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EXHIBIT 3.06
THE MEMBERSHIP INTERESTS REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF DELAWARE OR ANY OTHER
JURISDICTION. THE MEMBERSHIP INTERESTS MAY NOT BE SOLD, PLEDGED, GIVEN,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND APPLICABLE SECURITIES LAWS UNLESS APPROPRIATE EXEMPTIONS FROM
SUCH REGISTRATIONS ARE AVAILABLE AS EVIDENCED EITHER BY THE DELIVERY TO THE
COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE MANAGER OR SUBMISSION TO
THE MANAGER OF OTHER EVIDENCE SATISFACTORY TO THE MANAGER.
OPERATING AGREEMENT OF
SALEM MEDIA OF ILLINOIS, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
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THIS OPERATING AGREEMENT OF SALEM MEDIA OF ILLINOIS, LLC, a Delaware
limited liability company ("Agreement"), is entered into effective as of March
9, 2001, by and between SALEM MEDIA CORPORATION, a New York corporation (the
"Manager"), and SALEM RADIO OPERATIONS, LLC, a Delaware limited liability
company ("SRO"). The Manager and SRO are sometimes referred to collectively as
the "Members" or the "parties" and individually as a "Member" or a "party". In
consideration of the mutual covenants in this Agreement, the Members agree as
follows.
ARTICLE 1
ORGANIZATION AND PURPOSE
1.1 Formation. The Members have formed Salem Media of Illinois, LLC (the
"Company") as a limited liability company pursuant to the Delaware Limited
Liability Company Act, 6 Del. C. Section 18-101 et seq. (as from time to time
amended including any successor statute of similar import, the "Act"), subject
to the terms contained in this Agreement. The business and affairs of the
Company shall be managed by one Manager.
1.2 Name. The name of the Company is "Salem Media of Illinois, LLC" and
all business of the Company will be conducted under the name of the Company. The
Manager may change the Company's name and all of the Members shall be notified
of such change.
1.3 Purpose. The business of the Company is to (a) acquire, own, hold,
operate, finance, refinance, maintain, manage, develop, lease and/or sell the
radio broadcasting business heretofore owned and operated by the Manager
commonly known as station WYLL-FM (the "Business") and (b) to engage in any
other legal activity which a limited liability company is permitted to do
pursuant to the Act, all as the Manager shall reasonably determine.
1.4 Registered Office and Registered Agent. Company's initial office
shall be at 0000 Xxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxxxx, XX 00000. The Company's
registered agent in Delaware shall be National Registered Agents, Inc. and its
registered office in Delaware shall be 0 Xxxx Xxxxxxxxxx Xxxxxx, Xxxx xx Xxxxx,
Xxxxxx of Kent, State of Delaware. The Company shall be qualified to do business
in the State of Illinois. The Company's registered agent in Illinois shall be
National Registered Agents, Inc. and its registered office in Illinois shall be
000 Xx Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000. The registered office
and agent of the Company in either or both of Delaware or Illinois may be
changed from time to time by the Manager by filing the address of the new
registered office and/or the name of the new agent with the appropriate
Secretary of State pursuant to the laws of that state.
1.5 Addresses of Members. The addresses of the Members are set forth on
the signature pages of this Agreement.
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1.6 Term. The Company's term shall commence upon the filing with the
Delaware Secretary of State of a "Certificate of Formation" and will terminate
on December 31, 2050, subject to earlier termination upon an event of
termination otherwise provided by this Agreement or by law.
1.7 Documents. The Company will execute and file the documents necessary
to comply with the requirements of the Act and the other laws of Delaware for
the formation, continuation and operation of limited liability companies. The
Members agree to execute all documents and to undertake all other acts, as
reasonably may be deemed necessary by the Manager, in order to comply with the
requirements of the laws of Delaware for the formation, continuation and
operation of limited liability companies. The Manager will further execute and
file the documents necessary to qualify the Company to do business in Illinois
and any other jurisdictions in which the Company shall do business.
1.8 Membership Interest. "Membership Interest" shall mean a Member's
rights in the Company, collectively, including such Member's economic interest,
any right to vote and participate in management, and any right to information
concerning the business and affairs of the Company provided under this Agreement
or the Act.
ARTICLE 2
CAPITAL
2.1 Members' Capital Contributions. Concurrently with the execution of
this Agreement, (a) the Manager shall contribute all of the assets of the
Business and all related leases and contracts to the capital of the Company
subject to all existing liabilities of the Business, and (b) SRO shall
contribute cash in the amount of $790,000 to the capital of the Company. The
Members shall not be obligated to contribute any additional capital to the
Company.
2.2 Liability. No Member or Manager is liable to any other Member for
the repayment of any Member's capital contributions and, except as otherwise
provided in Section 2.1 of this Agreement, no Member is obligated to make any
advances or contributions of capital to the Company. Except as otherwise
provided in this Agreement or as required by law, the Members and Manager will
not be liable for any of the debts of the Company.
2.3 No Interest on Capital. Except as otherwise provided in this
Agreement, no interest will be paid to the Members on capital contributions or
on "Capital Account" (defined below) balances.
2.4 Return of Capital. Except as otherwise provided in this Agreement,
no time has been agreed upon for the contributions of the Members to be returned
to them. The Manager does not, in any way, guarantee the return of the Members'
capital contributions or a
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profit for the Members from the operations of the Company. The Members have no
right to demand and receive property other than cash in return for the Members'
capital contributions.
2.5 Loans from Members. Any Member may advance funds to the Company if
funds are deemed necessary by the Manager. The advances will be evidenced by the
Company's note payable to the lending Member. The note will provide for a rate
of interest mutually acceptable to the Manager and the Member advancing funds to
the Company; provided, however, such rate of interest shall be commercially
reasonable.
2.6 Capital Accounts. A "Capital Account" shall be maintained for each
Member in accordance with the provisions of Paragraph 1 of Exhibit "A".
