\nARTICLE I CERTAIN DEFINITIONS………………………………………………………… 1<\/p>\nARTICLE II FORMATION, NAME, OFFICES AND PURPOSES; MEMBERS………………………………… 11<\/p>\n
ARTICLE III CAPITAL CONTRIBUTIONS………………………………………………………. 13<\/p>\n
ARTICLE IV PARTICIPATION IN COMPANY PROPERTY……………………………………………. 14<\/p>\n
ARTICLE V MANAGEMENT………………………………………………………………… 15<\/p>\n
ARTICLE VI DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES FOR FEDERAL INCOME TAX PURPOSES….. 25<\/p>\n
ARTICLE VII ACCOUNTING………………………………………………………………… 30<\/p>\n
ARTICLE VIII SALE, TRANSFER, AND ADMISSION……………………………………………….. 31<\/p>\n
ARTICLE IX TERM AND DISSOLUTION……………………………………………………….. 35<\/p>\n
ARTICLE X CONVERSION OF CLASS B MEMBERSHIP UNITS……………………………………….. 36<\/p>\n
ARTICLE XI REDEMPTION OF THE CLASS C MEMBERSHIP UNIT…………………………………….. 38<\/p>\n
ARTICLE XII DISPUTE RESOLUTION…………………………………………………………. 38<\/p>\n
ARTICLE XIII CERTAIN PRE-CLOSING MATTERS…………………………………………………. 39<\/p>\n
ARTICLE XIV INITIAL PUBLIC OFFERING…………………………………………………….. 40<\/p>\n
ARTICLE XV GENERAL PROVISIONS…………………………………………………………. 41
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
Exhibit A – Initial Business Plan
\nExhibit B – Purchased Assets
\nExhibit C – Registration Rights Agreement<\/p>\n
ii<\/p>\n
XFL, LLC
\n LIMITED LIABILITY COMPANY AGREEMENT
\n ———————————–<\/p>\n
THIS LIMITED LIABILITY COMPANY AGREEMENT is made and entered into as
\nof this 12th day of June, 2000, by and between WWFE SPORTS, INC., a Delaware
\ncorporation (“WWFE”), and NBC-XFL HOLDING, INC., a Delaware corporation (“NBC”).<\/p>\n
WITNESSETH:<\/p>\n
WHEREAS, WWFE and NBC have formed XFL, LLC, a Delaware limited
\nliability company (the “Company”), as a vehicle through which to establish,
\ndevelop and operate a professional football league to be known as the “XFL”, by
\nfiling a Certificate of Formation (the “Certificate”) with the office of the
\nSecretary of State of the State of Delaware on March 20, 2000.<\/p>\n
NOW, THEREFORE, in consideration of the mutual covenants and
\nagreements herein contained and other good and valuable consideration, the
\nreceipt and sufficiency of which are hereby acknowledged, and intending to be
\nlegally bound hereby, the parties hereto agree as follows:<\/p>\n
ARTICLE I<\/p>\n
CERTAIN DEFINITIONS
\n ——————-<\/p>\n
As used in this Agreement, the following terms have the following
\ndefinitions:<\/p>\n
AAA Global Headquarters. “AAA Global Headquarters” has the meaning
\n ———————–
\nascribed thereto in Section 12.1 of this Agreement.<\/p>\n
Act. “Act” means the Delaware Limited Liability Company Law, Delaware
\n —
\nCode Annotated, Title 6, Chap. 18, as amended from time to time, in effect.<\/p>\n
Additional Capital Contribution. “Additional Capital Contribution”
\n ——————————-
\nhas the meaning ascribed thereto in Section 3.2(a) of this Agreement.<\/p>\n
Adjusted Capital Account Deficit. “Adjusted Capital Account Deficit”
\n ——————————–
\nmeans, with respect to any Member, the deficit balance, if any, in such Member’s
\nCapital Account as of the end of the relevant Fiscal Year, after giving effect
\nto the following adjustments:<\/p>\n
(i) Credit to such Capital Account any amounts which such Member is
\ndeemed to be obligated to restore pursuant to the penultimate sentences in
\nSections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and<\/p>\n
(ii) Debit to such Capital Account the items described in Sections
\n1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of
\nthe Regulations.<\/p>\n
The foregoing definition of Adjusted Capital Account Deficit is
\nintended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the
\nRegulations and shall be interpreted consistently therewith.<\/p>\n
Affiliate. “Affiliate” means, with respect to a Person, a Person
\n ———
\nthat, directly or indirectly, through one or more intermediaries, controls, is
\ncontrolled by, or is under common control with, the first mentioned Person, or
\nany member of the Immediate Family of the second mentioned Person.<\/p>\n
Agreement. “Agreement” means this Limited Liability Company
\n ———
\nAgreement, as it may be amended or supplemented from time to time, and is the
\n“Limited Liability Company Agreement” of the Company as defined in Section 18-
\n101(6) of the Act.<\/p>\n
Board of Managers. “Board of Managers” means the group of Managers
\n —————–
\nthat exercises the powers, and manages the business and affairs, of the Company
\npursuant to Article 5 of this Agreement.<\/p>\n
Book Item. “Book Item” has the meaning ascribed thereto in Section
\n ———
\n6.2(d)(i)(A) of this Agreement.<\/p>\n
Broadcast Agreement. “Broadcast Agreement” has the meaning ascribed
\n ——————-
\nthereto in Section 2.8 of this Agreement.<\/p>\n
Business. “Business” has the meaning ascribed thereto in Section 2.4
\n ——–
\nof this Agreement.<\/p>\n
Business Day. “Business Day” means any day other than a Saturday, a
\n ————
\nSunday, or any day on which national banking associations in the State of New
\nYork are closed.<\/p>\n
Call Exercise Notice. “Call Exercise Notice” has the meaning ascribed
\n ——————–
\nthereto in Section 8.4(a) of this Agreement.<\/p>\n
Call Closing. “Call Closing” has the meaning ascribed thereto in
\n ————
\nSection 8.4(a) of this Agreement.<\/p>\n
Capital Account. “Capital Account” means, with respect to any Member,
\n —————
\nthe Capital Account maintained for such Member in accordance with the following
\nprovisions:<\/p>\n
(i) To each Member’s Capital Account there shall be credited (A) such
\nMember’s Capital Contributions, (B) such Member’s distributive share of Profits
\nand any items in the nature of income or gain which are specially allocated
\npursuant to Section 6.2 hereof, and (C) the amount of any Company liabilities
\nassumed by such Member or which are secured by any property distributed to such
\nMember. The principal amount of a promissory note which is not readily traded
\non an established securities market and which is contributed to the Company by
\nthe maker of the note (or a Member related to the maker of the note within the
\nmeaning of <\/p>\n
2<\/p>\n
Regulations Section 1.704-1(b)(2)(ii)(c)) shall not be included in the Capital
\nAccount of any Member until the Company makes a taxable disposition of the note
\nor until (and to the extent) principal payments are made on the note, all in
\naccordance with Regulations Section 1.704-1(b)(2)(iv)(d)(2);<\/p>\n
(ii) To each Member’s Capital Account there shall be debited (A) the
\namount of money and the Gross Asset Value of any property distributed to such
\nMember pursuant to any provision of this Agreement, (B) such Member’s
\ndistributive share of Losses and any items in the nature of expenses or losses
\nwhich are specially allocated pursuant to Section 6.2 hereof, and (c) the amount
\nof any liabilities of such Member assumed by the Company or which are secured by
\nany property contributed by such Member to the Company;<\/p>\n
(iii) In the event Shares are Transferred in accordance with the
\nterms of this Agreement, the transferee shall succeed to the Capital Account of
\nthe transferor to the extent it relates to the Transferred Shares; and<\/p>\n
(iv) In determining the amount of any liability for purposes of
\nsubparagraphs (i) and (ii) above there shall be taken into account Code Section
\n752(c) and any other applicable provisions of the Code and Regulations.<\/p>\n
The foregoing provisions and the other provisions of this Agreement
\nrelating to the maintenance of Capital Accounts are intended to comply with
\nRegulations Section 1.704-1(b), and shall be interpreted and applied in a manner
\nconsistent with such Regulations. In the event the Board of Managers shall
\ndetermine that it is prudent to modify the manner in which the Capital Accounts,
\nor any debits or credits thereto (including, without limitation, debits or
\ncredits relating to liabilities which are secured by contributed or distributed
\nproperty or which are assumed by the Company or any Member), are computed in
\norder to comply with such Regulations, the Board of Managers may make such
\nmodification. The Board of Managers also shall (i) make any adjustments that
\nare necessary or appropriate to maintain equality between the Capital Accounts
\nof the Members and the amount of capital reflected on the Company’s balance
\nsheet, as computed for book purposes, in accordance with Regulations Section
\n1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event
\nunanticipated events might otherwise cause this Agreement not to comply with
\nRegulations Section 1.704-1(b).<\/p>\n
Capital Contributions. “Capital Contributions” means, with respect to
\n ———————
\nany Member, the amount of money and the initial Gross Asset Value of any
\nproperty (other than money) contributed to the Company with respect to the
\nShares in the Company held or purchased by such Member, including additional
\nCapital Contributions.<\/p>\n
Certificate. “Certificate” means the Company’s Certificate of
\n ———–
\nFormation filed with the Secretary of State of the State of Delaware on March
\n20, 2000, as amended from time to time.<\/p>\n
Class A Membership Units. “Class A Membership Units” means the
\n ————————
\nlimited liability company Interests of the Company represented by the 800,000
\nunits designated as Class A Membership Units in Section 2.7 of this Agreement.<\/p>\n
3<\/p>\n
Class B Membership Units. “Class B Membership Units” means the
\n ————————
\nconvertible, non-voting limited liability company Interests of the Company
\nrepresented by the 400,000 units designated as Class B Membership Units in
\nSection 2.7 of this Agreement.<\/p>\n
Class C Membership Unit. “Class C Membership Unit” means the
\n ———————–
\nredeemable, non-voting, cumulative, preferred, non-participating limited
\nliability company Interest of the Company represented by the 1 unit designated
\nas a Class C Membership Unit in Section 2.7 of this Agreement. Notwithstanding
\nany other provision of this Agreement, the Class C Membership Unit holder shall
\nbe entitled solely to a Priority Return to the extent provided herein and shall
\nreceive no other allocation of Profit or Loss or distribution hereunder.<\/p>\n
Code. “Code” means the Internal Revenue Code of 1986, as amended, 26
\n —-
\nU.S.C.A., et seq., or any succeeding federal internal revenue law as from time
\nto time in effect. Any reference to any section of the Code shall include the
\nprovisions of any successor revenue law as from time to time in effect.<\/p>\n
Company. “Company” means XFL, LLC, a Delaware limited liability
\n ——-
\ncompany, being the limited liability company formed pursuant to the Certificate
\nand governed by this Agreement.<\/p>\n
Company Minimum Gain. “Company Minimum Gain” has the meaning given
\n ——————–
\nthe term “partnership minimum gain” in Sections 1.704-2(b)(2) and 1.704-2(d) of
\nthe Regulations.<\/p>\n
Control. “Control” (including the terms “controlled by” and “under
\n ——-
\ncommon control with”) means the possession, directly or indirectly, of the power
\nto direct or cause the direction of the management or policies of a Person,
\nwhether through the ownership of voting securities or other ownership interests,
\nby contract or otherwise.<\/p>\n
Controlled Affiliate. “Controlled Affiliate” means, with respect to a
\n ——————–
\nPerson, a Person that, directly or indirectly, through one or more
\nintermediaries, is controlled by the first mentioned Person, and, in the case of
\nNBC, also means any Person that, directly or indirectly, through one or more
\nintermediaries, is controlled by NBC Parent.<\/p>\n
Conversion Date. “Conversion Date” has the meaning ascribed thereto
\n —————
\nin Section 10.1(c).<\/p>\n
Conversion Notice. “Conversion Notice” has the meaning ascribed
\n —————–
\nthereto in Section 10.1(a) of this Agreement.<\/p>\n
Defaulting Member. “Defaulting Member” has the meaning ascribed
\n —————–
\nthereto in Section 3.2(c) of this Agreement.<\/p>\n
Deficiency. “Deficiency” has the meaning ascribed thereto in Section
\n ———-
\n3.2(c) of this Agreement.<\/p>\n
Deficiency Contribution. “Deficiency Contribution” has the meaning
\n ———————–
\nascribed thereto in Section 3.2(c) of this Agreement.<\/p>\n
4<\/p>\n
Depreciation. “Depreciation” means, for each Fiscal Year, an amount
\n ————
\nequal to the depreciation, amortization, or other cost recovery deduction
\nallowable with respect to an asset for such Fiscal Year, except that if the
\nGross Asset Value of an asset differs from its adjusted basis for federal income
\ntax purposes at the beginning of such Fiscal Year, Depreciation shall be an
\namount which bears the same ratio to such beginning Gross Asset Value as the
\nfederal income tax depreciation, amortization, or other cost recovery deduction
\nfor such Fiscal Year bears to such beginning adjusted tax basis; provided,
\nhowever, that if the adjusted basis for federal income tax purposes of an asset
\nat the beginning of such Fiscal Year is zero, Depreciation shall be determined
\nwith reference to such beginning Gross Asset Value using any reasonable method
\nselected by the Board of Managers.<\/p>\n
Depreciation Recapture. “Depreciation Recapture” has the meaning
\n ———————-
\nascribed thereto in Section 6.2(d)(i)(B)(iii) of this Agreement.<\/p>\n
Dispute. “Dispute” has the meaning ascribed thereto in Section 12.1
\n ——-
\nof this Agreement.<\/p>\n
Estimated Tax Amount. “Estimated Tax Amount” shall mean, for each
\n ——————–
\nFiscal Year, an amount of cash which, in the good faith judgment of the Board of
\nManagers, equals (i) the amount of taxable income allocable from the Company in
\nrespect of such Fiscal Year to the Member receiving the greatest allocation of
\nsuch income, multiplied by (ii) forty percent (40%).<\/p>\n
Fair Market Value. “Fair Market Value” has the meaning ascribed
\n —————–
\nthereto in Section 8.5 of this Agreement.<\/p>\n
Financial Statements. “Financial Statements” has the meaning ascribed
\n ——————–
\nthereto in Section 7.3(a) of this Agreement.<\/p>\n
Fiscal Year. “Fiscal Year” has the meaning ascribed thereto in
\n ———–
\nSection 7.2 of this Agreement.<\/p>\n
Gross Asset Value. “Gross Asset Value” means with respect to any
\n —————–
\nasset, the asset’s adjusted basis for federal income tax purposes, except as
\nfollows:<\/p>\n
(i) The initial Gross Asset Value of any asset contributed by a Member
\nto the Company shall be the gross fair market value of such asset, as determined
\nby the Board of Managers;<\/p>\n
(ii) The Gross Asset Values of all Company assets shall be adjusted to
\nequal their respective gross fair market values (taking Code Section 7701(g)
\ninto account) as determined by the Board of Managers as of the following times:
\n(A) the acquisition of an additional Interest in the Company by any new or
\nexisting Member in exchange for more than a de minimis Capital Contribution; (B)
\nthe distribution by the Company to a Member of more than a de minimis amount of
\nCompany property as consideration for an Interest in the Company; and (C) the
\nliquidation of the Company within the meaning of Regulations Section 1.704-
\n1(b)(2)(ii)(g), provided that an adjustment described in clauses (A) and (B) of
\nthis paragraph shall be made only if the Board of Managers reasonably determines
\nthat such adjustment is necessary to reflect the relative economic interests of
\nthe Members in the Company;<\/p>\n
5<\/p>\n
(iii) The Gross Asset Value of any item of Company assets distributed
\nto any Member shall be adjusted to equal the gross fair market value (taking
\nCode Section 7701(g) into account) of such asset on the date of distribution as
\ndetermined by the Board of Managers; and<\/p>\n
(iv) The Gross Asset Values of the Company assets shall be increased
\n(or decreased) to reflect any adjustments to the adjusted basis of such assets
\npursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
\nthat such adjustments are taken into account in determining Capital Accounts
\npursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraph (vi) of
\nthe definition of “Profits” and “Losses” or Section 6.2(b)(vii) hereof;
\nprovided, however, that Gross Asset Values shall not be adjusted pursuant to
\nthis subparagraph (iv) to the extent that an adjustment pursuant to subparagraph
\n(ii) is required in connection with a transaction that would otherwise result in
