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ACME SUBSIDIARY HOLDINGS III, LLC
a Delaware limited liability company
LIMITED LIABILITY COMPANY AGREEMENT
Dated September 24, 1997
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TABLE OF CONTENTS
Page
ARTICLE I DEFINED TERMS 1
ATICLE II ORGANIZATION AND POWERS 5
2.01 Organization 5
2.02 Purposes and Powers 5
2.03 Principal Place of Business 6
2.04 Qualification in Other Jurisdictions 6
2.05 Fiscal Year 6
ARTICLE III MEMBERS 6
3.01 Membership Units 6
3.02 Issuance of Membership Units; Admission of
New Members 7
3.03 Voting Rights 7
3.04 Restrictions 7
3.05 Limitation on Liability of Members 9
3.06 Authority 9
3.07 Withdrawals; Termination 9
3.08 No Appraisal Rights 9
3.09 Compliance with Securities Laws and Other Laws
and Obligations 9
ARTICLE IV MANAGEMENT 10
4.01 Management 10
4.02 Reliance by Third Parties 11
4.03 Officers 11
ARTICLE V CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS AND
ALLOCATIONS AND DISTRIBUTIONS 11
5.01 Capital Contributions 11
5.02 Capital Accounts and Allocations 12
5.03 Distributions 12
5.04 Distributions Upon Dissolution 13
5.05 Distribution Upon Withdrawal 13
5.06 Tax Status 13
ARTICLE VI TRANSFERS OF INTERESTS 13
6.01 Restrictions on Transfers 13
6.02 Substitute Members 14
6.03 Allocation of Distributions Between Assignor
and Assignee 14
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ARTICLE VII INDEMNIFICATION 14
7.01 Right to Indemnification 14
7.02 Award of Indemnification 15
7.03 Successful Defense 15
7.04 Advance Payments 16
7.05 Insurance 16
7.06 Heirs and Personal Representatives 16
7.07 Non-Exclusivity 16
7.08 Amendment 16
ARTICLE VIII CONFLICTS OF INTEREST 16
8.01 Transactions with Interested Persons; Conflicts 16
8.02 Business Opportunities 17
ARTICLE IX DISSOLUTION, LIQUIDATION, AND TERMINATION 17
9.01 No Dissolution 17
9.02 Events Causing Dissolution 17
9.03 Notice of Dissolution 18
9.04 Liquidation 18
9.05 Certificate of Cancellation 18
ARTICLE XI GENERAL PROVISIONS 18
10.01 Offset 18
10.02 Notices 18
10.03 Entire Agreement 19
10.04 Amendment or Modification; Terms 19
10.05 Binding Effect 19
10.06 Governing Law; Severability 19
10.07 Further Assurances 20
10.08 Waiver of Certain Rights 20
10.09 Third-Party Beneficiaries 20
10.1 Failure to Pursue Remedies 20
10.11 Cumulative Remedies 20
10.12 Notice of Members of Provisions of this Agreement 20
10.13 Interpretation 20
10.14 Counterparts 21
Schedule A - Membership Units 23
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ACME Subsidiary Holdings III, LLC
Limited Liability Company Agreement
This Limited Liability Company Agreement is made as of September 24, 1997
by and among ACME Subsidiary Holdings III, LLC (the "Company") and each of the
Members listed on Schedule A hereto, and those Persons who become Members of the
Company in accordance with the provisions hereof and whose names are set forth
as such in the record books of the Company.
WHEREAS, the Company has been formed as a limited liability company under
the Delaware Limited Liability Company Act, Del. Code Xxx. tit. 6, Section
18.101 et seq. (as am time to time, the "Act"), by filing a Certificate of
Formation of the Company with the office of the Secretary of State of the State
of Delaware on September 24, 1997; and
WHEREAS, the Members desire to set out fully their respective rights,
obligations and duties regarding the Company and its assets and liabilities.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Members hereby
agree as follows:
ARTICLE I - DEFINED TERMS
Unless the context otherwise requires, the terms defined in this Article I
shall, for the purposes of this Agreement, have the meanings herein specified
(each such meaning to be equally applicable to both the singular and plural
forms of the respective terms so defined). Defined terms which are not defined
in this Article I or elsewhere in this Agreement shall have the meaning ascribed
to them in the Investment Agreement.
"Affiliate" shall mean, with respect to a specified Person, any Person that
directly or indirectly controls, is controlled by or is under common control
with, the specified Person. As used in this definition, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Agreement" shall mean this Limited Liability Company Agreement, as
amended, modified, supplemented or restated from time to time.
"Bankruptcy" means, with respect to a Person, that either (i) an
involuntary petition under any bankruptcy or insolvency or other debtor relief
law or under the reorganization provisions of any such law has been filed with
respect to such Person or a
receiver of or for the property of such Person has been appointed without the
acquiescence of such Person, which petition or appointment remains undischarged
or unstayed for an aggregate period of sixty (60) days (whether or not
consecutive) or (ii) a voluntary petition under any bankruptcy or insolvency or
other debtor relief law or under the reorganization provisions of any such law
has been filed by such Person, a voluntary assignment of such Person's property
for the benefit of creditors has been made, a written admission by such Person
of its inability to pay its debts as they mature has been made, a receiver of or
for the property of such Person has been appointed with the acquiescence of such
Person or such Person has done any similar act of like import.
"Capital Contribution" shall mean with respect to any Initial Member the
amount set forth opposite its name on Schedule A and with respect to any New
Member the amount set forth opposite its name on Schedule A, as amended.
"Certificate" shall mean the Certificate of Formation and any and all
amendments thereto and restatements thereof filed on behalf of the Company with
the Secretary of State of the State of Delaware pursuant to the Act.
"Common Members" shall mean those persons listed on Schedule A hereto as
Common Members.
