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Ventures LLC Agreement 07-31-1999

LIMITED LIABILITY COMPANY AGREEMENT OF

@ VENTURES INVESTORS, LLC

 

THIS LIMITED LIABILITY COMPANY AGREEMENT of @ Ventures Investors, LLC

(the "LLC"), dated as of July 31, 1999, is by and among the persons named on

Schedule A attached hereto, each of whom is designated as either a Class A

Member or a Class B Member.

 

WHEREAS, the LLC was formed as a limited liability company pursuant to

the Delaware Limited Liability Company Act, by the filing, on August 3, 1998, in

the Office of the Secretary of State of the State of Delaware, of a Certificate

of Formation for the LLC (the "Certificate"); and

 

WHEREAS, the Members desire to enter into this Agreement to set forth

the agreements among the Members with respect to the LLC, all as more fully set

forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and

sufficiency of which is hereby acknowledged, and in consideration of the

agreements hereinafter set forth, the parties hereby agree as follows:

 

 

ARTICLE I

 

DEFINITIONS

 

The following capitalized terms used in this Agreement shall have the

respective meanings ascribed to them below:

 

"Act" means the Delaware Limited Liability Company Act, in effect at

the time of the initial filing of the Certificate with the Office of the

Secretary of State of the State of Delaware, and as thereafter amended from time

to time.

 

"Affiliate" shall mean, with respect to any specified person or entity,

(i) any person or entity that directly or indirectly controls, is controlled by,

or is under common control with such specified person or entity; (ii) any person

or entity that directly or indirectly controls 10% or more of the outstanding

equity securities of the specified entity or of which the specified person or

entity is directly or indirectly the owner of 10% or more of any class of equity

securities; (iii) any person or entity that is an officer of, director of,

manager of, partner in, or trustee of, or serves in a similar capacity with

respect to, the specified person or entity or of which the specified person or

entity is an officer, director, partner, manager or trustee, or with respect to

which the specified person or entity serves in a similar capacity; or (iv) any

person that is a spouse, mother, father, brother, sister or lineal descendant of

the specified person.

 

"Agreement" means this Limited Liability Company Agreement as it may be

amended, supplemented, or restated from time to time.

 

"Capital Account" means a separate account maintained for each Member

and adjusted in accordance with Treasury Regulations under Section 704 of the

Code. To the extent consistent with such Treasury Regulations, the adjustments

to such accounts shall include the following:

 

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(i) There shall be credited to each Member's Capital Account

the amount of any cash actually contributed by such Member to the

capital of the LLC, the fair market value of any property contributed

by such Member to the capital of the LLC, the amount of liabilities of

the LLC assumed by the Member or to which property distributed to the

Member was subject and such Member's share of the Net Profits of the

LLC and of any items in the nature of income or gain separately

allocated to the Members; and there shall be charged against each

Member's Capital Account the amount of all cash distributions to such

Member, the fair market value of any property distributed to such

Member by the LLC, the amount of liabilities of the Member assumed by

the LLC or to which property contributed by the Member to the LLC was

subject and such Member's share of the Net Losses of the LLC and of any

items in the nature of losses or deductions separately allocated to the

Members.

 

(ii) If the LLC at any time distributes any of its assets

in-kind to any Member, the Capital Account of each Member shall be

adjusted to account for that Member's allocable share of the Net

Profits, Net Losses or items thereof that would be realized by the LLC

if it sold the assets that were distributed at their respective fair

market values (taking Code Section 7701(g) into account) immediately

prior to their distribution.

 

(iii) If elected by the LLC in accordance with Section 6.01(b)

hereof, at any time specified in Treasury Regulation Section

1.704-1(b)(2)(iv)(f), the Capital Account balance of each Member shall

be adjusted to the extent provided under such Treasury Regulation to

reflect the Member's allocable share (as determined under Article V) of

the items of Net Profits or Net Losses that would be realized by the

LLC if it sold all of its property at its fair market value (taking

Code Section 7701(g) into account) on the day of the adjustment.

 

"Carrying Value" means, with respect to any asset, the asset's adjusted

basis for federal income tax purposes; provided, however, that (i) the initial

Carrying Value of any asset contributed to the LLC shall be adjusted to equal

its gross fair market value at the time of its contribution and (ii) the

Carrying Values of all assets held by the LLC shall be adjusted to equal their

respective gross fair market values (taking Code Section 7701(g) into account)

upon an adjustment to the Capital Accounts of the Members described in paragraph

(iii) of the definition of "Capital Account." The Carrying Value of any asset

whose Carrying Value was adjusted pursuant to the preceding sentence thereafter

shall be adjusted in accordance with the provisions of Treasury Regulation

Section 1.704-1(b)(2)(iv)(g).

 

"Certificate" means the Certificate of Formation creating the LLC, as

it may, from time to time, be amended in accordance with the Act.

 

"Class A Member" shall refer severally to any person named as a Class A

Member in this Agreement and any person who becomes an additional, substitute or

replacement Class A Member as permitted by this Agreement, in such person's

capacity as a Class A Member of the LLC. "Class A Members" shall refer

collectively to all such persons in their capacities as Class A Members.

 

"Class B Member" shall refer severally to any person named as a Class B

Member in this Agreement and any person who becomes an additional, substitute or

replacement Class B Member as permitted by this Agreement, in such person's

capacity as a Class B Member of the LLC. "Class B Members" shall refer

collectively to all such persons in their capacities as Class B Members.

 

"CMGI" means CMGI Inc., a Delaware corporation.

 

"CMGI Fund" means CMG @ Ventures III, LLC, a Delaware limited liability

company.

 

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"CMGI Fund Agreement" means the Limited Liability Company Agreement of

the CMGI Fund, as from time to time amended and in effect.

 

"Code" means the Internal Revenue Code of 1986, as amended from time to

time.

 

"Distributable Cash and Property", with respect to any particular

Investment shall mean, with respect to any fiscal period, the excess of all cash

receipts and property of the LLC from such Investment, including dividends or

distributions in respect of such Investment, proceeds from a capital transaction

relating to such Investment, and any and all other sources (but excluding

capital contributions of the Members) over the sum of:

 

(i) Any and all expenses of the LLC related directly or

indirectly to such Investment (except to the extent such expenses are

reattributed to one or more other Investments pursuant to clause (ii)

below), including an allocable share of the following types of LLC

expenses:

 

(A) cash disbursements for all items which are

customarily considered to be "operating expenses";

 

(B) payments of interest, principal and premium and

points and other costs of borrowing under any indebtedness of

the LLC;

 

(C) payments made to purchase or sell securities, and

brokerage commissions, finders fees and transaction costs;

 

(D) payments made to purchase inventory or capital

assets, and for capital construction, rehabilitation,

acquisitions, alterations and improvements; and

 

(E) amounts set aside as reserves for working

capital, contingent liabilities, replacements or for any of

the expenditures described in clauses (A), (B), (C) and (D)

above which are deemed by the Class B Members (in their

reasonable discretion) to be necessary to meet the current and

anticipated future needs of the LLC; and

 

(ii) The amount of expenses described in clause (i) above that

(A) are attributable to another Investment (the "Other Investment"),

(B) are not paid from the receipts of cash and property attributable to

the Other Investment as a result of the total expenses attributable to

the Other Investment for the fiscal period exceeding the total receipts

of cash and property attributable to the Other Investment for the

fiscal period and (C) are paid from the receipts of cash and property

in respect of the Investment for which the computation of Distributable

Cash and Property is being made (the "First Investment"); provided,

however, that if Distributable Cash and Property with respect to the

First Investment is reduced as a result of this clause (ii), a

corresponding amount of the next amount of Distributable Cash and

Property with respect to the Other Investment shall be treated as a

receipt attributable to the First Investment.

