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EXHIBIT 3.08
THE MEMBERSHIP INTERESTS REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF DELAWARE OR ANY OTHER
JURISDICTION. THE MEMBERSHIP INTERESTS MAY NOT BE SOLD, PLEDGED, GIVEN,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND APPLICABLE SECURITIES LAWS UNLESS APPROPRIATE EXEMPTIONS FROM
SUCH REGISTRATIONS ARE AVAILABLE AS EVIDENCED EITHER BY THE DELIVERY TO THE
COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE MANAGER OR SUBMISSION TO
THE MANAGER OF OTHER EVIDENCE SATISFACTORY TO THE MANAGER.
OPERATING AGREEMENT OF
SALEM MEDIA OF NEW YORK, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
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THIS OPERATING AGREEMENT OF SALEM MEDIA OF NEW YORK, LLC, a
Delaware limited liability company ("Agreement"), is entered into effective as
of March 9, 2001, by and between SALEM MEDIA CORPORATION, a New York corporation
(the "Manager"), and SALEM RADIO OPERATIONS, LLC, a Delaware limited liability
company ("SRO"). The Manager and SRO are sometimes referred to collectively as
the "Members" or the "parties" and individually as a "Member" or a "party". In
consideration of the mutual covenants in this Agreement, the Members agree as
follows.
ARTICLE 1
ORGANIZATION AND PURPOSE
1.1 Formation. The Members have formed Salem Media of New York,
LLC (the "Company") as a limited liability company pursuant to the Delaware
Limited Liability Company Act, 6 Del. C.Section 18-101 et seq. (as from time to
time amended including any successor statute of similar import, the "Act"),
subject to the terms contained in this Agreement. The business and affairs of
the Company shall be managed by one Manager.
1.2 Name. The name of the Company is "Salem Media of New York,
LLC" and all business of the Company will be conducted under the name of the
Company. The Manager may change the Company's name and all of the Members shall
be notified of such change.
1.3 Purpose. The business of the Company is to (a) acquire, own,
hold, operate, finance, refinance, maintain, manage, develop, lease and/or sell
the radio broadcasting businesses heretofore owned and operated by the Manager
commonly known as stations WMCA-AM and WWDJ-AM (the "Business") and (b) to
engage in any other legal activity which a limited liability company is
permitted to do pursuant to the Act, all as the Manager shall reasonably
determine.
1.4 Registered Office and Registered Agent. The Company's
initial office shall be at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012.
The Company's registered agent in Delaware shall be National Registered Agents,
Inc. and its registered office in Delaware shall be 9 East Loockerman Street,
City of Dover, County of Kent, State of Delaware. The Company shall be qualified
to do business in the State of New Jersey. The Company's registered agent in New
Jersey shall be National Registered Agents, Inc. of NJ and its registered office
in New Jersey shall be 51 Everett Drive, Suite 107B, P.O. Box 927, West Windsor,
New Jersey 08550-0927. The registered office and agent of the Company in either
or both of Delaware or New Jersey may be changed from time to time by the
Manager by filing the address of the new registered office and/or the name of
the new agent with the appropriate Secretary of State pursuant to the laws of
that state.
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1.5 Addresses of Members. The addresses of the Members are set
forth on the signature pages of this Agreement.
1.6 Term. The Company's term shall commence upon the filing with
the Delaware Secretary of State of a "Certificate of Formation" and will
terminate on December 31, 2050, subject to earlier termination upon an event of
termination otherwise provided by this Agreement or by law.
1.7 Documents. The Company will execute and file the documents
necessary to comply with the requirements of the Act and the other laws of
Delaware for the formation, continuation and operation of limited liability
companies. The Members agree to execute all documents and to undertake all other
acts, as reasonably may be deemed necessary by the Manager, in order to comply
with the requirements of the laws of Delaware for the formation, continuation
and operation of limited liability companies. The Manager will further execute
and file the documents necessary to qualify the Company to do business in New
Jersey and any other jurisdictions in which the Company shall do business.
1.8 Membership Interest. "Membership Interest" shall mean a
Member's rights in the Company, collectively, including such Member's economic
interest, any right to vote and participate in management, and any right to
information concerning the business and affairs of the Company provided under
this Agreement or the Act.
ARTICLE 2
CAPITAL
2.1 Members' Capital Contributions. Concurrently with the
execution of this Agreement, (a) the Manager shall contribute all of the assets
of the Business and all related leases and contracts to the capital of the
Company subject to all existing liabilities of the Business, and (b) SRO shall
contribute cash in the amount of $1,000,000 to the capital of the Company. The
Members shall not be obligated to contribute any additional capital to the
Company.
2.2 Liability. No Member or Manager is liable to any other
Member for the repayment of any Member's capital contributions and, except as
otherwise provided in Section 2.1 of this Agreement, no Member is obligated to
make any advances or contributions of capital to the Company. Except as
otherwise provided in this Agreement or as required by law, the Members and
Manager will not be liable for any of the debts of the Company.
2.3 No Interest on Capital. Except as otherwise provided in this
Agreement, no interest will be paid to the Members on capital contributions or
on "Capital Account" (defined below) balances.
2.4 Return of Capital. Except as otherwise provided in this
Agreement, no
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time has been agreed upon for the contributions of the Members to be returned to
them. The Manager does not, in any way, guarantee the return of the Members'
capital contributions or a profit for the Members from the operations of the
Company. The Members have no right to demand and receive property other than
cash in return for the Members' capital contributions.
2.5 Loans from Members. Any Member may advance funds to the
Company if funds are deemed necessary by the Manager. The advances will be
evidenced by the Company's note payable to the lending Member. The note will
provide for a rate of interest mutually acceptable to the Manager and the Member
advancing funds to the Company; provided, however, such rate of interest shall
be commercially reasonable.
2.6 Capital Accounts. A "Capital Account" shall be maintained
for each Member in accordance with the provisions of Paragraph 1 of Exhibit "A".