2.7 Membership Percentages. The "Membership Percentages" of the Members
are as follows:
MEMBER MEMBERSHIP PERCENTAGE
------ ---------------------
Salem Radio Operations, LLC 1%
Salem Media Corporation 99%
---
Total 100%
===
2.8 Majority-in-Interest. For purposes of this Agreement, a
"Majority-in-Interest" of the Members shall mean those Members then owning more
than 50% of the Membership Percentages then owned by all of the Members who are
then entitled to vote. Except as otherwise provided in this Agreement or by the
Act, all decisions of the Members shall be made by a Majority-in-Interest of the
Members.
ARTICLE 3
PROFITS, LOSSES AND DISTRIBUTIONS
3.1 Definitions. For purposes of this Agreement, the following
capitalized terms are defined as follows:
3.1.1 "Distributable Cash" is all cash of the Company (including
without limitation cash from the sale of any or all of the Company property)
less (i) the amount necessary for payment of all costs, expenses, obligations
and liabilities of the Company then due (including any then due advances to the
Company by the Members) and (ii) the amount deemed necessary by the Manager, in
the exercise of its reasonable discretion, for the operation of the Company and
to establish a reserve for the payment of foreseen or unforeseen costs,
expenses, obligations or
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liabilities of the Company.
3.1.2 The "Profits" and "Losses" of the Company (as determined for
book purposes) shall be calculated in accordance with Paragraph 1.2.3 of
attached Exhibit "A".
3.1.3 The "Accounting Period" of the Company will be each period
commencing on the first day following the last day of the immediately preceding
Accounting Period (which for the Company's first fiscal year shall be deemed to
be the date of the commencement of the Company) and ending on December 31 (which
shall also be the Company's fiscal year end), unless another fiscal year is
selected by the Manager and permission to change to such other fiscal year is
granted by the Internal Revenue Service.
3.2 Allocation of Profits: Except as otherwise provided in Exhibit "A"
to this Agreement, Profits for any Accounting Period shall be allocated among
the Members in the ratio of their respective Membership Percentages.
3.3 Allocation of Losses: Except as otherwise provided in Exhibit "A" to
this Agreement, Losses for any Accounting Period shall be allocated among the
Members in the ratio of their respective Membership Percentages.
3.4 Distributions and Payments: For each Accounting Period, on a
cumulative basis, Distributable Cash shall be paid and distributed to the
Members in the ratio of their respective Membership Percentages.
3.5 Identity of Distributees. Distributions shall be made only to
persons who, according to the books and records of the Company, are the owners
of record of Membership Interests on a date to be determined by the Manager.
Neither the Manager nor the Company shall incur any liability for making
distributions in accordance with the preceding sentence, whether or not the
Manager has knowledge or notice of any transfer of ownership of any Membership
Interests.
3.6 Time of Distributions. Distributions shall be made to the Members as
soon as possible after the Manager's determination of the availability of cash
for such purposes, which determination shall be within the reasonable discretion
of the Manager.
3.7 Sharing Between Transferor and Transferee. If a Membership Interest
is transferred, the income, gains, losses and deductions allocable to the
Membership Interest transferred for the Accounting Period during which the
transfer occurred will be allocated between the transferor and transferee of the
Membership Interest in proportion to the time during the Accounting Period that
the Membership Interest was owned by the transferor and transferee. Credits
shall be allocated to the Member who owned the Membership Interest at the time
that the property giving rise to the credit was placed in service. Each
transferee will be credited with the Capital Account of the transferee's
transferor. If a transferor transfers less than all of the
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transferor's Membership Interest, the Capital Account will be allocated in
proportion to the fraction of the Membership Interest respectively transferred
and retained.
ARTICLE 4
REIMBURSEMENT OF MANAGER'S EXPENSES
AND INDEMNIFICATION OF MANAGER
The Company will reimburse the Manager for all ordinary and necessary
operating expenses incurred by the Manager in carrying on the Company's
business. The Manager shall not be liable to the Company or to any Member for
any act or omission suffered or taken by the Manager in good faith, and the
Manager shall be fully protected and indemnified by the Company against all
liabilities and losses suffered by virtue of its status as the Manager,
including amounts paid in respect of judgments, fines or in settlement of
litigation and expenses reasonably incurred by the Company or the Manager in
connection with any pending or threatened litigation or proceeding, with respect
to any action or omission suffered or taken, including but not limited to any
action taken by the Manager in the formation and operation of the Company or in
the financing, refinancing, improvement and sale of any assets of the Company,
liabilities arising under the "IRC" (as defined below) and the Manager's
activities as the "TMP" (as defined below), provided that (i) the acts or
omissions do not constitute gross negligence, fraud or criminal act by such
Manager, and (ii) the satisfaction of any indemnification and saving harmless
will be from and limited to Company assets. No Member will have any personal
liability on account of the indemnification and saving harmless of the Manager.
To the extent that the acts or omissions of the Manager constitute gross
negligence, fraud or criminal act, the Manager shall indemnify and save harmless
the Company and the Members from any loss or damage occasioned thereby
(including, without limitation, reasonable attorneys' fees). The Manager shall
not be liable to the Company or any Member because any taxing authorities
disallow or adjust any deductions, losses, credits or items of income or gain in
the Company's or any Member's income tax returns.
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ARTICLE 5
RIGHTS AND OBLIGATIONS OF MANAGER
5.1 Manager to Manage Business. The business and affairs of the Company
shall be managed by one Manager. The Manager shall be SALEM MEDIA CORPORATION, a
New York corporation, who shall serve as Manager until its dissolution,
resignation or removal. The Manager shall direct, manage and control the
business of the Company to the best of its ability and shall devote such portion
of its time and attention to the conduct of the business of the Company as is
necessary to carry out the purposes and business of the Company.
