Exhibit 10.21

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

THE SHERIDAN GROUP HOLDINGS (JEFFERIES), LLC

 

 

THE UNITS REFERENCED HEREIN HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS.  WITHOUT REGISTRATION, THESE SECURITIES MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT ON
DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE BOARD OF
THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR THE TRANSFER, OR THE
SUBMISSION TO THE BOARD OF THE COMPANY OF OTHER EVIDENCE SATISFACTORY TO THE
BOARD TO THE EFFECT THAT ANY TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR
REGULATIONS PROMULGATED THEREUNDER.  ADDITIONALLY, ANY SALE OR OTHER TRANSFER OF
ANY SUCH UNIT IS SUBJECT TO CERTAIN RESTRICTIONS THAT ARE SET FORTH IN THESE
REGULATIONS, THE FOLLOWING AGREEMENT AND THE MEMBERS AGREEMENT REFERRED TO
HEREIN.

 

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TABLE OF CONTENTS

 

ARTICLE I

GENERAL PROVISIONS; DEFINITIONS

 

 

 

 

Section 1.1

Formation

 

Section 1.2

Name

 

Section 1.3

Purposes and Powers

 

Section 1.4

Place of Business

 

Section 1.5

Registered Office and Registered Agent

 

Section 1.6

Fiscal Year

 

Section 1.7

Term

 

Section 1.8

Definitions

 

 

 

 

ARTICLE II

MEMBERS

 

 

 

 

Section 2.1

Members

 

Section 2.2

Meetings of Members

 

Section 2.3

Notice of Meetings of Members

 

Section 2.4

Quorum

 

Section 2.5

Voting Rights

 

Section 2.6

Registered Members

 

Section 2.7

Action Without a Meeting and Telephonic Meetings

 

Section 2.8

Limitation of Liability

 

Section 2.9

No Right to Withdraw

 

Section 2.10

Rights to Information

 

Section 2.11

Lack of Authority

 

Section 2.12

Nature of Interest in the Company

 

Section 2.13

Termination of Units

 

Section 2.14

Representations and Warranties of Members

 

Section 2.15

Business Opportunities of FS Private Investments III LLC and Jefferies

 

 

 

 

ARTICLE III

CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS

 

 

 

 

Section 3.1

Capital Contributions

 

Section 3.2

Capital Accounts

 

Section 3.3

Interest

 

Section 3.4

Negative Capital Accounts

 

Section 3.5

LLC Capital

 

Section 3.6

No Withdrawal

 

Section 3.7

Loans from Unitholders

 

Section 3.8

Transfer of Capital Accounts

 

 

 

 

ARTICLE IV

DISTRIBUTIONS AND ALLOCATIONS

 

 

 

 

Section 4.1

Distributions

 

Section 4.2

Allocations

 

 

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Section 4.3

Special Allocations

 

Section 4.4

Tax Allocations

 

Section 4.5

Curative Allocations

 

Section 4.6

Indemnification and Reimbursement for Payments on Behalf of a Unitholder or
Former Unitholder

 

 

 

 

ARTICLE V

MANAGEMENT

 

 

 

 

Section 5.1

Management Authority

 

Section 5.2

Number, Election and Qualifications

 

Section 5.3

Designation of Advisors

 

Section 5.4

Meetings of the Board

 

Section 5.5

Quorum

 

Section 5.6

Attendance and Waiver of Notice

 

Section 5.7

Delegation by the Board

 

Section 5.8

Issuance of Units

 

Section 5.9

Actions Without a Meeting and Telephonic Meetings

 

Section 5.10

Indemnification of Each Unitholder, Member, Terminated Member and Advisor

 

Section 5.11

Heirs and Personal Representatives

 

Section 5.12

Non-Exclusivity

 

Section 5.13

Issuance or Transfer of Interests

 

Section 5.14

Admission of New Members

 

Section 5.15

Withdrawal, Expulsion or Other Termination of Members

 

Section 5.16

Share of a Terminated Member

 

Section 5.17

Effect of Termination of a Member

 

Section 5.18

Forfeiture of Class B Units upon Termination of Employment of Executive

 

Section 5.19

LLC Funds

 

Section 5.20

Devotion of Time

 

Section 5.21

Payments to Advisors; Reimbursements

 

 

 

 

ARTICLE VI

DURATION; TERMINATION

 

 

 

 

Section 6.1

Duration

 

Section 6.2

Liquidation of LLC Interests

 

 

 

 

ARTICLE VII

VALUATION

 

 

 

 

Section 7.1

Valuation

 

 

 

 

ARTICLE VIII

BOOKS OF ACCOUNT

 

 

 

 

Section 8.1

Books

 

Section 8.2

Tax Allocations and Reports

 

 

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ARTICLE IX

MISCELLANEOUS

 

 

 

 

Section 9.1

Amendments

 

Section 9.2

Successors

 

Section 9.3

Governing Law; Severability

 

Section 9.4

Notices

 

Section 9.5

Singular; Plural; Gender

 

