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Internet Capital Group LLC Agreement 01-04-1999

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

Internet Capital Group, L.L.C.

 

A Delaware Limited Liability Company

 

Dated January 4, 1999

 

 

 

THE MEMBERSHIP INTERESTS REPRESENTED BY THIS AMENDED AND RESTATED LIMITED

LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND

EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE

DELAWARE SECURITIES ACT OF 1972, AS AMENDED, OR SIMILAR LAWS OR ACTS OF OTHER

STATES IN RELIANCE UPON EXEMPTIONS UNDER THOSE ACTS. THE SALE OR OTHER

DISPOSITION OF THE MEMBERSHIP INTERESTS IS RESTRICTED AS STATED IN THIS AMENDED

AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, AND IN ALL EVENTS IS

PROHIBITED UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO IT

AND ITS COUNSEL THAT SUCH SALE OR OTHER DISPOSITION CAN BE MADE WITHOUT

REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE

STATE SECURITIES ACTS AND LAWS. BY THE EXECUTION OF THIS AGREEMENT AND THE

ACQUISITION OF THE MEMBERSHIP INTEREST REPRESENTED HEREBY, THE MEMBER

REPRESENTS, INTER ALIA, THAT IT IS ACQUIRING ITS MEMBERSHIP INTEREST FOR

----- ----

INVESTMENT AND WITHOUT A VIEW TO DISTRIBUTION AND THAT IT WILL NOT SELL OR

OTHERWISE DISPOSE OF ITS MEMBERSHIP INTEREST WITHOUT REGISTRATION OR OTHER

COMPLIANCE WITH THE AFORESAID ACTS AND THE RULES AND REGULATIONS ISSUED

THEREUNDER.

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AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

OF

 

Internet Capital Group, L.L.C.

A Delaware Limited Liability Company

 

 

TABLE OF CONTENTS

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<S> <C> <C>

ARTICLE I DEFINITIONS............................................... 1

 

1.1 Definitions............................................... 1

1.2 Construction.............................................. 5

 

ARTICLE II ORGANIZATION.............................................. 5

 

2.1 Formation; Effective Date................................. 5

2.2 Name...................................................... 5

2.3 Registered Office; Registered Agent; Principal Office

in the United States; Other Offices....................... 5

2.4 Purpose................................................... 5

2.5 Foreign Qualification..................................... 5

2.6 Term...................................................... 6

2.7 No State-Law Company...................................... 6

2.8 Classification for Tax Purposes........................... 6

2.9 Management Company........................................ 6

 

ARTICLE III MEMBERSHIP, DISPOSITIONS OF INTERESTS..................... 6

 

3.1 Current Members........................................... 6

3.2 Representations and Warranties............................ 7

3.3 No Certification; Restrictions on the Disposition of

an Interest............................................... 8

3.4 New Members............................................... 10

3.5 Interests in a Member..................................... 11

3.6 Information............................................... 11

3.7 Liability to Third Parties................................ 12

3.8 Lack of Authority......................................... 12

3.9 Withdrawal................................................ 12

3.10 Preemptive Rights......................................... 12

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3.11 Right of First Refusal.................................... 13

3.12 Registration Rights....................................... 15

 

ARTICLE IV CAPITAL CONTRIBUTIONS..................................... 15

 

4.1 Contributions............................................. 15

4.2 Subsequent Contributions.................................. 15

4.3 Failure to Contribute..................................... 15

4.4 Return of Contributions................................... 16

4.5 Advances by Members....................................... 16

4.6 Capital Account........................................... 16

 

ARTICLE V ALLOCATIONS AND DISTRIBUTIONS............................. 17

 

5.1 Allocations............................................... 17

5.2 Distributions............................................. 18

 

ARTICLE VI. MANAGERS.................................................. 19

 

6.1 Management by Managers.................................... 19

6.2 Actions by Managers; Committees; Delegation and Duties.... 19

6.3 Number and Term of Office of Managers..................... 20

6.4 Vacancies; Removal; Resignation........................... 20

6.5 Meetings.................................................. 21

6.6 Approval or Ratification of Acts or Contracts by Members.. 21

6.7 Action by Written Consent or Telephone Conference......... 21

6.8 Expenses; Compensation.................................... 22

6.9 Co-Investment Opportunities............................... 22

6.10 Advisory Board............................................ 23

6.11 Conflicts of Interest..................................... 23

6.12 Related Party Transactions................................ 23

 

ARTICLE VII OFFICERS.................................................. 23

7.1 Officers.................................................. 23

7.2 Compensation.............................................. 23

7.3 Term of Office; Removal; Filling of Vacancies............. 24

7.4 Chairman.................................................. 24

7.5 President................................................. 24

7.6 Vice Presidents........................................... 24

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7.7 Secretary................................................. 24

7.8 Assistant Secretary....................................... 24

7.9 Treasurer................................................. 24

7.10 Additional Powers and Duties.............................. 24

 

ARTICLE VIII MEETINGS OF MEMBERS....................................... 25

 

8.1 Meetings.................................................. 25

8.2 Voting List............................................... 26

8.3 Proxies................................................... 26

8.4 Conduct of Meetings....................................... 26

8.5 Action by Written Consent or Telephone Conference......... 26

 

ARTICLE IX INDEMNIFICATION........................................... 26

 

9.1 Right to Indemnification.................................. 26

9.2 Advance Payment........................................... 27

9.3 Indemnification of Employees and Agents................... 27

9.4 Appearance as a Witness................................... 27

9.5 Nonexclusivity of Rights.................................. 28

9.6 Insurance................................................. 28

9.7 Savings Clause............................................ 28

9.8 Limitation on Liability................................... 28

 

ARTICLE X TAXES..................................................... 28

 

10.1 Tax Returns............................................... 28

10.2 Tax Elections............................................. 28

10.3 Tax Matters Partner....................................... 29

 

ARTICLE XI BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS................ 29

 

11.1 Maintenance of Books...................................... 29

11.2 Reports................................................... 30

11.3 Accounts.................................................. 30

 

ARTICLE XII BANKRUPTCY OF A MEMBER.................................... 30

 

12.1 Bankrupt Members.......................................... 30

 

ARTICLE XIII DISSOLUTION, LIQUIDATION, AND TERMINATION................. 31

 

13.1 Dissolution............................................... 31

13.2 Liquidation and Termination............................... 31

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13.3 Deficit Capital Accounts.................................. 33

13.4 Certificate of Cancellation............................... 33

 

ARTICLE XIV. 1940 ACT.................................................. 33

 

14.1 Expulsion................................................. 33

14.2 Purchase of Expelled Member's Membership Interest......... 33

 

ARTICLE XV GENERAL PROVISIONS........................................ 34

 

15.1 Offset.................................................... 34

15.2 Notices................................................... 34

15.3 Entire Agreement; Supersedure............................. 34

15.4 Effect of Waiver or Consent............................... 34

15.5 Amendment or Modification................................. 34

15.6 Binding Act............................................... 35

15.7 Governing Law; Severability............................... 35

15.8 Further Assurances........................................ 35

15.9 No Third Party Benefit.................................... 35

15.10 Waiver of Certain Rights.................................. 35

15.11 Indemnification........................................... 35

15.12 Counterparts.............................................. 36

15.13 Resolutions of Disputes................................... 36

15.14 Estoppels................................................. 37

15.15 Reliance on Authority of Person Signing Agreement......... 37

</TABLE>

EXHIBIT A: NAMES, CAPITAL CONTRIBUTIONS, COMMITMENTS, MEMBERSHIP PROFIT

INTERESTS AND TOTAL MEMBERSHIP INTERESTS OF MEMBERS

 

 

EXHIBIT B: REQUIRED INFORMATION

 

 

EXHIBIT C: REGISTRATION RIGHTS

 

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EXHIBIT 10.5.1

 

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

Internet Capital Group, L.L.C.

A Delaware Limited Liability Company

 

THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this

"Agreement") of INTERNET CAPITAL GROUP, L.L.C. (the "Company") dated as of

January 4, 1999 by and among the parties listed on Exhibit A attached hereto

---------

(the "Current Members") and those other persons who become Members of the

Company from time to time, as hereinafter provided.

 

ARTICLE I

DEFINITIONS

 

1.1 Definitions. As used in this Agreement, the following terms have

the following meanings:

 

"Act" means the Delaware Limited Liability Company Act (6 Del. C.

(S) 18-101 et. seq.), and any successor statute, as amended from time to

time.

 

"Agreement" has the meaning given that term in the introductory

paragraph as amended from time to time.

 

"Bankrupt" means, with respect to any person, a person (a) that (i)

makes an assignment for the benefit of creditors; (ii) files a voluntary

petition in bankruptcy; (iii) is adjudged a bankrupt or insolvent, or has

entered against him an order for relief, or is declared insolvent in any

bankruptcy or insolvency proceedings; (iv) files a petition or answer

seeking for the person a reorganization, arrangement, composition,

readjustment, liquidation, dissolution, or similar relief under any

statute, law, or regulation; (v) files an answer or other pleading

admitting or failing to contest the material allegations of a petition

filed against the person in a proceeding of the type described in

subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to,

or acquiesces in the appointment of a trustee, receiver, or liquidator of

the person's or of all or any substantial part of the person's properties;

or (b) against whom, a proceeding seeking reorganization, arrangement,

composition, readjustment, liquidation, dissolution, or similar relief

under any law has been commenced and 120 days have expired without

dismissal thereof or with respect to whom, without the person's consent or

acquiescence, a trustee, receiver, or liquidator of the person or of all or

any substantial part of the person's properties has been appointed and 90

days have expired without the appointment having been vacated or stayed, or

90 days have expired after the date of expiration of a stay, if the

appointment has not previously been vacated.

 

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"Business Day" means any day other than a Saturday, a Sunday, or a

holiday on which national banking associations in the Commonwealth of

Pennsylvania are closed.

 

"Capital Contribution" means any contribution by a Member to the

capital of the Company; provided that, upon the admission of a new Member

after the date hereof, the Capital Contribution of each Current Member

shall be deemed to be equal to the capital account of such Current Member

as revalued pursuant to Section 4.6 hereof.

 

"Certificate" has the meaning given that term in Section 2.1.

 

"Code" means the Internal Revenue Code of 1986 and any successor

statute, as amended from time to time.

 

"Commitment" means the amount of subsequent contributions each

Member is obligated to contribute to the Company pursuant to Section 4.2 of

this Agreement. The initial Commitment of each Current Member or new

Member purchasing shares of Membership Interest pursuant to Section 3.4

shall be the Commitment established pursuant thereto. Each Member's

Commitment shall be reduced by the amount of any subsequent Capital

Contributions made by such Member and by the amount of any distribution

applied against such commitment under Section 5.2(a)(ii).

 

"Commitment Ratio" with respect to any Current Member or any new

Member purchasing Membership Interests pursuant to Section 3.4 hereof shall

mean a fraction (expressed as a percentage), the numerator of which is that

Member's Commitment and the denominator of which is the sum of the

Commitments of all Current Members and new Members purchasing shares of

Membership Interests pursuant to Section 3.4 hereof.

 

"Company" means Internet Capital Group, L.L.C., a Delaware limited

liability company.

 

"Default Interest Rate" means a rate per annum equal to 3% plus a

varying rate per annum that is equal to the prime rate of interest as

reported in the Wall Street Journal, with adjustments in that varying rate

to be made on the same date as any change in that rate.

 

"Delinquent Member" has the meaning given that term in Section 4.3.

 

"Dispose," "Disposing" or "Disposition" means a sale, assignment,

transfer, exchange, mortgage, pledge, grant of a security interest, or

other disposition or encumbrance (including, without limitation, by

operation of law), or the acts thereof.

 

"Entity" means any general partnership, limited partnership,

corporation, joint venture, trust, business trust, limited liability

company, limited liability partnership, cooperative or association.

 

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"General Interest Rate" means a rate per annum equal to a varying

rate per annum that is equal to the prime rate of interest as reported in

the Wall Street Journal, with adjustments in that varying rate to be made

on the same date as any change in that rate.

 

"Manager" means any Member designated as a manager of the Company in

this Agreement or hereafter appointed as a Manager as provided in this

Agreement, but does not include any person who has ceased to be a manager

of the Company. The Managers may collectively be referred to as the "Board

of Managers."

 

"Member" means (a) the Current Members and (b) any person executing

this Agreement as of the date of this Agreement as a member or hereafter

admitted to the Company as a member as provided in this Agreement, but does

not include any person who has ceased to be a member in the Company.

