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EXHIBIT 3.3
EXECUTION COPY
INTERMEDIA CAPITAL PARTNERS IV, L.P.
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of March 19, 1996
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TABLE OF CONTENTS
Page
ARTICLE 1 General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Formation of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Principal Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Agent for Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Business of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Term of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 Capital Contributions, Withdrawals and Capital Accounts . . . . . . . . . . . . . . . . . . . . 3
2.1 Contributions of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) General Partner as Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Additional Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(d) Additional Contributions by Limited Partners . . . . . . . . . . . . . . . . . . . . . 3
(e) Additional Contributions by General Partner . . . . . . . . . . . . . . . . . . . . . . 4
(f) Payment of Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(g) General Partner Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(h) Limited Partner Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(i) Return of Certain Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Withdrawals of Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Withdrawals in General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Required Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Effective Date of Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(d) Effect of Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Limitations on Withdrawal of Capital Account . . . . . . . . . . . . . . . . . . . . . 6
(f) Interest on Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3 Profits and Losses; Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Profits and Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Partnership Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 4 Management of Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1 Management Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.2 Specific Authority of the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Valuation of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.5 Revaluation of Partnership Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.6 Management Fee and General Partner Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Management Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) General Partner Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.7 Rights of the Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) No Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Annual Operating Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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(d) Advisory Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(e) Dissolution or Bankruptcy of a Limited Partner . . . . . . . . . . . . . . . . . . . 21
4.8 Successor General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) Removal of the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) Withdrawal of the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(c) General Provision Regarding Approvals by the Limited Partners. . . . . . . . . . . . 23
(d) Right To Recover Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.9 Sale Initiation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.10 Nonvoting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 5 Tax Matters and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.1 Filing of Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.2 Tax Reports to Current and Former Partners . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.3 Restriction on General Partner Activity With Respect to Publicly Traded Partnerships . . . . . 27
5.4 Duties and Obligations of the General Partner With Respect to Publicly Traded Partnerships . . 27
5.5 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.6 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.7 Method of Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 6 Conflicts of Interest; Indemnification; Exculpation . . . . . . . . . . . . . . . . . . . . . 28
6.1 Outside Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Contracts With the General Partner, Affiliates and Limited Partners . . . . . . . . . . . . . 29
6.3 Indemnification of the Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.4 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 7 Termination and Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1 No Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2 Events of Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.3 Winding-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.4 Order of Liquidating Payments and Distributions . . . . . . . . . . . . . . . . . . . . . . . 32
7.5 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.6 Government Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.7 Orderly Methods of Liquidating Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 8 Transfer of Interest, Failure To Pay Capital Contributions, Beneficial Owners . . . . . . . . 35
8.1 Transfer of Partnership Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2 Transfer of IP Holdings Affiliates' Interests . . . . . . . . . . . . . . . . . . . . . . . . 35
8.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.4 Failure To Pay Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.5 Increase in Beneficial Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 9 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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9.3 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.5 Waiver of Partition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.7 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.8 Confidentiality of Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.11 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.12 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.13 Nonrecourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.14 Foreign Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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DEFINITIONS
Term Section
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1933 Act . . . . . . . . . . . . . . .Legend No. 1
Act . . . . . . . . . . . . . . . . . .1.1
Adjacent Systems . . . . . . . . . . .6.1
Advisory Committee . . . . . . . . . .4.7(d)
Adverse Regulatory Development . . . .7.6(b)
Affected Partner . . . . . . . . . . .7.6(b)
AVR . . . . . . . . . . . . . . . . . .Exhibit 2
BHC LP . . . . . . . . . . . . . . . .4.10
Capital Account . . . . . . . . . . . .2.3
Code . . . . . . . . . . . . . . . . .2.3
FRB . . . . . . . . . . . . . . . . .4.10
General Partner . . . . . . . . . . . .Preamble
Greenville/Spartanburg . . . . . . . .Exhibit 1 Note 5
Contribution Agreement
IMI . . . . . . . . . . . . . . . . . .6.2
Income Tax Regulations . . . . . . . .2.3
Indemnified Person . . . . . . . . . .8.2(a)
Indemnifying Person . . . . . . . . .8.2(a)
Interests . . . . . . . . . . . . . . .Legend No. 1
Investing Partnership . . . . . . . . .1.5(a)
Investment Company Act . . . . . . . .2.2(b)
IP . . . . . . . . . . . . . . . . . .Exhibit 1 Note 3
IP-IV . . . . . . . . . . . . . . . . .1.5(a)
IPSE . . . . . . . . . . . . . . . . .Exhibit 2
IPWT Contribution Agreement . . . . . .Exhibit 1 Note 3
IPWT . . . . . . . . . . . . . . . . .Exhibit 1 Note 3
Exhibit 2
Management Fee . . . . . . . . . . . .4.6(a)
New Partner . . . . . . . . . . . . . .2.1(f)
Net Loss . . . . . . . . . . . . . . .3.1(j)(4)
Nonvoting Interests . . . . . . . . .4.10
Notice Date . . . . . . . . . . . . . .4.9(d)
Override Tax Distributions . . . . . .2.1(i)(B)
Partnership . . . . . . . . . . . . . .1.1
Partnership Interest . . . . . . . . .3.1(a)
Preferred Return . . . . . . . . . . .3.3(d)(1)
Regulatory Change . . . . . . . . . . .7.6(b)
Retrievable Tax Benefit . . . . . . . .2.1(i)(B)
RMG . . . . . . . . . . . . . . . . . .Exhibit 2
Shortfall . . . . . . . . . . . . . . .2.1(i)
Systems . . . . . . . . . . . . . . . .Exhibit 1 Note 5
TCI Entities . . . . . . . . . . . . .Exhibit 1 Note 5
TCI . . . . . . . . . . . . . . . . . .4.7(b)(vii)
The Cablevision Company . . . . . . . .Exhibit 2
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INTERMEDIA CAPITAL PARTNERS IV, L.P.
AGREEMENT OF LIMITED PARTNERSHIP
THE LIMITED PARTNERSHIP INTERESTS ("INTERESTS") HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). SUCH
INTERESTS ARE BEING OFFERED AND SOLD UNDER THE EXEMPTION PROVIDED BY SECTION
4(2) OF THE 1933 ACT AND/OR PURSUANT TO RULE 506 OF REGULATION D THEREUNDER.
A PURCHASER OF ANY INTEREST MUST BE PREPARED TO BEAR THE ECONOMIC RISK
OF THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME BECAUSE THE INTERESTS HAVE
NOT BEEN REGISTERED UNDER THE 1933 ACT AND, THEREFORE, CANNOT BE SOLD UNLESS
THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THERE IS NO OBLIGATION OF THE PARTNERSHIP TO REGISTER THE INTERESTS UNDER THE
1933 ACT.
THE AGREEMENT RESTRICTS TRANSFER OF THE INTERESTS. ACCORDINGLY,
PURCHASE OF THE INTERESTS IS ONLY SUITABLE FOR INVESTORS WILLING AND ABLE TO
ACCEPT THE ECONOMIC RISK OF THE INVESTMENT AND LACK OF LIQUIDITY.
* * *
THIS AGREEMENT OF LIMITED PARTNERSHIP is entered into as of March 19,
1996 by and among INTERMEDIA CAPITAL MANAGEMENT IV, L.P., a California limited
partnership, as general partner (the "General Partner"), GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation ("GECC") as the preferred limited
partner (the "Preferred Limited Partner") with respect to, and only with respect
to, a portion of its interest and as a limited partner with respect to the
remainder of its interest, all as set forth on Exhibit 1 hereto, and the limited
partners listed on the signature pages hereto, who together with such other
persons or entities who hereafter shall be admitted as additional or substituted
limited partners pursuant to the terms hereof, all of which shall be listed on
Exhibit 1 hereto, collectively shall be referred to as the "Limited Partners."
Unless otherwise specifically set forth herein, the term Limited Partners shall
include the Preferred Limited Partner. The General Partner and the Limited
Partners are collectively referred to as the Partners and individually as a
Partner. In consideration of the mutual promises and agreements herein made and
intending to be legally bound, the Partners hereby agree as follows:
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ARTICLE 1
General Provisions
1.1 Formation of the Partnership. The Partners hereby form a limited
partnership (the "Partnership") pursuant to the California Revised Limited
Partnership Act (the "Act"). The Partnership shall continue without interruption
as a limited partnership pursuant to the Act. The persons and entities listed as
Limited Partners on Exhibit 1 to this Agreement shall be admitted to the
Partnership as Limited Partners upon their execution of this Agreement.
1.2 Name. The name of the Partnership shall be: InterMedia Capital
Partners IV, L.P. The name of the Partnership may be changed by the General
Partner upon compliance with applicable laws and after notice by the General
Partner to the Limited Partners.
1.3 Principal Place of Business. The principal place of business of the
Partnership shall be 235 Montgomery Street, Suite 420, San Francisco, California
94104. The principal place of business of the Partnership may be changed by the
General Partner after notice to the Limited Partners.
1.4 Agent for Service of Process. The agent for service of process for
the Partnership and his address shall be Leo J. Hindery, Jr., 235 Montgomery
Street, Suite 420, San Francisco, CA 94104. The agent for service of process of
the Partnership may be changed by the General Partner upon notice to the Limited
Partners.
1.5 Business of the Partnership.
(a) The Partnership is organized for the purpose of directly or
indirectly making equity and debt investments in, including acting as a general
partner and/or a limited partner of InterMedia Partners IV, L.P., a California
limited partnership ("IP-IV") and various partnerships which operate cable
television systems (each an "Investing Partnership"), and operating cable
television systems and to engage in all necessary and appropriate activities and
transactions as the General Partner may deem necessary, appropriate or advisable
in connection therewith, provided, however, the Partnership will not make any
investments, nor maintain any offices outside of the United States. Prior to
January 1, 1996, the Partnership had no material assets or liabilities and had
not engaged in any material business activities.
(b) Pending the investment of Partnership funds as described in Section
1.5(a), and the distribution of funds as described in Section 3.3, the
Partnership may invest in certificates of deposit and overnight time deposits in
commercial banks with capital and surplus over $500 million, commercial
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paper, money market funds, repurchase agreements and U.S. Treasury bills and
other government obligations and any other short-term, investment grade highly
liquid investments.
(c) The Partnership may enter into, deliver and perform all contracts,
agreements and other undertakings and engage in all activities and transactions
that are necessary or appropriate to carry out the foregoing purposes. Without
limiting the foregoing, the Partnership may:
(i) exercise all rights, powers, privileges, and other
incidents of ownership or possession with respect to Partnership
property and investments;
(ii) borrow or raise money and secure the payment of any
obligations of the Partnership, IP-IV or an Investing Partnership by
mortgage upon, or pledge or hypothecation of, all or any part of the
assets of the Partnership, IP-IV or an Investing Partnership;
(iii) engage personnel, whether part-time or full-time and do
such other acts as the General Partner may reasonably deem necessary or
advisable in connection with the maintenance and administration of the
Partnership, IP-IV or an Investing Partnership and their investments;
and
(iv) engage attorneys, independent accountants, investment
bankers, consultants or such other persons for the Partnership, IP-IV
or an Investing Partnership as the General Partner may deem necessary
or advisable.
1.6 Term of the Partnership. The term of the Partnership shall be from
the date the Certificate of Limited Partnership was filed with the California
Secretary of State until December 31, 2007, unless the Partnership is earlier
dissolved pursuant to Article 7.
ARTICLE 2
Capital Contributions, Withdrawals and Capital Accounts
2.1 Contributions of Capital.
(a) In General. The committed capital contributions of the Partners
shall be contributed in cash, in the respective amounts set forth next to each
Partner's name on Exhibit 1 attached hereto in the manner provided by Section
2.1(f). Notwithstanding the foregoing, committed capital contributions shall be
contributed in the form of property pursuant to the Greenville/Spartanburg
Contribution Agreement and the IPWT
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Contribution Agreement (both as defined on Exhibit 1 hereto). The General
Partner shall contribute an amount of capital to the Partnership such that the
General Partner's capital contribution will be at least one percent (1%) of the
aggregate capital contributions of all of the Partners, a portion of which may
be contributed in the form of a note as set forth on Exhibit 1 hereto.
(b) General Partner as Limited Partner. The General Partner shall also
be a Limited Partner to the extent that it purchases an interest as a Limited
Partner or it purchases or becomes a transferee of all of or any part of the
interest of a Limited Partner, and to such extent shall be treated in all
respects as a Limited Partner, and the consent of the Limited Partners to such a
purchase or transfer and admission of the General Partner as a Limited Partner
need not be obtained; provided, however, the General Partner shall not be
entitled to consent as a Limited Partner on those matters set forth in Section
4.7(b)(iv). The General Partner's capital contributions referred to in Sections
2.1(a) and 2.1(e) hereof will be made in its capacity as the General Partner and
such capital contribution as the General Partner will not entitle the General
Partner to any rights of a Limited Partner.
(c) Additional Limited Partners. Until the aggregate committed capital
contributions to the Partnership total $335,000,000 (not including the preferred
limited partner interest of the Preferred Limited Partner), and subject to the
condition that each new Limited Partner shall execute a signature page of this
Agreement, which execution shall be deemed to represent the execution of a
counterpart of this Agreement, and certain other agreements in connection with
its subscription, and such Limited Partner meets the suitability requirements
imposed on the original Limited Partners pursuant to the subscription
agreements, the General Partner may admit one or more additional Limited
Partners and may appropriately amend this Agreement to reflect such admissions,
only with the consent of seventy percent (70%) in interest of the Limited
Partners. Admission of a new Limited Partner shall not be a cause for
dissolution of the Partnership. Upon the aggregate committed capital
contributions to the Partnership equaling $335,000,000 (not including the
preferred limited partner interest of the Preferred Limited Partner), the
General Partner may admit any additional Limited Partners to increase the
aggregate committed capital contributions beyond $335,000,000 only with the
consent of one hundred percent (100%) in interest of the Limited Partners or
accept any additional commitment to make capital contributions from the Limited
Partners only with the consent of ninety percent (90%) in interest of the
Limited Partners; provided, however, that the General Partner shall offer, on a
pro rata basis, preemptive rights in connection with any additional cash capital
contributions to the existing Limited Partners and any such additional
commitments to make cash capital contributions shall be on terms no more
favorable
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than those offered to the existing Limited Partners. The Limited Partners will
have fifteen (15) days from the date of the written notice to exercise such
preemptive rights.
(d) Additional Contributions by Limited Partners. Until the aggregate
committed capital contributions to the Partnership total $335,000,000 (not
including the preferred limited partner interest of the Preferred Limited
Partner), the General Partner shall permit one or more Limited Partners to make
additional contributions to the Partnership until July 31, 1997 and may
appropriately amend this Agreement to reflect such additional contributions,
without the consent of any Limited Partner. A Partner which desires to make such
additional contributions during such period shall notify the General Partner of
its desire to do so not later than fifteen (15) days before such proposed
contribution.
(e) Additional Contributions by General Partner. The General Partner
shall from time to time make additional capital contributions to the extent
required to cause its aggregate capital contributions to equal at least one
percent (1%) of the aggregate capital contributions of all Partners. Any such
additional capital contribution required of the General Partner shall be made
within ten (10) days of the capital contribution of the Limited Partner(s)
giving rise to such requirement.
