Exhibit 10.17
THE MEMBERSHIP INTERESTS OF ▇▇▇▇▇ VENTURES CO-INVESTMENT FUND LLC HAVE NOT
BEEN REGISTERED UNDER ANY FEDERAL OR STATE SECURITIES LAWS AND CANNOT BE SOLD,
TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED UNLESS THEY
ARE REGISTERED THEREUNDER OR EXEMPTIONS FROM SUCH REGISTRATIONS ARE AVAILABLE,
AND THE REQUIREMENTS OF THIS LIMITED LIABILITY COMPANY AGREEMENT ARE
SATISFIED
LIMITED LIABILITY COMPANY AGREEMENT
OF ▇▇▇▇▇ VENTURES CO-INVESTMENT FUND LLC
EFFECTIVE AS OF APRIL 20, 2001
THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") OF ▇▇▇▇▇
VENTURES CO-INVESTMENT FUND LLC (the "Company") is made as of April 20, 2001 by
and among ▇▇▇▇▇ FINANCIAL CORPORATION, an Indiana corporation, as the Class A
member ("IFC" or the "Class A Member") and the other parties designated from
time to time as Class B members on SCHEDULE A hereto (each, a "Class B Member,"
and collectively, the "Class B Members"). The Class A Members and Class B
Members are sometimes referred to herein as the "Members". Certain capitalized
terms used in this Agreement have the meanings ascribed to them in ADDENDUM 1 to
this Agreement.
W I T N E S S E T H:
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WHEREAS, the parties hereto wish to form the Company as a limited
liability company among themselves under the terms stated in this Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE 1
CREATION AND NAME
The Members formed the Company on April 20, 2001 as a limited liability
company under the name ▇▇▇▇▇ Ventures Co-Investment Fund LLC pursuant to the
provisions of the Delaware Limited Liability Company Act, as amended (the
"Act"), and the terms and conditions of this Agreement. The Administrative
Member has caused to be filed with the Secretary of State of Delaware a
certificate of formation for the Company as required by the Act.
ARTICLE 2
LOCATION
The Company shall maintain its executive office and any additional
offices or places of business of the Company at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or at such other place or places as the
Administrative Member shall determine. The Company's resident agent for service
of process and its registered office in Delaware shall be as set forth in the
Certificate of Formation. The Administrative Member may (a) change the location
of the Company's principal place of business and establish such additional place
or places of business of the Company as it may determine from time to time, (b)
change the Company's registered office in Delaware, and/or (c) change the
Company's resident agent for service of process in Delaware.
ARTICLE 3
PURPOSE
The purpose of the Company is to facilitate investments by Qualified
Employees in the investments made by ▇▇▇▇▇ Ventures LLC, a Delaware limited
liability company (the "Venture Fund") and any and all related distributions
therefrom and to engage in any other activities deemed by the Management
Committee in its sole discretion to be incidental or related thereto or which
the Management Committee believes is otherwise appropriate. To effect its
purpose, Qualified Employees shall be entitled to make annual Capital
Contributions to the
Company in the manner set forth in Section 5.2, which Capital Contributions
shall be contributed by the Company to the Venture Fund at the beginning of each
year in exchange for an interest in investments made by the Venture Fund during
that year.
ARTICLE 4
TERM
The term of the Company commenced upon the filing of the Certificate of
Formation with the Delaware Secretary of State and shall continue until December
31, 2051, unless earlier terminated in accordance with this Agreement.
ARTICLE 5
CONTRIBUTION TO CAPITAL AND STATUS OF MEMBERS
Section 5.1. MEMBERSHIP INTERESTS. Membership Interests in the Company
initially shall be divided into two classes: (a) the Class A Memberships
Interests, which shall be entitled to vote on certain Company matters, including
the election of the members of the Management Committee, in the manner provided
in this Agreement and the holders of which shall be referred to as the Class A
Members, and (b) the Class B Membership Interests, which shall be non-voting
membership interests and the holders of which shall be referred to as the Class
B Members and who shall have no voting rights but shall be entitled to such
rights as set forth in Section 5.2. Except for voting rights (or as otherwise
expressly set forth in this Agreement), the Class A Membership Interests and
Class B Membership Interests shall be equal in all respects.
Section 5.2. CAPITAL CONTRIBUTIONS OF CLASS B MEMBERS.
5.2.1. At the beginning of each calendar year, for such period
as the Management Committee shall determine (the "Annual Investment Window"),
each Qualified Employee may elect to contribute to the Company the sum of (a)
up to Twenty-Five Thousand Dollars ($25,000) (or such greater amount as the
Management Committee may allow from time to time) of his Annual Bonus Award
for the year (the "Deferred Bonus Amount") and (b) an amount equal to the IFC
Loan. The aggregate amount so elected to be contributed by a Participating
Qualified Employee to the Company for any year under this Section 5.2.1 shall
be contributed as of January 1 of the year following the election and is
herein referred to as the "Annual Bonus Contribution." Each Participating
Qualified Employee hereby authorizes IFC to contribute such portion of his or
her Annual Bonus Award directly to the Company on his or her behalf.
5.2.2. Qualified Employees who elect to make an Annual Bonus
Contribution in subsequent years of the Company will be added from time to
time to the Company pursuant to Section 5.10 and will become members of an
Annual Investment Group owning a separate series of Class B Membership
Interests and will have an interest in Portfolio Investments initially made
in the year designated in the series or Annual Investment Group name. For
example, a Qualified Employee who elected in 2001 to have a portion of his or
her Annual Bonus Award contributed to the Company would have his or her
contribution effected at the beginning of 2002 and would be a member of the
"2002 Annual Investment Group." Such
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Participating Qualified Employee will have an interest as a Class B Member in
all Portfolio Investments initially made the Venture Fund in 2002.
5.2.3. It is the intention of the Company that the Membership
Interests in investments made by the Company be divided into separate series,
with a separate series for each Deferred Bonus Award Year that the Company is
in effect such that Qualified Employees who elect to contribute their
Deferred Bonus Amount to the Company for a particular year ("Participating
Qualified Employees") shall have one-hundred percent (100%) of the rights in
and to the Profits and Losses earned by the Company from investments
purchased by the Venture Fund in that Deferred Bonus Award Year in accordance
with this Agreement. To reflect this, each Participating Qualified Employee
shall become a Member in the Company and will be grouped together with other
Participating Qualified Employees electing to contribute their Deferred Bonus
Amount to the Company for that same year and such Participating Qualified
Employees shall have interests in the same group of Portfolio Investments for
the same Deferred Bonus Award Year (each such group of Qualified Employees
being herein an "Annual Investment Group"). Each Annual Investment Group will
be designated by the Deferred Bonus Award Year in respect of which funds are
contributed to the Company for investment in the Venture Fund. For example,
the "2001 Annual Investment Group" will be comprised of Qualified Employees
who shall be Class B Members and who shall share the Profits and Losses
allocable to the Company and attributable to investments initially made by
The Venture Fund in 2001.
5.2.4. Follow-on investments in Portfolio Investments in which
an Annual Investment Group already has an interest shall either, as the
Management Committee shall determine, (i) be funded out of the proceeds of a
sale of a Portfolio Investment in which that Annual Investment Group has an
interest, or (ii) not be funded by the Company. The Percentage Interest of
Members of the Annual Investment Group in the Portfolio Investment receiving
any such follow-on investment from the Company shall not be affected by any
follow-on investment funded in the manner set forth in clause (i) but shall
be diluted if clause (ii) is applicable and the follow-on investment is
funded from other sources.
5.2.5. The name, address and initial Percentage Interest of
each Member in the 2001 Annual Investment Group is set forth on SCHEDULE A
hereto. In addition to investments made in 2001, the members of the 2001
Annual Investment Group shall have the Percentage Interest set forth on
Schedule A hereto in each of the Portfolio Investments of the Venture Fund
initially made in 2000 (all of which are listed on Annex 1 to Schedule A).
The Percentage Interests of each of the Members of the 2001 Annual Investment
Group in Portfolio Investments made in 2001 shall be determined as of
December 31, 2001 and set forth on an amendment to SCHEDULE A prepared on or
after such date. As of the beginning of each Deferred Bonus Award Year, the
Administrative Member shall amend SCHEDULE A to reflect the new Annual
Investment Group being added and, at the end of such year, shall add to
SCHEDULE A the Percentage Interest of each such Member in Portfolio
Investments initially made in that year. Participating Qualified Employees
shall become Members of the Company as of the first day of each relevant
Deferred Bonus Award Year.
5.2.6. No Class B Member shall be required to make any other
capital contribution to the Company for any reason at any time. Upon the
creation of each series of
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Membership Interests and each Annual Investment Group, or upon a Class B Member
ceasing to be a Member, the Administrative Member shall revise SCHEDULE A to
reflect such change.
Section 5.3. CAPITAL CONTRIBUTIONS OF CLASS A MEMBER. The Class A
Member may, but shall not in any event be required to, make any capital
contribution to the Company.
Section 5.4. IFC LOANS. If, during the Annual Investment Window, a
Qualified Employee elects to contribute his Deferred Bonus Amount to the
Company, then such Qualified Employee shall be eligible to receive a loan from
IFC in an amount equal to the Deferred Bonus Amount contributed by such
Participating Qualified Employee to the Company for that particular year (each,
"an IFC Loan"). An IFC Loan (a) shall be treated as a loan from IFC to the
Participating Qualified Employee, (b) shall bear interest at not more than two
percent (2%) over the Prime Rate as determined by IFC, (c) shall be repayable at
such times and in such amounts as IFC and the Participating Qualified Employee
shall determine; provided, that an IFC Loan shall be repayable from all
distributions to which the Participating Qualified Employee is entitled under
this Agreement (provided, that for all purposes of this Agreement, such
distributions shall be treated as made to the Participating Qualified Employee),
(d) shall direct that IFC remit the proceeds of the IFC Loan directly to the
Company at such time as the Deferred Bonus Award is contributed by a
Participating Qualified Employee to the Company, (e) shall be repayable
immediately if the Participating Qualified Employee should cease to be employed
by IFC or its Affiliates, and (f) shall be secured by a pledge of the Qualified
Employee's Membership Interest in the Annual Investment Group to which the IFC
Loan related, in the form and manner satisfactory to IFC.
Section 5.5. REGISTRATION. Upon the admission of a person as a Class B
Member, such person shall be registered on the records of the Company as a Class
B Member, together with his Membership Interest, Annual Investment Group and
address. Each person registered as a holder of record of a Membership Interest
shall continue to be the holder of record of such Membership Interest until the
earlier of (i) notification of the transfer permitted pursuant to this Agreement
of any such Membership Interest is given in accordance with the terms of this
Agreement or (ii) the repurchase of such Membership Interest by a member of the
IFC Affiliated Group pursuant to Section 8.4. A Class B Member that is a holder
of record shall be entitled to the distributions and allocations of Profits
which relate to the Membership Interests registered in his name and to all other
rights of a Class B Member set forth in this Agreement until his rights in such
Membership Interests have been transferred in accordance with this Agreement and
the Management Committee has been notified as required herein. The Company shall
not be affected by any notice or knowledge of transfer of any interest in any
Membership Interest except as expressly provided in Article 8 hereof. The
payment to the holder of record of distributions in accordance with Sections 6.2
and 9.2 hereof with respect to such Membership Interests shall discharge the
Company's obligations with respect thereto.
