EXHIBIT 10.2
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
INSIGHTEXPRESS, L.L.C.
Dated as of October 18, 1999
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TABLE OF CONTENTS
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Article 1
Definitions .....................................................1
Section 1.1 Certain Definitions................................1
Section 1.2 Glossary...........................................6
Article 2
Continuation of Company..........................................8
Section 2.1 Continuation.......................................8
Section 2.2 Name...............................................8
Section 2.3 Effective Date; Term...............................8
Section 2.4 Principal Place of Business........................8
Section 2.5 Registered Office and Rent.........................8
Section 2.6 Filings............................................8
Section 2.7 Purpose............................................9
Section 2.8 Powers.............................................9
Article 3
Interests; Commitments; Closing; Contributions..................10
Section 3.1 Interests.........................................10
Section 3.2 Capital Contributions.............................11
Section 3.3 Additional Mandatory Capital Contributions........11
Article 4
Capital Accounts; Allocations; Distributions....................11
Section 4.1 Capital Accounts..................................11
Section 4.2 Allocation of Net Income..........................12
Section 4.3 Allocation of Net Loss............................12
Section 4.4 Additional Allocation Provisions..................13
Section 4.5 Distributions.....................................16
Section 4.6 Tax Distributions.................................16
Section 4.7 Distributions in Cash.............................16
Section 4.8 Restrictions on Distributions.....................16
Article 5
Board of Representatives........................................17
Section 5.1 General...........................................17
Section 5.2 The Board.........................................17
Section 5.3 Meetings..........................................18
Section 5.4 Quorum............................................18
Section 5.5 Voting; Proxies...................................18
Section 5.6 Fiduciary Duties. ...............................19
Section 5.7 Committees of the Board...........................19
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Article 6
Officers........................................................20
Section 6.1 Executive Officers................................20
Section 6.2 Other Officers....................................20
Section 6.3 Term of Office....................................21
Section 6.4 Removal of Officers...............................21
Section 6.5 Vacancies.........................................21
Section 6.6 Compensation of Officers..........................21
Section 6.7 Chairman and Chief Executive Officer..............21
Section 6.8 Chairman Emeritus and Vice Chairmen of the Board..22
Section 6.9 President.........................................22
Section 6.10 Chief Operating Officer...........................22
Section 6.11 Executive Vice Presidents, Senior Vice Presidents
and Vice Presidents Elected by the Board..........23
Section 6.12 Secretary.........................................23
Section 6.13 Treasurer.........................................23
Section 6.14 Powers and Duties of Other Officers...............24
Article 7
Members.........................................................24
Section 7.1 Members...........................................24
Section 7.2 Admission of New Members..........................24
Section 7.3 Power of Members..................................24
Section 7.4 Meetings..........................................24
Section 7.5 Quorum and Voting.................................25
Section 7.6 Actions Without a Meeting.........................25
Section 7.7 Authorized Representatives........................25
Section 7.8 Resignation.......................................26
Article 8
Accounting; Financial and Tax Matters...........................26
Section 8.1 Accounting Method.................................26
Section 8.2 Accounting Records................................26
Section 8.3 Financial Statements..............................26
Section 8.4 Bank and Investment Accounts......................27
Section 8.5 Tax Matters Partner...............................27
Section 8.6 Taxes.............................................27
Section 8.7 Accounting Decisions..............................28
Article 9
Liability; Exculpation; Indemnification.........................28
Section 9.1 Liability of Members; Limitation of Liability.....28
Section 9.2 Exculpation.......................................29
Section 9.3 Duties and Liabilities of Covered Persons.........29
Section 9.4 Indemnification by IX, L.L.C......................30
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Section 9.5 Insurance.........................................31
Section 9.6 Notice and Opportunity to Defend..................32
Article 10
Certain Covenants...............................................32
Section 10.1 Other Businesses of the Members...................32
Article 11
Transfers.......................................................33
Section 11.1 General Restrictions..............................33
Section 11.2 Additional Conditions to Transfers................33
Section 11.3 Effect of Transfer................................33
Section 11.4 Endorsement of Certificates.......................33
Section 11.5 Improper Transfer.................................34
Article 12
Representations and Warranties..................................34
Section 12.1 Due Organization and Authority....................34
Section 12.2 Authority to Execute and Perform Agreement........35
Article 13
Termination; Dissolution; Liquidation and Winding-Up............35
Section 13.1 Termination of IX, L.L.C..........................35
Section 13.2 Events of Dissolution.............................35
Section 13.3 Liquidation and Winding-Up........................36
Section 13.4 Survival After Termination........................37
Section 13.5 Claims of the Members.............................37
Article 14
Miscellaneous...................................................37
Section 14.1 Governing Law.....................................37
Section 14.2 Consent to Jurisdiction and Service of Process....37
Section 14.3 Cooperation.......................................37
Section 14.4 Notice............................................38
Section 14.5 Assignment........................................38
Section 14.6 No Agency.........................................38
Section 14.7 Entire Agreement; No Waiver.......................38
Section 14.8 Preservation of Remedies..........................38
Section 14.9 No Right to Partition.............................39
Section 14.10 Severability......................................39
Section 14.11 Counterparts......................................39
Section 14.12 Fees and Expenses.................................39
Section 14.13 Amendments........................................39
Section 14.14 Interpretation....................................40
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Schedule IA Percentage Interests, Capital Contributions and Class
of Membership Interest
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Amended and Restated Limited Liability Company Operating Agreement
(this "Agreement") of InsightExpress, L.L.C., a Delaware limited liability
company ("IX, L.L.C."), dated as of October 18, 1999, among IX, Inc., a Delaware
corporation ("IX, Inc."), IX Holding Co., Inc., a Delaware corporation ("IX
Holding"), and Xxxxxxxxx & Co., LLC, a New York limited liability company
("Greenhill"). IX, Inc., IX Holding and Greenhill are hereinafter sometimes
referred to collectively, with all such other Persons who from time to time
become members pursuant to this Agreement, as the "Members."
WHEREAS, IX, L.L.C. was formed on August 12, 1999, pursuant to the
Delaware Limited Liability Company Act (6 Del. C. ss. 18-101, et seq.), as
amended from time to time (the "Act"), and the Members desire to amend and
restate that certain Limited Liability Company Operating Agreement of IX,
L.L.C., dated as of August 30, 1999 (the "Operating Agreement"), to set forth
the terms and conditions with respect to a new capital investment in IX, L.L.C.
by IX Holding; and
WHEREAS, IX, Inc. and IX Holding are establishing IX, L.L.C. to
engage in the business (the "Business") of exploiting certain software and
intellectual property which enables customers to conduct market research via the
Internet in an automated manner.
NOW, THEREFORE, in consideration of the mutual promises, covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Members hereby
respectively covenant and agree that the Operating Agreement is amended and
restated in its entirety as follows:
Article 1
Definitions
Section 1.1 Certain Definitions. As used in this Agreement, the
following terms have the following meanings:
"Adjusted Capital Account Deficit" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant fiscal year, after giving effect to the following
adjustments:
(A) decrease such deficit by any amounts which such Member is
obligated to restore pursuant to this Agreement or is deemed to be
obligated to restore pursuant to the penultimate sentence of each of ss.
1.704- 2(i)(5) and 1.704-2(g) of the Treasury Regulations; and
(B) increase such deficit by the items described in ss. 1.704
1(b)(2)(i)(d)(4), (5) and (6) of the Treasury Regulations.
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The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of ss. 1.704-1(b)(2)(ii)(d) of the
Treasury Regulations and shall be interpreted consistently therewith.
"Affiliate(s)" means, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and business of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Business Day" means a day that is not a Saturday, Sunday or day on
which banking institutions in the State of New York are not required to be open.
"Certificate" means the certificate of formation of IX, L.L.C. and
any amendments thereto and restatements thereof filed on behalf of IX, L.L.C.
with the office of the Secretary of State of the State of Delaware pursuant to
the Act.
"Class A Interest" means an Interest which entitles its holder to
allocations under Sections 4.2(a) and 4.3(a).
"Class B Interest" means an interest other than a Class A Interest.
"Code" means the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Company Minimum Gain" means "partnership minimum gain," as defined
in ss. 1.704-2(b)(2) of the Treasury Regulations, and shall be determined in
accordance with ss. 1.704-2(d) of the Treasury Regulations.
"Depreciation" means, with respect to any fiscal year, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for Federal income tax purposes, except that
if the Gross Asset Value of the asset differs from its adjusted tax basis,
Depreciation shall be determined in accordance with the methods used for Federal
income tax purposes and shall equal the amount that bears the same ratio to the
Gross Asset Value of such asset as the depreciation, amortization or other cost
recovery deduction computed for Federal income tax purposes with respect to such
asset bears to the adjusted Federal income tax basis of such asset; provided,
however, that if any such asset that is depreciable or amortizable has an
adjusted federal income tax basis of zero, the rate of Depreciation shall be as
determined by the Tax Matters Partner.
"Effective Tax Rate" shall mean, for any year, the percentage
determined by the Tax Matters Partner, subject to the approval of IX Holding,
which
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approval shall not be unreasonably withheld, to be a reasonable estimate of the
highest marginal combined Federal, state and local income tax rate (giving
effect to the deduction of state and local income taxes, as applicable, for
Federal and state income tax purposes), applicable to individuals residing in
New York City, with respect to the taxable income allocated to the Members by
IX, L.L.C. for Federal income tax purposes.
"Excess Capital Account" of a Member shall mean the excess, if any,
of (x) the balance of the Capital Account of such member over (y) the initial
capital contribution of such Member plus, in the case of IX Holding, any portion
of the 6% simple interest on its Capital Contributions reflected in its Capital
Account as a result of the adjustments pursuant to Section 3.3(b)(i).
"Fair Market Value" means, with respect to any asset, the cash
purchase price which a willing buyer, under no compulsion to buy, would pay for
such asset to a willing seller, under no compulsion to sell. Such cash purchase
price shall be determined in good faith by the Tax Matters Partner; provided,
however, that if any Member objects to such determination, the matter shall be
submitted to an independent appraiser or valuation consultant, selected by IX,
Inc., subject to the approval of IX Holding, which approval shall not be
unreasonably withheld. The fees and costs of such appraiser or consultant shall
be paid by the objecting Member, unless the price as determined by such third
party varies by more than 5% from the price determined by the Tax Matters
Partner, in which event the Tax Matters Partner shall pay such fees and costs.
"Final Determination" means (i) a decision, judgment, decree or
other order by a court of original jurisdiction which has become final (i.e.,
the time for filing an appeal shall have expired), (ii) a closing agreement made
under Section 7121 of the Code or any other settlement agreement entered into in
connection with an administrative or judicial proceeding, (iii) the expiration
of the time for instituting a claim for refund, or if a claim was filed, the
expiration of the time for instituting suit with respect thereto, or (iv) in any
case where judicial review shall be unavailable, a decision, judgment, decree or
other order of an administrative official or agency which has become final.
"GAAP" means generally accepted accounting principles as in effect
in the United States from time to time.
"Governmental Agency" means the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative function of or
pertaining to government, and any Person owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
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"Gross Asset Value" means, with respect to any asset, such asset's
adjusted basis for Federal income tax purposes, except that (a) the initial
Gross Asset Value of any asset contributed to IX, L.L.C. shall be its gross fair
market value (as reasonably determined by the Tax Matters Partner) at the time
such asset is contributed or deemed contributed for purposes of computing
Capital Accounts, (b) upon a change in the Members' Percentage Interests, if the
Tax Matters Partner determines that such adjustment should be made, the Gross
Asset Value of all of the assets of IX, L.L.C. shall be adjusted to equal their
respective gross fair market values (as reasonably determined by the Tax Matters
Partner), (c) the Gross Asset Value of any asset distributed in kind to any
Member shall be the gross fair market value of such asset (as reasonably
determined by the Tax Matters Partner) on the date of such distribution, (d) the
Gross Asset Value of any asset determined pursuant to clause (a) or (b) above
shall thereafter be adjusted from time to time by the Depreciation taken into
account with respect to such asset for purposes of determining Net Income or Net
Loss, and (e) the Gross Asset Value of any IX, L.L.C. assets shall be increased
or decreased to the extent required by ss. 1.704-1(b)(2)(iv)(m) in the event
that the adjusted tax basis of such assets are adjusted pursuant to ss. 732, 734
or 743 of the Code.
