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ACME TELEVISION OF TENNESSEE, LLC
a Delaware limited liability company
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
Dated December 15, 1997
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TABLE OF CONTENTS
Page
ARTICLE I - DEFINED TERMS 1
ARTICLE II - ORGANIZATION AND POWERS 5
2.1 Organization 5
2.2 Purposes and Powers 5
2.3 Principal Place of Business 6
2.4 Qualification in Other Jurisdictions 6
2.5 Fiscal Year 6
ARTICLE III - MEMBERS 6
3.1 Membership Units 6
3.2 Issuance of Membership Units; Admission of New Members 7
3.3 Voting Rights 8
3.4 Restrictions 8
3.5 Limitation on Liability of Members 9
3.6 Authority 9
3.7 Withdrawals; Termination 9
3.8 No Appraisal Rights 10
3.9 Compliance with Securities Laws and Other Laws and Obligations 10
ARTICLE IV - MANAGEMENT 10
4.1 Management 10
4.2 Reliance by Third Parties 11
4.3 Officers 11
ARTICLE V - CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS AND
ALLOCATIONS AND DISTRIBUTIONS 12
5.1 Capital Contributions 12
5.2 Capital Accounts and Allocations 12
5.3 Distributions 14
5.4 Distributions Upon Dissolution 14
5.5 Distribution Upon Withdrawal 15
5.6 Tax Matters Partner 15
ARTICLE VI - TRANSFERS OF INTERESTS 16
6.1 Restrictions on Transfers 16
6.2 Substitute Members 17
6.3 Allocation of Distributions Between Assignor and Assignee 17
6.4 Permitted Transfers 17
6.5 Permitted Transfers to Lenders 18
ARTICLE VII - INDEMNIFICATION 19
7.1 Right to Indemnification 19
7.2 Award of Indemnification 20
7.3 Successful Defense 20
7.4 Advance Payments 21
7.5 Insurance 21
7.6 Heirs and Personal Representatives 21
7.7 Non-Exclusivity 21
7.8 Amendment 21
ARTICLE VIII - CONFLICTS OF INTEREST 22
8.1 Transactions with Interested Persons; Conflicts 22
8.2 Business Opportunities 22
ARTICLE IX - DISSOLUTION, LIQUIDATION, AND TERMINATION 23
9.1 No Dissolution 23
9.2 Events Causing Dissolution 22
9.3 Notice of Dissolution 23
9.4 Liquidation 23
9.5 Certificate of Cancellation 24
ARTICLE XI - GENERAL PROVISIONS 24
10.1 Offset 24
10.2 Notices 24
10.3 Entire Agreement 24
10.4 Amendment or Modification; Terms 24
10.5 Binding Effect 25
10.6 Governing Law; Severability 25
10.7 Further Assurances 25
10.8 Waiver of Certain Rights 25
10.9 Third-Party Beneficiaries 25
10.10 Failure to Pursue Remedies 25
10.11 Cumulative Remedies 25
10.12 Notice of Members of Provisions of this Agreement 26
10.13 Interpretation 26
10.14 Counterparts 26
Schedule A - Membership Units
ACME Television of Tennessee, LLC
Amended and Restated
Limited Liability Company Agreement
This Amended and Restated Limited Liability Company Agreement is
made as of December 15, 1997 by and among ACME Television of Tennessee,
LLC (the "Company") and each of the Members listed on Schedule A hereto, and
those Persons who become Members of the Company in accordance with the
provisions hereof and whose names are set forth as such in the record books of
the Company.
WHEREAS, the Company has been formed as a limited liability company
under the Delaware Limited Liability Company Act, Del. Code ▇▇▇. tit. 6, ss.
18.101 et seq. (as amended from time to time, the "Act"), by filing a
Certificate of Formation of the Company with the office of the Secretary of
State of the State of Delaware on April 17, 1997;
WHEREAS, certain of the Members are parties to the Limited Liability
Company Agreement dated as of the date hereof (the "Initial Agreement"); and
WHEREAS, the Members desire to amend and restate the Initial
Agreement, and set out fully their respective rights, obligations and duties
regarding the Company and its assets and liabilities as set forth herein.
NOW, THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Members hereby
agree as follows:
ARTICLE I - DEFINED TERMS
Unless the context otherwise requires, the terms defined in this
Article I shall, for the purposes of this Agreement, have the meanings herein
specified (each such meaning to be equally applicable to both the singular and
plural forms of the respective terms so defined).
"Affiliate" shall mean, with respect to a specified Person, any
Person that directly or indirectly controls, is controlled by or is under common
control with, the specified Person. As used in this definition, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Amended and Restated Limited Liability
Company Agreement, as amended, modified, supplemented or restated from time to
time.
"Bankruptcy" means, with respect to a Person, that either (i) an
involuntary petition under any bankruptcy or insolvency or other debtor relief
law or under the reorganization provisions of any such law has been filed with
respect to such Person or a receiver of or for the property of such Person has
been appointed without the acquiescence of such Person, which petition or
appointment remains undischarged or unstayed for an aggregate period of sixty
(60) days (whether or not consecutive) or (ii) a voluntary petition under any
bankruptcy or insolvency or other debtor relief law or under the reorganization
provisions of any such law has been filed by such Person, a voluntary assignment
of such Person's property for the benefit of creditors has been made, a written
admission by such Person of its inability to pay its debts as they mature has
been made, a receiver of or for the property of such Person has been appointed
with the acquiescence of such Person or such Person has done any similar act of
like import.
"Capital Contribution" shall mean with respect to any Initial Member
the amount set forth opposite its name on Schedule A and with respect to any New
Member the amount set forth opposite its name on Schedule A, as amended.
"Certificate" shall mean the Certificate of Formation and any and
all amendments thereto and restatements thereof filed on behalf of the Company
with the Secretary of State of the State of Delaware pursuant to the Act.
"Common Members" shall mean those persons listed on Schedule A
hereto as Common Members.
"Common Units" shall mean those Membership Units designated as
Common Units, as described in Section 3.1 hereof.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any corresponding federal tax statute enacted after the date of this
Agreement. A reference to a specific section of the Code refers not only to such
specific section but also to any corresponding provision of any federal tax
statute enacted after the date of this Agreement, as such specific section or
corresponding provision is in effect on the date of application of the
provisions of this Agreement containing such reference.
"Distribution Percentage" shall mean a percentage determined for
each holder of Common Units by dividing the aggregate Common Units of such
holder by the aggregate Common Units of all holders of Common Units entitled to
distributions at the time of such determination.
"FCC" means the Federal Communications Commission.
"Indemnified Parties" shall mean the Members, any Affiliate of the
Members and each Person serving as an Officer, employee or other agent of the
Company (including Persons who serve at the Company's request as directors,
managers, officers, employees, agents or trustees of another organization in
which the Company has any interest as a shareholder, creditor or otherwise) and
their respective successors and assigns.
"Initial Capital Contribution" shall mean with respect to any
Initial Member the amount set forth opposite its name on Schedule A hereto.
"Initial Members" shall mean those Persons listed on Schedule A
hereto as Initial Members as of the date hereof.
"Investment Company Act" means the Investment Company Act of 1940,
as amended from time to time, together with any successor statute, and the rules
and regulations promulgated thereunder.
