Exhibit "B"
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
SPRING BREAK '83 PRODUCTION, LLC
A California Limited Liability Company
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OPERATING AGREEMENT
TABLE OF CONTENTS
Page
Article I Glossary . . . . . . . . . . . . . . . . . . . . . . .
A-5
Article II Formation Matters . . . . . . . . . . . . . . . . . .
A-12
2.1 Formation of Limited Liability Company. . . . . . . . . .
A-12
2.2 Filings . . . . . . . . . . . . . . . . . . . . . . . . .
A-12
2.3 LLC Name. . . . . . . . . . . . . . . . . . . . . . . . .
A-12
2.4 Principal Office. . . . . . . . . . . . . . . . . . . . .
A-12
2.5 Term of LLC . . . . . . . . . . . . . . . . . . . . . . .
A-12
2.6 Name, Address and Designation of Members. . . . . . . . .
A-12
2.7 Agent for Service of Process . . . . . . . . . . . . . . .
A-12
Article III Purposes and Powers. . . . . . . . . . . . . . . . .
A-12
3.1 Purposes of the Limited Liability Company . . . . . . . .
A-12
3.2 Powers of the LLC . . . . . . . . . . . . . . . . . . . .
A-12
Article IV Contributions and Capital . . . . . . . . . . . . . .
A-13
4.1 Capital Contributions by Members. . . . . . . . . . . . .
A-13
4.2 Capital Contributions by Manager. . . . . . . . . . . . .
A-13
4.3 Cash and Property Contributions by Unit Holders . . . . .
A-13
4.4 Withdrawal of Capital . . . . . . . . . . . . . . . . . .
A-13
4.5 Interest. . . . . . . . . . . . . . . . . . . . . . . . .
A-13
4.6 Liabilities of Manager for Contributions . . . . . . . .
A-13
4.7 Capital Accounts. . . . . . . . . . . . . . . . . . . . .
A-14
Article V Allocations of Net Profits and Losses. . . . . . . . .
A-14
5.1 Allocation of Net Profits. . . . . . . . . . . . . . . .
A-14
5.2 Allocation of Net Losses . . . . . . . . . . . . . . . .
A-14
5.3 Syndication Expenses . . . . . . . . . . . . . . . . . .
A-15
5.4 Special Allocations. . . . . . . . . . . . . . . . . . .
A-15
5.5 Other Allocation Rules . . . . . . . . . . . . . . . . .
A-15
5.6 Accounting Policy; Fiscal Year . . . . . . . . . . ..
A-16
5.7 Books and Records. . . . . . . . . . . . . . . . . . . .
A-16
5.8 Banking. . . . . . . . . . . . . . . . . . . . . . . . .
A-16
5.9 Compensation of Manager and Affiliates . . . . . . . . .
A-16
5.10 Unit Holder Compensation. . . . . . . . . . . . . . . . .
A-17
Article VI Distributions. . . . . . . . . . . . . . . . . . . .
A-17
6.1 Distributions . . . . . . . . . . . . . . . . . . . . . .
A-17
6.2 Distributions for a Fiscal Year . . . . . . . . . . . . .
A-17
Article VII Management of the Limited Liability Company. . . . .
A-18
7.1 Election of Manager . . . . . . . . . . . . . . . . . . .
A-18
7.2 Management Powers of the Manager. . . . . . . . . . . . .
A-18
7.3 Specific Power and Authority of Manager. . . . . . . . .
A-18
7.4 Authority to Execute Agreements . . . . . . . . . . . .
A-19
7.5 Time Devoted to LLC. . . . . . . . . . . . . . . . . . .
A-19
7.6 Other Business . . . . . . . . . . . . . . . . . . . . .
A-19
7.7 Agreements With Members and Others . . . . . . . . . . .
A-19
7.8 Manager as Tax Matters Partner . . . . . . . . . . . . .
A-19
7.9 Withdrawal of Manager. . . . . . . . . . . . . . . . . .
A-19
7.10 Indemnification . . . . . . . . . . . . . . . . . . . . .
A-19
7.11 Rights and Obligations of Unit Holders. . . . . . . . . .
A-20
7.12 Reports to Members and Others . . . . . . . . . . . . . .
A-20
7.13 Meetings. . . . . . . . . . . . . . . . . . . . . . . . .
A-20
7.14 Fiduciary Duties of Manager . . . . . . . . . . . . . . .
A-20
Article VIII Assignment of Interests . . . . . . . . . . . . . .
A-20
8.1 Restrictions on Transfers . . . . . . . . . . . . . . . .
A-20
8.2 Assignment of Interest of the Manager . . . . . . . . . .
A-21
8.3 Rights of Assignee. . . . . . . . . . . . . . . . . . . .
A-21
8.4 Substitution of Assignee. . . . . . . . . . . . . . . . .
A-21
8.5 Allocations and Distributions . . . . . . . . . . . . . .
A-21
8.6 Incapacity, Death, Bankruptcy of Unit Holder. . . . . . .
A-21
8.7 Further Assignments . . . . . . . . . . . . . . . . . . .
A-21
8.8 Removal of Manager . . . . . . . . . . . . . . . . . . .
A-21
8.9 Incapacity or Death of Manager. . . . . . . . . . . . . .
A-22
Article IX Amendments. . . . . . . . . . . . . . . . . . . . . .
A-22
9.1 Amendments . . . . . . . . . . . . . . . . . . . . . . .
A-22
Article X Dissolution, Winding Up and Liquidation . . . . . . .
A-22
10.1 Events of Dissolution. . . . . . . . . . . . . . . . . .
A-22
10.2 LLC Continuation . . . . . . . . . . . . . . . . . . . .
A-22
10.3 Winding Up . . . . . . . . . . . . . . . . . . . . . . .
A-22
10.4 Liquidation. . . . . . . . . . . . . . . . . . . . . . .
A-22
Article XI Miscellaneous Provisions. . . . . . . . . . . . . . .
A-23
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . .
A-23
11.2 Power of Attorney . . . . . . . . . . . . . . . . . . . .
A-23
11.3 Severability. . . . . . . . . . . . . . . . . . . . . . .
A-23
11.4 Applicability of California Law . . . . . . . . . . . . .
A-23
11.5 Arbitration . . . . . . . . . . . . . . . . . . . . . . .
A-23
11.6 Headings. . . . . . . . . . . . . . . . . . . . . . . . .
A-24
11.7 Entire Agreement. . . . . . . . . . . . . . . . . . . . .
A-24
11.8 Successors. . . . . . . . . . . . . . . . . . . . . . . .
A-24
11.9 Consents and Agreements . . . . . . . . . . . . . . . . .
A-24
11.10 Attorney's Fees . . . . . . . . . . . . . . . . . . . . .
A-24
11.11 Waiver of Claims. . . . . . . . . . . . . . . . . . . . .
A-24
11.12 No Injunction . . . . . . . . . . . . . . . . . . . . . .
A-24
11.13 Cure. . . . . . . . . . . . . . . . . . . . . . . . . . .
A-24
11.14 Counterparts. . . . . . . . . . . . . . . . . . . . . . .
A-24
Article XII Purchaser Representations and Indemnification. . . .
A-24
12.1 Representations of Unit Holders . . . . . . . . . . . . .
A-24
12.2 Indemnification . . . . . . . . . . . . . . . . . . . . .
A-25
Signature Page . . . . . . . . . . . . . . . . . . . . . . . .
A-26
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . .
A-26
Appendix "A" . . . . . . . . . . . . . . . . . . . . . . . . .
X-00
Xxxxxxxx "X" . . . . . . . . . . . . . . . . . . . . . . . . .
A-28
OPERATING AGREEMENT
SPRING BREAK '83 PRODUCTION, LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (herein
called the "Operating Agreement" or "Agreement"), is entered into as
of the date set forth below, by and between Big Sky Motion Pictures,
LLC (the "Manager") and the Members pursuant to the Offering
Subscription Agreement executed by such Members.
W I T N E S S E T H:
NOW THEREFORE, it is agreed as follows:
Article I
GLOSSARY
The following terms, when used in this Agreement,
(capitalized herein and in the accompanying Prospectus) shall have
the respective meanings assigned to them in this Article unless the
context otherwise requires:
"ABOVE-THE-LINE": The portion of a film's budget which covers major
creative elements and personnel, (i.e., those which are creatively
unique and individually identifiable). These are primarily story
acquisition, screenplay rights, script development, writer,
executive producer, producer, director and principal members of the
cast. The phrase "above-the-line" refers to the location on the
film budget of the specific expense item/person.
"ACT": The federal securities act of 1933, as amended.
"ADJUSTED CAPITAL ACCOUNT DEFICIT": With respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the
end of the relevant fiscal year, after giving effect to the
following adjustments: (i) credit to such Capital Account any
amounts that such Member is deemed obligated to restore pursuant to
the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and (ii) debit to such Capital Account the items
described in 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 Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"ADVERTISING COSTS": The cost of preparing and producing
Advertising for the Motion Picture.
"ADVERTISING": The creation and dissemination of promotional
materials and the conduct of promotional activities including,
without limitation, cooperative advertising, institutional
advertising, national advertising and trade advertising in whatever
form or media.
"AFFILIATE": Any person or entity directly or indirectly
controlling, controlled by or under common control with this LLC or
its Manager.
"AGREEMENT": This written agreement as between all of the Members
and Manager and relating to and regulating the affairs of the LLC
and the conduct of its business in any manner not inconsistent with
law or the Articles of Organization, including all amendments
thereto. Such term shall refer to this Agreement as a whole, unless
the context otherwise requires. This Agreement is incorporated into
the accompanying Prospectus as Exhibit "A".
"ALLOCATIONS": Designations of Member and Manager shares of LLC
income, loss, credits, deductions and/or other financial or tax
items in the manner described in the Operating Agreement.