 

"Membership Interest" means the ownership interest of a Member in

the Company, including, without limitation, rights to distributions

(liquidating or otherwise), allocations, information, and to consent,

approve or vote upon matters upon which Members are entitled to so consent,

approve or vote upon hereunder. Each Member's Membership Interest shall be

represented by shares of Membership Interest. The number of shares of

Membership Interest owned by a Member at any time shall be equal to the sum

of (1) the quotient obtained by dividing that Member's Capital Contribution

plus then outstanding Commitment by $2.00 (provided that, solely for this

purpose, Capital Contributions attributable to Membership Profit Interests

upon a revaluation of the Company's capital accounts in accordance with

Treas. Reg. (S)1.704-1(b)(2)(iv)(f) shall be disregarded) plus (2) the

number of then outstanding shares of Membership Profit Interest owned by

such Member, if any plus (3) the number of then outstanding shares of

Membership Interests with respect to any vested and exercised Options owned

by such Member. The number of shares of Membership Interest owned on the

date hereof by the Current Members is shown on Exhibit A. As new Members

---------

are admitted to the Company, the Managers shall prepare and distribute to

all Members a revised Exhibit A showing the shares of Membership Interest

---------

then owned by all Members and their respective Capital Contributions,

Commitments, and shares of Membership Profit Interests, if any.

 

"1940 Act" means the Investment Company Act of 1940, as amended.

 

"Membership Profit Interest" means the 6,783,625 shares of

Membership Interest granted by the Company as performance incentives to

certain officers or employees of, or consultants or advisors to, the

Company designated by Walter W. Buckley, III and Kenneth A. Fox pursuant to

the Membership Profit Interest Plan.

 

"Offering" means the offering of shares of Membership Interest in

the Company made by the Company pursuant to the Private Placement

Memorandum on the terms and conditions set forth in the Private Placement

Memorandum.

 

"Options" means (1) the non-qualified options to purchase 470,000

shares of

 

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Membership Interests that may be granted to non-employee Managers

of the Company pursuant to the Company's Option Plan For Non-Employee

Managers, which was adopted by the Company's Board of Managers on January

16, 1997 and (2) the non-qualified options to purchase up to 10% of the

total shares of Membership Interests of the Company on a fully-diluted

basis after giving effect to this Offering that may be granted to

employees, officers, consultants and advisors to the Company pursuant to

the Company's Option Plan For Employees and Consultants, which plan has

been adopted by the Board of Managers.

 

"Private Placement Memorandum" means the Company's private placement

memorandum dated May 1998, as amended, providing for the offering of shares

of Membership Interest in the amount of up to $70,000,000.

 

"Public Offering" has the meaning given that term in Section 3.3(g).

 

"Proceeding" has the meaning given that term in Section 9.1.

 

"Required Interest" means one or more Members having among them more

than 50% of the then outstanding Membership Interests of all Members.

 

"Safeguard" means Safeguard Scientifics, Inc., a Pennsylvania

corporation which owns all of the outstanding equity interests of SSI-

Delaware.

 

"Securities Act" has the meaning given that term in Section 3.2(h).

 

"SSI-Delaware" means Safeguard Scientifics (Delaware), Inc., a

Delaware Corporation and a wholly owned subsidiary of Safeguard.

 

"Strategic Partner" has the meaning given that term in Section 6.3.

 

"Subscription Agreement" has the meaning given that term in Section

3.4(a).

 

"Successor Corporation" means any C corporation into, or with which,

the Company merges or consolidates, or to which the Company transfers its

assets in exchange for stock of such corporation.

 

"TL" means collectively Technology Leaders II, L.P., a Delaware

limited partnership and Technology Leaders II Offshore C.V., a Netherlands

Antilles limited partnership, and the TL Corporations.

 

"TL Corporations" means any corporations wholly owned by either

Technology Leaders II, L.P. or Technology Leaders II Offshore C.V. which

acquire Membership Interests in the Company.

 

Other terms defined herein have the meanings so given them.

 

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1.2 Construction. Whenever the context requires, the gender of all

words used in this Agreement includes the masculine, feminine, and neuter. All

references to Articles and sections refer to articles and Sections of this

Agreement, and all references to Exhibits are to Exhibits attached hereto, each

of which is made a part hereof for all purposes.

 

ARTICLE II

ORGANIZATION

 

2.1 Formation; Effective Date. The Company was organized as a Delaware

limited liability company on March 4, 1996 by the filing of a certificate of

formation (the "Certificate") with the Office of the Secretary of the State of

Delaware under and pursuant to the Act signed by Walter W. Buckley, III as an

"authorized person" within the meaning of the Act, and this Agreement shall be

effective as of the time of the filing of the Certificate. This Agreement

amends and restates in its entirety the Limited Liability Company Agreement

entered into on May 9, 1996 by and among SSI-Delaware and the original Members

(the "Original Agreement"), as amended and restated by the Amended and Restated

Limited Liability Company Agreement dated May 13, 1998 (the "May Agreement") and

by the Amended and Restated Limited Liability Company Agreement dated September

30, 1998 (the "September Agreement").

 

2.2 Name. The name of the Company is "Internet Capital Group, L.L.C."

and all Company business must be conducted in that name or such other names that

comply with applicable law as the Managers may select from time to time.

 

2.3 Registered Office; Registered Agent; Principal Office in the United

States; Other Offices. The registered agent and office of the Company

required by the Act to be maintained in the State of Delaware shall be

Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805 or

such other agent or office (which need not be a place of business of the

Company) as the Managers may designate from time to time in the manner provided

by law. The principal office of the Company shall be at such place as the

Managers may designate from time to time and the Company shall maintain such

records as are set forth on Exhibit B attached hereto. The Company may have

---------

such other offices as the Managers may designate from time to time.

 

2.4 Purpose. The purpose of the Company is to (a) acquire equity

interests in companies engaged in businesses related to the Internet, to

actively participate in the management and operations of those companies, and to

hold, manage and sell its investments, as described in the Private Placement

Memorandum; (b) engage in any such other activities permitted under Delaware law

as the Members holding a Required Interest shall determine; and (c) engage in

all other activities incidental or related thereto. Incident to such purposes

and as part of its business, the Company is authorized to do all things

necessary or appropriate to carry out the foregoing purposes or purposes related

or incidental thereto.

 

2.5 Foreign Qualification. Prior to the Company's conducting business

in any jurisdiction other than the State of Delaware, the Managers shall cause

the Company to comply with all requirements necessary to qualify the Company as

a foreign limited liability company in that jurisdiction if the nature of its

business makes such qualification necessary. At the request of

 

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the Managers, each Member shall execute, acknowledge, swear to, and deliver all

certificates and other instruments conforming with this Agreement that are

necessary or appropriate to qualify, continue, and terminate the Company as a

foreign limited liability company in all such jurisdictions in which the Company

may conduct business.

 

2.6 Term. The Company commenced on the date the Certificate was filed

with the Secretary of State of the State of Delaware and shall continue in

existence until April 30, 2008, unless the Board of Managers shall, in its sole

discretion, approve extension(s) of time for the orderly liquidation of the

Company, such extension(s) not to exceed two periods of one year each, or such

earlier time as this Agreement may specify.

 

2.7 No State-Law Partnership. The Members intend that the Company not

be a partnership (including, without limitation, a limited partnership) or joint

venture, and that no Member or Manager be a partner or joint venturer of any

other Member or Manager, for any purposes other than Federal and, to the extent

permitted, state and local tax purposes, and this Agreement shall not be

construed to produce a contrary result.

 

2.8 Classification for Tax Purposes. It is the express intention of the

Members that the Company lack the corporate characteristics of continuity of

life, centralized management and free transferability of interests (as those

terms are defined and utilized in Treas. Reg. (S) 301.7701-2) and, therefore, be

classified as a partnership for purposes of Federal income taxation and not as

an association taxable as a corporation. It is the further intention of the

Members that this Agreement be interpreted and applied accordingly.

 

2.9 Management Company. (a) The Company is authorized to enter into an

agreement with a management company selected by the Managers (such company, the

"Management Company"), in a form acceptable to the Managers (such agreement, the

"Management Agreement") pursuant to which the Management Company may provide

certain management and administrative services to the Company.

 

 

 

(b) The Managers shall be responsible for supervising the activities of the

Management Company and for enforcing the rights of the Company under the

Management Agreement. The Managers shall have final authority with respect to

the management, operations and policies of the Company and shall be solely

responsible for making all decisions with respect to the investment of the

Company's assets.

 

(c) In exchange for its services, the Management Company may be entitled to

receive from the Company a fee in such amount and payable at such times as

provided in the Management Agreement.

 

ARTICLE III

MEMBERSHIP, DISPOSITIONS OF INTERESTS

 

3.1 Current Members. The Current Members of the Company are set forth

on the attached Exhibit A, which Exhibit A designates the Current Members as

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

such and shall be

 

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amended from time to time to reflect the withdrawal of Members and the admission

of new Members pursuant to this Agreement.

 

3.2 Representations and Warranties. The Current Members hereby

acknowledge that the representations and warranties they made in the May

Agreement and the September Agreement were true and correct at the time they

were made and that such representations and warranties remain true and correct

as of the date hereof. Each new Member hereby represents and warrants to the

Company and each other Member that:

 

(a) if that Member is a corporation, it is duly organized, validly

existing, and in good standing under the law of the state of its incorporation

and is duly qualified and in good standing as a foreign corporation in the

jurisdiction of its principal place of business (if not incorporated therein);

 

(b) if that Member is a limited liability company, it is duly organized,

validly existing, and (if applicable) in good standing under the law of the

state of its organization and is duly qualified and (if applicable) in good

standing as a foreign limited liability company in the jurisdiction of its

principal place of business (if not organized therein);

 

(c) if that Member is a partnership, trust, or other entity, it is duly

formed, validly existing, and (if applicable) in good standing under the law of

the state of its formation, and if required by law is duly qualified to do

business and (if applicable) is in good standing in the jurisdiction of its

principal place of business (if not formed therein), and the representations and

warranties in clauses (a), (b) or (c) above, if applicable, are true and correct

with respect to each partner (other than limited partners), trustee, or other

member thereof;

 

(d) if that Member is an Entity, it has full corporate, limited liability

company, partnership, trust, or other applicable power and authority to execute

and agree to this Agreement and to perform its obligations hereunder and all

necessary actions by the board of directors, shareholders, managers, members,

partners, trustees, beneficiaries, or other persons necessary for the due

authorization, execution, delivery, and performance of this Agreement and the

Subscription Agreement by that Member have been duly taken;

 

(e) such Member has duly executed and delivered this Agreement and/or the

Subscription Agreement;

 

(f) such Member's authorization, execution, delivery, and performance of

this Agreement and the Subscription Agreement do not conflict with any other

agreement or arrangement to which that Member is a party or by which it is

bound;

 

(g) such Member is acquiring its Membership Interest for its own account,

for investment only and not with a view to the distribution thereof, except to

the extent provided in or contemplated by this Agreement;

 

(h) such Member recognizes that (i) the Membership Interests have not been

registered under the Securities Act of 1933, as amended (the "Securities Act"),

in reliance upon an

 

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exemption from such registration, and agrees that it will not sell, offer for

sale, transfer, pledge or hypothecate its Membership Interests, in whole or in

part, (A) in the absence of an effective registration statement covering such

Membership Interests under the Securities Act, unless such sale, offer of sale,

transfer, pledge or hypothecation is exempt from registration for any proposed

sale, as confirmed in the opinions of counsel required under Section 3.3(e) and

(B) except in compliance with all applicable provisions of this Agreement, and

(ii) the restrictions on transfer imposed by this Agreement may severely affect

the liquidity of an investment in the Membership Interests;

 

(i) the Company has made available to that Member the opportunity to ask

questions of and receive answers from the Company's Managers and officers

concerning the terms and conditions of the Offering and the business and

financial condition of the Company, and to acquire, and each Member has received

to its satisfaction, such additional information, in addition to that set forth

herein, about the business and financial condition of the Company and the terms

and conditions of the Member's investment in the Company as it has requested;

 

(j) such Member (i) is an "accredited investor" as such term is defined in

Rule 501 promulgated under the Securities Act, (ii) its financial situation is

such that it can afford to bear the economic risk of holding the Membership

Interests for an indefinite period of time and suffer complete loss of its

investment in the Membership Interests, and (iii) its knowledge and experience

in financial and business matters are such that it is capable of evaluating the

merits and risks of its purchase of the Membership Interests as contemplated by

this Agreement; and

 

(k) if that Member is an investment company, or would be an investment

company but for the exemption provided for by Section 3(c)(1) or Section 3(c)(7)

of the 1940 Act, the Member recognizes that it may acquire no more than 9% of

the Membership Interests, and that such Member's acquisition of more than 9% of

the Membership Interests will subject the Member to expulsion from the Company

under the terms and conditions of Article 14.

 

3.3 No Certification; Restrictions on the Disposition of an Interest.

 

(a) No Membership Interest in the Company shall be represented by a

separate certificate.

 

(b) Except as specifically provided in this Section 3.3 or in Section 3.11,

a Disposition of an interest in the Company may not be effected without the

consent of a majority of the non-transferring Managers (which consent may be

granted or withheld in each Manager's sole discretion). No consent shall be

required for the Disposition of a Membership Interest (i) by will or operation

of the intestacy laws upon the death of a Member who is a natural person, or

(ii) by a Strategic Partner (or Comcast Corporation ("Comcast")), or any direct

or indirect subsidiary of a Strategic Partner (or Comcast), to a direct or

indirect subsidiary of a Strategic Partner (or Comcast), or by any such

subsidiary to a Strategic Partner (or Comcast). Any attempted Disposition by a

person of an interest or right, or any part thereof, in or in respect of the

Company other than in accordance with this Section 3.3 shall be, and is hereby

declared, null and void ab initio.