"Losses" shall mean all liabilities, judgments, obligations, losses,
damages, taxes and interest and penalties thereon (other than (i) income taxes
due on income allocated to Membership Units; and (ii) taxes based on fees,
compensation or commissions received by an Indemnified Party in connection with
the administration of the Company or the Company's property), claims, actions,
suits or other proceedings (whether civil or criminal, pending or threatened,
before any-court or administrative or legislative body, and as the same are
accrued, in which an Indemnified Party may be or may have been involved as a
party or otherwise or with which he or she may be or may have been threatened,
while in office or thereafter), costs, expenses and disbursements (including,
without limitation, legal and accounting fees and expenses) of any kind and
nature whatsoever.
"Member" shall mean the Initial Members and any Person admitted as a
Member in accordance with the terms of this Agreement and named as a Member in
the record books of the Company, and includes any Person admitted pursuant to
the provisions of this Agreement when acting in his, her or its capacity as a
Member of the Company, and "Members" shall mean two (2) or more of such Persons
when acting in their capacities as Members of the Company.
"New Member" shall mean any Member who is not an Initial Member.
"Person" shall mean an individual, corporation, association,
partnership (general or limited), joint venture, trust, unincorporated
organization, limited liability company, any other entity or organization of any
kind or a government or any department, agency, authority, instrumentality or
political subdivision thereof.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time, together with any successor statute, and the rules and
regulations promulgated thereunder.
"Subscription Agreement" shall mean a subscription agreement for the
purchase of a Membership Unit in the Company, in a form acceptable to the
Members or the Majority Member, as applicable.
"Tax Rate" means, for any taxable year of a Member, the sum of the
Federal Rate and the State Rate, with (a) the "Federal Rate" defined to mean the
highest effective federal income tax rate applicable to any individual for such
year and (b) the "State Rate" defined as the product of (i) the highest
effective state income tax rate applicable to an individual Member for such year
multiplied by (ii) a percentage equal to the difference between one hundred
percent (100%) and the Federal Rate.
"Taxable Income" and "Taxable Loss" mean, for any taxable year, the
taxable income or loss attributable to such Member's distributive share of
taxable income or loss of the Company, as determined for federal income tax
purposes; provided that in making such determination all separately stated items
of income, gain, loss and deduction (other than tax-exempt income) shall be
included; and provided further, that in calculating Taxable Income and Taxable
Loss, items of income, gain, loss and deduction attributable to the sale or
exchange of all or substantially all of the assets of the Company shall be
excluded from such calculation.
"Transfer" shall mean any sale, assignment, transfer, exchange,
charge, pledge, gift, hypothecation, conveyance or encumbrance (such meaning to
be equally applicable to verb forms of such term).
"Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
The following terms shall have the meanings set forth in the
indicated Sections hereof:
DEFINED TERM SECTION NUMBER
"Act" Preamble
"Capital Account" 5.02
"Company" Preamble
"Consolidated Group Securities" 3.04(a)
"Holdings" 5.03(a)
"Liquidating Trustee" 9.03
"Majority Member" 4.01(b)
"Membership Unit" 3.01
"Senior Executive Offices" 4.06
"Tax Distributions" 5.03
"Tax Matters Partner" 5.06
ARTICLE II - ORGANIZATION AND POWERS
2.1 ORGANIZATION. The name of the Company is ACME Television
of Tennessee, LLC. The Company has been formed by the filing of its Certificate
with the Delaware Secretary of State pursuant to the Act. The Certificate may be
restated or amended by the Members or the Majority Member, as applicable, from
time to time in accordance with the Act and subject to the terms of this
Agreement. The Company shall deliver a copy of the Certificate and any amendment
thereto to any Member who so requests.
2.2 PURPOSES AND POWERS. The principal business activity and
purposes of the Company shall initially be to acquire, develop, own and operate
television broadcast stations and to conduct any business related thereto or
useful in connection therewith. However, the business and purposes of the
Company shall not be limited to its initial principal business activity, and the
Company shall, subject to the terms of this Agreement, have authority to engage
in any other lawful business, purpose or activity permitted by the Act. Except
as otherwise provided in this Agreement, the Company, and the Members or the
Majority Member, as applicable, acting on behalf of the Company in accordance
with this Agreement, shall possess and may exercise all of the powers and
privileges granted by the Act or which may be exercised by any Person, together
with any powers incidental thereto, so far as such powers or privileges are
necessary, appropriate, proper, advisable, incidental or convenient to the
conduct, promotion or attainment of the business purposes or activities of the
Company, including without limitation the following powers:
(a) to conduct its business and operations in any state,
territory or possession of the United States or in any foreign country or
jurisdiction;
(b) to purchase, receive, take, lease or otherwise
acquire, own, hold, improve, maintain, use or otherwise deal in and with, sell,
convey, lease, exchange, transfer or otherwise dispose of, mortgage, pledge,
encumber or create a security interest in all or any of its real or personal
property, or any interest therein, wherever situated;
(c) to borrow or lend money or obtain or extend credit
and other financial accommodations, to invest and reinvest its funds in any type
of security or obligation of or interest in any public, private or governmental
entity, and to give and receive interests in real and personal property as
security for the payment of funds so borrowed, loaned or invested;
(d) to make and modify contracts, including contracts of
insurance, incur liabilities and give guaranties, whether or not such guaranties
are in furtherance of the business and purposes of the Company, including
without limitation, guaranties of
obligations of other Persons who are interested in the Company or in whom the
Company has an interest;
(e) to employ and terminate Officers, employees, agents
and other Persons, to organize committees of the Company, to delegate to such
Persons and/or committees such power and authority, the performance of such
duties and the execution of such instruments in the name of the Company, to fix
the compensation and define the duties and obligations of such personnel, to
establish and carry out retirement, incentive and benefit plans for such
personnel, and to indemnify such personnel to the extent permitted by this
Agreement and the Act;
(f) to form and maintain subsidiaries and to merge with,
or consolidate into, another Delaware limited liability company or other
business entity (as defined in Section 18-209 of the Act); and
(g) to institute, prosecute, and defend any legal action
or arbitration proceeding involving the Company, and to pay, adjust, compromise,
settle, or refer to arbitration any claim by or against the Company or any of
its assets.
2.3 PRINCIPAL PLACE OF BUSINESS. The principal office and
place of business of the Company shall initially be Suite 850, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Members or the Majority Member, as
applicable, may change the principal office or place of business of the Company
at any time and may cause the Company to establish other offices or places of
business in various jurisdictions and appoint agents for service of process in
such jurisdictions.
2.4 QUALIFICATION IN OTHER JURISDICTIONS. The Members or the
Majority Member, as applicable, shall cause the Company to be qualified or
registered under applicable laws of any jurisdiction in which the Company
transacts business and shall be authorized to execute, deliver and file any
certificates and documents necessary to effect such qualification or
registration.
2.5 FISCAL YEAR. The fiscal year of the Company shall end on
December 31 of each year.
ARTICLE III - MEMBERS
3.1 MEMBERSHIP UNITS. The Members shall have no rights or
powers in respect of the Company (including, without limitation, any rights in
respect of allocations of profit and loss or distributions) other than the
rights conferred by this Agreement represented by issued and outstanding units
of membership interest (the "Membership Units"), which shall be deemed to be
personal property giving only the rights provided in
this Agreement and which shall consist of one class ("Common Units"), which
shall have rights and privileges, including voting rights as expressly set forth
in this Agreement. Every Member by virtue of having become a Member shall be
held to have expressly assented and agreed to the terms hereof and to have
become a party hereto. Ownership of a Membership Unit shall not entitle a Member
to any title in or to the whole or any part of the property of the Company or
right to call for a partition or division of the same or for an accounting. The
Initial Members of the Company, their addresses, and the respective classes and
denominations of Membership Units held by them shall be as set forth on Schedule
A hereto, and said schedule shall be amended from time to time by the Members or
the Majority Member, as applicable, in accordance with the terms hereof to
reflect the withdrawal of Members or the admission of additional Members
pursuant to this Agreement.