"Common Units" shall mean those Membership Units designated as Common
Units, as described in Section 3.01 hereof.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any corresponding federal tax statute enacted after the date of this
Agreement. A reference to a specific section of the Code refers not only to such
specific section but also to any corresponding provision of any federal tax
statute enacted after the date of this Agreement, as such specific section or
corresponding provision is in effect on the date of application of the
provisions of this Agreement containing such reference.
"Distribution Percentage" shall mean a percentage determined for each
holder of Common Units by dividing the aggregate Common Units of such holder by
the aggregate Common Units of all holders of Common Units entitled to
distributions at the time of such determination.
"FCC" means the Federal Communications Commission.
"Indemnified Parties" shall mean the Members, any Affiliate of the Members
and each Person serving as an Officer, employee or other agent of the Company
(including Persons who serve at the Company's request as directors, managers,
officers, employees, agents or trustees of another organization in which the
Company has any interest as a shareholder, creditor or otherwise) and their
respective successors and assigns.
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"Initial Capital Contribution" shall mean with respect to any Initial
Member the amount set forth opposite its name on Schedule A.
"Initial Members" shall mean those Persons listed on Schedule A hereto as
Initial Members as of the date hereof.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, together with any successor statute, and the rules
and regulations promulgated thereunder.
"Losses" shall mean all liabilities, judgments, obligations, losses,
damages, taxes and interest and penalties thereon (other than (i) income taxes
due on income allocated to Membership Units; and (ii) taxes based on fees,
compensation or commissions received by an Indemnified Party in connection with
the administration of the Company or the Company's property), claims, actions,
suits or other proceedings (whether civil or criminal, pending or threatened,
before any-court or administrative or legislative body, and as the same are
accrued, in which an Indemnified Party may be or may have been involved as a
party or otherwise or with which he or she may be or may have been threatened,
while in office or thereafter), costs, expenses and disbursements (including,
without limitation, legal and accounting fees and expenses) of any kind and
nature whatsoever.
"Member" shall mean the Initial Members and any Person admitted as a Member
in accordance with the terms of this Agreement and named as a Member in the
record books of the Company, and includes any Person admitted pursuant to the
provisions of this Agreement when acting in his, her or its capacity as a Member
of the Company, and "Members" shall mean two (2) or more of such Persons when
acting in their capacities as Members of the Company.
"New Member" shall mean any Member who is not an Initial Member.
"Person" shall mean an individual, corporation, association, partnership
(general or limited), joint venture, trust, unincorporated organization, limited
liability company, any other entity or organization of any kind or a government
or any department, agency, authority, instrumentality or political subdivision
thereof.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time, together with any successor statute, and the rules and regulations
promulgated thereunder.
"Subscription Agreement" shall mean a subscription agreement for the
purchase of a Membership Unit in the Company, in a form acceptable to the
Members or the Majority Member, as applicable.
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"Tax Rate" means, for any taxable year of a Member, the sum of the Federal
Rate and the State Rate, with (a) the "Federal Rate" defined to mean the highest
effective federal income tax rate applicable to any individual for such year and
(b) the "State Rate" defined as the product of (i) the highest effective state
income tax rate applicable to an individual Member for such year multiplied by
(ii) a percentage equal to the difference between one hundred percent (100%) and
the Federal Rate.
"Taxable Income" and "Taxable Loss" mean, for any taxable year, the taxable
income or loss attributable to such Member's distributive share of taxable
income or loss of the Company, as determined for federal income tax purposes;
provided that in making such determination all separately stated items of
income, gain, loss and deduction (other than tax-exempt income) shall be
included; and provided further, that in calculating Taxable Income and Taxable
Loss, items of income, gain, loss and deduction attributable to the sale or
exchange of all or substantially all of the assets of the Company shall be
excluded from such calculation.
"Transfer" shall mean any sale, assignment, transfer, exchange, charge,
pledge, gift, hypothecation, conveyance or encumbrance (such meaning to be
equally applicable to verb forms of such term).
"Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
The following terms shall have the meanings set forth in the indicated
Sections hereof:
Defined Term Section Number
"Act" Preamble
"Capital Account" 5.02
"Company" Preamble
"Consolidated Group Securities" 3.04(a)
"Holdings" 5.03(a)
"Liquidating Trustee" 9.03
"Majority Member" 4.01(b)
"Membership Unit" 3.01
"Tax Distributions" 5.03
"Tax Matters Partner" 5.06
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ARTICLE II - ORGANIZATION AND POWERS
2.01 Organization. The name of the Company is ACME Subsidiary Holdings,
LLC. The Company has been formed by the filing of its Certificate with the
Delaware Secretary of State pursuant to the Act. The Certificate may be restated
or amended by the Members or the Majority Member, as applicable, from time to
time in accordance with the Act and subject to the terms of this Agreement. The
Company shall deliver a copy of the Certificate and any amendment thereto to any
Member who so requests.