5.2 Powers of the Manager. The Manager shall have full and complete
authority, power and discretion to manage and control the business, affairs and
properties of the Company, to make all decisions regarding those matters and to
perform any and all other acts or activities customary or incident to the
management of the Company's business, including, but not limited to the power:
5.2.1 To encumber all or less than all Company assets or rights;
5.2.2 To make all decisions concerning the operational aspects of
the Company;
5.2.3 To execute and deliver all leases, contracts, deeds and other
instrumentation and documentation in connection with the operations or business
of the Company;
5.2.4 To borrow money on behalf of the Company and to execute and
deliver in the name of the Company notes evidencing such borrowings and
mortgages, deeds of trust and any other security instruments securing such
borrowings;
5.2.5 To pay from Company assets all expenses of organizing and
conducting the business of the Company, including without limitation, legal and
accounting fees and costs;
5.2.6 To execute any and all other instruments and take any and all
other action necessary or desirable to carry out the purposes and business of
the Company;
5.2.7 To sell, transfer, convey and/or exchange all or any portion
of the property or assets of the Company; and
5.2.8 To do any other lawful act or thing in furtherance of the
Company's business.
5.3 Restrictions on Authority of the Manager. The Manager shall not have
the
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authority or right to do any of the following acts:
5.3.1 To act in contravention of this Agreement.
5.3.2 To act in any manner that would make it impossible to carry on
the ordinary business of the Company, except as otherwise provided in this
Agreement;
5.3.3 To possess property, or assign rights in specific property,
for other than a Company purpose; or
5.3.4 To knowingly perform any act that would cause the Company to
conduct business in a state which has neither enacted legislation which permits
limited liability companies to organize in such state nor permits the Company to
register to do business in such state as a foreign limited liability company.
5.4 Right to Rely on the Manager. The Manager shall have the absolute
authority to bind the Company by its signature alone and anyone dealing with the
Company shall have the right to rely on such authority. Except as otherwise
expressly authorized by this Agreement or by the Manager, no Member (other than
the Manager), attorney-in-fact, employee or other agent of the Company shall
have any power or authority to bind the Company in any way, to pledge its credit
or to render it liable pecuniarily for any purpose. Any person dealing with the
Company may rely (without duty of further inquiry) upon a certificate signed by
the Manager as to: the identity of the Manager or any Member; the existence or
nonexistence of any fact or facts which constitute a condition precedent to acts
by the Manager or which are in any other manner germane to the affairs of the
Company; the persons and/or entities who are authorized to execute and deliver
any instrument or document of the Company; or any act or failure to act by the
Company or any other matter whatsoever involving the Company or any Member.
5.5 Manager Has No Exclusive Duty to Company. The Manager shall not be
required to manage the Company as its sole and exclusive function. Subject to
the fulfillment of the Manager's obligations pursuant to this Agreement, the
Manager may have other business interests and may engage in other activities in
addition to those relating to the Company. Neither the Company nor any Member
shall have any right, by virtue of this Agreement, to share or participate in
such other investments or activities of the Manager or to the income or proceeds
derived therefrom. The Manager shall not incur any liability to the Company or
to any of the Members as a result of engaging in any other business or venture.
5.6 Affiliates. The Manager may, in the Manager's absolute discretion,
employ an Affiliate in any capacity on a basis comparable to that which could be
arranged with unaffiliated third parties for comparable service. Any Affiliate
employed by the Company shall have the absolute right (but not the obligation)
to contract with independent third parties in connection with the performance of
the foregoing service. For purposes of this Agreement, an
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"Affiliate" shall include any and all firms and entities, including, without
limitation, corporations, partnerships, joint ventures, trusts, limited
liability companies and associations, which are directly or indirectly owned or
controlled, in whole or in part, by or in common with, any Member or Members or
Manager and/or any of such entities or any combination of any such persons or
entities.
5.7 Removal.
5.7.1 The "removal" of the Manager shall automatically take place in
the event that any of the following occurs:
5.7.1.1 The Manager becoming bankrupt. The Manager shall be
deemed to be bankrupt upon: (a) the filing of an application by the Manager for,
or its consent to, the appointment of a trustee, receiver, or custodian of its
assets; (b) the entry of an order for relief with respect to the Manager in
proceedings under the United States Bankruptcy Code, as amended or superseded
from time to time; (c) the making by the Manager of a general assignment for the
benefit of creditors; (d) the entry of an order, judgment, or decree by any
court of competent jurisdiction appointing a trustee, receiver or custodian of
the assets of the Manager unless the proceedings and the trustee, receiver or
custodian appointed are dismissed within ninety (90) days; or (e) the failure by
the Manager generally to pay its debts as the debts become due within the
meaning of Section 303(h)(1) of the United States Bankruptcy Code, as determined
by the Bankruptcy Court, or the admission in writing of its inability to pay its
debts as they become due.
5.7.1.2 The Manager is dissolved.
5.7.2 The removal of a Manager shall not affect such Manager's
rights as a Member and shall not constitute a withdrawal of a Member.
5.8 Vacancies. Upon any vacancy occurring for any reason in the office
of Manager of the Company, the vacancy may be filled by the affirmative vote of
a Majority-in-Interest of the Members.
5.9 Officers. The Manager may appoint and/or remove officers of the
company from time to time in its sole and absolute discretion. Each officer
shall have the title and authority designated by the Manager.
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ARTICLE 6
MEETINGS OF MEMBERS
6.1 Meetings. Any Member may call a meeting at any time on not less than
five (5) business days' prior written notice to all Members. Any notice for a
meeting must identify the nature of the business to be discussed at such
meeting.
6.2 Designees. Any Member may at any time, and from time to time, by
written notice to the other Members, designate a person ("Designee") to act on
its behalf at any meeting of the Members. Such Designee shall have all of the
voting rights of such Member. A Member who has named a Designee may subsequently
revoke such designation and may, at the same time or subsequently, name a
replacement Designee.
6.3 Meeting of all Members. If all of the Members shall meet at any time
and place, either within or outside of the State of Delaware and consent to the
holding of a meeting at such time and place, such meeting shall be valid without
call or notice, and at such meeting lawful action may be taken.
6.4 Record Date. For the purpose of determining Members entitled to
notice of or to vote at any meeting of Members or any adjournment, or Members
entitled to receive payment of any distribution, or in order to make a
determination of Members for any other purpose, the date on which notice of the
meeting is mailed or the date on which the resolution declaring such
distribution is adopted, as the case may be, shall be the record date for such
determination of Members. When a determination of Members entitled to vote at
any meeting of Members has been made as provided in this Paragraph 6.4, such
determination shall apply to any adjournment.