"Interest" means the entire ownership interest of a Member in IX,
L.L.C. at any time, including such Member's share of Net Income and Net Loss,
such Member's rights to receive distributions and other benefits to which such
Member may be entitled hereunder and under the Act, and the obligations of such
Member to comply with the applicable terms and provisions of this Agreement.
"Member Minimum Gain" means "partner nonrecourse debt minimum gain,"
as defined in ss. 1.704-2(i)(2) of the Treasury Regulations, and shall be
determined in accordance with ss. 1.704-2(i)(3) of the Treasury Regulations.
"Member Nonrecourse Debt" means "partner nonrecourse debt," as
defined in ss. 1.704-2(b)(4) of the Treasury Regulations.
"Member Nonrecourse Deductions" means "partner nonrecourse
deductions," as defined in ss. 1.704-2(i)(1) of the Treasury Regulations, and
shall be determined in accordance with ss. 1.704-2(i)(2) of the Treasury
Regulations.
"Net Income" or "Net Loss" means, with respect to any fiscal year,
an amount equal to the taxable income or loss of IX, L.L.C. as determined for
federal income tax purposes in accordance with ss. 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be separately
stated under ss. 703(a)(1) shall be included in taxable income or loss), with
the following adjustments:
(a) Such taxable income or loss shall be increased by the
amount, if any, of tax-exempt income received or accrued by IX, L.L.C.;
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(b) Such taxable income or loss shall be reduced by the
amount, if any, of all expenditures of IX, L.L.C. described in Section
705(a)(2)(B) of the Code, including expenditures treated as described therein
under ss. 1.704(b)(2)(iv)(i) of the Treasury Regulations;
(c) If the Gross Asset Value of any asset is adjusted
pursuant to clause (b) or (c) of the definition of Gross Asset Value, the amount
of such adjust ment shall be taken into account, immediately prior to the event
giving rise to such adjustment, as gain or loss from the disposition of such
asset for purposes of computing Net Income or Net Loss;
(d) Gain or loss resulting from any disposition of any asset
with respect to which gain or loss is recognized for Federal income tax purposes
shall be computed by reference to the Gross Asset Value of the asset disposed
of, notwithstanding that such Gross Asset Value differs from the adjusted tax
basis of such asset;
(e) In lieu of the depreciation, amortization, or other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year; and
(f) Notwithstanding any other provision of this definition,
any items that are specially allocated pursuant to Section 4.4(a) hereof shall
not be taken into account in computing Net Income and Net Loss.
"Nonrecourse Deductions" shall have the meaning set forth in ss.
1.704-2(b)(1) of the Treasury Regulations. The amount of Nonrecourse Deductions
for any year equals the excess, if any, of the net increase in the amount of
Company Minimum Gain during such year over the aggregate amount of any
distributions during such year of proceeds of a Nonrecourse Liability that are
allocable to an increase in Company Minimum Gain, determined in accordance with
ss. 1.704-2(c) of the Treasury Regulations.
"Nonrecourse Liability" shall have the meaning set forth in
ss. 1.704-2(b)(3) of the Treasury Regulations.
"Percentage Interest" means, with respect to each Member, the
percentage set forth opposite such Member's name under the heading "Percentage
Interest" on Schedule IA, as it may be from time to time amended.
"Person" means any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
estate, unincorporated organization, Governmental Agency or other entity.
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"Securities Act" means the U.S. Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Tax Matters Partner" means IX, Inc. or any successor Tax Matters
Partner elected in accordance with Section 8.5.
"Transfer" means, as a verb, to directly or indirectly, sell,
convey, exchange, pledge, lease, hypothecate, mortgage, create a security
interest in or other lien, gift, encumber, transfer, assign or otherwise dispose
of, and, as a noun, has a meaning correlative to the foregoing. "Transferor" and
"Transferee" have correlative meanings.
"Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time.
Section 1.2 Glossary. The following capitalized terms are defined in
the following Sections of the Agreement:
Term Section
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Act introductory statement
Adjusted Capital Account Deficit 1.1
Affiliate(s) 1.1
Affiliate Transaction 5.5(b)
Agreement introductory statement
Asserted Liability 9.6(a)
Board 5.1
Business introductory statement
Business Day 1.1
Capital Account 4.1(a)
Capital Contribution 3.2
Certificate 1.1
Claims Notice 9.6(a)
Class A Interest 1.1
Class B Interest 1.1
Code 1.1
Company Minimum Gain 1.1
Covered Person 9.2(a)
Depreciation 1.1
Dissolution Event 13.2
Effective Date 2.3
Effective Tax Rate 1.1
Excess Capital Account 1.1
Executive Office 6.1
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Term Section
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Executive Officers 6.1
Fair Market Value 1.1
Final Determination 1.1
GAAP 1.1
Governmental Agency 1.1
Greenhill introductory statement
Gross Asset Value 1.1
Indemnifying Party 9.6(a)
Interest 1.1
IX Holding introductory statement
IX, Inc. introductory statement
IX, L.L.C. introductory statement
License Agreement 14.13(b)
Losses 9.2(b)
Master Investors Rights Agreement 2.9(b)
Member Minimum Gain 1.1
Member Nonrecourse Debt 1.1
Member Nonrecourse Deductions 1.1
Members introductory statement
Modification of an Affiliate Transaction 5.5(b)
Net Income 1.1
Net Loss 1.1
Nonrecourse Deductions 1.1
Nonrecourse Liability 1.1
Operating Agreement introductory statement
Other Office 6.2
Other Officers 6.2
Percentage Interest 1.1
Person 1.1
Post-Amendment Period 4.2
Regulatory Allocations 4.4(a)(viii)
Representative 5.2(a)(ii)
Securities Act 1.1
Tax Matters Partner 1.1
Term 13.1
Transfer 1.1
Transferee 1.1
Transferor 1.1
Treasury Regulations 1.1
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Article 2
Continuation of Company
Section 2.1 Continuation. IX, Inc. formed IX, L.L.C. as a limited
liability company under and pursuant to the provisions of the Act by filing a
Certificate of Formation with the Office of the Secretary of State of the State
of Delaware on August 12, 1999 and, along with IX Holding, hereby agrees to
continue IX, L.L.C. as a limited liability company under and pursuant to the
provisions of the Act. The Members hereby agree that IX, L.L.C. shall be
governed by, and the rights, duties and liabilities of the Members shall be as
provided in, the Act and this Agreement.
Section 2.2 Name. The name of IX, L.L.C. shall be "InsightExpress,
L.L.C."
Section 2.3 Effective Date; Term. This Agreement shall become
effective upon the execution of this Agreement by IX, Inc., IX Holding and
Greenhill (the "Effective Date"), and shall only be deemed to be in full force
and effect from and after such date. IX, L.L.C. shall continue in existence
until it is dissolved and its affairs wound up in accordance with the Act and
this Agreement or until it is terminated as provided in the Act or this
Agreement.
Section 2.4 Principal Place of Business. The principal place of
business of IX, L.L.C. shall be at 0 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, XX
00000-0000 or at such other place as the Board shall determine from time to
time. IX, L.L.C. may have other offices, either within or outside of the State
of Delaware, at such place or places as the Board may from time to time
designate or the business of IX, L.L.C. may require.
Section 2.5 Registered Office and Rent. The address of IX, L.L.C.'s
registered office in Delaware shall be c/o The Corporation Trust Company, 0000
Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000. The name and address of the registered
agent of IX, L.L.C. for service of process on IX, L.L.C. in the State of
Delaware initially is The Corporation Trust Company, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000. Such registered office and agent may be changed from time
to time by the Chief Executive Officer.
Section 2.6 Filings. The Board promptly shall cause the execution
and delivery of such documents and performance of such acts consistent with the
terms of this Agreement as may be necessary to comply with the requirements of
law for the formation, qualification and operation of a limited liability
company under the laws of each jurisdiction in which IX, L.L.C. shall conduct
business. All expenses of such filings shall be borne by IX, L.L.C.
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Section 2.7 Purpose. IX, L.L.C. is formed for the purpose of
engaging in (i) the Business, (ii) any and all activities and transactions which
are related thereto or necessary, convenient, desirable or incidental to the
foregoing as the Board may determine from time to time and (iii) any and all
activities and transactions for which a limited liability company may be
organized under the Act.
Section 2.8 Powers. Subject to Article 5 and except as otherwise
limited in this Agreement,
(a) IX, L.L.C. shall have the power and authority to do any
and all acts necessary, appropriate, proper, advisable, convenient or incidental
to or for the furtherance of the purpose set forth in Section 2.8, including:
(i) to conduct its business, carry on its operations and
have and exercise the powers granted to a limited liability company by the
Act in any state, territory, district or possession of the United States,
or in any foreign country that may be necessary, appropriate, proper,
advisable, convenient or incidental to or for the furtherance of the
purpose of IX, L.L.C.;
(ii) to acquire by purchase, contribution of property or
otherwise own, hold, operate, maintain, finance, improve, demolish or
Transfer any real or personal property that may be necessary, appropriate,
proper, advisable, convenient or incidental to or for the furtherance of
the purpose of IX, L.L.C.;
(iii) to enter into, perform and carry out contracts of
any kind, including contracts with any Member or any Affiliate thereof, or
any agent of IX, L.L.C. necessary to, in connection with, convenient to,
or incidental to or for the furtherance of the purpose of IX, L.L.C.;
(iv) to purchase, take, receive, subscribe for or
otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend,
pledge, or otherwise dispose of, and otherwise use and deal in and with,
shares or other interests in or obligations of domestic or foreign
corporations, associations, general or limited partnerships (including the
power to be admitted as a partner thereof and to exercise the rights and
perform the duties created thereby), trusts, limited liability companies
(including the power to be admitted as a member or appointed as a manager
thereof and to exercise the rights and perform the duties created
thereby), or individuals or direct or indirect obligations of the United
States or of any other Governmental Agency;
(v) to lend money for any proper purpose, to invest and
reinvest funds and to take and hold real and personal property for the
payment of funds so loaned or invested;
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(vi) to xxx and be sued, complain and defend and
participate in administrative or other proceedings, in its name;
(vii) to appoint employees and agents of IX, L.L.C.,
define their duties and fix their compensation;
(viii) to indemnify any Person in accordance with the Act
and to obtain any and all types of insurance;
(ix) to cease its activities and cancel its Certificate;
(x) to negotiate, enter into, renegotiate, extend, renew,
terminate, modify, amend, waive, execute, acknowledge or take any other
action with respect to any lease, contract or security agreement in
respect of any assets of IX, L.L.C.;
(xi) to borrow money and issue evidences of indebtedness,
and to secure the same by a mortgage, pledge or other lien on the assets
of IX, L.L.C.;
(xii) to pay, collect, compromise, litigate, arbitrate or
otherwise adjust or settle any and all other claims or demands of or
against IX, L.L.C. or to hold such proceeds against the payment of
contingent liabilities; and
(xiii) to make, execute, acknowledge and file any and all
documents or instruments necessary, convenient or incidental to or for the
furtherance of the purpose of IX, L.L.C.
(b) Subject to the terms of the Master Investors Rights
Agreement, dated as of October 18, 1999 (the "Master Investors Rights
Agreement"), by and among IX, L.L.C., IX, Inc., IX Holding and the other persons
named therein, IX, L.L.C. may merge with, or consolidate into, another Delaware
limited liability company or "other business entity" (as defined in Section
18-209(a) of the Act) upon the approval of the Board.
Article 3
Interests; Commitments; Closing; Contributions
Section 3.1 Interests.
