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EXHIBIT 10.75
THE SECURITIES HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD UNLESS REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO EXEMPTION FROM REGISTRATION
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
FALSE RIVER, LLC.
a limited liability company
organized under the Georgia Limited Liability Company Act
THIS AMENDED AND RESTATED OPERATING AGREEMENT is made and entered into
as of the ____day of April 1998 by and among the undersigned parties to amend,
restate and supersede in its entirety the original Operating Agreement of False
River, LLC, dated March 17, 1998, by and among American Artists Film
Corporation, Xxxxxx X. Xxxxx and J. Xxxx Xxx Xxxx. Unless otherwise indicated by
the context, as used herein the term "Members" refers to those of the
undersigned parties at this date who are identified as initial Members in
Exhibit A hereto and to other persons who hereafter became parties hereto in
accordance with the terms hereof.
R E C I T A L S:
1. FALSE RIVER, LLC (the "Company"), was formed as a Georgia
limited liability company on March 17, 1998, by execution and delivery of
Articles of Organization to the Secretary of State of Georgia in accordance with
the provisions of the Georgia Limited Liability Company Act, as amended (the
"Act").
2. The business purpose of the Company is to produce and exploit
a feature motion picture tentatively entitled FALSE RIVER (the "Film").
3. The Members desire to organize the Company with themselves as
its members and to set out the terms of their agreement with respect to the
Company, its operations, and their own respective rights and interests therein.
AGREEMENT:
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In consideration of the Recitals, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
OFFICES; SEAL
1.1 Registered Office, Agent. The Company shall at all times
maintain a registered office in the State of Georgia and a registered agent at
that address but may have other offices located within or without the State of
Georgia.
1.2 Principal Office. The Company shall maintain its principal
office within the State of Georgia unless otherwise determined by the Board of
Managers.
1.3 Seal. The seal of the Company shall be in such form as the
Board of Managers may from time to time determine. If it is inconvenient to use
such a seal at any time, the signature of the Company followed by the word
"Seal" enclosed in parentheses or scroll shall be deemed the seal of the
Company.
ARTICLE II
LLC SHARES AND INTERESTS
2.1 LLC Shares. The ownership of the Company shall be divided
initially into 100,000 equal shares ("Limited Liability Company Shares" or "LLC
Shares"); provided, however, that the said number of LLC Shares may be increased
or reduced by the Board of Managers from time to time as hereinafter provided.
2.2 Initial Members. The names, addresses and federal tax
identification numbers of the initial Members are set out in Exhibit A hereto.
Each of the initial Members shall make an initial capital contribution to the
Company in cash or in kind in the amount specified in Exhibit A and receive in
consideration thereof the number and type of LLC Shares specified therein. The
capital contributions of the initial Members shall be made from time to time
upon call by the Company, but in any event not later than July 31, 1998. Exhibit
A is incorporated herein by reference and made a part of this Agreement.
2.3 Additional LLC Shares. (a) The Company by action of the Board
of Managers may from time to time increase the number of LLC Shares of the
Company by selling additional LLC Shares for fair value in cash or in kind to
one or more persons who are already Members or to other persons who are not
already Members; provided, however, that the Company may not sell LLC Shares to
any person unless the person at such time (i) agrees in writing to become a
party to, and to be bound as a Member by the terms and conditions of, this
Agreement, and (ii) pays in full the agreed consideration for the LLC Shares.
Upon receipt by the Company of the agreed original capital contribution of a
Member in respect of an LLC Share, the LLC Share and
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the resulting Interest of the Member shall be fully paid and non-assessable. No
Member shall have any preemptive rights with respect to the purchase of any such
additional LLC Shares.
(b) In connection with the sale of additional LLC Shares the Board
of Managers may, if it deems such action to be necessary and appropriate, at the
time of the sale thereof designate certain LLC Shares as Preferred Distribution
LLC Shares. Preferred Distribution LLC Shares shall be entitled to Preferred
Distributions in accordance with Section 8.1 of this Agreement.
2.4 Reduction of Shares. Except as prohibited by the Act, the
Company by action of the Board of Managers may from time to time agree to
repurchase the LLC Shares of a Member for fair value.
2.5 Options. The Company may also by action of the Board of
Managers grant options to such Members or non-Members as it may deem appropriate
for purchase of LLC Shares upon such terms and conditions and at such option
purchase price (not less than fair value of the LLC Shares on the date of grant)
as the Board of Managers may deem appropriate; provided, however, that upon
exercise of any such option the exercising person must satisfy the requirements
of clauses (i) and (ii) in Section 2.3(a) above.
2.6 Interests of Members. The limited liability company interest
(the "Interest") of each Member at any time shall be the percentage that the
number of LLC Shares owned by such Member constitutes of the aggregate number of
LLC Shares at such time.