Section 5.6. CONTINUATION OF CLASS B MEMBER STATUS. Once admitted as a
Class B Member in an Annual Investment Group of the Company, a person shall
continue to be a Class B Member with respect to that Annual Investment Group for
all purposes of this Agreement, until the earliest to occur of (i) a substitute
Class B Member is admitted in place of such person pursuant to the provisions of
Article 8, or (ii) the liquidation or distribution of all investments made by
the Company in which any Annual Investment Group of which such Class B Member is
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a member; PROVIDED THAT such person shall continue as a Class B Member in any
such Annual Investment Group until all of the Company's liabilities and
responsibilities with respect to Portfolio Investments made by such Annual
Investment Group shall have been performed, discharged, or otherwise satisfied.
Section 5.7. WITHDRAWAL AND RETURN OF CAPITAL. Although the Company may
make distributions to the Class B Members from time to time in accordance with
their Percentage Interests in a particular series of Membership Interests held
by an Annual Investment Group, no Class B Member shall have the right to
withdraw or demand a return of any of his Capital Account, to the extent not
distributed to such Member pursuant to this Agreement, without the consent of
the Management Committee, except after the liquidation or distribution of all
Portfolio Investments made by The Venture Fund in which any Annual Investment
Group of which such Class B Member is a member has an interest. Under
circumstances constituting a withdrawal of a Class B Member, no Class B Member
shall have the right to demand or receive property other than cash in respect of
such Member's Membership Interest in the Company. No Member shall have priority
over any other Member holding the same series of Interests or in the same Annual
Investment Group. Each Member acknowledges that, except as specifically provided
in this Agreement, (i) no specific time has been agreed upon for the payment of
distributions from the Company or The Venture Fund, (ii) no interest shall
accrue on any such distributions, and (iii) no Class B Member shall have the
right to withdraw or to be paid any distribution or to receive any other payment
in respect of his Membership Interest, including without limitation, as a result
of the withdrawal of such Member from the Company.
Section 5.8. LIMITED LIABILITY. No Member holding an interest in any
particular series of Membership Interests, as evidenced by being a member of an
Annual Investment Group, in his capacity as such, shall be liable for the debts,
liabilities, contracts or any other obligations of any other series of
Membership Interests evidenced by membership in any other Annual Investment
Group. No Class B Member shall be obligated to make contributions to the capital
of the Company or of any Annual Investment Group.
Section 5.9. CAPITAL ACCOUNTS.
5.9.1. A separate "Capital Account" shall be established and
maintained for each Member within each Annual Investment Group as provided in
this Section 5.9.
(a) The Capital Account of each Member shall be credited
with all income, gain, or Profits of the Company allocated to such Member
pursuant to Article 6 (including for purposes of this Section 5.9 income and
gain exempt from tax).
(b) The Capital Account of each Member shall be debited
with the sum of (i) all Losses or deductions of the Company allocated to such
Member pursuant to Article 6, (ii) such Member's distributive share of
expenditures of the Company described in Section 705(a)(2)(B) of the Code,
and (iii) all cash and the fair market value of any property (net of
liabilities assumed by such Member and the liabilities to which such property
is subject) distributed by the Company to such Member pursuant to Article 6.
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5.9.2. The amount of the Capital Account of a Member shall be
determined in accordance with the rules set forth in Treasury Regulation
1.704-1(b)(2)(iv). Any references in any Section or subsection of this
Agreement to the Capital Account of a Member shall be deemed to refer to such
Capital Account as the same may be credited or debited from time to time as
set forth above.
5.9.3. Except as may otherwise be provided in this Agreement,
whenever it is necessary to determine the Capital Account of a Member for
purposes of Article 6, the Capital Account of such Member shall be determined
after giving effect to all allocations and distributions for transactions
effected prior to the time as of which such determination is to be made. Any
Member, including any substitute Member, who shall acquire an interest or
whose interest shall be increased by means of a Transfer to him of all or
part of the interest of another Member, shall have a Capital Account which
reflects such Transfer.
Section 5.10. ROLE OF CLASS B MEMBERS. No Class B Member shall take
part in, or interfere in any manner with, the conduct or control of the business
of the Company nor shall any Class B Member have any right or authority to act
for or bind the Company or any series of the Company.
Section 5.11. ISSUANCE OF ADDITIONAL INTERESTS AND SECURITIES.
5.11.1. The Management Committee may, without any further
action or authorization of the Members and from time to time, create and
issue other classes of membership interests having such relative rights,
powers, duties, obligations and designations, (provided such rights, powers
and duties are not senior to existing classes and groups of Members
associated with the classes of Membership Interests) as may be established by
the Management Committee. The Management Committee shall reflect the creation
of any new class or group of Membership Interests in an amendment to this
Agreement indicating the different rights, powers, and duties, and such an
amendment need be executed only by the Management Committee and such
amendment need not be approved or consented to by the Members.
5.11.2. The Management Committee may issue additional interests
in additional series of Membership Interests and create Annual Investment
Groups for each Deferred Bonus Award Year in the future. Such interests may
be issued from time to time to Qualified Employees and the Management
Committee may admit them to the Company as additional Class B Members, all
without the consent or approval of any Member or any percentage thereof.
There shall be no limit on the number of Membership Interests or series of
Membership Interests or Annual Investment Groups that may be so issued or
created. The Management Committee shall have sole and absolute discretion in
determining the terms and conditions with respect to any future issuance of
Membership Interests or series of Membership Interests or Annual Investment
Groups, including the interest of such Membership Interests or series of
Membership Interests or Annual Investment Groups in the profits of the
Company, provided that no such Interests shall have priority over any other
such Interests except as may result from being part of different Annual
Investment Groups the Portfolio Investments of which result in distribution
to Members at different times.
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5.11.3. Each Class B Member within the same Annual Investment
Group shall have the same rights, designations, preferences and relative,
participating, optional or other special rights, powers and duties as all
other Class B Members within the same Annual Investment Group, all as shall
be fixed by the Management Committee in the exercise of its sole and absolute
discretion. No Annual Investment Group shall have a preferred status over any
other Annual Investment Group. Without limiting the foregoing, each Class B
member within an Annual Investment Group shall be entitled to a proportionate
share (based on the Class B Member's Percentage Interest) of:
(a) the allocation, for federal income and other tax
purposes, to such series of Membership Interests of items of Company income,
gain, loss, deduction and credit attributable to, or otherwise allocable
under the terms of this Agreement to, investments made by the Company with
funds contributed on behalf of such Annual Investment Group;
(b) the right of such series of Membership Interests to
share in Company distributions in accordance with Section 6.2 in respect of
Portfolio Investments (other than Excluded Investments) purchased by The
Venture Fund with capital contributions made by the Company from such Annual
Investment Group; and
(c) the rights of such series of Membership Interests upon
dissolution and liquidation of the Company.
5.11.4. Upon the issuance of any series of Membership
Interests, the Administrative Member (pursuant to its powers of attorney from
the Class B Members granted pursuant to this Agreement), without the approval
at the time of any Class B Member, may amend any provision of this Agreement
and execute, swear to, acknowledge, deliver, file and record, if required, an
amended Certificate of Formation and such other documents as may be required
in connection therewith, as shall be necessary or desirable to reflect the
authorization and issuance of such class of Membership Interests and the
relative rights and preferences of such class of Membership Interests as to
the matters set forth in the preceding sentence. Notwithstanding the
foregoing, neither the Management Committee nor the Administrative Member
shall have the authority to amend this Agreement in any manner which treats
one Annual Investment Group differently from another without the consent of
each of the Annual Investment Group treated differently from one another.
ARTICLE 6
ALLOCATION OF PROFIT AND LOSS AND
DISTRIBUTION TO MEMBERS
Section 6.1. GENERAL PREMISE. All distributions and allocations shall
be made as if each series of Membership Interests as evidenced by membership in
each Annual Investment Group comprised a separate Company housing only those
Portfolio Investments in which the Annual Investment Group has an interest.
Section 6.2. DISTRIBUTIONS. Subject to Section 6.1, all distributions
by the Company shall be made in accordance with this Section 6.2 and Section
9.2.
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6.2.1. TAX DISTRIBUTIONS. Distributable Cash, if any, shall be
distributed after the end of any Fiscal Year to Members of the Annual
Investment Group having an interest in the Portfolio Investment generating
the Distributable Cash, in accordance with their Percentage Interests
therein, as follows:
(a) FIRST, the Company shall distribute any mandatory or
discretionary tax distribution made (directly or indirectly) by a Portfolio
Company to the Venture Fund which is distributed to the Company, the Company
to those Members having an interest therein who are allocated Portfolio
Investment Profits pursuant to Section 6.3 hereof to which those tax
distributions relate, such distributions to be made in proportion to such
allocations of Portfolio Investment Profits.
(b) SECOND, the Company shall distribute an amount equal
to the difference, if any, between the distribution under clause (a) of this
Section 6.2.1 and an amount equal to forty percent (40%) of the Portfolio
Investment Profits allocated in that Fiscal Year, to the Members having an
interest in the Portfolio Investments generating such Portfolio Investment
Profits in proportion to such allocations of Portfolio Investment Profits.
6.2.2. DISTRIBUTIONS OF REMAINING DISTRIBUTABLE CASH. With respect
to all Distributable Cash remaining after the distributions contemplated by
Section 6.2.1, the Management Committee shall cause the Company to make
distributions thereof (i) FIRST, to the Class B Members until the Class B
Members shall have been distributed an amount of cash equal to the amount of
Unattributable Expenses allocated to them under Section 6.3.2, in proportion to
such allocation of Unattributable Expenses, and (ii) SECOND, to Class B Members
that are members of the Annual Investment Group that has an interest in the
Portfolio Investment generating the Distributable Cash being distributed, as
soon as practicable after the Company receives such cash from the Venture Fund.
All distributions to Class B Members pursuant to this Section 6.2.2 shall be
made pro rata in accordance with their applicable Percentage Interests in the
Portfolio Investment generating such cash.
6.2.3. DISTRIBUTIONS FOR REPAYMENT OF IFC LOAN. So long as any IFC
Loan or interest thereon remains unpaid by a Class B Member receiving a
distribution under 6.2.2., the Company shall make all distributions to which
such Member is entitled under Section 6.2.2 to IFC, which distributions shall
first be applied to the payment of any unpaid interest on the IFC Loan and then
to the Repayment of the principal of the IFC Loan.
6.2.4. PERCENTAGE INTEREST. The Percentage Interest of each
Class B Member in Portfolio Investments in which the Annual Investment Group in
which such Class B Member is a member has an interest, shall be equal to P in
the following formula:
P = [ (A / B) / C ] x [ D / A ]
where
A = the Annual Bonus Contributions of all members within such
Annual Investment Group.
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B= the number of Portfolio Investments made in the relevant
Fiscal Year in which such Annual Investment Group has an interest.
C= the total amount invested in the particular Portfolio
Investment for which the Percentage Interest of such Member is being
determined.
D =Annual Bonus Contribution of that Member in respect of that
Annual Investment Group.
The initial Percentage Interests of the Members in the Portfolio
Investments made in 2000 are set forth in SCHEDULE A hereto. The Percentage
Interests of Class B Members in Portfolio Investments made in 2001 shall be
determined as of December 31, 2001 and set forth on an amendment to SCHEDULE A
prepared at or after such date.