(a) Each Member's Interest shall entitle such Member to an
interest in the income, losses and distributions of IX, L.L.C. in accordance
with Article 4.
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(b) A Member's Interest shall for all purposes be personal
property. A Member has no interest in specific property of IX, L.L.C.
Section 3.2 Capital Contributions. Each of the Members has
contributed to IX, L.L.C. in exchange for a Class A Interest or Class B
Interest, as set forth on Schedule IA hereto, the amount set forth opposite such
Member's name under the heading "Capital Contribution" on Schedule IA hereto (in
each case, such Member's "Capital Contribution").
Section 3.3 Additional Mandatory Capital Contributions. (a) No
Member shall have any obligation to make any additional contributions to the
capital of IX, L.L.C.
(b) Notwithstanding any other provision in this Section 3.3,
as provided in Section 8.5 of the Master Investors Rights Agreement, upon the
exercise of any management option in IX Holding, IX Holding shall be obligated
to contribute the amount of the exercise price of such option to IX, L.L.C. At
the time of any such contribution, (x) the adjustment to the Members' Capital
Accounts pursuant to clause (c) of the definition of Net Income shall be made in
such a way as to cause IX Holding's and Xxxxxxxxx'x respective Capital Account
balances to be consistent with the principles set forth in Exhibit A to the
License Agreement, and (y) the Members' respective Percentage Interests shall be
adjusted such that (i) the Percentage Interest of IX Holding shall be equal to a
fraction, the numerator of which is equal to the aggregate capital contribution
of IX Holding and the denominator of which is equal to the aggregate capital
contributions of all of the Members and (ii) the aggregate Percentage Interests
of IX, Inc. and Xxxxxxxxx are equal to a fraction, the numerator of which is
equal to the aggregate capital contributions of IX, Inc. and Xxxxxxxxx and the
denominator of which is equal to the aggregate capital contributions of all of
the Members, and reduction in their aggregate Percentage Interests to be
allocated between them in proportion to their respective Percentage Interests
immediately prior to adjustment. .
Article 4
Capital Accounts; Allocations; Distributions
Section 4.1 Capital Accounts.
(a) There shall be established for each Member on the books of
IX, L.L.C. a capital account (the "Capital Account") reflecting the excess
(deficit) of (a) the sum of (i) such Member's aggregate capital contributions,
(ii) such Member's share of Net Income and any items in the nature of income or
gain that are specifically allocated to such Member and (iii) the amount of any
IX, L.L.C. liabilities assumed by such Member or which are secured by any
property distributed
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to such Member over (b) the sum of (i) such Member's share of Net Losses and any
items in the nature of losses or expenses that are specifically allocated to
such Member, (ii) any distributions to such Member and (iii) liabilities of such
Member assumed by IX, L.L.C. or which are secured by any property contributed by
such Member to IX, L.L.C. In determining the amount of any liability for
purposes of this Section 4.1, there shall be taken into account ss. 752(c) of
the Code and any other applicable provisions of the Code and Treasury
Regulations.
(b) Notwithstanding any other provision in this Section 4.1 or
elsewhere in this Agreement, each Member's Capital Account shall be maintained
and adjusted in accordance with the Code and the Treasury Regulations
thereunder, including xx.xx. 1.704-1(b)(2)(iv) and 1.704-2 of the Treasury
Regulations. It is intended that appropriate adjustments shall thereby be made
to Capital Accounts to give effect to any income, gain, loss or deduction (or
items thereof) that is allocated pursuant to this Agreement.
Section 4.2 Allocation of Net Income. Except as otherwise provided
in this Article 4, Net Income of IX, L.L.C. for any period beginning as of the
effectiveness of this Agreement (a "Post-Amendment Period") shall be allocated
as follows and in the following order of priority:
(a) First, to the Class A Interest holder, to reverse prior
allocations of Net Loss pursuant to Section 4.3(a), until such Class A Interest
holder has received aggregate allocations of Net Income pursuant to this Section
4.2(a) for the current and all prior periods sufficient to offset any Net Loss
allocated to such Member pursuant to Section 4.3(a) for all prior periods; and
(b) Thereafter, to the Members, in accordance with their
respective Percentage Interests.
(c) Notwithstanding the foregoing, if immediately following
any Capital Contribution and adjustments described in Section 3.3(b) the
Percentage Interest of IX Holding is greater than the percentage determined by
dividing the Excess Capital Account of IX Holding by the aggregate Excess
Capital Accounts of all Members (determined in each case after taking into
account the adjustment referred to in clause (c) of the definition of Net
Income), then all Net Income of IX, L.L.C. shall be allocated to IX Holding
until such percentage is equal to the Percentage Interest of IX Holding.
Section 4.3 Allocation of Net Loss. Except as otherwise provided in
this Article 4, Net Loss of IX, L.L.C. for any fiscal period shall be allocated
as follows and in the following order of priority:
(a) First, to the Class A Interest holder until such Class A
Interest holder has received aggregate allocations of Net Loss pursuant to this
Section
13
4.3(a) in excess of such Class A Interest holder's aggregate allocations of Net
Income pursuant to Section 4.2(a) for the current and all prior periods in an
amount equal to $25 million; and
(b) Thereafter, to the Members in accordance with their
respective Percentage Interests.
Section 4.4 Additional Allocation Provisions.
(a) Regulatory Allocations. Notwithstanding the foregoing
provisions of this Article 4, the following special allocations shall be made in
the following order of priority:
(i) If there is a net decrease in Company Minimum Gain
during a IX, L.L.C. taxable year, then each Member shall be allocated
items of IX, L.L.C. income and gain for such taxable year (and, if
necessary, for subsequent years) in an amount equal to such Member's share
of the net decrease in Company Minimum Gain, determined in accordance with
ss. 1.704- 2(g)(2) of the Treasury Regulations. This Section 4.4(a)(i) is
intended to comply with the minimum gain chargeback requirements of ss.
1.704-2(f) of the Treasury Regulations and shall be interpreted
consistently therewith.
(ii) If there is a net decrease in Member Minimum Gain
attributable to a Member Nonrecourse Debt during any IX, L.L.C. taxable
year, each Member who has a share of the Member Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with ss.
1.704-2(i)(5) of the Treasury Regulations, shall be specially allocated
items of IX, L.L.C. income and gain for such taxable year (and, if
necessary, for subsequent years) in an amount equal to such Member's share
of the net decrease in Member Minimum Gain attributable to such Member
Nonrecourse Debt, determined in a manner consistent with the provisions of
ss. 1.704-2(g)(2) of the Treasury Regulations. This Section 4.4(a)(ii) is
intended to comply with the partner nonrecourse debt minimum gain
chargeback requirement of ss. 1.704-2(i)(4) of the Treasury Regulations
and shall be interpreted consistently therewith.
(iii) If any Member unexpectedly receives an adjustment,
allocation or distribution of the type contemplated by ss. 1.704-
1(b)(2)(ii)(d)(4), (5), or (6) of the Treasury Regulations, items of
income and gain shall be allocated to all such Members (in proportion to
the amounts of their respective Adjusted Capital Account Deficits) in an
amount and manner sufficient to eliminate the Adjusted Capital Account
Deficit of such Member as quickly as possible. It is intended that this
Section 4.4(a)(iii) qualify and be construed as a "qualified income
offset" within the meaning of ss. 1.704-
14
1(b)(2)(ii)(d) of the Treasury Regulations and shall be interpreted
consistently therewith.
(iv) If the allocation of Net Loss to a Member as
provided in Section 4.3 hereof would create or increase an Adjusted
Capital Account Deficit, there shall be allocated to such Member only that
amount of Net Loss as will not create or increase an Adjusted Capital
Account Deficit. The Net Loss that would, absent the application of the
preceding sentence, otherwise be allocated to such Member shall be
allocated to the other Members in accordance with their relative
Percentage Interests, subject to the limitations of this Section
4.4(a)(iv).
(v) To the extent that an adjustment to the adjusted tax
basis of any IX, L.L.C. assets pursuant to ss. 734(b) of the Code, or ss.
743(b) of the Code is required, pursuant to ss. 1.704-1(b)(2)(iv)(m)(2) of
the Treasury Regulations or ss. 1.704-1(b)(2)(iv)(m)(4) of the Treasury
Regulations, to be taken into account in determining Capital Accounts as
the result of a distribution to a Member in complete liquidation of its
Interest in IX, L.L.C., the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases such basis),
and such gain or loss shall be specially allocated to the Members in
accordance with their Percentage Interests in IX, L.L.C. in the event that
ss. 1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the
Members to whom such distribution was made in the event that ss.
1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations applies.
(vi) The Nonrecourse Deductions for each taxable year of
IX, L.L.C. shall be allocated to the Members in proportion to their
Percentage Interests.
(vii) The Member Nonrecourse Deductions shall be
allocated each year to the Member that bears the economic risk of loss
(within the meaning of ss. 1.752-2 of the Treasury Regulations) for the
Member Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable.
(viii) The allocations set forth in Section 4.4(a)(i)
through (vii) hereof (the "Regulatory Allocations") are intended to comply
with certain requirements of xx.xx. 1.704-1(b) and 1.704-2(i) of the
Treasury Regulations. Notwithstanding the provisions of Sections 4.2 and
4.3, the Regulatory Allocations shall be taken into account in allocating
other items of income, gain, loss and deduction among the Members so that,
to the extent possible, the net amount of such allocations of other items
and the Regulatory Allocations to each Member shall be equal to the net
amount that would have
15
been allocated to each such Member if the Regulatory Allocations had not
occurred.
(b) Tax Allocations.
(i) Except as provided in Section 4.4(b)(ii) hereof, for
income tax purposes under the Code and the Treasury Regulations each IX,
L.L.C. item of income, gain, loss and deduction shall be allocated between
the Members as its correlative item of "book" income, gain, loss or
deduction is allocated pursuant to this Article 4.
(ii) Tax items with respect to IX, L.L.C. assets that
are contributed to IX, L.L.C. with a Gross Asset Value that varies from
its basis in the hands of the contributing Member immediately preceding
the date of contribution shall be allocated between the Members for income
tax purposes pursuant to Treasury Regulations promulgated under ss. 704(c)
of the Code, so as to take into account such variation. IX, L.L.C. shall
account for such variation under any method approved under ss. 704(c) of
the Code and the applicable Treasury Regulations as chosen by the Tax
Matters Partner. If the Gross Asset Value of any IX, L.L.C. asset is
adjusted pursuant to subparagraph (b), or subparagraph (c), of the
definition of Gross Asset Value, subsequent allocations of income, gain,
loss and deduction with respect to such IX, L.L.C. asset shall take
account of any variation between the adjusted basis of such IX, L.L.C.
asset for Federal income tax purposes and its Gross Asset Value in the
same manner as under ss. 704(c) of the Code and the Treasury Regulations
promulgated thereunder under any method approved under ss. 704(c) of the
Code and the applicable Treasury Regulations as chosen by the Tax Matters
Partner. Allocations pursuant to this Section 4.4(b)(ii) are solely for
purposes of federal, state and local taxes and shall not affect, or in any
way be taken into account in computing, any Member's Capital Account or
share of Net Income, Net Losses and any other items or distributions
pursuant to any provision of this Agreement.
(c) Other Provisions.
(i) For any fiscal year of IX, L.L.C. during which any
part of an Interest is Transferred between the Members or to another
Person, the portion of the Net Income, Net Losses and other items of
income, gain, loss, deduction and credit that are allocable with respect
to such part of an Interest shall be apportioned between the Transferor
and the Transferee under any method allowed pursuant to ss. 706 of the
Code and the applicable Treasury Regulations as agreed to by the
Transferor and Transferee.
(ii) For purposes of determining a Member's proportional
share of the "excess nonrecourse liabilities" of IX, L.L.C. within
16
the meaning of ss. 1.752-3(a)(3) of the Treasury Regulations, each
Member's interest in Net Income shall be such Member's Percentage
Interest.