\nan adjustment pursuant to this subparagraph (iv).<\/p>\n
If the Gross Asset Value of an asset has been determined or adjusted
\npursuant to subparagraph (ii) or (iv), such Gross Asset Value shall thereafter
\nbe adjusted by the depreciation taken into account with respect to such asset,
\nfor purposes of computing Profits and Losses.<\/p>\n
GAAP. “GAAP” shall mean U.S. generally accepted accounting
\n —-
\nprinciples, consistently applied.<\/p>\n
Immediate Family. “Immediate Family” means, and is limited to, an
\n —————-
\nindividual’s current spouse, parents, grandparents, children, siblings,
\ngrandchildren and other lineal descendants, or a trust or estate of which the
\nprimary beneficiaries are such individual or such related persons.<\/p>\n
Initial Business Plan. “Initial Business Plan” means the budget and
\n ———————
\nstrategic operating plan for the Company for the period commencing on May 1,
\n2000 and ending on April 30, 2002 in the form attached to this Agreement as
\nExhibit A.<\/p>\n
Interest. “Interest” means the entire ownership interest of a Member
\n ——–
\nin the Company at any time, including such Member’s Percentage Interest and the
\nright of such Member to any and all benefits to which a Member may be entitled
\nas provided in this Agreement, together with the obligations of such Member to
\ncomply with all of the terms and provisions of this Agreement.<\/p>\n
IPO. “IPO” has the meaning ascribed thereto in Section 14.1 of this
\n —
\nAgreement.<\/p>\n
Liquidator. “Liquidator” means that Person, or any successor thereto,
\n ———-
\nwho shall be designated to liquidate the Company pursuant to Section 9.3 hereof.<\/p>\n
Manager. “Manager” means any Person hereafter elected as a member of
\n ——-
\nthe Board of Managers of the Company as provided in this Agreement, but does not
\ninclude any Person who has ceased to be a member of the Board of Managers of the
\nCompany. Each member of the Board of Managers is a “Manager” within the meaning
\nof Section 18-101(10) of the Act.<\/p>\n
6<\/p>\n
Member. “Member” means any Person executing this Agreement as a
\n ——
\nmember or hereafter admitted to the Company as a member as provided in this
\nAgreement, but does not include any Person who has ceased to be a member in the
\nCompany, and each Member is a “Member” within the meaning of Section 18-101(11)
\nof the Act.<\/p>\n
Member Nonrecourse Debt. “Member Nonrecourse Debt” has the same
\n ———————–
\nmeaning as the term “partner nonrecourse debt” in Section 1.704-2(b)(4) of the
\nRegulations.<\/p>\n
Member Nonrecourse Debt Minimum Gain. “Member Nonrecourse Debt
\n ————————————
\nMinimum Gain” means an amount, with respect to each Member Nonrecourse Debt,
\nequal to the Company Minimum Gain that would result if such Member Nonrecourse
\nDebt were treated as a Nonrecourse Liability, determined in accordance with
\nSection 1.704-2(i)(3) of the Regulations.<\/p>\n
Member Nonrecourse Deductions. “Member Nonrecourse Deductions” has
\n —————————–
\nthe same meaning as the term “partner nonrecourse deductions” in Sections 1.704-
\n2(i)(1) and 1.704-2(i)(2) of the Regulations.<\/p>\n
Merchandising Agreement. “Merchandising Agreement” has the meaning
\n ———————–
\nascribed thereto in Section 2.8 of this Agreement.<\/p>\n
Monthly Management Reports. “Monthly Management Reports” has the
\n ————————–
\nmeaning ascribed thereto in Section 7.3(a) of this Agreement.<\/p>\n
NBC. “NBC” means NBC-XFL Holding, Inc., a Delaware corporation, its
\n —
\nsuccessors or permitted transferees of its entire Interest, as the case may be.<\/p>\n
NBC Parent. “NBC Parent” means National Broadcasting Company, Inc., a
\n ———-
\nDelaware corporation.<\/p>\n
NBC IPO Notice. “NBC IPO Notice” has the meaning ascribed thereto in
\n ————–
\nSection 14.2 of this Agreement.<\/p>\n
NBC IPO Put Notice. “NBC IPO Put Notice” has the meaning ascribed
\n ——————
\nthereto in Section 14.2 of this Agreement.<\/p>\n
NBC IPO Put Right. “NBC IPO Put Right” has the meaning ascribed
\n —————–
\nthereto in Section 14.2 of this Agreement.<\/p>\n
NBC Put Notice. “NBC Put Notice” has the meaning ascribed thereto in
\n ————–
\nSection 8.4(b) of this Agreement.<\/p>\n
NBC Put Right. “NBC Put Right” has the meaning ascribed thereto in
\n ————-
\nSection 8.4(b) of this Agreement.<\/p>\n
NFL. “NFL” has the meaning ascribed thereto in Section 5.13 of this
\n —
\nAgreement.<\/p>\n
Non-Defaulting Member. “Non-Defaulting Member” has the meaning
\n ———————
\nascribed thereto in Section 3.2(c) of this Agreement.<\/p>\n
7<\/p>\n
Nonrecourse Deductions. “Nonrecourse Deductions” has the meaning set
\n ———————-
\nforth in Section 1.704-2(b)(1) of the Regulations.<\/p>\n
Nonrecourse Liability. “Nonrecourse Liability” has the meaning set
\n ———————
\nforth in Section 1.704-2(b)(3) of the Regulations.<\/p>\n
Notice Letter. “Notice Letter” has the meaning ascribed thereto in
\n ————-
\nSection 12.2 of this Agreement.<\/p>\n
Observer. “Observer” has the meaning ascribed thereto in Section 5.3
\n ——–
\nof this Agreement.<\/p>\n
Offer Period. “Offer Period” has the meaning ascribed thereto in
\n ————
\nSection 8.3 of this Agreement.<\/p>\n
Offered Interest. “Offered Interest” has the meaning ascribed thereto
\n —————-
\nin Section 8.3 of this Agreement.<\/p>\n
Offered Members. “Offered Members” has the meaning ascribed thereto
\n —————
\nin Section 8.3 of this Agreement.<\/p>\n
Offering Member. “Offering Member” has the meaning ascribed thereto
\n —————
\nin Section 8.3 of this Agreement.<\/p>\n
Percentage Interest. “Percentage Interest” of any Member means the
\n ——————-
\npercentage of all outstanding Class A Membership Units and Class B Membership
\nUnits, taken together, held by such Member.<\/p>\n
Performance Based Conversion Notice. “Performance Based Conversion
\n ———————————–
\nNotice” has the meaning ascribed thereto in Section 10.1(a) of this Agreement.<\/p>\n
Person. “Person” means any person, corporation, partnership, limited
\n ——
\npartnership, limited liability company, joint venture, association, joint stock
\ncompany, trust, business trust, unincorporated association or other entity.<\/p>\n
Priority Return. “Priority Return” means a sum equal to ten percent
\n —————
\n(10%) per annum, determined on the basis of a year of 365 or 366 days, as the
\ncase may be, for the actual number of days in the period for which the Priority
\nReturn is being determined, cumulative (but not compounded) to the extent not
\ndistributed in any given Fiscal Year pursuant to Section 6.1(d) hereof, of the
\nCapital Contribution attributable to the Class C Membership Unit ($12.50),
\ncommencing on the first day the Class C Membership Unit is issued to the WWFE.<\/p>\n
Profits and Losses. “Profits” and “Losses” mean, for each Fiscal
\n ——————
\nYear, an amount equal to the Company’s taxable income or loss for such Fiscal
\nYear, determined in accordance with Code Section 703(a) (for this purpose, all
\nitems of income, gain, loss, or deduction required to be stated separately
\npursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
\nwith the following adjustments (without duplication):<\/p>\n
8<\/p>\n
(i) Any income of the Company that is exempt from federal income
\ntax and not otherwise taken into account in computing Profits or Losses pursuant
\nto this definition of “Profits” and “Losses” shall be added to such taxable
\nincome or loss:<\/p>\n
(ii) Any expenditures of the Company described in Code Section
\n705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
\nRegulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
\nin computing Profits or Losses pursuant to this definition of “Profits” and
\n“Losses”, shall be subtracted from such taxable income or loss;<\/p>\n
(iii) In the event the Gross Asset Value of any Company asset is
\nadjusted pursuant to subparagraphs (ii) or (iii) of the definition of Gross
\nAsset Value, the amount of such adjustment shall be treated as an item of gain
\n(if the adjustment increases the Gross Asset Value of the asset) or an item of
\nloss (if the adjustment decreases the Gross Asset Value of the asset) from the
\ndisposition of such asset and shall be taken into account for purposes of
\ncomputing Profits or Losses;<\/p>\n
(iv) Gain or loss resulting from any disposition of property with
\nrespect to which gain or loss is recognized for federal income tax purposes
\nshall be computed by reference to the Gross Asset Value of the property disposed
\nof, notwithstanding that the adjusted tax basis of such property differs from
\nits Gross Asset Value;<\/p>\n
(v) In lieu of the depreciation, amortization, and other cost
\nrecovery deductions taken into account in computing such taxable income or loss,
\nthere shall be taken into account Depreciation for such Fiscal Year computed in
\naccordance with the definition of Depreciation;<\/p>\n
(vi) To the extent an adjustment to the adjusted tax basis of any
\nCompany asset pursuant to Code Section 734(b) is required, pursuant to
\nRegulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in
\ndetermining Capital Accounts as a result of a distribution other than in
\nliquidation of a Member’s Interest in the Company, the amount of such adjustment
\nshall be treated as an item of gain (if the adjustment increases the basis of
\nthe asset) or loss (if the adjustment decreases such basis) from the disposition
\nof such asset and shall be taken into account for purposes of computing Profits
\nor Losses; and<\/p>\n
(vii) Notwithstanding any other provision of this definition, any
\nitems which are specially allocated pursuant to Section 6.2 hereof shall not be
\ntaken into account in computing Profits or Losses.<\/p>\n
The amounts of the items of Company income, gain, loss or deduction
\navailable to be specially allocated pursuant to Sections 6.2 hereof shall be
\ndetermined by applying rules analogous to those set forth in subparagraphs (i)
\nthrough (vi) above.<\/p>\n
Purchased Assets. “Purchased Assets” has the meaning ascribed thereto
\n —————-
\nin Section 13.2 of this Agreement.<\/p>\n
Put Closing. “Put Closing” has the meaning ascribed thereto in
\n ———–
\nSection 8.4(b) of this Agreement.<\/p>\n
9<\/p>\n
Put Rejection. “Put Rejection” has the meaning ascribed thereto in
\n ————-
\nSection 8.4(c) of this Agreement.<\/p>\n
Redemption Notice. “Redemption Notice” has the meaning ascribed
\n —————–
\nthereto in Article 11 of this Agreement.<\/p>\n
Regulatory Allocations. “Regulatory Allocations” has the meaning
\n ———————-
\nascribed thereto in Section 6.3 of this Agreement.<\/p>\n
Regulations. “Regulations” means the Income Tax Regulations,
\n ———–
\nincluding Temporary Regulations, promulgated under the Code, as such regulations
\nare amended from time to time.<\/p>\n
Rules. “Rules” has the meaning ascribed thereto in Section 12.1 of
\n —–
\nthis Agreement.<\/p>\n
Scheduled Contributions. “Scheduled Contributions” has the meaning
\n ———————–
\nascribed thereto in Section 5.19 of this Agreement.<\/p>\n
Securities Act. “Securities Act” means the Securities Act of 1933, as
\n ————–
\namended.<\/p>\n
Service. “Service” means the Internal Revenue Service.
\n ——- <\/p>\n
Shares. “Shares” means any Class A Membership Units, Class B
\n ——
\nMembership Units or Class C Membership Unit from time to time issued and
\noutstanding.<\/p>\n
Subsequent Business Plan. “Subsequent Business Plan” has the meaning
\n ————————
\nascribed thereto in Section 5.19 hereof.<\/p>\n
Tax Matters Member. “Tax Matters Member” means that Person designated
\n ——————
\nas the Tax Matters Member pursuant to Section 5.14 hereof.<\/p>\n
Tax Statements. “Tax Statements” has the meaning ascribed thereto in
\n ————–
\nSection 7.3(a) of this Agreement.<\/p>\n
Threshold Interest. “Threshold Interest” has the meaning ascribed
\n ——————
\nthereto in Section 5.3 of this Agreement.<\/p>\n
Transfer. “Transfer” means the sale, assignment, transfer,
\n ——–
\ndisposition, mortgage, pledge, charge or encumbrance, or contract to do or
\npermit any of the foregoing, whether voluntarily or by operation of law.<\/p>\n
Transferee. “Transferee” has the meaning ascribed thereto in Section
\n ———-
\n8.3 of this Agreement.<\/p>\n
Transfer Notice. “Transfer Notice” has the meaning ascribed thereto
\n —————
\nin Section 8.3 of this Agreement.<\/p>\n
10<\/p>\n
Valuation Date. “Valuation Date” has the meaning ascribed thereto in
\n ————–
\nSection 8.5 of this Agreement.<\/p>\n
WWFE. “WWFE” means WWFE Sports, Inc., a Delaware corporation, its
\n —-
\nsuccessors or permitted transferees of its entire Interest, as the case may be.<\/p>\n
WWFE Call Option. “WWFE Call Option” has the meaning ascribed thereto
\n —————-
\nin Section 8.4(a) of this Agreement.<\/p>\n
WWFE IPO Call Notice. “WWFE IPO Call Notice” has the meaning ascribed
\n ——————–
\nthereto in Section 14.3 of this Agreement.<\/p>\n
WWFE IPO Call Option. “WWFE IPO Call Option” has the meaning ascribed
\n ——————–
\nthereto in Section 14.3 of this Agreement.<\/p>\n
WWFE IPO Notice. “WWFE IPO Notice” has the meaning ascribed thereto
\n —————
\nin Section 14.3 of this Agreement.<\/p>\n
WWFE Parent. “WWFE Parent” means World Wrestling Federation
\n ———–
\nEntertainment, Inc., a Delaware corporation.<\/p>\n
XFL Property Rights. “XFL Property Rights” has the meaning ascribed
\n ——————-
\nthereto in Section 6.1 of this Agreement.<\/p>\n
ARTICLE II<\/p>\n
FORMATION, NAME, OFFICES AND PURPOSES; MEMBERS
\n ———————————————-<\/p>\n
Section 2.1. Formation. The Company was formed on March 20, 2000 by
\n ———
\nthe filing of the Certificate with the Secretary of State of the State of
\nDelaware. Except as otherwise provided in this Agreement, the rights, duties,
\nliabilities and obligations of the Members, and all other Persons who become
\nmembers of the Company in the manner set forth herein, and the administration,
\ndissolution, winding up and termination of the Company shall be governed by the
\nAct.<\/p>\n
Section 2.2. Name. The name of the Company is “XFL, LLC”. The
\n —-
\nCompany shall execute a certificate or certificates required by law to be filed
\nin connection with changes in the name of the Company or the conduct of the
\nbusiness of the Company and shall cause such certificate or certificates to be
\nfiled in the appropriate offices.<\/p>\n
Section 2.3. Offices. The principal office of the Company shall be
\n ——-
\nlocated at 1241 East Main Street, Stamford, CT 06902. The Company’s registered
\noffice and the name of its initial registered agent at such address shall be as
\nset forth in the Certificate. The Company may have such substituted and
\nadditional offices at such other locations as the Members shall designate. The
\nCompany’s registered office and registered agent may be changed from time to
\ntime by filing the address of the new registered office and\/or the name and the
\nacceptance of the new registered agent with the Delaware Secretary of State
\npursuant to the Act.<\/p>\n
11<\/p>\n
Section 2.4. Purposes; Power. The purpose of the Company shall be,
\n —————
\nand the Company shall have the power and authority, to establish, develop and
\noperate a professional football league to be known as the “XFL” (the “Business”)
\nand to acquire, own, manage and sell such assets and properties as may be
\nnecessary or convenient in connection with the operation of the Business. In
\ncarrying out these purposes and exercising these powers, the Company may enter
\ninto, make and perform all contracts and other undertakings and engage in all
\nactivities and transactions as may be necessary and proper to operate the
\nBusiness. The Company shall commence operations no later than the date hereof.
\nAny change in, or expansion of, the purpose or scope of the Business shall
\nrequire the prior written approval of NBC and WWFE.<\/p>\n
Section 2.5. Scope of Members’ Authority. Except as otherwise
\n —————————
\nexpressly and specifically provided in this Agreement, no Member shall have
\nauthority to bind or act for, or assume any obligations or responsibilities on
\nbehalf of, any other Member or the Company. Neither the Company nor any Member
\nshall be responsible or liable for any indebtedness or obligation of any other
\nMember incurred or arising either before or after the execution of this
\nAgreement, except as to such joint responsibilities, liabilities, indebtedness
\nor obligations incurred after the date hereof pursuant to a written instrument.
