Agreement of Limited Partnership - Time Warner Cable Inc., MediaOne of Colorado Inc., American Television & Communications Corp., AT&T Corp., AOL Time Warner Inc. and Warner Communications Inc.
FORM OF
TIME WARNER ENTERTAINMENT COMPANY, L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS..............................................1
1.1 Definitions..............................................1
1.2 Interpretation..........................................12
ARTICLE II ORGANIZATION; PURPOSE AND POWERS........................13
2.1 Name....................................................13
2.2 Term....................................................13
2.3 Principal Office........................................14
2.4 Delaware Office; Agent for Service of Process...........14
2.5 Purpose and Powers......................................14
ARTICLE III DISPOSITION; ADDITIONAL PARTNERS; RIGHT OF FIRST
REFUSAL; WITHDRAWAL.....................................14
3.1 Disposition; Additional Partners........................14
3.2 Withdrawal by Partner...................................15
3.3 Substitution of General Partner.........................15
3.4 Change in Interests.....................................16
ARTICLE IV PARTNERSHIP CAPITAL.....................................16
4.1 Recapitalization of Partnership Interests...............16
ARTICLE V DISTRIBUTIONS...........................................16
5.1 Mandatory Distribution of Preferred Return..............16
5.2 Mandatory Redemption of Preferred Component.............17
5.3 Tax Distributions.......................................17
5.4 Discretionary Distributions.............................17
5.5 Limitation on Distributions.............................17
5.6 No Distributions Under Original Agreement...............18
ARTICLE VI CAPITAL ACCOUNTS; ALLOCATIONS...........................18
6.1 Capital Accounts........................................18
6.2 Allocations of Preferred Profit; Residual Net Profit....18
6.3 Allocations of Residual Net Loss........................19
6.4 Regulatory Tax Allocations..............................19
6.5 Allocations for Tax Purposes............................20
ARTICLE VII MANAGEMENT..............................................20
7.1 Powers of the General Partner...........................20
7.2 Powers of Limited Partners..............................21
7.3 Liability of Partners...................................21
7.4 Exculpation and Indemnification.........................21
7.5 Certain Tax Matters.....................................23
7.6 Transactions with General Partner.......................23
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ARTICLE VIII DISSOLUTION OF THE PARTNERSHIP..........................23
8.1 Dissolution.............................................23
8.2 Resignation.............................................24
8.3 Winding-Up of the Partnership...........................24
8.4 No Recourse Against any Partner.........................25
ARTICLE IX BOOKS AND RECORDS.......................................25
9.1 Fiscal Year.............................................25
9.2 Maintenance of Books and Records........................25
9.3 Financial Statements; Tax Matters.......................25
9.4 Tax Allocations and Reports.............................26
ARTICLE X MISCELLANEOUS...........................................27
10.1 Confidential Information................................27
10.2 Amendments; Waiver......................................28
10.3 Additional Issuances....................................28
10.4 Successors and Assigns..................................28
10.5 No Waiver...............................................29
10.6 Severability............................................29
10.7 No Right to Set-Off.....................................29
10.8 Survival of Rights, Duties and Obligations..............29
10.9 Further Assurances......................................29
10.10 Competing Activities....................................29
10.11 Corporate Opportunities.................................30
10.12 Guarantees..............................................30
10.13 Effect of AT&T - Comcast Merger.........................31
10.14 Notices.................................................31
10.15 Counterparts; Effectiveness.............................32
10.16 No Right to Partition...................................32
10.17 Entire Agreement; No Third Party Beneficiaries..........32
10.18 Governing Law...........................................33
Schedule 4.1 Prior Partnership Interests
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
("Agreement"), dated as of ________, 200[ ], of TIME WARNER ENTERTAINMENT
COMPANY, L.P., a Delaware limited partnership (the "Partnership"), by and among
Time Warner Cable Inc., a Delaware corporation, as the general partner of the
Partnership ("TWC" or the "General Partner"), and MediaOne of Colorado, Inc., a
Colorado corporation(1) ("MediaOne"), American Television & Communications
Corporation, a Delaware corporation ("ATC"), and solely for the purposes of
being bound by Section 10.12 of this Agreement, AT&T Corp.(2), a New York
corporation, and AOL Time Warner Inc., a Delaware corporation ("AOLTW"), and
solely for the purpose of Section 9.4 of this Agreement, Warner Communications
Inc., a Delaware corporation ("WCI").
WHEREAS, the Partnership has heretofore been formed as a limited
partnership under the Delaware Act (as defined herein);
WHEREAS, the General Partner and the Limited Partners now wish
to amend and restate, in its entirety, the Agreement of Limited Partnership,
dated as of October 29, 1991, as amended to date (the "Original Agreement") as
set forth below.
NOW, THEREFORE, the General Partner and the Limited Partners
hereby amend and restate the Original Agreement in its entirety to read as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. When used in this Agreement, the following terms
shall have the meanings set forth below (all terms used in this Agreement that
are not defined in this Article I shall have the meanings set forth elsewhere in
this Agreement):
"Accountants" means Ernst & Young LLP or such other nationally
recognized public accountants of the Partnership as may be selected from time to
time by the General Partner.
"Act" means the Delaware Revised Uniform Limited Partnership Act (Del.
Code Ann. tit. 6 Section 17-101 et seq.).
"Adjusted Capital Account Deficit" means, with respect to each Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end of
the relevant Fiscal Year, after giving effect to the following adjustments:
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(1) If MediaOne of Colorado has transferred its interest to an FCC mandated
trust prior to the closing, then the trust shall be party to this Agreement
instead of MediaOne.
(2) In the event that the AT&T - Comcast merger is completed prior to the
execution hereof, AT&T Comcast shall replace AT&T as a signatory to this
Agreement
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(a) Credit to such Capital Account any amount which such
Partner is obligated to restore or is deemed obligated to restore
pursuant to Treasury Regulations Section 1.704-2(g)(1) and (without
duplication) 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
"Affiliate" means, as to any Person, any other Person directly or
indirectly, through one or more intermediaries, controlling, controlled by, or
under common control with such Person; provided that, for purposes of this
definition, "control" (including with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of equities securities, by contract or otherwise;
provided, further, that, solely for purposes of this definition of Affiliate,
with respect to any Person, a Disposition Trust (and any Person controlled by
such Disposition Trust) shall be deemed to be controlled by such Person.
"Agent" means, with respect to any Person, such Person's officers,
directors, employees, consultants, attorneys, accountants, representatives and
agents.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as amended, restated or modified from time to time, including any
Exhibits or Schedules attached hereto.
"AOLTW" has the meaning set forth in the preamble.
"AOLTW Partner" means ATC in its capacity as a limited partner of the
Partnership and shall include any transferee thereof admitted to the partnership
in accordance with Section 3.1.
"Applicable Law" means, with respect to any Person, any statute, law,
regulation, ordinance, rule, injunction, order, decree, Governmental Approval,
directive, requirement, or other governmental restriction or any similar form of
decision of, or determination by, or any interpretation or administration of any
of the foregoing by, any Governmental Authority, applicable to such Person or
its Subsidiaries or their respective assets.
"ATC" has the meaning set forth in the preamble.
"AT&T" means AT&T Corp., a New York corporation; provided that, except
as otherwise specifically provided herein, following consummation of the AT&T -
Comcast Merger, all references to "AT&T" shall mean AT&T Comcast and shall no
longer mean AT&T Corp.
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"AT&T Comcast" means AT&T Comcast Corporation, a Pennsylvania
corporation.
"AT&T - Comcast Merger" has the meaning set forth in the Restructuring
Agreement.
"ATC Capital Account" means the Capital Account of the ATC Partnership
Interest.
"ATC Partnership Interest" has the meaning set forth in Section 4.1(a).
"ATC Common Sub-Account" means the excess of the ATC Capital Account
over the ATC Preferred Sub-Account.
"ATC Percentage Interest" means 1%.
"ATC Preferred Sub-Account" means, prior to the Preferred Redemption
Date, the portion of the ATC Capital Account that includes the Preferred Amount
plus (x) all allocations of Preferred Net Profit pursuant to Section 6.2(a),
minus (y) (i) all distributions pursuant to Section 5.1 and (ii) all allocations
of Residual Net Loss pursuant to Section 6.3(b)(ii).
"Bankruptcy" of a Partner means (i) the filing by such Partner of a
voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under Title 11 of the United States Code
(or corresponding provisions of future laws) or any other bankruptcy or
insolvency law, or such Partner's filing an answer consenting to or acquiescing
in any such petition, (ii) the making by such Partner of any assignment for the
benefit of its creditors or the admission by such Partner in writing of its
inability to pay its debts as they mature or (iii) the expiration of 60 days
after the filing of an involuntary petition under Title 11 of the United States
Code (or corresponding provisions of future laws), an application for the
appointment of a receiver for the assets of such Partner, or an involuntary
petition seeking liquidation, reorganization, arrangements, composition,
dissolution or readjustment of its debts or similar relief under any bankruptcy
or insolvency law, provided that the same shall not have been vacated, set aside
or stayed within such 60-day period.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions are not required to be open in New York City.
"Capital Account" means, for each Partner, the Capital Account
established for such Partner pursuant to Article VI.
The Capital Account of each Partner on the date hereof (after giving
effect to the conversion described in Section 4.1) shall be as follows:
(1) The Capital Account of ATC with respect to the Preferred
Component of the ATC Partnership Interest shall be equal to the Preferred
Amount;
(2) The Capital Account of MediaOne with respect to the MediaOne
Partnership Interest shall be equal to the Capital Account with respect to its
Prior Partnership Interest
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that would result under the provisions of the Original Agreement following a
revaluation, as of the date hereof, of the Partnership's assets pursuant to
Treasury Regulations Section 1.704-1(b)(iv)(f).
