Exhibit B
FIRST AMENDMENT AND RESTATEMENT
TO MADISON RUN, LLC
OPERATING AGREEMENT
This First Amendment and Restatement to Madison Run, LLC
Operating Agreement (this "Agreement") is entered into on this 21st day of
October, 2004 (the "Effective Date"), by and among the signatories hereto,
constituting Members holding more than fifty percent (50%) of the outstanding
Percentages then held by Members (the "Majority"), for the purpose of amending
the Prior Agreement (as defined herein) of the Company.
Explanatory Statement
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WHEREAS, the Members formed Madison Run, LLC (the "Company")
as a limited liability company under the laws of the State of Delaware on
October 17, 2003 and entered into the Madison Run, LLC Operating Agreement,
dated May 11, 2004 (the "Prior Agreement");
WHEREAS, pursuant to Section 5.7.3 of the Prior Agreement, the
parties hereto desire to amend and restate the Prior Agreement by the
affirmative vote of the Majority; and
WHEREAS, this Amendment constitutes a written instrument
indicating the written consent of the Majority in accordance with Section 5.7.3
of the Prior Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals,
which are deemed a substantive part hereof, and of the mutual covenants,
conditions and agreements set forth herein, the parties, intending legally to be
bound, agree that the Prior Agreement is hereby amended and restated in its
entirety:
NO INTEREST IN THE COMPANY HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NO INTEREST MAY BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND THE RULES AND REGULATIONS IN
EFFECT THEREUNDER AND ALL APPLICABLE STATE SECURITIES LAWS OR (B) PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER OR OTHERWISE IN COMPLIANCE WITH, THE
SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS.
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Section I
Defined Terms
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The following capitalized terms shall have the meanings
specified in this Section 1. Other terms are defined in the text of this
Agreement and shall have the meanings respectively ascribed to them.
"Act" means the Delaware Limited Liability Company Act (6 Del. C.
ss.ss.18-101 et seq.), as amended from time to time.
"Affiliate" means either:
(i) with respect to any Entity:
(A) any other Person directly or indirectly Controlling, Controlled by, or
under common Control with such Entity;
(B) any other Person owning or controlling ten percent (10%) or more of the
outstanding voting interests in such Entity;
(C) any officer, employee, director, general partner, manager, or managing
member of such Entity; or
(D) any other Person that is an officer, director, general partner,
manager, managing member, or holder of ten percent (10%) or more of the voting
interests of any other Person described in subsections (A) through (C) above;
and
(ii) with respect to an individual:
(A) any other Person directly or indirectly controlled by such individual;
(B) any parent, grandparent, adult sibling, adult child, or adult
grandchild, or the spouse, of such individual;
(C) any trust established for the benefit of such individual, for the
benefit of any minor child or minor grandchild of such individual, or for the
benefit of any other individual described in subsection (B) above; or
(D) the testamentary estate, executor, executrix, administrator, personal
representative, heir, or devisee of such individual.
"Capital Account" means the account maintained by the Company
for each Member in accordance with the following provisions:
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(i) a Member's Capital Account shall be credited with the Member's Capital
Contributions and the Member's distributive share of Profit; and
(ii) a Member's Capital Account shall be debited with the amount of money
and the fair market value of any Company property distributed to the Member and
the Member's distributive share of Loss.
If any Interest is Transferred pursuant to the terms of this
Agreement, the transferee shall succeed to the Capital Account of the transferor
to the extent the Capital Account is attributable to the Transferred Interest.
If the book value of Company property is adjusted, the Capital Account of each
Member shall be adjusted to reflect the aggregate adjustment in the same manner
as if the Company had recognized gain or loss equal to the amount of such
aggregate adjustment. It is intended that the Capital Accounts of all Members
shall be maintained in compliance with the provisions of Regulation Section
1.704-1(b), and all provisions of this Agreement relating to the maintenance of
Capital Accounts shall be interpreted and applied in a manner consistent with
such Regulations.
"Capital Contribution" means the total amount of cash and the
fair market value of any other assets contributed (or deemed contributed
pursuant to Regulation Section 1.704-1(b)(2)(iv)(d)) to the Company by or on
behalf of a Member.
"Cash Flow" means all cash derived from the operations of the
Company, less cash used to (i) pay the expenses of managing the Company's
assets, (ii) acquire new assets, and (iii) establish reasonable reserves for
future expenses and asset acquisitions, as determined by the General Manager.
"Code" means the Internal Revenue Code of 1986, as amended, or
any corresponding provision of any succeeding law.
"Company" means the limited liability company formed in
accordance with this Agreement.
"Control" (or any form thereof) means ownership of more than
fifty percent (50%) of the voting interests of the Entity to which the term is
applied.
