, proper, advisable, incidental or convenient to or for
the furtherance of the purposes and business described herein and for the
protection and benefit of the Partnership, and shall have, without limitation,
any or all of the powers that may be exercised on behalf of the Partnership by
the Managing General Partner pursuant to Article VII.
(b) Without limiting the provisions of Section 3.02(a) and without
limiting the power and authority of the Partnership or the Managing General
Partner on behalf of the Partnership to enter into other agreements on behalf of
the Partnership, the Partnership and the Managing General Partner on behalf of
the Partnership may, and hereby are authorized to, enter into and perform the
Specified Debt Agreements, the Put and Call Option Agreement, the Barclays
Letter Agreement and the Indemnification Agreement without any further act, vote
or approval of any
27
Partner or any other Person notwithstanding any provision of this Agreement or
the Delaware RULPA.
Section 3.03. Changes in the Tax Laws.
(a) If, as a result of a change in the federal income tax laws or the
occurrence of any other event, the Managing General Partner reasonably believes
there is a substantial risk that the Partnership may be treated as an
association taxable as a corporation for federal income tax purposes, the
Managing General Partner shall have the right, but not the obligation, (i) to
incorporate the Partnership and its business and assets, subject to its
liabilities, in which event the Managing General Partner shall use reasonable
efforts to effectuate the incorporation of the Partnership in a manner that will
minimize the amount of taxes payable by the Partnership and the Partners in
connection therewith, or (ii) to attempt to qualify the Partnership for any
other pass-through treatment then available for federal income tax purposes. In
the event of a transfer of the Partnership's assets to a corporation pursuant to
(i) above, (A) each Partner (other than a Preferred Interest Limited Partner,
Class C Limited Partner and a Class C-1 Limited Partner prior to the occurrence
of Class C-1 Participation Event) shall receive, in exchange for its Units of
Partner Interest, such shares of common stock as are in accordance with its
Percentage Interest at the time of such transfer, provided, that Limited
Partners who are Restricted Partners shall receive shares of common stock in
such corporation which shall have such voting rights (in any event not more
extensive than those voting rights accorded to the other Limited Partners who
are not Restricted Partners) which shall, in the sole opinion of a majority in
interest of such Restricted Partners, not result in such common stock
constituting a "voting security" under Regulation Y of the Board of Governors of
the Federal Reserve System or otherwise result in the inability of any such
Restricted Partner to own such common stock, and provided, further, that if
Barclays shall not have been admitted as a Class A-2 Limited Partner prior to
the time of such transfer, Barclays shall receive, in exchange for its rights
with respect to the Put/Call Units under the Put and Call Option Agreement, the
Barclays Letter Agreement and the Indemnification Agreement, warrants to acquire
shares of common stock in such corporation which have the same or substantially
the same voting rights as the shares being issued to the Restricted Partners, as
is in accordance with its Percentage Interest for the Put/Call Units at the time
of such transfer, (B) the resulting corporate structure will reflect (to the
extent applicable and consistent with a corporate structure) substantially the
same rights and restrictions that the Partners have pursuant to this Agreement,
and (C) whether or not Barclays shall have been admitted as a
28
Class A-2 Limited Partner prior to the time of such transfer, Barclays shall
have the same or substantially the same registration and other rights as are
contained in the Barclays Letter Agreement with respect to its warrants or
shares of common stock in such corporation.
(b) In the event of an incorporation of the Partnership pursuant to
(a)(i) above, each Class C Limited Partner shall receive, in exchange for its
Units of Class C Limited Partner Interest, such number of shares of Class C
Preferred Stock as would entitle the holder thereof to receive a liquidation
preference at the time of such exchange equal to the Class C Liquidation
Preference in respect of the Class C Limited Partner Interest of such Partner so
exchanged, subject to cash settlement (based on such then liquidation
preference) of fractional shares that would otherwise be required to be issued,
but shall not be entitled to participate in any other distributions which may be
made by such corporation with respect to shares of common stock.
(c) In the event of an incorporation of the Partnership pursuant to
(a)(i) above prior to the occurrence of a Class C-1 Participation Event, each
Class C-1 Limited Partner shall receive, in exchange for its Units of Class C-1
Limited Partner Interest, such number of shares of Class C-1 Preferred Stock as
would entitle the holder thereof to receive a liquidation preference at the time
of such exchange equal to the Class C-1 Liquidation Preference in respect of the
Class C-1 Limited Partner Interest of such Partner so exchanged, subject to cash
settlement (based on such then liquidation preference) of fractional shares that
would otherwise be required to be issued, but shall not be entitled to
participate in any other distributions which may be made by such corporation
with respect to shares of common stock.
(d) The Managing General Partner shall determine the number of shares
of Class C Preferred Stock to which the Class C Limited Partners are entitled,
and the number of shares of Class C-1 Preferred Stock to which the Class C-1
Limited Partners are entitled, and the amount of cash settlement as aforesaid,
in each case in its reasonable discretion exercised in good faith. The shares of
Class C Preferred Stock shall have the same economic terms as the Class C
Limited Partner Interests and the shares of Class C-1 Preferred Stock shall have
the same economic terms as the Class C-1 Limited Partner Interests (including
without limitation accretion of liquidation preference at the equivalent of the
Class C Return and the Class C-1 Return, respectively) and shall otherwise have,
in all material respects, the same rights, preferences, privileges, limitations
and restrictions as the
29
Class C Limited Partner Interest and the Class C-1 Limited Partner Interests,
respectively (except that the distributions described in Section 6.05(a)(ii)(y)
shall not be permitted for any taxable year commencing after the incorporation
of the Partnership. Such terms shall be reflected in the certificate of
incorporation of the corporation and/or a certificate of designations.
(e) In the event of an incorporation of the Partnership pursuant to
(a)(i) above, each Preferred Interest Limited Partner shall receive, in exchange
for its Units of Preferred Limited Partner Interest, such number of shares of
Class A Preferred Stock as would entitle the holder thereof to receive a
liquidation preference at the time of such exchange equal to the Preferred
Interest Liquidation Preference in respect of the Preferred Limited Partner
Interests of such Partner so exchanged, subject to cash settlement (based on
such then liquidation preference) of fractional shares that would otherwise be
required to be issued, but shall not be entitled to participate in any other
distributions which may be made by such corporation with respect to shares of
common stock.
(f) The Managing General Partner shall determine the number of shares
of Class A Preferred Stock to which the Preferred Interest Limited Partners are
entitled, and the amount of cash settlement as aforesaid, in each case in its
reasonable discretion exercised in good faith. The shares of Class A Preferred
Stock shall have the same economic terms as the Preferred Limited Partner
Interests (including without limitation accrual of dividends at a rate
equivalent to the rate of the Preferential Return) and shall otherwise have, in
all material respects, the same rights, preferences, privileges, limitations and
restrictions as the Preferred Limited Partner Interests. Such terms shall be
reflected in the certificate of incorporation of the corporation and/or a
certificate of designations.
(g) Notwithstanding anything to the contrary set forth in this
Section 3.03, no action may be taken pursuant to subsection (a)(ii) above unless
the Partnership shall have received a written opinion of counsel to the
Partnership, addressed to the Partnership and each Limited Partner, to the
effect that the Limited Partners and Assignees would not be liable for the debts
and obligations of the entity in which the Limited Partners and Assignees have a
continuing equity interest to a greater extent than they would be under the
Delaware RULPA.
30
ARTICLE IV
TERM OF THE PARTNERSHIP
The Partnership commenced on the date upon which the Certificate of
Limited Partnership was filed with the office of the Secretary of State of the
State of Delaware as described in Section 2.01 hereof and shall continue until
December 31, 2020, unless (i) dissolved and liquidated before such date in
accordance with the provisions of this Agreement, or (ii) extended beyond
December 31, 2020, pursuant to an amendment to this Agreement executed by all of
the General Partners and the Majority Vote of the Partners.
ARTICLE V
CAPITAL ACCOUNTS
Section 5.01. Capital Contributions.
(a) The initial capital of the Partnership was the sum of the cash
and cash equivalents, the aggregate principal amount of the Promissory Notes
delivered by the Class B Limited Partners and the Net Agreed Value of any
property contributed to the Partnership on or prior to the date of the First
Restated Agreement.
(b) Limited Partner Interests shall not be assessable, except as
required by law, and, except for a Class B Limited Partner's payment of his
Promissory Note (if any), no Limited Partner shall be required or entitled to
make any additional capital contributions to the Partnership.
(c) Except as otherwise provided herein, no Partner shall have the
right to withdraw from the Partnership or demand a return of all or any part of
his or its Capital Contributions during the term of the Partnership. Any return
of such Capital Contributions 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 on Capital Contributions. Each Partner, to the fullest
extent permitted by applicable law, waives any right it may have to cause a
partition of all or any part of the Partnership assets.
Section 5.02. Capital Accounts.
(a) A separate capital account (a "Capital Account") shall be
maintained on the books and records of the Partnership
31
for the Units owned by each Partner or Assignee and for the Put/Call Units. For
these purposes, each of the Partners (other than the Class C Limited Partners
and the Class C-1 Limited Partners) had an initial Capital Account balance equal
to its Capital Contribution as set forth opposite its name in Schedule I hereto,
the Put/Call Units had an initial Capital Account balance of zero, the Class C
Limited Partners had an initial Capital Account balance of $8,000,000, and the
Class C-1 Limited Partners shall have an initial Capital Account balance of
$5,000,000. To each Capital Account there shall be credited (i) the amount of
cash and cash equivalents and the Net Agreed Value of any property contributed
to the Partnership after the date hereof with respect to the related Units, and
(ii) Net Income (and items thereof) allocated to such Units pursuant to Section
6.03 hereof, and from each Capital Account there shall be debited (i) the amount
of cash and cash equivalents and the Net Agreed Value of any property paid or
distributed in respect of the related Units pursuant to this Agreement and (ii)
Net Loss (and items thereof) allocated to such Units pursuant to Section 6.03
hereof. A Substituted Limited Partner or Assignee will succeed to the Capital
Account of his transferor relating to the Partner Interest transferred unless
the Partnership terminates under Section 708 of the Code as a result of such
transfer.
(b) For any Fiscal Year in which the Partnership has a Code Section
754 election in effect, Capital Accounts shall be maintained in accordance with
Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations.
(c) Pursuant to the provisions of Section 1.704-1(b)(2)(iv)(f)(5)(i)
of the Treasury Regulations, the Agreed Values of all the Partnership's assets
owned immediately prior to the issuance of the Units of Preferred Limited
Partner Interest were revised to equal their current fair market value, and the
gain or loss that would have been realized if, immediately prior to such
issuance, the Partnership's assets had been sold for their Agreed Values, as so
determined, was credited or charged to the Capital Accounts maintained for all
Units with a Percentage Interest greater than zero, as required by this Section
5.02(c) so that all such Capital Accounts were equal on a per Unit basis as of
the issuance of the Units of Preferred Limited Partner Interest. In the event of
(i) the issuance of additional Partner Interests after the date hereof for cash
or property, (ii) the distribution of cash or other Partnership assets in
exchange for Units or in liquidation of Units, including pursuant to Sections
17.02 or 19.04 hereof, (iii) an increase in the Percentage Interest represented
by the Units of Class C-1 Limited Partner Interest after the Class C-1
Participation Event, (iv) the liquidation of the Partnership (including in
connection with an
32
incorporation of the Partnership pursuant to Section 3.03 or 16.01 hereof) or a
termination of the Partnership under Section 708(b) of the Code, (v) a
conversion of Units of Preferred Limited Partner Interest pursuant to Section
19.05 hereof, or (vi) a other change in the Percentage Interest represented by
the Units of any class, to the extent that the General Partners reasonably
determine that the following adjustments are necessary or appropriate in order
to avoid economic distortions among the Partners, the Agreed Values of the
Partnership's assets shall be determined as of such date, and the Capital
Accounts shall be adjusted in accordance with Sections 1.704-1(b)(2)(iv)(d), (e)
or (f) of the Treasury Regulations, as applicable, to reflect the manner in
which the unrealized gain or loss inherent in such assets (based on their
respective Carrying Values prior to any adjustments to Agreed Values made in
connection with such event) would be allocated among the Units if, immediately
before such event, the Partnership had sold all of its assets for their Agreed
Values, as so determined. It is contemplated that any adjustments to Capital
Accounts made in connection with the event described in the immediately
preceding clause (iii) of this Section 5.02(c) (sometimes hereinafter called
"clause (iii) adjustments") shall be in the nature of interim adjustments,
pending further adjustments to Capital Accounts pursuant to the immediately
preceding clause (iv) of this Section 5.02(c). As such, the Partners intend that
any clause (iii) adjustments, including any related revisions to the Agreed
Values of the Partnership's assets, shall be limited to those necessary to cause
the ratios of the balances in the Capital Accounts maintained for all Units
(other than Units of Preferred Limited Partner Interest and Units of Class C
Limited Partner Interest) to equal the ratios of the Percentage Interests
represented by such Units after the Class C-1 Participation Event. If Units of
Class C-1 Limited Partner Interest are subsequently issued upon exercise of the
Class C-1 Participation Option, the amount of the Option Exercise Price shall be
credited to the Capital Account established for the Units issued to the Class C-
1 Limited Partners upon such exercise, and the Capital Accounts maintained for
all other Units (other than Units of Preferred Limited Partner Interest and
Units of Class C Limited Partner Interest) shall be adjusted as necessary to
cause the ratios of the balances of the Capital Accounts maintained for all
Units (other than Units of Preferred Limited Partner Interest and Units of Class
C Limited Partner Interest) to equal the ratios of the Percentage Interests
represented by such Units after the exercise of the Class C-1 Participation
Option. Upon an issuance of Class B Conversion Units, the Capital Accounts
maintained for all Units (other than Units of Class C Limited Partner Interest
and, prior to the Class C-1 Participation Event, Units of Class C-1 Limited
Partner Interest) shall be adjusted upward or downward, pursuant
33
to Section 5.02(c)(v) hereof, to reflect the allocation of Net Income or Net
Loss under Section 6.03 hereof for the Fiscal Period in which the conversion
occurs (such Net Income or Net Loss to be computed taking into account the
adjustments to the Agreed Values of the Partnership's assets made immediately
prior to such conversion) and otherwise as necessary to cause the ratios of the
balances of the Capital Accounts maintained for all Units (other than Units of
Class C Limited Partner Interest and, prior to the Class C-1 Participation
Event, Units of Class C-1 Limited Partner Interest), including the Class B
Conversion Units, to equal the ratios of the Percentage Interests represented by
such Units after the issuance of the Class B Conversion Units; provided,
however, that in the event any resultant adjustments made pursuant to this
Section 5.02(c) would cause the Capital Accounts established for the Class B
Conversion Units to be credited with a dollar amount that would exceed the
dollar amount, immediately prior to the conversion (after giving effect to the
allocations under Section 6.03 hereof for the Fiscal Period in which such
conversion occurs), of the Capital Accounts maintained for the Units of
Preferred Limited Partner Interest for which such Class B Conversion Units were
issued, the Capital Accounts maintained for all Units (other than Units of Class
C Limited Partner Interest and, prior to the Class C-1 Participation Event,
Units of Class C-1 Limited Partner Interest), including the Class B Conversion
Units, shall (after making the foregoing adjustments) be reduced to an amount
determined by multiplying the dollar amount of each such Capital Account by a
fraction, the numerator of which is the dollar amount of the Capital Accounts
maintained for the Units of Preferred Limited Partner Interest for which the
Class B Conversion Units were issued and the denominator of which is the
aggregate dollar amount of the Capital Accounts that would have been established
for the Class B Conversion Units as set forth in this sentence without regard to
the adjustments set forth in this proviso. Following any adjustments to Capital
Accounts pursuant to this Section 5.02(c), Capital Accounts shall be maintained
in accordance with Section 1.704-1(b)(2)(iv)(g) of the Treasury Regulations.
(d) Anything herein to the contrary notwithstanding, (i) the amount of the
Class C Return accruing in any Fiscal Period shall be treated by the Partnership
and the Partners as a guaranteed payment for the use of capital under Section
707(c) of the Code, and shall neither be credited to nor debited from the
Capital Account of any Class C Limited Partner, and (ii) no credits to or debits
from any Class C Limited Partner's Capital Account shall be made pursuant to
Section 5.02(b) or (c) hereof if and to the extent that such credits or debits
would cause any Class C Limited Partner's Capital Account balance to be
increased
34
above or reduced below the then Class C Liquidation Preference for such Class C
Limited Partner.
(e) Any amount treated as a guaranteed payment under Section 17.06(c)
hereof shall neither be credited to nor debited from the Class C-1 Limited
Partners' Capital Accounts. In the case of a payment by the Partnership of the
Class C-1 Liquidation Preference, if any, the portion thereof representing
payment of the Class C-1 Return shall be treated (and, to the extent not
previously reported, shall be reported) by the Partnership and the Partners as a
guaranteed payment for the use of capital within the meaning of Section 707(c)
of the Code, and shall neither be credited to nor debited from the Class C-1
Limited Partners' Capital Accounts.
(f) No adjustments shall be made to the Capital Accounts of the Class C-1
Limited Partners with respect to any indemnity payments which the Partnership
receives pursuant to the Comcast Agreement.
Section 5.03. Negative Capital Accounts. Except as otherwise provided
in Article XII hereof with respect to the General Partners, at no time during
the term of the Partnership or upon dissolution and liquidation thereof shall a
Partner or Assignee with a negative balance in its Capital Account have any
obligation to the Partnership or the other Partners to restore such negative
balance, except (i) as may be required by law, (ii) in the case of a Class B
Limited Partner who has delivered a Promissory Note at the time of his admission
to the Partnership, such Class B Limited Partner shall be obligated to pay the
outstanding balance, if any, of such Promissory Note on the date of liquidation
of the Partnership, or (iii) in respect of any negative balance resulting solely
from a withdrawal of capital or distribution from the Partnership in
contravention of this Agreement.
Section 5.04. General Partners Not Liable for Return of Capital.
Notwithstanding anything to the contrary contained herein (but subject to the
provisions of Section 7.06), the General Partners shall not be liable for the
distribution or return of the Capital Contributions of the Limited Partners, or
any portion thereof, it being expressly agreed that any such distribution,
return or payment as may be made at any time or from time to time shall be made
solely from the assets of the Partnership.
35
ARTICLE VI
PROFITS AND LOSSES; DISTRIBUTIONS
Section 6.01. Fiscal Year; Fiscal Period; Taxable Year. The fiscal
year (the "Fiscal Year") of the Partnership for Partnership accounting purposes
shall be the same as the taxable year of the Partnership for federal income tax
purposes. Except as otherwise required by the Code, the taxable year of the
Partnership shall end on December 31st. A fiscal period (a "Fiscal Period")
shall end on the last day of the third, sixth, ninth and twelfth month of such
Fiscal Year. The Managing General Partner shall have authority to change the
taxable year of the Partnership if the Managing General Partner, in its sole
discretion, subject to approval of the Internal Revenue Service (if required),
shall determine such change to be necessary or appropriate to the business of
the Partnership. The Managing General Partner shall give notice of any such
change to the other Partners in the first quarterly or annual report delivered
to the Partners after such change.
Section 6.02. Accounting Method. For Partnership accounting purposes
and federal income tax purposes, the Partnership shall use the accrual method of
accounting.
Section 6.03. Allocations for Capital Account
Purposes.
(a) (i) Except as otherwise provided in Section 6.03(b) or
Section 6.03(c) hereof, Net Income of the Partnership shall be
allocated, for each Fiscal Period, as follows: (A) first, if any Net
Loss was allocated to Units of Preferred Limited Partner Interest
under Section 6.03(a)(ii)(D) hereof, then Net Income shall be
allocated among such Units (treating any Class B Conversion Units that
were issued during such Fiscal Period as Units of Preferred Limited
Partner Interest for these purposes until the date on which they were
converted) to the extent of and in proportion to the amount of Net
Loss allocated to such Units; (B) next, among the Units of Preferred
Limited Partner Interest (treating any Class B Conversion Units that
were issued during such Fiscal Period as Units of Preferred Limited
Partner Interest for these purposes until the date on which they were
converted) to the extent of and in proportion to the sum of (x) the
Preferential Return on such Units for the Fiscal Period for which such
allocation of Net Income is being made, plus (y) the excess (if any)
of the cumulative Preferential Return
36
on such Units for all prior Fiscal Periods over the cumulative Net
Income allocated to such Units for such Fiscal Periods pursuant to
Section 6.03(c)(ii) and this Section 6.03(a)(i)(B); (C) next, if any
Net Loss was allocated to Units of Class C-1 Limited Partner Interest
under Section 6.03(a)(ii)(C) hereof, then Net Income shall be
allocated to the Units of Class C-1 Limited Partner Interest to the
extent of and in proportion to the amount of Net Loss so allocated to
them; (D) next, among the Units, other than Units of Preferred Limited
Partner Interest, Units of Class C Limited Partner Interest and Units
of Class C-1 Limited Partner Interest, to the extent and in the
proportions necessary to cause the Capital Account maintained for each
Unit within each such Class to be equal and the ratios of the sum of
the Capital Accounts maintained for the Units of each such Class to be
or remain in the ratios of the sum of the Percentage Interests
represented by the Units of each such Class, such ratios to be
determined as if such Units were the only outstanding Units (provided
that, solely for purposes of making such allocations, the Capital
Accounts maintained for such Units shall be deemed to have been
increased by the amount of income or gain that would be allocated to
such Units pursuant to Sections 6.03(c)(iii) and 6.03(c)(iv) hereof if
the Partnership's assets were then sold for their aggregate fair
market value taking into account Section 7701(g) of the Code); (E)
next, if the Class C-1 Participation Event shall have occurred, among
the Units, other than Units of Class C Limited Partner Interest and
Units of Preferred Limited Partner Interest, to the extent and in the
proportions necessary to cause the ratios of the balances in the
respective Capital Accounts maintained for such Units to be or remain
in the ratios of the Percentage Interests represented by such Units
(provided that, solely for purposes of making such allocations, the
Capital Accounts maintained for such Units shall be deemed to have
been increased in the manner described in the parenthetical of the
immediately preceding clause (D)); and (F) thereafter, among the
Units, other than the Units of Class C Limited Partner Interest and
Units of Preferred Limited Partner Interest, in accordance with the
Percentage Interests represented thereby; and except as hereinafter
provided, Net Income of the Partnership shall not be allocated to the
Class C Limited Partners.
37
(ii) Except as otherwise provided in Section 6.03(b) or Section
6.03(c) hereof, Net Loss of the Partnership shall be allocated, for
each Fiscal Period, among the Units, other than the Units of Class C
Limited Partner Interest, in accordance with the Percentage Interests
represented thereby, provided, however, in any such case, that no such
allocation of Net Loss shall be made to a Unit to the extent that such
allocation would cause such Unit to have an Adjusted Capital Account
Deficit or would increase the Adjusted Capital Account Deficit of such
Unit at the end of the Fiscal Period for which such allocation is
being made, and any remaining Net Loss shall instead be allocated as
follows: (A) first, among the other Units of the same Class, pro rata,
until the Capital Accounts maintained for such Units are reduced to
zero; (B) next, among all other Units (other than Units of Preferred
Limited Partner Interest, Units of Class C Limited Partner Interest
and, prior to a Class C-1 Participation Event, Units of Class C-1
Limited Partner Interest), pro rata, until the Capital Accounts
maintained for all such Units are reduced to zero; (C) next, among the
Units of Class C-1 Limited Partner Interest, until the Capital
Accounts of such Units are reduced to zero; (D) next, among the Units
of Preferred Limited Partner Interest, pro rata, until the Capital
Accounts of such Units are reduced to zero; and (E) thereafter, among
all Units (other than Units of Preferred Limited Partner Interest,
Units of Class C Limited Partner Interest and, prior to a Class C-1
Participation Event, Units of Class C-1 Limited Partner Interest), in
accordance with their Percentage Interests, subject to the limitation
imposed by this proviso; and except as hereinafter provided, Net Loss
of the Partnership shall not be allocated to the Class C Limited
Partners.
(iii) In no event shall the General Partners' aggregate share of
allocations pursuant to Section 6.03(a)(i) or Section 6.03(a)(ii) be
less than 1%.
(b) Except as otherwise provided in Section 6.03(c) hereof, the
following provisions shall override the other provisions of this Section 6.03:
(i) Except as otherwise required by Section 752 of the Code and
the Treasury Regulations promulgated thereunder, Nonrecourse
Deductions and Partnership Nonrecourse Liabilities for any Fiscal
Period shall be
38
allocated among the Units, other than the Units of Class C Limited
Partner Interest, in accordance with the Percentage Interests
represented thereby. Any Partner Nonrecourse Deductions for any Fiscal
Period shall be allocated to the Units of any Person who bears the
risk of loss with respect to the Partner Nonrecourse Liabilities to
which such Partner Nonrecourse Deductions are attributable. For
purposes of this Section 6.03(b)(i), the Nonrecourse Deductions and
Partner Nonrecourse Deductions, respectively, for any Fiscal Period
shall be determined by comparing the amount of the Minimum Gain
attributable to the related nonrecourse liabilities as of the close of
such Fiscal Period with the amount of such Minimum Gain as of the
close of the immediately preceding Fiscal Period.
(ii) Except as otherwise provided herein, each Partner
shall be allocated Net Income and Net Loss in accordance with this
Section 6.03 from the date on which such Partner is admitted to the
Partnership in accordance with this Agreement, and the Put/Call Units
shall be allocated Net Income and Net Loss from the date hereof. For
purposes of determining the Net Income, Net Loss, or any other items
allocable to any period, such items shall be determined by the
Managing General Partner using any permissible method under Section
706 of the Code and the Treasury Regulations promulgated thereunder.
(iii) If, for any Fiscal Year, a Partner (the "Service
Partner") receives compensation from the Partnership in the form of
Units of Partner Interest, (i) the proportionate share of the
Partnership's assets represented by the Units transferred shall be
deemed to have been sold to the Service Partner for an amount equal to
the value of the Units transferred, (ii) the Service Partner shall be
deemed to have immediately made a Capital Contribution to the
Partnership of the assets deemed transferred (the Net Agreed Value of
which shall be the value of the Units transferred), (iii) any gain or
loss recognized by the Partnership and any deductions associated with
the Units transferred shall be allocated among the Units, other than
the Units of Class C Limited Partner Interest, in accordance with the
Percentage Interests represented thereby, calculated by excluding the
interest deemed transferred to the Service Partner, and (iv) Capital
Accounts will be adjusted to reflect the revaluation of
39
the Partnership's assets in accordance with Section 5.02(c) hereof
(and subject to Section 5.02(d) hereof).
(iv) In the event that a Unit of Preferred Limited Partner
Interest is to be converted and there is insufficient Net Income to
allocate to such Unit the full amount prescribed by Sections
6.03(a)(i)(A) and 6.03(a)(i)(B) hereof, items of Partnership income
and gain shall be allocated to such Unit in order that, after giving
effect to such allocations and reasonably anticipated future
allocations of Net Income to such Unit under Sections 6.03(a)(i)(A)
and 6.03(a)(i)(B) up to the date of such conversion, the Capital
Account of such Unit immediately prior to the conversion of such Unit
shall be equal to the Preferred Interest Liquidation Preference of
such Unit; provided, however, that such allocation shall not be made
to the extent it would result in an allocation of Net Loss to Units of
Class C-1 Limited Partner Interest or Units of Preferred Limited
Partner Interest pursuant to Sections 6.03(a)(ii)(C) and
6.03(a)(ii)(D) hereof as a result of the limitation imposed by the
proviso in Section 6.03(a)(ii) (based on Capital Accounts immediately
prior to the date of such conversion, if the conversion occurs before
the close of the Fiscal Period for which such allocation would be
made).
(c) Notwithstanding any other provision of this Agreement:
(i) If in any Fiscal Year any Unit has an Adjusted Capital
Account Deficit resulting from unexpected 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 consisting of a pro rata portion
of each item of Partnership income (including without limitation items
of gross income) and gain for such Fiscal Year (and, if necessary,
subsequent years) shall be specially allocated to such Unit in an
amount and manner sufficient to eliminate such Adjusted Capital
Account Deficit as quickly as possible; provided that an allocation
pursuant to this Section 6.03(c)(i) shall only be made if and to the
extent that such Unit would have an Adjusted Capital Account Deficit
after all other allocations provided for in this Section 6.03 have
been tentatively made as if this Section 6.03(c)(i) were not in this
Agreement. This Section 6.03(c)(i) is intended
40
to constitute a "qualified income offset" within the meaning of
Section 1.704-1(b)(2)(ii)(d)(3) of the Treasury Regulations.
(ii) If any Unit has an Adjusted Capital Account Deficit
as of the end of any Fiscal Year, items of Partnership income and gain
consisting of a pro rata portion of each item of Partnership income
(including without limitation items of gross income) and gain for such
Fiscal Year (and, if necessary, subsequent years) shall be specially
allocated to such Unit in an amount and manner sufficient to eliminate
such Adjusted Capital Account Deficit as quickly as possible, provided
that an allocation pursuant to this Section 6.03(c)(ii) shall only be
made if and to the extent that such Unit would have an Adjusted
Capital Account Deficit after all other allocations provided for in
this Section 6.03 have been tentatively made as if this Section
6.03(c)(ii) were not in this Agreement.
(iii) Notwithstanding any other provision of this Section
6.03, if there is a net decrease in Minimum Gain attributable to
Partnership Nonrecourse Liabilities during any Fiscal Year, each Unit
with respect to which there is allocable a share of the Minimum Gain
attributable to such Partnership Nonrecourse Liabilities at the
beginning of such Fiscal Year shall be specially allocated items of
Partnership income (including without limitation items of gross
income) and gain for such Fiscal Year (and, if necessary, subsequent
years), in an amount equal to such Unit's share of the net decrease in
such Minimum Gain; provided, however, that such allocations shall not
apply to a Unit to the extent that such Unit's share of such decrease
in Minimum Gain results under the circumstances described in whichever
is applicable of Sections 1.704-2(f)(2), 1.704-2(f)(3), 1.704-2(f)(4)
and 1.704-2(f)(5) of the Treasury Regulations. Allocations pursuant to
this Section 6.03(c)(iii) shall be made first, out of any cancellation
of indebtedness income realized (whether or not recognized) by the
Partnership for federal income tax purposes, and otherwise, in the
manner described in Section 1.704-2(j)(2)(i) of the Treasury
Regulations. This Section 6.03(c)(iii) is intended to constitute a
"minimum gain chargeback" within the meaning of Section 1.704-2(f) of
the Treasury Regulations.
41
(iv) Notwithstanding any other provision of this Section
6.03, if there is a net decrease in the Minimum Gain attributable to
Partner Nonrecourse Liabilities during any Fiscal Year, each Unit with
respect to which there is allocable a share of the Minimum Gain
attributable to such Partner Nonrecourse Liabilities at the beginning
of such Fiscal Year shall be specially allocated items of Partnership
income (including without limitation items of gross income) and gain
for such Fiscal Year (and if necessary, subsequent years), in an
amount equal to such Unit's share of the net decrease in such Minimum
Gain; provided, however, that such allocations shall not apply to a
Unit to the extent that such Unit's share of such decrease in Minimum
Gain results under the circumstances identified as exceptions to the
charge-back rule in Section 1.704-2(i)(4) of the Treasury Regulations.
Allocations pursuant to this Section 6.03(c)(iv) shall be made first,
out of any cancellation of indebtedness income realized (whether or
not recognized) by the Partnership for federal income tax purposes,
and otherwise, in the manner described in Section 1.704-2(i)(4) of the
Treasury Regulations. This Section 6.03(c)(iv) is intended to
constitute a "partner nonrecourse debt minimum gain chargeback" within
the meaning of Section 1.704-2(i)(4) of the Treasury Regulations.
(d) The specially allocated items set forth in Sections 6.03(b)(i)
and 6.03(c) hereof are intended to comply with certain requirements of Section
1.704-1(b) of the Treasury Regulations. Notwithstanding any other provision of
this Section 6.03, the specially allocated items shall be taken into account in
allocating other items of Net Income and Net Loss among the Units so that, to
the extent permissible under applicable Treasury Regulations, the net amount of
such allocations of other items of Net Income and Net Loss and any items
specially allocated to each Unit shall be equal to the amount of Net Income or
Net Loss that would have been allocated to such Unit if the specially allocated
items had not occurred.
Section 6.04. Allocations for Tax Purposes.
(a) For federal income tax purposes, except as otherwise provided in
this Section 6.04, all items of income, gain, loss, deduction and credit
comprising Net Income and Net Loss or otherwise described in, and allocated
pursuant to, Section 6.03 shall be allocated among the Units, other than the
Units of Class C Limited Partner Interest, in the same proportions as the
related portions of the Partnership's Net Income or Net Loss, as
42
the case may be, are allocated pursuant to Section 6.03, and any additional
items of income, gain, loss, deduction and credit recognized by the Partnership
for federal income tax purposes shall be allocated among the Units, other than
the Units of Class C Limited Partner Interest, in accordance with the Percentage
Interests represented thereby.
(b) In the case of a Contributed Property, items of income, gain, loss,
amortization, depreciation and cost recovery deductions attributable thereto
shall be allocated for federal income tax purposes among the Units in a manner
that takes into account the variation between the Carrying Value of such
property and its adjusted income tax basis in attempting to eliminate all
related Book-Tax Disparities. Any elections or decisions relating to such
allocations shall be made by the Managing General Partner in a manner that
reasonably reflects the purpose and intention of this Agreement, and may include
a decision to use the "traditional method" of allocation described in Section
1.704-1(c)(2) of the existing Treasury Regulations and in Section 1.704-3(b)(1)
of the proposed Treasury Regulations. The Managing General Partner has
determined that the Partnership shall use, and the Partnership agrees to use,
the traditional method in the case of the Contributed Properties contributed to
the Partnership by the Class C-1 Limited Partners on the date hereof.
(c) To the extent any gain resulting from the sale or other taxable
disposition of a Partnership asset is "recaptured" as ordinary income by reason
of Section 1245 or 1250 of the Code (or equivalent state or local revenue
statutes), the amount of recapture income so recognized shall be allocated among
the Units in the same manner as the amortization, depreciation or cost recovery
deductions giving rise to such recapture income were allocated among the Units
(but not to exceed the amount of gain allocated to such Units).