6.2.5. SHORT TERM INVESTMENT INCOME. Short Term Investment Income
shall not be distributed, but shall be considered an additional contribution by
the Members who contributed the cash on which such Short Term Investment Income
was earned; PROVIDED, HOWEVER, THAT, if the Short Term Investment Income was
earned on proceeds of a disposition of a Portfolio Investment, such Short Term
Investment Income shall be distributed, together with such proceeds, to the
Members having an interest in such Portfolio Investment.
6.2.6. DISTRIBUTIONS IN KIND. Whenever the Company shall receive
(directly or indirectly) a distribution in kind from the Venture Fund, it shall
distribute same to the Class B Members having an interest therein as if it were
a distribution under Section 6.2.2 hereof. Otherwise, the Company shall not make
distributions in kind.
Section 6.3. GENERAL ALLOCATIONS OF NET PROFITS AND NET LOSSES. After
giving effect to the special allocations in Sections 6.4 and 6.5 hereof, the
following shall apply:
6.3.1. In accordance with Section 6.1, with respect to each
Portfolio Investment, Portfolio Investment Profit and Portfolio Investment Loss
shall be allocated among the Class B Members of each Annual Investment Group
having an interest therein, to the Class B Members that are members of the
Annual Investment Group that has an interest in the Portfolio Investment
generating the Portfolio Investment Profit or Portfolio Investment Loss being
allocated. All allocations to such Class B Members shall be made pro rata in
accordance with the Bonus Contribution to the Annual Investment Group that has
an interest in the Portfolio Investment generating Portfolio Investment Profit
or Portfolio Investment Loss.
6.3.2. All Unattributable Expenses shall be allocated to the
Class B Members in proportion to the aggregate Annual Bonus contributions
contributed by each such Member to the Company without regard to Annual
Investment Group.
Section 6.4. ALLOCATIONS OF NONRECOURSE DEDUCTIONS AND MINIMUM GAIN.
The Company does not intend to incur any nonrecourse indebtedness and, if it
does, the Management Committee will cause this Agreement to be amended in such
fashion as to provide that, if the Company incurs "nonrecourse deductions" or
"Partner nonrecourse deductions" or if there is a change in the Company's
"minimum gain" as those terms are defined in such Treasury Regulations, the
allocations of Profit, Loss and items thereof to the Members shall be modified
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as deemed reasonably necessary or advisable by the Management Committee to
comply with such regulations.
Section 6.5. OTHER SPECIAL ALLOCATIONS. Notwithstanding the provisions
of Section 6.3 above, but subject to the provisions of Section 6.4 above, the
following allocations shall be made:
6.5.1. QUALIFIED INCOME OFFSET. In the event any Member
unexpectedly receives an adjustment, allocation, or distribution described in
clause (4), (5) or (6) of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)
and that adjustment, allocation, or distribution causes or increases a
deficit balance in the Member's Capital Account, then items of Company income
and gain shall be specially allocated to such Members in an amount and manner
sufficient to eliminate the deficit balances in their Capital Accounts
created by such adjustments, allocations, or distributions as quickly as
possible. Any special allocations of items of income or gain pursuant to this
provision shall be taken into account in computing subsequent allocations of
Profit so that the net amount of any items so allocated and the Profit, Loss
and all other items allocated to each Member shall, to the extent possible,
be equal to the net amount that would have been allocated to each such Member
pursuant to the other provisions of this Agreement if such unexpected
adjustments, allocations or distributions had not occurred. If any such
unexpected adjustment, allocation or distribution creates or increases a
deficit balance in the Capital Accounts of more than one Member in any fiscal
year, all items of income and gain of the Company for the fiscal year and all
subsequent fiscal years will be allocated among all such Members in
proportion to their respective deficit balances until such balances have been
eliminated. If any allocation is made pursuant to this paragraph, subsequent
allocations shall be made (in a manner consistent with this paragraph) to
offset the effects of such prior allocation. This provision is intended to
qualify as a "qualified income offset" within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d).
6.5.2. STOP LOSS. Except as required by law, Losses shall not be
allocated to a Member if such allocation would cause or increase a deficit
balance in such Member's Capital Account. Any such items not allocable to
Members by reason of the foregoing limitation shall be allocated in accordance
with Treasury Regulation Section 1.704-1(b)(3).
Section 6.6. CURATIVE ALLOCATIONS. The allocations set forth in
Sections 6.4 and 6.5 are intended to comply with certain requirements of
Treasury Regulation sections 1.704-1(b) and 1.704-2. Notwithstanding any other
provisions of this Article 6 (other than the Regulatory Allocations), the
Regulatory Allocations shall be taken into account in allocating other items of
income, gain, loss and deduction among the Members so that, to the extent
possible, the net amount of such allocation of other items and the Regulatory
Allocations to each Member should be equal to the net amount that would have
been allocated to each such Member if the Regulatory Allocations had not
occurred. For purposes of applying the foregoing sentence, allocations pursuant
to this Section 6.6 shall be deferred with respect to Regulatory Allocations to
the extent the Management Committee reasonably determines that such Regulatory
Allocations are likely to be offset by subsequent Regulatory Allocations.
Section 6.7. ALLOCATIONS UPON TRANSFER OR ADMISSION. In the event that
a Member acquires a Membership Interest in a series of the Company either by
transfer from
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another Member or by acquisition from the Company, Profits or Losses (and all
similar items) of that Annual Investment Group for the year in which such
acquisition occurs shall be allocated among the Members of that Annual
Investment Group by (i) closing the books of that Annual Investment Group as of
the end of the day on which such acquisition occurs, (ii) computing the Profits
and Losses (and all similar items) of that Annual Investment Group separately
for the portion of the year ending as of the end of the day on which such
acquisition occurs and for the remaining portion and (iii) allocating the
Profits and Losses (and all similar items) as so computed for such periods among
the Members who were Members in that Annual Investment Group during such
periods; PROVIDED, HOWEVER, THAT if the Management Committee, in its sole
discretion so determines, all of such Profit or Loss shall be allocated between
the transferor and transferee based on the number of days each owned the
Interest during such year as such ownership is reflected in the books and
records of that Annual Investment Group.
Section 6.8. TAX MATTERS.
6.8.1. SECTION 704(c) ALLOCATIONS. In the event that the book
value of the Company assets differ from their adjusted tax basis upon
contribution or revaluation, the tax allocations of income, gain, loss and
deduction shall be shared among the Members in a manner that takes into account
the variation between such book value and adjusted tax basis, pursuant to
Section 704(c) of the Code or pursuant to the principles thereof. Allocations
made under this Section 6.8.1 are made solely for federal, state or local income
tax purposes and shall not affect, or in any way be taken into account in
computing any Member's Capital Account or share of Profits, Losses, other items
or distributions pursuant to any provision of this Agreement.
6.8.2. TAX ELECTION UPON TRANSFER. Upon the transfer of an
interest in the Company, the Company may elect, pursuant to Section 754 of the
Code, to adjust the basis of the Company's property as allowed by Section 734(b)
and 743(c) of the Code. Any election so made will be filed with the Company tax
return for the first taxable year to which the election applies or otherwise in
accordance with Treasury Regulations.
6.8.3. TAX ALLOCATIONS. Except as otherwise provided herein or as
required by Code Section 704, for tax purposes, all items of income, gain, loss,
deduction or credit shall be allocated to the Members in the same
manner as are Profits and Losses.
Section 6.9. NEGATIVE CAPITAL ACCOUNTS. Except as may be required by
law, no Member shall be required to reimburse the Company for any negative
balance in such Members' Capital Account.
Section 6.10. AUTHORITY OF MANAGEMENT COMMITTEE TO VARY ALLOCATIONS TO
PRESERVE AND PROTECT MEMBERS' INTENT.
6.10.1. It is the intent of the Members that each Member's
distributive share of income, gain, loss, deduction, or credit (or item thereof)
shall be determined and allocated in accordance with Sections 6.1 through 6.8 to
the fullest extent permitted by Section 704(b) of the Code. In order to preserve
and protect the determinations and allocations provided for in Sections 6.1
through 6.8, the Management Committee is authorized to allocate income, gain,
deduction, recapture or credit (or item thereof) arising in any year in a manner
different
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from that otherwise provided for in Sections 6.1 through 6.8 if, and to the
extent that, allocating income, gain, deduction, recapture or credit (or item
thereof) in the manner provided for in Sections 6.1 through 6.8, would cause the
determinations and allocations of each Member's distributive share of income,
gain, deduction, recapture or credit (or item thereof) not to be permitted by
Section 704(b) of the Code and any Treasury Regulations promulgated thereunder.
Any allocation made pursuant to this Section 6.10 shall be deemed to be a
complete substitute for any allocation otherwise provided for in Sections 6.1
through 6.8 and no amendment of this Agreement or approval of any Member shall
be required.
6.10.2. In making any allocation under Section 6.10.1, the
Management Committee is authorized to act only after having been advised in
writing, by either counsel to the Company or by the Company's accountant, that
in their opinion, after examining Section 704(b) of the Code and any current or
future proposed, temporary, or final Treasury Regulations thereunder, (A) the
new allocation is necessary, and (B) the new allocation is the minimum
modification of the allocations otherwise provided for in Sections 6.1 through
6.8 necessary in order to assure that, either in the then current year or in any
preceding year, each Member's distributive share of income, gain, deduction,
recapture or credit (or item thereof) is determined and allocated in accordance
with Sections 6.1 through 6.8 to the fullest extent permitted by Section 704(b)
of the Code and the Treasury Regulations thereunder.
6.10.3. New allocations made by the Management Committee in
reliance upon the written advice of the attorneys and accountants described
above shall not be deemed to be a breach of any fiduciary obligation of any
Member to the Company, and no such new allocation shall give rise to any claim
or cause of action by any Member.
6.10.4. If the Management Committee is required to make any new
allocation in a manner less favorable to the Members than is otherwise provided
for in Sections 6.1 through 6.8, the Management Committee shall be, and hereby
is, authorized and directed, insofar as permitted by Section 704(b) of the Code,
to allocate income, gain, deduction, recapture or credit (or item thereof)
arising in later years in a manner so as to bring the proportion of income,
gain, deduction, recapture or credit (or item thereof) allocated to the Members
as nearly as possible to the proportion otherwise contemplated by Sections 6.1
through 6.8.
6.10.5. The Management Committee has the power as provided in this
Section 6.10, limited as provided in the following sentence, to make such
allocations and to take such actions necessary under the Code or other
applicable law to effect and to maintain the substantial economic effect of
allocations made to the Members under Section 704(b) of the Code. The preceding
sentence does not give the Management Committee any power to make any allocation
or take any other action which affects the rights or preferences of, or
allocations or distributions to, any Member. All allocations made and other
actions taken by the Management Committee under this Section 6.10 will be
consistent to the maximum extent possible with the provisions of this Agreement.
Section 6.11. TAX CONTROVERSIES. The Administrative Member is
designated as the Company's "TAX MATTERS MEMBER" pursuant to Section 6231(a)(7)
of the Code, and, to the extent authorized or permitted under applicable law,
the Administrative Member is authorized and required to represent the Company
and each Member in connection with all examinations of
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the Company's affairs by tax authorities, including resulting administrative and
judicial proceedings, and to expend Company funds for professional services and
costs connected therewith. Each Member agrees to cooperate with the
Administrative Member and to do or refrain from doing any and all such things
reasonably required by the Administrative Member to conduct such proceedings.