"Entity" means any general partnership, limited partnership,
corporation, limited liability company, joint venture, trust, business trust,
cooperative, association or other form of organization.
"General Manager" is the Person designated as such in Section
V.
"Insolvency" means, with respect to any Person, the occurrence
of any of the events set forth in ss.18-304 of the Act.
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"Interest" means the percentage ownership interest of a Member
in the Company, including the right of such Member to any and all benefits to
which a Member may be entitled as provided in this Agreement including, without
limitation, such Member's share of the Profits and Losses of, and the right to
receive distributions from, the Company, together with the obligations of such
Member to comply with all of the terms and provisions of this Agreement and of
the Act.
"Involuntary Member" means a Member upon the Insolvency or
divorce of such Member.
"Involuntary Withdrawal" means, with respect to any Member,
the occurrence of any of the events set forth in ss.18-801(b) of the Act.
"Member" means each Person signing this Agreement and any
Person who subsequently is admitted as a Member of the Company.
"Notification" means a writing containing the information
required by this Agreement to be communicated to any Person, as provided in
Section 9.2 hereof.
"Percentage" means the percentage set forth after the Member's
name on Schedule A, as amended from time to time.
"Person" means any individual, Entity, or government or other
agency or political subdivision thereof, and the heirs, personal
representatives, successors and assigns of such Person.
"Profit" and "Loss" means, for each taxable year of the
Company (or other period for which Profit or Loss must be computed), the
Company's taxable income or loss determined in accordance with Code Section
703(a), with the following adjustments:
(i) all items of income, gain, loss, deduction, or credit
required to be stated separately pursuant to Code Section 703(a)(1) shall be
included in computing taxable income or loss;
(ii) any tax-exempt income of the Company, not otherwise taken
into account in computing Profit or Loss, shall be included in computing taxable
income or loss;
(iii) any expenditures of the Company described in Code
Section 705(a)(2)(B) (or treated as such pursuant to Regulation Section
1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in computing Profit
or Loss, shall be subtracted from taxable income or loss; and
(iv) any items which are specially allocated by
Members pursuant to Section 4.5 shall not be taken into account in computing
Profit or Loss.
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"Regulations" means the income tax regulations, including any
temporary regulations, from time to time promulgated under the Code.
"Special Member" means Madkens Partners, LLC, a newly-formed
Delaware limited liability company, whose initial members shall be Madison Run
Holdings, LLC and Kensington Partners, LLC.
"Transfer" means, when used as a noun, any voluntary sale,
hypothecation, pledge, assignment, attachment, or other transfer, and, when used
as a verb, means, voluntarily to sell, hypothecate, pledge, assign, or otherwise
transfer.
"Voluntary Withdrawal" means a Member's dissociation with the
Company by means other than by a Transfer or an Involuntary Withdrawal.
Section II
Formation and Name; Purpose; Term; Registered Office and Registered Agent
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2.1 Formation. A limited liability company was formed pursuant
to the Act as of October 17, 2003, with the filing for record of that certain
Certificate of Formation (the "Certificate") with the Secretary of State of the
State of Delaware (the "Secretary of State").
2.2 Name of the Company. The name of the Company is "Madison
Run, LLC." The Company may do business under that name and under any other name
or names which the General Manager selects. If the Company does business under a
name other than that set forth in the Certificate, the Company shall file any
certificates or documents as required by law.
2.3 Purpose. The purposes for which the Company is organized
are to (i) purchase, acquire, sell, own, trade in, hold, invest in, manage and
otherwise deal in and with securities of Digital Fusion, Inc.; (ii) engage in
any lawful act or activity for which a limited liability company may be
organized under the Act; and (iii) do any and all things necessary, convenient,
or incidental to the foregoing.
2.4 Term. The term of the Company shall commence as of the
date of filing of the Certificate with the Secretary of State, and shall
continue perpetually, unless the Company is dissolved and its affairs wound up
pursuant to Section VII hereof.
2.5 Registered Office. The registered office of the Company in
the State of Delaware shall be located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, in
the City of Wilmington, County of New Castle, 19808 or at any other place within
the State of Delaware which the General Manager selects.
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2.6 Registered Agent. The name and address of the Company's
initial registered agent for service of process in the State of Delaware shall
be Corporation Service Company, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
2.7 Members. The name, present mailing address, Capital
Contribution and Percentage of each Member (as of the date hereof) are set forth
on Schedule A attached hereto and made a part hereof. The name, present mailing
address and Percentage of the Special Member is set forth on Schedule C attached
hereto.
