SECOND AMENDMENT TO THE
LIMITED LIABILITY COMPANY AGREEMENT
of the members of
INTERACTIVE VOICE MEDIA MICHIGAN L.L.C.
(a Delaware limited liability company)
THIS SECOND AMENDMENT TO, THE LIMITED LIABILITY COMPANY AGREEMENT (the
"Agreement") is made and entered into effective as of the 28th day of February
2000, by and between Interactive Voice Media Michigan L.L.C. (the "Company"), a
Delaware limited liability company, and Interactive Voice Media New York LLC, a
Delaware limited liability company and the sole member of Company (the
"Member").
WITNESSETH:
WHEREAS, the Member and the Company entered into a Limited Liability
Company Agreement dated May 29, 1997 (the "Original Agreement"); and
WHEREAS, the Member and the Company entered into a First Amendment to the
Limited Liability Company Agreement dated March 26, 1998 (the "First Amendment")
(the Original Agreement, as amended by the First Amendment, is referred to
herein as the "Entire Agreement"); and
WHEREAS, the Member and the Company desire to amend the Entire Agreement,
as hereinafter provided.
NOW THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto agree as follows:
1. Amendment.
---------
Section 5.8 of the Entire Agreement is hereby amended to read in its
entirety as follows:
5.8 Officers.
--------
5.8.1 The Company shall have the following Officers:
Chairman of the Management Committee, Vice Chairman of the Management
Committee, Chief Executive Officer, Chief Financial Officer, Secretary and
Treasurer, and such other officers as the Management Committee from time to
time may appoint.
5.8.2 The Officers shall be appointed by the Management
Committee, and shall serve at the sufferance of the Management Committee.
Each Officer is subject to removal or replacement by the Managers at any
time. Subject to the limitations of this Agreement with respect to actions
required to be
2
taken by the Management Committee or the Members, the Officers shall have
the rights, powers, duties and responsibilities stated in Section 5.8.3
below, except as such rights, powers, duties and responsibilities may be
limited or expanded by action of the Management Committee; and any other
Officers shall have such rights, powers, duties and responsibilities as
shall be granted by action of the Management Committee. Officers shall be
considered to have a delegation of the Managers' powers, pursuant to
Section 18 407 of the Delaware Act, to the extent of their authority to
act as provided herein. Officerss who are not Managers under this Agreement
shall nevertheless be deemed "managers" for purposes of Section 18 303 of
the Delaware Act, regarding limited liability, but shall not, by virtue of
this sentence be a Manager under this Agreement or a "manager" under or
within the meaning of the Act, except as specifically hereinabove provided.
Any Officer of the Company may resign at any time by giving written notice
to the Management Committee. The resignation of any Officer shall take
effect upon receipt of notice thereof or at such later date specified in
such notice; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
5.8.3 The Officers shall have the following rights, powers,
duties and responsibilities:
(a) The Chairman of the Management Committee is authorized to preside
at meetings of the Members and of the Management Committee.
(b) The Vice Chairman of the Management Committee shall (in the
absence of the Chairman of the Management Committee) preside at
meetings of the Members and of the Management Committee.
(c) The Chief Executive Officer is authorized to be the chief
executive officer of the Company; shall (in the absence of the
Chairman of the Management Committee and the Vice Chairman of
the Management Committee) preside at meetings of the Members and
of the Management Committee and shall see that all orders and
resolutions of the Management Committee are carried into effect.
He shall have general and active management of all aspects of the
business of the Company. He shall have general responsibility for
all technological systems and related operations of the Company,
including, but not limited to telecommunications business systems
and Internet based business systems and implementation of any
upgrades, new services, repairs or changes to the same. He shall
have active management of all personnel of the Company, including
but not limited to marketing, business development, business
units and customer service. He may
3
sign, with any other proper Officer, certificates for membership
interests in the Company and any deeds, bonds, mortgages,
contracts and other documents which the Management Committee has
authorized to be executed, except where required by law to be
otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Management
Committee to some other Officer or agent of the Company. In
addition, the Chief Executive Officer shall perform whatever
duties and shall exercise whatever powers as may be prescribed
from time to time by the Management Committee.
(d) The Chief Financial Officer is authorized to be an executive
officer of the Company. The Chief Financial Officer shall be
responsible to the Management Committee and the Chief Executive
Officer for all financial control and internal audit of the
Company. He shall perform such other duties as may be assigned to
him by the Management Committee or the Chief Executive Officer.
(e) The Secretary is authorized to attend all meetings of the Members
and all meetings of the Management Committee. The Secretary shall
keep the minutes of the meetings of the Members and the
Management Committee in appropriate books and record all votes.
The Secretary shall give, or cause to be given, notice of all
meetings of the Members and the Management Committee as required
by law or the Agreement. The Secretary shall be custodian of the
records and seal of the Company and when authorized by the
Management Committee, shall affix the same to any instrument
requiring it and, when so affixed, it shall be attested by the
signature of the Secretary. The Secretary shall have general
charge of the membership certificate books of the Company and
shall perform such other duties as may be prescribed by the
Management Committee or the Chief Executive Officer, under whose
supervision the Secretary shall be. The Secretary shall sign,
with any other proper Officer, certificates for membership
interests in the Company. The Secretary shall respond to all
correspondence and present to the Management Committee at its
meetings all official communications received by the Secretary.
The Secretary shall perform all the duties incident to the office
of Secretary of the Company.
4
(f) The Treasurer is authorized to have the care and custody of and
be responsible for all of the funds and securities of the Company
and shall deposit such funds and securities in the name and to
the credit of the Company in such banks and/or safe deposit
companies as the Management Committee may designate. The
Treasurer shall make, sign, and endorse in the name of the
Company all checks, drafts, notes, and other orders for the
payment of money, and pay out and dispose of such under the
direction of the Chief Executive Officer or the Management
Committee. The Treasurer shall keep accurate books of account of
all the business and transactions of the Company and shall
exhibit at all reasonable times the books and accounts to any
Manager or member of the Company upon application at the office
of the Company during business hours. The Treasurer shall
further do and perform all other duties incident to the office
of Treasurer as may be prescribed by the Chief Executive Officer
or Management Committee from time to time.
2. Entire Agreement.
Except as specifically provided herein, the Entire Agreement shall remain
in full force and effect, without amendment or modification.
IN WITNESS WHEREOF, each of the parties hereto has executed this Second
Amendment to the Limited Liability Company Agreement as of the date first above
written.
The Company The Sole Member
Interactive Voice Media Michigan L.L.C. Interactive Voice Media New York LLC
By: /s/ Bruce Croxon By: /s/ Bruce Croxon
------------------------------------ -------------------------------------
Bruce Croxon, Chief Executive Officer Bruce Croxon, Chief Executive Officer
FIRST AMENDMENT TO THE
LIMITED LIABILITY COMPANY AGREEMENT
of the members of
INTERACTIVE VOICE MEDIA MICHIGAN L.L.C.
(a Delaware limited liability company)
THIS FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT (the
"Agreement") is made and entered into effective as of the 26th day of March
1998, by and between Interactive Voice Media Michigan L.L.C. (the "Company"), a
Delaware limited liability company, and Interactive Media (New York) Corp., a
New York corporation and the sole member of Company (the "Member").