\nThis Agreement shall not be deemed to create a partnership or other affiliation
\nbetween the Members with respect to any activities whatsoever, other than
\nactivities within the purpose of the Company as specified in Section 2.4 above.<\/p>\n
Section 2.6. Confidential Information. The Company and each Member
\n ————————
\nshall not use or disclose to others any confidential information received from
\nthe Company or any other Member which is not otherwise available to the public
\n(or any confidential information made available to the public as a result of a
\nbreach of this Agreement by the breaching party) for any purpose other than for
\nthe benefit of the Company, as determined by the Board of Managers, or as
\nrequired by law.<\/p>\n
Section 2.7. Classes of Membership Interests; Number Authorized.
\n ————————————————– <\/p>\n
(a) The limited liability company Interests of the Company
\n(as defined in Section 18-101(8) of the Act) shall be represented by the Class A
\nMembership Units, the Class B Membership Units and the Class C Membership Unit.
\nNo additional class or classes of limited liability company Interests of the
\nCompany shall be created or issued without the prior approval of the Members.<\/p>\n
(b) The total number of Class A Membership Units that the
\nCompany shall have the authority to issue is 800,000. On the date of this
\nAgreement, 200,000 Class A Membership Units are issued and outstanding and held
\nof record by WWFE. The total number of Class B Membership Units that the Company
\nshall have the authority to issue is 400,000. On the date of this Agreement,
\n200,000 Class B Membership Units are issued and outstanding and held of record
\nby NBC. The total number of Class C Membership Units that the Company shall have
\nthe authority to issue is 1. On the date of this Agreement, 1 Class C Membership
\nUnit is issued and outstanding and held of record by WWFE. Except as
\nspecifically provided in this Agreement, no additional Class A Membership Units,
\nClass B Membership Units or Class C Membership Units shall be issued by the
\nCompany.<\/p>\n
12<\/p>\n
Section 2.8. Ancillary Agreements. On the date of this Agreement,
\n ——————–
\nthe Company is entering into (i) a Merchandising and Support Services Agreement
\nwith WWFE Parent (the “Merchandising Agreement”) and (ii) a Broadcast Agreement
\nwith NBC Parent (the “Broadcast Agreement”).<\/p>\n
ARTICLE III<\/p>\n
CAPITAL CONTRIBUTIONS
\n ———————<\/p>\n
Section 3.1. Initial Capital Contribution.
\n —————————- <\/p>\n
(a) On the date hereof, WWFE has made an initial cash
\nCapital Contribution in the amount of $2,500,012.50. The Capital Account of WWFE
\nshall be increased from zero to $2,500,012.50.<\/p>\n
(b) On the date hereof, NBC has made an initial cash Capital
\nContribution in the amount of $2,500,000.00. The Capital Account of NBC shall be
\nincreased from zero to $2,500,000.00.<\/p>\n
Section 3.2. Additional Capital Contributions.
\n ——————————– <\/p>\n
(a) Each Member shall contribute to the capital of the
\nCompany (an “Additional Capital Contribution”) its proportionate share, based on
\nits Percentage Interest, of the aggregate amount of any additional cash
\ncontributions called for by the Board of Managers in accordance with this
\nAgreement, the Initial Business Plan and any Subsequent Business Plan. Except as
\nspecifically provided herein, no additional Shares shall be issued upon receipt
\nof any Additional Capital Contribution.<\/p>\n
(b) On approximately a monthly basis, the Board of Managers
\nshall send a written notice to each Member calling for such Member to make its
\nproportionate share of the Additional Capital Contributions then due, as
\ncontemplated by the Initial Business Plan or any Subsequent Business Plan, as
\nthe case may be. Such notice shall set forth (i) the aggregate amount of such
\nAdditional Capital Contributions and (ii) each Member’s proportionate share of
\nsuch Additional Capital Contributions. Additional Capital Contributions in the
\namounts called for in such notice shall be made by the Members within five (5)
\nBusiness Days following receipt of such notice from the Board of Managers. A
\nfailure by the Board of Managers to make a call for an Additional Capital
\nContribution at such time as the same is contemplated by the Initial Business
\nPlan, any Subsequent Business Plan or this Agreement shall not relieve the
\nMembers from their obligations under this Agreement to make such Additional
\nCapital Contributions when and as the same may be called for by the Board of
\nManagers. No call for an Additional Capital Contribution in excess of the
\namounts called for in the Initial Business Plan or any Subsequent Business Plan,
\nas the case may be, shall be made by the Board of Managers without the prior
\nwritten approval of NBC and WWFE.<\/p>\n
(c) Upon the failure of a Member (a “Defaulting Member”) to
\nmake any Additional Capital Contribution required by this Section (the portion
\nthereof not contributed by such Defaulting Member being referred to herein as
\nthe “Deficiency”), the Board of Managers shall give written notice of such
\nfailure, including the name of the Defaulting Member<\/p>\n
13<\/p>\n
and the amount of such Deficiency, to the other Members (each, a “Non-Defaulting
\nMember”). Each Non-Defaulting Member may (in addition to, and not in lieu of,
\nany other rights or remedies such Non-Defaulting Member may have under this
\nAgreement, at law or in equity), in its sole and absolute discretion, within
\nfive (5) Business Days after receipt of such written notice, contribute all or
\nany portion of such Deficiency to the capital of the Company (a “Deficiency
\nContribution”); provided, however, that if the proposed aggregate Deficiency
\nContributions of two or more Non-Defaulting Members are greater than the amount
\nof the Deficiency, then, unless such Non-Defaulting Members agree on the amount
\nof the Deficiency Contribution to be made by each of them, such Deficiency
\nContributions shall be made in proportion to such Non-Defaulting Members’
\nPercentage Interests. In the event of any such Deficiency Contribution(s), a
\nnumber of additional Class A Membership Units or Class B Membership Units, as
\nthe case may be, shall be issued to the Non-Defaulting Member or Members making
\nsuch Deficiency Contribution(s) (in proportion to the Deficiency Contribution
\nmade by each Non-Defaulting Member) so that the Defaulting Member’s Percentage
\nInterest is reduced by an amount (expressed in terms of a percentage) equal to
\nthe quotient determined by dividing (1) the amount of such Deficiency
\nContribution(s) by (2) the aggregate sum of all Capital Contributions (including
\nDeficiency Contributions) made by all Members to the Company through the date
\nsuch additional Class A Membership Units or Class B Membership Units are issued,
\nand the aggregate Percentage Interests of the Non-Defaulting Member or Members
\nmaking such Deficiency Contribution(s) shall be increased by a like amount (and
\nin proportion to the Deficiency Contribution made by each Non-Defaulting
\nMember).<\/p>\n
Section 3.3. Non Cash Capital Contributions. If the Members make any
\n ——————————
\nCapital Contributions in a form other than cash, the Members shall execute and
\ndeliver to the Company any assignments and other instruments of transfer as may
\nbe deemed necessary to confirm and carry out the contributions to capital of the
\nCompany.<\/p>\n
Section 3.4. Use of Capital Contributions. All contributions to
\n —————————-
\ncapital of the Company shall be available to the Company to carry out the
\npurposes of the Company.<\/p>\n
Section 3.5. Other Source of Funds. Subject to Section 5.18, the
\n ———————
\nCompany may, at the Board of Managers’ discretion, from time to time borrow and
\nre-borrow funds (for working capital purposes including ordinary course
\nintercompany reimbursements) under terms and conditions determined by the Board
\nof Managers, including without limitation, borrowing funds from Members and
\nAffiliates thereof as well as institutional lenders. No Member shall be
\nrequired to loan money to the Company.<\/p>\n
ARTICLE IV<\/p>\n
PARTICIPATION IN COMPANY PROPERTY
\n ———————————<\/p>\n
Section 4.1. Ownership by Member of Company. No Member shall have
\n ——————————
\nany right of partition with respect to any property or assets of the Company.<\/p>\n
Section 4.2. Return of Capital. Except as expressly provided herein,
\n —————–
\nno Member shall have the right to demand or receive a distribution of any
\ncapital prior to the <\/p>\n
14<\/p>\n
dissolution of the Company, and no Member shall have the right to demand and
\nreceive property other than cash in return for any contribution to the capital
\nof the Company.<\/p>\n
Section 4.3. No Interest. No Member shall be entitled to receive any
\n ———–
\ninterest with respect to its Capital Contributions or Capital Account.<\/p>\n
ARTICLE V<\/p>\n
MANAGEMENT
\n ———-<\/p>\n
Section 5.1. Management by the Board of Managers. Except for
\n ———————————–
\nsituations in which the approval of the Members, or NBC and\/or WWFE
\nspecifically, is required by this Agreement or by non-waivable provisions of the
\nAct or the approval of the Broadcast Committee is required under the Broadcast
\nAgreement, (i) the powers of the Company shall be exercised by or under the
\nauthority of, and the business and affairs of the Company shall be managed under
\nthe direction of, the Board of Managers; and (ii) the Board of Managers may make
\nall decisions and take all actions for the Company not otherwise provided for in
\nthis Agreement or in the Broadcast Agreement. If any action taken by the Board
\nof Managers conflicts or is inconsistent in any way with any action taken by the
\nBroadcast Committee (as defined in the Broadcast Agreement) pursuant to its
\npowers under the Broadcast Agreement, the action taken by the Broadcast
\nCommittee shall be controlling.<\/p>\n
Section 5.2. Actions by Board of Managers. In managing the business
\n —————————-
\nand affairs of the Company and exercising its powers granted hereunder, the
\nBoard of Managers may act through meetings or written consents pursuant to
\nSections 5.5 and 5.7. Any Person dealing with the Company, other than a Member,
\nmay rely on the authority of a Manager or any duly appointed officer of the
\nCompany in taking any action in the name of the Company without inquiry into the
\nprovisions of this Agreement or compliance herewith, regardless of whether that
\naction actually is taken in accordance with the provisions of this Agreement.
\nEach Member, by execution of this Agreement, agrees to, consents to, and
\nacknowledges the delegation of powers and authority to the Board of Managers
\ngranted hereunder, and to the actions and decisions of the Board of Managers
\nwithin the scope of their authority as provided herein.<\/p>\n
Section 5.3. Number and Term of Office. The Board of Managers shall
\n ————————-
\nconsist of three Managers prior to the Conversion Date and on and after the
\nConversion Date shall consist of six Managers. Prior to the Conversion Date,
\nthe holders of the Class A Membership Units shall be entitled to designate all
\nthree Managers to the Board of Managers. Prior to the Conversion Date, the
\nholders of the Class B Membership Units shall be entitled to designate one
\nindividual (the “Observer”) who shall not be a Manager but who may attend all
\nmeetings of the Board of Managers. The Observer shall receive all materials and
\ncommunications as and when received by the Managers but shall have no authority
\nto vote on any matter presented to the Board of Managers, but shall have the
\nability to submit non-binding recommendations to the Board of Managers. On and
\nafter the Conversion Date and so long as each of WWFE and NBC owns at least
\neighty-five percent (85%) of the total number of Shares owned by it as of the
\ndate hereof (subject to appropriate adjustment in the event of any equity
\ndistribution, split, combination or other similar recapitalization) (the
\n“Threshold Interest”), WWFE shall be entitled to designate three Managers to the
\nBoard of Managers and NBC shall be entitled to designate <\/p>\n
15<\/p>\n
three Managers to the Board of Managers; provided, however, that during any time
\nafter the Conversion Date that either or both of WWFE and NBC own less than the
\nThreshold Interest, NBC shall be entitled to designate a number (rounded to the
\nnearest whole number) of Managers to the Board of Managers that is directly
\nproportionate to the ratio of NBC’s Percentage Interest to WWFE’s Percentage
\nInterest and WWFE shall be entitled to designate a number (rounded to the
\nnearest whole number) of Managers to the Board of Managers that is directly
\nproportionate to the ratio of WWFE’s Percentage Interest to NBC’s Percentage
\nInterest. In the event that any adjustment to WWFE’s and NBC’s representation on
\nthe Board of Managers is required by the immediately preceding sentence, WWFE or
\nNBC, as the case may be, shall cause an appropriate number of Managers
\ndesignated by it to resign from the Board of Managers and any vacancy resulting
\nfrom such resignation(s) shall be filled by the other such Member. For purposes
\nof this Section 5.3, the number of Shares owned by, and the respective
\nPercentage Interests of, NBC and WWFE shall be deemed to include the Shares
\nowned by, and the Percentage Interests of, their respective Affiliates. On and
\nafter the Conversion Date, there shall be no Observer. On and after the
\nConversion Date, the Chairman of the Board of Managers shall be a Manager
\ndesignated by WWFE and the Vice Chairman of the Board of Managers shall be a
\nManager designated by NBC. On the Conversion Date, the Observer on the
\nConversion Date, together with two additional individuals designated by NBC,
\nshall become the initial Managers designated by NBC. On and after the Conversion
\nDate, all references herein to the Board of Managers shall be deemed to refer to
\nthe full six-member Board of Managers.<\/p>\n
The following persons are the Managers of the Company as of the date
\nhereof and until their successors are duly elected:<\/p>\n
Vincent K. McMahon<\/p>\n
Linda E. McMahon<\/p>\n
August J. Liguori<\/p>\n
The following person is the Observer as of the date hereof:<\/p>\n
Dick Ebersol<\/p>\n
Section 5.4. Vacancies; Removal; Resignation. Any Manager may be
\n ——————————-
\nremoved at any time, with or without cause, but only by the holders of the
\nShares (or the Member, if applicable) who designated such Manager. In the event
\nthat any Manager ceases to serve as a Manager during his term of office, the
\nresulting vacancy shall be filled by the holders of the Shares (or the Member,
\nif applicable) entitled to appoint the Manager whose absence has created such
\nvacancy. Any Manager may resign his office at any time.<\/p>\n
Section 5.5. Meetings.
\n ——– <\/p>\n
(a) A majority of the total number of Managers shall
\nconstitute a quorum for the transaction of business of the Board of Managers,
\nand the act of a majority of the Managers present at a meeting at which a quorum
\nis present shall be necessary and sufficient to be the act of the Board of
\nManagers. A Manager who is present at a meeting of the Board of Managers at
\nwhich action on any Company matter is taken shall be presumed to have assented
\nto<\/p>\n
16<\/p>\n
the action unless his dissent shall be entered in the minutes of the meeting or
\nunless he shall file his written dissent to such action with the Person acting
\nas secretary of the meeting before the adjournment thereof or shall deliver such
\ndissent to the Company immediately after the adjournment of the meeting. Such
\nright to dissent shall not apply to a Manager who voted in favor of such action.
\nAny Manager who is present at a meeting of the Board of Managers shall be
\nentitled to cast the vote of any Manager who is not present and who was
\nappointed by the same Member as the Manager casting the vote.<\/p>\n
(b) Meetings of the Board of Managers may be held at such
\nplace or places as shall be determined from time to time by resolution of the
\nBoard of Managers. At all meetings of the Board of Managers, business shall be
\ntransacted in such order as shall from time to time be determined by resolution
\nof the Board of Managers.<\/p>\n
(c) Regular meetings of the Board of Managers shall be held
\nat such times and places as shall be designated from time to time by resolution
\nof the Board of Managers, but shall not be held less frequently than quarterly.
\nNotice of such meetings shall not be required.<\/p>\n
(d) Special meetings of the Board of Managers may be called
\nby the Chairman of the Board of Managers or any two Managers on at least 24
\nhours’ notice to each other Manager. Such notice need not state the purpose or
\npurposes of, nor the business to be transacted at, such meeting, except as may
\notherwise be required by law or provided for in this Agreement.<\/p>\n
(e) Any matter upon which the Board of Managers is
\ndeadlocked shall be resolved pursuant to the provisions of Article 12.<\/p>\n
Section 5.6. Approval or Ratification of Acts or Contracts by
\n ————————————————
\nMembers. The Board of Managers in their discretion may submit any act or
\ncontract for approval or ratification at any annual or special meeting of the
\nMembers.<\/p>\n
Section 5.7. Action by Managers by Written Consent or Telephone
\n ————————————————–
\nConference. Any action permitted or required by the Act, the Certificate or
\n———-
\nthis Agreement to be taken at a meeting of the Board of Managers may be taken
\nwithout a meeting if a consent in writing, setting forth the action to be taken,
\nis signed by that number of the Managers having not less than the minimum number
\nof votes that would be necessary to authorize or take such action at a meeting
\nat which all Managers were present and voting. Such consent shall have the same
\nforce and effect as a vote at a meeting and may be stated as such in any
\ndocument or instrument filed with the Secretary of State of Delaware, and the
\nexecution of such consent shall constitute attendance or presence in person at a
\nmeeting of the Board of Managers. Subject to the requirements of the Act, the
\nCertificate or this Agreement for notice of meetings, unless otherwise
\nrestricted by the Certificate, the Managers may participate in and hold a
\nmeeting of the Board of Managers by means of a conference telephone or similar
\ncommunications equipment by means of which all Persons participating in the
\nmeeting can hear each other, and participation in such meeting shall constitute
\nattendance and presence in person at such meeting, except where a Person
\nparticipates in the meeting for the express purpose of objecting to the
\ntransaction of any business on the ground that the meeting is not lawfully
\ncalled or convened.<\/p>\n
17<\/p>\n
Section 5.8. Conflicts of Interest. Subject to the other express
\n ———————
\nprovisions of this Agreement, each Manager, Member and officer of the Company at
\nany time and from time to time may engage in and possess interests in other
\nbusiness ventures of any and every type and description, independently or with
\nothers, with no obligation to offer to the Company or any other Member, Manager
\nor officer the right to participate therein. The Company may transact business
\nwith any Manager, Member, officer or Affiliate thereof, provided the terms of
\nthose transactions are no less favorable than those the Company could obtain
\nfrom unrelated third parties.<\/p>\n
Section 5.9. Actions by Members. Regular meetings of the Members may
\n ——————
\nbe held at such places, and at such times, as the Members may from time to time
\ndetermine. No notice of any such meeting shall be required. Special meetings
\nof the Members may be held at any time or place called by any Member. Notice by
\nletter, telegram, telecopy or telephone of a special meeting of the Members
\nshall be given by the Member calling the meeting not less than two (2) Business
\nDays before the special meeting. The Members may participate in a meeting of the
\nMembers by means of conference telephone or similar communications equipment by
\nmeans of which all persons participating in the meeting can hear each other.