 

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(c) Subject to the provisions of Section 3.3(d), (e), and (f), and Section

3.11 (i) a person to whom an interest in the Company is transferred has the

right to be admitted to the Company as a Member with the Membership Interest and

the Commitment so transferred to such person, if (A) the Member making such

transfer grants the transferee the right to be so admitted, and (B) such

transfer is consented to in accordance with Section 3.3(b) or is made in

accordance with Section 3.11.

 

(d) The Company shall not recognize for any purpose any purported

Disposition of all or part of a Membership Interest unless and until the other

applicable provisions of this Section 3.3 have been satisfied and the Managers

have received, on behalf of the Company, a document (i) executed by both the

Member effecting the Disposition (or if the transfer is on account of the death,

incapacity, or liquidation of the transferor, its representative) and the person

to whom the Membership Interest or part thereof is Disposed, (ii) including the

notice address of any person to be admitted to the Company as a Member and its

agreement to be bound by this Agreement in respect of the Membership Interest or

part thereof being obtained, (iii) setting forth the Membership Interests and

the Commitments after the Disposition of the Member effecting the Disposition

and the person to whom the Membership Interest or part thereof is Disposed

(which together must total the Membership Interest and the Commitment of the

Member effecting the Disposition before the Disposition), and (iv) containing a

representation and warranty that the Disposition was made in accordance with all

applicable laws and regulations (including securities laws) and, if the person

to whom Membership Interest or part thereof is Disposed is to be admitted to the

Company, its representation and warranty that the representations and warranties

in Section 3.2 are true and correct with respect to that person. Each

Disposition and, if applicable, admission complying with the provisions of this

Section 3.3(d) shall be effective as of the first day of the calendar month

immediately succeeding the month in which the Managers receive the notification

of Disposition and the other requirements of this Section 3.3 have been met.

 

(e) Prior to the exercise of the right of a Member to Dispose of a

Membership Interest or any part thereof or of any person to be admitted to the

Company in connection therewith (i) either (A) the Membership Interest or part

thereof subject to the Disposition or admission must be registered under the

Securities Act, and any applicable state securities laws or (B) the Company must

receive a favorable opinion of the Company's legal counsel or of other legal

counsel reasonably acceptable to the Managers to the effect that the Disposition

or admission is exempt from registration under those laws, and (ii) the Company

must receive a favorable opinion of the Company's legal counsel or of other

legal counsel reasonably acceptable to the Managers to the effect that (C) the

Disposition or admission, when added to the total of all other sales,

assignments, or other Dispositions within the preceding 12 months, would not

result in the Company's being considered to have terminated within the meaning

of Section 708(b)(1)(B) of the Code and (D) the Disposition or admission would

not result in the Company having to register as an investment company under the

1940 Act. The Managers, however, may waive the requirements of this Section

3.3(e), in whole or in part, in such circumstances as they deem appropriate.

 

(f) The Member effecting a Disposition and any person admitted to the

Company as a Member in connection therewith shall pay, or reimburse the Company

for, all costs incurred by the Company in connection with such Disposition or

admission (including, without limitation, the

 

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legal fees incurred in connection with the legal opinions referred to in Section

3.3(e)) on or before the tenth day after the receipt by that person of the

Company's invoice for the amount due. If payment is not made by the date due,

the person owing that amount shall pay interest on the unpaid amount from the

date due until paid at a rate per annum equal to the Default Interest Rate.

 

(g) The restrictions in this Section 3.3 shall terminate upon consummation

of a Successor Corporation's initial underwritten public offering of stock

registered under the Securities Act (the "Public Offering").

 

3.4 New Members.

 

(a) Pursuant to the Offering, the Company offered to sell up to $70,000,000

of shares of Membership Interest in the Company to certain investors. Subject

to the discretion of the Managers to terminate, alter or amend the Offering at

any time, the Company offered to sell Membership Interests to investors in

accordance with the terms of the Private Placement Memorandum used in the

Offering. A person subscribing for shares of Membership Interest pursuant to

the Offering has been admitted as a Member of the Company and has become bound

by this Agreement on the date on which the Company accepted such person's

executed subscription agreement in a form acceptable to the Company (the

"Subscription Agreement") and received payment of 50% of the subscription price

as a Capital Contribution. Each Member admitted pursuant to this 3.4(a) is

obligated to pay an initial Capital Contribution on the date of his or its

admission as a Member of the Company equal to 50% of the subscription price and

the Membership Interest subscribed for by him or it in the Offering shall have a

Commitment equal to 50% of such subscription price. The execution and delivery

by any person of a Subscription Agreement and payment of 50% of the subscription

price constituted a request by such person that the Company's records reflect

his or its admission as a Member. The Managers have not materially modified the

terms on which the Membership Interests are offered and sold in the Offering

from the terms disclosed in the Private Placement Memorandum without the consent

of a Required Interest and each Strategic Partner.

 

(b) The Company is authorized to enter into agreements with the individuals

to whom it grants Membership Profit Interests and Options providing for the

vesting of such Membership Profit Interests and Options and granting the Company

the right and option to reacquire such Membership Profit Interests and Options

under certain circumstances on such terms and conditions as the Managers shall

determine. Any Membership Profit Interest or Option reacquired by the Company

pursuant to such agreements or otherwise may be regranted by the Company to

other officers and employees of the Company or other eligible persons from time

to time for such consideration, if any, as they shall deem appropriate, and on

such other terms and conditions as they shall deem appropriate, provided that

the purpose of such issuance is to provide incentives for performance of

services to the Company, and not as part of a capital raising transaction. A

person receiving Membership Profit Interests or Options shall be admitted as a

Member and become bound by this Agreement on the date on which the Company

receives an executed agreement from such person, in form acceptable to the

Company, containing such terms and conditions as are determined by the Managers.

The execution of such agreement by any such person shall constitute a request by

such person that the Company reflect his or her admission as a Member.

 

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(c) After the Offering has been completed or terminated, additional persons

may be admitted to the Company as Members and Membership Interests may be

created and issued to those persons and to existing Members with the approval of

a Required Interest on such terms and conditions as the Managers may determine.

The terms of admission or issuance must specify the Membership Interests,

Commitment Ratios and the Commitments applicable thereto and may provide for the

creation of different classes or groups of Members having different rights,

powers, and duties. The Managers shall reflect the creation of any new class or

group in an amendment to this Agreement indicating the different rights, powers,

and duties, and such an amendment need be executed only by the Managers. Any

such admission shall be effective only after the new Member has executed and

delivered to the Managers a document including the new Member's notice address,

its agreement to be bound by this Agreement, and its representation and warranty

that the representations and warranties in Section 3.2 are true and correct with

respect to the new Member. The provisions of this Section 3.4 shall not apply

to Dispositions of Membership Interests.

 

3.5 Interests in a Member. A Member that is not a natural person may

not cause or permit an interest, direct or indirect, in itself to be Disposed of

such that, after the Disposition, (a) the Company would be considered to have

terminated within the meaning of Section 708(b)(1)(B) of the Code or (b) without

the consent of the Managers, that Member shall cease to be controlled by

substantially the same persons who control it as of the date of its admission to

the Company; provided, however, that the provisions of this Section 3.5(b) shall

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

not apply to a transfer of an interest in a Strategic Partner (or Comcast), or

to a transfer of an interest in any direct or indirect subsidiary of a Strategic

Partner (or Comcast) as long as such Member remains a subsidiary of such

Strategic Partner (or Comcast). On any breach of the provisions of clause (b)

of the immediately preceding sentence, the Company shall have the option to buy,

and on exercise of that option the breaching Member shall sell, the breaching

Member's Membership Interest, all in accordance with Section 12.1 as if the

breaching Member were a Bankrupt Member.

 

3.6 Information. (a) Each Member shall have the right to access all

information to which that Member is entitled to have access pursuant to Section

18-305 of the Act, provided that such Member provides five days prior written

notice to the Company of the materials such Member requests be made available

and the purpose for inspecting such materials. Such materials shall be provided

at the executive headquarters of the Company during its regular business hours.

All expenses of providing the materials requested pursuant to this Section 3.6,

including, without limitation, duplication fees, shall be paid by the Member

requesting the information. Anything in this Section to the contrary

notwithstanding, the Managers shall have the right to keep confidential from the

Members, for such period of time as the Managers deem reasonable, any

information which the Managers reasonably believe to be in the nature of trade

secrets or other information the disclosure of which the Managers in good faith

believe is not in the best interest of the Company or could damage the Company

or its business or the Company is required by law or by agreement with a third

party to keep confidential.

 

(b) The Members acknowledge that, from time to time, they may receive

information from or regarding the Company in the nature of trade secrets or that

otherwise is confidential, the release of which may be damaging to the Company

or persons with which it does business. Each Member shall hold in strict

confidence any information it receives regarding the Company that is

 

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<PAGE>

 

identified as being confidential (and if that information is provided in

writing, that is so marked) and may not disclose it to any person other than

another Member or a Manager, except for disclosures (i) compelled by law (but

the Member must notify the Managers promptly of any request for that information

before disclosing it, if practicable), (ii) to advisers or representatives of

the Member or persons to which that Member's Membership Interest may be Disposed

as permitted by this Agreement, but only if the recipients have agreed to be

bound by the provisions of this Section 3.6(b), or (iii) of information that

Member also has received from a source independent of the Company that the

Member reasonably believes obtained that information without breach of any

obligation of confidentiality. The Members acknowledge that breach of the

provisions of this Section 3.6(b) may cause irreparable injury to the Company

for which monetary damages are inadequate, difficult to compute, or both.

Accordingly, the Members agree that the provisions of this Section 3.6(b) may be

enforced by specific performance.

 

3.7 Liability to Third Parties. Except as to any obligation it may have

under the Act to repay funds that may have been wrongfully distributed to it, no

Member or Manager shall be liable for the debts, obligations or liabilities of

the Company, including under a judgment decree or order of a court.

 

3.8 Lack of Authority. No Member (other than a Member who is, and who

is acting in the capacity of, a Manager) has the authority or power to act for

or on behalf of the Company, to do any act that would be binding on the Company,

or to incur any expenditures on behalf of the Company.

 

3.9 Withdrawal. A Member does not have the right to withdraw from the

Company as a Member (except in connection with a transfer of its entire

Membership Interest in accordance with this Agreement) and any attempt to

violate the provisions hereof shall be legally ineffective.

 

3.10 Preemptive Rights. (a) If at any time the Company proposes to

issue any equity securities, other than equity securities described in Section

3.10(d) below, the Company shall first offer in writing to sell to each

Strategic Partner its pro rata share of the proposed issue of such equity

securities, at the same price and on the same terms at which the Company

proposes to sell such issue to others. For purposes hereof, each Strategic

Partner's "pro rata share" of an issue of equity securities shall be that amount

of such equity securities which would result in such Strategic Partner owning

the same percentage of the Company's issued and outstanding Membership Interests

after the issuance of the equity securities as such Strategic Partner owned

immediately prior to the issuance (assuming the issuance of all Membership

Interests, if any, issuable upon conversion of such equity securities). The

term "equity security" when used in this Section 3.10 shall mean any shares of

Membership Interest of the Company, or any security convertible, with or without

consideration, into shares of Membership Interest, or any security carrying any

warrant, option, or right to subscribe to, or to purchase any shares of

Membership Interest, or any such warrant, option, or right.

 

(b) The Company's offer shall describe the equity securities proposed to be

issued by the Company, specifying the quantity, the price and payment terms.

Each Strategic Partner shall have thirty (30) days from receipt of such offer to

accept the offer in writing, which acceptance may be

 

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as to all or any part of its pro rata share of such issue. Sale of the portion

of the equity securities subscribed for hereunder shall be held on a date

acceptable to the Company and each Strategic Partner, but in no event more than

sixty (60) days after the date of the Company's offer to the Strategic Partners.

 

(c) In the event the Strategic Partners do not subscribe for all of the

issue of equity securities offered to them pursuant to this Section 3.10, the

Company may sell the portion of the securities not subscribed for, together with

the portion of such issue of securities, if any, not subject to preemptive

rights under this Section 3.10, at a price no less favorable to the Company than

that specified in such offer and on payment terms no less favorable to the

Company than those specified in such offer; provided, however, that if such sale

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

is not consummated within one hundred twenty (120) days after the date the offer

pursuant to this Section 3.10 was made to the Strategic Partners, the Company

shall not sell such securities without again complying with this Section 3.10.

 

(d) The rights of Strategic Partners under this Section 3.10 shall not

apply to the following securities:

 

(i) the shares of Membership Interest issued with respect to the

Options;

 

(ii) the shares of Membership Profit Interest issued in

accordance with this Agreement; and

 

 

(iii) any securities issued for consideration other than cash

pursuant to a merger, consolidation, acquisition or similar business

combination.

 

(e) Notwithstanding the foregoing provisions of this Section 3.10, the

rights of Strategic Partners and the obligations of the Company under this

Section 3.10 shall be inapplicable to the Public Offering and the provisions of

this Section 3.10 shall terminate upon the consummation of such Public Offering.