2.02 Purposes and Powers. The principal business activity and purposes of
the Company shall initially be to acquire, develop, own and operate television
broadcast stations and to conduct any business related thereto or useful in
connection therewith. However, the business and purposes of the Company shall
not be limited to its initial principal business activity, and the Company
shall, subject to the terms of this Agreement, have authority to engage in any
other lawful business, purpose or activity permitted by the Act. Except as
otherwise provided in this Agreement, the Company and the Members or the
Majority Member acting on behalf of the Company in accordance with this
Agreement shall possess and may exercise all of the powers and privileges
granted by the Act or which may be exercised by any Person, together with any
powers incidental thereto, so far as such powers or privileges are necessary,
appropriate, proper, advisable, incidental or convenient to the conduct,
promotion or attainment of the business purposes or activities of the Company,
including without limitation the following powers:
(a) to conduct its business and operations in any state, territory or
possession of the United States or in any foreign country or jurisdiction;
(b) to purchase, receive, take, lease or otherwise acquire, own, hold,
improve, maintain, use or otherwise deal in and with, sell, convey, lease,
exchange, transfer or otherwise dispose of, mortgage, pledge, encumber or create
a security interest in all or any of its real or personal property, or any
interest therein, wherever situated;
(c) to borrow or lend money or obtain or extend credit and other financial
accommodations, to invest and reinvest its funds in any type of security or
obligation of or interest in any public, private or governmental entity, and to
give and receive interests in real and personal property as security for the
payment of funds so borrowed, loaned or invested;
(d) to make and modify contracts, including contracts of insurance, incur
liabilities and give guaranties, whether or not such guaranties are in
furtherance of the business and purposes of the Company, including without
limitation, guaranties of obligations of other Persons who are interested in the
Company or in whom the Company has an interest;
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(e) to employ and terminate Officers, employees, agents and other Persons,
to organize committees of the Company, to delegate to such Persons and/or
committees such power and authority, the performance of such duties and the
execution of such instruments in the name of the Company, to fix the
compensation and define the duties and obligations of such personnel, to
establish and carry out retirement, incentive and benefit plans for such
personnel, and to indemnify such personnel to the extent permitted by this
Agreement and the Act;
(f) to form and maintain subsidiaries and to merge with, or consolidate
into, another Delaware limited liability company or other business entity (as
defined in Section 18-209 of the Act); and
(g) to institute, prosecute, and defend any legal action or arbitration
proceeding involving the Company, and to pay, adjust, compromise, settle, or
refer to arbitration any claim by or against the Company or any of its assets.
2.03 Principal Place of Business. The principal office and place of
business of the Company shall initially be Suite 850, 000 Xxxx Xxxxxx Xxxxx,
Xxxxx Xxxx, Xxxxxxxxxx 00000. The Members or the Majority Member, as applicable,
may change the principal office or place of business of the Company at any time
and may cause the Company to establish other offices or places of business in
various jurisdictions and appoint agents for service of process in such
jurisdictions.
2.04 Qualification in Other Jurisdictions. The Members or the Majority
Member, as applicable, shall cause the Company to be qualified or registered
under applicable laws of any jurisdiction in which the Company transacts
business and shall be authorized to execute, deliver and file any certificates
and documents necessary to effect such qualification or registration.
2.05 Fiscal Year. The fiscal year of the Company shall end on December 31
of each year.
ARTICLE III - MEMBERS
3.01 Membership Units. The Members shall have no rights or powers in
respect of the Company (including, without limitation, any rights in respect of
allocations of profit and loss or distributions) other than the rights conferred
by this Agreement represented by issued and outstanding units of membership
interest (the "Membership Units"), which shall be deemed to be personal property
giving only the rights provided in this Agreement and which shall consist of one
class ("Common Units"), which shall have rights and privileges, including voting
rights as expressly set forth in this Agreement. Every Member by virtue of
having become a Member shall be held to have expressly assented and agreed to
the terms hereof and to have become a party hereto. Ownership of a
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Membership Unit shall not entitle a Member to any title in or to the whole or
any part of the property of the Company or right to call for a partition or
division of the same or for an accounting. The Initial Members of the Company,
their addresses, and the respective classes and denominations of Membership
Units held by them shall be as set forth on Schedule A hereto, and said schedule
shall be amended from time to time by the Members or the Majority Member, as
applicable, in accordance with the terms hereof to reflect the withdrawal of
Members or the admission of additional Members pursuant to this Agreement.
The Company hereby authorizes for issuance 10 Common Units, all of which
shall have been issued to the Initial Member.
3.02 Issuance of Membership Units: Admission of New Members.
(a) The Company is not authorized to offer and sell, or cause to be offered
and sold, additional Membership Units or to admit additional Persons as Members
except with the approval of the Members holding more than fifty percent (50%) in
interest of the Common Units.
(b) The Members or the Majority Member, as applicable, may establish
eligibility requirements for admission of a subscriber as a New Member after the
date hereof and may refuse to admit any subscriber that fails to satisfy such
eligibility requirements. The Members or the Majority Member, as applicable,
shall have the responsibility for determining whether a person or entity is
eligible for admission as a New Member. Each Person who first subscribes for a
Membership Unit in the Company after the date hereof shall be admitted as a New
Member of the Company at the time (i) such Person executes a Subscription
Agreement agreeing to be bound by the provisions hereof, (ii) the Members or the
Majority Member, as applicable, at their sole discretion, accepts such
Subscription Agreement on behalf of the Company and (iii) the subscriber makes
the Capital Contribution(s) required pursuant to the terms of this Agreement and
its Subscription Agreement. None of the existing Members shall have any
preemptive or similar right to subscribe to the issuance of new Membership Units
in the Company, and each of the Members acknowledges that its membership
interest is subject to adjustment (downward and upward) in the event of the
admission of New Members to the Company pursuant hereto or the withdrawal of any
Member from the Company.
3.03 Voting Rights. Except as otherwise provided in this Agreement, no
Member or holder of a Membership Unit shall have the right to amend or terminate
this Agreement.
