Exhibit B
NO INTEREST IN THE COMPANY HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NO INTEREST MAY BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND THE RULES AND REGULATIONS IN
EFFECT THEREUNDER AND ALL APPLICABLE STATE SECURITIES LAWS OR (B) PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER OR OTHERWISE IN COMPLIANCE WITH, THE
SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS.
MADISON RUN, LLC
OPERATING AGREEMENT
This Operating Agreement (this "Agreement") is entered into as
of the ___ day of May, 2004 (the "Effective Date"), by and among the signatories
hereto.
EXPLANATORY STATEMENT
---------------------
Madison Run, LLC (the "Company") was formed on October 17,
2003 upon the filing of the Certificate (as defined herein) with the Secretary
of State (as defined herein);
The parties have agreed to organize and operate a limited
liability company in accordance with the terms and subject to the conditions set
forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
parties, intending legally to be bound, agree as follows:
SECTION I
DEFINED TERMS
The following capitalized terms shall have the meanings
specified in this Section 1. Other terms are defined in the text of this
Agreement and shall have the meanings respectively ascribed to them.
"ACT" means the Delaware Limited Liability Company Act (6 Del.
C.ss.ss.18-101 et seq.), as amended from time to time.
"AFFILIATE" means either:
(i) with respect to any Entity:
(A) any other Person directly or indirectly
Controlling, Controlled by, or under common Control with such Entity;
(B) any other Person owning or controlling
ten percent (10%) or more of the outstanding voting interests in such Entity;
(C) any officer, employee, director, general
partner, manager, or managing member of such Entity; or
(D) any other Person that is an officer,
director, general partner, manager, managing member, or holder of ten percent
(10%) or more of the voting interests of any other Person described in
subsections (A) through (C) above; and
(ii) with respect to an individual:
(A) any other Person directly or indirectly
controlled by such individual;
(B) any parent, grandparent, adult sibling,
adult child, or adult grandchild, or the spouse, of such individual;
(C) any trust established for the benefit of
such individual, for the benefit of any minor child or minor grandchild of such
individual, or for the benefit of any other individual described in subsection
(B) above; or
(D) the testamentary estate, executor,
executrix, administrator, personal representative, heir, or devisee of such
individual.
"AGREEMENT" means this Agreement, as amended from time to
time.
"CAPITAL ACCOUNT" means the account maintained by the Company
for each Member in accordance with the following provisions:
(i) a Member's Capital Account shall be credited with
the Member's Capital Contributions and the Member's distributive share of
Profit; and
(ii) a Member's Capital Account shall be debited with
the amount of money and the fair market value of any Company property
distributed to the Member and the Member's distributive share of Loss.
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If any Interest is Transferred pursuant to the terms of this
Agreement, the transferee shall succeed to the Capital Account of the transferor
to the extent the Capital Account is attributable to the Transferred Interest.
If the book value of Company property is adjusted pursuant to Section 4.3.3, the
Capital Account of each Member shall be adjusted to reflect the aggregate
adjustment in the same manner as if the Company had recognized gain or loss
equal to the amount of such aggregate adjustment. It is intended that the
Capital Accounts of all Members shall be maintained in compliance with the
provisions of Regulation Section 1.704-1(b), and all provisions of this
Agreement relating to the maintenance of Capital Accounts shall be interpreted
and applied in a manner consistent with such Regulations.
"CAPITAL CONTRIBUTION" means the total amount of cash and the
fair market value of any other assets contributed (or deemed contributed
pursuant to Regulation Section 1.704-1(b)(2)(iv)(d)) to the Company by or on
behalf of a Member.
"CASH FLOW" means all cash derived from the operations of the
Company, less cash used to (i) pay the expenses of managing the Company's
assets, (ii) acquire new assets, and (iii) establish reasonable reserves for
future expenses and asset acquisitions, as determined by the General Manager.
"CODE" means the Internal Revenue Code of 1986, as amended, or
any corresponding provision of any succeeding law.
"COMPANY" means the limited liability company formed in
accordance with this Agreement.
"CONTROL" (or any form thereof) means ownership of more than
fifty percent (50%) of the voting interests of the Entity to which the term is
applied.
"ENTITY" means any general partnership, limited partnership,
corporation, limited liability company, joint venture, trust, business trust,
cooperative, association or other form of organization.
"GENERAL MANAGER" is the Person designated as such in Section
V.
"INSOLVENCY" means, with respect to any Person, the occurrence
of any of the events set forth in ss.18-304 of the Act.