(d) To the extent provided in Section 1.704-1(b)(4)(iii) of the Treasury
Regulations, any recapture of tax credits shall be allocated to the Units to
which were allocated the tax credits giving rise to the recapture.
(e) (i) An amount equal to the Class C Return accruing in each Fiscal
Period shall be reported by the Partnership and the Partners as a guaranteed
payment for the use of capital under Section 707(c) of the Code, and not as an
allocation of Net Income or Net Loss.
(ii) In the case of any payment made by the Partnership to retire
or liquidate Units of the Class C Limited Partner Interest, the portion of the
Class C Liquidation Preference
43
representing payment of the Class C Return shall be treated as a guaranteed
payment for the use of capital within the meaning of Section 707(c) of the Code.
The balance of the Class C Liquidation Preference shall be considered to
represent the agreed-upon value of such Class C Limited Partners' interest in
all tangible and intangible Partnership property, including goodwill and going-
concern value, within the meaning of Section 736(b) of the Code, and, as such,
shall not be treated as a payment described in Section 707(c) of the Code.
(iii) The amount, if any, treated and reported by the Partnership
and the Partners under Section 17.06(c) as a guaranteed payment for the use of
capital within the meaning of Section 707(c) of the Code shall be so treated and
reported by the Partnership and the Partners for income tax purposes. In the
case of a payment by the Partnership of the Class C-1 Liquidation Preference, if
any, the portion thereof that does not represent a payment of the Class C-1
Return shall be considered to represent the agreed-upon value of the Class C-1
Limited Partners' interest in all tangible and intangible Partnership property,
including goodwill and going-concern value, within the meaning of Section 736(b)
of the Code, and, as such, shall not be treated as a payment described in
Section 707(c) of the Code.
(f) Allocations under this Section 6.04 are made solely for federal, state
or local income tax purposes and shall not impact any Capital Account balance or
share of distributions.
Section 6.05. Distributions.
(a) (i) Subject to the provisions of Section 6.05(a)(ii) and Section
6.05(f), from time to time, (1) the Managing General Partner shall cause the
Partnership to distribute to the General Partners, the Limited Partners (other
than the Class C Limited Partners) and the Assignees, as the case may be, the
cash distributions described in said Section 6.05(a)(ii)(y), and (2) in the
discretion of the Managing General Partner, the Partnership may distribute to
the General Partners, the Limited Partners (other than the Class C Limited
Partners) and the Assignees, as the case may be, additional sums in an amount
not to exceed the excess of (x) cash on hand of the Partnership on the date
thereof over (y) the cash requirements of the Partnership, including, but not
limited to, (A) any costs and expenses described in Section 9.02, including such
reserves for such costs and expenses as the Managing General Partner may
reasonably deem appropriate, (B) any costs and expenses required for the
servicing and repayment of indebtedness, (C) any general and administrative
charges, including amounts payable to the Managing General Partner and/or the
Administrative General Partner, (D)
any property and operating taxes, and (E) such reserves for anticipated costs or
expenses as the Managing General Partner may reasonably deem advisable;
provided, however, that the Partnership shall not make any distribution to any
Partner or any Assignee if and to the extent that such distribution is
prohibited by Delaware RULPA Section 17-607(a) or other applicable law; and
provided, further, however, that the Partnership shall not make any such
distribution to the extent that the terms of the Field Agreement or any
agreement or instrument under which there is any outstanding indebtedness of the
Partnership would then prohibit such a distribution, including, without
limitation, the Specified Debt Agreements. In the event that the Partnership
makes a distribution pursuant to this Section 6.05(a)(i) prior to the admission
of Barclays as a Class A-2 Limited Partner, it shall, subject to the provisions
of Section 6.05(a)(ii), make a payment to Barclays, pari passu with such
distribution to the Partners, in an amount equal to the product of (A) the total
amount that the Managing General Partner has designated for distribution
pursuant to this Section 6.05(a)(i) and (B) the Percentage Interest represented
by the Put/Call Units, and the amount to be paid to Barclays shall be subtracted
from the cash available for distribution to the Partners.
(ii) For so long as there are any outstanding Units of Class C
Limited Partner Interest or the Class C Exchange Notes (as defined in Section
16.02 hereof) shall be outstanding, unless all the Class C Limited Partners or
the holders of all the Class C Exchange Notes otherwise consent thereto, the
Partnership shall not, and shall not permit any Subsidiary to, directly or
indirectly, make any distributions of cash, securities or other assets in
respect of, or purchase or retire, any equity interests in the Partnership
(which for purposes of this sentence only shall include the Put/Call Units) or
options or warrants to purchase such interests, in each case outstanding on the
date of the First Restated Agreement (or equity interests, options or warrants
issued in respect of or upon Transfer of equity interests, options or warrants
outstanding on the date of the First Restated Agreement, including for these
purposes options issuable under the Management Option Plan), without the prior
consent of the Class C Limited Partners or the holders of the Class C Exchange
Notes, as applicable, except: (x) in connection with the termination of
employment of an employee of the Partnership, the repurchase of such employee's
equity interest and options under the Management Option Plan, provided that (1)
if the Class C Limited Partner Interests shall not be retired when required
pursuant to the provisions of Section 16.02(c) (or at the time at which such
retirement would be required but for the operation of Section 16.05(a) hereof or
the provisions of any Specified Debt Agreement) or (2) if the Class C Exchange
Notes shall not be paid
45
upon their "Maturity Date", then in each case, the Partnership may only effect
such repurchase by delivering to such employees Permitted Securities (as defined
below); (y) cash distributions (but only for such periods as the Partnership
exists in the form of a partnership) to the holders of equity interests in the
Partnership (other than the Class C Limited Partners) in an amount equal to the
lower of (A) the product of (i) the taxable income of the Partnership for any
fiscal year for which the Partnership reports taxable income for Federal income
tax purposes determined as if the Partnership were a separately taxable entity
and (ii) a percentage equal to the sum of (1) the highest marginal Federal
income tax rate applicable to individuals in effect for such year and (2) ten
percentage points or (B) the maximum amount of distributions for taxes the
Partnership is permitted to make under the Specified Debt Agreements; provided,
that, (1) if the Class C Limited Partner Interests shall not be retired when
required pursuant to the provisions of Section 16.02(c) (or at the time at which
such retirement would be required but for the operation of Section 16.05(a)
hereof or the provisions of any Specified Debt Agreement), (2) if the Class C
Exchange Notes or the Earn-Out Notes shall not be paid upon their "Maturity
Date", or (3) if the Earn-Out Payment shall not be paid when required (each
event specified in the preceding clause (1), (2) or (3), a "Specified Event"),
then in each case, the Partnership may not make the cash distributions described
in this clause (y); and (z) distributions by any Subsidiary to the Partnership.
For purposes of the preceding sentence and the subsequent sentence,
(1) the Partnership shall not be prohibited from delivering (A) securities
issued or issuable to employees pursuant to the Management Option Plan, (B) cash
payments in connection with the cash settlement of such securities pursuant to
the Management Option Plan, unless a Specified Event has occurred with respect
to the Class C Limited Partner Interests or the Class C Exchange Notes or unless
the Specified Debt Agreements otherwise prohibit such cash payments, in which
case the Partnership may effect such cash settlement only by delivering to such
employees Permitted Securities, or (C) securities issued or issuable pursuant to
the exercise of warrants or options issued to the holders of the Specified Debt
(or their Affiliates), including without limitation the Put/Call Units, and/or
securities contemplated by Section 11.08(f) pursuant to the provisions thereof,
and (2) the retirement date of the Class C Limited Partner Interests shall be
deemed to be such time specified in Section 16.02(c), provided that in no such
event shall such retirement date be deemed to be later than August 31, 2002.
"Permitted Securities" means (i) if a Specified Event or Specified C-1 Event has
occurred with respect to the Class C Limited Partner Interests or the Class C
Exchange Notes, or Class
46
C-1 Partnership Interests or the Class C-1 Exchange Notes, respectively, notes
of the Partnership having a ranking chosen by the Partnership (which ranking
shall be senior to the Class C Exchange Notes or Class C-1 Exchange Notes, as
the case may be) and (ii) if a Specified Event has occurred with respect to the
Earn-Out Notes or the Earn-Out Payment, notes of the Partnership pari passu with
the Earn-Out Notes (whether or not then issued) in terms of ranking and
restrictions on the terms of payments. To the extent permitted under the
Specified Debt Agreements, the Partnership shall make such cash distributions
pursuant to (y) above on a quarterly basis, on or before the 15th day of
January, April, June and September in each Fiscal Year. As soon as practicable
following the end of each Fiscal Year, the Managing General Partner shall
determine whether any adjustments with respect to such distributions pursuant to
(y) above are appropriate to reflect the actual taxable income, if any, of the
Partnership for such Fiscal Year, and shall notify the Partners and the taxpayer
with respect to the Put/Call Units accordingly if it determines that any excess
cash distributed should be restored to the Partnership.
(iii) All determinations by the Managing General Partner
regarding distributions shall be made reasonably and in good faith with due
regard to the criteria for distributions set forth above.
(b) Distributions (other than redemptions and distributions in liquidation
or dissolution) shall not be made to the Class C Limited Partners or their
Assignees. Except as otherwise provided in Section 19.02 hereof, distributions
under Section 6.05(a)(i) hereof shall be made in accordance with Percentage
Interests, except that, notwithstanding anything to the contrary in Section
6.05(a)(i) hereof, distributions described in Section 6.05(a)(ii)(y) hereof
shall be apportioned among the Units entitled to participate in distributions
under Section 6.05(a)(i)(1) hereof (i) first, so as to provide the holder of
each such Unit with tax distributions equal to (1) the applicable income tax
rate determined under said Section 6.05(a)(ii)(y) multiplied by the excess of
the cumulative Net Income allocated to such Unit for all Fiscal Periods
preceding the Fiscal Period for which the applicable tax distributions are being
made, over the cumulative Net Loss allocated to such Unit for such prior Fiscal
Periods, reduced by (2) all prior distributions made in respect of such Unit
under Section 6.05(a)(i)(1) for all Fiscal Periods preceding the Fiscal Period
for which the applicable tax distributions are being made; provided that no Unit
shall be entitled to receive such distributions on account of Net Income or
taxable income allocated to such Unit for Fiscal Periods (or portions thereof)
before the earliest date on which such Unit was
47
otherwise entitled to participate in distributions under Section 6.05(a)(i)(1)
hereof; provided, further, that a Class B Conversion Unit shall be entitled to
receive the portion (if any) of such distributions that would have been made to
the Unit of Preferred Limited Partner Interest for which it was issued for
periods after the conversion (based on the allocations and tax distributions
actually made to such Unit of Preferred Limited Partner Interest for periods up
to the conversion) had such Unit of Preferred Limited Partner Interest not been
converted; and (ii) as to the balance, in the ratio that such Units were
allocated the taxable income reported by the Partnership for the Fiscal Period
for which the applicable tax distributions are being made. In the event that
the Partnership shall make a distribution which consists of both non-cash
property and cash, the Partnership shall distribute, to the extent reasonably
practicable in the Managing General Partner's judgment, such property and cash
in such a manner that each of the Persons entitled to receive such distribution
shall receive approximately the same proportion of cash to such property.
(c) The Managing General Partner is authorized to take any action
that it determines in its sole discretion to be necessary or appropriate to
cause the Partnership to comply with any requirement relating to the withholding
of taxes, and may withhold taxes from any payment or distribution to the extent
required by the Code or any other applicable federal, state, local or foreign
law, including, without limitation, Sections 1441, 1442, 1445, 1446 and 3406 of
the Code. For purposes of this Agreement, any taxes so withheld by the
Partnership from any amount paid or distributed with respect to any Units shall
be deemed to be a distribution or payment with respect thereto, shall reduce the
amount that otherwise would be paid or distributed with respect to such Units
pursuant to this Agreement and shall reduce the Capital Account of such Units.
(d) If the Partnership is required by applicable law to pay any
federal, state or local income tax on behalf of any Person who is a taxpayer
with respect to Units, including, without limitation, any taxes required to be
withheld and paid over by the Partnership under Section 1446 of the Code in
respect of Net Income or items thereof allocated to such Units, then (i) to the
extent that the Partnership is then able to make a cash payment or distribution
to such taxpayer in accordance with the provisions of Section 6.05(a) of this
Agreement, the Managing General Partner shall be authorized, notwithstanding any
provision in this Agreement to the contrary, to offset the amount of tax to be
so paid on behalf of such taxpayer against such payment or distribution, and
(ii) to the extent that the amount of tax required to be so paid on behalf of
such taxpayer exceeds the
48
amount of the cash payment or distribution that the Partnership is able to so
make to such taxpayer, then (x) the Managing General Partner, notwithstanding
any provision in this Agreement to the contrary, shall send written notice to
such taxpayer, not more than 15 days before the due date of the relevant tax
payment, specifying the amount that such taxpayer must pay to the Partnership to
enable the Partnership to make the payment required to be so made on behalf of
such taxpayer, and (y) such taxpayer shall be obligated to pay to the
Partnership the amount set forth in such notice within 3 days of receiving such
notice and, if such amount is not so paid by such date (the "due date"), shall
also be liable to the Partnership for interest on such unpaid amount from the
due date to the date of payment at a rate equal to the Partnership's actual cost
of funds, together with any penalties imposed on the Partnership with respect to
such unpaid amount. The amount of any such taxes paid by the Partnership on
behalf of any such taxpayer (whether or not offset against the amount of any
payment or distribution to which such taxpayer would otherwise be entitled under
this Agreement) shall be treated as an actual distribution to such taxpayer for
all purposes of this Agreement. The Managing General Partner shall (1) upon the
making of a quarterly tax payment under Section 1446 of the Code on behalf of
any such taxpayer, advise such taxpayer of the Partnership's payment by
providing notice to such taxpayer in the form and manner specified in Revenue
Procedure 89-31, 1989-1 C.B. 895, as the same may be amended or modified from
time to time (or in the form and manner set forth in any Treasury Regulations
promulgated under Section 1446 of the Code), and (2) otherwise comply with all
reporting requirements under Section 1446 of the Code. If the Partnership is
permitted (but not required) by applicable law to pay any such tax on behalf of
any taxpayer, including any taxpayer who is a former Partner or Assignee, the
Managing General Partner shall be authorized (but not required) to pay such tax
from the funds of the Partnership and to take any action consistent with this
Section 6.05(d). The Managing General Partner shall be authorized (but not
required) to take all necessary or appropriate actions to collect all or any
portion of a deficiency in the payment of any such tax, which relates to prior
periods and which is attributable to Persons who were taxpayers with respect to
Units when such deficiencies arose, from such Persons.
(e) Notwithstanding anything to the contrary contained in this
Agreement, until a Class C-1 Participation Event occurs, a Class C-1 Limited
Partner shall not share in any Partnership distributions (other than
distributions in liquidation of such Limited Partner's Units and other than in
liquidation and dissolution of the Partnership). Following the occurrence of a
Class C-1 Participation Event, a Class C-1 Limited Partner shall
49
participate in Partnership distributions made pursuant to Section 6.05(a)
hereof, in accordance with the Percentage Interest represented by its Units,
except that such Limited Partner shall not participate in distributions
described in Section 6.05(f)(i)(y) hereof to the extent such distributions
relate to taxable income allocated to the Partners for any of the preceding
Fiscal Periods.
(f) (i) Prior to the Class C-1 Participation Event, unless all
the Class C-1 Limited Partners or the holders of all the outstanding Class C-1
Exchange Notes otherwise consent thereto, the Partnership shall not, and shall
not permit any Subsidiary to, directly or indirectly, make any distributions of
cash, securities or other assets in respect of, or purchase or retire, any
equity interests in the Partnership (which for the purposes of this sentence
only shall include the Put/Call Units) or options or warrants to purchase such
interests, in each case outstanding on the date of the First Restated Agreement
(or equity interests, options or warrants issued in respect of or upon Transfer
of equity interests, options or warrants outstanding on the date of the First
Restated Agreement, including for these purposes options issuable under the
Management Option Plan), except: (x) in connection with the termination of
employment of an employee of the Partnership, the repurchase of such employee's
equity interest and options under the Management Option Plan, provided that (1)
if the Class C-1 Limited Partner Interests shall not be retired when required
pursuant to the provisions of Section 17.02(c) (or at the time at which such
retirement would be required but for the operation of Section 17.05(a) hereof or
the provisions of any Specified Debt Agreement or any other agreements governing
the Indebtedness of the Partnership) or (2) if the Class C-1 Exchange Notes
shall not be paid upon their "Maturity Date", then in each case, the Partnership
may only effect such repurchase by delivering to such employees Permitted
Securities; (y) cash distributions (but only for such periods as the Partnership
exists in the form of a partnership) to the holders of equity interests in the
Partnership (other than the Class C-1 Limited Partners prior to the Class C-1
Participation Event) in an amount equal to the lower of (A) the product of (i)
the taxable income of the Partnership for any fiscal year for which the
Partnership reports taxable income for Federal income tax purposes determined as
if the Partnership were a separately taxable entity and (ii) a percentage equal
to the sum of (1) the highest marginal Federal income tax rate applicable to
individuals in effect for such year and (2) ten percentage points or (B) the
maximum amount of distributions for taxes the Partnership is permitted to make
under the Specified Debt Agreements or any other agreements governing
Indebtedness of the Partnership; provided, that, (1) if
50
the Class C-1 Limited Partner Interests shall not be retired when required
pursuant to the provisions of Section 17.02(c) (or at the time at which such
retirement would be required but for the operation of Section 17.05(a) hereof or
the provisions of any Specified Debt Agreement or any other agreements governing
Indebtedness of the Partnership), or (2) if the Class C-1 Exchange Notes shall
not be paid upon their "Maturity Date", (each event specified in the preceding
clause (1) or (2), a "Specified C-1 Event"), then in each case, the Partnership
may not make the cash distributions described in this clause (y); and (z)
distributions by any Subsidiary to the Partnership.
For purposes of the preceding sentence and the subsequent sentence, (1) the
Partnership shall not be prohibited from delivering (A) securities issued or
issuable to employees pursuant to the Management Option Plan, (B) cash payments
in connection with the cash settlement of such securities pursuant to the
Management Option Plan, unless a Specified C-1 Event has occurred with respect
to the Class C-1 Limited Partner Interests or the Class C-1 Exchange Notes or
unless the Specified Debt Agreements or other agreements governing Indebtedness
of the Partnership otherwise prohibit such cash payments, in which case the
Partnership may effect such cash settlement only by delivering to such employees
Permitted Securities, (C) securities issued or issuable pursuant to the exercise
of warrants or options issued to the holders of the Specified Debt or other
agreements governing Indebtedness of the Partnership (or their Affiliates),
including without limitation the Put/Call Units, and/or securities contemplated
by Section 11.08(f) pursuant to the provisions thereof, or (D) and issuing the
Conversion Units and/or the Special Subordinated Note (as defined in the
Guaranteed Note) (or Units of Class A-1 Partner Interest issued in exchange for
Conversion Units pursuant to Section 11.11(a)(ii)(b) of this Agreement), and (2)
the retirement date of the Class C-1 Limited Partner Interests shall be deemed
to be such time specified in Section 17.02(c), provided that in no such event
shall such retirement date be deemed to be later than the tenth anniversary of
the date hereof. To the extent permitted under the Specified Debt Agreements
and the other agreements governing Indebtedness of the Partnership, the
Partnership shall make such cash distributions pursuant to (y) above on a
quarterly basis, on or before the 15th day of January, April, June and September
in each Fiscal Year. As soon as practicable following the end of each Fiscal
Year, the Managing General Partner shall determine whether any adjustments with
respect to such distributions pursuant to (y) above are appropriate to reflect
the actual taxable income, if any, of the Partnership for such fiscal Year, and
shall notify the Partners and the taxpayer with respect to the Put/Call Units
51
accordingly if it determines that any excess cash distributed should be restored
to the Partnership.
(ii) All determinations by the Managing General Partner
regarding distributions shall be made reasonably and in good faith with due
regard to the criteria for distributions set forth above.
ARTICLE VII
MANAGEMENT
Section 7.01. Management and Control of the Partnership.
-----------------------------------------
(a) Except as otherwise provided herein, the Managing General Partner
shall have full, exclusive and complete discretion to manage and control the
business and affairs of the Partnership, to make all decisions affecting the
business and affairs of the Partnership and to take all such actions as it deems
necessary, appropriate, incidental or convenient to accomplish the purposes of
the Partnership as set forth herein. The Managing General Partner shall be
responsible for the day-to-day management of the Partnership and, except as
otherwise provided herein or as otherwise agreed in writing by all the General
Partners, shall have the sole right to manage and control the Partnership, with
no obligation to consult with or obtain the consent of the Administrative
General Partner or any additional General Partner.
(b) Except as otherwise provided herein, no General Partner other
than the Managing General Partner and no Limited Partner, as such, shall have
any authority, right or power to bind the Partnership, or to manage or control,
or to participate in the management or control of, the business and affairs of
the Partnership in any manner whatsoever.
(c) On any matter requiring the consent or agreement of the General
Partners, other than with respect to the dissolution of the Partnership pursuant
to Section 12.02(c) or the substitution of Limited Partners, in which event
(except as otherwise provided in Section 11.10(g)) the consent of each General
Partner shall be required, and except as otherwise provided in this Agreement
(e.g. where consent of each of or all of the General Partners or the consent of
each or all of the Partners is provided for), consent or agreement shall be
deemed to have been obtained if holders of the Units of General Partner Interest
rep-
52
resenting a majority of the outstanding Units of General Partner Interest shall
have consented or agreed.
Section 7.02. Powers of the Managing General Partner. Except as
otherwise expressly provided herein, the Managing General Partner (acting on
behalf of the Partnership) shall have the right, power and authority, in the
management of the business and affairs of the Partnership, to do or cause to be
done any and all acts, at the expense of the Partnership, deemed by the Managing
General Partner to be necessary, appropriate, incidental or convenient to
effectuate the business, purposes and objectives of the Partnership. Such
right, power and authority of the Managing General Partner shall include,
without limitation, the power and authority:
(a) to acquire, own, lease, sublease, manage, finance, hold, deal in,
control or dispose of any interests or rights in personal property or real
property;
(b) to negotiate, enter into, renegotiate, extend, renew, terminate,
modify, amend, waive, execute, acknowledge or take any other action with respect
to any lease, contract or security agreement in respect of any assets of the
Partnership;
(c) to pay, collect, compromise, litigate, arbitrate or otherwise
adjust or settle any and all other claims or demands of or against the
Partnership or to hold such proceeds against the payment of contingent
liabilities;
(d) to borrow money or to obtain credit in such amounts, at such rate
of interest and upon such other terms and conditions as the Managing General
Partner deems appropriate, recourse or nonrecourse, from banks, other lending
institutions or any other Person, including the Partners, and pursuant to
indentures, loan agreements or any other type of instrument, for any purpose of
the Partnership and to secure payment of the principal of any such indebtedness
and the interest thereon by mortgage, pledge, conveyance or assignment in trust
of or grant of security interests in the whole or any part of any or all of the
property and assets of the Partnership;
(e) to make, execute, deliver, perform, assign, acknowledge and file
on behalf of the Partnership any and all documents or instruments of any kind
which the Managing General Partner may deem necessary, appropriate, incidental
or convenient in carrying out the purposes and business of the Partnership; and
any Person dealing with the Managing General Partner shall not be required to
determine or inquire into its authority or power to
53
bind the Partnership or to execute, acknowledge or deliver any and all documents
in connection therewith;
(f) to assume obligations, enter into contracts, including contracts
of guaranty or suretyship, incur liabilities, lend money and otherwise use the
credit of the Partnership, and to secure any of the obligations, contracts or
liabilities of the Partnership, by mortgage, pledge or other encumbrance of all
or any part of the property and income of the Partnership;
(g) to invest funds of the Partnership;
(h) to employ and engage suitable agents, employees, advisers,
consultants and counsel (including any custodian, investment adviser,
accountant, attorney, corporate fiduciary, bank or other reputable financial
institution, or any other agents, employees or Persons who may serve in such
capacity for the Managing General Partner or any Affiliate of the Managing
General Partner and to designate employees or agents of the Partnership, who may
be employees or agents of a General Partner, as officers with titles including
but not limited to "president," "senior vice president," "vice president,"
"treasurer," "secretary," "assistant treasurer," and "assistant secretary," and
who in such capacity may act for and on behalf of the Partnership, as and to the
extent authorized by the Managing General Partner, at all times subject to the
supervision of the Managing General Partner) to carry out any activities that
the Managing General Partner is authorized or required to carry out under this
Agreement, including, without limitation, a Person who may be engaged to
undertake some or all of the general management, property management, financial
accounting and record keeping or other duties of the Managing General Partner
and to indemnify such Persons against liabilities incurred by them in acting in
such capacities on behalf of the Partnership;
(i) to qualify the Partnership to do business in any state,
territory, dependency or foreign country;
(j) subject to the terms of Section 11.07, to sell or dispose of all
or a portion of the Partnership's assets for the benefit of the Partners at the
times and on terms determined by the Managing General Partner, in its sole
discretion;
(k) to form or cause to be formed, and to own the stock of, one or
more corporations, and to form or cause to be formed and to participate in
partnerships, joint ventures, trusts or other entities;
54
(l) to establish, approve, adopt, amend, terminate or qualify any
management incentive plan or other employee benefit plan, in accordance with the
terms of any such plan;
(m) subject to the provisions of Section 11.11, to cause the
Partnership to issue and sell at any time or from time to time any and all types
of securities of, or interests in, the Partnership (including without limitation
securities or interests of an equity nature and warrants, options or other
rights with respect to the acquisition thereof), whether or not such securities
or interests are senior or junior to, or of the same or substantially the same
priority as, any then outstanding securities or interests (including without
limitation any Class of Limited Partner Interests); and
(n) to possess and exercise any additional rights and powers of a
general partner under the partnership laws of Delaware (including, without
limitation, the Delaware RULPA) and any other applicable laws, to the extent not
expressly prohibited by this Agreement.
The expression of any right, power or authority of the Managing
General Partner in this Agreement shall not in any way (i) limit or exclude any
other power or authority which is not specifically or expressly set forth in
this Agreement or (ii) limit any fiduciary duty of the Managing General Partner
to the Partnership or the Partners. Notwithstanding any of the foregoing (but
subject to the provisions of the preceding sentence), the Partnership will
operate in such a manner as the Managing General Partner reasonably deems
necessary or appropriate to preserve the limited liability of the Limited
Partners.
Section 7.03. Title to Assets of the Partnership. Title to assets of
the Partnership, whether real, personal or mixed or tangible or intangible,
shall be deemed to be owned by the Partnership as an entity, and no Partner,
individually or collectively, shall have any ownership interest in such assets
of the Partnership or any portion thereof. Title to any or all of the assets of
the Partnership may be held in the name of the Partnership, of one or more of
the General Partners or of one or more nominees, as the Managing General Partner
may determine. The General Partners declare and warrant that any assets of the
Partnership for which legal title is held in the name of a General Partner shall
be held in trust by such General Partner for the use and benefit of the
Partnership in accordance with the terms and provisions of this Agreement. All
assets of the Partnership shall be recorded as the property of the Partnership
on its books and records, irrespective of the name in which legal title to such
assets of the Partnership is held.
55
Section 7.04. Other Business Activities of Partners. Except as
otherwise agreed in writing by any of the parties hereto, any General Partner
(other than the Administrative General Partner) or Affiliate thereof may have
business interests or may engage in other business ventures of any nature or
description whatsoever in addition to those relating to the Partnership, whether
presently existing or hereafter created, and may compete, directly or
indirectly, with the business of the Partnership and such activities shall not
be deemed wrongful or improper. No General Partner (other than the
Administrative General Partner) or Affiliate thereof shall incur any liability
to the Partnership or any other Partner as the result of such Partner's pursuit
of such other business interests and ventures and competitive activity, and
neither the Partnership nor any of the other Partners shall have any right to
participate in such other business interests or ventures or to receive or share
in any income or profits derived therefrom.
Section 7.05. Transactions with the General Partners or Affiliates.
Except as otherwise expressly provided herein, the Partnership is expressly
permitted to enter into transactions with the General Partners or any Affiliate
thereof, provided that the terms of such transaction are at least as favorable
to the Partnership as those that the Partnership would have obtained in a
transaction on an arm's-length basis with a Person not a General Partner or an
Affiliate thereof.
Section 7.06. Exculpation; Indemnification.
----------------------------
(a) The General Partners, their respective Affiliates and all
officers, partners, directors, employees, stockholders and agents of the General
Partners and their respective Affiliates and all officers, agents and employees
of the Partnership who are Partners shall not be liable to the Partnership, to
Limited Partners or to any Person who has acquired an interest in the
Partnership for any losses sustained or liabilities incurred, including monetary
damages, as a result of any act or omission of the General Partners or any such
other Person if the conduct of the General Partners or such other Person did not
constitute fraud, willful misconduct or criminal conduct.
(b) To the fullest extent permitted by law, the Partnership shall
indemnify and hold harmless the General Partners, their respective Affiliates
and all officers, partners, directors, employees, stockholders and agents of the
General Partners and their respective Affiliates and all officers, agents and
employees of the Partnership who are Partners (for purposes of this Article VII,
individually, an "Indemnitee") from and against any and all losses, claims,
damages, liabilities, expenses
56
(including legal fees and expenses), judgments, fines, settlements and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, in which the Indemnitee may be
involved, or threatened to be involved, as a party or otherwise, by reason of
his, her or its management of the affairs of the Partnership or a General
Partner or status as a General Partner, an Affiliate thereof, or a partner,
director, officer, employee, stockholder or agent thereof or an officer, agent
or employee of the Partnership or a Person serving at the request of the
Partnership, a General Partner or any Affiliate thereof in another entity in a
similar capacity, which relates to or arises out of the Partnership, its
property, business or affairs or one of the General Partners, its properties,
businesses or affairs or any document filed with or submitted to the Securities
and Exchange Commission by the Partnership or any indemnification of
underwriters given in connection therewith, regardless of whether the Indemnitee
continues to be a General Partner, an Affiliate thereof or an officer, partner,
director, employee, stockholder or agent thereof or an officer, agent or
employee of the Partnership at the time any such liability or expense is paid or
incurred, and regardless of whether the liability or expense accrued at or
relates to, in whole or in part, any time before, on or after the date hereof;
provided, however, that this indemnification shall not apply to any liability or
expense that results from fraud, willful misconduct or criminal conduct of the
Indemnitee. The negative disposition of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere, or
its equivalent, shall not, of itself, create a presumption that the Indemnitee
acted in a manner contrary to the standard set forth in Section 7.06(c) below.
Any indemnification pursuant to this Section 7.06 shall be made only out of the
assets of the Partnership or from any insurance proceeds which the Partnership
may receive with respect to such indemnification (it being understood that the
Partnership may, but shall not be required to, obtain or maintain insurance with
respect to such indemnification).
(c) An Indemnitee shall not be entitled to indemnification under this
Section 7.06 with respect to any claim, issue or matter in which it has been
adjudged liable for fraud, willful misconduct or criminal conduct unless and
only to the extent that the court in which such action was brought, or another
court of competent jurisdiction, determines upon application that, despite the
adjudication of liability, but in view of all of the circumstances of the case,
the Indemnitee is fairly and reasonably entitled to indemnification for such
liabilities and expenses as the court may deem proper.
57
(d) To the fullest extent permitted by law, expenses (including legal
fees) incurred by an Indemnitee in defending any claim, demand, action, suit or
proceeding shall, from time to time, be advanced by the Partnership prior to the
final disposition of such claim, demand, action, suit or proceeding upon receipt
by the Partnership of an undertaking by or on behalf of the Indemnitee to repay
such amount if it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 7.06.
(e) The indemnification provided by this Section 7.06 shall be in
addition to the provisions of Section 15.05 hereof and any other rights not
inconsistent with this Section 7.06 to which an Indemnitee may be entitled under
any agreement, bylaw or vote of the Partners or as a matter of law or otherwise,
both as to action in the Indemnitee's capacity as a General Partner, an
Affiliate thereof or a partner, director, officer, employee, stockholder or
agent thereof or the Partnership and as to action in any other capacity which
relates to or arises out of the Partnership or the property, business or affairs
of the Partnership or a General Partner, shall continue as to an Indemnitee who
has ceased to serve in such capacity and shall inure to the benefit of the
heirs, successors, assigns and administrators of an Indemnitee.
(f) The General Partners and the Partnership may purchase and
maintain insurance, to the extent and in such amounts as the General Partners
shall, in their sole discretion, deem reasonable, on behalf of Indemnitees and
such other Persons as the General Partners shall determine against any liability
that may be asserted against or expense that may be incurred by such Person in
connection with activities of the Partnership or such Indemnitees, regardless of
whether the Partnership would have the power to indemnify such Person against
such liability under the provisions of this Agreement. The General Partners and
the Partnership may enter into indemnity contracts with Indemnitees and adopt
written procedures pursuant to which arrangements are made for the advancement
of expenses and the funding of obligations under this Section 7.06 and
containing such other procedures regarding indemnification as are appropriate,
provided that such arrangements, contracts or procedures are not inconsistent
with the provisions of this Section 7.06.
(g) In no event may an Indemnitee subject the Limited Partners or
Assignees to personal liability by reason of these indemnification provisions.
(h) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.06 solely because the
58
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.
(i) The provisions of this Section 7.06 are for the benefit of the
Indemnitees and their heirs, successors, assigns, administrators and personal
representatives and shall not be deemed to create any rights for the benefit of
any other Persons. The provisions of this Section 7.06 shall not be amended in
any way that would adversely affect the Indemnitees who are Partners without the
consent of the Partner that is adversely affected.
(j) In the event that any General Partner other than the Managing
General Partner shall attempt to exercise any right to bind the Partnership, or
to manage or control, or to participate in the management or control of, the
business and affairs of the Partnership in any manner whatsoever, other than as
expressly set forth in this Agreement, such General Partner shall indemnify and
hold harmless the Partnership, the Partners and their respective Affiliates,
from and against any and all losses, claims, damages, liabilities, expenses
(including legal fees and expenses), judgments, fines, settlements and other
amounts arising out of any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative, or investigative, which may arise
out of such actions.
(k) Notwithstanding any other provision of this Section 7.06, no
provision of this Section 7.06 shall limit (i) any fiduciary duty of a General
Partner to the Partnership or the Limited Partners or (ii) any liability of a
General Partner for any breach of such fiduciary duty or any material breach of
its other obligations to other Partners or the Partnership under this Agreement
nor shall it provide indemnification to a General Partner with respect to any
breach of such fiduciary duty or any such material breach.