WITNESSETH:
WHEREAS, the Member and the Company entered into a Limited Liability
Company Agreement dated May 29, 1997 (the "Original Agreement"); and
WHEREAS, the Member and the Company desire to amend the Original Agreement,
as hereinafter provided.
NOW THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto agree as follows:
1. Amendment.
---------
Section 5.8 of the Original Agreement is hereby amended to read in its
entirety as follows:
5.8 Officers.
--------
5.8.1 The Company shall have the following Officers:
Chairman of the Management Committee, Chief Executive Officer, President
and Chief Operating Officer, Chief Technology Officer, Chief People
Officer, Chief Financial Officer, Secretary and Treasurer, and such other
officers as the Management Committee from time to time may appoint.
5.8.2 The Officers shall be appointed by the Management
Committee, and shall serve at the sufferance of the Management Committee.
Each Officer is subject to removal or replacement by the Managers at any
time. Subject to the limitations of this Agreement with respect to actions
required to be taken by the Management Committee or the Members, the
Officers shall have the rights, powers, duties and responsibilities stated
in Section 5.8.3 below, except as such rights, powers, duties and
responsibilities may be limited or expanded by action of the Management
Committee; and any other Officers shall have such rights, powers,
2
duties and responsibilities as shall be granted by action of the Management
Committee. Officers shall be considered to have a delegation of the
Managers' powers, pursuant to Section 18 407 of the Delaware Act, to the
extent of their authority to act as provided herein. Officers who are not
Managers under this Agreement shall nevertheless be deemed "managers" for
purposes of Section 18-303 of the Delaware Act, regarding limited
liability, but shall not, by virtue of this sentence be a Manager under
this Agreement or a "manager" under or within the meaning of the Act,
except as specifically hereinabove provided. Any Officer of the Company may
resign at any time by giving written notice to the Management Committee.
The resignation of any Officer shall take effect upon receipt of notice
thereof or at such later date specified in such notice; and, unless
otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
5.8.3 The Officers shall have the following rights, powers,
duties and responsibilities:
(a) The Chairman of the Management Committee is authorized to preside
at meetings of the Members and of the Management Committee.
(b) The Chief Executive Officer is authorized to be the chief
executive officer of the Company; shall (in the absence of the
Chairman of the Management Committee) preside at meetings of the
Members and of the Management Committee and shall see that all
orders and resolutions of the Management Committee are carried
into effect. He may sign, with any other proper Officer,
certificates for membership interests in the Company and any
deeds, bonds, mortgages, contracts and other documents which the
Management Committee has authorized to be executed, except where
required by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly
delegated by the Management Committee to some other Officer or
agent of the Company. In addition, the Chief Executive Officer
shall perform whatever duties and shall exercise whatever powers
as may be prescribed from time to time by the Management
Committee.
(c) The President is authorized to be an executive officer of the
Company; shall (in the absence of both the Chairman of the
Management Committee and the Chief Executive Officer) preside at
meetings of the Members and of the Management Committee; and
shall have general and active management
3
of the business of the Company; and shall be responsible to the
Chief Executive Officer. He may sign, with any other proper
Officer, certificates for membership interests in the Company and
any deeds, bonds, mortgages, contracts and other documents which
the Management Committee has authorized to be executed, except
where required by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly
delegated by the Management Committee to some other Officer or
agent of the Company. In addition, the President shall perform
whatever duties and shall exercise whatever powers as may be
prescribed from time to time by the Management Committee. The
President shall also be known as the Chief Operating Officer of
the Company.
(d) The Chief Technology Officer is authorized to be an executive
officer of the Company. The Chief Technology Officer shall be
responsible to the Management Committee, the Chief Executive
Officer and the President for all technological systems and
related operations, including, but not limited to
telecommunications business systems and Internet based business
systems and implementation of any upgrades, new services, repairs
or changes to the same. He shall perform such other duties as may
be assigned to him by the Management Committee, the Chief
Executive Officer or the President.
(e) The Chief People Officer is authorized to be an executive officer
of the Company. The Chief People Officer shall be responsible to
the Management Committee, the Chief Executive Officer and
President for the management of all personnel of the Company,
including but not limited to marketing, business development,
business units and customer service. He shall perform such other
duties as may be assigned to him by the Management Committee, the
Chief Executive Officer or the President.
(f) The Chief Financial Officer is authorized to be an executive
officer of the Company. The Chief Financial Officer shall be
responsible to the Management Committee, the Chief Executive
Officer and the President for all financial control and internal
audit of the Company. He shall perform such other duties as may
be assigned to him by the Management Committee, the Chief
Executive Officer or the President.
4
(g) The Secretary is authorized to attend all meetings of the Members
and all meetings of the Management Committee. The Secretary shall
keep the minutes of the meetings of the Members and the
Management Committee in appropriate books and record all votes.
The Secretary shall give, or cause to be given, notice of all
meetings of the Members and the Management Committee as required
by law or the Agreement. The Secretary shall be custodian of the
records and seal of the Company and when authorized by the
Management Committee, shall affix the same to any instrument
requiring it and, when so affixed, it shall be attested by the
signature of the Secretary. The Secretary shall have general
charge of the membership certificate books of the Company and
shall perform such other duties as may be prescribed by the
Management Committee or the President, under whose supervision
the Secretary shall be. The Secretary shall sign, with any other
proper Officer, certificates for membership interests in the
Company. The Secretary shall respond to all correspondence and
present to the Management Committee at its meetings all official
communications received by the Secretary. The Secretary shall
perform all the duties incident to the office of Secretary of the
Company.
(h) The Treasurer is authorized to have the care and custody of and
be responsible for all of the funds and securities of the Company
and shall deposit such funds and securities in the name and to
the credit of the Company in such banks and/or safe deposit
companies as the Management Committee may designate. The
Treasurer shall make, sign, and endorse in the name of the
Company all checks, drafts, notes, and other orders for the
payment of money, and pay out and dispose of such under the
direction of the President or the Management Committee. The
Treasurer shall keep accurate books of account of all the
business and transactions of the Company and shall exhibit at all
reasonable times the books and accounts to any Manager or member
of the Company upon application at the office of the Company
during business hours. The Treasurer shall further do and perform
all other duties incident to the office of Treasurer as may be
prescribed by the President or Management Committee from time to
time.
5
2. Original Agreement.
------------------
Except as specifically provided herein, the Original Agreement shall remain
in full force and effect, without amendment or modification.
IN WITNESS WHEREOF, each of the parties hereto has executed this First
Amendment to the Limited Liability Company Agreement as of the date first above
written.
The Company The Sole Member
Interactive Voice Media Michigan L.L.C. Interactive Voice Media (New York) Corp.