"INTEREST" means the percentage ownership interest of a Member
in the Company, including the right of such Member to any and all benefits to
which a Member may be entitled as provided in this Agreement including, without
limitation, such Member's share of the Profits and Losses of, and the right to
receive distributions from, the Company,
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together with the obligations of such Member to comply with all of the terms and
provisions of this Agreement and of the Act.
"INVOLUNTARY MEMBER" means a Member upon the Insolvency or
divorce of such Member.
"INVOLUNTARY WITHDRAWAL" means, with respect to any Member,
the occurrence of any of the events set forth in ss.18-801(b) of the Act.
"MEMBER" means each Person signing this Agreement and any
Person who subsequently is admitted as a Member of the Company.
"NOTIFICATION" means a writing containing the information
required by this Agreement to be communicated to any Person, as provided in
Section 9.2 hereof.
"PERCENTAGE" means the percentage set forth after the Member's
name on Schedule A, as amended from time to time.
"PERSON" means any individual, Entity, or government or other
agency or political subdivision thereof, and the heirs, personal
representatives, successors and assigns of such Person.
"PROFIT" and "LOSS" means, for each taxable year of the
Company (or other period for which Profit or Loss must be computed), the
Company's taxable income or loss determined in accordance with Code Section
703(a), with the following adjustments:
(i) all items of income, gain, loss, deduction, or
credit required to be stated separately pursuant to Code Section 703(a)(1) shall
be included in computing taxable income or loss;
(ii) any tax-exempt income of the Company, not
otherwise taken into account in computing Profit or Loss, shall be included in
computing taxable income or loss; and
(iii) any expenditures of the Company described in
Code Section 705(a)(2)(B) (or treated as such pursuant to Regulation Section
1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in computing Profit
or Loss, shall be subtracted from taxable income or loss.
"REGULATIONS" means the income tax regulations, including any
temporary regulations, from time to time promulgated under the Code.
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"TRANSFER" means, when used as a noun, any voluntary sale,
hypothecation, pledge, assignment, attachment, or other transfer, and, when used
as a verb, means, voluntarily to sell, hypothecate, pledge, assign, or otherwise
transfer.
"VOLUNTARY WITHDRAWAL" means a Member's dissociation with the
Company by means other than by a Transfer or an Involuntary Withdrawal.
SECTION II
FORMATION AND NAME; PURPOSE; TERM; REGISTERED OFFICE AND REGISTERED AGENT
2.1 FORMATION. A limited liability company was formed pursuant
to the Act as of October 17, 2003, with the filing for record of that certain
Certificate of Formation (the "Certificate") with the Secretary of State of the
State of Delaware (the "Secretary of State"). A copy of the Certificate is
attached hereto as Exhibit A and made a part hereof.
2.2 NAME OF THE COMPANY. The name of the Company is "Madison
Run, LLC." The Company may do business under that name and under any other name
or names which the General Manager selects. If the Company does business under a
name other than that set forth in the Certificate, the Company shall file any
certificates or documents as required by law.
2.3 PURPOSE. The purposes for which the Company is organized
are to (i) purchase, acquire, sell, own, trade in, hold, invest in, manage and
otherwise deal in and with securities of Digital Fusion, Inc.; (ii) engage in
any lawful act or activity for which a limited liability company may be
organized under the Act; and (iii) do any and all things necessary, convenient,
or incidental to the foregoing.
2.4 TERM. The term of the Company shall commence as of the
date of filing of the Certificate with the Secretary of State, and shall
continue perpetually, unless the Company is dissolved and its affairs wound up
pursuant to Section VII hereof.
2.5 REGISTERED OFFICE. The registered office of the Company in
the State of Delaware shall be located at 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, in
the City of Wilmington, County of New Castle, 19808 or at any other place within
the State of Delaware which the General Manager selects.
2.6 REGISTERED AGENT. The name and address of the Company's
initial registered agent for service of process in the State of Delaware shall
be Corporation Service Company, 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxx, 00000.
2.7 MEMBERS. The name, present mailing address, Capital
Contribution and Percentage of each Member (as of the date hereof) are set forth
on Schedule A attached hereto and made a part hereof.
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SECTION III
MEMBERS; CAPITAL; CAPITAL ACCOUNTS; REPRESENTATIONS AND WARRANTIES
3.1 INITIAL CAPITAL CONTRIBUTION. The parties hereto
acknowledge and agree that, contemporaneously with the execution of this
Agreement, each Member contributed to the Company the respective Capital
Contribution set forth on Schedule A attached hereto.
3.2 NO OTHER CAPITAL CONTRIBUTIONS. No Member shall be
required to contribute any additional capital to the Company, and except as set
forth in the Act, no Member shall have any personal liability for any
obligations of the Company.