Section 9.6

Entire Agreement; Headings; Counterparts

 

Section 9.7

No Third Party Beneficiaries

 

Section 9.8

No Action for Partition

 

Section 9.9

Business Days

 

Section 9.10

No Strict Construction

 

Section 9.11

Manner of Distributions

 

Section 9.12

Compliance with the Act

 

Section 9.13

Further Assurances

 

Section 9.14

No Waiver of Remedies

 

Section 9.15

Remedies Cumulative

 

Section 9.16

Jurisdiction and Venue

 

Section 9.17

Waiver of Jury Trial

 

 

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LIMITED LIABILITY COMPANY AGREEMENT

OF

THE SHERIDAN GROUP HOLDINGS (JEFFERIES), LLC

 

This LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”), dated as of May 10,
2005, of The Sheridan Group Holdings (Jefferies), LLC, a Delaware limited
liability company (the “LLC” or “Company”), by and among the Members listed on
the attached Schedule I.  Certain terms used herein but not otherwise defined
have the meaning set forth in Section 1.8.

 

WHEREAS, the LLC was formed on February 22, 2005;

 

WHEREAS, the parties agree that their respective rights, powers, duties and
obligations with respect to the LLC and the management, operations and
activities of the LLC shall be governed by this Agreement.

 

WHEREAS, it is contemplated that the Members shall make capital contributions to
the LLC in such amounts and in such form as are set forth opposite their names
on Schedule I attached hereto.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Members hereby agree as follows:

 

ARTICLE I
GENERAL PROVISIONS; DEFINITIONS

 

Section 1.1                                      Formation.  The LLC was formed
upon the filing of the Certificate of Formation of the LLC with the Secretary of
State of the State of Delaware on February 22, 2005 pursuant to the Act.  The
Members shall continue the existence of the LLC until dissolution and
termination of the LLC in accordance with the provisions of Article VI hereof. 
The Certificate of Formation may be restated by the LLC as provided in the Act
or amended by the LLC with respect to the address of the registered office of
the LLC in Delaware or the name and address of its registered agent in
Delaware.  Other additions to or amendments of the Certificate of Formation
shall be authorized as provided in Section 2.5.  The Certificate of Formation,
as so amended from time to time, is referred to herein as the “Certificate.” 
Any Member who so requests shall have the right to receive from the LLC a copy
of the Certificate and any amendment thereto.

 

Section 1.2                                      Name.  The name of the LLC
shall be The Sheridan Group Holdings (Jefferies), LLC, or such other name or
names as the Board may from time to time designate; provided, that the name
shall always contain the words “Limited Liability Company” or “LLC.”

 

Section 1.3                                      Purposes and Powers.  The LLC
is organized for any lawful business, purpose or activity that may be conducted
by a limited liability company under the Act.  The Company shall have any and
all powers that are necessary or desirable to carry out the

 

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purposes and business of the Company, to the extent the same may be legally
exercised by limited liability companies under the Act.

 

Section 1.4                                      Place of Business.  The
principal office and place of business of the LLC shall initially be c/o
Jefferies Capital Partners, 520 Madison Avenue, 12th Floor, New York, NY 10022. 
The Board may change the principal office or place of business of the LLC from
time to time and may cause the LLC to establish other offices or places of
business in various jurisdictions and appoint agents for service of process in
such jurisdictions.

 

Section 1.5                                      Registered Office and
Registered Agent.  The Company’s initial registered agent and office shall be
The Corporation Trust Company, 1209 Orange Street, Wilmington, DE 19801.

 

Section 1.6                                      Fiscal Year.  The fiscal year
of the LLC shall end on December 31 of each year (the “Fiscal Year”).

 

Section 1.7                                      Term.  The term of the LLC
shall be perpetual from the date of filing of the Certificate with the Secretary
of State of the State of Delaware, unless the LLC is earlier dissolved in
accordance with either the provisions of this Agreement or the Act.

 

Section 1.8                                      Definitions.  For purposes of
this Agreement:

 

“Act” means the Delaware Limited Liability Company Act, Delaware Code, Title 6,
Sections 18-101, et seq., as in effect from time to time.

 

“Advisor” has the meaning set forth in Section 5.1.

 

“Affiliate” means as to any Person, any other Person that directly or indirectly
controls, or is under common control with, or is controlled by, such Person.  As
used in this definition, “control” (including, with its correlative meanings,
“controlled by” and “under common control with”) shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise).

 

“Agreement” has the meaning set forth in the introductory paragraph.

 

“Board of Advisors” or “Board” has the meaning set forth in Section 5.1.