2.7 Membership Percentages. The "Membership Percentages" of the
Members are as follows:
MEMBER MEMBERSHIP PERCENTAGE
------ ---------------------
Salem Radio Operations, LLC 1%
Salem Media Corporation 99%
---
Total 100%
====
2.8 Majority-in-Interest. For purposes of this Agreement, a
"Majority-in- Interest" of the Members shall mean those Members then owning more
than 50% of the Membership Percentages then owned by all of the Members who are
then entitled to vote. Except as otherwise provided in this Agreement or by the
Act, all decisions of the Members shall be made by a Majority-in-Interest of the
Members.
ARTICLE 3
PROFITS, LOSSES AND DISTRIBUTIONS
3.1 Definitions. For purposes of this Agreement, the following
capitalized terms are defined as follows:
3.1.1 "Distributable Cash" is all cash of the Company
(including without limitation cash from the sale of any or all of the Company
property) less (i) the amount necessary for payment of all costs, expenses,
obligations and liabilities of the Company then due (including any then due
advances to the Company by the Members) and (ii) the amount deemed necessary
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by the Manager, in the exercise of its reasonable discretion, for the operation
of the Company and to establish a reserve for the payment of foreseen or
unforeseen costs, expenses, obligations or liabilities of the Company.
3.1.2 The "Profits" and "Losses" of the Company (as
determined for book purposes) shall be calculated in accordance with Paragraph
1.2.3 of attached Exhibit "A".
3.1.3 The "Accounting Period" of the Company will be
each period commencing on the first day following the last day of the
immediately preceding Accounting Period (which for the Company's first fiscal
year shall be deemed to be the date of the commencement of the Company) and
ending on December 31 (which shall also be the Company's fiscal year end),
unless another fiscal year is selected by the Manager and permission to change
to such other fiscal year is granted by the Internal Revenue Service.
3.2 Allocation of Profits: Except as otherwise provided in
Exhibit "A" to this Agreement, Profits for any Accounting Period shall be
allocated among the Members in the ratio of their respective Membership
Percentages.
3.3 Allocation of Losses: Except as otherwise provided in
Exhibit "A" to this Agreement, Losses for any Accounting Period shall be
allocated among the Members in the ratio of their respective Membership
Percentages.
3.4 Distributions and Payments: For each Accounting Period, on a
cumulative basis, Distributable Cash shall be paid and distributed to the
Members in the ratio of their respective Membership Percentages.
3.5 Identity of Distributees. Distributions shall be made only
to persons who, according to the books and records of the Company, are the
owners of record of Membership Interests on a date to be determined by the
Manager. Neither the Manager nor the Company shall incur any liability for
making distributions in accordance with the preceding sentence, whether or not
the Manager has knowledge or notice of any transfer of ownership of any
Membership Interests.
3.6 Time of Distributions. Distributions shall be made to the
Members as soon as possible after the Manager's determination of the
availability of cash for such purposes, which determination shall be within the
reasonable discretion of the Manager.
3.7 Sharing Between Transferor and Transferee. If a Membership
Interest is transferred, the income, gains, losses and deductions allocable to
the Membership Interest transferred for the Accounting Period during which the
transfer occurred will be allocated between the transferor and transferee of the
Membership Interest in proportion to the time during the Accounting Period that
the Membership Interest was owned by the transferor and transferee. Credits
shall be allocated to the Member who owned the Membership Interest at the time
that the
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property giving rise to the credit was placed in service. Each transferee will
be credited with the Capital Account of the transferee's transferor. If a
transferor transfers less than all of the transferor's Membership Interest, the
Capital Account will be allocated in proportion to the fraction of the
Membership Interest respectively transferred and retained.
ARTICLE 4
REIMBURSEMENT OF MANAGER'S EXPENSES
AND INDEMNIFICATION OF MANAGER
The Company will reimburse the Manager for all ordinary and
necessary operating expenses incurred by the Manager in carrying on the
Company's business. The Manager shall not be liable to the Company or to any
Member for any act or omission suffered or taken by the Manager in good faith,
and the Manager shall be fully protected and indemnified by the Company against
all liabilities and losses suffered by virtue of its status as the Manager,
including amounts paid in respect of judgments, fines or in settlement of
litigation and expenses reasonably incurred by the Company or the Manager in
connection with any pending or threatened litigation or proceeding, with respect
to any action or omission suffered or taken, including but not limited to any
action taken by the Manager in the formation and operation of the Company or in
the financing, refinancing, improvement and sale of any assets of the Company,
liabilities arising under the "IRC" (as defined below) and the Manager's
activities as the "TMP" (as defined below), provided that (i) the acts or
omissions do not constitute gross negligence, fraud or criminal act by such
Manager, and (ii) the satisfaction of any indemnification and saving harmless
will be from and limited to Company assets. No Member will have any personal
liability on account of the indemnification and saving harmless of the Manager.
To the extent that the acts or omissions of the Manager constitute gross
negligence, fraud or criminal act, the Manager shall indemnify and save harmless
the Company and the Members from any loss or damage occasioned thereby
(including, without limitation, reasonable attorneys' fees). The Manager shall
not be liable to the Company or any Member because any taxing authorities
disallow or adjust any deductions, losses, credits or items of income or gain in
the Company's or any Member's income tax returns.
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ARTICLE 5
RIGHTS AND OBLIGATIONS OF MANAGER
5.1 Manager to Manage Business. The business and affairs of the
Company shall be managed by one Manager. The Manager shall be SALEM MEDIA
CORPORATION, a New York corporation, who shall serve as Manager until its
dissolution, resignation or removal. The Manager shall direct, manage and
control the business of the Company to the best of its ability and shall devote
such portion of its time and attention to the conduct of the business of the
Company as is necessary to carry out the purposes and business of the Company.
