eh1100637_form8k.htm
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 8-K


                            CURRENT REPORT PURSUANT
                         TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934


Date of report (Date of earliest event reported)         September 1,
2011             
 
 
                 EMMIS COMMUNICATIONS CORPORATION                 
      (Exact Name of Registrant as Specified in Its Charter)      
                                                                  
                               Indiana                            
                           (State or Other                        
                           Jurisdiction of    
                            Incorporation)    
                                                                  
        0-23264                                    35-1542018     
(Commission File Number)                         (IRS Employer    
                                              Identification No.) 
                                                                  


 
  ONE EMMIS PLAZA, 40 MONUMENT CIRCLE,     
    SUITE 700, INDIANAPOLIS, INDIANA         46204   
(Address of Principal Executive Offices)   (Zip Code)


 
                                                                 
                          317-266-0100                           
      (Registrant’s Telephone Number, Including Area Code)       
                                                                 
                         NOT APPLICABLE                          
  (Former Name or Former Address, if Changed Since Last Report)  



 
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

[ ]   Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)

[ ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)

[ ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))

[ ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
 
 
 
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Item 1.01  Entry into a Material Definitive Agreement.



On September 1, 2011, subsidiaries of Emmis Communications Corporation (the
“Company”), entered into the 2nd Amended & Restated Limited Liability Company
Agreement (the “LLC Agreement”) of Merlin, Media, LLC (“Merlin Media”), together
with GTCR Merlin Holdings, LLC (“Merlin Holdings”), an affiliate of investment
funds managed by GTCR, LLC, and Benjamin L. Homel (aka Randy Michaels) (together
with Merlin Holdings, the “Investors”).
 
In connection with the completion of the disposition of assets to Merlin Media
and sale of a controlling interest in Merlin Media pursuant to the Purchase
Agreement dated June 20, 2011 among the Company, Merlin Holdings and Mr. Homel
(the “Purchase Agreement), discussed below, the Company has retained preferred
equity and common equity interests in Merlin Media, the terms of which are
governed by the LLC Agreement. The Company’s common equity interests in Merlin
Media represent 20.6% of the outstanding common equity interests of Merlin Media
and are subject to dilution if the Company fails to participate pro rata in
future capital calls. The Company’s preferred equity interests in Merlin Media
consist of approximately $28.7 million of non-redeemable perpetual preferred
interests, on which a preferred return accretes quarterly at a rate of 8% per
annum. The preferred interests held by the Company are junior to non-redeemable
perpetual preferred interests held by the Investors of approximately $87
million, on which a preferred return accretes quarterly at a rate of 8% per
annum. The preferred interests held by the Company and the Investors are both
junior to a $60 million senior secured note issued to an affiliate of Merlin
Holdings. The note matures five years from closing, and interest accrues on the
note semi-annually at a rate of 15% per annum, payable in cash or in-kind at
Merlin Media’s election. Distributions in respect of Merlin Media’s common and
preferred interests are made when declared by Merlin Media’s board of managers.
 
Under the LLC Agreement, the Company is entitled initially to appoint one out of
five members of Merlin Media’s board of managers and has limited consent rights
with respect to specified transactions. The Company has no obligation to make
ongoing capital contributions to Merlin Media, but as noted above is subject to
dilution if it fails to participate pro rata in future capital calls.
 
Merlin Media is a private company and the Company will have limited ability to
sell its interests in Merlin Media, except pursuant to customary tag-along
rights with respect to sales by Merlin Media’s controlling Investor or, after
five years, a private sale to third parties subject to rights of first offer
held by the controlling Investor. The Company has customary registration rights
and is subject to a “drag-along” right of the controlling Investor.
 
 
Item 2.01  Completion of Acquisition or Disposition of Assets.



On September 1, 2011, the Company completed the disposition of a controlling
interest in Merlin Media, which owns the following radio stations: (i) WKQX-FM,
101.1 MHz, Channel 266, Chicago, IL (FIN 19525), (ii) WRXP-FM, 101.9 MHz,
Channel 270, New York, NY (FIN 67846) and (iii) WLUP-FM, 97.9 MHz, Channel 250,
Chicago, IL (FIN 73233). The sale was made pursuant to the Purchase Agreement,
initially disclosed on the Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission (the “Commission”) on June 21, 2011 (as
amended by a Current Report on Form 8-K/A filed with the Commission on June
 
 
 
                                        
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24, 2011). The Company received gross sale proceeds of $130 million in the
transaction, and has incurred or expects to incur approximately $9.8 million of
expenses, principally consisting of severance, state and local taxes, and
professional and other fees and expenses. The Company has used the net cash
proceeds to repay a portion of the term loans outstanding under its credit
facility.

 
Item 2.05  Costs Associated with Exit or Disposal Activities.


 
In connection with the sale of a controlling interest in Merlin Media, the
Company paid severance to employees of the radio stations WKQX, WLUP and WRXP
who were not offered employment with Merlin Media upon commencement of the Local
Marketing Agreement (“LMA”) on July 15, 2011. Further, if an employee of one of
these stations was offered employment, accepted the employment offer, but
subsequently is terminated by Merlin Media on or before October 13, 2011, the
Company intends to pay severance to those employees in accordance with its
severance policies. To date, the Company has paid approximately $1.0 million in
severance to affected employees and has reserved $2.4 million for potential
severance obligations.
 
As discussed above, the Company has incurred or expects to incur approximately
$9.8 million of expenses in connection with the sale, inclusive of the severance
discussed above. The remaining expenses principally consist of state and local
taxes of approximately $3.1 million, and professional and other fees and
expenses of approximately $3.3 million.
 
 
Item 3.01.  Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
            Standard; Transfer of a Listing.                                     


 
On August 31, 2011, the Company received a letter from the Nasdaq Stock Market
(“Nasdaq”) notifying the Company that it no longer complies with Markeplace Rule
5450(a)(1) (the “Minimum Bid Price Rule”), as the bid price of the Company’s
Class A Common Stock (listed on the Nasdaq Global Select Market under the symbol
“EMMS”) closed below the minimum $1.00 per share for the 30 consecutive business
days preceding August 31, 2011. In accordance with Marketplace Rule
5810(c)(3)(A), the Company has 180 calendar days, or until February 27, 2012, to
regain compliance with the Minimum Bid Price Rule. During the 180 day period,
the Company’s Class A Common Stock will continue to trade on the Nasdaq Global
Select Market.
 
If at any time before February 27, 2012, the bid price of the Company’s Class A
Common Stock closes at $1.00 per share or more for a minimum of 10 consecutive
business days, Nasdaq will notify the Company that it has achieved compliance
with the Minimum Bid Price Rule. If the Company does not regain compliance with
the Minimum Bid Price Rule by February 27, 2012, Nasdaq will notify the Company
that its Class A Common Stock will be delisted from the Nasdaq Global Select
Market. Nasdaq rules would then permit the Company to appeal any delisting
determination by the Nasdaq staff to a Listing Qualifications Panel.
 
The Company intends to actively evaluate and monitor the bid price for its Class
A Common Stock between now and February 27, 2012, and consider implementation of
various options
 
 
 
                                        
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available to the Company if its Class A Common Stock does not trade at a level
that is likely to regain compliance.
 
The Nasdaq deficiency letter does not affect the listing of the Company’s 6.25%
Series A Cumulative Convertible Preferred Stock, which will continue to trade on
the Nasdaq Global Select Market under the symbol “EMMSP”.
 
 
Item 9.01  Financial Statements and Exhibits



Unaudited financial information for WLUP, WKQX and WRXP is attached hereto as
Exhibit 99.1. The Company has included unaudited combined operating income
(loss) for the fiscal years ended February 2009, 2010 and 2011 as well as the
three-months ended May 31, 2010 and 2011. The Company has also included
unaudited combined balance sheets as of February 28, 2011 and May 31, 2011. As
discussed above, the Company used the net cash sale proceeds from the
transaction of approximately $120.2 million to repay a portion the term loans
outstanding under its credit facility.


 (d) Exhibits.

Exhibit   Description                                                           
                                                                                
2.1       Purchase Agreement, dated as of June 20, 2011, by and among GTCR      
          Merlin Holdings, LLC, Benjamin L. Homel, Emmis Operating Company,     
          Emmis Radio, LLC, Emmis Radio License, LLC, Emmis Radio Holding       
          Corporation and Emmis Radio Holding II Corporation, incorporated by   
          reference from Exhibit 2.1 to the Company’s Form 8-K/A filed June 24, 
          2011.                                                                 
                                                                                
10.1      Second Amended and Restated Limited Liability Company Agreement of    
          Merlin Media, dated September 1, 2011.                                
                                                                                
99.1      Unaudited financial information for WLUP, WKQX and WRXP.              
                                                                                
99.2      Press Release Dated September 1, 2011.                                


                                        
                                        
 
                                        
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                                   SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on Form 8-K to be signed on its behalf by
the undersigned, thereunto duly authorized.
 
Dated: September 1, 2011
 
  EMMIS COMMUNICATIONS CORPORATION                                        
                                                                          
  By:  /s/ J. Scott Enright                                               
       Name:  J. Scott Enright                                            
       Title:   Executive Vice President, General Counsel and Secretary   
                                                                          


 
 
 
                                        
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                               INDEX TO EXHIBITS
 

Exhibit   Description                                                           
                                                                                
2.1       Purchase Agreement, dated as of June 20, 2011, by and among GTCR      
          Merlin Holdings, LLC, Benjamin L. Homel, Emmis Operating Company,     
          Emmis Radio, LLC, Emmis Radio License, LLC, Emmis Radio Holding       
          Corporation and Emmis Radio Holding II Corporation, incorporated by   
          reference from Exhibit 2.1 to the Company’s Form 8-K/A filed June 24, 
          2011.                                                                 
                                                                                
10.1      Second Amended and Restated Limited Liability Company Agreement of    
          Merlin Media, dated September 1, 2011.                                
                                                                                
99.1      Unaudited financial information for WLUP, WKQX and WRXP.              
                                                                                
99.2      Press Release Dated September 1, 2011.                                


                                        
                                        
                                        
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EX-10.1
2
eh1100637_form8k-ex1001.htm
EXHIBIT 10.1

eh1100637_form8k-ex1001.htm
                                                                    EXHIBIT 10.1
 
 

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                          ___________________________
 
                               MERLIN MEDIA, LLC
                          ____________________________
 
        SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
 
                         Dated as of September 1, 2011
 
THE COMPANY INTERESTS REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY OTHER APPLICABLE SECURITIES LAWS. SUCH INTERESTS MAY NOT BE SOLD, ASSIGNED,
PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION
UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM AND COMPLIANCE WITH THE OTHER
SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.
 
CERTAIN OF THE COMPANY INTERESTS REPRESENTED BY THIS LIMITED LIABILITY COMPANY
AGREEMENT ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS, REPURCHASE OBLIGATIONS
AND FORFEITURE PROVISIONS SET FORTH IN A SEPARATE AGREEMENT WITH THE INITIAL
HOLDER OF SUCH INTEREST. A COPY OF ANY SUCH RESTRICTIONS, OBLIGATIONS OR
PROVISIONS MAY BE OBTAINED BY THE HOLDER OF SUCH INTEREST UPON WRITTEN REQUEST
WITHOUT CHARGE.
 
 
                                                          
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                               TABLE OF CONTENTS
 
                                                                            Page
 
ARTICLE I CERTAIN DEFINITIONS                                                      1
ARTICLE II ORGANIZATIONAL MATTERS                                                 17
       Section 2.1 Formation                                                      17
       Section 2.2 The Certificate, Etc                                           17
       Section 2.3 Name                                                           17
       Section 2.4 Purpose                                                        17
       Section 2.5 Powers of the LLC                                              18
       Section 2.6 Foreign Qualification                                          18
       Section 2.7 Principal Office; Registered Office                            18
       Section 2.8 Term                                                           18
       Section 2.9 No State-Law Partnership                                       18
ARTICLE III UNITS; CAPITAL ACCOUNTS                                               19
       Section 3.1 Units.                                                         19
       Section 3.2 Unitholder Meetings                                            20
       Section 3.3 Issuance of Additional Units and Interests.                    23
       Section 3.4 Preemptive Rights.                                             26
       Section 3.5 Capital Accounts.                                              28
       Section 3.6 Negative Capital Accounts                                      29
       Section 3.7 No Withdrawal                                                  29
       Section 3.8 Loans From Unitholders; Co-Investment Rights.                  29
       Section 3.9 Management Incentive Units.                                    31
ARTICLE IV DISTRIBUTIONS AND ALLOCATIONS                                          32
       Section 4.1 Distributions.                                                 32
       Section 4.2 Allocations                                                    35
       Section 4.3 Special Allocations.                                           35
       Section 4.4 Tax Allocations.                                               37
       Section 4.5 Indemnification and Reimbursement for Payments on Behalf       38
                   of a Unitholder                                          
       Section 4.6 Transfer of Capital Accounts                                   38
ARTICLE V BOARD OF MANAGERS; OFFICERS                                             38
       Section 5.1 Management by the Board of Managers.                           38
       Section 5.2 Composition and Election of the Board of Managers.             39
       Section 5.3 Board Meetings and Actions by Written Consent.                 41
       Section 5.4 Committees; Delegation of Authority and Duties.                43


 
 
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  Section 5.5  Certain Limitations on Liability.                       44
  Section 5.6  Officers.                                               44
  Section 5.7  Operations                                              45
ARTICLE VI GENERAL RIGHTS AND OBLIGATIONS OF UNITHOLDERS               46
  Section 6.1  Limitation of Liability                                 46
  Section 6.2  Lack of Authority                                       46
  Section 6.3  No Right of Partition                                   46
  Section 6.4  Unitholders Right to Act                                46
  Section 6.5  Investment Opportunities and Conflicts of Interest.     46
  Section 6.6  Transactions Between the LLC and the Unitholders        47
  Section 6.7  Rights of Contributors.                                 47
  Section 6.8  Material Default.                                       49
  Section 6.9  Insulated Members.                                      50
  Section 6.10 Refinancing of the Note                                 51
  Section 6.11 Management Rights                                       52
ARTICLE VII EXCULPATION AND INDEMNIFICATION                            52
  Section 7.1  Exculpation                                             52
  Section 7.2  Right to Indemnification                                52
  Section 7.3  Advance Payment                                         53
  Section 7.4  Indemnification of Employees and Agents                 53
  Section 7.5  Appearance as a Witness                                 53
  Section 7.6  Nonexclusivity of Rights                                53
  Section 7.7  Insurance                                               54
  Section 7.8  Limitation                                              54
  Section 7.9  Effect on Other Agreements and Unitholders’ Obligations 54
  Section 7.10 Savings Clause                                          54
ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS                    55
  Section 8.1  Records and Accounting                                  55
  Section 8.2  Fiscal Year                                             55
  Section 8.3  Tax Information                                         55
  Section 8.4  Transmission of Communications                          55
  Section 8.5  LLC Funds                                               55
ARTICLE IX TAXES                                                       55
  Section 9.1  Tax Returns                                             55
  Section 9.2  Tax Elections                                           56
  Section 9.3  Tax Matters Partner                                     56
  Section 9.4  Code Section 83 Safe Harbor Election.                   56
ARTICLE X TRANSFER OF LLC INTERESTS                                    57


 
 
 
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  Section 10.1  Consent to Transfer.                               57
  Section 10.2  Tag Along Rights.                                  58
  Section 10.3  Approved Sale; Drag Along Obligations.             59
  Section 10.4  Effect of Assignment.                              61
  Section 10.5  Additional Restrictions on Transfer                61
  Section 10.6  Legend                                             62
  Section 10.7  Transfer Fees and Expenses                         63
  Section 10.8  Void Transfers                                     63
  Section 10.9  Vesting, Forfeiture and Repurchase of Units        63
  Section 10.10 No Public Sales of Unvested Units                  63
  Section 10.11 Right of First Offer                               63
ARTICLE XI ADMISSION OF UNITHOLDERS                                64
  Section 11.1  Substituted Unitholders                            64
  Section 11.2  Additional Unitholders                             64
  Section 11.3  Optionholders                                      64
ARTICLE XII WITHDRAWAL AND RESIGNATION OF UNITHOLDERS              65
  Section 12.1  Withdrawal and Resignation of Unitholders          65
  Section 12.2  Withdrawal of a Unitholder                         65
ARTICLE XIII DISSOLUTION AND LIQUIDATION                           65
  Section 13.1  Dissolution                                        65
  Section 13.2  Liquidation and Termination                        65
  Section 13.3  Cancellation of Certificate                        66
  Section 13.4  Reasonable Time for Winding Up                     66
  Section 13.5  Return of Capital                                  66
  Section 13.6  Reserves Against Distributions                     66
ARTICLE XIV VALUATION                                              67
  Section 14.1  Cash Required for Payment of Units                 67
  Section 14.2  Fair Market Value                                  67
ARTICLE XV GENERAL PROVISIONS                                      68
  Section 15.1  Power of Attorney.                                 68
  Section 15.2  Amendments.                                        68
  Section 15.3  Title to LLC Assets                                69
  Section 15.4  Remedies                                           69
  Section 15.5  Successors and Assigns                             69
  Section 15.6  Severability                                       70
  Section 15.7  Change in Business Form; Recapitalization.         70
  Section 15.8  Opt-in to Article 8 of the Uniform Commercial Code 71
  Section 15.9  Notice to Unitholder of Provisions                 72


 
 
 
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  Section 15.10 Counterparts                               72
  Section 15.11 Consent to Jurisdiction                    72
  Section 15.12 Descriptive Headings; Interpretation       72
  Section 15.13 Applicable Law                             73
  Section 15.14 MUTUAL WAIVER OF JURY TRIAL                73
  Section 15.15 Addresses and Notices                      73
  Section 15.16 Creditors                                  73
  Section 15.17 Waiver                                     74
  Section 15.18 Further Action                             74
  Section 15.19 Entire Agreement                           74
  Section 15.20 Electronic Delivery                        74
  Section 15.21 Survival                                   74
  Section 15.22 Certain Acknowledgments                    74
  Section 15.23 Financial Statements and Other Information 75




 
 
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                               MERLIN MEDIA, LLC
 
        SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
 
THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated as
of September 1, 2011 (the “Effective Date”), is entered into by and among MERLIN
MEDIA, LLC (the “LLC”), the Unitholders and, solely with respect to Sections 5.2
and 6.11 hereof, GTCR Fund X/B LP, a Delaware limited partnership
(“GTCR Fund X/B”) and GTCR Fund X/C LP, a Delaware limited partnership
(“GTCR Fund X/C”).
 
WHEREAS, the LLC was formed on June 17, 2011 by the filing of the Certificate
(as defined herein) with the Secretary of State for the State of Delaware.
 
WHEREAS, prior to the execution and delivery of this Agreement, the LLC was
governed by that certain Amended and Restated Limited Liability Company
Agreement dated as of August 31, 2011 (the “Amended and Restated Agreement”) by
and among the LLC, Emmis Radio Holding Corporation, an Indiana corporation
(“Emmis Holding”), Emmis Radio Holding II Corporation, an Indiana corporation
and (“Emmis Holding II”) and Emmis Operating Company, an Indiana corporation
(“Emmis”, and together with Emmis Holding and Emmis Holding II, the “Initial
Contributors”).
 
WHEREAS, the parties hereto desire to enter into this Agreement to admit GTCR
Merlin Holdings, LLC, a Delaware limited liability company (“GTCR Merlin”) and
Benjamin L. Homel, an individual (“Mr. Homel”) as Unitholders (as defined
herein) and to give effect to certain agreements among the Unitholders.
 
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
 
                                   ARTICLE I
 
                              CERTAIN DEFINITIONS
 
Capitalized terms used but not otherwise defined herein shall have the following
meanings:
 
“Acceptance” has the meaning set forth in Section 10.11(b).
 
“Acceptance Deadline” has the meaning set forth in Section 10.11(b).
 
“Additional Unitholder” means a Person that is admitted to the LLC as a
Unitholder pursuant to Section 11.2.
 
 
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“Adjusted Capital Account” means, with respect to any Unitholder, the balance in
such Unitholder’s Capital Account as of the end of any Taxable Year. For this
purpose, such Unitholder’s Capital Account balance shall be
 
(i)      reduced for such Unitholder’s share of any items described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6), and
 
(ii)      increased for any amount such Unitholder is obligated to contribute or
is treated as being obligated to contribute to the LLC pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii)(c) (relating to partner liabilities to a
partnership) or 1.704-2(g)(1) and 1.704-2(i) (relating to Minimum Gain).
 
“Adjusted Capital Account Deficit” means, with respect to any Unitholder, the
deficit balance, if any, in such Unitholder’s Adjusted Capital Account.
 
The foregoing definitions of Adjusted Capital Account and Adjusted Capital
Account Deficit are intended to comply with the provisions of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
 
“Affiliate” of any particular Person means (i) any other Person controlling,
controlled by or under common control with such particular Person, where
“control” means the possession, directly or indirectly, of the power to direct
the management and policies of a Person whether through the ownership of voting
securities, by contract, or otherwise, (ii) if such Person is a partnership, any
general or managing partner thereof and (iii) without limiting the foregoing
with respect only to the Investors, any investment fund, managed or controlled
by or under common control with GTCR or GTCR II or any successor thereto or
affiliate thereof.
 
“Affiliated Institution” means, with respect to any Indemnified Person, any
investment fund, institutional investor or other financial intermediary with
which such Unitholder, Manager, Officer or other Person is Affiliated or of
which such Indemnified Person is a member, partner or employee.
 
“Agreement” means this Second Amended and Restated Limited Liability Company
Agreement, as amended or modified from time to time in accordance with the terms
hereof.
 
“Applicable Table” has the meaning set forth in Section 3.3(c)(ii).
 
“Appraisal Firm” means an Independent Third Party that is nationally recognized
as an appraiser in the radio broadcasting industry.
 
“Approved Sale” has the meaning set forth in Section 10.3(a).
 
“Bankruptcy Event” means, with respect to any Person, the occurrence of one or
more of the following events: (a) such Person (i) admits in writing its
inability to pay its debts as they become due, (ii) files, or consents by answer
or stipulation or otherwise agrees (by act or omission) to the filing against it
of a petition for relief or reorganization or rearrangement, readjustment or
similar relief or any other petition in bankruptcy, for liquidation or to take
 
 
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advantage of any bankruptcy, insolvency, dissolution, reorganization, moratorium
or other similar law of any jurisdiction, (iii) makes an assignment for the
benefit of its creditors, marshalling of assets for creditors or other similar
arrangement in respect of creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, (v) is
adjudicated as bankrupt or as insolvent or to be liquidated, (vi) gives notice
to any Governmental Authority of insolvency or pending insolvency or (vii) takes
any corporate action authorizing any of the foregoing; or (b) a court or
Governmental Entity of competent jurisdiction enters an order appointing,
without consent by such Person, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial part
of its property, or constituting an order for relief or approving a petition for
relief or reorganization or any other petition in bankruptcy or for liquidation
or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of such Person. With respect
to any Contributor, a “Bankruptcy Event” shall also include a Bankruptcy Event
of any Subsidiary of such Contributor or the ultimate parent entity (through
direct or indirect ownership or control or ownership of equity securities) of
such Contributor or any Subsidiary of such ultimate parent entity, to the extent
such Subsidiary is material to the Contributors and their Affiliates, taken as a
whole.
 
“Base Value” means, as of a particular date, the greater of (a) the product of
(i) the EBITDA of the LLC for the twelve-month period ending on the last day of
the month preceding such date, multiplied by (ii) ten (10), and (b) the
aggregate Capital Contributions as of such date (for the avoidance of doubt, the
foregoing shall not include any increase in any Class A Unreturned Capital
pursuant to Section 3.3(c)(iii)).
 
“Board” means the Board of Managers established pursuant to Section 5.2.
 
“Book Value” means, with respect to any LLC property, the LLC’s adjusted basis
for federal income tax purposes, adjusted from time to time to reflect the
adjustments required or permitted by Treasury Regulation Section
1.704-1(b)(2)(iv)(d)-(g), except that in the case of any property contributed to
the LLC, the Book Value of such property shall initially equal the Fair Market
Value of such property. The Book Value of LLC property as of the Effective Date
is set forth on Schedule B, to be completed as soon as reasonably practicable
following the date hereof.
 
“Business Opportunities” has the meaning set forth in Section 6.5.
 
“Call Notice” has the meaning set forth in Section 3.3(a)(iv).
 
“Capital Account” means the capital account maintained for a Unitholder pursuant
to Section 3.5.
 
“Capital Commitment” means, with respect to any Commitment Member, the dollar
amount of Capital that such Commitment Member has committed to contribute to the
LLC on the terms set forth in this Agreement, which dollar amount shall be
specified opposite such Commitment Member’s name in the Column entitled “Capital
Commitment” on Schedule A.
 
 
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“Capital Contributions” means any cash, cash equivalents, promissory
obligations, or the Fair Market Value of other property that a Unitholder
contributes to the LLC with respect to any Unit pursuant to Sections 3.1 or 3.3,
which, with respect to the contribution of the equity interests of LMA Newco on
the Effective Date by the Investors and Mr. Homel pursuant to Section 6.7 of the
Purchase Agreement shall equal the capital contributions made by the Investors
and Mr. Homel to LMA Newco on or prior to the Effective Date.
 
“Certificate” means the LLC’s Certificate of Formation as filed with the
Secretary of State of the State of Delaware.
 
“Class A Unit” means a Unit representing a fractional part of the interest of a
Unitholder in Profits, Losses and Distributions and having the rights and
obligations specified with respect to the Class A Units in this Agreement.
 
“Class A Unpaid Yield” of any Class A Unit means, as of any date, an amount
equal to the excess, if any, of (i) the aggregate Class A Yield accrued on such
Class A Unit for all periods prior to such date (including partial periods),
over (ii) the aggregate amount of all Distributions made by the LLC in respect
of such Class A Unit pursuant to Section 4.1(a)(i).
 
“Class A Unreturned Capital” of any Class A Unit means, as of any date, an
amount equal to the excess, if any, of (i) the aggregate Capital Contributions
made with respect to such Class A Unit prior to such date (as such amount may be
adjusted pursuant to Section 3.3(c)(iii)), over (ii) the aggregate amount of all
Distributions made by the LLC in respect of such Class A Unit pursuant to
Section 4.1(a)(ii).
 
“Class A Yield” means, with respect to each Class A Unit, the amount accruing on
such Class A Unit on a daily basis, at the rate of 8.0% per annum, compounded on
the last day of each calendar quarter, on the sum of (i) the Class A Unreturned
Capital of such Class A Unit (if any), plus (ii) the Class A Unpaid Yield as of
the last day of the immediately prior quarterly period (if any). In calculating
the amount of any Distribution to be made with respect to a Class A Unit during
a period, the portion of the Class A Yield with respect to such Class A Unit for
the portion of the quarterly period elapsing before such Distribution is made
shall be taken into account in determining the amount of such Distribution.
 
“Class B Unit” means a Unit representing a fractional part of the interest of a
Unitholder in Profits, Losses and Distributions and having the rights and
obligations specified with respect to the Class B Units in this Agreement.
 
“Class B Unpaid Yield” of any Class B Unit means, as of any date, an amount
equal to the excess, if any, of (i) the aggregate Class B Yield accrued on such
Class B Unit for all periods prior to such date (including partial periods),
over (ii) the aggregate amount of all Distributions made by the LLC in respect
of such Class B Unit pursuant to Section 4.1(a)(iii).
 
“Class B Unreturned Capital” of any Class B Unit means, as of any date, an
amount equal to the excess, if any, of (i) the aggregate Capital Contributions
made with respect to such Class B Unit prior to such date (as such amount may be
adjusted pursuant to Section 3.3(c)(iii)), over (ii) the aggregate amount of all
Distributions made by the LLC in respect of such Class B Unit pursuant to
Section 4.1(a)(iv).
 
 
                                     - 4 -
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“Class B Yield” means, with respect to each Class B Unit, the amount accruing on
such Class B Unit on a daily basis, at the rate of 8.0% per annum, compounded on
the last day of each calendar quarter, on the sum of (i) the Class B Unreturned
Capital of such Class B Unit (if any), plus (ii) the Class B Unpaid Yield as of
the last day of the immediately prior quarterly period (if any). In calculating
the amount of any Distribution to be made with respect to a Class B Unit during
a period, the portion of the Class B Yield with respect to such Class B Unit for
the portion of the quarterly period elapsing before such Distribution is made
shall be taken into account in determining the amount of such Distribution.
 
“Class C Unit” means a Unit representing a fractional part of the interest of a
Unitholder in Profits, Losses and Distributions and having the rights and
obligations specified with respect to the Class C Units in this Agreement.
 
“Class C Unitholder” means any owner of one or more Class C Units as reflected
on the LLC’s books and records, but only for so long as such person is shown on
the LLC’s books or records as the owner of such Class C Units.
 
“Class D Unit” means a Unit representing a fractional part of the interest of a
Unitholder in Profits, Losses and Distributions and having the rights and
obligations specified with respect to the Class D Units in this Agreement;
provided that if a Class D Unit is subject to vesting pursuant to the Senior
Management Agreement or other Equity Agreement pursuant to which such Class D
Unit was issued, such Class D Unit shall not have any voting rights (if
applicable) or any other rights hereunder (including, except as set forth in
Sections 4.1(a)(v)(C) and 4.1(b), the right to receive Distributions hereunder)
until such time as such Class D Unit is vested in accordance with such Senior
Management Agreement or other Equity Agreement, but shall be deemed to be
outstanding for all other purposes hereunder and shall be subject to the
obligations and restrictions applicable to the Class D Units hereunder.
 
“Closing Deadline” has the meaning set forth in Section 10.11(b).
 
“Co-Investment Notice” has the meaning set forth in Section 3.8(b).
 
“Code” means the United States Internal Revenue Code of 1986, as amended. Such
term shall, at the Board’s sole discretion, be deemed to include any future
amendments to the Code and any corresponding provisions of succeeding Code
provisions (whether or not such amendments and corresponding provisions are
mandatory or discretionary).
 