 

3.11 Right of First Refusal. (a) Any Strategic Partner (other than TL

or SSI-Delaware) (each, a "Transferring Member") may at any time offer to sell

to the Company any or all of the shares of Membership Interest then owned by it

upon written notice to the Company (the "Notice") which Notice shall set forth

(i) the number of shares of Membership Interest the Transferring Member desires

to sell (the "Offered Shares") and the price per share, (ii) the proposed date

of the transfer, and (iii) the percentage which the number of Offered Shares

constitutes with respect to the aggregate number of Shares of Membership

Interest then held by the Transferring Member.

 

(b) Company's Option. The Company shall have the option, but not the

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

obligation, to purchase all or any part of the Offered Shares on the same terms

as specified in the Notice. Within thirty (30) days after the giving of the

Notice, the Company shall give written notice to the Transferring Member stating

the number of Offered Shares it desires to purchase and a date and

 

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<PAGE>

 

time for consummation of the purchase not less than sixty (60) or more than

ninety (90) days after the giving of the Notice. Failure by the Company to give

such notice within such time period shall be deemed an election by it not to

purchase any Offered Shares. The Transferring Member shall not be entitled to

vote as a Manager in connection with the decision of the Company whether to

exercise its option to purchase its Offered Shares, provided that if the

--------

Transferring Member's vote is required for valid legal action it shall vote in

accordance with the decision of the majority of the other Managers.

 

(c) If the Company elects not to exercise its option with respect to all of

the Offered Shares (the Offered Shares which the Company elects not to purchase

being referred to as the "Refused Shares"), it may offer such Refused Shares to

one or more Members, or to another person or entity selected by it that is

reasonably acceptable to the Transferring Member (collectively, the "Permitted

Offerees"), by delivering written notice to such Permitted Offerees concurrently

with the delivery of its notice to the Transferring Member under subsection (b)

above. The number of Refused Shares offered to any Permitted Offeree shall be

determined by the Company in its sole discretion. Each such Permitted Offeree

shall thereupon have the option, but not the obligation, to purchase the number

of Refused Shares offered to it or him on the same terms as specified in the

Notice. After the expiration of the thirty (30)-day period described in Section

3.11(b), but within forty-five (45) days after the giving of the Notice, each

such Permitted Offeree shall give written notice to the Transferring Member and

the Company stating whether or not he or it elects to exercise his or its

option, and a date and time for consummation of the purchase not more than

ninety (90) days after the giving of the Notice by the Transferring Member.

Failure by a Permitted Offeree to give such notice within such time period shall

be deemed an election by him or it not to exercise his or its option. If the

Permitted Offerees and the Company do not purchase all of the Offered Shares,

the Transferring Member may sell all of the Offered Shares (and therefore the

rights of the Company and the Permitted Offerees under this Section 3.11 shall

be terminated) at any time within 180 days after the date the Notice was

delivered to the Company, to a person or Entity selected by the Transferring

Member who is reasonably acceptable to the Company (the "Proposed Transferee").

Any such sale shall be to the Proposed Transferee at the price and upon the

other terms and conditions set forth in the Notice, or at least terms no less

favorable to the Transferring Member or more favorable to the Proposed

Transferee, as the terms contained in the Notice. The Transferring Member shall

provide at least 20 days' prior written notice of such sale to the Company. Any

Offered Shares not sold within the 180 day period shall again be subject to the

requirements of a prior offer pursuant to this Section 3.11. If the

Transferring Member at any time proposes to sell the Offered Share at a price,

or on terms and conditions, less favorable to the Transferring Member or more

favorable to the Proposed Transferee than those set forth in the Notice, then

the Offered Shares shall again be subject to the requirements of a prior offer

pursuant to this Section 3.11. Any transfer pursuant to this Section 3.11 shall

be subject to the provisions of Sections 3.3(d), (e) and (f). The preemptive

rights granted under Section 3.10 shall not apply to any offering by the

`Company of Refused Shares under this Section 3.11(c).

 

(d) The provisions of this Section 3.11 shall terminate upon the

consummation of the Public Offering.

 

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<PAGE>

 

3.12 Registration Rights. The Company hereby grants to each Strategic

Partner the registration rights described on Exhibit C hereto (which Exhibit is

---------

hereby incorporated by reference in its entirety) which registration rights will

become effective after completion of the Public Offering. Upon the merger or

consolidation of the Company with or into, or the sale of the Company's assets

to, a Successor Corporation, the Successor Corporation will assume the

obligation to register each Strategic Partner's equity interests as provided in

Exhibit C, and the agreements providing for such merger, consolidation or sale

---------

will contain a provision expressly requiring the Successor Corporation to assume

such obligations. The Company hereby grants to each Member who has made (or

makes) and maintains a Capital Contribution equal to or greater than one million

dollars ($1,000,000) the piggyback registration rights set forth in Section 1.1

of the attached Exhibit C. Notwithstanding the definition of "Holder" contained

---------

in Section 1.1, each such Member shall be deemed a "Holder" for purposes of

Exhibit C.

---------

 

ARTICLE IV

CAPITAL CONTRIBUTIONS

 

4.1 Contributions. (a) The Capital Contributions of the Current Members

is as set forth on Exhibit A attached hereto, which Exhibit A designates the

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

Current Members as such and shall be revised from time to time to reflect the

withdrawal of Members and the admission of new Members.

 

(b) Current Members, including the persons admitted as new Members of the

Company pursuant to their subscription for Membership Interests in the Private

Placement Memorandum, shall make their Capital Contribution, in cash,

representing 50% of the subscription price of the total shares of Membership

Interest being subscribed for pursuant to the Private Placement Memorandum, on

the date of admission as a Member of the Company. Exhibit A shall be amended

---------

from time to time to reflect the Capital Contributions, Commitments, Membership

Interests and Membership Profit Interests, if any, of each Member.

 

4.2 Subsequent Contributions. Each Member shall contribute to the

Company, in cash, on or before the date specified as hereinafter described, from

time to time that Member's Commitment Ratio of all monies that in the judgment

of the Managers, are necessary to make portfolio investments or to otherwise

conduct the business of the Company; provided, however, that a Member is not

obligated to contribute an amount that exceeds that Member's Commitment. The

Managers shall notify each Member of the need for Capital Contributions pursuant

to this Section 4.2 from time to time as and when appropriate, which notice

shall specify a date (which date may be no earlier than thirty (30) days

following each Member's receipt of its notice) before which the Capital

Contributions must be made. Notices for Capital Contributions must be made to

all Members in accordance with their Commitment Ratios. Member's Commitments

will expire on April 30, 2000 if not fully taken down prior to that time.

 

4.3 Failure to Contribute. Unless the Managers shall otherwise

determine by agreement with the delinquent Member, if a Member (a "Delinquent

Member") does not contribute by the time required all or any portion of a

Capital Contribution which that member is required to make

 

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<PAGE>

 

as provided in this Agreement, unless payment of such Capital Contribution would

be unlawful, 100% of such Member's Membership Interest will be forfeited to the

Company, a corresponding reduction will be made to such Member's Capital

Account, such Delinquent Member shall no longer be a Member of the Company, and

its forfeited Membership Interest shall no longer be outstanding.

 

4.4 Return of Contributions. A Member is not entitled to the return of

any part of its Capital Contributions or to be paid interest in respect of

either its capital account or its Capital Contributions. An unrepaid Capital

Contribution is not a liability of the Company or of any Member. A Member is

not required to contribute or to lend any cash or property to the Company to

enable the Company to return any Member's Capital Contributions.

 

4.5 Advances by Members. With the Managers' consent, any Member may

advance funds to or on behalf of the Company on terms approved by the Managers.

An advance described in this Section 4.5 constitutes a loan from the Member to

the Company, and is not a Capital Contribution.

 

4.6 Capital Account. A capital account shall be established and

maintained for each Member. The capital accounts of the Members were revalued

as of May 29, 1998 on the Company's books in accordance with Treas. Reg.

(S)1.704-1(b)(2)(iv)(f), and the property of the Company was adjusted and

reflected on a Schedule 4.6 to this Agreement to reflect the fair market value

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

of such property as of the date of such revaluation. Such capital accounts

shall be subject to further revaluation in accordance with Treas. Reg. (S)1.704-

1(b)(2)(iv)(f) at such time as the Board of Managers shall determine. Each

Member's capital account (a) shall be increased by (i) the amount of money

contributed by that Member to the Company, (ii) the fair market value of

property contributed by that Member to the Company (net of liabilities secured

by the contributed property that the Company is considered to assume or take

subject to under Section 752 of the Code), and (iii) allocations to that Member

of Company income and gain (or items thereof), including income and gain exempt

from tax and income and gain described in Treas. Reg. (S) 1.704-1(b)(2)(iv)(g),

but excluding income and gain described in Treas. Reg. (S) 1.704-1(b)(4)(i), and

(b) shall be decreased by (i) the amount of money distributed to that Member by

the Company, (ii) the fair market value of property distributed to that Member

by the Company (net of liabilities secured by the distributed property that the

Member is considered to assume or take subject to under Section 752.of the

Code), (iii) allocations to that Member of expenditures of the Company described

in Section 705(a)(2)(B) of the Code, and (iv) allocations of Company loss and

deduction (or items thereof), including loss and deduction described in Treas.

Reg. (S) 1.704-1(b)(2)(iv)(g), but excluding items described in clause (b)(iii)

above and loss or deduction described in Treas. Reg. (S) 1.704-1(b)(4)(i) or (S)

1.704-1(b)(4)(iii). The Members' capital accounts also shall be maintained and

adjusted as permitted by the provisions of Treas. Reg. (S) 1.704-1(b)(2)(iv)(f)

and as required by the other provisions of Treas. Reg. (S)(S) 1.704-1(b)(2)(iv)

and 1.704-1(b)(4), including adjustments to reflect the allocations to the

Members of depreciation, depletion, amortization, and gain or loss as computed

for book purposes rather than the allocation of the corresponding items as

computed for tax purposes, as required by Treas. Reg. (S) 1.704-l(b)(2)(iv)(g).

A Member that has more than one Membership Interest shall have a single capital

account that reflects all its Membership Interests, regardless of the class of

Membership Interests owned by that Member and

 

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<PAGE>

 

regardless of the time or manner in which those Membership Interests were

acquired. On the transfer of all or part of a Membership Interest, the capital

account of the transferor that is attributable to the transferred Membership

Interest or part thereof shall carry over to the transferee Member in accordance

with the provisions of Treas. Reg. (S) 1.704-1(b)(2)(iv)(1).

 

ARTICLE V

ALLOCATIONS AND DISTRIBUTIONS

 

5.1 Allocations. (a) All items of income and gain of the Company shall

be allocated:

 

(i) first, to each Member, if any, with a negative capital

account balance, in proportion to such negative balances, until any

such negative balances have been eliminated;

 

(ii) second, if any Member's Capital Contributions (less any

amounts previously distributed to such Member) exceed his capital

account balance, to such Members in proportion to such excesses until

any such excesses have been eliminated;

 

(iii) third, if the excesses, if any, of (x) the sum of (A) the

capital account balance of each Member and (B) the cumulative

distributions made to such Member over (y) such Member's Capital

Contributions are not in proportion to their Membership Interests, to

the Members in such manner as will, as quickly as possible, cause such

excesses to be in such proportion; and

 

(iv) fourth, to all Members in proportion to their Membership

Interests.

 

And all items of loss and deduction of the Company shall be allocated:

 

(v) first, if the excesses, if any, of (x) the sum of (A) the

capital account balances of each Member and (B) the cumulative

distributions made to such Member over (y) such Member's Capital

Contributions are not in proportion to their Membership Interests, to

the Members in such manner as will, as quickly as possible, cause such

excesses to be in such proportion;

 

(vi) second, if the sum of (A) the capital account balance of any

Member and (B) the cumulative distributions made to such Member

exceeds the Capital Contributions of such Member, to such Member in

proportion to such excesses until such excesses have been eliminated;

and

 

(vii) third, to the Members in proportion to Capital

Contributions.

 

(b) All items of income, gain, loss, deduction, and credit allocable to any

Membership Interest that may have been transferred shall be allocated between

the transferor and the transferee based on the portion of the calendar year

during which each was recognized as owning that

 

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<PAGE>

 

Membership Interest, without regard to the results of Company operations during

any particular portion of that calendar year and without regard to whether cash

distributions were made to the transferor or the transferee during that calendar

year; provided, however, that this allocation must be made in accordance with a

method permissible under section 706 of the Code and the regulations thereunder.

 

(c) Solely for tax purposes, income, gain, loss and deduction with respect

to any property contributed to the capital of the Company or for which the

adjusted tax basis and book value differ shall be allocated among the Members so

as to take account of any variation between adjusted tax basis and book value.

The allocations provided in this Section 5.1 are intended to comply with the

requirements of section 704 of the Code and Treasury Regulations thereunder and

shall be interpreted (or modified, to the extent necessary) in such manner as is

consistent with such requirements, as determined by the "tax matters partner" of

the Company. For purposes of allocations under section 704(c) of the Code, the

Partnership shall use the remedial allocation method, as described in Treas.