By: /s/ Nicholas Paine By: /s/ Nicholas Paine
----------------------------------- ---------------------------------------
Nicholas Paine, Manager Nicholas Paine, Chief Executive Officer
LIMITED LIABILITY COMPANY AGREEMENT
of the members of
INTERACTIVE VOICE MEDIA MICHIGAN L.L.C.
a Delaware limited liability company
Dated May 29, 1997
TABLE OF CONTENTS
1. DEFINITIONS.................................................................1
2. ORGANIZATION OF THE COMPANY.................................................1
2.1 ORGANIZATION...............................................................1
2.2 NAME.......................................................................2
2.3 PRINCIPAL PLACE OF BUSINESS................................................2
2.4 STATUTORY AGENT............................................................2
2.5 TERM.......................................................................2
3. PURPOSES OF THE COMPANY.....................................................2
4. NAMES AND ADDRESSES OF MEMBERS..............................................2
5. MANAGEMENT OF THE COMPANY...................................................3
5.1 MANAGEMENT COMMITTEE.......................................................3
5.2 RESIGNATION................................................................3
5.3 FIDUCIARY RELATIONSHIP.....................................................3
5.4 MEETINGS OF THE MANAGEMENT COMMITTEE.......................................3
5.5 DECISIONS OF THE MANAGEMENT COMMITTEE......................................4
5.6 ACTIONS OF THE MANAGEMENT COMMITTEE WITHOUT A MEETING......................4
5.7 AUTHORITY OF MANAGEMENT COMMITTEE..........................................4
5.8 OFFICERS...................................................................4
6. RIGHTS AND POWERS OF THE MEMBERS............................................5
6.1 NO COMMITMENTS.............................................................5
6.2 ACTIONS REQUIRING THE APPROVAL OF A MAJORITY IN INTEREST OF THE MEMBERS....6
6.3 MEETINGS OF THE MEMBERS....................................................6
6.4 DECISIONS OF THE MEMBERS...................................................6
6.5 PROXIES....................................................................6
6.6 ACTIONS OF THE MEMBERS WITHOUT A MEETING...................................6
6.7 WAIVER OF NOTICE ..........................................................6
6.8 TAX MATTERS PARTNER........................................................6
7. LIMITATION OF LIABILITY; INDEMNIFICATION....................................7
7.1 PROOF OF FAILURE TO STANDARD OF CONDUCT....................................7
7.2 LIMITATION OF LIABILITY....................................................7
7.3 INDEMNIFICATION OF MEMBERS, MANAGERS AND THE PRESIDENT.....................7
8. CAPITAL CONTRIBUTIONS.......................................................7
8.1 GENERALLY..................................................................7
8.2 MEMBERS' CAPITAL ACCOUNTS..................................................8
9. ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS.............................8
9.1 ALLOCATION OF PROFITS AND LOSSES...........................................8
9.2 ACCOUNTING................................................................10
9.3 DISTRIBUTIONS.............................................................11
9.4 GUARANTEED PAYMENTS ......................................................11
10. TRANSFER OF INTERESTS; EFFECT OF WITHDRAWAL EVENTS........................11
10.1 RIGHT TO TRANSFER........................................................11
10.2 STATUS OF THIRD PARTY TRANSFEREE.........................................12
ii
10.3 ABSOLUTE RESTRICTION ON TRANSFERS........................................12
10.4 TIME OF TRANSFER.........................................................12
10.5 DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF TRANSFERRED INTEREST.........12
10.6 EFFECT OF WITHDRAWAL EVENTS..............................................13
11. TERMINATION, LIQUIDATION AND WINDING UP...................................13
11.1 TERMINATION AND WINDING UP OF THE COMPANY................................13
11.2 METHOD OF DISTRIBUTION UPON WINDING UP...................................14
11.3 ORDERLY LIQUIDATION......................................................14
12. MISCELLANEOUS PROVISIONS..................................................14
12.1 NOTICES..................................................................14
12.2 BOOKS OF ACCOUNTS AND RECORDS............................................14
12.3 GOVERNING LAW............................................................15
12.4 WAIVER OF ACTION FOR PARTITION...........................................15
12.5 AMENDMENTS...............................................................15
12.6 CONSTRUCTION.............................................................15
12.7 WAIVERS..................................................................15
12.8 RIGHTS AND REMEDIES CUMULATIVE...........................................15
12.9 ENTIRE AGREEMENT.........................................................15
12.10 SEVERABILITY............................................................16
12.11 HEIRS, SUCCESSORS AND ASSIGNS...........................................16
12.12 CREDITORS...............................................................16
12.13 COUNTERPARTS............................................................16
12.14 FEDERAL INCOME ME TAX ELECTIONS.........................................16
LIMITED LIABILITY COMPANY AGREEMENT
of the members of
INTERACTIVE VOICE MEDIA MICHIGAN L.L.C.
(a Delaware limited liability company)
THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and
entered into effective as of the 29th day of May, 1997, by and among the persons
listed on Schedule A attached hereto under the caption "Members" (the
"Members"), and Interactive Voice Media Michigan L.L.C. (the "Company"), a
Delaware limited liability company.
WITNESSETH:
WHEREAS, the Members have organized the Company as a Delaware limited
liability company for the purposes provided herein; and
WHEREAS, the Members desire, by executing this Agreement, to acknowledge
their intent to become members of the Company; and
WHEREAS, the Members desire to enter into a written agreement as to the
affairs of the Company and the conduct of the Company's business; and
WHEREAS, the Members intend this Agreement to be a "limited liability
company agreement" of the Company, within the meaning of Section 18 101 of the
Delaware Act.
NOW THEREFORE, In consideration of the covenants and agreements herein
contained, the parties hereto agree as follows:
1. Definitions.
-----------
Certain capitalized words and phrases used in this Agreement shall have the
meanings set forth in Exhibit 1 attached hereto and incorporated herein by
reference.
2. Organization of the Company.
---------------------------
2.1 Certificate of Formation.
------------------------
On May 29, 1997, the Members organized the Company by executing and
filing, by Candace Lynn Bell as an authorized person, a Certificate of Formation
with the Secretary of State of the State of Delaware in accordance with and
pursuant to the Delaware Act. The Members and the Company acknowledge the
resignation of Ms. Bell as authorized person of the Company, and the assignment
by Ms. Bell to the Members of all her right, title and interest, if any, as
authorized person of the Company. The Members and the Company hereby agree to
assume all duties and responsibilities in connection therewith, and to indemnify
and hold
2
harmless Ms. Bell from and against any and all liability of any kind whatsoever
which Ms. Bell may incur or suffer as a result of being the initial authorized
person of the Company. Ms. Bell shall be a third party beneficiary of the
provisions of this Section of the Agreement.
2.2 Agreement.
---------
This Agreement shall constitute a "limited liability company
agreement" of the Company, within the meaning of Section 18 101 of the Delaware
Act.
2.3 Admission of Members.
--------------------
This Agreement acknowledges that the Members were admitted as members
of the Company upon the formation of the Company.
2.4 Name.
----
The name of the Company is Interactive Voice Media Michigan L.L.C.
2.5 Principal Place of Business.
---------------------------
The principal place of business of the Company shall be located at
such address as shall be determined from time to time by the Management
Committee.
2.6 Statutory Agent.
---------------
The name and address of the registered agent for service of process
in Delaware shall be Prentice Hall Corporation System, Inc., 1013 Centre Road,
Wilmington, County of New Castle, Delaware 19805, or such other agent as the
Company may appoint from time to time in accordance with the Delaware Act.
2.7 Term.
----
The term of the Company commenced on the date of filing of the
Certificate of Formation of the Company with the Secretary of State of the
State of Delaware and shall continue until terminated in accordance with the
terms of Section 11.1 of this Agreement.