2.7 LLC Share Certificates; Register. The Company shall issue
certificates to the Members evidencing their respective ownership of LLC Shares.
The certificates shall be signed by the President and Secretary and the seal of
the Company shall be affixed thereto. The name, address and federal tax
identification number of the Member owning the LLC Shares, the number of LLC
Shares, and the date acquired shall be entered in a register maintained by the
Secretary. LLC Share certificates exchanged or returned shall be canceled and
retained by the Secretary.
2.8 Voting. The holders of the shares of LLC Shares shall be
entitled to one vote for each LLC Share owned of record.
ARTICLE III
MEMBERS MEETINGS
3.1 Annual Meeting. A meeting of Members shall be held annually.
The annual meeting shall be held at such time and place and on such date as the
Board of Managers shall determine from time to time and as shall be specified in
the notice of the meeting.
3.2 Special Meetings. Special meetings of the Members may be
called at any time by the Board of Managers, the President or Members owning at
least 50% of the LLC Shares.
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Special meetings shall be held at such time and place and on such date as shall
be specified in the notice of the meeting.
3.3 Place. Annual or special meetings of Members may be held
within or without the State of Georgia.
3.4 Notice. Notice of annual or special Members meetings stating
the place, day and hour of the meeting shall be given in writing not less than
10 nor more than 60 days before the date of the meeting, either mailed to the
last known address of or personally given to each Member. Notice of any special
meeting of Members shall state the purpose or purposes for which the meeting is
called. Notice of any meeting at which amendments to the Operating Agreement,
merger of the Company, or the disposition of all or substantially all of the
assets of the Company are to be considered shall state such purpose. Notice of a
meeting may be waived by an instrument in writing executed before or after the
meeting. The waiver need not specify the purpose of the meeting or the business
transacted. Attendance at a meeting in person or by proxy shall constitute a
waiver of notice thereof unless the Member shall provide written notice to the
Company prior to the taking of any action by the Members at the meeting that the
Member's attendance is not to be deemed a waiver of the requirement that notice
be given or of the adequacy of any notice that may have been given to the
Members.
3.5 Quorum; Vote Required. At all meetings of Members the Members
holding a majority of the outstanding LLC Shares, whether present in person or
by proxy, shall constitute a quorum for the transaction of business. Action by
the Members on all matters shall require the affirmative vote of Members holding
a majority of the LLC Shares represented at a meeting at which a quorum is
present, except that the affirmative vote of Members holding 80% of all of the
LLC Shares outstanding shall be required (i) to approve the Company's engaging
in any business not reasonably related to the business purpose of the Company,
or (ii) to approve the Company's guaranty or collateralization of the debt of
any person other than a wholly-owned subsidiary of the Company. A lesser number
may adjourn a meeting from day to day, and shall announce the time and place to
which the meeting is adjourned.
3.6 Action in Lieu of Meeting. Any action that may be taken at a
meeting of the Members may be taken without a meeting if a consent in writing
setting forth the action so taken shall be signed by Members holding a majority
of the outstanding LLC Shares or such greater number as would be required if the
action were taken at a meeting of the Members.
ARTICLE IV
BOARD OF MANAGERS
4.1 Management. Subject to the terms of this Agreement, or any
other lawful agreement among the Members, the full and entire management of the
affairs and business of the Company shall be vested in the Board of Managers,
which shall have and may exercise all of the powers that may be exercised or
performed by the Company.
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4.2 Number of Managers. The Members shall fix by resolution the
precise number of members of the Board of Managers. Managers shall be elected by
and serve at the pleasure of the Members. Membership on the Board of Managers is
not limited to Members. A majority of the Managers shall constitute a quorum for
the transaction of business. The Board of Managers shall act by the affirmative
vote of a majority of the Managers.
4.3 Meetings. The Managers shall meet annually, without notice,
following the annual meeting of the Members. Special meetings of the Managers
may be called at any time by the President or by a majority of the Managers, on
two days' written notice to each Manager, which notice shall specify the date,
time, and place of the meeting. Notice of a meeting may be waived by an
instrument in writing executed before or after the meeting. Managers may attend
and participate in meetings either in person or by means of communications
equipment by which all persons participating in the meeting can hear each other.
Attendance at a meeting shall constitute a waiver of notice thereof.
4.4 Action in Lieu of Meeting. Any action that may be taken at a
meeting of the Managers may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the Managers.
ARTICLE V
OFFICERS
5.1 General Provisions. The officers of the Company shall consist
of a President and a Secretary who shall be elected by the Board of Managers,
and such other officers, including a General Manager, as may be elected by the
Board of Managers or appointed as provided in this Agreement. Each officer shall
be elected or appointed to serve at the pleasure of the Board of Managers. Any
two or more offices may be held by the same person.
5.2 President. The President shall be the chief executive officer
of the Company and shall have general and active management of the operations of
the Company, subject to the directions and authority of the Board of Managers.
