EX-3.(ii)(a)
OPERATING AGREEMENT
of
XXXXX MEDIA COMPANY, LLC
This is the Operating Agreement of Xxxxx Media Company, LLC, a Virginia
limited liability company (the "Company"), made as of this 19th day of
November, 1997, by and between BH ONE, LLC, a Virginia limited liability
company, and BH TWO, LLC, a Virginia limited liability company, who hereby
become the Company's members [each (and each other person or entity while
hereafter admitted as a Member) a "Member", and collectively with each other
Member, the "Members"] and agree to form a limited liability company upon the
following terms and conditions.
1. Name. The name of the Company is Xxxxx Media Company, LLC. The business
of the Company may be conducted under such trade or fictitious name or names as
the Manager (hereinafter designated) may select from time to time.
2. Principal Office. The Company's principal office, where the Company's
principal executive offices are located, and at which the records required to be
maintained by the Act (hereinafter defined) are to be kept, shall be located at
000 XX Xxxxx Xxxxxx, Xxxxx 0-X, Xxxxxxxxxx, Xxxxxxx 00000, or such other place
or places as the Manager may determine from time to time.
3. Capital Accounts.
(a) Capital Contributions. The amount of each Member's capital
contribution is as set forth on Exhibit A; such Members shall not be required to
lend or make any additional capital contribution.
(b) Capital Accounts; Allocations. A separate capital account
(singly, a "Capital Account"; collectively, the "Capital Accounts"), shall be
established and maintained for each Member. As of any date, the amount of a
Member's Capital Account shall be adjusted and any allocations of the Company's
income, gain, loss, deductions, or credits (or items thereof) shall be
determined and made as hereinafter provided and in accordance with the Company's
records and, to the extent consistent herewith, applicable provisions of the
Virginia Limited Liability Company Act as it may be amended or superseded from
time to time (the "Act"):
(i) Each Member's Capital Account (a) shall be increased by
(i) the cash amount or agreed fair market value of all contributions
hereafter made by such Member to the Company, (ii) any net income
allocated
(but not distributed) to such Member pursuant to this Section 3, and
any items in the nature of income or gain that are specially
allocated (but not distributed) to such Member, and (iii) the amount
of any Company liabilities assumed by such Member or secured by any
property of the Company distributed to such Member, and (b) shall be
decreased by (i) the cash amount or agreed fair market value of all
actual or deemed distributions of cash or property made to such
Member pursuant to this agreement, (ii) any net loss allocated to
such Member pursuant to this Section 3, and any items in the nature
of expenses or losses that are specially allocated to such Member,
and (iii) the amount of any liabilities of such Member assumed or
secured by the Company. In determining the amount of any such
liabilities, there shall be taken into account the provisions of ss.
752(c), and any other applicable provisions, of the Internal Revenue
Code as amended from time to time (the "Code") and any applicable
regulations (the "Regulations"; singly, a "Regulation") thereunder.
(ii) In accordance with Regulation ss. 1.704, at appropriate
times, the Capital Accounts of all Members and the carrying values
of all Company properties shall be adjusted upwards or downwards to
reflect any unrealized gain or loss attributable to each Company
property, as if such unrealized gain or loss had been recognized
upon an actual sale of each such property at such time and had been
allocated to the Members pursuant to this Section 3. Similarly, in
accordance with such Regulation, immediately prior to the
distribution in kind of any Company property to a Member (including
pursuant to a liquidation of the Company) the Capital Accounts of
the Members shall be adjusted to reflect any unrealized gain or loss
attributable to such property as if such unrealized gain or loss had
been recognized upon an actual sale of such property at such time
and had been allocated to the Members pursuant to this Section 3.
Such unrealized gain or loss shall be determined using such methods
of valuation as the Members in their sole discretion deem
appropriate.
(iii) For purposes of this agreement, net income, gross income
and net loss shall be computed in the same manner as determined for
federal income tax purposes, with the modifications set forth in
Regulation ss. 1.704.