5.2 Powers of the Manager. The Manager shall have full and
complete authority, power and discretion to manage and control the business,
affairs and properties of the Company, to make all decisions regarding those
matters and to perform any and all other acts or activities customary or
incident to the management of the Company's business, including, but not limited
to the power:
5.2.1 To encumber all or less than all Company assets or
rights;
5.2.2 To make all decisions concerning the operational
aspects of the Company;
5.2.3 To execute and deliver all leases, contracts,
deeds and other instrumentation and documentation in connection with the
operations or business of the Company;
5.2.4 To borrow money on behalf of the Company and to
execute and deliver in the name of the Company notes evidencing such borrowings
and mortgages, deeds of trust and any other security instruments securing such
borrowings;
5.2.5 To pay from Company assets all expenses of
organizing and conducting the business of the Company, including without
limitation, legal and accounting fees and costs;
5.2.6 To execute any and all other instruments and take
any and all other action necessary or desirable to carry out the purposes and
business of the Company;
5.2.7 To sell, transfer, convey and/or exchange all or
any portion of the property or assets of the Company; and
5.2.8 To do any other lawful act or thing in furtherance
of the Company's business.
5.3 Restrictions on Authority of the Manager. The Manager shall
not have the
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authority or right to do any of the following acts:
5.3.1 To act in contravention of this Agreement.
5.3.2 To act in any manner that would make it impossible
to carry on the ordinary business of the Company, except as otherwise provided
in this Agreement;
5.3.3 To possess property, or assign rights in specific
property, for other than a Company purpose; or
5.3.4 To knowingly perform any act that would cause the
Company to conduct business in a state which has neither enacted legislation
which permits limited liability companies to organize in such state nor permits
the Company to register to do business in such state as a foreign limited
liability company.
5.4 Right to Rely on the Manager. The Manager shall have the
absolute authority to bind the Company by its signature alone and anyone dealing
with the Company shall have the right to rely on such authority. Except as
otherwise expressly authorized by this Agreement or by the Manager, no Member
(other than the Manager), attorney-in-fact, employee or other agent of the
Company shall have any power or authority to bind the Company in any way, to
pledge its credit or to render it liable pecuniarily for any purpose. Any person
dealing with the Company may rely (without duty of further inquiry) upon a
certificate signed by the Manager as to: the identity of the Manager or any
Member; the existence or nonexistence of any fact or facts which constitute a
condition precedent to acts by the Manager or which are in any other manner
germane to the affairs of the Company; the persons and/or entities who are
authorized to execute and deliver any instrument or document of the Company; or
any act or failure to act by the Company or any other matter whatsoever
involving the Company or any Member.
5.5 Manager Has No Exclusive Duty to Company. The Manager shall
not be required to manage the Company as its sole and exclusive function.
Subject to the fulfillment of the Manager's obligations pursuant to this
Agreement, the Manager may have other business interests and may engage in other
activities in addition to those relating to the Company. Neither the Company nor
any Member shall have any right, by virtue of this Agreement, to share or
participate in such other investments or activities of the Manager or to the
income or proceeds derived therefrom. The Manager shall not incur any liability
to the Company or to any of the Members as a result of engaging in any other
business or venture.
5.6 Affiliates. The Manager may, in the Manager's absolute
discretion, employ an Affiliate in any capacity on a basis comparable to that
which could be arranged with unaffiliated third parties for comparable service.
Any Affiliate employed by the Company shall have the absolute right (but not the
obligation) to contract with independent third parties in connection with the
performance of the foregoing service. For purposes of this Agreement, an
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"Affiliate" shall include any and all firms and entities, including, without
limitation, corporations, partnerships, joint ventures, trusts, limited
liability companies and associations, which are directly or indirectly owned or
controlled, in whole or in part, by or in common with, any Member or Members or
Manager and/or any of such entities or any combination of any such persons or
entities.
5.7 Removal.
5.7.1 The "removal" of the Manager shall automatically
take place in the event that any of the following occurs:
5.7.1.1 The Manager becoming bankrupt. The
Manager shall be deemed to be bankrupt upon: (a) the filing of an application by
the Manager for, or its consent to, the appointment of a trustee, receiver, or
custodian of its assets; (b) the entry of an order for relief with respect to
the Manager in proceedings under the United States Bankruptcy Code, as amended
or superseded from time to time; (c) the making by the Manager of a general
assignment for the benefit of creditors; (d) the entry of an order, judgment, or
decree by any court of competent jurisdiction appointing a trustee, receiver or
custodian of the assets of the Manager unless the proceedings and the trustee,
receiver or custodian appointed are dismissed within ninety (90) days; or (e)
the failure by the Manager generally to pay its debts as the debts become due
within the meaning of Section 303(h)(1) of the United States Bankruptcy Code, as
determined by the Bankruptcy Court, or the admission in writing of its inability
to pay its debts as they become due.
5.7.1.2 The Manager is dissolved.
5.7.2 The removal of a Manager shall not affect such
Manager's rights as a Member and shall not constitute a withdrawal of a Member.
5.8 Vacancies. Upon any vacancy occurring for any reason in the
office of Manager of the Company, the vacancy may be filled by the affirmative
vote of a Majority-in-Interest of the Members.
5.9 Officers. The Manager may appoint and/or remove officers of
the company from time to time in its sole and absolute discretion. Each officer
shall have the title and authority designated by the Manager.
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ARTICLE 6
MEETINGS OF MEMBERS
6.1 Meetings. Any Member may call a meeting at any time on not
less than five (5) business days' prior written notice to all Members. Any
notice for a meeting must identify the nature of the business to be discussed at
such meeting.
6.2 Designees. Any Member may at any time, and from time to
time, by written notice to the other Members, designate a person ("Designee") to
act on its behalf at any meeting of the Members. Such Designee shall have all of
the voting rights of such Member. A Member who has named a Designee may
subsequently revoke such designation and may, at the same time or subsequently,
name a replacement Designee.
6.3 Meeting of all Members. If all of the Members shall meet at
any time and place, either within or outside of the State of Delaware and
consent to the holding of a meeting at such time and place, such meeting shall
be valid without call or notice, and at such meeting lawful action may be taken.