Section III
Members; Capital; Capital Accounts; Representations and Warranties
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3.1 Initial Capital Contribution. The parties hereto acknowledge and agree
that, contemporaneously with the execution of this Agreement, each Member
contributed to the Company the respective Capital Contribution set forth on
Schedule A attached hereto.
3.2 No Other Capital Contributions. No Member shall be required to
contribute any additional capital to the Company, and except as set forth in the
Act, no Member shall have any personal liability for any obligations of the
Company.
3.3 No Interest on Capital Contributions. Members shall not be paid
interest on their Capital Contributions.
3.4 Return of Capital Contributions. Except as otherwise provided in this
Agreement, no Member shall have the right to receive the return of any Capital
Contribution.
3.5 Form of Return of Capital. If a Member is entitled to receive a return
of a Capital Contribution, the Member shall not have the right to receive
anything but cash in return of the Member's Capital Contribution.
3.6 Additional Capital Contributions. The Members recognize that the
Company may have need for additional capital for its business purposes,
including the exercise of warrants. If additional Capital Contributions are
desired, the General Manager shall provide the Members with written notice of
the need for such additional Capital Contributions. In accordance with Section
3.2, no Member shall be required to contribute any additional capital to the
Company and further the Members acknowledge that they have no right to make
additional Capital Contributions to the Company to maintain their Interest in
the Company and that the General Manager, in its sole discretion, shall
determine whether the additional Capital Contribution, if any, shall be made by
an existing Member(s), and if so, in what amount, or if the additional Capital
Contribution shall be made by a Person who is to be subsequently admitted as a
Member. The Members have no intention of allowing a transfer of any accrued but
unbooked asset appreciation or depreciation to occur as a result of any
additional Capital Contribution or any issuance of interests in the Company.
Accordingly, prior to any additional Capital Contribution or any issuance of
interests, the Company shall adjust or "book up" its assets and the Capital
Accounts of the Members pursuant to Regulation Section 1.704-1(b)(2)(iv)(f).
Additionally, the Capital Account of each Member making a Capital Contribution
shall be credited with the fair market value of such contribution.
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3.7 Capital Accounts. A separate Capital Account shall be maintained for
each Member and for the Special Member.
Section IV
Profit, Loss, and Distributions
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4.1 Profit or Loss. Subject to Sections 4.4 and 4.5, Profit or Loss shall
be allocated to the Members as follows:
4.1.1 Twenty percent (20%) of Profit or Loss shall be allocated to the
Special Member.
4.1.2 Any remaining Profit or Loss shall be allocated to the Members in
proportion to their Percentages.
4.2 Cash Flow. Distributions of Cash Flow may be made by the Company, at
such times as the General Manager may determine, as follows:
4.2.1 Twenty percent (20%) of Cash Flow shall be distributed to the Special
Member.
4.2.2 The first $__________ [INSERT EXPENSE NUMBER] of any remaining Cash
Flow that would otherwise be distributable to those members set forth on
Schedule A of the Prior Agreement shall be allocated to the Members listed on
Schedule B hereto in proportion to the percentages set forth on such schedule
opposite each Member's name.
4.2.3 Any remaining Cash Flow shall be allocated to the Members in
proportion to their Percentages.
4.3 Liquidation and Dissolution. If the Company is liquidated, the assets
of the Company shall be distributed to the Members and the Special Member in
accordance with the balances in their respective Capital Accounts, after taking
into account the allocations of Profit or Loss, if any, pursuant to Section 4.1,
and distributions, if any, of Cash Flow pursuant to Section 4.2.
4.4 General.
4.4.1 Except as otherwise provided in this Agreement, the timing and amount
of all distributions shall be determined by the General Manager.
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4.4.2 The General Manager shall have the right to distribute assets of the
Company in kind (including, without limitation, warrants for securities in
Digital Fusion, Inc.) prior to its liquidation or dissolution, provided that any
such distribution is a distribution by the General Manager to each Member and/or
the Special Member of his or its proportionate share (in proportion to his or
its Interest) in each such asset so distributed.
4.4.3 If the Company alters the Percentages of the Members as a result of
an additional Capital Contribution (an "Adjustment"), then in making allocations
of income, gain, loss or deduction for all periods subsequent to the date of
such Adjustment, the Company shall make such special allocations as are
necessary to ensure that the Adjustment does not affect the sharing of income,
gain, loss or deduction that has accrued before the date thereof.
4.4.4 The General Manager is hereby authorized, upon the advice of the
Company's tax counsel, to amend this Section IV to comply with the Code and the
Regulations promulgated under Code Section 704(b); provided, however, that no
amendment shall materially affect distributions to a Member without the Member's
prior written consent.