Section 7.07. Other Matters Concerning the General Partners.
(a) The General Partners may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed in good faith by such General Partner to be genuine and to
have been signed or presented by the proper party or parties.
(b) The General Partners may consult with legal counsel, accountants,
appraisers, management consultants, investment
59
bankers and other consultants and advisers selected by them, and any opinion of
any such Person as to matters that such General Partner reasonably believes to
be within its professional or expert competence (including, without limitation,
any opinion of legal counsel to the effect that the Partnership would "more
likely than not" prevail with respect to any matter) shall be full and complete
authorization and protection with respect to any action taken or suffered or
omitted by such General Partner hereunder in good faith and in accordance with
such opinion.
(c) Notwithstanding any other provision of this Agreement, no General
Partner nor any partner or shareholder in a General Partner nor any legal
representative, heir, estate, successor or assign of any such partner or any
officer, director, shareholder or partner in any General Partner, whether
disclosed or undisclosed, shall have any personal liability to the Partnership
or the Partners for the performance or discharge of any covenants or
undertakings of the Partnership, provided that this Section 7.07(c) shall not
limit any liability which any such Person may have under Section 7.06 of this
Agreement for an act or omission or conduct that constitutes fraud, willful
misconduct or criminal conduct of such Person.
Section 7.08. Resolution of Conflicts of Interest. Unless otherwise
expressly provided herein, whenever a conflict of interest exists or arises
between a General Partner or any of its Affiliates, on the one hand, and the
Partnership or any other Partner on the other hand, the Managing General Partner
shall resolve such conflict of interest in a way that is fair and reasonable to
all parties (including itself) taking into account the relative benefits and
burdens on such parties, any customary or accepted industry practices and any
applicable generally accepted accounting practices or principles. In the event
that one Partner disputes the fairness and reasonableness of any such
resolution, such Partner shall notify the Managing General Partner and if the
parties are unable to agree after good faith efforts as to a resolution that is
acceptable to the disputing Partner, the dispute shall be settled by arbitration
in accordance with and to the extent permitted by the Uniform Arbitration Act of
the State of Delaware and, to the extent not inconsistent therewith, the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"), as
amended and in effect on the date a demand for arbitration is filed with the
AAA. The arbitration shall be conducted (as determined by mutual consent of the
parties to the dispute) in (i) the City of New York, State of New York, (ii) the
City of Seattle, State of Washington, (iii) the City of Wilmington, State of
Delaware or (iv) such other place as the parties to the dispute shall agree.
The finding and deci-
60
sions of a majority of the arbitrators shall be final and binding upon the
parties.
ARTICLE VIII
LIMITED PARTNERS
Section 8.01. Liability of Limited Partners. No Limited Partner or
Assignee as such shall have any personal liability whatsoever, whether to the
Partnership, to any of the Partners or Assignees, to the creditors of the
Partnership or to any other Person, for the debts or obligations of the
Partnership. Except as otherwise expressly required by law, a Limited Partner or
Assignee as such shall have no liability in excess of (i) the amount of its
Capital Contribution, (ii) its share, if any, of any undistributed profits and
assets of the Partnership, (iii) its obligation to make other payments expressly
provided for in this Agreement and (iv) the amount of any distributions
wrongfully distributed to it. For purposes of Delaware RULPA Section 17-607(b),
no Limited Partner or Assignee that receives a distribution in violation of
Delaware RULPA Section 17-607(a) shall be deemed to know at the time of the
distribution that the distribution violated Delaware RULPA Section 17-607(a)
without actual knowledge thereof. The payment of any such money or distribution
of any such property to a Limited Partner or Assignee, whether or not deemed to
be a return of capital, shall be deemed to be a compromise within the meaning of
Section 17-502(b) of the Delaware RULPA, and the Limited Partner or Assignee
receiving any such money or property shall not be required to return any such
money or property to any Person, the Partnership or any creditor of the
Partnership. However, if any court of competent jurisdiction holds that,
notwithstanding the provisions of this Agreement, any distribution made by the
Partnership in violation of Delaware RULPA Section 17-607(a) was with the
knowledge of a Limited Partner or Assignee, any obligation under applicable law
to return the same or any portion thereof to or for the account of any Person,
the Partnership or its creditors shall be the obligation of such Limited Partner
or Assignee and not of the General Partners.
Section 8.02. No Management by Limited Partners. No Limited Partner,
in its capacity as such, shall take part in the day-to-day management, operation
or control of the business and affairs of the Partnership. No Limited Partner,
in its capacity as such, shall have any right, power or authority to transact
any business in the name of the Partnership or to act for or on behalf of or to
bind the Partnership. The Limited Partners shall
61
have no rights other than those specifically provided herein or granted by law
where consistent with a valid provision hereof.
Section 8.03. No Mention of Limited Partners. Subject to applicable
law, the Managing General Partner may (and, subject to applicable law, with
respect to the Class A-2 Limited Partners, Preferred Interest Limited Partners
who are also Class A-2 Limited Partners, and the Class C Limited Partners, shall
use its best efforts to) omit from the Certificate of Limited Partnership and
from any other certificates and documents filed in any state or other
jurisdiction in order to qualify the Partnership to do business therein, and
from all amendments thereto, the names and addresses of the Limited Partners and
Assignees and information relating to the Capital Contributions and share of
profits and losses of the Limited Partners and Assignees or state such
information in the aggregate rather than with respect to each individual Limited
Partner and Assignee.
Section 8.04. Employees, Agents or Officers of the Partnership or a
General Partner. A Limited Partner or an employee, agent or officer of a Limited
Partner may also be an employee, agent or officer of the Partnership or a
General Partner. The existence of these relationships and acting in such
capacities will not result in a Limited Partner being deemed to be participating
in the conduct or control of the business of the Partnership.
ARTICLE IX
COMPENSATION AND EXPENSES
Section 9.01. Compensation to the General Partners. The General
Partners will receive no compensation for the performance of their services
hereunder.
Section 9.02. Direct and Indirect Expenses; Expenses in Connection
with the Organization and Operation of Partnership. The Partnership shall be
responsible for its own expenses and all expenses incurred on its behalf and
shall reimburse the Managing General Partner and its Affiliates for any amounts
paid in connection with such expenses, including all out-of-pocket fees, costs
and expenses actually incurred by the Partnership, the Managing General Partner
and its Affiliates in connection with (a) the formation and organization of the
Partnership and the General Partners and (b) the qualification of the
Partnership to do business in any state in which the Managing General Partner
determines that such qualification is advisable. The Partnership shall also
reimburse the Managing General Partner for the
62
reasonable out-of-pocket expenses and annual fees of the directors of the
Managing General Partner or, if the Managing General Partner is a partnership,
the reasonable out-of-pocket expenses and annual fees of the directors of the
corporation which is the managing general partner of the Managing General
Partner, provided that the aggregate annual fees of all such directors shall not
exceed $100,000 (subject to reasonable cost of living adjustments based on
published sources and not to exceed 5% per annum). Any reimbursements or
payments to the Managing General Partner or its Affiliates shall be in addition
to any reimbursement to such Partner or Affiliate as a result of indemnification
pursuant to Section 7.06 or 15.05 of this Agreement.
ARTICLE X
FINANCIAL MATTERS
Section 10.01. Books and Records.
(a) The Managing General Partner shall keep, or cause to be kept,
books and records with respect to the Partnership, showing assets, liabilities,
income, operations, transactions and the financial condition of the Partnership
and a current register of the names and last known addresses of, and number and
type of Units of Partner Interest owned by, each Partner. The Managing General
Partner shall maintain and preserve all Partnership books and records for such
period as the Managing General Partner, in its reasonable discretion, shall
determine necessary or appropriate, subject to any requirement of federal or
state law.
(b) Each Partner, and each Partner's duly authorized representatives,
shall have the right, at reasonable times and at such Partner's own expense, to
inspect and copy the books of the Partnership and other reasonably available
records and information concerning the operations of the Partnership, including
copies of any appraisal reports and copies of the federal, state and local
income tax returns of the Partnership.
(c) The Managing General Partner shall keep, or cause to be kept, a
register of Units of Partner Interests (the "Unit Register") which shall provide
for the registration and Transfer of Units of Partner Interests in substantially
the form of Exhibit C attached hereto and the completed Unit Register shall be
attached as Schedule I hereto and made part hereof. Any and all Units of Partner
Interests and Transfers (including, without limitation, any pledges or
hypothecation to any Permitted Pledgee to secure any borrowing made by the
Partnership from such Per-
63
mitted Pledgee) of the Units of Partner Interests shall be registered and
recorded in the Unit Register. Any requirement in this Agreement that a Transfer
or the admission of a Partner be listed on the books and records of the
Partnership shall be satisfied upon such registration and recording in the Unit
Register, provided that such Transfer or admission is otherwise in accordance
with the provisions of this Agreement.
Section 10.02. Financial Statements and Information.
(a) All Partnership financial statements shall be accurate and
complete in all material respects and shall present fairly the financial
positions, operating results and cash flows of the Partnership.
(b) As soon as practicable, but in no event later than 120 days after
the close of each Fiscal Year, the Managing General Partner shall cause to be
mailed to each Partner as of the last day of such Fiscal Year reports containing
financial statements of the Partnership for such Fiscal Year, presented in
accordance with generally accepted accounting principles, including a balance
sheet, a statement of income, a statement of Partners' equity and a statement of
cash flows, such statements to be audited by a firm of independent accountants
selected by the Managing General Partner.
(c) As soon as practicable, but in no event later than 75 days after
the close of each Fiscal Period, except the last Fiscal Period of each Fiscal
Year, the Managing General Partner shall cause to be mailed to each Partner as
of the last day of that Fiscal Period a report containing such financial
information for that Fiscal Period as the Managing General Partner deems
appropriate.
(d) The Managing General Partner shall provide to each Partner such
other reports and information concerning the business and affairs of the
Partnership (i) as the Managing General Partner, in its sole and absolute
discretion, may deem necessary or appropriate, (ii) to the extent not provided
for in Section 10.02(b) or (c) as a Limited Partner requests for a purpose
reasonably related to such Limited Partner's interest in the Partnership as a
Limited Partner, and (iii) as may be specifically required by the Delaware RULPA
or by any other law or any regulation of any regulatory body applicable to the
Partnership.
(e) The Managing General Partner shall provide any of the reports or
other information referred to in this Section 10.02 to such federal, state or
local governments, governmental agencies, other regulatory entities or
securities exchanges as
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shall be required or as the Managing General Partner, in its sole and absolute
discretion, may deem necessary or appropriate.
Section 10.03. Accounting Decisions. All decisions as to accounting
matters, except as specifically provided to the contrary herein, shall be made
by the Managing General Partner, subject to review and advice as to major
accounting matters by the Partnership's independent certified public
accountants.
Section 10.04. Place Maintained. The books, accounts and records of
the Partnership at all times shall be maintained at the Partnership's principal
office or, at the option of the Managing General Partner, at the principal place
of business of the Managing General Partner.
Section 10.05. Preparation of Tax Returns. The Managing General
Partner shall arrange for the preparation and timely filing of all returns of
the Partnership showing all income, gains, deductions and losses necessary for
federal, state or local income tax purposes, as the case may be, and shall use
all reasonable efforts to furnish to the Limited Partners, any Assignees and the
taxpayer with respect to the Put/Call Units within ninety (90) days after the
close of each taxable year of the Partnership the tax information reasonably
required by the Limited Partners and Assignees for federal, state and local
income tax reporting purposes. In this regard, the Class C-1 Limited Partners
agree to provide promptly on request any information with respect to the Class
C-1 Limited Partners' adjusted tax basis, holding period, and depreciation or
amortization methods with respect to the Contributed Properties contributed to
the Partnership by such Class C-1 Limited Partners, as the Managing General
Partner shall reasonably request to enable the Partnership to prepare and file
its tax returns.
Section 10.06. Tax Elections.
(a) Except as otherwise specifically provided herein, the Managing
General Partner shall, in its sole discretion, determine whether to make any
available election under the Code or any applicable state or local tax law on
behalf of the Partnership.
(b) The Managing General Partner, if so requested by a Partner in
connection with a distribution of property or a Transfer of Units, shall cause
the Partnership to make the election described in Section 754 of the Code, but
only if the requesting Partner also agrees in writing to pay or reimburse the
Partnership on demand for all related costs and expenses. The
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Managing General Partner may seek to revoke such election, if made, only with
the consent of all the General Partners.
(c) The Managing General Partner shall cause the Partnership to elect
to amortize and deduct expenses incurred in organizing the Partnership over a
60-month period as provided in Section 709 of the Code.
(d) No election shall be made by the Partnership or any Partner for
the Partnership to be excluded from the application of any of the provisions of
Subchapter K, Chapter 1 of Subtitle A of the Code or from any similar provisions
of any state or local tax laws.
Section 10.07. Tax Matters Partner. The Managing General Partner
shall be the "tax matters partner" of the Partnership within the meaning of
Section 6231(a)(7) of the Code and is authorized to represent the Partnership in
connection with all examinations of the affairs of the Partnership by any
federal, state or local tax authorities, including any resulting administrative
and judicial proceedings, and to expend funds of the Partnership for
professional services and costs associated therewith. Each Person who is a
taxpayer with respect to any Units consents to have the Managing General Partner
be the tax matters partner and agrees to cooperate with the Managing General
Partner in connection with the conduct of all such proceedings.
Section 10.08. Confidentiality. In consideration of the Partnership's
issuance and sale of Units to each Partner and the rights granted to each
Partner under this Agreement, each Partner (and Assignee) agrees that, during
the period he or it is a Partner (or Assignee) and thereafter, (i) he or it will
keep confidential all financial statements, financial information, reports,
records, communications, notices and other information relating to the business,
operations, prospects, financial statements, projections, financial condition,
customers, customer lists, intellectual property, trade secrets, know-how,
business plans, or employees of Partnership (the "Partnership Information")
which he or it may receive, inspect, review or otherwise have access to pursuant
to this Agreement or as a result of his relationship with the Partnership and
(ii) he or it will not use the Partnership Information for his or its own
benefit or disclose it to any Third Party, except (w) as the Managing General
Partner may authorize with respect to a Class B Limited Partner who is an
employee of the Partnership, to the extent necessary for such Class B Limited
Partner to perform his duties as an employee of the Partnership, (x) as may be
otherwise expressly authorized in writing by the Managing General Partner, (y)
as permitted pursuant to Section 16.03 hereof, or
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(z) as may be required by applicable law or regulation or judicial or
regulatory process. The provisions of this Section 10.08 shall not apply to (i)
Partnership Information that is in the public domain unless such Partner's (or
Assignee's) breach of this Agreement caused such Partnership Information to be
in the public domain, or (ii) a Limited Partner's use of the Partnership
Information for his or its internal purposes relating to the evaluation and
monitoring of, and enforcement of rights relating to, his or its investments,
tax and estate planning and other similar internal uses relating to passive
investments of such Limited Partner. The provisions of this Section 10.08 are in
addition to, and not in limitation of, any other confidentiality agreements
between the Partnership and any Partner or Assignee or any other confidentiality
obligations pursuant to applicable law or regulation or any employment
agreements or employment relationships between the Partnership and any Partner
or Assignee (except that with respect to disclosures governed by the
confidentiality agreement referred to in Section 16.03, the provisions of such
confidentiality agreement shall control).
ARTICLE XI
TRANSFER OF UNITS OF GENERAL PARTNER INTEREST AND
LIMITED PARTNER INTEREST; ADMISSION OF NEW PARTNERS
Section 11.01. Transfer of Units of General Partner Interest.
(a) Except as otherwise expressly provided in this Article XI, no
General Partner shall have any right to Transfer any or all of its Units of
General Partner Interest (or any interest therein) to any Person. If a General
Partner shall Transfer any Units of General Partner Interest (or any interest
therein) in contravention of any provision of this Article XI, such Transfer
shall be void and deemed ineffectual, and shall not bind or be recognized by the
Partnership.
(b) The Managing General Partner shall have the right to Transfer any
or all of its Units of General Partner Interest (or any interest therein) to the
extent provided in Section 11.01(e), 11.01(g), 11.04, 11.06 or 11.07 or Article
XV hereof.
(c) The Administrative General Partner shall have the right to
Transfer any or all of its Units of General Partner Interest (or any interest
therein) pursuant to Section 11.01(e) and on or after the fifth anniversary of
the date hereof pursuant to Section 11.05 or 11.06 or Article XV hereof.
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(d) If a General Partner desires to Transfer any or all of its Units
of General Partner Interest (or any interest therein) pursuant to this Article
XI, notwithstanding any other provision of this Article XI, such Transfer shall
be permitted if (and only if) the Managing General Partner reasonably determines
that the transaction would not cause the Partnership (if its existence would not
otherwise have been terminated as a result of such Transfer and any other
related Transfers in connection therewith) to be treated as an association
taxable as a corporation for federal income tax purposes and reasonably
determines that such Transfer would not result in the loss of limited liability
of the Limited Partners under the Delaware RULPA; provided, however, that each
of such determinations shall be based upon the opinion of one or more
independent counsels if such transaction would result in the then remaining
General Partners in the aggregate having a General Partner Interest in the
Partnership of less than 1%.
(e) The Partnership and Partners acknowledge that a General Partner
may Transfer its Units of General Partner Interest to a bank or other lending
institution to secure any borrowings made by the Partnership from such bank or
other lending institution. Any such bank or other lending institution to which
Units of Partner Interest may be Transferred by a General Partner pursuant to
this Section 11.01(e) or a Limited Partner pursuant to Section 11.03(h) is
hereinafter sometimes referred to as a "Permitted Pledgee".
(f) [Intentionally Omitted]
(g) The Partnership and Partners acknowledge that, subject to the
provisions of Section 11.01(d), the Managing General Partner may Transfer its
Units of Partner Interest to Centre Partners L.P. or Holdings or their
respective partners or Affiliates.
Section 11.02. Admission of an Additional or Successor General
Partner.
(a) Upon a Transfer by a General Partner of any or all of its Units
of General Partner Interest in accordance with this Article XI, the transferor
shall be deemed to have given the transferee the right to seek admission to the
Partnership as an additional or successor General Partner. In the event that a
General Partner Transfers all of its Units of General Partner Interest in
accordance with this Article XI, and upon satisfaction of the conditions set
forth in Section 11.02(b), the admission of the transferee to the Partnership as
a successor General Partner shall occur, and for all purposes shall be deemed to
have
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occurred, immediately prior to the Transfer of the Units of General Partner
Interest by the transferor, and such transferee shall be authorized to continue
the business and operations of the Partnership without dissolution. Upon the
Transfer by a General Partner of its entire General Partner Interest in
accordance with this Article XI, such transferor shall cease to be a General
Partner (notwithstanding any failure or refusal by the remaining General
Partners or a Majority Vote of the Partners to approve the admission of the
transferee as a successor General Partner), and the Certificate of Limited
Partnership shall be amended to reflect such withdrawal. In the event that a
General Partner Transfers a portion of its General Partner Interest in
accordance with this Article XI, upon the satisfaction of the conditions set
forth in Section 11.02(b), the transferee shall be admitted to the Partnership
as an additional General Partner and, together with the transferor, which shall
remain a General Partner, shall continue the business of the Partnership without
dissolution. Within ninety (90) days after the admission to the Partnership of
an additional or successor General Partner, the Certificate of Limited
Partnership shall be amended in accordance with the Delaware RULPA to reflect
such admission.
(b) Notwithstanding anything in this Article XI to the contrary (but
subject to the provisions of paragraphs (d) and (e) of this Section 11.02), the
admission to the Partnership of an additional or successor General Partner
(including, without limitation, (i) the admission of a Permitted Pledgee
pursuant to Section 11.01(e) or (ii) the admission of a Person who is not then a
Partner pursuant to Section 11.04 or 11.05) shall be subject to either (A) the
prior written consent of each of the then remaining General Partners (which may
be given or withheld in their sole discretion) or (B) a Majority Vote of the
Partners, and the admission as an additional or successor General Partner of a
transferee of all or any portion of a General Partner's General Partner Interest
shall be further conditioned upon the receipt by the transferor or former
General Partner of all the following immediately prior to the Transfer:
(i) the additional or successor General Partner's
acceptance of, and agreement to be bound by, all the terms and
provisions of this Agreement, in form and substance satisfactory to
each of the remaining General Partners or, if none, the transferor or
former General Partner;
(ii) the additional or successor General Partner's being
listed as a partner of the Partnership on the books and records of the
Partnership;
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(iii) evidence of the authority of such additional or
successor General Partner to become a General Partner and to be bound
by all the terms and conditions of this Agreement;
(iv) the written agreement of the additional or successor
General Partner to continue the business of the Partnership in
accordance with the terms and provisions of this Agreement (if the
Partnership would be dissolved as a result of such Transfer and any
other related Transfers in connection therewith); and
(v) such other documents or instruments as may be required
in order to effect the admission of the additional or successor
General Partner as a general partner of the Partnership under this
Agreement.
(c) If the approval of the admission of a transferee as an additional
or successor General Partner is required pursuant to Section 11.02(b) but such
approval is not given, such transferee shall be deemed an Assignee, but may
become a Substituted Limited Partner with respect to the Units so acquired
pursuant to Section 11.10. If such Assignee is not so admitted, it shall have
an interest in the Partnership that is equivalent to that of a Limited Partner
solely with respect to allocations and distributions, including liquidating
distributions of the Partnership, but shall have no other rights of a Partner.
(d) The Partners hereby consent to the admission as a successor
General Partner of a Permitted Pledgee (or its assigns or transferees) of a
General Partner's General Partner Interest, in the event that pursuant to the
pledge agreement in favor of UBS-NY, as agent, with respect to such Interest,
there is an Event of Default (as defined in such pledge agreement) and such
agent exercises its rights and remedies thereunder with respect to such Interest
and the admission of a successor General Partner, such admission to occur
immediately prior to the time of such exercise upon the execution by such
Permitted Pledgee (or its assigns or transferees) of this Agreement or a
counterpart hereof.
(e) The Partners hereby consent to the admission as a successor
General Partner of the transferee of the Managing General Partner's General
Partner Interest pursuant to a Transfer in accordance with the provisions of
Sections 11.04 and 11.06 hereof, if such Transfer constitutes a Transfer Event
and such transferee has satisfied the requirements of clauses (i) through (v) of
Section 11.02(b).
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Section 11.03. Transfer of Units of Limited Partner Interest.
---------------------------------------------
(a) Except as otherwise expressly provided in this Article XI, no
Limited Partner shall have any right to Transfer any or all of its Units of
Limited Partner Interest (or any interest therein) to any Person. If a Limited
Partner or Assignee shall Transfer any Units of Limited Partner Interest (or any
interest therein) in contravention of any provision of this Article XI, such
Transfer shall be void and deemed ineffectual, and shall not bind or be
recognized by the Partnership.
(b) A Class A Limited Partner shall have the right to Transfer any or
all of its Units of Class A Limited Partner Interest (or any interest therein)
pursuant to Section 11.04, 11.06 or 11.07 or Article XV hereof.
(c) A Class B Limited Partner shall have the right to Transfer any or
all of its Units of Class B Limited Partner Interest (or any interest therein),
in the case of Class B Limited Partner Interests which are Class B Conversion
Units, at any time pursuant to Section 11.04 or 11.06 or Article XV hereof, and
in the case of Class B Limited Partner Interests which are not Class B
Conversion Units, at any time on or after the fifth anniversary of the date of
the First Restated Agreement pursuant to Section 11.05 or 11.06 or Article XV
hereof.
(d) (i) A Class C Limited Partner shall have the right to Transfer
any or all of its Units of Limited Partner Interest (or any interest therein)
pursuant to and subject to Sections 11.03(f) and 11.06 hereof or if all the
General Partners consent to the proposed Transfer, which consent may be given or
withheld in their sole discretion.
(ii) Prior to the occurrence of the Class C-1 Participation Event, a
Class C-1 Limited Partner shall have the right to Transfer all (but not
part) of its Units of Limited Partner Interest pursuant to and subject to
Section 11.03(j) and 11.06 hereof. After the Class C-1 Participation Event
a Class C-1 Limited Partner shall have the right to Transfer any or all of
its Units of Limited Partner Interests (or any interest therein) pursuant
to and subject to Section 11.03(j), 11.04, 11.06 and Article XV hereof. In
addition, a Class C-1 Limited Partner shall have the right to Transfer its
Units of Limited Partner Interests if all the General Partners consent to
the proposed Transfer, which consent may be given or withheld in their sole
discretion.
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(e) The Partnership and Partners acknowledge that any of the
following Transfers of Units of Limited Partner Interest (other than Class C
Limited Partner Interests or Class C-1 Limited Partner Interests) are deemed to
be permitted pursuant to this Article XI:
(i) a Transfer of Units upon the death of a Limited Partner to
his executors, legal heirs, administrators, testamentary trustees and
beneficiaries (the "Estate");
(ii) a Transfer of Units by a Limited Partner who is a natural
person made for nominal consideration or as a gift to the Limited Partner's
spouse, parents or issue, or to a trust, the beneficiaries of which, or to
a corporation or partnership, the stockholders or limited and general
partners of which, include only the Limited Partner and such Limited
Partner's spouse, parents or issue; provided, however, that a Transfer of
Units to such a trust shall be permitted only if (A) the provisions of the
governing trust instrument expressly provide that the trust shall be
subject to and bound by all the terms and conditions of this Agreement,
including without limitation the provisions of this Article XI, and (B)
such Limited Partner shall furnish the Partnership with an opinion of
counsel to the effect that such trust shall be subject to and bound by all
the terms and conditions of this Agreement, including without limitation
the provisions of this Article XI, which counsel and form and content of
opinion shall be acceptable to all the General Partners, in their
reasonable judgment; and
(iii) a Transfer of Units to the Partnership by a Class B Limited
Partner or a Preferred Interest Limited Partner who is also a Class B
Limited Partner to secure any borrowings from the Partnership made by such
Partner to purchase Units of Class B Limited Partner Interest and/or Units
of Preferred Limited Partner Interest.
The Estate of a Limited Partner (other than a Class C Limited Partner or a Class
C-1 Limited Partner) and each other Person to whom Units may be Transferred by a
Limited Partner (other than a Class C Limited Partner or a Class C-1 Limited
Partner) pursuant to this Section 11.03(e) is hereinafter sometimes referred to
as a "Permitted Transferee."
(f) The Partnership and Partners acknowledge that (i) MLP Sales may
Transfer its Units of Class C Limited Partner Interest to its partners (in
connection with a liquidation or dissolution of MLP Sales not in contravention
of the terms of the Field Agreement), (ii) a partner of MLP Sales which has
received
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Units of Class C Limited Partner Interest pursuant to the foregoing clause (i)
may Transfer such Units of Class C Limited Partner Interest to its partners or
shareholders in connection with a liquidation or dissolution of such partner of
MLP Sales, (iii) a Class C Limited Partner which is a trust may Transfer its
Units of Class C Limited Partner Interest to its beneficiaries in connection
with a termination of such trust, and (iv) a Class C Limited Partner which is a
natural Person may Transfer his Units of Class C Limited Partner Interest upon
his death to his executors, legal heirs, administrators, testamentary trustees
and beneficiaries (the "Class C Estate"), in any such case subject to the
provisions of Sections 11.10 and 16.03. Each partner of Seller to whom Units may
be Transferred by MLP Sales and a Class C Estate or other Person to whom Units
may be Transferred pursuant to this Section 11.03(f) is hereinafter sometimes
referred to as a "Permitted Trust Transferee."
(g) The Partnership and Partners acknowledge that Holdings, the
Managing General Partner or a Partner which is an Affiliate of Holdings or
Centre Partners L.P. may Transfer any or all of its Units of Partner Interest to
Centre Partners L.P. or Holdings or their respective partners or Affiliates,
provided that no such Transfer may be made to a Person who is subject to backup
withholding under Section 3406 of the Code. Each such Person to whom Units may
be Transferred pursuant to this Section 11.03(g) is hereinafter sometimes
referred to as a "Permitted Holdings Transferee."
(h) The Partnership and Partners acknowledge that (i) a Class A-1
Limited Partner may Transfer its Units of Class A-1 Limited Partner Interest,
(ii) a Class B Limited Partner may Transfer its Units of Class B Limited Partner
Interest, and (iii) a Preferred Interest Limited Partner may Transfer its Units
of Preferred Limited Partner Interest, in each case to a bank or other lending
institution to secure any borrowings made by the Partnership from such bank or
other lending institution.
(i) The Partnership and Partners acknowledge that a Class A-2 Limited
Partner (in its capacity as such and, if such Class A-2 Limited Partner also
owns Units of Preferred Limited Partner Interest and/or Class B Conversion
Units, then in its capacity as the holder of such Units) and Exeter may Transfer
any or all of its Units of Limited Partner Interest to its respective Affiliates
(other than (x) Affiliates who are officers, directors or employees of such
Class A-2 Limited Partner or Exeter, as applicable, or (y) other individuals who
are Affiliates of such Class A-2 Limited Partner or Exeter, as applicable),
provided that no such Transfer may be made to a Person who is subject to backup
withholding under Section 3406 of the Code. Each
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Affiliate of a Class A-2 Limited Partner or Exeter to whom Units may be
transferred pursuant to the preceding sentence of this Section 11.03(i) is
hereinafter sometimes referred to as a "Permitted A-2 Transferee." The Partners
also acknowledge that UBS may Transfer its entire Limited Partner Interest to a
UBS Entity and that any such UBS Entity may Transfer its entire Limited Partner
Interest (regardless of the class thereof) to any other UBS Entity, provided
that not more than two such Transfers may be made during any Fiscal Year and no
such Transfer may be made to a UBS Entity which is subject to backup withholding
under Section 3406 of the Code. Any such UBS Entity to which UBS' entire Limited
Partner Interest may be transferred pursuant to the preceding sentence of this
Section 11.03(i) is hereinafter sometimes referred to as a "UBS Entity
Transferee".
(j) The Partnership and the Partners acknowledge that the Class C-1
Limited Partners may Transfer their Units of Class C-1 Limited Partner Interest
or the Class C-1 Participation Option to Comcast Corporation or any wholly-owned
direct or indirect subsidiary of Comcast Corporation, and that a change of
control of Comcast Corporation shall not be deemed a Transfer of Units of Class
C-1 Limited Partner Interest or the Class C-1 Participation Option for purposes
of Section 11.03(a) and 17.02(c)(ii), respectively.
(k) The Partnership and the Partners acknowledge that a Preferred
Interest Limited Partner shall have the right to Transfer any or all of its
Units of Preferred Limited Partner Interest (or any interest therein) pursuant
to Section 11.04, 11.06 or Section 19.03 hereof.
(l) Notwithstanding any other provision of this Article XI, no
Transfer of any Units of Limited Partner Interest (or any interest therein)
shall be made if such Transfer (i) would violate the then applicable federal and
state securities laws or rules and regulations of the Securities and Exchange
Commission, any state securities commission or any other governmental authority
with jurisdiction over such Transfer, (ii) would affect the Partnership's
existence or qualification as a limited partnership under the Delaware RULPA or
(iii) would cause the Partnership to be treated as an association taxable as a
corporation for federal income tax purposes.
(m) Except as provided in Section 11.10(a) and subject to the
obligation to keep the Unit Register pursuant to Section 10.01(c), the
Partnership shall not recognize for any purpose any purported Transfer by a
Limited Partner or Assignee of any or all of its Units of Limited Partner
Interest (or any interest
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therein) held by such Limited Partner or Assignee until such Transfer is shown
on the books and records of the Partnership.
Section 11.04. Rights of First Refusal for Units of Partner Interest
Owned by Class A Limited Partners, the Managing General Partner, Preferred
Interest Limited Partners, holders of Class B Conversion Units or Class C-1
Limited Partners.
(a) If a Group A Partner, Preferred Interest Limited Partner, a
holder of Class B Conversion Units or, after the Class C-1 Participation Event,
a Class C-1 Limited Partner (for purposes of this Article XI, collectively the
"Specified Partners" and each a "Specified Partner") wishes to Transfer any or
all of its Units of Partner Interest then owned by it, then, except as otherwise
permitted by Sections 11.01, 11.03, 11.06, 11.07 and 19.03 and Article XV
hereof, such Specified Partner shall first give a written notice (the "Transfer
Notice") to the Partnership specifying the number of Units of Partner Interest
it wishes to Transfer (the "Transfer Units") and the identity of the proposed
transferee, containing an irrevocable offer (open to acceptance for a period of
thirty days after the date such Transfer Notice is given) to sell the Transfer
Units to the Transfer Offerees (as defined below) at the price per Unit stated
in the Transfer Notice, which price shall be equal to the price per Unit offered
to such Partner by a bona fide Third Party offeror (the "Transfer Price"), and
stating whether such offer is conditioned upon purchase of all the Transfer
Units by the Transfer Offerees (a Specified Partner who has delivered a Transfer
Notice for purposes of this Section 11.04, the "Notifying Partner").