Reg. (S) 1.704-3(d).

 

5.2 Distributions. (a) The Managers shall have the authority to

reinvest the Company's cash from operations and dispositions of its assets,

including the sale or other disposition of equity interests in a related company

in which the Company invests. Consequently, distributions to Members of the

Company's cash or other assets shall be made only at such times and in such

amounts as authorized by the Managers and the Managers shall have no obligation

or duty to distribute cash or other assets to the Members prior to the

dissolution and liquidation of the Company, except as otherwise provided in

paragraph (b) below. Distributions, if any, shall be made as follows:

 

(i) first, to all Members in proportion to their Capital

Contributions up to the amount of their Capital Contribution; and

 

(ii) then, to all Members in proportion to their Membership

Interests, provided that, if any Commitments remain outstanding, a

distribution payable to a Member with an outstanding Commitment shall

be retained by the Company and applied to reduce its outstanding

Commitment up to the amount of its remaining outstanding Commitment.

 

(b) Notwithstanding anything to the contrary, on or before March 15

following each taxable year of the Company, the Company shall distribute to each

Member, to the extent of available cash, an amount of cash equal to the excess

of (x) 40% of the excess of (A) such Member's cumulative share of income and

gain of the Company as of the end of such taxable year over (B) such Member's

cumulative share of loss and deduction of the Company as of the end of such

taxable year over (y) all prior distributions to such Member. Any amounts

distributed to a Member pursuant to this Section 5.2(b) shall be credited toward

the amounts that would otherwise be required to be distributed to such Member

pursuant to Section 5.1(a).

 

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(c) From time to time the Managers also may cause property of the Company

other than cash to be distributed to the Members, which distribution must be

made in accordance with Section 5.2(a) and may be made subject to existing

liabilities and obligations.

 

ARTICLE VI

MANAGERS

 

6.1 Management by Managers. (a) Except for any matters for which the

approval of the Members is required by this Agreement or by nonwaivable

provisions of applicable law, (i) the powers of the Company shall be exercised

by or under the authority of, and the business and affairs of the Company shall

be managed under the direction of, the Board of Managers; and (ii) the Board of

Managers may make all decisions and take all actions for the Company.

 

(b) The powers of the Company which may be exercised by the Managers

without the approval of the Members shall include, without limitation, the power

to purchase, hold and sell investments; to borrow and loan funds and provide

guarantees of the obligations of others; to acquire other companies; and to

dissolve and liquidate.

 

(c) Notwithstanding the provisions of Section 6.1(a) and 6.1(b), the Board

of Managers may not cause the Company to do any of the following without the

consent of a Required Interest:

 

(i) amend the Certificate (except for amendments described in

Section 18-202(b) of the Act);

 

(ii) amend this Agreement (except as otherwise provided in

Section 15.5 hereof);

 

(iii) remove a Manager from the Board of Managers for cause

pursuant to Section 6.4; and

 

(iv) issue the Membership Interests described in Section 3.4(c).

 

(d) The Managers shall have the power and authority to approve and

authorize the Company to merge with or into, or transfer its assets to, another

limited liability company or "other business entity," as such term is defined in

Section 18-209 of the Act, with the consent of a Required Interest. No

appraisal rights with respect to Membership Interests in the Company shall be

available for any class or group of Members in connection with any amendment of

this Agreement, any merger or consolidation in which this Company is a

constituent party to the merger or consolidation, or in the sale of all or

substantially all of the Company's assets.

 

6.2 Actions by Managers; Committees; Delegation and Duties. (a) In

managing the business and affairs of the Company and exercising its powers, the

Board of Managers shall act (i) collectively through meetings and written

consents pursuant to Sections 6.5 and 6.7; and (ii) through committees pursuant

to Section 6.2(b).

 

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(b) The Board of Managers may, from time to time, designate one or more

committees, each of which shall be comprised of one or more Managers. Any such

committee, to the extent provided in such resolution or in the Certificate or

this Agreement, shall have and may exercise all of the authority of the Board of

Managers, subject to the limitations set forth in the Act. At every meeting of

any such 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

present shall be necessary for the adoption of any resolution. The Board of

Managers may dissolve any committee at any time, unless otherwise provided in

the Certificate or this Agreement.

 

6.3 Number and Term of Office of Managers. The number of Managers on

the Board of Managers of the Company shall be five or such greater number as to

provide each Strategic Partner with a seat on the Board of Managers; provided

that the number of Managers on the Board of Managers shall not exceed nine. For

so long as (i) any of SSI-Delaware, TL, Comcast ICG, Inc. (an indirect wholly

owned subsidiary of Comcast Corporation) and CPQ Holdings, Inc. (a wholly owned

subsidiary of Compaq Computer Corp.) maintains a Capital Contribution equal to

or greater than three million dollars ($3,000,000) in the Company, (ii) GE

Capital maintains a Capital Contribution and Commitment that aggregate equal to

or greater than seven million dollars ($7,000,000) in the Company, and (iii) any

Entity subsequent to the date hereof that makes or has made and maintains a

Capital Contribution and Commitment that aggregate ten million dollars

($10,000,000) or greater, such Entity described in clauses (i), (ii) or (iii)

shall be a Manager of the Company (each, a "Strategic Partner").

Notwithstanding anything to the contrary herein, for purposes of calculating the

amounts set forth in clauses (i), (ii) or (iii) in the immediately preceding

sentence, distributions by the Company to any Manager described in such clauses

shall be disregarded. In addition, the number of Managers may also be amended

by action of the then incumbent Managers. Each Manager shall hold office as

long as he is a Member, or until his earlier death, insanity, Bankruptcy,

retirement, resignation or removal. Managers must be Members but need not be

residents of the State of Delaware. Any Entity that is a Manager shall

designate an officer or other employee of such Entity as a nominee to represent

it as Manager and such Entity will act through its nominee. Such Entity may

change its nominee, or appoint an alternate nominee to attend meetings of the

Managers and vote on its behalf when its primary nominee is unavailable, at any

time upon written notice to the Company. Except as expressly provided in this

Section 6.3 and Section 6.4, the Members shall not have the authority to

increase or decrease the number of Managers and neither the Members nor the

Managers shall have the authority to remove or replace any Managers.

 

6.4 Vacancies; Removal; Resignation. Any vacancy occurring pursuant to

Sections 6.3 and 6.4 may be filled, at the sole discretion of the Board of

Managers, by the affirmative vote of a majority of the remaining Managers though

less than a quorum. If the Board of Managers determines that there is cause to

remove a Manager, such Manager can be removed by the affirmative vote of a

Required Interest at any meeting of Members called expressly for that purpose

and at which a quorum of Members is present. Any Manager may resign at any

time. Such resignation shall be made in writing and shall take effect at the

time specified therein, or if no time be specified, at the time of its receipt

by the remaining Managers. The acceptance of a

 

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resignation shall not be necessary to make it effective, unless expressly so

provided in the resignation.

 

6.5 Meetings. (a) Unless otherwise required by law or provided in the

Certificate or this Agreement, a majority of the total number of Managers fixed

by, or in the manner provided in, the Certificate or this Agreement shall

constitute a quorum for the transaction of business of the Managers, and the act

of a majority of the Managers present at a meeting at which a quorum is present

shall be the act of the Managers unless otherwise provided herein. A Manager

who is present at a meeting of the Managers at which action on any Company

matter is taken shall be presumed to have assented to the action unless his

dissent shall be entered in the minutes of the meeting or unless he shall file

his written dissent to such action with the person acting as secretary of the

meeting before the adjournment thereof or shall deliver such dissent to the

Company immediately after the adjournment of the meeting. Such right to dissent

shall not apply to a Manager who voted in favor of such action.

 

(b) Meetings of the Managers may be held at such place or places as shall

be determined from time to time by resolution of the Managers. At all meetings

of the Managers, business shall be transacted in such order as shall from time

to time be determined by resolution of the Managers. Attendance of a Manager at

a meeting shall constitute a waiver of notice of such meeting, except where a

Manager attends a meeting for the express purpose of objecting to the

transaction of any business on the ground that the meeting is not lawfully

called or convened.

 

(c) Regular meetings of the Managers shall be held at such times and places

as shall be designated from time to time by resolution of the Managers, provided

that such meetings shall be held no less frequently than quarterly. Notice of

such regular meetings shall not be required.

 

(d) Special meetings of the Managers may be called by any Manager on at

least 48 hours notice to each other Manager. Such notice need not state the

purpose or purposes of, nor the business to be transacted at, such meeting,

except as may otherwise be required by law or provided for by the Certificate or

this Agreement.

 

6.6 Approval or Ratification of Acts or Contracts by Members. The

Managers, in their sole discretion, may submit any act or contract for approval

or ratification at any meeting of the Members called for the purpose of

considering any such act or contract, and any act or contract that shall be

approved or be ratified by a Required Interest shall be as valid and as binding

upon the Company and upon all the Members as if it shall have been approved or

ratified by every Member of the Company.

 

6.7 Action by Written Consent or Telephone Conference. Any action

permitted or required by the Act, the Certificate or this Agreement to be taken

at a meeting of the Managers or of any committee designated by the Managers may

be taken without a meeting if a consent in writing, setting forth the action to

be taken, is signed by all the Managers or members of such committee, as the

case may be. Such consent shall have the same force and effect as a unanimous

vote at a meeting and may be stated as such in any document or instrument filed

with the Secretary of State of Delaware, and the execution of such consent shall

constitute attendance or presence in

 

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person at a meeting of the Managers or any such committee, as the case may be.

Subject to the requirements of the Act, the Certificate or this Agreement for

notice of meetings, Managers, or members of any committee designated by the

Managers, may participate in and hold a meeting of the Managers or any committee

of Managers, as the case may be, by means of a conference telephone or similar

communications equipment by means of which all persons participating in the

meeting can hear each other, and participation in such meeting shall constitute

attendance and presence in person at such meeting, except where a person

participates in the meeting for the express purpose of objecting to the

transaction of any business on the ground that the meeting is not lawfully

called or convened.

 

6.8 Expenses; Compensation. (a) Except as otherwise provided herein,

the Company shall pay or cause to be paid (i) all costs and expenses incurred in

connection with the formation and organization of the Company, and (ii) all

costs and expenses of the Company incurred in pursuing and conducting, or

otherwise related to, the business of the Company. The Managers shall be

entitled to reimbursement of their reasonable expenses incurred on behalf of the

Company as and to the extent provided in paragraph (b) below. Subject to the

Act, no amount so paid to the Manager shall be deemed to be a distribution of

Company assets for purposes of this Agreement. Except for reimbursement of such

expenses as provided for in this Section 6.8 and its right to distributions as

provided in this Agreement, the Manager shall not receive any compensation for

its services as such.

 

(b) Unless otherwise approved by a Required Interest, the Managers shall

not receive compensation for their services as Managers. However, the Managers

shall be entitled to be reimbursed for reasonable out-of-pocket costs and

expenses incurred in the course of their service as Managers hereunder.

 

6.9 Co-Investment Opportunities. The Company, Safeguard and TL will

each present to each other and to each other Strategic Partner, in writing, any

Internet-related investment opportunity that it receives, and each of the

Company, TL, Safeguard (or Safeguard 98 L.P.) and such other Strategic Partner

will have the right on all Internet-related investments to invest equally in the

opportunity regardless of the origin of the deal, provided it gives written

notice of its election to invest to the party originating the deal within thirty

(30) days after receipt of the offer. No Strategic Partner (other than TL or

Safeguard) will be required to offer to the Company, TL or Safeguard any

Internet-related investment opportunity received by it. Notwithstanding the

above, Safeguard will not be required to offer to the Company, TL or any other

Strategic Partner any Internet-related investment originated by it in which it

intends to acquire a majority interest, or to offer to the Company or any

Strategic Partner (other than TL) any Internet-related investment to the extent

such offer would cause Safeguard to be in breach of its obligations or

commitments to TL or any future TL funds.

 

The Company has an understanding and acknowledgment from the other

parties that, for strategic reasons, it will have the right to take majority

ownership in four to six core portfolio companies, and that any such investment

will not be subject to the co-investment rules described above. This right will

be negotiated on a deal by deal basis. Notwithstanding anything in this

Agreement to the contrary, if the exercise by a Strategic Partner of any right

under this Section 6.9

 

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shall cause the Company, in the written opinion of outside counsel, to be an

investment company subject to registration under the 1940 Act, such Strategic

Partner will not be permitted to exercise any such right. As soon as reasonably

practicable after the date hereof, each of the Strategic Partners and the

Company agree to discuss and negotiate in good faith the modification or

termination of this Section 6.9 in the context of the Company's goal of

effecting a Public Offering in the future.

 

6.10 Advisory Board. The Managers may, in their sole discretion, form

and appoint persons to an advisory board of the Company (the "Advisory Board")

and pay compensation to persons serving on the Advisory Board. The sole purpose

of the Advisory Board shall be to advise the Board of Managers and the Advisory

Board shall have no other powers.