3. Purposes of the Company
-----------------------
The purposes of the Company are to engage in any and all businesses or
activities for which limited liability companies may be organized under the
Delaware Act.
4. Names and Addresses of Members.
------------------------------
The names and addresses of the Members are as set forth on Schedule A
attached to this Agreement and incorporated herein by reference.
3
5. Management of the Company.
-------------------------
5.1 Management Committee.
--------------------
Subject to Section 6 hereof and to the right and power to delegate to
one or more officers of the Company in accordance with Section 5.8 below, the
management of the Company shall be vested in a management committee (the
"Management Committee"), consisting initially of four (4) managers (each a
"Manager"). The Managers shall be elected by a Majority-in-Interest of the
Members. The initial Managers shall be:
Nicholas Paine
Bruce Croxon
Paul Woolner
John Bradlow
Each Manager may resign at any time. The number of Managers comprising the
Management Committee shall be determined from time to time by a
Majority-in-Interest of the Members. Each Manager is subject to removal or
replacement at any time by a Majority-in-Interest of the Members. A
Majority in Interest of the Members may fill any vacancy created by the death,
resignation or removal of any Manager or by the expansion of the Management
Committee.
5.2 Resignation.
-----------
Any Manager of the Company may resign at any time by giving written
notice to the Members. The resignation of any Manager shall take effect upon
receipt of notice thereof or at such later date specified in such notice; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
5.3 Fiduciary Relationship.
----------------------
At all times the Management Committee will have a fiduciary
relationship to the Company and to each Member. In performing its duties under
this Agreement, the Management Committee shall act in good faith and on a fair
dealing basis with the Company and each of the Members.
5.4 Meetings of the Management Committee.
------------------------------------
Any Manager may call a meeting of the Management Committee upon
forty eight (48) hours notice in writing (which may be by facsimile), which
notice shall specify the date and time of the meeting. Meetings of the
Management Committee shall be held at the Company's principal executive offices,
unless a majority of the Managers agree to meet at another location. Managers
may be present at any meeting of the Management Committee by telephone or other
means of communication, provided that each Manager can hear all other present
Managers. A majority of all Managers shall constitute a quorum of the Management
Committee for any meeting.
4
5.5 Decisions of the Management Committee.
-------------------------------------
Decisions of the Management Committee shall be made by a number of
Managers in attendance at a duly called and held meeting constituting a majority
of the entire Management Committee.
5.6 Actions of the Management Committee Without a Meeting.
-----------------------------------------------------
Any action which may be taken by the Management Committee at a meeting
may be taken by unanimous written action without a meeting, provided that the
writing setting forth such action shall be kept with the minutes of the meetings
of the Management Committee.
5.7 Authority of Management Committee.
---------------------------------
The Management Committee shall direct, manage and control the
business of the Company. Except for situations in which the approval of the
Members is expressly required by this Agreement or by nonwaivable provisions of
the Act, the Management Committee 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. Managers may take action permitted hereunder or under the
Act, only if approved by the Management Committee.
5.8 Officers.
--------
5.8.1 The Company shall have a President, Vice President,
Secretary and Treasurer, and such other officers as the Management Committee
fromm time to time may appoint. The initial officers of the Company shall be:
Nicholas Paine President
Ted Madden Vice President
Denis Weil Vice President
Ron Anderson Secretary
Ron Anderson Treasurer
5.8.2 The officers shall be appointed by the Management
Committee, and shall serve at the sufferance of the Management Committee. Each
offer is subject to removal or replacement by the Managers at any time. Subject
to the limitations of this Agreement with respect to actions required to be
taken by the Management Committee or the Members, the President, Vice President,
Secretary and Treasurer shall have those rights, powers, duties and
responsibilities as are customarily possessed by such officers of a Delaware
corporation, except as such rights, powers, duties and responsibilities may be
limited or expanded by action of the Management Committee; and any other
officers shall have such rights, powers, duties and responsibilities as shall be
granted by action of the Management Committee. Officers shall be considered to
have a delegation of the Managers' powers, pursuant to Section 18 407 of the
Delaware Act, to the extent of their authority to act as provided herein.
Officers who are not
5
Managers under this Agreement shall nevertheless be deemed "managers" for
purposes of Section 18 303 of the Delaware Act, regarding limited liability,
but shall not, by virtue of this sentence be a Manager under this Agreement or
a "manager" under or within the meaning of the Act, except as specifically
hereinabove provided. Any Officer of the Company may resign at any time by
giving written notice to the Management Committee. The resignation of any
Officer shall take effect upon receipt of notice thereof or at such later date
specified in such notice; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
6. Rights and Powers of the Members.
--------------------------------
6.1 No Commitments.
--------------
In dealing with third parties with respect to the Company's business
or on behalf of the Company, the Members shall act in accordance with policies
established by the Management Committee or by consent of a Majority-in-Interest
of the Members. No Member shall, in the name of or on behalf of the Company,
sign or execute any contract, instrument or document, perform any other act,
engage in any transaction, commit or bind the Company to any act, contract,
instrument or document, or incur any debt, except as expressly permitted by this
Agreement or with the written concurrence of a Majority-in-Interest of the
Members.
6.2 Actions Requiring the Approval of a Majority-in-Interest of the
---------------------------------------------------------------
Members.
- -------
Notwithstanding anything to the contrary contained in this
Agreement, any action with respect to the following matters shall require prior
approval of a Majority-in-Interest of the Members:
(A) any amendment, modification or change to the authority and
powers of the Management Committee as contemplated by
Section 5 hereof,
(B) any sale, exchange, lease, transfer or other disposition of
all or substantially all of the assets of the Company;
(C) any merger or consolidation of the Company with or into any
other entity;
(D) any other matter requiring the approval of a
Majority-in-Interest of the Members under any other
provision of this Agreement; and
(E) the admission of a person as a substituted Member of the
Company in accordance with Section 10.2.
6
6.3 Meetings of the Members.
-----------------------
Any Member may call a meeting of the Members upon fifteen (15) days
notice in writing (which may be by facsimile), which notice shall specify the
date, time and purpose or purposes of the meeting. Meetings of the Members
shall be held at the Company's principal executive offices, unless a
Majority-in-Interest of the Members agree to meet at another location. Members
may be present at any meeting of the Members by telephone or other means of
communication, provided that each Member can hear all other present Members.
Members holding a Majority-in-Interest of all of the Members shall constitute a
quorum of the Members, or Members of that class of Members, for the transaction
of business at any meeting.
6.4 Decisions of the Members.
------------------------
Decisions of the Members shall be made by those Members holding a
Majority-in-Interest of the Members.
6.5 Proxies.
-------
At all meetings of the Members, a Member may be present in person
or by proxy executed in writing by the Member. Any such proxy shall be filed
with the Company before or at the time of the meeting. No such proxy shall be
valid after eleven (11) months from the date of its execution, unless otherwise
provided in the proxy.
6.6 Actions of the Members Without a Meeting.
----------------------------------------
Any action which may be taken by the Members at a meeting may be taken
by unanimous written action, without a meeting, of the Members entitled to vote
at a meeting with respect to such action; provided that the writing setting
forth such action shall be kept with the minutes of the meetings of the Members.
