Operating Agreement.doc

Operating AgreementAMENDED AND RESTATED OPERATING AGREEMENT OF CCC, LLC This AMENDED AND RESTATED OPERATING AGREEMENT (the Agreement) is entered into as of _,_,_(M/D/Y), between AAA, Inc., a _(state) corporation (AAA), and BBB Inc.AMENDED AND RESTATED OPERATING AGREEMENT OF CCC, LLCThis AMENDED AND RESTATED OPERATING AGREEMENT (the 'Agreement') is entered into as of _,_,_(M/D/Y), between AAA, Inc., a _(state) corporation ('AAA'), and BBB Inc., a _(state) corporation ('BBB'), both of which are referred to as the 'Members' and individually as a 'Member.' Promptly following the execution of this Agreement, BBB intends to transfer all of its interest in the Company to UST, Inc., its indirect wholly owned subsidiary ('UST') (upon such event, the term 'BBB' as used herein shall be deemed to apply to UST for all purposes of this Agreement).A limited liability company was formed in accordance with the provisions of the _(state) Limited Liability Company Act (the 'Act') under the name of CCC, LLC (the 'Company') pursuant to a Certificate of Formation filed _,_,_(M/D/Y), with the _(state) Secretary of State. An Operating Agreement of the Company was entered into as of that same date, under which AAA was the sole member. Pursuant to a Subscription Agreement by and between BBB and the Company dated as of _,_,_(M/D/Y) (the 'Subscription Agreement'), BBB agreed to purchase an equity interest in the Company in exchange for the Capital Note (as hereinafter defined). Additionally, AAA agreed under a Contribution Agreement dated as of _,_,_(M/D/Y) by and among AAA and the Company (the 'Contribution Agreement') to contribute certain assets (the 'AAA Contributed Assets') to the Company. In light of the foregoing, the Members now desire to amend and restate the Operating Agreement of the Company. Accordingly, from and after the date hereof, the affairs of the Company will be governed by this Amended and Restated Operating Agreement. In consideration of the foregoing, and of the mutual promises contained herein, the Members agree as follows:ARTICLE 1THE LIMITED LIABILITY COMPANY1.1 Name. The name of the limited liability company shall be CCC, LLC.1.2 Certificate of Formation. A Certificate of Formation that complies with the requirements of the Act has been properly filed with the _(state) Secretary of State. In the future, the Managers shall execute such further documents (including amendments to the Certificate of Formation) and take such further action as shall be appropriate or necessary to comply with the requirements of law for the formation and operation of a limited liability company in all states and counties where the Company elects to carry on its business.1.3 Business. The business of the Company shall be (a) to provide advanced digital production, post-production and transmission facilities, digital media storage and distribution services, telephony-based data storage and enhanced services, access and routing services; (b) to do any and all other things necessary, desirable or incidental to the foregoing purposes; and (c) to engage in such other legal and lawful business activities as the Management Committee may deem desirable. The Company may sell or otherwise dispose of all or substantially all of its assets and any such sale or disposition shall be considered to be within the scope of the Company's business.1.4 Registered Office; Agent. The registered office of the Company shall be at _(address), or such other place in _(state) as may be selected by the Management Committee. The Company's registered agent at such address shall be Richard M. Jones.ARTICLE 2DEFINITIONS2.1 Cash Flow. 'Cash Flow' shall mean the excess of all cash receipts of the Company over all cash disbursements of the Company.2.2 Code. 'Code' shall mean the Internal Revenue Code of 1986, as amended, or any successor statute.2.3 Manager. 'Manager' is defined in Section 7.1(a).2.4 Profit or Loss. 'Profit' or 'Loss' shall mean the profit or loss of the Company as determined under the capital accounting rules of Treasury Regulation (S) 1.704-1(b)(2)(iv) for purposes of adjusting the capital accounts of the Members including, without limitation, the provisions of paragraphs (b), (f) and (g) of those regulations relating to the computation of items of income, gain, deduction and loss.2.5 Sharing Ratio. 'Sharing Ratio' shall mean the percentage representing the ratio that the number of Units owned by a Member bears to the aggregate number of Units owned by all of the Members. Upon the issuance of additional Units or the transfer, repurchase or cancellation of any outstanding Units, the Sharing Ratios of the Members shall be recalculated as of the date of such issuance, transfer, repurchase or cancellation. The recalculated Sharing Ratio of each Member shall be the percentage representing the ratio that the number of Units owned by the Member bears to the aggregate number of Units owned by all of the Members after giving effect to the issuance, transfer, repurchase or cancellation.2.6 Treasury Regulations. 