The Company hereby authorizes for issuance 200 Common Units. As of
the date hereof, the Company shall have issued 200 Common Units to the Initial
Members, as set forth on Schedule A hereto. Except for the Common Units issued
on the date hereof, none of the Common Units may be issued by the Company
without the prior written consent of a majority in interest of the Members.
3.2 ISSUANCE OF MEMBERSHIP UNITS: ADMISSION OF NEW MEMBERS.
(a) The Company is not authorized to offer and sell, or
cause to be offered and sold, additional Membership Units or to admit additional
Persons as Members except with the approval of the Members holding more than
fifty percent (50%) in interest of the Common Units.
(b) The Members or the Majority Member, as applicable,
may establish eligibility requirements for admission of a subscriber as a New
Member after the date hereof and may refuse to admit any subscriber that fails
to satisfy such eligibility requirements. The Members or the Majority Member, as
applicable, shall have the responsibility for determining whether a Person is
eligible for admission as a New Member. Each Person who first subscribes for a
Membership Unit in the Company after the date hereof shall be admitted as a New
Member of the Company at the time (i) such Person executes a Subscription
Agreement agreeing to be bound by the provisions hereof, (ii) the Members or the
Majority Member, as applicable, at their sole discretion, accepts such
Subscription Agreement on behalf of the Company and (iii) the subscriber makes
the Capital Contribution(s) required pursuant to the terms of this Agreement and
its Subscription Agreement. None of the existing Members shall have any
preemptive or similar right to subscribe to the issuance of new Membership Units
in the Company, and each of the Members acknowledges that its membership
interest is subject to adjustment (downward and upward) in the event of the
admission of New Members to the Company pursuant hereto or the withdrawal of any
Member from the Company.
3.3 VOTING RIGHTS.
(a) Except as otherwise provided in this Agreement, no
Member or holder of a Membership Unit shall have the right to amend or terminate
this Agreement.
3.4 RESTRICTIONS. Notwithstanding anything in this Agreement
to the contrary, the following matters shall require the prior written consent
of holders of more than fifty percent (50%) in interest of the Common Units:
(a) the redemption, purchase or other acquisition for
value (or payment into or set aside for a sinking fund for such purpose) of any
Membership Unit, or other type of equity interest of the Company or any of its
Subsidiaries, or security convertible into or exchangeable or exercisable for
such Membership Units or equity interests (which are hereinafter reflected to as
"Consolidated Group Securities");
(b) the authorization or issuance (or the incurrence of
any obligation to authorize or issue) of any additional Membership Units or
other Consolidated Group Securities;
(c) the increase or decrease of the total number of
authorized Membership Units or other Consolidated Group Securities;
(d) the payment or declaration of any dividend or
distribution (other than Tax Distributions pursuant to Section 5.3) with respect
to any Membership Units or other Consolidated Group Securities;
(e) the authorization of any merger or consolidation of
the Company or any of its Subsidiaries with or into any other entity (except for
mergers among wholly-owned Subsidiaries);
(f) the authorization of the reorganization or sale of
the Company or any of its Subsidiaries or the sale of any material assets of the
Company or any of its Subsidiaries;
(g) the authorization of any reclassification or
recapitalization of the outstanding Membership Units of the Company or any other
Consolidated Group Securities;
(h) engagement by the Company or any of its Subsidiaries
in any business other than the business now conducted or contemplated by the
Company or a business or businesses similar thereto or reasonably compatible
therewith;
(i) the alteration, modification or amendment of this
Agreement; or
(j) the application by the Company for or consent by it
to the appointment of a receiver, trustee, custodian or liquidator of it or any
of its property, (ii) the admission in writing by the Company of its inability
to pay its debts as they mature, (iii) the making by the Company of a general
assignment for the benefit of creditors, or (iv) the filing by the Company of a
voluntary petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors, or any other action by the
Company to take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation laws or statutes, or an answer
from the Company admitting the material allegations of a petition filed against
it in any proceeding under any such law.
3.5 LIMITATION ON LIABILITY OF MEMBERS. Except as otherwise
provided in the Act, no Member of the Company shall be obligated personally for
any debt, obligation or liability of the Company or of any other Member or
otherwise have any personal recourse hereunder, whether arising in contract,
tort or otherwise, solely by reason of being a Member. Except as expressly set
forth in this Agreement, no Member shall have any fiduciary or other duty to
another Member with respect to the business and affairs of the Company, and no
Member shall be liable to the Company or any other Member for acting in good
faith reliance upon the provisions of this Agreement. No Member shall have any
responsibility to restore any negative balance in its Capital Account or to
contribute to or in respect of the liabilities or obligations of the Company or
return distributions made by the Company except as required by this Agreement,
the Act or other applicable law; provided, however, that Members are responsible
for their failure to make required Capital Contributions in accordance with
Section 5.1.
3.6 AUTHORITY. Except as otherwise expressly provided herein,
in all matters relating to or arising out of the conduct or the operation of the
Company, the decision of the Members (acting by vote of holders of more than
fifty percent (50%) in interest of the Common Units) or the Majority Member, as
applicable, shall be the decision of the Company. The Company may employ one or
more Persons from time to time, and such Persons, in their capacity as Officers
or employees of the Company, may take part in the control and management of the
business of the Company to the extent such authority and power to act for or on
behalf of the Company has been delegated to them by the Members or the Majority
Member, as applicable.
3.7 WITHDRAWALS; TERMINATION. No Member shall have any right
to resign or withdraw from the Company without the consent of the Members or the
Majority Member, as applicable, or to receive any distribution on its Membership
Units or the repayment of its Capital Contributions except as provided in
Article V hereof.
3.8 NO APPRAISAL RIGHTS. No Member shall have any right to
have its interest in the Company appraised and paid out under the circumstances
provided in Section 18-210 of the Act or any other circumstances.
3.9 COMPLIANCE WITH SECURITIES LAWS AND OTHER LAWS AND
OBLIGATIONS. Each Member hereby represents and warrants to the Company and
acknowledges that (a) it has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
investment in the Company and making an informed investment decision with
respect thereto, (b) it is able to bear the economic and financial risk of an
investment in the Company for an indefinite period of time and understands that
it has no right to withdraw and have its interest repurchased by the Company,
(c) it is acquiring an interest in the Company for investment only and not with
a view to, or for resale in connection with, any distribution to the public or
public offering thereof, and (d) it understands that the interests in the
Company have not been registered under the securities laws of any jurisdiction
and cannot be disposed of unless they are subsequently registered and/or
qualified under applicable securities laws or pursuant to valid exemptions from
such registration/qualification requirements and the provisions of this
Agreement have been complied with.
ARTICLE IV - MANAGEMENT
4.1 MANAGEMENT.
(a) Except as provided in Section 4.1(b) hereof, the
Company shall be managed by the Members. No action may be taken by any Member to
bind the Company without the prior consent of Members holding more than fifty
percent (50%) in interest of the Common Units.
(b) If any Member shall own more than fifty percent
(50%) in interest of the Common Units of the Company (the "Majority Member"),
management and control of the business of the Company shall be vested
exclusively in the Majority Member for so long as such Member holds more that
fifty percent (50%) in interest of the Common Units, and such Majority Member
shall have exclusive power and authority, in the name of and on behalf of the
Company, to perform all acts and do all things which, in its sole discretion, it
deems necessary or desirable to conduct the business of the Company.