4.5 Special Allocations. Notwithstanding any other provision of this
Agreement, the Company shall adhere to the qualified income offset provisions of
Regulation ss.1.704-1(b)(2)(ii)(d), the minimum gain chargeback provisions of
Regulation ss.1.704-2(f), the partner minimum gain chargeback provisions of
Regulation ss.1.704-2(i) and the built-in gain and built-in loss provisions of
Code Section 704(c) before making any allocations of Profit or Loss pursuant to
Section 4.1.
Section V
Management: Rights, Powers, and Duties
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5.1 Management.
5.1.1 General Manager. The Company shall be managed by a General Manager
who may, but need not, be a Member. Madison Run Holdings, LLC is hereby
designated to serve as the initial General Manager.
5.1.2 General Powers. Except as set forth in Section 5.7, the General
Manager shall have full, exclusive, and complete discretion, power, and
authority, subject in all cases to the other provisions of this Agreement and
the requirements of applicable law, to manage, control, administer, and operate
the business and affairs of the Company for the purposes herein stated, and to
make all decisions affecting such business and affairs. Such power and authority
shall include the right to borrow funds to facilitate the exercise of warrants
or for other Company purposes either from a Member or a third party, or to loan
funds to a Member or a third party.
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5.1.3 Limitation on Authority of Members.
5.1.3.1 No Member is an agent of the Company solely by virtue of being a
Member, and no Member has authority to act for the Company solely by virtue of
being a Member.
5.1.3.2 This Section 5.1 supersedes any authority granted to the Members
pursuant to Section 18-402 of the Act. Any Member who takes any action or binds
the Company in violation of this Section 5.1 shall be solely responsible for any
loss and expense incurred by the Company as a result of the unauthorized action
and shall indemnify and hold the Company harmless with respect to the loss or
expense.
5.1.4 Removal of General Manager. Upon the unanimous consent of the
Members, the Members, at any time and from time to time and for any reason, may
remove the General Manager then acting and elect a new General Manager. The
General Manager shall have the right to designate his successor by sending a
Notification to the Members.
5.2 Personal Services.
5.2.1 No Member shall be required to perform services for the Company
solely by virtue of being a Member. Unless approved by the General Manager, no
Member shall perform services for the Company or be entitled to compensation for
services performed for the Company.
5.2.2 Except as otherwise provided in this Agreement, the General Manager
shall not be entitled to compensation for services performed for the Company.
However, upon substantiation of the amount and purpose thereof, the General
Manager shall be entitled to reimbursement for expenses reasonably incurred
(including, without limitation advances made by the General Manager for the
payment of legal expenses incurred in forming and organizing the Company) in
connection with the activities of the Company. All advances for expenses made by
the General Manager shall bear interest from the date of such advance at the
floating and fluctuating rate equal to the Prime Rate in effect from time to
time (as set forth in the Wall Street Journal from time to time) plus one
percent (1%).
5.2.3 As compensation for services performed for the Company, the Company
shall assign to the General Manager that certain warrant to purchase 50,000
shares of common stock of Digital Fusion, Inc. at a price of $1.25 per share
(the "Warrant") which the Company obtained for the benefit of Madison Run
Holdings, LLC pursuant to that certain Additional Subscription Agreement by and
among the Company, Madison Run Holdings, LLC and Digital Fusion, Inc., dated as
of October 21, 2004.
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5.3 Duties of Parties.
5.3.1 The General Manager shall devote such time to the business and
affairs of the Company as is necessary to carry out the General Manager's duties
set forth in this Agreement.
5.3.2 Except as otherwise expressly provided in Section 5.3.3, nothing in
this Agreement shall be deemed to restrict in any way the rights of any Member
to conduct any other business or activity whatsoever, and the Member shall not
be accountable to the Company or to any other Member with respect to that
business or activity even if the business or activity competes with the
Company's business. The organization of the Company shall be without prejudice
to their respective rights to maintain, expand or diversify such other interests
and activities and to receive and enjoy profits or compensation therefrom. Each
Member waives any rights the Member might otherwise have to share or participate
in such other interests or activities of any other Member.
5.3.3 Each Member understands and acknowledges that the conduct of the
Company's business may involve business dealings and undertakings with Members
and Persons related to Members. In any of those cases, those dealings and
undertakings shall be at arm's length and on commercially reasonable terms.
5.4 Liability and Indemnification.
5.4.1 The General Manager shall not be liable, responsible, or accountable,
in damages or otherwise, to any Member or to the Company for any act performed
by the General Manager within the scope of the authority conferred on the
General Manager by this Agreement, except for fraud, gross negligence, or an
intentional breach of this Agreement.
5.4.2 The Company hereby indemnifies the General Manager for any act it
performs within the scope of the authority conferred on him by this Agreement,
except for fraud, gross negligence, or an intentional breach of this Agreement,
provided, however, that any indemnity under this Section shall be provided out
of and to the extent of the assets of the Company only.