6.5 Quorum. A Majority-In-Interest of the Members, represented in person
or by proxy, shall constitute a quorum at any meeting of Members. In the absence
of a quorum at any such meeting, a majority of the Membership Percentages so
represented may adjourn the meeting from time to time for a period not to exceed
60 days without further notice. However, if the adjournment is for more than 60
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each Member of
record entitled to vote at the meeting. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed. The Members
present at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal during such meeting of that number
of Membership Percentages whose absence would cause less than a quorum.
6.6 Manner of Acting. If a quorum is present, the affirmative vote of
Majority-in-Interest of the Members (whether or not all are present) shall be
the act of the Members, unless the vote of a greater proportion or number is
otherwise required by the Act, by
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the Articles of Organization, or by this Agreement. Unless otherwise expressly
provided in this Agreement or required under applicable law, Members who have an
interest (economic or otherwise) in the outcome of any particular matter upon
which the Members are being asked to vote or consent may vote or consent upon
any such matter and their Membership Percentage, vote or consent, as the case
may be, shall be counted in the determination of whether the requisite matter
was approved by the Members.
6.7 Proxies. At all meetings of Members, a Member may vote in person or
by proxy executed in writing by the Member or by a duly authorized
attorney-in-fact. Such proxy shall be filed with the Members of the Company
before or at the time of the meeting. No proxy shall be valid after eleven
months from the date of its execution, unless otherwise provided in the proxy.
6.8 Action by Members Without a Meeting. Action required or permitted to
be taken at a meeting of Members may be taken without a meeting if the action is
evidenced by one or more written consents signed by all Members.
6.9 Waiver of Notice. When any notice is required to be given to any
Member, a waiver in writing signed by the person entitled to such notice,
whether before, at, or after the time stated in such notice shall be equivalent
to the giving of such notice.
ARTICLE 7
ADMISSION AND WITHDRAWAL OF MEMBERS
AND TRANSFER OF MEMBERSHIP INTERESTS
7.1 Definitions.
7.1.1 "Admission" means the addition of a new Member to the Company.
7.1.2 "Transfer" means the transfer, alienation, sale, assignment,
pledge or other disposition or encumbrance of all or any part of a Membership
Interest, whether voluntarily or involuntarily.
7.1.3 The term "Associate" shall mean with respect to any Member (i)
any other Member, (ii) any beneficiary of a trust which is a Member, (iii) any
spouse or adult lineal ascendants or descendants of any such Member or
beneficiary, or a trust for his or her or their benefit (including minor
descendants), and (iv) any and all firms and entities, including, without
limitation, corporations, limited liability companies, partnerships, joint
ventures, trusts and associations, which are directly or indirectly owned or
controlled by, or in common with, one or
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more of the previously identified persons.
7.2 Transfer and Admission.
7.2.1 Transfer. Except as otherwise provided in this Agreement, no
Member may effect a Transfer of any Membership Interest except for (i) Transfers
to Associates, (ii) Transfers previously approved in writing by the Manager,
which approval may be withheld in the Manager's absolute discretion, and (iii)
Transfers to persons pursuant to Paragraph 7.4 (entitled "Right of First
Refusal") (collectively referred to as "Permitted Transfers"); provided,
however, that (a) all such Permitted Transfers must be made in full compliance
with all requirements contained in this Agreement and (b) no Member may transfer
all or any part of such Member's Membership Interest to a minor or an
incompetent unless the Transfer is to a trust, guardianship, or other legal
entity formed for the benefit of the incapacitated party. Any Transfer of a
Membership Interest which does not comply with the provisions of this Agreement
shall be invalid and shall not vest any interest in the transferee.
7.2.2 Admission. Except as otherwise provided in this Agreement, a
person shall become a Member only upon (i) the approval of the Manager, which
approval may be withheld in the Manager's absolute discretion, and (ii) the
person executing any and all documents reasonably requested by the Manager,
including without limitation an agreement by which such person shall be bound by
all of the provisions of this Agreement. Notwithstanding the foregoing, if a
Member transfers a Membership Interest to an Associate or a Membership Interest
is transferred to a successor upon the death of a Member, the Associate or the
successor shall be entitled to Admission without the approval of the Manager,
provided that all other requirements contained in this Agreement must be
complied with prior to such Admission.
7.2.3 Admission Date. Any Admission shall be deemed to occur
effective either (i) if the Admission occurs from the first through the 15th day
of the month, then on the first day of the calendar month in which the admission
occurs or (ii) if the Admission occurs from the 16th through the last day of the
month, then on the first day of the calendar month after the month in which the
Admission occurs.
7.2.4 Additional Requirements. No Transfer or Admission shall be
permitted (i) if the proposed Transfer, transferee or Admission will, or could,
impair the ability of the Company to be taxed as a partnership under the Federal
income tax laws, or (ii) if the Transfer or Admission will, or could, cause the
Company's tax year to close or the Company to terminate for Federal income tax
purposes, and (iii) no Admission shall be permitted unless the proposed Member
has acknowledged in writing the liabilities of the transferor and the Company
which cannot be ascertained from this Agreement.
7.2.5 Necessary Amendments. In the event of the Admission of a
Member or a Permitted Transfer by a Member, this Agreement will be promptly
amended as necessary to reflect any changes in the profit and loss allocations
of Members, to reflect the
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capital contributions of the newly admitted Member and to set forth any new
provisions or to amend any existing provisions of this Agreement which may be
necessary or desirable in light of the Admission of a Member or Transfer by a
Member.
7.2.6 Enforceability of Transfer Restrictions. Each Member
acknowledges the reasonableness of the restrictions on the transferability of
Membership Interests imposed by this Agreement in view of the Company purposes
and the relationship of the Members. Accordingly, the restrictions on
transferability contained in this Agreement shall be specifically enforceable.