"ARTICLES": The Articles of Organization for the LLC originally
filed with the California Secretary of State, including all
amendments thereto or restatements thereof and such term shall mean
the Articles as a whole unless the context otherwise requires.
"ASSUMPTIONS": Circumstances that are assumed to be factual for
purposes of projecting the hypothetical results of an investment in
the LLC.
"BELOW-THE-LINE": Film budget items relating to the technical
expenses and labor (other than above-the-line) involved in producing
a film, (i.e., relating to mechanical, crew, extras, art, sets,
camera, electrical, wardrobe, transportation, raw-film stock,
printing and post-production).
"BLUE SKY": Relating to state securities law compliance matters as
opposed to federal securities law.
"CAPITAL ACCOUNT": With respect to any Member, the Capital Account
maintained for such Member in accordance with the following: (i) to
each Member's Capital Account there shall be credited (A) the amount
of money and the fair market value of any property contributed to
the LLC by the Member ("Invested Capital")...? [not a defined
term...?], and (B) such Member's distributive share of Net Profits
and any items in the nature of income or gain that are specially
allocated pursuant to Section 5.1 of this Agreement; (ii) to each
Member's Capital Account there shall be debited (A) the amount of
money and the fair market value of any property distributed to the
Member, and (B) the Member's distributive share of Net Losses and
any items in the nature of expenses or losses that are specially
allocated pursuant to Section 5 of this Agreement.
"CAPITAL CONTRIBUTION": (Same as "Contribution").
"CAPITAL TRANSACTION": Any sale of portions of LLC property or any
interest therein (not including the sale of all or substantially all
of the LLC property) and other similar transactions which in
accordance with generally accepted accounting practices are
attributable to capital.
"CLOSING DATE" or "CLOSING": The date on which the Units offered
hereby are fully subscribed for or such other date as the Manager
chooses.
"CODE": The Internal Revenue Code of 1986, as amended. All
references herein to sections of the Code shall include any
corresponding provision or provisions of succeeding law.
"CONTRIBUTION": Any money, property or a promissory note or other
binding obligation to contribute money or property, which a Member
contributes to the LLC as capital in that Member's capacity as a
Member pursuant to an agreement between and among the Members and
Manager, including an agreement as to value
(same as "Capital Contribution"). The aggregate amount of Capital
Contributions of the Unit Holders in the Offering shall be a maximum
of $9,000,000. No minimum has been established for the Offering.
"COUNSEL TO THE MANAGER": Securities/Entertainment attorney Xxxx X.
Cones, whose offices are located at 000 Xxx Xxxxxxx, Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000.
"CREATIVE TALENT": Screenwriter, Producer, Director, Actors and
others who participate in the creative process relating to the
Film's production.
"DEFERMENTS": or "DEFERRALS": Arrangements for the deferral of some
or all of the costs of goods and/or services provided by the
suppliers of such goods and/or services so that the payments are not
a production cost but rather are paid out of specified LLC receipts
before or after Recoupment.
"DEPRECIATION": 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 for federal
income tax purposes, 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 that 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, however, that if the adjusted basis
for federal income tax purposes of an asset at the beginning of such
fiscal year is zero, Depreciation shall be determined with reference
to such beginning Gross Asset Value using any reasonable method
selected by the Manager with the consent of the Members.
"DISSOCIATION EVENT": With respect to any Member, one or more of the
following: the death, retirement, withdrawal, resignation,
expulsion, bankruptcy or dissolution of a Member, or occurrence of
any other event which terminates his or her continued Member or
Manager Percentage Interest in the LLC, or as otherwise provided in
the California limited liability statute.
"DISTRIBUTABLE CASH": For any distribution period, the gross cash
revenues of the LLC less the portion used to pay or establish
reasonable reserves for all LLC expenses (including taxes), all as
determined by the Manager. In this regard, LLC expenses include (i)
all operating expenses of the LLC, including, if any, all remaining
unreimbursed Offering expenses and expenses incurred by the LLC in
connection with the distribution and exploitation of the Picture and
the ancillary rights thereto; (ii) all costs of production of the
Picture which have not been supplied by the LLC or by any pre-sales
or other similar agreements (such as, for example, production funds
obtained through loans); and(iii) any deferments or third-party
percentage participation commitments made by the Manager.
"DISTRIBUTOR": The person(s) or entities operating between the
producer and exhibitor of motion pictures who obtain rights to the
film, release it, and send such film to exhibitors, sometimes
through sub-distributors. A Distributor will typically be involved
in the promotion of a film.
"ECONOMIC INTEREST": A person's right to share in the income,
gains, losses, deductions, credit, or similar items of, and to
receive distributions from, the LLC, but does not include any other
rights of a Member or Manager, including without limitation, the
right to vote or to participate in management, or except as provided
in the California limited liability statute, any right to
information concerning the business and affairs of the LLC.
"EXECUTIVE PRODUCER": The individual or individuals who are
designated by the Manager to receive the Executive Producer credit
for the Picture for services rendered in the organization and
funding of the LLC, in the preparation and execution of this
Offering and/or in otherwise arranging for the production of the
Picture.
"EXECUTIVE PRODUCER FEE": A payment or payments to be paid out of
the Film's budget to the Executive Producers for services rendered
in the organization and funding of the LLC, in the preparation and
execution of this Offering and/or in otherwise arranging for the
production and/or distribution of the Picture.
"FINANCIAL PROJECTIONS": Good faith estimates (based on reasonable
assumptions) of the future financial results of the LLC and its
activities relating to the production, distribution and exploitation
of the Picture.
"GROSS ASSET VALUE": With respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows: (i) the
initial Gross Asset Value of any property contributed by a Member to
the LLC shall be the gross fair market value of such asset; (ii) the
Gross Asset Values of all items of LLC property shall be adjusted to
equal their respective gross fair market values (taking Code Section
7701(g) into account) as of the following times: (A) the
acquisition of an additional interest in the LLC by any new or
existing Member in exchange for more than a de minimis Capital
Contribution; (B) the distribution by the LLC to a Member of more
than a de minimis amount of LLC Property as consideration for an
interest in the LLC, and (C) the liquidation of the LLC within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g), provided that
an adjustment described in clauses (A) and (B) of this paragraph
shall be made only if the Manager reasonably determines that such
adjustment is necessary to reflect the relative economic interests
of the Members; (iii) the Gross Asset Value of any item of LLC
Property distributed to any Member shall be adjusted to equal the
gross fair market value (taking Code Section 7701(g) into account)
of such item on the date of distribution; and (iv) without
duplication, the Gross Asset Values of each item of LLC Property
shall be increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code Section 734(b) or
Section 743(b), but only to the extent that such adjustments are
taken into account in determining Capital Accounts pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraph (vi) of
the definition of "Net Profits" and "Net Losses" or section 5.4.3
hereof..
"GROSS PROCEEDS OF THE OFFERING": The aggregate total of the
Original Invested Capital of the Members and Manager.
"GROSS LLC REVENUES" or "GROSS REVENUES TO THE LLC": The total
amount of revenue received by the LLC from all sources for LLC
activities, including, but not limited to all the revenues derived
from distribution, exhibition and exploitation of the Picture,
along with all forms of contingent compensation paid to the LLC as a
result of the exploitation of the Picture in all markets and
media,
but not including any monies due to be paid to any co-financing
entity (same as "LLC Gross Revenues" and "LLC Gross Receipts").
"INFORMATION RIGHTS": The right to inspect, copy or obtain
information and documents concerning the affairs of the LLC as
provided in the California limited liability statute and in
Paragraph 5.5 of this Agreement.
"INTEREST": The entire ownership interest of a fully admitted or
substituted Member or Manager in the LLC at any particular time,
including the rights of such Member or Manager to any and all
benefits to which a Member or Manager may be entitled as provided in
the Agreement including (i) the management rights to participation
in the management and affairs of the LLC as provided in the
California limited liability statute, Articles and the Agreement,
and (ii) the economic rights to share in income, gains, losses,
deductions, credit and to receive distributions as provided in the
Agreement, together with the obligations of such Member and Manager
to comply with all terms and provisions of the Agreement.
"IRS": The Internal Revenue Service.
"ISSUER": The entity which is issuing the securities (the LLC
interests or Units) offered hereby, (i.e., Spring Break '83
Production, LLC, a California limited liability company.
"LLC GROSS REVENUES": (Same as "Gross LLC Revenues" or "Gross
Revenues to the LLC").
"LLC NET RECEIPTS": (Same as "Distributable Cash").
"LLC": The California limited liability company (Spring Break '83
Production, LLC) formed pursuant to the California Limited
Liability Company Act (same as "Limited Liability Company").
"MAIL": Unless otherwise provided in the Operating Agreement,
first-class mail, postage prepaid, unless registered mail is
specified. Registered mail includes certified mail.
"MAJORITY-IN-INTEREST": That group of Members and Manager whose
interests in the LLC amount to more than fifty percent (50%) of the
LLC's : (1) voting power, (2) capital, and (3) shares of
distributions and allocations.
"MANAGEMENT AND VOTING RIGHTS": Those rights of a Member and Manager
described in Article III of the Agreement as they may be limited in
this Agreement, the Articles and the California limited liability
statute.
"MANAGER": The entity elected by the Members of the LLC to manage
the LLC.
"MEMBER": A person who (1) has been admitted to the LLC as a Member
in accordance with the Articles or Operating Agreement, or an
assignee of an interest in the LLC who has become a Member pursuant
to the California limited liability statute; and (2) who has not
resigned, withdrawn, or been expelled as a Member or, if other than
an individual, been dissolved (same as Unit Holder).
"MEMBER OF RECORD": A Member named as a Member on the list
maintained in accordance with provisions of the California limited
liability statute.