6.4 Record Date. For the purpose of determining Members entitled
to notice of or to vote at any meeting of Members or any adjournment, or Members
entitled to receive payment of any distribution, or in order to make a
determination of Members for any other purpose, the date on which notice of the
meeting is mailed or the date on which the resolution declaring such
distribution is adopted, as the case may be, shall be the record date for such
determination of Members. When a determination of Members entitled to vote at
any meeting of Members has been made as provided in this Paragraph 6.4, such
determination shall apply to any adjournment.
6.5 Quorum. A Majority-In-Interest of the Members, represented
in person or by proxy, shall constitute a quorum at any meeting of Members. In
the absence of a quorum at any such meeting, a majority of the Membership
Percentages so represented may adjourn the meeting from time to time for a
period not to exceed 60 days without further notice. However, if the adjournment
is for more than 60 days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each Member of record entitled to vote at the meeting. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The Members present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal during such
meeting of that number of Membership Percentages whose absence would cause less
than a quorum.
6.6 Manner of Acting. If a quorum is present, the affirmative
vote of Majority-in-Interest of the Members (whether or not all are present)
shall be the act of the Members, unless the vote of a greater proportion or
number is otherwise required by the Act, by
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the Articles of Organization, or by this Agreement. Unless otherwise expressly
provided in this Agreement or required under applicable law, Members who have an
interest (economic or otherwise) in the outcome of any particular matter upon
which the Members are being asked to vote or consent may vote or consent upon
any such matter and their Membership Percentage, vote or consent, as the case
may be, shall be counted in the determination of whether the requisite matter
was approved by the Members.
6.7 Proxies. At all meetings of Members, a Member may vote in
person or by proxy executed in writing by the Member or by a duly authorized
attorney-in-fact. Such proxy shall be filed with the Members of the Company
before or at the time of the meeting. No proxy shall be valid after eleven
months from the date of its execution, unless otherwise provided in the proxy.
6.8 Action by Members Without a Meeting. Action required or
permitted to be taken at a meeting of Members may be taken without a meeting if
the action is evidenced by one or more written consents signed by all Members.
6.9 Waiver of Notice. When any notice is required to be given to
any Member, a waiver in writing signed by the person entitled to such notice,
whether before, at, or after the time stated in such notice shall be equivalent
to the giving of such notice.
ARTICLE 7
ADMISSION AND WITHDRAWAL OF MEMBERS
AND TRANSFER OF MEMBERSHIP INTERESTS
7.1 Definitions.
7.1.1 "Admission" means the addition of a new Member to
the Company.
7.1.2 "Transfer" means the transfer, alienation, sale,
assignment, pledge or other disposition or encumbrance of all or any part of a
Membership Interest, whether voluntarily or involuntarily.
7.1.3 The term "Associate" shall mean with respect to
any Member (i) any other Member, (ii) any beneficiary of a trust which is a
Member, (iii) any spouse or adult lineal ascendants or descendants of any such
Member or beneficiary, or a trust for his or her or their benefit (including
minor descendants), and (iv) any and all firms and entities, including, without
limitation, corporations, limited liability companies, partnerships, joint
ventures, trusts and associations, which are directly or indirectly owned or
controlled by, or in common with, one or
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more of the previously identified persons.
7.2 Transfer and Admission.
7.2.1 Transfer. Except as otherwise provided in this
Agreement, no Member may effect a Transfer of any Membership Interest except for
(i) Transfers to Associates, (ii) Transfers previously approved in writing by
the Manager, which approval may be withheld in the Manager's absolute
discretion, and (iii) Transfers to persons pursuant to Paragraph 7.4 (entitled
"Right of First Refusal") (collectively referred to as "Permitted Transfers");
provided, however, that (a) all such Permitted Transfers must be made in full
compliance with all requirements contained in this Agreement and (b) no Member
may transfer all or any part of such Member's Membership Interest to a minor or
an incompetent unless the Transfer is to a trust, guardianship, or other legal
entity formed for the benefit of the incapacitated party. Any Transfer of a
Membership Interest which does not comply with the provisions of this Agreement
shall be invalid and shall not vest any interest in the transferee.
7.2.2 Admission. Except as otherwise provided in this
Agreement, a person shall become a Member only upon (i) the approval of the
Manager, which approval may be withheld in the Manager's absolute discretion,
and (ii) the person executing any and all documents reasonably requested by the
Manager, including without limitation an agreement by which such person shall be
bound by all of the provisions of this Agreement. Notwithstanding the foregoing,
if a Member transfers a Membership Interest to an Associate or a Membership
Interest is transferred to a successor upon the death of a Member, the Associate
or the successor shall be entitled to Admission without the approval of the
Manager, provided that all other requirements contained in this Agreement must
be complied with prior to such Admission.
7.2.3 Admission Date. Any Admission shall be deemed to
occur effective either (i) if the Admission occurs from the first through the
15th day of the month, then on the first day of the calendar month in which the
admission occurs or (ii) if the Admission occurs from the 16th through the last
day of the month, then on the first day of the calendar month after the month in
which the Admission occurs.
7.2.4 Additional Requirements. No Transfer or Admission
shall be permitted (i) if the proposed Transfer, transferee or Admission will,
or could, impair the ability of the Company to be taxed as a partnership under
the Federal income tax laws, or (ii) if the Transfer or Admission will, or
could, cause the Company's tax year to close or the Company to terminate for
Federal income tax purposes, and (iii) no Admission shall be permitted unless
the proposed Member has acknowledged in writing the liabilities of the
transferor and the Company which cannot be ascertained from this Agreement.
7.2.5 Necessary Amendments. In the event of the
Admission of a Member or a Permitted Transfer by a Member, this Agreement will
be promptly amended as necessary to reflect any changes in the profit and loss
allocations of Members, to reflect the
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capital contributions of the newly admitted Member and to set forth any new
provisions or to amend any existing provisions of this Agreement which may be
necessary or desirable in light of the Admission of a Member or Transfer by a
Member.
7.2.6 Enforceability of Transfer Restrictions. Each
Member acknowledges the reasonableness of the restrictions on the
transferability of Membership Interests imposed by this Agreement in view of the
Company purposes and the relationship of the Members. Accordingly, the
restrictions on transferability contained in this Agreement shall be
specifically enforceable.