Section 4.5 Distributions. Except as set forth in Section 13.3(d),
distributions shall be made to the Members at the times and in the
aggregate amounts determined by the Board. Such distributions shall be
allocated to the Members in accordance with their respective Percentage
Interests.
Section 4.6 Tax Distributions.
(a) Notwithstanding the provisions of Section 4.5, if it is
anticipated that the allocations of Net Income for any year pursuant to Section
4.2(b) will result in the Members recognizing income with respect to IX, L.L.C.
for such year, the Board shall make a good faith estimate of the amount of such
taxable income to be recognized by each of the Members, and distributions of
cash shall be made to each of the Members in an amount equal to the Effective
Tax Rate multiplied by such Member's allocations of Net Income for such year
pursuant to Section 4.2(b). Distributions required to be made pursuant to this
Section 4.6(a) shall be made in quarterly installments at such times as shall
enable the Members to make quarterly estimated tax payments.
(b) The computation of the amounts required to be distributed
pursuant to Section 4.6(a) for any year shall be adjusted (i) prior to each
distribution for such year, (ii) upon the filing of IX, L.L.C.'s Federal income
tax return for such year, (iii) upon any Final Determination of IX, L.L.C.'s
taxable income for such year and (iv) at any other time when in the good faith
determination of the Tax Matters Partner (subject to the approval of IX Holding,
which approval shall not be unreasonably withheld) it appears that a prior
estimate has been incorrect, in each case so as to take into account actual
determinations and/or revised estimates of the Members' shares of taxable income
for such year for Federal income tax purposes. Following any such adjustment,
the amounts to be distributed pursuant to Section 4.6(a) shall be adjusted
appropriately, or additional distributions shall be made, so as to give effect
to such actual determinations and/or revised estimates.
Section 4.7 Distributions in Cash. Except as otherwise provided
herein, distributions made pursuant to this Agreement may be made only in cash.
Section 4.8 Restrictions on Distributions. Notwithstanding any
provision to the contrary contained in this Agreement, IX, L.L.C. shall not make
a distribution to any Member with respect to such Member's Interest if such
distribution would violate Section 18-607 of the Act or other applicable law.
17
Article 5
Board of Representatives
Section 5.1 General. The Board of Representatives of IX, L.L.C. (the
"Board") shall have authority over the affairs and property of IX, L.L.C. in
accordance with the purposes and limitations set forth in this Agreement. The
Board may exercise all powers and perform all acts not required to be exercised
or performed by the Members under this Agreement or the Act. Subject to the
authority of the Board, the day-to-day management of IX, L.L.C. shall be
conducted by the officers of IX, L.L.C.
Section 5.2 The Board.
(a) The Board shall consist of five representatives designated
as follows:
(i) three representatives shall be designated by IX,
Inc.; and
(ii) two representatives shall be designated by IX
Holding (each, a "Representative" and, all together, the
"Representatives").
IX, Inc. hereby designates Xxxxxx X. Xxxxxx, Xxxx Xxxxxxx and Xxxxxxx X. Xxxxxx
as its initial Representatives; IX Holding hereby designates Xxxxx X. Xxxxxxx as
one of its initial Representatives.
(b) In the event of a "Put Default" (as defined in the Master
Investors Rights Agreement), the number of Representatives on the Board shall
automatically be increased from five to seven, of which four Representatives
shall be designated by IX Holding and three representatives shall be designated
by IX, Inc. Upon cure by IX, L.L.C. of any Put Default or repayment of the
Company Notes (as defined in the Master Investors Rights Agreement) following a
Put Default, then, notwithstanding anything to the contrary contained herein,
the Board shall consist solely of three Representatives, all of whom shall be
designated by IX, Inc.
(c) A Member may change any of its Representatives at any time
by notice to the other Members, such change to be effective two Business Days
following such notice or such other date as provided in such notice or agreed by
the Members but in no event in any manner as would nullify any action
theretofore taken by the Board prior to the giving of such notice. A Member
shall fill any vacancy resulting from the removal, death or resignation of any
of its Representatives as promptly as possible.
18
(d) No Representative in his or her capacity as a
Representative (or Chairman) shall have the legal authority individually to bind
IX, L.L.C.
(e) Each Representative shall serve without compensation
(other than receipt of reimbursement of reasonable expenses in connection with
such Representative's service as a Representative) from IX, L.L.C.
Section 5.3 Meetings. The Board shall meet quarterly or upon the
call of any three Representatives or the Chairman, either in person or by means
of telephone or other communications facility that permits all persons
participating in the meeting to hear each other, or by video conference, at the
IX, L.L.C. offices or such other place as may be agreed from time to time by the
Board (unless such meeting shall be waived by a writing signed by all the
Representatives). Written notice of all meetings of the Board shall be given, in
compliance with the procedures set forth in Section 14.4, to all Representatives
not less than five days before the time of the meeting (which notice may be
waived by any Representative in writing or by participating in such meeting
except for the purpose of objecting to the transaction of any business on the
grounds that the meeting is not lawfully called); provided, however, that notice
of special meetings to discuss matters requiring prompt attention may be given
to all Representatives, facsimile, email or telephone not less than 24 hours
before the time of the meeting. If the Secretary of IX, L.L.C. is not present at
a meeting of the Board, then the Board shall designate an employee or advisor of
IX, L.L.C. or a Representative to serve as the secretary of the Board and such
person shall record and promptly distribute to each Representative the minutes
of any such meeting.
Section 5.4 Quorum. No action may be taken at a meeting of the Board
unless a simple majority (i.e., more than 50%) of the Representatives is present
(in person or by proxy) at such meeting.
Section 5.5 Voting; Proxies.
(a) Except as set forth in Section 5.5(b), the Board shall act
by a vote of a simple majority (i.e., more than 50%) of the entire Board at a
meeting or by written consent as provided in Section 5.5(b). Each Representative
shall have one vote, which may be exercised in person or by proxy. Each proxy
shall be revocable at the pleasure of the Representative executing it, provided
that unless a proxy by its terms expressly provides for a specific revocation
date, revocation of such proxy shall not be effective unless and until such
revocation is executed in writing by the Representative who executed such proxy
and such revocation is filed with the Secretary of the Board prior to the voting
of such proxy.
19
(b) The following actions shall require the affirmative vote
of a majority of the Representatives, including at least one Representative
designated by IX Holding:
(i) Any material change in the Business of IX, L.L.C.;
(ii) Permitting IX, L.L.C. to, directly or indirectly,
enter into or suffer to exist any transaction or series of related transactions
(including the sale, purchase, exchange or lease of assets, properties or
services) with any Member or any Affiliate of a Member (each an "Affiliate
Transaction"), or extend, renew, waive or otherwise modify the terms of any
Affiliate Transaction (each a "Modification of an Affiliated Transaction");
provided, however, that the affirmative vote of at least one Representative
designated by IX Holding is not required for any Affiliate Transaction or
Modification of an Affiliated Transaction if such transaction is on terms no
less favorable than those IX, L.L.C. would obtain in a comparable arm's length
transaction and such transaction is valued at less than $100,000 per annum; and
(iii) any amendment or other modification of this
Agreement other than those set forth in Section 14.13(a)(i)-(vi).
(c) Any action required or permitted to be taken at any
meeting of the Board may be taken without a meeting, without prior notice and
without a vote if a consent in writing, setting forth the action so taken, shall
be signed by all of the Representatives and such consent is filed with the
minutes of the proceedings of the Board.
Section 5.6 Fiduciary Duties. Subject to the provisions of the
Master Investors Rights Agreement, each Representative shall have the same
fiduciary duties as a member of the board of directors of a Delaware corporation
(assuming such corporation had in its certificate of incorporation a provision
eliminating certain liabilities of directors as provided in Section 102(b)(7) of
the General Corporation Law of the State of Delaware).
Section 5.7 Committees of the Board. The Board may, by resolution
passed by a vote of the entire Board, designate one or more committees, each
committee to consist of two or more Representatives of IX, L.L.C. and each to
consist of a majority of Representatives designated by IX, Inc.; provided,
however, that any such committee must consist of at least one Representative
designated by IX Holding. The Board may designate one or more Representatives as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of such committee. If a member of a committee shall be
absent from any meeting, or disqualified from voting thereat, the remaining
member or members present and not disqualified from voting, whether or not such
member or members
20
constitute a quorum, may, by a unanimous vote, appoint another member of the
Board to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board passed as aforesaid, shall have and may exercise all the powers and
authority of the Board in the management of the business and affairs of IX,
L.L.C., and may authorize the seal of IX, L.L.C. to be impressed on all papers
that may require it, to the extent permitted by the Act, the Certificate and
this Agreement; provided, however, that the authority and power relating to the
actions set forth in Section 5.5(b) shall remain exclusively with the Board, and
shall not be delegated to any committee thereof. At all meetings of any such
committee, a majority of the total number of members of the committee shall
constitute a quorum for the transaction of business, and the vote of a majority
of the members of the committee at which there is a quorum shall be the act of
the committee. Each committee shall keep regular minutes of its meetings. Unless
the Board otherwise provides, each committee designated by the Board may make,
alter and repeal rules for the conduct of its business, other than on rules set
forth in this Section 5.7. In the absence of such rules each committee shall
conduct its business in the same manner as the Board conducts its business
pursuant to Article 5 of this Agreement.
Article 6
Officers
Section 6.1 Executive Officers. The Board shall elect as executive
officers of IX, L.L.C. a Chairman and Chief Executive Officer, a President, a
Chief Operating Officer, a Secretary and a Treasurer, and may elect as executive
officers of IX, L.L.C. one or more Chairmen Emeritus, Vice Chairmen, Executive
Vice Presidents and Senior Vice Presidents. All such executive officers elected
by the Board are referred to in this Agreement as "Executive Officers"and any
such position filled by an Executive Officer is referred to as an "Executive
Office". The Board may from time to time appoint such other officers and agents
of IX, L.L.C. as the interests of IX, L.L.C. may require and may fix their
duties and terms of office. To the extent permitted by law, any number of
offices may be held by the same person.
Section 6.2 Other Officers. In addition to the Executive Officers
elected by the Board pursuant to Section 6.1, the Chairman and Chief Executive
Officer, the President and the Chief Operating Officer may from time to time
appoint such other officers of IX, L.L.C., including Vice Presidents, Assistant
Vice Presidents, Staff Vice Presidents, Assistant Secretaries, Assistant
Treasurers and Controllers, as the interests of IX, L.L.C. may require (the
"Other Officers"); provided, however, that no Other Officer may be appointed to
the office of Chairman Emeritus, Vice Chairman, President, Chief Operating
Officer, Executive Vice President, Senior Vice President, Secretary or
Treasurer. Each appointment of an Other Officer shall be in writing and shall
set forth the duties of the Other Officer
21
being appointed and, subject to Section 6.3, such officer's term of office. Any
such position filled by an Other Officer is referred to in this Agreement as an
"Other Office".
Section 6.3 Term of Office. Each Executive Officer shall hold office
until such officer's successor is elected and qualified by the Board, or until
such officer's earlier death, resignation, retirement or removal. Each Other
Officer shall hold office for a term to be decided by the appointing Chairman
and Chief Executive Officer, President or Chief Operating Officer; provided,
however, that no such term shall be for a period longer than the term of office
of the appointing Chairman and Chief Executive Officer, President or Chief
Operating Officer.
Section 6.4 Removal of Officers. Any Executive Officer or Other
Officer may be removed from office with or without cause at any time by the
Board. Any Other Officer may also be removed from office at any time with or
without cause by the Chairman and Chief Executive Officer, the President or the
Chief Operating Officer.
Section 6.5 Vacancies. A vacancy in any Executive Office or Other
Office arising from any cause may be filled for the unexpired portion of the
term by the Board. A vacancy in any Other Office arising from any cause may also
be filled for the unexpired portion of the term by the Chairman and Chief
Executive Officer, the President or the Chief Operating Officer.