3.04 Restrictions. Notwithstanding anything in this Agreement to the
contrary, the following matters shall require the prior written consent of
holders of more than fifty percent (50%) in interest of the Common Units:
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(a) the redemption, purchase or other acquisition for value (or payment
into or set aside for a sinking fund for such purpose) of any Membership Unit,
or other type of equity interest of the Company or any of its Subsidiaries, or
security convertible into or exchangeable or exercisable for such Membership
Units or equity interests (which are hereinafter reflected to as "Consolidated
Group Securities");
(b) the authorization or issuance (or the incurrence of any obligation to
authorize or issue) of any additional Membership Units or other Consolidated
Group Securities;
(c) the increase or decrease of the total number of authorized Membership
Units or other Consolidated Group Securities;
(d) the payment or declaration of any dividend or distribution (other than
Tax Distributions pursuant to Section 5.03) with respect to any Membership Units
or other Consolidated Group Securities;
(e) the authorization of any merger or consolidation of the Company or any
of its Subsidiaries with or into any other entity (except for mergers among
wholly-owned Subsidiaries);
(f) the authorization of the reorganization or sale of the Company or any
of its Subsidiaries or the sale of any material assets of the Company or any of
its Subsidiaries;
(g) the authorization of any reclassification or recapitalization of the
outstanding Membership Units of the Company or any other Consolidated Group
Securities;
(h) engagement by the Company or any of its Subsidiaries in any business
other than the business now conducted or contemplated by the Company or a
business or businesses similar thereto or reasonably compatible therewith;
(i) the alteration, modification or amendment of this Agreement; or
(j) the application by the Company for or consent by it to the appointment
of a receiver, trustee, custodian or liquidator of it or any of its property,
(ii) the admission in writing by the Company of its inability to pay its debts
as they mature, (iii) the making by the Company of a general assignment for the
benefit of creditors, or (iv) the filing by the Company of a voluntary petition
in bankruptcy, or a petition or an answer seeking reorganization or an
arrangement with creditors, or any other action by the Company to take advantage
of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution
or liquidation laws or statutes, or an answer from the Company admitting the
material allegations of a petition filed against it in any proceeding under any
such law.
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3.05 Limitation on Liability of Members. Except as otherwise provided in
the Act, no Member of the Company shall be obligated personally for any debt,
obligation or liability of the Company or of any other Member or otherwise have
any personal recourse hereunder, whether arising in contract, tort or otherwise,
solely by reason of being a Member. Except as expressly set forth in this
Agreement, no Member shall have any fiduciary or other duty to another Member
with respect to the business and affairs of the Company, and no Member shall be
liable to the Company or any other Member for acting in good faith reliance upon
the provisions of this Agreement. No Member shall have any responsibility to
restore any negative balance in its Capital Account or to contribute to or in
respect of the liabilities or obligations of the Company or return distributions
made by the Company except as required by this Agreement, the Act or other
applicable law; provided, however, that Members are responsible for their
failure to make required Capital Contributions in accordance with Section 5.01.
3.06 Authority. Except as otherwise expressly provided herein, in all
matters relating to or arising out of the conduct or the operation of the
Company, the decision of the Members (acting by vote of holders of more than
fifty percent (50%) in interest of the Common Units) or the Majority Member, as
applicable, shall be the decision of the Company. The Company may employ one or
more Members from time to time, and such Members, in their capacity as Officers
or employees of the Company, may take part in the control and management of the
business of the Company to the extent such authority and power to act for or on
behalf of the Company has been delegated to them by the Members or the Majority
Member, as applicable.
3.07 Withdrawals; Termination. No Member shall have any right to resign or
withdraw from the Company without the consent of the Members or the Majority
Member, as applicable, or to receive any distribution on its Membership Units or
the repayment of its Capital Contributions except as provided in Article V
hereof.
3.08 No Appraisal Rights. No Member shall have any right to have its
interest in the Company appraised and paid out under the circumstances provided
in Section 18-210 of the Act or any other circumstances.
3.09 Compliance with Securities Laws and Other Laws and Obligations. Each
Member hereby represents and warrants to the Company and acknowledges that (a)
it has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of an investment in the Company
and making an informed investment decision with respect thereto, (b) it is able
to bear the economic and financial risk of an investment in the Company for an
indefinite period of time and understands that it has no right to withdraw and
have its interest repurchased by the Company, (c) it is acquiring an interest in
the Company for investment only and not with a view to, or for resale in
connection with, any distribution to the public or public offering thereof, and
(d) it understands that the interests in the Company have not been registered
under the securities laws of any jurisdiction and cannot be disposed of unless
they are subsequently
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registered and/or qualified under applicable securities laws or pursuant to
valid exemptions from such registration/qualification requirements and the
provisions of this Agreement have been complied with.
ARTICLE IV - MANAGEMENT
4.01 Management.
(a) Except as provided in Section 4.01(b) hereof, the Company shall be
managed by the Members. No action may be taken by any Member to bind the Company
without the prior consent of Members holding more than fifty percent (50%) in
interest of the Common Units.
(b) If any Member shall own more than fifty percent (50%) in interest of
the Common Units of the Company (the "Majority Member"), management and control
of the business of the Company shall be vested exclusively in the Majority
Member for so long as such Member holds more than fifty percent (50%) in
interest of the Common Units, and such Majority Member shall have exclusive
power and authority, in the name of and on behalf of the Company, to perform all
acts and do all things which, in its sole discretion, it deems necessary or
desirable to conduct the business of the Company.
The Majority Member shall, subject to all applicable provisions of this
Agreement, be authorized in the name and on behalf of the Company: (i) to enter
into, execute, amend, supplement, acknowledge and deliver any and all contracts,
agreements, leases or other instruments for the operation of the Company's
business; and (ii) in general to do all things and execute all documents
determined by it to be necessary or appropriate to conduct the business of the
Company as more fully set forth in Section 2.02 hereof or as provided by law, or
to protect and preserve the Company's assets. The Majority Member may delegate
any or all of the foregoing powers. The Majority Member is an agent of the
Company for the purpose of the Company's business. Any action taken by the
Majority Member, and the signature of the Majority Member on any agreement,
contract, instrument or other document on behalf of the Company, shall be
sufficient to bind the Company and shall conclusively evidence the authority of
the Majority Member and the Company with respect thereto.
(c) The Members acting pursuant to Section 4.01(a) or the Majority Member
(as applicable) shall be the "manager" (within the meaning of the Act) of the
Company, and each shall have the benefits and protections accorded "managers"
under the Act. The Members acting pursuant to Section 4.01(a) or the Majority
Member shall devote such time to the business and affairs of the Company as is
reasonably necessary for the performance of their duties, but shall not be
required to devote full time to the performance of such duties and may delegate
their responsibilities as provided in this Agreement.