 

For purposes of determining Distributable Cash or Property in respect of any

particular Investment, the Class B Members shall allocate all LLC expenses of

the types described in clauses (i) and (ii) above among all Investments and to

Other Cash Receipts in such manner as they may reasonably determine.

 

"Distributable Other Cash" means, with respect to any fiscal period,

the excess of Other Cash Receipts over the sum of the types of expenses

described in clause (i) of the definition of "Distributable Cash and Property"

which the Class B Members reasonably allocate to Other Cash Receipts.

 

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"Domestic Fund" means @ Ventures III, L.P., a Delaware limited

partnership.

 

"Domestic Fund Agreement" means the Limited Partnership Agreement of

the Domestic Fund, as from time to time amended and in effect.

 

"Employer" shall mean the LLC, the Management Company, any Fund, CMGI

or any Affiliate of any of them. For purposes of this Agreement, a Portfolio

Company shall not constitute an Affiliate of any of the LLC, any Fund or CMGI

(and a Member shall not be deemed to be employed by the Employer if such Member

is employed by a Portfolio Company), unless the Class B Members specifically

elect in writing treat a Portfolio Company as an Affiliate and such Portfolio

Company falls within the definition of "Affiliate" set forth above.

 

"Foreign Fund" means @ Ventures Foreign Fund III, L.P., a Delaware

limited partnership.

 

"Foreign Fund Agreement" means the Limited Partnership Agreement of the

Foreign Fund, as from time to time amended and in effect.

 

"Funds" means the Domestic Fund, the Foreign Fund and the CMGI Fund,

and "Fund" means any one of the Funds.

 

"Investment" means each investment (excluding short-term investments

made pending investments in securities in Portfolio Companies) made by the LLC.

The LLC will invest only in Portfolio Companies in which one or more of the

Funds invests (excluding short-term investments made by any Fund pending

investments in securities in Portfolio Companies), and only at substantially the

same times and upon substantially the same terms upon which the Funds invest in

such Portfolio Companies.

 

"Investment Percentage Interest" means each Member's percentage

interest in an Investment, as specified on the Investment Schedule for such

Investment.

 

"Investment Schedule" means, with respect to each Investment, a

Schedule which shall be attached to this Agreement at such time as the

Investment is made and shall reflect the information described in Section

3.03(a) hereof with respect to the Investment.

 

"LLC" means the limited liability company formed pursuant to the

Certificate and this Agreement, as it may from time to time be constituted and

amended.

 

"Majority in Number of the Class B Members" means, with respect to a

particular action or matter, a majority in number of the Class B Members then

entitled to vote on the action.

 

"Management Company" means @Ventures Management, LLC, a Delaware

limited liability company which provides management services to the Funds.

 

"Maximum Contribution Obligation" for any Class A Member means the

amount set forth opposite such Class A Member's name on Schedule A hereto, as

amended and in effect from time to time.

 

"Member" shall refer severally to any person named as a Class A Member

or Class B Member in this Agreement and any person who becomes an additional,

substitute or replacement Class A Member or Class B Member as permitted by this

Agreement, in such person's capacity as a Member of the LLC. "Members" shall

refer collectively to all such persons in their capacities as Members.

 

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"Net Profits" and "Net Losses" mean the taxable income or loss, as the

case may be, for a period as determined in accordance with Code Section 703(a),

but computed with the following adjustments:

 

 

(i) Items of gain, loss, and deduction shall be computed based

upon the Carrying Values of the LLC's assets (in accordance with

Treasury Regulation Sections 1.704(b)(2)(iv)(g) and/or 1.704-3(d))

rather than upon the assets' adjusted bases for federal income tax

purposes;

 

(ii) Any tax-exempt income received by the LLC shall be

included as an item of gross income;

 

(iii) The amount of any adjustments to the Carrying Values of

any assets of the LLC pursuant to Code Section 743 shall not be taken

into account;

 

(iv) Any expenditure of the LLC described in Code Section

705(a)(2)(B) (including any expenditures treated as being described in

Section 705(a)(2)(B) pursuant to Treasury Regulations under Code

Section 704(b)) shall be treated as a deductible expense; and

 

(v) The amount of any items of Net Profits or Net Losses

deemed realized pursuant to paragraphs (ii) and (iii) of the definition

of "Capital Account" shall be included in the computation.

 

"Other Cash Receipts" means cash receipts of the LLC, exclusive of

capital contributions of the Members, which the Class B Members reasonably

determine are not allocable to Investments.

 

"Percentage Interest" shall be the percentage interest of a Member set

forth in Schedule B, as amended from time to time, and subject to adjustment

pursuant to Sections 3.04, 8.02 and 8.03.

 

"Permitted Transferee" means (A) any Member; (B) any spouse, parent,

lineal descendant, brother, sister, or spouse of a brother or sister of a

Member; (C) any trust, corporation or partnership or other entity in which any

Member and/or one of the persons designated in clause (B) is a principal,

beneficiary, majority stockholder, member or limited or general partner with an

aggregate interest in profits and losses of greater than fifty percent; (D)

grantors or beneficiaries of a trust which is (or of which the trustees thereof

are, in their capacities as trustees) a Member; or (E) charitable foundations

created or primarily endowed by a Member or a member of his or her family.

 

"Portfolio Company" means the issuer of any security in which the LLC

invests other than issuers of short-term investments pending investment in

long-term investments. The LLC will invest only in Portfolio Companies in which

one or more Funds invests.

 

"Securities Act" means the Securities Act of 1933, as amended.

 

"Separation Event" shall mean and shall be deemed to have occurred in

the event that:

 

(x) a Member dies or becomes mentally or physically disabled

(as determined by a physician licensed in the Commonwealth of

Massachusetts, selected by the Class B Members (exclusive of any Class

B Member as to whom the determination is being made) or a conservator

or guardian is appointed for the benefit of any Class B Member or his

property;

 

(y) the employment or other service relationship of such

Member to the Employer is terminated with or without cause; or

 

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(z) a Member defaults in its obligation to make Capital

Contributions to the LLC pursuant to Section 3.01 below.

 

 

 

ARTICLE II

 

GENERAL PROVISIONS

 

2.01 Formation of Limited Liability Company; Foreign Qualification. The

LLC was formed as a limited liability company under the Act on August 3, 1998,

by the filing on such date of the Certificate in the Office of the Secretary of

State of the State of Delaware.

 

Prior to the LLC's conducting business in any jurisdiction other than

the State of Delaware, the LLC shall comply, to the extent procedures are

available, with all requirements necessary to qualify the LLC as a foreign

limited liability company in each such jurisdiction where foreign qualification

is either necessary or appropriate. Each Member shall execute, acknowledge,

swear to and deliver all certificates and other instruments conforming to this

Agreement that are necessary or appropriate to qualify, or, as appropriate, to

continue or terminate the foreign qualification of, the LLC as a limited

liability company in all such jurisdictions in which the LLC may conduct

business.

 

2.02 Name of the LLC. The name of the LLC shall be @ Ventures

Investors, LLC.

 

2.03 Business of the LLC. The general character of the business of the

LLC is to (a) invest in each company in which one or more of the Funds invests,

and (b) engage in any activities directly or indirectly related or incidental

thereto which may be lawfully conducted by a limited liability company formed

under the laws of the State of Delaware. Each investment made by the LLC shall

(i) be in an amount which, when added to the amounts invested by the Funds in

such company, will equal 2% of the aggregate amount invested in such company by

the Funds and the LLC, (ii) be made at substantially the same time at which such

Funds invest in such company, and (iii) be upon substantially the same terms

upon which such Funds invest in such company.