(b) The Partnership shall have the right to purchase any or all of
the Transfer Units; provided, however, that the Partnership must determine the
number of Transfer Units it will purchase within fifteen days after its receipt
of the Transfer Notice. If the Partnership elects to purchase less than all of
the Transfer Units, it shall, within fifteen days after its receipt of the
Transfer Notice, deliver a copy of the Transfer Notice and a written statement
of the number of Transfer Units it has elected not to purchase (the "Remaining
Transfer Units") to each Specified Partner (other than the Notifying Partner)
and the Administrative General Partner and each Class B Limited Partner who is
then employed by the Partnership (collectively, the "Partner Transfer Offerees"
and, together with the Partnership, the "Transfer Offerees"). A Partner Transfer
Offeree who wishes to purchase any of the Remaining Transfer Units shall provide
the Partnership with written notice specifying the number of Remaining Transfer
Units (up to such Partner Transfer Offeree's Pro Rata Share) as to which such
Partner Transfer Offeree desires to accept the offer within seven days of the
giving of such notice
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by the Partnership and may, at the Partner Transfer Offeree's option, indicate
the maximum number of Remaining Transfer Units such Partner Transfer Offeree
would purchase in excess of such Partner Transfer Offeree's Pro Rata Share (the
"Excess Amount"). If one or more Partner Transfer Offerees declines to
participate in such purchase or elects to purchase less than such Partner
Transfer Offeree's Pro Rata Share, then the Remaining Transfer Units shall
automatically be deemed to be accepted by Partner Transfer Offerees who
specified an Excess Amount in their respective notices of acceptance, allocated
among such Partner Transfer Offerees (with rounding to avoid fractional Units)
in proportion to their respective Pro Rata Share but in no event shall an amount
greater than a Partner Transfer Offeree's Excess Amount be allocated to such
Partner Transfer Offeree. Any excess number of Remaining Transfer Units shall be
allocated among the remaining Partner Transfer Offerees whose specified Excess
Amount has not been satisfied (with rounding to avoid fractional Units) in
proportion to their respective Pro Rata Share, and such procedure shall be
employed until the entire Excess Amount of each Partner Transfer Offeree has
been satisfied or all Remaining Transfer Units have been allocated. The
Partnership shall have the right, but not the obligation, to purchase any
Remaining Transfer Units remaining thereafter. Notwithstanding the provisions of
this Section 11.04(b), none of the Persons who are Class A-2 Limited Partners
(including Barclays and Exeter if either of such Persons is then a Class A-2
Limited Partner) or Exeter (in its capacity as a Preferred Interest Limited
Partner) shall be entitled to purchase Units of Partner Interest pursuant to
this Section 11.04 to the extent that the purchase of such Units would cause the
aggregate interests of such Person (inclusive of each class of Partner Interest
held by such Person) and each other Limited Partner, if any, which is a "related
person" (within the meaning of Regulations Section 1.752-2(d)) as to such Person
in any item of Partnership income, gain, loss, deduction or credit for that
taxable year or any taxable year thereafter during the term of this Agreement to
be 10 percent or more; provided, however, that this sentence shall not apply to
a Limited Partner unless such Limited Partner or a "related person" to such
Limited Partner is a lender to the Partnership or a participant in an
outstanding loan to the Partnership at any time during the taxable year in which
the purchase is to occur.
(c) If the offer is accepted by any Transfer Offerees and, if the
offer is conditioned on the purchase of all Transfer Units covered by the
Transfer Notice, all such Transfer Units have been accepted for purchase, the
Partnership, on behalf of all purchasing Transfer Offerees, shall provide the
Notifying Partner with written notice of such acceptance specifying the number
of the Transfer Units as to which each Transfer Offeree is
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accepting the offer (a "Notice of Acceptance") within thirty days after the date
the Transfer Notice is given.
(d) The closing of the purchase by the Transfer Offerees of the
Transfer Units pursuant to this Section 11.04 shall take place at the principal
offices of the Partnership on the fifteenth business day after the Notice of
Acceptance is given. At such closing, each of the Transfer Offerees who has
elected to purchase the Transfer Units shall deliver a certified check or checks
in the appropriate amount to the Notifying Partner against delivery of a duly
executed instrument of assignment, representing the Transfer Units to be
purchased. The Transfer Units shall be delivered free and clear of all
Encumbrances.
(e) If any Transfer Units allocated to a Transfer Offeree are not
purchased by such Transfer Offeree (the "Transfer Default Units"), such Transfer
Default Units may be purchased by the Partnership. Nothing contained herein
shall prejudice any person's right to maintain any cause of action or pursue any
other remedies available to it as a result of such default.
(f) If, at the end of the thirtieth day after the Transfer Notice is
given, the Partnership has not delivered a Notice of Acceptance of the offer
contained in such Transfer Notice (or if the offer is conditioned on the
purchase of all the Transfer Units, the Notice of Acceptance does not cover all
the Transfer Units), or if it has delivered a Notice of Acceptance covering less
than all of the Transfer Units regarding an offer not conditioned on the
purchase of all Transfer Units, then the Notifying Partner shall have ninety
days in which to Transfer any or all of the Transfer Units not accepted for
purchase by the Transfer Offerees, at a price not lower than the Transfer Price
and on terms no more favorable to the transferee than those contained in the
Transfer Notice, to the proposed transferee identified in the Transfer Notice.
In the event that a Third Party shall acquire any or all of the Transfer Units,
it shall have no right to Transfer such Units (or any interest therein) unless
and until such Third Party is admitted as a Substituted Limited Partner pursuant
to Section 11.10 hereof or an additional or successor General Partner pursuant
to Section 11.02, as applicable. Promptly after any Transfer pursuant to this
Section 11.04, the Notifying Partner shall notify the Partnership of the
consummation thereof and shall furnish such evidence of the completion and time
of completion of such Transfer and of the terms thereof as the Partnership may
request. If, at the end of such ninety-day period, the Notifying Partner has not
completed the Transfer of all of the Transfer Units (provided that if there are
any Transfer Default Units which have not been purchased at
77
the end of such ninety-day period, the Notifying Partner shall have an
additional fifteen days to find purchasers for such Transfer Default Units), the
Notifying Partner shall no longer be permitted to Transfer such Units pursuant
to this Section 11.04 without again complying with Section 11.04 in its
entirety. If the Notifying Partner determines at any time within such ninety-day
period that the Transfer of any or all of such Transfer Units at a price not
lower than the Transfer Price and on terms no more favorable to the transferee
than those contained in the Transfer Notice is impractical, the Notifying
Partner may terminate all attempts to Transfer such Transfer Units and
recommence the procedures of Section 11.04 in their entirety without waiting for
the expiration of such ninety-day period by delivering written notice of such
decision to the Partnership.
(g) In the event that (i) federal or state banking laws, in the
reasonable judgment of a Class A-2 Limited Partner (in its capacity as such and,
if such Class A-2 Limited Partner also owns Units of Preferred Limited Partner
Interest and/or Class B Conversion Units, then in its capacity as the holder of
such Units), require such Class A-2 Limited Partner to Transfer its Units of
Class A-2 Limited Partner Interest, Units of Preferred Limited Partner Interest
and/or Class B Conversion Units and (ii) such Class A-2 Limited Partner
reasonably determines that such banking laws will not permit it to Transfer such
Units to a Permitted A-2 Transferee pursuant to Section 11.03(i), then such
Class A-2 Limited Partner may transfer such Units pursuant to and subject to all
of the provisions of this Agreement (including without limitation this Section
11.04 and Section 19.03 hereof), provided that (i) no such Transfer may be made
to a Person who is subject to backup withholding under Section 3406 of the Code,
and (ii) such transferee executes and delivers a counterpart of this Agreement.
The Third Party purchaser of such Class A-2 Limited Partner's Limited Partner
Interest pursuant to the preceding sentence of this Section 11.04(g) is
hereinafter sometimes referred to as a "Third Party A-2 Transferee."
(h) Transfers of Units of Partner Interest for property other than
cash are not permitted pursuant to this Section 11.04.
Section 11.05. Rights of First Refusal for Units of Partner Interest
(other than Class B Conversion Units) Owned by Class B Limited Partners or the
Administrative General Partner.
(a) If any Class B Limited Partner or the Administrative General
Partner (for purposes of this Section 11.05, a "Class B Transferring Partner")
wishes to Transfer any or all of
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the Units of Partner Interest (other than Class B Conversion Units) then owned
by such Class B Transferring Partner on or after September 4, 1997, other than
as otherwise permitted by Sections 11.01, 11.03 and 11.06 and Article XV hereof,
then such Class B Transferring Partner shall first give a written notice (the
"Class B Transfer Notice") to the Partnership specifying the number of Units of
Partner Interest such Class B Transferring Partner wishes to Transfer (the
"Class B Transfer Units") and the identity of the proposed transferee,
containing an irrevocable offer (open to acceptance for a period of thirty days
after the date such Class B Transfer Notice is given) to sell the Class B
Transfer Units to the Class B Transfer Offerees (as defined below) at the price
per Unit stated in the Class B Transfer Notice, which price shall be equal to
the price per Unit offered to such Class B Transferring Partner by a bona fide
Third Party offeror (the "Class B Transfer Price"), and stating whether such
offer is conditioned upon purchase of all the Class B Transfer Units by the
Class B Transfer Offerees.
(b) The Partnership shall, within five days of its receipt of the
Class B Transfer Notice, provide notice of receipt of the Class B Transfer
Notice to the Administrative General Partner, all Class B Limited Partners and
all Preferred Interest Limited Partners then employed by the Partnership, other
than (i) the Class B Transferring Partner, (ii) the proposed transferee (if the
proposed transferee is a Class B Limited Partner or Preferred Interest Limited
Partner then employed by the Partnership), and (iii) Class B Limited Partners
who are no longer employed by the Partnership and their Permitted Transferees
(each such Person to whom a Class B Transfer Notice is required to be delivered
to being referred to herein as a "Class B Partner Offeree"), and to the
Specified Partners (the Specified Partners, the Partnership and the Class B
Partner Offerees being collectively referred to herein as the "Class B Transfer
Offerees"). A Class B Partner Offeree who wishes to purchase any Class B
Transfer Units shall provide the Partnership with written notice specifying the
number of Class B Transfer Units (up to such Class B Partner Offeree's Pro Rata
Share) as to which such Class B Partner Offeree desires to accept the offer
within fifteen days of the giving of such notice by the Partnership, and may, at
the Class B Partner Offeree's option, indicate the maximum number of Class B
Transfer Units such Class B Partner Offeree would purchase in excess of such
Class B Partner Offeree's Pro Rata Share (the "Excess Amount"). If one or more
Class B Partner Offerees declines to participate in such purchase or elects to
purchase less than such Class B Partner Offeree's Pro Rata Share, then the
remaining Class B Transfer Units shall automatically be deemed to be accepted by
Class B Partner Offerees who specified an Excess Amount in their respective
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notices of acceptance, allocated among such Class B Partner Offerees (with
rounding to avoid fractional Units) in proportion to their respective Pro Rata
Share but in no event shall an amount greater than a Class B Partner Offeree's
Excess Amount be allocated to such Partner Offeree. Any excess number of Class B
Transfer Units shall be allocated among the remaining Class B Partner Offerees
whose specified Excess Amount has not been satisfied (with rounding to avoid
fractional Units) in proportion to their respective Pro Rata Share, and such
procedure shall be employed until the entire Excess Amount of each Class B
Partner Offeree has been satisfied or all of the Class B Transfer Units have
been allocated.
(c) If any Specified Partner wishes to purchase any Class B Transfer
Units which the Class B Partner Offerees or the Partnership have not elected to
purchase (the "Remaining Class B Transfer Units"), it shall provide the
Partnership with written notice specifying the number of Remaining Class B
Transfer Units as to which such Specified Partner desires to accept the offer
within twenty days of the giving of the notice of receipt of a Class B Transfer
Notice by the Partnership. To the extent the Class B Partner Offerees do not
purchase all of the Class B Transfer Units, the Partnership shall have the right
to purchase all such Remaining Class B Transfer Units; provided, that the
Partnership must determine the number of Remaining Class B Transfer Units it
will purchase within five days after the termination of all offers pursuant to
Section 11.05(b). If the Partnership elects to purchase less than all of the
Remaining Class B Transfer Units, it shall, within such five days, allocate to
each Specified Partner, to the extent each such Specified Partner elects to
purchase any of such Units, all Remaining Class B Transfer Units which the
Partnership has not elected to purchase. In the event the aggregate number of
Remaining Class B Transfer Units available for purchase by Specified Partners is
less than the number of such Units which such Specified Partners have indicated
a desire to purchase, such Remaining Class B Transfer Units shall be allocated
among the Specified Partners desiring to purchase such Units in proportion to
their respective Pro Rata Share (with rounding to avoid fractional Units). The
Partnership shall have the right but not the obligation to purchase any
Remaining Class B Transfer Units not accepted for purchase by the Class B
Partner Offerees or the Specified Partners. Notwithstanding the provisions of
Section 11.05(b) and this Section 11.05(c), none of the Persons who are Class
A-2 Limited Partners (including Barclays and Exeter if either of such Persons is
then a Class A-2 Limited Partner) or Exeter (in its capacity as a Preferred
Interest Limited Partner) shall be entitled to purchase Units of Partner
Interest pursuant to this Section 11.05 to the extent that the purchase of such
Units would
80
cause the aggregate interests of such Person (inclusive of each class of Partner
Interest held by such Person) and each other Limited Partner, if any, which is a
"related person" (within the meaning of Regulations Section 1.752-2(d)) as to
such Person in any item of Partnership income, gain, loss, deduction or credit
for that taxable year or any taxable year thereafter during the term of this
Agreement to be 10 percent or more; provided, however, that this sentence shall
not apply to a Limited Partner unless such Limited Partner or a "related person"
to such Limited Partner is a lender to the Partnership or a participant in an
outstanding loan to the Partnership at any time during the taxable year in which
the purchase is to occur.
(d) If the offer is accepted by any Class B Partner Offeree, the
Partnership or any Specified Partner, and, if the offer is conditioned on the
purchase of all Class B Transfer Units covered by the Class B Transfer Notice,
all such Class B Transfer Units have been accepted for purchase, the
Partnership, on behalf of all such Persons, shall provide the Class B
Transferring Partner with written notice of such acceptance specifying the
number of the Class B Transfer Units as to which each such Person is accepting
the offer (a "Notice of Acceptance") within thirty days after the date the
Transfer Notice is given.
(e) The closing of the purchase by the Class B Transfer Offerees of
the Class B Transfer Units pursuant to this Section 11.05 shall take place at
the principal offices of the Partnership on the fifteenth business day after the
Notice of Acceptance is given. At such closing, each of the Class B Transfer
Offerees who has elected to purchase the Class B Transfer Units shall deliver a
certified check or checks in the appropriate amount to the Class B Transferring
Partner against delivery of a duly executed instrument of assignment,
representing the Class B Transfer Units to be purchased. The Class B Transfer
Units shall be delivered free and clear of all Encumbrances.
(f) If any Class B Transfer Units allocated to a Class B Transfer
Offeree are not purchased by such Class B Transfer Offeree (the "Class B
Transfer Default Units"), such Class B Transfer Default Units may be purchased
by the Class B Partner Offerees, up to each such Class B Partner Offeree's Pro
Rata Share (with any Class B Transfer Default Units any such Person elects not
to purchase being reallocated among the remaining Class B Partner Offerees in
accordance with his Pro Rata Share until no such Person wishes to purchase any
more Class B Transfer Default Units or all such Class B Transfer Default Units
shall have been allocated), and if the Class B Partner Offerees do not purchase
all such Class B Transfer Default Units, such Units may
81
be purchased by the Partnership and, if the Partnership elects not to purchase
them, such Units may be purchased by the Specified Partners up to each such
Specified Partners' Pro Rata Share (with any Class B Transfer Default Units any
such Person elects not to purchase being reallocated among the remaining
Specified Partners in accordance with their respective Pro Rata Share until no
such Person wishes to purchase any more Class B Transfer Default Units or all
such Class B Transfer Default Units shall have been allocated), and if the
Specified Partners do not purchase all such Units, the Third Party purchaser may
purchase such Units. Nothing contained herein shall prejudice any person's right
to maintain any cause of action or pursue any other remedies available to it as
a result of such default.
(g) If, at the end of the thirtieth day after the Class B Transfer
Notice is given, the Partnership has not delivered a Notice of Acceptance of the
offer contained in such Class B Transfer Notice (or if the offer is conditioned
on the purchase of all the Class B Transfer Units, the Notice of Acceptance does
not cover all the Class B Transfer Units), or if it has delivered a Notice of
Acceptance covering less than all of the Class B Transfer Units regarding an
offer not conditioned on the purchase of all Class B Transfer Units, then the
Class B Transferring Partner shall have ninety days in which to Transfer any or
all of the Class B Transfer Units not accepted for purchase by the Class B
Transfer Offerees at a price not lower than the Class B Transfer Price and on
terms no more favorable to the transferee than those contained in the Class B
Transfer Notice, to the proposed transferee identified in the Class B Transfer
Notice. In the event that a Third Party shall acquire any or all of the Class B
Transfer Units, it shall have no right to Transfer such Units (or any interest
therein) unless and until such Third Party is admitted as a Substituted Limited
Partner pursuant to Section 11.10 hereof or an additional or successor General
Partner pursuant to Section 11.02, as applicable. Promptly after any Transfer
pursuant to this Section 11.05, the Class B Transferring Partner shall notify
the Partnership of the consummation thereof and shall furnish such evidence of
the completion and time of completion of such Transfer and of the terms thereof
as the Partnership may request. If, at the end of such ninety-day period, the
Class B Transferring Partner has not completed the Transfer of all of the Class
B Transfer Units (provided that if there are any Class B Transfer Default Units
which have not been purchased at the end of such ninety-day period, the Class B
Transferring Partner shall have an additional fifteen days to find purchasers
for such Class B Transfer Default Units), the Class B Transferring Partner shall
no longer be permitted to Transfer such Units of Partner Interest pursuant to
this Section 11.05 without again complying with Section 11.05 in its
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entirety. If the Class B Transferring Partner determines at any time within such
ninety-day period that the Transfer of all or any of such Class B Transfer Units
at a price not lower than the Class B Transfer Price and on terms no more
favorable to the transferee than those contained in the Class B Transfer Notice
is impractical, such Class B Transferring Partner may terminate all attempts to
Transfer such Class B Transfer Units and recommence the procedures of Section
11.05 in their entirety without waiting for the expiration of such ninety-day
period by delivering written notice of such decision to the Partnership.
(h) Transfers of Units of Partner Interest for property other than
cash are not permitted pursuant to this Section 11.05.
Section 11.06. Bring Along.
(a) If, after complying with the right of first refusal procedures
contained in Section 11.04 or 11.05 hereof, as applicable, a Partner (other than
a Preferred Interest Limited Partner) wishes to Transfer Units of its Partner
Interest to any Third Party (other than through a sale in a registered public
offering or Transfers permitted by Section 11.01(e), 11.01(g), 11.03(e),
11.03(f), 11.03(g), 11.03(h), 11.03(i) or 11.04(g) hereof, which Transfers shall
not be subject to this Section 11.06), then such Partner must, as a condition to
such Transfer, permit each other Partner and any holder of a Class C Exchange
Note or Class C-1 Exchange Note (as such terms are defined in Sections 16.02 and
17.02, respectively) (for the purposes of this Section 11.06, individually a
"Remaining Partner" and collectively the "Remaining Partners") (or cause it or
him to be permitted) to sell (to either the prospective purchaser of the selling
Partner's Units of Partner Interest, or another financially reputable purchaser
reasonably acceptable to such Remaining Partners or, in the case of the sale of
Units of Class C Limited Partner Interest or Class C-1 Limited Partner Interest
or any outstanding Class C Exchange Note or Class C-1 Exchange Note, to the
Partnership) the same proportion of Units of the Partner Interest then owned by
such Remaining Partner as the proportion that the number of Units (if any) of
Partner Interest the selling Partner has previously sold and proposes to sell
bears to the aggregate number of Units of Partner Interest (other than Preferred
Limited Partner Interests) acquired by such Partner pursuant to a Subscription
Agreement, or the exercise of Performance Options or otherwise as contemplated
by this Agreement, on the same terms and at the same price per Unit offered to
such selling Partner by the Third Party offeror, except that (i) in the case of
Units of Class C Limited Partner Interest, and, prior to the Class C-1
Participation Event, Units of Class C-1 Limited
83
Partner Interest held by a Remaining Partner, the price per Unit that such
Remaining Partner shall be entitled to receive for such Units shall equal the
then Class C Liquidation Preference or Class C-1 Liquidation Preference,
respectively, per Unit, (ii) in the case of Units of Preferred Limited Partner
Interest held by a Remaining Partner, such Remaining Partner shall be entitled
to receive for such Units, at the option of such Remaining Partner, either (a)
the then Preferred Interest Liquidation Preference per Unit or (b) the price per
Unit offered to such selling Partner by the Third Party offeror for each Unit
held by such Remaining Partner, assuming conversion of such Units in accordance
with the provisions of Section 19.05 hereof (including the manner of determining
the number of Units of Class B Partner Interest issuable upon such a conversion
set forth in said Section 19.05), and (iii) in the case of any outstanding Class
C Exchange Note or Class C-1 Exchange Note, the holder thereof shall be entitled
to receive a proportionate payment (after giving effect to any previous sales of
Units of Class C Limited Partner Interest or Class C-1 Limited Partner Interest
or partial payments on such Class C Exchange Note or Class C-1 Exchange Note) of
the outstanding principal and accrued interest on such Exchange Note, and
provided that in the event that a Class B Limited Partner or Preferred Interest
Limited Partner who is then employed by the Partnership wishes to Transfer Units
of his Limited Partner Interest (other than a Transfer pursuant to Section
11.08) and such Transfer would reduce such Partner's ownership of Units in the
aggregate, regardless of the class thereof, to below 50% of the aggregate number
of Units, regardless of class thereof, previously acquired by him pursuant to a
Subscription Agreement, or the exercise of Performance Options or otherwise as
contemplated by this Agreement, then the Managing General Partner and each Class
A Limited Partner shall be permitted to sell (either to the prospective
purchaser of the selling Partner's Units of Partner Interest or to another
financially reputable purchaser reasonably acceptable to the Managing General
Partner) all of their Units of General Partner Interest and Class A Limited
Partner Interest, respectively. In the event that the prospective purchaser of
the selling Partner's Units of Partner Interests and/or such other financially
reputable purchaser does not purchase for whatever reason (including without
limitation the financially reputable purchaser not being reasonably acceptable
as aforesaid) the requisite portion of Units of Partner Interest owned by the
Remaining Partners pursuant to the preceding sentence, the selling Partner shall
not be permitted to Transfer its Units of its Partner Interest to a Third Party.
The Partners agree that the Managing General Partner shall have the sole right
(in its discretion) to determine whether to admit as Substituted Limited
Partners the purchasers of the Units of Partner Interest being sold by the
selling Partner and the
84
Remaining Partners pursuant to this Section 11.06(a), provided that if there is
more than one prospective purchaser pursuant to this Section 11.06(a) at any one
time, then if any purchaser is admitted as a Substituted Limited Partner at such
time, all the purchasers at such time shall be so admitted as Substituted
Limited Partners. In the event that there has previously been a distribution on
Units of Partner Interest payable in Units or a split-up or a recombination of
Units of Partner Interest or other similar transaction (other than pursuant to
the exercise of a Performance Option), the number of Units of Preferred Limited
Partner Interest, Units of Class C Limited Partner Interest and Class C-1
Limited Partner Interest and the Preferred Interest Liquidation Preference,
Class C Liquidation Preference and Class C-1 Liquidation Preference per Unit to
which the rights of the Preferred Interest Limited Partners, Class C Limited
Partners and Class C-1 Limited Partners under this Section 11.06 shall apply
shall be appropriately adjusted to give effect to such transaction.
(b) Each Partner's obligation under this Section 11.06 to afford each of
the Remaining Partners (or to cause each of them to be afforded) the rights
referred to herein will be discharged if (i) the Remaining Partners are given
written notice thereof simultaneously with the giving of the Transfer Notice
required by Section 11.04 hereof or the giving of the Class B Transfer Notice
pursuant to Section 11.05 hereof, as applicable, and (ii) such notice provides
that each of the Remaining Partners may elect to avail itself or himself of such
rights by a written reply given on or before the expiration of the 20-day period
following the giving of the Transfer Notice or the Class B Transfer Notice, as
the case may be, addressed to such Person as may be designated in the notice
and, if requested in such notice, sent by registered mail, return receipt
requested.
(c) The "bring along" rights contained in this Section 11.06 may be
exercised or waived solely at the option of the party entitled thereto and are
in addition to the rights of the respective Partners set forth in Section 11.04
or 11.05, as applicable. The procedures set forth in Section 11.04 or 11.05, as
applicable, shall be satisfied prior to giving effect to the "bring along"
provisions of this Section 11.06.
(d) Anything contained herein to the contrary notwithstanding, the rights
of Partners under this Section 11.06 shall not be assignable, except to a
transferee of Units of Partner Interest pursuant to any Transfer of Units
otherwise permissible pursuant hereto and except to the extent that the Managing
General Partner or a Class A-1 Limited Partner may transfer its rights under
this Section 11.06 to a Partner that is an Affiliate
85
of the Managing General Partner, Centre Partners, L.P., Holdings or another
Class A-1 Limited Partner.
(e) Anything contained herein to the contrary notwithstanding, in the
event the Managing General Partner approves a transaction pursuant to which a
Person will acquire all of the Units of Partner Interest, each of the Partners
agrees to offer to sell all of their Units of Partner Interest, and to sell all
of their Units of Partner Interest, to such Person, upon the terms and
conditions for the transaction approved by the Managing General Partner,
provided that upon the request of either (i) the Administrative General Partner
or (ii) the Limited Partners owning a majority of the aggregate number of Units
of Class A-2 Limited Partner Interest, the Administrative General Partner and/or
the Class A-2 Limited Partners so requesting and the Managing General Partner
shall jointly select an investment banking or appraisal firm (which shall not be
Lazard Freres & Co.) to render a "fairness opinion" to the Partnership with
respect to the fairness of the consideration to be received by each class of
Partners in such transaction. If the selection of an investment banking or
appraisal firm is so requested, (i) no Partner shall be required to sell its
Units of Partner Interest until a fairness opinion is rendered, confirming the
fairness of the consideration to be received by such Partners, and (ii) the fees
and expenses of such investment banking or appraisal firm shall be borne by the
Partnership. In the event of a sale of Units of Partner Interest pursuant to
this Section 11.06(e), (i) the terms of the purchase and the consideration
received by each Class A-2 Limited Partner for its Units of Class A-2 Limited
Partner Interest shall be equal on a per Unit basis to the terms of the purchase
and the consideration received by the Initial Partners, as a group, for their
Units of Class A-1 Limited Partner Interest and Units of General Partner
Interest and (ii) in no event shall the consideration to be received by the
Class C-1 Limited Partners prior to the Class C-1 Participation Event be greater
than the Class C-1 Liquidation Preference. For purposes of the preceding
sentence, the consideration for the Units of Class A-1 Limited Partner Interest
and Units of General Partner Interest sold by the Initial Partners on a per Unit
basis shall be an amount equal to the aggregate consideration received by the
Initial Partners for all such Units of Partner Interest, divided by the number
of such Units of Partner Interest sold by the Initial Partners.
Section 11.07. Put Option.
(a) (i) At any time and from time to time after September 4, 1998, an
Initial Partner shall have the right to require the Partnership to purchase such
number of Units of Class
86
A-1 Limited Partner Interest or Units of General Partner Interest owned of
record by such Initial Partner as such Initial Partner may designate at the Fair
Market Value thereof.
(ii) In the event that an Initial Partner shall exercise
such right, such Initial Partner shall so notify the other Group A
Partners, and each Class A-2 Limited Partner shall have the right to
give notice to the Partnership, within ten days of the giving of such
notice by such Initial Partner, to require the Partnership to
purchase, at the Fair Market Value thereof (but subject to the
provisions of Section 11.07(e)), such number of Units of Class A-2
Limited Partner Interest owned of record by such Class A-2 Limited
Partner, provided that in no event shall a Class A-2 Limited Partner
have the right to require the Partnership to purchase a percentage of
such Class A-2 Limited Partner's total number of Units of Class A-2
Limited Partner Interest which is in excess of the percentage of the
total number of Units of Class A-2 Limited Partner Interest owned by
such Initial Partner which such Initial Partner has so designated for
purchase by the Partnership pursuant to Section 11.07(a)(i). In the
event that both Holdings and the Managing General Partner shall
exercise their rights under Section 11.07(a)(i), each Class A-2
Limited Partner shall have the right to so require the Partnership to
purchase a percentage of the total number of Units of Class A-2
Limited Partner Interest owned of record by such Class A-2 Limited
Partner which is not more than the percentage of the total number of
Units of Partner Interest owned by Holdings and the Managing General
Partner which they have so designated for purchase by the Partnership
pursuant to Section 11.07(a)(i). The Partners acknowledge that no
Group A Partner other than a Initial Partner shall have any right to
initiate the exercise of the right under Section 11.07(a)(i).
(b) The Partnership shall not be required to purchase any Units of
Partner Interest held by a Group A Partner pursuant to any exercise by a Group A
Partner of its rights under Section 11.07(a) to the extent that (i) the purchase
of such Units of Partner Interest (including the incurrence of any indebtedness
required to enable it to purchase such Units of Partner Interest) and any
related transactions pursuant to Section 11.07(d) would cause or constitute a
material adverse change in the business of the Partnership or a breach or
default (immediately or with notice or lapse of time or both) of any agreement
or instrument
87
to which the Partnership is a party or by which the Partnership or any of its
assets is bound, which agreement or instrument is in existence prior to such
exercise and as to which a consent or waiver thereunder for such purchase (or
incurrence of indebtedness) has not been obtained after all best efforts by the
Partnership (which best efforts shall include the consideration of all options
with respect to enabling the Partnership to purchase such Units of Partner
Interest, including, without limitation, a Sale), and (ii) the Partnership gives
written notice to such Group A Partner, within 30 business days after the date
of the notice of exercise of such right by such Group A Partner, that it is not
required to purchase the number of Units of Partner Interest set forth in such
notice by reason of clause (i) above and setting forth the facts relating
thereto. Any purchase of Units of Partner Interest by the Partnership pursuant
to any exercise by a Group A Partner of its rights under Section 11.07(a) shall
also be subject to the requirement that in the event that the Administrative
General Partner so requests, the Managing General Partner and the Administrative
General Partner shall jointly select an investment banking or appraisal firm
(which shall not be Lazard Freres & Co.) to render a "fairness opinion" to the
Partnership with respect to the fairness of the consideration to be received by
the Group A Partners and the fairness of the consideration to be received by the
Partnership in the event of a Sale. If the selection of an investment banking or
appraisal firm is so requested, (i) the Partnership shall not be required to
purchase any Units of Partner Interest pursuant to any exercise by a Group A
Partner of its rights under Section 11.07(a) until a fairness opinion is
rendered, confirming the fairness of the consideration to be received by the
Group A Partners and the fairness of the consideration to be received by the
Partnership in the event of a Sale, and (ii) the fees and expenses of such
investment banking or appraisal firm shall be borne by the Partnership.
(c) The giving of notice by a Group A Partner of the exercise of its
rights pursuant to Section 11.07(a) and the receipt by the Partnership of such
notice as provided in Article XVII shall constitute an irrevocable commitment by
such Group A Partner and the Partnership to sell and purchase, as the case may
be, the Units of Partner Interest referred to in such notice unless a notice is
given by the Partnership as provided in Section 11.07(b). If the Partnership is
permitted pursuant to Section 11.07(b) to purchase some but not all of the Units
of Partner Interest as to which a Group A Partner has exercised its rights under
Section 11.07, such Group A Partner may, in its sole discretion, by written
notice (a "Withdrawal Notice") given to the Partnership within 10 business days
of its receipt of the notice from the Partnership (the "Withdrawal Period")
withdraw
88
the exercise of such right, in which event it shall not be required to sell any
Units of Partner Interest to the Partnership. If such Group A Partner does not
give a Withdrawal Notice within the Withdrawal Period, such Group A Partner
shall be obligated to sell, and the Partnership shall be obligated to purchase,
all Units of Partner Interest that the Partnership is not prohibited from
purchasing pursuant to Section 11.07(b). The closing of any sale and purchase of
Units of Partner Interest pursuant to this Section 11.07 shall take place at
10:00 A.M. at the principal offices of the Partnership on a business day
designated by the Partnership on five days' prior notice to the Group A Partner
which day shall not be prior to the expiration of the Withdrawal Period nor
later than 150 days after such Group A Partner's notice of exercise of its right
to require the Partnership to purchase the Units of Partner Interest. At the
closing, the Group A Partner shall deliver a duly executed instrument of
assignment, representing the Units of Partner Interest to be purchased, against
receipt of the purchase price therefor in immediately available funds. Such
Units shall be delivered free and clear of all Encumbrances.
(d) Prior to any closing pursuant to Section 11.07(c), the
Partnership shall be required to retire all of the outstanding Units of
Preferred Limited Partner Interest, Units of the Class C Limited Partner
Interest and, prior to the Class C-1 Participation Event, all of the outstanding
Units of Class C-1 Limited Partner Interest or redeem all of the Class C
Exchange Notes and Class C-1 Exchange Notes (as such terms are defined in
Section 16.02 and 17.02, respectively), as provided in Section 16.02 and Section
17.02, respectively. At the closing of such retirement or redemption, as the
case may be, each Preferred Interest Limited Partner, Class C Limited Partner
and Class C-1 Limited Partner shall deliver to the Partnership a duly executed
instrument of assignment, representing its Units of Preferred Limited Partner
Interest, Class C Limited Partner Interest and Class C-1 Limited Partner
Interest, respectively, to be purchased, or each holder of a Class C Exchange
Note or Class C-1 Exchange Note shall deliver to the Partnership its Exchange
Note, against receipt of the Preferred Interest Liquidation Preference, Class C
Liquidation Preference and Class C-1 Liquidation Preference, respectively, or
payment of the Class C Exchange Note and Class C-1 Exchange Note, respectively,
therefor, as the case may be, in immediately available funds.
(e) In the event that the Partnership purchases (i) Units of Partner
Interest owned by one or more Initial Partners pursuant to this Section 11.07
(the "Initial Partners Put Units") and (ii) Units of Partner Interest owned by
one or more Class A-2 Limited Partners pursuant to this Section 11.07 (the "A-2
Put
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Units"), then the terms of the purchase and the consideration received by each
Class A-2 Limited Partner for its A-2 Put Units shall be equal on a per Unit
basis to the terms of the purchase and the consideration received by the Initial
Partners, as a group, for the Initial Partners Put Units. For purposes of the
preceding sentence, the consideration for the Initial Partners Put Units on a
per Unit basis shall be an amount equal to the aggregate consideration received
by the Initial Partners for all their Initial Partners Put Units, divided by the
number of Initial Partners Put Units so purchased by the Partnership.
Section 11.08. Right to Purchase on Termination of Employment.
(a) In the event that a Class B Limited Partner or Preferred Interest
Limited Partner is employed by the Partnership, upon such Class B Limited
Partner's or Preferred Interest Limited Partner's (for purposes of this Section
11.08, in each case a "Terminated Limited Partner") ceasing to be employed by
the Partnership for any reason whatsoever (whether due to such Terminated
Limited Partner's death, disability, termination, resignation or retirement) (a
"Termination Event"), the Terminated Limited Partner and such Terminated Limited
Partner's Permitted Transferees shall be deemed to have irrevocably offered
(open to acceptance for a period of sixty days) to sell all of the Units of
Partner Interest then owned by such Terminated Limited Partner and such
Terminated Limited Partner's Permitted Transferees, including without limitation
Units acquired pursuant to any Performance Options (the "Termination Units") to
the Partnership at a price per Termination Unit equal to the Termination Price.