The Majority Member shall, subject to all applicable provisions of
this Agreement, be authorized in the name and on behalf of the Company: (i) to
enter into, execute, amend, supplement, acknowledge and deliver any and all
contracts, agreements, leases or other instruments for the operation of the
Company's business; and (ii) in general to do all things and execute all
documents determined by it to be necessary or appropriate to conduct the
business of the Company as more fully set forth in Section 2.2 hereof or as
provided by law, or to protect and preserve the Company's assets. The Majority
Member may delegate any or all of the foregoing powers. The Majority Member is
an agent of the Company for the purpose of the Company's business. Any action
taken by the Majority Member, and the signature of the Majority Member on any
agreement, contract, instrument or other document on behalf of the Company,
shall be sufficient to bind the Company and shall conclusively evidence the
authority of the Majority Member and the Company with respect thereto.
(c) The Members acting pursuant to Section 4.1(a) or the
Majority Member, as applicable, shall be the "manager" (within the meaning of
the Act) of the Company, and each shall have the benefits and protections
accorded "managers" under the Act. The Members acting pursuant to Section 4.1(a)
or the Majority Member, as applicable, shall devote such time to the business
and affairs of the Company as is reasonably necessary for the performance of
their duties, but shall not be required to devote full time to the performance
of such duties and may delegate their responsibilities as provided in this
Agreement. The Majority Member shall not be personally liable to the Company or
to its Members for breach of any duty that does not involve: (i) a breach of the
duty of loyalty to the Company or its Members; (ii) an act or omission not in
good faith or which involves intentional misconduct or a knowing violation of
law; or (iii) a transaction from which the Majority Member derived an improper
personal benefit.
4.2 RELIANCE BY THIRD PARTIES. Any person dealing with the
Company or any Member may rely upon a certificate signed by the Majority Member
or any Officer as to (i) the identity of any other Member; (ii) any factual
matters relevant to the affairs of the Company; (iii) the persons who are
authorized to execute and deliver any document on behalf of the Company; or (iv)
any action taken or omitted by the Company or any Member. The Majority Member
shall not be personally liable to the Company or to its Members for breach of
any duty that does not involve: (i) a breach of the duty of loyalty to the
Company or its other Members; (ii) an act or omission not in good faith or which
involves intentional misconduct or a knowing violation of law; or (iii) a
transaction from which the Majority Member derived an improper personal benefit.
4.3 OFFICERS. The Members or the Majority Member, as
applicable, may designate employees of the Company as officers of the Company
(the "Officers") as they deem necessary or desirable to carry on the business of
the Company and the Members or the Majority Member, as applicable, may delegate
to such Officers such power and authority as the Members or the Majority Member,
as applicable, deem advisable. Any Officer may hold two or more offices of the
Company. The initial Officers of the Company shall be ▇▇▇▇▇ ▇▇▇▇▇▇▇ (Chairman
and Chief Executive Officer), ▇▇▇▇▇▇▇ ▇▇▇▇▇ (President and Chief Operating
Officer) and ▇▇▇▇▇▇ ▇▇▇▇▇ (Executive Vice President and Chief Financial
Officer). New offices may be created and filled by the Members or the Majority
Member, as applicable. Each Officer shall hold office until his or her successor
is designated by the Members or the Majority Member, as applicable, or until his
or her
earlier death, resignation or removal. Any Officer may resign at any time upon
written notice to the Members or the Majority Member, as applicable. Any Officer
may be removed by the Members or the Majority Member, as applicable, with or
without cause at any time. A vacancy in any office occurring because of death,
resignation, removal or otherwise, may, but need not, be filled by the Members
or the Majority Member, as applicable. The Officers are not "managers" (within
the meaning of the Act) of the Company.
ARTICLE V - CAPITAL CONTRIBUTIONS; CAPITAL
ACCOUNTS AND ALLOCATIONS AND DISTRIBUTIONS
5.1 CAPITAL CONTRIBUTIONS. The Initial Member has made as of
the date hereof the Capital Contribution to the Company specified on Schedule A
attached hereto. Each New Member shall make the Capital Contribution to the
Company specified in such Member's Subscription Agreement as of the date of
admission of such New Member as a Member of the Company. Except as approved by
the Members or the Majority Member, as applicable, or as set forth on Schedule A
or in a Member's Subscription Agreement, no Member shall be entitled or required
to make any Capital Contribution or loan or advance to the Company; provided,
however, that the Company may, subject to the other terms of this Agreement,
borrow from its Members as well as from banks or other lending institutions to
finance its working capital or the acquisition of assets upon such terms and
conditions as shall be approved by the Members or the Majority Member, as
applicable, and any such loans by Members shall not be considered Capital
Contributions or reflected in their Capital Accounts. The agreed value of all
non-cash Capital Contributions made by Members shall be set forth on Schedule A
or in such Member's Subscription Agreement. No Member shall be entitled to any
interest or compensation with respect to its Capital Contributions or any
services rendered on behalf of the Company except as specifically provided in
this Agreement. No Member shall have any liability for the repayment of the
Capital Contributions of any other Member and shall look only to the assets to
the Company for return of its Capital Contributions.
5.2 CAPITAL ACCOUNTS AND ALLOCATIONS.
(a) CAPITAL ACCOUNTS. A separate capital account (a
"Capital Account") shall be established and maintained for each Member, which
shall initially be equal to the Capital Contribution of such Member as set forth
on Schedule A hereto. Such Capital Accounts shall be maintained in accordance
with Section 1.704-1(b)(2)(iv) of the Treasury Regulations, and this Section 5.2
shall be interpreted and applied in a manner consistent with said Section of the
Treasury Regulations. The Capital Accounts shall be maintained for the sole
purpose of allocating items of income, gain, loss and deduction among the
Members and shall have no effect on the amount of any distributions to any
Members in liquidation or otherwise. The amount of all distributions to Members
shall be determined pursuant to Sections 5.3, 5.4 and 5.5.
(b) ALLOCATION OF PROFITS AND LOSSES. All items of
income, gain, loss and deduction as determined for book purposes shall be
allocated among the Members and credited or debited to their respective Capital
Accounts in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv), so
as to ensure to the maximum extent possible (i) that such allocations satisfy
the economic effect equivalence test of Treasury Regulations Section
1.704-1(b)(2)(ii)(i) (as provided hereinafter) and (ii) that all allocations of
items that cannot have economic effect (including credits and nonrecourse
deductions) are allocated to the Members in proportion to their membership
interests unless otherwise required by Code Section 704(b) and the Treasury
Regulations promulgated thereunder. To the extent possible, items that can have
economic effect shall be allocated in such a manner that the balance of each
Member's Capital Account at the end of any fiscal year (increased by such
Member's "share of partnership minimum gain" as defined in Treasury Regulations
Section 1.704-2) would be positive to the extent of the amount of cash that such
Member would receive (or would be negative to the extent of the amount of cash
that such Member should be required to contribute to the Company) if the Company
sold all of its property for an amount of cash equal to the book value (as
determined pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)) of such
property (reduced, but not below zero, by the amount of nonrecourse debt to
which such property is subject) and all of the cash of the Company remaining
after payment of all liabilities (other than nonrecourse liabilities) of the
Company were distributed in liquidation immediately following the end of such
fiscal year in accordance with Section 5.3. Except to the extent otherwise
required by the Code, the "traditional method" provided for in Treasury
Regulations Section 1.704-3(b) shall apply to all tax allocations governed by
Code Section 704(c) and all "reverse Section 704(c) allocations."