 

6.11 Conflicts of Interest. The parties hereto acknowledge that there

may be conflicts of interest that arise from time to time due to existing

investments of the Strategic Partners and prospective investments by the

Company. The Company shall notify each Strategic Partner in writing before

acquiring the securities of any portfolio company, which notice shall identify

the portfolio company and contain a brief description of the terms of the

acquisition and the portfolio company's business. The Company will not invest

in a portfolio company if within ten (10) days after receipt of the Company's

notice, a Strategic Partner notifies the Company in writing that such investment

would cause such Strategic Partner to be in breach of its contractual

obligations, or be subject to penalties, arising from its existing investments,

and the Strategic Partner provides evidence reasonably satisfactory to the

Company of such contractual obligations or penalties. The Company also intends

to use outside independent financial advisors to value investments in companies

where a Member already has an existing investment.

 

6.12 Related Party Transactions. The Company may transact business with

any Manager or Member or affiliate thereof, provided the terms of those

transactions are no less favorable than those the Company could obtain from

unrelated third parties.

 

ARTICLE VII

OFFICERS

 

7.1 Officers. The Managers may designate one or more individuals (who

may or may not be Managers) to serve as officers of the Company. The Company

shall have such officers as the Managers may from time to time determine, which

officers may (but need not) include a Chairman, a President, one or more Vice

Presidents (and in case of each such Vice President, with such descriptive

title, if any, as the Managers shall deem appropriate), a Secretary, an

Assistant Secretary and a Treasurer. Any two or more offices may be held by the

same person.

 

7.2 Compensation. The Company shall have the authority to pay and

provide compensation and other benefits to its officers and employees. The

compensation and benefits of all officers of the Company shall be fixed from

time to time by the Managers, unless otherwise delegated by the Managers to a

particular officer.

 

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7.3 Term of Office; Removal; Filling of Vacancies. Each officer of the

Company shall hold office at the pleasure of the Managers until his successor is

chosen and qualified in his stead or until his earlier death, resignation,

retirement, disqualification or removal from office. Any officer designated by

the Managers may be removed at any time by the Managers for any reason, but such

removal shall be without prejudice to the contract rights, if any, of the person

so removed. Designation of an officer shall not of itself create contract

rights. If the office of any officer becomes vacant for any reason, the vacancy

may be filled by the Managers. The Managers may abolish any office at any time.

 

7.4 Chairman. The Chairman, if one is designated by the Managers, shall

preside at meetings of the Managers and the Members. He shall assist the

Managers in the formulation of policies of the Company, and shall be available

to other officers for consultation and advice.

 

7.5 President. The President, if one is designated by the Managers,

shall be the chief executive officer of the Company and shall have day-to-day

supervision of the affairs of the Company, subject at all times to the authority

of the Managers.

 

7.6 Vice Presidents. Each Vice President that is designated by the

Managers shall generally assist the President and shall have such powers and

perform such duties and services as shall from time to time be prescribed or

delegated to him by the President or the Managers.

 

7.7 Secretary. The Secretary, if one is designated by the Managers,

shall keep and account for the records of the Company.

 

7.8 Assistant Secretary. The Assistant Secretary, if one is designated

by the Managers, shall generally assist the Secretary.

 

7.9 Treasurer. The Treasurer, if one is designated by the Managers,

shall be the chief accounting and financial officer of the Company and shall

have active control of and shall be responsible for all matters pertaining to

the accounts and finances of the Company.

 

7.10 Additional Powers and Duties. In addition to the foregoing

especially enumerated duties, services and powers, the several officers of the

Company shall perform such other duties and services and exercise such further

powers as may be provided by statute, the Certificate or this Agreement, or as

the Managers may from time to time determine or as may be assigned to them by

any competent superior officer. The Managers may also at any time limit or

circumvent the enumerated duties, services and powers of any officer. In

addition to the designation of officers and the enumeration of their respective

duties, services and powers, the Managers may grant powers of attorneys to

individuals to act as agent for or on behalf of the Company, to do any act which

would be binding on the Company, to incur any expenditures on behalf of or for

the Company, or to execute, deliver and perform any agreements, acts,

transactions or other matters on behalf of the Company. Such powers of attorney

may be revoked or modified as deemed necessary by the Managers.

 

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ARTICLE VIII

MEETINGS OF MEMBERS

 

8.1 Meetings. (a) A quorum shall be present at a meeting of Members if

the holders of a Required Interest are represented at the meeting in person or

by proxy. With respect to any matter, the affirmative vote of a Required

Interest at a meeting of Members at which a quorum is present shall be the act

of the Members.

 

(b) All meetings of the Members shall be held at the principal place of

business of the Company or at such other place within or without the State of

Delaware as shall be specified or fixed in the notices or waivers of notice

thereof; provided that any or all Members may participate in any such meeting by

means of conference telephone or similar communications equipment pursuant to

Section 8.5.

 

(c) The chairman of the meeting or the holders of a Required Interest shall

have the power to adjourn such meeting from time to time, without any notice

other than announcement at the meeting of the time and place of the holding of

the adjourned meeting. If such meeting is adjourned by the Members, such time

and place shall be determined by a vote of the holders of a Required Interest.

Upon the resumption of such adjourned meeting, any business may be transacted

that might have been transacted at the meeting as originally called.

 

(d) An annual meeting of the Members, for the purpose of the delivery of an

annual report of the Managers, may be held, but no meeting of Members need be

held. Any meeting of Members shall be held at such place, within or without the

State of Delaware, on such date and at such time as the Managers shall fix and

set forth in the notice of the meeting.

 

(e) Special meetings of the Members for any proper purpose or purposes may

be called at any time by the Managers. Only business within the purpose or

purposes described in the notice (or waiver thereof) required by this Agreement

may be conducted at a special meeting of the Members. No Member shall have the

power to require that a meeting of the Members be held or that any matter be

voted upon by the Members.

 

(f) Written or printed notice stating the place, day and hour of the

meeting and the purpose or purposes for which the meeting is called, shall be

delivered not less than ten nor more than 60 days before the date of the

meeting, either personally or by mail, by or at the direction of the Managers or

person calling the meeting, to each Member entitled to vote at such meeting. If

mailed, any such notice shall be deemed to be delivered on the third day after

it is deposited in the United States mail, addressed to the Member at such

Member's address provided for in Section 15.2, with postage thereon prepaid.

 

(g) The date on which notice of a meeting of Members is mailed or the date

on which the resolution of the Managers declaring a distribution is adopted, as

the case may be, shall be the record date for the determination of the Members

entitled to notice of or vote at such meeting, including any adjournment

thereof, or the Members entitled to receive such distribution.

 

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8.2 Voting List. At the request of any Member, the Managers shall make

available, at least ten days before a meeting of Members, a complete list of the

Members entitled to vote at such meeting or any adjournment thereof, arranged in

alphabetical order, with the address of and the Membership Interest held by

each, which list, for a period of ten days prior to such meeting, shall be kept

on file at the registered office or principal place of business of the Company

and shall be subject to inspection by any Member at any time during usual

business hours. Such list shall also be produced and kept open at the time and

place of the meeting and shall be subject to the inspection of any Member during

the whole time of the meeting. The original membership records shall be prima-

facie evidence as to who are the Members entitled to examine such list or

transfer records or to vote at any meeting of Members. Failure to comply with

the requirements of this Section shall not affect the validity of any action

taken at the meeting.

 

8.3 Proxies. A Member may vote either in person or by proxy executed in

writing by the Member. A telegram, telex, cablegram or similar transmission by

the Member, or a photographic, photostatic, facsimile or similar reproduction of

a writing executed by the Member shall be treated as an execution in writing for

purposes of this Section. A proxy shall be revocable unless the proxy form

conspicuously states that the proxy is irrevocable.

 

8.4 Conduct of Meetings. All meetings of the Members shall be presided

over by the chairman of the meeting, who shall be a Manager (or representative

thereof) designated by a majority of the Managers. The chairman of any meeting

of Members shall determine the order of business and the procedure at the

meeting, including such regulation of the manner of voting and the conduct of

discussion as seem to him in order.

 

8.5 Action by Written Consent or Telephone Conference.

 

(a) Any action which is submitted by the Managers to the Members and which

could be taken by the Members at a meeting of Members may be taken by the

Members by unanimous written consent.

 

(b) Subject to Section 8.1(f), Members may participate in and hold a

meeting by means of conference telephone or similar communications equipment by

means of which all persons participating in the meeting can hear each other, and

participation in such meeting shall constitute attendance and presence in person

at such meeting, except where a person participates in the meeting for the

express purpose of objecting to the transaction of any business on the ground

that the meeting is not lawfully called or convened.

 

ARTICLE IX

INDEMNIFICATION

 

9.1 Right to Indemnification. Subject to the limitations and conditions

as provided in this Article IX, each person who was or is made a party or is

threatened to be made a party to or is involved in any threatened, pending or

completed action, suit or proceeding, whether civil, criminal, administrative,

arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such

a Proceeding or any inquiry or investigation that could lead to such a

Proceeding, by reason of the fact that he or she, or a person of whom he or she

is the legal representative, is or was a

 

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Manager or officer of the Company or while a Manager or officer of the Company

is or was serving at the request of the Company as a Manager, director, officer,

partner, venturer, proprietor, trustee, employee, agent, or similar functionary

of another foreign or domestic limited liability company, corporation,

partnership, joint venture, sole proprietorship, trust, employee benefit plan or

other enterprise shall be indemnified by the Company, against judgments,

penalties (including excise and similar taxes and punitive damages), fines,

settlements and reasonable expenses (including, without limitation, attorneys'

fees) actually incurred by such person in connection with such Proceeding, and

indemnification under this Article IX shall continue as to a person who has

ceased to serve in the capacity which initially entitled such person to

indemnity hereunder. The rights granted pursuant to this Article IX shall be

deemed contract rights, and no amendment, modification or repeal of this Article

IX shall have the effect of limiting or denying any such rights with respect to

actions taken or Proceedings arising prior to any such amendment, modification

or repeal. The indemnification provided in this Article IX could involve

indemnification for negligence or under theories of strict liability but shall

not extend to any matter for which the final disposition of the Proceeding

determines that the conduct of such Manager constituted recklessness, self-

dealing or willful misconduct.

 

9.2 Advance Payment. The right to indemnification conferred in this

Article IX shall include the right to be paid or reimbursed by the Company the

reasonable expenses incurred by a person of the type entitled to be indemnified

under Section 9.1 who was, is or is threatened to be made a named defendant or

respondent in a Proceeding in advance of the final disposition of the Proceeding

and without any determination as to the person's ultimate entitlement to

indemnification; provided, however, that the payment of such expenses incurred

by any such person in advance of the final disposition of a Proceeding shall be

made only upon delivery to the Company of a written affirmation by such Manager

or officer of his or her good faith belief that he has met the standard of

conduct necessary for indemnification under this Article IX and a written

undertaking, by or on behalf of such person, to repay all amounts so advanced if

it shall ultimately be determined that such indemnified person is not entitled

to be indemnified under this Article IX or otherwise.

 

9.3 Indemnification of Employees and Agents. The Company, by adoption

of a resolution of the Managers, may indemnify and advance expenses to an

employee or agent of the Company to the same extent and subject to the same

conditions under which it may indemnify and advance expenses to Managers and

officers under this Article IX; and, the Company may indemnify and advance

expenses to persons who are not or were not Managers, officers, employees or

agents of the Company but who are or were serving at the request of the Company

as a Manager, director, officer, partner, venturer, proprietor, trustee,

employee, agent or similar functionary of another foreign or domestic limited

liability company, corporation, partnership, joint venture, sole proprietorship,

trust, employee benefit plan or other enterprise against any liability asserted

against him and incurred by him in such a capacity or arising out of his status

as such a person to the same extent that it may indemnify and advance expenses

to Managers and officers under this Article IX.

 

9.4 Appearance as a Witness. Notwithstanding any other provision of

this Article IX, the Company shall pay or reimburse expenses incurred by a

Manager or officer in connection with his

 

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appearance as a witness or other participation in a Proceeding at a time when he

is not a named defendant or respondent in the Proceeding.

 

9.5 Nonexclusivity of Rights. The right to indemnification and the

advancement and payment of expenses conferred in this Article IX shall not be

exclusive of any other right which a Manager, officer or other person

indemnified pursuant to Section 9.3 may have or hereafter acquire under any law

(common or statutory), provision of the Certificate or this Agreement,

agreement, vote of Members or disinterested Managers or otherwise.

 

9.6 Insurance. The Company shall purchase and maintain insurance, at

its expense, to protect itself and any person who is or was serving as a

Manager, officer, employee or agent of the Company or is or was serving at the

request of the Company as a Manager, director, officer, partner, venturer,

proprietor, trustee, employee, agent, or similar functionary of another foreign

or domestic limited liability company, corporation, partnership, joint venture,

sole proprietorship, trust, employee benefit plan or other enterprise against

any expense, liability or loss, whether or not the Company would have the power

to indemnify such person against such expense, liability or loss under this

Article IX.