3.3 NO INTEREST ON CAPITAL CONTRIBUTIONS. Members shall not be
paid interest on their Capital Contributions.
3.4 RETURN OF CAPITAL CONTRIBUTIONS. Except as otherwise
provided in this Agreement, no Member shall have the right to receive the return
of any Capital Contribution.
3.5 FORM OF RETURN OF CAPITAL. If a Member is entitled to
receive a return of a Capital Contribution, the Member shall not have the right
to receive anything but cash in return of the Member's Capital Contribution.
3.6 ADDITIONAL CAPITAL CONTRIBUTIONS. The Members recognize
that the Company may have need for additional capital for its business purposes,
including the exercise of warrants. If additional Capital Contributions are
desired, the General Manager shall provide the Members with written notice of
the need for such additional Capital Contributions. In accordance with Section
3.2, no Member shall be required to contribute any additional capital to the
Company and further the Members acknowledge that they have no right to make
additional Capital Contributions to the Company to maintain their Interest in
the Company and that the General Manager, in its sole discretion, shall
determine whether the additional Capital Contribution, if any, shall be made by
an existing Member(s), and if so, in what amount, or if the additional Capital
Contribution shall be made by a Person who is to be subsequently admitted as a
Member. Notwithstanding the foregoing, the Members have no intention of allowing
a transfer of any accrued but unbooked asset appreciation or depreciation to
occur as a result of any additional Capital Contribution. Accordingly, prior to
any additional Capital Contribution, by one or more Members to the Company, the
Company shall adjust or "book up" its assets and the Capital Accounts of the
Members pursuant to Regulation Section 1.704-1(b)(2)(iv)(f). Additionally, the
Capital Account of each Member making a Capital Contribution shall be credited
with the fair market value of such contribution. Each Member's Percentage will
thereafter be equal to his/her/its Capital Account, as a percentage of the
aggregate of all Member Capital
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Accounts, each as adjusted in accordance with this Section 3.6, and Schedule A
shall be amended accordingly.
3.7 CAPITAL ACCOUNTS. A separate Capital Account shall be
maintained for each Member.
SECTION IV
PROFIT, LOSS, AND DISTRIBUTIONS
-------------------------------
4.1 PROFIT OR LOSS. Profit or Loss shall be allocated to the
Members in proportion to their Percentages.
4.2 CASH FLOW. Distributions of Cash Flow may be made by the
Company, at such times as the General Manager may determine, to the Members in
proportion to their Percentages.
4.3 LIQUIDATION AND DISSOLUTION. If the Company is liquidated,
the assets of the Company shall be distributed to the Members in accordance with
the balances in their respective Capital Accounts, after taking into account the
allocations of Profit or Loss, if any, pursuant to Section 4.1, and
distributions, if any, of Cash Flow pursuant to Section 4.2.
4.4 GENERAL.
-------
4.4.1 Except as otherwise provided in this Agreement, the
timing and amount of all distributions shall be determined by the General
Manager.
4.4.2 The General Manager shall have the right to
distribute assets of the Company in kind (including, without limitation,
warrants for securities in Digital Fusion, Inc.) prior to its liquidation or
dissolution, provided that any such distribution is a distribution by the
General Manager to each Member of his/her/its proportionate share (in proportion
to his/her/its Interest) in each such asset so distributed.
4.4.3 If the Company alters the Percentages of the Members
as a result of an additional Capital Contribution (an "Adjustment"), then in
making allocations of income, gain, loss or deduction for all periods subsequent
to the date of such Adjustment, the Company shall make such special allocations
as are necessary to ensure that the Adjustment does not affect the sharing of
income, gain, loss or deduction that has accrued before the date thereof.
4.4.4 The General Manager is hereby authorized, upon the
advice of the Company's tax counsel, to amend this Section IV to comply with the
Code and the Regulations promulgated under Code Section 704(b); provided,
however, that no
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amendment shall materially affect distributions to a Member without the Member's
prior written consent.
SECTION V
MANAGEMENT: RIGHTS, POWERS, AND DUTIES
--------------------------------------
5.1 MANAGEMENT.
-----------
5.1.1 GENERAL MANAGER. The Company shall be managed by a
General Manager who may, but need not, be a Member. Madison Run Holdings, LLC is
hereby designated to serve as the initial General Manager.
5.1.2 GENERAL POWERS. Except as set forth in Section 5.7,
the General Manager shall have full, exclusive, and complete discretion, power,
and authority, subject in all cases to the other provisions of this Agreement
and the requirements of applicable law, to manage, control, administer, and
operate the business and affairs of the Company for the purposes herein stated,
and to make all decisions affecting such business and affairs. Such power and
authority shall include the right to borrow funds to facilitate the exercise of
warrants or for other Company purposes either from a Member or a third party, or
to loan funds to a Member or a third party.