(c) OTHER ALLOCATIONS. The Members or the Majority
Member, as applicable, may adjust the Capital Accounts of the Members to reflect
reevaluations of the Company property whenever the adjustment would be permitted
under Treasury Regulations Section 1.704-1(b)(2)(iv)(f). In the event that the
Capital Accounts of the Members are so adjusted, (i) the Capital Accounts of the
Members shall be adjusted in accordance with Treasury Regulations Section
1.704l(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and
gain or loss, as computed for book purposes, with respect to such property and
(ii) the Members' distributive shares of depreciation, depletion, amortization
and gain or loss, as computed for tax purposes, with respect to such property
shall be determined so as to take account of the variation between the adjusted
tax basis and book value of such property in the same manner as under Section
704(c) of the Code. In the event that Code Section 704(c) applies to Company
property, the Capital Accounts of the Members shall be adjusted in accordance
with Treasury Regulations Section 1.704-1(b)(2)(iv)(g) for allocations of
depreciation, depletion, amortization and gain and loss, as computed for book
purposes, with respect to such property. In applying clause (ii) of the second
preceding sentence and all of the preceding sentence, the provisions of Code
Section 704(b) shall apply.
5.3 DISTRIBUTIONS. Subject to (i) the terms of the Act, (ii)
any agreements of the Company or any of its Affiliates with respect to
indebtedness for money borrowed to which the Company may from time to time be
subject, and (iii) except in the case of distributions pursuant to subsection
(a) below, the prior written consent of holders of a majority in interest of the
Common Units, all funds of the Company which are available for distribution (as
determined by the Members or the Majority Member, as applicable, in their
discretion) shall be distributed as follows:
(a) FIRST, within one hundred and twenty (120) days after
the end of each taxable year during which ACME Televisions Holdings, LLC
("Holdings") shall have any direct or indirect ownership interest in the
Company, there shall be distributed to each Member an amount equal to the
product of (i) the Tax Rate and (ii) the difference between (x) the amount of
such Member's Taxable Income with respect to such taxable year and (y) the
cumulative amount of such Member's Taxable Loss, if any, from all prior taxable
years, but only to the extent such Taxable Loss on a cumulative basis exceeds
Taxable Income for all prior taxable years on a cumulative basis (the "Tax
Distributions"); provided however, that such distribution shall in all events be
sufficient to allow Holdings to make the distributions required under Section
5.3(a) of the Limited Liability Company Agreement of Holdings; and
(b) SECOND, pro rata to all Members in accordance with
their respective Distribution Percentages.
5.4 DISTRIBUTIONS UPON DISSOLUTION. Proceeds from a sale of
all or substantially all of the assets of the Company and amounts available upon
dissolution, after payment of, or adequate provision for, the debts and
obligations of the Company, including the expenses of its liquidation and
dissolution, shall be distributed and applied in the following priorities:
(a) FIRST, to fund reserves as deemed reasonably
necessary by the Members, the Majority Member, as applicable, or the Liquidating
Trustee for any contingent, conditional or unmatured liabilities or other
obligations of the Company, which such reserves (i) may be paid to a bank (or
other third party), to be held in escrow for the purpose of paying any such
contingent, conditional or unmatured liabilities or other obligations, and (ii)
shall at the expiration of such period(s) as the Members, the Majority Member,
as applicable, or Liquidating Trustee may reasonably deem advisable, shall be
distributed to the Members in accordance with Section 5.3; and
(b) SECOND, in accordance with Section 5.3.
If any assets of the Company are to be distributed in kind in
connection with such liquidation, such assets shall be distributed on the basis
of their fair market value net
of any liabilities encumbering such assets and, to the greatest extent possible,
shall be distributed pro-rata in accordance with the total amounts to be
distributed to each Member. Solely for purposes of Section 5.2 and immediately
prior to the effectiveness of any such distribution-in-kind, each item of gain
and loss that would have been recognized by the Company had the property being
distributed been sold at fair market value shall be determined and allocated to
those persons who were Members immediately prior to the effectiveness of such
distribution in accordance with Section 5.2.
5.5 DISTRIBUTION UPON WITHDRAWAL. No Member shall be
entitled to any distribution or payment with respect to its Membership Units
upon the resignation or withdrawal of such Member.
5.6 TAX MATTERS PARTNER. ACME Television Holdings of
Tennessee, LLC is hereby designated as the initial "Tax Matters Partner" of the
Company for purposes of Section 6231(a)(7) of the Code, and such Tax Matters
Partner shall have the power to manage and control, on behalf of the Company,
any administrative proceeding at the Company level with the Internal Revenue
Service relating to the determination of any item of Company income, gain, loss,
deduction or credit for federal income tax purposes. The Members or the Majority
Member, as applicable, may at any time hereafter designate a new Tax Matters
Partner; provided, however, that only a Member may be designated as the Tax
Matters Partner of the Company.
(a) PARTNERSHIP STATUS. The Company will elect to be
treated as a pass-through entity for purposes of federal and state income tax,
and each Member covenants that it will make no election, declaration or
statement on or in any tax return, tax filing, or any book or record maintained
by it which is inconsistent with or detrimental to the Company's ongoing
maintenance of partnership tax status (or as a single-member entity, if
applicable).
(b) INCOME TAX COMPLIANCE. The Tax Matters Partner shall
prepare or cause to be prepared and filed on behalf of the Company, when and as
required by applicable law, all federal, state and local income tax information
returns or requests for extensions thereof. Not less than thirty (30) days prior
to the due date (including extensions) for any return (but not later than August
15 of each year), the Tax Matters Partner shall submit to each Member a copy of
the return as proposed for review and a schedule showing the Member's allocable
share of the Company's tax attributes ("Tax Attributes") sufficient to allow
such Member to include such Tax Attributes in its federal income tax return.
Each Member shall provide to the Tax Matters Partner, when and as requested, all
information concerning the affairs of such Member as may be reasonably required
to permit the filing of such returns.
(c) TAX ELECTIONS. The Tax Matters Partner shall make
the following tax elections on behalf of the Company:
(i) Unless required to adopt a different taxable
year pursuant to Section 706(b) of the Code, adopt the calendar year as the
annual accounting period;
(ii) Adopt the accrual method of accounting;
(iii) Deduct interest expense and taxes attributable
to the construction or installation of real and personal property improvements
to the fullest extent permitted by the Code;
(iv) Compute the allowance for depreciation under the
most accelerated tax depreciation method and using the shortest life and lowest
salvage value authorized by applicable law, consistent with the election
provided for in the following clause, with respect to all depreciable assets;
(v) If allowed by the Code, and to the maximum
extent allowable, elect to take available investment tax credit on the full
basis of each asset; and
(vi) Make such other elections as the Tax Matters
Partner shall have been directed in writing by the Members or the Majority
Member, as applicable, to make. The requirement to make any of the elections set
forth above is predicated upon the assumption that current federal income tax
law will continue in force. If any legislative change is made in the Code or any
other tax statutes or by the IRS in regulations and other pronouncements or by
the courts in case law affecting any of such elections so as to materially alter
the economic result of the required election, the Tax Matters Partner shall make
such election in respect of the item so affected as directed by the Members or
the Majority Member, as applicable.
(d) CODE SECTION 754 ELECTION. In connection with any
transfer or assignment of any Membership Units, or any distribution with respect
to which a Member recognizes gain under Code section 731(a), the Members or the
Majority Member, as applicable, shall, upon the written request of any Member,
cause the Company to file an election under Code section 754 and the Treasury
Regulations thereunder to adjust the basis of the Company assets under Code
Section 734(b) or 743(b) and a corresponding election under the applicable
sections of state and local law.