 

“Book Value” means, with respect to any LLC asset, the adjusted basis of the LLC
asset for federal income tax purposes, except as follows:

 

(a)                                  The initial Book Value of any LLC asset
contributed by a Unitholder to the LLC shall be the gross fair market value of
such LLC asset as of the date of such contribution, as determined in good faith
by the Board;

 

(b)                                 The Book Value of each LLC asset shall be
adjusted to equal its respective gross fair market value, as determined in good
faith by the Board, as of the following times:

 

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(i)                                     the acquisition of an additional
interest in the LLC by any new or existing Unitholder in exchange for more than
a de minimis Capital Contribution unless the Board determines that such
adjustment is not necessary to reflect the relative economic interests of the
Unitholders in the LLC;

 

(ii)                                  the distribution by the LLC to a
Unitholder of more than a de minimis amount of LLC assets (other than cash) as
consideration for its Units unless the Board determines that such adjustment is
not necessary to reflect the relative economic interests of the Unitholders in
the LLC; and

 

(iii)                               the liquidation of the LLC within the
meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g);

 

(c)                                  The Book Value of an LLC asset distributed
to any Unitholder shall be the fair market value of such LLC asset as of the
date of distribution thereof as determined in good faith by the Board;

 

(d)                                 The Book Value of each LLC asset shall be
increased or decreased, as the case may be, to reflect any adjustments to the
adjusted basis of such LLC asset pursuant to Sections 732(d), 734(b) or
743(b) of the Code, but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(m); provided, that Book Values shall not be adjusted
pursuant to this subparagraph (d) to the extent that the Board determines that
an adjustment pursuant to subparagraph (b) above is necessary or appropriate in
conjunction with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph; and

 

(e)                                  If the Book Value of an LLC asset has been
determined or adjusted pursuant to subparagraphs (a), (b) or (d) above, such
Book Value shall thereafter be adjusted to reflect the depreciation or
amortization taken into account with respect to such LLC asset for purposes of
computing Profits and Losses.

 

“Capital Account” has the meaning set forth in Section 3.2.

 

“Capital Contributions” means, for each Unitholder, such Unitholder’s cash or
property contributed pursuant to Section 3.1 (net of any liabilities of such
Unitholder that the LLC is considered to assume or take subject to under
Section 752 of the Code).

 

“Certificate” has the meaning set forth in Section 1.1.

 

“Class A Member” means a Member holding Class A Units.

 

“Class A Unit” means a Unit representing a fractional part of the ownership of
the Company and having the rights, preferences and obligations specified with
respect to Class A Units in this Agreement.

 

“Code” means the Internal Revenue Code of 1986, as amended, as in effect as of
the date hereof.  Such term shall be deemed to include any future amendment to
the same and

 

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any corresponding provision of any successor thereto to the extent the Board
determines that any such amendment or provision does not adversely affect the
economic interests of the Unitholders hereunder.

 

“Common Stock” means the common stock, par value $.001 per share, of TSG
Holdings.

 

“Common Units” means the Class A Units and the Class B Units.

 

“Deficit Capital Account” shall mean with respect to any Unitholder, the deficit
balance, if any, in such Unitholder’s Capital Account as of the end of the
taxable year, after giving effect to the following adjustments:

 

(a)                                  Credit to such Capital Account any amount
that such Unitholder is obligated to restore under Treasury Regulations
Section 1.704-1(b)(2)(ii)(c), as well as any addition thereto pursuant to the
next to last sentence of Treasury Regulations Sections 1.704-2(g)(1) and (i)(5),
after taking into account thereunder any changes during such year in partnership
minimum gain (as determined in accordance with Treasury Regulations Sections
1.704-2(d)) and in the minimum gain attributable to any partner nonrecourse debt
(as determined under Treasury Regulations Section §1.704-2(i)(3)); and

 

(b)                                 Debit to such Capital Account the items
described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

 

This definition of Deficit Capital Account is intended to comply with the
provisions of Treasury Regulations Sections 1.704-1(b)(2)(ii)(d) and 1.704-2,
and shall be interpreted consistently with those provisions.

 

“Disability” means (a) the inability, due to illness, accident, injury, physical
or mental incapacity or other disability, of the Executive to carry out
effectively his duties and obligations to the LLC or any of its Subsidiaries or
to participate effectively and actively in the management of the LLC or any of
its Subsidiaries for a period of at least 90 consecutive days or for shorter
periods aggregating at least 90 days (whether or not consecutive) during any
six-month period, as determined in the good faith judgment of the Board, or
(b) as otherwise defined in any employment agreement, letter or other agreement
between the Executive and, or in written policies or procedures of, the LLC or
any of its Subsidiaries; provided, that the LLC and its Subsidiaries shall
comply with the Americans with Disabilities Act.

 

“Distribution” means each distribution made by the LLC to a Unitholder, whether
in cash, property or securities of the LLC and whether by liquidating
distribution, redemption, repurchase or otherwise (net of any liabilities of the
LLC that such Unitholder is considered to assume or take subject to under
Section 752 of the Code); provided, that none of the following shall be a
Distribution:  (a) any recapitalization or exchange of securities of the LLC,
(b) any subdivision (by Unit split or otherwise) or any combination (by reverse
Unit split or otherwise) of any outstanding Units, and (c) any redemption or
repurchase of any outstanding Units by the LLC.

 

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“Entity” means any general partnership, limited partnership, limited liability
company, corporation, joint venture, trust, business trust, cooperative,
association, or any foreign trust or foreign business organization, or any other
entity that is not a natural person.