(3) The Capital Account of ATC with respect to the Common Component
of the ATC Partnership Interest shall be equal to the product of (x) 1/95.3 and
(y) the excess of (A) the Fair Market Value of the Partnership assets (net of
liabilities not otherwise taken into account) as of the date hereof, over (B)
the sum of the Preferred Amount and the Capital Account balance of MediaOne, as
computed in accordance with the immediately preceding clause (2).
(4) The Capital Account of TWC with respect to the TWC Partnership
Interest shall be equal to the product of (x) 94.3/95.3 and (y) the excess of
(A) the Fair Market Value of the Partnership assets (net of liabilities not
otherwise taken into account) as of the date hereof, over (B) the sum of the
Preferred Amount and the Capital Account balance of MediaOne, as computed in
accordance with clause (2) above.
Following the date hereof, the Capital Accounts shall be adjusted as
follows:
(a) To each Partner's Capital Account there shall be
credited (i) such Partner's Capital Contributions after the date hereof,
if any, allocated to such Capital Account when and as received and (ii)
the Preferred Profit, the Residual Net Profit and other items of
Partnership income and gain allocated to such Capital Account pursuant
to Article 6;
(b) To each Partner's Capital Account there shall be debited
(i) the aggregate amount of cash distributed to such Partner with
respect to such Capital Account after the date hereof, (ii) the Residual
Net Loss and other items of Partnership loss and deduction allocated to
such Partner pursuant to Article 6 with respect to such Capital Account
and (iii) the Gross Asset Value of any Partnership assets (other than
cash) distributed to such Partner in kind (net of any liabilities
secured by such distributed property that the Partner is considered to
assume or "take subject to" under Section 752 of the Code) with respect
to such Capital Account after the date hereof;
(c) Capital Accounts shall be otherwise adjusted in
accordance with Treasury Regulations Section 1.704-1(b); and
(d) If Partnership Interests are transferred in accordance
with the terms of this Agreement after the date hereof, the transferee
shall succeed to the Capital Account or Accounts of the transferor to
the extent it relates to the transferred Partnership Interests.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Treasury
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Treasury Regulations.
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For the avoidance of doubt, after the date hereof, no adjustments shall
be made to the Capital Accounts of the Partners pursuant to the provisions of
the Original Agreement.
"Catch-Up Date" shall mean the date that is twenty-seven (27) months
following the date hereof.
"C Corporation" means a corporation subject to taxation under Section 11
of the Code.
"Capital Contribution" means for each Partner the total amount of cash
and the Gross Asset Value of property contributed to the Partnership by such
Partner pursuant to Section 4.1 or otherwise, net of any liabilities associated
with such contributed property that the Partnership is considered to assume or
"take subject to" under Section 752 of the Code.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Component" means the portion of the ATC Partnership Interest
that corresponds to the ATC Common Sub-Account.
"Corporate Opportunity" means an investment or business opportunity or
prospective economic advantage in which the Partnership could, but for the
provisions of Section 10.11, have an interest or expectancy.
"Depreciation" means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such Fiscal Year, Depreciation shall be an amount which bears
the same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization, or other cost recovery deduction for such Fiscal
Year bears to such beginning adjusted tax basis; provided, that if the adjusted
basis for federal income tax purposes of an asset at the beginning of such
Fiscal Year is zero and the Gross Asset Value of the asset is positive,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any permitted method selected by the General Partner.
"Determination" means a settlement, compromise, or other agreement with
the Internal Revenue Service or the relevant state or local Governmental
Authorities, whether contained in an Internal Revenue Service Form 870 or other
comparable form, or otherwise, or such procedurally later event, such as a
closing agreement with the Internal Revenue Service or the relevant state and
local Governmental Authorities, an agreement contained in Internal Revenue
Service Form 870-D or other comparable form, an agreement that constitutes a
determination under Section 1313(a)(4) of the Code, a deficiency notice with
respect to which the period for filing a petition with the Tax Court or the
relevant state or local tribunal has expired or a decision of any court of
competent jurisdiction that is not subject to appeal or as to which the time for
appeal has expired.
"Disposition" means any direct or indirect sale, assignment, alienation,
gift, exchange, conveyance, transfer, pledge, hypothecation or other
disposition, monetization or
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encumbrance whatsoever, whether voluntary or involuntary, direct or indirect,
including through a Subsidiary or by means of an equity offering by any such
Subsidiary. The term "Dispose" shall mean to make a Disposition.
"Disposition Trust" has the meaning set forth in the Restructuring
Agreement.
"Dissolution Action" has the meaning set forth in Section 8.1 of this
Agreement.
"Fair Market Value" means, as of any date, the fair market value on such
date as determined in good faith by the General Partner. For this purpose,
securities that are restricted by law, contract, market conditions (including
trading volume relative to the Partnership's holding) or otherwise as to
salability or transferability may be valued at an appropriate discount, based on
the nature and term of such restrictions.
"Fiscal Year" means (i) the taxable year of the Partnership, which shall
be the calendar year unless otherwise required (or, in the General Partner's
reasonable discretion, permitted) by the Code, and (ii) the portion of any
Fiscal Year for which the Partnership is required to (or does) allocate Gross
Income, Net Profit, Net Loss, or other items.
"GAAP" means United States generally accepted accounting principles as
in effect in the United States from time to time consistently applied.
"General Partner" has the meaning set forth in the preamble.
"Governmental Approval" means any action, order, authorization, consent,
approval, license, ruling, permit, tariff, rate, certification, exemption,
filing or registration by or with any Governmental Authority.
"Governmental Authority" means any government or political subdivision
thereof, governmental department, commission, board, bureau, agency, regulatory
authority, instrumentality, judicial or administrative body having jurisdiction
over the matter or matters in question.
"Gross Asset Value" means: (i) in the case of any asset held by the
Partnership on the date hereof, the gross Fair Market Value of such asset as of
the date hereof, and (ii) in the case of any asset acquired by the Partnership
after the date hereof, the adjusted basis of such asset for Federal income tax
purposes, except as follows:
(a) The initial Gross Asset Value of any Partnership asset
contributed by a Partner to the Partnership shall be the gross Fair
Market Value of such Partnership asset as of the date of such
contribution;
(b) The Gross Asset Value of each Partnership asset shall be
adjusted to equal its respective gross Fair Market Value, as of the
following times: (i) the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a
de minimis Capital Contribution; (ii) the distribution by the
Partnership to a Partner of more than a de minimis amount of Partnership
assets
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as consideration for all or part of its Interests unless the General
Partner reasonably determines that such adjustment is not necessary to
reflect the relative economic interests of the Partners in the
Partnership; and (iii) the liquidation of the Partnership within the
meaning of Treasury Regulations Section Section 1.704-1(b)(2)(ii)(g);
(c) The Gross Asset Value of a Partnership asset distributed
to any Partner shall be the Fair Market Value of such Partnership asset
as of the date of distribution thereof;
(d) The Gross Asset Value of each Partnership asset shall be
increased or decreased, as the case may be, to reflect any adjustments
to the adjusted basis of such Partnership asset pursuant to Section
734(b) or Section 743(b) of the Code, but only to the extent that such
adjustments are taken into account in determining Capital Account
balances pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m);
provided, that Gross Asset Values shall not be adjusted pursuant to this
subparagraph (d) to the extent that an adjustment pursuant to
subparagraph (b) above is made in conjunction with a transaction that
would otherwise result in an adjustment pursuant to this subparagraph
(d); and
(e) If the Gross Asset Value of a Partnership asset has been
determined or adjusted above (other than pursuant to clause (c) above),
such Gross Asset Value shall thereafter be adjusted to reflect the
Depreciation taken into account with respect to such Partnership asset
for purposes of computing Net Profits and Net Losses.
"Liabilities" has the meaning set forth in Section 7.4(b)(i).
"Limited Partners" means the MediaOne Partner and the AOLTW Partner.
"MediaOne" has the meaning set forth in the preamble.
"MediaOne Partner" means MediaOne in its capacity as a limited partner
of the Partnership and shall include any transferee thereof admitted to the
partnership in accordance with Section 3.1.
"MediaOne Partnership Interest" has the meaning set forth in Section
4.1(b).
"MediaOne Percentage Interest" means 4.7%.
"MediaOne Target Capital Account Balance" means a Capital Account
balance at the time equal to (x) 4.7%, multiplied by (y) the sum of (A) the ATC
Common Sub-Account balance, plus (B) the TWC Capital Account balance, plus (C)
the MediaOne Capital Account balance.
"Net Profit and Net Loss" means, for each Fiscal Year, an amount equal
to the Partnership's taxable income or loss for such Fiscal Year, determined in
accordance with Code Section 703(a) (including for this purpose, all items of
income, gain, loss or deduction required to be separately stated pursuant to
Code Section 703(a)(1)), with the following adjustments (without duplication):
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(a) Any income of the Partnership that is exempt from
Federal income tax and not otherwise taken into account in computing Net
Profit or Net Loss pursuant to this definition shall be added to such
taxable income or loss;
(b) Any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code
expenditures pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i) (other than expenses in respect of which an
election is properly made under Section 709 of the Code), and not
otherwise taken into account in computing Net Profit or Net Loss
pursuant to this definition shall be subtracted from such taxable income
or loss;
(c) In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to subparagraphs (b), (c) or (d) of the
definition of Gross Asset Value, the amount of such adjustment shall be
taken into account as gain (if the adjustment increases the Gross Asset
Value of an asset) or loss (if the adjustment decreases the Gross Asset
Value of an asset) from the disposition of such Partnership asset for
purposes of computing Net Profit or Net Loss;
(d) Gain or loss resulting from any disposition of any
Partnership asset with respect to which gain or loss is recognized for
Federal income tax purposes shall be computed by reference to the Gross
Asset Value of the Partnership asset disposed of, notwithstanding that
the adjusted tax basis of such Partnership asset may differ from its
Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other
cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for such
Fiscal Year, computed in accordance with the definition of Depreciation;
(f) To the extent an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Code Section 734(b) is required,
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4), to be
taken into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Partner's interest in the
Partnership, the amount of such adjustment shall be treated as an item
of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) from the disposition of such asset
and shall be taken into account for purposes of computing Net Profit or
Net Loss; and
(g) Any items of income, gain, loss or deduction specially
allocated under Section 6.4 shall be excluded.