The President shall be responsible for the administration of the Company,
including general supervision of the policies of the Company and management of
its financial affairs, and shall execute bonds, mortgages or other contracts in
the name and on behalf of the Company within the general powers of the office
and otherwise in accordance with the direction and authority of the Board of
Managers.
5.3 Secretary. The Secretary shall keep minutes of all meetings of
the Members and Managers and have charge of the minute books and seal of the
Company and shall perform such other duties and have such other powers as may
from time to time be delegated to him or her by the President or the Board of
Managers.
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5.4 Assistant Officers. Assistants to the Secretary may be
appointed by the President or by the Board of Managers and shall have such
duties as shall be delegated to them by the President or the Board of Managers.
5.5 Vice Presidents. The Company may have one or more Vice
Presidents, elected by the Board of Managers, who shall perform such duties as
may be delegated by the President or the Board of Managers.
ARTICLE VI
CAPITAL ACCOUNTS
6.1 Capital Accounts. "Capital Account" means an account that
shall be maintained in respect of each Member and which, as of any given date,
shall be equal to the sum of the following:
(i) The aggregate amount of cash that has been
contributed to the capital of the Company as of such date by or on
behalf of such Member in payment for its LLC Shares or otherwise; plus
(ii) The value of any property other than cash that has
been contributed to the capital of the Company as of such date by such
Member in payment for its LLC Shares or otherwise, and the amount of
liabilities assumed by any such Member under Regulation Section 1.752
or which are secured by any Company property distributed to such
Member; plus
(iii) The aggregate amount of the Company's Net Profit that
has been allocated to such Member as of such date pursuant to the
provisions of Article VII or any items of income or gain which are
specifically allocated to such Member or other positive adjustments
required by the Regulations and which have not been previously taken
into account in calculating Capital Accounts; minus
(iv) The aggregate amount of the Company's Net Loss that
has been allocated to such Member as of such date pursuant to Article
VII and the amount of any item of expense deduction or loss which is
specially allocated to such Member; minus
(v) The aggregate amount of cash and the value of all
other property (as of the date of distribution) that has been
distributed to or on behalf of such Member and the amount of any
liabilities of such Member assumed by the Company under Regulations
Section 1.752 or which are secured by any property contributed by such
Member to the Company and other negative adjustments required by the
Regulations; and
(vi) In the case of a Member who has acquired all or any
part of his or her LLC Shares by succession or assignment from another
Member, plus or minus (as the
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case may be) an aliquot portion of the Capital Account balance or
Capital Account Deficit of such predecessor in interest at the date of
such acquisition.
6.2 The provisions of this Article and the other provisions of
this 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.
ARTICLE VII
TAX ALLOCATIONS AND DISTRIBUTIONS
7.1 Tax Allocations of Net Profit and Net Losses.
(a) Except as otherwise provided the Company's Net Losses
for each fiscal year for federal and state income tax purposes shall be
allocated to the Members pro rata in proportion to their respective
Capital Accounts. Except as otherwise provided herein, the Company's
Net Profits for each fiscal year for federal and state income tax
purposes shall be allocated to the Members as follows:
(i) First, to the Members (or their successors
in interest) who have previously been allocated Net Losses,
pro rata in proportion to the Net Losses previously allocated
to each of them, respectively, until the cumulative amount of
Net Profits so allocated equals the cumulative amount of all
previously allocated Net Losses;
(ii) Thereafter, to the Members holding Preferred
Distribution LLC Shares (pro rata in proportion to the capital
contribution originally paid to the Company in respect of
their respective Preferred Distribution LLC Shares), until
each such Member shall have been allocated Net Profits equal
to 150% of the capital contribution originally paid to the
Company in respect of such Member's Preferred Distribution LLC
Shares; and
(iii) Thereafter as follows:
(A) 49% to Members holding Preferred
Distribution LLC Shares, pro rata in proportion to
their respective holdings of such Shares; and
(B) 51% to Members holding other LLC
Shares, pro rata in proportion to their respective
holdings of such other Shares.
(b) Net Losses allocated pursuant to subsection (a)
hereof shall not exceed the maximum amount of Net Losses that can be so
allocated without causing any Member to have an Adjusted Capital
Account Deficit at the end of any fiscal year. In the event some but
not all of the Members would have Adjusted Capital Account Deficits as
a consequence of an allocation of Net Losses pursuant to subsection (a)
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hereof, the limitation set forth in this subsection (b) shall be
applied on a Member-by-Member basis so as to allocate the maximum
permissible Net Losses to each Member under Section
1.704-1(b)(2)(ii)(d) of the Regulations.
(c) To the extent a Member is allocated Net Losses which
otherwise would have been allocated to another Member, or a result of
the application of subsection (b) hereof, then the Member that was
allocated additional Net Losses pursuant to subsection (b) hereof shall
be allocated as quickly as possible additional Net Profit in an amount
equal to such Net Losses.