(f) Payment of Capital Contributions. The capital contributions to be
contributed in the form of property pursuant to the Greenville/Spartanburg
Contribution Agreement or the IPWT Contribution Agreement shall be made at the
time and in the manner set forth in those agreements which in the case of the
Partners contributing assets pursuant to those agreements shall represent their
entire commitment. In no event shall the TCI Entities be required to contribute
more than forty-nine percent (49%) of the total capital contributions to the
Partnership (excluding the capital contributions of the Preferred Limited
Partner with respect to the Preferred Limited Partnership Interest). Except as
otherwise agreed to by the Partnership and any Partner, the provisions of this
Section 2.1(f) shall apply to all committed capital contributions to be made in
cash. Included in the first capital call by the Partnership, the Partners will
pay the portion of their committed capital contributions necessary to pay the
organizational expenses of the Partnership up to a maximum of $300,000 (in
aggregate). The committed capital contributions of the Limited Partners shall be
paid on fifteen (15) business days written notice in the following manner: (i)
as the General Partner determines is necessary or appropriate for meeting the
funding requirements of the Partnership or to comply with the Partnership's
obligations to make capital contributions to IP-IV or any Investing Partnership,
(ii) commencing on January 1, 1996, on the first day of each calendar quarter of
each year to the extent determined necessary by the General Partner for the
payment of Partnership expenses or the reimbursement of the General Partner
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for Partnership expenses described in Section 3.2; and (iii) as necessary to pay
the Management Fee as set forth in Section 4.6. The amount to be paid by each
Partner in respect of each such capital call shall be determined by first
requiring any additional Partner admitted to the Partnership pursuant to Section
2.1(c) (and any other Partner to the extent of any non-pro rata increase in its
capital commitment pursuant to Section 2.1(d)) ("New Partner") to pay an amount
such that the proportion of capital contributions paid by such New Partner in
relation to the committed capital contributions of such New Partner is the same
as the proportion of capital contributions previously made by the other
Partners, other than Partners who contributed property pursuant to the
Greenville/Spartanburg Contribution Agreement and the IPWT Contribution
Agreement, in relation to the committed capital contributions of such other
Partners, and then by dividing each Partner's committed capital contribution by
the aggregate committed capital contributions of all the Partners and
multiplying such fraction by the total remaining amount of capital to be called.
In the event a Partner executes and contributes a promissory note in respect of
its capital commitment, any payment of principal pursuant to such note shall
constitute a funding of its capital contribution. No capital contributions for
the Partnership or for investments in Investing Partnerships will be called by
the General Partner after December 31, 2000. References herein to a Partner's
capital contribution shall mean the amount of cash or the principal amount of
any note contributed by the General Partner or the value of property contributed
as set forth in the Greenville/Spartanburg Contribution Agreement or the IPWT
Contribution Agreement.
(g) General Partner Obligations. The General Partner shall not be
personally obligated to contribute cash or other assets to the Partnership to
make up any reduction in the Capital Accounts of the Limited Partners either
during the term of the Partnership or upon dissolution, subject to the
obligation of the General Partner to return to the Partnership certain
distributions as provided in the Act.
(h) Limited Partner Obligations. Limited Partners shall not be
personally obligated for the debts, liabilities and obligations of the
Partnership or of any other Partner, except that, any other provision of this
Agreement to the contrary notwithstanding, each Limited Partner shall only be
obligated to make its full capital contribution to the Partnership in the amount
set forth in Exhibit 1 hereto to the extent required by this Section 2.1, and
each Limited Partner (and any former Limited Partner) shall be obligated to
return to the Partnership distributions only to the extent provided in section
15666 of the Act.
(i) Return of Certain Distributions. If upon the liquidation of the
Partnership pursuant to Section 7.3 hereof, the Partners have not received the
full amount described in
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Sections 3.3(d)(1), 3.3(d)(2) and 3.3(d)(3) hereof (such deficiency being
referred to as the "Shortfall"), then notwithstanding anything in this Agreement
to the contrary, including Section 2.1(g), the General Partner shall be
obligated to contribute to the Partnership the lesser of:
(A) the amount necessary to provide the Partnership with
sufficient funds to allow the Partnership to make distributions in an
amount equal to the Shortfall; and
(B) an amount equal to the sum of all distributions made to
the General Partner pursuant to Section 3.3(a) which are attributable
to allocations of income and gain pursuant to Section 3.1(k)(5)(A)
("Override Tax Distributions"), but not in excess of the Retrievable
Tax Benefit.
For purposes of this Section 2.1(i), the term "Retrievable Tax Benefit" means an
amount equal to the excess, if any, of the Override Tax Distributions over the
General Partner's net aggregate actual tax liability arising out of allocations
of income and gain pursuant to Section 3.1(k)(5)(A). Such tax liability shall be
computed by taking into account any offsets, allowable for Federal income tax
purposes, against such allocations for (y) allocations of loss and deduction to
the General Partner pursuant to Section 3.1(j)(4)(A) and (z) any loss or
deduction arising out of any payment to be made under this Section 2.1(i).
2.2 Withdrawals of Capital Accounts. No Partner shall be entitled to
withdraw any amount from its Capital Account, other than as provided in this
Section 2.2.
(a) Withdrawals in General. A Limited Partner may not withdraw from the
Partnership in whole or in part prior to dissolution of the Partnership, except
(i) as required by Section 2.2(b), or (ii) with the unanimous written consent of
all of the Partners. In the event a Limited Partner elects to withdraw with the
consent of the Partners, or upon withdrawal of a Limited Partner pursuant to
Section 2.2(b), the Partnership Interest of such Limited Partner shall be
withdrawn in its entirety and shall be valued pursuant to Section 4.4 as of the
date of withdrawal. Notwithstanding the foregoing, the value of the Preferred
Limited Partnership Interest shall be deemed to be the amount of such Partner's
Capital Contribution plus the Preferred Return, reduced by any distributions
received by the Preferred Limited Partner prior to such valuation. The Capital
Account of such withdrawing Limited Partner shall be paid for in the manner
provided in this Section 2.2(a) as expeditiously as possible, at a time
determined by the General Partner. The General Partner shall not be required to
sell, liquidate, pledge or encumber any Partnership asset or security to effect
such withdrawal. The General Partner shall have sole discretion to
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make the payment in respect of the Capital Account of any withdrawing Limited
Partner in cash or, at the option of the General Partner, with a promissory note
bearing interest at a rate per annum equal to the rate announced from time to
time by Bank of America NT&SA as its prime rate. The promissory note will be
payable only after the payment of all third party debt and payment of preferred
return to the Preferred Limited Partner and any payments on such promissory
notes will be paid pari passu with payments due to the other Partners (excluding
the Preferred Limited Partner) with respect to the event giving rise to such
payment to the withdrawing Limited Partner upon the earlier of (i) final
dissolution of the Partnership, (ii) sale of all or substantially all of the
Partnership's assets, or (iii) December 31, 2007. For purposes of the foregoing,
the amount to be paid pari passu shall be determined by treating the amount that
would have been paid to each Partner if no payment were made to the withdrawing
Partner as if it also were represented by a promissory note and pro rating the
amount available for distribution to each Partner and withdrawing Partner on
that basis. Any portion of any payments made to a withdrawing Limited Partner in
kind pursuant to this Section 2.2 shall be made, based upon the balance in a
Partner's Capital Account as of the date of withdrawal, ratably in proportion to
the value that each security or asset then held by the Partnership, including
any interest in an Investing Partnership, determined pursuant to Section 4.4,
bears to the value of all assets of the Partnership determined pursuant to
Section 4.4.
(b) Required Withdrawals. The General Partner may terminate the
interest of any Limited Partner in the Partnership, with cause, at the end of
any calendar month upon fifteen (15) days prior written notice. For purposes of
this Agreement, "cause" shall be determined by the General Partner and shall
mean the following: (i) the continued participation of such Limited Partner is
likely, in the sole judgment of the General Partner, to cause the Partnership or
the General Partner to register as an investment company or elect to be a
"business development company" under the Investment Company Act of 1940 (the
"Investment Company Act"), the General Partner or any of its partners to
register as an investment adviser under the Investment Advisers Act of 1940, or
the Partnership or any Partner to violate any law, or (ii) such Limited Partner
fails to make a required capital contribution and the General Partner requires
withdrawal pursuant to Section 8.4(b). Notwithstanding the foregoing,
termination of the Partnership Interest of any Limited Partner as the result of
an Adverse Regulatory Development (as defined in Section 7.6(b)) shall be
treated as set forth in Section 7.6.
(c) Effective Date of Withdrawal. For purposes of this Agreement, the
effective date of a Partner's withdrawal shall mean the last day of the calendar
month in which the General Partner consents to such withdrawal pursuant to
Section 2.2(a)
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or such Partner's notice period lapses pursuant to Section 2.2(b).
(d) Effect of Withdrawal. In the event of the withdrawal of any Limited
Partner pursuant to this Section 2.2, the withdrawing Limited Partner shall not
otherwise share in the income, gains and losses of the Partnership from the
valuation date of its Partnership Interest and shall not have any other rights
under this Agreement other than payment to it of its Capital Account as revalued
pursuant to Section 4.5. The interest of a Limited Partner who withdraws
pursuant to this Section 2.2 shall not thereafter be included in calculating the
percentage in interest of the Limited Partners required to take any action under
this Agreement.
(e) Limitations on Withdrawal of Capital Account. The right of any
withdrawn Partner or its legal representatives to have distributed the Capital
Account of such Partner pursuant to this Section 2.2 is subject to the provision
by the General Partner for all Partnership liabilities in accordance with
section 15666 of the Act, and for estimates for contingencies and expenses. The
unused portion of any such estimates shall be distributed after the General
Partner shall have determined that the need therefor shall have ceased.
(f) Interest on Capital Accounts. No interest or compensation shall be
paid on or with respect to the Capital Account or capital contributions of any
of the Partners, except as otherwise expressly provided herein.
2.3 Capital Accounts. The Partnership shall maintain for each Partner a
separate capital account (a "Capital Account") in accordance with the capital
accounting rules of section 704(b) of the Internal Revenue Code of 1986 (the
"Code"), and the regulations thereunder (the "Income Tax Regulations")
(including particularly section 1.704-1(b)(2)(iv) of the Income Tax
Regulations).
(a) In general, under such capital accounting rules (but subject to any
contrary requirements of the Code and the Income Tax Regulations), a Partner's
Capital Account shall be (i) increased by the amount of money and the fair
market value (determined in accordance with Section 4.4 or as otherwise provided
in the Greenville/Spartanburg Contribution Agreement or the IPWT Contribution
Agreement) of other property (net of liabilities secured by such contributed
property that the Partnership is considered to take
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subject to or assume under section 752 of the Code) contributed by the Partner
to the Partnership and allocations to the Partner of Partnership income and gain
(or items thereof), including income and gains exempt from tax, and (ii)
decreased by the amount of money and the fair market value (determined in
accordance with Section 4.4) of other property distributed (net of liabilities
secured by such distributed property that the Partner is considered to take
subject to or assume under section 752 of the Code) to the Partner by the
Partnership and allocations to the Partner of Partnership loss and deduction (or
items thereof), including Partnership expenditures not deductible in computing
its taxable income and not properly chargeable to Capital Account. For purposes
of making allocations of all items of income, gain, loss and deduction and for
purposes of crediting or charging distributions to Capital Accounts, the
Preferred Limited Partner shall be considered to have a Capital Account separate
and distinct from its Capital Account attributable to its additional interest as
a Limited Partner.
(b) When Partnership property is revalued by the General Partner
pursuant to Section 4.5 or distributed in kind (whether in connection with
dissolution and liquidation of the Partnership or otherwise), the Capital
Accounts of the Partners first shall be adjusted to reflect the manner in which
the unrealized income, gain, loss or deduction inherent in such property (that
has not previously been allocated to Capital Accounts) would be allocated among
the Partners if there were a taxable disposition of such property for its fair
market value (determined in accordance with Section 4.4 and taking into account
section 7701(g) of the Code) and such income, gain, loss or deduction had been
recognized for federal income tax purposes immediately upon such distribution or
the event requiring such revaluation.
(c) Where section 704(c) of the Code applies to Partnership property or
when Partnership property is revalued pursuant to section 1.704-1(b)(2)(iv)(f)
of the Income Tax Regulations, Capital Accounts of the Partners shall be
adjusted in accordance with section 1.704-1(b)(2)(iv)(g) of the Income Tax
Regulations as to allocations to the Partners of depreciation, depletion,
amortization and gain or loss, as computed for book purposes with respect to
such property.
(d) The General Partner shall direct the Partnership's accountant to
make all necessary adjustments in each Partner's Capital Account as required by
the rules of section 704(b) of the Code and the regulations thereunder.
ARTICLE 3
Profits and Losses; Distributions
3.1 Profits and Losses. A Partner's distributive share of the
Partnership's total income, gain, loss, deduction or credit (or items thereof),
which total shall be as shown on the annual federal income tax return prepared
by the Partnership's accountants or as finally determined by the Internal
Revenue Service or the courts, and as modified by the capital accounting rules
of section 704(b) of the Code and the Income Tax Regula-
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tions thereunder as implemented by Section 2.3, as applicable, shall be
determined as provided in this Section 3.1.
(a) Except as otherwise provided in this Section 3.1, items of
Partnership income, gain, loss, deduction and credit shall be allocated among
the Partners in proportion to their respective actual capital contributions
(each, a "Partnership Interest").
(b) Solely for tax purposes, in determining each Partner's allocable
share of the taxable income or loss of the Partnership, depreciation, depletion,
amortization and gain or loss with respect to any contributed property, or with
respect to revalued property where Partnership property is revalued pursuant to
section 1.704-1(b)(2)(iv)(f) of the Income Tax Regulations, shall be allocated
to the Partners under the remedial method as provided in section 1.704-3(d) of
the Income Tax Regulations.
(c) Notwithstanding anything to the contrary in this Section 3.1, if
there is a net decrease in Partnership Minimum Gain or Partner Nonrecourse Debt
Minimum Gain (as such terms are defined in sections 1.704-2(b) and
1.704-2(i)(2), respectively, of the Income Tax Regulations) during a Partnership
taxable year, then each Partner shall be allocated items of Partnership income
and gain for such year (and, if necessary, for subsequent years), to the extent
required by, and in the manner provided in, section 1.704-2 of the Income Tax
Regulations. This provision is intended to be a "minimum gain chargeback" within
the meaning of sections 1.704-2(f) and 1.704-2(i)(4) of the Income Tax
Regulations and shall be interpreted and implemented as therein provided.
(d) Subject to the provisions of Section 3.1(c), but otherwise
notwithstanding anything to the contrary in this Section 3.1, if any Partner's
Capital Account has a deficit balance in excess of such Partner's obligation to
restore its Capital Account balance, computed in accordance with the rules of
section 1.704-1(b)(2)(ii)(d) of the Income Tax Regulations (including such
Partner's share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum
Gain as provided in sections 1.704-2(g) and 1.704-2(i)(5) of the Income Tax
Regulations), then sufficient amounts of income and gain (consisting of a pro
rata portion of each item of Partnership income, including gross income, and
gain for such year) shall be allocated to such Partner in an amount and manner
sufficient to eliminate such deficit as quickly as possible. This provision is
intended to be a "qualified income offset" within the meaning of section
1.704-1(b)(2)(ii)(d) of the Income Tax Regulations and shall be interpreted and
implemented as therein provided.
(e) Subject to the provisions of section 704(c) of the Code, Sections
3.1(b) through 3.1(d) and Sections 3.1(k)(1) and 3.1(l)(1) hereof, gain
recognized (or deemed recognized under
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the provisions hereof) upon the sale or other disposition of Partnership
property, which is subject to depreciation recapture, shall be allocated to the
Partner who was entitled to deduct such depreciation.
(f) Except as otherwise provided in Section 3.1(j), if and to the
extent any Partner is deemed to recognize income as a result of any loans
described herein pursuant to the rules of sections 1272, 1273, 1274, 1274A,
7872, 482 or 483 of the Code, or any similar provision now or hereafter in
effect, any corresponding resulting deduction of the Partnership shall be
allocated to the Partner who is charged with the income. Subject to the
provisions of section 704(c) of the Code and Sections 3.1(b) through 3.1(d)
hereof, if and to the extent the Partnership is deemed to recognize income as a
result of any loans described herein pursuant to the rules of sections 1272,
1273, 1274, 1274A, 7872, 482 or 483 of the Code, or any similar provision now or
hereafter in effect, such income shall be allocated to the Partner who is
entitled to any corresponding resulting deduction.
(g) Except as otherwise required by law, tax credits shall be allocated
among the Partners pro rata in accordance with the manner in which Partnership
profits are allocated to the Partners under this Section 3.1, as of the time the
credit property is placed in service or if no property is involved, as of the
time the credit is earned. Recapture of any tax credit required by the Code
shall be allocated to the Partners in the same proportion in which such tax
credit was allocated.
(h) Except as provided in Sections 3.1(f) and 3.1(g) or as otherwise
required by law, if the Partnership Interests of the Partners are changed
hereunder during any taxable year, all items to be allocated to the Partners for
such entire taxable year shall be prorated on the basis of the portion of such
taxable year which precedes each such change and the portion of such taxable
year on and after each such change according to the number of days in each such
portion, and the items so allocated for each such portion shall be allocated to
the Partners in the manner in which such items are allocated as provided in this
Section 3.1 during each such portion of the taxable year in question.