Section 6.6 Compensation of Officers. The salaries or compensation,
if any, of all Executive Officers shall be fixed by the Board. The salaries or
compensation of the Other Officers and division officers, if there be any, may
be fixed from time to time by the Board, the Chairman and Chief Executive
Officer, the President or the Chief Operating Officer.
Section 6.7 Chairman and Chief Executive Officer. The Chairman and
Chief Executive Officer shall be Chairman of the Board and of the Executive
Committee, if any, shall be the chief executive officer of IX, L.L.C. and,
subject to the control of the Board, shall have general charge and control of
the business and affairs of IX, L.L.C. with power and authority, when acting in
the ordinary course of business of IX, L.L.C., in the name and on behalf of IX,
L.L.C. and under its seal attested by the Secretary or an Assistant Secretary of
IX, L.L.C. or otherwise, to (i) execute and deliver agreements, contracts,
certificates and other instruments, (ii) purchase and accept delivery of stocks,
bonds, evidences of interest and indebtedness, rights and options to acquire the
same, and all other securities, whether negotiable or non-negotiable, (iii)
sell, assign, transfer and deliver all stocks, bonds, evidence of interest and
indebtedness, rights and options to acquire the same, and all other securities,
corporate or otherwise, now or hereafter standing in the name of or owned
beneficially by IX, L.L.C., (iv) open and maintain accounts with banking
institutions, including investment banks and brokerage firms, and (v) borrow
from
22
banks and other financial institutions, including investment banks and brokerage
firms, such sums of money for such periods of time and upon such terms as such
officer shall deem necessary or appropriate, and execute and deliver notes,
other evidences of indebtedness and agreements for the repayment of any sums so
borrowed in the name and on behalf of IX, L.L.C. Such officer shall preside at
all meetings of Members of IX, L.L.C. and the Board at which such officer is
present. Such officer shall perform all other duties and enjoy all other powers
which are commonly incident to the office of Chairman and Chief Executive
Officer, or are delegated to such officer from time to time by the Board or are
or may at any time be authorized or required by law.
Section 6.8 Chairman Emeritus and Vice Chairmen of the Board. The
Chairman Emeritus and Vice Chairmen of the Board, if there by any, shall be
members of the Board and shall have such powers and perform such duties as may
from time to time be assigned to them by the Board, the Chairman and Chief
Executive Officer, the President or the Chief Operating Officer.
Section 6.9 President. The President shall be responsible for
directing, administering and coordinating the business operations of IX, L.L.C.
in accordance with policies, goals and objectives established by the Board and
the Chairman and Chief Executive Officer with power and authority, when acting
in the ordinary course of business of IX, L.L.C., in the name and on behalf of
IX, L.L.C. and under its seal attested by the Secretary or an Assistant
Secretary of IX, L.L.C., or otherwise, to (i) execute and deliver agreements,
contracts, certificates and other instruments, (ii) purchase and accept delivery
of stocks, bonds, evidences of interest and indebtedness, rights and options to
acquire the same, and all other securities, whether negotiable or
non-negotiable, (iii) sell, assign, transfer and deliver all stocks, bonds,
evidences of interest and indebtedness, rights and options to acquire the same,
and all other securities, corporate or otherwise, now or hereafter standing in
the name of or owned beneficially by IX, L.L.C., (iv) open and maintain accounts
with banking institutions, including investment banks and brokerage firms, and
(v) borrow from banks and other financial institutions, including investment
banks and brokerage firms, such sums of money for such periods of time and upon
such terms as such officer shall deem necessary or appropriate, and execute and
delivery notes, other evidences of indebtedness and agreements for the repayment
of any sums so borrowed in the name and on behalf of IX, L.L.C. Such officer
shall perform all other duties and enjoy all other powers which are commonly
incident to the office of President or which are delegated to such officer by
the Chairman and Chief Executive Officer. In the absence of the Chairman and
Chief Executive Officer, the President shall perform all duties and may exercise
all powers of the Chairman and Chief Executive Officer and shall preside at
meetings of Members of IX, L.L.C. and the Board.
Section 6.10 Chief Operating Officer. The Chief Operating Officer
shall be the chief operating officer of IX, L.L.C. responsible for directing,
administering and coordinating the business operations of IX, L.L.C. in
accordance
23
with policies, goals and objectives established by the Board and the Chairman
and Chief Executive Officer with power and authority, when acting in the
ordinary course of business of IX, L.L.C., in the name and on behalf of IX,
L.L.C. and under its seal attested by the Secretary or an Assistant Secretary of
IX, L.L.C., or otherwise, to (i) execute and deliver agreements, contracts,
certificates and other instruments, (ii) purchase and accept delivery of stocks,
bonds, evidences of interest and indebtedness, rights and options to acquire the
same, and all other securities, whether negotiable or non-negotiable, (iii)
sell, assign, transfer and deliver all stocks, bonds, evidences of interest and
indebtedness, rights and options to acquire the same, and all other securities,
corporate or otherwise, now or hereafter standing in the name of or owned
beneficially by IX, L.L.C., (iv) open and maintain accounts with banking
institutions, including investment banks and brokerage firms, and (v) borrow
from banks and other financial institutions, including investment banks and
brokerage firms, such sums of money for such periods of time and upon such terms
as such officer shall deem necessary or appropriate, and execute and delivery
notes, other evidences of indebtedness and agreements for the repayment of any
sums so borrowed in the name and on behalf of IX, L.L.C. Such officer shall
perform all other duties and enjoy all other powers which are commonly incident
to the office of Chief Operating Officer, or which are delegated to such officer
by the Chairman and Chief Executive Officer. In the absence of the Chairman and
Chief Executive Officer and the President, the Chief Operating Officer shall
perform all duties and may exercise all powers of the Chairman and Chief
Executive Officer and the President and shall preside at meetings of Members of
IX, L.L.C. and the Board.
Section 6.11 Executive Vice Presidents, Senior Vice Presidents and
Vice Presidents Elected by the Board. The Executive Vice Presidents, the Senior
Vice Presidents and the Vice Presidents elected by the Board pursuant to Section
6.1, if there be any, shall have such powers and perform such duties as may from
time to time be assigned to them by the Board, the Chairman and Chief Executive
Officer, the President or the Chief Operating Officer.
Section 6.12 Secretary. The Secretary shall record the proceedings
of all meetings of Members of IX, L.L.C. and of the Board which such officer
attends in books to be kept for that purpose. Such officer shall attend to the
giving and serving of all notices on behalf of IX, L.L.C., shall have custody of
the records and the seal of IX, L.L.C. and shall affix the seal to any
instrument which requires the seal of IX, L.L.C. Such officer shall, in general,
perform all the duties and functions incident to the office of Secretary and
shall also perform such other duties as may from time to time be assigned to
such officer by the Board, the Chairman and Chief Executive Officer, the
President or the Chief Operating Officer.
Section 6.13 Treasurer. The Treasurer shall have custody and control
of all funds and securities of IX, L.L.C., except as otherwise provided by the
Board. Such officer shall keep full and accurate accounts of all receipts and
disbursements of IX, L.L.C. in books to be kept for that purpose, shall deposit
all money and other
24
valuable effects in the name and to the credit of IX, L.L.C. in such
depositories as may be designated by the Board, and shall render to the Chairman
and Chief Executive Officer, the President, the Chief Operating Officer or the
Board, whenever any of them may require it, an account of all such officer's
transactions as Treasurer and an account of the financial condition of IX,
L.L.C. Such officer shall also perform such other duties as may from time to
time be assigned to such officer by the Board, the Chairman and Chief Executive
Officer, the President or the Chief Operating Officer.
Section 6.14 Powers and Duties of Other Officers. The Other Officers
shall have such powers and perform such duties as may from time to time be
assigned to them by the Board, the Chairman and Chief Executive Officer, the
President or the Chief Operating Officer.
Article 7
Members
Section 7.1 Members. The name and the business, residence or mailing
address of each of the Members are set forth on Schedule IA.
Section 7.2 Admission of New Members. No new Members shall be
admitted except in accordance with Article 11. The Members also covenant and
agree that if new Interests are issued following compliance with Sections 2, 3
or 4 of the Master Investors Rights Agreement, they shall in good faith and as
expeditiously as possible admit any third party that purchases such Interests as
a Member and take all necessary action to amend this Agreement to admit such
third party and to make whatever equitable adjustments to the parties' Interests
as are necessary.
Section 7.3 Power of Members. The Members shall have the power to
exercise any and all rights or powers granted to Members pursuant to the express
terms of this Agreement and the Act. Except as otherwise specifically provided
by this Agreement or required by the Act, no Member shall have the power to act
for or on behalf of, or to bind, IX, L.L.C.
Section 7.4 Meetings.
(a) Meetings of the Members shall be held at such times as the
Board shall from time to time determine or at the request of a Member.
(b) Written notice shall be given to each Member of each
meeting of the Members, which notice shall state the place, date, time and
purpose of such meeting. Notice of each such meeting shall be given to each
Member, if by mail, not more than 30 days and not less than 15 days (or if by
telecopy, telegraph, cable, or other form of recorded communication, or
delivered personally or by
25
telephone, not less than ten days before the day on which such meeting is to be
held. A written waiver of notice, signed by the Member entitled to notice,
whether before or after the time of the meeting referred to in such waiver,
shall be deemed equivalent to notice. Neither the business to be transacted at,
nor the purpose of any meeting of the Members need be specified in any written
waiver of notice thereof. Attendance of a Member at a meeting of the Members
shall constitute a waiver of notice of such meeting, except as provided by law.
(c) The Members may hold meetings at IX, L.L.C.'s principal
place of business or such other place as IX, Inc. and IX Holding may mutually
consent.
(d) Any Member may participate in a meeting of the Members by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting by such means shall constitute presence in person at
such meeting.
(e) At each meeting of the Members, the Chairman shall act as
chairman of the meeting and preside. If the Secretary of IX, L.L.C. is not
present at a meeting of the Members then the Chairman shall appoint someone at
the meeting to act as secretary and to keep the minutes of such meeting.
Section 7.5 Quorum and Voting. A quorum of any meeting of the
Members shall require the presence of IX, Inc. and IX Holding. No action at any
meeting may be taken by the Members unless a quorum is present. Each Member
shall be entitled to such voting rights that are proportioned to his, her or its
Percentage Interest. Unless otherwise required by law, the Members shall act by
a vote of a simple majority in interest (i.e, more than 50%) of all the Members;
provided that, such majority includes IX, Inc.
Section 7.6 Actions Without a Meeting. Any action required or
permitted to be taken at any meeting of the Members may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by IX, Inc. and IX Holding
and such consent is filed with the minutes of the proceedings of the Members.
Section 7.7 Authorized Representatives. Any Member that is not an
individual may participate in any meeting of the Members by authorizing one or
more representatives of such Member to attend in person or participate by means
of conference telephone or similar communications equipment, and participation
in a meeting by such a duly authorized representative of such Member shall
constitute presence in person at such meeting by such Member; provided that,
only one such representative of a Member may be authorized to vote on any matter
on which such Member is entitled to vote.
26
Section 7.8 Resignation. A Member may not resign from IX, L.L.C.
prior to a Dissolution Event. A resigning Member shall not be entitled to
receive any distribution and shall not be entitled to receive the Fair Market
Value of its Interest except as expressly provided in this Agreement.
Article 8
Accounting; Financial and Tax Matters
Section 8.1 Accounting Method. IX, L.L.C. shall keep its
accounting records and shall report its profits or losses on the accrual method
of accounting in accordance with GAAP.
Section 8.2 Accounting Records. IX, L.L.C. shall keep complete and
accurate business and accounting records reflecting all transactions of IX,
L.L.C. Such accounting records shall be kept in accordance with GAAP
consistently applied and, to the extent inconsistent therewith, in accordance
with this Agreement. IX, L.L.C. shall also keep all records required to be kept
pursuant to the Act. IX, L.L.C.'s records, together with a copy of this
Agreement and of the Certificate, shall be maintained at the principal place of
business of IX, L.L.C. and shall be subject to inspection or examination by each
Member and its duly authorized representatives at all reasonable times for any
purpose reasonably related to such Member's interest as a member of IX, L.L.C.