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(iv) Should any Member's adjusted capital account balance
become negative as a result of any adjustment, allocation, or
distribution, thereafter, acting as rapidly as is possible, from
time to time such Member's share of the Company's income and gain,
if any, shall be separately allocated to such Member's Capital
Account until such time as such Member's Capital Account deficit is
eliminated.
(v) Non-recourse deductions shall be allocated in a manner
that is reasonably consistent with other allocations of items of
income, gain, or loss attributable to the property securing the
non-recourse liabilities. In the first year in which the Company has
non-recourse deductions or makes distributions attributable to an
increase in minimum gain as defined in the Regulations, this
agreement shall be deemed to include a "minimum gain chargeback" in
accordance with the Regulations.
4. Members. No person or entity shall be or become a Member of the Company
unless named as a Member herein or hereafter admitted as a Member of the Company
with the prior, written consent of all then Members. The time of admission of
any such new Member shall begin when such Member's status is first reflected in
writing in the Company's records, and not before. Any Member may resign, but
(unless the Members agree otherwise in writing) any such resignation shall first
become effective thirty (30) calendar days after the Company shall have received
written notice thereof, and not before. The Members shall have no right to
control or manage, nor shall they, as Members, take any part in the control or
management of the Company's business, but each may exercise any other rights and
powers of a Member under this agreement. Any Member, or any employee or
affiliate thereof, also may be an employee, officer, or director of the Manager.
Unless expressly specified to the contrary at the time of such act, all actions
taken with respect to the Company by any of such persons while acting for the
Manager shall be deemed to have been taken solely in their capacity as
employees, officers, or directors of the Manager and not as Members.
5. Transfer of Interests. Other than with the prior, written consent of
all then Members pursuant to Section 4, an assignee or other transferee of an
interest in the Company (by operation of law or otherwise) shall not thereby
become a Member of the Company nor thereby acquire any proprietary right in nor
right to become a Member or to participate in the affairs or
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management of the Company. Without such prior, written consent, by any written
assignment, pledge, encumbrance, or other transfer (jointly and severally, a
"Transfer") a Member may assign and transfer to and entitle the assignee or
transferee to receive only (as and to the extent expressly so assigned or
transferred) any share of the profits or losses or asset distributions of the
Company that the assignor or transferor Member thereafter otherwise would have
been or become entitled to hereunder, and nothing more. As to the Company, any
such Transfer shall be effective only if in a writing executed by both the
transferor and transferee in a form acceptable to the Company as evidenced by
the Company's prior written acknowledgment thereof. Any attempted assignment or
other transfer of a Member's rights in violation of this agreement shall be
void.
6. Ceasing to be a Member. Upon any Member's death, expulsion,
resignation, dissolution, incompetency, or bankruptcy, such person or entity
shall cease to be a Member. Any payment made to a Member's successor in
interest, personal representative, executor, or administrator shall acquit the
Company of any and all liability to such Member and to any such person as may be
interested in any such payment by reason of such Member's death, expulsion,
resignation, dissolution, incompetency, or bankruptcy.
7. Voting Rights of Members. In voting by the Members, each Member shall
be entitled to cast the number of votes indicated for such Member on Exhibit A.
8. Manager. The Company's business shall be managed by a manager (the
"Manager"), which initially shall be Xxxxx Media Management, Inc., a Virginia
corporation, whose address is 000 XX Xxxxx Xxxxxx, Xxxxx 0-X, Xxxxxxxxxx,
Xxxxxxx 00000. If the Manager also is a Member it shall have all the rights of
any other Member and also shall direct and manage the operation of the Company's
business, devoting so much of its time thereto as it deems appropriate. From
time to time, the Manager may delegate prescribed functions to any employee,
person, or agent and may contract with other person(s) to assist in management
of the Company's affairs, including any Member or any officer, agent, employee,
or affiliate of a Member. The Manager may submit its resignation as Manager at
any time, but such resignation shall become effective only when the Manager's
successor shall have been selected and duly qualified to serve. Any successor
Manager shall be selected only by a majority vote of the then Members.