(i) Any special allocation of income or gain pursuant to Section 3.1(d)
shall be taken into account in computing subsequent allocations of income and
gain pursuant to this Section 3.1 so that the net amount of all such allocations
to each Partner shall, to the extent possible, be equal to the net amount that
would have been allocated to each such Partner pursuant to the provisions of
this Section 3.1 if such special allocations of income or gain under Section
3.1(d) had not occurred.
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(j) (1) Items of deduction and loss attributable to recourse
liabilities of the Partnership (within the meaning of section 1.752-1(a)(1) of
the Income Tax Regulations but excluding Partner nonrecourse debt within the
meaning of section 1.704-2(b)(4) of the Income Tax Regulations) shall be
allocated among the Partners in accordance with the ratio in which the Partners
share the economic risk of loss (within the meaning of section 1.752-2 of the
Income Tax Regulations) for such liabilities.
(2) Items of deduction and loss attributable to Partner nonrecourse
debt within the meaning of section 1.704-2(b)(4) of the Income Tax Regulations
shall be allocated to the Partners bearing the economic risk of loss with
respect to such debt in accordance with section 1.704-2(i) of the Income Tax
Regulations.
(3) Items of deduction and loss attributable to Partnership nonrecourse
liabilities within the meaning of section 1.704-2(b)(1) of the Income Tax
Regulations shall be allocated among the Partners proportionately in accordance
with their Partnership Interests.
(4) All other items of deduction or loss ("Net Loss") shall be
allocated (A) First, if allocations of items of income or gain have been made to
any Partner under Section 3.1(k)(5)(A), then to such Partner in the amount of,
and proportionate to, the amount of such items of income or gain; (B) Second,
among any New Partners (as defined in Section 2.1(f)), an amount of Net Loss
sufficient to reduce its Capital Account balance to what it would have been had
all Partners been admitted to the Partnership as of the date hereof, with losses
so allocated to each New Partner in the proportion which such New Partner's
capital contribution bears to the capital contributions of all New Partners; and
(C) Third, among (i) the Partners (other than the Preferred Limited Partner),
proportionately in accordance with their Partnership Interests, except that Net
Loss shall not be allocated to any Partner to the extent it would create a
deficit balance in excess of such Partner's obligation to restore its capital
account balance, computed in accordance with the rules of section
1.704-1(b)(2)(ii)(d) of the Income Tax Regulations and including such Partner's
share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain as
provided in sections 1.704-2(g) and 1.704-2(i)(5) of the Income Tax Regulations
and (ii) thereafter to the Preferred Limited Partner to the extent of its
Capital Account balance until the balance of its Capital Account is equal to
zero (but never reduced below zero). Any Net Loss which cannot be allocated to a
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Partner because of the limitation set forth in the previous sentence
shall be allocated first to the other Partners to the extent such other
Partners would not be subject to such limitation and second any
remaining amount to the Partners in the manner required by the Code and
the Income Tax Regulations.
(k) Subject to the provisions of Sections 3.1(c) through 3.1(j), items
of income and gain shall be allocated to the Partners in the following priority:
(1) First, to the Preferred Limited Partner, (i) first, in an
amount equal to the excess of the amount of losses previously allocated
to it pursuant to Section 3.1(j)(4) over the amount of income
previously allocated to it pursuant to this clause (i) of Section
3.1(k)(1) and (ii) thereafter in the amount of any distributions of the
Preferred Return made to it pursuant to Section 3.3(d)(1)(i).
(2) Second, to those Partners who have had items of loss or
deductions allocated to them under section 3.1(j)(1), in the amount of,
and proportionate to, the amount of such items of loss or deduction
(provided, however, that no such allocation shall be made with respect
to previously allocated items of loss or deduction to the extent of any
income and gains previously deemed recognized under Section 2.3(b)).
(3) Third, if allocations of Net Loss have been made to the
Partners under Section 3.1(j)(4)(C)(i), then in the amount of, and
proportionate to, the amount of such Net Loss (provided, however, that
no such allocation shall be made with respect to previously allocated
Net Loss to the extent of any income and gains previously deemed
recognized under Section 2.3(b)).
(4) Fourth, to the Partners (other than the Preferred Limited
Partner), in amounts sufficient, after taking into account all amounts
previously distributed to such Partner and including such Partner's
actual capital contributions, to yield a pre-tax internal rate of
return of fifteen percent (15%), on such Partner's actual capital
contributions and in proportion to the amount required for each
Partner.
(5) Fifth, (A) twenty percent (20%) of the balance to the
General Partner; and (B) eighty percent (80%) of the balance among the
Partners (other than the Preferred Limited Partner) in proportion to
their relative Partnership Interests;
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(l) Notwithstanding Section 3.1(k), but subject to the provisions of
Section 3.1(c) through 3.1(j), gain which is recognized (or deemed to be
recognized) upon the sale, exchange or other disposition of all or substantially
all of the assets of the Partnership or upon the dissolution of the Partnership
shall be allocated in the following order:
(1) First, to the Preferred Limited Partner, in an amount
sufficient to bring its Capital Account balance (computed in the same
manner as provided parenthetically in subparagraph 2 below) to an
amount equal to the amount of its accrued and unpaid Preferred Return
and its unrepaid capital contribution.
(2) Second, to the Partners (other than the Preferred Limited
Partner) having deficit balances in their Capital Accounts (computed
after giving effect to all contributions, distributions, allocations
and other Capital Account adjustments for all taxable years, including
the year during which such liquidation or dissolution occurs and
including each Partner's share of Partnership Minimum Gain and Partner
Nonrecourse Debt Minimum Gain as provided in sections 1.704-2(g) and
1.704-2(i)(5) of the Income Tax Regulations), to the extent of, and in
proportion to, those deficits; and
(3) Thereafter, so as to bring the relationship of the credit
balance in each Partner's (other than the Preferred Limited Partner)
Capital Account (computed in the same manner as provided
parenthetically in the preceding subparagraph (2)), as nearly as
possible, the amount such Partner would receive in a distribution, if
the distribution were made in accordance with the provisions of Section
3.3(d).
(m) Unless otherwise specified by the instruments of transfer, any
Partner transferring part of its interest pursuant to this Agreement shall be
deemed to be transferring that portion of its share in future allocations of the
Partnership attributable to the portion of its total Capital Account transferred
by it.
(n) All matters not expressly provided for by the terms of this
Agreement concerning the valuation of assets of the Partnership, the allocation
of profits, gains, deductions, losses and credits among the Partners, including
taxes thereon, and accounting procedures shall be reasonably determined by the
General Partner, whose determination shall be final and conclusive as to all of
the Partners, provided that such action does not materially decrease the amount
or postpone the timing of any distributions, including distributions upon
liquidation,
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that any Partner would otherwise be entitled to receive pursuant to this
Agreement.
(o) Any financing or refinancing of TCI Debt (as defined in section
2.3(b) of the Greenville/Spartanburg Contribution Agreement) shall be a
"non-recourse" liability of the Partnership as such term is used in Section
1.752-1(a)(ii) of the Income Tax Regulations.
3.2 Partnership Expenses. To the extent not paid by IP-IV or an
Investing Partnership, the Partnership shall pay (or reimburse the General
Partner for) all expenses relating to the Partnership's business, investments or
reports not required to be borne by the General Partner pursuant to Section
4.6(b), including, without limitation, the following expenses: organization and
offering expenses, placement fees, interest, legal, accounting, consulting and
investment banking fees and expenses of the Partnership in connection with its
investments, preparation of federal and state tax returns, cost of Partnership
meetings (if any), all costs of acquisition and disposition of assets,
securities or investments (including legal, overhead expenses, accounting,
banking and advisory fees, expenses and commissions), all costs of research,
market and statistical information which are paid to unrelated third parties in
connection with a potential transaction, directors and advisers fees paid to
unrelated third parties, fees and expenses incurred in connection with
investigation, prosecution, or defense of any claims by or against the
Partnership, all costs of insurance and any extraordinary or other expenses
which the General Partner reasonably determines should properly be considered
related to the investment of the Partnership's assets or the operations of the
Partnership or its assets or investments.
3.3 Distributions.
(a) Subject to Section 3.3(e), prior to dissolution of the Partnership,
the General Partner shall, to the extent of available cash, distribute in cash,
no later than ninety (90) days after the close of each fiscal year, the excess,
if any, of (i) forty percent (40%) of an amount equal to the excess, if any, of
the cumulative items of income and gain over the cumulative items of deduction,
loss and credit (grossed up to a deduction equivalent at a forty percent (40%)
tax rate) of the Partnership as shown on the federal income tax returns of the
Partnership for all periods over (ii) the sum of amounts previously distributed
pursuant to Section 3.3(a), 3.3(b) or 3.3(c), provided that the General Partner
shall make such distributions on a quarterly basis as soon as possible to
address any Partner's quarterly payments of estimated tax if such early
distribution is feasible in terms of available cash and accurate anticipation of
the fiscal year's net tax position. The General Partner, in its reasonable
discretion, may adjust the rate of distribution provided in this Section 3.3(a)
to reflect any changes made to the ordinary income and capital
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gains tax rates of the Code which may have the effect of requiring the Partners
to pay more or less taxes on ordinary income or capital gains generated by
Partnership activities. Distributions pursuant to this Section 3.3(a) shall be
made to the Partners ratably in the proportions in which the net recognized
income and gains (but not income and gains deemed recognized under Section
2.3(b)) for such fiscal periods have been allocated to them for federal income
tax purposes pursuant to Section 3.1. For purposes of this Section 3.3(a), in
the case of property contributed to the capital of the Partnership, items of
income, gain, deduction and loss shall be computed as if the tax basis of such
property were equal to its fair market value at the time of such contribution as
determined in the Greenville/Spartanburg Contribution Agreement or the IPWT
Contribution Agreement, or as otherwise provided herein.
(b) Subject to Sections 3.3(a) and 3.3(e), prior to dissolution of the
Partnership, the General Partner shall distribute the net proceeds from the sale
or other disposition of any investment, after payment of all indebtedness with
respect thereto and less reasonable estimates for the Partnership's expenses,
liabilities, contingencies and working capital requirements, no later than
ninety (90) days after the close of such sale.
(c) Subject to the mandatory distribution provisions set forth in
Sections 3.3(a) and 3.3(b) and to Section 3.3(e), prior to dissolution of the
Partnership, the General Partner shall distribute to the Partners no less
frequently than on a quarterly basis cash received by the Partnership from
operations, any transaction not described in Section 3.3(b), and any dividends,
interest or other cash distributions from any corporation or other entity in
which the Partnership has invested and which is not necessary in the reasonable
judgment of the General Partner for the payment of Partnership expenses or debt
or the maintenance of reasonable reserves for the Partnership's expenses,
liabilities, contingencies and working capital requirements. With the consent of
seventy percent (70%) in interest of the Limited Partners, and with the consent
of the Preferred Limited Partner with respect to distributions to such Partner,
distributions may be made in assets of the Partnership other than those
described in the preceding sentence.
(d) Distributions pursuant to Sections 3.3(b) and 3.3(c) shall be made
as follows:
(1) First, to the Preferred Limited Partner (i) in payment of
its accrued Preferred Return until it has received the full amount
thereof, and (ii) then in payment of its unrepaid capital contribution.
For purposes of this Agreement, the "Preferred Return" shall be an
amount equal to eleven and three quarters percent (11.75%), per annum,
compounded semi-annually, multiplied by its unrepaid capital
contributions; for
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purposes of calculating Preferred Return for a subsequent period, any
accrued and unpaid Preferred Return shall be added to the principal
amount of the unrepaid capital contribution; and
(2) Second, to those Partners (other than the Preferred
Limited Partner) that have not received distributions pursuant to this
Section 3.3 equal to their actual capital contributions, in proportion
to their relative actual capital contributions until the Partners
(other than the Preferred Limited Partner) have received distributions
pursuant to this Section 3.3 equal to their actual capital
contributions; and
(3) Third, to those Partners (other than the Preferred Limited
Partner) that have not received distributions pursuant to this Section
3.3 of amounts sufficient to yield a pre-tax internal rate of return of
fifteen percent (15%) on their actual capital contributions, until such
time that they have each received distributions pursuant to this
Section 3.3 of amounts sufficient to yield a pre-tax internal rate of
return of fifteen percent (15%) on their actual capital contributions
and in proportion to the amount required for each such Partner; and
(4) Fourth, twenty percent (20%) of the balance to the General
Partner and eighty percent (80%) of the balance to the Partners (other
than the Preferred Limited Partner) in proportion to their relative
Partnership Interests.
All distributions made pursuant to this Section 3.3 (other than pursuant to
Section 3.3(d)(1)) shall be treated as a return of Partners' capital
contributions until their respective actual capital contributions are returned
in full. Except as otherwise provided herein, no Partner shall have a priority
over any other Partner as to returns of capital contributions or as to
compensation as a Partner by way of income.
(e) Any other provision of this Agreement to the contrary
notwithstanding, no distribution shall be made which would render the
Partnership insolvent or which is prohibited by the terms of any indebtedness of
the Partnership, IP-IV or an Investing Partnership, provided, however, that the
General Partner shall use its reasonable best efforts to obtain the right to
make tax distributions pursuant to Section 3.3(a) above under the terms of any
such indebtedness.
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ARTICLE 4
Management of Partnership
4.1 Management Generally. Except as otherwise provided herein, the business
of the Partnership shall be conducted and managed exclusively by the General
Partner. The General Partner will not be obligated to do or perform any act in
connection with the business of the Partnership not expressly set forth in this
Agreement. The General Partner (including Leo J. Hindery, Jr. as managing
general partner of the General Partner) shall devote such time, effort and skill
to the business and affairs of the Partnership, IP-IV and any Investing
Partnerships and their management as may be reasonable and necessary or
appropriate for the welfare and success of the Partnership, IP-IV and the
Investing Partnerships. The General Partner shall have the rights and powers and
be subject to all the restrictions and liabilities of a partner in a partnership
without limited partners.
4.2 Specific Authority of the General Partner. Except as otherwise provided
in this Agreement, the General Partner shall have full power and authority to do
all things and to perform all acts that it reasonably deems necessary or
advisable to conduct the business affairs of the Partnership, IP-IV and the
Investing Partnerships, or incidental thereto, without the consent of any
Limited Partner, including, without limitation, full power and authority to take
any of the following actions, each of which is hereby expressly authorized by
the parties hereto:
(a) Enter into contracts and perform the obligations of the Partnership
undertaken in such contracts, including, without limitation, any contract
entered into with the General Partner or a Limited Partner pursuant to Section
6.2;
(b) Make all decisions with respect to the investigation, selection,
negotiation, structure, acquisition, operation and disposition of the assets of
the Partnership, IP-IV or any Investing Partnership; and employ such agents,
consultants, advisers, directors, attorneys, accountants, investment bankers and
other personnel as may be necessary or appropriate for the business of the
Partnership, IP-IV or the Investing Partnerships on such terms and conditions as
the General Partner shall determine are reasonable; provided, however, that
concurrent with the formation of a new Investing Partnership or any partnership
which provides financing to any Investing Partnership, the General Partner will
obtain an opinion of counsel, reasonably satisfactory to the Advisory Committee,
that such Investing Partnership is taxable as a partnership.