“Commitment Members” has the meaning set forth in Section 3.3(a)(ii).
 
“Commitment Ratio” means, with respect to any Commitment Member, such Commitment
Member’s Unpaid Commitment Amount divided by the sum of all Commitment Members’
Unpaid Commitment Amounts.
 
“Contribution Agreement” means that certain Contribution Agreement, dated as of
June 20, 2011, by and among the Contributors, Emmis Radio License, LLC and the
LLC, as amended or modified from time to time in accordance with its terms.
 
“Contributor Governance Provisions” has the meaning set forth in Section 6.7.
 
 
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“Contributor Manager” has the meaning set forth in Section 5.2(a)(iv).
 
“Contributors” means the Initial Contributors and their respective Affiliates
and successors that become Additional Unitholders pursuant to Section 11.2.
 
“Debt Investment” has the meaning set forth in Section 3.8(b).
 
“Deemed Liquidation Percentage” of a Participating Member or a Non-Participating
Member, as applicable, with respect to a particular Capital Contribution
pursuant to Section 3.3(a) (after giving effect to Section 3.3(a)(iv)(A) and (B)
and treated as though all such Capital Contributions pursuant to Section
3.3(a)(iv)(B) were made on the same date as any such Capital Contributions made
pursuant to Section 3.3(a)(i) in connection with the same Call Notice), means a
fraction expressed as a percentage, (a) the numerator of which is the sum of
(i) the Class C Units held by such Participating Member or Non-Participating
Member, as applicable, as of the date of such Capital Contribution but not
giving effect thereto, plus (ii) an amount equal to (A) the amount of such
Capital Contribution made by such Participating Member or Non-Participating
Member, as applicable, divided by (B) the Deemed Per Unit Equity Value as of the
date of such Capital Contribution, and (b) the denominator of which is the sum
of (i) the outstanding Class C Units as of such date, plus (ii) an amount equal
to (A) the aggregate amount of such Capital Contributions made by all
Participating Members and Non-Participating Members, divided by (B) the Deemed
Per Unit Equity Value as of the date of such Capital Contribution.
 
“Deemed Per Unit Equity Value” means, as of a particular date, the Equity Value
as of such date, divided by the number of outstanding Class C Units and Class D
Units as of such date without giving effect to Capital Contributions made on
such date.
 
“Defaulting Unitholder” has the meaning set forth in Section 6.8(e).
 
“Delaware Act” means the Delaware Limited Liability Company Act, 6 Del. L.
§ 18-101, et seq., as it may be amended from time to time, and any successor to
the Delaware Act.
 
“Dispute Notice” has the meaning set forth in Section 14.2.
 
“Distribution” means each distribution made by the LLC to a Unitholder with
respect to such Person’s Units, whether in cash, property or securities of the
LLC and whether by liquidating distribution, redemption, repurchase or
otherwise; provided that any recapitalization or exchange or conversion of
Units, redemption or repurchase of Units pursuant to this Agreement or any
Equity Agreement and any subdivision (by Unit split or otherwise) or combination
(by reverse Unit split or otherwise) of any outstanding Units shall not be
deemed a Distribution.
 
“EBITDA” of any Person for any period, means the sum of (i) the consolidated
earnings of such Person and its Subsidiaries for such period determined in
accordance with GAAP plus (ii) the following expenses or charges to the extent
deducted from consolidated earnings in such period (giving pro forma effect to
the acquisition of any business during such period, as if such acquisition had
been consummated on the first day of such period) as
 
 
                                     - 6 -
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determined by the board of managers or other governing body of such
Person: interest expense, provision for Federal, state and local income taxes,
depreciation expense, amortization expense (including amortization of deferred
debt issuance costs), noncash compensation expense, loss on sale or other
disposition of fixed assets, impairment charges, and other similar noncash
charges and expenses which do not represent a cash item in such period or any
future period, minus (iii) any benefit for Federal, state and local income
taxes, gain on sale or other disposition of fixed assets, cash payments made
with respect to noncash charges added back in prior periods and otherwise
excluded, and all noncash items increasing consolidated
earnings. Notwithstanding anything to the contrary in the foregoing, “EBITDA”
shall not include any trade and barter.
 
“ECC” means Emmis Communications Corporation and its successors.
 
“ECC Permitted Holders” means ECC and any of ECC’s direct or indirect wholly
owned Subsidiaries.
 
“Effective Date” has the meaning set forth in the Preamble.
 
“Emmis” has the meaning set forth in the Preamble
 
“Emmis Holding” has the meaning set forth in the Preamble.
 
“Emmis Holding II” has the meaning set forth in the Preamble.
 
“Equity Agreement” means the Contribution Agreement, the Purchase Agreement, any
Senior Management Agreement and any other agreement, document or instrument
evidencing or effecting the issuance or other Transfer of any Equity Securities
or otherwise governing the terms and conditions with respect to any Equity
Securities, in each case as the same may be amended or otherwise modified from
time to time.
 
“Equity Securities” means (i) Units or other equity interests in the LLC or a
corporate successor thereto (including other classes, groups or series thereof
having such relative rights, powers, and duties as may from time to time be
established by the Board, including rights, powers, and/or duties senior to
existing classes, groups and series of Units or other equity interests in the
LLC), (ii) obligations, evidences of indebtedness, or other debt securities or
interests convertible or exchangeable into Units or other equity interests in
the LLC or a corporate successor thereto, and (iii) warrants, options, or other
rights to purchase or otherwise acquire Units or other equity interests in the
LLC or a corporate successor thereto.
 
“Equity Value” as of a particular date means the Base Value as of such date less
the aggregate amount of Indebtedness of the LLC and its Subsidiaries as of such
date.
 
“Event of Withdrawal” means the death, retirement, resignation, expulsion,
bankruptcy or dissolution of a Unitholder or the occurrence of any other event
that terminates the continued membership of a Unitholder in the LLC.
 
“Excluded Unitholder” has the meaning set forth in Section 3.4.
 
 
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“Excluded Unitholder Lender” has the meaning set forth in Section 3.8(b).
 
“Executive Manager” has the meaning set forth in Section 5.2(a)(iii).
 
“Exempt Transfers” has the meaning set forth in Section 10.1.
 
“Exercise Notice” has the meaning set forth in Section 6.8.
 
“Fair Market Value” means, as of any date, with respect to any property, the
price at which such property is likely to be sold in an arm’s length transaction
between a willing and able buyer and a willing and able seller, neither of which
is an Affiliate of the other or under any compulsion to enter into such
transaction, based on the then prevailing market conditions, taking into account
all attendent circumstances.
 
“FCC” means the Federal Communications Commission.
 
“Fiscal Quarter” means each calendar quarter ending March 31, June 30,
September 30 and December 31.
 
“Fiscal Year” has the meaning set forth in Section 8.2.
 
“Format Competitor” has the meaning set forth in Schedule C.
 
“Fund X/B Manager” has the meaning set forth in Section 5.2(a)(i).
 
“Fund X/C Manager” has the meaning set forth in Section 5.2(a)(ii).
 
“Governmental Entity” means the United States of America or any other nation,
any state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
government or any agency or department or subdivision of any governmental
authority, including the United States federal government or any state or local
government.
 
“GTCR” means GTCR LLC, a Delaware limited liability company.
 
“GTCR II” means GTCR Golder Rauner II, L.L.C., a Delaware limited liability
company.
 
“GTCR Fund X/B” has the meaning set forth in the Preamble hereto.
 
“GTCR Fund X/C” has the meaning set forth in the Preamble hereto.
 
“GTCR Merlin” has the meaning set forth in the Recitals.
 
“Indebtedness” of a particular Person as of a particular date, means (without
duplication) all (i) liabilities of such Person and its Subsidiaries for
borrowed money, (ii) indebtedness of such Person and its Subsidiaries evidenced
by notes, bonds, debentures or similar instruments, (iii) obligations of such
Person or any of its Subsidiaries for the deferred purchase price of goods or
services (other than trade payables or accruals in the Ordinary Course
 
 
                                     - 8 -
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of Business), (iv) obligations of such Person or any of its Subsidiaries under
capital leases, (v) obligations, contingent or otherwise, under bankers
acceptance, letters of credit or similar facilities, (vi) any indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to acquired property, (vii) the principal amount of any mandatorily
redeemable share capital of such Person or any of its Subsidiaries to the extent
any such redemption has not been made as and when required, (viii) break fees or
other breakage costs in respect of any outstanding derivatives contract,
including any interest rate or currency swap or hedge agreement,
(ix) obligations of such Person or any of its Subsidiaries in the nature of
Guarantees of the obligations described in clauses (i) through (viii) above of
any other Person, or any obligation of another Person secured by a lien on the
assets or property of such Person, and (x) accrued interest, fees and other
expenses, including prepayment penalties, premiums and other breakage fees, owed
with respect to any of the obligations described in clauses (i) through (ix)
above, in each case determined on a consolidated basis. For the avoidance of
doubt, Indebtedness of the LLC shall not include the Class A Units, Class B
Units or any other LLC Interest.
 
“Independent Third Party” means any Person who is not a party hereto or an
Affiliate of a party hereto, does not qualify as a Permitted Transferee and who,
immediately prior to the contemplated transaction, does not own in excess of 5%
of the LLC’s outstanding Class A Units, Class B Units or Residual Units (a “5%
Owner”), who is not controlling, controlled by or under common control with any
such 5% Owner and who is not the spouse or descendant of any such 5% Owner or a
trust for the benefit of any such 5% Owner and/or any such other Persons.
 
“Initial Contributors” has the meaning set forth in the Recitals.
 
“Investor Equity” means (i) the Class A Units and Residual Units purchased by
the Investors pursuant to the Purchase Agreement or any other Equity Agreement
and any other Equity Securities issued to or acquired by the Investors (whether
then held by the Investors or any of their respective Transferees, other than an
employee or former employee of the LLC and/or any of its Subsidiaries) and
(ii) any securities issued directly or indirectly with respect to the foregoing
securities by way of a Unit split, Unit dividend, or other division of
securities, or in connection with a combination of securities, recapitalization,
merger, consolidation or other reorganization. As to any particular securities
constituting Investor Equity, such securities shall cease to be Investor Equity
when they have been (A) effectively registered under the Securities Act and
Securities Exchange Act and disposed of in accordance with the registration
statement covering them, (B) distributed to the public pursuant to Rule 144
under the Securities Act (or similar provision then in force) (C) redeemed or
repurchased by the LLC or any of its Subsidiaries or any designee thereof or (D)
Transferred to any Person who has not agreed to be bound by this Agreement as an
Investor.
 
“Investor Manager” has the meaning set forth in Section 5.2(a)(ii).
 
“Investor Votes” has the meaning set forth in Section 5.3(a).
 
“Investors” means, collectively, GTCR Merlin, and any other investment fund
managed by GTCR or GTCR II or any successor thereto that purchases Units and
becomes an Additional Unitholder pursuant to Section 11.2.
 
 
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“Insulated Unitholder” has the meaning set forth in Section 6.9.
 
“Liens” means any mortgage, pledge, security interest, encumbrance, lien, or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof), any sale of receivables with recourse
against the LLC, any Subsidiary or any Affiliate thereof, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code or any similar statute other than to reflect ownership by a third party of
property leased to the LLC, any Subsidiary or any Affiliate under a lease which
is not in the nature of a conditional sale or title retention agreement, or any
subordination arrangement in favor of another Person (other than any
subordination arising in the ordinary course of business).
 
“LLC” means Merlin Media, LLC, a Delaware limited liability company.
 
“LLC Interest” means the interest of a Unitholder in Profits, Losses, and
Distributions.
 
“LMA Newco” means LMA Merlin Media, LLC, a Delaware limited liability company.
 
“Losses” means items of LLC loss and deduction determined according to
Section 3.5.
 
“Majority Holders” means, at any particular time, the holders of a majority of
the outstanding Class C Units.
 
“Manager” means a current member of the Board, who, for purposes of the Delaware
Act, will be deemed a “manager” (as defined in the Delaware Act) but will be
subject to the rights, obligations, limitations and duties set forth in this
Agreement.
 
“Management Incentive Unit” means a Class D Unit issued pursuant to Section 3.9.
 
“Management Unitholder” means any holder of Management Incentive Units.
 
“Marketable Securities” means equity securities of a Person that are listed on
the New York Stock Exchange or quoted on the Nasdaq Stock Market and are freely
tradeable under the Securities Act by the recipient thereof.
 
“Market Value” shall mean, as of any date, in the case of Marketable Securities,
the average of the last reported or quoted sales prices for the 20 consecutive
trading days ended immediately preceding the date in question of a unit of such
security on the New York Stock Exchange or Nasdaq Stock Market, as applicable.
 
“Material Default” has the meaning set forth in Section 6.8(d).
 
“Minimum Gain” means the partnership minimum gain determined pursuant to
Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).
 
 
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“Mr. Homel” has the meaning set forth in the Recitals.
 
“Net Loss” means, with respect to a Taxable Year, the excess, if any, of Losses
for such Taxable Year over Profits for such Taxable Year (excluding Losses and
Profits specially allocated pursuant to Sections 4.3 and 4.4).
 
“Net Profit” means, with respect to a Taxable Year, the excess, if any, of
Profits for such Taxable Year over Losses for such Taxable Year (excluding
Profits and Losses specially allocated pursuant to Sections 4.3 and 4.4).
 
“Note” has the meaning set forth in Section 6.7(b)(viii).
 
“Notice” has the meaning set forth in Section 9.4(a).
 
“Offer Notice” has the meaning set forth in Section 10.11(a).
 
“Offered Units” has the meaning set forth in Section 10.11.
 
“Officer” means a person designated as an officer of the LLC to whom authority
and duties have been delegated pursuant to Section 5.6, subject to any
resolution of the Board appointing such person as an officer or relating to such
appointment.
 
“Other Business” has the meaning set forth in Section 6.5.
 
“Other Unitholders” has the meaning set forth in Section 10.2(a).
 
“Ownership Threshold” shall be considered satisfied by the Contributors at any
time that the Contributors and their Permitted Transferees collectively hold at
least the greater of (x) one-half of the Class C Units originally issued to the
Contributors on the “Closing Date” (as defined in the Contribution Agreement),
subject to appropriate adjustments to reflect any Unit splits, reverse Unit
splits, Unit dividends, or other divisions or combinations of securities,
whether through recapitalization, merger, consolidation or otherwise effecting
following the Closing Date and (y) 10% of the outstanding Class C Units).
 
“Participating Member” means each Commitment Member that makes in full a Capital
Contribution required to be made by such Commitment Member pursuant to Section
3.3(a)(i).
 
“Participation Notice” has the meaning set forth in Section 3.4.
 
“Participation Threshold” has the meaning set forth in Section 3.9.
 
“Permitted Transferee” means, as to any particular Person, (a) in the case of
any individual, (i) any member of such individual Person’s immediate family,
which shall include spouse, siblings, children and grandchildren (in each case
whether natural or adopted) (herein, a “Family Member”), (ii) any trust,
corporation, partnership or limited liability company all of the beneficial
interests in which shall be held by such Person and/or one or more of
such Person’s Family Members, (but, in each case, only for so long as such
Transferee remains a Permitted
 
 
                                     - 11 -
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Transferee of such Person) and (b) with respect to the Contributors, their
respective Affiliates; provided that all of the equity interests of each such
Affiliate are owned directly or indirectly by ECC or an ECC Permitted Holder.
 
“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, any other business entity, or a Governmental
Entity.
 
“Pro Rata Basis” means, as determined with respect to any particular expense,
liability or obligation incurred (or amount of proceeds withheld) in connection
with any Transfer of Equity Securities pursuant to Section 10.2 or any Approved
Sale, with respect to each Unitholder participating in such Transfer or Approved
Sale, the amount such Unitholder’s proceeds would be reduced as a percentage of
the aggregate reduction in proceeds to all such participating Unitholders
assuming the Total Equity Value Proceeds implied by such Transfer or Approved
Sale were being distributed to all Units held by such participating Unitholders
in accordance with Section 4.1(a) in connection with such Transfer or Approved
Sale and as if such expense, liability or obligation were incurred and satisfied
(or such amount of proceeds were withheld) prior to such distribution out of
proceeds of such Transfer or Approved Sale.
 
“Pro Rata Share” means, with respect to each Unit, the proportionate amount such
Unit would receive if an amount equal to the Total Equity Value were distributed
to all Unitholders in accordance with Section 4.1(a), and with respect to each
Unitholder, such Unitholder’s pro rata share of the Total Equity Value Proceeds
represented by all Units owned by such Unitholder. If cash, Marketable
Securities or other consideration are being allocated for purposes of a Sale of
the LLC, then each holder shall receive the same relative portion of each form
of consideration with respect to its Units.
 
“Proceeding” has the meaning set forth in Section 7.2.
 
“Professional Services Agreement” means that certain Professional Services
Agreement, dated as of the date hereof, between GTCR Management X LP, a Delaware
limited partnership, and the LLC.
 
“Profits” means items of LLC income and gain determined according to
Section 3.5.
 
“Proportional Share” has the meaning set forth in Section 3.4.
 
“Protected Programming” has the meaning set forth on Schedule C.
 
“Public Offering” means any sale of the common equity securities of the LLC (or
a corporate successor thereto) pursuant to an effective registration statement
under the Securities Act filed with the Securities and Exchange Commission;
provided that any issuance of common equity securities or rights to acquire
common equity securities to employees of the LLC or its Subsidiaries as part of
an incentive or compensation plan shall not be considered or deemed to be a
Public Offering.
 
 
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“Purchase Agreement” means that certain Purchase Agreement, dated as of June 20,
2011, by and among GTCR Merlin, Mr. Homel, Emmis Radio License, LLC, a Delaware
limited liability company and the Contributors, as amended or modified from time
to time in accordance with its terms.
 
“Qualified Public Offering” means any Public Offering with anticipated proceeds
equal to or greater than One Hundred Million Dollars ($100,000,000) in which the
common equity of the LLC or the entity formed pursuant to Section 15.7(b) to
undertake a Public Offering is listed on the NASDAQ Stock Market or the New York
Stock Exchange.
 
“Qualified Purchaser” has the meaning set forth in Section 10.11.
 
“Qualified Unitholders” means the Investors, the Contributors and Mr. Homel.
 
“Registration Agreement” means the Registration Rights Agreement, dated as of
the date hereof, by and among the LLC, the Investors (or one or more Affiliates
thereof), the Contributors (or one or more Affiliates thereof) and the other
Persons party thereto from time to time, as the same may be amended or modified
from time to time in accordance with its terms.
 
“Regulatory Allocations” has the meaning set forth in Section 4.3(f).
 
“Rejection Date” has the meaning set forth in Section 10.11(c).
 
“Residual Units” means the Class C Units and/or the Class D Units.
 
“Rightholders” has the meaning set forth in Section 10.11.
 
“ROFO Sellers” has the meaning set forth in Section 10.11.
 
“Sale Notice” has the meaning set forth in Section 10.2(a).
 
“Sale of the LLC” means any transaction or series of transactions pursuant to
which any Person other than an Investor acquires, directly or indirectly
(whether by purchase, merger, consolidation, reorganization, combination, or
otherwise) (i) a majority of the outstanding equity securities of the LLC or
(ii) all or substantially all of the business and assets of the LLC’s and its
Subsidiaries’ determined on a consolidated basis; provided that all of
Unitholders receive their Pro Rata Share of the total proceeds of such
transaction(s) (treating all cash, the Market Value of any Marketable Securities
and any other consideration received by Unitholders as being the Fair Market
Value of the business and assets of the LLC); and provided that a Qualified
Public Offering shall not constitute a Sale of the LLC.
 
“Securities Act” means the Securities Act of 1933, as amended, and applicable
rules and regulations thereunder, and any successor to such statute, rules, or
regulations. Any reference herein to a specific section, rule, or regulation of
the Securities Act shall be deemed to include any corresponding provisions of
future law.
 
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended,
and applicable rules and regulations thereunder, and any successor to such
statute,
 
 
                                     - 13 -
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rules, or regulations. Any reference herein to a specific section, rule, or
regulation of the Securities Exchange Act shall be deemed to include any
corresponding provisions of future law.
 
“Senior Management Agreement” means any agreement for the sale of Equity
Securities by the LLC to any employees or other service providers of the LLC or
any of its Subsidiaries (other than any Person appointed as a Manager by any
Unitholder), including any securities purchase agreement, senior management
agreement or any other agreement that is designated as a “Senior Management
Agreement” and approved by the Board, entered into from time to time by the LLC
or any Subsidiary of the LLC and an executive or other service provider of the
LLC or any Subsidiary of the LLC, as the same may be amended or modified from
time to time pursuant in accordance with its terms.
 
“Specified Person” has the meaning set forth in Section 6.5.
 
“Subject Unitholders” has the meaning set forth in Section 15.2(b)(ii).
 
“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association, or business entity of which (i) if
a corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers, or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association, or other business entity (other than a corporation), a
majority of partnership or other similar ownership interest thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association, or other business entity
(other than a corporation) if such Person or Persons shall be allocated a
majority of limited liability company, partnership, association, or other
business entity gains or losses or shall be or control any managing director,
general partner, manager, or similar governing body of such limited liability
company, partnership, association, or other business entity. For purposes
hereof, references to a “Subsidiary” of any Person shall be given effect only at
such times that such Person has one or more Subsidiaries, and, unless otherwise
indicated, the term “Subsidiary” refers to a Subsidiary of the LLC.
 
“Substituted Unitholder” means a Person that is admitted to the LLC as a
Unitholder pursuant to Section 11.1.
 
“Tax” means any federal, state, local, or foreign income, gross receipts,
franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs, duties, real
property, personal property, capital stock, social security, unemployment,
disability, payroll, license, employee, or other withholding, or other tax, of
any kind whatsoever, including any interest, penalties, or additions to tax or
additional amounts in respect of the foregoing.
 
“Tax Distribution” has the meaning set forth in Section 4.1(b).
 
 
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“Tax Matters Partner” has the meaning set forth in Section 9.3.
 
“Taxable Year” means the taxable period required by Section 706 of the Code and
the Treasury Regulations promulgated thereunder.
 
“Total Equity Value Proceeds” means the aggregate proceeds which would be
received by the Unitholders in respect of the Units if: (i) the entire business
and assets of the LLC were sold for cash at their Fair Market Value; (ii) the
LLC satisfied and paid in full all of its obligations and liabilities (including
all Taxes, costs and expenses incurred in connection with such transaction and
any amounts reserved by the Board with respect to any contingent or other
liabilities) other than liabilities to creditors who hold evidence of
indebtedness for borrowed money, the payment of which is already reflected in
the calculation of the Fair Market Value, and assuming that all of the
convertible debt and other convertible securities were repaid or converted
(whichever yields cash to the holders of such convertible securities as required
by the terms of such convertible securities) and all options and warrants to
acquire Units (whether or not currently exercisable) that have an exercise price
below the Fair Market Value of such Units were exercised and the exercise price
therefor paid; and (iii) such net sale proceeds were then distributed in
accordance with Section 4.1(a).
 
“Transaction Documents” means this Agreement, the Registration Agreement, the
Contribution Agreement, or any other Related Documents (as defined in the
Purchase Agreement), each Equity Agreement, and any side agreements related to
any of the foregoing, and all other agreements, instruments, certificates and
other documents entered into or delivered by any Unitholder in connection with
the transactions contemplated hereby or thereby.
 
“Transfer” means any direct or indirect sale, transfer, assignment, pledge,
mortgage, exchange, hypothecation, grant of a security interest or other direct
or indirect disposition or encumbrance of a Unit (or any interest therein)
(whether with or without consideration, whether voluntarily or involuntarily and
including by operation of law) or the acts thereof or an offer or agreement to
do the foregoing, but explicitly excluding conversions or exchanges of one class
of Unit to or for another class of Unit; provided that, with respect to any
Contributor, the sale of equity securities (other than to an ECC Permitted
Holder) or a change of control of any entity that holds equity securities,
directly or through one or more other entities, of such Contributor (other than
a sale of equity securities or change of control of ECC or any direct or
indirect sale of all or substantially all of the assets or the radio
broadcasting business of ECC and its subsidiaries) shall be deemed a Transfer of
any Units held by such Contributor; provided, further, that, notwithstanding the
foregoing, in no event shall the following be deemed a Transfer of any Units
held by such Contributor: (x) any sale of equity securities or change of control
of ECC or any direct or indirect sale of all or substantially all of the assets
or the radio broadcasting business of ECC and its subsidiaries, (y) sale of
equity securities to any ECC Permitted Holder or any change of control of any
ECC Permitted Holder so long as the resulting controlling party remains another
ECC Permitted Holder, at least a majority of the equity capital of such selling
ECC Permitted Holder is held directly or indirectly by one or more ECC Permitted
Holders and such sale would not cause the LLC to be in violation of, or unable
to certify compliance with, any applicable Law, including any foreign ownership
rule or regulation of the FCC, or create any material risk of loss of any FCC
license or other material approval or permit or (z) any pledge of or security
interests in its Units granted by the Contributors to its lenders or
administrative agent
 
 
                                     - 15 -
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pursuant to that certain Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of November 2, 2006, as amended, by and among Emmis
Operating Company, an Indiana corporation, Emmis Communications Corporation, an
Indiana corporation and the lenders party thereto, or any other lender or agent
in connection with a bona fide financing for Indebtedness incurred by such
Contributor or its Affiliates. The terms “Transferee,” “Transferred,” and other
forms of the word “Transfer” shall have correlative meanings.
 
“Transferring Unitholder” has the meaning set forth in Section 10.2(a).
 
“Treasury Regulations” means the income tax regulations promulgated under the
Code and effective as of the date hereof. Such term shall, at the election of
the Board in its sole discretion, be deemed to include any future amendments to
such regulations and any corresponding provisions of succeeding regulations
(whether or not such amendments and corresponding provisions are mandatory or
discretionary).
 
“Unit” means an LLC Interest of a Unitholder in the LLC representing a
fractional part of the LLC Interests of all Unitholders and shall include Class
A Units, Class B Units, Class C Units and Class D Units; provided that any
class, group or series of Units issued shall have the relative rights, powers
and duties set forth in this Agreement, and the LLC Interest represented by such
class, group or series of Units shall be determined in accordance with such
relative rights, powers and duties set forth in this Agreement.
 
“Unitholder” means any owner of one or more Units as reflected on the LLC’s
books and records, and any person admitted to the LLC as an Additional
Unitholder or Substituted Unitholder, but in each case only for so long as such
person is shown on the LLC’s books and records as the owner of one or more
Units. For purposes of the Delaware Act, the Unitholders shall constitute the
“members” (as defined in the Delaware Act) of the LLC.
 
“Unitholder Lender” has the meaning set forth in Section 3.8(b).
 
“Unpaid Commitment Amount” means, with respect to any Commitment Member at any
time after the Effective Date, an amount equal to: (i) such Commitment Member’s
Capital Commitment, minus (ii) the cumulative Capital Contributions of such
Commitment Member contributed pursuant to Section 3.3(a) after the Effective
Date and prior to the time of such determination.
 
“Valuation Procedures” means, with respect to any determination of Fair Market
Value required hereunder, that such determination is made by the Board (or, if
pursuant to Section 13.2, the liquidator) and, except in the case of a
determination for purposes of Section 3.9(b) Management Incentive Units or any
determination of Book Value, notice of such determination is provided to
Unitholders; provided that if a Dispute Notice is delivered in accordance with
Section 14.2, then such determination shall be made by the Independent Appraiser
in accordance with Section 14.2 hereof.
 
 
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                                   ARTICLE II
 
                             ORGANIZATIONAL MATTERS
 
Section 2.1      Formation. The LLC has been organized as a Delaware limited
liability company by the filing of the Certificate with the Secretary of State
of the State of Delaware under and pursuant to the Delaware Act and shall be
continued in accordance with this Agreement. The rights and liabilities of the
Unitholders shall be determined pursuant to the Delaware Act and this
Agreement. To the extent that the rights or obligations of any Unitholders are
different by reason of any provision of this Agreement than they would be in the
absence of such provision, this Agreement, to the extent not prohibited by the
Delaware Act, shall control over the Delaware Act; provided that,
notwithstanding the foregoing, Section 18-210 of the Delaware Act (entitled
“Contractual Appraisal Rights”) shall not apply or be incorporated into this
Agreement and the Unitholders hereby waive any rights under such section of the
Delaware Act. This Agreement shall constitute the “limited liability company
agreement” (as defined in the Delaware Act) of the LLC for purposes of the
Delaware Act.
 
Section 2.2      The Certificate, Etc. The Certificate was filed with the
Secretary of State of the State of Delaware on June 17, 2011. The Unitholders
hereby agree to execute, file and record all such other certificates and
documents, including amendments to the Certificate, and to do such other acts as
may be appropriate to comply with all requirements for the formation,
continuation and operation of a limited liability company, the ownership of
property, and the conduct of business under the laws of the State of Delaware
and any other jurisdiction in which the LLC may own property or conduct
business.
 
Section 2.3       Name. The name of the LLC shall be “Merlin Media, LLC”. The
Board in its sole discretion may change the name of the LLC at any time and from
time to time. Notification of any such change shall be given to all
Unitholders. The LLC’s business may be conducted under its name and/or any other
name or names deemed advisable by the Board.
 
Section 2.4      Purpose. The purpose and business of the LLC shall be to engage
in any lawful act or activity which may be conducted by a limited liability
company formed pursuant to the Delaware Act and to engage in all activities
necessary or incidental to the foregoing. Notwithstanding anything herein to the
contrary, nothing set forth herein shall be construed as authorizing the LLC to
possess any purpose or power, or to do any act or thing, forbidden by law to a
limited liability company organized under the laws of the State of Delaware.
 