For the purposes of this Section 11.08, the term "Termination Price" shall mean
(i) in the event of a Terminated Limited Partner's death, Disability or
Retirement, the Fair Market Value of the Termination Units on the date of the
Termination Event, (ii) in the event of a Terminated Limited Partner's Voluntary
Resignation or Involuntary Termination, (a) the Fair Market Value of the
Termination Units that are "Protected Units" on the date of the occurrence of
the Termination Event (with 20% of the Units purchased pursuant to such
Terminated Limited Partner's Subscription Agreement for Class B Limited Partner
Interests becoming "Protected Units", and 20% of the Units purchased (or issued
in respect of a conversion of such Units purchased (i.e., Class B Conversion
Units) pursuant to such Terminated Limited Partner's Subscription Agreement for
Preferred Limited Partner Interests becoming "Protected Units", in each case on
each of the first through the fifth anniversaries of the date of purchase of
such Units, and all of the Units acquired pursuant to the exercise of
Performance Options in accordance with the terms of the Management Option Plan
being deemed "Protected Units") and (b)
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the lower of the original purchase price and the Fair Market Value of the
Termination Units that are not Protected Units on the date of the occurrence of
the Termination Event, and (iii) in the event of a Terminated Limited Partner's
termination for Cause, the lower of the original purchase price and the Fair
Market Value of the Termination Units on the date of the occurrence of the
Termination Event. Notwithstanding the foregoing, all Termination Units will be
Protected Units in the event that the Termination Event is the result of a
Transfer Event.
(b) If and to the extent the offer is accepted by the Partnership, the
Partnership shall provide the Terminated Limited Partner and such Terminated
Limited Partner's Permitted Transferees with written notice of such acceptance
specifying the number of Termination Units as to which the Partnership is
accepting the offer (a "Notice of Acceptance") within sixty days after the date
of the occurrence of the Termination Event.
(c) The closing of the purchase of the Termination Units pursuant to
this Section 11.08 shall take place at the principal offices of the Partnership
on a date chosen by the Partnership, which date shall in no event be more than
sixty days after the Notice of Acceptance is given. At such closing, the
Partnership shall deliver a certified check or checks in the appropriate amount
(which shall be reduced by any amounts due to the Partnership pursuant to such
Terminated Limited Partner's Promissory Note, if any) to the Terminated Limited
Partner and such Terminated Limited Partner's Permitted Transferees against
delivery of a duly executed instrument of assignment, representing the
Termination Units to be purchased. The Termination Units shall be delivered free
and clear of all Encumbrances. Notwithstanding anything to the contrary
contained in this Section 11.08(c), to the extent that any payment by the
Partnership for Termination Units with cash would cause or constitute a material
breach or default (immediately or with notice or lapse of time or both) of any
financing agreement or instrument (whether for equity or debt) to which the
Partnership is a party or by which the Partnership or any of its assets is bound
(or there then exists any breach or default) or would be prohibited under the
Delaware RULPA or other applicable law, the Partnership shall be permitted to
pay (which payment shall be reduced by any amounts due to the Partnership
pursuant to such Terminated Limited Partner's Promissory Note, if any) for the
Termination Units in such proportion of cash and a Permitted Security (as
defined in Section 6.05), as applicable, of the Partnership, bearing interest at
an annual rate equal to the prime rate (or, if more than one rate is reported,
the mean of those reported) on the date of issuance, as reported under "Money
Rates" in The Wall Street Journal on such date, as would not
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cause a breach or default or be so prohibited, provided that if a Specified
Event has occurred with respect to the Class C Limited Partner Interests or
Class C Exchange Notes or a Class C-1 Specified Event has occurred with respect
to the Class C-1 Limited Partnership Interest or Class C-1 Exchange Notes the
Partnership shall pay for such Termination Units which are not Preferred Limited
Partner Interests or Class B Conversion Units solely with Permitted Securities.
The principal amount of any such Permitted Security and the interest thereon
shall be payable at such time as would be permissible under the Specified Debt
Agreements, or other financing agreement or instrument or applicable law.
(d) In the event that a Terminated Limited Partner acquires any Units
of Partner Interest pursuant to the exercise of vested Performance Options (or
if Performance Options have become exercisable, whether or not vested, as a
result of the consummation of a Transfer Event, and such Terminated Limited
Partner acquires any Units of Partner Interest pursuant to the exercise of such
Performance Options) held by such Terminated Limited Partner after the date of
the occurrence of a Termination Event (a "Post Termination Acquisition"), such
Units of Partner Interest shall be deemed Termination Units for purposes of this
Section 11.08 as of the date they are so acquired, and the Partnership shall
have the right to acquire all such Termination Units in accordance with the
procedures set forth in this Section 11.08 at the Fair Market Value of such
Termination Units as of the date of the Termination Event.
(e) Any Termination Units not acquired by the Partnership pursuant to
this Section 11.08 shall continue to be held by the Terminated Limited Partners
and such Terminated Limited Partner's Permitted Transferees subject to all of
the terms and conditions of this Agreement.
(f) Within thirty days after a closing pursuant to Section 11.08(c),
the Partnership shall provide notice (the "Treasury Unit Notice") of an offer by
the Partnership to issue and sell to the Class B Limited Partners and Preferred
Interest Limited Partners then employed by the Partnership (the "Class B
Offerees") an aggregate number of Units of Class B Limited Partner Interest (the
"Treasury Units") equal to the number of Termination Units purchased by the
Partnership at such closing which are not Preferred Limited Partner Units, at a
price per Unit equal to the Fair Market Value on the date of the Treasury Unit
Notice. A Class B Offeree who wishes to purchase any Treasury Units shall
provide the Partnership with written notice specifying the number of Treasury
Units (up to such Class B Offeree's Pro Rata Share) as to which such Class B
Offeree
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desires to accept the offer within twenty days of the giving of the Treasury
Unit Notice by the Partnership, and may, at the Class B Offeree's option,
indicate the maximum number of Treasury Units such Class B Offeree would
purchase in excess of such Class B Offeree's Pro Rata Share (the "Excess
Amount"). If one or more Class B Offerees declines to participate in such
purchase or elects to purchase less than such Class B Offeree's Pro Rata Share,
then the remaining Treasury Units shall automatically be deemed to be accepted
by Class B Offerees who specified an Excess Amount in their respective notices
of acceptance, allocated among such Class B Offerees (with rounding to avoid
fractional Units) in proportion to their respective Pro Rata Share but in no
event shall an amount greater than a Class B Offeree's Excess Amount be
allocated to such Class B Offeree. Any excess Treasury Units shall be allocated
among the remaining Class B Offerees whose specified Excess Amount has not been
satisfied (with rounding to avoid fractional Units) in proportion to their
respective Pro Rata Share, and such procedure shall be employed until the entire
Excess Amount of each Class B Offeree has been satisfied or all Treasury Units
have been allocated.
(g) The closing of the purchase of the Treasury Units pursuant to
Section 11.08(f) shall take place at the principal offices of the Partnership on
a date chosen by the Partnership, which date shall in no event be more than
forty-five days after the Treasury Unit Notice is given. At such closing, each
of the Class B Offerees who has elected to purchase Treasury Units shall deliver
a certified check or checks in the appropriate amount to the Partnership for the
Treasury Units to be purchased by such Class B Offeree. In the event that the
Partnership shall thereafter purchase any Termination Units pursuant to a Post
Termination Acquisition, as provided in Section 11.08(d), the Class B Offerees
shall have the right, pursuant to Section 11.08(f), to acquire additional
Treasury Units in an aggregate amount equal to the number of such Termination
Units thereafter purchased by the Partnership.
Section 11.09. Allocations and Distributions Subsequent to
Assignment.
(a) All profits and losses of the Partnership attributable to any
Units of Partner Interest acquired by reason of an assignment permitted by this
Agreement shall be allocated, as provided in Section 11.09(b), among, and all
distributions shall be made by the Partnership directly to, the Partner or
Assignee who acquired such Units, beginning with the calendar month in which the
effective date of the assignment occurs.
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(b) The "effective date" of an assignment of an interest in the
Partnership for purposes of this Section 11.09 shall be the first day of the
calendar month in which such transferee is listed as such on the books and
records of the Partnership. The Managing General Partner, in its sole and
absolute discretion, may adopt or change the Partnership's method and convention
for allocating income, gain, loss, deduction, and credit for each Fiscal Year
among transferors and transferees of transferred Partner Interests to the extent
permitted or required by Section 706 of the Code. No such adoption, revision or
modification shall be treated as an amendment to this Agreement requiring the
consent of any Partner.
Section 11.10. Admission of Substituted Limited Partners; Assignees.
(a) Upon a Transfer by a Limited Partner of any or all of its Units of
Limited Partner Interest in accordance with this Article XI, the transferor
shall be deemed to have given the transferee the right to seek admission to the
Partnership as a Limited Partner. Such transferee shall become a Substituted
Limited Partner only upon the satisfaction of the following conditions: (i) the
execution and delivery by the transferee of a counterpart of this Agreement,
(ii) such transferee's being listed as a partner of the Partnership on the books
and records of the Partnership, and (iii) except as otherwise provided in
Sections 11.06(a), 19.03, and 11.10(g), the prior written consent of each of the
General Partners to the admission of such transferee to the Partnership as a
Substituted Limited Partner. Notwithstanding anything in this Article XI to the
contrary (but subject to the provisions of Sections 11.06(a), 19.03, Section
11.10(f) and Section 11.10(g)), the General Partners may give or withhold
consent to such admission (including without limitation the admission of a
Person who is not then a Partner pursuant to Section 11.04 or 11.05, the
admission of a Permitted Transferee or other transferee pursuant to Section
11.03(e)(ii) or (iii), the admission of a Permitted Trust Transferee pursuant to
Section 11.03(f), the admission of a Permitted Holdings Transferee pursuant to
Section 11.03(g), the admission of a Permitted Pledgee pursuant to Section
11.03(h), the admission of a Permitted A-2 Transferee pursuant to Section
11.03(i) or the admission of Comcast Corporation or any wholly-owned direct or
indirect subsidiary of Comcast Corporation pursuant to Section 11.03(j)) in
their sole discretion. If the consent of any of the General Partners is
withheld, such transferee shall be deemed an Assignee, and shall not be admitted
to the Partnership as a Substituted Limited Partner. Such Assignee shall have
an interest in the Partnership that is equivalent to that of a Limited Partner
solely with respect to allocations and distributions, includ-
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ing liquidating distributions of the Partnership, but shall have no other rights
of a Limited Partner. If the transferee(s) of all of the Units of Limited
Partner Interest of a Limited Partner is admitted to the Partnership as a
Substituted Limited Partner, or as Substituted Limited Partners, the transferor
shall cease to be a Limited Partner upon such admission. The admission of a
transferee as a Substituted Limited Partner shall be effective when such
transferee is listed as a Limited Partner on the books and records of the
Partnership.
(b) The admission of a Substituted Limited Partner shall be effected
without the approval of any Limited Partner or Assignee.
(c) Except as provided in Section 11.10(a), no Limited Partner may
withdraw from the Partnership without the written consent of each of the General
Partners, which consent may be granted or withheld in their sole discretion.
(d) With respect to any matter to be submitted to the vote of the
Partners pursuant to this Agreement, if a Limited Partner has assigned all of
its Units of Limited Partner Interest to a Person who is not then a Partner and
such Person shall not have become a Substituted Limited Partner because one or
more of the General Partners shall have refused to consent to the admission of
such Person as a Limited Partner of the Partnership, the transferring Limited
Partner shall be deemed to remain as a Limited Partner of the Partnership solely
for the purpose of exercising all rights other than any rights with respect to
allocations and distributions, including liquidating distributions of the
Partnership. Among other things, such transferring Limited Partner shall have
the right to vote on all matters submitted to a vote of the Partners, and shall
have the right to receive notice of meetings of the Partners. Such Units of
Limited Partner Interest shall be deemed to be outstanding for the purposes of
determining whether a Majority Vote has been obtained. Notwithstanding any
other provision of this Section 11.10(d), no Class C Limited Partner and, prior
to the occurrence of the Class C-1 Participation Event, no Class C-1 Limited
Partner shall have any rights with respect to matters submitted to a vote of the
Partners, except as provided in Section 13.04.
(e) Notwithstanding any other provision of this Article XI, no
Transfer of any Units of Class C Limited Partner Interest or Class C-1 Limited
Partner Interest (or any interest therein) shall be made (i) if such Transfer
(A) would violate the then applicable federal and state securities laws or rules
and regulations of the Securities and Exchange Commission, any state securities
commission or any other governmental authority with
95
jurisdiction over such transfer, (B) would affect the Partnership's existence or
qualification as a limited partnership under the Delaware RULPA, (C) would cause
the Partnership to be treated as an association taxable as a corporation for
federal income tax purposes, (D) would be to a Person who is not a "United
States person" (within the meaning of Section 7701(a)(30) of the Code), or a
Person who is subject to backup withholding under Section 3406 of the Code, or
(E) would cause the Partnership to be obligated to issue a Schedule K-1 (or
other "Tax Return" (as defined in the Field Agreement and Comcast Agreement)) to
more than three Persons in respect of the Units of Class C Limited Partner
Interest or to more than three Persons in respect of the Units of Class C-1
Limited Partner Interest, provided that the provisions of this clause (E) of
this Section 11.10(e) shall be waived by the Managing General Partner in its
reasonable discretion (which discretion may include the imposition of the fees
and expenses required to issue such additional Schedule K-1's or Tax Returns),
and (ii) unless, as a prior condition to such Transfer, the transferor or
transferee shall furnish the Partnership with an opinion of counsel with respect
to compliance with the conditions of clause (i) above, which counsel and form
and content of opinion shall be acceptable to the General Partners, in their
reasonable judgment.
(f) The General Partners hereby consent to the admission as a
Substituted Limited Partner of (i) a UBS Entity Transferee (as defined in
Section 11.03(i)) and (ii) a Third Party A-2 Transferee (as defined in Section
11.04(g)).
(g) If a Class A-2 Limited Partner Transfers any or all of its Units
of Limited Partner Interest to a Person in accordance with this Article XI and
such transferee is not a UBS A-2 Transferee, UBS Entity Transferee or a Third
Party A-2 Transferee, then the admission of such transferee as a Substituted
Limited Partner shall be subject to the prior written consent of only the
Managing General Partner (which consent may be given or withheld in its sole
discretion) and the other requirements of Section 11.10 (other than the
requirements of clause (iii) of the first sentence of Section 11.10(a)).
Section 11.11. Admission of Additional Partners.
(a) The Managing General Partner may, at any time or from time to
time, cause the Partnership to issue and sell any and all types of securities
of, or interests in, the Partnership (including without limitation securities or
interests of an equity nature and warrants, options or other rights with respect
to the acquisition thereof), whether or not such securities or interests are
senior or junior to, or of the same or substan-
96
tially the same priority as, any then outstanding securities or interests
(including without limitation any Class of Limited Partner Interests) and to
cause the Partnership to admit such additional Partners in connection therewith
for such reasonable purpose and consideration as the Managing General Partner
may determine in its reasonable discretion, exercised in good faith, provided
that in the event that such securities or interests are senior to the Class B
Limited Partner Interests and the issuance and sale of such securities or
interests would not have substantially the same economic effect on the Class A
Limited Partners, the Class B Limited Partners and, after the Class C-1
Participation Event, the Class C-1 Limited Partners, then such issuance and sale
shall also require the consent of the Administrative General Partner. Without
limiting the generality of the foregoing (including the proviso), the Managing
General Partner (i) may, at any time or from time to time, establish one or more
additional classes or groups of partners or partner interests in the Partnership
(including without limitation limited or general partners or partner interests
in the Partnership), having such relative rights, powers and duties (including
without limitation rights, powers and duties senior to existing classes and
groups of partners) as the Managing General Partner may so determine, (ii) may
convert (a) Units of General Partner Interest to Units of Limited Partner
Interest in order that the General Partners may Transfer Units of their Partner
Interest pursuant to, and subject to, the applicable provisions of this Article
XI, and (b) the Conversion Units into Units of Class A-1 Partnership Units at
any time when the Managing General Partner, Holdings or any Affiliate thereof
holds such Conversion Units and (iii) may cause the Partnership to issue
Treasury Units or New Units to Class B Limited Partners pursuant to Section
11.08 or Section 11.12, as the case may be. In the event that the Partnership
shall issue and sell any securities or interests to the Managing General Partner
or Holdings or any Affiliate thereof, the terms of such issuance and sale (i)
shall be at least as favorable to the Partnership as those that the Partnership
would have obtained from the issuance and sale of such securities or interests
in a transaction on an arm's-length basis with a Person not the Managing General
Partner or Holdings or an Affiliate thereof, and (ii) shall be subject to the
provisions of Section 11.11(g). Each of the Class A Limited Partners, Class B
Limited Partners and Class C-1 Limited Partners hereby agrees that the issuance
of the Conversion Units to Holdings pursuant to Section 8.1(c) of the Guaranteed
Note and this Agreement satisfy the provisions of the foregoing sentence.
(b) Any such Person who acquires an interest in the Partnership
pursuant to Section 11.11(a) shall be required, as a prior condition of his or
its admission to the Partnership as a
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Partner, to execute and deliver a counterpart of this Agreement. The admission
of such a Person as a Partner shall be effective when such Person is listed as a
Partner on the books and records of the Partnership and shall be effected
without the approval of any other Partner or Assignee.
(c) Pursuant to the Managing General Partner's authority pursuant to
this Section 11.11 (but subject to the provisions of Section 11.11(a) and
Article XIII), the Managing General Partner is authorized to make any and all
such amendments to this Agreement (including without limitation amendments with
respect to the provisions with respect to the allocation of distributions and
profits and losses to Partners or Assignees) that the Managing General Partner
determines, in its sole discretion, to be necessary, appropriate or desirable in
connection with effecting the issuance and sale of securities and interests
pursuant to the provisions of this Section 11.11, provided that no such
amendment shall (i) reduce, or change the method of determining, the Class C
Liquidation Preference or Class C Return or Class C-1 Liquidation Preference or
Class C-1 Return, (ii) amend the provisions of Section 6.05(a) or 6.05(f), (iii)
amend the provisions of Article XVI in such a manner that it would have a
material adverse effect on the Class C Limited Partners, including without
limitation the former Class C Limited Partners who are holders of, and with
respect to their interests in and rights with respect to, the Class C Exchange
Notes or (iv) amend the provisions of Article XVII in such a manner that it
would have a material adverse effect on the Class C-1 Limited Partners,
including without limitation the former Class C-1 Limited Partners who are
holders of and with respect to their interests in and rights with respect to the
Class C-1 Exchange Notes.
(d) The provisions of this Section 11.11 are in addition to the
Managing General Partner's authority with respect to the issuance of options,
rights or Units of Limited Partner Interest under any management incentive plan
or other employee benefit plan, as provided in Section 7.02(l).
(e) Except as otherwise expressly provided in Sections 11.11(a) and
(c) and 13.01(e), the provisions of this Section 11.11 are intended to grant the
Managing General Partner, and all the Partners hereby grant the Managing General
Partner, the maximum authority granted by the Delaware RULPA, including without
limitation the provisions of Sections 17-302 and 17-405 of the Delaware RULPA,
with respect to the creation of additional classes or groups of partners and
partnership interests (including without limitation a class or group of
partnership interests in the Partnership that was not previously outstanding)
without the vote or approval of any other Partner or class or group of
98
Partners, and the provisions of this Section 11.11 shall be construed in
accordance with such intent.
(f) Notwithstanding any provision in this Section 11.11 to the
contrary, the admission of an additional or successor General Partner or the
admission of an additional Limited Partner shall comply with the provisions of
Section 11.02 or Section 11.10, as the case may be, if such admission would have
the effect of constituting the Transfer of a Partner's Partner Interest.
(g) In the event that the Partnership proposes to issue and sell any
securities or interests to the Managing General Partner or Holdings or any
Affiliate of either such Person pursuant to this Section 11.11, the Partnership
shall notify UBS, each Class A-2 Limited Partner which has acquired Units of
Limited Partner Interest initially held by UBS, each Class B Limited Partner
then employed by the Partnership, each Preferred Interest Limited Partner and,
after the Class C-1 Participation Event, each Class C-1 Limited Partner (for the
purposes of this Section 11.11(g) individually, a "Participating Partner" and
collectively the "Participating Partners"), and each Participating Partner shall
have the right to purchase, upon the same terms of issuance and sale, an amount
of securities or interests which is equal to the product of (i) the aggregate
amount of securities or interests proposed to be issued and sold by the
Partnership to the Managing General Partner, Holdings and/or any Affiliate of
either such Person and (ii) a fraction, the numerator of which shall equal the
Units of Partner Interest then owned by such Participating Partner, and the
denominator of which shall equal the aggregate number of Units of Partner
Interest then outstanding (which, for purposes of this Section 11.11(g), shall
include the Put/Call Units and all Units issuable upon the exercise of
Performance Options, whether or not such Performance Options are then
exercisable). Such Participating Partner shall have the right to so purchase
such securities or interests, if it gives written notice to the Partnership
specifying the amount of such securities or interests as to which it desires to
purchase within ten days after the Partnership's notice pursuant to the
preceding sentence, and the closing of such purchase shall take place at the
principal office of the Partnership on a date chosen by the Partnership) which
date shall (except if the Partnership otherwise determines) be no later than the
later of (i) fifteen days after the Partnership's notice pursuant to the first
sentence of this Section 11.11(g) or (ii) the date of the purchase of such
securities or interests by the Managing General Partner or Holdings or any
Affiliate of either such Person.
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Section 11.12. Purchase of Additional Units Upon the Cash Settlement
of Performance Options.
(a) In the event that the Partnership elects to settle in cash (other
than pursuant to Section 11.08), or if there is a settlement by delivering
Permitted Securities, in accordance with the terms of the Management Option Plan
and as required by any other provision of this Agreement, with respect to, any
Performance Option exercisable by a Class B Limited Partner (the "Settling Class
B Limited Partner"), the Settling Class B Limited Partner shall have the right
to purchase from the Partnership, and the Partnership shall issue and sell to
the Settling Class B Limited Partner for cash, an aggregate number of Units of
Class B Limited Partner Interest (the "New Units") equal to the number of Units
with respect to which such Performance Option was settled in cash or Permitted
Securities, at a price per Unit equal to the Fair Market Value on the date of
such settlement (the "Settlement Date"). In the event that the Settling Class B
Limited Partner wishes to purchase any or all of the New Units, he shall provide
the Partnership with written notice specifying the number of New Units as to
which he desires to purchase within twenty days after the Settlement Date, and
the closing of the purchase of the New Units shall take place at the principal
office of the Partnership on a date chosen by the Partnership, which date shall
in no event be more than thirty days after the Settlement Date.
(b) The provisions of this Section 11.12 are in addition to (i) the
Managing General Partner's authority pursuant to Sections 7.02(l) and 11.11 and
(ii) the rights of the Class B Limited Partners to purchase Treasury Units
pursuant to Section 11.08(f).
Section 11.13. Participation by Barclays with respect to Put/Call
Units.
It is acknowledged that Barclays will be given notice of any offer
pursuant to Article XI hereof (other than Section 11.11(g)) to the same extent
that a Class A-2 Limited Partner would be entitled to receive such notice, and
that Barclays shall be permitted to participate in any such offer so long as it
shall notify the Partnership and the Managing General Partner, within seven days
of the Partnership's giving the notice of such offer pursuant to Article XI
hereof, of its intention to exercise its option pursuant to Section 1 of the Put
and Call Option Agreement and of its desire to participate in such offer. In the
event that Barclays so exercises its option pursuant to Section 1 of the Put and
Call Option Agreement and purchases the Put/Call Units at or prior to the
closing relating to such offer, the Pro
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Rata Shares of the Partners shall be adjusted accordingly to give effect to the
issued and outstanding Put/Call Units.
Section 11.14. Ownership of the Administrative General Partner.
(a) The Administrative General Partner represents and warrants to the
Partnership and the Partners that each stockholder of the Administrative General
Partner is a Class B Limited Partner.
(b) The Administrative General Partner agrees that in the event that
(i) a Class B Limited Partner shall Transfer all of its Units of Class B Limited
Partner Interest to the Partnership, any Partner or Partners or to any Person
(other than a "Permitted Transferee" which is not an "Estate" (as such terms are
defined in Section 11.03(e)) or (ii) a Class B Limited Partner ceases to be
employed by the Partnership for any reason whatsoever (whether due to such Class
B Limited Partner's death, disability, termination, resignation or retirement)
and such Class B Limited Partner's Units of Class B Limited Partner Interest are
purchased pursuant to Section 11.08, then at the request of the Partnership, the
Administrative General Partner shall exercise its rights under Section 3 of the
Administrative General Partner's Shareholders Agreement, dated as of September
4, 1992 and shall promptly repurchase all of such Class B Limited Partner's
shares of stock in the Administrative General Partner (except to the extent that
such shares are purchased by other stockholders of the Administrative General
Partner who are then employed by the Partnership).
(c) The Administrative General Partner agrees that the Shareholders
Agreement of the Administrative General Partner will at all times contain such
provisions as are necessary to comply with the Administrative General Partner's
obligations under Section 11.14(b) and that such Shareholders Agreement will not
be amended without the prior consent of the Partnership, if such amendment would
have the effect of eliminating or modifying (i) the Administrative General
Partner's obligations under Section 11.14(b) or (ii) a Class B Limited Partner's
obligation to offer his shares in the Administrative General Partner to the
other stockholders and the Administrative General Partner under the terms and
conditions specified in and pursuant to Section 3 of such Shareholders
Agreement.
(d) The Partnership agrees to lend the Administrative General Partner
such funds (upon such terms and conditions as may be reasonably agreed between
the Partnership and the Administrative General Partner) as the Administrative
General
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Partner may reasonably require to perform its obligations under Section
11.14(b).
Section 11.15. Certain Adjustments. In the event of a distribution
on Units of Partner Interest payable in Units or a split-up or a recombination
of Units of Partner Interest or other similar transaction, each Unit of Partner
Interest shall be appropriately adjusted in the same manner to give effect to
such transaction.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
Section 12.01. No Dissolution. The Partnership shall not be
dissolved by the admission of (i) a Substituted Limited Partner, (ii) additional
Partners in accordance with the terms of this Agreement, or (iii) successor
General Partners. The death, Bankruptcy or adjudicated incompetency of any
Limited Partner shall not in and of itself cause a dissolution of the
Partnership.
Section 12.02. Events Causing Dissolution. The Partnership shall be
dissolved and its affairs wound up upon the occurrence of any of the following
events:
(a) the expiration of the term of the Partnership, as provided in
Article IV;
(b) the withdrawal or Bankruptcy of a General Partner or a Transfer by
a General Partner of its entire interest in the Partnership or the occurrence of
any other event that results in a General Partner ceasing to be a general
partner of the Partnership under the Delaware RULPA unless, in any such case,
(i) at the time there is at least one remaining general partner of the
Partnership, who is hereby authorized to continue the business of the
Partnership without dissolution, and at least one such remaining general partner
does continue the business of the Partnership, or (ii) within ninety (90) days
after such event, all Partners agree in writing to continue the business of the
Partnership and to the appointment effective as of the date of such event of one
or more additional or successor general partners;
(c) the consent of the General Partners and the Majority Vote of the
Partners to dissolve the Partnership;
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(d) an incorporation of the Partnership pursuant to Section 3.03(a) or
Section 16.01;
(e) a Sale; or
(f) the entry of a decree of judicial dissolution under Section 17-802
of the Delaware RULPA.
Nothing contained in this Section 12.02 shall constitute or imply consent (where
consent would be necessary) to any voluntary action by any General Partner in
contravention of this Agreement which works a dissolution of the Partnership
under Section 12.02(b) or Section 12.02(f).
Section 12.03. Dissolution. Upon the dissolution of the Partnership,
the Liquidator (as defined in Section 12.04) or the Managing General Partner, as
the case may be, shall promptly notify the Partners of such dissolution.
Section 12.04. Liquidation. Upon the dissolution of the Partnership,
the Managing General Partner, or, in the event the dissolution is caused by an
event described in Section 12.02(b) and there is no other General Partner that
can be appointed Managing General Partner, a liquidating trustee approved by a
Majority Vote of the Partners (the "Liquidator"), shall wind up the affairs of
and liquidate the Partnership. The Liquidator or the Managing General Partner,
as the case may be, shall take all necessary or appropriate steps as it may
determine to collect all amounts then outstanding under any then outstanding
Promissory Notes of the Class B Limited Partners. The Liquidator or the
Managing General Partner, as the case may be, shall:
(a) first, pay (or make reasonable provision for the payment of) all
creditors of the Partnership, including Partners or Assignees who are creditors
but solely in their capacity as creditors, to the extent otherwise permitted by
law, in satisfaction of liabilities of the Partnership (other than liabilities
for distributions to Partners or Assignees) in the order of priority provided by
law;
(b) second, distribute to the Preferred Interest Limited Partners an
amount equal to the product of the then unpaid Preferred Interest Liquidation
Preference per Unit multiplied by the number of Units of Preferred Limited
Partner Interest owned by each such Partner;
(c) third, distribute, pari passu, (i) to the Class C Limited
Partners, an amount equal to the then unpaid Class C
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Liquidation Preference and, (ii) if the Class C-1 Participation Event shall not
have occurred, to the Class C-1 Limited Partners, an amount equal to the unpaid
Class C-1 Liquidation Preference; and
(d) fourth, distribute any remaining balance of the proceeds of
liquidation of the Partnership to the Partners (excluding the Preferred Interest
Limited Partners, the Class C Limited Partners, and, prior to the occurrence of
the Class C-1 Participation Event, excluding the Class C-1 Limited Partner) in
accordance with their respective positive Capital Accounts as determined after
all gains, profits, losses, deduction and credits shall have been allocated
pursuant to Sections 6.03 and 6.04 hereof, provided that any amount
distributable to a Class B Limited Partner shall be reduced by any unpaid
amounts due to the Partnership pursuant to such Class B Limited Partner's
Promissory Note. For purposes of this Section 12.04(d) only, in the event that
the Put/Call Units shall not previously have been issued and the Put and Call
Option Agreement shall still be in effect, Barclays shall receive distributions
pari passu with the distributions to the Partners in accordance with the Capital
Account of the Put/Call Units. In the event that the Partnership shall make a
distribution which consists of both non-cash property and cash, the Partnership
shall distribute, to the extent reasonably practicable in the Managing General
Partner's judgment, such property and cash in such a manner that each of the
Persons entitled to receive such distribution shall receive approximately the
same proportion of cash to such property.
In the event that, immediately prior to the liquidation and
dissolution of the Partnership, the General Partners have a deficit balance in
their Capital Accounts, the General Partners shall immediately contribute to the
capital of the Partnership an amount equal to the lesser of (i) such deficit
balance or (ii) the excess of 1.01% of the aggregate Capital Contributions of
the Limited Partners over the Capital Contributions previously made by the
General Partners.
A Liquidator, if one is approved by Majority Vote of the Partners,
shall be entitled to receive such compensation for its services as may be
approved by a Majority Vote of the Partners. The Liquidator shall agree not to
resign at any time without sixty (60) days prior written notice and may be
removed at any time, with or without cause, by written notice of removal
approved by a Majority Vote of the Partners. Upon dissolution, removal or
resignation of the Liquidator, a successor and substitute Liquidator (who shall
have and succeed to all rights, powers and duties of the original Liquidator)
shall be approved within ninety (90) days thereafter by a Majority Vote of the
Partners.
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The right to approve of a successor or substitute Liquidator in the manner
provided herein shall be recurring and continuing for so long as the functions
and services of the Liquidator are authorized to continue under the provisions
hereof, and every reference herein to the Liquidator will be deemed to refer
also to any such successor or substitute Liquidator approved in the manner
herein provided. Except as expressly provided in this Article XII, the
Liquidator approved in the manner provided herein shall have and may exercise,
without further authorization or approval of any of the parties hereto, all the
powers conferred upon the Managing General Partner under the terms of this
Agreement (but subject to all the applicable limitations, contractual and
otherwise, upon the exercise of such powers) to the extent necessary or
desirable in the good faith judgment of the Liquidator to carry out his or its
duties and functions hereunder (including the establishment of reasonable
reserves for liabilities that are contingent or uncertain in amount) for and
during such period of time as shall be reasonably required in the good faith
judgment of the Liquidator to complete the winding up and the liquidation of the
Partnership as provided for herein. In the event that no Person is selected to
be the Liquidator as herein provided within one hundred twenty (120) days
following the event of dissolution, or in the event that the Partners fail to
approve a successor or substitute Liquidator within the time periods set forth
above, any Limited Partner may make application to the Court of Chancery of the
State of Delaware to wind up the affairs of the Partnership and, if deemed
appropriate, to appoint a Liquidator and to establish its compensation.
Section 12.05. Termination of Partnership. Except as otherwise
provided in this Agreement, the Partnership shall terminate when all of the
assets of the Partnership, after payment of or due provision for all debts,
liabilities and obligations of the Partnership, shall have been distributed to
the Partners and Assignees as provided for in this Article XII, and the
Certificate of Limited Partnership shall have been cancelled in the manner
required by the Delaware RULPA.