"Original Agreement" has the meaning set forth in the recitals.
"Parent" means, with respect to any Person, any such other Person that
owns, directly or indirectly, 50 percent or more of the outstanding capital
stock or other equity interests of such Person, provided that any Person that
directly or indirectly holds all of the ownership
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interests in a Disposition Trust shall be deemed to be a Parent of such
Disposition Trust and its Subsidiaries.
"Partner" means each Person that (a) is an initial signatory to this
Agreement (other than AOLTW, AT&T and WCI), or has been admitted to the
Partnership as a Partner of the Partnership in accordance with the provisions of
this Agreement and (b) has not ceased to be a Partner of the Partnership in
accordance with the provisions of this Agreement or for any other reason. No
Person that is not a Partner shall be deemed a "Partner" under the Act.
"Partnership Business" means the ownership, operation and exploitation
of the various businesses, assets and rights owned or held from time to time by
the Partnership.
"Partnership Interest" means any ownership interest of a Partner in the
Partnership, including the right of such Partner to benefits to which it may be
entitled under, and the obligations of such Partner to comply with, all the
terms and conditions of this Agreement.
"Partnership Interest Sale Agreement" means the Partnership Interest
Sale Agreement, dated the date hereof, among MediaOne, AOLTW and the General
Partner.
"Partnership" has the meaning set forth in the preamble.
"Percentage Interest" means the ATC Percentage Interest, the MediaOne
Percentage Interest and the TWC Percentage Interest.
"Permitted AT&T Disposition" has the meaning set forth in the
Restructuring Agreement.
"Permitted Entity" means, with respect to any MediaOne Partner, any
Person, a majority of the equity and other ownership interests in which are
owned, directly or indirectly, by the Ultimate Parent of such MediaOne Partner.
"Permitted Transfer" means a Disposition by a Partner of all or any part
of such Partner's Partnership Interest: (i) with the consent of the General
Partner; (ii) to an Affiliate of such Partner (other than to a Disposition
Trust); (iii) pursuant to and in accordance with the Partnership Interest Sale
Agreement; (iv) to a Disposition Trust pursuant to a Permitted AT&T Disposition;
or (v) in a pledge by the Partner of all or any portion of such Partner's
Partnership Interest to a bank or other financial institution (the "Lender") in
connection with securing a bona fide loan made to such Partner; provided that,
in each such case (other than clause (i)), any transferee of such Disposition
provides a written agreement (in form and substance reasonably satisfactory to
the Partnership) to the Partnership by which it agrees to become a party to and
otherwise be bound by the terms and provisions of this Agreement and the
Partnership Interest Sale Agreement; and provided, further, that the Lender
shall only be required to provide such agreement in the event that the Lender
realizes upon its collateral or otherwise takes title to the pledged Partnership
Interest.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated
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organization and a governmental entity or any department, agency or political
subdivision thereof.
"Preferred Amount" means [$ ].(3)
"Preferred Component" means the portion of the ATC Partnership Interest
that corresponds to the ATC Preferred Sub-Account.
"Preferred Profit" for a Fiscal Year means the Net Profit of the
Partnership (as defined herein) for such Fiscal Year, adjusted to exclude any
Depreciation amounts taken into account in computing Net Profit for such Fiscal
Year.
"Preferred Redemption Date" means the day after the twentieth (20th)
anniversary of the date hereof.
"Preferred Redemption Value" means an amount equal to (x) the Preferred
Amount, plus (y) any accrued and unpaid Preferred Return.
"Preferred Return" means, with respect to the ATC Partnership Interest,
an amount equal to __%, cumulative and compounded on each Quarterly Payment Date
to the extent unpaid, on the amount of the Preferred Amount, commencing on the
date hereof.(4)
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(3) The Preferred Amount shall be calculated prior to the execution of this
Agreement in the manner specified with respect to the "TWE Preferred
Amount" in the Restructuring Agreement.
(4) The Preferred Return will be determined by adding 100 basis points
(1.00%) to the market yield of the Time Warner Entertainment Company,
L.P. 8.375% Debentures due March 15, 2023 (the "TWE Debentures"). The
market yield will be determined by calculating the average of the
average yields on the TWE Debentures for each of the fifteen consecutive
trading days ending two trading days prior to the Closing. The average
of the average yields will be calculated by the Calculation Agent. The
Calculation Agent will obtain bid spread quotes from five (5) Investment
Banks at the close of each of the fifteen consecutive trading days. On
each of the fifteen consecutive trading days, the Calculation Agent will
eliminate the high and low bid spread quotes and average the three
remaining bid spread quotes. The Calculation Agent will determine the
average yield on each of the fifteen consecutive trading days by adding
the average closing (as of 5:00 p.m. New York time) bid spread
(expressed in basis points) of the TWE Debentures for such day
(determined as provided in the preceding sentence) to the closing (as of
5:00 p.m. New York time) bid yield on such day of the most recently
issued 30 year U.S. Treasury bond. The closing bid yield of the most
recently issued 30 year U.S. Treasury bond will be determined by
referencing PX1 on Bloomberg. For purposes of determining the Preferred
Return, the "Calculation Agent" shall be JP Morgan Chase and the
"Investment Banks" are (i) Solomon Smith Barney, (ii) Merrill Lynch,
(iii) Bear Stearns, (iv) Barclays and (v) Morgan Stanley, if the
AT&T-Comcast Merger has closed at such time, or Credit
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"Prior Partnership Interest" means a Partnership Interest in the
Partnership held by a Partner prior to the exchange described in Section 4.1
hereof.
"Pro Rata Time" means the time at which the MediaOne Capital Account
balance is equal to the MediaOne Target Capital Account balance.
"Protected Person" shall mean each of the following Persons: the
Partners and their Affiliates and their respective stockholders and Agents.
"Quarterly Payment Date" means March 31, June 30, September 30 and
December 31, provided that, at any time that any such date falls on a day other
than a Business Day, the Quarterly Payment Date shall mean the first Business
Day following such date. In the event that a December 31 Quarterly Payment Date
is adjusted pursuant to the proviso of the preceding sentence, for purposes of
allocations of Preferred Profit pursuant to Section 6, the payment shall be
deemed to be paid on December 31.
"Residual Net Loss" for a Fiscal Year means (a) in any Fiscal Year for
which the Partnership has a Net Loss, an amount equal to (w) the Net Loss of the
Partnership for such Fiscal Year, minus (i.e., the amount of the Net Loss is
increased by) (x) the aggregate amount of Preferred Profit allocated pursuant to
Section 6.2(a) for such Fiscal Year; and (b) in any Fiscal Year for which the
Partnership has Net Profit, an amount equal to the excess, if any, of (y) the
amount of Preferred Profit allocated pursuant to Section 6.2(a) for such Fiscal
Year, over (z) the Net Profit of the Partnership for such Fiscal Year.
"Residual Net Profit" for a Fiscal Year means the excess, if any, of (a)
the Net Profit of the Partnership for such Fiscal Year, over (b) the aggregate
amount of Preferred Profit allocated pursuant to Section 6.2(a) for such Fiscal
Year.
"Restructuring Agreement" means the Restructuring Agreement, dated as of
August 20, 2002, by and among AOLTW, the Partnership and the other parties
thereto.
"Subsidiary" means, with respect to any Person, any other Person of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other body performing similar
functions are at any time directly or indirectly owned by such Person; provided
that with respect to any Person, a Disposition Trust, all of the ownership
interests of which are owned directly or indirectly by such Person (and any
Subsidiary of such Disposition Trust) shall be deemed to be a Subsidiary of such
Person.
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Suisse First Boston, if the AT&T-Comcast Merger has not closed at such
time. If the Calculation Agent or any of the Investment Banks (each an
"Institution") is sold to or merged with another entity, such successor
entity shall be deemed the Calculation Agent or Investment Bank, as the
case may be; provided that if one or more of the Institutions is either
(a) merged into or acquired by another Institution or (b) ceases to exist
or no longer performs the services contemplated to be provided hereunder,
the parties will promptly agree on substitute Institutions.
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"Tax Advance Amount" for any Partner means the Tax Amount for the
relevant Fiscal Year, multiplied by such Partner's Percentage Interest.
"Tax Amount" means, for any Fiscal Year, the amount obtained by
multiplying (x) the Tax Rate for such Fiscal Year by (y) the excess, if any, of
(i) the cumulative taxable income of the Partnership for all Fiscal Years, or
portions thereof commencing on or after the date hereof, including the current
Fiscal Year, allocated to all Partners other than with respect to the Preferred
Component, over (ii) the cumulative taxable loss of the Partnership for all
prior Fiscal Years or portions thereof commencing on or after the date hereof,
allocated to all Partners other than with respect to the Preferred Component, to
the extent such excess has not previously been taken into account in determining
the Tax Amount for a prior Fiscal Year or a portion thereof.
"Tax Matters Partner" has the meaning set forth in Section 9.4(b).
"Tax Rate" means, at any time, and from time to time, the effective
combined federal, state and local income and franchise tax that the Partnership
would be required to pay on its taxable income for such year, if it were a
corporation for Federal income tax purposes.
"Term" has the meaning set forth in Section 2.2.
"Transfer Date" means the second anniversary of the date hereof.
"Treasury Regulations" means the final or temporary regulations that
have been issued by the U.S. Department of Treasury pursuant to its authority
under the Code, and any successor regulations.
"TWC Partnership Interest" has the meaning set forth in Section 4.1(c).
"TWC Percentage Interest" means 94.3%.