 

“Executive” means John A. Saxton and any other employee of TSG Holdings or any
of its Subsidiaries who hereafter becomes a party to this Agreement.

 

“Fiscal Year” has the meaning set forth in Section 1.6.

 

“Indemnifying Person” has the meaning set forth in Section 4.6.

 

“IRR” means the annual interest rate, compounded annually, which, when used to
calculate the net present value of all Cash Inflows and all Cash Outflows (as
defined below), causes such net amount to equal zero.  “Cash Inflows” as used
herein shall include all cash Distributions made to the holders of Preferred
Units and Class A Units pursuant to Section 4.1(a)(i), 4.1(a)(ii),
4.1(a)(iii) and 4.1(a)(iv).  “Cash Outflows” as used herein shall mean the sum
of all cash payments made by the holders of Preferred Units and Class A Units to
acquire such Units; provided that with respect to the Units issued in exchange
for Capital Contributions made in the form of Preferred Stock and Common Stock
of TSG Holdings, (i) Cash Outflows shall mean the sum of all cash payments made
to acquire such shares of Preferred Stock and Common Stock and (ii) IRR shall be
calculated based on when such cash payments were made (i.e., August 21, 2003),
not when such Capital Contributions were made.

 

“Investor Unitholder” means Jefferies.

 

“Jefferies” means ING Furman Selz Investors III L.P., ING Barings U.S. Leveraged
Equity Plan, LLC, ING Barings Global Leveraged Equity Plan Ltd., ING Barings
Global Leveraged Equity Plan Holdings LLC, and any other fund managed by FS
Private Investments III LLC or its Affiliates.

 

“Jefferies Units” means (i) any Common Units issued or issuable to Jefferies
pursuant hereto, (ii) any Common Units subsequently acquired by Jefferies or any
of its Affiliates, and (iii) any common equity securities issued or issuable
directly or indirectly with respect to the securities referred to in clauses
(i) or (ii) above by way of recapitalization, merger, consolidation or other
reorganization, including a recapitalization or exchange.  As to any particular
Jefferies Units, such securities shall cease to be Jefferies Units when they
have been (x) distributed to the public pursuant to a offering registered under
the Securities Act, (y) sold to the public through a broker, dealer or market
maker in compliance with Rule 144 under the Securities Act (or any similar
rule then in force), or (z) acquired by any Executive.

 

“Losses” means items of the LLC’s loss and deduction determined according to
Sections 3.2(b) and (c).

 

“Marketable Securities” means Securities that are:

 

(a)                                  traded on a national securities exchange;

 

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(b)                                 reported through the National Association of
Securities Dealers, Inc., Automated Quotation System; or

 

(c)                                  otherwise traded over-the-counter or
saleable in transactions effected pursuant to Rule 144A under the Securities
Act,

 

as the case may be, and that, in each case, are determined by the Board to be
marketable at a price approximating their Value within a reasonable period of
time and are not subject to restrictions on Transfer as a result of applicable
contract provisions or the provisions of the Securities Act (other than as
contemplated by Rule 144A of the regulations promulgated thereunder) or
regulations thereunder.

 

“Member” means each party listed on the attached Schedule I and any other Person
who is admitted to the LLC as a Member pursuant to Section 5.14, in each case
solely in such Person’s capacity as a Member of the LLC and so long as such
Person continues to be a Member hereunder, and “Members” means all such Members.

 

“Minimum Gain” means, with respect to each nonrecourse liability of the LLC, the
amount of gain (of whatever character), if any, that would be realized by the
LLC if the LLC disposed of (in a taxable transaction) its property subject to
such liability in full satisfaction thereof (and for no other consideration),
and then aggregating the amounts so computed.  A Unitholder’s share of Minimum
Gain shall, at the end of any LLC Taxable Year, be equal to the excess of (x)
the sum of the nonrecourse deductions allocated to such Unitholder (and such
Unitholder’s predecessors in interest) and the aggregate distributions to such
Unitholder (and such Unitholder’s predecessors in interest) up to that time of
proceeds of nonrecourse liabilities that are allocable to an increase in Minimum
Gain over (y) the sum of such Unitholder’s (and such Unitholder’s predecessors
in interest) aggregate share of the net decreases in Minimum Gain up to that
time and such Unitholder’s (and such Unitholder’s predecessors in interest)
aggregate share of the decreases up to that time in Minimum Gain resulting from
revaluations of LLC property subject to one or more nonrecourse liabilities of
the LLC, as computed in accordance with the provisions of Treasury Regulations
Section 1.704-2(g).

 

“New Members” has the meaning set forth in Section 5.14.

 

“Offered Units” has the meaning set forth in Section 5.18.

 

“Permitted Transferee” has the meaning ascribed to such term in the Members
Agreement.

 

“Person” means any natural person or Entity, including a natural person’s heirs,
executors, administrators when the context so permits.

 

“Preferred Stock” means the Series A 10% Cumulative Compounding Preferred Stock,
par value $.001 per share, of TSG Holdings.