5.1.3 LIMITATION ON AUTHORITY OF MEMBERS.
-----------------------------------
5.1.3.1 No Member is an agent of the Company
solely by virtue of being a Member, and no Member has authority to act for the
Company solely by virtue of being a Member.
5.1.3.2 This Section 5.1 supersedes any authority
granted to the Members pursuant to Section 18-402 of the Act. Any Member who
takes any action or binds the Company in violation of this Section 5.1 shall be
solely responsible for any loss and expense incurred by the Company as a result
of the unauthorized action and shall indemnify and hold the Company harmless
with respect to the loss or expense.
5.1.4 REMOVAL OF GENERAL MANAGER. Upon the
unanimous consent of the Members, the Members, at any time and from time to time
and for any reason, may remove the General Manager then acting and elect a new
General Manager. The General Manager shall have the right to designate his
successor by sending a Notification to the Members.
5.2 PERSONAL SERVICES.
------------------
5.2.1 No Member shall be required to perform services for
the Company solely by virtue of being a Member. Unless approved by the General
Manager,
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no Member shall perform services for the Company or be entitled to compensation
for services performed for the Company.
5.2.2 The General Manager shall not be entitled to
compensation for services performed for the Company. However, upon
substantiation of the amount and purpose thereof, the General Manager shall be
entitled to reimbursement for expenses reasonably incurred (including, without
limitation advances made by the General Manager for the payment of legal
expenses incurred in forming and organizing the Company) in connection with the
activities of the Company. All advances for expenses made by the General Manager
shall bear interest from the date of such advance at the floating and
fluctuating rate equal to the Prime Rate in effect from time to time (as set
forth in the Wall Street Journal from time to time) plus one percent (1%).
5.3 DUTIES OF PARTIES.
------------------
5.3.1 The General Manager shall devote such time to the
business and affairs of the Company as is necessary to carry out the General
Manager's duties set forth in this Agreement.
5.3.2 Except as otherwise expressly provided in Section
5.3.3, nothing in this Agreement shall be deemed to restrict in any way the
rights of any Member to conduct any other business or activity whatsoever, and
the Member shall not be accountable to the Company or to any other Member with
respect to that business or activity even if the business or activity competes
with the Company's business. The organization of the Company shall be without
prejudice to their respective rights to maintain, expand or diversify such other
interests and activities and to receive and enjoy profits or compensation
therefrom. Each Member waives any rights the Member might otherwise have to
share or participate in such other interests or activities of any other Member.
5.3.3 Each Member understands and acknowledges that the
conduct of the Company's business may involve business dealings and undertakings
with Members and Persons related to Members. In any of those cases, those
dealings and undertakings shall be at arm's length and on commercially
reasonable terms.
5.4 LIABILITY AND INDEMNIFICATION.
------------------------------
5.4.1 The General Manager shall not be liable,
responsible, or accountable, in damages or otherwise, to any Member or to the
Company for any act performed by the General Manager within the scope of the
authority conferred on the General Manager by this Agreement, except for fraud,
gross negligence, or an intentional breach of this Agreement.
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xxxxxxxx
5.4.2 The Company hereby indemnifies the General Manager
for any act it performs within the scope of the authority conferred on him by
this Agreement, except for fraud, gross negligence, or an intentional breach of
this Agreement, provided, however, that any indemnity under this Section shall
be provided out of and to the extent of the assets of the Company only.
5.5 POWER OF ATTORNEY.
------------------
5.5.1 GRANT OF POWER. Each Member constitutes and appoints
the General Manager as the Member's true and lawful attorney-in-fact
("Attorney-in-Fact"), and in the Member's name, place and stead, to make,
execute, sign, acknowledge, and file:
5.5.1.1 one or more certificates;
5.5.1.2 all documents (including amendments to
certificates) which the Attorney-in-Fact deems appropriate to reflect any
amendment, change, or modification of this Agreement or to give effect to a
Transfer or issuance of an Interest pursuant to the terms of this Agreement;
5.5.1.3 any and all other certificates or other
instruments required to be filed by the Company under the laws of the State of
Delaware or of any other state or jurisdiction, including, without limitation,
any certificate or other instruments necessary in order for the Company to
continue to qualify as a limited liability company under the laws of the State
of Delaware;
5.5.1.4 one or more fictitious or trade name
certificates; and
5.5.1.5 all documents which may be required to
dissolve and terminate the Company and to cancel its Certificate.