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4.02 Reliance by Third Parties. Any person dealing with the Company or any
Member may rely upon a certificate signed by the Majority Member or any Officer
as to (i) the identity of any other Member; (ii) any factual matters relevant to
the affairs of the Company; (iii) the persons who are authorized to execute and
deliver any document on behalf of the Company; or (iv) any action taken or
omitted by the Company or any Member. The Majority Member shall not be
personally liable to the Company or to its Members for breach of any duty that
does not involve: (i) a breach of the duty of loyalty to the Company or its
other Members; (ii) an act or omission not in good faith or which involves
intentional misconduct or a knowing violation of law; or (iii) a transaction
from which the Majority Member derived an improper personal benefit.
4.03 Officers. The Members or the Majority Member, as applicable, may
designate employees of the Company as officers of the Company (the "Officers")
as they deem necessary or desirable to carry on the business of the Company and
the Members or the Majority Member, as applicable, may delegate to such Officers
such power and authority as the Members or the Majority Member, as applicable,
deem advisable. Any Officer may hold two or more offices of the Company. The
initial Officers of the Company shall be Xxxxx Xxxxxxx (Chairman and Chief
Executive Officer), Xxxxxxx Xxxxx (President and Chief Operating Officer) and
Xxxxxx Xxxxx (Executive Vice President and Chief Financial Officer). New offices
may be created and filled by the Members or the Majority Member, as applicable.
Each Officer shall hold office until his or her successor is designated by the
Members or the Majority Member, as applicable, or until his or her earlier
death, resignation or removal. Any Officer may resign at any time upon written
notice to the Members or the Majority Member, as applicable. Any Officer may be
removed by the Members or the Majority Member, as applicable, with or without
cause at any time. A vacancy in any office occurring because of death,
resignation, removal or otherwise, may, but need not, be filled by the Members
or the Majority Member, as applicable. The Officers are not "managers" (within
the meaning of the Act) of the Company.
ARTICLE V - CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS AND
ALLOCATIONS AND DISTRIBUTIONS
5.01 Capital Contributions. The Initial Member has made as of the date
hereof the Capital Contribution to the Company specified on Schedule A attached
hereto. Each New Member shall make the Capital Contribution to the Company
specified in such Member's Subscription Agreement as of the date of admission of
such New Member as a Member of the Company. Except as approved by the Members or
the Majority Member, as applicable, or as set forth on Schedule A or in a
Member's Subscription Agreement, no Member shall be entitled or required to make
any Capital Contribution or loan or advance to the Company; provided, however,
that the Company may, subject to the other terms of this Agreement, borrow from
its Members as well as from banks or other lending institutions to finance its
working capital or the acquisition of assets upon such terms and
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conditions as shall be approved by the Members or the Majority Member, as
applicable, and any such loans by Members shall not be considered Capital
Contributions or reflected in their Capital Accounts. The agreed value of all
non-cash Capital Contributions made by Members shall be set forth on Schedule A
or in such Member's Subscription Agreement. No Member shall be entitled to any
interest or compensation with respect to its Capital Contributions or any
services rendered on behalf of the Company except as specifically provided in
this Agreement. No Member shall have any liability for the repayment of the
Capital Contributions of any other Member and shall look only to the assets to
the Company for return of its Capital Contributions.
5.02 Capital Accounts and Allocations.
(a) Capital Accounts. A separate capital account (a "Capital Account")
shall be established and maintained for each Member, which shall initially be
equal to the Capital Contribution of such Member as set forth on Schedule A
hereto. The Capital Accounts shall have no effect on the amount of any
distributions to any Members in liquidation or otherwise. The amount of all
distributions to Members shall be determined pursuant to Sections 5.03, 5.04 and
5.05.
(b) Allocation of Profits and Losses. All items of income, gain, loss and
deduction as determined for book purposes shall be allocated among the Members
and credited or debited to their respective Capital Accounts in accordance with
their respective Distribution Percentages.
5.03 Distributions. Subject to (i) the terms of the Act, (ii) any
agreements of the Company or any of its Affiliates with respect to indebtedness
for money borrowed to which the Company may from time to time be subject , and
(iii) except in the case of distributions pursuant to subsection (a) below, the
prior written consent of holders of a majority in interest of the Common Units,
all funds of the Company which are available for distribution (as determined by
the Members or the Majority Member, as applicable, in their discretion) shall be
distributed as follows:
(a) First, within one hundred and twenty (120) days after the end of each
taxable year during which ACME Televisions Holdings, LLC ("Holdings") shall have
any direct or indirect ownership interest in the Company, there shall be
distributed to each Member an amount sufficient to allow Holdings to make the
distributions required under Section 5.03(a) of the Limited Liability Company
Agreement of Holdings (the "Tax Distributions"); and
(b) Second, pro rata to all Members in accordance with their respective
Distribution Percentages.
5.04 Distributions Upon Dissolution. Proceeds from a sale of all or
substantially all of the assets of the Company and amounts available upon
dissolution, after
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payment of, or adequate provision for, the debts and obligations of the Company,
including the expenses of its liquidation and dissolution, shall be distributed
and applied in the following priorities:
(a) First, to fund reserves as deemed reasonably necessary by the Members
or the Majority Member, as applicable, or the Liquidating Trustee for any
contingent, conditional or unmatured liabilities or other obligations of the
Company, which such reserves (i) may be paid to a bank (or other third party),
to be held in escrow for the purpose of paying any such contingent, conditional
or unmatured liabilities or other obligations, and (ii) shall at the expiration
of such period(s) as the Members or the Majority Member, as applicable, or
Liquidating Trustee may reasonably deem advisable, shall be distributed to the
Members in accordance with Section 5.03; and
(b) Second, in accordance with Section 5.03.