"Ultimate Parent" means with respect to any Person, any Parent of such
Person who is not a Subsidiary of another Person.
1.2 Interpretation. In this Agreement, unless otherwise specified or
where the context otherwise requires:
(a) a reference to a Recital is to the relevant Recital to
this Agreement, to a Section is to the relevant Section of this Agreement and to
an Exhibit is to the relevant Exhibit to this Agreement;
(b) words importing any gender shall include other genders;
(c) words importing the singular only shall include the
plural and vice versa;
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(d) the words "include", "includes" or "including" shall be
deemed to be followed by the words "without limitation";
(e) the words "hereof", "herein", "hereunder" and "herewith"
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, clause and Exhibit references are to the Articles,
clauses and Exhibits to this Agreement unless otherwise specified;
(f) references to any party hereto or any other agreement or
document shall include such party's successors and permitted assigns;
(g) the parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party hereto by virtue of the
authorship of any provisions of this Agreement;
(h) unless otherwise expressly provided herein, any contract
or law defined or referred to herein or in any contract that is referred to
herein means such contract or law as from time to time amended, modified or
supplemented, including (in the case of a contract) by waiver or consent and (in
the case of a law) by succession of comparable successor laws, and all
attachments thereto and instruments incorporated therein, and any reference in
this Agreement to a law shall be deemed to include any rules and regulations
promulgated thereunder; and
(i) the headings to Sections are inserted for convenience
only and shall not affect the construction of this Agreement.
ARTICLE II
ORGANIZATION; PURPOSE AND POWERS
2.1 Name.
(a) The business of the Partnership shall be conducted under
the name of "Time Warner Entertainment Company, L.P." or such other name or
names as the General Partner shall hereafter from time to time determine. No
Limited Partner shall be deemed to have the right to use, and each Limited
Partner agrees not to use, any of the names, marks, emblems or logos used by the
Partnership, other than on behalf of the Partnership.
(b) There shall be filed on behalf of the Partnership such
assumed or fictitious name certificates or similar documents as may be required
by Applicable Law to evidence the use of any names under which the Partnership
may operate.
2.2 Term. The Partnership shall continue until dissolved as provided
in Section 8.1. Such period of time as the Partnership shall remain in existence
is referred to herein as the "Term."
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2.3 Principal Office. The principal office of the Partnership shall
be located at 75 Rockefeller Plaza, New York, New York 10019, or at such other
or additional place or places as the General Partner shall from time to time
determine.
2.4 Delaware Office; Agent for Service of Process. The address of
the Partnership's registered office in the State of Delaware is Corporation
Trust Company, 1209 Orange Street, Wilmington, Delaware 19801, and the name of
the registered agent for service of process of the Partnership is Corporation
Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
2.5 Purpose and Powers. (a) The nature or purpose of the business to
be conducted or promoted by the Partnership is to engage in any lawful act or
activity for which a limited partnership may be formed under the Act. The
Partnership may engage in any and all activities necessary, desirable or
incidental to the accomplishment of the foregoing. Notwithstanding anything
herein to the contrary, nothing set forth herein shall be construed as
authorizing the Partnership to possess any purpose or power, or to do any act or
thing, forbidden by law to a limited partnership formed under the laws of the
State of Delaware.
(b) Subject to the provisions of this Agreement, the
Partnership shall have the power and authority to take any and all actions
necessary, appropriate, proper, advisable, convenient or incidental to, or for
the furtherance of, the purposes set forth in Section 2.5(a).
ARTICLE III
DISPOSITION; ADDITIONAL PARTNERS;
RIGHT OF FIRST REFUSAL; WITHDRAWAL
3.1 Disposition; Additional Partners.
(a) No MediaOne Partner shall Dispose of all or any of its
Partnership Interest (and no additional MediaOne Partner shall be admitted to
the Partnership) other than pursuant to a Permitted Transfer, provided that, in
each case, any such Disposition may only occur after the Transfer Date (and
prior to the Transfer Date, no MediaOne Partner shall attempt to Dispose of or
enter into an agreement to Dispose of all or any portion of its Partnership
Interest) and that the MediaOne Partner provides reasonably sufficient
information to the Partnership with respect to and prior to any such proposed
Disposition, including, without limitation, information concerning any
Prospective Purchaser (as defined in the Partnership Interest Sale Agreement),
to enable the Partnership to determine that such proposed Disposition complies
with all of the provisions of this Section 3.1; provided, however, that,
notwithstanding any other provision of this Section 3.1(a), any MediaOne Partner
may, at any time (whether before or after the Transfer Date), Dispose of all or
any of its Partnership Interest (i) to any Permitted Entity or (ii) pursuant to
a Permitted AT&T Disposition to a Disposition Trust of which all of the
ownership interests are owned, directly or indirectly, by a Permitted Entity.
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(b) Any Limited Partner (other than a MediaOne Partner) may
Dispose of all or a portion of its Partnership Interests to one or more
assignees, and such assignees shall be admitted to the Partnership as additional
or substitute Limited Partners.
(c) Except as provided in Section 3.1(a) or 3.1(b), no
additional Limited Partner shall be admitted to the Partnership without the
prior written consent of the General Partner.
(d) A Person admitted as a Limited Partner in accordance
with this Section 3.1 shall be deemed admitted at the time that such Person (x)
executes an amendment, counterpart or supplement to this Agreement (and, in the
case of a transferee of a MediaOne Limited Partner, the Partnership Interest
Sale Agreement) and such other instruments as the General Partner may reasonably
deem necessary or desirable to evidence such Person's agreement to be bound by
and to comply with the terms and provisions hereof and (y) is named on the books
and records of the Partnership.
(e) A transferee of the MediaOne Partner admitted as a
Limited Partner pursuant to Section 3.1(a) shall succeed to all of the rights,
and expressly assume all of the obligations of the MediaOne Partner set forth in
this Agreement and the Partnership Interest Sale Agreement (or the portion of
such rights and obligations being transferred as part of any partial transfer of
the MediaOne Partner's Partnership Interest), and a transferee of an AOLTW
Partner admitted as a Limited Partner pursuant to Section 3.1(b) shall succeed
to all of the rights and expressly assume all of the obligations of the AOLTW
Partner (or the portion of such rights and obligations being transferred as part
of any partial transfer of AOLTW's Partnership Interest) set forth in this
Agreement, in each case, including, without limitation, the rights and
obligations set forth in Section 5.3.
(f) Notwithstanding anything to the contrary contained in
this Agreement, no transfer, within the meaning of Treas. Reg. Section
1.7704-1(a)(3), by any Partner of all or any part of its Partnership Interest
may be made to any Person if such transfer (i) is effectuated through an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code, (ii) would
result in the Partnership having more than 100 partners, determined in
accordance with Treas. Reg. 1.7704-1(h), or (iii) would result in the
Partnership being, or would result in a material risk that the Partnership would
be, in the opinion of legal counsel to the Partnership, treated as a corporation
for federal income tax purposes.
3.2 Withdrawal by Partner. Upon the withdrawal of a Partner from the
Partnership for any reason, such Partner shall cease to have any further right
to or interest in distributions pursuant to Article V.
3.3 Substitution of General Partner. The General Partner may Dispose
all or a portion of its Partnership Interest to one or more assignees, and such
assignees shall be admitted to the Partnership as additional or substitute
General Partners and shall (x) succeed to all of the rights and expressly assume
all of the obligations of the General Partner (or the portion of such rights and
obligations being transferred as part of any partial transfer of General
Partner's Partnership Interests) set forth in this Agreement and (y) be subject
to all
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of the terms and conditions applicable to General Partners of the Partnership.
If the General Partner withdraws from the Partnership as the result of any such
Disposition, the General Partner nonetheless shall remain liable for obligations
and liabilities incurred by it as General Partner prior to the time of such
withdrawal, but, from and after the time of such withdrawal, it shall be free of
any obligation or liability incurred on account of the activities of the
Partnership.
3.4 Change in Interests. Upon any change in the relative interests
of the Partners, whether by reason of the admission or withdrawal of a Partner
or otherwise, the Partners' shares of all Partnership items shall be determined,
except as otherwise required by law, by an interim closing of the Partnership's
books.
ARTICLE IV
PARTNERSHIP CAPITAL
4.1 Recapitalization of Partnership Interests. In connection with
consummation of the transactions contemplated by the Restructuring Agreement,
the Partnership shall be recapitalized as of the date hereof as follows:
(a) ATC's Prior Partnership Interest, as described in
Schedule 4.1, shall be converted into a Partnership Interest (the "ATC
Partnership Interest"), which shall consist of a Preferred Component and a
Common Component, and shall entitle it to distributions and allocations as
provided in Sections 5 and 6 herein;
(b) MediaOne's Prior Partnership Interest, as described in
Schedule 4.1, shall be converted into a Partnership Interest (the "MediaOne
Partnership Interest"), which shall entitle it to distributions and allocations
as provided in Section 5 and 6 herein; and
(c) TWC's Prior Partnership Interest, as described in
Schedule 4.1, shall be converted into a Partnership Interest (the "TWC
Partnership Interest"), which shall entitle it to distributions and allocations
as provided in Sections 5 and 6 herein.
ARTICLE V
DISTRIBUTIONS
5.1 Mandatory Distribution of Preferred Return. The Partnership
shall distribute to ATC, with respect to the Preferred Component of its
Partnership Interest, on each Quarterly Payment Date, an amount equal to the
Preferred Return for such quarterly period, plus any unpaid Preferred Return for
any prior quarterly period. In the case of the dissolution or winding-up of the
Partnership pursuant to Section 8.3, the Partnership shall distribute to ATC,
with respect to its Preferred Sub-Account, on the date of such dissolution or
winding-up an amount equal to the product of (i) the Preferred Return for such
quarterly period and (ii) a fraction, the numerator of which is the number of
days from the last day of the quarter immediately preceding the dissolution or
winding-up through (and including) the date of such dissolution or winding-up,
and the denominator of which is 91.25.