7.2 Distribution of Assets. If the Company at any time distributes
any of its assets in kind to any Member, the Capital Account of each Member
shall be adjusted to account for that Member's allocable share of the Net
Profits or Net Losses that would have been realized by the Company had it sold
its assets that were distributed at their respective fair market values
immediately prior to their distribution.
7.3 Qualified Income Offset. In the event any Member unexpectedly
receives any adjustments, allocations, or distributions described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Company income and gain shall be specially
allocated to each 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 shall be made only if and only to the extent that such Member would
have an Adjusted Capital Account Deficit after all other allocations provided
for in this Article have been tentatively made as if this Section were not in
this Agreement.
7.4 Gross Income Allocation. In the event any Member has a deficit
Capital Account balance at the end of any fiscal year, each such Member shall be
specially allocated items of Company income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section shall be made if and only to the extent that such Member would have a
deficit Capital Account balance in excess of such sum after all other
allocations provided for in this Article have been tentatively made as if the
immediately preceding Section and this Section were not in this Agreement.
7.5 Section 704(c) Allocation.
(a) Notwithstanding any other provision of this Agreement
to the contrary, any gain or loss and any depreciation or other cost
recovery deductions recognized by the Company for income tax purposes
in any fiscal year with respect to all or any part of the Company's
property that is required or permitted to be allocated among the
Members in accordance with Section 704(c) of the Code and any
Regulations promulgated thereunder so as to take into account the
variation, if any, between the adjusted tax basis of such property at
the time of its contribution and the fair market value of such property
at the time of its contribution, shall be allocated to the Members for
income tax purposes in the manner so required or permitted.
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(b) Any elections or other decisions relating to such
allocations shall be made by the Board of Managers in any manner that
reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 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 profit, net loss, other items, or distributions pursuant to any
provision of this Agreement.
7.6 Section 754 Election. In connection with any permitted
transfer of an LLC Share in the Company, the Board of Managers shall cause the
Company, at the written request of the transferor, the transferee or any of the
Members, on behalf of the Company and at the time and in the manner provided in
Regulations Section 1.754-1(b), to make an election to adjust the basis of the
Company's property in the manner provided in Sections 734(b) and 743(b) of the
Code, and such transferee shall pay all costs incurred by the Company in
connection therewith, including, without limitation, attorneys' and accountants'
fees that are reasonable in the aggregate.
7.7 Adjusted Capital Account Deficit. As used herein, the term
"Adjusted Capital Account Deficit" means, with respect to any Member, the
Member's Adjusted Capital Account Deficit shall be the deficit balance, if any,
in the Member's Capital Account as of the end of the relevant fiscal year or at
any time, after giving effect to the following adjustments:
(i) Credit to the Member's Capital Account any amount
which the Member is obligated to restore pursuant to any provision of
this Agreement or is deemed obligated to restore pursuant to the
penultimate sentence of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(ii) Debit to the Member's Capital Account the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),
and 1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
7.8 Gross Asset Value. As used herein, the term "Gross Asset
Value" means, with respect to any asset, the asset's adjusted tax basis for
federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset
contributed by a Member to the Company shall be the gross fair market
value of the asset as determined by the contributing Member and the
Company;
(ii) The Gross Asset Values of all Company assets shall be
adjusted to equal their respective gross fair market values, as
determined by the Board of Managers, as of the following times: (A) the
acquisition of an additional LLC Share in the Company by any new or
existing Member in exchange for more than a de minimis capital
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contribution; (B) the distribution by the Company to a Member of more
than a de minimis amount of Company property as consideration for such
Member's LLC Shares in the Company; and (C) 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 (A) and (B)
above shall be made only if the Board of Managers reasonably determines
that such adjustments are necessary or appropriate to reflect the
relative economic interests of the Members in the Company;
(iii) The Gross Asset Value of any Company asset
distributed to any Member shall be the gross fair market value of the
asset on the date of distribution;
(iv) 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 Code Section 734(b) or Code 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) hereof; provided, however, that Gross Asset Values
shall not be adjusted pursuant to this paragraph to the extent the
Board of Managers determines that an adjustment pursuant to paragraph
(ii) above is necessary or appropriate in connection with a transaction
that would otherwise result in an adjustment pursuant to this
paragraph; and
(v) If the Gross Asset Value of an asset has been
determined or adjusted pursuant to paragraphs (i), (ii) or (iii) above,
the Gross Asset Value shall hereafter be adjusted by the depreciation
taken into account with respect to the asset for purposes of computing
Net Profits and Net Losses.