 

“Preferred Unit” means a Unit representing a fractional part of the ownership of
the Company and having the rights, preferences and obligations specified with
respect to Preferred Units in this Agreement.

 

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“Preferred Yield” means, with respect to each Preferred Unit, the amount
accruing on such Preferred Unit on a daily basis, at the rate of 10% per annum,
compounded annually on the last day of each July, on (a) the Unreturned Capital
of such Preferred Unit plus (b) Unpaid Preferred Yield thereon for all prior
periods.  Notwithstanding the foregoing, with respect to a Preferred Unit issued
in exchange for a share of Preferred Stock, for purposes of calculating the
Preferred Yield with respect to the period ending July 31, 2005 on such
Preferred Unit, the Unreturned Capital of such Preferred Unit shall be reduced
by an amount equal to the dividends which had accrued on such share of Preferred
Stock for the period from August 1, 2004 to the date prior to the contribution
of such share of Preferred Stock to the capital of the LLC, it being understood
that (i) for all other purposes the Unreturned Capital of such Preferred Unit
shall not be reduced by such amount and (ii) the purpose of this sentence is to
synchronize and equalize the compounding of dividends on such share of Preferred
Stock with the compounding of Preferred Yield on such Preferred Unit, so that at
July 31, 2005 the sum of the liquidation preference and accrued dividends on
such share of Preferred Stock will equal the sum of the Unreturned Capital and
Unpaid Preferred Yield on such Preferred Unit.  In calculating the amount of any
Distribution to be made during a period, a Preferred Unit’s Preferred Yield for
such portion of such period elapsing before such Distribution is made shall be
included as part of such Unit’s Preferred Yield.

 

“Profits” means items of the LLC’s income and gain determined according to
Sections 3.2(b) and (c).

 

“Required Members” means, as of any date, the approval, request or consent of
the holders of a majority of the Jefferies Units.

 

“Securities” shall mean shares of capital stock, limited partner interests,
warrants, options, bonds, notes, debentures and other securities and equity
interests of whatever kind of any Person, whether readily marketable or not.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.

 

“Subsidiaries” means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof.  Notwithstanding the
foregoing, TSG Holdings shall be considered a Subsidiary of the LLC.  For
purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing director, general partner or
similar controlling Person of such limited liability company, partnership,
association or other business entity.

 

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“Taxable Year” means the LLC’s Fiscal Year or such other year as may be required
by Code Section 706.

 

“Terminated Member” has the meaning set forth in Section 5.15.

 

“Transfer” has the meaning set forth in Section 5.13(a).

 

“Treasury Regulations” means the income tax regulations promulgated under the
Code and effective as of the date hereof.  Such term shall be deemed to include
any future amendments to such regulations and any corresponding provisions of
succeeding regulations to the extent the Board determines that any such
amendments and succeeding regulations do not adversely affect the economic
interests of the Unitholders hereunder.

 

“TSG Holdings” means TSG Holdings Corp., a Delaware corporation.

 

“Unit” means an interest in the Profits, Losses and Distributions of the LLC
representing a fractional part of all of the Profits, Losses and Distributions
of the LLC; provided, that any class or type of Units issued shall have the
rights, preferences and obligations specified in this Agreement.

 

“Unitholder” means any Person (whether or not a Member) in its capacity as owner
of one or more Units as reflected on the LLC’s books and records.

 

“Unpaid Preferred Yield” of any Preferred Unit means, as of any date, an amount
equal to the excess, if any, of (a) the aggregate Preferred Yield accrued on
such Preferred Unit for all periods prior to such date, over (b) the aggregate
amount of prior Distributions made by the Company that constitute payment of
Preferred Yield on such Preferred Unit pursuant to Section 4.1(a)(i).

 

“Unreturned Capital” means, with respect to a Unit, the Capital Contribution
made in exchange for or on account of such Unit reduced by all Distributions
made by the LLC that constitute a return of the Capital Contribution therefor
pursuant to Section 4.1(a)(ii) (in the case of Preferred Units) or
Section 4.1(a)(iii) (in the case of Class A Units).

 

“Value” shall mean, with respect to any Securities owned (directly or
indirectly) by the LLC at any time, the fair market value of such Securities, as
determined in accordance with Article VII hereof.

 

“Wholly-Owned Subsidiary” means, with respect to any Person, a Subsidiary of
which all of the outstanding capital stock or other ownership interests are
owned by such Person or another Wholly-Owned Subsidiary of such Person.

 

ARTICLE II
MEMBERS

 

Section 2.1                                      Members.  The initial Members
of the LLC and their addresses are listed on Schedule I hereto, and such
schedule shall be amended from time to time by the Board,

 

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among other reasons, to reflect the withdrawal or termination of Members or the
admission of additional Members pursuant to this Agreement.

 

Section 2.2                                      Meetings of Members.  Meetings
of the Members may be called by (i) the Board, or (ii) the holders of a majority
of the Class A Units.  All meetings of the Members will be held at the principal
office of the LLC or at such other place within or without the State of Delaware
as may be determined by the Board and set forth in the respective notice or
waivers of notice of such meeting.