Section 6.12. PROCEEDINGS. The Administrative Member shall keep the
Members informed of all administrative and judicial proceedings with respect to
Company tax returns or the adjustment of Company items. Any Member who enters
into a settlement agreement with respect to Company items must promptly give the
Administrative Member notice of the settlement agreement and terms that relate
to Company items.
Section 6.13. TAXES WITHHELD. Unless treated as a Tax Payment Loan (as
hereinafter defined), any amount paid by the Company for or with respect to any
Member on account of any withholding tax or other tax payable with respect to
the income, profits or distributions of the Company pursuant to the Code, the
Treasury Regulations, or any state or local statute, regulation or ordinance
requiring such payment (a "Withholding Tax Act") shall be treated as a
distribution to such Member for all purposes of this Agreement, consistent with
the character or source of the income, profits or cash which gave rise to the
payment or withholding obligation. To the extent that the amount required to be
remitted by the Company under the Withholding Tax Act exceeds the amount then
otherwise distributable to such Member, the excess shall constitute a loan from
the Company to such Member (a "Tax Payment Loan") which shall be payable upon
demand and shall bear interest, from the date that the Company makes the payment
to the relevant taxing authority, at the Prime Rate as of the date of such Tax
Payment Loan plus two (2) percentage points, compounded monthly. So long as any
Tax Payment Loan or the interest thereon remains unpaid, the Company shall make
future distributions due to such Member under this Agreement by applying the
amount of any such distribution first to the payment of any unpaid interest on
all Tax Payment Loans of such Member and then to the repayment of the principal
of all Tax Payment Loans of such Member. The Administrative Member shall have
the authority to take all actions necessary to enable the Company to comply with
the provisions of any withholding tax act applicable to the Company and to carry
out the provisions of this Section 6.13. Nothing in this Section 6.13 shall
create any obligation on the Administrative Member to advance funds to the
Company or to borrow funds from third parties in order to make any payments on
account of any liability of the Company under a Withholding Tax Act.
ARTICLE 7
MANAGEMENT OF THE COMPANY
Section 7.1. MANAGEMENT. The Company shall maintain a management
committee (the "Management Committee") which shall serve as the representative
of the Members for all purposes of this Agreement. Accordingly, except for any
matters for which the approval of the Class A Member is required by this
Agreement or by nonwaivable provisions of applicable law, the Management
Committee shall have the authority to direct, manage and control the business
and affairs of the Company, and to make all decisions and take all actions for
the Company; provided, however, that the Management Committee shall act pursuant
to and in accordance with this Agreement or other resolutions duly adopted by
the Management
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Committee in accordance with the procedures set forth in this Agreement; and,
provided further, that no single member of the Management Committee shall have
the authority to bind the Company unless otherwise expressly authorized by this
Agreement, the Class A Member or the Management Committee.
Section 7.2. POWERS AND AUTHORITY. Approval by or action taken by the
Management Committee (or, to the extent set forth in Section 7.3 hereof, by a
committee thereof) in accordance with this Agreement shall constitute approval
by or action by the Members, without requiring the consent of the Members, and
shall be binding on the Members unless pursuant to the terms of this Agreement
or a nonwaivable provision of applicable law such action specifically requires
the approval or consent of the Class A Member. Notwithstanding the provisions of
this Section 7.2 or Section 7.1, the Management Committee may not cause the
Company to do any of the following without the prior written consent of the
Class A Member:
(a) amend the Certificate of Formation, except for
amendments described in Section 14.1 hereof;
(b) amend this Agreement, except as otherwise provided to
reflect admission of new Members in accordance with this Agreement, or in
Sections 5.1 and 5.10 hereof; and
(c) except as otherwise provided in Section 7.5, remove a
member from the Management Committee;
Section 7.3. ACTIONS BY MANAGEMENT COMMITTEE; COMMITTEES. In managing
the business and affairs of the Company and exercising its powers hereunder, the
Management Committee shall act (a) collectively through meetings and written
consents pursuant to Section 7.6 hereof, and (b) through committees pursuant to
this Section 7.3. The Management Committee may, from time to time, by resolution
designate one or more committees, each of which shall be comprised of one or
more members of the Management Committee. Any such committee, to the extent
provided in such resolution or in this Agreement, shall have and may exercise
all of the authority of the Management Committee, subject to the limitations set
forth in such resolution, the Act or this Agreement. At every meeting of a
committee, the presence of a majority of all the members thereof shall
constitute a quorum, and the affirmative vote of a majority of the members of
the committee shall be necessary for the adoption of any resolution. The
Management Committee may dissolve any committee at any time, unless otherwise
provided in this Agreement or the Act.
Section 7.4. COMPOSITION OF THE MANAGEMENT COMMITTEE.
7.4.1. The Management Committee shall be comprised of at least
three (3) persons, with the exact number of members to be determined by
resolution of the Management Committee adopted from time to time. All members of
the Management Committee shall be appointed to the Management Committee by the
Class A Member and shall be the same as the members of the management committee
of the Venture Fund unless otherwise determined by written resolution of the
Class A Member in its capacity as a Member of the Company, in its sole
discretion. Each member of the Management Committee shall remain on
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the Management Committee for a period of one (1) year or until his earlier
death, retirement, insanity, bankruptcy or removal by the Class A Member. Any
person who is and then ceases to be a member of the management committee of the
Venture Fund, immediately, and without further action by the Company or the
Management Committee, shall cease to be a member of the Management Committee of
the Company.
7.4.2. The initial members of the Management Committee shall be as
set forth on SCHEDULE B attached hereto. The Class A Member may increase or
decrease the number of members on the Management Committee by notice to the
Company provided in accordance with Section 14.2.
Section 7.5. REMOVAL, VACANCY ON MANAGEMENT COMMITTEE. Neither the
Members nor the members on the Management Committee shall have the authority to
remove any member of the Management Committee, except that members of Management
Committee may remove a member of the Management Committee for cause with the
affirmative vote of the Class A Member. Members of the Management Committee
seeking to remove a member thereof for cause shall deliver a Notice to the Class
A Member identifying the removal purpose, the member on the Management Committee
proposed to be removed and the reasons for such removal. Any member may resign
from the Management Committee at any time; provided that any resignation shall
be in writing and shall take effect at the time specified therein or, if no time
is specified, at the time the resignation notice is received by the Management
Committee. The acceptance of any resignation shall not be necessary to make it
effective unless expressly so provided in the resignation notice. All vacancies
occurring on the Management Committee (whether as a result of removal or
resignation of a member thereof) shall be filled by the Class A Member.
Section 7.6. MEETINGS OF THE MANAGEMENT COMMITTEE. Regular meetings of
the Management Committee shall be held at such place and at such time as shall
be determined from time to time by resolution of the Management Committee;
provided that such meetings shall be held no less frequently than quarterly,
upon not less than ten (10) calendar days' prior written notice to each member
of the Management Committee. Special meetings of the Management Committee shall
be held upon the call of any member thereof upon not less than five (5) calendar
days' prior written notice to all members of the Management Committee. Notices
of any meetings shall set forth the purpose of the meeting and the business to
be transacted at such meeting. Attendance at any meeting of the Management
Committee shall constitute waiver of any notice requirement. A majority of the
members of the Management Committee shall constitute a quorum for the
transaction of business at a meeting of the Management Committee.
Section 7.7. MANNER OF ACTING. Unless otherwise expressly provided in
this Agreement, all decisions, actions, or transactions by the Management
Committee shall require the approval, at a duly convened meeting at which a
quorum is present, of a majority of the members of the Management Committee
present at a meeting. Any action permitted or required by the Act or this
Agreement to be taken at a meeting of the Management Committee or any action of
any committee designated by the Management Committee, may be taken without a
meeting if a written consent setting forth the action so taken is signed by all
of the members of the Management Committee or members of such committee. Such
consent shall have the same force and effect as a unanimous vote at a duly
convened meeting and may be stated as such in
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any document or instrument filed with the Secretary of State of Delaware, and
the execution of such consent shall constitute attendance or presence in person
at a meeting of the Management Committee or any such committee, as the case may
be. The Management Committee or any committee thereof may participate in and
hold its meeting by means of a conference telephone or similar communications
equipment, provided that all members thereof are able to simultaneously
participate with the other members with respect to all discussions and votes of
the Management Committee or committee, as applicable, and participation in such
meeting by such means shall constitute attendance and presence in person at such
meeting. Written minutes shall be taken at each meeting of the Management
Committee and any committee thereof and distributed to the Class A Member and
the members of the Management Committee promptly after such meeting and prior
to, and for approval at, the next meeting of the Management Committee; provided,
however, that any action taken or any matter agreed upon by the Management
Committee or a committee thereof at the meeting shall be deemed effective and
final, whether or not written minutes of the meeting have been prepared or
formalized.
Section 7.8. PROCEDURES. Except as otherwise expressly provided in this
Article 7, the Management Committee and any committee thereof shall conduct its
business in such manner and by such procedures as a majority of its members
deems appropriate.
Section 7.9. DESIGNATION OF OFFICERS.
7.9.1. The Members acknowledge that while Company decisions
generally shall be vested in the Management Committee in the manner set forth in
this Article 7, the Management Committee may, from time to time, delegate the
daily operation and certain management functions of the Company to one or more
individuals (who may or may not be Members or members of the Management
Committee ) to serve as officers of the Company ("Officers"). The Company shall
have such Officers as the Management Committee may, from time to time,
determine, which Officers may (but need not) include a Chief Executive Officer,
a President, one or more Vice Presidents (and in case of each of such Vice
Presidents, with such descriptive title, if any, as the Management Committee
shall deem appropriate), a Secretary and a Treasurer. The Management Committee
may, at any time and from time to time, establish, enumerate, designate,
determine, limit or circumvent the duties, services and powers delegated to any
Officer.
7.9.2. The Management Committee may enter into employment
agreements with any such Officer on behalf of the Company setting forth such
terms and conditions of the employment of such Officer, including compensation
and other benefits, as the Management Committee may determine to be reasonable
and appropriate. Subject to the prior consent of the Class A Member, the
compensation and benefits of all Officers shall be fixed from time to time by
the Management Committee, unless otherwise delegated by the Management Committee
to a particular Officer. Any Officer designated by the Management Committee
shall have the specific power and authority set forth in this Agreement, in an
employment agreement, if any, and as otherwise delegated to such Officer, from
time to time, by the Board of Managers; provided that such Officer shall operate
the Company subject to (i) the basic policy decisions adopted by the Management
Committee, (ii) specific limitations and requirements of this Agreement and any
other agreement executed by and between such Officer and the Company, and (iii)
limitations imposed under the Act. Notwithstanding any provision in this
Agreement or
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any other agreement to the contrary, no Officer shall have the authority,
either individually or acting in conjunction with other Officers to do any
act, make any decision, or engage in any transaction which requires the
approval of the Management Committee or the Members as set forth in this
Agreement, unless such Officer is specifically authorized in writing executed
by the Management Committee to undertake such act, make such decision or
engage in such transaction.
7.9.3. Each Officer designated by the Management Committee shall
hold office at the pleasure of the Management Committee until his successor is
chosen and qualified in his stead or until the earlier of his death, disability,
resignation, insanity, retirement or removal from office. Any Officer designated
by the Management Committee may be removed at any time and for any reason (with
or without cause) by the Management Committee, but any such removal shall be
without prejudice to the contract rights, if any, of the Officer so removed.