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5.2 Mandatory Redemption of Preferred Component. On the Preferred
Redemption Date, the Partnership shall distribute to ATC, in complete redemption
of the Preferred Component of its Partnership Interest, an amount equal to the
Preferred Redemption Value.
5.3 Tax Distributions.
(a) After the Partnership has made distributions described
in Section 5.1 and, when applicable, Section 5.2 above, the Partnership shall,
at least quarterly, distribute to each Partner an amount equal to 25 percent of
such Partner's Tax Advance Amount for the Fiscal Year that includes such
calendar quarter (as estimated in good faith by the General Partner).
(b) The General Partner's computation of each Partner's Tax
Advance Amount for each year shall be revised (x) prior to each distribution
pursuant to Section 5.3(a) for such year, (y) upon the filing of the
Partnership's Federal income tax return for such year, and (z) upon any
Determination of the taxable income of the Partnership for such year. Following
such revision, (A) the Partnership shall distribute to each Partner the excess
(if any) of the amount that should have been distributed to such Partner
pursuant to Section 5.3(a) based on such revised estimate, over the amount
actually distributed to such Partner pursuant to Section 5.3(a); or (B) each
Partner shall contribute to the Partnership the excess (if any) of the amount
actually distributed to such Partner pursuant to Section 5.3(a) over the amount
that should have been distributed to such Partner pursuant to Section 5.3(b)
based on such revised estimate.
5.4 Discretionary Distributions. Provided that, at or prior to such
time, the Partnership has made in full all distributions required to have been
made through such date under Sections 5.1, 5.2 and 5.3, and subject to Section
8.3, the Partnership may, in the sole and absolute discretion of the General
Partner, make distributions to the Partners in proportion to their Percentage
Interests.
5.5 Limitation on Distributions.
(a) In no event shall a distribution be made to a Partner
pursuant to Sections 5.1 through 5.4 or Section 8.3 if such distribution would
cause or increase an Adjusted Capital Account Deficit with respect to the
applicable Partner; provided that such distribution, plus (except with respect
to distributions pursuant to Sections 5.1 or 5.2) an amount equal to interest
compounded quarterly on such delayed distribution at a rate equal to the
percentage used in computing the Preferred Return, shall be made as soon as, and
to the extent, such distribution plus such amount would not so cause or increase
an Adjusted Account Deficit; and provided, further, the General Partner is
authorized to make appropriate adjustments in the allocation of items of income,
gain, loss and deduction as necessary to prevent the operation of this sentence
from limiting the amount otherwise distributable under this Agreement.
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(b) Notwithstanding any provision in this Agreement to the
contrary, the Partnership shall not make a distribution to any Partner on
account of its Partnership Interest if such distribution would violate the Act.
5.6 No Distributions Under Original Agreement.
(a) For the avoidance of doubt, as of the date hereof, the
provisions contained in Sections 8.4 and 8.5 of the Original Agreement (along
with all other provisions of the Original Agreement) shall have no further force
and effect.
(b) In the event that, following the date hereof, an
adjustment is made by any Governmental Authority that results in an increase or
decrease in tax owed by any Partner with respect to its Partnership Interest (as
defined in the Original Agreement) for any taxable year (or portion thereof)
ending on or prior to the date hereof:
(i) no Partner shall have any right to additional
distributions from the Partnership for any such increase in tax; and
(ii) no Partner shall have any obligation to make
additional contributions to the Partnership in respect of any such
decrease in tax.
ARTICLE VI
CAPITAL ACCOUNTS; ALLOCATIONS
6.1 Capital Accounts. "Capital Accounts" shall be established and
maintained for each Partner on the books of the Partnership and shall be
maintained as provided in the definition of Capital Account.
6.2 Allocations of Preferred Profit; Residual Net Profit. The
Partnership's Preferred Profit and Residual Net Profit for each Fiscal Year
shall be allocated annually (and at such other times that such allocation would
make a difference in connection with another allocation, distribution or other
event under this Agreement) to the Partners in the following order:
(a) Preferred Profit Allocation. First, Preferred Profit of
the Partnership shall be allocated to ATC until ATC has been allocated Preferred
Profit with respect to the Preferred Component of its Partnership Interest in
the following amounts:
(i) First, until ATC has received aggregate
allocations of Preferred Profit pursuant to this clause (a)(i) equal to
the amount of Residual Net Loss previously allocated under Subsection
6.3(b)(ii) below not previously offset by an allocation of Preferred
Profit under this subsection (a)(i); and
(ii) Second, until ATC has received allocations of
Preferred Profit pursuant to this clause (a)(ii) equal to the cumulative
amounts distributed pursuant to Section 5.1 through the end of the such
Fiscal Year (or portion thereof).
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(b) Residual Net Profit Allocation. Thereafter, Residual Net
Profit of the Partnership shall be allocated as follows:
(i) For all Fiscal Years or portions thereof
commencing on the date hereof and ending on or before the Catch-Up Date,
Residual Net Profit shall be allocated to the Partners in proportion to
their Percentage Interests;
(ii) For all Fiscal Years or portions thereof
beginning after the Catch-Up Date and prior to the Pro Rata Time:
(A) 100% of Residual Net Profit shall be
allocated to MediaOne, until the Capital Account balance of
MediaOne is equal to the MediaOne Target Capital Account
Balance; and
(B) Thereafter, Residual Net Profit shall be
allocated to the Partners in proportion to their Percentage
Interests.
(iii) Following the Pro Rata Date, Residual Net Profit
shall be allocated to the Partners in proportion to their Percentage
Interests.
6.3 Allocations of Residual Net Loss. Residual Net Loss of the
Partnership for each Fiscal Year shall be allocated annually (and at such other
times that such allocation would make a difference in connection with another
allocation, distribution or other event under this Agreement) to the Partners in
the following order:
(a) Allocations Prior to Pro Rata Time. Prior to the Pro
Rata Time, Residual Net Loss of the Partnership shall be allocated between ATC
and TWC, in proportion to their Percentage Interests.
(b) Allocations After the Pro Rata Time. After the Pro Rata
Time, Residual Net Loss of the Partnership shall be allocated as follows:
(i) First, to the Partners, in proportion to their
Percentage Interests, to the extent of (A) in the case of MediaOne and
TWC, their positive Capital Account balances, and (B) in the case of
ATC, its positive Common Sub-Account balance;
(ii) Next, to ATC, to the extent of its positive
Preferred Sub-Account balance; and
(iii) Thereafter, to the Partners, in proportion to
their Percentage Interests.
6.4 Regulatory Tax Allocations. Section 704 of the Code and the
Treasury Regulations issued thereunder, including the provisions of such
Treasury Regulations addressing qualified income offset provisions, minimum gain
chargeback requirements and allocations of deductions attributable to
non-recourse debt and partner non-recourse debt, are hereby incorporated by
reference. If, as a result of the provisions of Section 704 of the Code
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and such Treasury Regulations, items of income, gain, deduction or loss are
allocated to the Partners in a manner that is inconsistent with the manner in
which they intend to divide such items as reflected in Sections 6.2 and 6.3, to
the extent permitted under such Treasury Regulations, items of future income and
loss shall be allocated among the Partners so as to prevent such allocations
from distorting the manner in which the net amounts of Partnership income, gain,
deduction and loss will be divided among the Partners pursuant to this
Agreement; provided, that nothing in Section 704 of the Code and such Treasury
Regulations shall require a Partner to restore a deficit balance in its Capital
Account.
6.5 Allocations for Tax Purposes.
(a) In accordance with Section 704(c) of the Code and the
Treasury Regulations thereunder, income, gain, loss, and deduction with respect
to any property contributed to the capital of the Partnership shall, solely for
tax purposes, be allocated among the Partners so as to take account of any
variation between the adjusted basis of such property to the Partnership for
Federal income tax purposes and its initial Gross Asset Value using the
traditional method described in Treasury Regulations Section 1.704-3(b) in a
manner consistent with the application of such method under prior practice of
the Partnership.
(b) In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to subparagraph (b) of the definition of Gross Asset
Value, subsequent allocations of income, gain, loss, and deduction with respect
to such asset shall take account of any variation between the adjusted basis of
such asset for Federal income tax purposes and its Gross Asset Value in the same
manner as under Section 704(c) of the Code and the Treasury Regulations
thereunder.
(c) Subject to the preceding paragraphs (a) and (b), for
United States Federal, state and local income tax purposes, the income, gains,
losses and deductions of the Partnership shall, for each taxable period, be
allocated among the Partners in the same manner and in the same proportion that
such items have been allocated among the Partners' respective Capital Accounts.
ARTICLE VII
MANAGEMENT
7.1 Powers of the General Partner. Except as otherwise expressly
provided herein, the management and operation of the Partnership shall be vested
exclusively in the General Partner, who shall have the power on behalf and in
the name of the Partnership to carry out any and all of the purposes of the
Partnership and to perform all acts and enter into and perform all contracts and
other undertakings that it may deem necessary or advisable or incidental
thereto. Except as otherwise expressly provided in this Agreement, the General
Partner shall have, and shall have full authority in its discretion to exercise,
on behalf of and in the name of the Partnership, all rights and powers of a
general partner of a limited partnership under the Act necessary or convenient
to carry out the purposes of the Partnership.
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Any person not a party to this Agreement dealing with the Partnership shall be
entitled to rely conclusively upon the power and authority of the General
Partner to bind the Partnership in all respects, and to execute any and all
agreements, instruments and other writings on behalf of and in the name of the
Partnership.
7.2 Powers of Limited Partners. The Limited Partners shall not
participate in the management or control of the business of the Partnership, or
have any rights or powers with respect thereto, except those rights or powers
expressly granted to them by the terms of this Agreement or those conferred on
them by law. The Limited Partners shall not have the authority to bind the
Partnership.