7.3 Members and Assignees.
7.3.1 Rights of Admitted Member. A transferee who becomes a Member
succeeds to all of the rights and powers and is subject to all of the
obligations, restrictions and liabilities of a Member for the Membership
Interest which is acquired by the transferee;
7.3.2 Rights of Assignee. A transferee who does not become a Member
("Assignee") will be entitled only to (i) receive, to the extent assigned, the
distributions and the allocations of income, gains, losses, deductions, credit
or similar items to which the assignor would be entitled and (ii) require
information and accounts of Company transactions and to inspect the Company
books only as required by the Act, and an Assignee shall have no other rights or
powers of a Member. An Assignee nevertheless is subject to all of the provisions
of this Agreement and to all of the obligations, restrictions and liabilities
under this Agreement for the Membership Interest acquired.
7.3.3 Duties of Assignor. Until the time when the transferee of a
Membership Interest becomes a Member, the transferor of the Membership Interest
remains subject to all of the obligations, restrictions and liabilities under
this Agreement for the Membership Interest and retains all rights and powers of
a Member for the Membership Interest other than the right to receive cash and in
kind distributions and the return of capital contributions.
7.4 Right of First Refusal.
7.4.1 A Member ("Selling Member") who desires to sell all or any
portion of such Member's Membership Interest (the "Offered Interest") to a third
party purchaser ("Third Party") shall obtain from such Third Party a bona fide
written offer to purchase such Offered Interest stating the price and other
terms and conditions for the proposed purchase (the "Offer"). The Selling Member
shall give written notification to the remaining Members of the Selling Member's
intention to so transfer the Offered Interest (the "Offer Notice") and shall
include with the Offer Notice a copy of the Offer.
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7.4.2 The remaining Members shall have the right to exercise a right
of first refusal to purchase, in proportion to the Membership Percentages of the
remaining Members who exercise such right, all (but not less than all) of the
Offered Interest upon the same terms and conditions as stated in the Offer by
giving written notification to the Selling Member of their exercise of such
right (the "Exercise Notice") within 30 days after the Offer Notice is given. If
any of the remaining Members (in the aggregate) exercise their right to purchase
all of the Offered Interest, then the transaction shall close within 90 days
after the date upon which the last Exercise Notice is given. If no remaining
Members exercise their right to purchase all of the Offered Interest, then the
Selling Member may sell the Offered Interest on the terms and conditions stated
in the Offer to the purchaser named in the Offer within 120 days after the Offer
Notice is given. The purchaser shall become either a Member or an Assignee in
accordance with Paragraph 7.2 (entitled "Transfer and Admission") and shall not
otherwise be entitled to Admission. Whether or not the Offered Interest is so
sold, it shall remain subject to all of the terms and conditions of this
Agreement, including without limitation this Paragraph 7.4.
7.5 Withdrawal. No Member may withdraw or resign from the Company or
take any other voluntary action which would cause the dissolution of the Company
without the consent of the Manager, which consent may be withheld in its
absolute discretion.
7.6 Death of a Member. Upon the death of a Member who is an individual,
the Membership Interest of the deceased Member shall be transferred to his or
her lawful successor(s)-in-interest. Any such successor shall become a Member in
accordance with the provisions of this Article 7.
ARTICLE 8
DISSOLUTION AND LIQUIDATION
8.1 Events of Termination: The Company shall, unless otherwise provided,
terminate and dissolve on the happening of any of the following events:
8.1.1 Expiration. When the period fixed for the duration of the
Company shall expire pursuant to Paragraph 1.6 (entitled "Term");
8.1.2 Consent. By the consent in writing of the Manager and a
Majority-in-Interest of the Members; or
8.1.3 Statutory Dissolution. The happening of any events set forth
in Section 18-801 of the Act, unless the business of the Company is continued by
the consent of a Majority-in-Interest of the remaining Members within 90 days
after the happening of that event and there are at least two remaining Members.
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8.2 Winding Up Affairs and Liquidations. Upon the termination and
dissolution of the Company, the Manager or the persons required or permitted by
law to carry out the winding up of the affairs of the Company ("Liquidator")
will promptly notify all Members of such dissolution; shall proceed to the
liquidation of the assets of the Company by converting such assets to cash
insofar as deemed practicable by the Manager or the Liquidator; will wind up the
affairs of the Company; and, after paying or providing for the payment of all
liabilities and obligations of the Company, will distribute the proceeds of
liquidation and other assets of the Company as provided by law and the terms of
this Agreement. Upon the dissolution of the Company as the result of the
occurrence of an event described in Paragraph 8.1 (entitled "Events of
Termination"), the Manager or Liquidator shall cause to be filed in the office
of, and on a form prescribed by, the Delaware Secretary of State, a Certificate
of Dissolution. Upon the completion of the winding up of the affairs of the
Company, the Manager or Liquidator shall cause to be filed in the office of, and
on a from prescribed by, the Delaware Secretary of State, a Certificate of
Cancellation of Certificate of Formation.
8.3 Continuation of Business for Purpose of Winding Up Affairs. Upon the
filing with the Delaware Secretary of State of a Certificate of Dissolution, the
Company shall cease to carry on its business, except insofar as may be necessary
for the winding up of its business.
8.4 Distributions on Dissolution. The proceeds of liquidation and other
assets of the Company shall be applied and distributed in the following order of
priority:
8.4.1 Debts. To the payment of debts and liabilities of the Company
(other than any loans and advances that may have been made by any of the
Members, or amounts owing to any of the Members) and the expenses of
liquidation;
8.4.2 Reserves. To the setting up of any reserves that the Manager
or Liquidator may deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Company, which reserves shall be paid over to
an escrow holder designated by the Manager or Liquidator to be held for the
purpose of disbursing such reserves in payment of any of the aforementioned
contingencies, and, at the expiration of such period, as the Manager or the
Liquidator shall deem advisable, to distribute the balance thereafter remaining
in the manner hereinafter provided;
8.4.3 Member Loans. To the payment of any loans or advances that may
have been made by any of the Members; and
8.4.4 Members. Any balance then remaining will be distributed to the
Members in accordance with Paragraph 3.4 (entitled "Distributions and
Payments").