'Treasury Regulations' shall mean regulations issued by the Department of Treasury under the Code. Any reference to a specific section or sections of the Treasury Regulations shall be deemed to include a reference to any corresponding provision of future regulations under the Code.2.7 Units. 'Unit' shall mean an equity interest in the Company. The Company shall have two classes of Units: Class A and Class B. The two classes of Units shall be identical in all respects except for their respective Voting Interests. The number of Units owned by each Member shall be determined in connection with the issuance of a membership interest in the Company in exchange for the capital contribution made by such Member. Initially the Units shall not be represented by certificates. If the Management Committee determines that it is in the interest of the Company to issue certificates representing the Units, certificates shall be issued and the Units shall be represented by such certificates. The Company is authorized to issue _ Class A Units and _ Class B Units.2.8 Voting Interest. (a) With respect to the Class A Units, 'Voting Interest' shall mean that number of Class A Units held by a Member, and (b) with respect to the Class B Units, 'Voting Interest' shall mean that number of Class B Units held by a Member divided by 10.ARTICLE 3CAPITAL CONTRIBUTIONS3.1 Initial Capital Contributions.(a) In accordance with the terms of the Contribution Agreement, AAA has contributed to the Company all of its right, title and interest in and to the AAA Contributed Assets. As a result of such contribution, AAA has been credited with a capital account equal to $ _, and has received $ _ Class A Units.(b) In accordance with the terms of the Subscription Agreement, BBB has agreed to contribute to the Company, effective as of the date hereof, a promissory note (the 'Capital Note') in the amount of $ _, and such amount shall be credited to its capital account when and as the payments of principal are made on the Capital Note. As a result of its agreement to make such contribution and pursuant to the Subscription Agreement, BBB is hereby AAAtted as a Member of the Company, and has received $ _ Class A Units.(c) As a result of the transactions described above, the Members own the number and classes of Units and have capital account balances attributable to the Units as set forth below:Class A Units Class B Units Capital Account Balance AAA $ _ -0- $ _ BBB $ _ -0- $ 0 (d) Based on the above, the initial Sharing Ratio of AAA is 50%, and the initial Sharing Ratio of BBB is 50%.3.2 Additional Capital Contributions.(a) If, from time to time in the reasonable judgment of the Management Committee, the Company requires additional capital for any purpose, the Management Committee is hereby authorized to cause the Company to issue additional Units, on terms and conditions and with repayment priorities as approved by the Management Committee. Notwithstanding the foregoing, until a third party becomes a Member, Units shall not be issued at a price per Unit that is less than _$.(b) If the Company desires to issue additional Units pursuant to (a) above, the Company hereby grants to the Members the right of first refusal to purchase a pro rata share (equaling the Member's respective Sharing Ratio on the day before such additional Units are to be issued) of the additional Units which the Company proposes to issue. If the Company proposes to issue such additional Units, it shall give the Members written notice of its intention, describing the price and terms upon which the Company proposes to issue the Units. Each Member shall have 15 days from the date such notice is sent by the Company to agree to purchase the portion of the additional Units issued which it is entitled to purchase for the price and upon the terms so specified in the notice. Such notice shall be in writing and shall specify the quantity of additional Units to be purchased. If any Member fails to exercise the right of first refusal within the 15-day period, the Company shall have the right thereafter to sell or issue those additional Units upon terms no more favorable to the purchasers of the additional Units than specified in the Company's notice to Members.3.3 Return of Capital Contributions. Capital contributions shall be expended in furtherance of the business of the Company. All costs and expenses of the Company shall be paid from its funds. No interest shall be paid on capital contributions. No Manager shall have any personal liability for the repayment of any capital contribution to a Member.3.4 Loans.