9. Management. The Manager shall have the sole and
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exclusive right to manage the Company and to make all decisions regarding the
Company's business, including the right, power, and authority to do in the name
of, and acting solely on behalf of and for, the Company all lawful things that
the Company might do that in the Manager's sole good faith business judgment of
the best interests of the Company are necessary, proper, convenient, or
desirable to carry out the purposes of the Company, including, but not limited
to, the right, power, and authority at any time or from time to time acting in
the name of, on behalf of, and for the Company to do for the Company each or any
one or more of the following:
(a) to own, acquire by lease or purchase, develop, maintain,
improve, grant options with respect to, sell, convey, finance, assign, mortgage,
or lease real estate and/or personal property and to cause to have constructed
improvements upon any real estate necessary, convenient, or incidental to the
accomplishment of the Company's purposes;
(b) to execute on behalf of the Company any and all agreements,
contracts, documents, certifications, and instruments necessary, proper, or
convenient in connection with the development, management, maintenance, and
operation of the Company or of any properties or other assets in which the
Company has an interest, including without limitation, necessary easements to
public or quasi-public bodies or public utilities;
(c) to borrow money and issue evidences of the Company's
indebtedness in furtherance of any or all of the Company's purposes, and to
secure the repayment thereof by deed of trust, mortgage, security interest,
pledge, or other lien or encumbrance on the Company's properties or assets;
(d) to prepay in whole or in part, negotiate, refinance, recast,
increase, renew, modify, amend, or extend any secured or other indebtedness (or
the evidence thereof) for or on behalf of the Company or affecting Company
properties or assets and in connection therewith to execute any extensions,
renewals, amendments, or modifications of any evidences of indebtedness secured
by deeds of trust, mortgages, security interests, pledges, or other encumbrances
covering such properties or assets;
(e) to enter into any kind of contract or activity and to cause the
Company to perform and carry out activities or contracts of any kind necessary
to, or in connection with, or incidental to the accomplishment of the Company's
purposes, so long as those activities and contracts may lawfully be carried on
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or performed by a limited liability company under then applicable laws, rules,
and regulations;
(f) to lend money to the Company, as a creditor of the Company and
not as an additional capital contribution to the Company, or to borrow money
from the Company; provided that the terms of any such loan or loans, including
the terms and interest rate thereof, shall be at least as favorable to the
Company as those then available to the Company on the same type of loan if made
to or received from a disinterested third party; and
(g) to institute, conduct, defend, or prosecute any litigation,
arbitration, or ADR proceeding on behalf of the Company (and to employ attorneys
and experts in connection therewith), including the filing of all appropriate
pleadings or petitions in any proceeding in bankruptcy.
10. Execution of Documents, etc. The Manager may execute and deliver any
document or instrument for, by, or on behalf of the Company, including any deed,
deed of trust, note, or other evidence of indebtedness, lease agreement,
security agreement, financing statement, contract of sale, or other instrument
purporting to convey or encumber, in whole or in part, any or all of the
property or assets of the Company, or any receipt or compromise or settlement
agreement with respect to the Company's accounts receivable or claims; no other
signature shall be required for any such document or instrument to be valid,
binding, and enforceable against the Company in accordance with its terms, and
all persons may rely thereon and shall be exonerated from any and all liability
if they deal with the Company and the Manager on the basis of any document or
instrument executed by the Manager for and on behalf of the Company. Any person
dealing with the Company, its Manager, or its Members may rely upon a
certificate signed by the Manager as to: (a) the then identity of the Members or
of the Manager; (b) the performance of any act by the Company, its Members, or
the Manager; (c) any act or failure to act by the Company or (d) any other
matter whatsoever involving the Company, the Manager, or any Member. All actions
taken by the Manager on behalf of the Company from the date of its organization
to the date of this agreement are hereby ratified and confirmed.
11. Certain Actions, Taxes. On the Company's behalf, the Manager may make
any election permitted by Section 754 of the Code with respect to adjustments to
basis of the Company's property. The Manager shall cause the Company's federal,
state, and local tax returns to be prepared and timely filed as and when
required and shall promptly notify the Members of any proposed
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audit or adjustments of any Company tax return. Until a successor is chosen by
the Members, the Manager shall be the designated "tax matters partner" for the
Company, and the Manager shall select the Company's independent auditor and
shall determine the method of accounting upon which the Company's books are
maintained.