7.3 Liability of Partners. The liability of the Limited Partners
shall be limited as provided in the Act and as set forth in this Agreement.
Neither the General Partner nor any Limited Partner shall be obligated to
restore by way of capital contribution or otherwise any deficits in its Capital
Account or the Capital Account of any other Partner (if such deficits occur).
7.4 Exculpation and Indemnification.
(a) Exculpation. To fullest extent permitted under the Act,
no Protected Person shall be liable to the Partnership or any Partner for any
action taken or omitted to be taken by it or by any other Partner or other
Person with respect to the Partnership. Notwithstanding the immediately
preceding sentence and except as otherwise expressly provided in this Agreement
(including, without limitation, in Sections 10.10 and 10.11 hereof), nothing
herein is intended to limit, or relieve any Partner from, any fiduciary duty
applicable to such Partner under Applicable Law. Any Protected Person may (but
shall not be obligated to) consult with legal counsel and accountants with
respect to Partnership affairs (including interpretations of this Agreement) and
shall be fully protected and justified in any action or inaction which is taken
or omitted in good faith, in reliance upon and in accordance with the opinion or
advice of such counsel or accountants. In determining whether a Protected Person
acted with the requisite degree of care, such Protected Person shall be entitled
to rely on written or oral reports, opinions, certificates and other statements
of the directors, officers, employees, consultants, attorneys, accountants and
professional advisors of the Partnership selected with reasonable care;
provided, that no such Protected Person may rely upon such statements to the
extent it believed that such statements were false. This Section 7.4(a) shall
not be deemed to impose on any Protected Person any liability to which such
Protected Person would not be subject absent this Section 7.4.
(b) Indemnification.
(i) To the fullest extent permitted by law, the
Partnership shall indemnify, hold harmless, protect and defend each
Protected Person against any losses, claims, damages or liabilities,
including reasonable legal fees or other expenses incurred in
investigating or defending against any such losses, claims, damages or
liabilities, and any amounts expended in settlement of any claims
approved by the General Partner, not to be unreasonably withheld
(collectively, "Liabilities"), to which any Protected Person may become
subject:
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(A) by reason of any act or omission or
alleged act or omission (even if negligent) performed or omitted
to be performed in connection with the activities of the
Partnership;
(B) by reason of the fact that it is or was
acting in connection with the activities of the Partnership in
any capacity or that it is or was serving at the request of the
Partnership as a partner, stockholder or Agent of any Person; or
(C) by reason of any other act or omission
or alleged act or omission (even if negligent) arising out of or
in connection with the activities of the Partnership;
unless such Liability results from such Protected Person's own willful
misconduct, fraud, gross negligence or willful or material breach of
this Agreement.
(ii) The Partnership shall promptly reimburse as
incurred (and advance to the extent reasonably requested) each Protected
Person for reasonable legal or other expenses of each Protected Person
in connection with investigating, preparing to defend or defending any
claim, lawsuit or other proceeding relating to any Liabilities for which
the Protected Person may be indemnified pursuant to this Section 7.4(b);
provided, that such Protected Person executes a written undertaking to
repay the Partnership for such reimbursed or advanced expenses if it is
finally judicially determined that such Protected Person is not entitled
to the indemnification provided by this Section 7.4(b).
(iii) The provisions of this Section 7.4(b) shall
continue to afford protection to each Protected Person regardless of
whether such Protected Person remains in the position or capacity
pursuant to which such Protected Person became entitled to
indemnification under this Section 7.4(b) and regardless of any
subsequent amendment to this Agreement; provided, that no such amendment
shall reduce or restrict the extent to which these indemnification
provisions apply to actions taken or omissions made prior to the date of
such amendment.
(iv) To the extent available on commercially
reasonable terms, the General Partner may purchase, at the Partnership's
expense, insurance (including liability insurance policies and errors
and omissions policies) to cover Liabilities covered by the foregoing
indemnification provisions and to otherwise cover Liabilities for any
breach or alleged breach by any Protected Person of its duties in such
amount and with such deductibles as the General Partner may determine in
its discretion; the failure to obtain such insurance shall not affect
the right to indemnification of any Protected Person under the
indemnification provisions contained herein. Any such insurance may
extend beyond the termination of the Partnership.
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7.5 Certain Tax Matters.
(a) Change in Law. In the event that a change in Applicable
Law could result in taxation of the Partnership as a C Corporation, the Limited
Partners and the General Partner shall cooperate in good faith to restructure
the Partnership to avoid such treatment.
(b) Section 754 Election. The General Partner may make an
election under Section 754 of the Code. The Partnership shall make an election
under Section 754 of the Code in connection with any transfer of Partnership
Interests permitted under this Agreement if such election is requested by the
transferring party.
7.6 Transactions with General Partner. Except as provided in this
Agreement, all transactions between the General Partner or any of its
Subsidiaries (other than the Partnership and its Subsidiaries), on the one hand,
and the Partnership or any of its Subsidiaries, on the other hand, shall be
conducted on an arm's-length basis, except that any management, corporate or
similar services provided to the Partnership by the General Partner shall be
provided on a no mark-up basis, it being understood that the foregoing shall not
preclude fair allocations of administrative and other costs and general
overhead.
ARTICLE VIII
DISSOLUTION OF THE PARTNERSHIP
8.1 Dissolution. A dissolution of the Partnership shall take place
upon the first to occur of: (i) a determination by the General Partner in its
sole and absolute discretion to dissolve the Partnership; (ii) the transfer or
sale of all or substantially all of the Partnership's assets; or (iii) the
occurrence of any circumstances that by Applicable Law requires a dissolution of
the Partnership; provided, that the General Partner shall not, without the
consent of the MediaOne Partners holding a majority of the MediaOne Partnership
Interest, take any action which would cause, or would reasonably be expected to
cause, the liquidation, dissolution, winding up or Bankruptcy (under clause (i)
of the definition thereof) of the Partnership (each a "Dissolution Action"), or
permit any Dissolution Action to be taken prior to the third anniversary of the
date hereof, and thereafter only upon at least five (5) days' notice to the
MediaOne Partners; provided, further, that the General Partner shall not,
without the consent of the MediaOne Partners holding a majority of the MediaOne
Partnership Interest, take or permit to be taken any Dissolution Action, unless
a Dissolution Action has previously been commenced in accordance with this
Section 8.1, during any period commencing on the date that any MediaOne Partner
initiates its right to Dispose of its Partnership Interest pursuant to Section 3
or 4 of the Partnership Interest Sale Agreement through and until the earlier of
(i) the closing of such Disposition in accordance with Section 3 or 4, as
applicable, of the Partnership Interest Sale Agreement and (ii) the final date
upon which Section 3 or 4, as applicable, of the Partnership Interest Sale
Agreement requires such a closing to take place (provided that the General
Partner shall not take or permit to be taken any Dissolution Action during any
period of delay in such closing which results directly from a breach by AOLTW or
TWC of its obligations under the Partnership Interest Sale Agreement).
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<PAGE>
8.2 Resignation. Subject to Section 8.1, each Partner covenants and
agrees that it will not withdraw or resign from the Partnership or do anything
that would otherwise terminate the Partnership without the prior consent of the
other Partners (such consent not to be unreasonably withheld or delayed).
8.3 Winding-Up of the Partnership. Upon any dissolution of the
Partnership, the following shall be accomplished:
(a) The chief financial officer of the Partnership shall be
directed to prepare a balance sheet of the Partnership in accordance with GAAP
as of the date of dissolution, which shall be reported upon by the Accountants.
(b) To the extent that the General Partner determines that
any or all of the assets of the Partnership shall be sold, such assets shall be
sold as promptly as possible, but in an orderly and business-like manner so as
not to involve undue sacrifice. Prior to any such determination, the Partners
shall discuss in good faith the in-kind distribution of some or all of the
Partnership's assets, to the extent one or more Partners desire to acquire such
assets. If the Partners are unable to agree on an equitable distribution of such
assets among the Partners, such assets shall be sold in accordance with the
first sentence of this clause (b); provided that each Partner shall be given the
right to submit a bid for such assets and shall be entitled to purchase such
assets if its bid, as reasonably determined by the General Partner, is the most
favorable to the Partnership of all bids submitted. In connection with the
foregoing, the General Partner shall take reasonable steps to provide each
Partner with the opportunity to submit a bid for the purchase of the
Partnership's assets or any portion thereof.
(c) The Capital Account of each Partner shall be adjusted to
take into account the Net Profit or Net Loss resulting from the sale or
distribution in-kind of the assets of the Partnership.
(d) The proceeds of sale of the assets of the Partnership
and all other remaining assets of the Partnership shall be applied and
distributed as follows, and in the following order of priority:
(i) first, to the extent not otherwise adequately
provided for, to the payment of all debts and liabilities of the
Partnership and the expenses of liquidation and to the setting up of any
reserves which are reasonably necessary for any contingent liabilities
or obligations of the Partnership or Partners arising out of, or in
connection with, the Partnership; and
(ii) second, to ATC with respect to its Preferred
Sub-Account to the extent of the Preferred Redemption Value;
(iii) third, pro rata to the Partners with respect to
their Capital Account balances, to the extent of their positive Capital
Account balances; and
(iv) thereafter, to the Partners, in proportion to
their Percentage Interests.
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<PAGE>
(e) The Partnership shall terminate when all property and
assets owned by the Partnership to be sold or distributed shall have been
disposed of, and the net sale proceeds, after payment of or provision for the
amounts specified in Sections 8.3(d)(i) and 8.3(d)(ii), and any assets to be
distributed in-kind shall have been distributed to the Partners as provided
herein.