7.9 Net Profits and Net Losses. As used herein, the terms "Net
Profits" and Net Losses" mean for each fiscal year or other period an amount
equal to the Company's taxable income or loss for such fiscal year or period,
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:
(i) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Net
Profits or Net Losses pursuant to this Section shall be added to such
taxable income or loss;
(ii) Any expenditures of the Company described in Code
Section 705(a)(2)(B) or treated as Code 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 Net Profits or Net Losses
pursuant to this Section shall be subtracted from such taxable income
or loss;
(iii) In the event the Gross Asset Value of any Company
asset is adjusted pursuant to paragraphs (ii) or (iii) above, the
amount of such adjustment shall be taken
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into account as gain or loss from the disposition of such asset for
purposes of computing Net Profits or Net Losses;
(iv) 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;
(v) Notwithstanding any other provision of this Section,
any items which are specially allocated pursuant to Sections 7.3, 7.4
or 7.5 hereof shall not be taken into account in computing Net Profits
and Net Losses; and
(vi) The amounts of the items of Company income, gain,
loss or deduction to be specially allocated pursuant to Sections 7.3,
7.4 or 7.5 hereof shall be determined by applying rules analogous to
those set forth in paragraphs (i) through (iv) above.
7.10 Special Allocations. (a) Notwithstanding anything to the
contrary in this Article:
(i) All Nonrecourse Deductions for each Fiscal Year shall
be allocated to the Members in accordance with their relative
Interests.
(ii) All Member Nonrecourse Deductions for each Fiscal
Year shall be allocated to the Members who bear the economic risk of
loss with respect to the Member Nonrecourse Debt giving rise to such
deductions, in accordance with Regulation ss.1.704-2(i)(1).
(iii) If there is a net decrease in Minimum Gain during a
Fiscal Year, then before any other allocation is made for such Fiscal
Year , the Members shall be allocated items of income and gain for such
Fiscal Year (and, if necessary, subsequent Fiscal Years) in the amount
and in the proportions necessary to satisfy the requirements of a
"minimum gain chargeback" under Regulation ss.1.704-2(f).
(iv) If there is a net decrease in Member Minimum Gain
during a Fiscal Year, then before any other allocation is made for such
Fiscal year, the Members shall be allocated items of income and gain
for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in
the amount and in the proportions necessary to satisfy the requirements
of a "partner nonrecourse debt minimum gain chargeback" under
Regulation ss.1.704-2(i)(4).
(v) The allocations set forth in subsections (i) through
(iv) above (the "Regulatory Allocations") are intended to comply with
certain requirements of Treasury Regulation xx.xx. 1.704-1(b) and
1.704-2. Notwithstanding any other provision of this Section (other
than the Regulatory Allocations), the Regulatory
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Allocations shall be taken into account in allocating other items of
income, gain, loss and deduction among the Members so that, to the
extent possible, the net amount of such allocation of other items and
the Regulatory Allocations to each Member shall be equal to the net
amount that would have been allocated to each such Member if the
Regulatory Allocations had not occurred. (b) As used in subsection (a)
above, the following terms have the following meanings:
(i) Member Minimum Gain means an amount determined by
computing, with respect to each Member Nonrecourse Debt, the Minimum
Gain that would result if such Member Nonrecourse Debt were treated as
a nonrecourse liability, determined in accordance with Regulation ss.
1.704-2(i)(3).
(ii) Member Nonrecourse Debt means nonrecourse Company
debt for which one or more Members bears an economic risk of loss,
determined in accordance with Regulation ss. 1.704-2(b)(4).
(iii) Member Nonrecourse Deductions means, for each Fiscal
Year, the Company deductions which are attributable to Member
Nonrecourse Debt and are characterized as "partner nonrecourse
deductions" under Regulation ss. 1.704-2(i)(2).
(iv) Minimum Gain means an amount determined by computing,
with respect to each nonrecourse liability of the Company, the amount
of gain (of whatever character), if any, that would be realized by the
Company if it disposed of (in a taxable transaction) the Company
property subject to such liability for no consideration other than full
satisfaction of such liability, and by then aggregating the amounts so
computed. Such amount shall be determined in a manner consistent with
Regulation ss.1.704-2(d).
ARTICLE VIII
CASH DISTRIBUTIONS
8.1 Cash Flow. Subject to the provisions of Section 8.5, the Company
will distribute all of its Net Cash Flow, as hereinafter defined, as follows:
(i) First, to Members holding Preferred Distribution LLC Shares
until such Members shall have received distributions equal to 150% of the
initial capital contribution made in respect of such Preferred Distribution LLC
shares;
(ii) Second, thereafter to holders of Participations, as
hereinafter defined, until such holders shall have received distributions equal
to the aggregate stated amount of such Participations, the distributions to said
holders to be made pro rata in proportion to their respective Participations;
and
(iii) Third, thereafter as follows:
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(A) 49% to Members holding Preferred Distribution LLC Shares,
pro rata in proportion to their respective holdings of
such Shares; and
(B) 51% to Members holding other LLC Shares, pro rata in
proportion to their respective holdings of such other
Shares.