6.7 Waiver of Notice.
----------------
Notice of any meeting of the Members may be waived by a Member by a
waiver of the notice in writing, signed by the Member entitled to the notice,
whether before, at or after the time stated for the meeting. Attendance of a
Member at any meeting, whether in person, by proxy as provided above or by
telephone as provided above, shall constitute waiver of notice of such meeting.
Any waiver of notice of a meeting by a Member hereunder shall be equivalent to
the giving of such notice.
6.8 Tax Matters Partner.
-------------------
Interactive Media (New York) Corp. shall act as the initial "tax
matters partner" for the Company, as that term is defined in, and for all
purposes of, Section 6231 (a)(7) of the Code.
7
7. Limitation of Liability; Indemnification.
----------------------------------------
7.1 Proof of Failure to Standard of Conduct.
---------------------------------------
A Member, a Manager or an Officer shall not be deemed to have
violated any standard of conduct under this Section 7 unless such violation is
proved, by clear and convincing evidence, in an action brought against such
person. The termination of any action, suit or proceeding by judgment, order,
settlement or upon a plea of nolo contendere or its equivalent shall not of
itself constitute proof or create a presumption that the appropriate standard of
conduct has been violated.
7.2 Limitation of Liability.
-----------------------
No Member, no Manager and no person serving as an Officer shall be
liable to the Company or to any Member in damages for any action that such
Member, Manager or Officer takes or fails to take in such capacity, unless it is
proved, by clear and convincing evidence, in a court of competent jurisdiction
that such action or failure to act involved an act or omission undertaken with
deliberate intent to cause injury to the Company or undertaken with reckless
disregard for the best interests of the Company.
7.3 Indemnification of Members, Managers and the President.
------------------------------------------------------
The Company agrees to indemnify (A) each Member, (B) each Manager and
(C) each Officer (each an "indemnified party"), to the fullest extent permitted
by law, and to save and hold each indemnified party harmless from, and in
respect of, all (1) fees, costs and expenses incurred in connection with or
resulting from any claim, action or demand against such indemnified party or the
Company that arise out of or in any way relate to the Company, its properties,
business or affairs, and (2) such claims, actions and demands, and any losses or
damages resulting from such claims, actions and demands, including amounts paid
in settlement or compromise (if recommended by attorneys for the Company) of any
such claim, action or demand; provided, however, that this indemnification shall
apply only so long as the indemnified party has acted in good faith on behalf of
the Company, in a manner reasonably believed by him to be within the scope of
his authority under this Agreement and in the best interests of the Company, and
only if such action or failure to act did not constitute willful misconduct,
fraud or gross negligence.
8. Capital Contributions.
---------------------
8.1 Generally.
---------
Each Member has made a Capital Contribution in cash to the Company
as set forth on Schedule A attached hereto. Except as set forth in Section 8.2,
no Member shall make any additional Capital Contributions to the Company without
the prior approval of a Majority-in-Interest of the Members. No Member shall be
obligated to make any additional Capital Contributions to the Company. In
particular, no Member shall be obligated to make any Capital
8
Contribution to restore any deficit balance in such Member's Capital Account. No
interest shall be paid on any Capital Contributions.
8.2 Members' Capital Accounts.
-------------------------
8.2.1 A separate Capital Account shall be established and maintained
for each Member. As funded and adjusted in accordance with this Agreement, the
Capital Accounts of the Members shall reflect the underlying economic
arrangements of the Members.
8.2.2 Upon a transfer of all or part of an Interest in accordance with
Section 10, the Capital Account of the transferor Member that is attributable to
the transferred Interest shall carry over to the transferee thereof.
8.2.3 The determination and maintenance of the Members' Capital
Accounts, and any adjustments thereof, shall be made in a manner consistent with
tax accounting and other principles set forth in Section 704(b) of the Code and
applicable Income Tax Regulations thereunder, as finally determined for federal
income tax purposes.
9. Allocation of Profits and Losses; Distributions.
-----------------------------------------------
9.1 Allocation of Profits and Losses.
--------------------------------
9.1.1 Allocation of Profits Generally.
-------------------------------
Except as otherwise provided in sections 9.1.3 and 9.1.4 below,
Profits shall be allocated among the Members in the following order and
priority:
(A) first, among the Members until the cumulative Profits
allocated pursuant to this Section 9.1.1(A) are equal to the
cumulative Losses allocated among the Members pursuant to
Section 9.1.2(C) below for all prior periods, and in the
proportions that such Losses have been so allocated;
(B) then, among the Members until the cumulative Profits
allocated pursuant to this Section 9.1.1(B) are equal to the
cumulative Losses allocated among the Members pursuant to
Section 9.1.2(B) below for all prior periods, and in the
proportions that such Losses have been so allocated; and
(C) thereafter, among the Members, pro rata, in proportion to
their Percentage Interests.
9.1.2 Losses Generally.
----------------
Except as otherwise provided in Section 9.1.4 below, the Losses
of the Company shall be allocated among the Members in the following order and
priority:
9
(A) first, among the Members until the cumulative Losses
allocated pursuant to this Section 9.1.2(A) are equal to the
cumulative Profits allocated among the Members pursuant to
Section 9.1.1(C) above for all prior periods, and in the
proportions that such Profits have been so allocated;
(B) then, among the Members in proportion to, and to the extent
of, the positive Capital Account balances of such Members;
and
(C) thereafter, among the Members, pro rata, in proportion to
their Percentage Interests.
9.1.3 Other Allocation Rules.
----------------------
(A) Except as provided in Section 9.1.3(C) below, in the event
any Member unexpectedly receives any adjustments,
allocations or distributions described in Sections
1.704 1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations,
items of Company income and gain shall be specially
allocated to such Member in an amount and manner sufficient
to eliminate, to the extent required by the Regulations, any
deficit balance in his/her Capital Account of such Member as
quickly as possible.
(B) Except as provided in Section 9.1.3(C) below, in the event
any Member has a deficit balance in his/her Capital Account
at the end of any fiscal year, such Member shall be
specially allocated items of Company income and gain in an
amount and manner sufficient to eliminate, to the extent
required by the Regulations, the deficit balance in the
Capital Account of such Member as quickly as possible.
(C) Notwithstanding any other provision of this Section 9, if
there is a net decrease in Company Minimum Gain during any
fiscal year of the Company, each Member shall be specially
allocated items of Company income and gain for such year
(and, if necessary, subsequent years) in an amount equal to
such Member's share of the net decrease in Company Minimum
Gain, to the extent required under the Section 1.704 2 of
the Regulations. The items to be so allocated shall be
determined in accordance with Section 1.704 2 of the
Regulations. This Section 9.1.3(C) is intended to comply
with the "minimum gain chargeback" requirement in such
Section of the Regulations and shall be interpreted
consistently therewith.
(D) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Regulations Section
10
1.7041(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, the amount of such adjustment to the
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.
(E) Nonrecourse Deductions and Nonrecourse Liabilities for any
fiscal year or other period shall be allocated among the
Members, pro rata, in proportion to their Percentage
Interests. Member Nonrecourse Deductions and Member
Nonrecourse Debt for any fiscal year or other period shall
be allocated among the Members in accordance with applicable
Regulations under Sections 704 and 752 of the Code.
(F) For purposes of determining the Profits, Losses or any other
items allocable to any period, Profits, Losses and any such
other items shall be deemed to have been earned ratably over
the period of the fiscal year of the Company.