\nThe Secretary of the Company shall keep written minutes of all meetings of the
\nMembers. At all meetings of the Members, Members holding a majority of the
\noutstanding Class A Membership Units entitled to vote shall constitute a quorum
\nfor the transaction of business and shall be necessary and sufficient for taking
\nany action, except that where any action requires the prior approval of NBC
\nand\/or WWFE, the presence of NBC and\/or WWFE, as the case may be, shall be
\nrequired to constitute a quorum for the taking of such action. Any action to be
\ntaken by the Members shall require the affirmative vote of the holders of a
\nmajority of all the outstanding Class A Membership Units present in person or by
\nproxy and entitled to vote, except as otherwise specially provided in this
\nAgreement (e.g., where the prior approval of NBC and\/or WWFE is required). Each
\nholder of outstanding Class A Membership Units shall be entitled to one vote for
\neach Class A Membership Units held by that Member at each meeting of Members
\n(and written actions in lieu of meetings) with respect to any and all matters
\npresented to the Members for their action or consideration and on which they are
\nentitled to vote. Holders of Class B Membership Units and the Class C
\nMembership Unit shall not be entitled to vote on any action presented to the
\nMembers, except as required by law or by the provisions of this Agreement. Any
\naction required or permitted to be taken at any meeting of the Members may be
\ntaken without a meeting if a consent in writing, setting forth the action to be
\ntaken, is signed by that number of Members entitled to vote thereon having not
\nless than the minimum number of votes that would be necessary to authorize or
\ntake such action at a meeting at which all such Members were present and voting
\n(including, in cases where the prior approval of a Member is required, the
\napproval of the requisite Member(s)). No Member shall be prohibited from voting
\non a matter solely because the matter relates to such Member or an Affiliate of
\nsuch Member. No contract, action or transaction will be void or voidable with
\nrespect to the Company because it is between or affects the Company and one or
\nmore of its Members or their Affiliates regardless of whether any of the
\nconditions set forth in Section 18-107 of the Act have been met. Any matter
\nupon which the Members are deadlocked shall be resolved pursuant to the
\nprovisions of Article 12.<\/p>\n
Section 5.10. Officers. Subject to the rights and authority of the
\n ——–
\nBoard of Managers, the day-to-day operations of the Company shall be run by the
\nofficers of the Company who will be elected by the Board of Managers. The
\nofficers shall consist of a President, one or <\/p>\n
18<\/p>\n
more Vice Presidents, a Secretary and a Treasurer, and may consist of such other
\nofficers (including a Chief Financial Officer) and assistant officers as the
\nBoard of Managers may determine. Each officer or assistant officer shall serve
\nat the pleasure of the Board of Managers. The compensation of all officers and
\nassistant officers shall be fixed by, or pursuant to authority delegated by, the
\nBoard of Managers from time to time. Any two or more offices may be held by the
\nsame person.<\/p>\n
(A) President. The President shall be the chief executive
\n ———-
\n officer of the Company and shall have general and active charge and
\n control over the business and affairs of the Company, subject to the
\n oversight of the Board of Managers.<\/p>\n
(B) Vice President. The Vice President or, if there shall
\n ————–
\n be more than one, the Vice Presidents, in the order of their seniority
\n unless otherwise specified by the Board of Managers, shall have all of
\n the powers and perform all of the duties of the President during his
\n absence or inability to act. Each Vice President shall also have such
\n other powers and perform such other duties as shall be prescribed from
\n time to time by the Board of Managers or the President.<\/p>\n
(C) Secretary. The Secretary shall keep a record of the
\n ———
\n minutes of the proceedings of meetings of the Members and the Board of
\n Managers, and shall give notice of all such meetings as required by
\n the Act or this Agreement. The Secretary shall have custody of the
\n seal of the Company and of all books, records, and papers of the
\n Company, except such as shall be in the charge of the Treasurer or of
\n some other Person authorized to have custody and possession thereof by
\n resolution of the Board of Managers. The Secretary shall also have
\n such other powers and perform such other duties as are incident to the
\n office of the secretary of a limited liability company or as shall be
\n prescribed from time to time by, or pursuant to authority delegated
\n by, the Board of Managers or the President.<\/p>\n
(D) Treasurer. The Treasurer shall keep full and accurate
\n ———
\n accounts of the receipts and disbursements of the Company in books
\n belonging to the Company, shall deposit all moneys and other valuable
\n effects of the Company in the name and to the credit of the Company in
\n such depositories as may be designated by the Board of Managers, and
\n shall also have such other powers and perform such other duties as are
\n incident to the office of the treasurer of a limited liability company
\n or as shall be prescribed from time to time by, or pursuant to
\n authority delegated by, the Board of Managers or the President.<\/p>\n
The following officers of the Company shall serve at the pleasure of the Board
\nof Managers until their successors are elected: President — Basil DeVito; Vice
\nPresident, Football Operations — Michael Keller; Vice President, Administration
\n-William Hicks; Vice President, Finance, Chief Financial Officer and Treasurer –
\nAugust Liguori; Secretary -Linda McMahon.<\/p>\n
19<\/p>\n
Section 5.11. Bank Accounts. Only the Treasurer or his designees in
\n ————-
\naccordance with authorization cards on file with the Company’s banks may sign
\nchecks on behalf of the Company.<\/p>\n
Section 5.12. Compensation. Except as otherwise expressly provided
\n ————
\nin this Agreement, no Managers or Affiliate of any Managers shall be entitled to
\nany compensation from the Company or to reimbursement for expenses incurred in
\nconnection with the business or affairs of the Company, except with the prior
\napproval of the Managers. The Company shall pay the reasonable out-of-pocket
\nexpenses incurred by each Manager and Observer in connection with attending the
\nmeetings of the Board of Managers.<\/p>\n
Section 5.13. Activity of Members; Football Restrictions. Except as
\n ——————————————
\nspecifically set forth in this Section 5.13 or pursuant to Section 8.4, no
\nMember or any Affiliate thereof shall be prohibited from engaging in any other
\nbusiness or activity by virtue of its status as a Member in the Company.
\nNotwithstanding the foregoing, neither NBC nor WWFE (nor any Affiliate of either
\nof the foregoing) shall, directly or indirectly, own, operate or broadcast via
\ntelevision (other than highlights of any length for use in any format or media)
\nany teams, games or other events of a professional football league or own or
\noperate a professional football league (it being expressly agreed that the
\nNational Football League, Inc. (“NFL”) is excluded as it relates to this Section
\n5.13 and that, accordingly, nothing in this Agreement will prohibit any Member
\n(or any of its Affiliates) from owning, operating or broadcasting any NFL team,
\ngame or other event).<\/p>\n
Section 5.14. Tax Matters Member. The Tax Matters Member shall be
\n ——————
\nWWFE. The Tax Matters Member shall have the responsibility of a tax matters
\npartner specified under the Code. The Tax Matters Member shall immediately
\nnotify all Members of any action taken by the Service relating to an audit or
\nreview of the Company’s federal income tax filings and shall keep all Members
\ninformed of the status of any such proceedings. Each Member shall have the
\nright to participate in such proceedings at such Member’s own expense. The Tax
\nMatters Member shall not enter into any agreement with the Service which
\npurports to bind any Member without first obtaining the consent of such Member.
\nThe Company shall reimburse the Tax Matters Member for all expenses reasonably
\nincurred in connection with its duties hereunder.<\/p>\n
Section 5.15. Reliance on Acts of the Managers. No financial
\n ——————————–
\ninstitution or other Person dealing with an officer or another agent or
\nattorney-in-fact for the Board of Managers will be required to ascertain whether
\nthe officer or such representative of the Board of Managers is an authorized
\nagent acting in accordance with this Agreement, but such financial institution
\nor such other Person will be protected in relying solely upon the deed, transfer
\nor assurances or on the execution of such instrument or instruments by the
\nofficer, a Manager or any authorized agent thereof.<\/p>\n
Section 5.16. Rights and Obligations of Members. Except as expressly
\n ———————————
\nset forth in this Agreement or mandated by the Act, no Member shall have any
\nliability to the Company in excess of such Member’s Capital Contributions, and
\nno Member shall have any liability to any other Member for the return or
\nrepayment of the Capital Contributions of such other Member or for the repayment
\nof any loan by such other Member to the Company. No Member shall be required to
\npay to the Company or any other Member any deficit in such other Member’s
\nCapital Account (upon dissolution or otherwise). A Member will not be
\npersonally liable for any debts <\/p>\n
20<\/p>\n
or losses of the Company beyond the Member’s obligation under Article III to
\nmake Capital Contributions or as otherwise required by the Act.<\/p>\n
Section 5.17. Indemnity of the Managers, Officers, Employees, and
\n —————————————————
\nOther Agents.
\n———— <\/p>\n
(a) The Company shall indemnify, to the fullest extent now
\nor hereafter permitted by law, each Manager and Observer (including each former
\nManager and Observer) of the Company who was or is made a party to or a witness
\nin or is threatened to be made a party to or a witness in any threatened,
\npending or completed action or proceeding, whether civil, criminal,
\nadministrative or investigative, by reason of the fact that such Person is or
\nwas an authorized representative of the Company, against all expenses (including
\nattorneys’ fees and disbursements), judgments, fines (including excise taxes and
\npenalties) and amounts paid in settlement actually and reasonably incurred by
\nsuch Person in connection with such action or proceeding.<\/p>\n
(b) The Company shall pay all expenses (including
\nattorneys’ fees and disbursements) incurred by a Manager or Observer (including
\na former Manager or Observer) referred to in Section 5.17(a) hereof in defending
\nor appearing as a witness in any action or proceeding described in Section
\n5.17(a) hereof in advance of the final disposition of such action or proceeding
\nupon receipt of an undertaking by or on behalf of such Person to repay all
\namounts advanced if it is ultimately determined that he or she is not entitled
\nto be indemnified by the Company as provided in Section 5.17(d) hereof.<\/p>\n
(c) The Company shall, unless otherwise determined by
\nmutual agreement of NBC and WWFE, indemnify to the fullest extent now or
\nhereafter permitted by law, any Person who was or is made a party to or a
\nwitness in or is threatened to be made a party to or a witness in, or was or is
\notherwise involved in, any threatened, pending or completed action or
\nproceeding, whether civil, criminal, administrative or investigative, by reason
\nof the fact that such Person is or was an authorized representative of the
\nCompany, both as to action in such Person’s official capacity and as to action
\nin another capacity at the Company’s request while holding such office or
\nposition, against all expenses (including attorneys’ fees and disbursements),
\njudgments, fines (including excise taxes and penalties), and amounts paid in
\nsettlement actually and reasonably incurred by such Person in connection with
\nsuch action or proceeding. The Company shall, unless otherwise determined by
\nmutual agreement of NBC and WWFE, pay expenses incurred by any such Person by
\nreason of his or her participation in an action or proceeding referred to in
\nthis Section 5.17(c) in advance of the final disposition of such action or
\nproceeding upon receipt of an undertaking by or on behalf of such Person to
\nrepay such amount if it shall ultimately be determined that he or she is not
\nentitled to be indemnified by the Company as provided in Section 5.17(d) hereof.<\/p>\n
(d) Indemnification under this Section shall not be made by
\nthe Company in any case where a court determines that the alleged act or failure
\nto act giving rise to the claim for indemnification (i) is expressly prohibited
\nby the Act or any successor statute as in effect at the time of such alleged
\naction or failure to take action, (ii) constitutes willful misconduct, bad
\nfaith, gross negligence or reckless disregard of a Person’s duties or (iii) is<\/p>\n
21<\/p>\n
outside the scope of such Person’s duties performed in his or her official
\ncapacity or in another capacity at the Company’s request.<\/p>\n
(e) The Company may purchase and maintain insurance on
\nbehalf of any Person who is or was a Manager or an Observer, or is or was an
\nauthorized representative of the Company, against any liability asserted against
\nor incurred by such Person in any such capacity, or arising out of the status of
\nsuch Person as such, whether or not the Company would have the power to
\nindemnify such Person against such liability under the provisions of this
\nSection.<\/p>\n
(f) Each Manager and Observer shall be deemed to act in such
\ncapacity in reliance upon such rights of indemnification and advancement of
\nexpenses as are provided in this Section. The rights of indemnification and
\nadvancement of expenses provided by this Section shall not be deemed exclusive
\nof any other rights to which any Person seeking indemnification or advancement
\nof expenses may be entitled under any agreement, statute or otherwise, both as
\nto action in such Person’s official capacity and as to action in another
\ncapacity at the Company’s request while holding such office or position, and
\nshall continue as to a Person who has ceased to be an authorized representative
\nof the Company and shall inure to the benefit of the heirs and personal
\nrepresentatives of such Person. Indemnification and advancement of expenses
\nunder this Article shall be provided whether or not the indemnified liability
\narises or arose from any threatened, pending or completed action by or in the
\nright of the Company. Any repeal or modification of this Article shall not
\nadversely affect any right or protection existing at the time of such repeal or
\nmodification to which any Person may be entitled under this Section.<\/p>\n
(g) For purposes of this Section, references to “the
\nCompany” shall include all constituent limited liability companies, corporations
\nor other entities absorbed in a consolidation, merger or division, as well as
\nthe surviving or new limited liability companies, corporations or other entities
\nsurviving or resulting therefrom, so that (i) any Person who is or was an
\nauthorized representative of a constituent, surviving or new limited liability
\ncompany, corporation or other entity shall stand in the same position under the
\nprovisions of this Section with respect to the surviving or new limited
\nliability company, corporation or other entity as such Person would if he or she
\nhad served the surviving or new limited liability company, corporation or other
\nentity in the same capacity and (ii) any Person who is or was an authorized
\nrepresentative of the Company shall stand in the same position under the
\nprovisions of this Section with respect to the surviving or new limited
\nliability company, corporation or other entity as such Person would with respect
\nto the Company if its separate existence had continued.<\/p>\n
(h) For the purposes of this Section, the term “authorized
\nrepresentative” shall mean a Manager, Observer, officer, employee or agent of
\nthe Company or of any subsidiary of the Company, or a trustee, custodian,
\nadministrator, committeeman or fiduciary of any employee benefit plan
\nestablished and maintained by the Company or by any subsidiary of the Company,
\nor a Person serving another corporation, partnership, joint venture, trust or
\nother enterprise in any of the foregoing capacities at the request of the
\nCompany.<\/p>\n
(i) No Member shall have any obligation to indemnify any
\nother Member, Manager, Observer, officer, employee, agent or other authorized
\nrepresentative of the Company under any circumstances.<\/p>\n
22<\/p>\n
(j) No Member, Manager, Observer, officer, Company employee
\nor Affiliate of any of the foregoing or their respective agents and\/or the legal