8.5 Assets Other Than Cash. Assets of the Company may be distributed in
kind on the basis of the then fair market value of such assets as determined by
agreement of the Members, and if no such agreement of value is reached within 30
days, then such value shall be
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determined by an independent appraiser appointed by the Members (the cost and
expense of said appraisal to be borne by the Company). If agreed to by all the
Members, distributions in-kind will be made to the Members as tenants-in-common.
For purposes of making such distribution only, the unrealized profit or loss on
any such asset (based on its fair market value) shall be first allocated among
the Members and the distribution of the asset shall be treated as a distribution
of cash equal to the fair market value of such asset.
ARTICLE 9
FISCAL MATTERS
9.1 Books and Journals. The Company will maintain full and accurate
books of the Company at the offices of the Company, showing all receipts and
expenditures, assets and liabilities, Profits and Losses, and all other records
necessary for recording the Company's business and affairs or required by the
Act. Each Member and such Member's duly authorized representatives shall, during
normal business hours, have access to and may inspect and copy any of such books
and records. Furthermore, upon the request of any Member, copies of any portion
of such books and records shall be delivered to such Member at such Member's
sole cost and expense.
9.2 Accountants. The accountants shall be such firm of certified public
accountants as may be selected by the Manager.
9.3 Reports to Members. Within 90 days after the end of each fiscal
year, each Member shall be furnished a copy of the foreign, federal and state
income tax information returns of the Company for the preceding fiscal year
showing each Member's distributive share of each item of income, gain, loss,
deduction, credit or preference which a Member is required to take into account
separately on such Member's foreign, federal and state income tax returns.
9.4 Bank Accounts. All funds of the Company will be deposited in its
name and in such bank accounts as the Manager shall reasonably determine.
9.5 Accounting Decisions. All decisions as to accounting matters, except
as specifically provided to the contrary in this Agreement, will be made by the
Company's accountants subject to the approval of the Manager.
9.6 Federal Income Tax Elections. The Manager shall cause the Company to
make an election (or consent to any such election by a Member) pursuant to any
of IRC Sections 732(d) and/or 754 (or corresponding provisions of succeeding law
or state law), as may be determined by the Manager in the Manager's sole,
absolute and arbitrary discretion, except to the extent otherwise directed by
this Agreement.
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ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Notices. Any notice required under this Agreement shall be given in
writing (at the addresses set forth on the signature page for Members and at
Company's registered office for the Company) by any of the following means: (i)
personal service; (ii) electronic communicating by telegram, telecopying or fax
transmission; (iii) overnight courier; or (iv) registered or certified, first
class mail, postage prepaid with return receipt requested. Such addresses may be
changed by notice to the other parties given in the same manner as above
provided. Any notice sent pursuant to either (i) or (ii), above, shall be deemed
received upon such personal service or upon confirmation of receipt by
electronic means (unless confirmation occurs after 4:00 P.M. on the day sent or
the day sent is not a business day, in either of which events confirmation shall
be deemed to occur on the next following business day). Any notice sent pursuant
to (iii), above, shall be deemed received on the next business day following
deposit with the overnight courier, and any notice sent pursuant to (iv), above,
shall be deemed received two (2) business days following deposit in the mail.
10.2 Limited Power of Attorney. Each Member, by such Member's execution
of this Agreement, irrevocably constitutes and appoints the Manager as such
Member's true and lawful attorney and agent, with full power and authority in
such Member's name, place and stead only to execute, acknowledge and deliver and
to file or record in any appropriate public office: (i) any certificate or other
instrument which may be necessary, desirable or appropriate to qualify or to
continue the Company as a limited liability company or to transact business as a
limited liability company in any jurisdiction in which the Company conducts
business; (ii) any amendment to this Agreement or to any certificate or other
instrument which may be necessary, desirable or appropriate to reflect an
Admission, Transfer, withdrawal or any additional capital contributions, all in
accordance with the provisions of this Agreement; and (iii) any certificates or
instruments which may be appropriate, necessary or desirable to reflect the
dissolution and termination of the Company. This power of attorney will be
deemed to be coupled with an interest and will survive the transfer by any
Member of such Member's Membership Interest. Notwithstanding the existence of
this power of attorney, each Member agrees to join in the execution,
acknowledgment and delivery of the instruments referred to above if requested to
do so by the Members. This power of attorney granted to the Manager is a limited
power of attorney that does not authorize the Manager to act on behalf of any
Member except to execute the documents described in this Paragraph 11.2.
10.3 Integration. This Agreement sets forth the entire agreement between
the parties with regard to the subject matter of this Agreement. All agreements,
covenants, representations and warranties, express and implied, oral and
written, of the parties with regard to the subject matter of this Agreement are
contained in this Agreement and the documents referred to in this Agreement or
implementing the provisions of this Agreement. No other agreements,
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covenants, representations or warranties, express or implied, oral or written,
have been made by any Member to the other with respect to the subject matter of
this Agreement. All prior and contemporaneous conversations, negotiations,
possible and alleged agreements and representations, covenants, and warranties
with respect to the subject matter of this Agreement are waived, merged in this
Agreement and/or the other referenced documents and superseded by this
Agreement. This is an integrated agreement.
10.4 Applicable Law. This Agreement shall be governed by, construed and
enforced in accordance with the internal laws of the State of Delaware.
10.5 Counterparts. This Agreement may be executed in counterparts and
all counterparts so executed shall constitute one Agreement binding on all the
parties. It shall not be necessary for each Member to execute the same
counterpart.
10.6 Severability. In case any one or more of the provisions contained
in this Agreement or any application of the provisions shall be invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions or the remaining applications will not in any way be
affected or impaired.
10.7 Captions. The captions and headings in this Agreement are for
convenience only and will not be considered in interpreting any provision of
this Agreement.