 

2.04 Place of Business of the LLC; Resident Agent. The address of the

principal place of business of the LLC, and the office at which the LLC will

maintain its records is 100 Brickstone Square, Andover, Massachusetts 01810. the

LLC's registered office in Delaware is c/o Corporation Trust Company, 1209

Orange Street, Wilmington, Delaware, 19810, and the LLC's registered agent for

service of process in Delaware is Corporation Trust Company, 1209 Orange Street,

Wilmington, Delaware, 19810. The Class B Members may at any time and from time

to time change the LLC's principal place of business, establish additional

places of business, change the LLC's registered agent or registered office in

Delaware, and in each case shall promptly provide notice of any of such actions

(identifying all such offices and agents) to all Members.

 

2.05 Duration of the LLC. The term of the LLC commenced on August 3,

1998, and the LLC shall have perpetual existence, unless earlier terminated in

accordance with Article IX hereof.

 

2.06 Members' Names and Addresses. The name and address of each Member

are set forth on Schedule A. Additional Members may be admitted in accordance

with the procedures specified in Article VIII. A Member may not resign from the

LLC at any time.

 

2.07 No Partnership. The LLC is not intended to be a general

partnership, limited partnership or joint venture, and no Member shall be

considered to be a partner or joint venturer of any other Member, for any

purposes other than foreign and domestic federal, state, provincial and local

income tax purposes, and this Agreement shall not be construed to suggest

otherwise.

 

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2.08 Title to LLC Property. All property owned by the LLC, whether real

or personal, tangible or intangible, shall be deemed to be owned by the LLC as

an entity, and no Member, individually, shall have any ownership of such

property. The LLC may hold any of its assets in its own name or in the name of

its nominee, which nominee may be one or more trusts. Any property held by a

nominee trust for the benefit of the LLC shall, for purposes of this Agreement,

be treated as if such property were directly owned by the LLC.

 

2.09 Nature of Member's Interest. The interests of all of the Members

in the LLC are personal property and shall not, under any circumstances, be

considered real property.

 

2.10 Investment Representations. Each Member, by execution of this

Agreement or an amendment hereto reflecting such Member's admission to the LLC,

hereby represents and warrants to the LLC that:

 

(a) It is acquiring an interest in the LLC for its own account for

investment only, and not with a view to, or for sale in connection with, any

distribution thereof in violation of the Securities Act or any rule or

regulation thereunder.

 

(b) It understands that (i) the interest in the LLC it is

acquiring has not been registered under the Securities Act or applicable state

securities laws and cannot be resold unless subsequently registered under the

Securities Act and such laws or unless an exemption from such registration is

available, (ii) such registration under the Securities Act and such laws is

unlikely at any time in the future and neither the LLC nor the Members are

obligated to file a registration statement under the Securities Act or such

laws, and (iii) the assignment, sale, transfer, exchange, or other disposition

of the interests in the LLC is restricted in accordance with the terms of this

Agreement.

 

(c) It has had such opportunity as it has deemed adequate to ask

questions of and receive answers from representatives of the LLC concerning the

LLC, and to obtain from representatives of the LLC such information which the

LLC possesses or can acquire without unreasonable effort or expense, as is

necessary to evaluate the merits and risks of an investment in the LLC.

 

(d) It has, either alone or with its professional advisers,

sufficient experience in business, financial and investment matters to be able

to evaluate the merits and risks involved in investing in the LLC and to make an

informed investment decision with respect to such investment.

 

(e) It can afford a complete loss of the value of its investment

in the LLC and is able to bear the economic risk of holding such investment for

an indefinite period.

 

(f) If it is an entity, (i) it is duly organized, validly existing

and in good standing under the laws of its jurisdiction of organization, (ii) it

has full organizational power to execute and deliver this Agreement and to

perform its obligations hereunder, (iii) its execution, delivery and performance

of this Agreement has been authorized by all requisite action on behalf of the

entity, and (iv) it has duly executed and delivered this Agreement.

 

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ARTICLE III

 

CAPITAL CONTRIBUTIONS

 

3.01 Capital Contributions.

 

(a) Each Member shall be required to contribute capital to the LLC in

accordance with this Section 3.01. In no event shall any Class A Member be

required or permitted to contribute to the LLC, in the aggregate, an amount

which exceeds such Class A Member's Maximum Contribution Obligation.

 

(b) As and when the LLC determines to make an Investment, the Members

participating in such Investment, as more fully described below (the

"Participating Members") shall be required to contribute capital to the LLC in

an aggregate amount sufficient to enable the LLC to make such Investment. Each

Participating Member shall contribute to the LLC his or her proportionate share

of the amount required to enable the LLC to make such Investment determined in

the manner hereinafter provided. Each Participating Member's proportionate share

of the total amount required shall equal a fraction, the numerator of which

shall be such Participating Member's Percentage Interest on the date on which

the capital contribution is called for, and the denominator of which shall be

the aggregate Percentage Interests of all Participating Members on such date,

provided, however, (i) that in no event shall a Class A Member be required or

permitted to contribute to the LLC any amount if such amount, together with all

amounts previously contributed by such Class A Member to the LLC would exceed

such Class A Member's Maximum Contribution Obligation, and (ii) if, as a result

of the limitation contained in the preceding clause (i), a Class A Member's

proportionate share of a particular capital call is reduced, the amount of such

capital call to be made by the Participating Class B Members as a group shall be

correspondingly increased (such increase to be allocated among such

Participating Class B Members based on their respective Percentage Interests).

As used herein, "Participating Members" means all Members of the LLC, other than

(x) Members for whom a Separation Event has occurred and (y) Class A Members who

have made aggregate capital contributions to the LLC equal to their Maximum

Contribution Obligation.

 

(c) Subject to the limitations on Class A Members specified in Section

3.01(a), the Class B Members may call for capital for other LLC purposes as they

may from time to time reasonably determine, and any capital called for pursuant

to this Section 3.01(c) shall be contributed by the Members exclusive of Members

for whom a Separation Event has occurred in proportion to their respective

Percentage Interests on the date on which such capital is called for.

 

(d) The Class B Members shall call for capital from all Members for the

purposes specified in this Section 3.01 from time to time as needed. In

connection with any such call, the Class B Members shall provide to each Member

notice of a call for capital (which notice may be given in writing or by

electronic mail), which notice shall specify the aggregate amount called for by

the LLC, a general statement of the purposes for which such capital call is

being made, each Member's share of the total amount called for, and the date on

which the capital contribution is due (which shall, to the extent reasonably

practicable, be not less than 10 days after the date of the notice).

 

(e) The LLC shall maintain written records indicating the amount of

capital contributed by each Member to the LLC.

 

(f) The LLC may elect to withhold from any amounts which are otherwise

distributable to a Member in accordance with the terms of this Agreement any

amount which such Member may be required to contribute to the LLC pursuant to

this Section 3.01. In addition, the LLC may withhold from any amounts which are

otherwise distributable to a Member in accordance with this

 

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Agreement, and pay over to the Management Company, any amount which such Member

may owe to the Management Company pursuant to certain promissory notes made by

such Member to the Management Company, which notes evidence loans made by the

Management Company to such Member in order to enable such Member to satisfy its

capital contribution obligations to the LLC.