12. Manager's Compensation, Expenses. The Manager may contract with the
Company for its services and may receive such compensation as may be agreed upon
from time to time for the value of its services rendered to the Company as
Manager. The Manager also shall be entitled to have the Company pay or reimburse
all expenses reasonably incurred by the Manager in connection with its
management of the Company's affairs.
13. Authority of the Manager and Members to Engage in Other Businesses.
The Manager, any Member, or any affiliate of a Member may engage in and/or
possess an interest in other business ventures of any nature and description,
independently or with others, including but not limited to the ownership,
financing, leasing, operation, management, and development of businesses that
may compete with the Company; and neither the Company nor the Members shall have
any right by virtue of this agreement in or to any other venture or to any
income or profits derived therefrom. No Manager, Member, or any affiliate of any
Member shall be obligated to present any particular investment opportunity to
the Company even if such opportunity is of a character that, if presented to the
Company, could be taken by the Company, and each of them shall have the right to
take for its own account (individually or otherwise) or to recommend to others
any such particular investment opportunity.
14. Authority of Persons to Deal with the Company. The Company may, but
shall not be required to, transact business with, borrow money from, or lend
money to any Member, or any affiliate thereof, and such person or entity shall,
subject to applicable law, have the same rights and obligations with respect
thereto as would a person who was not a Member or affiliate.
15. Profits and Losses, Distributions, Books, Records, Reports, etc.
(a) Profits and Losses. As and to the extent permitted and not
prohibited by the Act, and as determined by a majority vote of the Members, the
Company's profits and losses and any then distributions of the Company's cash or
other assets shall be allocated and distributed among the Members at least
annually in proportion to their then Capital Accounts as
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reflected in the Company's records.
(b) Maintenance of Books. The Company shall maintain and keep at its
principal office described in Section 2 complete and accurate books of account
as required pursuant to the Act. Each Member shall have access thereto at all
reasonable times and the right to inspect and copy such books and records either
directly or through a person designated by such Member.
(c) Annual Reports. The Manager shall send to all Members an annual
report, containing a balance sheet, income statement, and statement of changes
in financial position, and all information necessary for each Member to prepare
its federal income tax return.
16. Exculpation. Except by reason of acts or omissions of the Member or
the Manager found by a court of competent jurisdiction upon entry of a final
judgment to have been due to such Member's or the Manager's bad faith, fraud,
willful misconduct, or knowing violation of the criminal law, in any proceeding
brought by or in the right of the Company or by or on behalf of any Member,
neither the Manager nor any Member shall be liable, responsible, or accountable
in damages or otherwise to the Company or to any Member, or to any successor,
assignee or transferee of the Company or any Member, for any losses, claims,
damages, or liabilities arising from or based on (i) any act performed, or the
omission to perform any act, within the scope of the authority conferred on any
Member or on the Manager by this agreement; (ii) the performance by any Member
or the Manager of, or the omission to perform, any act on advice of legal
counsel, accountants, or other professional consultants to the Company; or (iii)
the negligence, dishonesty, or bad faith of any employee, officer, or agent of
the Company selected, engaged, or consulted in good faith by any Member or by
the Manager.
17. Exoneration. No Member, Manager, or agent of the Company, jointly or
severally, shall be liable or have any obligation for any liability of the
Company, whether arising in contract, tort, or otherwise solely by reason of
being such Member, Manager, or agent of the Company.