8.2 Certain Definitions. As used herein, the following terms have
the following meanings:
(i) "Net Cash Flow" means all revenues of the Company
from exploitation of the Film or any other source, net after providing
for payment of all expenses and for satisfaction of all loans incurred
to produce and exploit the Film, other than Participations.
(ii) "Participations" means any so-called "points" or
other deferred compensation that the Company may agree to pay to
production personnel or participants in connection with production of
the Film; provided, however, that Participations shall be subject to
prior written approval by Members holding a majority of any Preferred
Distribution LLC Shares, which approval shall not be unreasonably
withheld.
8.3 Time of Distribution. Distribution to Members shall be made
quarterly and at such other intervals as the Board of Managers in its sole
discretion deems advisable.
8.4 Limitations on Distributions. No distribution shall be made to
Members if prohibited by Section 00-00-000 of the Act.
8.5 Board of Managers Determination. Notwithstanding any other
provision hereof, the distribution of Cash Flow shall be subject to
determination of the Board of Managers, in the exercise of its discretion, that
the financial condition and financing agreements and commitments of the Company
permit such distribution by the Company. In making such determination, the Board
of Managers may provide for retention of a reasonable cash reserve (taking into
account the anticipated future availability of other assets or revenue of the
Company) in an amount that it deems necessary for completing production and
exploitation of the Film and satisfying the obligations of the Company.
ARTICLE IX
PROTECTIONS AND POWERS
9.1 The Members do not intend to be liable for any debt,
obligation or liability of the Company or for any act or omission of its
Managers or agents, however arising.
9.3 The Company shall indemnify the Members, members of the Board
of Managers and officers of the Company to the maximum extent authorized by the
Act.
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9.3 No Member, acting solely in his or her capacity as a Member,
is an agent of the Company.
ARTICLE X
DISSOCIATION OF A MEMBER
10.1 Dissociation. Except as otherwise provided in this article, a
Member shall cease to be a Member as of the date of the occurrence of any of the
events under Section 14-11-601(a) of the Act.
10.2 No Dissociation. Notwithstanding the Act and Section 10.1
above, a Member shall not cease to be a Member upon the occurrence of any of the
events under Sections 14-11-601(a)(1), 14-11-601(a)(5), 14-11-601(a)(6),
14-11-601(a)(7) or 14-11-601(c) of the Act.
10.3 Death or Dissolution, etc. In the event of the death or
dissolution of a Member, or the occurrence of any of the events of Sections
14-11-601(a)(5), (6) or (7), the Member's successor-in-interest shall, except as
may be otherwise provided by law, be deemed to be an assignee of the Member's
LLC Shares and Interest but not a Member.
10.4 No Withdrawal. No Members may by voluntary act withdraw from
the Company.
10.5 Transfer; Repurchase. A Member shall cease to be a Member of
the Company upon transfer in compliance with this Agreement of all of his or her
LLC Shares or upon repurchase thereof by the Company.
ARTICLE XI
DISSOLUTION AND WINDING UP
11.1 Dissolution. The Company shall be dissolved upon the
occurrence of any of the following events ("Dissolution Event"):
(i) The expiration of the period fixed for the duration
of the Company as set out in the Articles of Organization of the
Company, namely, December 31, 2025;
(ii) The Members agree by majority vote of the LLC Shares
to dissolve the Company; or
(iii) The Board of Managers determines that dissolution of
the Company is appropriate and so notifies the Members.
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11.2 Effect of Dissolution. Upon dissolution, the Company shall
cease to carry on its business, except as permitted by Section 00-00-000 of the
Act. Upon dissolution the Company shall file a statement of commencement of
winding up pursuant to Section 00-00-000 of the Act and publish the notice
permitted by Section 00-00-000 of the Act.
11.3 Winding Up, Liquidation and Distribution of Assets.
(a) Upon dissolution, an accounting shall be made by the
Company's independent accountants of the accounts of the Company and of
the Company's assets, liabilities and operations, from the date of the
last previous accounting until the date of dissolution. The Board of
Managers shall immediately proceed to wind up the affairs of the
Company.
(b) If the Company is dissolved and its affairs are to be
wound up, the Board of Managers shall, subject to the availability of
assets of the Company for such purposes:
(i) Sell or otherwise liquidate all of the
Company's assets as promptly as practicable (except to the
extent the Board of Managers may determine to distribute any
assets to the Members in kind);
(ii) Allocate any profit or loss resulting from
such sales to the Members in accordance with Article VII;
(iii) Discharge all liabilities of the Company,
other than liabilities to Members, and establish such reserves
as may be reasonably necessary to provide for contingent
liabilities of the Company;
(iv) Discharge liabilities of the Company to
Members; and
(v) Make distributions to the Members in
accordance with Section 8.2 of this Agreement. Any such
distributions to the Members in respect of their Interests
shall be made in accordance with the time requirements set
forth in Section 1.704-1(b)(2)(ii)(b)(2) of the Regulations.