\nrepresentatives of any of them shall be liable to any Member, the Company or any
\nother Person for mistakes of judgment or for action or inaction which such
\nMember, Manager, Observer, officer, Company employee, Affiliate, agent or legal
\nrepresentative reasonably believed to be in or not opposed to the best interests
\nof the Company unless such action or inaction constitutes willful misconduct,
\nbad faith, gross negligence or reckless disregard of, or is outside the scope
\nof, his or its duties and, with respect to any criminal action, such party
\nreasonably believes his conduct was lawful. Each Member, Observer and Manager
\nmay (on its own behalf or on the behalf of any representative, any Affiliates of
\nsuch Member or their respective agents and\/or legal representatives of any of
\nthem) consult with counsel, accountants and other experts in respect of the
\nCompany’s affairs and such Person shall be fully protected and justified in any
\naction or inaction which is taken in accordance with the advice or opinion of
\nsuch counsel, accountants or other experts. Notwithstanding any of the foregoing
\nto the contrary, the provisions of this Section shall not be construed so as to
\nrelieve (or attempt to relieve) (i) any Person of any liability, to the extent
\n(but only to the extent) that such liability may not be waived, modified or
\nlimited under applicable law, but shall be construed so as to effectuate the
\nprovisions of this Section to the fullest extent permitted by law or (ii) any
\nMember of any liability for the breach of any contract related to the Business,
\nincluding, without limitation, this Agreement.<\/p>\n
Section 5.18. Member Protective Provisions. Notwithstanding any
\n —————————-
\nother provision of this Agreement to the contrary, at any time when either of
\nWWFE or NBC (together with their respective Affiliates) (a) has less than three
\n(3) Managers designated by it to the Board of Managers and (b) has a Percentage
\nInterest greater than fifteen percent (15%), the Company shall not take any of
\nthe following actions without the prior written approval of such Member:<\/p>\n
(a) Issue any additional membership Interest, or any right
\nto acquire any membership Interest, in the Company to any Person (except in
\naccordance with Section 3.2 of this Agreement);<\/p>\n
(b) Incur or guarantee any obligation or liability (fixed
\nor contingent) for borrowed money such that the Company has, individually or in
\nthe aggregate, in excess of $1,000,100 of indebtedness and amounts guaranteed
\noutstanding at any time;<\/p>\n
(c) Transfer or acquire assets that, individually or in the
\naggregate, have a book value in excess of $1,000,100;<\/p>\n
(d) Merge or consolidate with any other Person or engage in
\nany recapitalization, reclassification, reorganization or any other
\nextraordinary corporate transaction;<\/p>\n
(e) Pledge, mortgage, grant a security interest in or
\npermit the placing of a lien or encumbrance on all or any part of the assets of
\nthe Company other than in the ordinary course of the Company’s business;<\/p>\n
(f) Enter into or modify the terms of any agreement, or
\nengage in any transaction or enter into any arrangement, understanding or
\ncommitment, with any Member or any Affiliate of any Member;<\/p>\n
23<\/p>\n
(g) Settle any litigation or other proceeding in which the
\namount involved exceeds $2,000,000;<\/p>\n
(h) Confess a judgment against the Company in connection
\nwith any threatened or pending legal action, execute or deliver any assignment
\nfor the benefit of creditors of the Company, authorize the filing of a
\nbankruptcy petition, consent to the filing of an involuntary bankruptcy
\npetition, consent to the appointment of a trustee, receiver or liquidator of all
\nor substantially all of the Company’s assets or, except as expressly permitted
\npursuant to Section 8.4(c), voluntarily liquidate the Company; and<\/p>\n
(i) Make any decision which affects the calculation of
\nCapital Accounts, Depreciation or Gross Asset Value or make or not make any
\nelection for federal, state, local or non-U.S. tax matters.<\/p>\n
Section 5.19. Subsequent Business Plan. At least forty five (45)
\n ————————
\ndays prior to the end of each Fiscal Year beginning with the Fiscal Year ending
\nApril 30, 2002, the President shall present to the Board of Managers for its
\napproval an annual operating budget and capital budget for the Company for the
\nnext Fiscal Year (each, a “Subsequent Business Plan”). Each Subsequent Business
\nPlan shall be in substantially the form of the Initial Business Plan and shall
\ncontain, among other things, a quarterly schedule of Additional Capital
\nContributions that the Company expects to need during the next Fiscal Year (any
\nAdditional Capital Contributions contained in the Initial Business Plan and each
\nSubsequent Business Plan being hereinafter referred to as the “Scheduled
\nContributions”). Notwithstanding any other provision of this Agreement to the
\ncontrary, all Scheduled Contributions, and any modification of the Initial
\nBusiness Plan or any Subsequent Business Plan so as to increase by more than 5%
\n(whether by a single modification or a series of modifications with such effect)
\nthe total amount of any Scheduled Contributions with respect to any fiscal
\nquarter of the Company, must be approved by each of WWFE and NBC; provided,
\nhowever, that if either WWFE or NBC fails to approve any of the foregoing
\nmatters in the immediately preceding sentence and the Board of Managers
\ndetermines, in the exercise of its reasonable judgment, that the Company
\nrequires additional funds in excess of the Members’ Capital Contributions and
\nany Scheduled Contributions that have been approved by WWFE and NBC, then WWFE
\nand\/or NBC may agree to lend the Company up to a combined aggregate of $5
\nmillion (but subject to the limitation that such $5 million amount shall be the
\nmaximum outstanding balance of all such loans made by WWFE and\/or NBC pursuant
\nto this Section 5.19 at any given time) on terms that, taken as a whole, are at
\nleast as favorable to the Company as the terms that could then have been
\nobtained in an arm’s length negotiation from a party that is not a Member or an
\nAffiliate of a Member. If both NBC and WWFE desire to make such loans to the
\nCompany but are unable to agree on the amount that each such Member will lend to
\nthe Company, such loans shall be made in proportion to their then respective
\nPercentage Interests (which, for purposes of this Section 5.19, shall be deemed
\nto include the Percentage Interests of their respective Affiliates).<\/p>\n
24<\/p>\n
ARTICLE VI<\/p>\n
DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND
\n LOSSES FOR FEDERAL INCOME TAX PURPOSES
\n ————————————–<\/p>\n
Section 6.1. Distributions.
\n ————- <\/p>\n
(a) General. Except as otherwise provided herein, the Board
\n ——-
\nof Managers, acting in good faith and in furtherance of the purpose of the
\nCompany, shall have sole discretion as to the amounts and timing of
\ndistributions to Members and distributions to Members shall be in proportion to
\nthe Members’ Percentage Interests.<\/p>\n
(b) Tax Distributions. The Board of Managers shall use its
\n —————–
\nbest efforts to estimate the Estimated Tax Amount for each fiscal quarter of the
\nCompany prior to the close of such fiscal quarter, and shall make distributions
\nto each Member in an amount equal to the Estimated Tax Amount for that period
\nnot later than the thirtieth (30th) day following the close of the fiscal
\nquarter. The Board of Managers shall, subject to any applicable covenants and
\nrestrictions contained in the Company’s loan agreements and other agreements or
\nobligations to which the Company or its properties are subject, use its best
\nefforts to ensure that the Estimated Tax Amount shall be distributed to each
\nMember. At the close of the Fiscal Year, the Board of Managers shall make proper
\nadjustments as may be necessary to the amounts of such distributions to
\nreconcile the final Estimated Tax Amount as of the close of the Fiscal Year with
\nthe projected Estimated Tax Amount previously distributed to each Member with
\nrespect to such Fiscal Year.<\/p>\n
(c) Property Distributions. Except as otherwise provided in
\n ———————-
\nthe Broadcast Agreement, the Board of Managers may not distribute to the Members
\nany property of the Company (other than cash) without the prior approval of the
\nMembers. Any property so distributed to the Members shall be distributed to the
\nMembers in accordance with their respective Percentage Interests; provided,
\nhowever, that so long as WWFE is a Member, the XFL logo, all related Trademarks
\nand Trademark applications, the XFL URL and all other intellectual property
\nrights related to the XFL (the “XFL Property Rights”) shall not be distributed
\nin kind to any Member until the dissolution of the Company pursuant to Article
\nIX, and then shall be distributed only to WWFE upon such dissolution provided
\nthat WWFE (i) has a Percentage Interest of at least ten percent (10%)
\nimmediately prior to such dissolution and (ii) pays to the Company the fair
\nmarket value of the XFL Property Rights as determined by an appraiser selected
\nby the Liquidator.<\/p>\n
(d) Priority Distributions. No later than the 30th day after
\n ———————-
\nthe end of each Fiscal Year, the Board of Managers shall use its best efforts to
\nensure that a distribution is made to the Class C Membership Unit holder of
\nrecord in an amount equal to the excess of (i) the cumulative Priority Return
\nfrom the inception of the Company to the end of such Fiscal Year, over (ii) the
\nsum of all prior distributions made to the Class C Membership Unit holder of
\nrecord. Accrual and payment of the Priority Return in any Fiscal Year is
\ncontingent upon the Company recognizing a net Profit (determined without regard
\nto clause (vii) of the definition of Profit) in the Fiscal Year to which such
\nPriority Return relates.<\/p>\n
25<\/p>\n
Section 6.2. Allocations.
\n ———– <\/p>\n
(a) Profits and Losses. After giving effect to the special
\n ——————
\nallocations set forth in Section 6.2(b), Profits and Losses for any Fiscal Year
\nshall be allocated to the Members in proportion to their Percentage Interests.<\/p>\n
(b) Special Allocations.
\n ——————- <\/p>\n
The following special allocations shall be made in the
\nfollowing order:<\/p>\n
(i) Minimum Gain Chargeback. Except as otherwise
\n ———————–
\n provided in Section 1.704-2(f) of the Regulations, notwithstanding any
\n other provisions of this Section 6.2, if there is a net decrease in
\n Company Minimum Gain during any Fiscal Year, each Member shall be
\n specially allocated items of Company income and gain for such Fiscal
\n Year (and, if necessary, subsequent Fiscal Years) in an amount equal
\n to such Member’s share of the net decrease in Company Minimum Gain,
\n determined in accordance with Regulations Section 1.704-2(g).
\n Allocations pursuant to the previous sentence shall be made in
\n proportion to the respective amounts required to be allocated to each
\n Member pursuant thereto. The items to be so allocated shall be
\n determined in accordance with sections 1.704-2(f)(6) and 1.704-2(j)(2)
\n of the Regulations. This Section 6.2(b)(i) is intended to comply with
\n the minimum gain chargeback requirement in Section 1.704-2(f) of the
\n Regulations and shall be interpreted consistently therewith.<\/p>\n
(ii) Member Minimum Gain Chargeback. Except as
\n ——————————
\n otherwise provided in Section 1.704-2(i)(4) of the Regulations,
\n notwithstanding any other provision of this Section 6.2, if there is a
\n net decrease in Member Nonrecourse Debt Minimum Gain attributable to a
\n Member Nonrecourse Debt during any Fiscal Year, each Member who has a
\n share of the Member Nonrecourse Debt Minimum Gain attributable to such
\n Member Nonrecourse Debt, determined in accordance with Section 1.704-
\n 2(i)(5) of the Regulations, shall be specially allocated items of
\n Company income and gain for such Fiscal Year (and, if necessary,
\n subsequent Fiscal Years) in an amount equal to such Member’s share of
\n the net decrease in Member Nonrecourse Debt, determined in accordance
\n with Regulations Section 1.704-2(i)(4). Allocations pursuant to the
\n previous sentence shall be made in proportion to the respective
\n amounts required to be allocated to each Member pursuant thereto. The
\n items to be so allocated shall be determined in accordance with
\n Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Regulations. This
\n Section 6.2(b)(ii) is intended to comply with the minimum gain
\n chargeback requirement in Section 1.704-2(i)(4) of the Regulations and
\n shall be interpreted consistently therewith.<\/p>\n
(iii) Qualified Income Offset. In the event any Member
\n ———————–
\n unexpectedly receives any adjustments, allocations or distributions
\n described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
\n 1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of the Regulations,
\n items of Company income and gain shall be specially <\/p>\n
26<\/p>\n
allocated to such Member in an amount and manner sufficient to
\n eliminate, to the extent required by the Regulations, the Adjusted
\n Capital Account Deficit of the Member as quickly as possible, provided
\n that an allocation pursuant to this Section 6.2(b)(iii) shall be made
\n only if and to the extent that the Member would have an Adjusted
\n Capital Account Deficit after all other allocations provided for in
\n this Section 6.2 have been tentatively made as if this Section
\n 6.2(b)(iii) were not in the Agreement.<\/p>\n
(iv) Gross Income Allocation. In the event any Member has a
\n ———————–
\n deficit Capital Account at the end of any Fiscal Year which is in
\n excess of the sum of (i) the amount such Member is obligated to
\n restore pursuant to the penultimate sentences of Regulations Sections
\n 1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be specially
\n allocated items of Company income and gain in the amount of such
\n excess as quickly as possible, provided that an allocation pursuant to
\n this Section 6.2(b)(iv) shall be made only if and to the extent that
\n such Member would have a deficit Capital Account in excess of such sum
\n after all other allocations provided for in this Section 6.2 have been
\n made as if Section 6.2(b)(iii) and this Section 6.2(b)(iv) were not in
\n the Agreement.<\/p>\n
(v) Nonrecourse Deductions. Nonrecourse Deductions for any
\n ———————-
\n Fiscal Year shall be specially allocated to the Members in proportion
\n to their respective Percentage Interests.<\/p>\n
(vi) Member Nonrecourse Deductions. Any Member Nonrecourse
\n —————————–
\n Deductions for any Fiscal Year shall be specially allocated to the
\n Member who bears the economic risk of loss with respect to the Member
\n Nonrecourse Debt to which such Member Nonrecourse Deductions are
\n attributable in accordance with Regulations Section 1.704-2(i)(1).<\/p>\n
(vii) Section 754 Adjustments. To the extent an adjustment to
\n ———————–
\n the adjusted tax basis of any Company asset, pursuant to Code Section
\n 734(b) or Code Section 743(b) is required, pursuant to Regulations
\n Section 1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4), to be
\n taken into account in determining Capital Accounts as the result of a
\n distribution to a Member in complete liquidation of such Member’s
\n Interest in the Company, the amount of such adjustment to Capital
\n Accounts shall be treated as an item of gain (if the adjustment
\n increases the basis of the asset) or loss (if the adjustment decreases
\n such basis) and such gain or loss shall be specially allocated to the
\n Members in accordance with their Interests in the Company in the event
\n Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member
\n to whom such distribution was made in the event Regulations Section
\n 1.704-1(b)(2)(iv)(m)(4) applies.<\/p>\n
(viii) Priority Return. The Class C Membership Unit shall be
\n —————
\n allocated items of income in an amount equal to the Priority Return
\n accrued during the Fiscal Year.<\/p>\n
27<\/p>\n
(ix) Certain Correlative Adjustments. In the event that the
\n ——————————-
\n taxable income of a Member in respect of a transaction between a
\n Member and the Company is increased by any taxing authority (pursuant
\n to Section 482 of the Code or otherwise), an amount of the correlative
\n deduction equal to the amount of such increase shall be specially
\n allocated to such Member.<\/p>\n
(c) Other Allocation Rules.
\n ———————- <\/p>\n
(i) For purposes of determining the Profits, Losses, or any
\n other items allocable to any period, Profits, Losses, and any such
\n other items shall be determined on a daily, monthly, or other basis,
\n as determined by the Board of Managers using any permissible method
\n under Code Section 706 and the Regulations thereunder.<\/p>\n
(ii) The Members are aware of the income tax consequences of the
\n allocations made by this Section 6.2 and hereby agree to be bound by
\n the provisions of this Section 6.2 in reporting their shares of
\n Company income and loss for income tax purposes.<\/p>\n
(d) Tax Allocations.