(G) Except as otherwise provided in this Agreement, all items of
income, gain, loss and deduction, and any other allocations
not otherwise provided for, shall be allocated among the
Members in the same proportions as they share Profits or
Losses (as the case may be) for each fiscal year.
9.1.4 Curative Allocations.
--------------------
The allocations set forth in Sections 9.1.3(A), (B), (C), and (E)
above (the "Regulatory Allocations") are intended to comply with certain of the
requirements of Section 1.704 1(b) of the Income Tax Regulations. The Regulatory
Allocations may not be consistent with the manner in which the Members
intend to share distributions from the Company. Accordingly, a
Majority-in-Interest of Members hereby are authorized to divide other
allocations of income, gain, deduction or loss among the Members so as to
prevent the Regulatory Allocations from distorting the manner in which
distributions from the Company are intended to be shared among the Members
pursuant to this Agreement. The Members will have the discretion to accomplish
this result in any reasonable manner.
9.2 Accounting.
----------
The Company's books shall be kept on the basis of the accounting
method of the Company for federal income tax purposes, as selected by the
Management Committee. The fiscal year of the Company shall be as selected by the
Management Committee.
11
9.3 Distributions.
-------------
The Company may make distributions to the Members when, as and if
declared by the Management Committee (i) to enable the Members to pay federal,
state and local income taxes attributable to their Interests (including
quarterly tax distributions to those Members who make estimated tax payments),
and all distributions under this clause (i) shall be made to the Members based
upon an assumed tax rate, equal to the highest marginal tax rate then applicable
to any of the Members and, except as hereinafter provided, among the Members
based upon their relative shares of the Company's taxable income for the period;
provided, that, in the case of a tax distribution hereunder to a Member which is
attributable to a special allocation of items of income and gain in accordance
with Section 704(c) of the Code, a corresponding distribution shall be made to
all other Members so that such tax distribution and such corresponding
distributions are, in the aggregate, shared by the Members, pro rata, in
proportion to their Percentage Interests; or (ii) otherwise as the Management
Committee may determine (except in connection with the termination and winding
up of the Company), and all distributions under this clause (ii) shall be made
among the Members in proportion to their Capital Account balances. Assets or
cash available for distribution in connection with the termination and winding
up of the Company shall be distributed in accordance with the provisions of
Section 11.2.
9.4 Guaranteed Payments.
-------------------
Any payment to a Member for services rendered by the Company which is
not governed for all purposes by an agreement other than this Agreement shall be
deemed to be a "guaranteed payment" described in and governed by Section 707(c)
of the Code.
10. Transfer of interests; Effect of Withdrawal Events.
--------------------------------------------------
10.1 Right to Transfer.
-----------------
10.1.1 No Member shall be entitled to sell, mortgage,
hypothecate, transfer, pledge, assign, donate, create a seeurity interest in or
lien on, encumber, give, place in trust (voting or other) or otherwise dispose
of, including but not limited to any involuntary transfer or transfer by
operation of law upon divorce, in bankruptcy or by way of execution, seizure or
sale by legal process (hereinafter "transfer") his/her Interest or any portion
thereof unless the applicable provisions of this Section 10 are complied with in
full. Any attempted transfer of an Interest other than in accordance with the
preceding sentence shall be null and void and be of no force or effect. Any
transfer of an Interest shall be made only in compliance with all applicable
securities laws and the Company may require the transferor to obtain and deliver
to the Company an opinion of counsel (reasonably acceptable, as to both the
opinion and the counsel, to the Company) that such proposed transfer so
complies.
10.1.2 A Member shall be entitled to transfer all or any part of
his/her interest to any person, upon the approval of a Majority-in-Interest of
the Members.
12
10.2 Status of Third Party Transferee.
--------------------------------
Except as otherwise provided, no third party transferee of an Interest
shall, without the prior written consent of all of the Members, acquire the
status of a substituted Member of the Company under the Delaware Act or this
Agreement, but shall have solely the economic rights to share in the Company's
allocations of Profits and Losses and distributions with respect to the
transferred Interest. In the event a substitute Member is admitted to the
Company in accordance with this Section 10.2, such substitute Member shall be
responsible for the payment of all fees and expenses associated with the
transfer and such substitution as the Management Committee may deem reasonable
and appropriate.
10.3 Absolute Restriction on Transfers.
---------------------------------
Notwithstanding any provision of this Agreement to the contrary, the
transfer of an Interest to any person or entity other than the Company or a
Member will not be permitted if the Interest sought to be transferred, when
added to the total of all other Interests transferred within the period of
twelve (12) consecutive months ending with the proposed date of the transfer,
results in the termination of the Company under Section 708 of the Code, unless
the transfer is consented to by a Majority-in-Interest of the Members.
10.4 Time of Transfer.
----------------
Any transfer of an Interest to a third party or to a Member permitted
under this Section 10 shall be effective as of midnight of the last day of the
calendar month in which it is made, or, at the election of a
Majority-in-Interest of the remaining Members, as of 7:00 A.M. the day following
the date of the transfer (the "Effective Transfer Date").
10.5 Distributions and Allocations in Respect of Transferred
-------------------------------------------------------
Interest.
- --------
If any Interest is transferred during any accounting period to a
third party or to a Member in compliance with the provisions of this Section 10,
Profits, Losses, each item thereof and all other items attributable to
such Interest for such period shall be divided and allocated between the
transferor and the transferee by taking into account their varying interests
during the period in accordance with Section 9 hereof and Code Section 706(d),
using the Effective Transfer Date as the date upon which the change in ownership
of the Interest occurred, and using any conventions permitted by law and
selected by the unanimous action of the remaining Members. All distributions on
or before the Effective Transfer Date shall be made to the transferor and all
distributions thereafter shall be made to the transferee. Neither the Company
nor any Manager or Member shall incur any liability for making allocations and
distributions in accordance with the provisions of this Section 10.5, whether or
not any of them has knowledge of any transfer of ownership of any Interest.
13
10.6 Effect of Withdrawal Events.
---------------------------
10.6.1 No Resign.
---------
No Member shall be entitled to resign as a Member, except in
connection with a transfer of such Member's entire Interest in the Company in
compliance with the terms and conditions of this Section 10 and with respect to
which such Member's transferee has been admitted as a substituted Member in
accordance with Section 10.3.
10.6.2 Death or Adjudication of Incompetence.
-------------------------------------
If the Company is continued in accordance with Section 11.1(B)
below following the death or adjudication of incompetency of a Member, such
Member's Interest shall not be terminated or repurchased and the
successor in interest or legal representative of such Member shall thereafter be
the Member with respect to such Interest and such successor-in-interest shall be
substituted as a Member upon compliance with the terms and conditions of Section
10.2.
10.6.3 No Other Withdrawal.
-------------------
Except as expressly provided in Section 11.2 in connection with
the termination and winding up of the Company, the Company shall not be
obligated to repurchase the Interest of any Member, nor shall any Member be
entitled to receive any other payment or distribution in connection with such
Member's withdrawal from the Company.