(a) The Company may borrow additional capital from any source, including any Member. No Member shall be obligated to make a loan to the Company.(b) If from time to time in the reasonable judgment of the Management Committee the Company requires additional capital for any purpose related to the business of the Company, the Management Committee is authorized to cause the Company to borrow such capital, on terms and conditions as approved by the Management Committee. If the Management Committee decides to borrow such capital from a Member (the 'Loan Amount), each Member shall be given the opportunity, but shall not be obligated, to loan its share of the Loan Amount to the Company. A Member's share of the Loan Amount shall be the Loan Amount multiplied by the Member's Sharing Ratio. The loans shall be made within 10 days after request by the Management Committee to the Members. Such request shall be in writing and shall specify the amount of the Loan Amount. If a Member does not loan its share of the Loan Amount (the 'Shortfall Amount') and the other Member does loan its share (a 'Participating Member'), the Participating Member shall have the right, exercisable within 10 days after notice, to loan the Company the Shortfall Amount. The loans to the Company by the Participating Members shall be unsecured, evidenced by promissory Note of the Company, shall accrue interest at a rate determined by the Management Committee, shall be payable on a pro rata basis solely from Cash Flow prior to any distributions to Members, and shall not contain any default interest or penalty provisions.ARTICLE 4DISTRIBUTIONS4.1 Nonliquidating Distributions. Cash Flow shall be distributed to the Members in amounts deemed appropriate by the Management Committee after establishing appropriate reserves. Except as provided in Section 4.2, all distributions of Cash Flow shall be made among the Members in accordance with their respective Sharing Ratios.4.2 Liquidating Distributions. All distributions made in connection with the sale or exchange of all or substantially all of the Company assets and all distributions made in connection with the liquidation of the Company shall be made to the Members in accordance with their relative capital account balances at the time of distribution.ARTICLE 5ALLOCATION OF PROFIT AND LOSS5.1 Determination of Profit and Loss. Profit or Loss shall be determined on an annual basis and for such other periods as may be required.5.2 Loss Allocation. Except as provided in Section 5.4, Loss shall be allocated among the Members in accordance with their relative Sharing Ratios.5.3 Profit Allocation.(a) Except as provided in Section 5.3(b) and Section 5.4, Profit shall be allocated among the Members in accordance with their relative Sharing Ratios.(b) Any Profit with respect to the sale, exchange or other disposition of all or substantially all of the Company assets or with respect to the liquidation of the Company shall be allocated among the Members so that their capital account balances are proportionate to their Sharing Ratios.(c) For purposes of Section 5.3(b), the capital accounts of the Members shall be determined (i) before giving effect to distributions under Section 4.2; (ii) after allocating all other items of Profit and Loss; and (iii) after making all distributions under Section 4.1.5.4 Regulatory Allocations and Curative Provision.(a) The 'qualified income offset' provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) are incorporated herein by reference and shall apply to adjust the allocation of Profit and Loss otherwise provided for under Sections 5.2 and 5.3 to the extent provided in that regulation.(b) The 'minimum gain' provisions of Treasury Regulation Section 1.704-2 are incorporated herein by reference and shall apply to adjust the allocation of Profit and Loss otherwise provided for under Sections 5.2 and 5.3 to the extent provided in that regulation.(c) Notwithstanding the provisions of Section 5.2, if during any fiscal year of the Company the allocation of any loss or deduction, net of any income or gain, to a Member would cause or increase a negative balance in a Member's capital account as of the end of that fiscal year, only the amount of such loss or deduction that reduces the balance to zero shall be allocated to the Member and the remaining amount shall be allocated to the other Member. For the purpose of the preceding sentence, a capital account shall be reduced by the adjustments, allocations and distributions described in Treasury Regulations (S)(S) 1.704-1(b)(2)(d)(4), (5) and (6), and increased by the amount, if any, that the Member is obligated to restore to the Member's capital account within the meaning of Treasury Regulation (S) 1.704-1(b)(2)(ii)(c) as of that time or is deemed obligated to restore under Treasury Regulation (S) 1.704-2