5.5.2 IRREVOCABILITY. The foregoing power of attorney is
irrevocable and is coupled with an interest, and, to the extent permitted by
applicable law, shall survive the death or disability of a Member. It also shall
survive the Transfer of an Interest, except that if the transferee is approved
for admission as a Member, this power of attorney shall survive the delivery of
the assignment for the sole purpose of enabling the Attorney-in-Fact to execute,
acknowledge and file any documents needed to effectuate the substitution. Each
Member shall be bound by any representations made by the Attorney-in-Fact acting
in good faith pursuant to this power of attorney, and each Member hereby waives
any and all defenses which may be available to contest, negate or disaffirm the
action of the Attorney-in-Fact taken in good faith under this power of attorney.
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5.6 FIDUCIARY DUTIES. Notwithstanding anything in the Act or
any other provision to the contrary in this Agreement, the General Manager shall
have no fiduciary duty to the Company or to the Members.
5.7 MEETINGS OF AND VOTING BY MEMBERS.
5.7.1 A meeting of the Members may be called at any time
by the General Manager in order to amend the terms of this Agreement. Meetings
of Members shall be held at such time and such place, either within or outside
the State of Delaware, designated by the Person calling the meeting. Not less
than ten (10) nor more than ninety (90) days before each meeting, the Managing
Member shall give written notice of the meeting to each Member entitled to vote
at the meeting. The notice shall state the time, place and purpose of the
meeting. Notwithstanding the foregoing provisions, each Member who is entitled
to notice waives notice if before or after the meeting the Member signs a waiver
of the notice which is filed with the records of Members' meetings, or is
present at the meeting in person or by proxy. At a meeting of Members, the
presence in person or by proxy of Members holding more than fifty percent (50%)
of the Percentages then held by Members constitutes a quorum. A Member may vote
either in person or by written proxy signed by the Member or by its, her or his
duly authorized attorney-in-fact.
5.7.2 Except as otherwise provided in this Agreement, at
any meeting where a quorum is present, the affirmative vote of Members holding
more than fifty percent (50%) of the Percentages present in person or by proxy
at the meeting shall be required to approve the amendment of this Agreement.
5.7.3 In lieu of holding a meeting, the Members may vote
or otherwise take action to amend this Agreement by a written instrument
indicating the written consent of Members holding more than fifty percent (50%)
of the outstanding Percentages then held by Members.
SECTION VI
TRANSFER OF INTERESTS AND WITHDRAWALS OF MEMBERS
6.1 NO TRANSFER OR VOLUNTARY WITHDRAWAL. No Member may
Transfer all or any portion of his, her or its Interest, directly or indirectly,
without the prior written consent of the General Manager (which consent may be
granted or withheld in the sole and absolute discretion of the General Manager)
and satisfaction of the requirements of Section 6.2. Any Transfer in
contravention of this Section 6.1 shall be null and void. No Member shall
Voluntarily Withdraw or otherwise resign or retire from the Company without the
prior written consent of the General Manager.
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6.2 TRANSFER OR ASSIGNMENT OF MEMBER'S INTEREST. The
admission of a Transferee as a Member of the Company shall become effective only
upon receipt by the Company of (or waiver of such receipt by the General
Manager), (i) a written statement of consent by the General Manager (which
consent may be granted or withheld in the sole and absolute discretion of the
General Manager); (ii) an opinion of counsel to the Company that the admission
will not require registration of the Interest of such Transferee with the
Securities and Exchange Commission or any state securities agency; (iii) the
written agreement of the Transferee to be bound by the provisions of this
Agreement and all other applicable agreements, including without limitation the
power of attorney in favor of the General Manager, all in such form as the
General Manager shall require; and (iv) reimbursement to the Company by the
Transferee for the expense of his, her or its admission as a Member of the
Company. A Transferee shall become and may exercise the rights of a Member of
the Company only if such Transferee is admitted into the Company as a Member in
accordance with this Section 6.2. Nothing herein shall be construed to relieve a
Member Transferring its, her or his Interest in the Company of any obligations
or liabilities to the Company under this Agreement.
6.3 RIGHT OF COMPANY TO ACQUIRE INTEREST
------------------------------------
6.3.1 Notwithstanding the provisions of Section 6.1
hereof, at any time from and after the date of this Agreement, the Company shall
have the right to purchase the entire Interest of any Member (including any
Transferee of any Member who acquired an Interest pursuant to the General
Manager's written consent) by providing such Member with Notification of the
Company's intent to acquire its entire Interest and by paying the purchase price
as provided in Sections 6.3.3.