(a)      Board of Managers. Subject to the provisions of this Agreement, the
Contribution Agreement, the Purchase Agreement, the Registration Agreement and
the other agreements contemplated hereby and thereby, (i) the LLC may, with the
approval of the Board, enter into and perform under any and all documents,
agreements and instruments, all without any further act, vote or approval of any
Unitholder, and (ii) the Board may authorize any Person (including any
Unitholder or Officer) to enter into and perform under any document, agreement
or instrument on behalf of the LLC.
 
(b)      Merger. Subject to the provisions of this Agreement, the Contribution
Agreement, the Purchase Agreement and the other agreements contemplated hereby
and thereby,
 
 
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 the LLC may, with the approval of the Board and the Majority Holders and
without the need for any further act, vote or approval of any Unitholder or
class, group or series of Unitholders, except as otherwise specified herein,
merge with, or consolidate into, another limited liability company (organized
under the laws of Delaware or any other state), a corporation (organized under
the laws of Delaware or any other state) or “other business entity” (as defined
in Section 18-209(a) of the Delaware Act), regardless of whether the LLC or such
other entity is the survivor. If a merger is used as a means of effecting the
intent of Section 15.7 of this Agreement, then the provisions of that Section
shall apply to such transaction.
 
Section 2.5      Powers of the LLC. Subject to the provisions of this Agreement,
the Contribution Agreement, the Purchase Agreement and the other agreements
contemplated hereby and thereby, the LLC shall have the power and authority to
take any and all actions necessary, appropriate, proper, advisable, convenient
or incidental to or for the furtherance of the purposes set forth in
Section 2.4, to the extent the same may be lawfully exercised by limited
liability companies under the Delaware Act.
 
Section 2.6      Foreign Qualification. Prior to the LLC’s conducting business
in any jurisdiction other than the State of Delaware, the LLC shall comply, to
the extent procedures are available and those matters are reasonably within the
control of the LLC, with all requirements necessary to qualify the LLC as a
foreign limited liability company in that jurisdiction. At the request of the
Board or any Officer, each Unitholder shall execute, acknowledge, swear to and
deliver all certificates and other instruments conforming with this Agreement
that are necessary or appropriate to qualify, continue and terminate the LLC as
a foreign limited liability company in all such jurisdictions in which the LLC
may conduct business.
 
Section 2.7      Principal Office; Registered Office. The principal office of
the LLC shall be located at such place as the Board may from time to time
designate, and all business and activities of the LLC shall be deemed to have
occurred at its principal office. The LLC may maintain offices at such other
place or places as the Board deems advisable. Notification of any such change
shall be given to all Unitholders. The registered office of the LLC required by
the Delaware Act to be maintained in the State of Delaware shall be the office
of the initial registered agent named in the Certificate or such other office
(which need not be a place of business of the LLC) as the Board may designate
from time to time in the manner provided by law. The registered agent of the LLC
in the State of Delaware shall be the initial registered agent named in the
Certificate or such other Person or Persons as the Board may designate from time
to time in the manner provided by law.
 
Section 2.8      Term. The term of the LLC commenced upon the filing of the
Certificate in accordance with the Delaware Act and shall continue in existence
until termination and dissolution thereof in accordance with the provisions of
Article XIII.
 
Section 2.9      No State-Law Partnership. The Unitholders intend that the LLC
not be a partnership (including a limited partnership) or joint venture and that
no Unitholder be a partner or joint venturer of any other Unitholder by virtue
of this Agreement (except for tax purposes as set forth in the next succeeding
sentence of this Section 2.9), and neither this Agreement nor any other document
entered into by the LLC or any Unitholder relating to the subject matter hereof
shall be construed to suggest otherwise. The Unitholders intend that the
 
 
                                     - 18 -
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LLC shall be treated as a partnership for federal and, to the extent applicable,
state and local income and franchise tax purposes and that each Unitholder and
the LLC shall file all tax returns and shall otherwise take all tax and
financial reporting positions in a manner consistent with such treatment, in
each case except as required by applicable law and except as provided in the
next succeeding sentence of this Section 2.9 or in Section 15.7(b). Without the
consent of the Board, the LLC shall not make an election to be treated as a
corporation for federal income tax purposes pursuant to Treasury Regulation
Section 301.7701-3 (or any successor regulation or provision) or, to the extent
applicable, state or local income or franchise tax purposes.
 
                                  ARTICLE III
 
                            UNITS; CAPITAL ACCOUNTS
 
Section 3.1      Units.
 
(a)      Authorized Units. Subject to Section 3.3 and Section 6.7, the total
Units which the LLC has authority to issue shall be determined by the Board from
time to time (which determination the Board shall cause to be reflected as a
supplement to Schedule A attached hereto) and shall initially consist of
87,055,202 Class A Units, 28,733,333 Class B Units, 5,104,367 Class C Units and
1,045,473 Class D Units. The LLC may issue fractional Units.
 
(b)      Capital Contributions; Schedule of Unitholders. Each Person named on
Schedule A has made Capital Contributions to the LLC as set forth on Schedule A
in exchange for the Units specified thereon. Any reference in this Agreement to
Schedule A shall be deemed to be a reference to Schedule A as amended,
supplemented and in effect from time to time. Each Person listed on Schedule A,
upon (i) such Person’s execution of this Agreement or a counterpart signature
page hereto and (ii) receipt (or deemed receipt) by the LLC of such Person’s
Capital Contribution as set forth on Schedule A, is hereby admitted to the LLC
as a Unitholder of the LLC. The Board may in its discretion issue certificates
to the Unitholders representing the Units held by each Unitholder. The Board may
in its discretion provide any Unitholder (other than the Investors and the
Contributors) with Schedule A in summary form and may omit the amount of Capital
Contributions made by and Units held by each other Unitholder.
 
(c)      Adjustments to Residual Units. If the LLC at any time subdivides (by
any Unit split or otherwise) the Residual Units into a greater number of Units,
such subdivision shall divide each class of Residual Units proportionately, and
if the LLC at any time combines (by reverse Unit split or otherwise) the
Residual Units into a smaller number of Units, such combination shall combine
each class of Residual Units proportionately.
 
(d)      Representations and Warranties of Unitholders. Each Unitholder hereby
represents and warrants to the LLC and acknowledges that: (i) such Unitholder
has knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of an investment in the LLC and making an
informed investment decision with respect thereto; (ii) such Unitholder has
reviewed and evaluated all information necessary to assess the merits and risks
of his, her or its investment in the LLC and has had answered to such
Unitholder’s satisfaction any and all questions regarding such information;
(iii) such Unitholder is able to bear the economic and financial risk of an
investment in the LLC for an indefinite period of time;
 
 
                                     - 19 -
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(iv) such Unitholder is acquiring interests in the LLC for investment only and
not with a view to, or for resale in connection with, any distribution to the
public or public offering thereof; (v) the interests in the LLC have not been
registered under the securities laws of any jurisdiction and cannot be disposed
of unless they are subsequently registered and/or qualified under applicable
securities laws and the provisions of this Agreement have been complied with;
(vi) such Unitholder is an “accredited investor” within the meaning of Rule 501
of Regulation D of the Securities and Exchange Commission (unless otherwise
disclosed in writing to the LLC); (vii) to the extent applicable, the execution,
delivery and performance of this Agreement have been duly authorized by such
Unitholder and do not require such Unitholder to obtain any consent or approval
that has not been obtained and do not contravene or result in a default under
any provision of any law or regulation applicable to such Unitholder or other
governing documents or any agreement or instrument to which such Unitholder is a
party or by which such Unitholder is bound; (viii) the determination of such
Unitholder to purchase interests in the LLC has been made by such Unitholder
independent of any other Unitholder and independent of any statements or
opinions as to the advisability of such purchase, which may have been made or
given by any other Unitholder or by any agent or employee of any other
Unitholder; (ix) no other Unitholder has acted as an agent of such Unitholder in
connection with making its investment hereunder and that no other Unitholder
shall be acting as an agent of such Unitholder in connection with monitoring its
investment hereunder; (x) the interests in the LLC were not offered to such
Unitholder by means of general solicitation or general advertising; (xi) this
Agreement is valid, binding and enforceable against such Unitholder in
accordance with its terms; and (xii) such Unitholder is a resident of, or if not
a natural person has its principal place of business in, the state listed for
notices to such Unitholder on Schedule A.
 
(e)      No Liability of Unitholders.
 
(i)      No Liability. Except as otherwise required by applicable law and as
expressly set forth in this Agreement, no Unitholder shall have any personal
liability whatsoever in such Unitholder’s capacity as a Unitholder, whether to
the LLC, to any of the other Unitholders, to the creditors of the LLC or to any
other third party, for the debts, liabilities, commitments or any other
obligations of the LLC or for any losses of the LLC. Each Unitholder shall be
liable only to make such Unitholder’s Capital Contribution to the LLC and the
other payments provided expressly herein.
 
(ii)      Distribution. In accordance with the Delaware Act and the laws of the
State of Delaware, a member of a limited liability company may, under certain
circumstances, be required to return amounts previously distributed to such
member. It is the intent of the Unitholders that no Distribution to any
Unitholder pursuant to Article IV shall be deemed a return of money or other
property paid or distributed in violation of the Delaware Act. The payment of
any such money or distribution of any such property to a Unitholder shall be
deemed to be a compromise within the meaning of the Delaware Act, and the
Unitholder receiving any such money or property shall not be required to return
to any Person any such money or property. However, if any court of competent
jurisdiction holds that, notwithstanding the provisions of this Agreement, any
Unitholder is obligated to make any such payment, such obligation shall be the
obligation of such Unitholder and not of any other Unitholder.
 
Section 3.2      Unitholder Meetings.
 
 
 
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(a)      Quorum; Voting of Class C Unitholders. A quorum shall be present at a
meeting of Class C Unitholders if the Majority Holders are represented at the
meeting in person or by proxy. With respect to any matter, other than a matter
for which the affirmative vote of the holders of a specified portion of Class C
Unitholders entitled to vote is required by the non-waivable provisions of the
Delaware Act (if any) or by this Agreement, the affirmative vote of the Majority
Holders at a meeting of Class C Unitholders at which a quorum is present shall
be the act of the Class C Unitholders.
 
(b)      Place. All meetings of the Class C Unitholders shall be held at the
principal place of business of the LLC or at such other place within or without
the State of Delaware as shall be specified or fixed in the notices or waivers
of notice thereof; provided that any or all Class C Unitholders may participate
in any such meeting by means of conference telephone or similar communications
equipment pursuant to Section 3.2(j).
 
(c)      Adjournment. Notwithstanding the other provisions of the Certificate or
this Agreement, the chairman of the meeting or the Majority Holders shall have
the power to adjourn such meeting from time to time, without any notice other
than announcement at the meeting of the time and place of the holding of the
adjourned meeting. If such meeting is adjourned by the chairman of the meeting,
such time and place shall be determined by a vote of the Majority Holders. Upon
the resumption of such adjourned meeting, any business may be transacted that
might have been transacted at the meeting as originally called.
 
(d)      Meetings. Meetings of the Class C Unitholders for any proper purpose or
purposes may be called at any time by the Board or the Majority Holders. If not
otherwise stated in or fixed in accordance with the remaining provisions hereof,
the record date for determining Class C Unitholders entitled to call a meeting
is the date any Class C Unitholder first signs the notice of that meeting. Only
business within the purpose or purposes described in the notice (or waiver
thereof) required by this Agreement may be conducted at a meeting of the Class C
Unitholders.
 
(e)      Notice. A written or printed notice stating the place, day and hour of
the meeting and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered to each Class C Unitholder
entitled to vote at such meeting not less than five nor more than 30 days before
the date of the meeting by or at the direction of the Board or the Class C
Unitholders calling the meeting.
 
(f)      Written Consent in Lieu of Meeting. Any action required or permitted to
be taken at any meeting of Class C Unitholders may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by all Class C
Unitholders. Every written consent shall bear the date of signature of each
Class C Unitholder who signs the consent. No written consent shall be effective
to take the action that is the subject to the consent unless, within 60 days
after the date of the earliest dated consent delivered to the LLC in the manner
required by this Section 3.2(f), a consent or consents signed by all other Class
C Unitholders are delivered to the LLC by delivery to its registered office, its
principal place of business or the chief executive officer in each case, in
accordance with Section 15.15. Any such delivery to the LLC’s principal place of
business shall be addressed to the chief executive officer. A telegram, telex,
cablegram, electronic mail or
 
 
                                     - 21 -
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similar transmission by a Class C Unitholder, or a photographic, photostatic,
facsimile or similar reproduction of a writing signed by a Class C Unitholder,
shall be regarded as signed by the Class C Unitholder for purposes of this
Section 3.2(f).
 
(g)      Record Date. Unless otherwise determined by the Board, the date on
which notice of a meeting of Class C Unitholders is given, the first date on
which a signed written consent is delivered to the LLC setting forth the action
taken or proposed to be taken, or the date on which the resolution of the Board
declaring a Distribution is adopted, as the case may be, shall be the record
date for the determination of the Class C Unitholders entitled to notice of or
to vote at such meeting (including any adjournment thereof) or to consent to
such action in writing without a meeting or the Class C Unitholders or to
receive such Distribution, as the case may be.
 
(h)      Proxies. A Class C Unitholder may vote either in person or by proxy
executed in writing by the Class C Unitholder. An email or similar transmission
by the Class C Unitholder, or a photographic, photostatic, facsimile,
electronically transmitted copy in portable document format (pdf) or similar
reproduction of a writing executed by the Class C Unitholder shall (if stated
thereon) be treated as a proxy executed in writing for purposes of this
Section 3.2(h). Proxies for use at any meeting of Class C Unitholders or in
connection with the taking of any action by written consent pursuant to
Section 3.2(f) shall be filed with the Secretary of the LLC (or such other
Person designated by the Board), before or at the time of the meeting or
execution of the written consent, as the case may be. The Secretary of the LLC
(or such other Person designated by the Board) shall decide all questions
concerning the validity of the proxies and the acceptance or rejection of
votes. No proxy shall be valid after 11 months from the date of its execution
unless otherwise provided in the proxy. A proxy shall be revocable unless the
proxy form conspicuously states that the proxy is irrevocable and the proxy is
coupled with an interest. Should a proxy designate two or more Persons to act as
proxies with respect to any issue, the LLC shall not be required to recognize
such proxy with respect to such issue if such proxy does not specify how the
Class C Units that are the subject of such proxy are to be voted with respect to
such issue.
 
(i)      Voting Rights. Except as expressly provided in this Agreement or by
non-waivable provisions of the Delaware Act, the Unitholders shall not have any
voting or consent rights under this Agreement or the Delaware Act with respect
to the Units held by such Person, including with respect to any matters to be
decided by the LLC or any other governance matters described in this Agreement,
and each holder of Units, by its acceptance thereof, expressly waives any
consent or voting rights (except to the extent expressly provided in this
Agreement) or other rights to participate in the governance of the LLC, whether
such rights may be provided under the Delaware Act or otherwise. Except as
expressly provided in this Agreement or non-waivable provisions of the Delaware
Act, the holders of Class C Units shall be entitled to vote on all matters
submitted to the Class C Unitholders for a vote with each Class C Unit entitled
to one vote. In any matter submitted to the holders of Class A Units for a vote
(if any), the holders of Class A Units shall be entitled to vote as a single
class and each holder of Class A Units shall be entitled to one vote for each
dollar of Class A Unreturned Capital with respect to such holder’s Class A
Units. In any matter submitted to the holders of Class B Units for a vote (if
any), the holders of Class B Units shall be entitled to vote as a single class
and each holder of Class B Units shall be entitled to one vote for each dollar
of Class B Unreturned
 
 
                                     - 22 -
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Capital with respect to such holder’s Class B Units. In any matter submitted to
the holders of Class D Units for a vote (if any), the holders of Class D Units
shall be entitled to vote on all matters submitted to the holders of Class D
Units for a vote with each Class D Unit entitled to one vote,
 
(j)      Telephone Conference. Unitholders may participate in and hold a meeting
by means of conference telephone or similar communications equipment by means of
which all Persons participating in the meeting can hear each other, and
participation in such meeting shall constitute attendance and presence in person
at such meeting, except where a Person participates in the meeting for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
 
(k)      Vote of Other Classes. In the event any non-waivable provisions of the
Delaware Act require a vote of the holders of Class A Units, Class B Units or
Class D Units, the provisions of Section 3.2(a) through (j) shall apply mutatis
mutandis as if such Class A Units, Class B Units or Class D Units were Class C
Units and the holders of a majority of the outstanding votes of each such class
were the Majority Holders.
 
Section 3.3      Issuance of Additional Units and Interests.
 
(a)      Additional Capital Contributions After the Effective Date.
 
(i)      The Investors, the Contributors and Mr. Homel shall make additional
Capital Contributions (and receive additional Class A Units with respect
thereto), in each case in cash in proportion to their respective Commitment
Ratios in amounts as shall be determined by the Board for investments and other
expenditures which have been approved by the Board in its sole discretion.
 
(ii)      None of the Investors, Mr. Homel or the Contributors (collectively,
the “Commitment Members”, and each, a “Commitment Member”) shall be obligated to
make any Capital Contribution that exceeds its Unpaid Commitment Amount or is
not in proportion to its Commitment Ratio. Notwithstanding anything in this
Agreement to the contrary, the LLC shall not issue any Equity Securities other
than pursuant to this Section 3.3(a), Section 3.3(c) or Section 3.9 until such
time as the Unpaid Commitment Amount of each Commitment Member equals zero.
 
(iii)      Each time a properly authorized request for additional Capital
Contributions is to be made, the LLC shall give each Commitment Member a written
notice specifying (A) the aggregate amount of the Capital Contribution requested
and such Commitment Member’s share thereof, and (B) wire instructions for the
account into which such Capital Contribution shall be made (a “Call
Notice”). The Commitment Members will make any Capital Contributions required
hereunder, within seven (7) days of the date that a Call Notice is given by the
LLC, subject to any extension necessary to pursue any required regulatory
approvals or clearances.
 
(iv)      In the event that any Commitment Member fails to pay any portion of
its additional Capital Contribution within the time period specified in
Section 3.3(a)(iii) (each such amount not paid is referred to herein as the
“Non-Participation Amount”), such
 
 
                                     - 23 -
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Commitment Member (a “Non-Participating Member”) shall be deemed to have elected
not to make the full Capital Contribution set forth in the Call Notice, and the
following provisions shall apply (which, except as provided in Section 3.5,
shall be the sole and exclusive remedy for such Commitment Members’ failure to
pay any Capital Contributions contemplated by this Section 3.3).
 
(A)      The Unpaid Commitment Amount of such Non-Participating Member shall
automatically and without any further action on the part of any party hereto be
adjusted so that such Unpaid Commitment Amount equals the product of (i) such
Non-Participating Member’s Deemed Liquidation Percentage (after giving effect to
such Capital Contribution) multiplied by (ii) an amount determined by dividing
(x) the sum of the Unpaid Commitment Amounts of the Participating Members by (y)
the sum of the Deemed Liquidation Percentages of the Participating Members
(after giving effect to such Capital Contribution, including any increase in
such Capital Contribution pursuant to Section 3.3(a)(iv)(B)).
 
(B)      The Board shall promptly give written notice of the non-participation
to the Commitment Members (each such notice shall be referred to herein as a
“Non-Participation Notice”). Upon receipt of a Non-Participation Notice, each
Commitment Member (other than a Non-Participating Member) shall have the right
for ten (10) days following receipt of such Non-Participation Notice to elect to
make additional Capital Contributions up to its Commitment Ratio (after giving
effect to the reduction of the Unpaid Commitment Amount of such
Non-Participating Member pursuant to Section 3.3(a)(iv)(A)) of the aggregate
amount of the Non-Participation Amount. The procedure set forth in this Section
3.3(a)(iv)(B) may be repeated until the Participating Members have elected to
make Capital Commitments pursuant to such provisions equal to the
Non-Participation Amount. The Participating Members shall make such Capital
Contributions on a date reasonably agreed to by such Participating Members and
the LLC, subject to any extension necessary to pursue any required regulatory
approvals or clearances.
 
(C)      The Class C Units of each Participating Member and Non-Participating
Member shall be adjusted by the LLC so that such Participating Member or
Non-Participating Member shall hold a number of Class C Units equal to its
Deemed Liquidation Percentage of the outstanding Class C Units. In the event the
LLC issues certificates representing Class C Units, each Non-Participating
Member shall deliver to the LLC, free and clear of all liens and encumbrances,
certificates or other documents, duly endorsed for transfer, and the LLC shall
issue to each Participating Member certificates to give effect to the
foregoing. The rights and obligations set forth in this Section 3.3(a)(iv)(C)
shall continue in full force and effect so long as any Commitment Member has any
Unpaid Commitment Amount, and may be enforced with respect to a Capital
Contribution pursuant to this Section 3.3(a) against a Person that was a
Non-Participating Member in a prior Capital Contribution pursuant to this
Section 3.3(a) and whose Unpaid Commitment Amount was reduced pursuant to
Section 3.3(a)(iv)(A) in connection with such prior Capital Contribution.
 
(b)      Additional Securities. Subject to compliance with the provisions of
this Agreement, the Contribution Agreement, the Purchase Agreement and the
Registration Agreement, the Board shall have the right at any time and from time
to time after the aggregate Capital Commitments of the Investors equal zero to
cause the LLC to create and/or issue Units or
 
 
                                     - 24 -
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other Equity Securities (including other classes, groups or series thereof
having such relative rights, powers, and/or obligations as may from time to time
be established by the Board, including rights, powers, and/or obligations
different from, senior to or more favorable than existing classes, groups and
series of Units or other Equity Securities). Notwithstanding anything herein to
the contrary, the Board shall have the power to amend this Agreement and/or
Schedule A to reflect such additional issuances and dilution and to make any
such other amendments as it deems necessary or desirable to reflect such
additional issuances made in accordance with this Agreement. Any Person who
acquires Units or other Equity Securities may be admitted to the LLC as a
Unitholder pursuant to the terms of Section 11.2. If any Person acquires Units
or other Equity Securities or is admitted to the LLC as an additional
Unitholder, Schedule A shall be amended to reflect such additional issuance
and/or Unitholder, as the case may be. It is understood that no Unitholder shall
have any right to consent or object to any terms (including valuation) of any
issuance of Units or other Equity Securities, so long as (i) the LLC has
complied with Section 3.4 and Section 6.7 in connection with such issuance and
(ii) except in the event the proceeds of such issuance are to be used to satisfy
or prevent any breach or default under any Indebtedness of the LLC or a
Bankruptcy Event of the LLC, any such issuance to the Investors includes a
purchase price for such Units not less than the price implied by the Equity
Value at the time of issuance.
 
(c)      Additional Capital Contributions in Connection with the Effective Date.
 
(i)           In the event the Contributors have not elected to make a Capital
Contribution as described in Section 1.3 of the Purchase Agreement, then at the
Effective Date the Investors shall make Capital Contributions in an aggregate
amount equal to the difference, if any, between $20,000,000 and the amount of
capital contributions that have been made prior to the Effective Date to LMA
Newco, such that, after giving effect to the issuance, purchase and sale of
Units under the Purchase Agreement and Related Documents, the ownership of Units
shall be as set forth on Schedule 3.3(c) in the table in the column entitled
“Alternative 1” which corresponds to the option elected by the Sellers in the
Election Notice delivered pursuant to Section 1.6 of the Contribution Agreement.
 
(ii)           In the event the Contributors have elected to make a Capital
Contribution as described in Section 1.3 of the Purchase Agreement, then each of
the Investors, Mr. Homel, the Contributors and the other Unitholders shall at
the Effective Date be issued Units such that, after giving effect to the
issuance, purchase and sale of Units under the Purchase Agreement and Related
Documents, the ownership of Units is as set forth on Schedule 3.3(c) in the
table in the column entitled “Commitment Fulfilled” which corresponds to the
option elected by the Sellers in the Election Notice delivered pursuant to
Section 1.6 of the Contribution Agreement (the “Applicable Table”). At the
Effective Date, the Investors and Mr. Homel shall make such Capital
Contributions or be returned such capital by the LLC such that, after giving
effect to the capital contributions to LMA Newco they have made prior to the
Effective Date and their acquisition of Units under the Purchase Agreement,
their aggregate Capital Contributions and purchase price paid under the Purchase
Agreement, and Class A Unreturned Capital, corresponds to the number and type of
Units set forth on the Applicable Table assuming a contribution and price of
$1.00 per Unit. In the event that capital is so returned, such return shall not
be treated as a Distribution subject to Section 4.1. Within sixty (60) days
after the Effective
 
 
                                     - 25 -
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Date, the Contributors shall make such Capital Contributions such that their
aggregate Capital Contributions, together with the issuance of Units under the
Contribution Agreement and sales of Units under the Purchase Agreement, and
Class B Unreturned Capital, correspond to the number and type of Units set forth
on the Applicable Table assuming a contribution and price of $1.00 per Unit.
 
(iii)           In the event the Contributors have elected to make a Capital
Contribution as described in Section 1.3 of the Purchase Agreement, but fail to
make in full the Capital Contributions required by Section 3.3(c)(ii) within
sixty (60) days after the Effective Date, the Investors shall make Capital
Contributions to the LLC in an aggregate amount equal to the amount to be funded
by the Contributors under Section 3.3(c)(ii), assuming a contribution and
purchase price of $1.00 per Unit, and the LLC shall cause the Units held by all
Unitholders to be increased or decreased, as applicable and the Class A
Unreturned Capital increased, such that the number of Units and the Class A
Unreturned Capital and Class B Unreturned Capital of each Unitholder, as
applicable, shall equal those set forth in the table under the column entitled
“Commitment Not Fulfilled” on Schedule 3.3(c) which corresponds to the
Applicable Table and Schedule A shall be revised accordingly.
 
Section 3.4      Preemptive Rights.
 
(a)      Except for issuances of:
 
(i)      Units set forth on Schedule A as of the date hereof (including, for the
avoidance of doubt, any Capital Contributions made after the date hereof in
respect of Class A Units or Class B Units set forth on Schedule A hereto);
 
(ii)      Class A Units, Class B Units and/or Class C Units issued pursuant to
Section 3.3(a) or Section 3.3(c) hereof, or Class D Units issued pursuant to
Section 3.9;
 
(iii)      Equity Securities upon exercise, conversion or exchange of debt
securities or Equity Securities which were issued in compliance with (including
if such issuances were exempt from) this Section 3.4 (to the extent such
issuance is effected pursuant to the original terms of any such debt securities
or other Equity Securities);
 
(iv)      Equity Securities to effectuate a transaction in accordance with
Section 15.7 of this Agreement;
 
(v)      Equity Securities in connection with a restructuring (other than such
securities received in return for new capital invested in connection with such
restructuring); or
 
(vi)      Units in connection with any Unit split or any subdivision of Units,
Unit dividend or similar recapitalization of the LLC or any of its Subsidiaries;
 
if the LLC proposes to issue or sell any Equity Securities, the LLC shall offer
to each Qualified Unitholder holding Class C Units (other than Excluded
Unitholders) by written notice from the LLC (describing in reasonable detail the
Equity Securities being offered, the purchase price
 
 
                                     - 26 -
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thereof, the payment terms and such Qualified Unitholder’s Proportional Share)
(the “Participation Notice”) the right to purchase a portion of such Equity
Securities being purchased equal to the quotient obtained by dividing (1) the
aggregate number of Class C Units held by such Qualified Unitholder, by (2) the
aggregate number of Class C Units held by all Qualified Unitholders other than
Excluded Unitholders (such Qualified Unitholder’s “Proportional Share”);
provided that no Qualified Unitholder who either (x) would be entitled to
purchase less than $10,000 of such Equity Securities after determination of such
holder’s Proportional Share, (y) is not an “accredited investor” as such term is
defined in the Securities Act and the rules and regulations promulgated
thereunder or (z) at any time has breached or is in breach of any
noncompetition, nonsolicitation, confidentiality or similar restrictive
provisions to which such Qualified Unitholder is bound pursuant to a Senior
Management Agreement, other Equity Agreement or other agreement between such
Qualified Unitholder and the LLC or any of its Subsidiaries (any such Qualified
Unitholder, an “Excluded Unitholder”) shall have any rights under this
Section 3.4. Each such Qualified Unitholder shall be entitled to purchase all or
any portion of its Proportional Share of such offered Equity Securities at the
same price and on the same terms as such Equity Securities are to be offered to
any other Person; provided that if all Persons entitled to purchase or receive
any class, group or series of such Equity Securities are required to also
purchase other securities of the LLC, the Qualified Unitholders exercising their
rights pursuant to this Section 3.4 shall also be required to purchase the same
strip of securities (on the same terms and conditions) that such other Persons
are required to purchase. If all of the Equity Securities offered to the
Qualified Unitholders hereunder are not fully subscribed by such Qualified
Unitholders, the unsubscribed Equity Securities shall be allocated to the
Qualified Unitholders purchasing their full allotment and indicating in their
notice to the LLC pursuant to Section 3.4(b) a desire to acquire any Equity
Securities that are available because of under-subscription.
 
(b)      In order to exercise its purchase rights hereunder, a Qualified
Unitholder must within fifteen (15) calendar days of the date of the
Participation Notice deliver a written notice to the LLC irrevocably exercising
its rights to purchase such offered Equity Securities hereunder (including the
extent, subject to any maximum dollar amounts or number of Equity Securities
specified therein, to which such Qualified Unitholder elects to acquire any
Equity Securities in excess of its Proportional Share available if the Equity
Securities offered to Qualified Unitholders are not fully subscribed by such
Qualified Unitholders based on their respective Proportional Shares).
 
(c)      Upon the expiration of the offering periods described above, the LLC
shall be entitled to sell such Equity Securities which such Qualified
Unitholders have not elected to purchase during the 180 calendar days following
such expiration at a price and on payment terms not less than the price and
payment terms offered to the Qualified Unitholders, and on other terms and
conditions not more favorable in the aggregate than such other terms and
conditions were offered to the Qualified Unitholders. Any securities offered or
sold by the LLC after such 180 calendar day period must be reoffered to such
Qualified Unitholders pursuant to the terms of this Section 3.4.
 