7.3 Members and Assignees.
7.3.1 Rights of Admitted Member. A transferee who
becomes a Member succeeds to all of the rights and powers and is subject to all
of the obligations, restrictions and liabilities of a Member for the Membership
Interest which is acquired by the transferee;
7.3.2 Rights of Assignee. A transferee who does not
become a Member ("Assignee") will be entitled only to (i) receive, to the extent
assigned, the distributions and the allocations of income, gains, losses,
deductions, credit or similar items to which the assignor would be entitled and
(ii) require information and accounts of Company transactions and to inspect the
Company books only as required by the Act, and an Assignee shall have no other
rights or powers of a Member. An Assignee nevertheless is subject to all of the
provisions of this Agreement and to all of the obligations, restrictions and
liabilities under this Agreement for the Membership Interest acquired.
7.3.3 Duties of Assignor. Until the time when the
transferee of a Membership Interest becomes a Member, the transferor of the
Membership Interest remains subject to all of the obligations, restrictions and
liabilities under this Agreement for the Membership Interest and retains all
rights and powers of a Member for the Membership Interest other than the right
to receive cash and in kind distributions and the return of capital
contributions.
7.4 Right of First Refusal.
7.4.1 A Member ("Selling Member") who desires to sell
all or any portion of such Member's Membership Interest (the "Offered Interest")
to a third party purchaser ("Third Party") shall obtain from such Third Party a
bona fide written offer to purchase such Offered Interest stating the price and
other terms and conditions for the proposed purchase (the "Offer"). The Selling
Member shall give written notification to the remaining Members of the Selling
Member's intention to so transfer the Offered Interest (the "Offer Notice") and
shall include with the Offer Notice a copy of the Offer.
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7.4.2 The remaining Members shall have the right to
exercise a right of first refusal to purchase, in proportion to the Membership
Percentages of the remaining Members who exercise such right, all (but not less
than all) of the Offered Interest upon the same terms and conditions as stated
in the Offer by giving written notification to the Selling Member of their
exercise of such right (the "Exercise Notice") within 30 days after the Offer
Notice is given. If any of the remaining Members (in the aggregate) exercise
their right to purchase all of the Offered Interest, then the transaction shall
close within 90 days after the date upon which the last Exercise Notice is
given. If no remaining Members exercise their right to purchase all of the
Offered Interest, then the Selling Member may sell the Offered Interest on the
terms and conditions stated in the Offer to the purchaser named in the Offer
within 120 days after the Offer Notice is given. The purchaser shall become
either a Member or an Assignee in accordance with Paragraph 7.2 (entitled
"Transfer and Admission") and shall not otherwise be entitled to Admission.
Whether or not the Offered Interest is so sold, it shall remain subject to all
of the terms and conditions of this Agreement, including without limitation this
Paragraph 7.4.
7.5 Withdrawal. No Member may withdraw or resign from the
Company or take any other voluntary action which would cause the dissolution of
the Company without the consent of the Manager, which consent may be withheld in
its absolute discretion.
7.6 Death of a Member. Upon the death of a Member who is an
individual, the Membership Interest of the deceased Member shall be transferred
to his or her lawful successor(s)-in-interest. Any such successor shall become a
Member in accordance with the provisions of this Article 7.
ARTICLE 8
DISSOLUTION AND LIQUIDATION
8.1 Events of Termination: The Company shall, unless otherwise
provided, terminate and dissolve on the happening of any of the following
events:
8.1.1 Expiration. When the period fixed for the duration
of the Company shall expire pursuant to Paragraph 1.6 (entitled "Term");
8.1.2 Consent. By the consent in writing of the Manager
and a Majority-in-Interest of the Members; or
8.1.3 Statutory Dissolution. The happening of any events
set forth in Section 18-801 of the Act, unless the business of the Company is
continued by the consent of a Majority-in-Interest of the remaining Members
within 90 days after the happening of that event and there are at least two
remaining Members.
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8.2 Winding Up Affairs and Liquidations. Upon the termination
and dissolution of the Company, the Manager or the persons required or permitted
by law to carry out the winding up of the affairs of the Company ("Liquidator")
will promptly notify all Members of such dissolution; shall proceed to the
liquidation of the assets of the Company by converting such assets to cash
insofar as deemed practicable by the Manager or the Liquidator; will wind up the
affairs of the Company; and, after paying or providing for the payment of all
liabilities and obligations of the Company, will distribute the proceeds of
liquidation and other assets of the Company as provided by law and the terms of
this Agreement. Upon the dissolution of the Company as the result of the
occurrence of an event described in Paragraph 8.1 (entitled "Events of
Termination"), the Manager or Liquidator shall cause to be filed in the office
of, and on a form prescribed by, the Delaware Secretary of State, a Certificate
of Dissolution. Upon the completion of the winding up of the affairs of the
Company, the Manager or Liquidator shall cause to be filed in the office of, and
on a from prescribed by, the Delaware Secretary of State, a Certificate of
Cancellation of Certificate of Formation.
8.3 Continuation of Business for Purpose of Winding Up Affairs.
Upon the filing with the Delaware Secretary of State of a Certificate of
Dissolution, the Company shall cease to carry on its business, except insofar as
may be necessary for the winding up of its business.
8.4 Distributions on Dissolution. The proceeds of liquidation
and other assets of the Company shall be applied and distributed in the
following order of priority:
8.4.1 Debts. To the payment of debts and liabilities of
the Company (other than any loans and advances that may have been made by any of
the Members, or amounts owing to any of the Members) and the expenses of
liquidation;
8.4.2 Reserves. To the setting up of any reserves that
the Manager or Liquidator may deem reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Company, which reserves shall be
paid over to an escrow holder designated by the Manager or Liquidator to be held
for the purpose of disbursing such reserves in payment of any of the
aforementioned contingencies, and, at the expiration of such period, as the
Manager or the Liquidator shall deem advisable, to distribute the balance
thereafter remaining in the manner hereinafter provided;
8.4.3 Member Loans. To the payment of any loans or
advances that may have been made by any of the Members; and
8.4.4 Members. Any balance then remaining will be
distributed to the Members in accordance with Paragraph 3.4 (entitled
"Distributions and Payments").