ARTICLE XIII
AMENDMENTS
Section 13.01. Amendments To Be Adopted Solely by the Managing
General Partner. The Managing General Partner (pursuant to the Managing General
Partner's powers of attorney from the Partners and Assignees described in
Article XIV), without the approval of any other Partner or Assignee may amend
any provision of this Agreement, and execute, swear to, acknowledge, deliver,
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file and record all documents required or desirable in connection therewith, to
reflect only the following matters:
(a) a permitted change in the name of the Partnership or the location
of the principal place of business of the Partnership;
(b) the permitted admission, substitution, termination or withdrawal
of Partners in accordance with this Agreement;
(c) a change that is necessary or, in the reasonable opinion of the
Managing General Partner, advisable to (i) qualify the Partnership as a limited
partnership or a partnership in which the Limited Partners have limited
liability under the laws of any state or (ii) ensure that the Partnership will
not be treated as an association taxable as a corporation for federal income tax
purposes, provided that if such change would have a material adverse effect on
the Class C Limited Partners or, prior to the occurrence of a Class C-1
Participation Event, on the Class C-1 Limited Partners, no such change may be
made without the prior consent of the Class C Limited Partners or Class C-1
Limited Partners, as applicable;
(d) a change that is (i) of an inconsequential nature and does not
adversely affect the Administrative General Partner or any Limited Partner or
Assignee in any material respect; (ii) necessary or desirable to cure any
ambiguity, to correct or supplement any provision herein that would be
inconsistent with any other provision herein, or to make any other provision
with respect to matters or questions arising under this Agreement that will not
be inconsistent with the provisions of this Agreement, in each case so long as
such change does not adversely affect the Administrative General Partner or any
Limited Partner or Assignee; or (iii) necessary or desirable to satisfy any
requirements, conditions or guidelines contained in any opinion, directive,
order, ruling or regulation of any federal or state statute, so long as such
change does not adversely affect the Administrative General Partner or any
Limited Partner or Assignee; and
(e) a change that is necessary to implement the provisions of Section
3.03, 6.05 or 11.11, provided that no such amendment shall, (A) without the
consent of the Class C Limited Partners or the holders of the Class C Exchange
Notes, (i) reduce, or change the method of determining, the Class C Liquidation
Preference or Class C Return, (ii) amend the provisions of Section 6.05(a),
(iii) amend the provisions of Section 11.11(a) or (c), or (iv) amend the
provisions of Article XVI in such a manner that it would have a material adverse
effect
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on the Class C Limited Partners including without limitation their interests in
and rights with respect to the Class C Exchange Notes, (B) without the prior
written consent of the Class C-1 Limited Partner (which consent shall only be
required prior to the Class C-1 Participation Event) or the holders of the Class
C-1 Exchange Notes, (i) reduce, or change the method of determining, the Class
C-1 Liquidation Preference or Class C-1 Return, (ii) amend the provisions of
Section 6.05(f), (iii) amend the provisions of Section 11.11(a) or (c), or (iv)
amend the provisions of Article XVII in such a manner that it would have a
material adverse effect on the Class C-1 Limited Partners including without
limitation their interests in and rights with respect to the Class C-1 Exchange
Notes, and provided, further, that without the consent of the Administrative
General Partner, no such amendment shall be made if it would amend the
provisions of Section 3.03, Section 6.03 (except as permitted by Section 11.11),
Section 6.04 or 6.05 (if in any such case such amendment is occasioned by the
issuance of a new class of securities or interests under Section 11.11 and would
not have substantially the same economic effect on the Initial Partners, the
Class A-2 Limited Partners and the Class B Limited Partners), the last paragraph
of Section 7.02, Section 7.03, Section 7.05, Section 7.06, Section 7.08, Section
8.04, Section 9.01, Section 9.02, Section 10.01, Section 10.02, Section
11.03(c), (e) and (h), Section 11.04, Section 11.05, Section 11.06, Section
11.07(b), Section 11.08, Section 11.11(a), (c) and (e), Section 11.12, this
Section 13.01, Section 13.02, Section 13.03, Article XIV, Article XV (with
respect to the registration rights of the Class B Limited Partners) and Section
16.01, in each case (other than with respect to Section 6.03, 6.04 or 6.05) if
such amendment would have a material adverse effect on the Class B Limited
Partners.
Section 13.02. Amendment Procedures. Except as specifically provided
in Sections 13.01 and 13.03, all amendments to this Agreement shall be made
solely in accordance with the following requirements:
(a) If an amendment of this Agreement is proposed, the Managing
General Partner shall seek the written approval of the holders of the requisite
number of Partner Interests or call a meeting of the General and Limited
Partners (other than (i) the Class C Limited Partners or the holders of the
Class C Exchange Notes unless their consent is required, in which case it shall
be evidenced in writing and delivered to the Managing General Partner, (ii) the
Class C-1 Limited Partners prior to the Class C-1 Participation Event or the
Class C-1 Exchange Notes unless their consent is required, in which case it
shall be evidenced in writing and delivered to the Managing Partner or (iii) the
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Restricted Partners, if such voting rights would be limited or otherwise
restricted as set forth in the definition of "Majority Vote" contained herein).
A proposed amendment shall be effective upon its approval by the Majority Vote
of the Partners, provided that the consent of the Administrative General Partner
shall also be required to approve amendments described in the last proviso of
Section 13.01(e); and
(b) The Managing General Partner shall notify all Partners upon final
adoption of any proposed amendment. The Managing General Partner is hereby
authorized to execute such adopted amendment on behalf of the Limited Partners
and Assignees.
Section 13.03. Amendment Restrictions. Except as otherwise expressly
provided in Sections 3.03, 6.05 and 11.11 (notwithstanding the provisions of
Sections 13.01 and 13.02), no amendment to this Agreement shall be valid without
a unanimous vote of the General Partners and Limited Partners if such amendment
would (a) adversely affect the liability of any Limited Partner, (b) have an
effect on the provisions that allocate distributions and profits and losses to
any Partner or Assignee or on the voting rights of the Partners that is
materially adverse to any Limited Partner or General Partner unless each such
materially and adversely affected Partner consents in writing to such amendment,
(c) cause the Partnership to be treated as an association taxable as a
corporation for federal income tax purposes or (d) permit the substitution of a
Limited Partner without the consent of the General Partners or place limitations
on the General Partners' ability to grant or withhold their consent in their
sole discretion.
Section 13.04. Limitations on Voting Rights of Preferred Interest
Limited Partners, Class C Limited Partners and Class C-1 Limited Partners.
Subject to the provisions of Sections 11.02(b) and (c), 11.11(c) and the second
sentence of this Section 13.04, and except as expressly required by the Delaware
RULPA, no Preferred Interest Limited Partner, Class C Limited Partner or, prior
to the Class C-1 Participation Event, Class C-1 Limited Partner, shall have any
right to approve, consent to or vote on (i) any proposed amendment to this
Agreement, or (ii) any other action (including without limitation an
incorporation of the Partnership pursuant to Article XVI hereof) which may
require the approval, consent or vote of the Limited Partners. Notwithstanding
any other provision of this Agreement, to the extent that (i) the Delaware RULPA
expressly requires that any amendment to this Agreement be approved, consented
to or voted upon by the Preferred Interest Limited Partners, Class C Limited
Partners or Class C-1 Limited Partners, (ii) any
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provision of this Agreement expressly requires or expressly provides for the
approval or consent of the Preferred Interest Limited Partners, Class C Limited
Partners or Class C-1 Limited Partners, or (iii) any provision of this Agreement
requires that any Partner or the Partnership take or refrain from taking any
action so long as any Class C Exchange Notes or Class C-1 Exchange Notes are
outstanding or so long as a Class C Limited Partner or Class C-1 Limited Partner
has or holds a specified interest in the Partnership, including without
limitation as a holder of Units of such Limited Partner Interests or such
Exchange Notes, then, in each such case, the written consent of such Limited
Partners or the holders of such Exchange Notes, as the case may be, shall be
required prior to any such amendment, approval or consent or any amendment,
waiver or modification affecting the provisions referred to in clause (ii) and
(iii) hereof, if such amendment, waiver or modification would (i) reduce, or
change the method of determining, the Preferred Interest Liquidation Preference
or Preferential Return, (ii) reduce, or change the method of determining, the
Class C Liquidation Preference or Class C Return, Class C-1 Liquidation
Preference or Class C-1 Return, (iii) amend the provisions of Section 6.05(a) or
6.05(f), (iv) amend the provisions of Article XVI in such a manner that it would
have a material adverse effect on the Class C Limited Partners, including
without limitation their interests in and rights with respect to the Class C
Exchange Notes, (v) amend the provisions of Article XVII in such a manner that
it would have a material adverse effect on the Class C-1 Limited Partners,
including without limitation their interests in and rights with respect to the
Class C-1 Exchange Notes, or (vi) amend the provisions of Article XIX in such a
manner that it would have a material adverse effect on the Preferred Interest
Limited Partners. The Preferred Interest Limited Partners, Class C Limited
Partners and Class C-1 Limited Partners, as applicable, will be deemed to have
so approved or consented to such amendment, action, waiver or modification, upon
the written approval by or consent of a majority of the outstanding Units of the
Preferred Limited Partner Interest, Class C Limited Partner Interest or Class
C-1 Limited Partner Interest, as applicable. The holders of the Class C Exchange
Notes and Class C-1 Exchange Notes will be deemed to have so approved or
consented upon the written approval by or consent of the holders of the Class C
Exchange Notes and Class C-1 Exchange Notes representing a majority of the
outstanding aggregate principal amount of the Class C Exchange Notes and Class
C-1 Exchange Notes, as applicable. In addition, if the Partnership shall have
failed to retire the Class C-1 Limited Partner Interests at the time required
pursuant to Section 17.02(c) or shall have failed to pay the Class C-1 Exchange
Notes on their "Maturity Date" then, so long as such default shall continue, the
holders of
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Class C-1 Partnership Units or Class C-1 Exchange Notes, as the case may be,
shall have such voting rights as such holders would have had if the Class C-1
Participation Event had occurred immediately prior to such default.
Section 13.05. Further Amendment Restrictions.
(a) Any amendment to this Agreement (i) with respect to the provisions
of Section 3.03, Article V, Article VI, Section 8.01, Section 11.06(e), Section
11.10(g), Section 11.11(g), Section 12.04, Article XIII, Section 15.01(c),
Section 16.01, Section 16.05, Section 17.05, Section 18.09 or the definitions
set forth in Article I of Fair Market Value, Majority Vote, Restricted Partner
or Transfer Event, (ii) affecting the rights of the holders of Class A-2 Limited
Partner Interests to transfer, sell or otherwise dispose of Units of Partner
Interest (including, without limitation, rights to participate with others in
sales or transfers initiated by others and rights of any transferee of a Unit of
Class A-2 Limited Partner Interest to be admitted to the Partnership as a
Limited Partner) or create additional requirements in connection with or
restrictions on any such transfer or adversely affect any rights of a holder of
Units of Class A-2 Limited Partner Interest with respect to transfers by others
of Partner Interests, (iii) with respect to the dissolution of the Partnership
under Section 12.02(c) of this Agreement, or (iv) affecting the rights or
privileges of the Class A-2 Limited Partners without having a corresponding and
at least equal adverse effect on the other Class A Limited Partners, shall not
be effective if such amendment would significantly and adversely affect the
Class A-2 Limited Partners, unless the holders of a majority of the outstanding
Units of Class A-2 Limited Partner Interest consent thereto.
(b) The consent of Barclays shall be required for any amendment to (i)
the provisions of the last sentence of Section 11.11(a), (ii) the provisions of
Section 11.13, (iii) the provisions of the last sentence of Section 17.02, (iv)
the provisions of the first three sentences of Section 17.09, or (v) the
definitions set forth in Article I of Specified Debt or Specified Debt
Agreements.
(c) Without the consent of all the Class C Limited Partners or the
holders of all the Class C Exchange Notes, for so long as any Units of Class C
Limited Partner Interest or any Class C Exchange Note shall be outstanding, the
Partnership shall not enter into any amendment, modification or restatement of
or supplement to the Barclays Letter Agreement, the Put and Call Option
Agreement or the Indemnification Agreement if the effect thereof would be to (i)
reduce, or change the method of deter-
110
mining, the Class C Liquidation Preference or Class C Return, (ii) amend the
provisions of Section 6.05(a), (iii) amend the provisions of Section 11.11(a) or
(c), (iv) amend the provisions of this Section 13.05(c), (v) amend the
provisions of Article XVI, (vi) amend the provisions of the first three
sentences of Section 18.09, in such a manner that it would have a material
adverse effect on the Class C Limited Partners, including without limitation
their interests in and rights with respect to the Class C Exchange Notes, or
(vii) amend the definitions set forth in Article I of Specified Debt or
Specified Debt Agreements.
(d) Prior to the occurrence of the Class C-1 Participation Event,
without the consent of all the Class C-1 Limited Partners or the holders of all
the Class C-1 Exchange Notes, for so long as any Units of Class C-1 Limited
Partner Interest or any Class C-1 Exchange Note shall be outstanding, the
Partnership shall not enter into any amendment, modification or restatement of
or supplement to the Barclays Letter Agreement, the Put and Call Option
Agreement or the Indemnification Agreement if the effect thereof would be to (i)
reduce, or change the method of determining, the Class C-1 Liquidation
Preference or Class C-1 Return, (ii) amend the provisions of Section 6.05(f),
(iii) amend the provisions of Section 11.11(a) or (c), (iv) amend the provisions
of this Section 13.05(d), (v) amend the provisions of Article XVII, (vi) amend
the provisions of the first three sentences of Section 18.09, in such a manner
that it would have a material adverse effect on the Class C-1 Limited Partners,
including without limitation their interests in and rights with respect to the
Class C-1 Exchange Notes, or (vii) amend the definitions set forth in Article I
of Specified Debt or Specified Debt Agreements.
ARTICLE XIV
POWER OF ATTORNEY
Subject to the provisions of the second paragraph of this Article XIV,
each Partner and each Assignee as provided herein (including any additional or
Substituted Limited Partners) hereby irrevocably constitutes, appoints and
empowers the Managing General Partner (and any successor by merger, transfer,
election or otherwise) and any Liquidator, as the true and lawful agent and
attorney-in-fact, with full power and authority in his name, place and stead to
make, execute, verify, consent to, swear to, acknowledge, make oath as to,
publish, deliver, file and/or record in the appropriate public offices solely in
such Partner's capacity as a partner of the Partnership and not in any
individual capacity of such Partner (i) all certificates and other
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instruments including, at the option of the Managing General Partner, this
Agreement and the Certificate of Limited Partnership and all amendments and
restatements thereof, that the Managing General Partner reasonably deems
appropriate or necessary to form and qualify, or continue the qualification of,
the Partnership as a limited partnership (or a partnership in which the Limited
Partners have limited liability) in the State of Delaware and all jurisdictions
in which the Partnership may or may intend to conduct business or own property;
(ii) all other certificates, instruments and documents as may be requested by,
or may be appropriate under the laws of, any state or other jurisdiction in
which the Partnership may or may intend to conduct business or own property;
(iii) all instruments that the Managing General Partner (or the Liquidator, as
the case may be) reasonably deems appropriate or necessary to reflect any
conveyances and other instruments or documents, including a Certificate of
Cancellation, that the Managing General Partner (or the Liquidator, as the case
may be) reasonably deems appropriate or necessary to reflect any amendment,
change or modification of this Agreement in accordance with the terms hereof;
(iv) all conveyances and other instruments or documents that the Managing
General Partner (or the Liquidator, as the case may be) reasonably deems
appropriate or necessary to effectuate or reflect the dissolution, winding up of
affairs, liquidation and termination of the Partnership pursuant to the terms of
this Agreement; (v) any and all financing statements, continuation statements,
mortgages or other documents necessary to grant to or perfect for secured
creditors of the Partnership, including the Managing General Partner and its
Affiliates, a security interest, mortgage, pledge or lien on all or any of the
assets of the Partnership; (vi) all instruments or papers required to continue
the business of the Partnership pursuant to Article XII; (vii) all instruments
(including this Agreement and the Certificate of Limited Partnership and
amendments and restatements thereof) relating to the admission of any Partner
pursuant to Article XI, and relating to any duly adopted amendment; (viii) any
conveyances, instruments, papers or other documents that the Managing General
Partner reasonably deems appropriate or necessary to effectuate or reflect the
incorporation of the Partnership pursuant to the terms of this Agreement; and
(ix) all other instruments as the attorneys-in-fact or any one of them may
reasonably deem necessary or advisable to carry out fully the provisions of this
Agreement in accordance with its terms.
Nothing herein contained shall be construed as authorizing any Person
acting as attorney-in-fact pursuant to this Article XIV to take action as an
attorney-in-fact for any Partner, to increase in any way the liability of such
Partner beyond the liability expressly set forth in this Agreement or to
112
take any action for such Partner that would require such Partner's express
approval or consent under the terms of this Agreement or that is not consistent
with the terms of this Agreement.
The appointment by each Partner and each Assignee of the Persons
designated in this Article XIV as attorneys-in-fact is a power of attorney
coupled with an interest in recognition of the fact that each of said Persons
will be relying upon the power to act pursuant to this power of attorney for the
orderly administration of the affairs of the Partnership. The foregoing power
of attorney is hereby declared to be irrevocable, and it shall survive, and
shall not be affected by, the subsequent death, incompetency, dissolution,
disability, incapacity, Bankruptcy or termination of any Partner or Assignee and
it shall extend to such Person's heirs, successors and assigns. Each Partner or
Assignee hereby waives any and all defenses that may be available to contest,
negate or disaffirm the action taken as attorney-in-fact under this power of
attorney in accordance with this Agreement. Each Partner or Assignee shall
execute and deliver to the Managing General Partner, within fifteen (15) days
after receipt of the Managing General Partner's request therefor, all such
further designations, powers of attorney and other instruments as the Managing
General Partner reasonably deems necessary to effectuate this Agreement and the
purposes of the Partnership, subject to the terms hereof.
ARTICLE XV
REGISTRATION RIGHTS
Section 15.01. Required Registration by Holdings; Partnership
Registration.
(a) Upon the written request of Holdings or the Managing General
Partner that the Partnership effect registration of any or all of the Units of
Partner Interest owned by the Managing General Partner or the Class A-1 Limited
Partners, which request complies with the requirements of this Article XV (a
"Holdings Registration Request"), the Partnership will use its best efforts to
effect, as promptly as practicable (but in no event later than 120 days after
the Partnership receives such request), the registration under the 1933 Act of
such Units of Partner Interest that may be included therein pursuant to this
Article XV, all to the extent necessary to permit disposition of such Units of
Partner Interest pursuant to a registered public offering. If the Partnership
shall receive a Holdings Registration Request or shall determine to effect any
regis-
113
tration of equity securities under the 1933 Act pursuant to a registration
statement on Form S-1 (or its equivalent if such form is not in effect or on an
alternative form if such alternative form is then authorized for the sale to the
public of the Partnership's securities in an unlimited amount and such form
would permit registration of securities for sale by or on behalf of Partners),
the Partnership will, at its expense (which shall include, without limitation,
all registration and filing fees, printing and mailing expenses, fees and
disbursements of counsel and independent accountants for the Partnership, fees
and expenses incident to compliance with state securities laws, fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, and fees and expenses of any special experts retained in connection
with the requested registration, but shall exclude fees and disbursements of
counsel to any Partner, underwriting discounts and commissions and transfer
taxes, if any, properly allocable to securities included in such registration
statement by any person other than the Partnership):
(i) promptly give written notice thereof to each Class A
Limited Partner, Class B Limited Partner and Class C-1 Limited Partner, who
is an owner of record (for purposes of this Article XV only, a "Holder") of
Limited Partner Interests and to the holders of the Class C-1 Participation
Option and each Preferred Interest Limited Partner;
(ii) subject to Section 15.02, include in the registration (in
addition to those Units of Partner Interest included by the Partnership,
Holdings or the Managing General Partner) such portion of the Partner
Interests held by the Holders as shall be specified in a written request or
requests received by the Partnership from such Holders within 15 days after
the date upon which the Partnership gave the aforementioned notice and,
upon receipt of any such written request and in respect of Partner
Interests in such request, take the actions specified in clauses (iii)
through (xii) below (the Partner Interests as to which registration is so
requested, including those as to which Holdings or the Managing General
Partner requests registration, if applicable, being referred to herein as
"Securities");
(iii) use its best efforts to effect registration, qualification
or compliance under the 1933 Act and under any other applicable federal law
and any applicable securities or blue sky laws of such jurisdictions within
the United States (such action being
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herein called a "Filing" or the "Filings") of the Securities as the
Holders of at least 10% thereof may request and to obtain all such
licenses or permits or amendments to such existing licenses and
permits as shall be necessary to enable the Partnership to continue
the production, distribution and marketing of its products following
any public offering of Securities pursuant to such Filings; provided,
however, that in no event shall the Partnership be obligated to
qualify to do business in any jurisdiction where it is not so
qualified or to take any action that would subject it to tax or the
service of process (other than process in connection with such
registration) in any state where it is not subject thereto;
(iv) furnish to each Holder of Securities such number of copies
of such registration statement and of each amendment and supplement
thereto (in each case including all exhibits), the prospectus in the
registration statement filed under the 1933 Act (including each
preliminary and summary prospectus) in conformity with the
requirements of the 1933 Act and such other documents as such Holder
may reasonably request in order to facilitate the disposition of the
Securities covered by the registration statement;
(v) notify each Holder of Securities, at any time when a
prospectus relating to the Securities covered by such registration
statement is required to be delivered under the 1933 Act, of the
Partnership's becoming aware that the prospectus in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, and at the request of any Holder of Securities, prepare
and furnish to such Holder any reasonable number of copies of any
supplement to or amendment of such prospectus necessary so that, as
thereafter delivered to any purchaser of the Securities, such
prospectus, as so amended, shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(vi) prepare and file with the Securities and Exchange
Commission (the "SEC") such amendments and supplements to such
registration statement and the prospectus used in connection therewith
as may be neces-
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sary to keep such registration statement effective for such period not to
exceed 120 days as any Holder of Securities shall request and to comply
with the provisions of the 1933 Act with respect to the sale or other
disposition of all Securities covered by such registration statement during
such period;
(vii) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earning statement covering
the period of twelve months beginning not later than the first day of the
Partnership's first calendar quarter after the effective date of the
registration statement, which earning statement shall satisfy the
provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder;
(viii) use its best efforts to cause all Securities covered by such
registration statement to be listed on the principal securities exchange on
which similar equity securities issued by the Partnership are then listed
or eligible for listing, if the listing of such Securities is then
permitted under the rules of such exchange;
(ix) provide a transfer agent and registrar for all Securities covered
by such registration statement not later than the effective date of such
registration statement;
(x) in connection with any underwritten offering, enter into an
underwriting agreement with the underwriter of such offering in the form
customary for such underwriter for similar offerings, including such
representations and warranties by the Partnership, provisions regarding the
delivery of opinions of counsel for the Partnership and accountants'
letters, provisions regarding indemnification and contribution, and such
other terms and conditions as are at the time customarily contained in such
underwriter's underwriting agreements for similar offerings (and, at the
request of any Holder of Securities that are to be distributed by such
underwriter(s), any or all (as requested by such Holder) of the
representations and warranties by, and the other agreements on the part of,
the Partnership to and for the benefit of such underwriter(s) shall also be
made to and for the benefit of such Holder);
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(xi) upon receipt of such confidentiality agreements as the
Partnership may reasonably request, make available for inspection by any
Holder of Securities and by any attorney, accountant or other agent
retained by any such Holder, all pertinent financial and other records,
pertinent partnership or corporate documents and properties of the
Partnership and its Subsidiaries, and cause all of the Partnership's and
its Subsidiaries' general partners, officers, directors and employees to
supply all information reasonably requested by any such Holder, attorney,
accountant or agent in connection with such registration statement; and
(xii) permit any Holder of Securities, any other Partner or any
holder of Class C Exchange Notes or Class C-1 Exchange Notes who, in the
sole judgment, exercised in good faith, of the Managing General Partner,
might be deemed to be a controlling person of the Partnership, to
participate in the preparation of such registration or comparable statement
and to require the insertion therein of material, furnished to the
Partnership in writing, that in the judgment of the Managing General
Partner, as aforesaid, should be included.
Except in connection with a registration to be effected pursuant to a
Holdings Registration Request, the Partnership may, at its election at any time
after giving written notice of its intention to effect a registration of
Securities and prior to the effective date of the registration statement filed
in connection with such registration, if it shall determine for any reason not
to register such Securities, give written notice of such determination to each
Holder of Securities and thereupon it shall be relieved of its obligation to
register any Securities (but not of its obligation to pay registration
expenses).
(b) Anything to the contrary contained herein notwithstanding, (i) the
Partnership shall not be obligated to file a registration statement pursuant to
a Holdings Registration Request within a period of six months after the
effective date of any other registration statement of the Partnership (other
than registration statements on Form S-4 or Form S-8, or any successor or
similar forms), (ii) the Partnership may postpone filing a registration
statement pursuant to a Holdings Registration Request for a reasonable period
(not in excess of 90 days) if in its judgment such filing would require the
disclosure of material information that the Partnership has a bona fide business
purpose for preserving as confidential, (iii) the Partnership shall not be
required to register any Class C-1 Partnership Interest prior
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to the Class C-1 Participation Event, (iv) the Partnership shall not be required
to give notice under Section 15.01(a)(i) to the Class C-1 Limited Partners after
the first such notice if such first notice is followed by delivery of the Notice
of Election pursuant to Section 17.06(a) prior to the Class C-1 Preference
Election Date (and from and after the timely delivery of such Notice of
Election, the Class C-1 Limited Partners shall not be "Holders" for purposes of
this Article XV and shall have no further rights under Section 15.01(a)), and
(v) each Class A Limited Partner and Class B Limited Partner shall only have
rights as a "Holder" under this Article XV with respect to the Class A Limited
Partner Interests and Class B Limited Partner Interests, respectively, owned by
such Limited Partner, and shall not have any rights whatsoever under this
Article XV with respect to any other Units of Partner Interest owned by such
Limited Partner.
(c) The Partners acknowledge that (i) the Managing General Partner
shall be entitled to participate in any registration pursuant to this Article XV
on substantially the same terms, and be entitled to substantially the same
registration rights, as the Class A-1 Limited Partners and (ii) the
Administrative General Partner shall be entitled to participate in any
registration pursuant to this Article XV on substantially the same terms, and be
entitled to substantially the same registration rights, as the Class B Limited
Partners, and the Partners hereby authorize the Managing General Partner to take
such action as may be reasonably required, in the judgment of the Managing
General Partner, to effectuate the provisions of this Section 15.01(c),
including, without limitation, the conversion of Units of General Partner
Interest to Units of Limited Partner Interest. The Partners also acknowledge
that only the Managing General Partner or Holdings shall have the right to make
a Holdings Registration Request, but upon a Holdings Registration Request being
made, a Class A-2 Limited Partner shall be entitled to participate in a Holdings
Registration Request on the same terms as the Class A-1 Limited Partners.
(d) Unless otherwise required by applicable securities laws and
disclosure requirements, any registration statement or prospectus of the
Partnership pursuant to this Article XV shall not disclose the identity of the
Class C Limited Partners or the holders of the Class C Exchange Notes. To the
extent that, in the reasonable judgment of the Partnership or the Managing
General Partner, such disclosure is required, the Class C Limited Partners or
the holders of the Class C Exchange Notes shall have the right to review and
approve such disclosure with respect to the Class C Limited Partners or the
holders of the Class C Exchange Notes, which approval shall not be unreasonably
withheld
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by the Class C Limited Partners or the holders of the Class C Exchange Notes.
Section 15.02. Limitation on Registration. If the Partnership's
offering is underwritten, Holders of Securities shall sell such Securities to or
through the underwriter or underwriters of the Securities being registered for
the account of the Partnership and/or the Class A Limited Partners or the
Managing General Partner upon terms generally comparable to the terms applicable
to the Partnership and/or the Class A Limited Partners or the Managing General
Partner, and if any lead underwriter reasonably determines that the number of
Securities included in the registration statement exceeds the number (the
"Saleable Number") that can be sold in an orderly fashion within a price range
acceptable to the Partnership, if such registration is being effected at the
Partnership's determination, or all of the Securities of the Class A Limited
Partners and the Managing General Partner, if such registration is being
effected pursuant to a Holdings Registration Request, then the number of
Securities that the Partnership and the Holders of Securities will be permitted
to include in such registration statement will be allocated as follows: (i)
first, all the securities of the Partnership, if such registration is being
effected at the Partnership's determination, or all of the Securities of the
Class A Limited Partners and the Managing General Partner, if such registration
is being effected pursuant to a Holdings Registration Request (provided that if
such registration is the initial public offering with respect to securities of
the Partnership, then the allocation with respect to the Securities of the Class
A Limited Partners and the Managing General Partner shall be governed by clause
(ii) below), and (ii) second, the difference between the Saleable Number and the
number, if any, to be included pursuant to clause (i) hereof, allocated among
all Holders of Securities pro rata on the basis of the relative number of
Securities held by each such Holder not included pursuant to clause (i) hereof.
If as a result of the proration provisions of this Section 15.02, any Holder of
Securities is not entitled to include all such Securities in such registration,
such Holder may elect to withdraw his request to include any Securities in such
registration (a "Withdrawal Election"); provided, however, that a Withdrawal
Election shall be irrevocable and a Holder of Securities who has made a
Withdrawal Election shall no longer have any right to include any Securities in
the registration as to which such Withdrawal Election was made. The number of
Securities required to satisfy any underwriters' overallotment option shall be
allocated pro rata among the Partnership and all Holders of Securities on the
basis of the relative number of Securities otherwise to be included by each of
them in the registration.
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It is acknowledged that to the extent any of the terms of this Article
XV (including without limitation this Section 15.02) are inconsistent with the
terms of the Barclays Letter Agreement, the terms of the Barclays Letter
Agreement shall, as to the rights and obligations of Barclays, control.
It is also acknowledged that, subject to the terms of the Barclays
Letter Agreement (including without limitation the provisions of Section 2
thereof), Holders of Securities shall be entitled to participate in any
registrations requested by Barclays pursuant to the Barclays Letter Agreement,
but the provisions of Sections 15.03, 15.04 and 15.05 shall otherwise govern the
rights and obligations of the Holders of Securities other than Barclays (the
"Non-Barclays Holders") with respect to any such registration. For purposes of
determining the allocation of Securities among the Non-Barclays Holders in any
registration which is the subject of the Barclays Letter Agreement, the
provisions of Section 2 of the Barclays Letter Agreement shall first govern, and
the remaining Securities shall be allocated as the Non-Barclays Holders shall
reasonably agree to give effect to the provisions of this Section 15.02,
provided that any such allocation among the Initial Partners and UBS (or such
other UBS Entity which shall then be a Class A-2 Limited Partner) shall be pro
rata on the basis of the relative number of Securities held by such Initial
Partners and UBS (or such other UBS Entity which shall then be a Class A-2
Limited Partner).
Section 15.03. Limitations on Sales Before or After Registration. If
requested in writing by the Partnership or the lead underwriter, if any, of any
offering effected pursuant to this Article XV, the Partnership and each Partner
owning of record more than 1% of the Partner Interests then outstanding
(including Partner Interests that a Partner has the right to acquire upon
exercise of Performance Options or otherwise) agrees not to effect any public
sale or distribution, including any sale pursuant to Rule 144 under the 1933
Act, of any Partner Interests (other than as part of such underwritten public
offering) within 7 days before or 120 days after the effective date of a
registration statement filed pursuant to this Article XV.
Section 15.04. Cooperation by Holders.
(a) As a condition to including any Holder's Securities in a
registration, the Partnership may require (i) that such Holder furnish to the
Partnership such information regarding such Holder and the contemplated
distribution of such Holder's Securities as is required to be included in the
registration statement, and (ii) that such information be furnished to the
Partnership in writing and signed by such Holder and stated to be specifically
120
for use in the related registration statement, prospectus, offering circular or
other document incident thereto. Except for the foregoing and as otherwise
provided by Section 15.05, Holders of Securities shall not be required to make
any representations or warranties to or agreements with the Partnership or the
underwriters as a condition to the inclusion of such Securities in a
registration.
(b) Each Holder of Securities shall, upon receipt of any notice from
the Partnership pursuant to Section 15.01(a)(v), forthwith discontinue
disposition of Securities pursuant to the registration statement covering such
Securities until such Holder's receipt of copies of the supplemented or amended
prospectus contemplated by Section 15.01(a)(v) and, if so directed by the
Partnership, such Holder shall deliver to the Partnership (at the Partnership's
expense) all copies other than permanent file copies then in such Holder's
possession, of the prospectus covering such Securities that was in effect prior
to such amendment or supplement. In the event the Partnership shall give any
such notice, the period set forth in Section 15.01(a)(vi) shall be extended by
the number of days elapsed from and including the date of the giving of such
notice pursuant to Section 15.01(a)(v) to and including the date on which each
Holder of Securities covered by such registration statement shall have received
the copies of the supplemented or amended prospectus contemplated by Section
15.01(a)(v).
Section 15.05. Indemnification.
(a) In the event of the filing of any registration statement
under the 1933 Act with respect to the Securities pursuant to this Article XV,
the Partnership will indemnify and hold each Holder of Securities participating
in such registration and the directors, officers, partners and controlling
persons (within the meaning of the 1933 Act ("Controlling Persons")) of each
such Holder, the Class C Limited Partners and the holders of the Class C
Exchange Notes, the Class C-1 Limited Partners and the holders of the Class C-1
Exchange Notes (each, a "Partner Indemnitee") harmless from and against any
losses, claims, damages or liabilities, joint or several, to which each such
Partner Indemnitee may become subject under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained, on the effective date thereof, in any
registration statement under which the Securities were registered under the 1933
Act, any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material
121
fact required to be stated therein or necessary to make the statements therein
not misleading, or arise out of or are based upon the failure by the Partnership
to file any amendment or supplement thereto that was required to be filed under
the 1933 Act, and will reimburse each such Partner Indemnitee for any legal or
any other expenses reasonably incurred by such Partner Indemnitee in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Partnership will not be liable to any
Partner Indemnitee in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made (i) in such
registration statement, preliminary prospectus, final prospectus or amendment or
supplement in reliance upon and in conformity with written information furnished
to the Partnership through an instrument duly executed by such Partner
Indemnitee specifically for use in the preparation thereof or (ii) in any
preliminary prospectus or any final prospectus later amended or supplemented if
(A) such Partner Indemnitee failed to deliver a copy of the final prospectus or
the final prospectus as then amended or supplemented, as the case may be, to the
Person asserting such loss, claim, damage or liability at or prior to the
written confirmation of such sale, (B) such delivery was required by the 1933
Act and (C) the untrue statement or alleged untrue statement or omission or
alleged omission in such preliminary prospectus or final prospectus was
corrected in the final prospectus or the final prospectus as then amended or
supplemented, respectively. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any such Partner
Indemnitee and shall survive the transfer of such Securities.