5.5 Power of Attorney.
5.5.1 Grant of Power. Each Member constitutes and appoints the General
Manager as the Member's true and lawful attorney-in-fact ("Attorney-in-Fact"),
and in the Member's name, place and stead, to make, execute, sign, acknowledge,
and file:
5.5.1.1 one or more certificates;
5.5.1.2 all documents (including amendments to certificates) which the
Attorney-in-Fact deems appropriate to reflect any amendment, change, or
modification of this Agreement or to give effect to a Transfer or issuance of an
Interest pursuant to the terms of this Agreement;
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5.5.1.3 any and all other certificates or other instruments required to be
filed by the Company under the laws of the State of Delaware or of any other
state or jurisdiction, including, without limitation, any certificate or other
instruments necessary in order for the Company to continue to qualify as a
limited liability company under the laws of the State of Delaware;
5.5.1.4 one or more fictitious or trade name certificates; and
5.5.1.5 all documents which may be required to dissolve and terminate the
Company and to cancel its Certificate.
5.5.2 Irrevocability. The foregoing power of attorney is irrevocable and is
coupled with an interest, and, to the extent permitted by applicable law, shall
survive the death or disability of a Member. It also shall survive the Transfer
of an Interest, except that if the transferee is approved for admission as a
Member, this power of attorney shall survive the delivery of the assignment for
the sole purpose of enabling the Attorney-in-Fact to execute, acknowledge and
file any documents needed to effectuate the substitution. Each Member shall be
bound by any representations made by the Attorney-in-Fact acting in good faith
pursuant to this power of attorney, and each Member hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the Attorney-in-Fact taken in good faith under this power of attorney.
5.6 Fiduciary Duties. Notwithstanding anything in the Act or any other
provision to the contrary in this Agreement, the General Manager shall have no
fiduciary duty to the Company or to the Members.
5.7 Meetings of and Voting by Members.
5.7.1 A meeting of the Members may be called at any time by the General
Manager in order to amend the terms of this Agreement. Meetings of Members shall
be held at such time and such place, either within or outside the State of
Delaware, designated by the Person calling the meeting. Not less than ten (10)
nor more than ninety (90) days before each meeting, the Managing Member shall
give written notice of the meeting to each Member entitled to vote at the
meeting. The notice shall state the time, place and purpose of the meeting.
Notwithstanding the foregoing provisions, each Member who is entitled to notice
waives notice if before or after the meeting the Member signs a waiver of the
notice which is filed with the records of Members' meetings, or is present at
the meeting in person or by proxy. At a meeting of Members, the presence in
person or by proxy of Members holding more than fifty percent (50%) of the
Percentages then held by Members constitutes a quorum. A Member may vote either
in person or by written proxy signed by the Member or by its, her or his duly
authorized attorney-in-fact.
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5.7.2 Except as otherwise provided in this Agreement, at any meeting where
a quorum is present, the affirmative vote of Members holding more than fifty
percent (50%) of the Percentages present in person or by proxy at the meeting
shall be required to approve the amendment of this Agreement.
5.7.3 In lieu of holding a meeting, the Members may vote or otherwise take
action to amend this Agreement by a written instrument indicating the written
consent of Members holding more than fifty percent (50%) of the outstanding
Percentages then held by Members.
5.7.4 The provisions of Section 5.7.2 and Section 5.7.3 relating to the
affirmative vote and written consent, respectively, of Members holding more than
fifty percent (50%) of the outstanding Percentages then held by Members, shall
not apply to Section 5.1.4 hereof.
Section VI
Transfer of Interests and Withdrawals of Members
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6.1 No Transfer or Voluntary Withdrawal. No Member may Transfer all or any
portion of his, her or its Interest, directly or indirectly, without the prior
written consent of the General Manager (which consent may be granted or withheld
in the sole and absolute discretion of the General Manager) and satisfaction of
the requirements of Section 6.2. Any Transfer in contravention of this Section
6.1 shall be null and void. No Member shall Voluntarily Withdraw or otherwise
resign or retire from the Company without the prior written consent of the
General Manager.