Designation of an Officer shall not of itself create any employment contracts
rights. The Management Committee may abolish any officer at any time.
7.9.4. An Officer shall devote time, effort and managerial
resources to the business of the Company as shall be set forth in an employment
agreement between the Company and an Officer or as otherwise required by the
Management Committee.
Section 7.10. LIABILITY FOR ACTS OR OMISSIONS; INDEMNIFICATION.
7.10.1. None of the Class A Member, the Class B Members, the
Officers, the members of the Management Committee or a Committee thereof, or any
Affiliate or any partner, director, officer, employee, agent or representative
of any of the foregoing (each, a "Covered Person") shall be liable, responsible
or accountable in damages to any of the Members or the Company for any act or
omission on behalf of the Company performed or omitted in good faith and in a
manner reasonably believed by such Covered Person to be within the scope of the
authority granted to him or it by this Agreement, even if such act or omission
is negligent. No Covered Person shall be liable for omitting to do any act which
such Person is not specifically required to do under this Agreement, and a
Covered Person shall have no obligation or liabilities, express or implied, to
the Company or the Members, except as specifically set forth in this Agreement.
7.10.2. The Company hereby indemnifies and agrees to save Covered
Person, harmless from and against losses, damages, expenses (including, without
limitation, court costs and attorneys' fees), judgments and amounts paid in
settlement incurred by it in connection with any threatened or contemplated
claim, action, suit or proceeding to which the Covered Person is a party or is
threatened to be made a party by reason of its capacity as a member of the
Company or the Management Committee or a committee thereof or the fact that he
or it was engaged in activities on behalf of the Company, unless the act or
failure to act giving rise to such claim, action, suit or proceeding was not
taken or omitted in good faith. For purposes of this subsection, the
determination of any claim, action, suit or proceeding by judgment, order or
settlement will not of itself create a presumption that the Covered Person did
not act in good faith. The Management Committee shall have the right, but shall
not be required, to cause the Company to obtain and pay the premiums on
liability insurance at Company expense as the Management Committee in its
discretion deems appropriate.
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7.10.3. None of the officers, directors, shareholders, employees,
agents or partners of IFC, the Venture Fund, or any affiliate thereof, and none
of the officers, directors, shareholders, employees, agents or partners of any
other Member which is a corporation, Company, limited liability company or
similar entity, shall have any liability for the obligations or liabilities of
such Member to the Company or the other Members which may arise under any terms
of this Agreement, under applicable law or otherwise, and no recourse shall be
had against the assets of such specified persons on account thereof.
Section 7.11. NO OBLIGATION TO MAKE ADDITIONAL CAPITAL CONTRIBUTIONS OR
ADVANCES. Neither IFC nor any Class A Member shall have the obligation to make
Capital Contributions to the Company or to loan or otherwise provide funds to
the Company, except as expressly stated herein, even if the failure to do so
could result in a default by the Company, foreclosure upon the properties of the
Company, or any other consequence adverse to the Company.
ARTICLE 8
TRANSFERABILITY OF COMPANY INTERESTS
Section 8.1. CLASS A MEMBER.
8.1.1. A Class A Member may not sell or otherwise transfer all or
any portion of its interest in the Company or an Annual Investment Group, if
any, except that a Class A Member may sell, transfer or otherwise assign all or
any part of its interest as a Class A Member to an assignee which is an
affiliate of the Class A Member, which assignee shall be admitted to the Company
as an additional or substitute Class A Member in connection with such permitted
assignment, with all the rights and duties of its assignor with respect to the
interest assigned.
8.1.2. An assignee of the interest of a Class A Member, or any
portion thereof, shall become a substituted Class A Member entitled to all the
rights of a Class A Member, including the right to elect members of the
Management Committee if, and only if:
(a) the assignor gives the assignee such right; and
(b) the assignee executes and delivers such instruments, in
form and substance satisfactory to the Company, as it may deem necessary or
desirable to effect such substitution and to confirm the agreement of the
assignee to be bound by all of the terms and provisions of this Agreement.
Section 8.2. TRANSFER OF CLASS B MEMBERS' INTEREST; WITHDRAWAL.
8.2.1. No Class B Member may, without the prior written consent
of the Management Committee (which written consent may be withheld in its sole
discretion), voluntarily or involuntarily sell, assign, encumber or thereafter
transfer all or any part of his Membership Interest in the Company or an Annual
Investment Group of the Company except as permitted by the terms of this
Agreement.
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8.2.2. Notwithstanding anything herein to the contrary, no
transferee of a Class B Member's interest in the Company or an Annual Investment
Group shall become a substituted Class B Member with respect to the transferred
interest or the Annual Investment Group, unless and until the Management
Committee gives its prior written consent thereto (which written consent may be
withheld by the Management Committee in its sole discretion) and the transferee
shall:
(a) assume all the obligations of his predecessor under this
Agreement with respect to the interest transferred accruing from and after the
effective date of the transfer;
(b) deliver to the Company a statement, in form and substance
satisfactory to the Management Committee, acknowledging the assumption of such
liability and that the transferee has read the provisions of this Agreement and
intends to be legally bound as a Class B Member by all the terms and conditions
of this Agreement and any amendments or modifications thereof, and execute a
counterpart of the Agreement as then in effect;
(c) obtain and furnish to the Company an opinion of counsel
satisfactory to the Management Committee that such transaction may be effected
without registration under the Securities Act of 1933, as amended, or under any
applicable state securities laws, unless the Management Committee shall have
determined that no such opinion is necessary; and
(d) pay all reasonable expenses (including, without
limitation, legal and accounting fees) incurred by the Company in connection
with such transfer, including but not limited to the cost of the preparation,
filing and publishing of any amendment to the Company's Certificate of Formation
and any fictitious name or similar registrations necessary or desirable in
connection therewith.
Once the above conditions of this Section 8.2.2 have been satisfied,
the transferee shall become a Class B Member on the first day of the next
following calendar month or any earlier date as the Management Committee shall
deem reasonable and appropriate in light of all of the facts and circumstances
existing at the time. The Company shall, upon substitution, thereafter make all
further distributions on account of the Membership Interests so assigned to the
assignee with respect to the Annual Investment Group or groups to which such
transfer relates for such time as the Membership Interests are transferred on
its books in accordance with the above provisions. Any person so admitted to the
Company as a Class B Member shall be subject to all provisions of this Agreement
(as amended on or prior to the date of such transfer) as if originally a party
hereto.
8.2.3. Except as otherwise specifically provided in this
Agreement, a Class B Member may not withdraw from the Company or an Annual
Investment Group or have the right to receive Company distributions, or the fair
value of his interest in the Company, at any time prior to the dissolution and
winding up of the Company or a liquidation of all of the Portfolio Investments
of an Annual Investment Group to which such Class B Member belongs.
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Section 8.3. COMPLIANCE WITH SECURITIES LAWS. The Class B Members
acknowledge and confirm that their Membership Interests constitute securities
which have not been registered under any federal or state securities laws by
virtue of exemptions from the registration provisions thereof and consequently
cannot be sold except pursuant to appropriate registration or exemption from
registration as applicable. Each Class B Member confirms hereby that he, she or
it is acquiring his, her or its Membership Interests herein for investment and
without a view to the distribution thereof. No transfer or assignment of all or
any part of a Membership Interest (except a transfer upon the death, incapacity
or bankruptcy of such Member to his personal representative and beneficiaries),
including, without limitation, any transfer of a right to distributions, profits
and/or losses to a person who does not become a Class B Member, may be made
unless such assignment (a) may be effected without registration under the
Securities Act of 1933, as amended, (b) does not violate any applicable federal
or state securities laws (including any investment suitability standards)
applicable to the Company or the Class A Member and (c) is in compliance with
all provisions of this Agreement.
Section 8.4. TERMINATION OF EMPLOYMENT.
8.4.1. If at any time the employment of any Class B Member with
an IFC Group Member is terminated for any reason (other than a termination for
Cause), including without limitation, a termination due to such Member's death,
disability, resignation or termination by an IFC Group Member without Cause,
then, at any such time thereafter as is determined by IFC, the Class A Member
(or its nominee(s)) shall have the right, but not the obligation, to purchase
from such Class B Member, free and clear of all liens, claims or encumbrances,
such Class B Member's Membership Interests in all Annual Investment Groups to
which such terminated Class B Member belongs, and, if so elected by the Class A
Member, the Class B Member shall be required to so sell such Interests. The
Class A Member shall provide notice of its intent to exercise its right and
complete the purchase of the Membership Interests within sixty (60) days after
the date of termination of the Class B Member. In the event that a Class A
Member exercises its right to purchase such Membership Interest, the interest
will be purchased at its fair value as of the date of termination, as determined
by the Management Committee. In determining the fair value of a terminated Class
B Member's Membership Interests, the Management Committee shall take into
account all of the Annual Investment Groups to which such Member belongs and the
valuation principles utilized by the Venture Fund in valuing the Portfolio
Investments of those Annual Investment Groups.
8.4.2. In the event that such Class B Member's employment with an
IFC Group Member has been terminated for Cause, then his or her Membership
Interests may be repurchased by the Class A Member (or its nominee) at the
option of the Class A Member, for an amount equal to lesser of (i) fifty percent
(50%) of the market value of such Membership Interests as of the date of
termination, such value to be determined by the Management Committee in the
manner set forth in Section 8.4.1, or (ii) the amount of Capital Contributions
made by the terminated Class B Member less the distributions previously made to
such Class B Member (other than distributions to fund tax liabilities
attributable to the Company's Profits) (such lesser amount being herein the "For
Cause Purchase Price"). In the event of such a termination, then at any such
time thereafter as is determined by the Class A Member, such Class B Member
shall be required to sell to the Class A Member (or its nominee(s)) for the For
Cause Purchase Price and the Class A Member shall have the right, but not the
obligation, to purchase
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from such Class B Member, free and clear of all liens, claims or encumbrances,
100% of such Class B Member's Interests in all Annual Investment Groups in which
such Class B Member is a member. Any determination that a termination of the
Class B Member's employment is with or without Cause shall be made by the IFC
Group Member for which such Class B Member is employed pursuant to its customary
employment guidelines and policies.
8.4.3. The closing of any sale pursuant to this Section 8.4 shall
be held at such time and place as is specified by ten (10) days prior written
notice given by the Class A Member or its nominee to the terminated Class B
Member. At the closing, the Class A Member shall deliver check(s) for the amount
of the purchase price and the Class B Member shall deliver a ▇▇▇▇ of sale for
the Membership Interests being sold and such other documents as shall be
requested by the Class A Member or its nominee in order to vest good and
unencumbered title to the interests being sold to the Class A Member or its
nominee. It shall be a condition to the ability of the Class B Member to receive
any purchase price for the sale of any Membership Interests pursuant to this
Section 8.4 that such Member shall pay any sums and other obligations owed by it
to the Company or to any IFC Group Member, including without limitations, all
amounts outstanding under any IFC Loan.
ARTICLE 9
TERMINATION OF THE COMPANY
Section 9.1. DISSOLUTION.