(c) Notwithstanding anything to the contrary in this
Agreement, upon a liquidation within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Regulations, if any Member has an Adjusted
Capital Account Deficit (after giving effect to all contributions,
distributions, allocations and other Capital Account adjustments for
all taxable years, including the year during which such liquidation
occurs), such Member shall have no obligation to make any Capital
Contribution, and the negative balance of such Member's Capital Account
shall not be considered a debt owed by such Member to the Company or to
any other person for any purpose whatsoever.
(d) Upon completion of the winding up, liquidation and
distribution of the assets, the Company shall be deemed terminated.
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(e) The Board of Managers shall comply with any
applicable requirements of applicable law pertaining to the winding up
of the affairs of the Company and the final distribution of its assets.
11.4 Certificate of Termination. When all debts, liabilities and
obligations have been paid and discharged or adequate provisions have been made
therefor and all of the remaining property and assets have been distributed to
the Members, a Certificate of Termination shall be executed and filed with the
Secretary of State of Georgia in accordance with Section 00-00-000 of the Act.
ARTICLE XII
DISPOSITION OF LLC SHARES
12.1 Disposition. No Member shall have the right to assign,
transfer, sell, or convey its LLC Shares in the Company or any of its rights and
obligations as a Member, without the written consent of the Board of Managers.
12.2 Securities Law Compliance. No Member shall sell, pledge or
otherwise dispose of or transfer any LLC Share unless registered under the
Securities Act of 1933, as amended, and applicable state securities laws, or an
opinion is given by counsel satisfactory to the Company that such registration
is not required.
12.3 Dispositions not in Compliance with this Article Void. Any
attempted assignment, transfer, sale or conveyance of an Interest not in
compliance with this Article is null and void.
ARTICLE XIII
TAX MATTERS REPRESENTATIVE
13.1 The initial Tax Matter Representative, as defined in Section
6231 of the Code, shall be Xxxxxx X. Xxxxx. A successor Tax Matter
Representative may be selected by majority vote of the Members from time to time
in their discretion.
ARTICLE XIV
AMENDMENT
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14.1 Amendment. This Agreement may be amended or modified from time
to time only by vote of Members holding a majority of the LLC Shares, except
that in no event shall any amendment hereto, without the unanimous consent of
the Members:
(i) Create any individual liability of any Members to any
other Members or to third parties, without express written consent of
any Member to be obligated thereby, or
(ii) Create any obligation of any Members to the Company,
including (but not by way of limitation) any obligation to pay any
assessment or make any capital contribution to the Company, without
express written consent of any Member to be obligated thereby; or
(iii) Alter or amend the voting rights of the LLC Shares or
their relative participation in the net profits and net losses of the
Company; or
(iv) Extend the date specified in the Articles of
Organization of the Company for dissolution of the Company.
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1 Entire Agreement. This Agreement represents the entire
Agreement among all the Members.
15.2 No Partnership Intended for Non-tax Purposes. The Company is
formed under the Act, and the Members expressly do not intend hereby to form a
partnership under either the State Uniform Partnership Act nor the State Uniform
Limited Partnership Act. The Members do not intend to be partners one to another
or partners as to any third party.
15.3 Application of Georgia Law. This Agreement, the application
and interpretation hereof shall be governed exclusively by its terms and the
laws of the State of Georgia and specifically the Act.
15.4 Execution of Additional Instruments. Each Member hereby agrees
to execute such other and further statements of interest and holdings,
designations, powers of attorney and other instruments necessary to comply with
any laws, rules or regulations.
15.5 Construction. When required by the context, whenever the
singular form is used in this Agreement, the same shall include the plural and
vice versa, and the masculine gender shall include the feminine and neuter
genders and vice versa.
15.6 Headings. The headings in this Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define, or
limit the scope, extent or intent of this Agreement or any provision hereof.
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15.7 Waivers. The failure of any party to seek redress for
violation of or to insist upon the strict performance of any covenant or
condition of this Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation.
15.8 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 party shall not preclude or waive the right to use any or all other
remedies. Such rights and remedies are given in addition to any other rights the
parties may have by law, statute, ordinance or otherwise.
15.9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
15.10 Certification of Non-Foreign Status. In order to comply with
Section 1445 of the Code and the applicable Treasury Regulations thereunder, in
the event of the disposition by the Company of a United States real property
interest as defined in the Code and Treasury Regulations, each Member shall
provide to the Company, an affidavit stating, under penalties of perjury, (i)
the Member's address, (ii) United States taxpayer identification number, and
(iii) that the Member is not a foreign person as that term is defined in the
Code and Treasury Regulations.