6.2 Transfer or Assignment of Member's Interest. The admission of a
Transferee as a Member of the Company shall become effective only upon receipt
by the Company of (or waiver of such receipt by the General Manager), (i) a
written statement of consent by the General Manager (which consent may be
granted or withheld in the sole and absolute discretion of the General Manager);
(ii) an opinion of counsel to the Company that the admission will not require
registration of the Interest of such Transferee with the Securities and Exchange
Commission or any state securities agency; (iii) the written agreement of the
Transferee to be bound by the provisions of this Agreement and all other
applicable agreements, including without limitation the power of attorney in
favor of the General Manager, all in such form as the General Manager shall
require; and (iv) reimbursement to the Company by the Transferee for the expense
of his, her or its admission as a Member of the Company. A Transferee shall
become and may exercise the rights of a Member of the Company only if such
Transferee is admitted into the Company as a Member in accordance with this
Section 6.2. Nothing herein shall be construed to relieve a Member Transferring
its, her or his Interest in the Company of any obligations or liabilities to the
Company under this Agreement.
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6.3 Right of Company to Acquire Interest
6.3.1 Notwithstanding the provisions of Section 6.1 hereof, at any time
from and after the date of this Agreement, the Company shall have the right to
purchase the entire Interest of any Member (including any Transferee of any
Member who acquired an Interest pursuant to the General Manager's written
consent) by providing such Member with Notification of the Company's intent to
acquire its entire Interest and by paying the purchase price as provided in
Sections 6.3.3.
6.3.2 Closing of the sale of the Interest of a Member ("Closing"), shall,
unless otherwise agreed by the Company and the withdrawing Member, be held at
the principal place of business of the Company ninety (90) days from the date of
the occurrence of any Notification referenced in Section 6.3.1.
6.3.3 If the Company gives Notification to a Member that it intends to
acquire the Member's entire Interest as provided in Section 6.3.1, the Member
shall be required to sell, and the Company shall be entitled to purchase at the
Closing, the Member's entire Interest by distributing a pro rata share of each
asset of the Company to the Member in proportion to their Interest. For example,
if the assets of Company were 100 shares of common stock of Digital Fusion, Inc.
and 100 warrants to purchase shares of common stock of Digital Fusion, Inc., and
the Member's Interest was 25% of the Company, the Company would pay the Member
25 shares of common stock of Digital Fusion, Inc. and 25 warrants to purchase
common stock of Digital Fusion, Inc. at the Closing.
Section VII
Dissolution, Liquidation, and Termination of the Company
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7.1 Events of Dissolution. The Company shall be dissolved upon the decision
of the General Manager to dissolve the Company.
7.2 Involuntary Withdrawals. The Company shall not be dissolved upon the
occurrence of an Involuntary Withdrawal of a Member.
7.3 Procedure for Winding Up and Dissolution. If the Company is dissolved,
the General Manager shall wind up its affairs. On winding up of the Company, the
assets of the Company shall be distributed, first, to creditors of the Company,
including Members who are creditors, in satisfaction of the liabilities of the
Company, and then to the Members, in accordance with Section 4.3.
7.4 Filing of Certificate of Cancellation. If the Company is dissolved, the
General Manager shall promptly file a certificate of cancellation with the
Secretary of State. If there is no General Manager, then the certificate of
cancellation shall be filed by the remaining Members; if there are no remaining
Members, the certificate of cancellation shall be filed by the last Person to be
a Member; if there is neither a General Manager, remaining Member or a Person
who last was a Member, the certificate of cancellation shall be filed by the
legal or personal representatives of the Person who last was a Member.
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Section VIII
Books, Records, Accounting, and Tax Elections
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8.1 Bank Accounts. All funds of the Company shall be deposited in a bank
account or accounts maintained in the Company's name. The General Manager shall
determine the institution or institutions at which the accounts will be opened
and maintained, the types of accounts, and the Persons who will have authority
with respect to the accounts and the funds therein.
8.2 Books and Records.
8.2.1 The General Manager shall keep or cause to be kept complete and
accurate books and records of the Company and supporting documentation of the
transactions with respect to the conduct of the Company's business. The records
shall include, but not be limited to, complete and accurate information
regarding the state of the business and financial condition of the Company, a
copy of the certificate and operating agreement and all amendments to the
certificate and operating agreement; a current list of the names and last known
business, residence, or mailing addresses of all Members; and the Company's
federal, state and local tax returns.
8.2.2 The books and records shall be maintained in accordance with sound
accounting practices and shall be available at the Company's principal office
for examination by any Member or the Member's duly authorized representative at
any and all reasonable times during normal business hours.
8.2.3 Each Member shall reimburse the Company for all costs and expenses
incurred by the Company in connection with the Member's inspection and copying
of the Company's books and records.
8.3 Annual Accounting Period. The annual accounting period of the Company
shall be its taxable year. The Company's taxable year shall be selected by the
General Manager, subject to the requirements and limitations of the Code.
8.4 Reports. Within seventy-five (75) days after the end of each taxable
year of the Company, the General Manager shall cause to be sent to each Person
who was a Member at any time during the accounting year then ended that tax
information concerning the Company which is necessary for preparing the Member's
income tax returns for that year.