18. Indemnification and Advances.
(a) As and to the full extent permitted by law and by ss. 13.1-1009
of the Act, the Company intends to and shall, indemnify, defend and hold each
Member (including by the use of such term for purposes of this Section, the
Manager in its capacity as such and, if the Manager also is a Member, also
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separately in its capacity as a Member) harmless from and against, and may, with
the approval of a majority vote of the Members, indemnify, defend, and hold the
Company's and each such Member's respective affiliates, agents, employees,
advisors, consultants, or independent contractors, (hereinafter, collectively,
"Agents"; singly, an "Agent") harmless from and against, any loss, liability,
damage, fine, judgment, penalty, attachment, cost, or expense, including
reasonable attorneys' fees, arising from any demands, claims, or suits against
each or any Member, the Manager, the Company, or any Agent, arising from or
relating to the capacity, actions, or omissions of the Company, or of any
Member, or of the Manager, or of an Agent, or arising from or relating to
activities undertaken on behalf of the Company in the ordinary course of the
Company's business, including, without limitation, any demands, claims, or
lawsuits initiated by a Member, unless the acts or omissions of any Member, the
Manager, the Company, or any Agent seeking indemnification are found by a court
of competent jurisdiction upon entry of a final judgment to have been the result
of bad faith, fraud, willful misconduct, or a knowing violation of the criminal
law by the person or entity seeking indemnification, or to have violated any
lesser standard of conduct that under applicable law affirmatively prevents
indemnification hereunder. The termination of any action, suit, or proceeding by
judgment, order, settlement, plea of nolo contendere (or its equivalent), or
conviction shall not, of itself, create a presumption that a Member, the
Manager, the Company, or any Agent shall not be entitled to indemnification
hereunder or that such Member, the Manager, or the Company, or such Agent did
not act in good faith and in a manner that each reasonably believed to be in or
not opposed to the best interests of the Company.
(b) Upon approval by a majority vote of the Members, any person
entitled to receive indemnity hereunder shall be entitled to receive advances
from the Company to cover the costs (including all attorneys' and experts' fees)
of defending any claim or action against them subject to indemnity hereunder;
provided, however, that any such advances shall be repaid to the Company (with
interest thereon at an annual rate equal to the prime rate in effect from time
to time as reflected in The Wall Street Journal but not to exceed the maximum
permitted by applicable law) if such recipient of an advance is found by a court
of competent jurisdiction upon entry of a final judgment to have violated any of
the standards set forth above in (a) as standards that preclude indemnification
hereunder. All rights of indemnity hereunder shall survive dissolution of the
Company or the death, resignation, expulsion, incompetency, dissolution,
liquidation, or bankruptcy of any Member or any Agent, and shall
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inure to the benefit of their heirs, personal representatives, successors, and
assigns.
(c) If the indemnification provisions of this Section shall be
deemed unenforceable to any extent by a court of competent jurisdiction, such
unenforceable portion shall be modified or stricken so as to give effect to this
Section to the fullest extent permitted by law.
(d) The right of indemnification hereby provided for shall not be
exclusive of or affect any other rights that a Member, the Manager, or any Agent
otherwise may have. Nothing contained in this Section shall limit any lawful
right to indemnification existing independently of this Section.
(e) Notwithstanding anything contained herein to the contrary, any
amount of indemnity payable hereunder shall be payable only out of and to the
extent of the Company's then assets, including any insurance proceeds then
available to the Company for such purposes. No Member shall be liable for the
payment of any indemnity amount payable hereunder, nor to make any capital
contribution to the Company, nor to return any capital distribution made to it
by the Company, nor to restore any negative capital account balance of that
Member in order to enable the Company to make any payment under this Section.
19. Dissolution. The Company shall be dissolved upon the earliest to occur
of (i) the Members' unanimous written consent, (ii) entry of a decree of
judicial dissolution under the Act, or (iii) the date set forth in the Articles
of Organization. The death, expulsion, resignation, dissolution, incompetency,
or bankruptcy of a Member or any other event that terminates the continued
membership of a Member shall not cause a dissolution of the Company, because the
remaining Members hereby unanimously consent to continue the business of the
Company upon the happening of such event. Upon any dissolution, the Company's
business shall be wound up, its liabilities satisfied, and any balance, less
reasonable reserves, shall be distributed to the Members in accordance with
their positive capital accounts.
20. Miscellaneous Provisions.
(a) Governing Law. This agreement and the rights and liabilities of
the parties shall be determined in accordance with the laws of the Commonwealth
of Virginia.