Each Holder of Securities agrees that if such Holder requests the
inclusion of Securities in a registration, such Holder will execute, and the
Partnership's obligation to take any action pursuant to Section 15.01(a) hereof
is specifically conditioned on the Partnership's receipt of, an undertaking
satisfactory to the Partnership to indemnify and hold harmless (in the same
manner and to the same extent as set forth in the preceding paragraph of this
Section 15.05), the Partnership, all other Holders of Securities and any
underwriter of such offering, and their respective directors, officers, partners
and Controlling Persons (for purposes of this Article XV, each an "Indemnitee"),
with respect to any untrue statement or alleged untrue statement of any material
fact contained, on the effective date thereof, in any registration statement
under the 1933 Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto or any omission or alleged
omission to state therein a material fact required to be stated therein or
122
necessary to make the statements therein not misleading if such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Partnership through an instrument duly executed by such Holder
of Securities specifically for use in the preparation of such registration
statement, preliminary prospectus or final prospectus or amendment or
supplement; provided, however, that such Holder will not be liable in any such
case to any Indemnitee to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission in any preliminary prospectus or any
final prospectus later amended or supplemented if (i) such Indemnitee failed to
deliver a copy of the final prospectus or the final prospectus as then amended
or supplemented, as the case may be, to the Person asserting such loss, claim,
damage or liability at or prior to the written confirmation of such sale, (ii)
such delivery was required by the 1933 Act and (iii) the untrue statement or
alleged untrue statement or omission or alleged omission in such preliminary
prospectus or final prospectus was corrected in the final prospectus or the
final prospectus as then amended or supplemented, respectively. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of any such Indemnitee and shall survive the transfer of such
Securities.
As soon as possible after receipt by an indemnified party hereunder of
written notice of the commencement of any action or proceeding with respect to
which a claim for indemnification may be made pursuant to this Section 15.05,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action; provided that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding paragraphs of this Section 15.05, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice. If
any such claim or action shall be brought against an indemnified party, and it
shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein, and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party; provided that the
indemnifying party shall not be entitled to so participate or so assume the
defense if, in the indemnified party's reasonable judgment, a conflict of
interest between the indemnified party and the indemnifying party exists in
respect of such claim. After notice from the indemnifying party to such
indemnified party of its election to assume the defense of such claim or action,
the indemnifying party shall not
123
be liable to the indemnified party under this Section 15.05 for any legal or
other expenses subsequently incurred by the indemnified party in connection with
the defense thereof; provided, however, that an indemnified party shall have the
right to employ one counsel to represent such indemnified party and its
officers, directors, partners and Controlling Persons if, in such indemnified
party's reasonable judgment, a conflict of interest between such indemnified
parties and the indemnifying parties exists in respect of such claim, and in
that event the fees and expenses of such separate counsel shall be paid by the
indemnifying party; and provided, further, that if, in the reasonable judgment
of any indemnified party, a conflict of interest between such indemnified party
and any other indemnified parties exists in respect of such claim, such
indemnified party shall be entitled to additional counsel or counsels and the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels. No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to all
indemnified parties of a release from all liability in respect of such claim or
litigation.
Indemnification similar to that specified in the preceding paragraphs
of this Section 15.05 (with appropriate modifications) shall be given by the
Partnership and, at the Partnership's request, by each Holder of Securities with
respect to any required registration or other qualification of securities under
any state securities and "blue sky" laws.
If the indemnification provided for in this Section 15.05 is
unavailable or insufficient to hold harmless an indemnified party, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first two paragraphs of this Section 15.05 in such proportion
as is appropriate to reflect the relative fault of the indemnifying party on the
one hand and the indemnified party on the other hand in connection with
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
indemnifying party or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statements or omission. The parties hereto agree that it would not be
just and equitable if contributions pursuant to this paragraph were to be
determined by pro rata allocation or by any
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other method of allocation which does not take account of the equitable
considerations referred to in the first sentence of this paragraph. The amount
paid by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this paragraph shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim (which
shall be limited as provided in the third paragraph of this Section 15.05 if the
indemnifying party has assumed the defense of any such action in accordance with
the provisions thereof) which is the subject of this paragraph. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. Promptly after receipt by an indemnified
party under this paragraph of notice of the commencement of any action against
such party in respect of which a claim for contribution may be made against an
indemnifying party under this paragraph, such indemnified party shall notify the
indemnifying party in writing of the commencement thereof if the notice
specified with respect to indemnification has not been given with respect to
such action; provided that the omission so to notify the indemnifying party
shall not relieve the indemnifying party from any liability which it may have to
any indemnified party otherwise under this paragraph, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice.
Notwithstanding anything in this paragraph to the contrary, no indemnifying
party (other than the Partnership) shall be required pursuant to this paragraph
to contribute any amount in excess of the proceeds received by such indemnifying
party from the sale of Securities in the offering to which the losses, claims,
damages or liabilities of the indemnified parties relate.
Section 15.06. Registration Rights upon Incorporation of the
Partnership. In the event that the Partnership and its business and assets shall
at any time be incorporated, the Partners agree that the Holders shall have
substantially the same rights as are set forth in this Article XV (and Barclays
shall have substantially the same rights as are set forth in the Put and Call
Option Agreement and the Barclays Letter Agreement) with respect to the shares
of such corporation and the Partner Indemnitees shall have substantially the
same rights as are set forth in Section 15.05 with respect to indemnification in
connection therewith, and the Partners agree to execute any and all such
documents or agreements as may be reasonably required, in the judgment of the
Managing General Partner, to effectuate the provisions of this Article XV and,
to the extent applicable, Section 16.02 and Section 17.02 with respect to the
shares of such corporation.
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ARTICLE XVI
INCORPORATION OF THE PARTNERSHIP;
THE CLASS C LIMITED PARTNER INTEREST
Section 16.01. Incorporation of the Partnership. The Partners
recognize that it may be advisable or appropriate to incorporate the Partnership
and its business and assets in the future and hereby authorize the Managing
General Partner to take such action at such time as, in the Managing General
Partner's sole discretion, may be necessary, appropriate, proper or advisable to
present to the Limited Partners, for their consideration, any proposal by the
Managing General Partner with respect to such incorporation. In formulating such
proposal, the Managing General Partner shall consider the tax consequences
thereof to the Partners, and shall use reasonable efforts to effectuate the
incorporation of the Partnership in a manner that will minimize the amount of
taxes payable by the Partnership and the Partners. Subject to the provisions of
Section 13.04, any such proposal in connection therewith will be deemed to have
been approved upon the written approval of the Managing General Partner and the
Majority Vote of the Partners, as provided in Section 13.02(a) hereof. In the
event of an incorporation pursuant to this Section 16.01, each Class C Limited
Partner shall receive, in exchange for its Units of Class C Limited Partner
Interest, such number of shares of Class C Preferred Stock as would entitle the
holder thereof to receive a liquidation preference at the time of such exchange
equal to the Class C Liquidation Preference in respect of the Class C Limited
Partner Interest of such Partner so exchanged, subject to cash settlement (based
on such then liquidation preference) of fractional shares that would otherwise
be required to be issued, but shall not be entitled to participate in any other
distributions which may be made by such corporation with respect to shares of
common stock. In the event of an incorporation pursuant to this Section 16.01,
each Partner (other than a Preferred Interest Limited Partner as such, a Class C
Limited Partner as such and, prior to the Class C-1 Participation Event, a Class
C-1 Limited Partner as such) shall receive, in exchange for its Units of Partner
Interest, such shares of common stock as is in accordance with its Percentage
Interest at the time of such incorporation, provided that the Limited Partners
who are Restricted Partners shall receive shares of common stock in such
corporation which shall have such voting rights (in any event not more extensive
than those voting rights accorded to the other Limited Partners) which shall, in
the sole opinion of a majority in interest of such Restricted Partners, not
result in such common stock constituting a "voting security" under Regulation Y
of the Board of Governors of the Federal
126
Reserve System or otherwise result in the inability of any such Restricted
Partner to own such common stock. In the event of an incorporation pursuant to
this Section 16.01 prior to the admission of Barclays as a Class A-2 Limited
Partner, Barclays shall receive, in exchange for its rights with respect to the
Put/Call Units under the Put and Call Option Agreement, the Barclays Letter
Agreement and the Indemnification Agreement, warrants to acquire shares of
common stock in such corporation which have the same or substantially the same
voting rights as the shares being issued to the Restricted Partners, as is in
accordance with its Percentage Interest for the Put/Call Units at the time of
such incorporation. In the event of an incorporation pursuant to this Section
16.01 (whether prior or subsequent to the admission of Barclays as a Class A-2
Limited Partner), Barclays shall have the same or substantially the same
registration and other rights as are contained in the Barclays Letter Agreement
with respect to its warrants or shares of common stock in such corporation. The
Partners also acknowledge that, in the event such a proposal is presented or in
connection with an incorporation pursuant to Section 3.03(a)(i), to the extent
applicable and consistent with a corporate structure, they will negotiate in
good faith such arrangements as are reasonably required to reflect substantially
the same rights and restrictions that the Partners have pursuant to this
Agreement, including without limitation, the provisions of Sections 11.04,
11.05, 11.06, 11.07 and 11.08 hereof. Subject to the provisions of the preceding
sentence, the provisions of this Article XVI are in addition to, and not in
limitation of, the authority granted to the Managing General Partner pursuant to
Section 3.03 hereof. The Managing General Partner shall give the Class C Limited
Partners or the holders of the Class C Exchange Notes (or their Class C Designee
pursuant to Section 16.03) not less than 10 days' notice prior to any
incorporation of the Partnership and its business and assets and concurrently
deliver to such Persons copies of the constituent documents of such corporation,
including any certificate of incorporation, certificate of designations, any
authorizing resolutions relating to the incorporating of such corporation, the
by-laws of such corporation and any other documents of such corporation which
are to be filed with the secretary of state or similar officer of the state of
its incorporation, it being understood, however, that, without derogating from
any other rights such Person may have pursuant to this Agreement, such Person
shall have no right to request any changes or modifications in any such
documents and all such documents may be executed and filed without the approval
of any such Person.
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Section 16.02. Exchange or Retirement of the Class C Limited Partner
Interests.
(a) At the Managing General Partner's option at any time, in its sole
discretion, the Managing General Partner may require each of the Class C Limited
Partners to exchange its Units of Class C Limited Partner Interest for an
exchange note in a principal amount equal to (i) the number of Units then owned
by such Class C Limited Partner, times (ii) the then amount of the Class C
Liquidation Preference per Unit, such exchange note to be substantially in the
form attached hereto as Exhibit D (the " Class C Exchange Note").
(b) In the event of an incorporation of the Partnership and its
business and assets, the Managing General Partner shall have the right in its
sole discretion to:
(i) cause the exchange referred to in Section 16.02(a); or
(ii) cause the Class C Limited Partners to exchange all their
Units of Class C Limited Partner Interest for such number of shares of
preferred stock ("Class C Preferred Stock") (having, in all material
respects, substantially the same rights, preferences, privileges,
limitations and restrictions as the Class C Limited Partner Interest) of
the resulting corporation to which it would be entitled on the basis of the
Class C Liquidation Preference of the Class C Limited Partner Interest at
such time, such determination to be made by the Managing General Partner in
its reasonable discretion, exercised in good faith.
(c) In the event that (i) there shall have been no exchange of the
Units of Class C Limited Partner Interest pursuant to Section 16.02(a) or (b)
prior to the ninety-first day after August 31, 2002 or (ii) if earlier, a
Transfer Event shall occur, or the closing of a sale of Units of Partner
Interest shall occur pursuant to Section 11.07(c), the Partnership shall retire
all of such Units on the ninety-first day after August 31, 2002 or on or before
the date of such Transfer Event or such closing, as applicable, for an amount
equal to the then Class C Liquidation Preference. MLP Sales, for so long as it
is a Limited Partner or holder of a Class C Exchange Note, or the Class C
Designee (as defined in Section 16.03), on behalf of the Class C Limited
Partners or the holders of the Class C Exchange Notes, shall each have the sole
and exclusive right, to the extent not otherwise limited by law, to bring an
action at law or in equity to enforce the terms of this Section 16.02(c). It is
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acknowledged that the provisions of this Section 16.02(c) shall be subject to
the provisions of Section 16.05.
(d) In the event that any Units of Class C Limited Partner Interest or
any Class C Exchange Note shall be outstanding at the time of a registered
public offering of the securities of the Partnership or its successor
corporation pursuant to the provisions of Article XV and such registration
relates to securities owned by the Class A-1 Limited Partners and/or the
Managing General Partner, the outstanding Units of Class C Limited Partner
Interest or Class C Exchange Notes shall be partially retired or a principal
payment shall be made thereon, as applicable, on or prior to the closing date of
such registered public offering in the same proportion as the amount of
securities sold in such registered public offering by the Class A-1 Limited
Partners and the Managing General Partner bears to the total number of
securities owned by the Class A-1 Limited Partners and the Managing General
Partner immediately prior to such registered public offering.
Section 16.03. Designation by Class C Limited Partners.
Notwithstanding any other provision of this Agreement (including, without
limitation, the provisions of Articles XI and XIII and Section 6.05(a)(ii) and
Section 16.04), there shall always be, to the extent permitted by law, one
Person (the "Class C Designee", which Person shall initially be MLP Sales) from
time to time designated by the holders of all interests in the Class C Limited
Partner Interests and the Class C Exchange Notes (collectively, for purposes of
this Section 16.03 only, the "Holders") (i) to make all decisions, (ii) to
receive all notices and other communications, (iii) to receive and disburse all
payments and (iv) otherwise generally to act for and on behalf of the Holders in
respect of their interests in the Class C Limited Partner Interests or the Class
C Exchange Notes, as applicable (collectively, for purposes of this Section
16.03 only, the "Class C Interests"), including the resolution of all disputes
with respect thereto. Each Holder shall, by holding a Class C Interest,
automatically have consented to the appointment of the Class C Designee and the
Class C Designee's authority as described above, including without limitation,
the Partnership's right to treat the Class C Designee as the owner and holder of
the Class C Limited Partner Interests or the Class C Exchange Notes for all
purposes as contemplated by this Section 16.03. Such authority shall be
exercised so that (i) such decisions shall be made within the period required by
the relevant documents governing the Class C Interests (and in that connection
the Class C Designee may act upon the instructions of the Holders, in such
numbers as they may agree, provided that the Class C Designee shall have full
authority to act in the absence of
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receipt of timely instructions), (ii) such notices and other communications need
not be sent to the Holders (and such notices and other communications shall not
be forwarded by the Class C Designee to the Holders unless the Holders have
executed confidentiality agreements in the form of Exhibit E hereto), (iii) such
payments shall be made directly to the Class C Designee (and in that connection,
the Partnership shall have no duty to see that such payments are delivered to
and/or properly applied as among the Holders, and any such payment properly made
to the Class C Designee shall release and discharge the Partnership of its
obligation otherwise to make such payment and/or application to the Holders) and
(iv) such Holders shall not otherwise attempt to exercise authority in lieu of
the Class C Designee. Any certificates evidencing Class C Interests shall, if
desired by the Partnership, be appropriately legended to reflect the foregoing
provisions relating to the Class C Designee. The Class C Designee shall provide
the Partnership with evidence of its authority to exercise such authority.
Section 16.04. Covenants. Without the consent of all the Class C
Limited Partners or the holders of all the Class C Exchange Notes, for so long
as any Units of Class C Limited Partner Interest or any Class C Exchange Note
shall be outstanding, until the earlier of (i) the expiration of the Base Period
(as defined in the Asset Purchase Agreement) or (ii) the occurrence of a
Transfer Event, and, in the case of paragraph (e) below, at all times until the
Earn-Out Payment is made unless following the Determination Date (as defined in
the Asset Purchase Agreement) the Earn-Out Payment shall not be payable in
accordance with the terms of the Asset Purchase Agreement:
(a) The Partnership shall not, and shall not permit any Subsidiary to,
Transfer any of its assets, other than in the ordinary course of business or to
secure the Specified Debt, for aggregate consideration having a value of less
than the then fair market value of the assets Transferred.
(b) The Partnership shall not, and shall not permit any Subsidiary to,
enter into any transaction with any Affiliate of the Partnership unless the
Partnership or such Subsidiary would have entered into such transaction with a
Person not an Affiliate of the Partnership and the terms thereof are at least as
favorable to the Partnership or such Subsidiary as those that the Partnership or
such Subsidiary would have obtained in a transaction on an arm's-length basis
with a Person not an Affiliate of the Partnership, except that the foregoing
shall not restrict the ability of the Partnership to (i) adopt and comply with
any management bonus plan and/or the Management Option Plan, (ii) reimburse
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the Administrative General Partner and the Managing General Partner (or its
successor) for reasonable out-of-pocket expenses and the Managing General
Partner for directors' fees paid to the members of the board of directors of its
managing general partner, provided, that, such payments for directors' fees
shall not exceed $100,000 annually in the aggregate (subject to reasonable cost
of living adjustments based on published sources and not to exceed 5% per
annum), or (iii) enter into and comply with any employment agreements with
members of the Partnership's management.
(c) The Partnership and the Subsidiaries collectively shall continue
to engage in the business of the same general type as the Business (as defined
in the Field Agreement).
(d) The Partnership shall give MLP Sales notice of a Transfer Event
and any Significant Asset Sale (as defined in the Field Agreement) or any
Significant Asset Purchase (as defined in the Field Agreement) ("Event") upon
the earlier of (i) entering into a binding agreement providing for such Event or
(ii) the giving of notice of such Event to the Limited Partners; provided, that,
such notice to MLP Sales shall not in any event be given less than ten (10) days
prior to such Event.
(e) The Partnership shall not, and shall not permit any Subsidiary to,
directly or indirectly, make any distribution of cash, securities or other
assets in respect of, or purchase or retire, any equity interests in the
Partnership (which for purposes of this sentence only shall include the Put/Call
Units) or options or warrants to purchase such interests, in each case
outstanding on the date of the First Restated Agreement (or equity interests,
options or warrants issued in respect of or upon Transfer of equity interests,
options or warrants outstanding on the date of the First Restated Agreement,
including for these purposes options issuable under the Management Option Plan),
except: (a) in connection with the termination of employment of an employee of
the Partnership, the repurchase of such employee's equity interest and options
under the Management Option Plan, provided that if a Specified Event has
occurred with respect to the Class C Limited Partner Interests or the Class C
Exchange Notes, the Partnership may only effect such repurchase by delivering to
such employees Permitted Securities (as defined in Section 6.05); (b) cash
distributions (but only for such periods as the Partnership exists in the form
of a partnership) to the holders of equity interests in the Partnership (other
than the Class C Limited Partners) in an amount equal to the lower of (A) the
product of (i) the
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taxable income of the Partnership for any fiscal year for which the Partnership
reports taxable income for Federal income tax purposes determined as if the
Partnership were a separately taxable entity and (ii) a percentage equal to the
sum of (1) the highest marginal Federal income tax rate applicable to
individuals in effect for such year and (2) ten percentage points or (B) the
maximum amount of distributions for taxes the Partnership is permitted to make
under the Specified Debt Agreements; provided, that, if a Specified Event has
occurred with respect to the Class C Limited Partner Interests, the Class C
Exchange Notes, the Earn-Out Notes or the Earn-Out Payment, the Partnership may
not make the cash distributions described in this clause (b); and (c)
distributions by any Subsidiary to the Partnership. For purposes of the
preceding sentence, (1) the Partnership shall not be prohibited from delivering
(x) securities issued or issuable to employees pursuant to the Management Option
Plan, (y) cash payments in connection with the cash settlement of such
securities pursuant to the Management Option Plan, unless a Specified Event has
occurred with respect to the Class C Limited Partner Interests or the Class C
Exchange Notes or unless the Specified Debt Agreements otherwise prohibit such
cash payments, in which case, the Partnership may effect such cash settlement
only by delivering to such employees Permitted Securities, or (z) securities
issued or issuable pursuant to the exercise of warrants or options issued to the
holders of the Specified Debt (or their Affiliates), including without
limitation the Put/Call Units, and/or securities contemplated by Section
11.08(f) pursuant to the provisions thereof, and (2) the retirement date of the
Class C Limited Partner Interests shall be deemed to be such time specified in
Section 16.02(c), provided that in no such event shall such retirement date be
deemed to be later than August 31, 2002.
(f) The Partnership shall provide to MLP Sales or the Class C
Designee, as applicable, (i) as soon as available after the end of the first
three quarters of each fiscal year of the Partnership the unaudited quarterly
financial statements of the Partnership for such fiscal quarter, (ii) as soon as
available after the end of each fiscal year of the Partnership, the audited
annual financial statements of the Partnership for such fiscal year and (iii)
any notice of an occurrence of an event of default (or of an event that, with
notice or lapse of time or both would constitute an event of default) received
by the Partnership from its lenders or delivered to such lenders by the
Partnership and any amendments to the financing documents among the Partner-
132
ship and its lenders. If the Partnership has any consolidated subsidiaries, the
financial statements referred to in clauses (i) and (ii) shall be consolidated
and consolidating financial statements in any case, such financial statements
shall be prepared in accordance with United States generally accepted accounting
principles on a consistent basis and shall fairly present the financial
condition, results of operation and cash flows of the Partnership for the dates
and periods covered thereby, subject, in the case of interim financial
statements, to normal year-end adjustments and to the absence of footnotes.
(g) The Partnership (i) shall not permit any member of its operating
management to be employed by Centre Partners L.P. or Holdings, directly or
indirectly, other than through employment by the Partnership and (ii) shall
require that each member of its operating management devote substantially all of
his or her business time to the Business.
Section 16.05. Debt Financing Agreements.
(a) (i) Payment of the Class C Liquidation Preference upon the
retirement of the Class C Limited Partner Interests shall not be made at
any time at which the provisions of the Specified Debt Agreements prohibit
such payment or if such payment would constitute a default thereunder (the
"Prohibitions").
(ii) The holders of the Class C Limited Partner Interests shall
not assert, participate in or bring any action, suit or proceeding
(including, without limitation, any bankruptcy or insolvency proceedings)
either at law or in equity against the Partnership, the Partners or any of
their respective properties or assets, for the enforcement, collection or
realization of the retirement of the Class C Limited Partner Interests,
including without limitation the payment of all or any part of the Class C
Liquidation Preference so long as, and solely to the extent to which, the
failure to make payment thereof is prohibited by a Prohibition.
(b) Notwithstanding any other provision of this Agreement, no General
Partner nor any partner or shareholder in a General Partner nor any legal
representative, heir, estate, successor or assign of any such partner or any
officer, director, shareholder or partner in any General Partner, whether
disclosed or undisclosed, shall have any personal liability for the retirement
of the Class C Limited Partner Interests, including, but not limited to, any
payment of the Class C Liquidation Preference. In the event that any Units of
the Class C Limited Partner Interest shall not be retired, or the Class C
Liquidation
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Preference shall not be paid, in accordance with the provisions of this
Agreement, the Class C Limited Partners shall proceed solely against the
properties and assets of the Partnership for such retirement of the Class C
Limited Partner Interest or payment of the Class C Liquidation Preference. The
Class C Limited Partners shall not seek or claim recourse against any other
person or party named above in this Section 16.05(b) or referred to as being
exculpated from personal liability for any such retirement or payment.
ARTICLE XVII
THE CLASS C-1 LIMITED PARTNER INTEREST
Section 17.01. Incorporation of the Partnership. In the event of an
incorporation pursuant to Section 16.01 prior to the Class C-1 Participation
Event, each Class C-1 Limited Partner shall receive, in exchange for its Units
of Class C-1 Limited Partner Interest, such number of shares of Class C-1
Preferred Stock as would entitle the holder thereof to receive a liquidation
preference at the time of such exchange equal to the Class C-1 Liquidation
Preference in respect of the Class C-1 Limited Partner Interest of such Partner
so exchanged, subject to cash settlement (based on such then liquidation
preference) of fractional shares that would otherwise be required to be issued,
but shall not be entitled to participate in any other distributions which may be
made by such corporation with respect to shares of common stock, which shares of
Class C-1 Preferred Stock shall, unless the Class C-1 Limited Partner shall have
given the Notice of Election under 17.06(a), be convertible into the number of
shares of common stock equivalent to the Class C-1 Participation Amount upon the
occurrence of a Class C-1 Participation Event. The Managing General Partner
shall give the Class C-1 Limited Partners or the holders of the Class C-1
Exchange Notes not less than 10 days' notice prior to any incorporation of the
Partnership and its business and assets and concurrently deliver to such Persons
copies of the constituent documents of such corporation, including any
certificate of incorporation, certificate of designations, any authorizing
resolutions relating to the incorporating of such corporation, the by-laws of
such corporation and any other documents of such corporation which are to be
filed with the secretary of state or similar officer of the state of its
incorporation, it being understood, however, that, without derogating from any
other rights such Person may have pursuant to this Agreement, such Person shall
have no right to request any changes or modifications in any such documents and
all such documents may be executed and filed without the approval of any such
Person.
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Section 17.02. Exchange or Retirement of the Class C-1 Limited
Partner Interests.
(a) At the Managing General Partner's option at any time prior to the
Class C-1 Participation Event, in its sole discretion, the Managing General
Partner may require each of the Class C-1 Limited Partners to exchange its Units
of Class C-1 Limited Partner Interest (or Class C-1 Preferred Stock if the
exchange referred to in Section 17.02(b)(ii) hereof shall have occurred prior to
such time) for a convertible exchange note in a principal amount equal to (i)
the number of Units (or shares of Class C-1 Preferred Stock, as the case may be)
then owned by such Class C-1 Limited Partner, times (ii) the then amount of the
Class C-1 Liquidation Preference per Unit (or share of Class C-1 Preferred
Stock, as the case may be), such exchange note to be substantially in the form
attached hereto as Exhibit F (the "Class C-1 Exchange Note") provided that the
Partnership shall be obligated to pay, in cash, subject to any right of set-off
by the Partnership pursuant to Article X of the Comcast Agreement (1) at the
time of the exchange, an amount equal to 40% of the then accrued Class C-1
Return, and (2) on each anniversary of the date of issuance of the Class C-1
Exchange Note, interest accrued on the outstanding principal balance thereof at
the rate of 2.8% per annum for the 12-month period then ended. Upon their
issuance, the Class C-1 Exchange Notes will have been duly authorized and will
be a valid and binding obligation of the Partnership enforceable (subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
application relating to or affecting creditors' rights and to general equity
principles) in accordance with their terms.
(b) In the event of an incorporation of the Partnership and its
business and assets prior to the Class C-1 Participation Event, the Managing
General Partner shall have the right in its sole discretion to:
(i) cause the exchange referred to in Section 17.02(a); or
(ii) cause the Class C-1 Limited Partners to exchange all their
Units of Class C-1 Limited Partner Interest for such number of shares of
convertible preferred stock ("Class C-1 Preferred Stock") (having, in all
material respects, substantially the same rights, preferences, privileges,
limitations and restrictions as the Class C-1 Limited Partner Interest has
prior to the Class C-1 Participation Event and automatically converted into
the number of shares of common stock equivalent to the Class C-1
Participation
135
Amount upon the occurrence of the Class C-1 Participation Event) of
the resulting corporation to which it would be entitled on the basis
of the Class C-1 Liquidation Preference of the Class C-1 Limited
Partner Interest at such time, such determination to be made by the
Managing General Partner in its reasonable discretion, exercised in
good faith.
(c) (i) Prior to the Class C-1 Participation Event, in the event that
(x) there shall have been no exchange of the Units of Class C-1 Limited Partner
Interest (or Class C-1 Preferred Stock, as the case may be) pursuant to Section
17.02(a) or (b) prior to the tenth anniversary of the date of this Agreement or
(y) if earlier, a Transfer Event shall occur, or the closing of a sale of Units
of Partner Interest shall occur pursuant to Section 11.07(c), the Partnership
shall retire all of such Units on the tenth anniversary of the date of this
Agreement or on or before the date of such Transfer Event or such closing, as
applicable, for an amount equal to the then Class C-1 Liquidation Preference.
The Contributing Parties, for so long as they are a Limited Partner or holder of
a Class C-1 Exchange Note, shall each have the sole and exclusive right, to the
extent not otherwise limited by law, to bring an action at law or in equity to
enforce the terms of this Section 17.02(c). It is acknowledged that the
provisions of this Section 17.02(c)(i) shall be subject to the provisions of
Section 17.05.
(ii) Prior to the Partnership giving its first notice to the Class
C-1 Limited Partners pursuant to Section 15.01(a)(i) hereof, the Managing
General Partner, in its sole discretion, may cause the Partnership to retire all
(but not less than all) of the outstanding Units of Class C-1 Limited Partner
Interest for an amount equal to the then Class C-1 Liquidation Preference. In
addition, after receipt by the Partnership of the Notice of Election, the
Managing General Partner, in its sole discretion, may from time to time cause
the Partnership to retire all or less than all of the outstanding Units of Class
C-1 Limited Partner Interest for an amount equal to the then Class C-1
Liquidation Preference, in the case of retirement of all of such Units, or an
amount equal to the then Class C-1 Liquidation Preference per Unit times the
number of Units of Class C-1 Limited Partner Interest retired, in the case of
retirement of less than all of such Units. Units of Class C-1 Limited Partner
Interest may not be retired pursuant to this Section 17.02(c)(ii) from the date
the Partnership gives its first notice pursuant to Section 15.01(a)(i) hereof
through and including the Class C-1 Preference Election Date (unless the Notice
of Election is received by the Partnership during such period). It is
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acknowledged that the provisions of this Section 17.02(c)(ii) shall be subject
to the provisions of Section 17.05.
(iii) In the event that the Partnership retires all of the Units of
Class C-1 Limited Partner Interest prior to the Partnership giving its first
notice to the Class C-1 Limited Partners pursuant to Section 15.01(a)(i) hereof
(other than a retirement pursuant to Section 17.02(c)(i) hereof), the Class C-1
Limited Partners shall, in addition to receiving the then Class C-1 Liquidation
Preference, automatically be granted the option (the "Class C-1 Participation
Option") to acquire the number of Units of Class C-1 Limited Partner Interest
equal to the Class C-1 Participation Amount for an exercise price (the "Option
Exercise Price") equal to the amount that the Class C-1 Liquidation Preference
would have been at the time of exercise but for the earlier retirement of the
Units of Class C-1 Limited Partner Interest pursuant to Section 17.02(c)(ii).
The Class C-1 Participation Option shall only be exercisable by Comcast from the
date the Partnership gives its first notice pursuant to Section 15.01(a)(i)
hereof through and including the Class C-1 Preference Election Date (the "Class
C-1 Option Period"). To exercise the Class C-1 Participation Option, Comcast
shall deliver to the Partnership an irrevocable written notice of such exercise
and, at the time of such notice, pay to the Partnership, by wire transfer or
official or certified bank check in immediately available funds, the Option
Exercise Price, which notice and payment, to be effective, must be received by
the Partnership prior to expiration of the Class C-1 Option Period. The Units of
Class C-1 Limited Partner Interest issued upon exercise of the Class C-1
Participation Option shall have the same rights, preferences, privileges,
limitations and restrictions as if a Class C-1 Participation Event shall have
occurred. The Class C-1 Participation Option shall not be Transferable by the
holders thereof except as provided in Section 11.03(j) hereof. Upon the earliest
of (i) 12:01 a.m. (New York time) on the date immediately following the Class C-
1 Preference Election Date, (ii) the occurrence of a Transfer Event, (iii) the
giving of notice by an Initial Partner pursuant to Section 11.07(a) hereof, (iv)
the commencement of the liquidation of the Partnership, and (v) the eleventh
anniversary of the date hereof, the Class C-1 Participation Option shall, if not
theretofore exercised, expire and terminate and be of no further effect.
(iv) At the time the Class C-1 Participation Option is granted,
Comcast and the Partnership shall enter into an option agreement providing for
terms effectuating the provisions of Section 17.02(c)(ii) and (iii).
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Section 17.03. Designation by Class C-1 Limited Partners.
Notwithstanding any other provision of this Agreement (including, without
limitation, the provisions of Articles XI and XIII and Section 17.04), Comcast
shall be, to the extent permitted by law, the irrevocable designee (the "Class
C-1 Designee") of the holders of all interests in the Class C-1 Limited Partner
Interests, the Class C-1 Exchange Notes and the Class C-1 Participation Option
(collectively, for purposes of this Section 17.03 only, the "Class C-1 Holders")
(i) to make all decisions, (ii) to receive all notices and other communications,
(iii) to receive and disburse all payments and (iv) otherwise generally to act
for and on behalf of the Class C-1 Holders in respect of their interests in the
Class C-1 Limited Partner Interests, the Class C-1 Exchange Notes and the holder
of the Class C-1 Participation Option, as applicable (collectively, for purposes
of this Section 17.03 only, the "Class C-1 Interests"), including the resolution
of all disputes with respect thereto. Each Class C-1 Holder shall, by holding a
Class C-1 Interest, automatically have consented to the appointment of the Class
C-1 Designee and the Class C-1 Designee's authority as described above,
including without limitation, the Partnership's right to treat the Class C-1
Designee as the owner and holder of the Class C-1 Limited Partner Interest, the
Class C-1 Exchange Notes and the Class C-1 Participation Option for all purposes
as contemplated by this Section 17.03. Such authority shall be exercised so
that (i) such decisions shall be made within the period required by the relevant
documents governing the Class C-1 Interests, (ii) such notices and other
communications need not be sent to the Class C-1 Holders, (iii) such payments
shall be made directly to the Class C-1 Designee (and in that connection, the
Partnership shall have no duty to see that such payments are delivered to and/or
properly applied as among the Class C-1 Holders, and any such payment properly
made to the Class C-1 Designee shall release and discharge the Partnership of
its obligation otherwise to make such payment and/or application to the Class C-
1 Holders) and (iv) such Class C-1 Holders shall not otherwise attempt to
exercise authority in lieu of the Class C-1 Designee. Any certificates
evidencing Class C-1 Interests shall, if desired by the Partnership, be
appropriately legended to reflect the foregoing provisions relating to the Class
C-1 Designee.
Section 17.04. Covenants. Prior to the Class C-1 Participation
Event, without the consent of all the Class C-1 Limited Partners or the holders
of all the Class C-1 Exchange Notes, for so long as any Units of Class C-1
Limited Partner Interest or any Class C-1 Exchange Note shall be outstanding,
until the occurrence of a Transfer Event:
138
(a) The Partnership shall not, and shall not permit any Subsidiary to,
Transfer any of its assets, other than in the ordinary course of business
or to secure the Specified Debt, for aggregate consideration having a value
of less than the then fair market value of the assets Transferred.