(d)      So long as the Qualified Unitholders are not disadvantaged (e.g.,
unable to participate in a Distribution or payment in respect of Equity
Securities to be acquired hereunder), in lieu of offering any Equity Securities
to the Qualified Unitholders at the time such Equity
 
 
                                     - 27 -
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Securities are offered to other Persons, the LLC may comply with the provisions
of this Section 3.4 by making an offer to sell to the Qualified Unitholders
(other than Excluded Unitholders) their Proportional Share of such securities
promptly after a sale to such other Persons is effected. In such event, for all
purposes of this Section 3.4, each Qualified Unitholder’s Proportional Share
shall be determined taking into consideration the actual number of Equity
Securities sold to any other Person so as to achieve the same economic effect as
if such offer would have been made prior to such sale.
 
(e)      The rights of the Unitholders under this Section 3.4 shall terminate
upon the consummation of the first to occur of (i) a Qualified Public Offering
or (ii) an Approved Sale.
 
Section 3.5      Capital Accounts.
 
(a)      The LLC shall maintain a separate Capital Account for each Unitholder
according to the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). The
Capital Account of each Unitholder as of the Effective Date is set forth on
Schedule A. For this purpose, the LLC may (in the discretion of the Board), upon
the occurrence of the events specified in Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), increase or decrease the Capital Accounts in
accordance with the rules of such regulation and Treasury Regulation
Section 1.704-1(b)(2)(iv)(g) to reflect a revaluation of LLC property.
 
(b)      For purposes of computing the amount of any item of LLC income, gain,
loss, or deduction to be allocated pursuant to Article IV and to be reflected in
the Capital Accounts, the determination, recognition, and classification of any
such item shall be the same as its determination, recognition, and
classification for federal income tax purposes (including any method of
depreciation, cost recovery, or amortization used for this purpose); provided
that:
 
(i)      The computation of all items of income, gain, loss, and deduction shall
include those items described in Code Section 705(a)(1)(B) or Code Section
705(a)(2)(B) and Treasury Regulation Section 1.704-1(b)(2)(iv)(i), without
regard to the fact that such items are not includable in gross income or are not
deductible for federal income tax purposes.
 
(ii)      If the Book Value of any LLC property is adjusted pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(e) or (f), the amount of such adjustment
shall be taken into account as gain or loss from the disposition of such
property.
 
(iii)      Items of income, gain, loss, or deduction attributable to the
disposition of LLC property having a Book Value that differs from its adjusted
basis for tax purposes shall be computed by reference to the Book Value of such
property.
 
(iv)      Items of depreciation, amortization, and other cost recovery
deductions with respect to LLC property having a Book Value that differs from
its adjusted basis for tax purposes shall be computed by reference to the
property’s Book Value in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(g), provided, however, that if such difference is being
eliminated by use of the method set forth in Treasury Regulation Section
1.704-3(d), such cost recovery deductions shall be determined pursuant to the
rules prescribed by Treasury Regulation Section 1.704-3(d)(2).
 
 
                                     - 28 -
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(v)      To the extent an adjustment to the adjusted tax basis of any LLC asset
pursuant to Code Sections 732(d), 734(b) or 743(b) is required, pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis).
 
(vi)      The amounts of the items of LLC income, gain, loss or deduction
available to be specially allocated pursuant to Section 4.3 shall be determined
by applying rules analogous to those set forth in this Section 3.5(b).
 
(c)      Notwithstanding the foregoing, in the event there is a
Non-Participation Amount, the Capital Account balance of each Participating
Member shall be adjusted to equal an amount which would cause the Adjusted
Capital Account balance of such Participating Member with respect to its
Residual Units (expressed as a fraction of the total aggregate Adjusted Capital
Account balances of all Unitholders with respect to their Residual Units) to
equal a fraction the numerator of which is the number of such Participating
Member’s Residual Units and the denominator of which is the aggregate number of
all outstanding Residual Units.
 
(d)      For the avoidance of doubt, if the LLC is compensated for a Loss or
Expense, or otherwise indemnified, by any Unitholder pursuant to the
Contribution Agreement or the Purchase Agreement, such payment shall not be
treated as a Capital Contribution and such Unitholder’s Capital Account balance
will not be affected by such payment.
 
Section 3.6      Negative Capital Accounts. No Unitholder shall be required to
pay to any other Unitholder or the LLC any deficit or negative balance which may
exist from time to time in such Unitholder’s Capital Account (including upon and
after dissolution of the LLC).
 
Section 3.7      No Withdrawal. No Person shall be entitled to withdraw any part
of such Person’s Capital Contributions or Capital Account or to receive any
Distribution from the LLC, except as expressly provided herein or in the other
agreements referred to herein.
 
Section 3.8      Loans From Unitholders; Co-Investment Rights.
 
(a)      Loans by Unitholders to the LLC shall not be considered Capital
Contributions. If any Unitholder shall loan funds to the LLC, the making of such
loans shall not result in any increase in the amount of the Capital Account of
such Unitholder. The amount of any such loans shall be a debt of the LLC to such
Unitholder and shall be payable or collectible in accordance with the terms and
conditions upon which such loans are made.
 
(b)      Except with respect to the Note, if the LLC proposes to borrow funds
from any Unitholder (such loan, a “Debt Investment” and such Unitholder, the
“Unitholder Lender”), the LLC shall offer to each Qualified Unitholder holding
Class C Units (other than Excluded Unitholder Lenders) by written notice from
the LLC (describing in reasonable detail the proposed Debt Investment, the
aggregate principal amount thereof, the terms and conditions thereof and such
Qualified Unitholder’s Proportional Share) (the “Co-Investment Notice”) the
right to co-invest with such Unitholder Lender in such Debt Investment in an
amount equal to such Qualified Unitholder’s Proportional Share (being the
quotient obtained by dividing (1) the
 
 
                                     - 29 -
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aggregate number of Class C Units held by such Qualified Unitholder, by (2) the
aggregate number of Class C Units held by all Qualified Unitholders other than
Excluded Unitholders); provided that no Qualified Unitholder who either (x)
would be entitled to invest less than $10,000 in such Debt Investment after
determination of such holder’s Proportional Share or (y) at any time has
breached or is in breach of any noncompetition, nonsolicitation, confidentiality
or similar restrictive provisions to which such Qualified Unitholder is bound
pursuant to a Senior Management Agreement, other Equity Agreement or other
agreement between such Qualified Unitholder and the LLC or any of its
Subsidiaries (any such Qualified Unitholder, an “Excluded Unitholder Lender”)
shall have any rights under this Section 3.8(b). Each such Qualified Unitholder
shall be entitled to invest in all or any portion of its Proportional Share of
such offered Debt Investment at the same price and on the same terms as such
Debt Investment is to be offered to any other Person; provided that if all
Persons entitled to invest in such Debt Investment are required to also purchase
other securities of the LLC, the Qualified Unitholders exercising their rights
pursuant to this Section 3.8(b) shall also be required to purchase the same
strip of securities (on the same terms and conditions) that such other Persons
are required to purchase. If the entire aggregate principal amount of such Debt
Investment offered to the Qualified Unitholders hereunder is not fully
subscribed by such Qualified Unitholders, the unsubscribed amount of such Debt
Investment shall be allocated to the Qualified Unitholders investing the full
amount of their Proportional Share and indicating in their notice to the LLC
pursuant to Section 3.8(c) a desire to invest additional amounts in such Debt
Investment that are available because of under subscription.
 
(c)      In order to exercise its investment rights hereunder, a Qualified
Unitholder must within fifteen (15) calendar days of the date of the
Co-Investment Notice deliver a written notice to the LLC irrevocably exercising
its rights to invest in such Debt Investment hereunder (including the extent,
subject to any maximum dollar amounts specified therein, to which such Qualified
Unitholder elects to invest in such Debt Investment in excess of its
Proportional Share available if the Debt Investment offered to Qualified
Unitholders are not fully subscribed by such Qualified Unitholders based on
their respective Proportional Shares).
 
(d)      Upon the expiration of the offering periods described above, the
Unitholder Lender shall be entitled to invest in the portion of such Debt
Investment which such Qualified Unitholders have not elected to subscribe for
during the 180 calendar days following such expiration at a price and in an
aggregate principal amount not less than the price and aggregate principal
amount offered to the Qualified Unitholders, and on other terms and conditions
not more favorable in the aggregate than such other terms and conditions were
offered to the Qualified Unitholders. Any proposed Debt Investment to be made
after such 180 calendar day period must be reoffered to such Qualified
Unitholders pursuant to the terms of clauses (b), (c) and (d) of this Section
3.8.
 
(e)      So long as the Qualified Unitholders are not disadvantaged, in lieu of
offering any Debt Investment to the Qualified Unitholders at the time such Debt
Investment is offered to a Unitholder Lender, the LLC may comply with the
provisions of this Section 3.8 by making an offer to the Qualified Unitholders
(other than Excluded Unitholders) to invest in their Proportional Share of such
Debt Investment promptly after the completion of the investment by such
Unitholder Lender. In such event, for all purposes of this Section 3.8, each
Qualified Unitholder’s Proportional Share shall be determined taking into
consideration the actual amount
 
 
                                     - 30 -
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of the Debt Investment sold to any other Unitholder Lender so as to achieve the
same economic effect as if such offer would have been made prior to the
completion of such investment.
 
(f)      The rights of the Unitholders under clauses (b), (c) and (d) of this
Section 3.8 shall terminate upon the consummation of the first to occur of (i) a
Qualified Public Offering or (ii) an Approved Sale.
 
Section 3.9      Management Incentive Units.
 
(a)      Management Incentive Units Generally. The LLC may issue authorized but
unissued Management Incentive Units to existing or new employees, officers,
directors, consultants or other service providers of the LLC or any of its
Subsidiaries pursuant to a Senior Management Agreement or other Equity Agreement
approved by the Board, which agreement shall contain such provisions as the
Board shall determine; provided, however, that Management Incentive Units may
not be issued to any Investor, any Contributor, any Affiliate of any Investor or
Contributor or any of their respective employees, officers or directors (other
than employees or officers of the LLC and its Subsidiaries). In the Board’s
discretion, the terms of any Management Incentive Units issued pursuant to this
Section 3.9 may include limitations on the Distribution entitlements of such
Units imposed in order to cause such Units to qualify as “profits interests”
within the meaning of Internal Revenue Service Revenue Procedures 93-27 and
2001-43, Internal Revenue Service Notice 2005-43, or any future Internal Revenue
Service guidance, including, as set forth in Section 3.9(b) below, by
establishing a threshold amount (a “Participation Threshold”) of cumulative
Distributions that must be made with respect to all or one or more specified
classes, groups or series of Units outstanding immediately prior to the issuance
of Management Incentive Units before such Management Incentive Units may receive
any Distributions. Except as otherwise provided by the Board, any Unitholder who
receives Management Incentive Units that are subject to a substantial risk of
forfeiture within the meaning of Section 83 of the Code shall make a timely and
effective election under Section 83(b) of the Code with respect to such
Units. The LLC and all Unitholders will (A) treat such Units as outstanding for
tax purposes, (B) treat such Unitholder as a member of the LLC for income tax
purposes with respect to such Units and (C) file all tax returns and reports
consistently with the foregoing (except for non-U.S. federal returns or reports
for which a different tax treatment is required by applicable law), and neither
the LLC nor any of its Unitholders will deduct any amount (as wages,
compensation or otherwise) for the fair market value of such Units for income
tax purposes. This Section 3.9, together with the Senior Management Agreements
or other Equity Agreements pursuant to which the Management Incentive Units are
issued, are intended to qualify as a compensatory benefit plan within the
meaning of Rule 701 of the Securities Act (and any similarly applicable state
“blue-sky” securities laws) and the issuance of Management Incentive Units
pursuant hereto is intended to qualify for the exemption from registration under
the Securities Act provided by Rule 701 (and any similarly applicable state
“blue-sky” securities laws); provided that the foregoing shall not restrict or
limit the LLC’s ability to issue any Management Incentive Units pursuant to any
other exemption from registration under the Securities Act available to the
LLC. The LLC may make the Management Incentive Units and any issuance thereof
and any applicable Equity Agreement subject to the terms and conditions of any
other equity incentive plan consistent with the terms of this Agreement, as may
have been adopted by the LLC.
 
 
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(b)      Participation Thresholds. On the date of each grant of Management
Incentive Units to a Unitholder who is, or as a result of such grant becomes, a
holder of Management Incentive Units pursuant to a grant made under a Senior
Management Agreement or other Equity Agreement, the Board shall establish an
initial Participation Threshold with respect to each Management Incentive Unit
granted on such date. Unless otherwise determined by the Board, the
Participation Threshold with respect to a Management Incentive Unit shall be
equal to or greater than the Total Equity Value Proceeds (determined by using
the Valuation Procedures) on the date of grant of such Management Incentive
Unit. The Board may designate a series number for each subset of Management
Incentive Units consisting of Management Incentive Units having the same
Participation Threshold, which Participation Threshold differs from the
Participation Thresholds of all Management Incentive Units not included in such
subset. In the event of any Capital Contribution by any Unitholder made after
the date a Management Incentive Unit is issued, unless the Board determines
otherwise, the Participation Threshold (if any) of such Incentive Unit shall be
increased by the amount of such Capital Contribution.
 
The Participation Thresholds applicable to outstanding Management Incentive
Units shall be set forth on Schedule A, and Schedule A shall be amended from
time to time as necessary to reflect any adjustments to the Participation
Thresholds of outstanding Management Incentive Units required pursuant to this
Section 3.9.
 
(c)      Notwithstanding anything in this Section 3.9 to the contrary, the Board
shall have the power to amend the provisions of this Section 3.9 and
Section 4.1(a) to achieve the economic results intended by this Agreement,
including that any Management Incentive Units that are granted to executives of
the LLC or any of its Subsidiaries in exchange for services provided or to be
provided to the LLC or any Subsidiary thereof are intended to be profits
interests when issued for United States federal income tax purposes.
 
                                   ARTICLE IV
 
                         DISTRIBUTIONS AND ALLOCATIONS
 
Section 4.1      Distributions.
 
(a)      Distributions Generally. Except as otherwise set forth in this
Section 4.1, and subject to the provisions of Section 18-607 of the Delaware
Act, the Board may in its sole discretion make Distributions at any time and
from time to time. All Distributions (other than Tax Distributions) shall be
made only in the following order and priority (and with respect to each time
Distributions are being made, no Distributions shall be made pursuant to any
subsequent clause of the following until all Distributions under prior clauses
have been fully paid):
 
(i)      First, to the Unitholders holding Class A Units, an amount equal to the
aggregate Class A Unpaid Yield on such Unitholders’ outstanding Class A Units as
of the time of such Distribution (distributed among such Unitholders based on
the proportion that each Unitholder’s share of Class A Unpaid Yield bears to the
aggregate Class A Unpaid Yield) until the entire amount of the Class A Unpaid
Yield on the outstanding Class A Units as of the time of such Distribution has
been paid in full.
 
 
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(ii)      Second, to the Unitholders holding Class A Units, an amount equal to
the aggregate Class A Unreturned Capital with respect to such Unitholders’ Class
A Units held as of the time of such Distribution (distributed among such
Unitholders based on the proportion that each such Unitholder’s share of Class A
Unreturned Capital bears to the aggregate amount of Class A Unreturned Capital),
until the entire amount of Class A Unreturned Capital with respect to the
outstanding Class A Units as of the time of such Distribution has been paid in
full.
 
(iii)      Third, to the Unitholders holding Class B Units, an amount equal to
the aggregate Class B Unpaid Yield on such Unitholders’ outstanding Class B
Units as of the time of such Distribution (distributed among such Unitholders
based on the proportion that each Unitholder’s share of Class B Unpaid Yield
bears to the aggregate Class B Unpaid Yield) until the entire amount of the
Class B Unpaid Yield on the outstanding Class B Units as of the time of such
Distribution has been paid in full.
 
(iv)      Fourth, to the Unitholders holding Class B Units, an amount equal to
the aggregate Class B Unreturned Capital with respect to such Unitholders’ Class
B Units held as of the time of such Distribution (distributed among such
Unitholders based on the proportion that each such Unitholder’s share of Class B
Unreturned Capital bears to the aggregate amount of Class B Unreturned Capital),
until the entire amount of Class B Unreturned Capital with respect to the
outstanding Class B Units as of the time of such Distribution has been paid in
full.
 
(v)      (A)      Thereafter, subject to the provisos in clauses (B) and (C)
immediately below, to the Unitholders holding Class C Units or Class D Units,
distributed among such Unitholders in proportion to the number of Class C Units
and Class D Units held by each such Unitholder;
 
(B)      provided, however, that notwithstanding anything to the contrary in
Section 4.1(a)(v)(A), no Distribution shall be made to a Unitholder pursuant to
Section 4.1(a)(v)(A) or Section 13.2 with respect to any Management Incentive
Unit with a Participation Threshold until the aggregate Distributions made to
all Unitholders pursuant to Section 4.1(a) and Section 13.2 from the date of
issuance of such Management Incentive Unit is equal to or greater than such
Participation Threshold of such Management Incentive Unit. An amount equal to
the amount of any reduction in Distributions to a Management Incentive
Unitholder resulting from the application of the foregoing sentence (i.e., the
incremental amount that such Management Incentive Unitholder would have
otherwise been distributed) shall be distributed, in accordance with Section
4.1(a)(v)(A) to the other Unitholders in respect of (i) Class C Units, (ii)
Class D Units with no Participation Threshold and (iii) Management Incentive
Units with Participation Thresholds lower than that of the Management Incentive
Unit(s) with respect to which the Management Incentive Unitholder’s
Distributions were reduced and to the extent such Management Incentive
Unitholder would otherwise be entitled to participate in such Distribution
pursuant to the application of the first sentence of this Section 4.1(a)(v)(B).
Distributions pursuant to Section 4.1(a)(v)(A) shall be made after taking into
account and applying the principles set forth in this Section 4.1(a)(v)(B);
provided, that the Board may determine to amend this Agreement in accordance
with Section 15.2 in order to make such changes to this Agreement as the Board
determines in its reasonable discretion is necessary to reflect the principles
set forth in this Section 4.1(a)(v)(B); and
 
 
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(C)      provided further, however, that, notwithstanding the foregoing, the
portion of any Distribution that would otherwise be made with respect to any
unvested Residual Unit pursuant to this Section 4.1(a)(v) (x) except as provided
in clause (y) below, shall be held in reserve by the LLC or one of its
Subsidiaries (the “Reserve Amount”) (but treated as Distributed for purposes of
this Agreement) until such unvested Residual Unit either (I) vests, in which
case the Reserve Amount attributable to such Unit shall be distributed to the
Unitholder holding such Unit, or (II) is cancelled, forfeited, repurchased or
otherwise acquired by the LLC or any of its Subsidiaries, in which case the
Reserve Amount attributable to such Unit shall be distributed among the
Unitholders holding Residual Units pursuant to this Section 4.1(a)(v) (but
subject to the holdback terms of this proviso with respect to any unvested
Residual Units) and (y) in connection with any liquidating distribution shall
equal the lesser of the amount the holder of such Residual Unit would have
received if such Residual Unit were vested and the holder’s Capital Contribution
with respect to such unvested Residual Unit.
 
(b)      Tax Distributions. Notwithstanding any other provision herein to the
contrary, so long as the LLC is treated as a partnership for federal income tax
purposes, the LLC shall use its reasonable best efforts to distribute to the
Unitholders within 15 days after the end of each Fiscal Quarter of the LLC, to
the extent that funds are legally available therefor and would not impair the
liquidity of the LLC with respect to working capital, capital expenditures, debt
service, reserves, or otherwise and would not be prohibited under any credit
facility to which the LLC or any Subsidiary is a party, an aggregate amount of
cash (a “Tax Distribution”) in respect of such Fiscal Quarter which in the good
faith estimation of the Board equals the product of (x) the aggregate amount of
all taxable income allocable to the Unitholders in respect of such Fiscal
Quarter (determined without regard to adjustments under Section 734(b), if
applicable) (provided that in no event shall such calculation include any
taxable income for any period prior to the effective date of this Agreement or
any tax liability relating thereto), multiplied by (y) the combined maximum U.S.
federal, state, and local income tax rate to be applied with respect to such
taxable income (calculated by using the highest maximum combined marginal U.S.
federal, state and local income tax rates (including self-employment and similar
taxes but not reduced by any deduction or credit allowable for state and local
taxes and not reflecting any reduced rate applicable to any special class of
income) to which any Unitholder may be subject) for such Fiscal Quarter (making
an appropriate adjustment for any rate changes that take place during such
period). Each Tax Distribution shall be distributed among the Unitholders on a
pro rata basis according to the allocation of the LLC’s taxable income for such
Fiscal Quarter (determined without regard to adjustments under Sections 704(c)
and 734(b), if applicable). The Board shall be entitled to adjust subsequent Tax
Distributions up or down to reflect any variation between its prior estimation
of quarterly Tax Distributions and the Tax Distributions that would have been
computed under this Section 4.1(b) based on subsequent information. In the event
that the funds legally available for any Tax Distribution to be made hereunder
are insufficient to pay the full amount of the Tax Distribution that would
otherwise be required under this Section 4.1(b), (i) the reduced amount of such
Tax Distribution shall be distributed to the Unitholders on a pro rata basis
(according to the amounts that would have been distributed to each Unitholder
pursuant to this Section 4.1(b) if legally available funds existed in a
sufficient amount to make such Distribution in full) and (ii) at any time
thereafter when additional funds of the LLC are legally available for
Distribution, such funds shall be immediately distributed to the Unitholders on
a pro rata basis (according to the amounts that would have been distributed to
each Unitholder pursuant to this Section 4.1(b) if legally available funds would
have existed in a sufficient
 
 
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amount to make such Tax Distribution in full). Each Tax Distribution pursuant to
this Section 4.1(b) shall reduce the amount of any other Distributions to such
Unitholder that would otherwise be made at the time of such Tax Distribution or
thereafter pursuant to Section 4.1(a) until such Tax Distributions have been
fully offset.
 
(c)      Persons Receiving Distributions. Each Distribution shall be made to the
Persons shown on the LLC’s books and records as Unitholders as of the date of
such Distribution; provided, however, that any transferor and transferee of
Units may mutually agree as to which of them should receive payment of any
Distribution under Section 4.1. In the event that restrictions on Transfer or
change in beneficial ownership of Units set forth herein have been breached, the
LLC may withhold Distributions in respect of the affected Units until such
breach has been cured.
 
(d)      On the Effective Date, the LLC shall distribute an aggregate of
$60,000,000 in cash to the Contributors (pro rata based on relative ownership of
Class B Units) in redemption of an aggregate of 60 million Class B Units issued
to them upon consummation of the transactions contemplated under the
Contribution Agreement (it being understood that the Units outstanding after
giving effect to such redemption shall be as set forth on Schedule A
hereto). For U.S. federal and applicable state income tax purposes, such
distribution of cash shall be treated pursuant to Treasury Regulation Section
1.707-3, as a sale by the Contributors to the LLC of an undivided interest in
each of the assets transferred by the Contributors to the LLC pursuant to the
Contribution Agreement.
 
Section 4.2      Allocations. Except as otherwise provided in Section 4.3, Net
Profit or Net Loss for any Taxable Year shall be allocated among the Unitholders
in such a manner that, as of the end of such Taxable Year, the Adjusted Capital
Account of each Unitholder is, as nearly as possible, equal (proportionately) to
the distributions that would be made to such Unitholder, determined as if the
LLC were to (i) liquidate the assets of the LLC for an amount equal to their
Book Value, and (ii) distribute the proceeds of liquidation pursuant to
Section 13.2 and satisfy all LLC liabilities (limited with respect to each
nonrecourse liability to the Book Value of the asset securing such liability)
(provided that, for purposes of such determination only, all outstanding
Management Incentive Units shall be deemed to be fully vested for purposes of
calculating the amount of such proceeds distributed to each Unitholder pursuant
to Section 13.2). Notwithstanding the foregoing, in any Taxable Year in which
the LLC makes a distribution pursuant to Section 4.1(a)(i) or Section
4.1(a)(iii), if the aggregate amount distributed pursuant to Section 4.1(a)(i)
or Section 4.1(a)(iii) for such Taxable Year and all prior Taxable Years exceeds
the aggregate Net Profit (and, if Section 13.2 is applicable to such Taxable
Year, Profit) that would, but for this sentence, be allocated to the Unitholders
holding Units other than Management Incentive Units for such Taxable Year and
all prior Taxable Years pursuant to this Section 4.2, then such excess shall be
treated as a guaranteed payment pursuant to Section 707(c) of the Code to the
Unitholders holding Units other than Management Incentive Units for such Taxable
Year.
 
Section 4.3      Special Allocations.
 
(a)      Losses attributable to partner nonrecourse debt (as defined in Treasury
Regulation Section 1.704-2(b)(4)) shall be allocated in the manner required by
Treasury
 
 
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Regulation Section 1.704-2(i). If there is a net decrease during a Taxable Year
in partner nonrecourse debt minimum gain (as defined in Treasury Regulation
Section 1.704-2(i)(3)), Profits for such Taxable Year (and, if necessary, for
subsequent Taxable Years) shall be allocated to the Unitholders in the amounts
and of such character as determined according to, and subject to the exceptions
contained in, Treasury Regulation Section 1.704-2(i)(4). This Section 4.3(a) is
intended to be a minimum gain chargeback provision that complies with the
requirements of Treasury Regulation Section 1.704-2(i)(4) and shall be
interpreted in a manner consistent therewith.
 
(b)      Nonrecourse deductions shall be allocated to the holders of Residual
Units (ratably among such Unitholders based upon the number of Residual Units
held by each such Unitholder). If there is a net decrease in Minimum Gain during
any Taxable Year, each Unitholder shall be allocated Profits for such Taxable
Year (and, if necessary, for subsequent Taxable Years) in the amounts and of
such character as determined according to, and subject to the exceptions
contained in, Treasury Regulation Section 1.704-2(f). This Section 4.3(b) is
intended to be a minimum gain chargeback provision that complies with the
requirements of Treasury Regulation Section 1.704-2(f), and shall be interpreted
in a manner consistent therewith.
 
(c)      If any Unitholder that unexpectedly receives an adjustment, allocation,
or distribution described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6) has an Adjusted Capital Account Deficit as
of the end of any Taxable Year, computed after the application of Sections
4.3(a) and 4.3(b) but before the application of any other provision of this
Article IV, then Profits for such Taxable Year shall be allocated to such
Unitholder in proportion to, and to the extent of, such Adjusted Capital Account
Deficit. This Section 4.3(c) is intended to be a qualified income offset
provision as described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted in a manner consistent therewith.
 
(d)      Profits and Losses shall be allocated in a manner consistent with the
manner that the adjustments to the Capital Accounts are required to be made
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m).
 
(e)      If the allocation of Net Loss (or items of loss or deduction) to a
Unitholder as provided in Section 4.2 hereof would create or increase an
Adjusted Capital Account Deficit, there shall be allocated to such Unitholder
only that amount of Net Loss (or items of loss or deduction) as will not create
or increase an Adjusted Capital Account Deficit. The Net Loss (or items of loss
or deduction) that would, absent the application of the preceding sentence,
otherwise be allocated to such Unitholder shall be allocated to the other
holders of Residual Units (ratably among such Unitholders based upon the number
of Residual Units held by each such Unitholder), subject to the limitations of
this Section 4.3(e).
 
(f)      The allocations set forth in Sections 4.3(a)-(e) (the “Regulatory
Allocations”) are intended to comply with certain requirements of Sections
1.704-1(b) and 1.704-2 of the Treasury Regulations. The Regulatory Allocations
may not be consistent with the manner in which the Unitholders intend to
allocate Profit and Loss of the LLC or make LLC distributions. Accordingly,
notwithstanding the other provisions of this Article IV, but subject to the
Regulatory Allocations, income, gain, deduction, and loss shall be reallocated
among the
 
 
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Unitholders so as to eliminate to the extent possible the effect of the
Regulatory Allocations and thereby cause the respective Capital Accounts of the
Unitholders to be in the amounts (or as close thereto as possible) they would
have been if Profit and Loss (and such other items of income, gain, deduction,
and loss) had been allocated without reference to the Regulatory Allocations. In
general, the Unitholders anticipate that this will be accomplished by specially
allocating other Profit and Loss (and such other items of income, gain,
deduction, and loss) among the Unitholders so that the net amount of the
Regulatory Allocations and such special allocations to each such Unitholder is
zero.
 
(g)      The Unitholders acknowledge that allocations analogous to those
described in Proposed Treasury Regulation Section 1.704-1(b)(4)(xii)(c) may
result from the allocations of Profits and Losses provided for in this
Agreement. For the avoidance of doubt, the LLC is entitled to make such
allocations and, once required by applicable final or temporary guidance,
allocations of Profits and Losses will be made in accordance with Proposed
Treasury Regulation 1.704-1(b)(4)(xii)(c) or any successor provision or
guidance.
 
Section 4.4      Tax Allocations.
 
(a)      The income, gains, losses, deductions, and credits of the LLC will be
allocated, for federal, state, and local income tax purposes, among the
Unitholders in accordance with the allocation of such income, gains, losses,
deductions, and credits among the Unitholders for computing their Capital
Accounts; except as otherwise provided in Sections 4.4(b) and 4.4(c) and except
that, if any such allocation is not permitted by the Code or other applicable
law, then the LLC’s subsequent income, gains, losses, deductions, and credits
will be allocated among the Unitholders so as to reflect as nearly as possible
the allocation set forth herein in computing their Capital Accounts.
 
(b)      Items of LLC taxable income, gain, loss, and deduction with respect to
any property contributed to the capital of the LLC shall be allocated among the
Unitholders in accordance with Code Section 704(c) so as to take account of any
variation between the adjusted basis of such property to the LLC for federal
income tax purposes and its Book Value using the method as determined by the
Investors, in their sole and absolute discretion.
 