 

9.7 Savings Clause. If this Article IX or any portion hereof shall be

invalidated on any ground by any court of competent jurisdiction, then the

Company shall nevertheless indemnify and hold harmless each Manager or officer

or any other person indemnified pursuant to this Article IX as to costs, charges

and expenses (including reasonable attorneys' fees), judgments, fines and

amounts paid in settlement with respect to any action, suit or proceeding,

whether civil, criminal, administrative or investigative to the full extent

permitted by any applicable portion of this Article IX that shall not have been

invalidated and to the fullest extent permitted by applicable law.

 

9.8 Limitation on Liability. No Manager or officer shall be personally

liable, as such, for any action taken or omitted from being taken unless: (i)

such Manager or officer breached or failed to perform the duties of his office;

and (ii) the breach or failure to perform constituted recklessness, self-dealing

or willful misconduct. The foregoing shall not apply to any responsibility or

liability under a criminal statute or liability for the payment of taxes under

Federal, state, or local law.

 

ARTICLE X

TAXES

 

10.1 Tax Returns. The Managers shall cause to be prepared and filed all

necessary Federal, state and local tax returns for the Company including making

the elections described in Section 10.2. Each Member shall furnish to the

Managers all pertinent information in its possession relating to Company

operations that is necessary to enable the Company's tax returns to be prepared

and filed.

 

10.2 Tax Elections. To the extent permitted by applicable tax law, the

Company shall make the following elections on the appropriate tax returns:

 

(a) to adopt the calendar year as the Company's taxable year;

 

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(b) to adopt the accrual method of accounting and to keep the

Company's books and records on the income-tax method;

 

(c) if a transfer of a Membership Interest as described in section 743

of the Code occurs, on written request of any transferee Member, or if a

distribution of Company property is made on which gain described in section

734(b)(1)(A) of the Code is recognized or there is an excess of adjusted

basis as described in section 734(b)(1)(B) of the Code, to elect, pursuant

to section 754 of the Code, to adjust the basis of Company properties;

 

(d) to elect to amortize the organizational expenses of the Company

and the start-up expenditures of the Company ratably over a period of 60

months as permitted by Sections 195 and 709(b) of the Code; and

 

(e) any other election the Managers may deem appropriate and in the

best interests of the Members.

 

Neither the Company nor any Manager or Member may make an election for the

Company to be excluded from the application of the provisions of subchapter K of

chapter 1 of subtitle A of the Code or any similar provisions of applicable

state law, and no provision of this Agreement (including, without limitation,

Section 2.8) shall be construed to sanction or approve such an election.

 

10.3 Tax Matters Partner. SSI-Delaware shall be the "tax matters

partner" of the Company pursuant to section 6231(a)(7) of the Code. The tax

matters partner shall take such action as may be necessary to cause each other

Member to become a "notice partner" within the meaning of section 6223 of the

Code. The tax matters partner shall inform each other Member of all significant

matters that may come to its attention in its capacity as tax matters partner by

giving notice thereof on or before the fifth Business Day after becoming aware

thereof and, within that time, shall forward to each other Member copies of all

significant written communications it may receive in that capacity. The tax

matters partner may not take any action contemplated by sections 6222 through

6232 of the Code without the consent of a Required Interest, but this sentence

does not authorize the tax matters partner to take any action left to the

determination of an individual Member under sections 6222 through 6232 of the

Code.

 

ARTICLE XI

BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

 

11.1 Maintenance of Books. The Company shall keep books and records of

accounts and shall keep minutes of the proceedings of its Members, its Managers

and each committee of the Managers. The Company shall also maintain the books

and records on Exhibit B. The books of account for the Company shall be

---------

maintained on the accrual method of accounting in accordance with generally

accepted accounting principles and the terms of this Agreement, except that the

capital accounts, of the Members shall be maintained in accordance with Section

4.6. The accounting year of the Company shall be the same as its taxable year.

 

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11.2 Reports. On or before the 90th day following the end of each

fiscal year during the term of the Company, the Managers shall cause each Member

to be furnished with (i) an Internal Revenue Service Form K-1 and similar forms

required for the filing of such Member's state and local income tax returns and

(ii) a balance sheet, a statement of operations and cash flows, a statement of

changes in Members, capital of the Company and a statement of value of the

Company's portfolio securities for, or as of the end of, that year certified by

a recognized firm of certified public accountants. These financial statements

shall be prepared in accordance with generally accepted accounting principles

for accrual-basis records consistently applied (except as therein noted) and be

accompanied by a report of the certified public accountants. In addition, the

Company shall provide each Member with quarterly unaudited financial statements

within forty-five (45) days after the end of each of the first three quarters in

each fiscal year. The Managers also may cause to be prepared or delivered such

other reports as they may deem appropriate. The Company shall bear the costs of

all of these reports.

 

11.3 Accounts. The Managers shall establish and maintain one or more

separate bank and investment accounts and arrangements for Company funds in the

Company name with financial institutions and firms that the Managers determine.

The Managers may not commingle the Company's funds with the funds of any Member.

The Company's funds may be invested in such manner as the Managers determine.

 

ARTICLE XII

BANKRUPTCY OF A MEMBER

 

12.1 Bankrupt Members. Subject to Section 13.1 (c) , if any Member

becomes a Bankrupt Member, the Company shall have the option, exercisable by

notice from the Managers to the Bankrupt Member (or its representative) at any

time prior to the 180th day after receipt of notice of the occurrence of the

event causing it to become a Bankrupt Member, to buy, and on the exercise of

this option the Bankrupt Member or its representative shall sell, its Membership

Interest. The purchase price shall be an amount equal to the fair market value

thereof determined by agreement by the Bankrupt Member (or its representative)

and the Managers; however, if those persons do not agree on the fair market

value on or before the 30th day following the exercise of the option, either

such person, by notice to the other, may require the determination of fair

market value to be made by an independent appraiser. The independent appraiser

shall be selected in good faith by the Managers and reasonably acceptable to the

Bankrupt Member. The determination of the independent appraiser is final and

binding on all parties. The Bankrupt Member and the Company each shall pay one-

half of the costs of the appraisal. The Company shall pay the fair market value

as so determined in four equal cash installments, the first due on closing and

the remainder (together with accumulated interest on the amount unpaid at the

General Interest Rate) due on each of the first three anniversaries thereof.

The payment to be made to the Bankrupt Member or its representative pursuant to

this Section 12.1 is in complete liquidation and satisfaction of all the rights

and interest of the Bankrupt Member and its representative (and of all persons

claiming by, through, or under the Bankrupt Member and its representative) in

and in respect of the Company, including, without limitation, any Membership

Interest, any rights in specific Company property, and any rights against the

Company and (insofar as the affairs of the Company are concerned) against the

Members.

 

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ARTICLE XIII

DISSOLUTION, LIQUIDATION, AND TERMINATION

 

13.1 Dissolution. The Company shall dissolve and its affairs shall be

wound up on the first to occur of the following:

 

(a) the decision of the Managers to dissolve and liquidate the

Company;

 

(b) the written consent of all the Members;

 

(c) the expiration of the period fixed for the duration of the Company

in this Agreement;

 

(d) any Member that is a Manager shall die, become insane, retire,

resign, be expelled, become a Bankrupt Member (with or without the consent

of a Required Interest) or dissolve, or there shall occur any other event

that terminates the continued membership in the Company of any such Member,

unless, in any such case, within 90 days of such event, Members owning a

majority of the remaining Membership Interests elect to continue the

business of the Company; and

 

(e) entry of a decree of judicial dissolution of the Company under

Section 18-802 of the Act.

 

The Company shall not be dissolved by the admission of Members in

accordance with the terms of this Agreement. Except as provided in Section

13.1(d), the death, insanity, retirement, resignation, expulsion, bankruptcy or

dissolution of a Member or the occurrence of an event that terminates the

continued membership of a Member in the Company, shall not cause the Company to

be dissolved and its affairs wound up so long as the Company at all times has at

least two Members. Upon the occurrence of any such event, the business of the

Company shall be continued without dissolution.

 

13.2 Liquidation and Termination. (a) On dissolution of the Company,

the Managers who have not wrongfully dissolved the Company shall act as

liquidator or may appoint one or more Members as liquidator. The liquidator

shall wind up the affairs of the Company as provided in the Act and shall have

all the powers set forth in the Act. The costs of liquidation shall be a

Company expense.

 

(b) Upon the winding up of the Company, the assets of the Company shall

first be distributed to creditors, including Members and Managers who are

creditors, to the extent otherwise permitted by law, in satisfaction of

liabilities of the Company (whether by payment or the making of reasonable

provision for payment thereof) other than liabilities for which reasonable

provision for payment has been made.

 

(c) Any assets remaining after the Company's liabilities and obligations

have been paid or reasonable provision for the payment thereof has been made,

shall be distributed to the Members in accordance with the positive capital

account balances of the Members, as determined after

 

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taking into account all capital account adjustments for the Company's taxable

year during which such liquidation occurs (other than those made as a result of

this Section), by the end of such taxable year or, if later, within 90 days

after the date of such liquidation, except as permitted by Treas. Reg.

(S) 1.704-v1(b)(2)(ii)(b).

 

(d) If, at the discretion of the Managers, any assets of the Company are

distributed to the Members in-kind, such assets shall be valued on the basis of

the fair market value thereof as determined by the Managers in their reasonable

discretion on the date of distribution. Without limiting the managers,

discretion to make such a valuation or requiring that any such appraisal be

made, the valuation of any asset by the Managers on the basis of the

determination of its fair market value by an independent appraiser shall be

deemed to be a reasonable value for such asset and a reasonable exercise of such

discretion. Upon any such in-kind distribution to a Member, the Capital Account

of the Members shall be adjusted to reflect the manner in which the unrealized

income, gain, loss or deduction inherent in such property (that has not

previously been reflected in the Members' Capital Accounts) would be allocated

among the Members if there had been a taxable disposition of such property at

its fair market value on the date of distribution. The Capital Accounts of the

Members receiving a distribution in-kind shall then be reduced by the fair

market value of the property distribution.

 

(e) Nothing in this Article 13 shall be construed to extend the time period

prescribed under Section 13.2(c) above and Treas. Reg. (S) 1.704-1(b)(2)(ii)(b)

for making liquidating distributions of the Company's assets. If the Liquidator

deems it impracticable to cause the Company to make distributions of the

liquidating proceeds to the Members within the time period described under

Treas. Reg. (S) 1.704-l(b)(2)(ii)(b), the Liquidator may make any arrangement

that is considered for federal income tax purposes to effectuate liquidating

distributions of all of the Company's assets to the Members within the time

period prescribed in such regulation and that will permit the sale of the non-

cash assets considered so distributed in a manner that gives effect, to the

extent possible, to the intent of the preceding provisions of this Article 13.

 

(f) Notwithstanding anything contained herein to the contrary, upon the

merger or consolidation of the Company into, or transfer of its assets to, a

Successor Corporation in connection with a public offering of shares of such

Successor Corporation, shares in such Successor Corporation will be allocated

among the Members in the following proportions, based upon the price at which

such shares are initially offered to the public:

 

(i) first, to all Members in proportion to their Capital

Contributions, up to the amount of the excess, if any, of (x) their

Capital Contributions over (y) prior distributions to them;

 

(ii) second, to the Members in proportion to their Membership

Profit Interests until the aggregate shares distributed to all Members

are in proportion to their Membership Interests; and

 

(iii) third, to the Members in proportion to their Membership

Interests.

 

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In addition, upon such merger, consolidation or sale of the Company in

connection with a public offering, the Successor Corporation shall acquire the

TL Corporations in exchange for stock of the Successor Corporation in a tax-free

transaction.

 

13.3 Deficit Capital Accounts. Notwithstanding anything to the contrary

contained in this Agreement, and notwithstanding any custom or rule of law to

the contrary, to the extent that the deficit, if any, in the Capital Account of

any Member results from or is attributable to deductions and losses of the

Company (including non-cash items such as depreciation), or distributions of

assets pursuant to this Agreement to all Members, upon dissolution of the

Company such deficit shall not be an asset of the Company and such Members shall

not be obligated to contribute such amount to the Company to bring the balance

of such Member's capital account to zero.

 

13.4 Certificate of Cancellation. On the completion of the winding up

of the Company following its dissolution, the Company is terminated, and the

Managers (or such other person or persons as the Act may require or permit)

shall file a Certificate of Cancellation with the Office of the Secretary of

State of the State of Delaware, and cancel any other filings made pursuant to

Section 2.5.

 

ARTICLE XIV

1940 ACT

 

14.1 Expulsion. Anything herein to the contrary notwithstanding, no

Member that is an investment company, or would be an investment company but for

the exception provided by Section 3(c)(1) or Section 3(c)(7) of the 1940 Act,

may at any time own more than nine percent of the aggregate shares of Membership

Interests then outstanding. If, at any time, the Company is informed that any

such Member has acquired more than nine percent of the shares of Membership

Interests (an "Investment Company Violation"), such Member shall be deemed to

have given notice of withdrawal pursuant to this Article 14, effective as of the

last day of the fiscal quarter Preceding such Investment Company Violation (the

"Investment Company Withdrawal Date"), of such portion or all of the Capital

Accounts of such Member as the Manager may determine is necessary or advisable

to cure such Investment Company Violation, and such withdrawal shall be

consummated as provided in this Article 14 to the maximum feasible extent. The

Company may expel such Member's Membership Interest at any time while such

Investment Company Violation continues by notice to such Member and such

expulsion shall be effective as of the Investment Company Withdrawal Date. On

advice of counsel for the Company, the Manager may waive the restrictions in

this Section with respect to a new or existing Member if the number of holders

of such securities would not prevent the Company from relying on the exclusion

from the definition of "investment company" under Section 3(c)(1) of the 1940

Act. Such a waiver may only be granted if such Member makes a written

representation to the Company as to the number of holders of such securities and

such waiver shall only be effective so long as the number of holders of such

securities does not exceed the number so represented to the Member.