"MEMBERS' CAPITAL CONTRIBUTIONS": The amount invested by each Member
in the LLC.
"MEMBERS' PERCENTAGE INTERESTS": The ratio of each LLC Member's
Capital Contribution to the total LLC Members' Capital
Contributions.
"MEMBERSHIP INTEREST": A Member's rights in the LLC, collectively,
including the Member's economic interest, any right to vote or
participate in management, and any right to information concerning
the business and affairs of the LLC provided by the California
limited liability statute.
"MOTION PICTURE": The original film production entitled Spring
Break '83 in whatever format or form such film may be reproduced
and/or exhibited (same as "Picture").
"NET PROFITS AND NET LOSSES": For each fiscal year, an amount equal
to the LLC's taxable income or loss for such year, determined in
accordance with Code section 703(a) (for this purpose, all items of
income, gain, loss, or deduction required to be stated separately
pursuant to Code section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments (without
duplication): (i) any income of the LLC that is exempt from federal
income tax and not otherwise taken into account in computing Net
Profits or Net Losses pursuant to this definition shall be added to
such taxable income or loss; (ii) any expenditures of the LLC
described in code Section 705(a)(2)(B) or treated as Code Section
705(a)(2)(B) pursuant to Regulations Section 1.704-1(b)(2)(iv)(i),
and not otherwise taken into account in computing Net Profits and
Net Losses shall be subtracted from such taxable income; (iii) in
the event the Gross Asset Value of any items of LLC property is
adjusted pursuant to subparagraphs (ii) or (iii) of the definition
of Gross Asset Value, the amount of such adjustment shall be treated
as an item of gain (if the adjustment increases the Gross Asset
Value of the item of property) or an item of loss (if the adjustment
decreases the Gross Asset Value of the item of property) from the
disposition of such item of property and shall be taken into account
for purposes of computing Net Profits or Net Losses; (iv) gain or
loss resulting from any disposition of property 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
property disposed of, notwithstanding that the adjusted tax basis of
such property differs from its Gross Asset Value; (v) 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; (vi) to the extent
an adjustment to the adjusted tax basis of any item of LLC property
pursuant to Code Section 734(b) or regulations Section
1.704-1(b)(2)(iv)(m)(4) is required to be taken into account in
determining Capital Accounts as a result of a distribution other
than in liquidation of a Member's interest, the amount of such
adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the item of property) or loss (if the
adjustment decreases such basis) from the disposition of such item
of Property and shall be taken into account for purposes of
computing Net Profits or Net Losses; and (vii) notwithstanding any
other provision of this definition, any items that are specially
allocated pursuant to Section 5.4 hereof, shall not be taken into
account in computing Net Profits or Net Losses. The amounts of the
items of LLC income, gain, loss, or deduction available to be
specially allocated pursuant to Section 5.4 hereof shall be
determined by applying rules analogous to those set forth in
subparagraphs (i) through (vi) above.
"NET PROCEEDS OF THE OFFERING": Gross Proceeds of the Offering less
expenses incurred and to be paid by the LLC in connection with
organizing the LLC and in offering Units to Prospective Purchasers.
"NET RECEIPTS": (Same as "Distributable Cash").
"OFFERING": The offer and sale of Units in the LLC made in reliance
on the SEC's Regulation SB, promulgated by the Securities and
Exchange Commission and compatible state registration regulations.
"OPERATING AGREEMENT": (Same as "Agreement").
"ORGANIZATIONAL EXPENSES": Expenses paid or incurred in connection
with the organization of the LLC. Such expenses must be amortized
and therefore deducted over a 60-month period. Included are legal
fees for services incident to the organization of the LLC, such as
negotiation and preparation of the Operating Agreement and
preparation and filing of the LLC's Articles of Organization,
accounting fees for establishing the LLC's accounting system and
necessary LLC filing fees.
"ORIGINAL INVESTED CAPITAL": The amount in cash contributed to the
capital of the LLC by the Unit Holders and the Manager, if any such
Manager contributions are made.
"PERCENTAGE PARTICIPATION": The interests of persons or entities
negotiated and/or designated by the Manager and/or entitled under
the provisions of the Agreement to receive a specific percentage of
a particular fund or portion of the Picture's revenue, (e.g., of
Distributable Cash, or of the Manager's share of Distributable Cash).
"PERCENTAGE INTEREST": (a) For voting purposes, the percentage of a
Member or Manager interest set forth opposite the name of the Member
or Manager under the column "Member/Manager's Percentage Interest"
in Appendix "A" hereto and (b) for allocations of Net Profits and
Net Losses, the percentage of a Member or Manager's interest set
forth opposite the name of the Member or Manager in the designated
column of Appendix "B", as such percentage interests may be adjusted
from time to time pursuant to the terms of this Agreement.
Percentage Interests shall be determined, unless otherwise provided
herein, in accordance with the relative proportions of the Capital
Accounts of Members and Manager, effective as of the first day of
the LLC's fiscal year but with all distributions under Article VI
hereof to be deemed to have occurred on such day immediately prior
to determination of Percentage Interest of a Member or Manager.
"PERSON": Individuals, general partnerships, limited partnerships,
other limited liability companies, corporations, trusts, estates,
real estate investment trusts, firms and any other association or
entities.
"PICTURE": (Same as "Motion Picture").
"PRE-PRODUCTION": The earliest phase of production, encompassing
writing, polishing and breaking down the script, hiring or obtaining
letters of intent from creative personnel, including the director
and principal cast establishing shooting locations and shooting
schedules, preparing the budget and such other steps as are
necessary to prepare for the actual commencement of photography. It
may be expected that the pre-production stage of the Picture will
extend from 2 to 6 months. Principal photography follows the
pre-production stage.
"PRE-SALE FINANCING": Funds obtained in addition to the proceeds of
the Offering in the form of cash advances or guarantees paid by
domestic or foreign distributors, pay or cable television systems,
video cassette producers, television syndicators, and/or bank loans
obtained by using such cash advances or guarantees as collateral.
"PRODUCER": Those individuals or entities designated by the Manager
to receive the Producer credit for their work in connection with the
production of the Picture.
"PRODUCTION COST DEFERMENTS": Arrangements for the deferral of some
or all of the costs of goods and/or services provided by the
suppliers of such goods and/or services so that the payments are not
a production cost but rather are paid out of specified LLC receipts
before and/or after Recoupment.
"PRODUCTION MONEY LLC": (Same as "LLC").
"PROFITS", "LOSSES" "CREDITS": The net income, net loss or credits
of the LLC, respectively, as determined for Federal income tax
purposes.
"PROSPECTIVE PURCHASERS": Persons or entities who or which receive
copies of the Prospectus and are considering investing in the
Offering.
"PROSPECTUS": The accompanying securities disclosure document which
is required to be furnished to Prospective Purchasers of Units
(prior to purchase) pursuant to the federal and state securities
laws. The Spring Break '83 Production, LLC Prospectus is dated
___________________...?, 2006.
"PROXY": A written authorization signed or an electronic
transmission authorized by a Member or the Member's attorney-in-fact
giving another person the power to exercise the voting rights of
that Member. "Signed", for this purpose, means the placing of the
Member's name on the proxy (whether by manual signature,
typewriting, telegraphic or electronic transmission, or otherwise)
by the Member or Member's attorney-in-fact. A proxy may be
transmitted by an oral telephonic transmission if it is submitted
with information from which it may be determined that the proxy was
authorized by the Member, or by the Member's attorney-in-fact.
"RECOUPMENT": The designated point at which investors in the LLC
are paid a specified percentage of their invested capital.
Recoupment for purposes of this Offering is defined as one hundred
ten percent (110%) of the Member investors' Original Invested
Capital.
"REGISTERED OFFICE": The office maintained at the street address of
the agent for service of process of the LLC in California.
"REGULATIONS": Unless the context clearly indicates otherwise, the
regulations currently in force as final or temporary that have been
issued by the U.S. Department of Treasury pursuant to its authority
under the Internal Revenue Code of 1986, as amended.
"RELEASE PRINT": The final version of the Picture made from the
color-reversal negative and ready for distribution to exhibitors,
(i.e., the composite print made for general distribution).
"RETURN OF CAPITAL": Any distribution to a Member or Manager to the
extent that the Member or Manager's capital account, immediately
after the distribution, is less than the amount of that member's
contributions to the LLC as reduced by prior distributions that were
a return of capital.
"SCREENPLAY": The written dialogue and scene descriptions
collectively entitled Spring Break '83.
"SECURITIES AND EXCHANGE COMMISSION": The federal agency responsible
for regulating the sales of securities including passive-investor
(i.e., manager-managed) limited liability company interests. Such
agency may also be referred to herein as the SEC.
"SUBSCRIPTION AGREEMENT" or "SUBSCRIPTION APPLICATION": A document
included as part of the separate packet accompanying this Prospectus
and entitled "Spring Break '83 Production, LLC, Subscription
Documents"which each person desiring to become a Unit Holder must
complete, execute, acknowledge and deliver to the Manager before
being accepted by the Manager as a Unit Holder.
"SYNDICATION EXPENSES": Expenses paid or incurred in connection with
the issuing and marketing of interests in the LLC, including
brokerage fees, selling commissions, state ("Blue Sky") filing fees,
legal fees of the Issuer for consultations relating to the
requirements of the applicable federal and state securities laws and
for tax advice pertaining to the adequacy of tax disclosures in the
Prospectus, accounting fees, if any, for preparation of financial
projections to be included in the Offering materials and
printing/binding costs of such Offering materials. Unlike other
expenses, Syndication Expenses may not be deducted currently or
amortized over a period of time (in contrast to Organizational
Expenses).