(c)      If the Book Value of any LLC asset is adjusted pursuant to the
requirements of Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f),
subsequent allocations of items of taxable income, gain, loss, and deduction
with respect to such asset shall take account of any variation between the
adjusted basis of such asset for federal income tax purposes and its Book Value
in the same manner as under Code Section 704(c) using the method as determined
by the Investors, in their sole and absolute discretion.
 
(d)      Allocations of tax credits, tax credit recapture, and any items related
thereto shall be allocated to the Unitholders according to their interests in
such items as determined by the Board taking into account the principles of
Treasury Regulation Section 1.704-1(b)(4)(ii).
 
(e)      Allocations pursuant to this Section 4.4 are solely for purposes of
federal, state, and local taxes and shall not affect, or in any way be taken
into account in computing, any
 
 
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Unitholder’s Capital Account or share of Profits, Losses, Distributions or other
LLC items pursuant to any provision of this Agreement.
 
(f)      For any Taxable Year during which any Unit is Transferred between the
Unitholders or to another Person, the portion of the Net Profits, Net Losses and
other items of income, gain, loss, deduction and credit that are allocable with
respect to such Unit shall be apportioned between the transferor and the
transferee under any method allowed pursuant to Section 706 of the Code and the
applicable Treasury Regulations as determined by the Board.
 
(g)      In the event that the Code or any Treasury Regulation require
allocations of items of income, gain, loss, deduction or credit different from
those set forth in this Article IV, the Board is hereby authorized to make new
allocations in reliance on the Code and such Treasury Regulations, and no such
new allocation shall give rise to any claim or cause of action by any
Unitholder.
 
Section 4.5      Indemnification and Reimbursement for Payments on Behalf of a
Unitholder. If the LLC is required by law to make any payment that is
specifically attributable to a Unitholder or a Unitholder’s status as such
(including any federal, state, local or foreign withholding, personal property,
personal property replacement, unincorporated business or other taxes), then
such Unitholder shall indemnify the LLC in full for the entire amount paid
(including interest, penalties and related expenses). The LLC may pursue and
enforce all rights and remedies it may have against each Unitholder under this
Section 4.5, including instituting a lawsuit to collect such indemnification and
contribution with interest calculated at a rate equal to 10% per annum,
compounded as of the last day of each year (but not in excess of the highest
rate per annum permitted by law) and shall be entitled to deduct and offset any
amounts owed to the LLC by a Unitholder hereunder from amounts otherwise
distributable to such Unitholder. The obligations hereunder shall survive the
winding up or dissolution of the LLC.
 
Section 4.6      Transfer of Capital Accounts. If a Unitholder Transfers an LLC
Interest to a new or existing Unitholder, the transferee Unitholder shall
succeed to that portion of the transferor’s Capital Account that is attributable
to the Transferred LLC Interest. Any reference in this Agreement to a Capital
Contribution of, or Distribution to, a Unitholder that has succeeded any other
Unitholder shall include any Capital Contributions or Distributions previously
made by or to the former Unitholder on account of the LLC Interest of such
former Unitholder Transferred to such successor Unitholder.
 
                                   ARTICLE V
 
                          BOARD OF MANAGERS; OFFICERS
 
Section 5.1      Management by the Board of Managers.
 
(a)      No Management by Unitholders. The Unitholders shall not manage or
control the business and affairs of the LLC, except for situations in which the
approval of Class C Unitholders or any other class of Unitholders, if applicable
is expressly required by this Agreement or by non-waivable provisions of
applicable law.
 
 
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(b)      Authority of Board of Managers.
 
(i)      Management Authority. Except for situations in which the approval of
the Majority Holders is otherwise expressly required by this Agreement, subject
to Section 5.1(b)(ii) and Section 6.7, (A) the powers of the LLC shall be
exercised by or under the authority of, and the business and affairs of the LLC
shall be managed under the direction of, the Board, and (B) the Board may make
all decisions and take all actions for the LLC not otherwise provided for in
this Agreement.
 
(ii)      Board Action. The Board may act (A) by resolutions adopted at a
meeting and by written consents pursuant to Section 5.3, (B) by delegating power
and authority to committees pursuant to Section 5.4, and (C) by delegating power
and authority to any Officer pursuant to Section 5.6.
 
(iii)      Time and Attention of Managers. Each Unitholder acknowledges and
agrees that no Manager shall, solely as a result of being a Manager, be bound to
devote all of his business time to the affairs of the LLC, and that such Manager
and his Affiliates do and will continue to engage for their own account and for
the accounts of others in other business ventures.
 
(c)      Officers. The management of the business and affairs of the LLC by the
Officers and the exercising of their powers shall be conducted under the
supervision of and subject to the approval of the Board.
 
Section 5.2     Composition and Election of the Board of Managers.
 
(a)      Number and Designation. The number of Managers on the Board shall be
the number serving pursuant to clauses (i) through (iv) below. Subject to
Section 5.2(c) and Section 5.2(d), the Board shall at all times be comprised
of the following persons:
 
(i)      two (2) representatives, designated by GTCR Fund X/B (each a “Fund X/B
Manager” and, together, the “Fund X/B Managers”), who initially shall be Philip
A. Canfield and Stephen J. Jeschke;
 
(ii)      one (1) representative designated by GTCR Fund X/C (the “Fund X/C
Manager” and, together with the Fund X/B Managers, each an “Investor Manager”
and, collectively, the “Investor Managers”), who initially shall be Mark
Anderson;
 
(iii)      Mr. Homel, so as long as he is employed by the LLC or any of its
Subsidiaries and if Mr. Homel is no longer employed by the LLC or any of its
Subsidiaries, the LLC’s chief executive officer (the “Executive Manager”); and
 
(iv)      So long as the Contributors satisfy the Ownership Threshold one (1)
representative designated by the Contributors (the “Contributor Manager”), who
shall initially be Jeff Smulyan, except that during any period the Contributors
elect to be Insulated Unitholders, they shall only hold such rights to the
extent consistent with Section 6.9 and the FCC’s rules regarding the insulation
of members of a limited liability company.
 
 
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(b)      Term. Members of the Board shall serve from their designation in
accordance with the terms hereof until their resignation, death or removal in
accordance with the terms hereof. Members of the Board need not be Unitholders
and need not be residents of the State of Delaware. A person shall become a
Manager and member of the Board effective upon receipt by the LLC at its
principal place of business of a written notice addressed to the Board (or at
such later time or upon the happening of some other event specified in such
notice) of such person’s designation from the person or persons entitled to
designate such Manager pursuant to Section 5.2(a); provided that the persons
specifically named in Section 5.2(a) shall be members of the Board commencing on
the date hereof without further action. A Manager may resign as such by
delivering his, her or its written resignation to the LLC at the LLC’s principal
office addressed to the Board. Such resignation shall be effective upon receipt
unless it is specified to be effective at some other time or upon the happening
of some other event.
 
(c)      Removal. If Mr. Homel ceases to be employed by the LLC or any of its
Subsidiaries for any reason, such Executive Manager shall, at such time, be
automatically removed from the Board and each committee thereof (without any
action on the part of the Executive Manager, the Board or such committee) and
each of the board of directors or board of managers (or committees thereof), as
applicable, of the LLC’s Subsidiaries, and such Executive Manager shall execute
such documents as may be requested by the LLC to reflect such removals. After
Mr. Homel is no longer employed by the LLC or any of its Subsidiaries and the
LLC’s chief executive officer ceases to be the LLC’s chief executive officer for
any reason, such then current Executive Manager shall, at such time, be
automatically removed from the Board and each committee thereof (without any
action on the part of the Executive Manager, the Board or such committee) and
each of the board of directors or board of managers (or committees thereof), as
applicable, of the LLC’s Subsidiaries, and such Executive Manager shall execute
such documents as may be requested by the LLC to reflect such removals. The
removal from the Board or any of its committees (with or without cause) of any
Fund X/B Manager shall be upon (and only upon) the written request of GTCR Fund
X/B. The removal from the Board or any of its committees (with or without cause)
of any Fund X/C Manager shall be upon (and only upon) the written request of
GTCR Fund X/C. The removal from the Board or any of its committees (with or
without cause) of the Contributor Manager shall be upon (and, except as provided
herein, only upon) written request of the Contributors. If the Contributors are
no longer entitled to elect a Contributor Manager pursuant to Section
5.2(a)(iv), the Contributor Manager shall, at such time, be automatically
removed from the Board and each committee thereof (without any action on the
part of the Contributor Manager, the Board or such committee) and each of the
board of directors or board of managers (or committees thereof), as applicable,
of the LLC’s Subsidiaries, and such Contributor Manager shall execute such
documents as may be requested by the LLC to reflect such removals.
 
(d)      Vacancies. In the event that any Manager other than an Executive
Manager for any reason (other than with respect to a Contributor Manager, in the
event the Contributors are no longer entitled to elect a Contributor Manager
pursuant to Section 5.2(a)(iv)) ceases to serve as a member of the Board,
(i) the resulting vacancy on the Board shall be filled by a Person designated by
the person or persons originally entitled to designate such Manager pursuant to
Section 5.2(a) above (provided that, if any party fails to designate a person to
fill a vacancy on the Board pursuant to the terms of this Section 5.2, such
vacant managership shall remain vacant until such managership is filled pursuant
to this Section 5.2(d)), and (ii) such
 
 
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designee shall be removed promptly after such time from each committee of the
Board. In the event that an Executive Manager ceases to serve as a member of the
Board as a result of ceasing to be the LLC’s chief executive officer, such
Executive Manager managership shall remain vacant until the LLC’s chief
executive officer is appointed by the Board.
 
(e)      Reimbursement. The LLC shall pay all reimbursable out-of-pocket costs
and expenses incurred by each member of the Board incurred in the course of
their service hereunder, including in connection with attending regular and
special meetings of the Board, any board of managers or board of directors of
each of the LLC’s Subsidiaries and/or any of their respective committees.
 
(f)      Compensation of Managers. No Investor Manager, no Contributor Manager
and, except as approved by the Majority Holders, no other Manager shall receive
any compensation for serving in such capacity.
 
(g)      Reliance by Third Parties. Any Person dealing with the LLC, other than
a Unitholder, may rely on the authority of the Board (or any Officer authorized
by the Board) in taking any action in the name of the LLC without inquiry into
the provisions of this Agreement or compliance herewith, regardless of whether
that action actually is taken in accordance with the provisions of this
Agreement. Every agreement, instrument or document executed by the Board (or any
Officer authorized by the Board) in the name of the LLC with respect to any
business or property of the LLC shall be conclusive evidence in favor of any
Person relying thereon or claiming thereunder that (i) at the time of the
execution or delivery thereof, this Agreement was in full force and effect,
(ii) such agreement, instrument or document was duly executed according to this
Agreement and is binding upon the LLC and (iii) the Board or such Officer was
duly authorized and empowered to execute and deliver such agreement, instrument
or document for and on behalf of the LLC.
 
(h)      Subsidiary Board of Managers or Board of Directors. The LLC shall at
all times, unless otherwise determined by the Board in its good faith
discretion, cause the board of managers or board of directors of each of the
LLC’s Subsidiaries to be of the same size and comprised of the same persons who
are then Managers of the Board pursuant to Section 5.2(a) above; provided that
Mr. Homel shall be entitled to sit on any of the board of managers or board of
directors of the LLC’s Subsidiaries as he determines in his sole discretion for
so long as he remains an Executive Manager. The voting rights of the Investor
Managers serving on any board of managers or board of directors of any of the
LLC’s Subsidiaries shall be commensurate with the voting rights of the Investor
Managers with respect to the Board.
 
Section 5.3     Board Meetings and Actions by Written Consent.
 
(a)      Quorum; Voting. A majority of the total number of votes held by
Managers then serving on the Board (i.e., excluding any vacancies on the Board)
must be present (including for purposes of actions taken pursuant to
Section 5.3(g)) in order to constitute a quorum for the transaction of business
of the Board (provided that a quorum must at all times include at least two
Investor Managers), and except as otherwise provided in this Agreement, the act
of the Managers holding a majority of the total votes present at a meeting of
the Board at which a quorum is present shall be the act of the Board. Once a
quorum is present to commence
 
 
                                     - 41 -
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a meeting of the Board, such quorum shall be broken as soon as no Investor
Managers remain present at such meeting and no further business may be
transacted at such meeting until such time as a quorum shall again be
present. If a quorum shall not be present during a meeting of the Board, the
Managers present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be
present. A Manager who is present at a meeting of the Board at which action on
any matter is taken shall be presumed to have assented to the action unless his
dissent shall be entered in the minutes of the meeting or unless he shall file
his written dissent to such action with the person acting as secretary of the
meeting before the adjournment thereof or shall deliver such dissent to the LLC
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a Manager who voted in favor of such action. At each meeting of the
Board, the Investor Managers present at such meeting shall be collectively
entitled to a number of votes (the “Investor Votes”) on all matters to be voted
on by the Board equal to the sum of one plus the number of Managers present at
such meeting that are not Investor Managers, with each Investor Manager entitled
to cast his proportionate share of the total Investor Votes. Each Executive
Manager and each Contributor Manager shall be entitled to one vote on all
matters voted on by the Board.
 
(b)      Place; Attendance. Meetings of the Board may be held at such place or
places as shall be determined from time to time by resolution of the Board. At
all meetings of the Board, business shall be transacted in such order as shall
from time to time be determined by resolution of the Board. Attendance of a
Manager at a meeting shall constitute a waiver of notice of such meeting, except
where a Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
 
(c)      Meeting In Connection With Class C Unitholder Meeting. In connection
with any meeting of Class C Unitholders, the Managers may, if a quorum is
present and the Contributor Manager is present), hold a meeting for the
transaction of business immediately after and at the same place as such meeting
of the Class C Unitholders. Notice of such meeting at such time and place shall
not be required.
 
(d)      Regular Meetings. Regular meetings of the Board shall be held at such
times as shall be designated from time to time by unanimous resolution of the
Board. Notice of such meetings shall not be required.
 
(e)      Special Meetings. Special meetings of the Board may be called by any
Investor Manager or Executive Manager on at least 24 hours’ notice to each other
Manager, either personally, by telephone, by mail, by telegraph, by facsimile or
by email. Such notice shall state the purpose or purposes of, and the business
to be transacted at, such meeting.
 
(f)      Chairman and Vice Chairman. The Board shall designate one of the
Managers to serve as Chairman and a different Manager to serve as Vice
Chairman. The Chairman shall preside at all meetings of the Board. If the
Chairman is absent at any meeting of the Board, the Vice Chairman shall preside
over such Board meeting. If the Chairman and Vice Chairman are absent, the
Managers present shall designate a member to serve as interim chairman for that
meeting. Neither the Chairman nor Vice Chairman, except in their capacity as an
Officer, shall have the authority or power to act for or on behalf of the LLC,
to do any act that
 
 
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would be binding on the LLC or to make any expenditure or incur any obligation
on behalf of the LLC or authorize any of the foregoing.
 
(g)      Action by Written Consent or Telephone Conference. Any action permitted
or required by the Delaware Act, the Certificate or this Agreement to be taken
at a meeting of the Board or any committee designated by the Board may be taken
without a meeting, without notice and without a vote if a consent in writing,
setting forth the action to be taken, is signed by all Managers than serving on
the Board. Such consent shall have the same force and effect as a vote at a
meeting and may be stated as such in any document or instrument filed with the
Secretary of State of the State of Delaware, and the execution of such consent
shall constitute attendance or presence in person at a meeting of the Board or
any such committee, as the case may be. Subject to the requirements of the
Delaware Act, the Certificate or this Agreement for notice of meetings, unless
otherwise restricted by the Certificate, the Managers or members of any
committee designated by the Board may participate in and hold a meeting of the
Board or any committee, as the case may be, by means of a conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, and participation in such meeting shall
constitute attendance and presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
 
Section 5.4     Committees; Delegation of Authority and Duties.
 
(a)      Committees; Generally. The Board may, from time to time, designate one
or more committees; provided that the composition of any committee shall be
determined in good faith by the Board and, prior to the consummation of a
Qualified Public Offering, the Contributor Manager shall have the right to be
appointed to each such committee. Any such committee, to the extent provided in
the enabling resolution or in the Certificate or this Agreement, shall have and
may exercise all of the authority of the Board. At every meeting of any such
committee, the presence of a majority of all the members thereof and at least
one Investor Manager shall constitute a quorum, and except as otherwise provided
in this Agreement, the act of the Managers holding a majority of the total votes
present at a meeting of such committee at which a quorum is present shall be the
act of such committee. Once a quorum is present to commence a meeting of such
committee, such quorum shall be broken as soon as no Investor Managers remain
present at such meeting and no further business may be transacted at such
meeting until such time as a quorum shall again be present. The voting rights of
the Investor Managers with respect to any such committee shall be commensurate
with the voting rights of the Investor Managers with respect to the Board. The
Board may dissolve any committee at any time, unless otherwise provided in the
Certificate or this Agreement.
 
(b)      Delegation; Generally. The Board may, from time to time, delegate to
one or more Persons (including any Manager or Officer) such authority and duties
as the Board may deem advisable in addition to those powers and duties set forth
in Section 5.1(b) hereof. The Board also may assign titles (including chairman,
chief executive officer, president, vice president, secretary, assistant
secretary, treasurer and assistant treasurer) to any Manager, Unitholder or
other individual and may delegate to such Manager, Unitholder or other
individual certain authority and duties. Any number of titles may be held by the
same Manager, Unitholder
 
 
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or other individual. Any delegation pursuant to this Section 5.4(b) may be
revoked at any time by the Board.
 
(c)      Third-party Reliance. Any Person dealing with the LLC, other than a
Unitholder, may rely on the authority of any Officer in taking any action in the
name of the LLC without inquiry into the provisions of this Agreement or
compliance herewith, regardless of whether that action actually is taken in
accordance with the provisions of this Agreement.
 
Section 5.5     Certain Limitations on Liability.
 
(a)      Board Discretion. Whenever in this Agreement or any other agreement
contemplated herein the Board is permitted or required to take any action or to
make a decision or determination, the Board shall take such action or make such
decision or determination in its sole discretion, unless another standard is
expressly set forth herein or therein. Whenever in this Agreement or any other
agreement contemplated herein the Board is permitted or required to take any
action or to make a decision or determination in its “sole discretion” or
“discretion,” with “complete discretion” or under a grant of similar authority
or latitude, each Manager shall be entitled to consider such interests and
factors as such Manager determines are appropriate, subject to Section 5.5 (c).
 
(b)      Good Faith and Other Standards. Whenever in this Agreement or any other
agreement contemplated herein the Board is permitted or required to take any
action or to make a decision or determination in its “good faith” or under
another express standard, each Manager shall act under such express standard
and, to the extent permitted by applicable law, shall not be subject to any
other or different standards imposed by this Agreement or any other agreement
contemplated herein, and, notwithstanding anything contained herein to the
contrary, so long as such Manager acts in good faith, the resolution, action or
terms so made, taken or provided by the Board shall not constitute a breach of
this Agreement or any other agreement contemplated herein or impose liability
upon such Manager or any of such Manager’s Affiliates, employees, agents or
representatives. Each Manager shall act in good faith in all matters brought
before the Board.
 
(c)      No Fiduciary Duties. To the fullest extent permitted by law, and
subject to subsections (a) and (b) of this Section 5.5, the Board shall owe no
fiduciary duties to the LLC or the Unitholders; provided that the Board shall
act in accordance with the implied contractual covenant of good faith and fair
dealing.
 
(d)      Effect on Other Agreements. This Section 5.5 shall not in any way
affect, limit or modify any Officer’s or employee’s liabilities or obligations
under any employment agreement, consulting agreement, confidentiality agreement,
noncompete agreement, nonsolicit agreement or any similar agreement with the LLC
or any of its Subsidiaries or any Unitholder’s obligations under this Agreement.
 
Section 5.6     Officers.
 
(a)      Designation and Appointment. The Board may (but need not), from time to
time, designate and appoint one or more persons as an Officer of the LLC. No
Officer need be a resident of the State of Delaware, a Unitholder or a
Manager. Any Officers so designated shall
 
 
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have such authority and perform such duties as the Board may, from time to time,
delegate to them. The Board may assign titles to particular Officers. Unless the
Board otherwise decides, if the title is one commonly used for officers of a
business corporation formed, the assignment of such title shall constitute the
delegation to such Officer of the authority and duties that are normally
associated with that office, subject to (i) any specific delegation of authority
and duties made to such Officer by the Board pursuant to the third sentence of
this Section 5.6(a) or (ii) any delegation of authority and duties made to one
or more Officers pursuant to the terms of Section 5.4(b). Each Officer shall
hold office until such Officer’s successor shall be duly designated and shall
qualify or until such Officer’s death or until such Officer shall resign or
shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same individual. The salaries or other compensation,
if any, of the Officers and agents of the LLC shall be fixed from time to time
by the Board. The Officers of the LLC as of the signing and execution of this
Agreement shall be as set forth on Schedule D.
 
(b)      Resignation; Removal; Vacancies. Any Officer (subject to any contract
rights available to the LLC, if applicable) may resign as such at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein, or if no time be specified, at the time of its receipt by the
Board. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation. Any Officer may be
removed as such, either with or without cause, by the Board in its discretion at
any time or by the Majority Holders in their discretion at any time; provided,
however, that such removal shall be without prejudice to the contract rights, if
any, of the individual so removed. Designation of an Officer shall not of itself
create contract rights. Any vacancy occurring in any office of the LLC may be
filled by the Board and shall remain vacant until filled by the Board.
 
(c)      Duties of Officers. The Officers, in the performance of their duties as
such, shall owe to the Unitholders duties of loyalty and due care of the type
owed by the officers of a corporation to such corporation and its stockholders
under the laws of the State of Delaware.
 
Section 5.7     Operations. The Board and Officers shall take steps and actions
necessary to (a) maintain books and records, bank accounts and financial
statements separate from any other Person, including the Unitholders, (b) not
commingle its assets with those of any other Person, including the Unitholders,
(c) conduct its business in its own name, (d) pay its own expenses and
liabilities out of its own funds, (e) observe all organizational formalities
required under the Delaware Act, (f) not guarantee or become obligated for, or
pledge its assets for, the debts or liabilities of any Unitholder, or hold out
its credit as being available to satisfy the obligations of its Unitholders, (g)
conduct its business in offices which are physically segregated from those of
its Affiliates or, if unable to be segregated, allocate fairly and reasonably
any overhead for shared office space, (h) use its own distinct stationary,
invoices and checks, (i) at all times hold itself out to the public and all
other Persons as a legal entity separate from any other Person and correct any
known misunderstanding regarding its separate identity, (j) have a mailing
address and telephone and telecopy numbers different than those of its
Unitholders, (k) be duly qualified and in good standing as a foreign company
under applicable law in each state in which its assets are located and such
qualification is necessary or advisable, (l) except as otherwise provided
herein, not permit any Person, including the Unitholders, to control its daily
business decisions, (m) maintain an arm’s length relationship with its
Affiliates, (n) except as contemplated by any Transaction Documents or other
contract or agreement entered into for such
 
 
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purpose, pay the salaries of its own employees and (o) maintain adequate capital
for its operation and business purposes at all times.
 
                                   ARTICLE VI
 
                 GENERAL RIGHTS AND OBLIGATIONS OF UNITHOLDERS
 
Section 6.1     Limitation of Liability. Except as otherwise provided by
applicable law, the debts, obligations, and liabilities of the LLC, whether
arising in contract, tort, or otherwise, shall be solely the debts, obligations,
and liabilities of the LLC, and no Unitholder shall be obligated personally for
any such debt, obligation, or liability of the LLC solely by reason of being a
Unitholder of the LLC; provided that a Unitholder shall be required to return to
the LLC any Distribution made to it in clear and manifest accounting or similar
error. The immediately preceding sentence shall constitute a compromise to which
all Unitholders have consented within the meaning of the Delaware
Act. Notwithstanding anything contained herein to the contrary, the failure of
the LLC to observe any formalities or requirements relating to the exercise of
its powers or management of its business and affairs under this Agreement or the
Delaware Act shall not be grounds for imposing personal liability on the
Unitholders for liabilities of the LLC.
 
Section 6.2     Lack of Authority. No Unitholder in his, her, or its capacity as
such (other than the members of the Board acting as the Board or an authorized
Officer of the LLC) has the authority or power to act for or on behalf of the
LLC in any manner, to do any act that would be (or could be construed as)
binding on the LLC or to make any expenditures on behalf of the LLC, and the
Unitholders hereby consent to the exercise by the Board of the powers conferred
on it by law and this Agreement. Without limiting the foregoing, neither the
lending of money to the LLC by a Unitholder or any Affiliate thereof nor the
service by a Unitholder or its designee on the Board shall be deemed to
constitute participation in control of the LLC or affect, impair or eliminate
the limitations on the liability of a Unitholder under this Agreement.
 
Section 6.3     No Right of Partition. No Unitholder shall have the right to
seek or obtain partition by court decree or operation of law of any LLC
property, or the right to own or use particular or individual assets of the LLC.
 
Section 6.4     Unitholders Right to Act. Except as expressly provided in this
Agreement, or as otherwise required under non-waivable provisions of the
Delaware Act, the Unitholders shall have no right to vote on any LLC matter. For
situations where the approval of any Unitholders or class thereof (rather than
the approval of the Board on behalf of the Unitholders) is required, such
Unitholders or class thereof shall act through meetings and written consents as
described in Section 3.2.
 
Section 6.5     Investment Opportunities and Conflicts of Interest.
 
(a)      The Unitholders expressly acknowledge and agree that (a) any Unitholder
and its respective Affiliates (but excluding the LLC and its Subsidiaries from
the definition of Affiliates for purposes of this Section 6.5) and their
respective managers, directors, officers, shareholders, partners, members,
employees, representatives, and agents (including any of their representatives
serving on the Board or on the board of directors or board of managers of the
 
 
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LLC’s Subsidiaries or as an officer of the LLC or any of its Subsidiaries
(collectively, the “Specified Persons”) are permitted (i) to have and develop,
and may presently or in the future have and develop, investments, transactions,
business ventures, contractual, strategic or other business relationships,
prospective economic advantages or other opportunities (the “Business
Opportunities”) in any business conducted by the LLC (other than through the LLC
or any of its Subsidiaries) or in businesses that are and may be competitive or
complementary with such business (an “Other Business”), for their own account or
for the account of any Person other than the LLC or any of its Subsidiaries or
any other Unitholder, or (ii) to direct any such Business Opportunities to any
other Person, in each case, regardless of whether such Business Opportunities
are presented to a Specified Person in his, her or its capacity as a Unitholder,
Manager, director or manager in the board of directors or board of managers of
the LLC or any other Subsidiaries or officer of the LLC or any of its
Subsidiaries or otherwise, (b) none of the Specified Persons will be prohibited
by virtue of their investments in the LLC or any of its Subsidiaries or their
service as a Manager or service on the board of directors or board of managers
of the LLC or any other Subsidiaries or as an officer of the LLC or any of its
Subsidiaries or otherwise from pursuing and engaging in any such activities,
(c) none of the Specified Persons will be obligated to inform or present the LLC
or any of its Subsidiaries or the Board or the board of directors or board of
managers of the LLC or any other Subsidiary or any other Unitholder of or with
any such Business Opportunity, (d) neither the LLC or any of its Subsidiaries or
the other Unitholders will have or acquire or be entitled to any interest or
expectancy or participation (such right to any interest, expectancy or
participation, if any, being hereby renounced and waived to the fullest extent
permitted from time to time under applicable law) in any Business Opportunity as
a result of the involvement therein of any of the Specified Persons, and (e) the
involvement of any of the Specified Persons in any Business Opportunity will not
constitute a conflict of interest, breach of fiduciary duty, or breach of this
Agreement by such Persons with respect to the LLC or any of its Subsidiaries or
the other Unitholders. This Section 6.5 shall not in any way affect, limit or
modify any liabilities, obligations, duties or responsibilities of any Person
under any employment agreement, consulting agreement, confidentiality agreement,
noncompete agreement, nonsolicit agreement or any similar agreement with the LLC
or any of its Subsidiaries.
 
(b)      Notwithstanding any thing to the contrary contained herein, so long as
any Contributor holds any Unit (unless such Contributor is an “insulated”
Unitholder under Section 6.9) it shall not, and shall cause its Affiliates not
to, provide Protected Programming.
 
Section 6.6     Transactions Between the LLC and the
Unitholders. Notwithstanding that it may constitute a conflict of interest, the
Unitholders or their Affiliates may engage in any transaction (including the
purchase, sale, lease or exchange of any property or rendering of any service or
the establishment of any salary, other compensation or other terms of
employment) with the LLC so long as such transaction is approved by the Board
and, if applicable, the Contributors pursuant to Section 6.7.
 
Section 6.7     Rights of Contributors.
 
(a)      At any time prior to a Qualified Public Offering, so long as the
Contributors satisfy the Ownership Threshold, the written consent of the
Contributors (not to be
 
 
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unreasonably withheld, conditioned, delayed or denied) shall be required for the
LLC or any of its Subsidiaries to directly or indirectly:
 
(i)      engage in any Affiliate Transaction, other than any Affiliate
Transaction on arm’s length terms that, at the time it is entered into, involves
annual consideration less than the greater of (x) $5,000,000 or (y) 10% of
EBITDA of the LLC per year;
 
(ii)      increase the number of authorized Class D Units or issue any Equity
Securities to Mr. Homel or any other employee of the LLC having rights or
priorities that are senior to the Class C Units;
 
(iii)      effect any amendment, modification, alteration or restatement (by
merger consolidate or otherwise) of this Section 6.7, Section 3.4, Section 4.1,
any of Article X, Section 15.2 (or any definitions used or incorporated in any
of such sections or articles);
 
(iv)      repurchase, redeem or otherwise retire for value any Units, or
otherwise consummate any transaction (other than pursuant to Section 10.3) that
would result in consideration to the Unitholders, other than in proportion to
the Pro Rata Share of such Units, except for the repurchase, redemption or
retirement of Units held by former employees of the LLC or any of its
Subsidiaries or in connection with distributions pursuant to Section 4.1;
 
(v)      incur Indebtedness for borrowed money in an aggregate principal amount
in excess of the greater of (x) $60 million and (y) an amount equal to the
EBITDA of the LLC for the twelve-month period ending on the last day of the
month preceding the date on which such transaction would otherwise occur,
multiplied by seven (7); or
 
(vi)      take or commit to take any of the foregoing actions indirectly,
whether by amendment, merger, consolidation, operation of law or otherwise.
 