8.5 Assets Other Than Cash. Assets of the Company may be
distributed in kind on the basis of the then fair market value of such assets as
determined by agreement of the Members, and if no such agreement of value is
reached within 30 days, then such value shall be
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determined by an independent appraiser appointed by the Members (the cost and
expense of said appraisal to be borne by the Company). If agreed to by all the
Members, distributions in- kind will be made to the Members as
tenants-in-common. For purposes of making such distribution only, the unrealized
profit or loss on any such asset (based on its fair market value) shall be first
allocated among the Members and the distribution of the asset shall be treated
as a distribution of cash equal to the fair market value of such asset.
ARTICLE 9
FISCAL MATTERS
9.1 Books and Journals. The Company will maintain full and
accurate books of the Company at the offices of the Company, showing all
receipts and expenditures, assets and liabilities, Profits and Losses, and all
other records necessary for recording the Company's business and affairs or
required by the Act. Each Member and such Member's duly authorized
representatives shall, during normal business hours, have access to and may
inspect and copy any of such books and records. Furthermore, upon the request of
any Member, copies of any portion of such books and records shall be delivered
to such Member at such Member's sole cost and expense.
9.2 Accountants. The accountants shall be such firm of certified
public accountants as may be selected by the Manager.
9.3 Reports to Members. Within 90 days after the end of each
fiscal year, each Member shall be furnished a copy of the foreign, federal and
state income tax information returns of the Company for the preceding fiscal
year showing each Member's distributive share of each item of income, gain,
loss, deduction, credit or preference which a Member is required to take into
account separately on such Member's foreign, federal and state income tax
returns.
9.4 Bank Accounts. All funds of the Company will be deposited in
its name and in such bank accounts as the Manager shall reasonably determine.
9.5 Accounting Decisions. All decisions as to accounting
matters, except as specifically provided to the contrary in this Agreement, will
be made by the Company's accountants subject to the approval of the Manager.
9.6 Federal Income Tax Elections. The Manager shall cause the
Company to make an election (or consent to any such election by a Member)
pursuant to any of IRC Sections 732(d) and/or 754 (or corresponding provisions
of succeeding law or state law), as may be determined by the Manager in the
Manager's sole, absolute and arbitrary discretion, except to the extent
otherwise directed by this Agreement.
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ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Notices. Any notice required under this Agreement shall be
given in writing (at the addresses set forth on the signature page for Members
and at Company's registered office for the Company) by any of the following
means: (i) personal service; (ii) electronic communicating by telegram,
telecopying or fax transmission; (iii) overnight courier; or (iv) registered or
certified, first class mail, postage prepaid with return receipt requested. Such
addresses may be changed by notice to the other parties given in the same manner
as above provided. Any notice sent pursuant to either (i) or (ii), above, shall
be deemed received upon such personal service or upon confirmation of receipt by
electronic means (unless confirmation occurs after 4:00 P.M. on the day sent or
the day sent is not a business day, in either of which events confirmation shall
be deemed to occur on the next following business day). Any notice sent pursuant
to (iii), above, shall be deemed received on the next business day following
deposit with the overnight courier, and any notice sent pursuant to (iv), above,
shall be deemed received two (2) business days following deposit in the mail.
10.2 Limited Power of Attorney. Each Member, by such Member's
execution of this Agreement, irrevocably constitutes and appoints the Manager as
such Member's true and lawful attorney and agent, with full power and authority
in such Member's name, place and stead only to execute, acknowledge and deliver
and to file or record in any appropriate public office: (i) any certificate or
other instrument which may be necessary, desirable or appropriate to qualify or
to continue the Company as a limited liability company or to transact business
as a limited liability company in any jurisdiction in which the Company conducts
business; (ii) any amendment to this Agreement or to any certificate or other
instrument which may be necessary, desirable or appropriate to reflect an
Admission, Transfer, withdrawal or any additional capital contributions, all in
accordance with the provisions of this Agreement; and (iii) any certificates or
instruments which may be appropriate, necessary or desirable to reflect the
dissolution and termination of the Company. This power of attorney will be
deemed to be coupled with an interest and will survive the transfer by any
Member of such Member's Membership Interest. Notwithstanding the existence of
this power of attorney, each Member agrees to join in the execution,
acknowledgment and delivery of the instruments referred to above if requested to
do so by the Members. This power of attorney granted to the Manager is a limited
power of attorney that does not authorize the Manager to act on behalf of any
Member except to execute the documents described in this Paragraph 11.2.
10.3 Integration. This Agreement sets forth the entire agreement
between the parties with regard to the subject matter of this Agreement. All
agreements, covenants, representations and warranties, express and implied, oral
and written, of the parties with regard to the subject matter of this Agreement
are contained in this Agreement and the documents referred to in this Agreement
or implementing the provisions of this Agreement. No other agreements,
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covenants, representations or warranties, express or implied, oral or written,
have been made by any Member to the other with respect to the subject matter of
this Agreement. All prior and contemporaneous conversations, negotiations,
possible and alleged agreements and representations, covenants, and warranties
with respect to the subject matter of this Agreement are waived, merged in this
Agreement and/or the other referenced documents and superseded by this
Agreement. This is an integrated agreement.
10.4 Applicable Law. This Agreement shall be governed by,
construed and enforced in accordance with the internal laws of the State of
Delaware.
10.5 Counterparts. This Agreement may be executed in
counterparts and all counterparts so executed shall constitute one Agreement
binding on all the parties. It shall not be necessary for each Member to execute
the same counterpart.
10.6 Severability. In case any one or more of the provisions
contained in this Agreement or any application of the provisions shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions or the remaining applications will
not in any way be affected or impaired.
10.7 Captions. The captions and headings in this Agreement are
for convenience only and will not be considered in interpreting any provision of
this Agreement.