 

3.02 No Additional Capital. Except as provided in this Article III, no

Member shall be obligated or permitted to contribute any additional capital to

the LLC. No interest shall accrue on any contributions to the capital of the

LLC, and no Member shall have the right to withdraw or to be repaid any capital

contributed by it or to receive any other payment in respect of its interest in

the LLC, including without limitation as a result of the withdrawal or

resignation of such Member from the LLC, except as specifically provided in this

Agreement.

 

3.03 Anticipated Operations of the LLC.

 

(a) As and when any Fund determines to make an investment (other than a

short-term investment), the LLC shall make an Investment in the same issuer, in

the amounts and on the terms described in Section 2.03. In connection therewith,

the Class B Members shall call for capital in accordance with Section 3.01(b),

and after such capital contributions are made, the Class B Members shall create

an Investment Schedule for such Investment, which shall be attached to this

Agreement. The Investment Schedule for each Investment shall reflect (a) the

Portfolio Company issuing the securities, (b) the acquisition date, (c) the

number and class or series of shares of such securities, (d) the purchase price

and/or other consideration payable by the LLC therefor, (e) the Investment

Percentage Interest of each of Participating Member in such Investment

(determined in the manner hereinafter provided) and (f) such other information,

if any, as the Class B Members may deem appropriate.

 

(b) The Investment Percentage Interest of each Member in each

Investment shall equal the amount of the capital contribution made by such

Participating Member to the LLC to enable the LLC to acquire such Investment

divided by the aggregate amount of the capital contributions made by all Members

to the LLC to enable the LLC to acquire such Investment.

 

3.04 Separation Event.

 

(a) Upon the occurrence of a Separation Event with respect to any

member:

 

(i) Such Member's Percentage Interest in the LLC shall, from

and after the date of the Separation Event, be reduced to zero, and the

Percentage Interest in the LLC of all Class B Members (exclusive of any

Class B Member for whom a Separation Event has occurred) shall be

increased by an aggregate amount equal to the amount of the Percentage

Interest of the Member for whom the Separation Event has occurred (such

increase to be allocated among them in proportion to their respective

Percentage Interests immediately prior to the adjustment contemplated

hereby).

 

(ii) Such Member shall not be entitled to participate in any

Investment made by the LLC from and after the date of the Separation

Event.

 

(iii) Such Member, if a Class B Member, shall have no right to

vote on or participate in any decision or matter on or in which Class B

Members are entitled to vote or participate and such Class B Member

shall be disregarded for all purposes in determining the number of

Class B Members which constitute a Majority in Number of the Class B

Members.

 

(iv) Such Member shall not be required to make any capital

contributions to the LLC from and after the date of the Separation

Event.

 

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(v) Such Member shall automatically and without any action on

the part of the LLC, such Member or any other Member, be deemed to have

withdrawn from the LLC on the first date on which the LLC no longer

owns any Investment in which such Member has an Investment Percentage

Interest.

 

The Class B Members shall make all determinations under this Section

3.04 (including determinations as to when and whether a Separation Event has

occurred, and the adjustment of the Percentage Interests of the Members in

connection therewith), in their reasonable discretion.

 

(b) Schedules A and B shall be amended as required to effectuate the

provisions of this Section 3.04(b), any such amendments to be approved by a

Majority in Number of the Class B Members and attached to this Agreement.

 

 

ARTICLE IV

 

DISTRIBUTIONS

 

4.01 Distribution of Distributable Cash and Property and Distributable

Other Cash.

 

(a) Distributable Cash and Property of the LLC shall be distributed on

an Investment by Investment basis, at such times and in such amounts as the

Class B Members may in their reasonable discretion determine. Any non-cash

distributions made to the Members shall be valued at their respective fair

market values, as determined by the Class B Members in good faith and in a

manner consistent with the valuation procedures established in the Domestic Fund

Agreement and the Foreign Fund Agreement. Distributable Other Cash shall be

distributed, in such amounts as the Class B Members may determine, not less

frequently than quarterly, within 30 days following the last day of each fiscal

quarter of the LLC.

 

(b) Subject to the provisions of Section 9.02(b) below: (i)

Distributable Cash and Property related to an Investment shall be distributed to

the Members in proportion to their respective Investment Percentage Interests in

such Investment; and (ii) Distributable Other Cash shall be distributed to the

Members in proportion to their respective Percentage Interests on the date the

LLC makes such distribution.

 

(c) The Class B Members will use reasonable efforts to cause the LLC to

distribute to each Member in each year the Tax Distribution Amount (as defined

below), which amount shall be treated as an advance against future distributions

to such Member pursuant to Section 4.01(b) above. The Tax Distribution Amount

shall equal an amount which, when added to all distributions previously made to

the Member pursuant to this Section 4.01 from the inception of the LLC, equals

the product of (i) the Member's allocable share of the net taxable income of the

LLC computed on an aggregate cumulative basis from the inception of the LLC and

(ii) the highest combined marginal rate of federal and Massachusetts state

income tax applicable to individuals for any year since the inception of the

LLC. Separate Tax Distribution Amounts shall be computed with respect to each

Investment, and, to the extent practicable, the required distribution of the Tax

Distribution Amount attributable to a particular Investment for a particular

period shall be satisfied by a distribution of Distributable Cash and Property

attributable to such Investment. To the extent that the required distribution of

the Tax Distribution Amount attributable to a particular Investment is satisfied

by a distribution of Distributable Cash and Property attributable to another

Investment, rules similar to those set forth in the parenthetical in clause (i)

and clause (ii) of the definition of "Distributable Cash and Property" shall

apply.

 

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4.02 Certain Payments to the Internal Revenue Service Treated as

Distributions.

 

(a) For purposes of this Section 4.03, the Class B Members may assume

that any Member who fails to provide to the LLC satisfactory evidence of its tax

status for United States federal income tax purposes is a foreign person taxable

as corporation.

 

(b) Notwithstanding anything to the contrary herein, to the extent that

the LLC is required, or elects, pursuant to applicable law, either (i) to pay

tax (including estimated tax) on a Member's allocable share of LLC items of

income or gain, whether or not distributed, or (ii) to withhold and pay over to

the tax authorities any portion of a distribution otherwise distributable to a

Member, the LLC may pay over such tax or such withheld amount to the tax

authorities, and such amount shall be treated as a distribution to such Member

at the time it is paid to the tax authorities. In the event that the amount paid

(or paid over) to the tax authorities on behalf of any Member exceeds the amount

which would have been distributed to such Member absent such tax obligation,

such excess shall be treated as a demand loan from the LLC to such Member, which

loan shall bear interest at the prime rate announced from time to time by The

Wall Street Journal, until paid in full.

 

4.03 Distributions in Kind. A Member, regardless of the nature of his

contribution to the LLC, shall have no right to demand or receive any

distribution from the LLC in any form other than cash. The LLC may, at any time

and from time to time, make distributions in kind to the Members. Any Member

entitled to any interest in such assets shall, unless otherwise determined by

the Members, receive separate assets of the LLC and not an interest as a

tenant-in-common with other Members so entitled in any asset being distributed.

 

 

ARTICLE V

 

ALLOCATION OF NET PROFITS AND NET LOSSES

 

5.01 Basic Allocations.

 

(a) Net Profits and Net Losses shall be computed on an Investment by

Investment basis as of the end of each fiscal year (or other relevant period).

Except as provided in Section 5.02 below (which shall be applied first), Net

Profits and Net Losses attributable to a particular Investment shall be

allocated among the Members in proportion to their respective Investment

Percentage Interests in such Investment. Net Profits and Net Losses attributable

to Other Cash Receipts shall be allocated among the Members in proportion to

their respective Percentage Interests.