9.1.1. An Annual Investment Group of the Company may be dissolved
pursuant to Section 18-801(j) of the Act without causing the dissolution of the
Company, and the Company shall be dissolved upon the happening of any of the
following events:
(a) the sale or other disposition of all or substantially all
of the assets of the Company (except under circumstances where (x) all or a
portion of the purchase price is payable after the closing of the sale or other
disposition, or (y) the Company retains a material economic or ownership
interest in the entity to which all or substantially all of its assets are
transferred in either such event, the Company shall be dissolved upon the
unconditional receipt of the full purchase price in the event of the
circumstance set forth in (x) or the release of the Company from any further
liability or responsibility in the event of the circumstance set forth in (y);
(b) the bankruptcy of the Company, or an assignment by the
Company for the benefit of creditors;
(c) a determination by the Class A Member that the Company
should be dissolved; or
(d) within a reasonable period of time (as determined by the
Management Committee) after the dissolution and liquidation of the Venture Fund;
or
(e) the expiration of the term set forth in Article 4.
-21-
9.1.2. The dissolution of the Company shall be effective on the
day on which the event occurs giving rise to the dissolution, but the Company
shall not terminate until the Company's Certificate of Cancellation shall have
been filed with the Secretary of State of Delaware as required under the Act and
the assets of the Company shall have been distributed as provided in Section
9.2. Notwithstanding the dissolution of the Company, prior to the termination of
the Company, as aforesaid, the business of the Company and the affairs of the
Members, as such, shall continue to be governed by this Agreement.
9.1.3. The bankruptcy, insolvency, dissolution, death or
adjudication of incompetency of a Member shall not cause the dissolution of the
Company. In the event of the death or incompetency of a Class B Member, his
executors, administrators or personal representatives shall have the same rights
that such Class B Member would have if he had not died or become incompetent,
and the interest of such Class B Member in the Company shall, until the
dissolution and liquidation of the Company, be subject to the terms, provisions
and conditions of this Agreement as if such Class B Member had not died or
become incompetent. Except as provided in this Agreement, in the event of any
other withdrawal of a Class B Member, the Class B Member shall only be entitled
to Company distributions to which such Class B Member's legal right accrued
prior to the date of withdrawal and which were not actually paid to him prior to
such withdrawal.
Section 9.2. LIQUIDATION.
9.2.1. Except as otherwise provided in Section 9.1, upon
dissolution of the Company, the Administrative Member shall take a full account
of the assets and liabilities of the Company or an Annual Investment Group, and
prepare a statement setting forth the assets and liabilities of the Company or
the dissolved Annual Investment Group as the case may be. A copy of such
statement shall be furnished to each of the Members in the case of a dissolution
of the Company and in the event of a dissolved Annual Investment Group, to the
Members having an interest therein, within ninety (90) days after such
dissolution. Thereafter, the assets of the Company or the Annual Investment
Group, as the case may be shall be liquidated as promptly as possible and the
proceeds thereof shall be applied in the following order:
(a) the expenses of liquidation and the debts of the Company,
including debts of the Company to any Member, together with interest accrued
thereon, shall be paid or reasonable provisions for the payment therefor be
made. Any reserves shall be established or continued which the Administrative
Member deems reasonably necessary for any contingent or unforeseen liabilities
or obligations of the Company or its liquidation. Such reserves shall be held by
the Company for the payment of any of the aforementioned contingencies until the
expiration of such period as the Administrative Member shall deem advisable;
(b) the balance, if any, including without limitation
reserved amounts released from reserves from time to time, shall be paid to the
Members in accordance with Section 6.2 hereof.
9.2.2. Upon dissolution of the Company or an Annual Investment
Group, each Member shall look solely to the assets of the Company or Annual
Investment Group for the
-22-
return of his investment, if any, and if the Company's or Annual Investment
Group' assets remaining after payment and discharge of debts and liabilities of
the Company, including any debts and liabilities owed to any one or more of the
Members (including the IFC Loan), is not sufficient to satisfy the rights of a
Member, he shall have no recourse or further right or claim against IFC or any
other Member and no Class B Member shall have any rights to the income, gain,
distributable operating cash or liquidity event cash generated by an Annual
Investment Group to which he is not a member.
9.2.3. If any assets of the Company are to be distributed in kind,
such assets shall be distributed on the basis of the fair market value thereof
as determined by the Management Committee and any Member entitled to any
interest in such assets shall receive such interest therein as a
tenant-in-common with all other Members so entitled..
ARTICLE 10
COMPANY FUNDS
All deposits in and withdrawals from Company bank accounts shall be
made by the Management Committee or such other person or persons employed by the
Company as the Management Committee may from time to time designate. Pending
utilization of funds in the operations of the Company, such funds may be
deposited by the Company in savings or checking accounts or in such investments
as it deems desirable.
ARTICLE 11
BOOKS AND RECORDS; REPORTS
Section 11.1. BOOKS AND RECORDS. The Company shall keep adequate books
and records with respect to each Annual Investment Group at the principal place
of business of the Company or at such other place as the Management Committee
may determine, setting forth a true and accurate account of all business
transactions arising out of and in connection with the conduct of each Annual
Investment Group. A Class B Member, upon reasonable notice to the Company, shall
have the right to inspect the books and records of the Company relating to the
Annual Investment Groups to which he belongs but shall not have the right to
inspect the books and records of the Company relating to any Annual Investment
Groups to which he is not a member.
Section 11.2. ACCOUNTING METHOD. The accounting basis on which the
books of the Company are kept shall be as determined by the Management
Committee.
Section 11.3. REPORTS. The Administrative Member shall prepare the
Company's annual income tax return and annual financial statements which shall
include a balance sheet and the related statements of income. Such financial
statements need not be audited. The Administrative Member shall use reasonable
efforts to transmit within ninety (90) days after the end of the Fiscal Year to
each person who was a Member during such Fiscal Year such information with
respect to such person's interest in the profits, losses, tax credits,
deductions, tax preference items and investment credits, if any, of the Company
or a particular Annual Investment Group for such Fiscal Year as such person
shall require for federal income tax purposes.
-23-
Section 11.4. TAX ELECTIONS. All tax elections on behalf of the Company
may be made or rescinded in the discretion of the Management Committee.
ARTICLE 12
WAIVER OF PARTITION
Each Member hereby waives any right of partition or any right to take
any other action which otherwise might be available to him or it for the purpose
of severing his or its relationship with the Company or his or its interest in
assets held by the Company from the interest of the other Members.
ARTICLE 13
POWER OF ATTORNEY
Section 13.1. GRANT OF POWER. 13.1.1. Each Class B Member, including
any additional or substituted Class B Member, by the execution of this Agreement
or any counterpart thereof, does hereby irrevocably constitute and appoint IFC
and each member of the Management Committee, and any of the foregoing acting
alone, in each case with full power of substitution, such Class B Member's true
and lawful agent and attorney-in-fact, with full power and authority in his or
her name, place and ▇▇▇▇▇, for the purpose of
(a) executing, delivering and filing such agreements
(including amendments to this Agreement), certificates and other instruments as
said attorney-in-fact shall deem necessary or appropriate in order to issue
interests in the Company and to admit additional persons to the Company as Class
B Members in accordance with the terms of this Agreement,
(b) preparing such amendments to Schedule A hereto as may be
necessary or appropriate from time to time to reflect the admission of Class B
Members to the Company,
(c) making, executing, acknowledging, swearing to,
delivering, filing and recording such documents and instruments as may be
necessary or appropriate to carry out the provisions of this Agreement,
including, but not limited to, (i) such amendments to this Agreement and the
Company's Certificate of Formation, as amended from time to time, as are
necessary to effectuate the provisions of Section 5.1 and 5.10 of this Agreement
or to admit to the Company a substituted or additional Class B Member pursuant
to Section 5.10 or Article 8 hereof or a substituted Class A Member pursuant to
Section 8.1 hereof, (ii) such documents and instruments as are necessary to
cancel the Company's Certificate of Formation pursuant to Section 9.2 hereof,
(iii) an amended or restated Certificate of Formation reflecting the terms of
this Agreement or any amendment hereto, if required by the Act, (iv) all
certificates and other instruments deemed advisable by the Management Committee
to permit the Company to become or to continue as a limited liability company in
the jurisdictions where the Company may be doing business, (v) all fictitious or
assumed name certificates required or permitted to be filed on behalf of the
Company and (vi) all other instruments which may be required or permitted by law
to be filed on behalf of the Company.
Section 13.2. SURVIVAL OF POWER. The foregoing power of attorney is
coupled with an interest and shall be irrevocable and survive the death,
dissolution, bankruptcy or
-24-
incapacity of any Class B Member. SCHEDULE A, any amendments thereto or any
amendments to this Agreement, as aforesaid, when prepared by said
attorney-in-fact shall be deemed a part of this Agreement and incorporated
herein by reference, as of the effective date of such SCHEDULE A, amendment
thereto or amendment to this Agreement, to the same extent as if attached hereto
and incorporated herein by this reference on the date hereof.
ARTICLE 14
GENERAL PROVISIONS
Section 14.1. AMENDMENTS. Except as contemplated by Article 5 with
respect to the reflection on SCHEDULE A or any additional schedule hereto of
information with respect to Class B Members, series of Interests and Annual
Investment Groups, which Schedules shall be amendable by the Company and the
Management Committee as needed to reflect the Class B Members of each Annual
Investment Group and their interests therein, no amendment of this Agreement
shall be binding unless such amendment is proposed in writing by the
Management Committee, and the written consent of the Class A Member is
obtained with respect thereto; PROVIDED, HOWEVER, THAT no such amendment may
(i) require the Class B Members to make Capital Contributions to the Company
or (ii) make one or more of the Class B Members personally liable for any
obligations of the Company, or (iii) except as necessary to reflect the
admission of new Class B Members pursuant to Section 5.10, modify the
allocation or timing of distributions of cash or Company profits and losses
with respect to the Annual Investment Group to which such Class B Member
belongs, or (iv) modify the method of determining distributions of cash and
allocations of profits and losses with respect to the Annual Investment Group
to which such Class B Member belongs, or (v) modify the provisions of Article
5, in each case without the written agreement of all Members adversely
affected thereby. Subject to the foregoing, amendments may be made to this
Agreement from time to time by the Management Committee or Administrative
Member, without the consent of any of the Class B Members: (i) to add to the
representations, duties or obligations of the Management Committee or
Administrative Member, respectively, or surrender any right or power granted
to the Management Committee or Administrative Member, respectively, herein;
(ii) to cure any ambiguity, correct or supplement any provision herein which
may be inconsistent with any other provision herein or make any other
provisions with respect to matters or questions arising hereunder which will
not be inconsistent with any other provision hereof; (iii) to delete from or
add to any provision hereof required to be so deleted or added by a state
"Blue Sky" commission in order to permit the offer or sale of Company
Interests in any state; and (iv) as otherwise provided in this Agreement.
Section 14.2. NOTICES.
14.2.1. Any notice to be given under this Agreement shall be made
in writing and shall be deemed to have been duly given when personally delivered
against written receipt or when mailed by certified or registered mail, return
receipt requested, postage prepaid, or sent by overnight courier (whether or not
a signature is required) or by facsimile (with an original mailed pursuant to
one of the methods above), addressed as set forth below:
(a) If to the Class A Member:
▇▇▇▇▇ Financial Corporation
-25-
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
(b) If to any Class B Member such notice shall be mailed to
the address of the Class B Member appearing on the records of the Company.