"TAX MATTERS PARTNER": The designated Manager or Member who, as
required by the Tax Equity and Fiscal Responsibility Act of 1983, is
to serve as the primary liaison between the LLC and the IRS with
regard to LLC tax matters and proceedings before the IRS. For the
LLC, the Tax Matters Partner is the Manager Big Sky Motion Pictures,
LLC or its designated representative.
"UNIT HOLDER" or "UNIT PURCHASER": An investor in the LLC. One
who purchases one or more Units and has thereby obtained a pro rata
share in the LLC. (Same as "Member").
"UNIT": A ratable interest in the LLC of a Unit Holder. Units
equaling a Maximum of $9,000,000 are being offered hereby at $30,000
per Unit with a minimum purchase requirement of one (1) Unit
($30,000). Under limited circumstances, the Manager has the
discretion to sell fractional Units.
"VOTE": Includes authorization by written consent.
"WITHDRAWAL": Includes the resignation or retirement of a Member as
a Member.
"WRITTEN" or "IN WRITING": Includes facsimile and telegraphic
communication.
Article II
FORMATION MATTERS
2.1 FORMATION OF LIMITED LIABILITY COMPANY--The Members do hereby
authorize the formation of, pursuant to the California Limited
Liability Company Act, a limited liability company ("LLC"). The
rights and liabilities of the Members and Manager shall, except as
may be hereinafter expressly stated to the contrary, be as provided
for in such California limited liability company statute.
2.2 FILINGS--The Manager shall execute, file, record and publish
all certificates (including, at the option of the Manager, this
Agreement), notices, statements and other instruments required by
law for the formation and operation of the LLC as a limited
liability company in all jurisdictions in which the LLC conducts
business. Each Unit Holder agrees to execute promptly all
certificates and other documents consistent with the terms of this
Agreement deemed necessary by the Manager for such qualification.
2.3 LIMITED LIABILITY COMPANY NAME--The name of the LLC shall be:
Spring Break '83 Production, LLC, a California limited liability
company. The business of the LLC shall be conducted under said name,
or such modification or variations thereof as the Manager may
determine from time to time.
2.4 PRINCIPAL OFFICE--The Manager's address to which all mail
should be directed is Big Sky Motion Pictures, LLC, ATTN: XXXX
XXXXXXXX, 000 Xxxxx Xxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
however substitute or additional places of business may be
established at such other locations as may, from time to time, be
determined by the Manager.
2.5 TERM OF LLC--The LLC shall be effective upon the filing of the
Articles of Organization with the California Secretary of State and
shall remain effective in perpetuity or the LLC may be dissolved
sooner as provided in this Agreement.
2.6 NAME, ADDRESS AND DESIGNATION OF MANAGER AND MEMBERS--The name
of the Manager is Big Sky Motion Pictures, LLC. The business
address for the LLC and Manager is 000 Xxxxx Xxxxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000. The names and business addresses of the
Members are set forth on their respective Subscription Agreements.
2.7 AGENT FOR SERVICE OF PROCESS--The agent for service of process
on the LLC shall be Xxxxxx Xxxxxx, 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx
X-000, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
Article III
PURPOSES AND POWERS
3.1 PURPOSES OF THE LIMITED LIABILITY COMPANY--The purpose and
character of the business of the LLC is to engage in the financing,
production, ownership, distribution and other exploitation of the
single feature film tentatively entitled Spring Break '83 and the
exploitation of the ancillary and subsidiary rights to the Picture
produced.
3.2 POWERS OF THE LLC--Such business purposes as set forth in 3.1
shall include the doing of any and all things incidental thereto or
in furtherance thereof. Without in any way limiting the generality
of the foregoing statement, the LLC may own, operate, sell,
transfer, convey, license, mortgage, exchange, exploit or otherwise
dispose of or deal with property of every nature whatsoever and
engage in any activities in furtherance of said purpose as are not
prohibited by law.
The LLC purposes set forth in 3.1 hereof may be accomplished
by taking any action which is permitted under the California limited
liability company statute, and which is customary or directly
related to the acquisition, ownership, development, improvement,
operation, management, financing, selling, leasing, exchanging,
exploiting, or other disposing of property of any nature whatsoever;
provided, however, that nothing contained in this Section 3.2 or
elsewhere in this Agreement shall obligate the Manager to take any
action on behalf of the LLC if the Manager deems such action
inappropriate or not reasonably necessary to accomplish LLC purposes.
Article IV
CONTRIBUTIONS AND CAPITAL
4.1 CAPITAL CONTRIBUTIONS BY MEMBERS--Each Member shall contribute
to the LLC the amount of such Member's Capital Contribution. The
LLC intends to offer for subscription limited liability company
interests ("Units"), priced at $30,000 per Unit (payable as provided
in Section 4.3), and each investor who subscribes for at least one
(1) Unit [or an approved purchase of a lesser amount] will acquire
an interest in the LLC subject to the provisions of Section 4.3 of
this Agreement. The Capital Contributions described herein shall
constitute the full obligation of the Members to furnish funds to
the LLC. No additional funds or other property shall be required of
any Member. The Capital Contributions may be used by the Manager for
any LLC purpose.
4.2 CAPITAL CONTRIBUTION BY MANAGER--As its contribution to the
Capital of the LLC, the Manager shall acquire and contribute the
rights to the underlying literary source material, the Screenplay
and its visual development.
4.3 CASH AND PROPERTY CONTRIBUTION BY UNIT HOLDERS--The
Contributions of the Unit Holders shall be an amount equal to the
value of funds and property actually received from the private sale
of Units, in the Maximum of $9,000,000 which will represent an
eighty percent (80%) interest in Distributable Cash prior to
Recoupment for the LLC Member/Investors (shared pro rata among such
Members), and an ongoing interest as defined elsewhere herein
(shared pro rata among Members). No minimum amount of Offering
Proceeds has been established for the Offering, thus the LLC Manager
is authorized to expend Investor funds immediately upon receipt and
acceptance. Pursuant to the above stated percentages, each Unit
Holder shall be entitled to a pro rata interest in all profits,
losses, credits and cash distributions of the LLC. The minimum
contribution for each Unit Holder is $30,000, except the Manager, in
its discretion, may accept purchases of fractional Units.
4.4 WITHDRAWAL OF CAPITAL--Other than as provided in this
Agreement, no Member shall have the right to withdraw such Member's
Capital Contribution to the LLC or to receive any return of a
portion of such Contribution.
4.5 INTEREST--No Member or Manager shall be paid interest on any
Capital Contribution to the LLC. In addition, no interest will be
paid to Members on amounts placed in a segregated or escrow account
up to and until such funds are transferred to the LLC production
account, since Investor funds will immediately be deposited in the
LLC's production account (i.e., no minimum amount of capital
contribution has been set for this Offering).
4.6 LIABILITIES OF MANAGER FOR CONTRIBUTIONS--The Manager shall not
be personally liable for the return of any portion of the
Contributions of the Unit Holders; the return of those Contributions
shall be made solely from LLC assets. The Manager shall be required
to restore any deficit in its Capital Account on dissolution of the
LLC. However, except as specifically provided in the preceding
sentences, the Manager shall not be required to pay to the LLC or
any Unit Holder any deficit in any Unit Holder's Capital Account on
dissolution or otherwise. Under the circumstances requiring a return
of any Capital Contribution, no Member or Manager shall have the
right to demand or receive property other than cash except as may be
specifically provided for in this Agreement.
4.7 CAPITAL ACCOUNTS--An individual Capital Account shall be
established and maintained in accordance with the principles set
forth in Treasury Regulations under Code Section 704 for each Member
and Manager strictly in conformity with the requirements of Treasury
Regulation Section1.704(b)(2)(iv). Each Member and Manager's Capital
Account will be credited with such Member and Manager's Capital
Contribution and each Member and Manager's Capital Account shall be
further credited and debited, as the case may be, to reflect such
individual Member or Manager's share of LLC distributions, income,
losses and all related tax items such as gains, losses, deductions,
credits and depreciation recapture. In the event that any Member or
Manager shall at any time have a negative balance in such Member or
Manager's Capital Account, such negative balance shall not
constitute a debt owed by such Member or Manager to the other
Members or Manager or the LLC (except as provided in paragraph 4.6
for the Manager). No interest shall be paid on Capital Accounts.
The foregoing provisions and the other provisions of this
Operating Agreement relating to the maintenance of Capital Accounts
are intended to comply with Regulations Section 1.704-1(b), and
shall be interpreted and applied in a manner consistent with such
regulations. In the event the Manager shall determine that it is
prudent to modify the manner in which the Capital Accounts, or any
debits or credits thereto are computed in order to comply with such
Regulations, the Manager may make such modification. The Manager
also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the aggregate Capital
Accounts of the Members and the amount of capital reflected on the
LLC's balance sheet, as computed for book purpose, in accordance
with regulations Section 1.704.1(b)(2)(iv)(q) and (ii) make any
appropriate modifications in the event unanticipated events might
otherwise cause this Operating Agreement not to comply with
Regulations section 1.704-1(b).
Article V
ALLOCATIONS OF NET PROFITS AND LOSSES
5.1 ALLOCATION OF NET PROFITS--All Net Profits of the LLC for a
fiscal year after shall be allocated in the following order of
priority:
5.1.1 First, to the Manager, in an amount equal to the
excess, if any, of (i) the cumulative Net Losses allocated to the
Manager pursuant to section 5.2.2 for all prior fiscal years over
(ii) the cumulative Net Profits allocated to the Manager pursuant to
this section 5.1.1 for all prior fiscal years;
5.1.2 Next, 20% to the Manager and 80% to the Members until
the cumulative Net Profits allocated to the Members pursuant to this
section 5.1.2.equals 110% of the Members' Invested Capital. The
allocation under this provision to the Members shall be pro rata in
accordance with their LLC Percentage Interests, in the following
order of priority:
5.1.2.1 First, until the cumulative Net Profits allocated
under section 5.1.2 equals the excess, if any, of (i) the
cumulative Net Losses allocated to the Members pursuant to
section 5.2.1 over (ii) the cumulative Net Profits allocated
to the Members pursuant to section 5.1.2 for all prior
fiscal years;
5.1.2.2. Second, until the cumulative Net Profits allocated
under section 5.1.2 equals the amount of Syndication
Expenses allocated to the Members pursuant to section 5.3;
and,
5.1.2.3 Third, pro rata in accordance with their LLC
Percentage Interests until the cumulative Net Profits
allocated under section5.1.2 equals 110% of the Members'
Invested Capital.