 

Section 2.3                                      Notice of Meetings of Members. 
Written or printed notice stating the place, day and hour of the meeting will be
delivered, by or at the direction of the Board, to each Member entitled to vote
at such meeting not fewer than three (3) business days before the date of the
meeting; provided, that such notice requirement may be waived in writing by the
Required Members.  Such notice may, but need not, specify the purpose or
purposes of such meeting and may, but need not, limit the business to be
conducted at such meeting to such purpose(s).  Attendance of a Member at a
meeting shall constitute a waiver of notice of such meeting, except when the
Member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened.

 

Section 2.4                                      Quorum.  Except as otherwise
provided by applicable law, Members holding a majority of the Class A Units,
represented in person or by proxy, shall constitute a quorum at all meetings of
the Members.  Once a quorum is present at the meeting of the Members, the
subsequent withdrawal from the meeting of any Member prior to adjournment or the
refusal of any Member to vote will not affect the presence of a quorum at the
meeting.  If, however, such quorum will not be present at any meeting of the
Members, the Members entitled to vote at such meeting will have the power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until Members representing a quorum are present or represented.

 

Section 2.5                                      Voting Rights.  Except as
specifically provided herein or otherwise required by applicable law, (i) each
Class A Member shall be entitled to one vote per Class A Unit held by such
Class A Member on all matters to be voted on by the Members of the LLC and
(ii) the Class B Units, and the Preferred Units shall be non-voting Units and
shall not entitle the holders thereof to vote on any matters to be voted on by
the Members of the LLC.  When a quorum is present, the affirmative vote of
Members holding a majority of Class A Units (whether present in person or
represented by proxy) entitled to vote on the subject matter shall be the act of
the Members, unless the question is one upon which by express provision of the
Act or this Agreement requires the consent of a specific Member or Members, in
which case such express provision shall govern and control the decision of such
question.

 

Section 2.6                                      Registered Members.  The LLC
will be entitled to treat the owner of record of any Units as the owner in fact
of such Unit for all purposes, and accordingly will not be bound to recognize
any equitable or other claim to or interest in such Unit on the part of any
other person, whether or not it will have express or other notice of such claim
or interest, except as expressly provided by this Agreement or the laws of the
State of Delaware.

 

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Section 2.7                                      Action Without a Meeting and
Telephonic Meetings.  Notwithstanding any provision contained in this Agreement,
any action of the Members may be taken by written consent without a meeting, or
any meeting of the Members may be held by means of a telephonic conference
connection so long as all parties can hear one another.  Any such action taken
by the Members by written consent without a meeting will be effective only if
the written consent or consents are in writing, set forth the action so taken,
and are signed by Members holding a majority of the Class A Units.  Prompt
notice of the taking of any such action by the Members without a meeting by less
than unanimous written consent shall be given to those Members who have not
consented in writing.

 

Section 2.8                                      Limitation of Liability. 
Except as otherwise provided in the Act, no Member or Unitholder shall be
obligated personally for any debt, obligation or liability of the LLC or of any
other Member or Unitholder solely by reason of being a Member or Unitholder. 
Except as otherwise provided in the Act, by law or expressly in this Agreement
or any of the other Investment Documents, no Member or Unitholder, each in its
capacity as such, shall have any fiduciary or other duty to another Member or
Unitholder with respect to the business and affairs of the LLC.  No Member or
Unitholder shall have any responsibility to restore any negative balance in his
Capital Account or to contribute to or in respect of the liabilities or
obligations of the LLC or return distributions made by the LLC except as
provided in Section 4.6 or as otherwise required by the Act or other applicable
law; provided, that Unitholders shall be responsible for their failure to make
capital contributions required hereunder.

 

Section 2.9                                      No Right to Withdraw.  No
Unitholder shall have any right to receive any distribution or the repayment of
his Capital Contributions, except distributions provided in Section 4.1 and
distributions provided in Article VI upon dissolution and liquidation of the
LLC.  A Member may withdraw from the LLC only in accordance with Section 5.15.

 

Section 2.10                                Rights to Information.  Members
shall have the right to receive from the LLC upon request a copy of the
Certificate and of this Agreement, as in effect from time to time, and such
other information regarding the LLC as is required by the Act, subject to
reasonable conditions and standards established by the Board (which may include,
without limitation, withholding or restrictions on the disclosure or use of
confidential information).  Terminated Members shall have the right to receive
such information from the LLC regarding the basis of the allocations made
pursuant to Section 4.2 and the distributions made pursuant to Section 4.1 as
such a Terminated Member may reasonably request, subject to reasonable
conditions and standards established by the Board (which may include, without
limitation, withholding or restrictions on the disclosure or use of confidential
information).