 

14.2 Purchase of Expelled Member's Membership Interest. Upon the

occurrence of an Investment Company Violation, the Managers shall redeem such

portion of such Member's

 

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Membership Interest as the Managers determine is necessary or advisable to cure

such violation, all in accordance with Section 12.1 as if the breaching Member

were a Bankrupt Member.

 

ARTICLE XV

GENERAL PROVISIONS

 

15.1 Offset. Whenever the Company is to pay any sum to any Member, any

amounts that Member owes the Company may be deducted from that sum before

payment.

 

15.2 Notices. Except as expressly set forth to the contrary in this

Agreement, all notices, requests, or consents provided for or permitted to be

given under this Agreement must be in writing and must be given either by

depositing that writing in the United States mail, addressed to the recipient,

postage paid, and registered or certified with return receipt requested or by

delivering that writing to the recipient in person, by courier, or by facsimile

transmission; and a notice, request, or consent given under this Agreement is

effective on receipt by the person to receive it. All notices, requests, and

consents to be sent to a Member must be sent to or made at the addresses given

for that Member on Exhibit A or in the instrument described in 3.3(d) or 3.4, or

---------

such other address as that Member may specify by notice to the other Members.

Any notice, request, or consent to the Company or the Managers must be given to

the Managers at the following address: 103 Springer Building, 1st Floor Concord

Plaza, 3411 Silverside Road, Wilmington, DE 19810. Whenever any notice is

required to be given by law, the Certificate or this Agreement, a written waiver

thereof, signed by the person entitled to notice, whether before or after the

time stated therein, shall be deemed equivalent to the giving of such notice.

 

15.3 Entire Agreement; Supersedure. This Agreement constitutes the

entire agreement of the Members and their affiliates relating to the Company and

supersedes all prior contracts or agreements with respect to the Company,

whether oral or written.

 

15.4 Effect of Waiver or Consent. A waiver or consent, express or

implied, to or of any breach or default by any person in the performance by that

person of its obligations with respect to the Company is not a consent or waiver

to or of any other breach or default in the performance by that person of the

same or any other obligations of that person with respect to the Company.

Failure on the part of a person to complain of any act of any person or to

declare any person in default with respect to the Company, irrespective of how

long that failure continues, does not constitute a waiver by that person of its

rights with respect to that default until the applicable statute-of-limitations

period has run.

 

15.5 Amendment or Modification. This Agreement may be amended or

modified from time to time only by a written instrument adopted by the Managers

and executed and agreed to by a Required Interest and each Strategic Partner;

provided, however, that (a) an amendment or modification reducing a Member's

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

Membership Interest or increasing its Commitment (other than to reflect changes

otherwise provided by this Agreement) or reducing a Member's distributions under

Section 5.2 is effective only with that Member's consent, (b) an amendment or

modification reducing the required Membership Interest or other measure for any

consent or vote in this Agreement is effective only with the consent or vote of

Members having the Membership Interest or other measure theretofore required,

(c) amendments of the type described in Section 3.4 may be

 

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adopted as therein provided, (d) an amendment to Section 6.9 is effective only

with the consent of Members' holding at least 66 2/3% of all Membership

Interests and (e) amendments to this Agreement that (i) the Managers have

reasonably determined do not adversely affect the Members, (ii) are required or

contemplated by this Agreement, (iii) are reasonable and necessary or

appropriate in the sole discretion of the Managers to qualify or continue the

qualification of the Company as a limited liability company under the laws of

any state, (iv) are advisable in the opinion of the Managers to cure any

ambiguity in any provision herein, or (v) are required to effect a change in the

name of the Company, in the registered office or registered agent of the Company

or in the location of the principal place of business of the Company or the

admission, substitution or termination of Members in accordance with this

Agreement, may be made by the Managers without the consent of the Members.

 

15.6 Binding Act. Subject to the restrictions on Dispositions set forth

in this Agreement, this Agreement is binding on and inures to the benefit of the

Members and their respective heirs, legal representatives, successors, and

assigns.

 

15.7 Governing Law; Severability. THIS AGREEMENT IS GOVERNED BY AND

SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,

EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE

OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. If

any provision of this Agreement or the application thereof to any person or

circumstance is held invalid or unenforceable to any extent, the remainder of

this Agreement and the application of that provision to other persons or

circumstances is not affected thereby and that provision shall be enforced to

the greatest extent permitted by law.

 

15.8 Further Assurances. In connection with this Agreement and the

transactions contemplated hereby, each Member shall execute and deliver any

additional documents and instruments and perform any additional acts that may be

necessary or appropriate to effectuate and perform the provisions of this

Agreement and those transactions.

 

15.9 No Third Party Benefit. The provisions hereof are solely for the

benefit of the Company and its Members and Managers and are not intended to, and

shall not be construed to, confer a right or benefit on any creditor of the

Company or any other person.

 

15.10 Waiver of Certain Rights. Each Member irrevocably waives any right

it may have to maintain any action for dissolution of the Company or for

partition of the property of the Company.

 

15.11 Indemnification. To the fullest extent permitted by law, each

Member shall indemnify the Company, each Manager and each other Member and hold

them harmless from and against all losses, costs, liabilities, damages, and

expenses (including, without limitation, costs of suit and attorney's fees) they

may incur on account of any breach by that Member of this Agreement.

 

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15.12 Counterparts. This Agreement may be executed in any number of

counterparts with the same effect as if all signing parties had signed the same

document. All counterparts shall be construed together and constitute the same

instrument.

 

15.13 Resolutions of Disputes.

 

(a) If any dispute arises under this Agreement that is not settled promptly

in the ordinary course of business, the parties shall seek to resolve any such

dispute between them, first, by negotiating promptly with each other in good

faith in face-to-face negotiations. These face-to-face negotiations shall be

conducted by the respective designated senior management representative of each

party. If the parties are unable to resolve the dispute between them within 20

business days (or such period as the parties shall otherwise agree) through

these face-to-face negotiations, then any such disputes shall be resolved in the

manner set forth in subsections (b) through (d) below.

 

(b) Any action, suit or proceeding where the amount in controversy as to at

least one party, exclusive of interest and costs, exceeds $1,000,000 Dollars (a

"Summary Proceeding"), arising out of or relating to this Agreement or the

breach, termination or validity thereof, shall be litigated exclusively in the

Superior Court of the State of Delaware (the "Delaware Superior Court") as a

summary proceeding pursuant to Rules 124-131 of the Delaware Superior Court, or

any successor rules (the "Summary Proceeding Rules") for as long as such rules

are in effect. Each of the parties hereto hereby irrevocably and

unconditionally (i) submits to the jurisdiction of the Delaware Superior Court

for any Summary Proceeding, (ii) agrees not to commence any Summary Proceeding

except in the Delaware Superior Court, (iii) waives, and agrees not to plead or

to make, any objection to the venue of any Summary Proceeding in the Delaware

Superior Court, (iv) waives, and agrees not to plead or to make, any claim that

any Summary Proceeding brought in the Delaware Superior Court has been brought

in an improper or otherwise inconvenient forum, (v) waives, and agrees not to

plead or to make, any claim that the Delaware Superior Court lacks personal

jurisdiction over it, (vi) waives its right to remove any Summary Proceeding to

the federal courts except where such courts are vested with sole and exclusive

jurisdiction by statute and (vii) understands and agrees that it shall not seek

a jury trial or punitive damages in any Summary Proceeding based upon or arising

out of or otherwise related to this Agreement or any other agreement executed in

connection herewith or the breach, termination or validity thereof, and waives

any and all rights to any such jury trial or to seek punitive damages.

 

(c) In the event any action, suit or proceeding where the amount in

controversy as to at least one party, exclusive of interest and costs, does not

exceed $1,000,000 Dollars (a "Proceeding"), arising out of or relating to this

Agreement or any other agreement executed in connection herewith or the breach,

termination or validity thereof is brought, the parties to such Proceeding agree

to make application to the Delaware Superior Court to proceed under the Summary

Proceeding Rules. Until such time as such application is rejected, such

Proceeding shall be treated as a Summary Proceeding and all of the foregoing

provisions of this Section relating to Summary Proceedings shall apply to such

Proceeding.

 

(d) If a Summary Proceeding is not available to resolve any dispute

hereunder, the controversy or claim shall be settled by arbitration conducted on

a confidential basis, under the

 

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U.S. Arbitration Act, if applicable, and the then current Commercial Arbitration

Rules of the American Arbitration Association (the "Association") strictly in

accordance with the terms of the Agreement and the substantive law of the State

of Delaware. The arbitration shall be conducted at the Association's regional

office located closest to the Company's principal place of business by three

arbitrators, at least one of whom shall be knowledgeable in general business

practices, one of whom shall be an attorney and one of whom shall be a member of

a "Big Five" accounting firm familiar with businesses engaged in asset

management. Judgment upon the arbitrators, award may be entered and enforced in

any court of competent jurisdiction. Neither party shall institute a proceeding

hereunder unless at least 60 days prior thereto such party shall have given

written notice to the other party of its intent to do so.

 

(e) Neither party shall be precluded hereby from securing equitable

remedies in courts of any jurisdiction, including, but not limited to, temporary

restraining orders and preliminary injunctions to protect its rights and

interests but shall not be sought as a means to avoid or stay arbitration or

Summary Proceeding.

 

15.14 Estoppels. Each Member shall, upon not less than fifteen (15)

days written notice from any Member, execute and deliver to such other Member a

statement certifying that this Agreement is unmodified and in full force and

effect (or, if modified, the nature of the modification) and whether or not

there are, to such Member's knowledge, any uncured defaults on the part of the

other Member, specifying such defaults if any are claimed. Any such statement

may be relied upon by third parties.

 

15.15 Reliance on Authority of Person Signing Agreement. If a Member is

an Entity, the Company and the Members shall:

 

(a) not be required to determine the authority of the person signing this

Agreement to make any commitment or undertaking on behalf of such Entity or to

determine any fact or circumstance bearing upon the existence of the authority

of such Entity or to determine any fact or circumstance bearing upon the

existence of the authority of such person;

 

(b) not be required to see to the application or distribution of proceeds

paid or credited to persons signing this Agreement on behalf of such Entity;

 

(c) be entitled to rely on the authority of the person signing this

Agreement or the Subscription Agreement with respect to the voting of the

Membership Interest of such Entity and with respect to the giving of consent on

behalf of such Entity in connection with any matter for which consent is

permitted or required under this Agreement; and

 

(d) be entitled to rely upon the authority of any general partner, joint

venturer, trustee, or president or vice president, as the case may be, of any

such Entity the same as if such person were the person originally signing this

Agreement on behalf of such Entity.

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as

of the date first set forth above.

 

SAFEGUARD SCIENTIFICS (DELAWARE), INC.

 

/s/ Michael W. Miles

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

By: Michael W. Miles

Title: Vice President

 

 

SAFEGUARD 98 CAPITAL, L.P.

 

/s/ Michael W. Miles

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

By: Michael W. Miles

Title: Vice President

 

 

COMCAST ICG, INC.

 

/s/ Julian Brodsky

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

By: Julian Brodsky

Title: Vice Chairman

 

 

CPQ HOLDINGS, INC.

 

/s/ Linda S. Auwers

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

By: Linda S. Auwers

Title: Secretary

 

 

GENERAL ELECTRIC CAPITAL CORPORATION

 

/s/ Scott Gould

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

By: Scott Gould

Title: Regional Operations Manager

 

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TECHNOLOGY LEADERS II, L.P.

 

/s/ Jordan B. Savitch

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

By: Jordan B. Savitch

Title: Assistant Secretary

 

 

TECHNOLOGY LEADERS II OFFSHORE C.V.

 

/s/ Jordan B. Savitch

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

By: Jordan B. Savitch

Title: Assistant Secretary

 

 

 

INTERNET ASSETS, INC.

 

/s/ Bader F. Al-Rezaiham

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

By: Bader F. Al-Rezaiham

Title: President / Director

 

 

 

/s/ Julian Brodsky

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

JULIAN BRODSKY, Manager

 

 

 

/s/ Scott Gould

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

SCOTT GOULD, Manager

 

 

/s/ Robert E. Keith

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

ROBERT E. KEITH, Manager

 

 

/s/ Walter W. Buckley

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

WALTER W. BUCKLEY, III, Manager

 

 

/s/ Thomas P. Gerrity

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

THOMAS P. GERRITY, Manager

 

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