5.1.3 Finally, the balance of the Net Profits, if any,
shall be allocated 50% to the Manager and 50% to the Members pro
rata in accordance with their LLC Percentage Interests.
5.2 ALLOCATION OF NET LOSSES--All Net Losses shall be allocated in
the following order of priority:
5.2.1 First, 100% to the Members, pro rata in accordance
with their LLC Percentage Interests until each Member's Capital
Account is reduced to zero.
5.2.2 The balance, if any, to the Manager.
5.3. SYNDICATION EXPENSES
5.3.1 Syndication Expenses shall be allocated to the
Members pro rata in accordance with their LLC Member Percentage
Interests.
5.4 SPECIAL ALLOCATIONS--The following special allocations shall be
made in the following order:
5.4.1 Qualified Income Offset--In the event that any Member
unexpectedly receives any adjustments, allocations, or distributions
described in Regulations section 1.704-1(b)(2)(ii)(d)(4), (5) or
(6), items of LLC income and gain shall be allocated to such Member
in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the Adjusted Capital Account Deficit of
such Member as quickly as possible; provided that an allocation
pursuant to this Section 5.4.1 shall be made only if and to the
extent that such Member would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Article V
have been tentatively made as if this Section 5.4.1 were not in this
Operating Agreement.
5.4.2 Gross Income Allocation--In the event that any Member
has an Adjusted Capital Account Deficit at the end of any fiscal
year, each such Member shall be allocated items of LLC income and
gain in the amount of such deficit as quickly as possible; provided
that an allocation pursuant to this Section 5.4.2 shall be made only
if and to the extent that such Member would have an Adjusted Capital
Account Deficit in excess of such sum after all other allocations
provided for in this Article V have been tentatively made as if
Section 5.4.1 and this Section 5.4.2 were not in this Operating
Agreement.
5.4.3 Section 754 Adjustments--To the extent an adjustment
to the adjusted tax basis of any LLC asset, pursuant to Code Section
734(b) or Section 743(b) or Regulations Section
1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4), is
required to be taken into account in determining Capital Accounts as
the result of a distribution to a Member in complete liquidation of
such Member's Interest in the LLC, the amount of such adjustment to
Capital Accounts 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) and such gain or loss shall be
specially allocated to the Members in accordance with their
Interests in the LLC in the event Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such
distribution was made in the event Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
5.4.4 Curative Allocations--The allocations set forth in
sections 5.4.1, 5.4.2 and 5.4.3 (the "Regulatory Allocations") are
intended to comply with certain requirements of the Regulations. It
is the intent of the Members that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory
Allocations or with special allocations of other items of LLC
income, gain, loss, or deduction pursuant to this Section 5.4.4.
Therefore, notwithstanding any other provision of this Article V
(other than the Regulatory Allocations), the Manager shall make such
offsetting special allocations of LLC income, gain, loss, or
deduction in whatever manner it determines appropriate so that,
after such offsetting allocations are made, each Member's Capital
Account balance is, to the extent possible, equal to the Capital
Account Balance such Member would have had if the Regulatory
Allocations were not part of the Agreement and all LLC items were
allocated pursuant to Sections 5.1 and 5.2.
5.5 OTHER ALLOCATION RULES
5.5.1 Section 706--For purposes of determining the Net
Profits, Net Losses, or any other items allocable to any period, Net
Profits, Net Losses and any such other items shall be determined on
a daily, monthly, or other basis, as determined by the Manager using
any permissible method under Code Section 706 and the Regulations
thereunder.
5.5.2 Section 704(c)--In accordance with Code Section
704(c) and the Regulations thereunder, income, gain, loss, and
deduction with respect to any property contributed to the capital of
the LLC shall, solely for tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted
basis of such property to the LLC for federal income tax purposes
and its initial Gross Asset Value. In the event the Gross Asset
Value of any LLC asset is adjusted pursuant to subparagraph (ii) 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 Code Section 704(c) and the Regulations
thereunder. Any elections or other decisions relating to such
allocations shall be made by the Manager in any manner that
reasonably reflects the purpose and intention of this Operating
Agreement, provided that the LLC shall elect to apply the Section
704(c) allocation method permitted by the Regulations under Code
Section 704(c). Allocations pursuant to this section 5.5.2 are
solely for purposes of federal, state and local taxes and shall not
affect, or in any way be taken into account in computing, any
Member's Capital Account or share of Net Profits, Net Losses, or
other items, or distributions pursuant to any provision of this
Operating Agreement.
5.6 ACCOUNTING POLICY; FISCAL YEAR--For tax purposes, the fiscal
year of the LLC shall be the calendar year. Statements showing the
Gross LLC Revenues and Distributable Cash, if any, shall be
furnished, and all distributions by the LLC shall be made, to
Members, Manager, Creative Talent and others entitled thereto no
less frequently than annually during the term of the LLC, with each
such statement being furnished not later than seventy-five (75) days
after the end of each such annual period, and payments made not
later than seventy-five (75) days after the end of each such
annual
period.
5.7 BOOKS AND RECORDS--The Manager shall cause to be kept at the
office of the LLC the following records:
(a) A current list of the full name and last known business or
residence address of each Member and of each holder of an economic
interest in the LLC set forth in alphabetical order, together with
the contribution and the share in profits and losses of each Member
and holder of an economic interest.
(b) A current list of the full name and business or residence
address of each Manager.
(c) A copy of the Articles of Organization and all amendments
thereto, together with any powers of attorney pursuant to which the
Articles or any amendments thereto were executed.
(d) Copies of the LLC's federal, state and local income tax or
information returns and reports, if any, for the six most recent
taxable years.
(e) A copy of the LLC's Operating Agreement and any amendments
thereto, together with any powers of attorney pursuant to which any
written Operating Agreement or any amendments thereto were executed.
(f) Copies of the financial statements of the LLC, if any, for the
six most recent fiscal years.
(g) The books and records of the LLC as they relate to the internal
affairs of the LLC for at least the current and past four fiscal
years.
The LLC's books of account shall be kept on an accrual basis
in accordance with generally accepted accounting practices and
principles which show accurately the transactions of the LLC. Each
Member and such Member's agents and representatives shall have
access to the LLC's books and records at all reasonable
times. The Manager shall arrange for annual tax returns for the LLC
to be prepared, filed and transmitted to each Member within a
reasonable period after the close of each fiscal year of the LLC.
5.8 BANKING--All funds of the LLC shall be deposited in the name of
the LLC in such bank account or accounts as shall be determined by
the Manager. No other funds shall be deposited in such accounts. The
funds in such accounts shall be used solely for the business of the
LLC. All withdrawals therefrom shall be made on checks or drafts
signed on behalf of the LLC by such person or persons as the Manager
shall designate.
5.9 COMPENSATION OF MANAGER AND AFFILIATES--The following
summarizes the form and estimated amounts of compensation, fees and
Percentage Participations to be paid to the LLC's Manager and
Affiliates. Such items have not been determined by arm's-length
negotiations. Other than as set forth herein and in the Estimated
Use of Proceeds section of the Prospectus, no other compensation or
remuneration in any form is to be paid to the Manager or Affiliates.
The Manager has waived any right to receive an LLC
Organization Fee for services rendered in connection with the
organization of the LLC.
The Manager has, and will during the course of this
Offering, advance necessary funds for LLC organizational and
offering expenses and the Manager will be reimbursed for such
expenses out of the Gross Offering Proceeds. Such reimbursement
shall not exceed a ceiling equal to 2% of the Offering Proceeds.
The Manager has waived any right to receive an LLC
Management fee for services rendered in connection with ongoing
management of the LLC.
The Manager will have a twenty percent (20%) interest in
Distributable Cash until the Members achieve Recoupment (110% of
their Original Invested Capital) and then after Deferments are paid,
if any, the Manager will have a fifty percent (50%) interest in
Distributable Cash for the balance of the life of the LLC.
The Manager will have no interest in LLC Losses and tax
deductions for federal income tax purposes until after the Member's
capital accounts have been reduced to zero.
The individual owner of the Manager (Xxxx Xxxxxxxx) will
be paid $360,000 out of the Film's budget for his directing services
and $360,000 for the Script. The individual owner of the Manager
(Rand Chortoff) will be paid $900,000 for his services as
Producer.
No other compensation in any form shall be paid to the
Manager, or any of its Affiliates, except as set out above. At the
conclusion of the LLC, however, all property rights and ancillary
rights in the Picture shall revert to and be distributed to the
Manager.
5.10 UNIT HOLDER COMPENSATION--No Unit Holder shall be paid any
salary or fee for services in connection with the activities of the
LLC in his or her capacity as a Unit Holder and no such services
shall be rendered.
Article VI
DISTRIBUTIONS
6.1. DISTRIBUTIONS--Distributions of Distributable Cash for any
fiscal year shall be made in the following order of priority:
6.1.1. First, twenty percent (20%) to the Manager and
eighty percent (80%) to the Members, pro rata in accordance with
their LLC Member Interests until such Members will have received
cumulative distributions pursuant to this Section 6.1.1. for the
current and all prior fiscal years equal to one hundred ten percent
(110%) of the Members' Original Invested Capital.