8.4 No Recourse Against any Partner. A Partner shall look solely to
the assets of the Partnership for the return of its investment, and if the
property of the Partnership remaining after the payment or discharge of the
debts and liabilities of the Partnership is insufficient to return such
investment, it shall have no recourse against any other Partner. Distributions
upon dissolution of the Partnership will constitute a complete return to the
Partners of their interests in the profits of the Partnership and their Capital
Contributions, a final and complete distribution to the Partners of all of their
interests in the Partnership properties and its other assets and a final
termination and settlement of all of the Partners' other interests in the
Partnership.
ARTICLE IX
BOOKS AND RECORDS
9.1 Fiscal Year. The books and records of the Partnership shall be
kept on an accrual basis consistent with the Fiscal Year of the Partnership.
9.2 Maintenance of Books and Records. At all times during the Term,
the General Partner shall cause to be kept, at the principal office of the
Partnership, full and complete books of account. The books of account shall be
maintained in a manner that provides sufficient assurance that:
(a) transactions of the Partnership are executed in
accordance with the general or specific authorization of the General Partner or
the officers of the Partnership, consistent with the provisions of this
Agreement; and
(b) transactions of the Partnership are recorded in such
form and manner as will (i) permit preparation of income and franchise tax
returns of the Partners in their respective appropriate jurisdictions and
information returns in accordance with this Agreement and as required by law,
(ii) permit preparation of the Partnership's financial statements in a manner
consistent with the manner in which AOLTW prepares its financial statements,
subject to such changes as are necessitated by the transactions contemplated
hereby, and (iii) maintain accountability for the Partnership's assets.
9.3 Financial Statements; Tax Matters.
(a) Annual Statements. As soon as practicable following the
end of each fiscal year but in any event within 120 days after the end of such
fiscal year, the General Partner shall cause to be prepared and delivered to
each Partner an audited statement of income (loss) of the Partnership and a
statement of cash flow for such fiscal year, and an audited balance sheet of the
Partnership as of the end of such fiscal year, including the
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<PAGE>
footnotes thereto, each prepared in accordance with GAAP and accompanied by the
Accountants' report thereon.
(b) Quarterly Statements. As soon as practicable following
the end of each fiscal quarter (other than the last fiscal quarter of each
fiscal year) but in any event within 60 days after the end of such fiscal
quarter, the General Partner shall cause to be prepared and delivered to each
Partner a statement of income (loss) of the Partnership for such quarter and for
the year to date and an unaudited balance sheet of the Partnership as of the end
of such quarter, together with a certificate of the chief financial officer of
the Partnership to the effect that such financial statements have been prepared
under his supervision and that, although such financial statements do not
contain the footnotes and other disclosures required by GAAP, such financial
statements, in his judgment, except as disclosed in the notes to such financial
statements, fairly present in all material respects the interim results of
operations and financial position of the Partnership for the period and as of
the date indicated, subject to normal audit adjustments.
(c) Estimated Returns. The Partnership shall provide each
Partner with such information as such Partner shall reasonably request to enable
it to comply on a timely basis with its estimated tax obligations.
9.4 Tax Allocations and Reports.
(a) As soon as practicable following the end of each Fiscal
Year, but in no event later than seven calendar months following the end of such
Fiscal Year, the General Partner shall cause to be prepared and delivered to
each Partner a preliminary draft Schedule K-1 of the Partnership. As soon as
practicable thereafter, the General Partner shall cause to be prepared and
delivered to each Partner a final Schedule K-1. Upon the written request of any
such Partner and at the expense of such Partner, the Partnership will use
reasonable efforts to deliver or cause to be delivered, at such time and in the
format as such Partner shall reasonably request, any additional information
necessary for the preparation of any state, local and foreign income tax return
which must be filed by such Partner.
(b) To the extent applicable, the Partnership hereby
designates the General Partner to act as the "Tax Matters Partner" (as defined
in Section 6231(a)(7) of the Code) in accordance with Sections 6221 through 6233
of the Code for all Fiscal Years or portions thereof commencing on or after the
date hereof. The Tax Matters Partner for all Fiscal Years or portions thereof
ending on or prior to the date hereof shall be a former General Partner of the
Partnership, WCI. The Tax Matters Partner is authorized and required to
represent the Partnership (at the Partnership's expense) in connection with all
examinations of the Partnership's affairs by tax authorities, including
resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each Partner
agrees to cooperate with the Tax Matters Partner and to do or refrain from doing
any or all things reasonably requested by the Tax Matters Partner with respect
to the conduct of such proceedings. Subject to the foregoing proviso, the Tax
Matters Partner will have reasonable discretion to determine whether the
Partnership (either on its own behalf or on behalf of the Partners) will contest
or continue to contest any tax deficiencies assessed or proposed to be assessed
by any taxing
26
<PAGE>
authority. Any deficiency for taxes imposed on any Partner (including penalties,
additions to tax or interest imposed with respect to such taxes) will be paid by
such Partner, and if paid by the Partnership, will be recoverable from such
Partner (including by offset against distributions otherwise payable to such
Partner). The Tax Matters Partner shall take reasonable action to cause each
other Partner to be treated as a "notice partner" within the meaning of Section
6231(a)(8) of the Code. Each such Partner shall have the right to participate in
any administrative proceeding and any discussions with the Internal Revenue
Service at its own expense. The Tax Matters Partner shall determine in good
faith and consistent with any fiduciary duties it has to all Partners whether to
make or revoke any available election pursuant to the Code. Each Partner will,
upon request, supply the information necessary to give proper effect to any such
election.
(c) Each of the Partners and the Partnership shall take no
action or position (whether on a tax return or otherwise) inconsistent with, and
shall make or cause to be made all applicable elections with respect to (i) the
treatment of the Partnership as a partnership; and (ii) the treatment of the
Partnership as not a publicly traded partnership for federal income tax
purposes.
ARTICLE X
MISCELLANEOUS
10.1 Confidential Information. For so long as any Limited Partner is
a party to this Agreement each Limited Partner shall, and shall use its
reasonable best efforts to cause its Affiliates and its and their respective
Agents to, keep secret and hold in strictest confidence any and all confidential
information relating to the Partnership Business that is proprietary to the
Partnership, other than the following:
(i) information that has become generally available
to the public other than as a result of a disclosure by such Limited
Partner, its Affiliates or its Agents;
(ii) information that becomes available to such
Limited Partner or an Agent of such Limited Partner on a nonconfidential
basis from a third party having, to such Partner's knowledge, no
obligation of confidentiality to a party to this Agreement or the
Partnership and which, to such Partner's knowledge, has not itself
received such information directly or indirectly in breach of any such
obligation of confidentiality;
(iii) information that is required to be disclosed by
Applicable Law, judicial order or pursuant to any listing agreement
with, or the rules or regulations of, any securities exchange or
quotation system on which securities of such Limited Partner or any such
Affiliate are listed or traded; provided that the party making such
disclosure or whose Affiliates or Agents are making such disclosure
shall notify the other parties and the Partnership as promptly as
practicable (and, if possible, prior to making such disclosure) and
shall use its reasonable best efforts to
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<PAGE>
limit the scope of such disclosure and seek confidential treatment of
the information to be disclosed; and
(iv) reasonable disclosures made in good faith to a
prospective transferee of such Partner's Partnership Interest in
connection with a potential Permitted Transfer; provided that prior to
any such disclosure such prospective transferee executes a
confidentiality agreement in form and substance reasonably acceptable to
the Partnership.
10.2 Amendments; Waiver. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement (other than this Section 10.2,
Section 10.3 and Section 10.10) may be amended or waived if, but only if, such
amendment is in writing and signed by the General Partner; provided, however,
that:
(a) any amendment to or waiver of any provision of this
Agreement that would increase the liabilities or obligations of any Limited
Partner shall require the written consent of such Limited Partner;
(b) any amendment to or waiver of any provision that would
alter the allocations to Capital Accounts, or the distributions from the
Partnership shall require the written consent of each Limited Partner who would
be adversely affected by such amendment;
(c) any amendment to or waiver of any provision which
discriminates against any Limited Partner, or adversely affects the value or
rights of one Limited Partner in the Partnership, in relation to one or more of
the other Partners shall require the written consent of such Limited Partner;
and
(d) any amendment of Section 7.4, 7.6 or 8.1 shall require
the consent of the MediaOne Partners holding a majority of the MediaOne
Partnership Interests.
Promptly after any change or amendment or waiver in accordance with this Section
10.2, the General Partner shall send a written notice to each Limited Partner
describing such change or amendment or waiver in reasonable detail. Any
amendment of this Section 10.2 shall require the written consent of all of the
Partners.
10.3 Additional Issuances. The Partnership, in the sole and absolute
discretion of the General Partner, shall be permitted to issue additional equity
of the Partnership, provided, that any Partnership Interest so issued shall be
at Fair Market Value. Notwithstanding Section 10.2, the General Partner may
authorize the amendment of this Agreement as necessary to reflect any such
issuance of equity of the Partnership. Any amendment of this Section 10.3 shall
require the written consent of all of the Partners. To the extent applicable,
the provisions of this Section 10.3 shall be subject to the provisions of
Article VI of the Bylaws of the General Partner or Section 7.6 of this
Agreement.
10.4 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the successors and permitted assigns of the Partners.
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10.5 No Waiver. No failure or delay by any Partner in exercising any
right, power or privilege hereunder shall operate as a waiver hereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by Applicable Law.
10.6 Severability. If any term, provision, covenant or restriction of
this Agreement is determined by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner adverse to any party hereto. Upon such a
determination, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby
may be consummated as originally contemplated to the fullest extent possible.
10.7 No Right to Set-Off. No Partner shall be entitled to offset
against any of its financial obligations to the Partnership under this
Agreement, any obligation owed to it or any of its Affiliates by any other
Partner or any of such other Partner's Affiliates.
10.8 Survival of Rights, Duties and Obligations. The dissolution or
termination of the Partnership for any reason shall not release any Partner from
any liability, which at the time of dissolution or termination had already
accrued to any other party or parties or which thereafter may accrue in respect
of any act or omission prior to such dissolution or termination.