(b) The Partnership shall not, and shall not permit any Subsidiary to,
enter into any transaction with any Affiliate of the Partnership unless the
Partnership or such Subsidiary would have entered into such transaction
with a Person not an Affiliate of the Partnership and the terms thereof are
at least as favorable to the Partnership or such Subsidiary as those that
the Partnership or such Subsidiary would have obtained in a transaction on
an arm's-length basis with a Person not an Affiliate of the Partnership,
except that the foregoing shall not restrict the ability of the Partnership
to (i) adopt and comply with any management bonus plan and/or the
Management Option Plan, (ii) reimburse the Administrative General Partner
and the Managing General Partner (or its successor) for reasonable out-of-
pocket expenses and the Managing General Partner for directors' fees paid
to the members of the board of directors of its managing general partner,
provided, that, such payments for directors' fees shall not exceed $100,000
annually in the aggregate (subject to reasonable cost of living adjustments
based on published sources and not to exceed 5% per annum), or (iii) enter
into and comply with any employment agreements with members of the
Partnership's management.
(c) The Partnership and the Subsidiaries collectively shall
continue to engage in the business of the same general type as the Business
(as defined in the Field Agreement).
(d) The Partnership shall give the Class C-1 Limited Partners notice
of a Transfer Event upon the earlier of (i) entering into a binding
agreement providing for such Transfer Event or (ii) the giving of notice of
such Transfer Event to the Limited Partners; provided, that, such notice to
the Contributing Parties shall not in any event be given less than ten (10)
days prior to such Transfer Event.
(e) The Partnership shall not, and shall not permit any Subsidiary to,
directly or indirectly, make any distribution of cash, securities or other
assets in respect of, or purchase or retire, any equity interests in the
Partnership (which for purposes of this sentence only shall include the
Put/Call Units) or options or warrants to purchase such interests, in each
case outstanding on the date of the First Restated Agreement (or equity
interests, options or warrants
139
issued in respect of or upon Transfer of equity interests, options or
warrants outstanding on the date of the First Restated Agreement, including
for these purposes options issuable under the Management Option Plan),
except: (a) in connection with the termination of employment of an employee
of the Partnership, the repurchase of such employee's equity interest and
options under the Management Option Plan, provided that if a Specified C-1
Event shall have occurred with respect to the Class C-1 Limited Partners or
the Class C-1 Exchange Notes, the Partnership may only effect such
repurchase by delivering to such employees Permitted Securities (as defined
in Section 6.05); (b) cash distributions (but only for such periods as the
Partnership exists in the form of a partnership) to the holders of equity
interests in the Partnership (other than the Class C-1 Limited Partners
prior to the Class C-1 Participation Event) in an amount equal to the lower
of (A) the product of (i) the taxable income of the Partnership for any
fiscal year for which the Partnership reports taxable income for Federal
income tax purposes determined as if the Partnership were a separately
taxable entity and (ii) a percentage equal to the sum of (1) the highest
marginal Federal income tax rate applicable to individuals in effect for
such year and (2) ten percentage points or (B) the maximum amount of
distributions for taxes the Partnership is permitted to make under the
Specified Debt Agreements; provided, that, if a Specified C-1 Event has
occurred with respect to the Class C-1 Limited Partner Interests or the
Class C-1 Exchange Notes, the Partnership may not make the cash
distributions described in this clause (b); and (c) distributions by any
Subsidiary to the Partnership. For purposes of the preceding sentence, (1)
the Partnership shall not be prohibited from delivering (x) securities
issued or issuable to employees pursuant to the Management Option Plan, (y)
cash payments in connection with the cash settlement of such securities
pursuant to the Management Option Plan, unless a Specified C-1 Event has
occurred with respect to the Class C-1 Limited Partner Interests or the
Class C-1 Exchange Notes or unless the Specified Debt Agreements otherwise
prohibit such cash payments, in which case, the Partnership may effect such
cash settlement only by delivering to such employees Permitted Securities,
or (z) securities issued or issuable pursuant to the exercise of warrants
or options issued to the holders of the Specified Debt (or their
Affiliates), including without limitation the Put/Call Units, and/or
securities contemplated by Section 11.08(f) pursuant to the provisions
thereof, and (2) the retirement date of the Class C-1 Limited Partner
Interests shall be deemed to be such time specified in Section 17.02(c),
provided that in no such
140
event shall such retirement date be deemed to be later than the tenth
anniversary of the date of this Agreement.
(f) The Partnership shall provide to the Contributing Parties or the
Class C-1 Designee, as applicable, (i) as soon as available after the end
of the first three quarters of each fiscal year of the Partnership the
unaudited quarterly financial statements of the Partnership for such fiscal
quarter, (ii) as soon as available after the end of each fiscal year of the
Partnership, the audited annual financial statements of the Partnership for
such fiscal year and (iii) any notice of an occurrence of an event of
default (or of an event that, with notice or lapse of time or both would
constitute an event of default) received by the Partnership from its
lenders or delivered to such lenders by the Partnership and any amendments
to the financing documents among the Partnership and its lenders. If the
Partnership has any consolidated subsidiaries, the financial statements
referred to in clauses (i) and (ii) shall be consolidated and consolidating
financial statements in any case, such financial statements shall be
prepared in accordance with United States generally accepted accounting
principles on a consistent basis and shall fairly present the financial
condition, results of operation and cash flows of the Partnership for the
dates and periods covered thereby, subject, in the case of interim
financial statements, to normal year-end adjustments and to the absence of
footnotes.
(g) The Partnership (i) shall not permit any member of its operating
management to be employed by Centre Partners L.P. or Holdings, directly or
indirectly, other than through employment by the Partnership and (ii) shall
require that each member of its operating management devote substantially
all of his or her business time to the Business.
Section 17.05. Debt Financing Agreements.
(a) (i) Payment of the Class C-1 Liquidation Preference upon the
retirement of the Class C-1 Limited Partner Interests shall not be made at any
time at which the provisions of the Specified Debt Agreements or any other
agreements governing Indebtedness of the Partnership prohibit such payment or if
such payment would constitute a default thereunder (the "Indebtedness
Prohibitions"); provided, that regardless of any Indebtedness Prohibitions,
payment of the Class C-1 Liquidation Preference upon the retirement of the Class
C-1 Limited Partner Interests shall be made in any event no later than the
eleventh anniversary of the date of this Agreement.
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(ii) The holders of the Class C-1 Limited Partner Interests
shall not assert, participate in or bring any action, suit or proceeding
(including, without limitation, any bankruptcy or insolvency proceedings)
either at law or in equity against the Partnership, the Partners or any of
their respective properties or assets, for the enforcement, collection or
realization of the retirement of the Class C-1 Limited Partner Interests,
including without limitation the payment of all or any part of the Class C-
1 Liquidation Preference so long as, and solely to the extent to which, the
failure to make payment thereof is prohibited by an Indebtedness
Prohibition, and provided that such restriction shall in no event continue
later than the eleventh anniversary of the date of this Agreement.
(b) Notwithstanding any other provision of this Agreement, no General
Partner nor any partner or shareholder in a General Partner nor any legal
representative, heir, estate, successor or assign of any such partner or any
officer, director, shareholder or partner in any General Partner, whether
disclosed or undisclosed, shall have any personal liability for the retirement
of the Class C-1 Limited Partner Interests, including, but not limited to, any
payment of the Class C-1 Liquidation Preference. In the event that any Units of
the Class C-1 Limited Partner Interest shall not be retired, or the Class C-1
Liquidation Preference shall not be paid, in accordance with the provisions of
this Agreement, the Class C-1 Limited Partners shall proceed solely against the
properties and assets of the Partnership for such retirement of the Class C-1
Limited Partner Interest or payment of the Class C-1 Liquidation Preference.
The Class C-1 Limited Partners shall not seek or claim recourse against any
other person or party named above in this Section 17.05(b) or referred to as
being exculpated from personal liability for any such retirement or payment.
Section 17.06. Notice of Election; Class C-1 Participation Event;
Class C-1 Accrual Event.
(a) Following receipt of the first notice delivered to the Class C-1
Limited Partners pursuant to Section 15.01(a)(i) and prior to the Class C-1
Preference Election Date, the Class C-1 Limited Partners together shall have the
option to deliver a written notice (the "Notice of Election") to the Partnership
stating that the Class C-1 Limited Partners desire to retain the Class C-1
Liquidation Preference with respect to all of the Units of Class C-1 Limited
Partner Interest. If the Class C-1 Limited Partners deliver the Notice of
Election on or prior to the Class C-1 Preference Election Date, the Class C-1
Limited Partners (i) shall not be entitled to additional notices under Section
15.01(a)(i) or any other rights under Article XV, and (ii) shall
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otherwise be entitled to the rights and benefits, and be subject to the
obligations, restrictions and limitations, set forth in this Agreement
pertaining to the Class C-1 Limited Partners prior to the Class C-1
Participation Event.
(b) If the Class C-1 Limited Partners shall not have delivered the
Notice of Election prior to the Class C-1 Preference Election Date (i.e., the
Class C-1 Participation Event shall have occurred):
(i) the number of Class C-1 Limited Partner Units held by
the Class C-1 Limited Partners shall be adjusted to be equal in number to
the Class C-1 Participation Amount and the Percentage Interest of the Class
C-1 Limited Partners and the other Partners, respectively, shall be
adjusted as provided in the definition of "Percentage Interest";
(ii) the Class C-1 Liquidation Preference shall become
zero and shall be eliminated (but this shall not affect the Capital Account
balances of the Class C-1 Limited Partners), and the portion thereof
consisting of the then accrued Class C-1 Return shall be cancelled,
extinguished and forfeited, in each case without any further action by the
Partnership or the Class C-1 Limited Partner, and the Partnership shall no
longer be required to pay the Class C-1 Liquidation Preference and retire
the Class C-1 Limited Partner Interest pursuant to Section 17.02(c); and
(iii) the Class C-1 Limited Partner shall otherwise be
entitled to the rights and benefits, and be subject to the obligations,
restrictions and limitations, set forth in this Agreement pertaining to the
Class C-1 Limited Partners after the Class C-1 Participation Event has
occurred.
(c) With respect to the Units of Class C-1 Limited Partner Interest,
if a Class C-1 Accrual Event shall occur (but, unless the Partnership reasonably
determines that it is otherwise required to do so under applicable tax laws, not
prior thereto), then there shall be treated and reported by the Partnership and
the Partners (other than the Class C Limited Partner) as a guaranteed payment
for the use of capital under Section 707(c) of the Code (and not as an
allocation of Net Income or Net Loss), (1) an amount equal to the cumulative
Class C-1 Return determined for the Fiscal Years preceding the Fiscal Year in
which such event occurs, which amount shall be so treated and reported in the
Fiscal Year in which such Class C-1 Accrual Event occurs, and
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(2) an amount equal to the Class C-1 Return (if any) accruing in the Fiscal Year
in which the Class C-1 Accrual Event occurs and each Fiscal Year thereafter,
which amount shall be so treated and reported in such Fiscal Years as accrued.
A Class C-1 Accrual Event shall mean the earliest to occur of the following:
(i) the date (not later than the Class C-1 Preference Election Date) on which
the Class C-1 Limited Partner gives the Notice of Election to the Partnership
under Section 17.06(a) hereof; (ii) the date on which the Class C-1 Liquidation
Preference is required to be paid under Section 17.02(c)(i) hereof; (iii) the
date on which Units of Class C-1 Partner Interest are retired under Section
17.02(c)(ii) hereof or are retired and exchanged pursuant to Section 17.02(a)
hereof, or are liquidated pursuant to Section 12.04(b) hereof; and (iv) the date
on which any event not described in the preceding clauses (i) through (iii)
occurs that fixes the right of the Class C-1 Limited Partner to receive the
Class C-1 Liquidation Preference.
ARTICLE XVIII
MISCELLANEOUS PROVISIONS
Section 18.01. Additional Actions and Documents. Each of the
Partners hereby agrees to take or cause to be taken such further actions, to
execute, acknowledge, deliver and file or cause to be executed, acknowledged,
delivered and filed such further documents and instruments and to use reasonable
efforts to obtain such consents, as may be necessary or as may be reasonably
requested in order to fully effectuate the purposes, terms and conditions of
this Agreement, whether before, at or after the closing of the transactions
contemplated by this Agreement.
Section 18.02. Notices. All notices, demands, requests or other
communications which may be or are required to be given, served or sent by a
Limited Partner or Assignee to the Partnership pursuant to this Agreement shall
be deemed given or delivered (i) when delivered personally or by private
courier, (ii) when actually delivered by registered or certified United States
mail or (iii) when sent by telecopy, and all notices, demands, requests or other
communications which may be or are required to be given, served or sent by the
Partnership to any Limited Partner or Assignee pursuant to this Agreement shall
be deemed given or delivered (i) when delivered personally or by private
courier, (ii) when actually delivered by registered or certified United States
mail or (iii) when sent by telecopy, addressed to such Partner or Assignee at
the address set forth in Schedule I hereto or as otherwise reflected in the
books and records of the Partnership from time to time. Each Partner, each
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Assignee and the Partnership may designate by notice in writing a new address to
which any notice, demand or communication may thereafter be so given, served or
sent. Each Partner, Assignee or taxpayer with respect to Units or Put/Call
Units that is not a "United States person" (within the meaning of Section
7701(a)(30) of the Code) shall be required, at the time it becomes a Partner,
Assignee or taxpayer with respect to such Units or Put/Call Units, to designate
an address in New York City to which the Partnership shall be entitled to send
any notice, demand, request or other communication and any payment to or for the
benefit of such Person. Barclays shall be entitled to receive a copy of any
notice, demand, request or other communication which may be or is required to be
given, served or sent by the Partnership to a Class A-2 Limited Partner with
respect to any matter which is the subject of Article XI (other than Section
11.11(g)), or Article XIII or XV of this Agreement, and any such notice, demand,
request or other communication shall be given or delivered in the manner set
forth in the first sentence of this Section 18.02, provided that Barclays shall
have no right to participate in any such matter prior to its admission as a
Class A-2 Limited Partner.
Section 18.03. Severability. The invalidity of any one or more
provisions hereof or of any other agreement or instrument given pursuant to or
in connection with this Agreement shall not affect the remaining portions of
this Agreement or any such other agreement or instrument or any part thereof;
and in the event that one or more of the provisions contained herein or therein
should be invalid, or should operate to render this Agreement or any such other
agreement or instrument invalid, this Agreement and such other agreements and
instruments shall be construed as if such invalid provisions had not been
inserted.
Section 18.04. Survival. It is the express intention and agreement
of the Partners that all covenants, agreements, statements, representations,
warranties and indemnities made in this Agreement shall survive the execution
and delivery of this Agreement.
Section 18.05. Waivers. Neither the waiver by a Partner of a breach
of or a default under any of the provisions of this Agreement, nor the failure
of a Partner, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right, remedy or privilege hereunder, shall
thereafter be construed as a waiver of any subsequent breach or default of a
similar nature, or as a waiver of any such provisions, rights, remedies or
privileges hereunder. To the fullest extent permitted under applicable law, the
Partners hereby waive any right of partition and any right to take any
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other action which otherwise might be available to them for the purpose of
severing their relationship with the Partnership or their interest in the
Partnership's assets from the interests of the other Partners.
Section 18.06. Exercise of Rights. No failure or delay on the part
of a Partner or the Partnership in exercising any right, power or privilege
hereunder and no course of dealing between the Partners or between a Partner and
the Partnership shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein expressly provided are cumulative and
not exclusive of any other rights or remedies which a Partner or the Partnership
would otherwise have at law or in equity or otherwise.
Section 18.07. Binding Effect. Subject to any provisions hereof
restricting assignment, this Agreement shall be binding upon and shall inure to
the benefit of the Partners and their respective heirs, devisees, executors,
administrators, legal representatives, permitted successors and assigns. None
of the provisions of this Agreement shall be for the benefit of or enforceable
by any Persons other than the Partners in their capacity as Partners.
Section 18.08. Consent of Limited Partners. By acceptance of a
Limited Partner Interest, each Limited Partner expressly approves and agrees
that, whenever in this Agreement it is specified that an action may be taken
upon the affirmative vote of less than all the Limited Partners, such action may
be so taken and each such Limited Partner shall be bound by the results of such
action.
Section 18.09. Entire Agreement. The Put and Call Option Agreement,
the Barclays Letter Agreement and the Indemnification Agreement is each
incorporated by reference in, and deemed to be part of, this Agreement. The
terms of the Barclays Letter Agreement (as originally in effect) with respect to
registration and other rights shall control if any such terms thereof are
inconsistent or conflict with the terms of this Agreement. This Agreement, the
Put and Call Option Agreement, the Barclays Letter Agreement and the
Indemnification Agreement contain the entire agreement among the Partners with
respect to the subject matter hereof or thereof, and supersede all prior oral or
written agreements, commitments or understandings with respect to the matters
provided for herein and therein, including, without limitation, the Original
Agreement. It is acknowledged that the Class C Liquidation Preference is
subject to setoff to the extent
146
provided in Article X of the Field Agreement and the "Setoff Procedure" referred
to in the Field Agreement, and that the Class C-1 Liquidation Preference and
Class C-1 Exchange Notes are subject to set-off to the extent provided in
Article X of the Comcast Agreement. It is also acknowledged that the Specified
Debt Agreements place certain limitations and/or restrictions on the exercise of
the rights, powers and privileges set forth in this Agreement, and by acceptance
of a Partner Interest, each Partner expressly agrees that, notwithstanding any
other provision in this Agreement, any right, power, privilege, or provision set
forth herein shall be subject to such limitations and/or restrictions set forth
in the Specified Debt Agreements and that the payment of obligations hereunder
shall not be made at any time at which the provisions of the Specified Debt
Agreements prohibit such payment or if such payment would constitute a default
thereunder. No Partner (in its capacity as such) shall assert, participate in
or bring any action, suit or proceeding (including, without limitation, any
bankruptcy or insolvency proceedings) either at law or in equity against the
Partnership, any other Partner or any of their respective properties or assets,
for the enforcement, collection or realization of any of such obligations.
Section 18.10. Pronouns. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identity of the Person may require.
Section 18.11. Headings. Article, Section and subsection headings
contained in this Agreement are inserted for convenience of reference only,
shall not be deemed to be part of this Agreement for any purpose and shall not
in any way define or affect the meaning, construction or scope of any of the
provisions hereof. All references herein to Articles, Sections and subsections
are to Articles, Sections and subsections of this Agreement unless otherwise
specifically stated.
Section 18.12. Governing Law. This Agreement, the rights and
obligations of the parties hereto and any claims or disputes relating thereto,
shall be governed by and construed in accordance with the laws of the State of
Delaware, without giving effect to principles thereof relating to conflicts of
laws.
Section 18.13. Execution in Counterparts. To facilitate execution,
this Agreement may be executed in as many counterparts as may be required; and
it shall not be necessary that the signatures of, or on behalf of, each party,
or that the signatures of all Persons required to bind any party, appear on each
counterpart; but it shall be sufficient that the signature of, or
147
on behalf of, each party, or that the signatures of the Persons required to bind
any party, appear on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement. It shall not be necessary in making
proof of this Agreement to produce or account for more than such number of
counterparts as contain one signature of, or on behalf of, each of the parties
hereto.
ARTICLE XIX
PREFERRED LIMITED PARTNER INTERESTS
Section 19.01. Incorporation of the Partnership. In the event of an
incorporation pursuant to Section 16.01, each Preferred Interest Limited Partner
shall receive, in exchange for its Units of Preferred Limited Partner Interest,
such number of shares of preferred stock ("Class A Preferred Stock") as would
entitle the holder thereof to receive a liquidation preference at the time of
such exchange equal to the Preferred Interest Liquidation Preference in respect
of the Preferred Limited Partner Interest of such Partner so exchanged, subject
to cash settlement (based on such then liquidation preference) of fractional
shares that would otherwise be required to be issued, but shall not be entitled
to participate in any other distributions which may be made by such corporation
with respect to shares of common stock. Such shares of Class A Preferred Stock
shall have the same rights, or similar rights, to the extent applicable to and
consistent with corporate structure (including, without limitation, the right to
receive a return equivalent to the Preferential Return, the rights set forth in
Section 19.02 hereof and the conversion rights set forth in Section 19.05
hereof) and be subject to the same restrictions and limitations, or similar
restrictions and limitations, to the extent applicable and consistent with
corporate structure (including, without limitation, the restrictions and/or
limitations set forth in Sections 19.03 and 19.04 hereof), as are accorded the
Preferred Limited Partner Interests pursuant to this Agreement.
Section 19.02. Priority to Distributions. Notwithstanding any other
provision of this Agreement, (i) any distribution pursuant to clause (2) of
Section 6.05(a)(i) shall first be applied to pay any then accrued and unpaid
Preferential Return (determined by reducing the accrued and unpaid Preferential
Return of the Preferred Interest Limited Partners by all amounts distributed to
the Preferred Interest Limited Partners pursuant to clause (1) of Section
6.05(a)(i)) before being distributed to the other Partners, and (ii) the
Partnership shall not be subject to the provisions of the last sentence of
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Section 6.05(a)(i) with respect to distributions to the Preferred Interest
Limited Partners on account of the accrued and unpaid Preferential Return.
Section 19.03. Bring Along. (a) If, after complying with the right
of first refusal procedures contained in Section 11.04 hereof, a Preferred
Interest Limited Partner wishes to Transfer Units of Preferred Limited Partner
Interest to any Third Party (other than through a sale in a registered public
offering or Transfers permitted by Section 11.01(g), 11.03(e), 11.03(g),
11.03(h), 11.03(i) or 11.04(g) hereof, which Transfers shall not be subject to
this Section 19.03), then such Partner must, as a condition to such Transfer,
permit each other Preferred Interest Limited Partner (for the purposes of this
Section 19.03, individually a "Remaining Preferred Partner" and collectively the
"Remaining Preferred Partners") (or cause it or him to be permitted) to sell (to
either the prospective purchaser of the selling Partner's Units of Limited
Partner Interest, or another financially reputable purchaser reasonably
acceptable to such Remaining Preferred Partners) the same proportion of Units of
Limited Partner Interest then owned by such Remaining Preferred Partner as the
proportion that the number of Units of Preferred Limited Partner Interest (if
any) the selling Partner has previously sold and proposes to sell bears to the
aggregate number of Units of Preferred Limited Partner Interest acquired by such
Partner pursuant to the Subscription Agreement for such Units, on the same terms
and at the same price per Unit offered to such selling Partner by the Third
Party offeror. In the event that the prospective purchaser of the selling
Partner's Units of Preferred Limited Partner Interest and/or such other
financially reputable purchaser does not purchase for whatever reason (including
without limitation the financially reputable purchaser not being reasonably
acceptable as aforesaid) the requisite portion of Units of Preferred Limited
Partner Interest owned by the Remaining Preferred Partners pursuant to the
preceding sentence, the selling Partner shall not be permitted to Transfer its
Units of Preferred Limited Partner Interest to a Third Party. The Partners
agree that the Managing General Partner shall have the sole right (in its
discretion) to determine whether to admit as Substituted Limited Partners the
purchasers of the Units of Preferred Limited Partner Interest being sold by the
selling Partner and the Remaining Preferred Partners pursuant to this Section
19.03(a), provided that if there is more than one prospective purchaser pursuant
to this Section 19.03(a) at any one time, then if any purchaser is admitted as a
Substituted Limited Partner at such time, all the purchasers at such time shall
be so admitted as Substituted Limited Partners.
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(b) Each Preferred Limited Partner's obligation under this Section
19.03 to afford each of the Remaining Preferred Partners (or to cause each of
them to be afforded) the rights referred to herein will be discharged if (i) the
Remaining Preferred Partners are given written notice thereof simultaneously
with the giving of the Transfer Notice required by Section 11.04, hereof and
(ii) such notice provides that each of the Remaining Preferred Partners may
elect to avail itself or himself of such rights by a written reply given on or
before the expiration of the 20-day period following the giving of the Transfer
Notice addressed to such Person as may be designated in the notice and, if
requested in such notice, sent by registered mail, return receipt requested.
(c) The "bring along" rights contained in this Section 19.03 may be
exercised or waived solely at the option of the party entitled thereto and are
in addition to the rights of the respective Partners set forth in Section 11.04.
The procedures set forth in Section 11.04 shall be satisfied prior to giving
effect to the "bring along" provisions of this Section 19.03.
(d) Anything contained herein to the contrary notwithstanding, the
rights of Partners under this Section 19.03 shall not be assignable, except to a
transferee of Units of Preferred Limited Partner Interest pursuant to any
Transfer otherwise permissible pursuant hereto and except to the extent that
Holdings as a Preferred Interest Limited Partner (and its permitted transferees)
may transfer its rights under this Section 19.03 to a Partner that is an
Affiliate of Holdings.
(e) Anything contained herein to the contrary notwithstanding, in the
event the Managing General Partner approves a transaction pursuant to which a
Person will acquire all of the Units of Partner Interest, each of the Preferred
Interest Limited Partners agrees to offer to sell all of their Units of
Preferred Limited Partner Interest, and to sell all of their Units of Preferred
Limited Partner Interest, to such Person, upon the terms and conditions for the
transaction approved by the Managing General Partner.
Section 19.04. Redemption. (a) At any time and from time to time
after delivery by the Partnership of its first notice to the Preferred Interest
Limited Partners pursuant to Section 15.01(a)(i) hereof, the Partnership shall
have the right, but not the obligation, to redeem any or all of the outstanding
Units of Preferred Limited Partner Interest at a redemption price per Unit equal
to the then Preferred Interest Liquidation Preference per Unit (the "Redemption
Price"); provided, however, in the event of a redemption by the Partnership of
less than all
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of the outstanding Preferred Limited Partner Interests, the Partnership shall
redeem Units of Preferred Limited Partner Interest on a pro-rata basis.
(b) In the event of any redemption of Units of Preferred Limited
Partner Interest pursuant to Section 19.04(a), the Partnership shall deliver
written notice of such redemption (a "Redemption Notice") to the Preferred
Interest Limited Partners. Such Redemption Notice shall state (i) the proposed
date on which such redemption shall take place (the "Redemption Date"), which
date shall be at least 10, but not more than 30, days after the date of the
Redemption Notice, (ii) the number of Units of Preferred Limited Partner
Interest owned by the addressee of the Redemption Notice which are being
redeemed, and (iii) the Redemption Price for such Units being redeemed.
(c) Except with respect to Units which are the subject of a Conversion
Notice received by the Partnership prior to the Redemption Date, the effective
date of a redemption, and the date on which the Redemption Price shall be paid
by the Partnership, shall be the Redemption Date specified in the Redemption
Notice applicable to such Units. Units which are the subject of a Conversion
Notice received by the Partnership prior to the Redemption Date shall not be
redeemed (and the Redemption Notice applicable to such Units shall be null and
void and of no further force and effect as to such Units), but shall be
converted pursuant to Section 19.05 hereof; provided, that if the Partnership
shall have received a timely Withdrawal Notice with respect to any or all of the
Units which are the subject of such Conversion Notice, such Units which are the
subject of such Withdrawal Notice shall not be converted (and the Conversion
Notice applicable to such Units shall be null and void and of no further force
and effect as to such Units), but shall be redeemed pursuant to the Redemption
Notice covering such Units, and the effective date of the redemption of such
Units, and the date on which the Redemption Price for such Units shall be paid
by the Partnership, shall be the later of the next business day following the
day on which such Withdrawal Notice is received by the Partnership and the
Redemption Date specified in the Redemption Notice.
(d) From and after the Redemption Date all rights of a Preferred
Limited Partner in respect of the redeemed Units shall cease and terminate;
provided, however, that if the Partnership fails to pay or tender for payment
the Redemption Price for any such Units, such rights shall continue until the
payment or tender for payment thereof.
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Section 19.05. Conversion. (a) At any time and from time to time,
each Preferred Interest Limited Partner shall be entitled, but shall not be
obligated, to convert any or all Units of Preferred Limited Partner Interest
owned by such Partner into the number of Units of Class B Limited Partner
Interest which has a then Fair Market Value equal to the then Preferred Interest
Liquidation Preference of the Units of Preferred Limited Partner Interest being
converted; provided, however, that no Preferred Interest Limited Partner who is
also a Class A-2 Limited Partner shall be entitled to convert his Units of
Preferred Limited Partner Interest to the extent that such conversion would
cause the aggregate interests of such Person (inclusive of each class of Partner
Interest held by such Person) and each other Limited Partner, if any, which is a
"related person" (within the meaning of Regulations Section 1.752-2(d)) as to
such Person in any item of Partnership income, gain, loss, deduction or credit
for that taxable year or any taxable year thereafter during the term of this
Agreement to be 10 percent or more; provided, further, however, that the
limitation contained in the foregoing proviso shall not apply to a Limited
Partner unless such Limited Partner or a "related person" to such Limited
Partner is a lender to the Partnership or a participant in an outstanding loan
to the Partnership at any time during the taxable year in which the conversion
is to occur.
(b) In the event a Preferred Interest Limited Partner desires to
convert Units of Preferred Limited Partner Interest pursuant to Section 19.05(a)
hereof, such Preferred Limited Partner shall deliver written notice (a
"Conversion Notice") thereof to the Partnership. Such Conversion Notice shall
state (i) the number of Units of Preferred Limited Partner Interest to be
converted, and (ii) the proposed date of such conversion (the "Conversion
Date"), which date shall be at least 5, but not more than 30, days after the
date of the Conversion Notice. The Partnership shall, prior to the Conversion
Date specified in a Conversion Notice, provide written notice to the Partner who
delivered such Conversion Notice, which notice shall state the Fair Market Value
of a Unit of Class B Limited Partner Interest as of the applicable Conversion
Date and the corresponding number of Class B Conversion Units into which the
Preferred Limited Partner Interests specified in the Conversion Notice shall be
converted. Such conversion shall be effective as of the close of business on
the Conversion Date unless, prior to such time, the Preferred Interest Limited
Partner who delivered the Conversion Notice notifies the Partnership in writing
(a "Withdrawal Notice") of the withdrawal of such Conversion Notice as to all or
a portion of the Preferred Limited Partner Units covered thereby. Upon receipt
by the Partnership of a Withdrawal Notice, the Conversion Notice to which such
Withdrawal Notice relates shall
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be null and void and of no further force and effect with respect to the Units
covered by such Withdrawal Notice.
(c) In the case of, and as a condition to, any capital reorganization
of, or any reclassification of the equity interests of, the Partnership or in
the case of, and as a condition to, the consolidation or merger of the
Partnership with or into another partnership or with or into a corporation
(other than a merger in which the Partnership is the surviving partnership and
which does not result in any reclassification of outstanding equity interests of
the Partnership), each Unit of Preferred Limited Partner Interest shall be
convertible into the number of units of partnership interest or shares of stock
or other securities or property receivable upon such reorganization,
reclassification, consolidation or merger by a holder of the number of Units of
Class B Limited Partner Interest into which such Unit of Preferred Limited
Partner Interest was convertible immediately prior to such reorganization,
reclassification, consolidation or merger; and, in any such case, appropriate
adjustment shall be made in the application of the provisions set forth in this
Section 19.05 with respect to the rights and interests thereafter of the
Preferred Interest Limited Partners to the end that the provisions set forth in
this Section 19.05 shall thereafter be applicable, as nearly as reasonably may
be, in relation to any units of partnership interest or shares of stock or other
securities or property thereafter deliverable upon the conversion of Units of
Preferred Limited Partner Interest.
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ARTICLE XX
EXECUTION
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement,
or have caused this Agreement to be duly executed on their behalf, as of the day
and year first hereinabove set forth.
Attest: MLP ACQUISITION, L.P.
By: Music Holdings Corp.,
General Partner
By: [Signature Illegible]
---------------------------
Title: Vice President
Attest: MLP ADMINISTRATION CORP. pursuant
to power of attorney executed in
favor of, and granted and delivered to,
the Managing General Partner
By: MLP Acquisition, L.P.
By: Music Holdings Corp.,
General Partner
By: [Signature Illegible]
---------------------------
Title: Vice President
Attest: MLP HOLDINGS L.P. pursuant to power
of attorney executed in favor of, and
granted and delivered to, the
Managing General Partner
By: MLP Acquisition, L.P.
By: Music Holdings Corp.,
General Partner
By: [Signature Illegible]
---------------------------
Title: Vice President
154
Attest: MLP SALES LIMITED PARTNERSHIP pursuant to power of
attorney executed in favor of, and granted and
delivered to, the Managing General Partner
By: MLP Acquisition, L.P.
By: Music Holdings Corp.,
General Partner
By: [Signature Illegible]
---------------------------
Title: Vice President
Attest: COMCAST SOUND COMMUNICATIONS, INC.,
an Illinois corporation, pursuant
to power of attorney executed in
favor of, and granted and delivered
to, the Managing General Partner
By: MLP Acquisition, L.P.
By: Music Holdings Corp.,
General Partner
By: [Signature Illegible]
---------------------------
Title: Vice President
Attest: COMCAST SOUND COMMUNICATIONS, INC.,
a Colorado corporation, pursuant
to power of attorney executed in favor
of, and granted and delivered to, the
Managing General Partner
By: MLP Acquisition, L.P.
By: Music Holdings Corp.,
General Partner
By: [Signature Illegible]
---------------------------
Title: Vice President
155
Attest: UBS CAPITAL CORPORATION
By: /s/ Michael Green
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Title:
By: /s/ Jeffrey Wald
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Title:
Attest: INTERNATIONALE NEDERLANDEN (U.S.)
FINANCE CORPORATION
By: [Signature Illegible]
---------------------------
Title: Vice President
Attest: The Class B Limited Partners listed in
Schedule I hereto pursuant to powers of
attorney executed in favor of, and granted
and delivered to, the Managing General Partner
By: MLP Acquisition, L.P.
By: Music Holdings Corp.,
General Partner
By: [Signature Illegible]
---------------------------
Title: Vice President
Attest: JOHN HAWKINS pursuant to power of attorney
executed in favor of, and granted and delivered
to, the Managing General Partner
By: MLP Acquisition, L.P.
By: Music Holdings Corp.,
General Partner
By: [Signature Illegible]
---------------------------
Title: Vice President
156
Attest: The Preferred Interest Limited
Partners listed in Schedule 1
hereto pursuant to power of attorney
executed in favor of, and granted and
delivered to, the Managing General Partner
By: MLP Acquisition, L.P.
By: Music Holdings Corp.,
General Partner
By: [Signature Illegible]
---------------------------
Title: Vice President
157