14.2.2. Any Member may change the address to which notice is to be
sent by giving notice of such change to the Company, and to each Class B Member
in the case of a change by a Class A Member or the Company, in conformity with
the provisions of this Section for the giving of notice.
14.2.3. Any such notice so given shall be deemed to be effective
as of the date so de livered if delivered personally (which shall include
delivery by overnight carrier or by telecopy or facsimile), or as of the third
day after the date on which the same was deposited in a regularly maintained
receptacle for the deposit of United States mail, addressed and sent as
aforesaid.
Section 14.3. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware notwithstanding
any conflict-of-law doctrines of such State or other jurisdiction to the
contrary.
Section 14.4. BINDING NATURE OF AGREEMENT. Except as otherwise
provided, this Agreement shall be binding upon and inure to the benefit of the
Members and their heirs, personal representatives, successors and assigns.
Section 14.5. VALIDITY. In the event that all or any portion of any
provision of this Agreement shall be held to be invalid, the same shall not
affect in any respect whatsoever the validity of the remainder of this
Agreement.
Section 14.6. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements and
understanding, inducements or conditions, express or implied, oral or written,
except as herein contained. This Agreement may not be modified or amended other
than by an agreement in writing.
Section 14.7. INDULGENCES, ETC. Neither the failure nor any delay on
the part of any party hereto to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or any other right, remedy, power or privilege; nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and signed by the party asserted to have granted such waiver.
-26-
Section 14.8. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of such
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories. Any and all counterparts hereto may be executed by facsimile.
Section 14.9. PARAGRAPH HEADINGS. The paragraph headings in this
Agreement are for convenience only; they form no part of this Agreement and
shall not effect its interpretation.
Section 14.10. GENDER, ETC. Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number singular or plural, any other gender, masculine, feminine or
neuter, as the context requires.
Section 14.11. NUMBER OF DAYS. In computing the number of days for the
purpose of this Agreement, all days shall be counted, including Saturdays,
Sundays and holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday or holiday, then the final day shall be
deemed to be the next day which is not a Saturday, Sunday or holiday.
Section 14.12. INTERPRETATION. No provision of this Agreement is to be
interpreted for or against either party because that party or that party's legal
representative drafted such provision.
Section 14.13. CORPORATE AND COMPANY AUTHORITY. Any corporation or
company signing this Agreement represents and warrants that the execution,
delivery and performance of this Agreement by such corporation or company has
been duly authorized by all necessary corporate or company action.
Section 14.14. THIRD PARTY BENEFICIARIES. Notwithstanding anything to
the contrary contained herein, no provision of this Agreement is intended to
benefit any party other than the Members and their successors and assigns in the
Company and the Company, and no such provision shall be enforceable by any other
party.
Section 14.15. COPIES OF CERTIFICATE OF FORMATION AND AMENDMENTS
THERETO. Neither the Company nor the Management Committee shall be required to
send the Class B Members a copy of the Certificate of Formation or any
amendments thereof or any other certificate or statement required or permitted
to be filed under the Act. Notwithstanding this section 14.15, a Class B Member
shall have the right to inspect the Certificate of Formation and amendments
thereto and any other Company records in accordance with Section 11.1.
Section 14.16. NOMINAL TITLE HOLDER. The Management Committee may, at
its option, cause any or all of the Company's property to be held in street name
or in the name of a nominal or record title holder.
-27-
IN WITNESS WHEREOF the parties have executed this Limited Liability
Company Agreement of ▇▇▇▇▇ Ventures Co-Investment Fund LLC as of the day and
year first above written.
Class A Member:
▇▇▇▇▇ FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: Executive V.P.
---------------------------------
CLASS B MEMBERS:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as attorney-in-fact
for the parties whose names are set forth on
Schedule A attached hereto.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name
SEPARATE COUNTERPART SIGNATURE PAGES OF
THE CLASS B MEMBERS ARE ATTACHED HERETO
-28-
LIMITED LIABILITY COMPANY AGREEMENT
OF
▇▇▇▇▇ VENTURES CO-INVESTMENT FUND LLC
COUNTERPART SIGNATURE PAGE FOR CLASS B MEMBERS
By executing this counterpart signature page, the undersigned hereby agrees to
become a Class B Member of ▇▇▇▇▇ Ventures Co-Investment Fund LLC, having such
rights, entitlements and obligations as set forth in the Limited Liability
Company Agreement of ▇▇▇▇▇ Ventures Co-Investment Fund LLC, effective as of
April 20, 2001 a copy of which the undersigned acknowledges he has received and
has had the opportunity to review and pursuant to which by executing this
signature page the undersigned agrees to be bound thereby.
CLASS B MEMBER
/s/ ▇▇▇▇ ▇▇▇▇
------------------------------
(Signature)
▇▇▇▇ ▇▇▇▇
------------------------------
Print Name
-29-
SCHEDULE A
NAME AND ADDRESS OF
CLASS A MEMBER
▇▇▇▇▇ FINANCIAL CORPORATION
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
NAMES, ADDRESSES AND ANNUAL INVESTMENT GROUP OF
CLASS B MEMBERS
2000 AND 2001 ANNUAL INVESTMENT VINTAGE YEARS
YEAR DEFERRED BONUS NAME AND ADDRESS OF ANNUAL BONUS * PORTFOLIO * PERCENTAGE INTEREST IN
AWARD EARNED CLASS B MEMBER CONTRIBUTION INVESTMENT PORTFOLIO INVESTMENT
------------------- ------------------- ------------ ------------- ----------------------
2000 ▇▇▇▇▇▇ ▇▇▇▇▇ $20,000 IV 0.46%
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2000 ▇▇▇▇ ▇▇▇▇▇▇▇▇ $25,000 IV 0.57%
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2000 ▇▇▇▇ ▇▇▇▇ $25,000 IV 0.57%
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2000 ▇▇▇▇ ▇▇▇▇ $ 5,000 IV 0.06%
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2000 ▇▇▇▇ ▇▇▇▇▇ $10,000 IV 0.23%
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2000 ▇▇▇ ▇▇▇▇▇▇▇▇ $25,000 IV 0.57%
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
A-1
2002 ANNUAL INVESTMENT VINTAGE YEAR
YEAR DEFERRED BONUS NAME AND ADDRESS OF ANNUAL BONUS * PORTFOLIO * PERCENTAGE INTEREST IN
AWARD EARNED CLASS B MEMBER CONTRIBUTION INVESTMENT PORTFOLIO INVESTMENT
------------------- ------------------- ------------ ------------- ----------------------
2001 ▇▇▇▇▇▇ ▇▇▇▇▇ $20,000
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2001 ▇▇▇▇ ▇▇▇▇▇▇▇▇ $25,000
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2001 ▇▇▇ ▇▇▇▇▇▇▇▇ $25,000
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2001 ▇▇▇▇ ▇▇▇▇ $25,000
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2001 ▇▇▇▇ ▇▇▇▇▇ $10,000
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
A-2
ANNEX 1
TO
SCHEDULE A
PORTFOLIO INVESTMENTS
▇▇▇▇▇▇ (NEWTON, MA)
▇▇▇▇▇▇ Associates, Inc. develops and markets systems integration and data
transformation software modeling products for the financial and B2B markets.
▇▇▇▇▇▇ provides solutions that transform complex architectures, with multiple
databases, system interfaces, message interfaces, APIs, and applications into
a universal workflow and communications methodology. ▇▇▇▇▇▇ offers
MetaStreamer(TM), a powerful, universal, data transformation engine providing
a broad range of applications and RECONASSIST(TM) a unique solution that
automates securities reconciliation.
DOCUTOUCH (SEATTLE, WA)
Dent Bay Corporation fka DocuTouch was a Seattle-based application service
provider (ASP) specializing in secure online document management and digital
signature technology. DocuTouch's technology provided a comprehensive
solution for secure, online business-to-business information exchange using
legally binding digital services. The company had a patented authentication
process to absolutely identify anonymous users on the Internet. Using the
DocuTouch system, the parties in the financing transaction could review,
route and sign documents electronically in a matter of minutes. In 2001, the
assets of DocuTouch were sold to NetUpdate.
LIVE CAPITAL (SAN MATEO, CA)
LiveCapital is a leading provider of automated, flexible credit solutions for
enterprises that want to control bad debt and minimize processing costs.
LiveCapital's hosted software solutions automate credit approval by
incorporating customers' decisioning rules and industry-leading credit data
and scoring models.
NETUPDATE (REDMOND, WA)
NetUpdate has created a transaction management platform that enables
businesses to transform tasks that are disconnected, time-consuming,
expensive, and paper-centric into highly efficient seamless digital
transactions. This migration occurs at the business' own pace and can be
integrated with their existing software. By facilitating real-time online
collaboration with any customer or partner, businesses can efficiently manage
all the elements of their transactions - including documents, shared workflow,
customer information, and messaging. NetUpdate provides access to powerful
technology in a
A-3
simple, consistent interface. Users are easily able to take advantage of the
technology, allowing them to focus on business and their customers.
PAYCYCLE (MOUNTAIN VIEW, CA)
PayCycle offers an online payroll service for small businesses and household
employers that greatly simplifies the task of doing payroll. PayCycle
provides an easy-to-use, Web interface that collects payroll information in a
timely fashion. This allows employers to produce paychecks or pay employees
through electronic funds transfer. This online payroll service also sends
email reminders when tax filings are due, and produces pre-filled tax forms
and W-2's that can be printed and/or filed electronically. PayCycle's
affordable self-serve, online payroll service saves employers time and
frustration while keeping them in control of their payroll expenses.
ZOOLOGIC (NEW YORK, NY)
Zoologic is a leading provider of sophisticated learning solutions for
financial professionals. Zoologic uses the Internet as a delivery platform
for education and corporate training. This requires Zoologic to make a broad
and long-term commitment to clients. In addition to sophisticated web-based
courseware spanning a wide range of financial topics, Zoologic also assists
clients in developing curriculum strategies, offering technical advice and
assisting in the selection of complementary services and products.
A-4
SCHEDULE B
MEMBERS OF THE MANAGEMENT COMMITTEE
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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ADDENDUM 1
CERTAIN DEFINITIONS
Capitalized terms used in the Agreement and not defined in the text of
the Agreement shall have the following meanings:
"Administrative Member" shall mean IFC or such other Member designated
from time to time by the Class A Member.
"Affiliate" means (i) any Person, directly or indirectly controlling,
controlled by or in common control with a specified person; (ii) any Person
owning or controlling 10% or more of the outstanding voting securities of such
specified Persons; (iii) any officer, director, partner or trustee of such
specified Person; and (iv) if such specified Person is an officer, director,
partner or trustee of a Person, the Person for which such Person acts in such
capacity.
"Annual Bonus Award" shall mean the annual bonus to which a Qualified
Employee is entitled pursuant to the Management Bonus Plan maintained by the IFC
Affiliated Group.
"Annual Investment Group" means, for any particular Deferred Bonus
Award Year, the group of Members defined in Section 5.2 of the Agreement who
have the right to receive the Profits attributable to the group of Portfolio
Investments made in that Deferred Bonus Award Year.
"Capital Account" shall have the meaning given to such term in Section
5.8 of this Agreement.
"Capital Contribution" means the amount of money and the fair market
value of property, if any, contributed to the Company by a Member for any
particular year.