15.11 Withholding.
(a) The Company shall withhold and pay over to the
Internal Revenue Service or other applicable taxing authority, all
taxes or withholdings, and all interest, penalties, additions to tax,
and similar liabilities in connection therewith or attributable thereto
(hereinafter "Withheld Taxes") to the extent that the Board of Managers
determines that such withholding and/or payment is required by the Code
or any other law, rule, or regulation, including, without limitation,
Sections 1441, 1442, 1445, or 1446 of the Code and Section 48-7-129 of
the Official Code of Georgia. The Board of Managers shall determine in
good faith to which Member such Withheld Taxes are attributable. All
amounts withheld pursuant to this paragraph with respect to any
allocation, payment or distribution to any Member shall be treated as
amounts distributed to such Member pursuant to Article VII hereof for
all purposes of this Agreement.
(b) If an amount payable to the Company is reduced
because the Member paying that amount withholds and/or pays over to the
Internal Revenue Service or other applicable taxing authority any
amount as a result of the status of a Member, the Board of Managers
shall make such adjustments to amounts distributed and allocated among
Members as it determines to be fair and equitable. (For example, if a
portion of interest income earned by the Company is withheld by the
payor and paid over to the Internal Revenue Service because a
particular Member is a non-U.S. Person, the Manger might include such
withheld and paid over amount in computing amounts
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available for distribution to the Members pursuant to Article VII and
rate such withheld and paid over amount as if that amount were
distributed to the Member in satisfaction of whose tax liability such
amount was withheld and paid over.)
15.12 Banking. All funds of the Company shall be deposited in its
name in an account or accounts of a financial institution as shall be designated
from time to time by the Board of Managers. All funds of the Company shall be
used solely for the business and affairs of the Company. All withdrawals from
the Company bank accounts shall be made only upon checks or other instructions
signed by the Board of Managers or by such other persons as the Board of
Managers may designate from time to time.
15.13 Attorney-in-fact. The Members hereby severally designate and
appoint the President of the Company, as the same may be from time to time, as
their agent and attorney-in-fact for the purpose of executing on their behalf
and in their stead one or more amendments to this Agreement from time to time
for the purpose of adding new Members to this Agreement in accordance with the
terms hereof, specifying their respective ownership of LLC Shares, and
identifying the consideration to be received by the Company in payment for such
LLC Shares or the Member from whom the LLC Shares are being transferred.
15.14 Authorization to Transact Business in Other States. The Board
of Managers is authorized, empowered and directed to undertake any and all
actions that may be necessary or appropriate to enable the Company to transact
business in those states in which the Company is required to qualify to transact
business.
15.15 Determination of Matters Not Provided for in This Agreement.
The Board of Managers shall decide any questions arising with respect to the
Company and this Agreement which are not specifically or expressly provided for
in this Agreement.
15.16 Further Assurances. The Members each agree to cooperate, and
to execute and deliver in a timely fashion any and all additional documents
necessary to effectuate the purposes of the Company and this Agreement.
15.17 Time. TIME IS OF THE ESSENCE OF THIS AGREEMENT, AND TO ANY
PAYMENTS, ALLOCATIONS AND DISTRIBUTIONS SPECIFIED UNDER THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and affixed their seals.
AMERICAN ARTISTS FILM CORPORATION
Attest:
/s/ J. Xxxx Xxx Xxxx By: /s/ Xxxxxx X. Xxxxx
---------------------------------- ----------------------------------
Secretary Authorized Officer
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/s/ Xxxxxx X. Xxxxx
----------------------------------
Xxxxxx X. Xxxxx
/s/ J. Xxxx Xxx Xxxx
----------------------------------
J. Xxxx Xxx Xxxx
/s/ Xxxx X. Xxxxxx
----------------------------------
Xxxx X. Xxxxxx
/s/ Xxx X. Xxxxx
----------------------------------
Xxx X. Xxxxx
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EXHIBIT A
to Amended and Restated Operating Agreement of
FALSE RIVER, LLC.
a limited liability company
organized under the laws of Georgia
Preferred
Ordinary Distribution Capital
Name, address and federal tax LLC Shares LLC Shares Contribution
identification number of initial Members Received Received by Member
---------------------------------------- -------- -------- ---------
1. American Artists Film Corporation 51,000 19,600 $201,000
0000 Xxxxxx Xxxxxx, X. X.
Xxxxxxx, XX 00000
Tax I.D. No.: 00-0000000
2. Xxxx X. Xxxxxx 0 9,800 $100,000
00 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Soc. Sec. No.: ###-##-####
3. Xxx X. Xxxxx 0 19,600 $200,000
X.X. Xxx 00000
Xxxxxxx, XX 00000-0000
Soc. Sec. No.: ###-##-####
4.
------ ------ --------
Totals 51,000 49,000 $501,000
====== ====== ========
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