If any assets of the Company are to be distributed in kind in connection
with such liquidation, such assets shall be distributed on the basis of their
fair market value net of any liabilities encumbering such assets and, to the
greatest extent possible, shall be distributed pro-rata in accordance with the
total amounts to be distributed to each Member.
5.05 Distribution Upon Withdrawal. No Member shall be entitled to any
distribution or payment with respect to its Membership Units upon the
resignation or withdrawal of such Member.
5.06 Tax Status. For as long as all of the interests in the Company are
held by ACME Television, LLC, the Company will elect to be disregarded as an
entity separate from its owner for tax purposes and will be treated for tax
purposes as a branch or division of Holdings.
ARTICLE VI - TRANSFERS OF INTERESTS
6.01 Restrictions on Transfers. No Membership Units of the Company may be
Transferred, nor may any Member offer to Transfer, and no Transfer by a Member
shall be binding upon the Company or any Member unless such Transfer complies
with the provisions of this Article VI and the Company receives an executed copy
of the documents effecting such Transfer.
No Transfer shall be permitted if such Transfer would (i) violate the
registration provisions of the Securities Act or the securities laws of any
applicable jurisdiction, (ii) cause the Company to become subject to regulation
as an "investment company" under the Investment Company Act, and the rules and
regulations promulgated thereunder, (iii) result in the termination of any
material contract to which the Company is a party and
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which is material, or (iv) result in the treatment of the Company as an
association taxable as a corporation or as a "publicly traded partnership" for
federal income tax purposes. The Company may require reasonable evidence as to
the foregoing, including, without limitation, a favorable opinion of counsel.
6.02 Substitute Members. If a Transferee of Membership Units does not
become (and until any such Transferee becomes) a substitute Member in accordance
with the provisions of Section 6.01 hereof, such Person shall not be entitled to
exercise or receive any of the rights, powers or benefits of a Member other than
the right to receive distributions which the assigning Member has Transferred to
such Person. The Company shall admit as a substitute Member any Person that
acquires Membership Units by Transfer from any Member pursuant to Section 6.01
hereof, but only upon the receipt of an executed instrument satisfactory to the
Company whereby such assignee becomes a party to this Agreement as a Member.
6.03 Allocation of Distributions Between Assignor and Assignee. Upon the
Transfer of Membership Units pursuant to this Article and unless the assignor
and assignee otherwise agree and so direct the Company in a written statement
signed by both the assignor and assignee (a) distributions pursuant to Article V
shall be made to the Person owning such Membership Units at the date of
distribution and (b) the assignee shall succeed to a pro-rata (based on the
percentage of such assignor's Membership Units Transferred) portion of the
assignor's Capital Account with respect to such Membership Units.
Any Membership Units Transferred shall remain subject to the provisions of
this Agreement and the transferee shall have entered into an enforceable written
agreement providing that all Membership Units so Transferred shall continue to
be subject to all provisions of this Agreement as if such Membership Units were
still held by the transferring Member, and provided further that such permitted
transferee shall not be permitted to make any further Transfer without complying
with the provisions of this Agreement. Anything to the contrary in this
Agreement notwithstanding, transferees permitted hereunder shall take any
Membership Units so Transferred subject to all obligations under this Agreement
as if such Membership Units were still held by the transferring Member whether
or not they so expressly agree.
ARTICLE VII - INDEMNIFICATION
7.01 Right to Indemnification. Except as limited by law and subject to the
provisions of this Article, the Company shall indemnify each Indemnified Party
from and against any and all Losses in any way related to or arising out of this
Agreement, the business of the Company or the action or inaction of such Person
hereunder (including, without limitation, the actions or inactions of the
Members and the other Indemnified Parties pursuant to Article IX hereof upon
dissolution of the Company), which may be
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imposed on, incurred by or asserted at any time against any such Indemnified
Party, except that no indemnification shall be provided for any Indemnified
Party regarding any matter as to which it shall be finally determined that such
Indemnified Party did not act in good faith and in the reasonable belief that
its action was in the best interests of the Company, or with respect to a
criminal matter, that it had reasonable cause to believe that its conduct was
unlawful. Subject to the foregoing limitations, such indemnification may be
provided by the Company with respect to Losses in connection with which it is
claimed that such Indemnified Party received an improper personal benefit by
reason of its position, regardless of whether the claim arises out of the
Indemnified Party's service in such capacity, except for matters as to which it
is finally determined that an improper personal benefit was received by such
Indemnified Party. The indemnification contained in this Article VII shall
survive termination of this Agreement.
7.02 Award of Indemnification. The determination of whether the Company is
authorized to indemnify any Indemnified Party hereunder and any award of
indemnification shall be made in each instance by the Members provided, however,
that as to any matter disposed of by a compromise payment, pursuant to a consent
decree or otherwise, no indemnification, either for said payment or for any
other Losses, shall be provided unless there has been obtained an opinion in
writing of legal counsel to the effect that the Person subject to
indemnification hereunder appears to have acted in good faith and that such
indemnification would not protect such Person against any liability to the
Company or the Members to which he, she or it would otherwise be subject by
reason of gross negligence, willful malfeasance or fraud in the conduct of his,
her or its office or actions not taken in good faith by such Person. The Company
shall be obliged to pay indemnification applied for by any Indemnified Party
unless there is an adverse determination (as provided above) within forty-five
(45) days after the application. If indemnification is denied, the applicant may
seek an independent determination of its right to indemnification by a court,
and in such event, the Company shall have the burden of proving that the
applicant was ineligible for indemnification under this Article. Notwithstanding
the foregoing, in the case of a proceeding by or in the right of the Company
which an Indemnified Party is adjudged liable to the Company, indemnification
hereunder shall be provided only upon a determination by a court having
jurisdiction that in view of all the circumstances of the case, the Indemnified
Party is fairly and reasonably entitled to indemnification for such Losses as
the court shall deem proper.