(c) Open, maintain and close bank accounts and draw checks and other orders
for the payment of money;
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(d) Collect accounts receivable, income and other payments due to the
Partnership, IP-IV or any Investing Partnership;
(e) Keep the books and records of the Partnership and hire independent
certified public accountants;
(f) Pay accounts payable and other expenses of the Partnership;
(g) Transfer, hypothecate, compromise or release any Partnership claim;
(h) Administer the financial affairs of the Partnership, IP-IV and any
Investing Partnership, make tax and accounting elections, including an election
or elections under section 754 of the Code (which election shall be made upon
the request of any Limited Partner), file all required tax returns relating to
the Partnership, pay the liabilities of the Partnership and distribute the
profits of the Partnership to the Partners;
(i) Borrow money on behalf of the Partnership, IP-IV or any Investing
Partnership and make, issue, accept, endorse and execute promissory notes,
drafts, bills of exchange, guarantees, and other instruments and evidences of
indebtedness in the name of the Partnership, IP-IV or any Investing Partnership,
including, without limitation, in connection with and as part of purchasing
assets and securities for the Partnership, IP-IV or any Investing Partnership
and mortgage, pledge, assign or grant security interests in all or any part of
the assets then owned or thereafter acquired by the Partnership, IP-IV or any
Investing Partnership in connection therewith;
(j) Cause the Partnership, IP-IV and any Investing Partnership to purchase
and maintain any insurance, in amounts and on terms customary in the industry,
covering the potential liabilities of the Partnership, the General Partner and
its partners, employees and agents, and the officers, directors and employees of
the partners, of the General Partner, as well as the potential liabilities of
any person serving at the request of the Partnership, IP-IV or any Investing
Partnership as a director, officer, employee, agent, partner, consultant or
adviser of any corporation or other entity in which the Partnership, IP-IV or
any Investing Partnership has an investment; provided, however, the General
Partner shall cause the Partnership to purchase insurance for the liabilities of
directors and officers to the extent such insurance is available on commercially
reasonable terms;
(k) Commence or defend litigation that pertains to the Partnership, IP-IV
or any Investing Partnership or any assets of the Partnership, IP-IV or any
Investing Partnership and investigate potential claims;
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(l) Execute and file fictitious business name statements and similar
documents;
(m) Admit additional Limited Partners and permit additional capital
contributions as provided in Sections 2.1(c) and 2.1(d) (and appropriately amend
this Agreement to reflect such admissions and additional capital contributions)
without the consent of any Limited Partner except as provided in Section 2.1(c)
and admit an assignee of a Limited Partner's interest to be a substituted
Limited Partner in the Partnership (and appropriately amend this Agreement and
the Partnership records to reflect such assignment), without the consent of any
Limited Partner;
(n) Terminate the Partnership pursuant to Section 7.2(vi), (vii) or (viii);
and
(o) Execute and deliver all documents and instruments necessary or
advisable to carry out the foregoing.
4.3 Reports. The General Partner will distribute annual audited financial
statements of the Partnership, prepared by a "big six" accounting firm, to the
Limited Partners within ninety (90) days after the end of each Partnership
fiscal year. The General Partner will distribute unaudited quarterly progress
reports on the Partnership's investment activities to the Limited Partners
within forty-five (45) days of the end of the first three fiscal quarters. The
General Partner will distribute monthly income statements of the Partnership to
the Limited Partners within fifteen (15) days of the end of each calendar month.
The General Partner will distribute any default notices with respect to the debt
of the Partnership, IP-IV or any Investing Partnership to the Limited Partners
within five (5) days of the receipt thereof from a lender or the delivery
thereof by the Partnership, IP-IV or any Investing Partnership to a lender.
4.4 Valuation of Assets.
(a) The General Partner shall value the assets of the Partnership whenever
the General Partner may, in its sole discretion, deem appropriate, and whenever
else required by this Agreement or under the Code, and on any date provided for
in this Agreement on which valuation is required due to the withdrawal of a
Limited Partner pursuant to Section 2.2 or Section 7.6, and shall within ninety
(90) days of each such date furnish to each Limited Partner a statement showing
the value of each system and the net worth of the Partnership. If the
Partnership is dissolved and the assets are not sold, the General Partner shall
value the assets of the Partnership as of the date of dissolution and shall as
promptly as practicable thereafter furnish the Limited Partners with the
statement showing the value of each system and the net worth of the Partnership.
The value of any system of the Partnership
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determined by the General Partner pursuant to this Section 4.4(a) shall be
conclusive and binding on all of the Partners and all parties claiming through
or under them except as provided in Section 4.4(c).
(b) In the event of the withdrawal of a Limited Partner from the
Partnership pursuant to Section 2.2 or Section 7.6, the General Partner shall
within a reasonable period of time notify the Limited Partners in writing of the
valuation of the total amount of the assets of the Partnership attributable to
the withdrawing Limited Partner.
(c) If (i) any of the Limited Partners object in writing to the valuation
of the systems and/or net worth of the Partnership made pursuant to Section
4.4(a) by the General Partner or (ii) the withdrawing Limited Partner objects in
writing to the valuation of the systems and/or net worth of the Partnership made
pursuant to Section 4.4(b) by the General Partner, in either case, within thirty
(30) days after the General Partner has furnished the Limited Partners with the
statement provided by Section 4.4(a) or 4.4(b) as of such date, the General
Partner shall give notice to all the Limited Partners of such objection and the
General Partner shall attempt to determine an alternative value for the systems
and net worth of the Partnership (with respect to a valuation pursuant to
Section 4.4(a)) or the assets of the Partnership attributable to the withdrawing
Partner (with respect to a valuation pursuant to Section 4.4(b)). If the General
Partner and (i) seventy percent (70%) in interest of the Limited Partners (with
respect to a valuation pursuant to 4.4(a)) or (ii) the withdrawing Limited
Partner (with respect to a valuation pursuant to Section 4.4(b)) are unable to
determine an alternative value for the systems and/or net worth of the
Partnership within sixty (60) days after such objections, the matter in dispute
shall be submitted to three appraisers of which one shall be chosen by the
General Partner, one by (x) seventy percent (70%) in interest of the Limited
Partners (with respect to a valuation pursuant to Section 4.4(a)) or (y) the
withdrawing Limited Partner (with respect to a valuation pursuant to Section
4.4(b)) and the third by means of the written agreement of the two appraisers
selected by such Partners, provided that such third individual is not associated
with any of the Partners. Each appraiser appointed in accordance with this
paragraph shall complete its appraisal within sixty (60) days of its
appointment. The two appraisals closest to one another shall be averaged and
such valuation shall be final and binding on the Partners. If performed in
connection with Section 4.4(a), the Partnership shall bear all of the costs and
expenses of such appraisal. The Partnership and the withdrawing Limited Partner
shall each bear one-half (1/2) of the costs and expenses of such appraisal if
performed in connection with Section 4.4(b).
4.5 Revaluation of Partnership Assets. The General Partner shall revalue
Partnership property to its fair market
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value (determined as provided in Section 4.4) as of the date when any additional
or existing Partner makes a non-pro rata contribution of money or property to
the Partnership in exchange for an interest in the Partnership or when the
Partnership distributes money or property to a withdrawing or continuing Partner
in exchange for all or part of its interest in the Partnership.
4.6 Management Fee and General Partner Expenses.
(a) Management Fee. The Partnership will pay to the General Partner in cash
during the period the Partnership is in existence, as full payment for services
rendered as the General Partner, an annual management fee (the "Management Fee")
equal to one percent (1%) per annum of the total capital contributions that have
been funded by Partners to the Partnership (other than with respect to the
preferred limited partner interest of the Preferred Limited Partner) determined
as of the beginning of each calendar quarter in each fiscal year of the
Partnership; provided, however, if the acquisition of a cable system by the
Partnership, IP-IV or an Investing Partnership is made with debt financing of
more than two-thirds of the purchase price of such cable system, capital
contributions of one-third of such purchase price shall be deemed to have been
made and the Management Fee shall be paid on such deemed contributions. At such
time as any such debt financing is replaced with actual capital contributions of
the Partners, the Management Fee shall be based on such actual capital
contributions rather than a deemed contribution for such amount. Notwithstanding
the foregoing, in no event shall a Management Fee be payable on any amounts in
excess of the total capital commitments to the Partnership. Except with respect
to acquisitions of cable systems with debt financing as set forth above, the
General Partner agrees that it will not receive a management fee from the
Investing Partnerships of the Partnership greater than one percent (1%) of the
capital contributions to the Investing Partnerships and the Partnership. The
Management Fee for the first year on any capital contribution shall be paid in
advance upon payment of such capital contribution and shall begin to accrue from
the closing of the first cable television system purchased by the Partnership.
The Management Fee for all subsequent periods shall be paid quarterly, in
advance, one-fourth of one percent (.25%) per quarter, on the first business day
of each calendar quarter, beginning with the first calendar quarter that begins
after the first anniversary of the payment of such capital contribution. Any
Management Fee due for the period from the expiration of such first year and the
next scheduled payment of the Management Fee shall be paid at such next payment
date. The Management Fee shall be offset, on a cumulative basis, by any
management fee received by the General Partner or any affiliate of the General
Partner from IP-IV or any Investing Partnership. The Management Fee for the
Partnership's last annual fiscal
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year, if less than a full year, shall be prorated based upon the number of days
in such period.
(b) General Partner Expenses. The General Partner will bear and be charged
with the following expenses: salaries and other expenses (including bonuses and
health, welfare, retirement and other benefits) and overhead expenses (including
rents, travel and costs) of the General Partner, and the chief operating officer
and the directors of development, finance and accounting of the General Partner
and their related staffs.
4.7 Rights of the Limited Partners.
(a) No Control. The Limited Partners shall not take part in the control,
management, direction or operation of the business of the Partnership, nor,
except as specified in Section 4.7(b) and Section 4.9, have the right, power or
authority to be consulted with respect to investment decisions or the other
affairs of the Partnership nor have the power to sign documents for or otherwise
bind the Partnership and shall have no right to consent on any matter except
those expressly set forth in this Agreement or otherwise specified in Section
4.7(b) and Section 4.9.
(b) Consents. The Limited Partners shall have a right to consent only with
respect to those matters expressly set forth in this Agreement and the matters
listed below, which actions may be taken only with the written consent of the
General Partner (except with respect to item (iv) which action may be taken
without the consent of the General Partner and except to the extent provided in
Section 4.9) and the affirmative consent of the percent in interest of the
Limited Partners so indicated. The Preferred Limited Partner shall not be
entitled to consent, initiate or cause any sale of the Partnership's cable
systems or otherwise vote on or take action with respect to any matters in this
Agreement, including without limitation Section 4.9 hereof, unless required by
law and the preferred limited partnership interest of the Preferred Limited
Partner shall not be included in either the numerator or the denominator of any
computation of the required percentage in interest of the Limited Partners
hereunder for all such purposes (except where the consent of the Preferred
Limited Partner is required); provided, that the Preferred Limited Partner shall
be entitled to consent on any matter which requires the unanimous consent of the
Limited Partners and provided further that the Preferred Limited Partner's
consent shall be required for any settlement with a tax authority which would
affect the income, gain, loss, deductions or credits allocated to it. For any
matters on which the Preferred Limited Partner is not entitled to consent, the
required consent shall be the required percent of interest of the Limited
Partners other than the Preferred Limited Partner Interest of the Preferred
Limited Partner. In the event one Limited Partner holds seventy percent (70%) of
the interests of the Limited Partners, all references in this Agreement to
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seventy percent (70%) shall be changed to seventy-five percent (75%). For
purposes of this Agreement a Limited Partner's interest in the Partnership shall
be determined on the basis of its actual capital contributions. The Limited
Partners shall be entitled to consent on the following matters:
(i) The amendment of this Agreement pursuant to Section 9.3 hereof
upon the affirmative consent of seventy percent (70%) in interest of the
Limited Partners; provided, however, that this Agreement may not be amended
without the approval of the Partner being affected if the amendment would
change the allocation to any Partner of any income or loss or distribution
of cash or property from that which is provided or contemplated herein
(other than as a result of any dilution in their Partnership Interests
resulting from the admission of any new Limited Partners as contemplated by
Section 2.1(c) or additional contributions by Partners pursuant to Section
2.1(d) or 2.1(e) hereof, as Section 2.1(c), Section 2.1(d) or 2.1(e) may be
amended from time to time);
(ii) The amendment of the allocations and distributions to the
Limited Partners other than as permitted by Section 3.1 upon the
affirmative consent of each Partner adversely affected;
(iii) The admission of a new general partner where there is an
existing General Partner upon the affirmative consent of seventy percent
(70%) in interest of the Limited Partners;
(iv) The approval of a transaction in which the General Partner or
any of its affiliates has an actual or potential conflict of interest with
the Limited Partners or the Partnership and which is not permitted by
Section 6.1 or 6.2 or otherwise expressly permitted by the terms of this
Agreement, upon the affirmative consent of seventy percent (70%) in
interest of the disinterested Limited Partners; provided, however, the
transactions set forth on Exhibit 2 hereto may be consummated by the
Partnership, IP-IV or any Investing Partnership without any further consent
of the Limited Partners;
(v) The continuation of the Partnership to effect an orderly
dissolution of the Partnership in accordance with Article 7 upon the
affirmative consent of seventy percent (70%) in interest of the Limited
Partners;
(vi) The agreement to enter into any Investing Partnership or make
any investments in excess of
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$15,000,000 upon the affirmative consent of seventy percent (70%) in
interest of the Limited Partners; provided, however, each of the
acquisitions set forth on Exhibit 2 hereto may be consummated by the
Partnership, IP-IV or any Investing Partnership without any further consent
of the Limited Partners;
(vii) The merger of or consolidation of the Partnership with any
other entity upon the affirmative consent of each Partner;
(viii) The taking of any act that would make it impossible to carry
on the business of the Partnership except upon the dissolution of the
Partnership in accordance with this Agreement upon the affirmative consent
of each Partner;
(ix) Confessing a judgment against the Partnership, IP-IV or any
Investing Partnership in excess of one hundred fifty thousand dollars
($150,000) or settling a judgment against the Partnership, IP-IV or any
Investing Partnership in excess of three hundred thousand dollars
($300,000) upon the affirmative consent of each Partner;
(x) Using any funds or assets of the Partnership other than for the
benefit of the Partnership upon the affirmative consent of each Partner;
(xi) Taking any action that would subject the Limited Partners to
personal liability as a general partner in any jurisdiction upon the
affirmative consent of each Partner;
(xii) The making of, execution of, or delivery of any general
assignment for the benefit of the Partnership's creditors upon the
affirmative consent of each Partner;
(xiii) Any matter in the partnership agreement of IP-IV or any
Investing Partnership that requires the consent of the Limited Partners or
of the limited partner or a general partner other than the managing general
partner of IP-IV or an Investing Partnership; provided, however, that the
consent required under this clause (xiii) shall require the approval of the
applicable percentage of Limited Partners that would have been required if
such consent were required under this Agreement or if no percentage is
specified hereunder, seventy percent (70%); and provided further, that the
amount or timing of any distributions to the Partnership from any Investing
Partnership or IP-IV may not be changed in a manner inconsistent with the
amount or timing of
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distributions under this Agreement without the unanimous consent of the
Limited Partners and the General Partner;
(xiv) The approval of a transaction with Tele-Communications, Inc. or
any of its affiliates in an amount greater than five hundred thousand
dollars ($500,000) or transactions less than five hundred thousand dollars
($500,000), which exceed an aggregate of two million dollars ($2,000,000),
in any twelve (12) month period, upon the affirmative consent of a majority
in interest of the Limited Partners (other than TCI or any of its
affiliates); provided, however, that purchases of programming and equipment
on no less favorable to the Partnership than arms'-length terms and in the
ordinary course of business shall not require any approval by the Limited
Partners; and provided further, that the transactions set forth on Exhibit
2 hereto may be consummated by the Partnership, IP-IV or any Investing
Partnership without any further consent of the Limited Partners; and
(xv) The approval of any waiver of rights of the Partnership under
the IPWT Contribution Agreement if such waiver would result in the
Partnership forgoing rights valued in excess of five percent (5%) of the
total consideration paid by the Partnership for the contribution of
partnership interests and debt transferred under such agreement.
(c) Annual Operating Plan. The General Partner shall prepare and submit to
the Limited Partner having the largest interest as a Limited Partner in the
Partnership for approval (which approval shall not be unreasonably withheld)
each year an annual operating plan for the Partnership (including IP-IV and the
Investing Partnerships) which shall also set forth the amounts to be expended by
the Partnership, IP-IV or any Investing Partnership for capital expenditures in
the following categories: system rebuild, plant extensions, converters and
related equipment, plant maintenance and miscellaneous expenditures. A copy of
the final approved operating plan shall be sent to each Limited Partner.
Notwithstanding any provision of this Agreement to the contrary, the General
Partner on behalf of the Partnership as General Partner of IP-IV and each
Investing Partnership shall cause IP-IV and each Investing Partnership not to
make any expenditures which would cause expenditures in any enumerated category
of the annual operating plan to exceed the approved amount for such category by
more than ten percent (10%) without the consent of the largest limited partner
as set forth above.