ARTICLE VI - TRANSFERS OF INTERESTS
6.1 RESTRICTIONS ON TRANSFERS. No Membership Units of the
Company may be Transferred, nor may any Member offer to Transfer, and no
Transfer by a Member shall be binding upon the Company or any Member unless such
Transfer complies with the provisions of this Article VI and the Company
receives an executed copy of the documents effecting such Transfer.
No Transfer shall be permitted if such Transfer would (i) violate
the registration provisions of the Securities Act or the securities laws of any
applicable jurisdiction, (ii) cause the Company to become subject to regulation
as an "investment company" under the Investment Company Act, and the rules and
regulations promulgated thereunder, (iii) result in the termination of any
material contract to which the Company is a party and which is material, or (iv)
result in the treatment of the Company as an association taxable as a
corporation or as a "publicly traded partnership" for federal income tax
purposes. The Company may require reasonable evidence as to the foregoing,
including, without limitation, a favorable opinion of counsel.
6.2 SUBSTITUTE MEMBERS. If a Transferee of Membership Units
does not become (and until any such Transferee becomes) a substitute Member in
accordance with the provisions of Section 6.1 hereof, such Person shall not be
entitled to exercise or receive any of the rights, powers or benefits of a
Member other than the right to receive distributions which the assigning Member
has Transferred to such Person. The Company shall admit as a substitute Member
any Person that acquires Membership Units by Transfer from any Member pursuant
to Section 6.1 hereof, but only upon the receipt of an executed instrument
satisfactory to the Company whereby such assignee becomes a party to this
Agreement as a Member.
6.3 ALLOCATION OF DISTRIBUTIONS BETWEEN ASSIGNOR AND ASSIGNEE.
Upon the Transfer of Membership Units pursuant to this Article and unless the
assignor and assignee otherwise agree and so direct the Company in a written
statement signed by both the assignor and assignee (a) distributions pursuant to
Article V shall be made to the Person owning such Membership Units at the date
of distribution and (b) the assignee shall succeed to a pro-rata (based on the
percentage of such assignor's Membership Units Transferred) portion of the
assignor's Capital Account with respect to such Membership Units.
Any Membership Units Transferred shall remain subject to the
provisions of this Agreement and the transferee shall have entered into an
enforceable written agreement providing that all Membership Units so Transferred
shall continue to be subject to all provisions of this Agreement as if such
Membership Units were still held by the transferring Member, and provided
further that such permitted transferee shall not be permitted to make any
further Transfer without complying with the provisions of this Agreement.
Anything to the contrary in this Agreement notwithstanding, transferees
permitted hereunder shall take any Membership Units so Transferred subject to
all obligations under this Agreement as if such Membership Units were still held
by the transferring Member whether or not they so expressly agree.
6.4 PERMITTED TRANSFERS. Subject to the provisions of
Sections 6.1(a) and 6.2, holders of Common Units may Transfer such Common Units
to any other holder of Common Units or to a partner or Affiliate of such Member
or to any other investment
fund or other entity for which such Member and/or one or more partners or
Affiliates thereof, directly or indirectly through one or more intermediaries,
serve as general partner or manager or in a like capacity.
6.5 PERMITTED TRANSFERS TO LENDERS. Notwithstanding the
provisions of this Article VI restricting or otherwise regulating a Transfer by
a Member, Section 3.2 with respect to the admission of New Members, Section 5.1
with respect to Capital Contributions and Subscription Agreements by New Members
and any other provision contained in this Agreement to the contrary:
(a) Each Member hereby (i) consents to the collateral
assignment and pledge by each other Member of its Membership Units (including
all economic interests therein) in the Company pursuant to a Security and Pledge
Agreement dated as of December 2, 1997 (as the same may be amended, restated,
renewed, replaced, supplemented or otherwise modified from time to time, the
"Pledge Agreement") between the Company and Canadian Imperial Bank of Commerce,
New York Agency, as agent for the Lenders (the "Lenders") referred to therein
(together with its successors and assigns in such capacity, the "Agent"), which
Pledge Agreement was entered into, or reaffirmed, as applicable, (x) as a
condition to the execution and delivery of the First Amended and Restated Credit
Agreement dated as of December 2, 1997 among the Agent, the Lenders and ACME
Television, LLC, a Delaware limited liability company (the "Borrower"), (as the
same may be amended, restated, renewed, replaced, supplemented or otherwise
modified from time to time, the "Credit Agreement") and (y) to secure the
Company's Guaranty dated as of December 2, 1997 of the Borrower's obligations
under the Credit Agreement (as the same may be amended, restated, renewed,
replaced, supplemented as otherwise modified from time to time the "Guaranty");
(ii) in connection with the exercise by the Agent of any of its rights and
remedies under the Pledge Agreement, consents to the assignment of any of such
Membership Units (including any economic interests therein) to any other Person
(and to the substitution of such other Person as a New Member holding the
Membership Units so assigned), and (iii) agrees that no such assignment (or
substitution) and no foreclosure thereunder or other remedies in respect thereof
shall effect a termination or dissolution of the Company.
(b) Without limiting the generality of the foregoing,
each Member hereby agrees that upon the exercise of remedies pursuant to Section
12 of the Pledge Agreement and subject to the Agent or its designee having
obtained the requisite consent from the FCC as further set forth in Section 17
of the Pledge Agreement.
(i) with respect to each Membership Unit (and
economic interest therein) assigned by any existing Member (in each case, the
"Assignor") to the Agent under the Pledge Agreement, the Agent shall thereupon
be admitted (or shall have the right to have one or more designees of its choice
admitted) as a New Member of the Company (in each such case, such New Member
admitted pursuant to this Section 6.5
being hereinafter referred to as the "Agent Designee Member") with no further
action by any Member or any other Person being necessary, and each Member hereby
consents to such admission and agrees to execute and deliver such instruments,
if any, as shall be necessary to effect or further evidence the foregoing;
(ii) in connection with the admission of any Agent
Designee Member to the Company, no capital contribution by such Agent Designee
Member shall be required;
(iii) no Agent Designee Member shall have any
liability with respect to the obligations of the Company under the Credit
Agreement or the Guaranty;
(iv) on and after the admission of any Agent
Designee Member to the Company, such Agent Designee Member shall have all
powers, statutory and otherwise, possessed by members under the Act and any
other applicable laws and, if any such Agent Designee Member shall then
constitute the Majority Member, such Agent Designee Member shall have the sole
authority to manage the business and affairs of the Company in accordance with
Section 4.1 and, in any event and notwithstanding any other provision contained
herein or in any such laws, the Assignor(s) to such Agent Designee Member shall
have no further powers or privileges with respect to the management of the
Company;
(v) following the admission of any Agent Designee
Member to the Company (and without limiting similar restrictions contained in
the Pledge Agreement), none of the other remaining Members may Transfer or
otherwise dispose of any of their Membership Units in the Company without the
prior written consent of such Agent Designee member.
(c) The Members hereby acknowledge and agree that the
Agent shall have no obligation or liability under this Agreement, the Pledge
Agreement, the Guaranty or otherwise by reason of, or arising out of, the
collateral assignment and pledge of the Membership Units or be obligated to
perform any of the obligations, or assume any of the liabilities, of the Members
arising hereunder.
(d) The provisions of clauses (a) and (b) shall terminate
when all Obligations under, and as defined in, the Credit Agreement have been
paid in full and the Commitments (as defined in the Credit Agreement) have been
terminated.