\n ————— <\/p>\n
(i) Section 704(b) Allocations.<\/p>\n
(A) Each item of income, gain, loss, deduction or credit
\n for federal income tax purposes which corresponds to an item of
\n income, gain, loss or expense that is either taken into account in
\n computing Profits or Losses or specially allocated pursuant to Section
\n 6.2(b) (a “Book Item”) shall be allocated among the Members in the
\n same proportions as the corresponding Book Item is allocated among
\n them pursuant to Section 6.2(a) or 6.2(b).<\/p>\n
(B) If the Company recognizes Depreciation Recapture (as
\n defined below) in respect of the sale of any Company asset:<\/p>\n
(i) the portion of the gain on such sale which is
\n allocated to a Member pursuant to Sections 6.2(a) or 6.2(b)
\n shall be treated as consisting of a portion of the Company’s
\n Depreciation Recapture on the sale and a portion of the balance
\n of the Company’s gain on such sale under principles consistent
\n with Regulations Section 1.1245-1; and <\/p>\n
(ii) if, for federal income tax purposes, the Company
\n recognizes both “unrecaptured 1250 gain” (as defined in Section
\n 1(h) of the Code) and gain treated as ordinary income under
\n Section 1250(a) of the Code in respect of such sale the amount
\n treated as Depreciation Recapture under Section 6.2(d)(i)(B)(i)
\n shall be comprised of a proportionate share of both such types
\n of gain.<\/p>\n
28<\/p>\n
(iii) For purposes of Section 6.2(d)(i)(B)
\n “Depreciation Recapture” means the portion of any gain from
\n the disposition of an asset of the Company which, for
\n federal income tax purposes, (A) is treated as ordinary
\n income under Section 1245 of the Code, (B) is treated as
\n ordinary income under Section 1250 of the Code, or (C) is
\n “unrecaptured 1250 gain” as such term is defined in Section
\n 1(h) of the Code.<\/p>\n
(ii) Section 704(c) Allocations. In the event any property
\n of the Company is credited to the Capital Account of a Member at a
\n value other than its tax basis (whether as a result of a contribution
\n of such property or a revaluation of such property pursuant to clause
\n (ii) of the definition of Gross Asset Value), then allocations of
\n taxable income, gain, loss and deductions with respect to such
\n property shall be made in a manner which will comply with Section
\n 704(c) of the Code and the Regulations thereunder. The Company, with
\n the consent of all Members, may make “curative” or “remedial”
\n allocations (within the meaning of the Regulations under Section
\n 704(c) of the Code) including, but not limited to:<\/p>\n
(A) “curative” allocations which offset the effect of the
\n “ceiling rule” for a prior Fiscal Year (within the meaning of Regulations
\n Section 1.704-3(c)(3)(ii)); and<\/p>\n
(B) “curative” allocations from dispositions of contributed
\n property (within the meaning of Regulations Section 1.704-3(c)(3)(iii)(B)).<\/p>\n
(iii) Other Provisions. The tax allocations made pursuant
\n —————-
\n to this Section 6.2(d) shall be solely for tax purposes and shall not
\n affect any Member’s Capital Account or share of non-tax allocations or
\n distributions under this Agreement.<\/p>\n
(e) Tax Elections. Upon the request of a transferee of Shares
\n ————-
\nor a distributee of a Company distribution, the Company shall make the election
\nprovided for in Section 754 of the Code.<\/p>\n
Section 6.3. Curative Allocations. The allocations set forth in
\n ——————–
\nSections 6.2(b)(i), 6.2(b)(ii), 6.2(b)(iii), 6.2(b)(iv), 6.2(b)(v), 6.2(b)(vi),
\n6.2(b)(vii) and 6.4 (the “Regulatory Allocations”) are intended to comply with
\ncertain requirements of the Regulations. It is the intent of the Members that,
\nto the extent possible, all Regulatory Allocations shall be offset either with
\nother Regulatory Allocations or with special allocations of other items of
\nCompany income, gain, loss or deduction pursuant to this Section 6.3.
\nTherefore, notwithstanding any other provision of this Article 6 (other than the
\nRegulatory Allocations), the Members jointly shall make such offsetting special
\nallocations of Company income, gain, loss or deduction in whatever manner that
\nthe Members determine appropriate so that, after such offsetting allocations are
\nmade, each Member’s Capital Account balance is, to the extent possible, equal to
\nthe Capital Account balance such Member would have had if the Regulatory
\nAllocations were not part of the Agreement and all Company items were allocated
\npursuant to Sections 6.2(a), 6.2(b)(viii) and 6.2(b)(ix).<\/p>\n
29<\/p>\n
Section 6.4. Loss Limitation. Losses allocated pursuant to Section
\n —————
\n6.2(a) hereof shall not exceed the maximum amount of Losses that can be
\nallocated without causing any Member to have an Adjusted Capital Account Deficit
\nat the end of any Fiscal Year. In the event some but not all of the Members
\nwould have Adjusted Capital Account Deficits as a consequence of an allocation
\nof Losses pursuant to Section 6.2(a) hereof, the limitation set forth in this
\nSection 6.4 shall be applied on a Member-by-Member basis and Losses not
\nallocable to any Member as a result of such limitation shall be allocated to the
\nother Members in accordance with the positive balances in such Members’ Capital
\nAccounts so as to allocate the maximum permissible Losses to each Member under
\nSection 1.704-1(b)(2)(ii)(d) of the Regulations.<\/p>\n
ARTICLE VII<\/p>\n
ACCOUNTING
\n ———-<\/p>\n
Section 7.1. Books and Records.
\n —————– <\/p>\n
(a) The Board of Managers, or its designee, shall keep books
\nof account in which will be entered fully and accurately every transaction of
\nthe Company. The books of account shall be kept on the accrual method of
\naccounting and in accordance with GAAP.<\/p>\n
(b) Such books of account, together with all correspondence,
\npapers and other documents, shall be kept at such offices of the Company as the
\nBoard of Managers shall designate and shall, upon reasonable notice to the Board
\nof Managers, be open to the examination of any Member, Manager or its authorized
\nrepresentatives who will be permitted to make copies of all or any part thereof
\nat such Member’s or Manager’s cost.<\/p>\n
(c) If the Federal income tax return of any Member is
\naudited, investigated, reviewed, or questioned by the Service, the Tax Matters
\nMember shall provide all books, records and other necessary financial
\ninformation regarding the Company which is in its possession, or can be obtained
\nby the Tax Matters Member, to such Member.<\/p>\n
Section 7.2. Fiscal Year. To the extent permitted by Code Section
\n ———–
\n706 and the Regulations promulgated thereunder, the Fiscal Year and the tax year
\nof the Company shall begin upon the commencement of the existence of the Company
\nand shall expire on April 30 thereafter.<\/p>\n
Section 7.3. Reports.
\n ——- <\/p>\n
(a) The Board of Managers shall have prepared at Company
\nexpense, documents containing: (i) Internal Revenue Service Form K-1 or similar
\nform as may be required by the Service stating the Member’s allocation of
\nincome, gain, loss or credit for the fiscal year annually (“Tax Statements”) (if
\nand so long as the Company is taxed under Subchapter K of the Code); (ii)
\nmonthly management reports (to consist of an unaudited profit and loss
\nstatement, an unaudited statement of cash flows and an unaudited condensed
\nbalance sheet as of and for the month and year-to-date period then ended)
\n(“Monthly Management Reports”); and (iii) financial statements (balance sheet,
\nstatement of profits or losses, Members’ equity, and changes in financial
\nposition) on a quarterly and annual basis, which shall be <\/p>\n
30<\/p>\n
prepared in accordance with GAAP and shall present fairly the financial
\ncondition and results of operations of the Company as of the end of and for the
\nperiod covered thereby (“Financial Statements”). The quarterly Financial
\nStatements shall present the quarterly and year-to-date results of operations of
\nthe Company, contain a comparative analysis to the same periods in the prior
\nFiscal Year and be certified by the Chief Financial Officer of the Company. The
\nannual Financial Statements shall be both unaudited and certified by the Chief
\nFinancial Officer of the Company, as well as audited and certified by the
\nCompany’s independent public accountants. Tax Statements shall be distributed
\nwithin ninety (90) days after the close of each Fiscal Year. Monthly Management
\nReports shall be distributed within twenty one (21) days after each calendar
\nmonth. The Financial Statements with respect to the first three fiscal quarters
\nof the Company shall be distributed within forty-five (45) days after the close
\nof each such fiscal quarter and the Financial Statements with respect to the
\nfourth fiscal quarter of the Company and the full Fiscal Year shall be
\ndistributed within ninety (90) days after the close of each Fiscal Year.<\/p>\n
(b) The Board of Managers, at Company expense, shall cause to be
\nprepared and timely filed with appropriate federal and state regulatory and
\nadministrative bodies, all reports required to be filed with such entities under
\nthen-current applicable laws, rules and regulations. Such reports shall be
\nprepared on the accounting or reporting basis required by such regulatory
\nbodies. Any Member shall be provided with a copy of any such report upon
\nrequest and without expense to such Member. The Board of Managers shall cause
\nall income tax information returns for the Company to be prepared and, following
\nreview and approval by NBC, timely filed with the appropriate authorities. The
\nBoard of Managers hereby designates Deloitte & Touche LLP as the independent
\npublic accountants for the Company; such independent public accountants may not
\nbe discharged or otherwise replaced without the approval of the Board of
\nManagers.<\/p>\n
(c) The Tax Matters Member shall give notice to all Members of
\nany audit or review of the Company by the Service and shall make such additional
\nreports to all the Members as are reasonably necessary to keep them informed of
\nthe status of any such review or audit and any negotiations, proposed
\nsettlements or litigation related thereto and shall inform the Members of the
\nmanner in which they may opt out of any proposed settlements.<\/p>\n
ARTICLE VIII<\/p>\n
SALE, TRANSFER, AND ADMISSION
\n —————————–<\/p>\n
Section 8.1. General.
\n ——- <\/p>\n
(a) WWFE Holding Period. Except as expressly permitted in this
\n ——————-
\nAgreement, WWFE shall not Transfer all or any portion of the Shares held by it
\nprior to the earlier to occur of (i) June 1, 2005 or (ii) the termination of the
\nBroadcast Agreement and NBC Parent’s obligations thereunder.<\/p>\n
(b) NBC Holding Period. Except as expressly permitted in this
\n ——————
\nAgreement, NBC shall not Transfer all or any portion of the Shares held by it
\nprior to the earlier <\/p>\n
31<\/p>\n
to occur of (i) December 31, 2002 or (ii) the termination of the Broadcast
\nAgreement and NBC Parent’s obligations thereunder.<\/p>\n
Section 8.2. Transfers to Affiliates. Notwithstanding Section 8.1 of
\n ———————–
\nthis Agreement, any Member may, at any time, Transfer all (but not less than
\nall) of the Shares held by it to an Affiliate of such Member; provided that any
\nsuch transferee shall automatically be bound by the terms of this Agreement and
\nshall be required as a condition precedent to the consummation of such Transfer
\nto join in and execute and deliver a copy of this Agreement to the Members as a
\nparty to this Agreement. No Transfer of Shares shall relieve the transferring
\nMember of any duty, responsibility or obligation hereunder. Notwithstanding the
\nforegoing, any Transfer pursuant to this Section 8.2 which, alone or together
\nwith previous Transfers, causes a termination of the Company pursuant to Section
\n708 of the Code shall require the prior written consent of the Members.<\/p>\n
Section 8.3. Right of First Refusal. If a Member (the “Offering
\n ———————-
\nMember”) desires to Transfer (other than to an Affiliate pursuant to Section 8.2
\nor in a public offering registered under the Securities Act) all or any portion
\nof the Shares held by it (the “Offered Interest”), and such Transfer is
\notherwise permitted by the terms of this Agreement, the Offering Member shall
\nfirst deliver a written notice (the “Transfer Notice”) to the Company and the
\nother Members (such other Members, the “Offered Members”) indicating that the
\nOffering Member desires to Transfer such Shares. Each Offered Member shall have
\nuntil the later of (i) thirty (30) Business Days from the date the Offer Notice
\nis given and (ii) five (5) Business Days after the Fair Market Value of the
\nOffered Interest is determined pursuant to Section 8.5 (such period, the “Offer
\nPeriod”) in which to notify the Offering Member in writing whether it elects to
\npurchase all (but not less than all) of its pro rata share (based on the
\npercentage such Offered Member’s Shares bear to the aggregate number of Shares
\nheld by all Members other than the Offering Member) of the Offered Interest for
\nan aggregate cash purchase price equal to the Fair Market Value of its pro rata
\nshare of the Offered Interest. If the Offered Members elect to purchase all of
\nthe Offered Interest in accordance with this Section 8.3, the closing of such
\npurchase and sale shall occur within ten (10) Business Days after the end of the
\nOffer Period at such place as the Offering Member and the Offered Members may
\nagree. After completion of the procedures described in this Section 8.3, if the
\nOffered Members elect not to purchase all of the Offered Interest within the
\nOffer Period, the Offering Member may, during the sixty (60) Business Day period
\nfollowing the end of the Offer Period, Transfer to any Person (the “Transferee”)
\nall (but not less than all) of the Offered Interest at a price not less than the
\nFair Market Value of the Offered Interest so Transferred. As a condition to
\nsuch Transfer, the Transferee shall agree in writing to be bound by this
\nAgreement to the same extent as the Offering Member was bound. If the proposed
\nTransfer is not completed within the sixty (60) Business Day period described
\nabove, the Offered Interest shall again be subject to this Section 8.3.<\/p>\n
Section 8.4. Put\/Call on Termination of Broadcast Agreement.
\n ———————————————- <\/p>\n
(a) WWFE Call Option. At any time following the
\n —————-
\ntermination of the Broadcast Agreement, WWFE or an Affiliate thereof may, but
\nshall not be required to (except as required by Section 8.4(b)), purchase all
\n(but not less than all) of the Shares then owned by NBC (the “WWFE Call Option”)
\nfor an aggregate cash purchase price equal to the Fair Market Value of the
\nShares then owned by NBC. If WWFE elects to exercise the WWFE Call Option, it
\nshall <\/p>\n
32<\/p>\n
so notify NBC in writing of such election (the “Call Exercise Notice”),
\nwhereupon NBC shall be obligated to sell the Shares then owned by it to WWFE.
\nThe closing of the purchase and sale pursuant to this Section 8.4(a) (the “Call
\nClosing”) shall occur on the later of (i) the thirtieth (30th) Business Day
\nafter receipt by NBC of the Call Exercise Notice and (ii) the fifth (5th)
\nBusiness Day after the Fair Market Value of the Shares owned by NBC is
\ndetermined pursuant to Section 8.5, at such place as WWFE and NBC may agree. At
\nthe Call Closing, NBC shall assign the Shares then owned by it to WWFE and WWFE
\nshall pay the purchase price for such Shares in cash or other immediately
\navailable funds.<\/p>\n
(b) NBC Put Right. At any time following the termination of the
\n ————-
\nBroadcast Agreement, NBC may, upon written notice to WWFE (the “NBC Put
\nNotice”), cause WWFE or an Affiliate thereof to purchase the Shares then owned
\nby NBC (the “NBC Put Right”) for an aggregate cash purchase price equal to the
\nFair Market Value of the Shares then owned by NBC. The closing of the purchase
\nand sale pursuant to this Section 8.4(b) (the “Put Closing”) shall occur on the
\nlater of (i) the thirtieth (30th) Business Day after receipt by WWFE of the NBC
\nPut Notice and (ii) the fifth (5th) Business Day after the Fair Market Value of
\nthe Shares owned by NBC is determined pursuant to Section 8.5, at such place as
\nNBC and WWFE may agree. At the Put Closing, NBC shall assign the Shares then
\nowned by it to WWFE and WWFE shall pay the purchase price for such Shares in
\ncash or other immediately available funds.<\/p>\n
(c) NBC Put Right as a Voluntary Liquidation. Notwithstanding
\n —————————————-
\nSection 8.4(b), WWFE shall have the right (exercisable by written notice to NBC
\nwithin thirty (30) Business Days after receipt by WWFE of the NBC Put Notice) to
\nreject the exercise by NBC of the NBC Put Right (the “Put Rejection”). Upon a
\nPut Rejection, (i) WWFE shall have no obligation to purchase the Shares owned by
\nNBC pursuant to Section 8.4(b), and the Company shall as promptly as practicable
\nthereafter be dissolved in accordance with the provisions of Article 9 of this
\nAgreement and the Act and (ii) for a period of three years after such
\ndissolution, neither WWFE nor any of its Affiliates shall, directly or
\nindirectly, own, operate, support (financially or otherwise) or broadcast (via
\nnetwork, cable or otherwise) any teams, games or other events of a professional
\nfootball league, or own, operate or in any way participate in any professional
\nfootball league, provided, however that, nothing in this Section shall prohibit
\nWWFE (or any of its Affiliates) from owning, operating, supporting or
\nbroadcasting any NFL team, game or other event.<\/p>\n
Section 8.5. Fair Market Value. The Fair Market Value of any Shares to be
\n —————–
\nTransferred pursuant to Section 8.3, Section 8.4, Section 14.2 or Section 14.3
\nshall be determined in accordance with the procedures set forth in this Section
\n8.5. If NBC and WWFE do not agree on the Fair Market Value of any such Shares
\nwithin a period of ten (10) Business Days following receipt of the Transfer
\nNotice, the Call Exercise Notice, the NBC Put Notice, the NBC IPO Put Notice or
\nthe WWFE IPO Call Notice, as the case may be (the “Valuation Date”), the Fair
\nMarket Value shall be determined by an appraiser mutually agreed upon by NBC and
\nWWFE. If an appraiser is not agreed upon within ten (10) Business Days following
\nthe Valuation Date, each of NBC and WWFE shall select one appraiser who together
\nshall select a single appraiser who shall solely determine the Fair Market Value
\nof such Shares. The appraiser who shall determine the Fair Market Value of the
\nShares shall do so within thirty (30) Business Days after the Valuation Date,
\nand the determination of such appraiser shall be final and binding <\/p>\n
33<\/p>\n
upon the Members. In making its determination, the appraiser shall take into
\nconsideration the following factors: the terms and conditions of any bona fide
\nthird-party offer for the Shares; whether there are currently broadcast
\narrangements in place with respect to XFL games and other events, or the
\nlikelihood that such arrangements will be made, and the terms thereof; other
\nsources of revenue for the Business, whether or not then in existence.