(b) Captions. Captions contained in this agreement are inserted only
as a matter of convenience and in no way
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define, limit, extend, or describe the scope or intent of this agreement or any
Section or provision hereof.
(c) Construction. Whenever the context may require, each pronoun
used herein shall include the corresponding masculine, feminine, or neuter
forms, and the singular form of each noun or pronoun shall include the plural,
and vice versa.
(d) Severability. Every provision of this agreement is intended to
be severable. If any term or provision hereof is determined to be illegal,
invalid, or unenforceable for any reason whatsoever, such illegality,
invalidity, or unenforceability shall not affect the validity of the remaining
terms or provisions of this agreement.
(e) Successors. Subject to the limitations on transferability
contained herein, each and all of the terms, provisions and agreements herein
contained shall be binding upon and inure to the benefit of the successors,
heirs, and assigns (including an assignee of all or part of an interest in the
Company) of the respective parties hereto.
(f) Execution and Counterparts. This agreement and any amendment
hereto may be executed in multiple counterparts, each of which shall be deemed
an original and all of which together shall constitute but one agreement. In
addition, this agreement may be executed through the use of counterpart
signature pages. The signature of any party on any counterpart agreement or
counterpart signature page shall be deemed to be a signature to, and may be
appended to, one document.
(g) Third Party Beneficiary. No provision of this agreement is
intended to be for the benefit of any creditor or other person to which any
debt, liability, or obligation is owed by (or that otherwise has any claim
against) the Company or any Member, and no creditor or other person shall obtain
any right under any of the foregoing provisions, nor shall any such person
solely by reason of any of the foregoing provisions make any claim in respect of
any debt, liability, or obligation (or otherwise) against the Company or any
Member.
(h) Investment Representation. By executing this agreement, each
Member represents and warrants that its interest in the Company is being
acquired by it for its own account for investment and not with a view to resale
or distribution thereof and that it is fully aware that each other Member and
the Company are relying upon the truth and accuracy of this representation and
warranty.
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(i) Entire Agreement. This agreement constitutes the sole operating
agreement among the Members, and supersedes and cancels any prior agreements,
representations, warranties, or communications, whether oral or written, among
the Members relating to the affairs of the Company and the conduct of the
Company's business. No amendment or modification of this agreement shall be
effective unless approved in writing as provided herein.
21. Notices; Consents, etc. Any notice, consent, election, approval,
payment, demand, or communication required or permitted to be given by this
agreement shall be in writing and shall be deemed to have been sufficiently
given or served for all purposes only when delivered personally to or actually
received by the party or an officer of the entity to which directed or ten (10)
days after having been sent by registered or certified mail, postage and charges
prepaid, addressed to the address for the notified party contained in the
Company's records. Any Member may change its address for purposes of this
agreement by giving the Company and each other Member notice of such change, in
the manner set forth above.
22. Amendment. This agreement may be amended at any time upon a unanimous
vote of the Members, but such amendment shall be effective only when reduced to
writing and signed by all Members.
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IN WITNESS WHEREOF, the undersigned have caused this agreement to be
executed by their duly authorized officers as of the day, month, and year first
above written.
Member:
BH ONE, LLC, a Virginia
limited liability company
By:
-------------------------------
Xxxx X. Xxxxx, Member
Member:
BH TWO, LLC, a Virginia
limited liability company
By:
-------------------------------
Xxxx X. Xxxxx, Member
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EXHIBIT A
(1) (2) (3) (4)
Number Capital
Name Interest of Votes Contribution
---- -------- -------- ------------
BH ONE, LLC 50% 50 $500.00
BH TWO, LLC 50% 50 $500.00
This is Exhibit A to the Operating Agreement of Xxxxx Media Company, LLC
as of the 19th day of November, 1997.
Member:
BH ONE, LLC, a Virginia
limited liability company
By:
------------------------------
Xxxx X. Xxxxx, Member
Member:
BH TWO, LLC, a Virginia
limited liability company
By:
------------------------------
Xxxx X. Xxxxx, Member
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