ARTICLE VII - INDEMNIFICATION
7.1 RIGHT TO INDEMNIFICATION. Except as limited by law and
subject to the provisions of this Article, the Company shall indemnify each
Indemnified Party from and against any and all Losses in any way related to or
arising out of this Agreement, the
business of the Company or the action or inaction of such Person hereunder
(including, without limitation, the actions or inactions of the Members and the
other Indemnified Parties pursuant to Article IX hereof upon dissolution of the
Company), which may be imposed on, incurred by or asserted at any time against
any such Indemnified Party, except that no indemnification shall be provided for
any Indemnified Party regarding any matter as to which it shall be finally
determined that such Indemnified Party did not act in good faith and in the
reasonable belief that its action was in the best interests of the Company, or
with respect to a criminal matter, that it had reasonable cause to believe that
its conduct was unlawful. Subject to the foregoing limitations, such
indemnification may be provided by the Company with respect to Losses in
connection with which it is claimed that such Indemnified Party received an
improper personal benefit by reason of its position, regardless of whether the
claim arises out of the Indemnified Party's service in such capacity, except for
matters as to which it is finally determined that an improper personal benefit
was received by such Indemnified Party. The indemnification contained in this
Article VII shall survive termination of this Agreement.
7.2 AWARD OF INDEMNIFICATION. The determination of whether
the Company is authorized to indemnify any Indemnified Party hereunder and any
award of indemnification shall be made in each instance by the Members;
provided, however, that as to any matter disposed of by a compromise payment,
pursuant to a consent decree or otherwise, no indemnification, either for said
payment or for any other Losses, shall be provided unless there has been
obtained an opinion in writing of legal counsel to the effect that the Person
subject to indemnification hereunder appears to have acted in good faith and
that such indemnification would not protect such Person against any liability to
the Company or the Members to which he, she or it would otherwise be subject by
reason of gross negligence, willful malfeasance or fraud in the conduct of his,
her or its office or actions not taken in good faith by such Person. The Company
shall be obliged to pay indemnification applied for by any Indemnified Party
unless there is an adverse determination (as provided above) within forty-five
(45) days after the application. If indemnification is denied, the applicant may
seek an independent determination of its right to indemnification by a court,
and in such event, the Company shall have the burden of proving that the
applicant was ineligible for indemnification under this Article. Notwithstanding
the foregoing, in the case of a proceeding by or in the right of the Company
which an Indemnified Party is adjudged liable to the Company, indemnification
hereunder shall be provided only upon a determination by a court having
jurisdiction that in view of all the circumstances of the case, the Indemnified
Party is fairly and reasonably entitled to indemnification for such Losses as
the court shall deem proper.
7.3 SUCCESSFUL DEFENSE. Notwithstanding any contrary
provisions of this Article, if any Indemnified Party has been wholly successful
on the merits in the defense of any action, suit or proceeding in which it was
involved by reason of its position with the Company or as a result of serving in
such capacity (including termination of investigative or other proceedings
without a finding of fault on the part of such Indemnified Party), such
Indemnified Party shall be indemnified by the Company against all Losses
incurred by such Indemnified Party in connection therewith.
7.4 ADVANCE PAYMENTS. Except as limited by law, Losses
incurred by an Indemnified Party in defending any action, suit or proceeding,
including a proceeding by or in the right of the Company, shall be paid by the
Company to such Indemnified Party in advance of final disposition of the
proceeding upon receipt of its written undertaking to repay such amount if such
Indemnified Party is determined pursuant to this Article VII or adjudicated to
be ineligible for indemnification, which undertaking shall be an unlimited
general obligation but need not be secured and may be accepted without regard to
the financial ability of such Indemnified Party to make repayment; provided,
however, that no such advance payment of issues shall be made if it is
determined pursuant to Section 7.2 of this Article on the basis of the
circumstances known at the time (without further investigation) that such
Indemnified Party is ineligible for indemnification.
7.5 INSURANCE. The Company shall have power to purchase and
maintain insurance on behalf of any Indemnified Party against any liability or
cost incurred by such Person in any such capacity or arising out of its status
as such, whether or not the Company would have power to indemnify against such
liability or cost.
7.6 HEIRS AND PERSONAL REPRESENTATIVES. The indemnification
provided by this Article shall inure to the benefit of the heirs and personal
representatives of the Indemnified Parties.
7.7 NON-EXCLUSIVITY. The provisions of this Article shall not
be construed to limit the power of the Company to indemnify the Members,
Officers, employees or agents to the fullest extent permitted by law or to enter
into specific agreements, commitments or arrangements for indemnification
permitted by law. The absence of any express provision for indemnification
herein shall not limit any right of indemnification existing independently of
this Article.
7.8 AMENDMENT. The provisions of this Article may be amended
or repealed in accordance with Section 10.5; provided, however, that no
amendment or repeal of such provisions that adversely affects the rights of the
Members under this Article with respect to acts or omissions occurring at any
time prior to such amendment or repeal, shall apply to any Member without such
Member's consent.
ARTICLE VIII - CONFLICTS OF INTEREST
8.1 TRANSACTIONS WITH INTERESTED PERSONS; CONFLICTS.
(a) Unless entered into in bad faith, no contract or
transaction between the Company and one or more of its Members or any other
Indemnified Party, or between the Company and any other Person in which one or
more of its Members or any other Indemnified Party has a financial interest or
is a director, manager or officer, shall be voidable solely for this reason if
such contract or transaction is fair and reasonable to the Company; and no
Member or other Indemnified Party interested in such contract or transaction,
because of such interest, shall be liable to the Company or to any other Person
or organization for any loss or expense incurred by reason of such contract or
transaction or shall be accountable for any gain or profit realized from such
contract or transaction.
(b) Unless otherwise expressly provided herein,
(i) whenever a conflict of interest exists or arises between the Company, its
Members and/or the other Indemnified Parties or (ii) whenever this Agreement
provides that any such Person shall act in a manner that is, or provide terms
that are, fair and reasonable to the Company or any Member, such Person shall
resolve such conflict of interest, taking such action or providing such terms,
considering in each case the relative interest of each party (including its own
interest) to such conflict, agreement, transaction or situation and the benefits
and burdens relating to such interests, any customary or acceptable industry
practices, and any applicable generally acceptable accounting practices or
principles. In the absence of bad faith by the Member or other Indemnified
Party, as the case may be, the resolution, action or term so made, taken or
provided by such Person shall not constitute a breach of this Agreement or any
other agreement contemplated herein or of any duty or obligation of such Person
at law or in equity or otherwise.
8.2 BUSINESS OPPORTUNITIES.
Members may engage in or possess an interest in other business
ventures of any nature, and neither the Company nor any other Member shall have
any rights by virtue of this Agreement in or to any such venture or the income
or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the activities of the Company, shall not be deemed improper or
wrongful. No Member shall be obligated to present any particular investment or
business opportunity to the Company even if such opportunity is of a nature
which could be taken by the Company.
ARTICLE IX - DISSOLUTION, LIQUIDATION, AND
TERMINATION
9.1 NO DISSOLUTION. The Company shall not be dissolved by the
admission of additional Members, the withdrawal of a Member or the written
consent of all Members, but shall continue to exist in perpetuity, except in
accordance with the terms of this Agreement. Upon the death, retirement,
resignation, expulsion, Bankruptcy or dissolution of any Member the Company
shall not dissolve and its affairs shall not be wound up except as set forth in
Section 9.2 below.