6.3.2 Closing of the sale of the Interest of a Member
("Closing"), shall, unless otherwise agreed by the Company and the withdrawing
Member, be held at the principal place of business of the Company ninety (90)
days from the date of the occurrence of any Notification referenced in Section
6.3.1.
6.3.3 If the Company gives Notification to a Member that
it intends to acquire the Member's entire Interest as provided in Section 6.3.1,
the Member shall be required to sell, and the Company shall be entitled to
purchase at the Closing, the Member's entire Interest by distributing a pro rata
share of each asset of the Company to the Member in proportion to his/her/its
Interest. For example, if the assets of Company were 100 shares of common stock
of Digital Fusion, Inc. and 100 warrants to purchase shares of common stock of
Digital Fusion, Inc., and the Member's Interest was 25% of the Company, the
Company would pay the Member 25 shares of common stock of Digital Fusion, Inc.
and 25 warrants to purchase common stock of Digital Fusion, Inc. at the Closing.
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SECTION VII
DISSOLUTION, LIQUIDATION, AND TERMINATION OF THE COMPANY
--------------------------------------------------------
7.1 EVENTS OF DISSOLUTION. The Company shall be dissolved
upon the decision of the General Manager to dissolve the Company.
7.2 INVOLUNTARY WITHDRAWALS. The Company shall not be
dissolved upon the occurrence of an Involuntary Withdrawal of a Member.
7.3 PROCEDURE FOR WINDING UP AND DISSOLUTION. If the Company
is dissolved, the General Manager shall wind up its affairs. On winding up of
the Company, the assets of the Company shall be distributed, first, to creditors
of the Company, including Members who are creditors, in satisfaction of the
liabilities of the Company, and then to the Members, in accordance with Section
4.3.
7.4 FILING OF CERTIFICATE OF CANCELLATION. If the Company is
dissolved, the General Manager shall promptly file a certificate of cancellation
with the Secretary of State. If there is no General Manager, then the
certificate of cancellation shall be filed by the remaining Members; if there
are no remaining Members, the certificate of cancellation shall be filed by the
last Person to be a Member; if there is neither a General Manager, remaining
Member or a Person who last was a Member, the certificate of cancellation shall
be filed by the legal or personal representatives of the Person who last was a
Member.
SECTION VIII
BOOKS, RECORDS, ACCOUNTING, AND TAX ELECTIONS
---------------------------------------------
8.1 BANK ACCOUNTS. All funds of the Company shall be
deposited in a bank account or accounts maintained in the Company's name. The
General Manager shall determine the institution or institutions at which the
accounts will be opened and maintained, the types of accounts, and the Persons
who will have authority with respect to the accounts and the funds therein.
8.2 BOOKS AND RECORDS.
------------------
8.2.1 The General Manager shall keep or cause to be kept
complete and accurate books and records of the Company and supporting
documentation of the transactions with respect to the conduct of the Company's
business. The records shall include, but not be limited to, complete and
accurate information regarding the state of the business and financial condition
of the Company, a copy of the certificate and operating agreement and all
amendments to the certificate and operating agreement; a current list of the
names and last known business, residence, or mailing addresses of all Members;
and the Company's federal, state and local tax returns.
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8.2.2 The books and records shall be maintained in
accordance with sound accounting practices and shall be available at the
Company's principal office for examination by any Member or the Member's duly
authorized representative at any and all reasonable times during normal business
hours.
8.2.3 Each Member shall reimburse the Company for all
costs and expenses incurred by the Company in connection with the Member's
inspection and copying of the Company's books and records.
8.3 ANNUAL ACCOUNTING PERIOD. The annual accounting period of
the Company shall be its taxable year. The Company's taxable year shall be
selected by the General Manager, subject to the requirements and limitations of
the Code.
8.4 REPORTS. Within seventy-five (75) days after the end of
each taxable year of the Company, the General Manager shall cause to be sent to
each Person who was a Member at any time during the accounting year then ended
that tax information concerning the Company which is necessary for preparing the
Member's income tax returns for that year.
8.5 TAX MATTERS PARTNER. The General Manager shall be the
Company's tax matters partner ("Tax Matters Partner"). The Tax Matters Partner
shall have all powers and responsibilities provided in Code Section 6221, et
seq. The Tax Matters Partner shall keep all Members informed of all notices from
government taxing authorities which may come to the attention of the Tax Matters
Partner. The Company shall pay and be responsible for all reasonable third-party
costs and expenses incurred by the Tax Matters Partner in performing those
duties. A Member shall be responsible for any costs incurred by the Member with
respect to any tax audit or tax-related administrative or judicial proceeding
against any Member, even though it relates to the Company. The Tax Matters
Partner may not compromise any dispute with the Internal Revenue Service without
the unanimous approval of the Members.