10.8 Binding Effect. Except as otherwise provided to the
contrary, this Agreement will be binding upon, and inure to the benefit of, the
Members and their respective heirs, executors, administrators, successors and
assigns.
10.9 Gender and Number. Whenever required by the context, the
singular will be deemed to include the plural, and the plural will be deemed to
include the singular, and the masculine, feminine and neuter genders will each
be deemed to include the other.
10.10 Amendment. Except as otherwise permitted in this
Agreement, this Agreement may be amended in whole or in part only by an
agreement in writing signed by all of the Members.
10.11 Exhibits. All attached Exhibits are incorporated in this
Agreement by reference as though fully set forth in this Agreement.
10.12 Interpretation. No provision of this Agreement is to be
interpreted for or against any Member because that Member or that Member's legal
representative drafted such provision. The term "including" shall not be
limiting and shall mean "including but not limited to."
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10.13 Company Tax Audits. The Manager is designated as the
Company's "Tax Matters Partner" ("TMP") in accordance with the provisions of
IRCSection 6231(a)(7).
10.14 Waiver of Action for Partition. Each Member irrevocably
waives any right that such Member may have to maintain any action for partition
of the Company or any of its property during the term of the Company. Each
Member hereby acknowledges having been previously advised as to his or her
partition rights and further acknowledges entering into this Agreement in
reliance on the waiver of these rights by each other Member.
10.15 Rights and Remedies Cumulative. The rights and remedies
provided by this Agreement are cumulative and the use of any one right or remedy
by any Member shall not preclude or waive the right to use any or all other
remedies. All rights and remedies are given in addition to any other rights the
parties may have by law, statute, ordinance or otherwise.
10.16 Creditors. None of the provisions of this Agreement shall
be for the benefit of or enforceable by any creditors of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
ADDRESS MANAGER
- ------- -------
4880 Santa Rosa Road SALEM MEDIA CORPORATION,
Suite 300 a New York corporation
Camarillo, CA 93012
By: /s/ Jonathan L. Block
--------------------------------
Jonathan L. Block,
Vice President
[signatures continued on the following page]
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[signatures continued from previous page]
4880 Santa Rosa Road SALEM RADIO OPERATIONS, LLC, a
Suite 300 Delaware limited liability company
Camarillo, CA 93012
By: /s/ Jonathan L. Block
--------------------------------
Jonathan L. Block,
Vice President
4880 Santa Rosa Road SALEM MEDIA CORPORATION,
Suite 300 a New York corporation
Camarillo, CA 93012
By: /s/ Jonathan L. Block
--------------------------------
Jonathan L. Block,
Vice President
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EXHIBIT "A"
ALLOCATION PROVISIONS
1. Capital Accounts and Definitions.
1.1 Capital Account. A Capital Account shall be maintained for
each Member in accordance with Regulations Section 1.704-1(b)(2)(iv). If the
Manager determines that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits to the Capital Accounts (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Company or a
Member), are computed in order to comply with such Regulations, the Manager may
make such modification, provided that the modification is not likely to have a
material affect on the amounts distributable to any Member pursuant to Article 9
of this Agreement upon the dissolution of the Company. The Manager also shall
make any appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b)(2)(iv).
1.2 Definitions. For purposes of this Agreement, the following
capitalized terms are defined as follows:
1.2.1 Depreciation. "Depreciation" means, for each
Accounting Period (as defined below) of the Company, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such Accounting Period, except that if the "Gross Asset
Value" (defined below) of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such Accounting Period, Depreciation
shall, in accordance with Regulations Section 1.704-1(b)(2)(iv)(g)(3), be an
amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if such asset has a zero adjusted tax basis, Depreciation shall be
determined using any reasonable method selected by the Members.
1.2.2 Gross Asset Value. "Gross Asset Value" means, with
respect to any asset, the asset's adjusted basis for federal income tax
purposes, except as follows:
1.2.2.1 Initial Value. The initial Gross Asset
Value of any asset contributed by a Member to the Company shall be the gross
fair market value of such asset at the time of contribution, as mutually agreed
by the contributing Member and the Manager.
1.2.2.2 Adjustments. The Gross Asset Values of
all Company assets shall be adjusted to equal their respective gross fair market
values, as determined by the Manager, as of the following times: (i) the
acquisition of an additional interest in the Company
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by any new or existing Member in exchange for more than a de minimis capital
contribution; (ii) the distribution by the Company to a Member of more than a de
minimis amount of Company property as consideration for an interest in the
Company; and (iii) the liquidation of the Company within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, that adjustments
pursuant to clauses (i) and (ii) above shall be made only if the Manager
reasonably determines that such adjustments are necessary or appropriate to
reflect the relative economic interests of the Members in the Company;
1.2.2.3 Distributions. The Gross Asset Value of
any Company asset distributed to any Member shall be the gross fair market value
of such asset on the date of distribution; and
1.2.2.4 Special Adjustments. The Gross Asset
Values of Company assets shall be increased (or decreased) to reflect any
adjustments to the adjusted basis of such assets pursuant to IRC Section 734(b)
or IRC Section 743(b), but only to the extent that such adjustments are required
to be taken into account in determining Capital Accounts pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m) and subparagraph 2.4 of this Exhibit "A"; provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subparagraph 1.2.2.4 to the extent the Manager determines that an adjustment
pursuant to subparagraph 1.2.2.2 of this Exhibit "A" is necessary or appropriate
in connection with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph 1.2.2.4. If the Gross Asset Value of an asset has
been determined or adjusted pursuant to subparagraphs 1.2.2.1 or 1.2.2.2 of this
Exhibit "A" or this subparagraph 1.2.2.4, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing "Profits" and "Losses" (as defined below).
1.2.2.5 Manager's Determination. Except as
otherwise provided in subparagraph 1.2.2.1 of this Exhibit "A", for purposes of
determining the Gross Asset Value of any Company asset, the reasonable
determination of the Manager shall control.