10.9 Further Assurances. Each of the parties to this Agreement hereby
agrees to execute and deliver all such other and additional instruments and
documents and to do such other acts and things as may be reasonably necessary
more fully to effectuate the Partnership and this Agreement. In addition, each
party hereto agrees to use its commercially reasonable efforts to cooperate with
the other parties in obtaining any regulatory approvals necessary for any
Disposition of Partnership Interests permitted by this Agreement..
10.10 Competing Activities. Except as otherwise expressly provided in
an agreement between or among the Partnership and any Partner or Partners, (i)
the Partners, including, the General Partner and its officers, directors,
agents, stockholders, members, partners and Affiliates, may engage or invest in,
independently or with others, any business activity of any type or description,
including those that might be the same as or similar to the Partnership Business
or the business of any Subsidiary of the Partnership; (ii) neither the
Partnership, any Subsidiary of the Partnership nor any Partner of the
Partnership shall have any right in or to such business activities or ventures
or to receive or share in any income or proceeds derived therefrom; and (iii) to
the extent required by applicable law in order to effectuate the purpose of this
provision, the Partnership shall have no interest or expectancy, and
specifically renounces any interest or expectancy, in any such business
activities or ventures.
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10.11 Corporate Opportunities. If any Protected Person (or, as set
forth below, any of such Protected Person's officers, directors, agents,
stockholders, members or partners) acquires knowledge of a potential transaction
or matter which may be a Corporate Opportunity or otherwise is then exploiting
any Corporate Opportunity, the Partnership shall have no interest in such
Corporate Opportunity and no expectancy that such Corporate Opportunity be
offered to the Partnership, any such interest or expectancy being hereby
renounced, so that, as a result of such renunciation, and for the avoidance of
doubt, such Person (i) shall have no duty to communicate or present such
Corporate Opportunity to the Partnership, (ii) shall have the right to hold any
such Corporate Opportunity for its (and/or its officers', directors', agents',
stockholders', members' or partners') own account or to recommend, sell, assign
or transfer such Corporate Opportunity to Persons other than the Partnership or
any Subsidiary of the Partnership, and (iii) shall not breach any fiduciary duty
to the Partnership, in such Person's capacity as the General Partner of the
Partnership or otherwise, by reason of the fact that such Person pursues or
acquires such Corporate Opportunity for itself, directs, sells, assigns or
transfers such Corporate Opportunity to another Person, or does not communicate
information regarding such Corporate Opportunity to the Partnership.
10.12 Guarantees. Each of AOLTW and AT&T agrees that it shall cause
the AOLTW Partner and the MediaOne Partner, as applicable, (and any direct or
indirect transferee of such Partner) to comply with all of the obligations of
such Partner hereunder. AT&T further agrees that it will continue to own
directly and indirectly a majority of the equity and other ownership interests
of each MediaOne Partner (or, if such MediaOne Partner is a Disposition Trust,
of a Person that owns all of the ownership interests of in such Disposition
Trust) until such time as such MediaOne Partner shall have Disposed of its
Partnership Interests to any Person who is not an Affiliate of such MediaOne
Partner in accordance with Section 3.1; provided that AT&T may Dispose of all of
its equity interests in the MediaOne Partner or any Parent thereof in connection
with a sale or transfer of all or substantially all of its broadband business if
the transferee thereof (and, if such transferee is a Subsidiary of another
Person, then such transferee's Ultimate Parent) agrees in writing to succeed to
the benefits of and be bound by all of the terms and conditions binding upon or
to the benefit of AT&T under this Agreement and the Partnership Interest Sale
Agreement. TWC will continue to own, directly or indirectly, a majority of the
equity of the Partnership through and until the third anniversary of the date
hereof and thereafter shall not take any action that would result in TWC ceasing
to own, directly or indirectly, a majority of the equity of the Partnership
unless it provides at least five (5) days' notice to the MediaOne Partners;
provided, however, that TWC shall not, without the consent of the MediaOne
Partners holding a majority of the MediaOne Partnership Interest, take any such
action, unless such action has previously been commenced in accordance with this
Section 10.12, during any period commencing on the date that any MediaOne
Partner initiates its right to Dispose of its Partnership Interest pursuant to
Section 3 or 4 of the Partnership Interest Sale Agreement through and until the
earlier of (i) the closing of such Disposition in accordance with Section 3 or
4, as applicable, of the Partnership Interest Sale Agreement and (ii) the final
date upon which Section 3 or 4, as applicable, of the Partnership Interest Sale
Agreement requires such a closing to take place (provided that TWC shall not
take or permit to be taken any such action during any period of delay in such
closing which results directly
30
<PAGE>
from a breach by AOLTW or TWC of its obligations under the Partnership Interest
Sale Agreement).
10.13 Effect of AT&T - Comcast Merger.(5) Upon consummation of the
AT&T - Comcast Merger, the parties hereto acknowledge and agree that all of AT&T
Corp.'s rights and obligations hereunder will automatically and without further
action of any of the parties hereto be assigned to and assumed by AT&T Comcast.
Upon execution of this Agreement by AT&T Comcast, AT&T Comcast will replace AT&T
Corp. as a party hereto, and AT&T Corp. shall automatically be released from any
and all of its obligations under this Agreement, and each party hereto shall
execute and deliver such instruments as are reasonably requested by AT&T Corp.
to evidence such release.
10.14 Notices. All notices, requests and other communications to any
party hereto shall be in writing (including facsimile transmission) and shall be
given,
<TABLE>
<S> <C>
if to AOLTW: AOL Time Warner Inc.
75 Rockefeller Center Plaza
New York, New York 10019
Attention: Executive Vice President
and General Counsel
Fax: (212) 258-3172
Time Warner Cable Inc.
75 Rockefeller Center Plaza
New York, New York 10019
Attention: Executive Vice President
and General Counsel
Fax: (212) 258-3172
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Attention: Robert B. Schumer
Fax: (212) 757-3990
if to AT&T Corp. prior to closing of the AT&T Corp.
AT&T-Comcast Merger, to: 295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attention: Corporate Secretary
Fax: (908) 953-8360
</TABLE>
------------------------
(5) In the event that the AT&T - Comcast Merger is consummated prior to the
execution of this Agreement, this Section 10.13 shall be deleted and the
Section numbers in the remainder of the document shall be appropriately
adjusted.
31
<PAGE>
<TABLE>
<S> <C>
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Trevor S. Norwitz
Fax: (212) 403-2000
if to AT&T Comcast after closing of the AT&T Comcast Corporation
AT&T-Comcast Merger, to: 1500 Market Street
Philadelphia, Pennsylvania 19102
Attention: General Counsel
Fax: (215) 981-7794
With a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Dennis S. Hersch
William L. Taylor
Fax: (212) 450-4800
</TABLE>
or such other address or facsimile number as such party hereto may hereafter
specify for such purpose by notice to the other parties hereto. All such
notices, requests and other communications shall be deemed received on the date
of receipt by the recipient thereof if received prior to 5 p.m. on a Business
Day, in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.
10.15 Counterparts; Effectiveness. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received a counterpart
hereof signed by the other parties hereto.
10.16 No Right to Partition. The Partners, on behalf of themselves and
their shareholders, partners, successors and assigns, if any, hereby
specifically renounce, waive and forfeit all rights, whether arising under
contract or statute or by operation of law, except as otherwise expressly
provided in this Agreement, to seek, bring or maintain any action in any court
of law or equity for partition of the Partnership or any asset of the
Partnership, or any interest which is considered to be Partnership property,
regardless of the manner in which title to such property may be held.
10.17 Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all prior
agreements and
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understandings, both oral and written, between the parties with respect to such
subject matter.
(b) This Agreement shall be binding upon and inure solely to
the benefit of each party hereto and their respective successors and assigns,
and nothing in this Agreement, express or implied, is intended to or shall
confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
10.18 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware (other than its rules of
conflicts of laws to the extent that the application of the laws of another
jurisdiction would be required thereby), and specifically, the Partnership shall
be subject to the provisions of the Act, except to the extent modified by the
provisions hereof.
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IN WITNESS WHEREOF, all of the parties hereto have executed this
Agreement, effective as of the date first written above; provided, however, AT&T
and AOLTW are parties to this Agreement solely for purposes of being bound by
Section 10.12 hereof and WCI is a party to this Agreement solely for purposes of
Section 9.4 hereof.
TIME WARNER CABLE INC.
By:
-------------------------------------
Name:
Title:
AMERICAN TELEVISION &
COMMUNICATIONS CORPORATION
By:
-------------------------------------
Name:
Title:
MEDIAONE OF COLORADO, INC.
By:
-------------------------------------
Name:
Title:
AT&T CORP.
By:
-------------------------------------
Name:
Title:
AOL TIME WARNER INC.
By:
-------------------------------------
Name:
Title:
34
<PAGE>
WARNER COMMUNICATIONS INC.
By:
-------------------------------------
Name:
Title:
35
<PAGE>
SCHEDULE 4.1(6)
A. ATC's Prior Partnership Interest shall be a portion of ATC's A
Sub-Account (as defined in the Original Agreement) with a value equal to
the Preferred Amount plus 1% of the value of the equity of TWE net of
the Preferred Amount immediately following the TWE Distribution.
B. MediaOne's Prior Partnership Interest shall be the interest of MediaOne
prior to the transactions contemplated by the Restructuring Agreement.
C. TWC's Prior Partnership Interest shall be the aggregate partnership
interests of (i) ATC and WCI (other than ATC's Prior Partnership
Interest as described above in this Schedule 4.1) immediately following
the TWE Distribution and (ii) the Company prior to the transactions
contemplated by the Restructuring Agreement.
------------------------
(6) All capitalized terms used in this Schedule 4.1 unless defined herein
shall have the meanings set forth in the Restructuring Agreement.