 

Section 2.11                                Lack of Authority.  The Members
shall have no power to participate in the management of the LLC except as
expressly authorized by the Act or this Agreement.  No Member, acting solely in
the capacity of a Member, is an agent of the LLC nor does any Member, unless
expressly and duly authorized in writing to do so by the Board, have any power
or authority to act for or on behalf of the LLC, to do any act that would be
binding on the LLC, to pledge its credit, to incur any expenditures on behalf of
the LLC, to execute any instrument on its behalf or to render it liable for any
purpose.

 

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Section 2.12                                Nature of Interest in the Company. 
A Member’s interests in the LLC shall be personal property for all purposes.

 

Section 2.13                                Termination of Units.  A Member
shall cease to be a Member or Unitholder, as the case may be, at such time that
such Member transfers all of its Units in accordance with this Agreement.

 

Section 2.14                                Representations and Warranties of
Members.  In connection with the acquisition by the Members of Units pursuant to
the terms and conditions of this Agreement (including each Member, if any,
admitted after the date hereof), each Member, severally and not jointly,
represents and warrants to the LLC that:

 

(a)                                  The Units will be acquired for the Member’s
own account and not with a view to, or intention of, distribution thereof in
violation of the Securities Act, or any applicable state securities laws, and
the Units will not be disposed of in contravention of the Securities Act or any
applicable state securities laws;

 

(b)                                 No commission, fee or other remuneration is
to be paid or given directly or indirectly, to any Person for soliciting the
Member to acquire the Membership Units;

 

(c)                                  The Member is sophisticated in financial
matters and is able to evaluate the risks and benefits of making the capital
contribution contemplated hereunder with respect to the Units and has determined
that such investment is suitable for the Member, based upon the Member’s
financial situation and needs, as well as the Member’s other securities
holdings;

 

(d)                                 The Member is not subject to any state’s
administrative enforcement order or judgment which prohibits, denies or revokes
the use of any exemption from registration in connection with the offer,
purchase or sale of securities;

 

(e)                                  The Member is able to bear the economic
risk of such Member’s investment in the Units for an indefinite period of time
and the Member understands that the Units have not been registered under the
Securities Act and cannot be sold unless subsequently registered under the
Securities Act or unless an exemption therefrom is available;

 

(f)                                    The Member has had an opportunity to ask
questions and receive answers concerning the terms and conditions of such
Member’s investment in the Units and has had full access to such other
information concerning the LLC as the Member has requested; and

 

(g)                                 This Agreement constitutes the legal, valid
and binding obligation of the Member, enforceable in accordance with its terms
(subject to principles of equity, the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws), and the
execution, delivery and performance of this Agreement by the Member does not and
will not, in any material respect, conflict with, violate or cause a

 

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breach of any applicable law, material agreement, contract or instrument to
which the Member is a party or any judgment, order or decree to which the Member
is subject.

 

Section 2.15                                Business Opportunities of FS Private
Investments III LLC and Jefferies.  The Members hereby acknowledge that the
interests of FS Private Investments III LLC, a Delaware limited liability
company (“FS Private Investments III LLC”), and Jefferies in the LLC are that of
investors providing capital for the LLC in accordance with the terms hereof, and
the very nature of the businesses of FS Private Investments III LLC and
Jefferies and the Affiliates thereof is to provide capital and financing in a
wide variety of forms to, and to make investments with respect to, a vast and
expanding number of diverse Persons, businesses and enterprises.  Accordingly,
the Members hereby agree that FS Private Investments III LLC and Jefferies and
their respective Affiliates may engage, provide financing, invest or possess an
interest in other businesses and enterprises of any kind, nature or description,
independently or with others, whether (i) such ventures are competitive with the
LLC and its Affiliates or (ii) the operations or property of such businesses and
enterprises are transacted or located in the vicinity of or adjacent to the LLC
or any area in which the LLC or any of its Affiliates engages in business, and,
to the extent permitted by the Act, FS Private Investments III LLC and Jefferies
and their respective Affiliates shall not have any duties or responsibilities to
the LLC that they might otherwise have under the Act.  The fact that FS Private
Investments III LLC, Jefferies or any of their respective Affiliates (including
any Jefferies Advisor who may be deemed to be Affiliates of FS Private
Investments III LLC or Jefferies) may take advantage of such opportunities and
not offer such opportunities, or disclose information pertaining thereto, to the
LLC or to the other Members, shall not subject FS Private Investments III LLC,
Jefferies or any of their respective Affiliates (including any Jefferies
Advisor) to any liability to the LLC or to the other Members whatsoever. 
Neither the LLC nor any other Member shall have the right by virtue of this
Agreement, or the relationship created hereby, in or to such ventures,
investments or other opportunities, or to the income or profits derived
therefrom by FS Private Investments III LLC¸ Jefferies or any of their
respective Affiliates, and the pursuit of, and nondisclosure of information to
the LLC pertaining to, such ventures, investments or other opportunities even
though competitive with the business of the LLC, shall not be deemed wrongful or
improper or in violation of this Agreement or any rights of the LLC or the
Members under the Act or other applicable law.