Section 8.3 Financial Statements.
(a) As soon as practicable but in any event within 45 days
after the end of the first fiscal period and each of the first three quarters of
each fiscal year of IX, L.L.C., the financial officers of IX, L.L.C. shall
prepare and distribute to each Member financial statements of IX, L.L.C. (which
need not be examined or reported on by an independent certified public
accountant), which shall include a balance sheet of IX, L.L.C. as of the end of
the first fiscal period or such fiscal quarter, as the case may be, a statement
of Net Income and Net Loss for the first fiscal period or such fiscal quarter,
as the case may be, and a statement of cash flows of IX, L.L.C. for the first
fiscal period or such fiscal quarter, as the case may be, all in reasonable
detail, setting forth in each case in comparative form the information for the
corresponding period (or periods) of the previous fiscal year, if any.
(b) As soon as practicable but in any event within 120 days
after the close of each fiscal year of IX, L.L.C., IX, L.L.C. shall cause to be
prepared and delivered to each Member the following financial statements,
accompanied by the audited report thereon of the independent accountants for IX,
L.L.C.: (i) a balance sheet of IX, L.L.C. as at the end of such fiscal year;
(ii) a statement of Net Income and Net Loss for such fiscal year; (iii) a
statement of cash flows of IX, L.L.C. for such fiscal year; and (iv) a statement
of the Members'
27
Capital Accounts and changes therein for such fiscal year, all in reasonable
detail, setting forth in each case in comparative form all the information for
the corresponding period (or periods) of the previous fiscal year, if any.
(c) IX, L.L.C. shall provide to the Members any other
information about IX, L.L.C.'s financial position and affairs as may be
reasonably requested from time to time by a Member.
Section 8.4 Bank and Investment Accounts. All funds of IX, L.L.C.
shall be deposited in its name, or in such name as may be designated by the
Board, in such checking, savings or other accounts, or held in its name in the
form of such other investments as shall be designated by the Board. The funds of
IX, L.L.C. shall not be commingled with the funds of any Person. All withdrawals
of such deposits or liquidations of such investments by IX, L.L.C. shall be made
exclusively upon the signature or signatures of an officer or officers of IX,
L.L.C. as the Chairman and Chief Executive Officer may designate.
Section 8.5 Tax Matters Partner.
(a) The Tax Matters Partner (as such term is defined in
Section 6231(a)(7) of the Code) of IX, L.L.C. shall be the Person so defined in
Section 1.1 or any successor Tax Matters Partner designated by the Members in
accordance with this Agreement. Each Member, by its execution of this Agreement,
consents to such designation of the Tax Matters Partner, and agrees to execute,
certify, acknowledge, deliver, swear to, file and record at the appropriate
public offices such documents as may be necessary or appropriate to evidence
such consent.
(b) Prompt notice shall be given to the Board and the Members
upon receipt of advice that the Internal Revenue Service or another taxing
authority intends to examine any income tax returns or record or books of IX,
L.L.C. and of any notice from the Internal Revenue Service in any administrative
proceeding at any IX, L.L.C. level relating to the determination of any item of
income, gain, loss, deduction or credit of IX, L.L.C., in each case together
with a copy of such Internal Revenue Service notice (or other taxing authority).
Notwithstanding anything to the contrary herein, the Tax Matters Partner shall
not take any action without the prior approval (not to be unreasonably withheld)
of IX Holding.
Section 8.6 Taxes.
(a) IX, L.L.C. shall prepare, or cause to be prepared, and
shall file all tax returns, be they information returns or otherwise, which are
required to be filed with the Internal Revenue Service, state and local tax
authorities and foreign tax jurisdictions, if any.
28
(b) IX, L.L.C. shall furnish the Members with all information
relating to IX, L.L.C. required to be reported in the tax returns of the Members
for tax jurisdictions in which IX, L.L.C. is considered to be doing business,
including a report indicating each Member's share for income tax purposes of IX,
L.L.C.'s income, gain, credits, losses and deductions within 75 days after the
end of IX, L.L.C.'s fiscal year.
(c) Except as otherwise provided in this Agreement, including
this Section 8.6(c), all determinations as to tax elections shall be made by the
Tax Matters Partner. The Tax Matters Partner shall cause IX, L.L.C. to make a
Section 754 election upon request of any Member.
(d) IX, L.L.C. shall be treated as a partnership for U.S.
Federal income tax purposes.
Section 8.7 Accounting Decisions. All determinations as to
accounting principles shall be made by the Board in accordance with this
Agreement. IX, L.L.C.'s independent accountants shall be Xxxxxx Xxxxxxxx LLP or,
any successor accountants designated by the Board.
Article 9
Liability; Exculpation; Indemnification
Section 9.1 Liability of Members; Limitation of Liability.
(a) Except as otherwise required by any non-waivable provision
of the Act (or other applicable law) or as otherwise expressly provided for
herein: (i) no Member shall be personally liable in any manner whatsoever for
any debt, liability or other obligation of IX, L.L.C., whether such debt,
liability or other obligation arises in contract, tort, or otherwise; and (ii)
no Member shall in any event have any liability whatsoever in excess of (A) the
amount of its Capital Contributions, (B) its share of any assets and
undistributed profits of IX, L.L.C. and (C) the amount of any wrongful
distribution to such Member, if, and only to the extent, such Member has actual
knowledge (at the time of the distribution) that such distribution is made in
violation of Section 18-607 of the Act.
(b) Notwithstanding anything to the contrary contained in this
Agreement, in no event shall IX, L.L.C. or any Member be liable for any
consequential or punitive damages, whether foreseeable or not, occasioned by any
failure of a party to perform or the breach of any obligation of a party under
this Agreement or for any cause whatsoever whether or not caused by the
negligence of a party. In no event shall any projections or forecasts by any
Person, unless expressly set forth in this Agreement, be binding as commitments
or, in any way, promises by such Person.
29
Section 9.2 Exculpation.
(a) For purposes of this Agreement, "Covered Person" shall
mean any Representative, any Member, any Affiliate of a Member, and any officer,
director, shareholder, partner, member, employee or agent of a Member or any
Affiliate thereof, and any officer, employee or authorized agent of IX, L.L.C.
(b) No Covered Person shall be liable to IX, L.L.C. or any
other Covered Person for any claims, losses, liabilities, damages, deficiencies,
judgments, assessments, fines, settlement costs and expenses (including,
interest, penalties, fees and reasonable expenses and disbursements of
attorneys, experts, personnel and consultants incurred by the indemnified party
in any action or proceeding between the indemnifying party and the indemnified
party or between the indemnified party and any third party, or otherwise)
("Losses") incurred by reason of any act or omission performed or omitted by
such Covered Person in good faith on behalf of IX, L.L.C. and in a manner
reasonably believed to be within the scope of authority conferred on such
Covered Person by this Agreement, except that a Covered Person shall be liable
for any such Losses incurred by reason of such Covered Person's gross negligence
or willful misconduct.
(c) A Covered Person shall be fully protected in relying in
good faith upon the records of IX, L.L.C. and upon such information, opinions,
reports or statements presented to IX, L.L.C. by any Person as to matters the
Covered Person reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable care by or on
behalf of IX, L.L.C., including information, opinions, reports or statements as
to the value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from which
distributions to Members might properly be paid.
Section 9.3 Duties and Liabilities of Covered Persons.
(a) To the extent that, at law or in equity, any Covered
Person has duties (including fiduciary duties) and liabilities related thereto
to IX, L.L.C. or to any other Covered Person, a Covered Person acting under this
Agreement shall not be liable to IX, L.L.C. or to any other Covered Person for
its good faith reliance on the provisions of this Agreement. The provisions of
this Agreement, to the extent that they restrict the duties and liabilities of a
Covered Person otherwise existing at law or in equity, are agreed by the Members
to replace such other duties and liabilities of such Covered Person.
(b) Subject to the provisions of Section 5.6 of this
Agreement, unless otherwise expressly provided herein, (i) whenever a conflict
of interest exists or arises between Covered Persons, or (ii) whenever this
Agreement or
30
any other agreement contemplated herein provides that a Covered Person shall act
in a manner that is, or provides terms that are, fair and reasonable to IX,
L.L.C. or any Member, the Covered Person shall resolve such conflict of
interest, taking such action or providing such terms, considering in each case
the relative interest of each party (including its own interest) to such
conflict, agreement, transaction or situation and the benefits and burdens
relating to such interests, any customary or accepted industry practices, and
any applicable generally accepted accounting practices or principles. In the
absence of bad faith by the Covered Person, the resolution, action or term so
made, taken or provided by the Covered Person shall not constitute a breach of
this Agreement or any other agreement contemplated herein or of any duty or
obligation of the Covered Person at law or in equity or otherwise.
(c) Subject to the provisions of Section 5.6 of this
Agreement, whenever in this Agreement a Covered Person is permitted or required
to make a decision (i) in its "discretion" or under a grant of similar authority
or latitude, the Covered Person shall be entitled to consider only such
interests and factors as it desires, including its own interests, and shall have
no duty or obligation to give any consideration to any interest of or factors
affecting IX, L.L.C. or any other Person, or (ii) in its "good faith" or under
another express standard, the Covered Person shall act under such express
standard and shall not be subject to any other or different standard imposed by
this Agreement or other applicable law.
Section 9.4 Indemnification by IX, L.L.C.
(a) To the fullest extent permitted by applicable law, IX,
L.L.C. shall indemnify, defend and hold harmless any Covered Person who was or
is made a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding brought against such Covered Person (in
connection with the business of IX, L.L.C.) or otherwise, whether civil,
criminal, administrative or investigative, including an action by or in the
right of IX, L.L.C. to procure a judgment in its favor, by reason of the fact
that such Covered Person is or was a Representative, Member, officer, employee
or agent of IX, L.L.C., or that such Covered Person is or was serving at the
request of IX, L.L.C. as a partner, member, manager, director, officer, trustee,
employee or agent of another Person, against all Losses. Notwithstanding the
foregoing, no indemnification shall be provided to or on behalf of any Covered
Person if a judgment or other final adjudication adverse to such Covered Person
establishes that his or her acts were committed in bad faith or constituted
intentional misconduct or gross negligence.
(b) Any indemnification under Section 9.4(a) (unless ordered
by a court) shall be made by IX, L.L.C. only as authorized in the specific case
upon a determination that the indemnification of the Covered Person is proper
under the circumstances because he or she has met the applicable standard of
conduct set forth in Section 9.4(a). Such determination shall be made by the
Board or, if the Board so directs, by independent legal counsel in a written
opinion; provided, however, that if
31
the person seeking indemnification under this section is a Representative, then
such Representative shall not participate in such determination by the Board.
Any indemnification payment shall be payable only out of and to the extent of
IX, L.L.C.'s assets, and no Covered Person shall have any liability therefor.
(c) IX, L.L.C. shall, in the discretion of the Board, pay
expenses incurred in defending any action, suit or proceeding described in
Section 9.4(a) (including reasonable legal fees and expenses of counsel and
other experts) in advance of the final disposition of such action, suit or
proceeding upon receipt by IX, L.L.C. of an undertaking, in form satisfactory to
the Board or IX, L.L.C.'s legal counsel, to repay such amount if it shall be
determined that the Covered Person is not entitled to be indemnified as
authorized by Section 9.4(a).
(d) The indemnification provided by this Section 9.4 shall not
be deemed exclusive of any other rights to indemnification to which those
seeking indemnification may be entitled under any agreement, determination of
the Board or otherwise. The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 9.4
shall continue as to a Covered Person who has ceased to be a Representative,
Member, officer, employee or agent (or other Person indemnified hereunder) and
shall inure to the benefit of the executors, administrators, legatees and
distributees of such Person.