 

(b) For purposes of this Article V, the amount of the Net Profits or

Net Losses from any Investment (treating all sources of Other Cash Receipts as

one Investment) shall be determined by allocating expenses incurred by the LLC

among the Investments in the same manner that expenses are allocated pursuant to

the last sentence of the definition of "Distributable Cash and Property."

 

(c) Allocations of Net Profits and Net Losses provided for in this

Section 5.01 shall generally be made as of the end of the fiscal year of the

LLC; provided, however, that allocations of items of Net Profits and Net Losses

described in clause (v) of the definition of "Net Profits" and "Net Losses"

shall be made at the time deemed realized as described in the definition of

"Capital Account."

 

5.02 Regulatory Allocations. Notwithstanding the provisions of Section

5.01 above, the following allocations of Net Profits, Net Losses and items

thereof shall be made in the following order of priority:

 

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(a) Items of income or gain (computed with the adjustments contained in

paragraphs (i), (ii) and (iii) of the definition of "Net Profits and Net

Losses") for any taxable period shall be allocated to the Members in the manner

and to the minimum extent required by the "minimum gain chargeback" provisions

of Treasury Regulation Section 1.704-2(f) and Treasury Regulation Section

1.704-2(i)(4).

 

(b) All "nonrecourse deductions" (as defined in Treasury Regulation

Section 1.704-2(b)(1)) of the LLC for any year shall be allocated to the Members

in the manner in which Net Profits and Net Losses are allocated; provided,

however, that nonrecourse deductions attributable to "partner nonrecourse debt"

(as defined in Treasury Regulation Section 1.704-2(b)(4)) shall be allocated to

the Members in accordance with the provisions of Treasury Regulation Section

1.704-2(i)(1).

 

(c) Items of income or gain (computed with the adjustments contained in

paragraphs (i), (ii) and (iii) of the definition of "Net Profits and Net

Losses") for any taxable period shall be allocated to the Members in the manner

and to the extent required by the "qualified income offset" provisions of

Treasury Regulation Section 1.704-1(b)(2)(ii)(d).

 

(d) In no event shall Net Losses of the LLC be allocated to a Member if

such allocation would cause or increase a negative balance in such Member's

Capital Account (determined for purposes of this Section 5.02(d) only, by

increasing the Member's Capital Account balance by (i) the amount the Member is

obligated to restore to the LLC pursuant to Treasury Regulation Section

1.704-1(b)(2)(ii)(c) and (ii) such Member's share of "minimum gain" and of

"partner nonrecourse debt minimum gain" as determined pursuant to Treasury

Regulation Sections 1.704-2(g) and 1.704-2(i)(5), respectively).

 

(e) Except as otherwise provided herein or as required by Code Section

704, for tax purposes, all items of income, gain, loss, deduction or credit

shall be allocated to the Members in the same manner as are Net Profits and Net

Losses; provided, however, that if the Carrying Value of any property of the LLC

differs from its adjusted basis for tax purposes, then items of income, gain,

loss, deduction or credit related to such property for tax purposes shall be

allocated among the Members so as to take account of the variation between the

adjusted basis of the property for tax purposes and its Carrying Value in the

manner provided for under Code Section 704(c).

 

(f) In the event that Net Profits, Net Losses or items thereof in

respect of any Investment are allocated to one or more Members pursuant to

subsections (a) through (d) above, subsequent Net Profit, Net Losses or items

thereof will first be allocated (subject to the provisions of subsections (a)

through (d)) to the Members in a manner designed to result in each Member having

been allocated an amount of Net Profits, Net Losses or items thereof

attributable to each Investment as such Member would have been allocated had

Section 5.02 not been contained in this Agreement.

 

ARTICLE VI

 

MANAGEMENT

 

6.01 Management of the LLC. (a) Subject to the provisions of this

Agreement and the Act, all powers shall be exercised by or under the authority

of, and the business and affairs of the LLC shall be controlled by the Members.

 

(b) Except to the extent that this Agreement specifically provides for

a higher or lower number or percentage of Members, all decisions respecting any

matter set forth herein or otherwise affecting or arising out of the conduct of

the business of the LLC shall be made by action of a Majority in Number of the

Class B Members; provided that, Class B Members with respect to whom a

Separation Event has occurred shall have no right to vote on or participate in

any matter or decision to be made by

 

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the Class B Members and shall be disregarded for all purposes in determining the

number of Class B Members which constitute a Majority in Number of the Class B

Members. Subject to the foregoing, the Class B Members shall have the exclusive

right and full authority to manage, conduct and operate the LLC business.

Specifically, but not by way of limitation, the Class B Members (by action of

such Majority in Number) shall be authorized, for and on behalf of the LLC:

 

(i) to borrow money, to issue evidences of indebtedness and to

guarantee the debts of others for whatever purposes they may specify,

and, as security therefor, to pledge or otherwise encumber the assets

of the LLC;

 

(ii) to cause to be paid on or before the due date thereof all

amounts due and payable by the LLC to any person or entity;

 

(iii) to employ such agents, employees, managers, accountants,

attorneys, consultants and other persons necessary or appropriate to

carry out the business and affairs of the LLC, whether or not any such

persons so employed are Members or are affiliated or related to any

Member, and to pay such fees, expenses, salaries, wages and other

compensation to such persons as the Members shall in their sole

discretion determine;

 

(iv) to pay, extend, renew, modify, adjust, submit to

arbitration, prosecute, defend or compromise, upon such terms as they

may determine and upon such evidence as they may deem sufficient, any

obligation, suit, liability, cause of action or claim, including taxes,

either in favor of or against the LLC;

 

(v) to pay any and all fees and to make any and all

expenditures which the Class B Members, in their discretion, deem

necessary or appropriate in connection with the organization of the

LLC, and the carrying out of its obligations and responsibilities under

this or any other Agreement;

 

(vi) to invest the assets of the LLC, and to lease, sell,

finance, refinance or dispose of all or any portion of the LLC's

property;

 

(vii) to cause the LLC to make or revoke any of the elections

referred to in Sections 108, 704, 709, 754 or 1017 of the Code or any

similar provisions enacted in lieu thereof, or in any other Section of

the Code;

 

(viii) to establish and maintain reserves for such purposes

and in such amounts as they deem appropriate from time to time;

 

(ix) to pay all organizational expenses and general and

administrative expenses of the LLC;

 

(x) to deal with, or otherwise engage in business with, or

provide services to and receive compensation therefor from, any person

who has provided or may in the future provide any services to, lend

money to, sell property to, or purchase property from the LLC,

including without limitation, a Member;

 

(xi) to engage in any kind of activity and to perform and

carry out contracts of any kind necessary to, or in connection with, or

incidental to the accomplishment of the purposes of the LLC;

 

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(xii) to compromise the obligation of a Member to make a

contribution to the capital of the LLC or to return to the LLC money or

other property paid or distributed to such Member in violation of this

Agreement or the Act;

 

(xiii) to cause to be paid any and all taxes, charges and

assessments that may be levied, assessed or imposed upon any of the

assets of the LLC, unless the same are contested by the Class B

Members; and

 

(xiv) to exercise all powers and authority granted by the Act

to members, except as otherwise specifically provided in this

Agreement.

 

(d) Any Class B Member is authorized to execute, deliver and file on

behalf of the LLC any documents to be filed with the Secretary of State of the

State of Delaware. The signature of one Class B Member on any agreement,

contract, instrument or other document shall be sufficient to bind the LLC in

respect thereof and conclusively evidence the authority of such Class B Member

and the LLC with respect thereto, and no third party need look to any other

evidence or require the joinder or consent of any other party.