(d) Advisory Committee. The Partnership will form an Advisory Committee
(the "Advisory Committee") consisting of one
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representative from each of the seven (7) Limited Partners with the largest
aggregate interests in the Partnership (for purposes of selection of the
Advisory Committee, (i) each of the interests of GECC as a Preferred Limited
Partner and a Limited Partner shall be aggregated, (ii) each of the interests of
NationsBanc Investment Corp. and Atlantic Equity Corporation as Limited Partners
shall be aggregated, (iii) each of the interests of Mellon Bank, N.A., as
Trustee for Third Plaza Trust and the interests of Mellon Bank, N.A., as Trustee
for Fourth Plaza Trust as Limited Partners shall be aggregated, and (iv) each of
the interests of the IP Holdings Affiliates (as that term is defined in Exhibit
1 hereto) shall be aggregated). For purposes of this Agreement, the
determination of aggregate Limited Partner interests in the Partnership shall be
based on the aggregate Limited Partner interests in the Partnership held by a
Limited Partner and any affiliates thereof, which aggregate holdings shall
entitle such Limited Partner and affiliates, if any, to one representative on
the Advisory Committee. The General Partner will be responsible for
administration of the Advisory Committee and shall have the right to attend any
meeting of the Advisory Committee, but shall be excluded from Advisory Committee
membership. The General Partner will distribute to the Advisory Committee
monthly profit and loss statements of the Partnership and any other monthly
financial statements prepared for management personnel. The General Partner will
distribute to the Advisory Committee quarterly profit and loss statements,
balance sheets and statements of cash flow of the Partnership. The General
Partner will distribute to the Advisory Committee the proposed annual operating
plan at the same time that it is submitted pursuant to Section 4.7(c) to the
Limited Partner having the largest interest in the Partnership, and each member
of the Advisory Committee shall have the right to consult with the General
Partner regarding such plan for ten (10) days after receipt. In addition, the
General Partner will distribute the foregoing reports to any Limited Partner
that would be entitled to be on the Advisory Committee but due to regulatory
requirements is precluded from membership on the Advisory Committee. The
Advisory Committee (including any Limited Partner that because of regulatory
requirements is precluded from membership on the Advisory Committee) will meet
quarterly in a location approved by the General Partner and a majority of the
members of the Advisory Committee, and will consult with and advise the General
Partner with respect to the business of the Partnership and perform such other
advisory functions as may be requested by the General Partner from time to time;
provided, however, that the Advisory Committee shall not perform any functions
or duties, which, if performed by a Limited Partner, would constitute
participation in the control of the business of the Partnership under the Act.
The doing of any act or the failure to do any act by any member of the Advisory
Committee, acting in its capacity as such, the effect of which may cause or
result in loss, liability, damage or expense to the Partnership or any Partner,
shall not subject such member to any liability to the
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Partnership or to any Partner, except that such member may be so liable if it
acted fraudulently or in bad faith or was guilty of willful misconduct or a
breach of this Agreement. The Partnership shall pay all reasonable expenses of
each member of the Advisory Committee incurred in connection with attendance at
Advisory Committee meetings or otherwise in the performance of his or her duties
as a member of the Advisory Committee. In the event that interests in the
Partnership are converted into or exchanged for interests in a corporation
(other than in connection with a sale of interests in the Partnership), the
General Partner will take all actions necessary to cause a director of such
corporation at all times to be a person designated by each Limited Partner
entitled to a representative on the Advisory Committee, so long as such Limited
Partner owns an interest in such corporation.
(e) Dissolution or Bankruptcy of a Limited Partner. In the event of the
dissolution, liquidation, bankruptcy or insolvency of a Limited Partner, the
interest of such Limited Partner will continue at the risk of the Partnership
business until the dissolution and winding up of the Partnership. The legal
representative of a Limited Partner who has dissolved, liquidated or been
declared bankrupt or become insolvent will succeed to such Limited Partner's
interest in the Partnership, but will not be a substituted Limited Partner
without the prior written consent of the General Partner which consent may be
granted or denied in the sole and absolute discretion of the General Partner
without the consent of any Limited Partner.
4.8 Successor General Partner.
(a) Removal of the General Partner.
(i) Seventy percent (70%) in interest of the Limited Partners may initiate
removal of the General Partner by delivering written notice to the General
Partner (x) specifying one or more grounds for removal that the Limited Partners
believe exist, and, (y) if the notice specifies grounds for removal described in
Section 4.8(a)(i)(A), selecting an individual to arbitrate whether such grounds
exist in accordance with Section 4.8(a)(ii). For purposes of this Section
4.8(a), grounds for removal means any of the following:
(A) conduct by or on behalf of the General Partner in connection with
the Partnership that constitutes willful misconduct, bad faith, gross
negligence, reckless disregard of its duties, criminal intent, or a
material breach of this Agreement;
(B) acceleration of the senior debt of the Partnership, IP-IV, any
Investing Partnership or any operating company for any reason; or
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(C) the occurrence of any event of default that permits acceleration of
the Partnership's, IP-IV's, any Investing Partnership's or any operating
company's senior debt, if such event of default has not been waived or
cured within sixty (60) days of the date the General Partner knew or should
have known of its occurrence.
(ii) The existence of grounds for removal with respect to matters described
in Section 4.8(a)(i)(A) shall be determined by arbitration. Within ten (10)
business days after its receipt of the Limited Partners' notice described in
Section 4.8(a)(i), the General Partner shall send a written notice to the
Limited Partners selecting a second individual to arbitrate whether grounds for
removal exist. If the General Partner fails to select a second arbitrator within
the time period specified in the preceding sentence, the existence of grounds
for removal shall be determined by the arbitrator selected by the Limited
Partners (and such arbitrator shall be deemed to be the "arbitration panel" for
purposes of this Section 4.8(a)). If the General Partner selects a second
arbitrator within the specified time period, the existence of grounds for
removal shall be determined by an arbitration panel consisting of the arbitrator
selected by the Limited Partners, the arbitrator selected by the General
Partner, and a third arbitrator selected by the two arbitrators previously
selected. None of the arbitrators selected pursuant to this Section 4.8(a) shall
be associated or affiliated with any of the Partners or with any partner of the
General Partner. The arbitration panel shall conduct its proceedings in San
Francisco in accordance with the commercial rules of the American Arbitration
Association then in effect and the determination of such panel shall be final
and binding upon and enforceable against all Partners.
(iii) If the required percent of the Limited Partners (with respect to
matters described in Section 4.8(a)(i)(B) or (C)) or the arbitration panel (with
respect to matters described in Section 4.8(a)(i)(A)) determines that grounds
for removal exist, then:
(A) A successor general partner of the Partnership shall be selected
by seventy percent (70%) in interest of the Limited Partners. If the
Limited Partners are unable to agree on a successor general partner within
sixty (60) days after the determination that grounds for removal exist, the
Partnership shall be dissolved in accordance with Article 7.
(B) Promptly following the determination that grounds for removal
exist, the Partners and the partners of the General Partner shall undertake
to obtain any government consents and approvals necessary to permit the
actions described in the following paragraphs of this Section 4.8(a)(iii)
to be taken.
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Such actions shall be taken as soon as practicable after all such consents
and approvals have been obtained; provided, however, that if all such
consents and approvals shall not have been obtained within one (1) year
after the determination by the arbitration panel that grounds for removal
exist, the Partnership shall be dissolved in accordance with Article 7.
(C) The successor general partner designated in accordance with
Section 4.8(a)(iii)(A) shall be admitted as the general partner of the
Partnership and the General Partner shall be converted into a limited
partner of the Partnership as set forth in Section 4.8(a)(iii)(D). The
successor general partner shall, beginning on the date of admission, have
the same authority and obligations that the removed general partner had and
shall have such rights to distributions and allocations as are determined
by the unanimous consent of the Limited Partners and the removed General
Partner. Upon the admission of the successor general partner, the rights to
distributions and allocations of the Partners shall be modified to the
extent required to reflect the rights accorded to the successor general
partner. The admission of a successor general partner to the Partnership
shall be deemed to have occurred prior to the effective date of the
conversion of the General Partner.
(D) Upon removal of the General Partner as general partner of the
Partnership, its interest in the Partnership shall be converted to a
limited partnership interest and the Partnership Agreement shall be amended
to reflect the events set forth in this Section 4.8.
(E) The removed General Partner shall remain liable for any
obligations and liabilities incurred by it as general partner prior to the
effective date of its removal but shall be free of any and all obligations
or liabilities incurred on account of the activities of the general partner
of the Partnership from and after that time.
(b) Withdrawal of the General Partner.
(i) For purposes of this Section 4.8(b), "withdrawal of the General
Partner" shall include the occurrence of any of the following:
(A) any event that causes the General Partner to cease to be the
General Partner;
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(B) the bankruptcy, insolvency, or appointment of a trustee to manage
the affairs of the General Partner or Leo J. Hindery, Jr.;
(C) the dissolution, whether or not required by operation of law or
judicial decree, of the General Partner;
(D) the death of Leo J. Hindery, Jr.;
(E) the incapacity of Leo J. Hindery, Jr. such that he is unable to
perform substantially all of his duties as general partner of the General
Partner for a period of nine (9) months; or
(F) any other event that causes the General Partner to cease to be
controlled directly or indirectly through one or more intermediaries by Leo
J. Hindery, Jr.
(ii) Upon the withdrawal of the General Partner, the provisions of Section
4.8(a)(iii) shall be complied with, however, the time frames set forth in
Sections 4.8(a)(iii)(A) and (B) shall run from the date of withdrawal of the
General Partner.
(c) General Provision Regarding Approvals by the Limited Partners. For
purposes of any provision of this Section 4.8 that refers to the approval of a
specified interest of the Limited Partners, any Limited Partner that is an
affiliate of the General Partner shall not be entitled to consent or approve the
matter at issue and such Limited Partner's interest shall not be taken into
account in determining whether the matter at issue has been approved by Limited
Partners holding the requisite interest.
(d) Right To Recover Damages. (i) Removal of the General Partner pursuant
to this Section 4.8 shall not limit the right of the Partnership or any Partner
to recover any direct compensatory damages suffered by such person as a result
of any breach of this Agreement by the General Partner or any other person.
(ii) Removal of the General Partner, except pursuant to the terms of this
Agreement, shall entitle the General Partner to receive, in cash compensation,
damages for all direct and indirect economic consequences of such removal,
including, but not limited to, damages for all lost profits. Such removed
General Partner's interest in the Partnership shall be converted to a limited
partnership interest pursuant to Section 4.8(a)(iii)(D).
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4.9 Sale Initiation Rights.
(a) Any time after July 31, 1999, Partners (other than
Tele-Communications, Inc. or any directly or indirectly controlled affiliate
thereof which is a Partner (collectively "TCI")) comprising twenty percent (20%)
or more of the Interests in the Partnership may petition the General Partner to
review, report on and recommend (or not) a sale of some or all of the
Partnership's cable systems.
(b) Any time after July 31, 2001, (i) Partners (other than TCI, the
General Partner and InterMedia Partners, a California limited partnership
("IP-I")), comprising a majority or more of the Interests in the Partnership
(other than Interests in the Partnership held by TCI, the General Partner and
IP-I) may force a sale of one (1) or both of the Partnership's two significant
cable system clusters (i.e., (a) middle Tennessee and (b) eastern Tennessee,
eastern Georgia and western South Carolina), by sending a notice to such effect
(the "Sale Notice") to the General Partner; provided that TCI shall have a
"right of first offer" related thereto as provided in Section 4.9(d) and the
terms of any such sale shall be approved by Partners (other than TCI, the
General Partner and IP- I) comprising a majority or more of the Interests in the
Partnership (other than Interests in the Partnership held by TCI, the General
Partner and IP-I), provided that any Sale Notice must include the sale of all of
the systems in each cluster and shall include all significant clusters, or (ii)
Partners (including TCI, the General Partner and IP-I) comprising seventy
percent (70%) or more of the Interests in the Partnership may force a sale of
some or all of the Partnership's cable systems by sending a Sale Notice to the
General Partner and the terms of any such sale shall be approved by Partners
(including TCI, the General Partner and IP-I) comprising seventy percent (70%)
or more of the Interests in the Partnership unless such sale is to TCI in which
case the foregoing percentage required to approve the terms of the sale to TCI
shall be 75%. The Sale Notice shall indicate which cable television systems are
desired to be sold and any desired price. The General Partner shall promptly
respond to the Partners that sent the Sale Notice (the "Sale Partners") with a
good faith proposal for effectuating the sale of the assets specified in the
Sale Notice, such proposal to be approved by the Sale Partners. Immediately upon
approval of such proposal, the General Partner shall use its best efforts to
effect the sale on such terms as soon as is reasonably practicable and the
General Partner will provide the Partners with monthly progress reports on the
sale process.
(c) In addition to Section 4.9(b), at any time, the General Partner may
elect to (i) sell all or substantially all of the Partnership's cable systems
subject to obtaining the consent of Partners (other than TCI) comprising a
majority or more of the Partnership Interests (other than Partnership
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Interests held by TCI); provided that, if the General Partner makes an election
to sell pursuant to this Section 4.9(c)(i) prior to July 31, 2001, TCI shall
have a "right of first refusal" related thereto in accordance with the
procedures set forth in Section 4.9(e) or (ii) sell some or all of the
Partnership's cable systems subject to obtaining the consent of Partners
(including TCI) comprising at least seventy percent (70%) of the Partnership
Interests unless the sale is to TCI in which case the foregoing percentage shall
be 75%.
(d) Before the Partnership shall offer to sell any of the Partnership's
cable television systems pursuant to Section 4.9(b)(i), the General Partner
shall (i) first deliver a notice to TCI offering to sell all such assets to TCI
and specifying the purchase price and other terms on which the General Partner
would propose to sell such assets to any third party (the date of such notice
being the "Notice Date") and (ii) deliver to each Limited Partner a copy of an
appraisal of any such cable television system conducted by an independent
appraisal firm to be selected by the General Partner to the reasonable
satisfaction of the Advisory Committee, provided, that such appraisal firm has
no current or pre-existing relationship with the General Partner or any of its
Affiliates other than transactions in which the appraisal firm (i) represents
the General Partner or any of its Affiliates as a buyer or seller, (ii)
represents the other party to a transaction with the General Partner or any of
its Affiliates as a buyer or seller or (iii) any other transaction in the
ordinary course of business with such appraisal firm on arm's-length terms.
Within thirty (30) days after the Notice Date, TCI may, by giving notice to the
General Partner elect, to purchase all such assets for such purchase price and
on such other terms specified in such notice and shall enter into an agreement
binding it to such purchase within ninety (90) days after its election to
exercise the right under such notice. If TCI fails to notify the General Partner
of its agreement to purchase all of such assets as of the end of such thirty
(30) day period, fails to enter into a purchase agreement within ninety (90)
days of such election date, or fails to purchase the assets within either (i)
one hundred fifty (150) days after entering into a purchase agreement or (ii)
the earlier of ten (10) days after all regulatory and franchise approvals have
been obtained or three hundred sixty (360) days after the Notice Date (each an
"Abandonment Date"), TCI will not have the right to purchase any of such assets
except as provided in the subsequent provisions of this Section 4.9(d) or if the
failure to purchase such assets is due to a breach of such purchase agreement by
the Partnership and, in the event of such abandonment, the TCI affiliates who
are Limited Partners will be deemed to have approved any subsequent sale by the
Partnership pursuant to the terms of this Section 4.9(d); provided, however,
that nothing contained herein shall preclude TCI and its affiliates from
participating in any auction of such assets by the Partnership. If TCI elects
not to or does not purchase such assets offered in accordance with the
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terms of this Section 4.9(d), the General Partner may thereafter sell such
assets to any third party only at a price equal to or greater than the price and
on terms and conditions not materially more favorable to the purchaser than
those specified in the notice delivered pursuant to this Section 4.9(d),
provided that a binding agreement for such sale is executed within two hundred
ten (210) days after the Abandonment Date and such sale shall be consummated
within four hundred fifty (450) days of the Abandonment Date and, provided,
further that in the event TCI enters into a purchase agreement with respect to
such assets, but fails to close (other than due to a breach of the agreement by
the Partnership), then the Partnership will be free to sell such assets at a
price less than the price, and on terms and conditions materially more favorable
to the purchaser than those, agreed to with TCI, but TCI will be permitted to
participate in any auction by the Partnership for such assets. If a binding
agreement is not executed within such two hundred ten (210) day period or such
sale is not consummated within such four hundred fifty (450) day period, then
the Partnership shall be required to again offer such assets to TCI pursuant to
and must otherwise comply with the terms of this Section 4.9(d) unless the
Partnership had previously entered into an agreement with respect to such assets
and TCI had failed to close such agreement due to failure to obtain regulatory
or franchise consents or due to a breach by TCI. The rights of TCI pursuant to
this Section shall terminate if TCI enters into a binding agreement with respect
to any of the Partnership's cable television systems and fails to close such
purchase due to its breach; provided that TCI and its affiliates may participate
in any auction by the Partnership of its assets.
