-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
ACME TELEVISION HOLDINGS OF UTAH, LLC
a Delaware limited liability company
LIMITED LIABILITY COMPANY AGREEMENT
Dated September 24, 1997
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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 18
ARTICLE VII - INDEMNIFICATION 18
7.1 Right to Indemnification 18
7.2 Award of Indemnification 18
7.3 Successful Defense 19
7.4 Advance Payments 19
7.5 Insurance 19
7.6 Heirs and Personal Representatives 19
7.7 Non-Exclusivity 19
7.8 Amendment 20
ARTICLE VIII - CONFLICTS OF INTEREST 20
8.1 Transactions with Interested Persons; Conflicts 20
8.2 Business Opportunities 20
ARTICLE IX - DISSOLUTION, LIQUIDATION, AND TERMINATION 21
9.1 No Dissolution 21
9.2 Events Causing Dissolution 21
9.3 Notice of Dissolution 21
9.4 Liquidation 21
9.5 Certificate of Cancellation 22
ARTICLE XI - GENERAL PROVISIONS 22
10.1 Offset 22
10.2 Notices 22
10.3 Entire Agreement 22
10.4 Amendment or Modification; Terms 23
10.5 Binding Effect 23
10.6 Governing Law; Severability 23
10.7 Further Assurances 23
10.8 Waiver of Certain Rights 23
10.9 Third-Party Beneficiaries 23
10.10 Failure to Pursue Remedies 23
10.11 Cumulative Remedies 24
10.12 Notice of Members of Provisions of
this Agreement 24
10.13 Interpretation 24
10.14 Counterparts 24
Schedule A - Membership Units
ACME Television Holdings of Utah, LLC
Limited Liability Company Agreement
This Limited Liability Company Agreement is made as of September __, 1997
by and among ACME Television Holdings of Utah, 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, Section
18.101 et seq. (as am time to time, the "Act"), by filing a Certificate of
Formation of the Company with the office of the Secretary of State of the State
of Delaware on August , 1997; and
WHEREAS, the Members desire to 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). Defined terms which are not defined
in this Article I or elsewhere in this Agreement shall have the meaning ascribed
to them in the Investment Agreement.
"Affiliate" shall mean, with respect to a specified Person, any Person that
directly or indirectly controls, is controlled by or is under common control
with, the specified Person. As used in this definition, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Agreement" shall mean this Limited Liability Company Agreement, as
amended, modified, supplemented or restated from time to time.
"Bankruptcy" means, with respect to a Person, that either (i) an
involuntary petition under any bankruptcy or insolvency or other debtor relief
law or under the
reorganization provisions of any such law has been filed with respect to such
Person or a receiver of or for the property of such Person has been appointed
without the acquiescence of such Person, which petition or appointment remains
undischarged or unstayed for an aggregate period of sixty (60) days (whether or
not consecutive) or (ii) a voluntary petition under any bankruptcy or insolvency
or other debtor relief law or under the reorganization provisions of any such
law has been filed by such Person, a voluntary assignment of such Person's
property for the benefit of creditors has been made, a written admission by such
Person of its inability to pay its debts as they mature has been made, a
receiver of or for the property of such Person has been appointed with the
acquiescence of such Person or such Person has done any similar act of like
import.
"Capital Contribution" shall mean with respect to any Initial Member the
amount set forth opposite its name on Schedule A and with respect to any New
Member the amount set forth opposite its name on Schedule A, as amended.
"Certificate" shall mean the Certificate of Formation and any and all
amendments thereto and restatements thereof filed on behalf of the Company with
the Secretary of State of the State of Delaware pursuant to the Act.
"Common Members" shall mean those persons listed on Schedule A hereto as
Common Members.
"Common Units" shall mean those Membership Units designated as Common
Units, as described in Section 3.1 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.
2
"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.
3
"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
4
ARTICLE II - ORGANIZATION AND POWERS
2.1 Organization. The name of the Company is ACME Television Holdings of
Utah, 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
5
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
6
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 or entity is
eligible for admission as a New Member. Each Person who first subscribes for a
Membership Unit in the Company after the date hereof shall be admitted as a New
Member of the Company at the time (i) such Person executes a Subscription
Agreement agreeing to be bound by the provisions hereof, (ii) the Members or the
Majority Member, as applicable, at their sole discretion, accepts such
Subscription Agreement on behalf of the Company and (iii) the subscriber makes
the Capital Contribution(s) required pursuant to the terms of this Agreement and
its Subscription Agreement. None of the existing Members shall have any
preemptive or similar right to subscribe to the issuance of new Membership Units
in the Company, and each of the Members acknowledges that its membership
interest is subject to adjustment (downward and upward) in the event of the
admission of New Members to the Company pursuant hereto or the withdrawal of any
Member from the Company.
7
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;
8
(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.
9
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
10
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
11
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.
12
(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.
13
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
14
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 Intermediate Holdings, 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:
15
(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.
16
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.
Notwithstanding the foregoing, the pledge of the Membership Units to a
lender or lenders of the Company pursuant to a security and pledge agreement or
a substantially similar agreement and such lender(s)' exercise of its rights
thereunder shall be deemed to be a permitted transfer hereunder.
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
17
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.
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
18
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
19
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
20
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
21
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.
22
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 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
23
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]
24
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date set forth above.
ACME TELEVISION HOLDINGS OF UTAH, LLC
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President & COO
ACME TELEVISION, LLC
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President & COO
ACME SUBSIDIARY HOLDINGS II, LLC
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President & COO
25
ACME TELEVISION HOLDINGS OF UTAH, LLC
Schedule A
Member No. of Units Capital Contribution
ACME Television, LLC 199 $995.00
ACME Subsidiary Holdings III, LLC 1 $ 5.00