 

(e) Each Class B Member is authorized to use the title "Managing

Director" when acting on behalf of the LLC in the conduct of the LLC's business.

 

(f) No Class A Member, in his or her capacity as such, shall be

authorized to act for or on behalf of or to bind the LLC.

 

 

6.02 Tax Matters Partner. Andrew J. Hajducky, III shall be the tax

matters partner for the LLC pursuant to Code Sections 6221 through 6231.

 

6.03 Liability of the Members; Indemnification.

 

(a) No Member shall be liable to the LLC or any other Member for any

act or omission taken by the Member in good faith and in the belief that such

act or omission is in the best interests of the LLC; provided that such act or

omission is not in violation of this Agreement and does not constitute

negligence, misconduct, fraud or a willful violation of law by the Member. No

Member shall be liable to the LLC or any other Member for any action taken by

any other Member, nor shall any Member (in the absence of negligence,

misconduct, fraud or a willful violation of law by the Member) be liable to the

LLC or any other Member for any action of any employee or agent of the LLC

provided that the Member shall have exercised appropriate care in the selection

and supervision of such employee or agent.

 

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(b) Each Member and its respective partners, agents, employees and

Affiliates (the "Indemnitees") shall be and hereby are (i) indemnified and held

harmless by the LLC and (ii) released by the other Members from and against any

and all claims, demands, liabilities, costs, expenses, damages, losses, suits,

proceedings and actions for which such Indemnitee has not otherwise been

reimbursed (collectively, "Liabilities"), whether judicial, administrative,

investigative or otherwise, of any nature whatsoever, known or unknown,

liquidated or unliquidated, that may accrue to the LLC or any other Member or in

which any of the Indemnitees may become involved, as a party or otherwise,

arising out of the conduct of the business or affairs of the LLC by the

respective Indemnitee or otherwise relating to this Agreement, provided that an

Indemnitee shall not be entitled to indemnification or release hereunder if it

shall have been determined by a Majority in Number of the Class B Members that

(x) such person did not act in good faith and in a manner such person reasonably

believed to be in the best interests of the LLC and, in the case of a criminal

proceeding, did not have reasonable cause to believe that its conduct was

lawful, or (y) such Liabilities shall have arisen from a violation of this

Agreement or the negligence, misconduct, fraud or willful violation of law by

such Indemnitee, or actions of such Indemnitee outside the scope of and

unauthorized by this Agreement, and provided further that an Indemnitee shall

not be entitled to indemnification hereunder with respect to any liability

arising in connection with its activities performed for or on behalf of any

Portfolio Company, the securities of which have been sold or have been

distributed to the Members pursuant to Article IV, if such activities were

performed after the date on which such securities were sold or distributed. The

termination of any proceeding by settlement shall not, of itself, create a

presumption that the Indemnitee did not act in good faith and in a manner that

such person reasonably believed to be in the best interests of the LLC or that

the Indemnitee did not have reasonable cause to believe that its conduct was

lawful. The indemnification rights provided for in this Section 6.03 shall

survive the termination of the LLC and this Agreement.

 

Expenses incurred by an Indemnitee in defense or settlement of any

claim that may be subject to a right of indemnification hereunder may be

advanced by the LLC prior to the final disposition thereof provided that the

following conditions are satisfied: (i) the claim relates to the performance of

duties or services by the Indemnitee on behalf of the LLC and (ii) the

Indemnitee undertakes to repay the advanced funds to the LLC if it is ultimately

determined that the Indemnitee is not entitled to be indemnified hereunder or

under applicable law. The right of any Indemnitee to indemnification provided

herein shall be cumulative of, and in addition to, any and all rights to which

such Indemnitee may otherwise be entitled by contract or as a matter of law or

equity and shall extend to such Indemnitee's successors, assigns and legal

representatives. The obligations of the Members under this Section 6.03(b) shall

be satisfied only after any applicable insurance proceeds have been exhausted

and then only out of LLC assets and, to the extent required by law,

distributions made by the LLC to the Members, and the Members shall have no

liability to fund any indemnification payment hereunder.

 

6.04 Liability of Members. The liability of the Members for the losses,

debts and obligations of the LLC shall be limited to their capital

contributions; provided, however, that under applicable law, the Members may

under certain circumstances be liable to the LLC to the extent of previous

distributions made to them in the event that the LLC does not have sufficient

assets to discharge its liabilities.

 

6.05 Certain Fees and Expenses. All out-of-pocket expenses reasonably

incurred by any Member in connection with the LLC's business (other than

overhead and similar expenses of any Member) shall be paid by the LLC or

reimbursed to the Member by the LLC.

 

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6.06 Other Activities.

 

(a) Subject to Section 6.06(b) below, the Members and their respective

Affiliates may engage in and possess interests in other business ventures and

investment opportunities of every kind and description, independently or with

others, including serving as directors, officers, stockholders, managers,

members and general or limited partners of corporations, partnerships or other

limited liability companies with purposes similar to or the same as those of the

LLC. Neither the LLC nor any other Member shall have any rights in or to such

ventures or opportunities or the income or profits therefrom.

 

(b) Each Member agrees that (I) during his or her employment by the

Employer, and (II) while he or she holds any interest in the LLC, such Member

will not, directly or indirectly:

 

(x) recruit, solicit or induce, or attempt to induce, any

employee or consultant of the Employer or of any Portfolio Company or

of any Affiliate of any of them to terminate his or her employment

with, or otherwise cease any relationship with, the Employer or any

Portfolio Company or any Affiliate of any of them; or

 

(y) solicit, divert, take away, or attempt to divert or take

away, any investment opportunity with respect to any Portfolio Company

or any investment opportunity with respect to any prospective

investment or prospective portfolio company which the Employer

contacted or solicited during such Member's employment relationship

with the Employer.

 

If any restriction set forth herein is found by any court to be unenforceable

because it extends for too long a period of time, or over too great a range of

activities, or over too broad a geographic area, the restriction shall be

interpreted to extend only over the maximum period of time, range of activities,

or geographic area which the court finds to be enforceable. Each Member

acknowledges and agrees that the restrictions contained in this Section 6.06(b)

are necessary for the protection of the business and goodwill of the Employer,

the Portfolio Companies and the Affiliates of any of them and are considered by

such Member to be reasonable for such purpose and that his or her interest in

the LLC is being received partly in consideration for the foregoing covenant.

 

ARTICLE VII

 

BOOKS, RECORDS AND BANK ACCOUNTS

 

7.01 Books and Records. The Class B Members shall keep or cause to be

kept just and true books of account with respect to the operations of the LLC.

Such books shall be maintained at the LLC's principal place of business, or at

such other place as the Members shall determine, and all Members, and their duly

authorized representatives, shall at all reasonable times have access to such

books as well as any information required to be made available to the Members

under the Act. The Class B Members shall not be required to deliver or mail

copies of the LLC's Certificate of Formation or copies of certificates of

amendment thereto or cancellation thereof to the Members, although such

documents shall be available for review and/or copying by the Members at the

LLC's principal place of business.

 

 

7.02 Accounting Basis and Fiscal Year. The LLC's books shall be kept on

the accrual method of accounting, or on such other method of accounting as the

Members may from time to time determine, and shall be closed and balanced at the

end of each fiscal year of the LLC. The fiscal year of the LLC shall be the

calendar year.