10.8 Binding Effect. Except as otherwise provided to the contrary, this
Agreement will be binding upon, and inure to the benefit of, the Members and
their respective heirs, executors, administrators, successors and assigns.
10.9 Gender and Number. Whenever required by the context, the singular
will be deemed to include the plural, and the plural will be deemed to include
the singular, and the masculine, feminine and neuter genders will each be deemed
to include the other.
10.10 Amendment. Except as otherwise permitted in this Agreement, this
Agreement may be amended in whole or in part only by an agreement in writing
signed by all of the Members.
10.11 Exhibits. All attached Exhibits are incorporated in this Agreement
by reference as though fully set forth in this Agreement.
10.12 Interpretation. No provision of this Agreement is to be
interpreted for or against any Member because that Member or that Member's legal
representative drafted such provision. The term "including" shall not be
limiting and shall mean "including but not limited to."
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10.13 Company Tax Audits. The Manager is designated as the Company's
"Tax Matters Partner" ("TMP") in accordance with the provisions of IRC Section
6231(a)(7).
10.14 Waiver of Action for Partition. Each Member irrevocably waives any
right that such Member may have to maintain any action for partition of the
Company or any of its property during the term of the Company. Each Member
hereby acknowledges having been previously advised as to his or her partition
rights and further acknowledges entering into this Agreement in reliance on the
waiver of these rights by each other Member.
10.15 Rights and Remedies Cumulative. The rights and remedies provided
by this Agreement are cumulative and the use of any one right or remedy by any
Member shall not preclude or waive the right to use any or all other remedies.
All rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.
10.16 Creditors. None of the provisions of this Agreement shall be for
the benefit of or enforceable by any creditors of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ADDRESS MANAGER
0000 Xxxxx Xxxx Xxxx XXXXX MEDIA CORPORATION,
Suite 300 a New York corporation
Xxxxxxxxx, XX 00000
By: /s/ Xxxxxxxx X. Block
---------------------------------
Xxxxxxxx X. Block,
Vice President
[signatures continued on the following page]
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[signatures continued from previous page]
MEMBERS
0000 Xxxxx Xxxx Xxxx XXXXX RADIO OPERATIONS, LLC, a
Suite 300 Delaware limited liability company
Xxxxxxxxx, XX 00000
By: /s/ Xxxxxxxx X. Block
---------------------------------
Xxxxxxxx X. Block,
Vice President
0000 Xxxxx Xxxx Xxxx XXXXX MEDIA CORPORATION,
Suite 300 a New York corporation
Xxxxxxxxx, XX 00000
By: /s/ Xxxxxxxx X. Block
---------------------------------
Xxxxxxxx X. Block,
Vice President
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EXHIBIT "A"
ALLOCATION PROVISIONS
1. Capital Accounts and Definitions.
1.1 Capital Account. A Capital Account shall be maintained for each
Member in accordance with Regulations Section 1.704-1(b)(2)(iv). If the Manager
determines that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits to the Capital Accounts (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Company or a
Member), are computed in order to comply with such Regulations, the Manager may
make such modification, provided that the modification is not likely to have a
material affect on the amounts distributable to any Member pursuant to Article 9
of this Agreement upon the dissolution of the Company. The Manager also shall
make any appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b)(2)(iv).
1.2 Definitions. For purposes of this Agreement, the following
capitalized terms are defined as follows:
1.2.1 Depreciation. "Depreciation" means, for each Accounting
Period (as defined below) of the Company, an amount equal to the depreciation,
amortization or other cost recovery deduction allowable with respect to an asset
for such Accounting Period, except that if the "Gross Asset Value" (defined
below) of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such Accounting Period, Depreciation shall, in
accordance with Regulations Section 1.704-1(b)(2)(iv)(g)(3), be an amount which
bears the same ratio to such beginning Gross Asset Value as the federal income
tax depreciation, amortization or other cost recovery deduction for such year
bears to such beginning adjusted tax basis; provided, however, that if such
asset has a zero adjusted tax basis, Depreciation shall be determined using any
reasonable method selected by the Members.
1.2.2 Gross Asset Value. "Gross Asset Value" means, with
respect to any asset, the asset's adjusted basis for federal income tax
purposes, except as follows:
1.2.2.1 Initial Value. The initial Gross Asset Value of
any asset contributed by a Member to the Company shall be the gross fair market
value of such asset at the time of contribution, as mutually agreed by the
contributing Member and the Manager.
1.2.2.2 Adjustments. The Gross Asset Values of all
Company assets shall be adjusted to equal their respective gross fair market
values, as determined by the Manager, as of the following times: (i) the
acquisition of an additional interest in the Company
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by any new or existing Member in exchange for more than a de minimis capital
contribution; (ii) the distribution by the Company to a Member of more than a de
minimis amount of Company property as consideration for an interest in the
Company; and (iii) the liquidation of the Company within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, that adjustments
pursuant to clauses (i) and (ii) above shall be made only if the Manager
reasonably determines that such adjustments are necessary or appropriate to
reflect the relative economic interests of the Members in the Company;
1.2.2.3 Distributions. The Gross Asset Value of any
Company asset distributed to any Member shall be the gross fair market value of
such asset on the date of distribution; and
1.2.2.4 Special Adjustments. The Gross Asset Values of
Company assets shall be increased (or decreased) to reflect any adjustments to
the adjusted basis of such assets pursuant to IRC Section 734(b) or IRC Section
743(b), but only to the extent that such adjustments are required to be taken
into account in determining Capital Accounts pursuant to Regulations Section
1.704-1(b)(2)(iv)(m) and subparagraph 2.4 of this Exhibit "A"; provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subparagraph 1.2.2.4 to the extent the Manager determines that an adjustment
pursuant to subparagraph 1.2.2.2 of this Exhibit "A" is necessary or appropriate
in connection with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph 1.2.2.4. If the Gross Asset Value of an asset has
been determined or adjusted pursuant to subparagraphs 1.2.2.1 or 1.2.2.2 of this
Exhibit "A" or this subparagraph 1.2.2.4, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing "Profits" and "Losses" (as defined below).