1.2.3 Profits and Losses. "Profits" and "Losses" means,
for each Accounting Period of the Company, an amount equal to the Company's
taxable income or loss for such year, determined in accordance with IRC Section
703(a) (for this purpose, all items of income, gain, loss or deduction required
to be stated separately pursuant to IRC Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
1.2.3.1 Income. Any income of the Company that
is exempt from federal income tax and not otherwise taken into account in
computing Profits or Losses pursuant to this subparagraph 1.2.3 shall be added
to such taxable income or loss;
1.2.3.2 Special Expenditures. Any expenditures
of the Company described in IRC Section 705(a)(2)(B) or treated as IRC Section
705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i)
and not otherwise taken into account in computing Profits or
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Losses pursuant to this subparagraph 1.2.3 shall be subtracted from such taxable
income or loss;
1.2.3.3 Disposition. If the Gross Asset Value of
any Company asset is adjusted pursuant to subparagraph 1.2.2.2 or subparagraph
1.2.2.3 of this Exhibit "A", the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset;
1.2.3.4 Gross Asset Value Adjustment. Gain or
loss resulting from any disposition of Company property with respect to which
gain or loss is recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its Gross Asset Value;
1.2.3.5 Special Depreciation. In lieu of the
depreciation, amortization, and other cost recovery deductions taken into
account in computing such taxable income or loss, there shall be taken into
account Depreciation for such Accounting Period, computed in accordance with
subparagraph 1.2.1 of this Exhibit "A"; and
1.2.3.6 Special Allocations. Notwithstanding any
other provision of this Paragraph 1, any items which are specially allocated
pursuant to Paragraphs 2 or 3 of this Exhibit "A" shall not be taken into
account in computing Profits or Losses.
1.2.4 Adjusted Capital Account Deficit. For purposes of
this Agreement, "Adjusted Capital Account Deficit" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant Accounting Period after giving effect to the following
adjustments:
1.2.4.1 Restoration Amounts. Credit to such
Capital Account any amounts which such Member is obligated to restore pursuant
to any provision of the Agreement or is deemed to be obligated to restore
pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
1.2.4.2 Special Debits. Debit to such Capital
Account the items described in Regulations 1.704-1(b)(2)(ii)(d) (4),
1.704-1(b)(2)(ii)(d)(5) and/or 1.704- 1(b)(2)(ii)(d)(6).
The definition of Adjusted Capital Account
Deficit is intended to comply with the provisions of RegulationsSection
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
2. Special Allocations: The following special allocations shall be made
in the following order:
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2.1 Minimum Gain Chargeback. Each Member shall be specially
allocated items of Company income and gain to the extent necessary to comply
with the "minimum gain chargeback" requirements in Regulations Sections
1.704-2(f), (i)(4).
2.2 Qualified Income Offset. Each Member shall be specially
allocated items of Company income and gain to the extent necessary to comply
with the "qualified income offset" requirements in Regulations Section
1.704-1(b)(2)(d).
2.3 Recourse and Nonrecourse Debt. Each Member shall be
specially allocated items of Company loss, deduction and IRC Section
705(a)(2)(B) expenditure to the extent necessary to comply with the allocation
requirements for "partner nonrecourse deductions" and "nonrecourse deductions"
in Regulations Sections 1.704-2(i), (c).
2.4 Special Tax Basis Adjustments. To the extent that
Regulations Section 1.704-1(b)(2)(iv)(m) requires an adjustment to the adjusted
tax basis of any Company property under IRC Sections 734(b) or 743(b) to be
taken into account in determining Capital Accounts, the amount of such
adjustment to Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specially allocated to the
Members in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such section of the Regulations.
2.5 Adjusted Capital Account Deficits. The Losses allocated
pursuant to Paragraph 3.3 of this Agreement shall not exceed the maximum amount
of Losses that can be so allocated without causing any Member to have an
Adjusted Capital Account Deficit at the end of any Accounting Period. In the
event that some but not all of the Members would have Adjusted Capital Account
Deficits as a consequence of an allocation of Losses under Paragraph 3.2 of this
Agreement, the limitation set forth in this Paragraph 2.5 shall be applied on a
Member by Member basis so as to allocate the maximum permissible loss to each
Member under Regulations Section 1.704-1(b)(2)(ii)(d).
3. Other Allocation Rules:
3.1 Method of Allocation. For any Company Accounting Period, all
items of Company income, gain, loss, deduction and any other items not otherwise
allocated pursuant to this Agreement shall be divided among the Members in the
same proportions as they share Profits or Losses, as the case may be, for such
Company Accounting Period.
3.2 Acknowledgment by Members. The Members are aware of the
income tax consequences of the allocations made by Article 3 of this Agreement
and this Exhibit "A" and agree to be bound by the provisions of Article 3 of
this Agreement and this Exhibit "A" in reporting their shares of Company income
and loss for income tax purposes.
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3.3 Contributed Property. In accordance with IRC Section 704(c)
and the Regulations, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its initial Gross Asset Value (computed in accordance with
subparagraph 1.2.2.1 of this Exhibit "A").
3.4 Tax Purposes. In the event the Gross Asset Value of any
Company asset is adjusted pursuant to subparagraph 1.2.2.2 of this Exhibit "A",
subsequent allocations of income, gain, loss and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the same
manner as under IRC Section 704(c) and the Regulations thereunder. Any elections
or other decisions relating to such allocations shall be made by the Manager in
a manner that reasonably reflects the purpose and intention of the Agreement.
Allocations pursuant to this Paragraph 3 are solely for purposes of federal and
state income taxes and shall not, except to the extent required pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(m), affect, or in any way be
taken into account in computing, any Member's Capital Account or share of
Profits, Losses, other items or distributions pursuant to any provision of this
Agreement.
3.5 Liquidation of Member's Interest. Upon liquidation of any
Member's interest in the Company, the liquidating distributions shall be made in
accordance with the positive Capital Account balances of the Members adjusted as
otherwise required by the provisions of this Agreement. A liquidation of a
Member's interest shall occur as required pursuant to Regulations Section
1.704-1(b)(2)(ii)(g).
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