(e) If the Partnership desires to sell any of its cable systems as
provided in Section 4.9(c)(i) to a third party pursuant to a bona fide written
offer (which shall set forth all material terms of the proposed sale but may be
subject to reasonable and customary conditions in the cable television industry)
by such third party to purchase such cable systems for cash, then the
Partnership shall first offer to sell such cable systems to TCI at the price and
on the other terms stated in such bona fide written offer. The Partnership's
offer to TCI shall be in writing and shall be accompanied by a copy of the third
party bona fide offer. TCI shall have thirty (30) days from the date of receipt
of such offer in which to accept it by giving written notice of such acceptance
to the General Partner. If TCI fails to accept the Partnership's offer within
such thirty (30) day period, the Partnership will be free to sell such cable
systems for a period of three hundred sixty (360) days after the end of the
thirty (30) day right of first refusal period, or such longer or shorter period
as may be specified in the original bona fide offer, but only at a price and on
terms not more favorable to the purchaser than those contained in the bona fide
offer. If TCI timely accepts the Partnership's offer, TCI must enter into an
agreement binding it to such purchase within ninety (90) days after its
acceptance of such offer and
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must purchase such cable systems within either (i) one hundred fifty (150) days
after entering into a purchase agreement or (ii) the earlier of ten (10) days
after all regulatory and franchise approvals have been obtained or three hundred
sixty (360) days after receipt of the Partnership's offer, or in either case,
such longer or shorter period as may have been specified in the original bona
fide offer. If TCI accepts the Partnership's offer but fails to enter into a
purchase agreement or fails to purchase the cable systems, in either case within
the respective periods specified in the preceding sentence, then the Partnership
may sell such cable systems at a price and on terms not more favorable to the
purchaser than those contained in the bona fide written offer within the time
period specified in such offer or, if no time period is specified in the offer,
within three hundred sixty (360) days and TCI will not have the right to
purchase any of such cable systems within such period. Any sale to any third
party pursuant to this Section 4.9(e) shall not be connected in any way with any
other transaction (including the sale of any other assets) under which
consideration of any kind is transferred to the third party by the Partnership
such that the price purported to be paid for the Partnership's cable systems (as
specified in the bona fide offer) could overstate the value assigned thereto by
the third party.
(f) For purposes of this Section 4.9, all references to the
Partnership's cable systems shall mean any cable system in which the Partnership
has an ownership interest either directly or indirectly through IP-IV or any
Investing Partnership.
4.10 Nonvoting Interests. Notwithstanding anything to the contrary in
this Agreement, if (i) a Limited Partner or any affiliate of such Limited
Partner is subject to the Bank Holding Company Act of 1956, as amended, and
Regulation Y of the Board of Governors of the Federal Reserve System (the "FRB")
promulgated thereunder (such Limited Partner and any of its affiliates
hereinafter collectively referred to as a "BHC LP"), (ii) the limited
partnership interests of the Partnership (the "Interests") held by the BHC LP
exceed 5.0% of the then total outstanding Interests (exclusive of the Nonvoting
Interests, as defined below); and (iii) the BHC LP has not received the approval
of the FRB to hold more than 5.0% of the Interests, then the overline amount of
the Interests in excess of 5.0% shall constitute a separate class of limited
partnership interests hereinafter referred to as "Nonvoting Interests". In
addition, the aggregate amount of the Interests and Nonvoting Interests held by
a BHC LP, that has not received the approval of the FRB to hold more than 5.0%
of the Interests, shall at no time exceed 24.9% of the aggregate amount of all
outstanding Interests and Nonvoting Interests. The rights, privileges, benefits
and liabilities appertaining to the Nonvoting Interests shall be identical in
all respects to the rights, privileges, benefits and liabilities appertaining to
the Interests, except that (i) holders of Nonvoting Interests shall not be
entitled to
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vote upon or give consents in respect of any action by the Partners, except
those matters that, in the judgment of the BHC LP, acting upon advice of legal
counsel, would significantly and adversely affect the rights or preference of
its Interests or Nonvoting Interests, including but not limited to the issuance
of additional Interests or Nonvoting Interests; any modification or amendment
relating to the terms of its Interests, Nonvoting Interests or this Agreement;
or the dissolution of the Partnership and (ii) the Nonvoting Interests (other
than such Nonvoting Interests that are subject to the exception set forth in the
immediately preceding clause (i)) shall not be included in either the numerator
or the denominator of any computation of the required percentage in interest of
the Limited Partners hereunder for all such purposes (except where the consent
of the holders of the Nonvoting Interests is required).
ARTICLE 5
Tax Matters and Reports
5.1 Filing of Tax Returns. The General Partner, at the expense of the
Partnership, shall prepare and file, or cause the accountants of the Partnership
to prepare and file, all required tax returns, including a federal information
tax return in compliance with section 6031 of the Code and any required state
and local income tax and information returns for each tax year of the
Partnership. The General Partner shall act as the Tax Matters Partner of the
Partnership as that term is defined in section 6231(a)(7) of the Code.
5.2 Tax Reports to Current and Former Partners. Within ninety (90) days
of the end of each fiscal year, the Partnership shall prepare and mail, or cause
its accountants to prepare and mail, to each Partner and, to the extent
necessary, to each former Partner (or its legal representatives), a report
setting forth in sufficient detail such information as is required to be
furnished to the Partners by law (e.g., section 6031(b) of the Code and
regulations thereunder) and as shall enable such Partner or former Partner (or
his or its legal representatives) to prepare their respective federal and state
income tax or informational returns in accordance with the laws, rules and
regulations then prevailing. Partners subject to ERISA will receive information
necessary for them to calculate the fair market value of their Partnership
Interests (determined in accordance with Section 4.4).
5.3 Restriction on General Partner Activity With Respect to Publicly
Traded Partnerships. Without the consent of all of the Limited Partners, the
General Partner shall not have the authority on behalf of the Partnership to:
(a) list, recognize, or facilitate the trading of partnership interests
(or any interest therein) on any "established
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securities market" within the meaning of section 7704 of the Code, or permit any
of its affiliates to take such actions, if as a result thereof the Partnership
might be taxed for federal income tax purposes as an association taxable as a
corporation; or
(b) create for the partnership interests (or any interest therein) a
"secondary market (or the substantial equivalent thereof)" within the meaning of
section 7704 of the Code or otherwise permit, recognize or facilitate the
trading of such interests (or any interest therein) on any such market, or
permit any of its affiliates (or to the extent the General Partner has rights
with respect thereto, the selling agents or any of their affiliates) to take
such actions, if as a result thereof the Partnership might be taxed for federal
income tax purposes as an association taxable as a corporation.
5.4 Duties and Obligations of the General Partner With Respect to
Publicly Traded Partnerships. The General Partner shall monitor the transfers of
partnership interests to determine if such interests are being traded on an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of section 7704 of the Code, and shall
take (and cause its affiliates to take) all steps within its power and authority
as are reasonably necessary or appropriate to prevent any such trading of
interests.
5.5 Books and Records. Complete books and records accurately reflecting
the accounts, business, transactions and Partners of the Partnership shall be
maintained and kept by the General Partner at the Partnership's principal place
of business. The books and records of the Partnership required to be maintained
by section 15615 of the Act shall be open at reasonable business hours on prior
appointment for inspection and copying by the Partners. Notwithstanding anything
to the contrary in this Agreement, the General Partner shall have the right to
keep confidential from the Limited Partners for such period of time as the
General Partner deems reasonable, any information which the Partnership is
required by law or by agreement with a third party to keep confidential and any
information which relates to its purchasing of individual items of programming,
plant or equipment which it reasonably deems confidential.
5.6 Fiscal Year. Except as may otherwise be required by the federal tax
laws, the fiscal year of the Partnership for both financial and tax reporting
purposes shall end on December 31.
5.7 Method of Accounting. The books and accounts of the Partnership
shall be maintained using the accrual method of accounting for financial
reporting purposes and for tax purposes and shall be annually audited by a "Big
Six" accounting firm (or a successor thereof). Those documents relating to
allocations
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of items of Partnership income, gain, loss, deduction or credit and Capital
Accounts shall be kept under federal income tax accounting principles as
provided herein.
ARTICLE 6
Conflicts of Interest; Indemnification; Exculpation
6.1 Outside Activities. Without the consent of seventy percent (70%) in
interest of the Limited Partners, the General Partner (and its partners,
employees, agents and affiliates, including, but not limited to, Leo J. Hindery,
Jr.) may not begin the offer and sale of interests in other enterprises with the
purpose of investing in cable television systems until the earlier of July 31,
1997 or such time as sixty-six and two-thirds percent (66-2/3%) of the committed
capital contributions to the Partnership shall be invested or committed for
investment. Without the consent of a majority in interest of the Limited
Partners, the General Partner (and its partners, employees, agents and
affiliates, including, but not limited to, Leo J. Hindery, Jr.) may not begin to
actively supervise the investment of capital of such other enterprises or
partnerships until the earlier of July 31, 1997 or such time as ninety-five
percent (95%) of the committed capital contributions to the Partnership shall be
invested or committed for investment. The General Partner shall first offer any
investment opportunities within the scope of the Partnership, IP-IV's and the
Investing Partnerships' business purpose and for which the Partnership, IP-IV or
the Investing Partnerships have adequate resources to take advantage of the
opportunity to the Partnership, IP-IV and the Investing Partnerships and, to the
extent that the Partnership and the Investing Partnerships, after good faith
consideration by the General Partner, do not invest in such opportunity or take
all of such opportunity, the General Partner may elect to give or share such
investment opportunity to or with one or more of the following: any Partner, any
officer, director, shareholder, partner, employee or affiliate of a Partner, any
enterprise or partnership in which the General Partner has an interest, or any
nonaffiliated person. Notwithstanding the foregoing, in the event the General
Partner is permitted under the provisions of this Section 6.1 to begin the offer
and sale of interests in other enterprises with the purpose of investing in
cable television systems, and the General Partner believes such enterprises may
invest in cable television systems in areas contiguous to those owned by the
Partnership, IP-IV or any Investing Partnership, the General Partner will offer
the Limited Partners an opportunity to invest in such enterprise. Except as set
forth in this Section 6.1, the General Partner or its partners, employees,
agents or affiliates shall not be prohibited from engaging directly or
indirectly in other activities, or from directly or indirectly purchasing,
selling and holding securities or assets in cable television systems or
corporations for their account or for the
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accounts of others. Any Limited Partner (and their partners, employees, agents
and affiliates) may engage in any other enterprises, including enterprises in
competition or in conflict with the Partnership. The Partnership shall not have
any right to any income or profit derived by any Partner, or its partners,
officers, directors, employees, agents or affiliates from any enterprise,
opportunity or transactions permitted by this paragraph. Each Limited Partner
shall have the right to transact business with the Partnership, IP-IV or the
Investing Partnerships. Neither the General Partner nor any of its affiliates
shall sell securities or assets to or purchase securities or assets from the
Partnership without the unanimous consent of the Limited Partners; provided that
the transactions set forth in Exhibit 2 hereto may be consummated by the
Partnership, IP-IV or any Investing Partnership without any further consent of
the Limited Partners. The General Partner may, on behalf of the Partnership or
cable systems of IP-IV or any Investing Partnership, enter into cost and revenue
sharing agreements with cable systems adjacent to those owned by the
Partnership, IP-IV or any Investing Partnership including those systems
purchased by any enterprise or partnership in which the General Partner, any
affiliate of the General Partner or the Partnership or any partner of the
General Partner has an interest (the "Adjacent Systems"), to operate the
Adjacent Systems as a single system with the cable systems of the Partnership,
IP-IV or any Investing Partnership with costs equitably allocated between the
various systems as the General Partner and the owner or operator of such
Adjacent System shall determine based on the relative costs associated with such
systems and, if determined by the General Partner and the owner or operator of
such Adjacent System to be in the best interests of the Partnership, IP-IV, the
Investing Partnerships and the Adjacent Systems, to sell such systems as a
single system and allocate the sales revenues in such manner as such parties
deem appropriate based on the relative values of such systems; provided,
however, the terms of any such arrangement are disclosed to the Limited Partners
and are on arm's-length terms and conditions. The parties hereto hereby waive,
and covenant not to sue on the basis of, any law (statutory, common law or
otherwise) respecting the rights and obligations of the Partners inter se which
is or may be inconsistent with this Section 6.1 with respect to the matters
covered by this Section 6.1, but in no event shall the foregoing be construed as
limiting any rights or remedies with respect to a breach of this Section 6.1.
6.2 Contracts With the General Partner, Affiliates and Limited
Partners. The General Partner may, on behalf of the Partnership, IP-IV or
portfolio companies of the Investing Partnerships, enter into contracts with
itself or any of its partners, employees, agents or affiliates, including but
not limited to InterMedia Management, Inc. ("IMI"), a corporation wholly owned
by Leo J. Hindery, Jr.; provided, however, that except to the extent that the
proceeds therefrom offset but do not exceed the Management Fee payable by the
Partnership, such
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transactions shall be on terms no less favorable to the Partnership than are
generally afforded from unrelated third parties or shall require the approval
of seventy percent (70%) in interest of the Limited Partners, excluding any
interest as a Limited Partner owned or controlled directly or indirectly by the
General Partner, which approval shall not be unreasonably withheld. The
validity of any transaction, agreement or payment involving the Partnership,
IP-IV or an Investing Partnership and the General Partner or any affiliate of
the General Partner or a Limited Partner shall not be affected by reason of (a)
the relationship between the Partnership, IP-IV or portfolio companies of an
Investing Partnership, and the General Partner or such partner, employee, agent
or affiliate of the General Partner or a Limited Partner or the relationship
between such partner, employee, agent or affiliate of the General Partner or a
Limited Partner and the General Partner or (b) the absence of approval of said
transaction, agreement or payment by the Limited Partners if the proceeds
therefrom offset but do not exceed the Management Fee.
6.3 Indemnification of the Partners. The Partnership shall indemnify
and hold harmless the General Partner, any Limited Partner, any Advisory
Committee member and any partner, employee or agent of the General Partner, any
Limited Partner or any Advisory Committee member and any employee or agent of
the Partnership and/or the legal representatives of any of them, and each other
person who may incur liability as a general partner in connection with the
management of the Partnership or any corporation or other entity in which the
Partnership has an investment, against all liabilities and expenses (including
amounts paid in satisfaction of judgments, in compromise, and as counsel fees)
reasonably incurred by him or it in connection with the defense or disposition
of any civil action, suit or other proceeding, in which he or it may be involved
or with which he or it may be threatened, while a general partner or serving in
such other capacity or thereafter, by reason of its being or having been a
general partner, or by serving in such other capacity, except with respect to
any matter which constitutes willful misconduct, bad faith, gross negligence or
reckless disregard of the duties of its office, or material breach of this
Agreement. The Partnership shall advance, in the sole discretion of the General
Partner, to the General Partner, any Limited Partner, any Advisory Committee
member and any partner, employee or agent of the General Partner, any Limited
Partner, any Advisory Committee member or the Partnership reasonable attorneys'
fees and other costs and expenses incurred in connection with the defense of any
such action or proceeding. The General Partner hereby agrees, and each employee
or agent of the General Partner and the Partnership shall agree in writing prior
to any such advancement, that in the event he or it receives any such advance,
such indemnified party shall reimburse the Partnership for such fees, costs and
expenses to the extent that it shall be determined that he or it was not
entitled to indemnification under this Section. The rights ac-
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cruing to a General Partner, any Limited Partner and each partner, employee or
agent of the General Partner, any Limited Partner or the Partnership under this
paragraph shall not exclude any other right to which it or they may be lawfully
entitled; provided, that any right of indemnity or reimbursement granted in this
paragraph or to which any indemnified party may be otherwise entitled may only
be satisfied out of the assets of the Partnership, and no withdrawn General
Partner, and no Limited Partner, shall be personally liable with respect to any
such claim for indemnity or reimbursement. Notwithstanding any of the foregoing
to the contrary, the provisions of this Section 6.3 shall not be construed so as
to provide for the indemnification of the General Partner, any Limited Partner,
and Advisory Committee member or any employee or agent of the General Partner,
any Limited Partner or Advisory Committee member for any liability to the extent
(but only to the extent) that such indemnification would be in violation of
applicable law or such liability may not be waived, modified or limited under
applicable law, but shall be construed so as to effectuate the provisions of
this Section 6.3 to the fullest extent permitted by law.