1.2.2.5 Manager's Determination. Except as otherwise
provided in subparagraph 1.2.2.1 of this Exhibit "A", for purposes of
determining the Gross Asset Value of any Company asset, the reasonable
determination of the Manager shall control.
1.2.3 Profits and Losses. "Profits" and "Losses" means, for
each Accounting Period of the Company, an amount equal to the Company's taxable
income or loss for such year, determined in accordance with IRC Section 703(a)
(for this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to IRC Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
1.2.3.1 Income. Any income of the Company that is exempt
from federal income tax and not otherwise taken into account in computing
Profits or Losses pursuant to this subparagraph 1.2.3 shall be added to such
taxable income or loss;
1.2.3.2 Special Expenditures. Any expenditures of the
Company described in IRC Section 705(a)(2)(B) or treated as IRC Section
705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i)
and not otherwise taken into account in computing Profits or
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Losses pursuant to this subparagraph 1.2.3 shall be subtracted from such taxable
income or loss;
1.2.3.3 Disposition. If the Gross Asset Value of any
Company asset is adjusted pursuant to subparagraph 1.2.2.2 or subparagraph
1.2.2.3 of this Exhibit "A", the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset;
1.2.3.4 Gross Asset Value Adjustment. Gain or loss
resulting from any disposition of Company 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;
1.2.3.5 Special Depreciation. 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 Accounting Period, computed in accordance with
subparagraph 1.2.1 of this Exhibit "A"; and
1.2.3.6 Special Allocations. Notwithstanding any other
provision of this Paragraph 1, any items which are specially allocated pursuant
to Paragraphs 2 or 3 of this Exhibit "A" shall not be taken into account in
computing Profits or Losses.
1.2.4 Adjusted Capital Account Deficit. For purposes of this
Agreement, "Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant Accounting Period after giving effect to the following adjustments:
1.2.4.1 Restoration Amounts. Credit to such Capital
Account any amounts which such Member is obligated to restore pursuant to any
provision of the Agreement or is deemed to be obligated to restore pursuant to
the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
1.2.4.2 Special Debits. Debit to such Capital Account
the items described in Regulations Sections 1.704-1(b)(2)(ii)(d) (4),
1.704-1(b)(2)(ii)(d)(5) and/or 1.704-1(b)(2)(ii)(d)(6).
The 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.
2. Special Allocations: The following special allocations shall be made
in the following order:
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2.1 Minimum Gain Chargeback. Each Member shall be specially
allocated items of Company income and gain to the extent necessary to comply
with the "minimum gain chargeback" requirements in Regulations Sections
1.704-2(f), (i)(4).
2.2 Qualified Income Offset. Each Member shall be specially
allocated items of Company income and gain to the extent necessary to comply
with the "qualified income offset" requirements in Regulations Section
1.704-1(b)(2)(d).
2.3 Recourse and Nonrecourse Debt. Each Member shall be specially
allocated items of Company loss, deduction and IRC Section 705(a)(2)(B)
expenditure to the extent necessary to comply with the allocation requirements
for "partner nonrecourse deductions" and "nonrecourse deductions" in Regulations
Sections 1.704-2(i), (c).
2.4 Special Tax Basis Adjustments. To the extent that Regulations
Section 1.704-1(b)(2)(iv)(m) requires an adjustment to the adjusted tax basis of
any Company property under IRC Sections 734(b) or 743(b) to be taken into
account in determining Capital Accounts, 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 a
manner consistent with the manner in which their Capital Accounts are required
to be adjusted pursuant to such section of the Regulations.
2.5 Adjusted Capital Account Deficits. The Losses allocated pursuant
to Paragraph 3.3 of this Agreement shall not exceed the maximum amount of Losses
that can be so allocated without causing any Member to have an Adjusted Capital
Account Deficit at the end of any Accounting Period. In the event that some but
not all of the Members would have Adjusted Capital Account Deficits as a
consequence of an allocation of Losses under Paragraph 3.2 of this Agreement,
the limitation set forth in this Paragraph 2.5 shall be applied on a Member by
Member basis so as to allocate the maximum permissible loss to each Member under
Regulations Section 1.704-1(b)(2)(ii)(d).
3. Other Allocation Rules:
3.1 Method of Allocation. For any Company Accounting Period, all
items of Company income, gain, loss, deduction and any other items not otherwise
allocated pursuant to this Agreement shall be divided among the Members in the
same proportions as they share Profits or Losses, as the case may be, for such
Company Accounting Period.
3.2 Acknowledgment by Members. The Members are aware of the income
tax consequences of the allocations made by Article 3 of this Agreement and this
Exhibit "A" and agree to be bound by the provisions of Article 3 of this
Agreement and this Exhibit "A" in reporting their shares of Company income and
loss for income tax purposes.
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3.3 Contributed Property. In accordance with IRC Section 704(c) and
the Regulations, income, gain, loss, and deduction with respect to any property
contributed to the capital of the Company 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 Company for federal income tax purposes
and its initial Gross Asset Value (computed in accordance with subparagraph
1.2.2.1 of this Exhibit "A").
3.4 Tax Purposes. In the event the Gross Asset Value of any Company
asset is adjusted pursuant to subparagraph 1.2.2.2 of this Exhibit "A",
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 IRC Section 704(c) and the Regulations thereunder. Any elections
or other decisions relating to such allocations shall be made by the Manager in
a manner that reasonably reflects the purpose and intention of the Agreement.
Allocations pursuant to this Paragraph 3 are solely for purposes of federal and
state income taxes and shall not, except to the extent required pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(m), affect, or in any way be
taken into account in computing, any Member's Capital Account or share of
Profits, Losses, other items or distributions pursuant to any provision of this
Agreement.
3.5 Liquidation of Member's Interest. Upon liquidation of any
Member's interest in the Company, the liquidating distributions shall be made in
accordance with the positive Capital Account balances of the Members adjusted as
otherwise required by the provisions of this Agreement. A liquidation of a
Member's interest shall occur as required pursuant to Regulations Section
1.704-1(b)(2)(ii)(g).
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