\nNotwithstanding the foregoing, if a bona fide third-party (i.e., other than from
\nan Affiliate of any Member) offer for the Shares to be Transferred has been made
\nin writing, then the Fair Market Value of such Shares shall not be less than the
\noffer price therefor. All appraisers shall be investment banking firms of
\nnational standing with experience in valuing sports franchises. The costs of the
\nappraisers shall be split equally between the Members.<\/p>\n
Section 8.6. Additional Members. Additional Persons may be admitted
\n ——————
\nto the Company as Members and membership Interests may be created and issued to
\nthose Persons upon the unanimous approval of the Members. A Person who becomes
\na new Member shall execute and deliver a joinder to this Agreement pursuant to
\nwhich that Person agrees to be bound by all of the provisions of this Agreement
\napplicable to Members.<\/p>\n
Section 8.7. Preemptive Rights.
\n —————– <\/p>\n
(a) Each Member shall have a preemptive right in proportion to
\nits Percentage Interest to subscribe for or to purchase (i) any shares of any
\nclass of equity interest whatsoever which the Company may hereafter issue or
\nsell or (ii) any obligations or securities which the Company may hereafter issue
\nor sell convertible into or exchangeable for any equity interest in the Company
\nof any class or (iii) any warrants, options or other rights which the Company
\nmay hereafter issue or sell that confer upon the holder or owner thereof the
\nright to subscribe for or purchase from the Company any of its equity interest
\nof any class or such convertible or exchangeable securities ((i), (ii) and (iii)
\ncollectively, “New Securities”). Such preemptive right may be exercised in full
\nor in part at the Member’s option and shall exist regardless of the character of
\nthe consideration proposed to be received for the interests to be issued or sold
\nby the Company.<\/p>\n
(b) In the event that the Company proposes to undertake an
\nissuance of New Securities, the Company shall give the Members written notice of
\nits intention, describing the type of New Securities and the price and general
\nterms upon which the Company proposes to issue such New Securities. Each Member
\nshall have twenty (20) days from the date any such notice is given to agree to
\npurchase all or any part of its pro rata share of such New Securities for the
\nprice and upon the general terms specified in the notice by giving written
\nnotice to the Company and stating therein the quantity of New Securities to be
\npurchased. In the event that any Member fails to exercise in full its preemptive
\nright within such twenty (20) day period, the Company shall have sixty (60) days
\nthereafter to sell the New Securities with respect to which preemptive rights
\nwere not exercised at a price and upon general terms no more favorable to the
\npurchaser(s) thereof than specified in the Company’s notice to the Members. In
\nthe event the Company has not sold such New Securities within such sixty (60)
\nday period, the Company shall not thereafter issue or sell such New Securities
\nwithout first offering such New Securities to the Members in the manner provided
\nabove.<\/p>\n
34<\/p>\n
(c) “New Securities” shall not include Shares or other equity
\ninterests or securities of the Company (i) issuable upon conversion of Shares
\n(or other equity interests or securities) or pursuant to any options, warrants,
\nrights or agreements, provided that the preemptive rights established by this
\nSection 8.7 shall apply with respect to the initial issuance, sale, grant or
\nentering into by the Company of such Shares (or other equity interests or
\nsecurities), options, warrants, rights or agreements, (ii) offered to the public
\ngenerally pursuant to an effective registration statement under the Securities
\nAct, (iii) issued pursuant to the acquisition by the Company of all or any part
\nof another Person, whether by merger, purchase of shares, purchase of assets or
\nother transaction, (iv) issued pursuant to any employee benefit plan approved in
\naccordance with this Agreement, (v) issued in connection with any
\nrecapitalization, reclassification, reorganization or similar transaction or
\n(vi) issued pursuant to Section 3.2 of this Agreement.<\/p>\n
ARTICLE IX<\/p>\n
TERM AND DISSOLUTION
\n ——————–<\/p>\n
Section 9.1. Term. The term of the Company commenced on the date of
\n —-
\nfiling of the Certificate with the Secretary of State of the State of Delaware
\nand shall continue with perpetual existence until dissolved as provided herein.<\/p>\n
Section 9.2. Dissolution. In addition to those events listed in
\n ———–
\nSection 18-801 of the Act, the Company will be dissolved upon the occurrence of
\nany of the following:<\/p>\n
(a) Agreement of all Members;<\/p>\n
(b) Pursuant to Section 8.4(c); or<\/p>\n
(c) An order of a court of competent jurisdiction ordering the
\ndissolution of the Company.<\/p>\n
The death, retirement, resignation, bankruptcy or dissolution of any Member
\nshall not constitute an event of dissolution of the Company unless required by
\nthe Act.<\/p>\n
Section 9.3. Liquidation and Termination. On dissolution of the
\n —————————
\nCompany, NBC and WWFE shall appoint a Liquidator. The Liquidator shall proceed
\ndiligently to wind up the affairs of the Company and make final distributions as
\nprovided herein and in the Act. The costs of liquidation shall be borne as a
\nCompany expense. Until final distribution, the Liquidator shall continue to
\noperate the Company properties with all of the power and authority of the Board
\nof Managers. The steps to be accomplished by the Liquidator are as follows:<\/p>\n
(a) as promptly as possible after dissolution and again after final
\nliquidation, the Liquidator shall cause a proper accounting to be made by a
\nrecognized firm of certified public accountants of the Company’s assets,
\nliabilities, and operations through the last day of the calendar month in which
\nthe dissolution occurs or the final liquidation is completed, as applicable;<\/p>\n
35<\/p>\n
(b) the Liquidator shall pay, satisfy or discharge from Company funds
\nall of the debts, liabilities and obligations of the Company (including, without
\nlimitation, all expenses incurred in liquidation) or otherwise make adequate
\nprovision for payment and discharge thereof (including, without limitation, the
\nestablishment of a cash escrow fund for contingent liabilities in such amount
\nand for such term as the Liquidator may reasonably determine); and<\/p>\n
(c) all remaining assets of the Company shall be distributed to the
\nMembers as follows:<\/p>\n
(i) the Liquidator may sell any or all Company property,
\n including to Members; and<\/p>\n
(ii) Company cash and property shall be distributed first to
\n redeem the Class C Membership Unit in an amount equal to $12.50 plus
\n any accrued and unpaid Priority Return (but only to the extent that
\n the amount of such accrued and unpaid Priority Return does not exceed
\n the amount of the Company’s net Profit (determined without regard to
\n clause (vii) of the definition of Profit) in the Fiscal Year in which
\n the distribution occurs) and then among the Members in proportion to
\n their respective Percentage Interests. Such distributions shall be
\n made by the end of the taxable year of the Company during which the
\n liquidation of the Company occurs (or, if later, 90 days after the
\n date of the liquidation).<\/p>\n
All distributions in kind to the Members shall be made subject to the liability
\nof each distributee for costs, expenses, and liabilities theretofore incurred or
\nfor which the Company has committed prior to the date of termination and those
\ncosts, expenses, and liabilities shall be allocated to the distributee pursuant
\nto this Section 9.3.<\/p>\n
Section 9.4. Deficit Capital Accounts. Notwithstanding anything to
\n ————————
\nthe contrary contained in this Agreement, and notwithstanding any custom or rule
\nof law to the contrary, to the extent that the deficit, if any, in the Capital
\nAccount of any Member results from or is attributable to deductions and losses
\nof the Company (including non-cash items such as depreciation), or distributions
\nof money or other property pursuant to this Agreement, upon dissolution of the
\nCompany such deficit shall not be an asset of the Company and such Member shall
\nnot be obligated to contribute such amount to the Company to bring the balance
\nof such Member’s Capital Account to zero.<\/p>\n
ARTICLE X<\/p>\n
CONVERSION OF
\n CLASS B MEMBERSHIP UNITS
\n ————————<\/p>\n
Section 10.1. Optional Conversion. (a) Subject to and in compliance
\n ——————-
\nwith the provisions of this Section 10.1, all (but not less than all)
\noutstanding Class B Membership Units may, at the option of the holder thereof,
\nbe converted into a like number of Class A Membership Units upon 365 days’ prior
\nwritten notice to the Board of Managers given at any time after the second
\nanniversary of the date of this Agreement (the “Conversion Notice”). The
\nConversion <\/p>\n
36<\/p>\n
Notice shall set forth the effective date of the conversion of the Class B
\nMembership Units into Class A Membership Units. The Conversion Notice may be
\nwithdrawn by the holder of Class B Membership Units by written notice to the
\nBoard of Managers at any time prior to the Conversion Date without prejudice to
\nthe rights of such holder under this Article 10 or otherwise. Notwithstanding
\nthe foregoing, if the audited or unaudited annual Financial Statements provided
\npursuant to Section 7.3(a) with respect to any Fiscal Year ending on or after
\nApril 30, 2002 reflect annual or cumulative operating results that are 5% or
\nmore below the annual or cumulative operating results projected in the Initial
\nBusiness Plan or the Subsequent Business Plan for such period, as the case may
\nbe, then, for a period of thirty (30) calendar days following the receipt by the
\nholder of the Class B Membership Units of such Financial Statements, such holder
\nmay convert all (but not less than all) of the Class B Membership Units held by
\nit into a like number of Class A Membership Units, effective immediately upon
\ndelivery at any time during such thirty (30) calendar day period of written
\nnotice of such conversion to the Board of Managers (the “Performance Based
\nConversion Notice”). In addition, notwithstanding the foregoing, in the event
\nthe Company undertakes an IPO, the holder of the Class B Membership Units may
\nconvert all (but not less than all) of the Class B Membership Units held by it
\ninto a like number of Class A Membership Units by delivering written notice of
\nsuch conversion to the Board of Managers at any time prior to the date of the
\nclosing of the IPO, and such conversion shall be effective on the date of, and
\nshall be expressly conditioned upon, the closing of the IPO.<\/p>\n
(b) Reorganization, Recapitalization or Reclassification. If the
\n —————————————————-
\nClass A Membership Units shall be changed into the same or a different number of
\nshares of any class or classes of equity of the Company, whether by
\nreorganization, recapitalization, reclassification or otherwise, then and in
\neach such event each holder of Class B Membership Units shall have the right
\nthereafter to convert such units into the kind and amount of shares of equity
\nand other securities and property receivable upon such reorganization,
\nrecapitalization, reclassification or other change by holders of the number of
\nClass A Membership Units into which such Class B Membership Units might have
\nbeen converted immediately prior to such reorganization, recapitalization,
\nreclassification or change.<\/p>\n
(c) Conversion Date. The date set forth in the Conversion Notice as
\n —————
\nthe effective date for the conversion of Class B Membership Units into Class A
\nMembership Units, or the date of delivery of the Performance Based Conversion
\nNotice, or the closing date of the IPO, as applicable, shall be the “Conversion
\nDate.” Such conversion shall be deemed to have been effected immediately prior
\nto the close of business on the Conversion Date, and at such time the rights of
\nsuch holder as a holder of Class B Membership Units shall cease and such Person
\nshall be deemed to have become a holder of Class A Membership Units with all
\nrights appurtenant thereto. No Class B Membership Units that have been
\nconverted shall be reissued without the prior approval of the Members.<\/p>\n
(d) Reservation of Class A Membership Units. The Company hereby
\n —————————————
\nexpressly reserves 200,000 of the authorized but unissued Class A Membership
\nUnits solely for the purpose of effecting the conversion of the Class B
\nMembership Units outstanding on the date hereof. The Members agree to take all
\nnecessary action to cause the Company to at all times reserve and keep available
\nout of the authorized but unissued Class A Membership Units, solely for the
\npurpose of effecting the conversion of the Class B Membership Units, such number
\nof its <\/p>\n
37<\/p>\n
Class A Membership Units as shall from time to time be sufficient to effect the
\nconversion of all outstanding Class B Membership Units.<\/p>\n
ARTICLE XI<\/p>\n
REDEMPTION OF THE
\n CLASS C MEMBERSHIP UNIT
\n ———————–<\/p>\n
NBC shall have the right, exercisable by written notice to the Board
\nof Managers at any time on or after the Conversion Date (the “Redemption
\nNotice”), to cause the Company to redeem the outstanding Class C Membership Unit
\nat a price equal to $12.50 plus any accrued and unpaid Priority Return on the
\nClass C Membership Unit. The Company shall, immediately following receipt of the
\nRedemption Notice, redeem the Class C Membership Unit from the holder thereof.
\nThe Class C Membership Unit redeemed pursuant to this Article 11 shall be
\ncanceled and may not, under any circumstances, be reissued, sold or Transferred
\nand the Company shall take such appropriate action as may be necessary to
\neliminate the authorized Class C Membership Unit.<\/p>\n
ARTICLE XII<\/p>\n
DISPUTE RESOLUTION
\n ——————<\/p>\n
Section 12.1. Arbitration. Subject to the provisions of Section 12.2
\n ———–
\nbelow, all disputes arising out of, or in connection with, this Agreement or the
\ncommercial relationships between or among the parties that are created by this
\nAgreement, including any disputes concerning the formation, validity,
\nperformance or termination of this Agreement or any of the rights or obligations
\ncreated or transferred hereby, and including any disputes concerning the
\njurisdiction of the arbitral tribunal or the scope of arbitrable issues
\n(collectively, “Disputes”), shall be finally resolved by arbitration pursuant to
\nthe UNCITRAL Arbitration Rules (the “Rules”). Any such arbitration shall be
\nadministered by the American Arbitration Association through its global
\nheadquarters in New York (the “AAA Global Headquarters”), and the AAA Global
\nHeadquarters shall act as the appointing authority under the Rules. The place of
\narbitration shall be New York, New York (without prejudice to the powers of the
\narbitral tribunal under Articles 16 (2) and (3) of the Rules). The law to be
\napplied to the merits of any Dispute shall be the law of New York and, in the
\nevent a claim is asserted that is governed by federal law, the arbitral tribunal
\nshall apply federal law as it would be applied to such a dispute by a United
\nStates District Court for the Southern District of New York.<\/p>\n
All pleadings, proceedings and information exchanged or disclosed in
\nthe arbitration shall be treated as confidential and shall not be disclosed by
\nthe parties except (1) as necessary in connection with the prosecution or
\ndefense of the arbitration, (2) to protect or assert a right provided by law, or
\n(3) to comply with an obligation imposed by law. The arbitral tribunal shall
\nhave the power to implement and enforce this agreement concerning
\nconfidentiality by appropriate order.<\/p>\n
Section 12.2. Submission to Member Management Prior to Arbitration.
\n —————————————————-
\nIf a Dispute arises, the Member intending to commence arbitration concerning the
\nDispute shall, <\/p>\n
38<\/p>\n
prior to commencing the arbitration, submit to the other Members who will be
\nmade parties to the arbitration a letter (the “Notice Letter”) setting forth the
\nnature of the Dispute, including the claims proposed to be asserted in
\narbitration, the parties involved in the Dispute, and the nature and amount of
\nthe relief to be sought in arbitration if the Dispute cannot be resolved. The
\naffected Members’ executive management teams shall attempt in good faith to
\nresolve the Dispute within 10 calendar days after receipt of the Notice Letter,
\nincluding any disagreement concerning the number of arbitrators (one or three)
\nto be appointed in the event the Dispute proceeds to arbitration, and including
\nthe selection of a sole arbitrator if a sole arbitrator is to be appointed. If
\nthe Dispute is not resolved within such period of 10 calendar days, then any
\nMember who is a party to the Dispute may commence arbitration pursuant to the
\nRules and, absent an agreement within such 10 calendar days upon a sole
\narbitrator whom the parties shall jointly nominate, a three-member arbitral
\ntribunal shall be formed in accordance with the Rules, and the Member commencing
\nthe arbitration shall nominate an arbitrator in the Notice of Arbitration (which
\nshall include the Statement of Claim provided for in Article 18 of the Rules) at
\nthe time the arbitration is commenced.<\/p>\n
Section 12.3. Consent to Jurisdiction. The parties hereby consent to
\n ———————–
\nthe exclusive jurisdiction of the United States District Court for the Southern
\nDistrict of New York for the purposes of any judicial proceedings relating to an
\narbitrable Dispute, including any proceedings to enforce or to set aside an
\narbitral award.<\/p>\n
ARTICLE XIII<\/p>\n
CERTAIN PRE-CLOSING MATTERS
\n —————————<\/p>\n
Section 13.1. General; Reimbursement of Expenses. The Members
\n ———————————-
\nacknowledge that, prior to the date of this Agreement, each of NBC and WWFE (and
\ntheir respective Affiliates) has incurred expenses, acquired property or entered
\ninto contracts in its individual capacity but for the benefit of the Company.