6.1.2 Second, one hundred percent (100%) to pay for any
Deferments committed by the Manager to be paid after Investor
Recoupment, if any.
6.1.3. Third, and subsequent to Recoupment, the payment of
Deferments and for the balance of the life of the LLC, the Manager
and the Members will share Distributable Cash, if any, on a 50/50
basis. Amounts distributed pursuant to this Section shall be
allocated among the Members in accordance with Member Percentage
Interests.
6.2 DISTRIBUTIONS FOR A FISCAL YEAR--Distributions for a fiscal
year shall include distributions made through March 15 of the next
succeeding fiscal year.
Article VII
MANAGEMENT OF THE LIMITED LIABILITY COMPANY
7.1 ELECTION OF MANAGER--The election of the Manager to fill the
initial LLC Manager position shall be by declaration set forth
herein, and shall be confirmed by the affirmative vote of a majority
in interest of the Members. Item 3.15 of the accompanying
Subscription Application and Agreement provides that by completing
such application and by signing it, the Prospective Purchaser is
authorizing his or her vote to be cast by proxy held by the
individual Xxxx Xxxxxxxx for the election of the Manager Big Sky
Motion Pictures, LLC to fill the initial Manager position of the LLC
pursuant to the California limited liability company statute.
7.2 MANAGEMENT POWERS OF THE MANAGER (GENERALLY)--The Manager shall
have full and exclusive control of the management and operation of
the business of the LLC and shall be responsible for making all
creative and business judgments, determinations, and decisions
affecting LLC affairs except as otherwise specifically provided
herein.
7.3 SPECIFIC POWER AND AUTHORITY OF MANAGER--The Manager shall
have, subject to any limitations imposed elsewhere in this
Agreement, the power and authority on behalf of the LLC to do or
cause to be done any and all acts deemed by the Manager to be
necessary or appropriate in connection with the management and
operation of the business of the LLC. Without limiting the
generality of the foregoing, the Manager may at any time, in their
sole discretion and without further notice to, or consent from, any
Unit Holder:
(i) Open and maintain bank checking accounts on behalf of
the LLC and to designate signatories on such accounts, provided that
the funds of the LLC may not be commingled with funds owned by or
held on behalf of the Manager or any limited liability company,
partnership or other entity in which either has an interest;
(ii) Enter into agreements on behalf of the LLC with motion
picture or television studios, distributors or other third parties
pursuant to which the LLC may commit to pay a percentage of the
LLC's Gross Revenues in exchange for such studio's, distributor's or
other third parties' assistance in financing, producing,
distributing and/or otherwise exploiting the Picture; such
agreements may include but are not limited to flat fee arrangements,
negative pickup deals or an outright sale of the Picture;
(iii) Apply a portion of Capital Contributions to marketing
and distribution of the Film whether or not the Maximum funding of
the Offering is achieved;
(iv) Modify the budget of the LLC's Picture to adapt to
changing contingencies, so long as in the judgment of the Manager
such budget changes improve the LLC's ability to produce a better
Picture;
(v) Enter into co-financing, co-production or pre-sale
agreements with joint venture partners or other production entities,
thereby permitting the LLC to expend fewer dollars on such a film
than if such film was produced solely by the LLC;
(vi) Enter into agreements on behalf of the LLC which
provide that persons providing financing, rendering services or
furnishing literary material or other materials or facilities in
connection with the development, production, distribution or other
exploitation of the Picture shall receive as salary or other
compensation, deferred amounts or a percentage participation in LLC
revenue either before or after Investor Recoupment.
(vii) Choose locations for shooting the LLC's movie other
than planned locations disclosed in the Prospectus;
(viii) Transfer any property of the LLC on such terms as
the Manager shall determine;
(ix) Borrow money for LLC purposes or on behalf of the LLC
on such terms as the Manager shall determine, pledge any assets or
rights of the LLC as security for such borrowing and pay back the
principal and interest on such loans out of Gross Offering Proceeds;
(x) Expend Capital Contributions for LLC purposes
immediately upon receipt and acceptance; and
(xi) Otherwise deal in any reasonable manner with the
assets of the LLC in connection with the management and operation of
the business of the LLC.
7.4 AUTHORITY TO EXECUTE AGREEMENTS ON BEHALF OF LLC--In connection
with the foregoing, it is agreed that any instrument, agreement or
other document executed by the Manager, while acting in the name and
on behalf of the LLC shall be deemed to be an action of the LLC as
to any third parties (including the Unit Holders as third parties
for such purposes). Notwithstanding anything to the contrary
contained herein, the Manager shall have no authority to cause the
LLC to effect any borrowing in any transaction in which the creditor
would receive, at any time as a result of making the loan, any
direct or indirect interest in the profits, capital or property of
the LLC other than as a secured creditor.
7.5 TIME DEVOTED TO LLC--The Manager shall devote to the LLC's
affairs such time, on a non-exclusive basis, as the Manager, in
their reasonable discretion, shall deem appropriate.
7.6 OTHER BUSINESS--Any Member or Manager shall have the right to
engage in or possess any interest in other business ventures of any
kind, nature or description (including without limitation, motion
pictures and television projects which may compete with the Picture)
whether or not in competition with the LLC. Neither the LLC nor any
other Member or Manager shall have any right by virtue of this
Agreement in or to such independent ventures or to the income or
profits derived therefrom.
7.7 AGREEMENTS WITH MEMBERS AND OTHERS--The Manager shall not enter
into (on behalf of the LLC) any agreements with Members or any
person related to the Manager unless such agreements are on terms
and conditions which the Manager might reasonably conclude are not
less favorable to the LLC than the terms and conditions likely to
result from "arms-length" negotiations with unaffiliated third
parties. For the purposes of this subsection, the term "unaffiliated
third parties" shall mean third parties in which the Manager have no
material direct or indirect financial interest.
7.8 MANAGER AS TAX MATTERS PARTNER--The Manager Big Sky Motion
Pictures or its representative is designated as the Tax Matters
Partner of the LLC as that term is used in Section 6231(a) of the
Code and regulations thereunder. Such Manager, acting as Tax Matters
Partner, may enter into one or more agreements with the IRS with
respect to the tax treatment of any LLC income, loss, deductions or
credits and, to the extent permitted under the Code, may expressly
agree that such agreement shall bind any other Manager and Members
of the LLC.
7.9 WITHDRAWAL OF MANAGER--Without the written consent of a
majority of the Unit Holders, the Manager shall not have any right
to withdraw or retire from the LLC, and shall be considered as a
"key man" to this Agreement.
7.10 INDEMNIFICATION--The Manager, the Manager's Affiliates,
Counsel, consultants and its representatives or agents shall be held
harmless and be indemnified by the LLC for any liability, loss
(including amounts paid in settlement), damages or expenses
(including reasonable attorney's fees) suffered by virtue of any
acts or omissions or alleged acts or omissions arising out of such
person's activities either on behalf of the LLC or in furtherance of
the interests of the LLC and in a manner believed in good faith by
such person to be within the scope of the authority conferred by
this Agreement or law, so long as such person is not determined to
be guilty in a final adjudication of criminal conduct, gross
negligence or gross misconduct with respect to such acts or
omissions.
Such indemnification or agreement to hold harmless shall
only be recoverable out of the assets of the LLC, including
insurance proceeds, if any. Notwithstanding the foregoing,
indemnification of the Manager or its representatives or agents by
the LLC for liability imposed by a judgment arising from or out of
violation of state or federal securities laws shall not be made.
7.11 RIGHTS AND OBLIGATIONS OF THE UNIT HOLDERS--(i) No
Participation in Management--The Unit Holders shall not participate
in the management of the business of, or transact any business for,
the LLC and shall have only such rights and powers as a Unit Holder
as are expressly provided herein or provided by applicable law.
(ii) Liability--No Unit Holder shall be personally liable
for any of the debts, contracts or other obligations of the LLC or
any of the losses thereof, except to the extent of such Unit
Holder's Capital Contribution, plus such Unit Holder's share of
undistributed LLC income if any. When a Unit Holder has rightfully
recovered the return in whole or in part of such Unit Holder's
Capital Contribution, such Unit Holder shall nevertheless be liable
to the LLC for a period of one year thereafter for any sum, not in
excess of such return with interest, necessary to discharge such
Unit Holder's liability to all creditors who extended credit or
whose claim arose during the period the contribution was held by the
LLC. No Unit Holder shall be required to contribute any amounts to
the LLC except as provided for in this Agreement.
(iii) Unit Holders May Not Bind LLC--No Unit Holder shall
have any power to represent, sign for or bind the Manager or the LLC.
7.12 REPORTS TO MEMBERS AND OTHERS--The Manager shall prepare and
distribute to the Members and Counsel to the Manager a quarterly
report regarding the status of the Offering and the LLC during the
Offering period, and thereafter, no less than annually, including a
breakdown on LLC expenditures. Not later than 75 days after the
close of each fiscal year of the LLC, the Manager shall deliver to
each Member the following three items: (1) an annual report, (2) a
balance sheet of the LLC, (3) an income statement for that year and
(4) a statement setting forth that Member's allocable share of all
items of LLC income, gain, loss, deduction, credit and tax
preference for that fiscal year which are to be included by that
Member on such Member's federal income tax return for that year.
Each of the financial statements and documents referred to
above will be conclusive and binding upon the Members unless written
objection thereto is received by the Manager within 60 days after
the statement has been delivered to the Members.
7.13 MEETINGS--(a) Meetings of Members may be held at any place,
either within or without the state of California, selected by the
person or persons calling the meeting or as may be stated in or
fixed in accordance with the Articles of Organization or this
Operating Agreement. If no other place is stated or so fixed, all
meetings shall be held at the principal executive office of the LLC.