6.4 Exculpation. The General Partner and any partner, employee or agent
of the General Partner or the Partnership shall not be liable to any
Limited Partner or the Partnership for mistakes of judgment or for action or
inaction which the General Partner or any such partner, employee or agent of
the General Partner or the Partnership reasonably believed to be in the best
interests of the Partnership unless action or inaction constitutes willful
misconduct, bad faith, gross negligence, reckless disregard of its duties or
material breach of this Agreement. The General Partner may consult with counsel,
accountants and other experts in respect of Partnership affairs and be fully
protected and justified in any action or inaction which is taken in accordance
with the advice or opinion of such counsel, accountants or other experts,
provided that they shall have selected with reasonable care. Notwithstanding
any of the foregoing to the contrary, the provisions of this section 6.4 shall
not be construed so as to relieve (or attempt to relieve) the General Partner
and any partner, employee or agent of the General Partner or the Partnership of
any liability, to the extent (but only to the extent) that such liability may
not be waved, modified or limited under applicable law, but shall be construed
so as to effectuate the provisions of this Section 6.4 to the fullest extent
permitted by law.
ARTICLE 7
Termination and Dissolution
7.1 No Dissolution. The Partnership shall not be dissolved by the
admission of substituted Limited Partners or by
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the admission of a new General Partner in accordance with the terms of this
Agreement. The dissolution or bankruptcy of a Limited Partner shall not cause a
dissolution of the Partnership.
7.2 Events of Dissolution. The Partnership shall dissolve upon the
first to occur of the following: (i) expiration of the term of the Partnership
specified in Section 1.6 hereof, (ii) the bankruptcy, insolvency or appointment
of a trustee or receiver to manage the affairs of the General Partner, (iii) the
voluntary withdrawal of Leo J. Hindery, Jr. as general partner of the General
Partner if a successor general partner has not been appointed in accordance with
Section 4.8 hereof, (iv) the removal of the General Partner pursuant to Section
4.8(a) if a successor general partner of the Partnership is not appointed
pursuant to Section 4.8 hereof, (v) dissolution being required by operation of
law or judicial decree including, without limitation, the withdrawal of the
General Partner where there is no remaining or surviving general partner, (vi)
the determination by the General Partner with the affirmative consent of seventy
percent (70%) in interest of the Limited Partners, (vii) the Partnership
becoming taxable as a corporation for federal tax purposes or, (viii) the
determination by the General Partner, based upon advice of counsel, that the
Partnership would be required to register as an investment company under the
Investment Company Act and there is no reasonably practicable means of avoiding
such requirement. Notwithstanding anything to the contrary in this Section 7.2,
without the unanimous consent of the Limited Partners, the General Partner
agrees not to voluntarily withdraw as a general partner of the Partnership, and
Leo J. Hindery, Jr. agrees not to voluntarily withdraw as managing general
partner of the General Partner, and the General Partner and Leo J. Hindery, Jr.
each agrees that they will not voluntarily take or permit any action that would
cause the Partnership to cease to be controlled directly or indirectly by Leo J.
Hindery, Jr. and if any of such persons effects such withdrawal or cessation of
control in violation of this Agreement, the Partnership may recover damages for
breach of this Agreement.
7.3 Winding-up. Upon the occurrence of an event of dissolution, the
Partnership shall be wound up and liquidated. The General Partner or, if there
is no general partner or if the General Partner or the general partner of the
General Partner wrongfully caused the dissolution of the Partnership, a
liquidator appointed by a majority in interest of the Limited Partners, shall
proceed with the dissolution and the final distribution. In the dissolution, the
General Partner or such liquidator shall use its best efforts to reduce to cash
and cash equivalent items such assets of the Partnership as the General Partner
or such liquidator shall deem it advisable to sell, subject to obtaining fair
value for such assets and any tax or other legal considerations. A reasonable
time shall be allowed for the orderly winding up of the business and affairs of
the
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Partnership and the liquidation of its assets in order to minimize any losses
otherwise attendant upon such a winding up, provided that the liquidation is
carried out in conformity with the requirements of Section 7.4 and section
1.704-1(b)(2)(ii)(b)(2) and (3) of the Income Tax Regulations.
7.4 Order of Liquidating Payments and Distributions. In settling
accounts after dissolution, the assets of the Partnership shall be distributed
as expeditiously as possible in the following order not later than the end of
the taxable year of the liquidation (i.e., the date upon which the Partnership
ceases to be a going concern as provided in section 1.704-1(b)(2)(ii)(g) of the
Income Tax Regulations) or if later, within ninety (90) days after the date of
such liquidation:
(a) To creditors, including the Partners to the extent of any unpaid
expenses or any outstanding loan or advance;
(b) To the payment of the costs of winding up the affairs of,
liquidating and dissolving the Partnership including, without limitation,
expenses of selling assets of the Partnership, discharging the liabilities of
the Partnership, distributing the assets of the Partnership and terminating the
Partnership in accordance with Section 7.3 hereof;
(c) To the establishment of reasonable reserves to provide for
obligations to creditors;
(d) To the Partners with respect to which any other debts of the
Partnership are owing, other than debts arising out of the expulsion or
withdrawal of a Partner;
(e) To the Preferred Limited Partner in an amount equal to the positive
balance in its Capital Account as determined after all adjustments to such
account for the taxable year of the Partnership during which the liquidation
occurs as are required by this Agreement and section 1.704-1(b) of the Income
Tax Regulations, such adjustments to be made within the time specified in such
Regulations;
(f) To the Partners (other than the Preferred Limited Partner) in the
proportion of their respective Capital Accounts as those accounts are determined
after all adjustments to such accounts for the taxable year of the Partnership
during which the liquidation occurs as are required by this Agreement and
section 1.704-1(b) of the Income Tax Regulations, such adjustments to be made
within the time specified in such Regulations.
7.5 Termination. The Partnership shall terminate following its
dissolution and liquidation pursuant to this Article 7 when all of the
Partnership assets as to which it is practicable to do so in the sole discretion
of the General Partner or the liquidator shall have been converted into cash,
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the net proceeds therefrom, as well as any other assets of the Partnership,
after payment of or due provision for all debts, liabilities and obligations of
the Partnership, shall have been distributed to the Partners as provided for
herein and the Partnership shall have been terminated in the manner required by
the Act.
7.6 Government Regulation.
(a) The General Partner shall use its best efforts to insure that it
and the Partnership are in substantial compliance with those provisions, if any,
of ERISA with which they are obligated by that statute to comply, and to qualify
as a venture capital operating company (as defined in the Department of Labor
regulations promulgated under ERISA) subject to the following provisions of this
Section 7.6.
(b) In the event that at any time after its admission to the
Partnership, (i) any Limited Partner delivers to the General Partner a written
opinion of counsel, reasonably satisfactory to the General Partner, to the
effect that, by reason of the adoption of any law, rule or regulation or the
issuance of any order or directive by any governmental authority (a "Regulatory
Change"), such Limited Partner's continued participation in the Partnership or
the making by such Limited Partner of any additional capital contribution to the
Partnership would violate any law, rule, regulation, license, permit or other
regulatory requirement binding upon or required of such Limited Partner or would
subject such Limited Partner to any penalty or tax to which it was not subject
at the time of its admission to the Partnership and which is, in the reasonable
judgment of such Limited Partner, material in relation to its investment in the
Partnership and is not applicable to such Limited Partner's investments
generally or (ii) the General Partner delivers to any Limited Partner an opinion
of the Partnership's counsel to the same effect or to the effect that, by reason
of a Regulatory Change, such Limited Partner's continued participation in the
Partnership would materially restrict the continued conduct of the Partnership's
business (any such event described in clause (i) or (ii) of this paragraph (b)
is referred to as an "Adverse Regulatory Development" and the Limited Partner
affected thereby is referred to as the "Affected Partner"), then the General
Partner and the Affected Partner shall cooperate with each other in taking or
causing to be taken such action as shall eliminate such Adverse Regulatory
Development. Any such opinion of counsel shall describe the applicable
Regulatory Change and its effect on the Affected Partner and the Partnership
and, insofar as practicable, the actions which would eliminate such Adverse
Regulatory Development.
(c) If an Adverse Regulatory Development cannot otherwise be resolved
to the mutual satisfaction of the Affected Partner and the General Partner, the
General Partner and the Affected Partner shall each use its best efforts to find
a purchaser for
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all the Affected Partner's interest in the Partnership, or such part thereof as
shall be sufficient to eliminate the Adverse Regulatory Development, on terms
and conditions reasonably acceptable to the Affected Partner, and if acceptable
to the Affected Partner, the General Partner shall consent to the sale of such
interest as long as, in the reasonable judgment of the General Partner, the
purchaser thereof has sufficient financial resources to satisfy any remaining
obligation to contribute capital to the Partnership to be assumed by such
purchaser from the Affected Partner with respect to the interest in the
Partnership to be purchased by it and meets the requirements for transfer set
forth in Section 8.1.
(d) If, within thirty (30) business days after the delivery of an
opinion referred to in paragraph (b) above or such later time as the General
Partner and the Affected Partner shall agree, the General Partner and the
Affected Partner have not resolved to their mutual satisfaction the Adverse
Regulatory Development, then the Partnership may take any of the following
actions with respect to the Affected Partner's interest in the Partnership, but
only upon the delivery to the Affected Partner of an opinion of the
Partnership's counsel (which opinion shall be reasonably acceptable to the
Affected Partner) to the effect that the taking of such action should eliminate
the Adverse Regulatory Development: (i) release the Affected Partner from making
any capital contribution with respect to any new investment by the Partnership
(and appropriate provisions shall be made in this Agreement to preserve such
Affected Partner's interest in all existing investments and to eliminate such
Affected Partner's participation in future investments); (ii) redeem the
Affected Partner's interest in the Partnership in exchange for the assignment to
the Affected Partner of the percentage share of the Partnership's cash and
short-term investments which the Affected Partner would receive if all such
assets were then distributed to the Partners plus the percentage share in each
of the Partnership's other investments and any other assets of the Partnership
equal to the share of all such assets it would receive if the Partnership were
dissolved at such time and all such assets were liquidated for their then value
as determined in accordance with Section 4.4(b), or a cash payment in lieu
thereof in an amount equal to the fair market value (as determined pursuant to
Section 4.4) of their Partnership Interest as of the date of the determination
of an Adverse Regulatory Development; or (iii) terminate and dissolve the
Partnership and, if in the judgment of the General Partner it is prudent to do
so, distribute all or any portion of the Partnership's investments to the
Partners in kind so that, as nearly as practicable, each Partner receives an
equal portion of its total distribution in each investment distributed in kind,
in which event the General Partner shall offer to establish a successor
partnership on terms and conditions in all material respects the same as this
Partnership by contributing the property distributed to them by this
Partnership. The Partnership shall seek to take the foregoing actions in the
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order stated and shall take an action subsequently stated only if, in accordance
with the opinion of counsel referred to above, none of the actions previously
stated should eliminate the Adverse Regulatory Development.
(e) If, within sixty (60) business days after the delivery of the
opinion referred to in paragraph (b) above or such later time as the General
Partner and the Affected Partner shall agree upon, the General Partner and the
Affected Partner have not resolved to their mutual satisfaction the Adverse
Regulatory Development or the Partnership has not taken any of the actions
permitted by paragraph (d) above to eliminate the Adverse Regulatory
Development, the Affected Partner, by notice to the Partnership, may require the
Partnership to take any of such actions but only upon the delivery to the
Partnership of an opinion of counsel (which opinion and counsel shall be
reasonably acceptable to the General Partner) to the effect that the taking of
such action should eliminate the Adverse Regulatory Development; provided that
the Affected Partner shall require the Partnership to take any of the actions
stated in paragraph (d) only if, in the opinion of counsel delivered pursuant to
this paragraph (e), none of the actions stated in paragraph (d) before the
action proposed to be taken would likely eliminate the Adverse Regulatory
Development; and provided further that the Partnership shall not be required to
take the actions referred to in clause (iii) of paragraph (d) if the Regulatory
Change is the imposition on the Affected Partner of a penalty or tax of the type
referred to in paragraph (b) and the General Partner reasonably determines that
such action would have an effect on the other Limited Partners that is material
and adverse in relation to their investment in the Partnership.
(f) The Partnership and the Affected Partner shall each bear all
expenses it may respectively incur in connection with taking any of the actions
permitted or required of it by paragraphs (b) through (e) of this Section 7.6,
including the costs of providing any opinions of counsel it is required to
provide.
(g) Whenever the General Partner proposes to make any cash payment to
an Affected Partner as permitted by paragraph (d) or as may otherwise be agreed
upon by the Affected Partner and the General Partner or to take any other action
pursuant to this Section 7.6 which would adversely and materially affect the
interest of the other Limited Partners in relation to their investment in the
Partnership, the General Partner shall first obtain the approval of seventy
percent (70%) of such Limited Partners for such payment or action.
(h) The Partnership or an Affected Partner may take the actions
contemplated by this Section 7.6 either (i) in advance of any Regulatory Change
coming into effect if all necessary governmental action has occurred to cause
such Regulatory Change to come into effect or (ii) prior to expiration of the
time
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periods provided hereunder for the taking of such actions if in the opinion of
counsel referred to herein doing so is necessary to avoid an Adverse Regulatory
Development coming into effect with respect to an Affected Partner.
7.7 Orderly Methods of Liquidating Payments. Notwithstanding anything
to the contrary in this Article 7, if required to maximize the proceeds of
liquidation, the General Partner (or the liquidator chosen in accordance with
Section 7.3) may, with the consent of seventy percent (70%) in interest of the
Limited Partners, implement the distribution provisions of Section 7.4(f) hereof
by transfer, on behalf of the Partners, of the assets of the Partnership to a
liquidating trustee or trustees.
ARTICLE 8
Transfer of Interest, Failure To Pay
Capital Contributions, Beneficial Owners
8.1 Transfer of Partnership Interest. No Limited Partner shall sell,
assign, mortgage, encumber, hypothecate or otherwise transfer, whether
voluntarily or involuntarily, its interest in the Partnership or any part
thereof, unless (x) any such transferee entity meets the suitability
requirements originally imposed under the subscription agreement on the
transferring Limited Partner and (y) such assignment or transfer will not (and,
upon request of the General Partner, the transferring Limited Partner provides
an opinion of counsel in form and substance satisfactory to the General Partner
that such assignment or transfer will not) (A) violate any applicable federal or
state securities laws or regulations, subject the Partnership to registration as
an investment company or election as a "business development company" under the
Investment Company Act; (B) require the General Partner or any of its partners
to register as an investment adviser under the Investment Advisers Act of 1940;
(C) violate any other federal, state or local laws; (D) effect a termination of
the Partnership under section 708 of the Code; or (E) cause the Partnership to
be treated as an association taxable as a corporation for federal income tax
purposes, or violate this Agreement. Notwithstanding the preceding sentence, a
Partner may assign or transfer its interest in the Partnership if any such
assignment or transfer effects a termination of the Partnership under section
708 of the Code so long as the transferring Partner agrees to indemnify and hold
harmless the Partnership and all other Partners against any and all costs and
expenses incurred as a direct result of a termination of the Partnership under
section 708 of the Code. No transferee or assignee of all or any part of a
Limited Partner's interest shall become a Limited Partner without the prior
written consent of the General Partner which consent shall not be unreasonably
withheld so long as such Partner sells the lesser of all its Partnership
Interests or a Partnership Interest representing an initial contribution of at
least
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$5,000,000 and in no event shall the substitution of an assignee or transferee
as a Limited Partner require the consent of any Limited Partner. Any purported
transfer of any interest of a Limited Partner in the Partnership or any part
thereof not in compliance with this Section 8.1 shall be void and of no force or
effect and the transferring Partner shall be liable to the other Partners and
the Partnership for all liabilities, obligations, damages, losses, costs and
expenses (including reasonable attorneys' fees and court costs) arising as a
result of such noncomplying transfer.