14
8.5 Tax Matters Partner. The General Manager shall be the Company's tax
matters partner ("Tax Matters Partner"). The Tax Matters Partner shall have all
powers and responsibilities provided in Code Section 6221, et seq. The Tax
Matters Partner shall keep all Members informed of all notices from government
taxing authorities which may come to the attention of the Tax Matters Partner.
The Company shall pay and be responsible for all reasonable third-party costs
and expenses incurred by the Tax Matters Partner in performing those duties. A
Member shall be responsible for any costs incurred by the Member with respect to
any tax audit or tax-related administrative or judicial proceeding against any
Member, even though it relates to the Company. The Tax Matters Partner may not
compromise any dispute with the Internal Revenue Service without the unanimous
approval of the Members.
8.6 Tax Elections. The General Manager shall have the authority to make all
Company elections permitted under the Code, including, without limitation,
elections of methods of depreciation and an election under Code Section 754. The
decision to make or not make an election shall be at the General Manager's sole
and absolute discretion.
8.7 Title to Company Property.
8.7.1 Except as provided in Section 8.7.2, all property acquired by the
Company shall be acquired and held by the Company in its name.
8.7.2 The General Manager may direct that legal title to all or any portion
of the Company's property be acquired or held in a name other than the Company's
name. Without limiting the foregoing, the General Manager may cause title to be
acquired and held in its name or in the names of trustees, nominees, or straw
parties for the Company. It is expressly understood and agreed that the manner
of holding title to the Company's property (or any part thereof) is solely for
the convenience of the Company, and all of that property shall be treated as
Company property.
Section IX
General Provisions
------------------
9.1 Assurances. Each Member shall execute all such certificates and other
documents and shall do all such filing, recording, publishing and other acts as
the General Manager deems appropriate to comply with the requirements of law for
the formation and operation of the Company and to comply with any laws, rules,
and regulations relating to the acquisition, operation, or holding of the
property of the Company.
9.2 Notifications. Any notice, demand, consent, election, offer, approval,
request, or other communication (each, a "Notification") required or permitted
under this Agreement must be in writing and either delivered personally or sent
by certified or registered mail, postage prepaid, return receipt requested. Any
Notification to be given hereunder by the Company shall be given by the General
Manager. A Notification must be addressed to a Member at the Member's last known
address on the records of the Company. A Notification to the Company must be
addressed to the Company's principal office. A Notification delivered personally
will be deemed given only when acknowledged in writing by the person to whom it
is delivered. A Notification that is sent by mail will be deemed given three (3)
business days after it is mailed. Any party may designate, by Notification to
all of the others, substitute addresses or addressees for Notifications; and,
thereafter, Notifications are to be directed to those substitute addresses or
addressees.
15
9.3 Specific Performance. The parties recognize that irreparable injury may
result from a breach of any provision of this Agreement and that money damages
may be inadequate to fully remedy the injury. Accordingly, in the event of a
breach or threatened breach of one or more of the provisions of this Agreement,
any party who may be injured (in addition to any other remedies which may be
available to that party) shall be entitled to one or more preliminary or
permanent orders (i) restraining and enjoining any act which would constitute a
breach or (ii) compelling the performance of any obligation which, if not
performed, would constitute a breach.
9.4 Complete Agreement. This Agreement constitutes the complete and
exclusive statement of the agreement among the Members. It supersedes all prior
written and oral statements, including any prior representation, statement,
condition, or warranty.
9.5 Applicable Law. All questions concerning the construction, validity,
and interpretation of this Agreement and the performance of the obligations
imposed by this Agreement shall be governed by the internal law, not the law of
conflicts, of the State of Delaware.
9.6 Section Titles. The headings herein are inserted as a matter of
convenience only, and do not define, limit, or describe the scope of this
Agreement or the intent of the provisions hereof.
9.7 Binding Provisions. This Agreement is binding upon, and inures to the
benefit of, the parties hereto and their respective heirs, executors,
administrators, personal and legal representatives, successors, and permitted
assigns.
9.8 Jurisdiction and Venue. Any suit involving any dispute or matter
arising under this Agreement may only be brought in the United States District
Court for the District of Maryland, or any Maryland State Court having
jurisdiction over the subject matter of the dispute or matter. All Members
hereby consent to the exercise of personal jurisdiction by any such court with
respect to any such proceeding.
9.9 Terms. Common nouns and pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular and plural, as the identity of the Person
may in the context require.
9.10 Separability of Provisions. Each provision of this Agreement shall be
considered separable; and if, for any reason, any provision or provisions herein
are determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or affect those portions of this
Agreement which are valid.