(e) The provisions of this Section 9.4 shall be a contract
between IX, L.L.C., on the one hand, and each Covered Person who served in such
capacity at any time while this Section 9.4 is in effect, on the other hand,
pursuant to which IX, L.L.C. and each such Covered Person intend to be legally
bound. No repeal or modification of this Section 9.4 shall affect any rights or
obligations with respect to any state of facts then or theretofore existing or
thereafter arising or any proceeding theretofore or thereafter brought or
threatened based in whole or in part upon such state of facts.
Section 9.5 Insurance. IX, L.L.C. may purchase and maintain
insurance, to the extent and in such amounts as the Board shall, in its sole
discretion, deem reasonable, on behalf of Covered Persons and such other Persons
as the Board shall determine, against any liability that may be asserted against
or expenses that may be incurred by any such Person in connection with the
activities of IX, L.L.C. or such indemnities, regardless of whether IX, L.L.C.
would have the power to indemnify such Person against such liability under the
provisions of this Agreement. To the extent consistent with the provisions of
Section 9.4, IX, L.L.C. may enter into indemnity contracts with Covered Person
and adopt written procedures pursuant to which arrangements are made for the
advancement of expenses and the funding of obligations under Section 9.4 hereof
and containing such other procedures regarding indemnification as are
appropriate.
32
Section 9.6 Notice and Opportunity to Defend.
(a) All claims by a Covered Person shall be asserted and
resolved as follows: promptly after receipt by the Covered Person of notice of
any claim or circumstances which, with the lapse of time, would or might give
rise to a claim or the commencement (or threatened commencement) of a claim
including any action, proceeding or investigation (an "Asserted Liability") that
may result in a Loss, the Covered Person shall give notice thereof (the "Claims
Notice") to the party against whom such claims are asserted under this Article 9
(the "Indemnifying Party"). The Claims Notice shall describe the Asserted
Liability in reasonable detail, and shall indicate the amount (estimated, if
necessary and to the extent feasible) of the Loss that has been or may be
suffered by the Covered Person.
(b) The Indemnifying Party may elect to compromise or defend,
at its own expense and by its own counsel any Asserted Liability. If the
Indemnifying Party elects to compromise or defend such Asserted Liability, it
shall within 30 days (or sooner, if the nature of the Asserted Liability so
requires) notify the Covered Person of its intent to do so, and the Covered
Person shall cooperate, at the expense of the Indemnifying Party, in the
compromise of, or defense against, such Asserted Liability. If the Indemnifying
Party elects not to compromise or defend the Asserted Liability, fails to notify
the Covered Person of its election as herein provided or contests its obligation
to indemnify under this Agreement, the Covered Person may pay, compromise or
defend such Asserted Liability. Notwithstanding the foregoing, neither the
Indemnifying Party nor the Covered Person may settle or compromise any Asserted
Liability over the objection of the other; provided, however, consent to
settlement or compromise shall not be unreasonably withheld or delayed. In any
event, the Covered Person and the Indemnifying Party may participate, at their
own expense, in the defense of such Asserted Liability. If the Indemnifying
Party chooses to defend any Asserted Liability, the Covered Person shall make
available to the Indemnifying Party any books, records or other documents within
its control that are necessary or appropriate for such defense.
Article 10
Certain Covenants
Section 10.1 Other Businesses of the Members. Except as otherwise
provided by written agreement entered into with IX, L.L.C., a Member and any
Affiliate thereof may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the Business of IX, L.L.C., and IX, L.L.C. and the other Members
shall have no rights by virtue of this Agreement in and to such independent
ventures or the income or profits derived therefrom, and the pursuit of any such
venture, even if competitive with the Business of IX, L.L.C., shall not be
deemed wrongful or improper.
33
Article 11
Transfers
Section 11.1 General Restrictions. Members shall not, directly or
indirectly, Transfer all or any fraction of their Interests except in accordance
with the Master Investors Rights Agreement.
Section 11.2 Additional Conditions to Transfers. In addition to all
other terms and conditions contained in this Agreement, no Transfers to which
the provisions of Section 11.1 would apply shall be completed or effective for
any purpose unless prior thereto the Transferee shall have executed and
delivered to IX, L.L.C. an agreement by which it shall become a party to and be
bound by the applicable terms and provisions of this Agreement.
Section 11.3 Effect of Transfer. Upon consummation of any Transfer
of an Interest in accordance with the provisions of this Agreement, (a) the
Transferee shall be admitted as a Member (if not already a Member) and for
purposes of this Agreement such Transferee shall be deemed a Member, (b) the
transferred Interest shall continue to be subject to all the provisions of this
Agreement and (c) the Capital Account (or applicable portion thereof in the case
of a Transfer of less than all of the Interest of the Transferor) of the
Transferor shall be transferred to the name of such Transferee at the close of
business on the effective date of such Transfer. No Transfer shall relieve the
Transferor (or any of its Affiliates) of any of their obligations or liabilities
under this Agreement arising prior to the closing of the consummation of such
Transfer.
Section 11.4 Endorsement of Certificates.
(a) Upon the execution of this Agreement, in addition to any
other legend which IX, L.L.C. may deem advisable under the Securities Act and
certain state securities laws, all certificates representing issued and
outstanding Interests shall be endorsed at all times unless the legend has been
removed pursuant to Section 11.4(d) as follows:
THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE ONLY UPON COMPLIANCE
WITH, THE PROVISIONS OF THE AMENDED AND RESTATED LIMITED LIABILITY COMPANY
OPERATING AGREEMENT, DATED AS OF OCTOBER 18, 1999, BETWEEN THE MEMBERS OF
IX, L.L.C. AND THE MASTER INVESTORS RIGHTS AGREEMENT, DATED OCTOBER 18,
1999, BETWEEN IX, INC., IX HOLDING CO., INC., INSIGHTEXPRESS, L.L.C. AND
THE OTHER PARTIES THERETO. COPIES OF THE ABOVE-REFERENCED AGREEMENTS ARE
ON FILE AT THE PRINCIPAL OFFICE OF IX, L.L.C.
34
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION FROM
REGISTRATION, UNDER SAID ACT.
(b) Except as otherwise expressly provided in this Agreement,
all certificates or other instruments representing Interests hereafter issued to
or acquired by any of the Members or their successors, assigns or Transferees
shall bear the legends set forth above, and the Interests represented by such
certificates or instruments shall be subject to the applicable provisions of
this Agreement. The obligations of each party hereto shall be binding upon each
Transferee to whom Interests are Transferred by any party hereto, whether or not
such Transfer is permitted under the terms of this Agreement. Prompt notice
shall be given to IX, L.L.C. and each Member by the Transferor of any Transfer
of any Interest.
(c) The second paragraph of the legend set forth in Section
11.4(a) shall be removed from a particular certificate representing Interests,
at the written request of a Member, when an opinion of counsel has been
delivered to IX, L.L.C. to the effect that any such security may be freely sold
to the public without compliance with the registration provisions of the
Securities Act. Such counsel may include an attorney who is an employee of a
Member and such opinion shall be subject to the reasonable approval of the
Board.
(d) Whenever the restrictions imposed by this Agreement shall
terminate as to any particular Interests, the holder thereof shall be entitled
to receive from IX, L.L.C., without expense, upon delivery to IX, L.L.C. of the
existing certificate representing Interests, a new certificate not bearing the
respective legends otherwise required pursuant to this Section 11.4.
Section 11.5 Improper Transfer. Any attempt to Transfer any
Interests other than in accordance with the terms of this Agreement shall be
null and void and neither IX, L.L.C. nor any transfer agent of such securities
shall give any effect to such attempted Transfer or encumbrance in its records
of Interests.
Article 12
Representations and Warranties
Each Member, severally and not jointly with the other Members,
represents and warrants that:
Section 12.1 Due Organization and Authority. It is an entity duly
organized, validly existing and in good standing under the laws of the state or
other
35
governmental entity in which it was incorporated or formed and has all requisite
corporate or company power and authority to own, lease and operate its
properties and to carry on its business as now being and as heretofore
conducted.
Section 12.2 Authority to Execute and Perform Agreement. It has the
full legal right and power and all authority and approvals required to enter
into, execute and deliver this Agreement and each and every agreement and
instrument contemplated hereby to which it is or will be a party and to perform
fully its obligations hereunder and thereunder. This Agreement and each and
every agreement and instrument contemplated hereby to which it is or will be a
party has been or will be duly executed and delivered by it, and (assuming due
execution and delivery hereof and thereof by the other parties hereto and
thereto) this Agreement and each such other agreement and instrument will be
valid and binding obligations of it enforceable against it in accordance with
their respective terms. The execution and delivery by it of this Agreement and
each and every other agreement and instrument contemplated hereby to which it is
or will be a party, the consummation of the transactions contemplated hereby and
thereby and the performance by it of this Agreement and each such other
agreement and instrument in accordance with their respective terms and
conditions will not (a) violate any provision of the articles of incorporation,
by-laws, certificate of formation or operating agreement (or comparable
instruments) of it; (b) require it to obtain any consent, approval,
authorization or action of, or make any filing with or give any notice to, any
Governmental Agency or any other Person; (c) violate, conflict with or result in
the breach of any of the terms and conditions of, result in a material
modification of the effect of, otherwise cause the termination of or give any
other contracting party the right to terminate, or constitute (or with notice or
lapse of time or both constitute) a default under, any contract to which it is a
party or by or to which it or any of its properties is or may be bound or
subject; or (d) violate any law or order of any Governmental Agency applicable
to it.
Article 13
Termination; Dissolution; Liquidation and Winding-Up
Section 13.1 Termination of IX, L.L.C. The term of the Agreement
(the "Term") shall commence on the Effective Date and, in the event of the
occurrence of a Dissolution Event, this Agreement and IX, L.L.C. shall be
terminated on the 90th day after the occurrence of such event.
Section 13.2 Events of Dissolution. IX, L.L.C. shall be dissolved
upon any of the following (each a "Dissolution Event"):
(a) at the option of the Board, following the expiration of 60
days after the Transfer of all or substantially all of the assets, properties
and business of IX, L.L.C.;
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(b) the affirmative agreement of IX, Inc. and IX Holding for a
dissolution of IX, L.L.C.; and
(c) upon the entry of a decree of judicial dissolution under
Section 18-802 of the Act.
Section 13.3 Liquidation and Winding-Up. If IX, L.L.C. is dissolved,
IX, L.L.C. shall be liquidated and wound up in accordance with the Act and the
following provisions:
(a) The financial officers of IX, L.L.C. shall be directed to
prepare a balance sheet, income statement and statement of cash flows of IX,
L.L.C. in accordance with GAAP as of the date of dissolution and for the period
ended on such date, which balance sheet shall be reported upon by IX, L.L.C.'s
independent public accountants.
(b) The assets, properties and business of IX, L.L.C. shall be
liquidated by the Board as promptly as possible, but in an orderly and
businesslike manner so as not to involve undue sacrifice. Notwithstanding the
foregoing, if it is determined by the Board not to sell all or any portion of
the properties and assets of IX, L.L.C. such properties and assets shall be
distributed in kind in the order of priority set forth in subparagraph (d);
provided, however, that the Fair Market Value of such properties and assets
shall be used in determining the extent and amount of a distribution in kind of
such properties and assets in lieu of actual cash proceeds of any sale or other
disposition thereof.
(c) Net Income or Net Loss of IX, L.L.C. for the year of
liquidation shall be credited or charged to the Capital Accounts of the Members
in accordance with the allocation provisions set forth in Article 4.
(d) The proceeds of sale of all or substantially all of the
properties and assets of IX, L.L.C. and all other properties and assets of IX,
L.L.C. not sold, as provided in subparagraph (b) above, and valued at the Fair
Market Value thereof as provided in such subparagraph (b), shall be applied and
distributed as follows, and in the following order of priority:
(i) First, to the payment of all debts and liabilities
of IX, L.L.C. and the expenses of liquidation not otherwise adequately
provided for;
(ii) Second, to the setting up of any reserves that are
reasonably necessary for any contingent unforeseen liabilities or
obligations of IX, L.L.C. or of the Members arising out of, or in
connection with, IX, L.L.C.; and
37
(iii) Third, to the Members in proportion to the
positive balances of their respective Capital Accounts until the remaining
balances of all such accounts are zero.