(b)      The term “Affiliate Transaction” shall mean any transaction between the
LLC or any of its Subsidiaries, on the one hand, and any Unitholder, any
director or officer of the LLC or any Unitholder, or any of their respective
Affiliates or family members, on the other hand, except that none of the
following shall constitute an Affiliate Transaction:
 
(i)      an employment or similar agreement to which the LLC or any of its
Subsidiaries is a party (other than any such agreement with a Person that is
also an employee, officer or director of any Investor or its Affiliates
(excluding the LLC and its Subsidiaries)) or the performance thereof or any
transaction mandated by the terms of such an agreement;
 
(ii)      the advancement or reimbursement of expenses to an employee, officer,
consultant, Manager or director of the LLC or any Subsidiary that are incurred
and paid in accordance with the expense advancement or reimbursement policies of
the LLC and its Subsidiaries as in effect from time to time and adopted and
approved by disinterested Managers;
 
(iii)      the payment of indemnification amounts or advancement of expenses to
an employee, officer, consultant, Manager or director of the LLC or any
Subsidiary pursuant to the provisions of this Agreement, any governing documents
of any Subsidiary, or pursuant to any agreement between any Affiliate and the
LLC or any Subsidiary, in each case in
 
 
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accordance with policies adopted by the Board and consistent with customary
practice in the LLC’s industry;
 
(iv)      the exercise of any rights or the performance of any obligations under
the this Agreement;
 
(v)      a transaction solely between or among the LLC and its Subsidiaries;
 
(vi)      a transaction mandated by, or pursuant to the performance of, any
Transaction Document;
 
(vii)      a transaction mandated by, or pursuant to the performance of, the
Professional Services Agreement, as in effect on the date hereof;
 
(viii)      any transaction contemplated by that certain $60,000,000 principal
amount Senior Secured Promissory Note due September 1, 2016 issued by the LLC
and outstanding as of the Effective Date (the “Note”), including any
determination by the LLC regarding the payment of cash interest or accrual of
interest or the refinancing of the Note; and
 
(ix)      any issuance of Equity Securities pursuant to Section 3.3(a) or
Section 3.3(c) or subject to Section 3.4.
 
Section 6.8     Material Default.
 
(a)      Upon a Material Default of any Unitholder, the Investors shall have the
right to purchase, and the Defaulting Unitholder shall sell, transfer and
assign, all Units held by such Defaulting Unitholder for a cash purchase price
equal to the Total Equity Value Proceeds with respect to such Units as of the
date that the Investors exercise such right. Such right shall be exercisable by
the Investors by delivering written notice to the Defaulting Unitholder together
with the determination of Total Equity Value Proceeds, subject to the provisions
of Section 14.2, with respect to each such Unit and the Board’s determination of
Fair Market Value used in such determination, along with reasonable detail and
documentation supporting such determination (the “Exercise Notice”). Any such
purchase and sale shall be consummated on a date selected by the Investors no
less than three (3) days and no later than 60 days after the Exercise Notice is
provided (or, if later, three (3) Business Days after the receipt of all
required governmental approvals). For the avoidance of doubt, the parties agree
that notwithstanding any issuance of a Dispute Notice, determination of Fair
Market Value or payment under Section 14.2, the consummation of such purchase
and sale under this Section 6.8 shall be deemed completed, with any payment
under Section 14.2 to be in the nature of a post-closing adjustment.
 
(b)      Upon a Material Default of any Unitholder that has the right to appoint
or designate a Manager, such right to appoint or designate such Manager shall
terminate and such Manager appointed or designated by such Defaulting Unitholder
shall automatically and without any further action on the part of any party
hereto be removed from the Board of Managers.
 
(c)      Upon a Material Default of any Unitholder the Units held by such
Unitholder shall no longer be entitled to vote any such Units in connection with
any matter
 
 
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subject to a vote of Unitholders or any class thereof pursuant to this Agreement
and such Units shall not be treated as outstanding in determining the number of
votes required to approve any such action.
 
(d)      “Material Default” shall mean the occurrence or existence of any one or
more of the following:
 
(i)      Prohibited Transfers. Any Unitholder engages in a Transfer prohibited
by Section 10.1, or enters into any contract or agreement that would, if
consummated (other than any such agreement that by its terms is contingent on a
waiver or amendment hereunder), breach or result in a default under Section
10.1.
 
(ii)      Bankruptcy Event. Any Unitholder experiences a Bankruptcy Event.
 
(iii)      Agreement Default. Any Unitholder or any of its Affiliates breaches
or is in default with respect to any Indebtedness of such Unitholder and any of
its Affiliates having an aggregate principal amount outstanding of at least Five
Million Dollars ($5,000,000), and such breach or default is with respect to (a)
any payment obligation or (b) any other covenant, obligation or default
provision, and such breach or default under this clause (b) has not been cured
within the lesser of (x) 10 days and (y) one-half of the number of days after
such breach or default before which any holder or holders of such Indebtedness
or any representative, trustee of agent thereof has the right (whether with
notice of default or otherwise) to cause such Indebtedness to be accelerated
under the terms of any agreement with respect to such Indebtedness (whether or
not such Indebtedness is accelerated) (for the avoidance of doubt, if there is
no such period prior such right to accelerate arising, the Material Default
shall be deemed to have occurred upon the occurrence of such breach or default).
 
(e)      “Defaulting Unitholder” shall mean any Unitholder that is in Material
Default. A Material Default by one Unitholder shall be deemed also to be a
Material Default by any other Unitholders that are Affiliates of such Defaulting
Unitholder.
 
Section 6.9     Insulated Members.
 
(a)      A Unitholder may, by providing written notice to the Board, elect to be
insulated from attribution under the rules and regulations of the Federal
Communications Commission (“FCC”) and, in the event of such an election, shall
be deemed to be an “Insulated Unitholder.” Upon making such an election, an
Insulated Unitholder, including any director, officer, equivalent non-corporate
official, partner, member, employee, or 5% or greater shareholder or other
direct or indirect owner of such Unitholder (a “Unitholder Affiliate”), shall
not:
 
(i)      act as an employee of the LLC if such Unitholder’s or Unitholder
Affiliate’s functions, directly or indirectly, relate to the media enterprises
of the LLC;
 
(ii)      serve, in any material capacity, as an independent contractor or agent
of the LLC, with respect to the media enterprises of the LLC;
 
 
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(iii)      communicate with the LLC, the Board, any LLC management committee or
any Manager on matters pertaining to the day-to-day operations of the LLC’s
business;
 
(iv)      vote to admit any additional Unitholder or Manager to the LLC subject
to Section 6.7(a), if applicable;
 
(v)      vote to replace a Manager or member of the Board unless the Manager or
such member of the Board is (i) subject to bankruptcy proceedings, (ii) is
adjudicated incompetent by a court of competent jurisdiction, or (iii) is
removed for cause, as determined by an independent party;
 
(vi)      perform any services for the LLC materially relating to its media
activities, with the exception of making loans to, or acting as a surety for,
the LLC (subject to compliance with the FCC’s equity debt attribution rules); or
 
(vii)      become actively involved in the management or operation of the media
businesses of the LLC.
 
(b)      The insulation provisions of Section 6.9(a) are designed to ensure that
an Insulated Unitholder will not be deemed to hold an attributable interest in
the LLC. Accordingly, such provisions shall be read to preclude an Insulated
Unitholder from engaging in any activity which is inconsistent with the
insulation criteria of the FCC, as such may be amended, modified or clarified
from time to time, and the Board is authorized to amend the provisions of this
Section 6.9(a) as may be deemed necessary to ensure that this Agreement
insulates an Insulated Unitholder from attribution pursuant to the rules and
regulations of the FCC and for purposes of the foreign ownership restrictions
set forth in Section 310(b) of the Communications Act of 1934, as amended. The
insulation provisions, however, are not designed to preclude an Insulated
Unitholder from engaging in any activity which is consistent with the FCC’s
insulation criteria and the holding of a non-attributable membership interest in
the LLC.
 
(c)      So long as it does not cause the LLC to be in violation of the FCC’s
ownership rules, a Unitholder may, at any time relinquish its status as an
“insulated” Unitholder effective upon written notice to the Board, in which case
the provisions of Section 6.9(a) shall no longer apply to such Unitholder.
 
(d)      For the avoidance of doubt, the provisions of this Section 6.9 shall
not limit the rights of the Contributors pursuant to Section 6.7, except to the
extent that any such right is inconsistent with the insulation criteria of the
FCC, as such may be amended, modified or clarified from time to time.
 
Section 6.10    Refinancing of the Note. The LLC shall use commercially
reasonable efforts to cause the Note to be refinanced as soon as reasonably
practicable following the Effective Date at an interest rate and on other terms
and conditions that, taken as a whole, and considering all attendant
circumstances (including the timing of such financing and anticipated
availability of alternative financing in the future), are more favorable to the
LLC than the interest rate and other terms and conditions of the Note, such
determination to be made in the good faith
 
 
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judgment of Mr. Homel (or, if Mr. Homel is not a Unitholder, other senior
management of the LLC).
 
Section 6.11     Management Rights.
 
So long as any Investor is a Unitholder or owns, directly or indirectly, any
ownership interest in the LLC, each of Fund X/B and Fund X/C will have the right
under this Agreement to (a) consult with and advise the management of the LLC
and any of its Subsidiaries (including the right to meet with management
personnel at least quarterly at the request of each of Fund X/B and Fund X/C) on
matters relating to the business and financial affairs of the LLC and any of its
Subsidiaries and (b) review the books and records of the LLC and any of its
Subsidiaries, including without limitation, financial data (including
projections) and operating data covering each of such entities, their
businesses, operations and financial performance. The rights granted to each of
Fund X/B and Fund X/C under this Section 6.11 are intended to constitute
“management rights” within the meaning of U.S. Department of Labor Regulation §
2510.3-101(d)(3)(ii), and the LLC and its Subsidiaries will be operated
consistent with the status of the LLC as a “venture capital investment” of each
of Fund X/B and Fund X/C. Notwithstanding anything to the contrary contained in
this Section 6.11, the Board of Managers has full and exclusive power and
authority on behalf of the LLC and its Subsidiaries to acquire, manage, control,
administer and operate the property, business and affairs of the LLC and its
Subsidiaries in accordance with Section 6.11 and the other applicable provisions
of this Agreement.
 
                                  ARTICLE VII
 
                        EXCULPATION AND INDEMNIFICATION
 
Section 7.1      Exculpation. No Officer or Manager shall be liable to any other
Officer, Manager, the LLC or any of its Subsidiaries or to any Unitholder for
any loss suffered by the LLC or any of its Subsidiaries or any Unitholder unless
such loss is caused by such Person’s fraud, gross negligence, willful misconduct
or intentional and material breach of this Agreement. The Officers and Managers
shall not be liable for errors in judgment or for any acts or omissions that do
not constitute fraud, gross negligence, willful misconduct or intentional and
material breach of this Agreement. Any Officer or Manager may consult with
counsel and accountants in respect of LLC affairs, and provided such Person acts
in good faith reliance upon the advice or opinion of such counsel or
accountants, such Person shall not be liable for any loss suffered by the LLC or
any Unitholder in reliance thereon.
 
Section 7.2      Right to Indemnification. Subject to the limitations and
conditions as provided in this Article VII, each Person (an “Indemnified
Person”) who was or is made a party or is threatened to be made a party to or is
involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative (hereinafter a
“Proceeding”), or any appeal in such a Proceeding or any inquiry or
investigation that could lead to such a Proceeding, by reason of the fact that
he or she, or a Person of whom he or she is the legal representative, is or was
a Unitholder, Manager or Officer, or while a Unitholder, Manager or Officer is
or was serving at the request of the LLC as a manager, director, officer,
partner, venturer, proprietor, trustee, employee, agent or similar functionary
of another foreign or
 
 
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domestic limited liability company, corporation, partnership, joint venture,
sole proprietorship, trust, employee benefit plan or other enterprise, shall be
indemnified by the LLC to the fullest extent permitted by the Delaware Act, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the LLC to provide
broader indemnification rights than said law permitted the LLC to provide prior
to such amendment) against judgments, penalties (including excise and similar
taxes and punitive damages), fines, settlements and reasonable expenses
(including attorneys’ fees) actually incurred by such Indemnified Person in
connection with such Proceeding, and indemnification under this Article VII
shall continue as to an Indemnified Person who has ceased to serve in the
capacity which initially entitled such Indemnified Person to indemnity
hereunder. The rights granted pursuant to this Article VII shall be deemed
contract rights, and no amendment, modification or repeal of this Article VII
shall have the effect of limiting or denying any such rights with respect to
actions taken or Proceedings arising prior to any amendment, modification or
repeal. It is expressly acknowledged that the indemnification provided in this
Article VII could involve indemnification for negligence or under theories of
strict liability. The Indemnified Persons are intended express third party
beneficiaries of, and shall be entitled to enforce the provisions of this
Article VII.
 
Section 7.3      Advance Payment. Reasonable expenses incurred by an Indemnified
Person who was, is or is threatened to be made a named defendant or respondent
in a Proceeding shall be paid by the LLC in advance of the final disposition of
the Proceeding, unless otherwise determined by the Board in the specific case,
upon receipt of an undertaking by or on behalf of such Indemnified Person to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the LLC.
 
Section 7.4      Indemnification of Employees and Agents. The LLC, by adoption
of a resolution of the Board, may indemnify and advance expenses to an employee
or agent of the LLC to the same extent and subject to the same conditions under
which it may indemnify and advance expenses to Persons who are not or were not
Managers or Officers but who are or were serving at the request of the LLC as a
manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise against any liability asserted against
him and incurred by him in such a capacity or arising out of his status as such
a Person to the same extent that it may indemnify and advance expenses to
Managers and Officers under this Article VII.
 
Section 7.5      Appearance as a Witness. Notwithstanding any other provision of
this Article VII, the LLC shall pay or reimburse reasonable out-of-pocket
expenses incurred by a Manager or Officer in connection with his appearance as a
witness or other participation in a Proceeding at a time when he is not a named
defendant or respondent in the Proceeding.
 
Section 7.6      Nonexclusivity of Rights. The right to indemnification and the
advancement and payment of expenses conferred in this Article VII shall not be
exclusive of any other right which an Indemnified Person may have or hereafter
acquire under any law (common or statutory), provision of the Certificate or
this Agreement, agreement, vote of Unitholders or disinterested Managers or
otherwise. Without limiting the foregoing, the LLC and each Unitholder hereby
acknowledges that one or more of the Indemnified Persons may have certain
 
 
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rights to indemnification, advancement of expenses and/or insurance provided by
an Affiliated Institution. The LLC and each Unitholder hereby agrees that, with
respect to any such Indemnified Person, the LLC (i) is, relative to each
Affiliated Institution, the Indemnitor of first resort (i.e., its obligations to
the applicable Indemnified Person under this Agreement are primary and any
duplicative, overlapping or corresponding obligations of an Affiliated
Institution are secondary), (ii) shall be required to make all advances and
other payments under this Agreement, and shall be fully liable therefor, without
regard to any rights any such Indemnified Person may have against his or her
Affiliated Institution, and (iii) irrevocably waives, relinquishes and releases
any such Affiliated Institution from any and all claims against such Affiliated
Institution for contribution, subrogation or any other recovery of any kind in
respect thereof. The LLC further agrees that no advancement or payment by an
Affiliated Institution on behalf of any Indemnified Person with respect to any
claim for which such Indemnified Person has sought indemnification from the LLC
shall affect the foregoing and any such Affiliated Institution shall have a
right of contribution and/or be subrogated to the extent of such advancement or
payment to all of the rights of recovery of any such applicable Indemnified
Person against the LLC. The LLC and each Unitholder agree that each Affiliated
Institution is an express third party beneficiary of the terms of this
Section 7.6.
 
Section 7.7      Insurance. The LLC may purchase and maintain insurance, or
cause its Subsidiaries to purchase and maintain insurance, at its or their
expense, to protect itself and any Person who is or was serving as a Manager,
Officer or agent of the LLC or is or was serving at the request of the LLC as a
manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent or similar functionary of another foreign or domestic limited ability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise against any expense, liability or
loss, whether or not the LLC would have the power to indemnify such Person
against such expense, liability or loss under this Article VII.
 
Section 7.8      Limitation. Notwithstanding anything contained herein to the
contrary (including in this Article VII), but subject to any applicable Equity
Agreement, any indemnity by the LLC relating to the matters covered in this
Article VII shall be provided out of and to the extent of the LLC’s assets only,
and no Unitholder shall have personal liability on account thereof or shall be
required to make additional Capital Contributions to help satisfy such indemnity
of the LLC).
 
Section 7.9      Effect on Other Agreements and Unitholders’ Obligations. This
Article VII shall not in any way affect, limit or modify any Unitholder’s
liabilities or obligations under this Agreement or any Officer’s or employee’s
liabilities or obligations under any employment agreement, consulting agreement,
confidentiality agreement, noncompete agreement, nonsolicit agreement or any
similar agreement with the LLC or any of its Subsidiaries.
 
Section 7.10     Savings Clause. If this Article VII or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
LLC shall nevertheless indemnify and hold harmless each Manager, Officer or any
other Person indemnified pursuant to this Article VII as to costs, charges and
expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by
 
 
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any applicable portion of this Article VII that shall not have been invalidated
and to the fullest extent permitted by applicable law.
 
                                  ARTICLE VIII
 
                     BOOKS, RECORDS, ACCOUNTING AND REPORTS
 
Section 8.1      Records and Accounting. The LLC shall keep, or cause to be
kept, appropriate books and records with respect to the LLC’s business,
including all books and records necessary to provide any information, lists, and
copies of documents required to be provided pursuant to Section 8.3 or pursuant
to applicable laws. The unit ledger for the LLC and any unit certificates held
by the LLC, and the stock or unit ledgers and equity certificates for each of
its Subsidiaries, shall be maintained at the New York and/or Washington, D.C.
offices of Latham & Watkins LLP or at such other place as directed by the
Majority Holders in writing from time to time hereafter. All matters concerning
(i) the determination of the relative amount of allocations and distributions
among the Unitholders pursuant to Articles III and IV and (ii) accounting
procedures and determinations, and other determinations not specifically and
expressly provided for by the terms of this Agreement, shall be determined by
the Board, acting reasonably and in good faith, which determination shall be
final and conclusive as to all of the Unitholders absent manifest clerical
error.
 
Section 8.2      Fiscal Year. The annual accounting period of the LLC (the
“Fiscal Year”) shall constitute the 12-month period ending on December 31 of
each calendar year, or such other annual accounting period as may be established
by the Board.
 
Section 8.3      Tax Information. The LLC shall use reasonable best efforts to
deliver or cause to be delivered, within 45 days after the end of each Taxable
Year, to each Person who was a Unitholder at any time during such Taxable Year
all information regarding the LLC necessary for the preparation of such Person’s
federal and state income tax returns.
 
Section 8.4      Transmission of Communications. Each Person that owns or
controls Units on behalf of, or for the benefit of, another Person or Persons
shall be responsible for conveying any report, notice, or other communication
received from the Board to such other Person or Persons.
 
Section 8.5      LLC Funds. No Manager or Officer may commingle the LLC’s funds
with the funds of any Unitholder, Manager or Officer.
 
                                   ARTICLE IX
 
                                     TAXES
 
Section 9.1      Tax Returns. At the direction of the Tax Matters Partner, the
LLC shall prepare and file all necessary federal and state income tax returns,
including making the elections described in Section 9.2. Each Unitholder shall
furnish to the LLC all pertinent information in its possession relating to LLC
operations that is necessary to enable the LLC’s income tax returns to be
prepared and filed.
 
 
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Section 9.2      Tax Elections. The LLC shall make any election the Tax Matters
Partner may deem appropriate.
 
Section 9.3      Tax Matters Partner. GTCR Merlin (or an Affiliate so designated
by GTCR Merlin and permissible under Section 6231 of the Code and the Treasury
Regulations promulgated thereunder) shall be the “tax matters partner” of the
LLC pursuant to Section 6231(a)(7) of the Code and any comparable provision of
state or local tax law (the “Tax Matters Partner”).
 
Section 9.4      Code Section 83 Safe Harbor Election.
 
(a)      By executing this Agreement, each Unitholder authorizes and directs the
LLC to elect to have the “Safe Harbor” described in the proposed Revenue
Procedure set forth in Internal Revenue Service Notice 2005-43 (the “Notice”)
apply to any interest in the LLC transferred to a service provider by the LLC on
or after the effective date of such Revenue Procedure in connection with
services provided to the LLC. For purposes of making such Safe Harbor election,
the Tax Matters Partner is hereby designated as the “partner who has
responsibility for federal income tax reporting” by the LLC and, accordingly,
execution of such Safe Harbor election by the Tax Matters Partner constitutes
execution of a “Safe Harbor Election” in accordance with Section 3.03(1) of the
Notice. The LLC and each Unitholder hereby agree to comply with all requirements
of the Safe Harbor described in the Notice, including the requirement that each
Unitholder shall prepare and file all federal income tax returns reporting the
income tax effects of each interest in the LLC issued by the LLC covered by the
Safe Harbor in a manner consistent with the requirements of the Notice.
 
(b)      The LLC and any Unitholder may pursue any and all rights and remedies
it may have to enforce the obligations of the LLC and the Unitholders (as
applicable) under Section 9.4(a), including seeking specific performance and/or
immediate injunctive or other equitable relief from any court of competent
jurisdiction (without the necessity of showing actual money damages, or posting
any bond or other security) in order to enforce or prevent any violation of the
provisions of Section 9.4(a). A Unitholder’s obligations to comply with the
requirements of this Section 9.4 shall survive such Unitholder’s ceasing to be a
Unitholder of the LLC and/or the termination, dissolution, liquidation and
winding up of the LLC, and, for purposes of this Section 9.4, the LLC shall be
treated as continuing in existence.
 
(c)      Each Unitholder authorizes the Tax Matters Partner to amend
Section 9.4(a) and 9.4(b) to the extent necessary to achieve substantially the
same tax treatment with respect to any interest in the LLC transferred to a
service provider by the LLC in connection with services provided to the LLC as
set forth in Section 4 of the Notice (e.g., to reflect changes from the rules
set forth in the Notice in subsequent guidance), provided that such amendment is
not materially adverse to such Unitholder (as compared with the after-tax
consequences that would result if the provisions of the Notice applied to all
interests in the LLC transferred to a service provider by the LLC in connection
with services provided to the LLC).
 
 
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                                   ARTICLE X
 
                           TRANSFER OF LLC INTERESTS
 
Section 10.1     Consent to Transfer.
 
(a)      No Unitholder shall Transfer all or any part of any interest in any
Equity Securities except in compliance with this Article X and any other
agreement binding upon such Unitholder which restricts the Transfer of Equity
Securities (including any Senior Management Agreement or other Equity
Agreement). No Unitholder (other than a holder of Investor Equity) shall
Transfer all or any part of any interest in any Equity Securities without first
obtaining the Board’s prior written consent, which consent may be withheld in
the Board’s sole discretion; provided that such Unitholder may Transfer Equity
Securities (without the Board’s prior written consent, but subject to the other
provisions of this Agreement) (i) pursuant to an Approved Sale, (ii) pursuant to
Section 10.2 (but not as a Transferring Unitholder), (iii) pursuant to the
forfeiture or repurchase provisions set forth in any applicable Senior
Management Agreement or other Equity Agreement, (iv) subject to Section 10.5(a),
to such Unitholder’s Permitted Transferees provided that the ultimate parent of
such Unitholder retains, directly or indirectly, voting control of such Equity
Securities and (v) pursuant to Section 10.11 (collectively, the “Exempt
Transfers”); provided that if such Unitholder Transfers any interests in any
Equity Securities to a Permitted Transferee and such Person ceases to be a
Permitted Transferee of such Unitholder, then such Person shall, upon ceasing to
be a Permitted Transferee, Transfer such interest to the Unitholder making such
Transfer. Upon the Transfer of Equity Securities pursuant to clause (iv) above,
the transferring holder of Equity Securities shall deliver a written notice (a
“Transfer Notice”) to the LLC, which shall disclose in reasonable detail the
identity of the Permitted Transferee(s) (and, if any such Permitted Transferee
is an entity, the beneficial owner(s) thereof). The holders of Investor Equity,
subject to the restrictions on transfer set forth in the Registration Agreement
(including in Section 3 thereof) or any agreement executed pursuant thereto, may
Transfer all or any interest in Investor Equity at any time subject only to the
restrictions on Transfer, if any, that are applicable to such Transfer pursuant
to Sections 10.2, 10.3, and 10.5. The limitations on Transfer set forth in this
Section 10.1, shall not apply to any public offering of Equity Securities
pursuant to an effective registration statement pursuant to the Securities Act
or in compliance with Rule 144 promulgated thereunder. Notwithstanding anything
to the contrary in this Agreement, no Unitholder shall Transfer any Unit if such
Transfer would cause the LLC to be in violation of, or unable to certify
compliance with, any applicable material Law, including any foreign ownership
rule or regulation of the FCC, or create any material risk of loss of any FCC
license or other material approval or permit.
 
(b)      Spouses.
 
(i)      As a condition to becoming or remaining a Unitholder, each Unitholder
that is an individual and is or becomes married will cause his or her spouse to
execute an agreement in the form of Schedule E hereof. If an existing Unitholder
fails to have his or her spouse execute such agreement, until such time as such
agreement is duly executed, such Unitholder will lose all of his or her rights
hereunder except for the economic rights associated with his or her Units.
 
 
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(ii)      In the event of a property settlement or separation agreement between
a Unitholder and his or her spouse, such Unitholder will use his or her best
efforts to assign to his or her spouse only the right to share in profits and
losses, to receive distributions, and to receive allocations of income, gain,
loss, deduction or credit or similar items to which such Unitholder was
entitled, with respect to his or her Units to the extent Transferred to his or
her spouse.
 
(iii)      If a spouse or former spouse of a Unitholder acquires any Units as a
result of any property settlement or separation agreement, such spouse or former
spouse hereby grants, as evidenced by Schedule E, an irrevocable power of
attorney (which will be coupled with an interest) to the original Unitholder who
held such Units to vote or to give or withhold such approval as such original
Unitholder will himself or herself vote or approve with respect to such matter
and without the necessity of the taking of any action by any such spouse or
former spouse. Such power of attorney will not be affected by the subsequent
disability or incapacity of the spouse or former spouse granting such power of
attorney. Furthermore, such spouse or former spouse agrees that the LLC will
have the option at any time to purchase all, but not less than all, of such
Units for a purchase price equal to the amount that would have been distributed
with respect to such Units pursuant to Section 4.1(a) if an amount equal to the
Total Equity Value Proceeds (determined in accordance with the Valuation
Procedure) were distributed to all Unitholders pursuant to Section 4.1(a).
 
Section 10.2     Tag Along Rights.
 
(a)      Participation Rights. At least 20 days prior to any Transfer, in any
one transaction or series of related transactions, by a holder of Class A Unit,
Class B Units or Class C Units, of any Units (other than one or more Transfers
(i) pursuant to a transaction pursuant to Section 10.3 or Section 15.7, (ii) to
any Affiliate of the Investors or Contributors, as applicable, (iii) which are
Exempt Transfers or (iv) to any current or former officer, employee, manager,
director, member, partner or co-investor of the Investors or any of their
Affiliates), such holder of Class A Units, Class B Units and/or Class C Units
(the “Transferring Unitholder”) shall deliver a written notice (the “Sale
Notice”) to the LLC and to each of the other Unitholders (the “Other
Unitholders”), specifying in reasonable detail the number and class of Units to
be Transferred and the terms and conditions of the contemplated Transfer. The
Other Unitholders holding the same class or series of Units (with the Class A
Units, Class B Units, Class C Units and Class D Units each being treated as a
separate class or series for purposes of this Section 10.2) may elect to
participate in the contemplated Transfer by delivering written notice to the
Transferring Unitholder within 20 days after delivery of the Sale Notice (such
Unitholders delivering such notice of election in accordance with this
Section 10.2, collectively, the “Electing Unitholders”). Such participation
shall be based upon the Pro Rata Share represented by the Units requested to be
included in such Transfer by each Unitholder relative to the Pro Rata Share of
all Units of such class or series held by the Unitholders participating in such
Transfer (including the Transferring Unitholder). Each Electing Unitholder shall
Transfer his, her or its Units on the same terms and conditions, with the
aggregate consideration to be paid in connection with such Transfer allocated
among each Unit included therein based on such Unit’s Pro Rata Share, determined
based upon the Total Equity Value Proceeds implied by the price offered in the
Sale Notice; provided that in the event that Units being transferred by the
Transferring Unitholder are comprised solely of Class A Units or Class B Units,
the aggregate
 
 
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consideration to be paid in connection with such Transfer shall be allocated
based on the proportionate Class A Unreturned Capital and Class A Unpaid Yield,
or Class B Unreturned Capital and Class B Unpaid Yield, as the case may
be. Notwithstanding the foregoing, (A) if the Transferring Unitholder intends to
Transfer Units of more than one class or series, each of the Other Unitholders
electing to participate must participate in all such Transfers (to the extent
such Other Unitholders hold such other class or series), (B) if such Transfer
constitutes a Sale of the LLC, the Class D Units shall be deemed to be the same
class of Units as the Class C Units for the purpose of this Section 10.2, and
(C) in no event shall any Unitholder be entitled to Transfer any unvested
Management Incentive Units pursuant this Section 10.2.
 