16
9.11 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original and all of which, when taken together, constitute one and the same
document. The signature of any party to any counterpart shall be deemed a
signature to, and may be appended to, any other counterpart.
9.12 Estoppel Certificate. Each Member shall, within ten (10)
days after written request by any Member or the General Manager, deliver to the
requesting Person a certificate stating, to the Member's knowledge, that: (a)
this Agreement is in full force and effect; (b) this Agreement has not been
modified except by any instrument or instruments identified in the certificate;
and (c) there is no default hereunder by the requesting Person, or if there is a
default, the nature and extent thereof. If the certificate is not received
within that ten (10) day period, the General Manager shall execute and deliver
the certificate on behalf of the requested Member, without qualification,
pursuant to the power of attorney granted in Section 5.5.
9.13 Additional Grants. The grant of an Interest to any Member
shall neither guarantee nor preclude a grant in any additional limited liability
company established by the General Manager or its Affiliates in that year or
subsequent years.
[This space left intentionally blank.]
17
IN WITNESS WHEREOF, the parties have executed, or caused this Agreement
to be executed, under seal, as of the Effective Date.
ATTEST/WITNESS: GENERAL MANAGER:
MADISON RUN HOLDINGS, LLC
___________________________(SEAL) /s/ G. ▇▇▇▇▇▇▇ ▇▇▇▇ (SEAL)
-------------------------
G. ▇▇▇▇▇▇▇ ▇▇▇▇, Managing Member
MEMBERS:
MADISON RUN HOLDINGS, LLC
___________________________(SEAL) /s/ G. ▇▇▇▇▇▇▇ ▇▇▇▇ (SEAL)
-------------------------
G. ▇▇▇▇▇▇▇ ▇▇▇▇, Managing
Member
NEL XVIII LLC
___________________________(SEAL) /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Member
___________________________(SEAL) /s/ ▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇
___________________________(SEAL) /s/ H. ▇▇▇ ▇▇▇▇, ▇▇. (SEAL)
--------------------------------
H. ▇▇▇ ▇▇▇▇, ▇▇.
___________________________(SEAL) /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________(SEAL) /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ (SEAL)
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
___________________________(SEAL) /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (SEAL)
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
18
___________________________(SEAL) (SEAL)
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
___________________________(SEAL) /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (SEAL)
----------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
___________________________(SEAL) /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
___________________________(SEAL) /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. (SEAL)
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
___________________________(SEAL) /s/ O.T. ▇▇▇▇▇▇ (SEAL)
----------------------------------
O.T. ▇▇▇▇▇▇
19
SPECIAL MEMBER:
MADKENS PARTNERS, LLC
By: Madison Run Holdings, LLC
___________________________(SEAL) /s/ G. ▇▇▇▇▇▇▇ ▇▇▇▇ (SEAL)
---------------------------
G. ▇▇▇▇▇▇▇ ▇▇▇▇, Member By:
Kensington Partners, LLC
___________________________(SEAL) /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Member
20
SCHEDULE A
List of Special Member, Members, Capital, and Percentages
Capital
Name and Address of Member Contribution Percentage
-------------------------- ------------ ----------
MEMBERS:
Madison Run Holdings, LLC $300,000 17.70%
▇/▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ H St. NW, 12th Floor
Washington, D.C. 20005
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 50,000 2.95%
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇ $ 25,000 1.47%
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ $150,000 8.85%
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ $ 10,000 0.59%
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 40,000 2.36%
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇ $220,000 12.98%
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
H. ▇▇▇ ▇▇▇▇, ▇▇. $ 60,000 3.54%
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
21
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $100,000 5.90%
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
NEL XVIII LLC $625,000 36.87%
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. $ 40,000 2.36%
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
O.T. ▇▇▇▇▇▇ $ 75,000 4.42%
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Total $1,695,000(1) 99.99%(2)
======
1 Does not include $500,000 loan to Madison Run, LLC from The Laredo National
Bank
2 0.01% of the membership interests are owned by Madkens Partners, LLC, as
Special Member.
22
SCHEDULE B
List of New Members and Percentage of New Membership
Name and Address of New Member Percentage
------------------------------ ----------
Madison Run Holdings, LLC
c/o G. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇ ▇▇. ▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ 15.26%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ 8.03%
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 1.61%
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 9.64%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ 4.02%
NEL XVIII LLC
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 50.20%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 3.21%
O.T. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 6.02%
23
H. ▇▇▇ ▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 2.01%
24
SCHEDULE C
Name and Address of Special Member
Name and Address of Special Member Percentage
---------------------------------- ----------
Madkens Partners, LLC 0.01%
▇/▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ H St. NW, 12th Floor
Washington, D.C. 20005
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
25