7.03 Successful Defense. Notwithstanding any contrary provisions of this
Article, if any Indemnified Party has been wholly successful on the merits in
the defense of any action, suit or proceeding in which it was involved by reason
of its position with the Company or as a result of serving in such capacity
(including termination of investigative or other proceedings without a finding
of fault on the part of such Indemnified Party), such Indemnified Party shall be
indemnified by the Company against all Losses incurred by such Indemnified Party
in connection therewith.
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7.04 Advance Payments. Except as limited by law, Losses incurred by an
Indemnified Party in defending any action, suit or proceeding, including a
proceeding by or in the right of the Company, shall be paid by the Company to
such Indemnified Party in advance of final disposition of the proceeding upon
receipt of its written undertaking to repay such amount if such Indemnified
Party is determined pursuant to this Article VII or adjudicated to be ineligible
for indemnification, which undertaking shall be an unlimited general obligation
but need not be secured and may be accepted without regard to the financial
ability of such Indemnified Party to make repayment; provided, however, that no
such advance payment of issues shall be made if it is determined pursuant to
Section 7.02 of this Article on the basis of the circumstances known at the time
(without further investigation) that such Indemnified Party is ineligible for
indemnification.
7.05 Insurance. The Company shall have power to purchase and maintain
insurance on behalf of any Indemnified Party against any liability or cost
incurred by such Person in any such capacity or arising out of its status as
such, whether or not the Company would have power to indemnify against such
liability or cost.
7.06 Heirs and Personal Representatives. The indemnification provided by
this Article shall inure to the benefit of the heirs and personal
representatives of the Indemnified Parties.
7.07 Non-Exclusivity. The provisions of this Article shall not be construed
to limit the power of the Company to indemnify the Members, Officers, employees
or agents to the fullest extent permitted by law or to enter into specific
agreements, commitments or arrangements for indemnification permitted by law.
The absence of any express provision for indemnification herein shall not limit
any right of indemnification existing independently of this Article.
7.08 Amendment. The provisions of this Article may be amended or repealed
in accordance with Section 10.05; provided, however, that no amendment or repeal
of such provisions that adversely affects the rights of the Members under this
Article with respect to acts or omissions occurring at any time prior to such
amendment or repeal, shall apply to any Member without such Member's consent.
ARTICLE VIII - CONFLICTS OF INTEREST
8.01 Transactions with Interested Persons; Conflicts.
(a) Unless entered into in bad faith, no contract or transaction between
the Company and one or more of its Members or any other Indemnified Party, or
between the Company and any other Person in which one or more of its Members or
any other Indemnified Party has a financial interest or is a director, manager
or officer, shall be voidable solely for this reason if such contract or
transaction is fair and reasonable to the
16
Company; and no Member or other Indemnified Party interested in such contract or
transaction, because of such interest, shall be liable to the Company or to any
other Person or organization for any loss or expense incurred by reason of such
contract or transaction or shall be accountable for any gain or profit realized
from such contract or transaction.
(b) Unless otherwise expressly provided herein, (i) whenever a conflict of
interest exists or arises between the Company, its Members and/or the other
Indemnified Parties or (ii) whenever this Agreement provides that any such
Person shall act in a manner that is, or provide terms that are, fair and
reasonable to the Company or any Member, such Person shall resolve such conflict
of interest, taking such action or providing such terms, considering in each
case the relative interest of each party (including its own interest) to such
conflict, agreement, transaction or situation and the benefits and burdens
relating to such interests, any customary or acceptable industry practices, and
any applicable generally acceptable accounting practices or principles. In the
absence of bad faith by the Member or other Indemnified Party, as the case may
be, the resolution, action or term so made, taken or provided by such Person
shall not constitute a breach of this Agreement or any other agreement
contemplated herein or of any duty or obligation of such Person at law or in
equity or otherwise.
8.02 Business Opportunities.
Members may engage in or possess an interest in other business ventures of
any nature, and neither the Company nor any other Member shall have any rights
by virtue of this Agreement in or to any such venture or the income or profits
derived therefrom, and the pursuit of any such venture, even if competitive with
the activities of the Company, shall not be deemed improper or wrongful. No
Member shall be obligated to present any particular investment or business
opportunity to the Company even if such opportunity is of a nature which could
be taken by the Company.
ARTICLE IX - DISSOLUTION, LIQUIDATION, AND TERMINATION
9.01 No Dissolution. The Company shall not be dissolved by the admission of
additional Members, the withdrawal of a Member or the written consent of all
Members, but shall continue to exist in perpetuity, except in accordance with
the terms of this Agreement. Upon the death, retirement, resignation, expulsion,
Bankruptcy or dissolution of any Member the Company shall not dissolve and its
affairs shall not be wound up except as set forth in Section 9.02 below.
9.02 Events Causing Dissolution. The Company shall be dissolved and its
affairs wound up upon the occurrence of any of the following events:
(a) if a Majority Member shall be acting as a Manager under Section 6.02
hereof, the Bankruptcy, dissolution, death, retirement, or resignation of the
Majority
17
Member; unless the Company is continued upon the written consent of a majority
of the remaining Members, such consent to be given within ninety (90) days
following the occurrence of such event;
(b) if there shall be no Majority Member acting as a Manager under Section
6.02 hereof, the Bankruptcy, dissolution, death, retirement, or resignation of
any Member; unless the Company is continued upon the written consent of a
majority of the remaining Members, such consent to be given within ninety (90)
days following the occurrence of such event; or
(c) the entry of a decree of judicial dissolution under Section 18-802 of
the Act.
9.03 Notice of Dissolution. Upon the dissolution of the Company, the Member
or the other Person or Persons (the "Liquidating Trustee") appointed by the
Members or the Majority Member, as applicable, to carry out the winding up of
the Company, shall promptly notify the Members of such dissolution.