9.2 EVENTS CAUSING DISSOLUTION. The Company shall be
dissolved and its affairs wound up upon the occurrence of any of the following
events:
(a) if a Majority Member shall be acting as a Manager
under Section 6.2 hereof, the Bankruptcy, dissolution, death, retirement, or
resignation of the Majority Member; unless the Company is continued upon the
written consent of a majority of the remaining Members, such consent to be given
within ninety (90) days following the occurrence of such event;
(b) if there shall be no Majority Member acting as a
Manager under Section 6.2 hereof, the Bankruptcy, dissolution, death,
retirement, or resignation of any Member; unless the Company is continued upon
the written consent of a majority of the remaining Members, such consent to be
given within ninety (90) days following the occurrence of such event;
(c) the entry of a decree of judicial dissolution under
Section 18-802 of the Act.
9.3 NOTICE OF DISSOLUTION. Upon the dissolution of the
Company, the Member or the other Person or Persons (the "Liquidating Trustee")
appointed by the Members or the Majority Member, as applicable, to carry out the
winding up of the Company, shall promptly notify the Members of such
dissolution.
9.4 LIQUIDATION. Upon dissolution of the Company, the
Liquidating Trustee shall proceed diligently to liquidate the Company and wind
up its affairs and to make final distributions as provided in Section 5.4 hereof
and in the Act. The costs of dissolution and liquidation shall be borne as an
expense of the Company. Until final distribution, the Liquidating Trustee shall
continue to operate the Company properties with all of the power and authority
of the Members or the Majority Member, as applicable. As promptly as possible
after dissolution and again after final liquidation, the Liquidating Trustee
shall cause an accounting to be made by a firm of independent public accountants
of the Company's assets, liabilities and operations.
9.5 CERTIFICATE OF CANCELLATION. On completion of the
distribution of Company assets as provided herein, the Company shall be
terminated, and the Members or the Majority Member, as applicable, (or such
other Person or Persons as the Act may require or permit) shall file a
Certificate of Cancellation with the Secretary of State of the State of Delaware
under the Act, cancel any other filings made pursuant to Sections 2.1, 2.2 and
2.4, and take such other actions as may be necessary to terminate the existence
of the Company.
ARTICLE X - GENERAL PROVISIONS
10.1 OFFSET. Whenever the Company is to pay any sum to any
Member, any amounts that Member owes the Company may be deducted from that sum
before payment. All amounts so deducted shall nevertheless be treated as
distributions for purposes of Sections 5.3, 5.4 and 5.5 hereof.
10.2 NOTICES. Except as expressly set forth to the contrary
in this Agreement, all notices, requests, or consents provided for or permitted
to be given under this Agreement must be in writing and shall be given either by
registered or certified mail, addressed to the recipient, with return receipt
requested, or by delivering the writing to the recipient in Person, by courier,
or by facsimile transmission; and a notice, request, or consent given under this
Agreement is effective upon receipt or three days after the date mailed,
whichever is sooner. All notices, requests, and consents to be given to a Member
must be sent to or delivered at the addresses given for that Member on Schedule
A, or such other address as that Member may specify by written notice to the
other Members and the Company. Any notice, request, or consent to be given to
the Company must be given to the Members or the Majority Member, as applicable,
at the address of the principal office of Company specified in Section 2.3.
Whenever any notice is required to be given by law, the Certificate or this
Agreement, a written waiver thereof, signed by the Person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
10.3 ENTIRE AGREEMENT. This Agreement, together with each
Member's Subscription Agreement, constitutes the entire agreement of the Members
relating to the Company and supersedes all prior contracts or agreements with
respect to the Company, whether oral or written.
10.4 AMENDMENT OR MODIFICATION; TERMS. This Agreement,
including any Schedule hereto, may be amended from time to time, in whole or in
part, by an instrument in writing signed in accordance with Section 3.4 hereof.
Copies of each such amendment shall be delivered to each Member at least thirty
(30) days prior to the effective date of such amendment; provided, however, in
the case of any amendment that the Members or the Majority Member, as
applicable, determine is necessary or appropriate to prevent the Company from
being treated as a publicly traded partnership taxed as a corporation under
section 7704 of the Code, the amendment shall be effective on the date provided
in the instrument containing the terms of such amendment. Nothing contained in
this Agreement shall permit the amendment of this Agreement to impair the
exemption from personal liability of the officers, employees and agents of the
Company or Members or to permit assessments upon the Members.
10.5 BINDING EFFECT. Subject to the restrictions on Transfers
set forth in this Agreement, this Agreement is binding on and inures to the
benefit of the parties and their respective heirs, legal representatives,
successors and assigns.
10.6 GOVERNING LAW; Severability. This Agreement is governed
by and shall be construed in accordance with the law of the State of Delaware,
exclusive of its conflict-of-laws principles. In the event of a direct conflict
between the provisions of this Agreement and any provision of the Certificate,
or any mandatory provision of the Act, the applicable provision of the
Certificate or the Act shall control. If any provision of this Agreement or the
application thereof to any Person or circumstance is held invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of that provision shall be enforced to the fullest extent permitted by law.
10.7 FURTHER ASSURANCES. In connection with this Agreement
and the transactions contemplated hereby, each Member shall execute and deliver
any additional documents and instruments and perform any additional acts that
may be necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions, as requested by the Members or the Majority
Member, as applicable.
10.8 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives
any right it may have to maintain any action for dissolution of the Company or
for partition of the property of the Company.
10.9 THIRD-PARTY BENEFICIARIES. Except with respect to the
Agent and the Lenders, who are expressly intended to be third-party
beneficiaries of this Agreement, there shall be no third-party beneficiaries of
this Agreement.
10.10 FAILURE TO PURSUE REMEDIES. The failure of any party to
seek redress for violation of, or to insist upon the strict performance of, any
provision of this Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of any original
violation.
10.11 CUMULATIVE REMEDIES. The rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive its right to use any or all other remedies.
Said rights and remedies are
given in addition to any other right the parties may have by law, statute,
ordinance or otherwise.
10.12 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By
executing this Agreement, each Member acknowledges that such Member has actual
notice of (a) all of the provisions of this Agreement, including, without
limitation, the restrictions on the Transfer of Membership Units set forth in
Article VI and the limitations on participation of Members in the management of
the Company set forth in Article III, and (b) all of the provisions of the
Certificate. Each Member hereby agrees that this Agreement constitutes adequate
notice of all such provisions, and each Member hereby waives any requirement
that any further notice thereunder be given.
10.13 INTERPRETATION. For the purposes of this Agreement,
terms not defined in this Agreement shall be defined as provided in the Act; and
all nouns, pronouns and verbs used in this Agreement shall be construed as
masculine, feminine, neuter, singular, or plural, whichever shall be applicable.
Titles or captions of Articles and Sections contained in this Agreement are
inserted as a matter of convenience and for reference, and in no way define,
limit, extend or describe the scope of this Agreement or the intent of any
provision hereof.
10.14 COUNTERPARTS. This Agreement may be executed in any
number of counterparts with the same effect as if all signing parties had signed
the same document, and all counterparts shall be construed together and shall
constitute the same instrument.
[END OF TEXT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date set forth above.
ACME TELEVISION OF TENNESSEE, LLC
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
______________________________________
Name:
Title:
ACME TELEVISION HOLDINGS OF TENNESSEE, LLC
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
______________________________________
Name:
Title:
ACME SUBSIDIARY HOLDINGS III, LLC
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
______________________________________
Name:
Title:
ACME TELEVISION OF TENNESSEE, LLC
Schedule A
Member No. of Units Capital Contribution
____________ ____________________
ACME Television Holdings of Tennessee, LLC 199 $995.00
ACME Subsidiary Holdings III, LLC 1 $ 5.00