 

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7.03 Bank Accounts. The Class B Members shall be responsible for

causing one or more accounts to be maintained in a bank (or banks), which

accounts shall be used for the payment of the expenditures incurred by the Class

B Members in connection with the business of the LLC, and in which shall be

deposited any and all cash receipts of the LLC. All deposits and funds not

needed for the operations of the LLC may be invested in such short-term

investments as the Class B Members may determine. All such amounts shall be and

remain the property of the LLC, and shall be received, held and disbursed by the

Class B Members for the purposes specified in this Agreement. There shall not be

deposited in any of said accounts any funds other than funds belonging to the

LLC, and no other funds shall in any way be commingled with such funds.

 

7.04 Reports to Members. Within 90 days after the end of each fiscal

year, the Class B Members shall cause the LLC to furnish to each Member (i) such

information as may be needed to enable the Members to file their federal income

tax returns and any required state income tax returns, and (ii) a balance sheet

of the LLC as of the last day of such fiscal year, and financial statements of

the LLC for such fiscal year, none of which need be audited. The cost of such

reporting shall be paid by the LLC as a LLC expense. Any Member may, at any

time, at its own expense, cause an audit of the LLC books to be made by a

certified public accountant of its own selection. All expenses incurred by such

accountant shall be borne by such Member.

 

ARTICLE VIII

 

TRANSFERS OF INTERESTS OF MEMBERS

 

8.01 Substitution and Assignment of Member's Interest.

 

(a) Subject to Section 8.01(b) below, no Member may sell, transfer,

assign, pledge, hypothecate or otherwise dispose of all or any part of its

interest in the LLC (whether voluntarily, involuntarily or by operation of law),

unless a Majority in Number of the Class B Members shall have previously

consented to transfer, assignment, pledge, hypothecation or disposition in

writing, the granting or denying of which consent shall be in the Class B

Members' absolute discretion. The provisions of this Section 8.01(a) shall not

be applicable to any assignment of the interest of a Member to a Permitted

Transferee (provided that no such Permitted Transferee may be admitted to the

LLC as a substitute Member except as provided in Section 8.01(c) below).

 

(b) No assignment of the interest of a Member shall be made if, in the

opinion of counsel to the LLC, such assignment (i) may not be effected without

registration under the Securities Act of 1933, as amended, (ii) would result in

the violation of any applicable state securities laws, (iii) would result in a

termination of the LLC under Section 708 of the Code, unless such a transfer is

consented to by a Majority in Number of the Class B Members, (iv) would result

in the treatment of the LLC as an association taxable as a corporation or as a

"publicly-traded limited partnership" for tax purposes, unless such a transfer

is consented to by a Majority in Number of the Class B Members or (v) would

require the LLC or any Fund to register as an investment company under the

Investment Company Act of 1940, as amended, or as an investment advisor under

the Investment Advisors Act of 1940, as amended. The LLC shall not be required

to recognize any assignment until the instrument conveying such interest has

been delivered to the LLC for recordation on the books of the LLC. Unless an

assignee becomes a substituted Member in accordance with the provisions of

Section 8.01(c), it shall not be entitled to any of the rights granted to a

Member hereunder, other than the right to receive all or part of the share of

the Net Profits, Net Losses, distributions of cash or property or returns of

capital to which his assignor would otherwise be entitled.

 

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(c) An assignee of the interest of a Member, or any portion thereof,

shall become a substituted Member entitled to all the rights of a Member if, and

only if:

 

(i) the assignor gives the assignee such right;

 

(ii) a Majority in Number of the Class B Members consent to

such substitution, the granting or denying of which consent shall be in

the Class B Members' absolute discretion;

 

(iii) the assignee or the assignor pays to the LLC all costs

and expenses incurred in connection with such substitution, including

specifically, without limitation, costs incurred in the review and

processing of the assignment and in amending this Agreement; and

 

(iv) the assignee executes and delivers such instruments, in

form and substance satisfactory to the LLC, as may be necessary or

desirable to effect such substitution and to confirm the agreement of

the assignee to be bound by all of the terms and provisions of this

Agreement.

 

(d) The LLC and the Class B Members shall be entitled to treat the

record owner of any interest in the LLC as the absolute owner thereof in all

respects, and shall incur no liability for distributions of cash or other

property made in good faith to such owner until such time as a written

assignment of such interest has been received and accepted by the Class B

Members and recorded on the books of the LLC. The Class B Members may refuse to

accept an assignment until the end of the next successive quarterly accounting

period. In no event shall any interest in the LLC, or any portion thereof, be

sold, transferred or assigned to a minor or incompetent, and any such attempted

sale, transfer or assignment shall be void and ineffectual and shall not bind

the LLC.

 

(e) If a Member who is an individual dies or a court of competent

jurisdiction adjudges him to be incompetent to manage his person or his

property, the Member's executor, administrator, guardian, conservator or other

legal representative may exercise all of the Member's rights hereunder, but

solely for the purpose of settling his estate or administering his property, and

in no event shall such executor, administrator, guardian, conservator or legal

representative participate in any way in the conduct of the business of the LLC,

or in the making of any decision or the taking of any action provided for

hereunder (including without limitation, Section 6.01(a) or (b)) for any other

purpose. If a Member is a corporation, trust or other entity, and is dissolved

or terminated, the powers of that Member may be exercised by its legal

representative or successor.

 

8.02 Additional Members.

 

(a) Additional Class A Members may be admitted to the LLC at any time

and from time to time upon the written consent of a Majority in Number of the

Class B Members. Additional Class B Members may be admitted to the LLC at any

time and from time to time upon the written consent of a Majority in Number of

the Class B Members. Any such consent shall specify the Maximum Contribution

Obligation, if any, and/or the capital contribution, if any, and Percentage

Interest of the additional Member, and any other rights and obligations of such

additional Member. Any such approval shall bind all Members. In connection with

any such admission of an additional Member, this Agreement (including Schedules

A and B) shall be amended to reflect the additional Member, its capital

contribution, if any, its Percentage Interest, and any other rights and

obligations of the additional Member.

 

(b) In connection with any such admission of an additional Member, the

Percentage Interest or other rights and interests of the Class A Members in the

LLC shall not be diluted or otherwise modified or adjusted. Unless all Class B

Members (exclusive of those with respect to whom a Separation

 

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Event has occurred) otherwise agree in connection with the admission of any

additional Member to the LLC, the Percentage Interests of all Class B Members

(but not the Percentage Interests of the Class A Members) shall be diluted

proportionately based on their respective Percentage Interests immediately prior

to any such admission.

 

(c) Each Member, and each person who is hereinafter admitted to the LLC

as a Class B Member, hereby consents to the admission to the LLC of any such

third party on such terms as may be approved by the Class B Members in

accordance with this Section 8.02, and to any amendment to this Agreement which

may be necessary or appropriate to reflect the admission of any such third party

and the terms of its interest in the LLC. Each Class B Member acknowledges that,

in connection with any admission of any such person, such Class B Member's

interest in allocations of Net Profits and Net Losses and distributions of cash

and property of the LLC, and net proceeds upon liquidation of the LLC, may be

diluted or otherwise altered (subject to the provisions of this Section 8.02).

 

(d) Any amendment to this Agreement which shall be made in order to

effectuate the provisions of this Section 8.02 shall be executed by the number

of Class B Members required to approve the admission of the additional Member or

Members, as described in Section 8.02, and the Member being admitted to the LLC,

and any such amendment shall be binding upon all of the Members.

 

ARTICLE IX

 

DISSOLUTION AND TERMINATION

 

9.01 Events of Dissolution.

 

(a) The LLC shall be dissolved:

 

(i) on a date designated in writing by a Majority in Number of

the Class B Members;

 

(ii) upon the sale or other disposition of all of the LLC's

assets; or

 

(iii) upon the entry of a decree of judicial dissolution under

Section 18-802 of the Act.