(b)      Participation Procedure; Conditions. With respect to any Transfer
subject to Section 10.2(a), each Transferring Unitholder shall use its
commercially reasonable efforts to obtain the agreement of the prospective
Transferee(s) to the participation of the Electing Unitholders, and no
Transferring Unitholder shall Transfer any of its Units to any prospective
Transferee if such prospective Transferee(s) declines to allow the participation
of the Electing Unitholders, unless in connection with such Transfer, one or
more of the Transferring Unitholders or their Affiliates purchase the number of
Units from each Electing Unitholder which such Electing Unitholder would have
been entitled to sell pursuant to Section 10.2(a) for the price specified in
Section 10.2(a). Each Electing Unitholder Transferring Units pursuant to this
Section 10.2 shall pay its share (determined on a Pro Rata Basis) of the
expenses incurred by the Transferring Unitholders in connection with such
Transfer and shall be obligated to join on a Pro Rata Basis in any
indemnification or other obligations that the Transferring Unitholder provides
in connection with such Transfer (other than any such obligations that relate
specifically to a particular Unitholder such as indemnification with respect to
representations and warranties given by a Unitholder regarding such Unitholder’s
title to and ownership of Units, in which case the Electing Unitholders will
only be obligated to agree to such terms with respect to himself, herself or
itself that the Transferring Unitholder provides with respect of itself);
provided that except to the extent a prospective Transferee permits a Unitholder
to give a guarantee, letter of credit or other mechanism (which shall be dealt
with on an individual basis), any escrow of proceeds of any such transaction
shall be withheld on a Pro Rata Basis among all Unitholders.
 
(c)      No Election. If the Other Unitholders have not elected to participate
in the contemplated Transfer (through notice to such effect or expiration of the
20-day period after delivery of the Sale Notice), then the Transferring
Unitholder may Transfer the Units specified in the Sale Notice at a price and on
terms no more favorable to the Transferring Unitholder thereof than specified in
the Sale Notice during the 90-day period immediately following the date of the
delivery of the Sale Notice. Any Transferring Unitholder’s Units not Transferred
within such 90-day period shall be subject to the provisions of this
Section 10.2 upon subsequent Transfer. The rights and obligations set forth in
this Section 10.2 shall not apply to, and shall terminate upon the first to
occur of, an initial Qualified Public Offering and a Sale of the LLC.
 
Section 10.3     Approved Sale; Drag Along Obligations.
 
(a)      Approved Sale. If the Board approves or the Investors notify the Board
that they desire to consummate a Sale of the LLC to one or more Independent
Third Parties (an “Approved Sale”), each Unitholder (and each Person that
retains voting control of any Units
 
 
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Transferred to a Permitted Transferee) shall (and shall cause any Manager(s)
designated by it to) vote for (whether at a meeting of Unitholders or Managers
or by written consent), consent to and raise no objections against, and not
otherwise impede or delay, and take such actions required or reasonably
requested by the Board and/or the Investors to effectuate such Approved Sale. In
furtherance of the foregoing, if the Approved Sale is structured as a (x) merger
or consolidation, each Unitholder shall waive any dissenters rights, appraisal
rights or similar rights in connection with such merger or consolidation or
(y) sale of Units, each Unitholder shall agree to sell, and shall sell, all of
his, her or its Units and rights to acquire Units on the terms and conditions
approved by the Board and/or the Investors. Each Unitholder shall take all
necessary or desirable actions in connection with the consummation of the
Approved Sale as requested by the Board and/or the Investors (including
executing and delivering any and all agreements, instruments and other documents
executed by the Investors on terms no less favorable to such Unitholders than to
the Investors, including any applicable purchase agreement, stockholders
agreement and/or indemnification and/or contribution agreement and, only in the
case of Unitholders and their Affiliates who are also employees of the LLC or
any of its Subsidiaries, executing and delivering any requested reaffirmation of
any then existing non-competition and non-solicitation agreements between the
LLC or any of its Subsidiaries and any such employee), it being understood, for
the avoidance of doubt, that no terms of the Approved Sale shall result in any
non-competition, non-solicitation or similar restrictions on the operations of
any Unitholder that is not also an employee of the LLC or any of its
Subsidiaries. Notwithstanding anything in this Agreement to the contrary, upon
the request of the Investor, an Approved Sale shall be structured to include the
sale of equity securities of any corporation that is an Affiliate of such
Investor, and directly or indirectly is the beneficial owner of any Units (with
no other operations, assets or liabilities other than its direct or indirect
interest in such Units).
 
(b)      Indemnification; Expenses. Notwithstanding anything to the contrary,
the Unitholders (including the Investors) shall be severally obligated to join
on a Pro Rata Basis in any indemnification obligation the Board and/or the
Investors have agreed to in connection with such Approved Sale (other than any
such obligations that relate specifically to a particular Unitholder, such as
indemnification with respect to representations and warranties given by a
Unitholder regarding such Unitholder’s title to and ownership of Units, in which
all Unitholders will have obligations no less favorable than the Investors);
provided that except to the extent a prospective Transferee permits a Unitholder
to give a guarantee, letter of credit or other mechanism (which shall be dealt
with on an individual basis), any escrow of proceeds of any such transaction
shall be withheld on a Pro Rata Basis among all Unitholders. Each Unitholder
shall pay a portion of the expenses incurred by the Investors pursuant to an
Approved Sale to the extent such expenses are incurred for the benefit of all
Unitholders (as determined by the Board and/or the Investors), with the total
amount of such expenses allocated among the Unitholders on a Pro Rata
Basis. Expenses incurred by any Unitholder on its own behalf (including the fees
and disbursements of counsel, advisors and other Persons retained by such holder
in connection with the Approved Sale) will not be considered costs incurred for
the benefit of all Unitholders and, to the extent not paid by the LLC, will be
the responsibility of such Unitholder. Each Unitholder shall enter into any
other agreement which the Board and/or the Investors approve and the Investors
enter into on the same terms and conditions (other than as differences in such
terms and conditions which might result from holdings of different classes of
Units). Without limiting the immediately prior sentence, each Unitholder shall
enter into any indemnification, contribution or unitholder representative
agreement requested by the Board and/or the Investors to ensure
 
 
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compliance with this Section 10.3(b) and the provisions of this Section 10.3(b)
requiring several liability shall be deemed complied with if such requirement is
addressed through such agreement, even if the purchase and sale agreement or
merger agreement related to the Approved Sale provides for joint and several
liability.
 
(c)      Purchaser Representative. If any of the LLC, any of its Subsidiaries,
or the Investors enter into any negotiation or transaction for which Rule 506
(or any similar rule then in effect) promulgated by the Securities Exchange
Commission may be available with respect to such negotiation or transaction
(including a merger, consolidation or other reorganization), any other
Unitholder is not an “accredited investor” as defined in such rule, shall, at
the reasonable request of the LLC, appoint a “purchaser representative” (as such
term is defined in Rule 501 promulgated under the Securities Act) designated by
the LLC. If any Unitholder so appoints a purchaser representative, the LLC shall
pay the fees of such purchaser representative. However, if any such other
Unitholder declines to appoint the purchaser representative designated by the
LLC, such Unitholder shall appoint another purchaser representative (reasonably
acceptable to the LLC), and such Unitholder shall be responsible for the fees of
the purchaser representative so appointed.
 
(d)      No Grant of Dissenters Rights or Appraisal Rights. In no manner shall
this Section 10.3 be construed to grant to any Unitholder any dissenters rights
or appraisal rights or give any Unitholder any right to vote in any transaction
structured as a merger or consolidation, it being understood that the
Unitholders hereby expressly grant to the Board and/or the Investors the sole
right to approve or consent to a sale of all or substantially all of the assets
of the LLC or a merger or consolidation of the LLC without approval or consent
of the Unitholders, subject to compliance with the terms and conditions of this
Agreement.
 
Section 10.4    Effect of Assignment.
 
(a)      Termination of Rights. Any Unitholder who shall assign any Units or
other interest in the LLC shall cease to be a Unitholder of the LLC with respect
to such Units or other interest and shall no longer have any rights or
privileges of a Unitholder with respect to such Units or other interest.
 
(b)      Deemed Agreement. Any Person who acquires in any manner whatsoever any
Units or other interest in the LLC, irrespective of whether such Person has
accepted and adopted in writing the terms and provisions of this Agreement,
shall be deemed by the acceptance of the benefits of the acquisition thereof to
have agreed to be subject to and bound by all of the terms and conditions of
this Agreement that any predecessor in such Units or other interest in the LLC
of such Person was subject to or by which such predecessor was bound.
 
Section 10.5    Additional Restrictions on Transfer. The following provisions
apply to any Transfer (other than any Transfer in a public offering pursuant to
an effective registration statement pursuant to the Securities Act or in
compliance with Rule 144 promulgated thereunder):
 
(a)      Counterpart. Each Transferee of Units or other interest in the LLC
shall, as a condition precedent to such Transfer, execute and deliver to the LLC
a counterpart to this
 
 
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Agreement and each Equity Agreement applicable to such Units to which the
Transferor of such Units is a party (including any Senior Management Agreement)
pursuant to which such Transferee shall agree to be bound by the provisions of
this Agreement and each such Equity Agreement.
 
(b)      Legal Opinion. No Transfer of Units or any other interest in the LLC
may be made unless in the opinion of counsel, satisfactory in form and substance
to the Board (which opinion may be waived by the Board), such Transfer would not
violate any federal securities laws or any state or provincial securities or
“blue sky” laws (including any investor suitability standards) applicable to the
LLC or the interest to be Transferred, or cause the LLC to be required to
register as an “Investment Company” under the U.S. Investment Company Act of
1940, as amended. Such opinion of counsel shall be delivered in writing to the
LLC prior to the date of the Transfer.
 
(c)      Code Section 7704 Safe Harbor. In order to permit the LLC to qualify
for the benefit of a “safe harbor” under Code Section 7704, notwithstanding
anything to the contrary in this Agreement, no Transfer of any Unit or economic
interest shall be permitted or recognized by the LLC or the Board (within the
meaning of Treasury Regulation Section 1.7704-1(d)) if and to the extent that
such Transfer would cause the LLC to have more than 100 partners (within the
meaning of Treasury Regulation Section 1.7704-1(h), including the look-through
rule in Treasury Regulation Section 1.7704-1(h)(3)). Further, no Transfer of any
Unit or economic interest shall be permitted if such Transfer would create, in
the Board’s discretion, a risk that the LLC would be treated as a
publicly-traded partnership within the meaning of Code Section 7704.
 
Section 10.6    Legend. In the event that certificated Units are issued, such
certificated Units will bear the following legend:
 
“THE UNITS REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
_____________ ___, _____, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS (“STATE ACTS”)
AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR STATE ACTS
OR AN EXEMPTION FROM REGISTRATION THEREUNDER.
 
THE TRANSFER OF THE UNITS REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE
CONDITIONS SPECIFIED IN A LIMITED LIABILITY COMPANY AGREEMENT, DATED AS OF
SEPTEMBER ____, 2011, AS AMENDED AND MODIFIED FROM TIME TO TIME, GOVERNING THE
ISSUER (THE “LLC”), AND BY AND AMONG CERTAIN INVESTORS (THE “LLC
AGREEMENT”). THE UNITS REPRESENTED BY THIS CERTIFICATE MAY ALSO BE SUBJECT TO
ADDITIONAL TRANSFER RESTRICTIONS, CERTAIN VESTING PROVISIONS, REPURCHASE
OPTIONS, OFFSET RIGHTS AND FORFEITURE PROVISIONS SET FORTH IN
 
 
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THE LLC AGREEMENT AND/OR A SEPARATE AGREEMENT WITH THE INITIAL HOLDER. A COPY OF
SUCH CONDITIONS, REPURCHASE OPTIONS AND FORFEITURE PROVISIONS SHALL BE FURNISHED
BY THE LLC TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”
 
If a Unitholder holding certificated Units delivers to the LLC an opinion of
counsel, satisfactory in form and substance to the Board (which opinion may be
waived by the Board), that no subsequent Transfer of such Units will require
registration under the Securities Act, the LLC will promptly upon such
contemplated Transfer deliver new certificated Units which do not bear the
portion of the restrictive legend relating to the Securities Act set forth in
this Section 10.7.
 
Section 10.7    Transfer Fees and Expenses. The Transferor and Transferee of any
Units or other interest in the LLC shall be jointly and severally obligated to
reimburse the LLC for all reasonable expenses (including attorneys’ fees and
expenses) of any Transfer or proposed Transfer, whether or not consummated.
 
Section 10.8    Void Transfers. Any Transfer by any Unitholder of any Units or
other interest in the LLC in contravention of this Agreement (including the
failure of the Transferee to execute a counterpart in accordance with Section
10.5(a)) or which would cause the LLC to not be treated as a partnership for
U.S. federal income tax purposes shall be void and ineffectual and shall not
bind or be recognized by the LLC or any other Person. No purported assignee
shall have any right to any profits, losses or distributions of the LLC.
 
Section 10.9    Vesting, Forfeiture and Repurchase of Units. Notwithstanding
anything to the contrary set forth in this Agreement, Units may be subject to
vesting, forfeiture or repurchase as set forth in any applicable Senior
Management Agreement or Equity Agreement.
 
Section 10.10   No Public Sales of Unvested Units. Following the initial Public
Offering of the LLC, no Management Unitholder shall Transfer any unvested
securities of the LLC or any corporate successor thereto.
 
Section 10.11   Right of First Offer. At any time after the fifth (5th)
anniversary of the Effective Date, so long as the Contributors or their
Permitted Transferees satisfy the Ownership Threshold, the Contributors or their
Permitted Transferees (as applicable, the “ROFO Sellers”) may propose to
transfer or sell any Units (the “Offered Units”) to any Person that is not a
Permitted Transferee, the Investors, any of their Affiliates or any Format
Competitor (such Person, a “Qualified Purchaser”), and the ROFO Sellers shall
first offer to sell to the Investors (the “Rightholders”) the Offered Units in
accordance with the following procedure:
 
(a)      The ROFO Sellers shall notify the Rightholders in writing (the “Offer
Notice”) of their desire to sell the Offered Units and provide the price and
other material terms and conditions upon which they are willing to sell the
Offered Units and request that the Rightholders provide the ROFO Sellers with an
offer to purchase such Offered Units.
 
(b)      The Rightholders shall have the right, but not the obligation, within
10 Business Days following delivery of the Offer Notice, to deliver a written
acceptance (an “Acceptance”) to the ROFO Sellers of the offer contained in the
Offer Notice, whereupon the
 
 
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Rightholders shall be obligated to purchase the Offered Units at the price and
subject to the terms and conditions specified in the Offer Notice
 
(c)      The closing of the transfer of such Offered Units pursuant to an
Acceptance shall occur on or before the date specified for Closing in the Offer
Notice, which date shall not be later than 90 days following the date of the
Offer Notice (subject to delay for any required governmental approvals). If the
Rightholders do not deliver an Acceptance within 10 Business Days following
delivery of the Offer Notice (the “Acceptance Deadline”) or if the Rightholders
do not consummate the purchase of the Offered Interests within the time period
described in the foregoing sentence (the “Closing Deadline”), the offer
contained in the Offer Notice shall be deemed a “Rejected Offer” and the date of
such rejection (the “Rejection Date”) shall be the Acceptance Deadline or the
Closing Deadline, as applicable.
 
(d)      The ROFO Sellers may, at any time within 180 days of the Rejection
Date, sell such Offered Units to any Qualified Purchaser at a same or better (to
the ROFO Sellers) price and payment terms and subject to other terms and
conditions that are not materially more favorable to the Qualified Purchaser
than the Rightholders. Notwithstanding the foregoing, the ROFO Sellers shall not
be permitted to Transfer any Units to any Qualified Purchaser if such Transfer
would cause the LLC to be in violation of, or unable to certify compliance with,
any applicable Law, including any foreign ownership rule or regulation of the
FCC, or create any material risk of loss of any FCC license or other material
approval or permit.
 
                                   ARTICLE XI
 
                            ADMISSION OF UNITHOLDERS
 
Section 11.1    Substituted Unitholders. In connection with the Transfer of an
LLC Interest of a Unitholder permitted under the terms of this Agreement and the
other Transaction Documents, the transferee shall become a Substituted
Unitholder on the effective date of such Transfer, which effective date shall
not be earlier than the date of compliance with or waiver of the conditions to
such Transfer, including executing counterparts of, and become a party to, this
Agreement and the other Transaction Documents to which the transferor Unitholder
was a party, and such admission shall be shown on the books and records of the
LLC.
 
Section 11.2    Additional Unitholders. A Person may be admitted to the LLC as
an Additional Unitholder only as contemplated under, and in compliance with, the
terms of this Agreement, including furnishing to the Board (a) a letter of
acceptance, in form satisfactory to the Board, of all the terms and conditions
of this Agreement, including the power of attorney granted in Section 15.1, and
(b) such other documents or instruments as may be necessary or appropriate to
effect such Person’s admission as a Unitholder (including counterparts or
joinders to all applicable Transaction Documents). Such admission shall become
effective on the date on which the Board determines in its good faith discretion
that such conditions have been satisfied and when any such admission is shown on
the books and records of the LLC.
 
Section 11.3    Optionholders. Except as set forth in this Agreement, no Person
that holds Equity Securities exercisable, exchangeable, or convertible into
Units shall have any rights with respect to such Units until such Person is
actually issued Units upon such exercise,
 
 
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exchange, or conversion and, if such Person is not then a Unitholder, is
admitted as a Unitholder pursuant to Section 11.2.
 
                                  ARTICLE XII
 
                   WITHDRAWAL AND RESIGNATION OF UNITHOLDERS
 
Section 12.1    Withdrawal and Resignation of Unitholders. No Unitholder shall
have the power or right to withdraw or otherwise resign or be expelled from the
LLC prior to the dissolution and winding up of the LLC pursuant to Article XIII,
except as otherwise expressly permitted by this Agreement or any of the other
agreements contemplated hereby. Notwithstanding that payment on account of a
withdrawal may be made after the Effective Date of such withdrawal, any
completely withdrawing Unitholder will not be considered a Unitholder for any
purpose after the Effective Date of such complete withdrawal, and, in the case
of a partial withdrawal, such Unitholder’s Capital Account (and corresponding
voting and other rights) shall be reduced for all other purposes hereunder upon
the Effective Date of such partial withdrawal.
 
Section 12.2    Withdrawal of a Unitholder. No Unitholder shall have the power
or right to withdraw or otherwise resign from the LLC except, simultaneous with
the Transfer of all of a Unitholder’s Units in a Transfer permitted by this
Agreement and, if such Transfer is to a Person that is not a Unitholder, the
admission of such Person as a Unitholder pursuant to Section 11.1.
 
                                  ARTICLE XIII
 
                          DISSOLUTION AND LIQUIDATION
 
Section 13.1    Dissolution. The LLC shall not be dissolved by the admission of
Additional Unitholders or Substituted Unitholders, or by the death, retirement,
expulsion, bankruptcy or dissolution of a Unitholder. The LLC shall dissolve,
and its affairs shall be wound up upon the first to occur of the following:
 
(a)      approval of dissolution by the Board (with the approval of the Majority
Holders) or by the Majority Holders (subject to Section 6.7(a)(v), if
applicable); or
 
(b)      the entry of a decree of judicial dissolution or an administrative
dissolution of the LLC under Section 18-802 of the Delaware Act.
 
Except as otherwise set forth in this Article XIII, the LLC is intended to have
perpetual existence. An Event of Withdrawal shall not cause a dissolution of the
LLC and the LLC shall continue in existence subject to the terms and conditions
of this Agreement.
 
Section 13.2    Liquidation and Termination. On dissolution of the LLC, the
Board shall act as liquidator or may appoint one or more representatives or
Unitholders as liquidator. The liquidator shall proceed diligently to wind up
the affairs of the LLC, sell all or any portion of the LLC assets for cash or
cash equivalents as they deem appropriate, and make final distributions as
provided herein and in the Delaware Act. The costs of liquidation shall be borne
as an LLC expense. Until final distribution, the liquidator shall continue to
operate the LLC
 
 
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properties with all of the power and authority of the Board. The liquidator
shall pay, satisfy, or discharge from LLC funds all of the debts, liabilities,
and obligations of the LLC (including all expenses incurred in liquidation) or
otherwise make adequate provision for payment and discharge thereof (including
the establishment of a cash fund for contingent liabilities in such amount and
for such term as the liquidator may reasonably determine) and shall promptly
distribute the remaining assets to the holders of Units in accordance with
Section 4.1(a), as if the LLC’s Taxable Year closed immediately prior to such
distribution. Any non-cash assets that are distributed to the Unitholders will
first be written up or down to their Fair Market Value, thus creating Profit or
Loss (if any), which shall be allocated in accordance with Section 4.2 and
Section 4.3. After taking into account such allocations, it is anticipated that
each Unitholder’s Capital Account will be equal to the amount to be distributed
to such Unitholder pursuant to this Section 13.2. In making the distributions
pursuant to this Section 13.2, the liquidator shall allocate each type of asset
(i.e., cash, cash equivalents, securities, etc.) among the Unitholders ratably
based upon the aggregate amounts to be distributed with respect to the Units
held by each such Unitholder. Any such distributions in kind shall be subject to
(x) such conditions relating to the disposition and management of such assets as
the liquidator deems reasonable and equitable and (y) the terms and conditions
of any agreement governing such assets (or the operation thereof or the holders
thereof) at such time.
 
The distribution of cash and/or property to a Unitholder in accordance with the
provisions of this Section 13.2 constitutes a complete return to the Unitholder
of its Capital Contributions and a complete distribution to the Unitholder of
its interest in the LLC and all the LLC’s property and constitutes a compromise
to which all Unitholders have consented within the meaning of the Delaware
Act. To the extent that a Unitholder returns funds to the LLC, it has no claim
against any other Unitholder for those funds.
 
Section 13.3    Cancellation of Certificate. On completion of the distribution
of LLC assets as provided herein, the LLC shall be terminated (and the LLC shall
not be terminated prior to such time), and the Board (or such other Person or
Persons as the Delaware Act may require or permit) shall file a certificate of
cancellation with the Secretary of State of the State of Delaware, cancel any
other filings made pursuant to this Agreement that are or should be canceled,
and take such other actions as may be necessary to terminate the LLC. The LLC
shall be deemed to continue in existence for all purposes of this Agreement
until it is terminated pursuant to this Section 13.3.
 
Section 13.4    Reasonable Time for Winding Up. A reasonable time shall be
allowed for the orderly winding up of the business and affairs of the LLC and
the liquidation of its assets pursuant to Section 13.2 in order to minimize any
losses otherwise attendant upon such winding up.
 
Section 13.5    Return of Capital. The liquidator shall not be personally liable
for the return of Capital Contributions or any portion thereof to the
Unitholders (it being understood that any such return shall be made solely from
LLC assets).
 
Section 13.6    Reserves Against Distributions. The Board shall have the right
to withhold from Distributions payable to any Unitholder under this Agreement
amounts sufficient to pay and discharge any reasonably anticipated contingent
liabilities of the LLC. Any amounts
 
 
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remaining after payment and discharge of any such contingent liabilities of the
LLC will be paid to the Unitholders from whom the Distributions were withheld.
 
                                  ARTICLE XIV
 
                                   VALUATION
 
Section 14.1    Cash Required for Payment of Units. Except as otherwise provided
herein or in any agreement, document or instrument contemplated hereby, any
amount to be paid under this Agreement by reference to the Fair Market Value or
Total Equity Value Proceeds shall be paid in full in cash, and any Unit being
Transferred in exchange therefor will be Transferred free and clear of all
Liens.
 
Section 14.2    Fair Market Value. Within ten (10) days after consummation of
the purchase and sale of Units pursuant to Section 6.8, the Contributors may
dispute such determination by issuing a dispute notice (a “Dispute Notice”) to
the Investors. If the Contributors issue a Dispute Notice, then the Contributors
and Investors shall reasonably agree on an Appraisal Firm (the “Independent
Appraiser”). If the Contributors and the Investors are not able to agree on an
Appraisal Firm within five (5) days, then one Appraisal Firm will be engaged by
the Contributors (the “Contributors’ Appraiser”), one Appraisal Firm will be
engaged by the Investors (the “Investors’ Appraiser”), and a third Appraisal
Firm will be engaged by the LLC and selected by the two Appraisal Firms, in
which case such third Appraisal Firm will be the “Independent Appraiser” for
purposes hereof. Within a period of 30 days of the Dispute Notice, the
Contributors (or the Contributors’ Appraiser, if applicable) and the Investors
(or the Investors’ Appraiser, if applicable), shall each provide a determination
of Fair Market Value to the Independent Appraiser (which in the case of the
Investors or the Investors’ Appraiser shall not be less than the Board’s
determination of Fair Market Value giving rise to the Dispute Notice).  Upon
receipt of such determinations, the Independent Appraiser shall select the
determination that it believes more accurately represents Fair Market Value,
using all factors, information and data deemed to be pertinent and in accordance
with this Agreement, and such determination shall be final and binding on the
parties hereto. The Contributors and the Investors shall use their reasonable
and good faith efforts to work with the Independent Appraiser so that it has the
information it reasonably believes necessary or advisable to make such
selection. If the Independent Appraiser selects the determination of Fair Market
Value prepared by (i) the Contributors or the Contributors’ Appraiser, then the
fees and expenses of the Appraisers will be borne by the Investors or (ii) the
Investors or the Investors’ Appraiser, then the fees and expenses of each
Appraiser will be borne by the Contributors. If the determination of Fair Market
Value selected by the Independent Appraiser is greater than the amount paid by
the Investors, the Investors shall promptly pay such difference to the
Contributors.
 
 
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                                   ARTICLE XV
 
                               GENERAL PROVISIONS
 
Section 15.1    Power of Attorney.
 
(a)      Each Unitholder hereby constitutes and appoints each member of the
Board and the liquidator, with full power of substitution, as his true and
lawful agent and attorney-in-fact, with full power and authority in his or its
name, place and stead, to execute, swear to, acknowledge, deliver, file, and
record in the appropriate public offices (i) this Agreement, all certificates,
and other instruments and all amendments (in the manner set forth herein)
thereof in accordance with the terms hereof which the Board deems appropriate or
necessary to form, qualify, or continue the qualification of, the LLC as a
limited liability company in the State of Delaware and in all other
jurisdictions in which the LLC may conduct business or own property; (ii) all
instruments which the Board deems appropriate or necessary to reflect any
amendment, change, modification, or restatement of this Agreement in accordance
with its terms; (iii) all conveyances and other instruments or documents which
the Board deems appropriate or necessary to reflect the dissolution and
liquidation of the LLC pursuant to the terms of this Agreement, including a
certificate of cancellation; and (iv) all instruments relating to the admission,
withdrawal, or substitution of any Unitholder pursuant to Articles XI and XII.
 
(b)      The foregoing power of attorney is irrevocable and coupled with an
interest, and shall survive the death, disability, incapacity, dissolution,
bankruptcy, insolvency, or termination of any Unitholder and the Transfer of all
or any portion of his or its LLC Interest and shall extend to such Unitholder’s
heirs, successors, assigns, and personal representatives.
 
Section 15.2    Amendments.
 
(a)      Subject to Section 15.2(b) and 15.2(c), any provision of this Agreement
may be amended or modified (whether by merger, consolidation, combination or
otherwise (except in the event such merger, consolidation or other combination
is in compliance with Section 10.3)) if, but only if, such amendment or
modification is in writing and is approved in writing by the LLC and the
Majority Holders.
 
(b)      Notwithstanding Section 15.2(a) but subject to Section 15.2(c), if an
amendment or modification of this Agreement (whether by merger, consolidation,
combination or otherwise (except in the event such merger, consolidation or
other combination is in compliance with Section 10.3)):
 
(i)      would alter or change the rights hereunder of a Unitholder or class or
group of Unitholders specifically granted such rights by name or by class
(including without limitation any rights granted under Section 6.7), such
amendment or modification shall not be effective against such Unitholder or
group of Unitholders (as the case may be) without the prior written consent of
such Unitholder (which, for purposes of any amendment to Section 6.7, means the
consent of the Contributors) or, in the case of a class or group of Unitholders,
the holders of at least a majority of the Units held by such class or group of
Unitholders; or
 
 
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(ii)      would alter or change the powers, preferences or rights hereunder of
any Units in a manner that treats holders of a class of Units (holders of such
class, the “Subject Unitholders”) materially and adversely different than other
holders of such class of Units, such amendment or modification shall not be
effective against the applicable Subject Unitholders without the prior written
consent of the holders of at least a majority of such class of Units held by
such Subject Unitholders; or
 
(iii)      would modify the limited liability of a Unitholder or adversely
affect the exculpation, indemnification or advancement rights of such Unitholder
or any of its Manager designees, such amendment or modification shall not be
effective against such Unitholder without the prior written consent of such
Unitholder.
 
(c)      Any amendments or modifications otherwise expressly permitted by this
Agreement (including pursuant to Section 3.3), shall be interpreted in a manner
that is consistent with the provisions of Section 15.2(a) and Section
15.2(b).  The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
 
Section 15.3    Title to LLC Assets. LLC assets shall be deemed to be owned by
the LLC as an entity, and no Unitholder, individually or collectively, shall
have any ownership interest in such LLC assets or any portion thereof. Legal
title to any or all LLC assets may be held in the name of the LLC or one or more
nominees, as the Board may determine. The Board hereby declares and warrants
that any LLC assets for which legal title is held in its name or the name of any
nominee shall be held in trust by the Board or such nominee for the use and
benefit of the LLC in accordance with the provisions of this Agreement. All LLC
assets shall be recorded as the property of the LLC on its books and records,
irrespective of the name in which legal title to such LLC assets is held.
 
Section 15.4    Remedies. Each Unitholder and the LLC shall have all rights and
remedies set forth in this Agreement and all rights and remedies which such
Person has been granted at any time under any other agreement or contract and
all of the rights which such Person has under any law. Any Person having any
rights under any provision of this Agreement or any other agreements
contemplated hereby shall be entitled to enforce such rights specifically
(without posting a bond or other security), to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by law.
 