11. Termination, Liquidation and Winding Up.
---------------------------------------
11.1 Termination and Winding Up of the Company.
-----------------------------------------
11.1.1 The Company shall terminate upon the first to occur of
(A) the unanimous agreement of the Members in writing (B) the occurrence of a
Withdrawal Event as to any Member, unless at such time there is at least one (1)
remaining Member(s) of the Company and a Majority-in-Interest of the remaining
Member(s) agree to continue the Company within ninety (90) days after the
occurrence of such Withdrawal Event, or (C) otherwise upon the occurrence of any
of the events of dissolution stated in Section 18 801 of the Act
11.1.2 As soon as possible following the occurrence of any event
of termination, the Company shall execute and file as provided in the
Delaware Act a statement of intent to dissolve in such form as shall be
prescribed by the Secretary of State of Delaware or which otherwise complies
with the Delaware Act. Upon the filing of such statement of intent to dissolve
with the Secretary of State of Delaware, the Company shall cease to carry on its
business, except insofar as may be necessary for the winding up of its affairs,
but its separate existence shall continue until a certificate of dissolution has
been filed with the Secretary of State of Delaware or until a decree dissolving
the Company has been entered by a court of competent jurisdiction. The filing of
the statement of intent to dissolve shall not affect the limited liability of
the Members, Managers and Officers of the Company.
14
11.2 Method of Distribution Upon Winding Up.
--------------------------------------
Upon termination of the Company pursuant to Section 11.1 above, the
Management Committee shall supervise and control the termination and winding up
of the Company and the assets of the Company and the proceeds of any liquidation
shall be applied and distributed in the following manner and order of priority:
(A) to the payment and discharge of all of the Company's debts
and liabilities and the expenses of liquidation and
dissolution;
(B) to the setting up of any reserves reasonably necessary for
any contingent or unforeseen liabilities or obligations of
the Company; and
(C) to the payment of the balance, if any, of the respective
Capital Accounts of the Members (after making the
allocations required under the provisions of Section 9), but
if the amount available for such payment shall be
insufficient, then pro rata among all of the Members
according to the respective positive balances of their
Capital Accounts at such time; and
(D) to the payment of any remaining balance to the Members,
according to their Percentage Interests.
11.3 Orderly liquidation.
-------------------
A reasonable time shall be allowed for the orderly liquidation of the
assets of the Company and the discharge of liabilities to creditors so as to
enable the Members to minimize the normal losses attendant upon a liquidation.
12. Miscellaneous Provisions.
------------------------
12.1 Notices.
-------
Any notice or communication required or permitted to be given by any
provision of this Agreement shall be deemed to have been given and received for
all purposes when delivered personally to the party to whom the same is
directed; or when mailed, sent by overnight delivery service, charges prepaid,
or sent by facsimile addressed to the party to whom the same is directed, at the
address set forth in this Agreement or such other address as the Company has
received written notice from time to time.
12.2 Books of Accounts and Records.
-----------------------------
Proper and complete records and books of account shall be kept or
shall be caused to be kept by the Management Committee, in which shall be
entered fully and accurately all transactions and other matters relating to the
Company's business in the detail and completeness
15
customary and usual for businesses of the type engaged in by the Company. The
books and records shall at all times be maintained at the principal executive
offices of the Company and shall be open to the reasonable inspection and
examination of the Members or their duly authorized representatives during
reasonable business hours.
12.3 Governing Law.
-------------
The Company, this Agreement and the rights of the Members, Managers
and Officers of the Company hereunder shall be governed by the laws of the State
of Delaware.
12.4 Waiver of Action for Partition.
------------------------------
Each Member irrevocably waives any right that such Member may have to
maintain any action for partition with respect to the property of the Company.
12.5 Amendments.
----------
This Agreement may not be amended except in writing by the affirmative
vote of all of the Members.
12.6 Construction.
------------
Whenever the singular is used in this Agreement and when required by
the context, the same shall include the plural and vice versa, and the
masculine gender shall include the feminine and neuter genders and vice versa.
The headings in this Agreement are for convenience only and are in no way
intended to describe, interpret, define or limit the scope, extent or intent of
this Agreement or any of its provisions.
12.7 Waivers.
-------
The failure of any party to seek redress for default of or to insist
upon the strict performance of any covenant or condition of this Agreement shall
not prevent a subsequent act, which would have originally constituted a default,
from having the effect of an original default.
12.8 Rights and Remedies Cumulative.
------------------------------
The rights and remedies provided by this operating Agreement are
cumulative and the use of any one right or remedy by any party shall not
preclude or waive the right to use any other remedy. Said rights and remedies
are given in addition to any other legal rights the parties may have.
12.9 Entire Agreement.
----------------
This Agreement contains the entire understanding among the parties
with respect to the subject matter hereof and supersedes any prior
understandings and agreements, whether written or oral, with respect to such
subject matter.
16
12.10 Severability.
------------
If any provision of this Agreement or its application to any person or
circumstance shall, for any reason and to any extent, be invalid, illegal or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby, but
rather shall be enforceable to the fullest extent permitted by law.
12.11 Heirs, Successors and Assigns.
-----------------------------
Each and all of the covenants, terms, provisions and agreements
contained in this Agreement shall be binding upon and inure to the benefit of
the parties hereto and, to the extent permitted by this Agreement, their
respective heirs, legal representatives, successors and assigns.
12.12 Creditors.
---------
None of the provisions of this Agreement shall be for the benefit of
or enforceable by any creditors of the Company.
12.13 Counterparts.
------------
This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same instrument.
12.14 Federal Income me Tax Elections.
-------------------------------
In the event of a transfer of all or any portion of the Interest of
any Member, the Company may elect (by unanimous action of the Members) pursuant
to Section 754 of the Code to adjust the basis of assets of the Company upon
written request of the transferee.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first above written.
The Company The Members
Interactive Voice Media Michigan L.L.C. Interactive Voice Media (New York) Corp.
By: /s/ Nicholas Paine By: /s/ Nicholas Paine
---------------------------------------- ----------------------------------------
Nicholas Paine, Manager Nicholas Paine, President
SCHEDULE A
----------
MEMBERS' NAMES, ADDRESSES AND CAPITAL CONTRIBUTIONS
---------------------------------------------------
MEMBERS: CAPITAL CONTRIBUTION
(name and address)
Interactive Media (New York) Corp., a New $1,000
York corporation
c/o Interactive Media Group
905 King Street West, Suite 500
Toronto, Ontario M6K 3G9
TOTAL CAPITAL CONTRIBUTIONS $1,000
EXHIBIT 1
---------
DEFINITIONS
Certain capitalized words and phrases used in this Agreement shall have the
following meanings:
1. "Agreement" means this Limited Liability Company Agreement, as
originally executed and as amended from time to time in accordance with Section
12.5 hereof.
2. "Bankruptcy Event" means, with respect to any Member:
(A) the making of an assignment for the benefit of creditors;
(B) the filing of a voluntary petition in bankruptcy;
(C) the adjudication of bankruptcy or insolvency, or the entry
of an order for relief, in any bankruptcy or insolvency
proceeding;
(D) the filing of a petition or answer seeking for the Member
any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any
statute, law or regulation;
(E) the filing of an answer or other pleading admitting or
failing to contest the material allegations of a petition
filed against the Member in any proceeding of a nature
described in (A) (E) above;
(F) seeking, consenting to or acquiescing in the appointment of
a trustee, receiver or liquidator of the Member or of all or
any substantial part of his properties; or
(G) the passage of one hundred twenty (120) days after the
commencement of any proceeding against the Member seeking
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any
statute, law or regulations, if the proceeding has not been
dismissed, or the passage of ninety (90) days after the
appointment without his consent or acquiescence of a
trustee, receiver or liquidator of the Member or of all or
any substantial part of his properties, if the appointment
is not vacated or stayed, or the passage of ninety (90) days
after the expiration of any such stay, if the appointment is
not vacated.