8.2 Transfer of IP Holdings Affiliates' Interests. Notwithstanding the
provisions of Section 8.1, any IP Holdings Affiliate (as that term is defined in
Exhibit 1 hereto) may transfer any or all of its interest in the Partnership to
any other IP Holdings Affiliate at any time, provided that such transfer is made
in compliance with clauses (x) and (y) of Section 8.1.
8.3 Indemnification. (a) Each Limited Partner and substituted Limited
Partner (each an "Indemnifying Person") shall indemnify and hold harmless the
Partnership, the General Partner and every other Limited Partner (each an
"Indemnified Person") who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of or arising from
(including without limitation from any actual or alleged misrepresentation or
misstatement of facts or omission to represent or state facts made by such
Limited Partner in connection with) (i) any assignment, transfer, encumbrance or
other disposition of all or any part of such Limited Partner's Partnership
Interest, or (ii) the admission of such substituted Limited Partner, against
losses, liabilities and expenses for which the Partnership or other person has
not otherwise been reimbursed (including attorneys' fees, judgments, fines and
amounts paid in settlement) actually and reasonably incurred by it in connection
with such action, suit or proceeding.
(b) Each Indemnifying Person agrees that no Indemnifying Person will,
without the prior written consent of the Indemnified Person, settle, compromise
or consent to the entry of any judgment in any pending or threatened action in
respect of which indemnification may be sought under this Agreement unless such
settlement includes an unconditional release of the Indemnified Person from all
liability arising therefrom. Any Indemnifying Person shall have no
indemnification obligations with respect to any such claim or demand which has
been settled by an Indemnified Person without the prior written consent of such
Indemnifying Person, which consent will not be unreasonably withheld or delayed.
8.4 Failure To Pay Capital Contributions. The parties hereto agree that
prompt payment of the installments of required
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capital contributions hereunder is of the essence and that failure of any
Partner to make such payments as provided herein will cause substantial injury
to the Partnership and the other Partners; further, the amount of damages caused
by such injury will be difficult to calculate. Accordingly, the parties hereto
agree that in the event that any Limited Partner fails to pay any installment of
its required capital contribution to the Partnership promptly when due, the
General Partner shall give such defaulting Limited Partner written notice
thereof, and if such defaulting Limited Partner shall fail to make such required
payment in full within fifteen (15) days following the mailing of such notice or
such other longer period as the General Partner may elect, the General Partner
may elect, in its sole discretion, either of the following alternatives:
(a) to commence legal proceedings against such defaulting Limited
Partner to collect the due and unpaid payment, plus interest from the date due
at the reference rate as announced from time to time by Bank of America NT&SA,
plus two (2) percentage points, plus the expenses of collection, including
attorneys' fees; or
(b) to rescind and terminate all of the defaulting Limited Partner's
interest in the Partnership. In such event, the defaulting Limited Partner will
receive, upon termination of the Partnership, the lesser of (1) its paid-in
capital or (2) seventy-five percent (75%) of its Capital Account at the time of
default (reduced by what its Partnership Interest in subsequent deductions and
losses would have been had it remained a Partner in the Partnership) and in such
event the remaining amount that would have been distributed to such Limited
Partners shall be available for distribution to the remaining Partners in
accordance with Article 3.
Notwithstanding the foregoing, without the consent of the Limited
Partner having the largest interest as a Limited Partner (other than with
respect to a default by such Limited Partner) or if the defaulting Limited
Partner has not then paid to the Partnership at least one-third of its
commitment of equity to the Partnership as in effect on the date hereof, the
General Partner shall not have the option to pursue remedies against the
defaulting Limited Partner under the terms of clause 8.3(b) above, but instead
may only pursue remedies against such Limited Partner pursuant to clause 8.3(a)
above or as otherwise provided herein, at law or in equity.
The foregoing alternatives, to the extent available as provided above,
are in addition to and not in limitation of any other right or remedy of the
Partnership under this Agreement, at law or in equity. Losses attributable to a
defaulting Limited Partner pursuant to Section 3.1 shall be calculated as if
such installment had been paid when due.
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8.5 Increase in Beneficial Owners. Notwithstanding any other provision
of this Agreement, no Limited Partner shall increase the number of its
beneficial owners if (a) at such time, such Limited Partner owns more than ten
percent (10%) of the Partnership Interests in the Partnership and has more than
ten percent (10%) of its assets invested in private investment companies which
are not registered under the Investment Company Act of 1940, as amended, because
such companies have less than one hundred (100) beneficial owners and do not
presently propose to make a public offering of their interests, or (b) such
Limited Partner was formed for the purpose of investing in a Partnership
Interest.
ARTICLE 9
Miscellaneous
9.1 Notices. All notices, approvals, consents and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be hand delivered (including by messenger or recognized commercial
delivery or courier service), sent by facsimile transmission or sent by
registered or certified mail, postage prepaid, addressed to the Partner intended
at the address set forth below its name on Exhibit 1 hereto or at such other
address as such Partner may designate by notice given to the other Partners in
the manner aforesaid and shall be deemed given and received on the date it is
delivered, in the case of delivery by hand or by facsimile (if sent on a
business day, or if not sent on a business day, the next business day
thereafter) or, in the case of delivery by mail, actual delivery as shown by the
addressee's return receipt. Rejection or other refusal to accept or inability to
deliver because of a change of address of which no notice was given shall be
deemed to be receipt of the notice.
9.2 Governing Law. This Agreement and this limited partnership created
hereby shall be governed by and construed in accordance with the laws of the
State of California.
9.3 Amendments. This Agreement may be modified or amended only by an
instrument in writing signed by the General Partner and by seventy percent (70%)
in interest of the Limited Partners (or such other percentage as required by
Section 4.7(b)); provided that, in addition to any amendments otherwise
authorized herein, this Agreement may be amended from time to time by the
General Partner without the consent of any of the Limited Partners to (i) add to
the representations, duties or obligations of the General Partner or surrender
any right or power granted to the General Partner herein, (ii) add to the rights
or powers granted to the Limited Partners, (iii) clarify any inconsistency
between sections hereof and correct any printing, stenographic or clerical
errors or omissions; and (iv) to comply with legal or tax requirements provided
such compliance
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does not materially decrease the amount or timing of any distributions,
including distributions upon liquidation, or materially change allocations of
income or losses, that the Limited Partners would otherwise be entitled to
receive pursuant to this Agreement, provided however, that nothing herein shall
be construed to permit the General Partner to add to the rights or powers of the
Limited Partners if such addition could reasonably be expected to cause the
Limited Partners to have liability as general partners and provided that the
General Partner shall not relinquish any rights or powers if such relinquishment
could reasonably be expected to prevent it from performing its duties and
obligations hereunder.
9.4 Entire Agreement. This instrument together with the Subscription
Agreements of the Partners constitute the entire agreement between the Partners
with respect to the Partnership and supersede all prior agreements,
understandings, offers and negotiations, oral or written.
9.5 Waiver of Partition. Each Partner hereby irrevocably waives any and
all rights that it may have to maintain an action for partition of the
Partnership or any of the Partnership's property.
9.6 Consents. All consents, agreements and approvals required or
permitted by this Agreement shall be in writing and a signed copy thereof shall
be filed and kept with the books of the Partnership.
9.7 Successors. Subject to Article 8, all rights and duties of the
Partners hereunder shall inure to the benefit of and be binding upon their
respective successors and assigns.
9.8 Confidentiality of Investors. Neither the General Partner nor the
Partnership shall disclose to any person or entity (other than to another
Partner or potential partner or to lenders or potential lenders to the
Partnership) the fact that a Limited Partner is an investor in the Partnership
except to the extent (a) required by law or legal process upon prior written
notice to such Limited Partner or (b) authorized by any such Limited Partner in
writing.
9.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
9.10 Severability. Each provision of this Agreement shall be considered
severable and if for any reason any provision which is not essential to the
effectuation of the basic purposes of the Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable and contrary to the Act or
existing or future applicable law, such invalidity shall not impair the
operation of or affect those provisions of this Agreement which are valid. In
that case, this Agreement shall
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be construed so as to limit any term or provision so as to make it enforceable
or valid within the requirements of any applicable law, and in the event such
term or provision cannot be so limited, this Agreement shall be construed to
omit such invalid or unenforceable provisions.
9.11 Affiliate. For purposes of this Agreement, an affiliate of any
person shall mean any other person that (i) directly or indirectly through one
or more intermediaries controls, is controlled by, or is under common control
with, the specified person; (ii) is a director or officer of, partner in, member
of, or trustee of, or serves in a similar capacity with respect to, the
specified person or of which the specified person is a director, officer,
partner, or trustee, or with respect to which the specified person serves in a
similar capacity; (iii) directly or indirectly through one or more
intermediaries is the beneficial owner of ten percent (10%) or more of any class
of equity securities of the specified person or of which the specified person is
directly or indirectly through one or more intermediaries the owner of ten
percent (10%) or more of any class of equity securities; (iv) directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, a person described in clause (iii), (v) is acting at
the direction and primarily in furtherance of the interests of the specified
person or (vi) is an immediate family member of the specified person.
Notwithstanding the foregoing, for purposes of Sections 4.7(d), 4.8, 4.9, 6.1
and 6.2 of this Agreement in no event shall any person that is under the direct
or indirect control of Leo J. Hindery, Jr. be deemed to be an affiliate of
Tele-Communications, Inc. or its related entities and for purposes of Sections
4.7(d), 4.8 and 6.1, InterMedia Partners, a California limited partnership,
shall not be deemed to be an affiliate of the General Partner, the Partnership,
IP-IV or any Investing Partnership.
9.12 Power of Attorney. Each Limited Partner, including any additional
or substituted Limited Partner, hereby irrevocably constitutes and appoints the
General Partner, and each general partner of the General Partner, and each of
them acting singly, its true and lawful agent and attorney-in-fact, with full
power and authority of substitution, to make, amend, execute, acknowledge, swear
to, deliver, file and record for and on behalf of such Limited Partner, such
documents and instruments as may be reasonably necessary to carry out the
provisions of, and which is permitted by, this Agreement, including a
Certificate of Limited Partnership and any amendments thereto required by law,
any amendments to this Agreement by reason of admissions, substitutions or
withdrawals of Limited Partners or any amendments to give effect to the voting
of the Partners and any amendments permitted by Section 9.3 without the consent
of the Limited Partners.
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The foregoing power of attorney, being coupled with an interest, is
hereby declared to be irrevocable, and shall survive the death, dissolution or
incapacity of any Limited Partner.
9.13 Nonrecourse. Neither the Partnership nor the Partners shall have
recourse to any partner, officer, director or shareholder of any Partner or to
the assets of any partner, officer, director or shareholder of any Partner with
respect to the obligations and liabilities of such Partner under this Agreement,
except that this Section 9.13 shall not limit or impair the exercise or
enforcement of rights and remedies in respect of any agreement to which such
person is a party in accordance with the terms and provisions of such agreement.
9.14 Foreign Person. Should any Partner be subject to withholding
pursuant to the Code or any applicable state, local or foreign law, the
Partnership may withhold all amounts otherwise distributable to such Partner or
otherwise under this Agreement or such other amount as may be required by law
and any amounts so withheld shall be deemed to have been distributed to the
Partner under this Agreement. If any sums are withheld pursuant to this
provision, the Partnership shall remit the sums so withheld to and file the
required forms with the Internal Revenue Service or other applicable government
agency and, in the event of any claimed over- withholding, the Partner shall be
limited to an action against the Internal Revenue Service or other applicable
government agency for refund and hereby waives any claim or right of action
against the Partnership on account of such withholding. Moreover, if the amounts
required to be withheld exceed the amounts which would otherwise have been
distributed to such Partner, such Partner shall contribute any deficiency to the
Partnership within five (5) days after receipt of notice from the General
Partner.
IN WITNESS WHEREOF, the Partners have executed this Agreement of
Limited Partnership as of the date first hereinabove written.
GENERAL PARTNER:
INTERMEDIA CAPITAL MANAGEMENT IV,
L.P.
By /s/ Leo J. Hindery, Jr.
------------------------------
Leo J. Hindery, Jr.
Managing General Partner
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PREFERRED LIMITED PARTNER:
GENERAL ELECTRIC CAPITAL CORPORATION
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
LIMITED PARTNERS:
ATLANTIC EQUITY CORPORATION
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
BANCORP HAWAII, INC.
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
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THE BANK OF NEW YORK COMPANY, INC.
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
CABLE PARTNERS, AN ILLINOIS
GENERAL PARTNERSHIP
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
GENERAL ELECTRIC CAPITAL
CORPORATION
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
MELLON BANK, N.A., AS TRUSTEE FOR
THIRD PLAZA TRUST
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
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MELLON BANK, N.A., AS TRUSTEE FOR
FOURTH PLAZA TRUST
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
***
---------------------------------------
WILLIAM D. HORVITZ
INDOSUEZ CAPITAL
By Indosuez CM II, Inc.
Its Managing General Partner
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
***
---------------------------------------
THIERRY DEVERGNES
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INTER CABLE INVESTORS, A
CALIFORNIA LIMITED PARTNERSHIP
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
INTERMEDIA PARTNERS, a California
limited partnership
By InterMedia Capital Management,
a California limited partnership
Its General Partner
By
------------------------------------
Leo J. Hindery, Jr.
Managing General Partner
IP HOLDINGS L.P.,
By Centre Partners, L.P.
Its General Partner
By Park Road Corporation
Its General Partner
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
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64
CENTRE CAPITAL INVESTORS II, L.P.
CENTRE CAPITAL TAX-EXEMPT
INVESTORS II, L.P.
By Centre Partners II, L.P. as
general partner of such
partnerships
By Centre Partners Management
LLC,
attorney-in fact
By ***
------------------------------------
Bruce G. Pollack
Managing Director
CENTRE PARTNERS COINVESTMENT,
L.P.
CENTRE PARALLEL MANAGEMENT
PARTNERS, L.P.
By Centre Partners II, LLC, a
general partner
By ***
------------------------------------
Bruce G. Pollack
Managing Director
SBA CABLE CORP.
By ***
------------------------------------
Bruce G. Pollack
Treasurer
OVERSEAS CABLE CORP.
By ***
------------------------------------
Bruce G. Pollack
Treasurer
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65
LJR LIMITED PARTNERSHIP
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
NATIONSBANC INVESTMENT CORP.
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
RMS LIMITED PARTNERSHIP
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
ROYAL BANK OF CANADA
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
SUMITOMO CORPORATION
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
-60-
66
SUMITOMO CORPORATION OF AMERICA
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
TCI OF GREENVILLE, INC.
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
TCI OF PIEDMONT, INC.
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
TCI OF SPARTANBURG, INC.
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
TORONTO DOMINION INVESTMENTS, INC.
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
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67
WLD LAMONT PARTNERS
By ***
------------------------------------
Name
----------------------------------
Title
---------------------------------
Leo J. Hindery, Jr. agrees to be bound by the terms of Section 6.1 and Section
7.2 to the extent such Sections relate to him.
Agreed and Accepted this 19th
day of March, 1996
/s/ Leo J. Hindery, Jr.
- ------------------------------
Leo J. Hindery, Jr.
InterMedia Capital Management IV, L.P.,
a California limited partnership as
Attorney-in-Fact for each Limited Partner
marked with ***
/s/ Leo J. Hindery, Jr.
- ------------------------------
Leo J. Hindery, Jr.
Managing General Partne
-62-