"Cause" shall mean (i) a Participant's repeated disregard of lawful
instructions of the Board of Directors of an IFC Group Member for which such
Participant is employed or the senior management of such IFC Group Member, as
determined in the sole discretion of the Board of Directors of such IFC Group
Member, that are consistent with the Participant's position or responsibilities;
(ii) a material breach of a Participant's obligations under his or her
employment arrangement; (iii) alcohol or drug abuse; or (iv) commission of a
felony or an act which, in the good faith determination of the Board of
Directors of the IFC Group Member for which such Participant is employed
constitutes fraud, theft or dishonesty.
"Certificate of Formation" shall mean the certificate of formation of
the Company that is executed and filed with the Secretary of State of Delaware
pursuant to the Act, as amended from time to time.
"Class A Member" means IFC or any other Person subsequently admitted
to the Company as a Class A Member pursuant to the terms of this Agreement.
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"Class B Members" means the Persons listed on SCHEDULE A to this
Agreement who have been admitted to the Company as Class B Members and any other
Persons subsequently admitted to the Company as Class B Members pursuant to the
terms of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Deferred Bonus Amount" shall have the meaning set forth in Section
5.2.1.
"Deferred Bonus Award Year" shall mean each year in which a Qualified
Employee contributes a Deferred Bonus Amount to the Company.
"Distributable Cash" means, with respect to any Fiscal Year, the
excess of all cash receipts of the Company from any source whatsoever, over the
sum of the following amounts:
(a) cash disbursements for accounting and bookkeeping services,
costs of purchases and sales of assets, legal expenses, investment banking fees,
custodial fees, and any and all other items which are actually incurred by the
Company and customarily considered to be "operating expenses";
(b) payments of interest, principal and premium and points and
other costs of borrowing under any indebtedness of the Company;
(c) capital expenditures of any type or kind and costs and
expenses incurred in connection with the organization of the Company; and
(d) any amounts set aside as reserves for working capital,
contingent liabilities, or for any of the expenditures described in clauses (i),
(ii) and (iii) hereof which are deemed by the Management Committee to be
reasonably necessary to meet the current and anticipated future needs of the
Company.
"Fiscal Year" of the Company means the calendar year.
"IFC Affiliated Group" shall mean IFC and any of its Affiliates.
"IFC Group Member" shall mean a member of the IFC Affiliated Group.
"IFC Loan" shall have the meaning set forth in Section 5.2.1.
"Loss" is defined in the definition of "Profit" or "Loss."
"Management Bonus Plan" shall mean the Management Bonus Plan
maintained by the IFC Affiliated Group.
"Management Committee" shall have the meaning set forth in Section 7.1
of the Agreement.
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"Membership Interest" or "Interest" means a Member's interest in the
Company, including all rights to share in the Profits allocable to any Annual
Investment Group in which such Member is a member, all rights to return of
capital, if any, and all other rights as a Member under this Agreement.
"Percentage Interest" of a Member, with respect to the Portfolio
Investments in which the Annual Investment Group of which such Member is a
member has an interest, means the percentage interest of that Member in
Portfolio Investment Profits and Portfolio Investment Losses determined in
accordance with Section 6.2.3, and cash distributions relating thereto.
"Person" means an individual, corporation, Company, association, joint
stock company, trust or unincorporated organization.
"Portfolio Company" means the issuer of securities acquired by The
Venture Fund, other than issuer of certificate of deposits, shares or other
participation in mutual funds or similar money market type instruments which
give rise to Short Term Investment Income.
"Portfolio Investment" means an investment in a Portfolio Company by
The Venture Fund in which the Company has an indirect interest by reason of its
interest in The Venture Fund, and any other direct or indirect investments
received as a dividend or distribution thereon, in a reclassification with
respect thereto or in an exchange or otherwise therefor.
"Portfolio Investment Loss" means Loss of the Company computed with
respect to each Portfolio Investment as if such Portfolio Investment were an
asset and the only asset of the Company and the only expenses of the Company
were the Company's share of expenses of The Venture Fund which are directly
attributable to such Portfolio Investment. Expenses shall be considered directly
attributable to a Portfolio Investment if, but for that Portfolio Investment,
they would not have been incurred by The Venture Fund.
"Portfolio Investment Profit" means Profit of the Company computed
with respect to each Portfolio Investment as if such Portfolio Investment were
an asset and the only asset of the Company and the only expenses of the Company
were the Company's share of expenses of The Venture Fund which are directly
attributable to such Portfolio Investment. For purposes of the definition of
Portfolio Investment Profit, Short Term Investment Income earned in a Fiscal
Year shall be considered Portfolio Investment Profit and shall be allocable to
each Portfolio Investment in proportion to the capital of the Company invested
in such Portfolio Investment. Expenses shall be considered directly attributable
to a Portfolio Investment if, but for that Portfolio Investment, they would not
have been incurred by The Venture Fund.
"Prime Rate' shall mean the prime lending rate as announced from time
to time by ▇▇▇▇▇ Union Bank and Trust Company.
"Profit" or "Loss" means at all times during the existence of the
Company, the net income or net loss of the Company for federal income tax
purposes with respect to each Fiscal Year determined by the Company's
accountants at the close of the Company's Fiscal Year, including, without
limitation, each item of Company income, gain, loss or deduction, other than
those items specially allocated in Section 6. The terms Profit or Loss include
the Company's distributive share of the Profit or Loss of any Company or joint
venture in which it is a member.
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The Profit or Loss of the Company shall be computed with the adjustments
required to comply with the Capital Account maintenance rules of Treasury
Regulation Section 1.704-1(b)(2)(iv), including those applicable to the
revaluation of Company assets under Treasury Regulations Section
1.704-1(b)(2)(iv)(d) and (f).
"Qualified Employees" means those employees of an IFC Group Member
eligible to participate in the Management Bonus Plan and who are selected in
each year by IFC to participate in the Company.
"Regulations" means regulations promulgated by the Department of
Treasury of the United States in respect of the Code.
"Short Term Investment Income" means income earned (by the Company or
The Venture Fund and allocated to the Company) from the investment of capital in
short term investments pending investment by The Venture Fund in a Portfolio
Company or pending distribution following disposition of a Portfolio Company.
"Transfer" means to sell, assign, transfer, give, donate, pledge,
hypothecate, create a security interest in, place in trust or otherwise
voluntarily or involuntarily dispose of or otherwise encumber. The terms
"Transferred," "Transferor" and "Transferee" have corresponding definitions.
"Unattributable Expenses" means all expenses of the Company not taken
into account in the definition of Portfolio Investment Loss and Portfolio
Investment Profit.
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TABLE OF CONTENTS
PAGE
ARTICLE 1 CREATION AND NAME.......................................................................................1
ARTICLE 2 LOCATION................................................................................................1
ARTICLE 3 PURPOSE.................................................................................................1
ARTICLE 4 TERM....................................................................................................2
ARTICLE 5 CONTRIBUTION TO CAPITAL AND STATUS OF MEMBERS...........................................................2
Section 5.1. Membership Interests........................................................................2
Section 5.2. Capital Contribution of Class B Members.....................................................2
Section 5.3. Capital Contributions of Class A Member.....................................................4
Section 5.4. IFC Loans...................................................................................4
Section 5.5. Registration................................................................................4
Section 5.6. Continuation of Class B Member Status.......................................................4
Section 5.7. Withdrawal and Return of Capital............................................................5
Section 5.8. Limited Liability...........................................................................5
Section 5.9. Capital Accounts............................................................................5
Section 5.10. Role of Class B Members....................................................................6
Section 5.11. Issuance of Additional Interests and Securities............................................6
ARTICLE 6 ALLOCATION OF PROFIT AND LOSS AND DISTRIBUTION TO MEMBERS...............................................7
Section 6.1. General Premise.............................................................................7
Section 6.2. Distributions...............................................................................7
Section 6.3. General Allocations of Net Profits and Net Losses...........................................9
Section 6.4. Allocations of Nonrecourse Deductions and Minimum Gain......................................9
Section 6.5. Other Special Allocations..................................................................10
Section 6.6. Curative Allocations.......................................................................10
Section 6.7. Allocations Upon Transfer or Admission.....................................................10
Section 6.8. Tax Matters................................................................................11
Section 6.9. Negative Capital Accounts..................................................................11
Section 6.10. Authority of Management Committee to Vary Allocations to Preserve and
Protect Members' Intent.................................................................................11
Section 6.11. Tax Controversies.........................................................................12
Section 6.12. Proceedings...............................................................................13
Section 6.13. Taxes Withheld............................................................................13
ARTICLE 7 MANAGEMENT OF THE COMPANY..............................................................................13
Section 7.1. Management.................................................................................13
Section 7.2. Powers and Authority.......................................................................14
Section 7.3. Actions by Management Committee; Committees................................................14
Section 7.4. Composition of the Management Committee....................................................14
Section 7.5. Removal, Vacancy on Management Committee...................................................15
Section 7.6. Meetings of the Management Committee.......................................................15
Section 7.7. Manner of Acting...........................................................................15
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Section 7.8. Procedures.................................................................................16
Section 7.9. Designation of Officers....................................................................16
Section 7.10. Liability for Acts or Omissions; Indemnification..........................................17
Section 7.11. No Obligation to Make Additional Capital Contributions or Advances........................18
ARTICLE 8 TRANSFERABILITY OF COMPANY INTERESTS...................................................................18
Section 8.1. Class A Member.............................................................................18
Section 8.2. Transfer of Class B Members' Interest; Withdrawal..........................................18
Section 8.3. Compliance with Securities Laws............................................................20
Section 8.4. Termination of Employment..................................................................20
ARTICLE 9 TERMINATION OF THE COMPANY.............................................................................21
Section 9.1. Dissolution................................................................................21
Section 9.2. Liquidation................................................................................22
ARTICLE 10 COMPANY FUNDS.........................................................................................23
ARTICLE 11 BOOKS AND RECORDS; REPORTS............................................................................23
Section 11.1. Books and Records.........................................................................23
Section 11.2. Accounting Method.........................................................................23
Section 11.3. Reports...................................................................................23
Section 11.4. Tax Elections.............................................................................24
ARTICLE 12 WAIVER OF PARTITION...................................................................................24
ARTICLE 13 POWER OF ATTORNEY.....................................................................................24
Section 13.1. Grant of Power............................................................................24
Section 13.2. Survival of Power.........................................................................24
ARTICLE 14 GENERAL PROVISIONS....................................................................................25
Section 14.1. Amendments................................................................................25
Section 14.2. Notices...................................................................................25
Section 14.3. Governing Law.............................................................................26
Section 14.4. Binding Nature of Agreement...............................................................26
Section 14.5. Validity..................................................................................26
Section 14.6. Entire Agreement..........................................................................26
Section 14.7. Indulgences, Etc..........................................................................26
Section 14.8. Execution in Counterparts.................................................................27
Section 14.9. Paragraph Headings........................................................................27
Section 14.10. Gender, Etc..............................................................................27
Section 14.11. Number of Days...........................................................................27
Section 14.12. Interpretation...........................................................................27
Section 14.13. Corporate and Company Authority..........................................................27
Section 14.14. Third Party Beneficiaries................................................................27
Section 14.15. Copies of Certificate of Formation and Amendments Thereto................................27
Section 14.16. Nominal Title Holder.....................................................................27
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