 

(b) Dissolution of the LLC shall be effective on the day on which the

event occurs giving rise to the dissolution, but the LLC shall not terminate

until the LLC's Certificate of Formation shall have been cancelled and the

assets of the LLC shall have been distributed as provided herein.

Notwithstanding the dissolution of the LLC, prior to the termination of the LLC,

as aforesaid, the business of the LLC and the affairs of the Members, as such,

shall continue to be governed by this Agreement. A liquidator appointed by the

Class B Members (who may be a Member), shall liquidate the assets of the LLC,

and distribute the proceeds thereof as contemplated by this Agreement and cause

the cancellation of the LLC's Certificate of Formation.

 

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9.02 Distributions Upon Liquidation.

 

(a) After payment of liabilities owing to creditors, the liquidator

shall set up such reserves as it deems reasonably necessary for any contingent

or unforeseen liabilities or obligations of the LLC. Said reserves may be paid

over by such liquidator to a bank, to be held in escrow for the purpose of

paying any such contingent or unforeseen liabilities or obligations and, at the

expiration of such period as such liquidator may deem advisable, such reserves

shall be distributed to the Members or their assigns in the manner set forth in

paragraph (b) below.

 

 

(b) After paying such liabilities and providing for such reserves, the

liquidator shall cause the remaining net assets of the LLC to be distributed to

all Members with positive Capital Account balances (after such balances have

been adjusted to reflect all debits and credits required by applicable Treasury

Regulations under Section 704(b) of the Code for all events through and

including the distribution in liquidation of the LLC), in proportion to and to

the extent of such positive balances. In the event that any part of such net

assets consists of notes or accounts receivable or other non-cash assets, the

liquidator may take whatever steps it deems appropriate to convert such assets

into cash or into any other form which would facilitate the distribution

thereof. If any assets of the LLC are to be distributed in kind, such assets

shall be distributed on the basis of their fair market value net of any

liabilities. No Member shall have any right or interest in or to the name "@

Ventures" and all rights and interest in such name shall, upon termination of

the LLC, be assigned and transferred to CMGI or an Affiliate designated by CMGI.

 

ARTICLE X

 

MISCELLANEOUS

 

10.01 Notices. Except as otherwise specifically provided in this

Agreement, any and all notices, requests, elections, consents or demands

permitted or required to be made under this Agreement shall be in writing,

signed by the Member giving such notice, request, election, consent or demand,

and shall be delivered personally, or sent by registered or certified mail, or

by overnight mail, Federal Express or other similar commercial overnight

courier, to the other Member or Members at their addresses set forth in Schedule

A, and, in the case of a notice to the LLC, at the address of its principal

office as set forth in Article I hereof, or at such other address as may be

supplied by written notice given in conformity with the terms of this Section

10.01. The date of personal delivery, three days after the date of mailing, the

business day after delivery to an overnight courier, as the case may be, or the

date of actual delivery if sent by any other method (including electronic mail),

shall be the date of such notice.

 

10.02 Successors and Assigns. Subject to the restrictions on transfer

set forth herein, this Agreement, and each and every provision hereof, shall be

binding upon and shall inure to the benefit of the Members, their respective

successors, successors-in-title, heirs and assigns, and each and every

successor-in-interest to any Member, whether such successor acquires such

interest by way of gift, purchase, foreclosure, or by any other method, shall

hold such interest subject to all of the terms and provisions of this Agreement.

 

10.03 Amendments. Except as otherwise specifically provided in this

Agreement (including without limitation, Section 3.04 and Article VIII), this

Agreement may be amended or modified only by a Majority in Number of the Class B

Members; provided that (x) no such amendment shall increase the liability of,

increase the obligations of or adversely affect the interest of, any Member

without the specific approval of such Member (other than upon the occurrence of

a Separation Event, or upon admission of a Member in accordance with Section

8.02); (y) if any provision of this Agreement provides for the approval or

consent of a greater number of Members or of Members holding a higher percentage

of the total Percentage Interests of the Members, any amendment effectuated

pursuant to such provision, and

 

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<PAGE>

 

any amendment to such provision, shall require the approval or consent of such

greater number of Members or of Members holding such higher percentage of

Percentage Interests; and (z) subject to clauses (x) and (y) above, any

amendment to this Section 10.03 shall require the approval of Class B Members

holding not less than two-thirds of all Percentage Interests held by all Class B

Members.

 

10.04 Partition. The Members hereby agree that no Member nor any

successor-in-interest to any Member, shall have the right while this Agreement

remains in effect to have the property of the LLC partitioned, or to file a

complaint or institute any proceeding at law or in equity to have the property

of the LLC partitioned, and each Member, on behalf of himself, his successors,

representatives, heirs and assigns, hereby waives any such right. It is the

intention of the Members that during the term of this Agreement, the rights of

the Members and their successors-in-interest, as among themselves, shall be

governed by the terms of this Agreement, and that the right of any Member or

successor-in-interest to assign, transfer, sell or otherwise dispose of his

interest in the LLC shall be subject to the limitations and restrictions of this

Agreement.

 

10.05 No Waiver. The failure of any Member to insist upon strict

performance of a covenant hereunder or of any obligation hereunder, irrespective

of the length of time for which such failure continues, shall not be a waiver of

such Member's right to demand strict compliance in the future. No consent or

waiver, express or implied, to or of any breach or default in the performance of

any obligation hereunder, shall constitute a consent or waiver to or of any

other breach or default in the performance of the same or any other obligation

hereunder.

 

10.06 Entire Agreement. This Agreement constitutes the full and

complete agreement of the parties hereto with respect to the subject matter

hereof.

 

10.07 Captions. Titles or captions of Articles or sections contained in

this Agreement are inserted only as a matter of convenience and for reference,

and in no way define, limit, extend or describe the scope of this Agreement or

the intent of any provision hereof.

 

10.08 Counterparts. This Agreement may be executed in a number of

counterparts, all of which together shall for all purposes constitute one

Agreement, binding on all the Members notwithstanding that all Members have not

signed the same counterpart.

 

10.09 Applicable Law. This Agreement and the rights and obligations of

the parties hereunder shall be governed by and interpreted, construed and

enforced in accordance with the laws of the State of Delaware.

 

10.10 Gender, Etc. In the case of all terms used in this Agreement, the

singular shall include the plural and the masculine gender shall include the

feminine and neuter, and vice versa, as the context requires.

 

10.11 Creditors. None of the provisions of this Agreement shall be for

the benefit of or enforceable by any creditor of any Member or of the LLC other

than a Member who is such a creditor of the LLC.

 

[SIGNATURE PAGES FOLLOW.]

 

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IN WITNESS WHEREOF, the Members have signed and sworn to this Agreement

under penalties of perjury as of the date first above written.

 

CLASS A MEMBER:

 

/s/ Denise Ames

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

Denise Ames

 

/s/ Joshua Daniels

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

Joshua Daniels

 

/s/ Denise W. Marks

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

Denise W. Marks

 

/s/ Janet Veino

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

Janet Veino

 

 

CLASS B MEMBERS:

 

/s/ David S. Wetherell

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

David S. Wetherell

 

/s/ Guy A. Bradley

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

Guy A. Bradley

 

/s/ Jonathan Callaghan

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

Jonathan Callaghan

 

/s/ Andrew J. Hajducky, III

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

Andrew J. Hajducky, III

 

/s/ Peter H. Mills

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

Peter H. Mills

 

/s/ Marc Poirier

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

Marc Poirier

 

/s/ Brad Garlinghouse

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

Brad Garlinghouse

 

/s/ David Nerrow

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

David Nerrow

 

 

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