8.6 TAX ELECTIONS. The General Manager shall have the
authority to make all Company elections permitted under the Code, including,
without limitation, elections of methods of depreciation and an election under
Code Section 754. The decision to make or not make an election shall be at the
General Manager's sole and absolute discretion.
8.7 TITLE TO COMPANY PROPERTY.
-------------------------
8.7.1 Except as provided in Section 8.7.2, all property
acquired by the Company shall be acquired and held by the Company in its name.
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8.7.2 The General Manager may direct that legal title to
all or any portion of the Company's property be acquired or held in a name other
than the Company's name. Without limiting the foregoing, the General Manager may
cause title to be acquired and held in its name or in the names of trustees,
nominees, or straw parties for the Company. It is expressly understood and
agreed that the manner of holding title to the Company's property (or any part
thereof) is solely for the convenience of the Company, and all of that property
shall be treated as Company property.
SECTION IX
GENERAL PROVISIONS
9.1 ASSURANCES. Each Member shall execute all such
certificates and other documents and shall do all such filing, recording,
publishing and other acts as the General Manager deems appropriate to comply
with the requirements of law for the formation and operation of the Company and
to comply with any laws, rules, and regulations relating to the acquisition,
operation, or holding of the property of the Company.
9.2 NOTIFICATIONS. Any notice, demand, consent, election,
offer, approval, request, or other communication (each, a "Notification")
required or permitted under this Agreement must be in writing and either
delivered personally or sent by certified or registered mail, postage prepaid,
return receipt requested. Any Notification to be given hereunder by the Company
shall be given by the General Manager. A Notification must be addressed to a
Member at the Member's last known address on the records of the Company. A
Notification to the Company must be addressed to the Company's principal office.
A Notification delivered personally will be deemed given only when acknowledged
in writing by the person to whom it is delivered. A Notification that is sent by
mail will be deemed given three (3) business days after it is mailed. Any party
may designate, by Notification to all of the others, substitute addresses or
addressees for Notifications; and, thereafter, Notifications are to be directed
to those substitute addresses or addressees.
9.3 SPECIFIC PERFORMANCE. The parties recognize that
irreparable injury may result from a breach of any provision of this Agreement
and that money damages may be inadequate to fully remedy the injury.
Accordingly, in the event of a breach or threatened breach of one or more of the
provisions of this Agreement, any party who may be injured (in addition to any
other remedies which may be available to that party) shall be entitled to one or
more preliminary or permanent orders (i) restraining and enjoining any act which
would constitute a breach or (ii) compelling the performance of any obligation
which, if not performed, would constitute a breach.
9.4 COMPLETE AGREEMENT. This Agreement constitutes the
complete and exclusive statement of the agreement among the Members. It
supersedes all prior written and oral statements, including any prior
representation, statement, condition, or warranty.
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9.5 APPLICABLE LAW. All questions concerning the
construction, validity, and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement shall be governed by the internal
law, not the law of conflicts, of the State of Delaware.
9.6 SECTION TITLES. The headings herein are inserted as a
matter of convenience only, and do not define, limit, or describe the scope of
this Agreement or the intent of the provisions hereof.
9.7 BINDING PROVISIONS. This Agreement is binding upon, and
inures to the benefit of, the parties hereto and their respective heirs,
executors, administrators, personal and legal representatives, successors, and
permitted assigns.
9.8 JURISDICTION AND VENUE. Any suit involving any dispute or
matter arising under this Agreement may only be brought in the United States
District Court for the District of Maryland, or any Maryland State Court having
jurisdiction over the subject matter of the dispute or matter. All Members
hereby consent to the exercise of personal jurisdiction by any such court with
respect to any such proceeding.
9.9 TERMS. Common nouns and pronouns shall be deemed to refer
to the masculine, feminine, neuter, singular and plural, as the identity of the
Person may in the context require.
9.10 SEPARABILITY OF PROVISIONS. Each provision of this
Agreement shall be considered separable; and if, for any reason, any provision
or provisions herein are determined to be invalid and contrary to any existing
or future law, such invalidity shall not impair the operation of or affect those
portions of this Agreement which are valid.
9.11 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original and all of which, when taken together, constitute one and the same
document. The signature of any party to any counterpart shall be deemed a
signature to, and may be appended to, any other counterpart.