Section 15.5    Successors and Assigns. All covenants and agreements contained
in this Agreement shall bind and inure to the benefit of the parties hereto and
their respective heirs, executors, administrators, successors, legal
representatives, and permitted assigns, whether so expressed or not. Each other
party hereto consents to the Contributors’ pledging, assigning and granting, for
the benefit of the financial institutions identified as agents or lenders under
the Amended and Restated Revolving Credit and Term Loan Agreement dated as of
November 2, 2006, as amended, by and among Emmis, Emmis Communications
Corporation and the financial institutions identified therein from time to time
as lenders, a continuing security interest and lien on all of the Contributors’
right, title and interest in and to all rights held by the Contributors and
 
 
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the rights to payment of money owing to the Contributors and all payments
received by such Contributors (whether in cash or otherwise), in each case,
under this Agreement.
 
Section 15.6    Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal, or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality, or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be performed, construed, and
enforced in such jurisdiction as if such invalid, illegal, or unenforceable
provision had never been contained herein.
 
Section 15.7    Change in Business Form; Recapitalization.
 
(a)      IPO Approval. If the Board approves an initial Qualified Public
Offering with respect to the LLC, each Unitholder (and each Person that retains
voting control of any Units Transferred to a Permitted Transferee) hereby
consents to such Qualified Public Offering and shall vote for (to the extent it
has any voting right) and raise no objections against such Qualified Public
Offering, and each Unitholder shall take all reasonable actions in connection
with the consummation of such initial Qualified Public Offering as determined by
the Board.
 
(b)      Incorporation of the LLC. The Board may, in order to facilitate a
Qualified Public Offering of securities of the LLC, or for other reasons that
the Board deems in the best interests of the LLC and/or its Unitholders, cause
the LLC to incorporate its business, or any portion thereof, including by
(i) the transfer of all of the assets of the LLC, subject to the LLC’s
liabilities, or the transfer of any portion of such assets and liabilities, to
one or more corporations in exchange for shares of such corporation(s) and the
subsequent distribution of such shares, at such time as the Board may determine,
to the Unitholders, (ii) conversion of the LLC into a corporation pursuant to
§18-216 of the Delaware Act (or any successor section thereto), (iii) Transfer
by each Unitholder of Units held by such Unitholder to one or more corporations
in exchange for shares of such corporation(s) (including by merger of the LLC
into a corporation) or (iv) causing a corporation to be admitted as a member of
the LLC, with such corporation purchasing interests in the LLC from the LLC or
the Unitholders (as determined by the Board) with the proceeds of a public
offering of the corporation’s stock and, in connection therewith, each
Unitholder agrees to the Transfer of its Units in accordance with the terms of
exchange as provided by the Board and further agrees that as of the effective
date of such exchange any Unit outstanding thereafter which shall not have been
tendered for exchange shall represent only the right to receive a certificate
representing the number of shares of such corporation(s) as provided in the
terms of such exchange. In connection with any such transaction as provided
above, each holder of Units shall receive, in exchange for the Units held by
such holder, capital stock, options or other securities with substantially
similar economic and other rights, privileges and preferences as the Units being
exchanged had prior to the consummation of such transaction pursuant to the
terms of this Agreement, any Equity Agreement, or otherwise as determined by the
Board. The LLC shall pay any and all organizational, legal and accounting
expenses and filing fees incurred in connection with such incorporation
transaction, including any fees related to a filing under the Hart-Scott-Rodino
Anti-Trust Improvements Act of 1976, as amended, if applicable. It is the intent
of the Unitholders that the conversion of the LLC into corporate form and the
conversion or
 
 
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reorganization of any of the LLC’s operating divisions, whether currently
existing or existing in the future, into corporate form are part of the
Unitholders’ original investment decision with respect to the Units of the
Unitholders. In connection with any such reorganization or change, no Unitholder
shall have the right or power to veto, vote for or against, amend, modify or
delay any such reorganization or exchange. Further, each Unitholder shall
execute and deliver any documents and instruments and perform any additional
acts that may be necessary or appropriate, as determined by the Board, to
effectuate and perform any such reorganization or change (including any
amendment to this Agreement and, in the case of any Management Unitholder,
executing an agreement with the successor entity providing for the continued
vesting of, and repurchase rights respecting, any equity securities issued in
respect of unvested Management Incentive Units in form and substance similar to
the provisions and restrictions with respect to vesting and repurchase rights
set forth in any Senior Management Agreement or similar agreement, as the case
may be).
 
(c)      Conversion to Limited Partnership. Without limiting the generality of
the foregoing, the Board may at any time, if the Board deems it in the best
interests of the LLC and/or its Unitholders, effect a conversion of the LLC into
a limited partnership pursuant to §18-216 of the Delaware Act (or any successor
section thereto) provided that no Person that is a Unitholder immediately prior
to such conversion shall be a general partner of such limited partnership
without such Person’s prior written consent which may be granted or withheld in
such Person’s sole discretion. It is the intent of the Unitholders that the
possibility of a conversion of the LLC into a limited partnership is part of the
Unitholders’ original investment decision with respect to their respective
Units. No Unitholder shall have the right or power to veto, vote for or against,
amend, modify or delay any such conversion. Further, each Unitholder shall
execute and deliver any documents and instruments and perform any additional
acts that may be necessary or appropriate, as determined by the Board, to
effectuate and perform any such conversion.
 
(d)      At any time after the LLC converts to a corporation pursuant to
Section 15.7(b) or otherwise converts to or becomes treated as a corporation for
federal income tax purposes, or in anticipation of such a conversion or
treatment, the Unitholders (and their owners) shall cooperate in good faith to
minimize any tax inefficiencies that may arise as a result of such
treatment. Without limiting the generality of the foregoing, the holder(s) of
all of the outstanding equity interests of any Unitholder (or direct or indirect
owner of any Unitholder) that is an entity treated as a corporation for federal
income tax purposes shall have the right to merge such corporation with and into
the LLC, or exchange the equity interests of such corporation for stock or
interests, as the case may be, of the LLC, in each case for a number of shares
or interests, as the case may be, in the LLC equal to the number of LLC units or
interests, as the case may be, owned by such corporation, provided in each case
that at the time of such merger or exchange such corporation has no material
assets other than equity interests in the LLC and has no liabilities.
 
Section 15.8    Opt-in to Article 8 of the Uniform Commercial Code. The
Unitholders hereby agree that the Units shall be securities governed by
Article 8 of the Uniform Commercial Code of the State of Delaware (and the
Uniform Commercial Code of any other applicable jurisdiction).
 
 
                                     - 71 -
--------------------------------------------------------------------------------
                                                                                
Section 15.9    Notice to Unitholder of Provisions. By executing this Agreement,
each Unitholder acknowledges that it has actual notice of (a) all of the
provisions hereof (including the restrictions on Transfer set forth herein), and
(b) all of the provisions of the Certificate.
 
Section 15.10   Counterparts. This Agreement may be executed in multiple
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.
 
Section 15.11   Consent to Jurisdiction. Each Unitholder irrevocably submits to
the nonexclusive jurisdiction of the United States District Court for the State
of Delaware and the state courts of the State of Delaware for the purposes of
any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each Unitholder further agrees that service of
any process, summons, notice or document by United States certified or
registered mail to such Unitholder’s respective address set forth in the LLC’s
books and records or such other address or to the attention of such other person
as the recipient party has specified by prior written notice to the sending
party shall be effective service of process in any action, suit or proceeding in
Delaware with respect to any matters to which it has submitted to jurisdiction
as set forth above in the immediately preceding sentence. Each Unitholder
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the United States District Court for the State of
Delaware or the state courts of the State of Delaware and hereby irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in such court has been brought in an
inconvenient forum.
 
Section 15.12   Descriptive Headings; Interpretation. The descriptive headings
of this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. Whenever required by the context, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine, or neuter forms, and the singular form of nouns, pronouns, and verbs
shall include the plural and vice versa. The use of the word “including” in this
Agreement shall be by way of example rather than by limitation. Reference to any
agreement, document, or instrument means such agreement, document, or instrument
as amended or otherwise modified from time to time in accordance with the terms
thereof, and, if applicable, hereof. Without limiting the generality of the
immediately preceding sentence, no amendment or other modification to any
agreement, document, or instrument that requires the consent of any Person
pursuant to the terms of this Agreement or any other agreement will be given
effect hereunder unless such Person has consented in writing to such amendment
or modification. Wherever required by the context, references to a Fiscal Year
or Taxable Year shall refer to a portion thereof. The use of the words “or,”
“either,” and “any” shall not be exclusive. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement. Wherever a conflict
exists between this Agreement and any other agreement, this Agreement shall
control but solely to the extent of such conflict.
 
 
                                     - 72 -
--------------------------------------------------------------------------------
                                                                                
Section 15.13   Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
 
Section 15.14   MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, EACH PARTY TO THIS AGREEMENT (INCLUDING THE LLC) HEREBY WAIVES ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE
ANY DISPUTE BETWEEN OR AMONG ANY OF THE PARTIES HERETO, WHETHER ARISING IN
CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED OR
INCIDENTAL TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY AND/OR THE
RELATIONSHIPS ESTABLISHED AMONG THE PARTIES HEREUNDER.
 
Section 15.15   Addresses and Notices. All notices, demands, or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given or
made when (a) delivered personally to the recipient, (b) telecopied to the
recipient (with hard copy sent to the recipient by reputable overnight courier
service (charges prepaid) that same day) if telecopied before 5:00 p.m. Chicago,
Illinois time on a business day, and otherwise on the next business day, or
(c) one business day after being sent to the recipient by reputable overnight
courier service (charges prepaid). Such notices, demands, and other
communications shall be sent to the address for such recipient set forth in the
LLC’s books and records, or to such other address or to the attention of such
other person as the recipient party has specified by prior written notice to the
sending party. All notices, demands, and other communications sent to the
Investors shall be sent with a copy (which shall not constitute notice)
to: Latham & Watkins, LLP, 885 Third Avenue, New York, NY 10022-4834,
Facsimile: (212) 751-4864, Attention: Edward Sonnenschein and to Latham &
Watkins, LLP, 555 Eleventh Street, N.W., Suite 1000, Washington, D.C.
20004-1304, Attention: Nicholas Luongo. All notices, demands, and other
communications sent to any Contributor shall be sent with a copy (which shall
not constitute notice) to: Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285
Avenue of the Americas, New York, New York 10019-6064, Attn: James M. Dubin and
Kelley D. Parker, Facsimile: (212) 757-3900 and Wiley Rein LLP, 1776 K Street
NW, Washington, DC 20006, Attn: John E. Fiorini, III, Facsimile: (202)
719-7049. Any notice to the Board or the LLC shall be deemed given if received
by the Board at the principal office of the LLC designated pursuant to
Section 2.5.
 
Section 15.16   Creditors. None of the provisions of this Agreement shall be for
the benefit of or enforceable by any creditors of the LLC or any of its
Affiliates, and no creditor who makes a loan to the LLC or any of its Affiliates
may have or acquire (except pursuant to the terms of a separate agreement
executed by the LLC in favor of such creditor) at any time as a
 
 
                                     - 73 -
--------------------------------------------------------------------------------
                                                                                
 
result of making the loan any direct or indirect interest in LLC Profits,
Losses, Distributions, capital, or property other than as a secured
creditor. Notwithstanding the foregoing, each of the Managers, Officers or other
Persons indemnified pursuant to Article 7 are intended third party beneficiaries
of Article 7 and shall be entitled to enforce such provision (as it may be in
effect from time to time).
 
Section 15.17   Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement, or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement,
or condition. Notwithstanding the other provisions of this Agreement,
Section 18-305(a) of the Delaware Act shall not apply to the LLC and no
Unitholder shall have any rights thereunder.
 
Section 15.18   Further Action. The parties shall execute and deliver all
documents, provide all information, and take or refrain from taking such actions
as may be necessary or appropriate to achieve the purposes of this Agreement.
 
Section 15.19   Entire Agreement. This Agreement, those documents expressly
referred to herein, the other documents of even date herewith, and the other
Transaction Documents embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements, or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
 
Section 15.20   Electronic Delivery. This Agreement, the agreements referred to
herein, and each other agreement or instrument entered into in connection
herewith or therewith or contemplated hereby or thereby, and any amendments
hereto or thereto, to the extent signed and delivered by means of a
photographic, photostatic, facsimile or similar reproduction of such signed
writing using a facsimile machine or electronic mail shall be treated in all
manner and respects as an original agreement or instrument and shall be
considered to have the same binding legal effect as if it were the original
signed version thereof delivered in person. At the request of any party hereto
or to any such agreement or instrument, each other party hereto or thereto shall
re-execute original forms thereof and deliver them to all other parties. No
party hereto or to any such agreement or instrument shall raise the use of a
facsimile machine or electronic mail to deliver a signature or the fact that any
signature or agreement or instrument was transmitted or communicated through the
use of a facsimile machine or electronic mail as a defense to the formation or
enforceability of a contract and each such party forever waives any such
defense.
 
Section 15.21    Survival. Sections 4.5, 6.1, and Article VII shall survive and
continue in full force in accordance with its terms notwithstanding any
termination of this Agreement or the dissolution of the LLC.
 
Section 15.22   Certain Acknowledgments. Upon execution and delivery of a
counterpart to this Agreement or a joinder to this Agreement, each Unitholder
shall be deemed to acknowledge to the Investors as follows: (a) the
determination of such Unitholder to acquire Units in connection with this
Agreement or any other agreement has been made by such Unitholder independent of
any other Unitholder and independent of any statements or opinions as to the
advisability of such purchase or as to the properties, business, prospects or
condition
 
 
                                     - 74 -
--------------------------------------------------------------------------------
                                                                                
 
(financial or otherwise) of the LLC and its Subsidiaries which may have been
made or given by any other Unitholder or by any agent or employee of any other
Unitholder, (b) no other Unitholder has acted as an agent of such Unitholder in
connection with making its investment hereunder and that no other Unitholder
shall be acting as an agent of such Unitholder in connection with monitoring its
investment hereunder, (c) the Investors have retained Latham & Watkins LLP in
connection with the transactions contemplated hereby and expect to retain Latham
& Watkins LLP as legal counsel in connection with the management and operation
of the investment in the LLC and its Subsidiaries, (d) Latham & Watkins LLP is
not representing and will not represent any other Unitholder in connection with
the transaction contemplated hereby or any dispute which may arise between the
Investors, on the one hand, and any other Unitholder, on the other hand,
(e) such Unitholder will, if it wishes counsel on the transactions contemplated
hereby, retain its own independent counsel, and (f) Latham & Watkins LLP may
represent Investors (or any of their respective Affiliates (including, for the
avoidance of doubt, the LLC and its Subsidiaries) in connection with any and all
matters contemplated hereby (including any dispute between the Investors, on the
one hand, and any other Unitholder, on the other hand) and such Unitholder
waives any conflict of interest in connection with such representation by Latham
& Watkins LLP.
 
Section 15.23   Financial Statements and Other Information. So long as the
Contributors or their Permitted Transferees have the right to appoint the
Contributor Manager, the Contributor Manager shall receive all information and
documents made available to any other Manager of the same time it is made
available to such other Manager, and the LLC shall deliver to such Contributor,
and to the extent requested by a holder of Class D Units, so long as such holder
is employed by the LLC or one of its Subsidiaries, the LLC shall deliver to such
holder of Class D Units:
 
(a)      as soon as available but in any event within 30 days after the end of
each monthly accounting period in each fiscal year, unaudited consolidated
statements of income and cash flows of the LLC and its Subsidiaries for such
monthly period and for the period from the beginning of the fiscal year to the
end of such month, and consolidated balance sheets of the LLC and its
Subsidiaries as of the end of such monthly period, all prepared in accordance
with United States generally accepted accounting principles, consistently
applied (“GAAP”), subject to the absence of footnote disclosures, normal
year-end adjustments and such other departures from GAAP as the Board may
authorize;
 
(b)      as soon as available but in any event within 45 days after the end of
each quarterly accounting period in each fiscal year, unaudited consolidating
and consolidated statements of income and cash flows of the LLC and its
Subsidiaries for such quarterly period and for the period from the beginning of
the fiscal year to the end of such quarter, and consolidating and consolidated
balance sheets of the LLC and its Subsidiaries as of the end of such quarterly
period, all prepared in accordance with GAAP, subject to the absence of footnote
disclosures, normal year-end adjustments and such other departures from GAAP as
the Board may authorize; and
 
(c)      as soon as available but in any event within 75 days after the end of
each fiscal year, consolidating and consolidated statements of income and cash
flows of the LLC and its Subsidiaries for such fiscal year, and consolidating
and consolidated balance sheets of the
 
 
                                     - 75 -
--------------------------------------------------------------------------------
                                                                                
 
LLC and its Subsidiaries as of the end of such fiscal year, all prepared in
accordance with GAAP and audited by a nationally recognized independent
accounting firm.
 
 
                                    * * * *
                                        
                                        
                                        
                                        
                                        
                                        
 
 
                                     - 76 -
--------------------------------------------------------------------------------
                                                                                

 
IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on
their behalf this Limited Liability Company Agreement as of the date first above
written.
 
 
 
  MERLIN MEDIA, LLC          
                             
  By: /s/ Benjamin L. Homel  
  Name: Benjamin L. Homel    
  Title:  President          
                             


 
 
 

 
 

 [Signature Page to Merlin Media, LLC Second Amended & Restated LLC Agreement]

 
                                        
--------------------------------------------------------------------------------
                                                                                

 
 
  Investor:                     
                                
  GTCR MERLIN HOLDINGS, LLC     
                               
                                
  By: /s/ Christian B. McGrath  
  Name: Christian B. McGrath    
  Title:  Secretary             
                                


 
  Solely with respect to Sections 5.2 and 6.11 hereof:    
                                                          
  GTCR FUND X/B LP                                        
                                                         
  By:       GTCR Partners X/B LP                          
  Its:      General Partner                               
                                                          
  By:       GTCR Investment X LLC                         
  Its:      General Partner                               
                                                          
  By:       /s/ Christian B. McGrath                      
  Name: Christian B. McGrath                              
  Title:  General Counsel                                 
                                                          


 
  GTCR FUND X/C LP                
                                 
  By:   GTCR Partners X/A&C LP    
  Its:  General Partner           
                                  
  By:   GTCR Investment X LLC     
  Its:  General Partner           
                                  
  By:   /s/ Christian B. McGrath  
  Name: Christian B. McGrath      
  Title:  General Counsel         
                                  


 
 


 [Signature Page to Merlin Media, LLC Second Amended & Restated LLC Agreement]

 
                                        
--------------------------------------------------------------------------------
                                                                                
 
 
  Mr. Homel:                
                           
                            
   /s/ Benjamin L. Homel    
  Name: Benjamin L. Homel   
                            
                            


 

 
 






 [Signature Page to Merlin Media, LLC Second Amended & Restated LLC Agreement]

 
                                        
--------------------------------------------------------------------------------
                                                                                
 
 
  Contributors:                     
                                    
  EMMIS OPERATING COMPANY           
                                   
                                    
  By:  /s/ J. Scott Enright         
  Name: J. Scott Enright            
  Title:  Executive Vice President  
                                    


 
 
  EMMIS RADIO HOLDING CORPORATION    
                                    
                                     
  By:   /s/ J. Scott Enright         
  Name: J. Scott Enright             
  Title:  Executive Vice President   
                                     


 
 
  EMMIS RADIO HOLDING II CORPORATION    
                                       
                                        
  By:   /s/ J. Scott Enright            
  Name: J. Scott Enright                
  Title:  Executive Vice President      
                                        


 


 



 

 [Signature Page to Merlin Media, LLC Second Amended & Restated LLC Agreement]

 
                                        
--------------------------------------------------------------------------------
                                                                                

                                   SCHEDULE A
 
                           (As of September 1, 2011)
 
Name and                          Number of     Number of                   Number of  Participation   Initial  
Address of             Capital     Class A       Class B       Number of     Class D   Threshold for   Capital  
Unitholder            Commitment    Units         Units      Class C Units    Units    Class D Units   Account  
GTCR Merlin                                                                                          
Holdings, LLC                                                                                        
300 N. LaSalle       $100,000,000 86,200,000        —          3,800,000        —            —       $90,000,000
Street                                                                                               
Suite 5600                                                                                           
Chicago, IL 60654                                                                                    
Benjamin L. Homel                                                                                    
1717 Dixie Highway                                                                                   
Suite 650              $992,114    855,202          —            37,700      614,984         —       $1,507,886 
Ft. Wright, Kentucky                                                                                 
41011                                                                                                
Emmis Operating                                                                                      
Company                                                                                              
One Emmis Plaza                                                                                      
40 Monument Circle   $32,420,000      —      27,946,039.6758 1,231,960.3242     —            —       $29,178,000
Suite 700                                                                                            
Indianapolis, IN                                                                                     
46204                                                                                                
Emmis Radio Holding                                                                                  
Corporation                                                                                          
One Emmis Plaza                                                                                      
40 Monument Circle     $756,667       —       652,246.6591    28,753.3409       —            —        $681,000  
Suite 700                                                                                            
Indianapolis, IN                                                                                     
46204                                                                                                
Emmis Radio Holding                                                                                  
II Corporation                                                                                       
One Emmis Plaza                       —                                                              
40 Monument Circle     $156,666               135,046.6651     5,953.3349       —            —        $141,000  
Suite 700                                                                                            
Indianapolis, IN                                                                                     
46204                                                                                                
TOTAL                $134,325,447 87,055,202   28,733,333      5,104,367     614,984         —                  



 
                                        
--------------------------------------------------------------------------------
                                                                                

                                   Schedule B
 
                           Book Value of LLC property
 
 

 
 

 
 
 [To be completed as soon as reasonably practicable following the date hereof.]
 

 
                                        
--------------------------------------------------------------------------------
                                                                                

                                   Schedule C
 
                              Certain Definitions
 
“Format Competitor” means any Independent Third Party that provides news-talk
programming at any radio station in the top ten radio markets as measured by
Arbitron Inc.

“Restricted Programming” means news-talk programming at radio stations
broadcasting to the greater metropolitan areas of New York, NY or Chicago, IL.
 
 
 
 
 
 

 
                                        
--------------------------------------------------------------------------------
                                                                                

                                   Schedule D

                                    Officers

Benjamin L. Homel President and Chief Executive Officer
Walter Sabo       Authorized Officer                   


 

 

 
                                        
--------------------------------------------------------------------------------
                                                                                


 
                                   Schedule E
 
                               Consent of Spouse
 
I, the undersigned, the spouse of
____________                                                      , a Unitholder
of Merlin Media, LLC (the “LLC”) named in the Second Amended and Restated
Limited Liability Company Agreement of the LLC (the “Agreement”) acknowledge
that I have read the Agreement and that I understand its contents. I hereby
consent to and approve of the provisions of the Agreement, as it may be amended
from time to time in accordance with its terms, and agree that the Units held by
my spouse and my interest in such Units are subject to such provisions. I agree
that I will take no action at any time to hinder the operations of the LLC.
 
Dated: ________________, 20__.
 
 
              
    Name:     
    Address:  
              


 

 
 
 
--------------------------------------------------------------------------------

                                  



EX-99.1
3
eh1100637_form8k-ex9901.htm
EXHIBIT 99.1

eh1100637_form8k-ex9901.htm
                                                                    EXHIBIT 99.1

            Unaudited financial information for WLUP, WKQX and WRXP.

Unaudited combined balance sheet as of May 31, 2011 and February 28, 2011

                                                         As of                   
                                          February 28, 2011       May 31, 2011   
                                                      (000’s )           (000’s )
Current assets:                                                                  
                                                                                 
 Cash and cash equivalents               $                 1     $            1  
 Accounts receivable, net                              4,215              4,464  
 Prepaid expenses                                        323                276  
 Other                                                   281                257  
   Total current assets                                4,820              4,998  
                                                                                 
Noncurrent assets:                                                               
                                                                                 
 Property and equipment, net                           2,469              2,305  
 Intangible assets, net                              115,788            115,788  
 Other noncurrent assets                                 126                126  
   Total noncurrent assets                           118,383            118,219  
                                                                                 
 Total assets                            $           123,203     $      123,217  
                                                                                 
Current liabilities:                                                             
                                                                                 
 Accounts payable and accrued expenses   $               243     $          161  
 Accrued salaries and commissions                        525                582  
 Deferred revenue                                        336                288  
 Other                                                   364                350  
   Total current liabilities                           1,468              1,381  
a                                                                                
   Other noncurrent liabilities                        1,397              1,437  
                                                                                 
 Total liabilities                       $             2,865     $        2,818  
                                                                                 



                                                                                
 
                                        
--------------------------------------------------------------------------------
                                                                                
                                                                                

                                                                                
Unaudited combined operating income (loss) for the fiscal years ended February
28, 2009, 2010 and 2011
 
                                              For the year ended February 28,       
                                              2009            2010          2011    
                                                (000’s )       (000’s )     (000’s )
                                                                                    
Net revenues                              $     24,402      $  22,939     $ 25,257  
                                                                                    
Station operating expenses, excluding                                              
  depreciation and amortization expense         29,124         25,013       22,731  
Restructuring charge                               268            262            -  
Depreciation and amortization                    1,181          1,206        1,090  
Loss on disposal of assets                           -              -            7  
Impairment loss                                155,500         78,246            -  
Operating income (loss)                       (161,671 )      (81,788 )      1,429  




Unaudited combined operating income (loss) for the fiscal quarter ended May 31,
2011

                                             For the three months ended May 31,       
                                               2010                      2011         
                                                    (000’s )                  (000’s )
                                                                                      
Net revenues                             $           5,910         $           5,724  
Station operating expenses, excluding                                                
 depreciation and amortization expense               5,427                     5,228  
Restructuring charge                                   262                         -  
Depreciation and amortization                          290                       234  
Operating income (loss)                                (69 )                     262  


 
 
 
--------------------------------------------------------------------------------






EX-99.2
4
eh1100637_form8k-ex9902.htm
EXHIBIT 99.2

eh1100637_form8k-ex9902.htm
                                                                    EXHIBIT 99.2
For Immediate Release
Thursday, September 1, 2011
                                                         Contacts: Patrick Walsh
                                                                   Ryan Hornaday
                                                                    317.266.0100

 Emmis Completes Sale of Controlling Interest in Three Radio Stations to GTCR;
 NASDAQ Notifies Emmis that Class A Common Shares Fall Below Minimum Bid Price
 
Indianapolis….Emmis Communications Corporation (Nasdaq: EMMS) today announced it
has completed the transfer of WKQX-FM (101.1 MHz, Chicago, IL), WLUP-FM (97.9
MHz, Chicago, IL) and WRXP-FM (101.9 MHz, New York, NY) to Merlin Media LLC
(“Merlin Media”), and the sale of a controlling interest in Merlin Media to
Chicago-based private equity firm GTCR and Randy Michaels.

Emmis received approximately $120 million in cash proceeds from the sale of the
stations, net of transaction expenses, and continues to own $28.7 million of
preferred equity and 20.6 % of the common equity interests in Merlin Media. The
net cash proceeds were used to repay approximately 38% of the company’s term
loans under its senior credit facility.

“While it is difficult to part with these stations, we are pleased to remain
involved as an investor in Merlin Media. The proceeds of the sale allow us to
significantly delever the company and evaluate a variety of exciting
opportunities for the next era of growth at Emmis,” said Jeff Smulyan, Chairman
& CEO of Emmis.

The transaction was announced on June 21, 2011. Merlin Media began programming
the stations under a Local Marketing Agreement (LMA) on July 15, 2011.
 
Paul, Weiss, Rifkind, Wharton & Garrison LLP and Wiley Rein LLP served as legal
counsel and Moelis & Company served as financial advisor to Emmis. 

Late Wednesday, Emmis received notification from the Nasdaq Stock Market
("Nasdaq") that the Company’s Class A Common Stock had closed below the minimum
$1.00 per share bid requirement for 30 consecutive business days (starting July
19) and therefore is not in compliance with Nasdaq Marketplace Rule 5450(a)(1)
(the “Minimum Bid Rule”).  The Company has until February 27, 2012, to regain
compliance with the Minimum Bid Price Rule. During this period, the Company's
Class A Common Stock will continue to trade on the Nasdaq Global Select Market.
 
“The notice from Nasdaq was not a surprise, but the timing is ironic coming the
very day before we closed the Merlin transaction and repaid approximately $120
million of our debt. We are optimistic that the performance of our businesses
and our continued efforts to rationalize our balance sheet will enable us to
achieve compliance with the Minimum Bid Price Rule before February 27, 2012,”
said Smulyan.
 
If at any time before February 27, 2012, the bid price of the Company's Class A
Common Stock closes at $1.00 per share or more for a minimum of 10 consecutive
business days, Nasdaq will notify the Company that it has achieved compliance
with the Minimum Bid Price Rule. If the Company does not regain compliance with
the Minimum Bid Price Rule by February 27, 2012, Nasdaq will notify the Company
that its Class A Common Stock will be delisted from the Nasdaq Global Select
Market.  Nasdaq
 
 
 
                                        
--------------------------------------------------------------------------------
                                                                                
 
 
rules would then permit the Company to appeal any delisting determination by the
Nasdaq staff to a Listing Qualifications Panel.
 
The Company intends to actively evaluate and monitor the bid price for its Class
A Common Stock between now and February 27, 2012, and consider implementation of
various options available to the Company if its Class A Common Stock does not
trade at a level that is likely to regain compliance.
 

About Emmis Communications (Nasdaq: EMMS)
Emmis Communications Corporation is a diversified media company, principally
focused on radio broadcasting. Emmis operates the 8th largest publicly traded
radio portfolio in the United States based on total listeners. Emmis owns 18 FM
and two AM radio stations in New York, Los Angeles, St. Louis, Austin (Emmis has
a 50.1% controlling interest in Emmis' radio stations located there),
Indianapolis and Terre Haute, IN.

 
 
 
 
--------------------------------------------------------------------------------
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