(e) A Certificate of Cancellation shall be filed with the
Secretary of State of the State of Delaware by the Members.
Section 13.4 Survival After Termination. Upon termination of this
Agreement, this Agreement shall become null and void and have no further force
or effect, except that any such termination shall be without prejudice to the
rights of any party on account of the breach or violation of the
representations, warranties, covenants, acknowledgments or agreements of another
party under this Agreement. Notwithstanding anything in this Agreement to the
contrary, the provisions of Sections 1.1, 13.3, 13.4 and 13.5 and Articles 8, 9
and 14 shall survive any termination of this Agreement.
Section 13.5 Claims of the Members. Unless otherwise provided
herein, Members and former Members shall look solely to IX, L.L.C.'s assets for
the return of their contributions to IX, L.L.C., and if the assets of IX, L.L.C.
remaining after payment of or due provision for all debts, liabilities and
obligations of IX, L.L.C. are insufficient to return such contributions, the
Members and former Members shall have no recourse against IX, L.L.C. or any
other Member.
Article 14
Miscellaneous
Section 14.1 Governing Law. This Agreement is governed by and is to
be construed in accordance with the laws of the State of Delaware.
Section 14.2 Consent to Jurisdiction and Service of Process. Any
claim arising out of or relating to this Agreement may be instituted in any
Federal court of the Southern District of New York or any state court located in
New York County, State of New York, and each Member agrees not to assert, by way
of motion, as a defense or otherwise, in any such claim, that (i) any claim that
it is not subject personally to the jurisdiction of such court, (ii) the claim
is brought in an inconvenient forum, (iii) the venue of the claim is improper or
(iv) this Agreement, or the subject matter hereof may not be enforced in or by
such court. Each Member further irrevocably submits to the jurisdiction of such
court in any such claim. Nothing herein contained shall be deemed to affect the
right of any Member to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against any other party in any
other jurisdiction.
Section 14.3 Cooperation. Each Member will provide the information,
cooperation and assistance which the Board reasonably requires to
38
comply with any terms of this Agreement, obtain any consents, approvals or
permits required by or as a result of this Agreement.
Section 14.4 Notice. All notices and other communications hereunder
shall be in writing and shall be deemed effective or given upon (a)
transmitter's confirmation of receipt when sent by facsimile transmission, (b)
confirmed delivery by a recognized courier service or an affidavit of the
messenger when delivered by hand or (c) the expiration of seven calendar days
after the day when mailed by certified or registered mail, postage prepaid,
addressed to the addresses set forth in Section 2.4 in the case of IX, L.L.C. or
set forth on Schedule IA for all Members until such time as IX, L.L.C. or a
Member designates a different or additional address or addresses.
Section 14.5 Assignment. A party may not assign its rights or
obligations under this Agreement, in whole or in part, without the prior written
consent of the Members, which consent may be granted or withheld in the Members'
sole discretion, except to a Transferee pursuant to the terms of Article 11.
Section 14.6 No Agency. None of the Members shall be or hold itself
out as agent of any other Member under this Agreement.
Section 14.7 Entire Agreement; No Waiver. This Agreement and the
Master Investors Rights Agreement contain the full understanding of the parties
with respect to the subject matter covered herein and therein and supersede any
previous agreements between the parties regarding such subject matter. This
Agreement cannot be changed or terminated orally. No provision of this Agreement
may be waived unless such waiver is in writing and signed by the Members against
whom the waiver is to be effective. No delay on the part of any party in
exercising any right hereunder shall operate as a waiver thereof and no waiver
of any breach of any provision hereof shall be or be deemed to be a waiver of
any preceding or subsequent breach of the same or any other provision of this
Agreement.
Section 14.8 Preservation of Remedies. The rights and remedies
provided herein are cumulative and are not exclusive of any other rights or
remedies contained herein or that any party may otherwise have at law or in
equity. The rights and remedies of any party based upon, arising out of or
otherwise in respect of any inaccuracy in or breach of any representation,
warranty, covenant, acknowledgment or agreement contained in this Agreement or
any document delivered pursuant to this Agreement shall in no way be limited by
the fact that the act, omission, occurrence or other state of facts upon which
any claim of any such inaccuracy or breach is based may also be the subject
matter of any other representation, warranty, covenant, acknowledgment or
agreement contained in this Agreement or any document delivered pursuant to this
Agreement (or in any other agreement between the parties) as to which there is
no inaccuracy or breach.
39
Section 14.9 No Right to Partition. The Members, on behalf of
themselves and their shareholders, partners, members, successors and assigns, if
any, hereby specifically renounce, waive and forfeit all rights, whether arising
under contract or statute or by operation of law, except as otherwise expressly
provided in this Agreement, to seek, bring or maintain any action in any court
of law or equity for partition of IX, L.L.C. or any asset of IX, L.L.C., or any
interest which is considered to be property of IX, L.L.C., regardless of the
manner in which title to such property may be held.
Section 14.10 Severability. Any provision of this Agreement which is
illegal, void or unenforceable by or contrary to law will be ineffective to the
extent only of that illegality, voidness or unenforceability by or contrariness
to law, without invalidating the remaining provisions of this Agreement. In such
event, the parties shall negotiate in good faith a new provision which is not
illegal, void or unenforceable by or contrary to law and which provides, or
would provide the parties, with the same or equivalent benefits and
participation as are provided by the provision which is illegal, void or
unenforceable by or contrary to law.
Section 14.11 Counterparts. This Agreement may be executed in a
number of counterparts, each of which shall be taken together, when duly
executed by all named parties to the Agreement, to constitute a single
Agreement.
Section 14.12 Fees and Expenses. IX, L.L.C. shall pay all (up to
$100,000 in the aggregate) fees and expenses incurred by IX Holding and General
Atlantic Service Corporation, a Delaware corporation, in connection with IX
Holding's capital investments in IX, L.L.C. IX, L.L.C. shall also reimburse NFO
(a) for all of NFO's legal expenses owing to Xxxx, Weiss, Rifkind, Xxxxxxx &
Xxxxxxxx in connection with this Agreement and the transactions contemplated
hereby and (b) in amount equal to $2,109,000 all of (x) NFO's expenses in
connection with its investment in IX, L.L.C., and (y) NFO's expenses incurred on
behalf of IX, L.L.C. to the date of this Agreement.
Section 14.13 Amendments. (a)Any amendment to this Agreement must:
(1) be approved by the Board in accordance with Section 5.5(b), (2) be consented
to in writing by Members holding more than 50% of the Percentage Interests of
IX, L.L.C. and by IX, Inc. and (3) if any Member would be adversely affected by
any such amendment in any material respect, be consented to in writing, by such
Member. Notwithstanding the foregoing, the Board, without the consent of any
Member, may amend any provision of this Agreement (unless such amendment would
have a material adverse effect on any Member) to reflect:
(i) a change in the name of IX, L.L.C. or the location of the
principal place of business or the registered office and registered agent
of IX, L.L.C.;
40
(ii) subject to Section 7.2, the admission of Members or a
change in the Interest of any Member in accordance with this Agreement
(including amending Schedule IA to reflect such admission or change, as
required);
(iii) a change that is necessary to qualify IX, L.L.C. as a
limited liability company in which the Members have limited liability
under the laws of any jurisdiction or that is necessary or advisable in
the opinion of the Board to ensure that IX, L.L.C. will not be taxable
other than as a partnership under the Code and Treasury Regulations;
(iv) a change that is (A) of an inconsequential nature or (B)
necessary or desirable to satisfy any requirements, conditions or
guidelines contained in any opinion, directive, order, ruling or
regulation of any Governmental Agency or contained in any federal or state
statute;
(v) a change clarifying any ambiguity, defect or inconsistency
in this Agreement; or
(vi) any other amendments similar to the foregoing;
provided, however, that (A) no such amendment shall increase the amount of
any Member's Capital Contribution without such Member's consent and (B)
any amendment that (1) alters the allocations to, or distributions from,
Capital Accounts, (2) alters the rights of the Member upon liquidation of
IX, L.L.C. or (3) alters the provisions of this Section 14.13, shall
require the written consent of the Members adversely affected by such
amendment or, if such amendment adversely affects only the rights of
holders of a particular class or series of Interests, then such amendment
shall require the consent of the Members holding such class or series.
Within a reasonable period after any change or amendment in accordance
with the preceding sentence, the Chairman and Chief Executive Officer or
his or her designee shall send a written notice to the Members describing
such change or amendment in reasonable detail.
(b) Notwithstanding anything to the contrary herein, (i) if
the Put Rights (as defined in Section 9 of the License Agreement, dated as of
even date herewith (the "License Agreement"), between IX, Inc. and IX, L.L.C.)
are exercised, the Members agree to amend this Agreement in accordance with
Exhibit A of the License Agreement and (ii) the Members agree to amend this
Agreement, as necessary, in accordance with Section 7.2.
Section 14.14 Interpretation. In this Agreement, unless the context
otherwise requires:
41
(a) headings and underlinings are for convenience only and do
not affect the interpretation of this Agreement;
(b) words importing the singular include the plural and vice
versa;
(c) words importing a gender include any gender;
(d) other parts of speech and grammatical forms of a word or
phrase defined in this Agreement have a corresponding meaning;
(e) a reference to a part, Article, Section, party, annex,
Exhibit or Schedule is a reference to a part, Article and Section of, and a
party, annex, Exhibit and Schedule to, this Agreement and a reference to this
Agreement includes any annex, Exhibit and Schedule;
(f) a reference to any statute, regulation, proclamation,
ordinance or by-law includes all statutes, regulations, proclamations,
ordinances or by-laws amending, consolidating or replacing them, and a reference
to a statute includes all regulations, proclamations, ordinances and by-laws
issued under that statute;
(g) a reference to a document includes an amendment or
supplement to, or replacement or novation of, that document;
(h) a reference to a party to a document includes that party's
successors and permitted assigns;
(i) where the day on or by which anything is to be done is not
a Business Day, that thing must be done on or by the preceding Business Day;
(j) no rule of construction applies to the disadvantage of a
party because that party was responsible for the preparation of this Agreement
or any part of it;
(k) a covenant or agreement on the part of two or more Persons
binds them severally and not jointly;
(l) a reference to an agreement other than this Agreement
includes an undertaking, agreement or legally enforceable arrangement or
understanding whether or not in writing;
(m) a reference to an asset includes all property of any
nature, including a business, and all rights, revenues and benefits;
42
(n) a reference to a document includes any agreement in
writing, or any certificate, notice, instrument or other document of any kind;
and
(o) whenever the word "includes" or " including" is used in
this Agreement, it shall be deemed to be followed by the words "without
limitation" unless clearly understood otherwise.
43
IN WITNESS WHEREOF, the parties have executed this Agreement by
their duly authorized representatives effective as of the day and year first
written above.
IX, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer
IX HOLDING CO., INC.
By: /s/ Xxxxx Xxxxxxx
---------------------
Name: Xxxxx Xxxxxxx
Title: President and Secretary
XXXXXXXXX & CO., LLC
By: /s/ Xxxxx X. Xxx
--------------------
Name: Xxxxx X. Xxx
Title: Managing Director
Schedule IA
Percentage Interests, Capital Contributions and Class of Membership Interest
Percentage Capital Class of
Member Interest Contribution Membership Interest
------ -------- ------------ -------------------
IX, Inc. 1% $1,000 Class B
0 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000-0000
Fax: 000-000-0000
IX Holding Co., Inc. 92.82% $25,000,000 Class A
c/o General Atlantic Service
Corporation
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Fax: 000-000-0000
Xxxxxxxxx & Co., LLC 6.18% $1,250,000 1/ Class B
00 Xxxx 00xx Xx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
--------
1/ Services rendered to IX, L.L.C. valued at $1,250,000.