9.04 Liquidation. Upon dissolution of the Company, the Liquidating Trustee
shall proceed diligently to liquidate the Company and wind up its affairs and to
make final distributions as provided in Section 5.04 hereof and in the Act. The
costs of dissolution and liquidation shall be borne as an expense of the
Company. Until final distribution, the Liquidating Trustee shall continue to
operate the Company properties with all of the power and authority of the
Members or the Majority Member, as applicable . As promptly as possible after
dissolution and again after final liquidation, the Liquidating Trustee shall
cause an accounting to be made by a firm of independent public accountants of
the Company's assets, liabilities and operations.
9.05 Certificate of Cancellation. On completion of the distribution of
Company assets as provided herein, the Company shall be terminated, and the
Members or the Majority Member, as applicable, (or such other Person or Persons
as the Act may require or permit) shall file a Certificate of Cancellation with
the Secretary of State of the State of Delaware under the Act, cancel any other
filings made pursuant to Sections 2.01, 2.02 and 2.04, and take such other
actions as may be necessary to terminate the existence of the Company.
ARTICLE X - GENERAL PROVISIONS
10.01 Offset. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment. All amounts so deducted shall nevertheless be treated as distributions
for purposes of Sections 5.03, 5.04 and 5.05 hereof.
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10.02 Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, requests, or consents provided for or permitted to be
given under this Agreement must be in writing and shall be given either by
registered or certified mail, addressed to the recipient, with return receipt
requested, or by delivering the writing to the recipient in Person, by courier,
or by facsimile transmission; and a notice, request, or consent given under this
Agreement is effective upon receipt or three days after the date mailed,
whichever is sooner. All notices, requests, and consents to be given to a Member
must be sent to or delivered at the addresses given for that Member on Schedule
A, or such other address as that Member may specify by written notice to the
other Members and the Company. Any notice, request, or consent to be given to
the Company must be given to the Members or the Majority Member, as applicable,
at the address of the principal office of Company specified in Section 2.03.
Whenever any notice is required to be given by law, the Certificate or this
Agreement, a written waiver thereof, signed by the Person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
10.03 Entire Agreement. This Agreement, together with each Member's
Subscription Agreement, constitutes the entire agreement of the Members relating
to the Company and supersedes all prior contracts or agreements with respect to
the Company, whether oral or written.
10.04 Amendment or Modification; Terms. This Agreement, including any
Schedule hereto, may be amended from time to time, in whole or in part, by an
instrument in writing signed in accordance with Section 3.04 hereof. Copies of
each such amendment shall be delivered to each Member at least thirty (30) days
prior to the effective date of such amendment; provided, however, in the case of
any amendment that the Members or the Majority Member, as applicable, determines
is necessary or appropriate to prevent the Company from being treated as a
publicly traded partnership taxed as a corporation under section 7704 of the
Code, the amendment shall be effective on the date provided in the instrument
containing the terms of such amendment. Nothing contained in this Agreement
shall permit the amendment of this Agreement to impair the exemption from
personal liability of the Members , officers, employees and agents of the
Company or Members or to permit assessments upon the Members.
10.05 Binding Effect. Subject to the restrictions on Transfers set forth in
this Agreement, this Agreement is binding on and inures to the benefit of the
parties and their respective heirs, legal representatives, successors and
assigns.
10.06 Governing Law; Severability. This Agreement is governed by and shall
be construed in accordance with the law of the State of Delaware, exclusive of
its conflict-of-laws principles. In the event of a direct conflict between the
provisions of this Agreement and any provision of the Certificate, or any
mandatory provision of the Act, the applicable provision of the Certificate or
the Act shall control. If any provision of this Agreement or the application
thereof to any Person or circumstance is held invalid or
19
unenforceable to any extent, the remainder of this Agreement and the application
of that provision shall be enforced to the fullest extent permitted by law.
10.07 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions, as requested by the Members or the Majority
Member, as applicable.
10.08 Waiver of Certain Rights. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.
10.09 Third-Party Beneficiaries. Except with respect to the Lenders, who
are expressly intended to be third-party beneficiaries of this Agreement, there
shall be no third-party beneficiaries of this Agreement.
10.10 Failure to Pursue Remedies. The failure of any party to seek redress
for violation of, or to insist upon the strict performance of, any provision of
this Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of any original violation.
10.11 Cumulative Remedies. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive its right to use any or all other remedies. Said
rights and remedies are given in addition to any other right the parties may
have by law, statute, ordinance or otherwise.
10.12 Notice to Members of Provisions of this Agreement. By executing this
Agreement, each Member acknowledges that such Member has actual notice of (a)
all of the provisions of this Agreement, including, without limitation, the
restrictions on the Transfer of Membership Units set forth in Article VI and the
limitations on participation of Members in the management of the Company set
forth in Article III, and (b) all of the provisions of the Certificate. Each
Member hereby agrees that this Agreement constitutes adequate notice of all such
provisions, and each Member hereby waives any requirement that any further
notice thereunder be given.
10.13 Interpretation. For the purposes of this Agreement, terms not defined
in this Agreement shall be defined as provided in the Act; and all nouns,
pronouns and verbs used in this Agreement shall be construed as masculine,
feminine, neuter, singular, or plural, whichever shall be applicable. Titles or
captions of Articles and Sections contained in this Agreement are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any provision hereof.
20
10.14 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document, and all counterparts shall be construed together and shall constitute
the same instrument.
[END OF TEXT]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date set forth above.
ACME SUBSIDIARY HOLDINGS III, LLC
By/s/Xxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: President & COO
ACME TELEVISION, LLC
By/s/Xxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: President & COO
ACME SUBSIDIARY HOLDINGS III, LLC
Schedule A
Member No. of Units
Acme Television, LLC 200