9.12 ESTOPPEL CERTIFICATE. Each Member shall, within ten (10)
days after written request by any Member or the General Manager, deliver to the
requesting Person a certificate stating, to the Member's knowledge, that: (a)
this Agreement is in full force and effect; (b) this Agreement has not been
modified except by any instrument or instruments identified in the certificate;
and (c) there is no default hereunder by the requesting Person, or if there is a
default, the nature and extent thereof. If the certificate is not received
within that ten (10) day period, the General Manager shall execute and deliver
the certificate on behalf of the requested Member, without qualification,
pursuant to the power of attorney granted in Section 5.5.
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9.13 ADDITIONAL GRANTS. The grant of an Interest to any
Member shall neither guarantee nor preclude a grant in any additional limited
liability company established by the General Manager or its Affiliates in that
year or subsequent years.
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[This space left intentionally blank.]
IN WITNESS WHEREOF, the parties have executed, or caused this
Agreement to be executed, under seal, as of the Effective Date.
ATTEST/WITNESS: GENERAL MANAGER:
MADISON RUN HOLDINGS, LLC
(SEAL) /s/ G. Xxxxxxx Xxxx (SEAL)
--------------------------- -------------------------------
G. Xxxxxxx Xxxx, Managing Member
MEMBERS:
MADISON RUN HOLDINGS, LLC
(SEAL) /s/ G. Xxxxxxx Xxxx (SEAL)
--------------------------- -------------------------------
G. Xxxxxxx Xxxx, Managing Member
(SEAL) /s/ Xxxx X. Xxxx (SEAL)
--------------------------- -------------------------------
Xxxx X. Xxxx
(SEAL) /s/ H. Xxx Xxxx, Xx. (SEAL)
--------------------------- -------------------------------
H. Xxx Xxxx, Xx.
(SEAL) /s/ Xxxxx X. Xxxxxx (SEAL)
--------------------------- -------------------------------
Xxxxx X. Xxxxxx
(SEAL) /s/ Xxxxx X. Xxxxx (SEAL)
--------------------------- -------------------------------
Xxxxx X. Xxxxx
(SEAL) /s/ Xxxxxxx X. Xxxxx (SEAL)
--------------------------- -------------------------------
Xxxxxxx X. Xxxxx
(SEAL) /s/ Xxxxxx X. Xxxxx (SEAL)
--------------------------- -------------------------------
Xxxxxx X. Xxxxx
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(SEAL) /s/ Xxxxxxxx Xxxxxx (SEAL)
--------------------------- -------------------------------
Xxxxxxxx Xxxxxx
(SEAL) /s/ Xxxxxx X. Xxxxxxx (SEAL)
--------------------------- -------------------------------
Xxxxxx X. Xxxxxxx
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SCHEDULE A
LIST OF MEMBERS, CAPITAL, AND PERCENTAGES
CAPITAL
NAME AND ADDRESS OF MEMBER CONTRIBUTION PERCENTAGE
-------------------------- ------------ ----------
MEMBERS:
Madison Run Holdings, LLC $ 110,000 24.4444%
x/x X. Xxxxxxx Xxxx
0000 H St. NW, 12th Floor
Washington, D.C., 20005
Xxxxx X. Xxxxxx $ 50,000 11.1111%
0000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Xxxxx X. Xxxxx $ 25,000 5.5556%
X.X. Xxx 000
Xxxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxx $ 50,000 11.1111%
0000 Xxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Xxxxxx X. Xxxxx $ 10,000 2.2222%
000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxxxxxx Xxxxxx $ 20,000 4.4444%
000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
Xxxx X. Xxxx $ 100,000 22.2222%
0000 Xxxxxxxxx Xxxxx - Xxxxx X
Xxxxxxxxxx, XX 00000
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FAIR MARKET VALUE OF INITIAL
NAME AND ADDRESS OF MEMBER CAPITAL CONTRIBUTION PERCENTAGE
-------------------------- ---------------------------- ----------
H. Xxx Xxxx, Xx. $ 35,000 7.7778%
0000 Xxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx $ 50,000 11.1111%
0000 Xxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Total $ 450,000 99.9999%
========
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EXHIBIT A
CERTIFICATE OF FORMATION
OF
MADISON RUN, LLC
THIS CERTIFICATE OF FORMATION of Madison Run, LLC (the
"Company") is being executed by the undersigned for the purpose of forming a
limited liability company pursuant to the Delaware Limited Liability Company
Act.
FIRST: The name of the Company is:
MADISON RUN, LLC
SECOND: The Company's registered office in the State of
Delaware is located at 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000,
and its registered agent at such address is Corporation Service Company.
IN WITNESS WHEREOF, the undersigned, being an authorized
person of the Company, has executed this Certificate of Formation on this 17th
day of October, 2003.
/s/ Xxxxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxxxx X. Xxxxxxxx, Authorized Person
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