\nAs soon as practicable after the date hereof (but subject to the approval of NBC
\nand WWFE as described below), the Company shall reimburse each of NBC and WWFE
\nfor the reasonable expenses incurred by each of them (and their respective
\nAffiliates) in good faith and upon prior consultation with the other party for
\nthe benefit of the Company after April 1, 2000 but prior to the date of this
\nAgreement. Each of NBC and WWFE shall submit to the other party an itemized list
\nof the expenses for which it seeks reimbursement pursuant to this Section 13.1
\nand shall provide such additional information or explanation with respect
\nthereto as the other party may reasonably request. The Company shall promptly
\nreimburse the expenses incurred by each of NBC and WWFE (and their respective
\nAffiliates) that NBC and WWFE reasonably determine were incurred in good faith
\nby such party and upon prior consultation with the other party for the benefit
\nof the Company during such period. The Company shall not reimburse either NBC or
\nWWFE for the fees and expenses of its (and its Affiliates’) counsel or other
\nprofessional advisors or the costs incurred by such party (and its Affiliates)
\nin the negotiation of this Agreement and the transactions related thereto.<\/p>\n
Section 13.2. Purchase and Sale of Certain Assets.
\n ———————————– <\/p>\n
(a) WWFE Parent does hereby sell, assign, transfer, set over and
\ndeliver unto the Company, and the Company does hereby purchase, pay for and
\naccept from <\/p>\n
39<\/p>\n
WWFE Parent, the assets and properties set forth on Exhibit B to this Agreement
\n(the “Purchased Assets”). The Company does hereby pay in immediately available
\nfunds to WWFE Parent the aggregate purchase price for the Purchased Assets set
\nforth on Exhibit B. After the date hereof, WWFE Parent shall execute and deliver
\nsuch other documents and instruments as may be reasonably necessary or
\nappropriate to more fully vest title to the Purchased Assets in the Company.<\/p>\n
(b) WWFE Parent represents and warrants to the Company the following:
\nWWFE Parent owns all of the Purchased Assets free and clear of any liens,
\npledges, security interests, restrictions, third-party rights, claims and
\nencumbrances of any nature whatsoever. The intellectual property included in
\nthe Purchased Assets (the “Purchased Intellectual Property”) is valid and
\nsubsisting. The use of the Purchased Intellectual Property does not infringe on
\nthe rights of any Person and, to the best knowledge of WWFE Parent, no Person is
\ninfringing on the Purchased Intellectual Property. There is no pending or, to
\nthe best knowledge of WWFE Parent, threatened claim challenging the ownership,
\nvalidity, effectiveness or use by WWFE Parent of the Purchased Intellectual
\nProperty.<\/p>\n
ARTICLE XIV<\/p>\n
INITIAL PUBLIC OFFERING
\n ———————–<\/p>\n
Section 14.1. Initial Public Offering. NBC and WWFE may mutually
\n ———————–
\nagree at any time to undertake an initial public offering (the “IPO”) of equity
\ninterests in the Company. In the IPO, NBC and WWFE shall have equal rights of
\nparticipation. Without limiting the authority of NBC and WWFE to elect
\notherwise, NBC and WWFE may, subject to applicable tax and accounting
\nconsiderations, agree to convert the Company into a corporation in order to
\nfacilitate the IPO. Prior to incorporation, the Company shall redeem the Class C
\nMembership Unit at a price equal to $12.50 plus any accrued and unpaid Priority
\nReturn (but only to the extent that the amount of such accrued and unpaid
\nPriority Return does not exceed the amount of the Company’s net Profit
\n(determined without regard to clause (vii) of the definition of Profit) in the
\nFiscal Year in which the redemption occurs). Upon incorporation, the total
\noutstanding shares of common stock of the corporation shall be distributed among
\nthe Members in proportion to their respective Percentage Interests on the date
\nof incorporation. Upon incorporation, each Member shall have the registration
\nrights with respect to such shares of common stock as are set forth in the form
\nof Registration Rights Agreement attached hereto as Exhibit C. The Members shall
\nwork diligently and shall cooperate in good faith to consummate any IPO that is
\nundertaken by the Company as promptly as practicable.<\/p>\n
Section 14.2. NBC’s Right to Request IPO. If, at any time after the
\n ————————–
\ncompletion of the second full football season conducted by the Company, NBC
\nshall notify WWFE in writing (the “NBC IPO Notice”) of its good faith desire to
\nundertake the IPO, and either (i) WWFE does not agree within ninety (90)
\ncalendar days following receipt of the NBC IPO Notice to cause the Company to
\neffect the IPO or (ii) the IPO is not consummated by the first anniversary of
\nthe date of receipt of the NBC IPO Notice, then NBC may (subject to the
\nremainder of this Section 14.2), upon written notice to WWFE (the “NBC IPO Put
\nNotice”), cause WWFE or an Affiliate thereof to purchase all or any portion of
\nthe Shares then owned by NBC (the “NBC IPO Put Right”) for an aggregate cash
\npurchase price equal to the Fair Market <\/p>\n
40<\/p>\n
Value of such Shares. The closing of the purchase and sale pursuant to this
\nSection 14.2 shall occur on the later of (i) the thirtieth (30th) Business Day
\nafter receipt by WWFE of the NBC IPO Put Notice and (ii) the fifth (5th)
\nBusiness Day after the Fair Market Value of the Shares then owned by NBC is
\ndetermined pursuant to Section 8.5, at such place as NBC and WWFE may agree. At
\nthe closing, NBC shall assign the Shares being sold to WWFE and WWFE shall pay
\nthe purchase price for such Shares in cash or other immediately available funds.
\nNotwithstanding the foregoing, if an underwriter of national standing mutually
\nacceptable to NBC and WWFE determines in good faith that market conditions are
\nnot favorable for the IPO within the one year period referred to in clause (ii)
\nabove, then such period shall automatically be extended until such time as such
\nunderwriter determines in good faith that market conditions have become
\nfavorable for the IPO. The NBC IPO Put Right shall be suspended and may not be
\nexercised by NBC during any such extension of the one year period referred to
\nabove.<\/p>\n
Section 14.3. WWFE’s Right to Request IPO. If, at any time after the
\n —————————
\ncompletion of the second full football season conducted by the Company, WWFE
\nshall notify NBC in writing (the “WWFE IPO Notice”) of its good faith desire to
\nundertake the IPO, and NBC does not agree within ninety (90) calendar days
\nfollowing receipt of the WWFE IPO Notice to cause the Company to effect the IPO,
\nthen WWFE or an Affiliate thereof may, upon written notice to NBC (the “WWFE IPO
\nCall Notice”), purchase all or any portion of the Shares then owned by NBC (the
\n“WWFE IPO Call Option”) for an aggregate cash purchase price equal to the Fair
\nMarket Value of such Shares. The closing of the purchase and sale pursuant to
\nthis Section 14.3 shall occur on the later of (i) the thirtieth (30th) Business
\nDay after receipt by NBC of the WWFE IPO Call Notice and (ii) the fifth (5th)
\nBusiness Day after the Fair Market Value of the Shares then owned by NBC is
\ndetermined pursuant to Section 8.5, at such place as WWFE and NBC may agree. At
\nthe closing, NBC shall assign the Shares being purchased to WWFE and WWFE shall
\npay the purchase price for such Shares in cash or other immediately available
\nfunds.<\/p>\n
ARTICLE XV<\/p>\n
GENERAL PROVISIONS
\n ——————<\/p>\n
Section 15.1. eCommerce Activities; Merchandise Fulfillment. The
\n ———————————————
\nCompany shall use commercially reasonable efforts to utilize the services of
\nValueVision International, Inc. as the provider of (i) direct television sales
\nand marketing of the Company’s merchandise and (ii) fulfillment services for
\nelectronic commerce engaged in by the Company.<\/p>\n
Section 15.2. Binding Effect and Benefit. This Agreement will be
\n ————————–
\nbinding upon, and will inure to the benefit of, the parties hereto and their
\nsuccessors and permitted assigns.<\/p>\n
Section 15.3. Certificates, etc. At the expense of the Company, the
\n ——————
\nMembers shall promptly cause to be prepared and executed all legally required
\nfictitious name, state qualification or other applications, registrations,
\npublications, certificates and affidavits for filing with the proper
\ngovernmental authorities, and shall arrange for the proper advertisement,
\npublication and filing thereof for record where required by applicable law in
\nany jurisdiction in which such is required.<\/p>\n
41<\/p>\n
Section 15.4. Members’ Relationships Inter Se. Except as expressly
\n ——————————-
\nprovided herein, nothing herein contained will be construed to constitute any
\nMember the agent of any other Member or in any manner to limit the Members in
\nthe carrying on of their own respective business or activities. Except as
\nprovided in 13.1 hereof, to the extent any Member has entered into agreements
\nwith respect to the Company and is not entitled to be reimbursed hereunder or
\nunder any other agreement among the parties hereto for expenses incurred in
\ncarrying out such agreements, such expenses shall be considered the sole
\nobligation of the Member.<\/p>\n
Section 15.5. Notices, Statements, etc. All notices, statements or
\n ————————-
\nother documents which are required or contemplated by this Agreement shall be in
\nwriting and delivered personally or sent by first class registered or certified
\nmail (postage prepaid, return receipt requested), overnight courier service or
\ntelecopy to the address most recently provided to the Members or such other
\naddress or telecopy number as may be designated in writing by any party to the
\nother parties hereto. Any notice or other communication so transmitted shall be
\ndeemed to have been given on the day of delivery, if delivered personally, on
\nthe business day following receipt of telecopy confirmation, if sent by
\ntelecopy, one business day after delivery to an overnight courier service or
\nfive days after mailing if sent by mail.<\/p>\n
Section 15.6. Integration\/Amendments. This Agreement, the
\n ———————-
\nMerchandising Agreement and the Broadcast Agreement represent the entire
\nunderstanding of the parties and supersede and cancel any and all prior
\nnegotiations, undertakings and agreements among the parties with respect to
\ntheir subject matter. This Agreement may be amended, and any provision hereof
\nmay be waived, at any time and from time to time with the prior consent of the
\nMembers.<\/p>\n
Section 15.7. Interpretation. Whenever in this Agreement reference
\n ————–
\nis made to “this Agreement” or to any provision “hereof”, or words to similar
\neffect, such reference shall be construed to refer to this Agreement. As used
\nin this Agreement, any gender will include any other gender and the plural will
\ninclude the singular and the singular will include the plural, each wherever
\nappropriate. The titles of the articles and sections herein have been inserted
\nfor convenience of reference only and will not control or affect the meaning or
\nconstruction of any term or provision hereof.<\/p>\n
Section 15.8. Governing Law. This Agreement shall be interpreted and
\n ————-
\nconstrued in accordance with the law of the State of Delaware, without regard to
\nthe conflict of laws provisions thereof.<\/p>\n
Section 15.9. Severability. If one or more provisions of this
\n ————
\nAgreement are held to be unenforceable under applicable law, such provision
\nshall be excluded from this Agreement and the balance of the Agreement shall be
\ninterpreted as if such provision was so excluded and shall be enforceable in
\naccordance with its terms.<\/p>\n
Section 15.10. Counterparts. This Agreement may be executed in
\n ————
\ncounterparts, each of which when executed shall be deemed to be an original but
\nall of which taken together shall constitute one and the same agreement.<\/p>\n
42<\/p>\n
Section 15.11. Guarantees.
\n ———- <\/p>\n
(a) By WWFE Parent. WWFE Parent hereby absolutely,
\n ————–
\nunconditionally and irrevocably guarantees the prompt payment and performance,
\nin each case when due, of all obligations (monetary and non-monetary) of WWFE
\nand\/or any of its Affiliates under this Agreement. WWFE Parent agrees that this
\nguarantee is continuing in nature and shall survive and continue in full force
\nnotwithstanding the dissolution or liquidation of, or the insolvency or
\nbankruptcy of, merger or any other corporate change or other occurrence
\nwhatsoever affecting the obligations and liabilities of WWFE or any such
\nAffiliate. WWFE Parent agrees that, with respect to the monetary obligations of
\nWWFE or any such Affiliate under this Agreement, this Section 15.11(a) is a
\nguarantee of performance and payment and not merely of collection, and that WWFE
\nParent will perform said obligations without offset of any kind and without
\nfirst pursuing any rights or remedies that it may have against WWFE or any such
\nAffiliate, regardless of the existence or adequacy of such rights or remedies.
\nWWFE Parent agrees to reimburse the Company for all costs and expenses,
\nincluding reasonable attorneys’ fees and expenses, incurred by the Company in
\nconnection with the enforcement of the Company’s rights under this Section
\n15.11(a). WWFE Parent hereby unconditionally and irrevocably waives, to the
\nextent permitted by applicable law, (i) notice of acceptance of the guarantee
\nand any notice regarding the performance or non-performance of WWFE or any such
\nAffiliate with respect to any of its obligations hereunder, (ii) presentment for
\npayment, notice of non-payment or non-performance, demand, protest, notice of
\nprotest and notice of dishonor or default to anyone, (iii) defenses to pay or
\nperform based upon any of the obligations of WWFE or any such Affiliate
\nhereunder not being a valid and binding obligation of WWFE or any such Affiliate
\nenforceable in accordance with its terms for any reason whatsoever, (iv) all
\nother notices to which WWFE Parent may be entitled but which may legally be
\nwaived, (v) any defense or circumstance which might otherwise constitute a legal
\nor equitable discharge of WWFE Parent and (vi) all rights under any state or
\nfederal statute dealing with or affecting the rights of creditors. WWFE Parent
\nrepresents and warrants that WWFE is, and at all times during the term of this
\nAgreement will be, a wholly-owned subsidiary of WWFE Parent.<\/p>\n
(b) By NBC Parent. NBC Parent hereby absolutely,
\n ————-
\nunconditionally and irrevocably guarantees the prompt payment and performance,
\nin each case when due, of all obligations (monetary and non-monetary) of NBC
\nand\/or any of its Affiliates under this Agreement. NBC Parent agrees that this
\nguarantee is continuing in nature and shall survive and continue in full force
\nnotwithstanding the dissolution or liquidation of, or the insolvency or
\nbankruptcy of, merger or any other corporate change or other occurrence
\nwhatsoever affecting the obligations and liabilities of NBC or any such
\nAffiliate. NBC Parent agrees that, with respect to the monetary obligations of
\nNBC or any such Affiliate under this Agreement, this Section 15.11(b) is a
\nguarantee of performance and payment and not merely of collection, and that NBC
\nParent will perform said obligations without offset of any kind and without
\nfirst pursuing any rights or remedies that it may have against NBC or any such
\nAffiliate, regardless of the existence or adequacy of such rights or remedies.
\nNBC Parent agrees to reimburse the Company for all costs and expenses, including
\nreasonable attorneys’ fees and expenses, incurred by the Company in connection
\nwith the enforcement of the Company’s rights under this Section 15.11(b). NBC
\nParent hereby unconditionally and irrevocably waives, to the extent permitted by
\napplicable law, (i) notice of acceptance of the guarantee and any notice
\nregarding the performance or non-performance of NBC or any such Affiliate with
\nrespect to any of its obligations hereunder, (ii) <\/p>\n
43<\/p>\n
presentment for payment, notice of non-payment or non-performance, demand,
\nprotest, notice of protest and notice of dishonor or default to anyone, (iii)
\ndefenses to pay or perform based upon any of the obligations of NBC or any such
\nAffiliate hereunder not being a valid and binding obligation of NBC or any such
\nAffiliate enforceable in accordance with its terms for any reason whatsoever,
\n(iv) all other notices to which NBC Parent may be entitled but which may legally
\nbe waived, (v) any defense or circumstance which might otherwise constitute a
\nlegal or equitable discharge of NBC Parent and (vi) all rights under any state
\nor federal statute dealing with or affecting the rights of creditors. NBC Parent
\nrepresents and warrants that NBC is, and at all times during the term of this
\nAgreement will be, a wholly-owned subsidiary of NBC Parent.<\/p>\n
44<\/p>\n
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
\nof the day and year first above written.<\/p>\n
WWFE SPORTS, INC.<\/p>\n
By:_____________________________<\/p>\n
Title:__________________________<\/p>\n
NBC-XFL HOLDING, INC.<\/p>\n
By:____________________________<\/p>\n
Title:_________________________<\/p>\n
WORLD WRESTLING FEDERATION ENTERTAINMENT, INC.,
\nsolely for the purpose of agreeing to be bound by Sections 13.2 and 15.11 of
\nthis Agreement.<\/p>\n
By:____________________________<\/p>\n
Title:_________________________<\/p>\n
NATIONAL BROADCASTING COMPANY, INC.,
\nsolely for the purpose of agreeing to be bound by Section 15.11 of this
\nAgreement.<\/p>\n
By:____________________________<\/p>\n
Title:_________________________<\/p>\n
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