(b) A meeting of the Members may be called by any Manager or by any
Member or Members representing more than 50 percent of the interests
of Members for the purpose of addressing any matters on which the
Members may vote.(c) Notice and other matters relating to such
meetings shall be accordance with the provisions of the California
limited liability company statute. The scheduling of such meetings
shall not interfere with the duties of the Manager in the production
of the Film.
7.14 FIDUCIARY DUTIES OF MANAGER--The fiduciary duties a Manager
owes to the LLC and to its Members are those of a partner to a
partnership and to the partners of the partnership.
Article VIII
ASSIGNMENT OF INTERESTS IN THE LIMITED LIABILITY COMPANY
8.1 RESTRICTIONS ON TRANSFERS--Notwithstanding anything to the
contrary contained in this Agreement, interests in the LLC may not
be assigned, sold or otherwise transferred if such assignment, sale
or other transfer is prohibited by law or is not effected in
compliance with all applicable federal and state securities laws and
regulations or would result in a termination of the LLC for tax
purposes (unless such transfer is by operation of law). In the event
an Interest is transferred in accordance with the terms of this
Operating Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the
transferred interest.
8.2 ASSIGNMENT OF THE INTEREST IN THE LLC OF A MANAGER--The Manager
shall have the free and unrestricted right to assign all of their
interests in the proceeds of and distributions from the LLC, or any
part thereof. Said assignee, however, shall not become a Manager
without the consent of the Manager and Unit Holders who own more
than 50% of the outstanding Units. Such assignment shall not relieve
the Manager of their obligations hereunder.
8.3 RIGHTS OF ASSIGNEE--An assignee, legal representative or
successor in interest of a Unit Holder shall be subject to all of
the restrictions on a Unit Holder provided in this Agreement. An
assignee of a Unit Holder's interest, or a portion thereof, who does
not become a substituted Member in accordance with the provisions
below shall have no right to an accounting of LLC transactions, to
inspect the LLC's books, or to vote on any of the matters on which a
Member would be entitled to vote. Upon the giving of notice of the
assignment to the other Members and the Manager, such an assignee
shall be entitled to receive only the share of LLC profits or other
compensation by way of income, or the return of the assignor's
contribution, to which the assignor would have been entitled.
8.4 SUBSTITUTION OF ASSIGNEE--An assignee of all or any part of a
Unit Holder's interest will become a substituted Member only if (a)
the Manager consents thereto in writing (and the Manager may
withhold such consent in its discretion) and (b) each of the
following conditions is met:
(i) The assignee shall consent in writing, in a form
prepared by or satisfactory to the Manager, to be bound by the terms
and conditions of this Agreement;
(ii) The assignee shall pay any expenses of the LLC in
effecting the substitution;
(iii) The assignment shall be effected in compliance with
all applicable federal and state securities laws and regulations; and
(iv) All requirements of the California limited liability
company statute including amendment of this Operating Agreement,
shall have been completed by the assignee, the assignor and the LLC,
as the case may be.
8.5 ALLOCATIONS AND DISTRIBUTIONS--All assignments shall become
effective for distribution and allocation purposes at the close of
the calendar month in which the Manager is notified of such
assignment. All cash distributions required to be made or made after
the date the assignment is effective shall be made to the
transferee. Income or loss for the year shall be allocated to the
transferor and transferee based on the ratio of months each was
considered to be the Member of Record in the LLC.
8.6 INCAPACITY, DEATH, BANKRUPTCY OF A UNIT HOLDER--In the event of
the incapacity (i.e., judicially determined incompetence or
insanity), death or bankruptcy of a Unit Holder, the executor,
trustee, guardian or conservator, administrator, receiver or other
successor in interest of such Unit Holder shall have all the rights
of such Unit Holder for the purpose of settling or managing such
Unit Holder's affairs and such power as such Unit Holder possessed
to assign all or a part of such Unit Holder's interest (subject to
the Manager's approval) and to join with the assignee in satisfying
the conditions precedent to such assignee's becoming a substituted
Member.
The incapacity, death, or bankruptcy of a Unit Holder shall
not dissolve the LLC. Each Unit Holder's estate or other successor
in interest shall be liable for all obligations of such Unit Holder.
In no event, however, shall such estate, legal representative or
other successor in interest become a substituted Member as such term
is used herein, except in accordance with the above.
8.7 FURTHER ASSIGNMENTS--An assignee of all or any portion of the
interest of a Unit Holder in the LLC pursuant to the terms hereof,
who desires to make a further assignment of such interest, shall be
subject to all the provisions of this Section to the same extent and
in the same manner as such Unit Holder making an initial assignment
of such Unit Holder's interest in the LLC.
8.8 REMOVAL OF THE MANAGER--Due to the unique nature of the project
being undertaken by the LLC, and the relationship of the Manager to
such project, the Manager, once elected, enjoys a protected status.
The Manager may be removed, but only for good and sufficient cause,
and only by vote of 95% in number of the Members and Manager
considered together at a meeting called expressly for that
purpose.
Any removal shall be without prejudice to the rights, if any, of
such Manager under any contract of employment, and if the original
Manager is removed, all rights relating to the Screenplay and rights
to the underlying literary material (both as contributed by the
Manager to the LLC) shall revert to the Manager. Upon the
effectiveness of such removal, the Member may by the consent of a
majority of the Unit Holders and the remaining Manager, if any,
elect a successor Manager to continue the business of the LLC, or
continue the business of the LLC with the remaining Manager acting
in that capacity.
8.9 INCAPACITY OR DEATH OF A MANAGER--In the event of the
withdrawal, incapacity, or death of a Manager, the remaining Manager
or Manager, if any, may continue the business of the LLC alone, or,
at his or her option may appoint a successor Manager. If no
remaining Manager exists, a new Manager may be named by Unit Holders
who own more than 50% of the outstanding Units.
Article IX
AMENDMENTS
9.1 AMENDMENTS--This Agreement may be amended only with the written
consent of the Manager and such Unit Holders as own 66 2/3% of the
outstanding Units. No amendment which is not approved in writing by
such Members and Manager, however, shall change the purpose of the
LLC, modify the term of the LLC, change the LLC to a general
partnership, reduce the liabilities, obligations or responsibilities
of the Manager, increase the liabilities or commitments of the Unit
Holders or change the provisions of this Agreement requiring the
unanimous consent of the Unit Holders to continue the business of
the LLC.
Article X
DISSOLUTION, WINDING UP AND LIQUIDATION
10.1 EVENTS OF DISSOLUTION--The LLC shall be dissolved at the time
specified at Article 2.5 above or upon the earlier occurrence of any
of the following: (a) at the time specified in the Articles of
Organization; (b) upon the happening of events specified in the
Articles of Organization; (c) by the vote of a majority in interest
of the Members, (d) upon the occurrence of a Dissociation Event,
unless the business of the LLC is continued by a vote of a majority
in interest of the remaining Members within 90 days of the happening
of the event, or (e) by decree of judicial dissolution pursuant to
the California limited liability company statute.
10.2 LLC CONTINUATION--The LLC shall not be dissolved by the death,
withdrawal, retirement or incapacity of a Manager, provided the
business of the LLC is continued by a remaining or successor Manager
pursuant to a right to do so stated in the Agreement, which right is
hereby granted.
10.3 WINDING UP--In the event of dissolution as provided above
(including in the event that Members do not elect a successor
Manager and continue the business of the LLC as provided above), the
business of the LLC shall be wound up, and the assets distributed as
provided herein. The winding up of the affairs of the LLC and the
distribution of its assets shall be conducted by the Manager who are
hereby authorized to do any and all acts and things authorized by
law for these purposes.
In the event of the removal, death, incapacity, withdrawal
or bankruptcy of the Manager, the winding up of the affairs of the
LLC and the distribution of its assets shall be conducted by such
person or entity as may be selected by such Unit Holders as own at
least a majority of the outstanding Units, which person or entity is
hereby authorized to do any and all acts and things authorized by
law for these purposes. In winding up the affairs of the LLC,
property may be sold and a Member may, if such Member desires,
purchase such property for the fair market value thereof.
10.4 LIQUIDATION--(a) Upon liquidation of the LLC, all assets of
the LLC (except for the remaining rights associated with the Film
itself) shall be liquidated and distributions shall be made to
Members and the Manager in accordance with their positive capital
account balances. Net profits and net losses resulting from
transactions in connection with liquidation shall be allocated to
each Member and Manager's capital account as set forth in Article V
hereof. If upon liquidation, a Manager has a deficit capital
account, such Manager must restore the amounts of such deficits to
the LLC. Upon the Dissolution of the LLC all property rights and
ancillary rights in the Motion Picture shall revert to and be
distributed to the Manager. (b) After dissolution and liquidation,
all remaining assets of the LLC shall be paid in the following
order: (i) to third party creditors (including any lending bank), in
the order of priority provided for by law; (ii) to the Manager for
reimbursement of any unreimbursed expenses advanced by such Manager
or other amounts owed to such Manager by the LLC; (iii) to the
Members in accordance with their ending Capital Account balances.(c)
If all of the Members and Manager shall so determine, payments on
dissolution, or any other LLC distributions, may be made in whole or
in part in kind.
Article XI
MISCELLANEOUS PROVISIONS
11.1 NOTICES--Any notice, payment, demand or communication required
or permitted to be given by any provision of this Agreement shall be
deemed to have been sufficiently given or served for all purposes if
delivered personally to the party to whom the same is directed or
three (3) business days after deposit in the United States mail,
registered or certified, postage and charges prepaid, addressed to
each Member or Manager, as applicable, at the applicable address
specified by such Member in the Subscription Agreement. A Member
may change such Member's address for purposes of notice by a writing
sent in accordance with this Section to the Manager.