2
3. "Capital Account" means, with respect to any Member, the Capital Account
maintained for such Member pursuant to the provisions of Section 8.2 of this
Agreement, which shall be determined and adjusted as follows (but subject to the
provisions of Section 8.2.3):
(A) To each Member's Capital Account, there shall be credited
the following: (a) such Member's Capital Contributions; (b)
such Member's allocations of Profits; and (c) any items in
the nature of income or gain which are specially allocated
to such Member pursuant to Section 9.1.3; and
(B) To each Member's Capital Account there shall be debited the
following: (a) the amount of any distributions to such
Member pursuant to any provision of this Agreement; (b) such
Member's allocations of Losses; and (c) any items in the
nature of expenses or losses which are specially allocated
to such Member pursuant to Section 9.1.3.
4. "Capital Contribution" means the amount in cash contributed by each
Member (or his or her predecessors in interest) to the capital of the Company
for his or her Interest, as set forth on Schedule A attached hereto.
5. "Certificate of Formation" means the Certificate of Formation of the
Company as filed with the Secretary of State of Delaware on May 29, 1997, as
the same may be amended from time to time in accordance with the Delaware Act.
6. "Code" means the Internal Revenue Code of 1986, as amended, or
corresponding provisions of succeeding federal revenue laws.
7. "Company" means Interactive Media Michigan L.L.C., a Delaware limited
liability company.
8. "Company Minimum Gain" has the meaning of "partnership minimum gain" as
set forth in Section 1.704 2(d) of the Regulations.
9. "Delaware Act" means the Delaware Limited Liability Company Act,
Delaware Code Title 6, Chapter 18 (Sections 18 101, et seq.), as amended from
time to time (or any corresponding provisions of succeeding law).
10. "Effective Transfer Date" is defined in Section 10.4.
11. "Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
3
(A) The Gross Asset Values of all Company assets shall be
adjusted to equal their respective gross fair market values
as of the following times: (a) the acquisition of an
additional Interest (other than pursuant to Section 8.1) by
any new or existing Member in exchange for more than a de
minimis Capital Contribution; (b) the distribution by the
Company to a Member of more than a de minimis amount of
Company property (including cash) as consideration for an
Interest, if the Management Committee reasonably determines
that such adjustment is necessary or appropriate to reflect
the relative economic interests of the Members in the
Company; and (iii) the liquidation of the Company within the
meaning of Regulations Section 1.704 1(b)(2)(ii)(g).
(B) The Gross Asset Values of Company assets shall be increased
(or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code
Section 743(b), but only to the extent that such adjustments
are taken into account in determining Capital Accounts
pursuant to Regulation Section 1.704 1(b)(2)(iv)(m);
provided, however, that Gross Asset Values shall not be
adjusted pursuant to this section (11)(B) to the extent the
Management Committee shall determine that an adjustment
pursuant to section (11)(A) is necessary or appropriate in
connection with a transaction that would otherwise result in
an adjustment pursuant to this section (11)(B).
12. "Interest" means the entire interest in the Company owned by a Member,
including such Member's (1) interest in the Company's allocations and
distributions, (2) rights with respect to the management and administration of
the Company, (3) access to or rights to demand or require any information or
account of the Company or its affairs, and (4) rights to inspect the books and
records of the Company.
13. "Management Committee" is defined in Section 5.1.
14. "Manager" is defined in Section 5.1.
15. "Majority-in-Interest", when used with respect to the Members, means
Members holding more than 50% of the Interests, as measured by the Members
respective Capital Contributions, held in the aggregate by all Members.
16. "Members" means Interactive Media (New York) Corp. and any persons
admitted as additional or substituted Members pursuant to this Agreement.
"Member" means any one of the Members, as the context requires.
4
17. "Member Minimum Gain" has the meaning of "partner minimum gain" as set
forth in Sections 1.704 2(i)(3) and (5) of the Regulations, determined in
accordance with Sections 1.704 2(g)(1) and (3) of the Regulations.
18. "Member Nonrecourse Debt" has the meaning of "partner nonrecourse
debt" as set forth in Section 1.704 2(b)(4) of the Regulations.
19. "Member Nonrecourse Deductions" has the meaning of "partner nonrecourse
deductions" as set forth in Section 1.704 2(i)(2) of the Regulations. The amount
of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a
fiscal year of the Company equals the excess, if any, of the net increase, if
any, in the amount of Member Minimum Gain attributable to such Member
Nonrecourse Debt during such fiscal year over the aggregate amount of any
distributions during such fiscal year to the Member that bears the economic risk
of loss for such Member Nonrecourse Debt, to the extent such distributions are
from the proceeds of such Member Nonrecourse Debt and are allocable to an
increase in Member Minimum Gain attributable to such Member Nonrecourse Debt
determined in accordance with Section 1.704 2(i)(2) of the Regulations.
20. "Nonrecourse Deductions" has the meaning set forth in Section
1.704 2(b)(1) of the Regulations. The amount of Nonrecourse Deductions for a
fiscal year equals the net increase, if any, in the amount of Company Minimum
Gain during that fiscal year over the aggregate distributions made during the
year of proceeds of any Nonrecourse Liability that are allocable to an increase
in Company Minimum Gain.
21. "Nonrecourse Liability" has the meaning set forth in Sections
1.704 2(b)(3) and 1.752 1(a)(2) of the Regulations.
22. "Percentage Interest" means the percentage interest of a Member in the
Company, determined by dividing the Member's Capital Contribution by the total
Capital Contributions of all of the Members of the Company.
23. "Profits" and "Losses" means, for each fiscal year or other period, an
amount equal to the Company's taxable income or loss for such year or period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(A) 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 section 22 shall be added
to such taxable income or loss.
5
(B) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section
1.704 1(b)(2)(iv)(i), and not otherwise taken into account
in computing Profits or Losses pursuant to this section 22,
shall be subtracted from such taxable income or loss.
(C) At any time the Gross Asset Value of any Company property is
adjusted pursuant to section (11)(A), the amount of such
adjustment shall be taken into account as gain or loss from
the disposition of such property for purposes of computing
Profits or Losses.
(D) Gain or loss resulting from the disposition of any Company
asset 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.
(E) Notwithstanding any other provision of this section 22, any
items which are specially allocated pursuant to Section
9.1.3 or 9.1.4 of the Agreement shall not be taken into
account in computing Profits or Losses.
24. "Regulations" means the regulations promulgated under the Code, as the
same may be amended from time to time, including corresponding provisions of any
succeeding regulations.
25. "Regulatory Al1ocations" is defned in Section 9.1.4.
26. "Withdrawal Event" means the death, dissolution, adjudication of
incompetency, occurrence of a Bankruptcy Event or resignation (except as
expressly permitted by this Agreement) of or with respect to an Member.