11.2 POWER OF ATTORNEY--Each Unit Holder, upon execution of an
Offering Subscription Agreement and approval of the Manager, hereby
make, constitute and appoint Xxxx Xxxxxxxx as such Unit Holder's
true and lawful attorney, with full power of substitution, for such
Unit Holder and in such Unit Holder's name, place, stead and
benefit, to sign this Agreement, to file and record the Articles of
Organization, and, subject to any applicable consent requirements
contained in this Agreement, to sign, execute, certify, swear,
acknowledge, file and record any other documents, instruments and
conveyances as may be necessary or appropriate to carry out the
provisions or purposes of this Agreement or which may be required of
the LLC by law in California, or any other applicable jurisdiction,
or by federal or state securities laws or other applicable laws,
including, without limitation, amendments to or cancellations of
such articles.
The foregoing grant of authority is hereby declared to be
irrevocable and a power coupled with an interest and shall survive
the death, incapacity or bankruptcy of any person hereby giving such
power and the transfer or assignment for the whole or any portion of
the LLC interest of such person; provided, however, that in the
event of a transfer by a Unit Holder of all of such Unit Holder's
Units, the foregoing power of attorney of a transferor Unit Holder
shall survive such transfer until such time, if any, as the
transferee shall have been duly admitted to the LLC as a
Substitute
Member.
11.3 SEVERABILITY--If any provision of this Agreement shall be
invalid, illegal or unenforceable in any applicable jurisdiction,
the validity, legality, and enforceability of the remaining
provisions, or of such provision in any other jurisdiction, shall
not in any way be affected or impaired thereby.
11.4 APPLICABILITY OF CALIFORNIA LAW This Agreement, and the
application or interpretation hereof, shall be governed, construed
and enforced exclusively by its terms and in accordance with the
laws of the state of California.
11.5 ARBITRATION--Any dispute, controversy or claim arising out of
or in connection with or relating to this Agreement or any breach or
alleged breach hereof shall be determined and settled by arbitration
in California, pursuant to the rules then in effect of the American
Arbitration Association, and any such determination or settlement
shall be enforceable pursuant to the applicable provisions of the
laws of the state of California. Any award rendered shall be final
and conclusive upon the parties and a judgment thereon may be
entered in the highest court of the forum (state or federal) having
jurisdiction. An arbitrator shall be selected according to the
procedure provided for under the commercial arbitration rules of the
American Arbitration Association.
11.6 HEADINGS--Headings at the beginning of each Article and
Section of this Agreement are solely for the convenience of the
readers and are not intended to control or influence in any manner
the meaning of the specific language provided thereunder.
11.7 ENTIRE AGREEMENT--This Agreement, the accompanying Prospectus
and the Subscription Agreement executed contemporaneously herewith
contain the entire agreement between the Members and Manager
relating to the subject matter hereof and all other agreements
relative hereto which are not contained therein are terminated.
Amendments, variations, modifications or changes herein may be
effective and binding
on the Members and Manager by, and only by, setting the same forth
in a document duly executed and consented to by the holders of
sixty-six and two-thirds percent (66 2/3%) of the Percentage
Interests owned by Unit Holders and Manager and any alleged
amendment, variation, modification or change herein which is not so
documented shall not be effective as to any Member or Manager.
11.8 SUCCESSORS--This Agreement shall be binding on and inure to
the benefit of the respective successors, assigns and personal
representatives of the parties hereto, except to the extent of any
contrary provision in this Agreement.
11.9 CONSENTS AND AGREEMENTS--Any and all consents and agreements
provided for or permitted by this Agreement shall be in writing and
a signed copy thereof shall be filed and kept with the books of
the
LLC.
11.10 ATTORNEY'S FEES--If any legal action or arbitration or other
proceeding is brought by any party hereto for the enforcement of
this Agreement or as a result of an alleged breach, default or
misrepresentation in connection with any of the provisions of this
Agreement, the prevailing party shall be entitled to recover
reasonable attorney's fees and other costs incurred in such action
or proceeding, in addition to any other relief in which the party
may be entitled.
11.11 WAIVER OF CLAIMS--Each Member is hereby urged to obtain the
advice of independent counsel regarding all matters relating to this
investment. To the extent that a Member chooses not to obtain
separate legal representation on matters relating to the affairs of
the LLC, such Member or Members hereby knowingly and willingly agree
to waive any claims against the Manager's Counsel based on such
Counsel's advice to his Manager client as it relates to the LLC.
11.12 NO INJUNCTION--The parties hereto agree and acknowledge that
in the event of a breach of any party hereto of any obligation
hereunder, the damage caused any other party shall not be
irreparable or otherwise so sufficient as to give rise to a right of
injunctive or other equitable relief, and the parties hereto
acknowledge that their rights and remedies in the event of any such
breach shall be limited to the right, if any, to recover damages in
an action at law or arbitration hereunder and shall not include the
right to enjoin the development, financing, production, distribution
or other exploitation of the Picture hereunder.
11.13 CURE--No party shall be liable to any other party for damages
of any kind arising out of or in connection with any breach of this
Agreement occurring or accruing before the breaching party has had
reasonable notice of and opportunity to cure such breach.
11.14 COUNTERPARTS--This Agreement may be executed in counterparts
by each of the Members and Manager, all of which taken together
shall be deemed one original.
Article XII
PURCHASER REPRESENTATIONS AND INDEMNIFICATION
12.1 REPRESENTATIONS OF THE UNIT HOLDER--Each Unit Holder hereby
represents and warrants to the LLC and all Members and the Manager
that the following statements are true: (a) Such Unit Holder is a
bona fide
resident of the state or country set opposite such Unit Holder's
name on the signature page of the Subscription Agreement in that:
(i) if a corporation, partnership, trust or other form of business
organization, it has its principal office within such state; (ii) if
an individual, such individual's principal residence is in such
state; and (iii) if a corporation, partnership, trust or other form
of business organization
which has organized for the specific purpose of acquiring Units in
the LLC, all of its beneficial owner are residents of such state.
(b) Such Unit Holder acknowledges the receipt of the Spring
Break '83 Production, LLC Prospectus dated _____________...?,
2006.
Such Unit Holder has been advised that the Manager is available to
answer questions about the purchase of Units in the LLC and such
Unit Holder has asked any questions of the Manager which such Unit
Holder desires to ask and has received answers from the Manager with
respect to all such questions.
(c) Such Unit Holder recognizes that the LLC will be newly
organized and has no history of operations or earnings and is of a
speculative nature.
(d) Such Unit Holder understands that no state or federal
governmental authority has made any finding or determination
relating to the fairness for public investment of the Units offered
by the LLC and that no state or federal government authority has or
will recommend or endorse these LLC interests.
(e) Such Unit Holder recognizes that prior to this Offering
there has been no public market for the Units offered by the LLC and
it is likely that after the Offering there will be no such market
for the Units.
(f) Such Unit Holder is financially able to comply with
such Unit Holder's obligations hereunder; and such Unit Holder has
adequate means of providing for such Unit Holder's current financial
needs and possible contingencies exclusive of such Prospective
Purchaser's investment in the LLC.
(g) Such Unit Holder understands that the IRS may disallow
some or all of the deductions or losses to be claimed by the LLC and
that the IRS may attempt to treat the LLC as an association taxable
as a corporation which could have an adverse economic effect on the
Members by (i) taxation of the LLC as a corporation resulting in
double taxation of income to the Members and no flow-through of
losses and (ii) substantial reduction in yield, if any, of the
Members' investment in the LLC.
(h) Such Unit Holder is aware that the Manager and its
Affiliates may engage in businesses which are competitive with that
of the LLC, and such Unit Holder agrees to such activities even
though there may be conflicts of interests inherent therein.
12.2 INDEMNIFICATION--Each Unit Holder shall and does hereby agree
to indemnify and save harmless the LLC, the Manager, the Manager's
Affiliates, Counsel and consultants and each other Unit Holder from
any damages, claims, expenses, losses or actions resulting from (i)
a breach by such Unit Holder of any of the warranties and
representations contained in this Section or (ii) the untruth of any
of the warranties and representations contained herein. If such
warranties and representations are either breached or are not
true,
(Continued Next Page)
the Unit Holder who breached such warranties and/or representations,
shall, at the election of the Manager, be subject to a rescission of
such Unit Holder's rights or interests in the LLC.
IN WITNESS WHEREOF, the undersigned have executed the Agreement as
of the date set forth below.
SPRING BREAK '83 PRODUCTION, LLC
__________________________________________________
By Xxxx Xxxxxxxx, An Owner of the Manager
MEMBER ATTORNEY-IN-FACT ACKNOWLEDGMENT
THE STATE OF CALIFORNIA )
COUNTY OF ________________ )
This instrument was acknowledged before me on the ____ day
of _________________, _______, by Xxxx Xxxxxxxx, an individual, as
the ATTORNEY-IN-FACT FOR THE MEMBERS of the Spring Break '83
Production, LLC and he is known by me or has demonstrated by
sufficient evidence to be the person represented.
__________________________
Notary Public in and for
the State of California
(Notary Seal)
__________________________
Printed Name of Notary
My Commission Expires:
_______________________
MANAGER ACKNOWLEDGMENT
THE STATE OF CALIFORNIA )
COUNTY OF ________________ )
This instrument was acknowledged before me on the ____ day
of _________________, _______ by Xxxx Xxxxxxxx, an owner of Big Sky
Motion Pictures, LLC and he is known by me or has been demonstrated
by sufficient evidence to be the person represented.
__________________________
Notary Public in and for
the State of California
(Notary Seal)
__________________________
Printed Name of Notary
My Commission Expires:
_______________________
Appendix "A"
MEMBER/MANAGER VOTING INTERESTS
Date: __________________
Percentage
Interest
Member/Manager Name Address for
Voting
Purposes
Appendix "B"
ALLOCATIONS OF NET PROFITS AND NET LOSSES
Date: _____________________
Member/Manager Name Address
Percentage
Interest