 

ARTICLE III
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS

 

Section 3.1                                      Capital Contributions. 
Immediately upon the execution and delivery of this Agreement, each initial
Member shall make the Capital Contribution set forth opposite the name of such
member on Schedule I hereto, and in exchange therefore shall be issued the
number and type of Units specified opposite the name of such Member on
Schedule I hereto.  Except for the Executive, the initial Capital Contributions
shall be made in the form of Preferred Stock and Common Stock of TSG Holdings. 
The initial Capital Account of each such initial Member shall equal the amount
set opposite such Member’s name on Schedule I hereto.  The Board may amend
Schedule I from time to time to reflect changes in ownership, including, without
limitation, by reason of the admission, withdrawal or termination of any Member
or the Transfer of any Unit.  Except for the Capital Contributions of the
Members required to be made

 

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pursuant to this Section 3.1, the Members shall not be required to make any
additional Capital Contributions.

 

Section 3.2                                      Capital Accounts.

 

(a)                                  The LLC shall maintain a separate “Capital
Account” for each Unitholder according to the rules of Treasury Regulations
Section 1.704-1(b)(2)(iv).  For this purpose, the LLC may, upon the occurrence
of the events specified in Treasury Regulations Section 1.704-1(b)(2)(iv)(f),
increase or decrease the Capital Accounts in accordance with the rules of such
regulation and Treasury Regulations Section 1.704-1(b)(2)(iv)(g) to reflect a
revaluation of the LLC property.

 

(b)                                 For purposes of computing the amount of any
item of the LLC’s income, gain, loss or deduction to be allocated pursuant to
Article IV and to be reflected in the Capital Accounts, the determination,
recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes
(including, without limitation, any method of depreciation, cost recovery and
amortization used for this purpose); provided, that:

 

(i)                                     The computation of all items of income,
gain, loss and deduction shall include those items described in Code
Section 705(a)(2)(B) or Treasury Regulations Section 1.704-1(b)(2)(iv)(i),
without regard to the fact that such items are not includable in gross income or
are not deductible for federal income tax purposes.

 

(ii)                                  If the Book Value of any LLC property is
adjusted pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(e) or (f),
the amount of such adjustment shall be taken into account as gain or loss from
the disposition of such property.

 

(iii)                               Items of income, gain, loss or deduction
attributable to the disposition of the LLC property having a Book Value that
differs from its adjusted basis for tax purposes shall be computed by reference
to the Book Value of such property.

 

(iv)                              Items of depreciation, amortization and other
cost recovery deductions with respect to the LLC property having a Book Value
that differs from its adjusted basis for tax purposes shall be computed by
reference to the property’s Book Value in accordance with Treasury Regulations
Section 1.704-1(2)(iv)(g).

 

(v)                                 To the extent an adjustment to the adjusted
tax basis of any LLC asset pursuant to Code Sections 732(d), 734(b) or 743(b) is
required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m), to be
taken into account in determining Capital Accounts, 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).

 

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(c)                                  The Board shall be responsible for
allocating items of income, gain, loss, and deduction for purposes of
determining Profits and Losses.

 

Section 3.3                                      Interest.  Except as otherwise
expressly provided herein, no interest shall be paid by the LLC on Capital
Contributions or on balances in Capital Accounts.

 

Section 3.4                                      Negative Capital Accounts.  No
Unitholder shall be required to pay to the LLC or any other Unitholder any
deficit or negative balance which may exist from time to time in such
Unitholder’s Capital Account.

 

Section 3.5                                      LLC Capital.  No Unitholder
shall have any right (a) to demand the return of such Unitholder’s Capital
Contribution or any other distribution from the LLC (whether upon resignation,
withdrawal, termination or otherwise), except upon dissolution of the LLC
pursuant to Article VI hereof, or (b) to cause a partition of the LLC’s assets.

 

Section 3.6                                      No Withdrawal.  No Person shall
be entitled to withdraw any part of his Capital Contribution or Capital Account
or to receive any Distribution from the LLC, except as expressly provided
herein.

 

Section 3.7                                      Loans from Unitholders.  Loans
by Unitholders to the LLC shall not be considered Capital Contributions.  If any
Unitholder shall advance funds to the LLC in excess of the amounts required
hereunder to be contributed by him to the capital of the LLC, the making of such
advance shall not result in any increase in the amount of the Capital Account of
such Unitholder.  The amount of any such advance shall be a debt of the LLC to
such Unitholder and shall be payable or collectible in accordance with the terms
and conditions upon which such advances are made, as agreed upon by the LLC
(with the approval of the Board) and such Unitholder.  Notwithstanding the
foregoing provisions of this Section 3.7, the LLC shall use its best efforts to
refrain from any activity that would cause a Member (or any holder of direct or
indirect interests in a Member) to recognize “unrelated business taxable income”
under Sections 511-514 of the Code.

 

Section 3.8                                      Transfer of Capital Accounts. 
The original Capital Account established for any substituted Unitholder shall be
in the same amount as the Capital Account of the Unitholder (or portion thereof)
to which such substituted Unitholder succeeds, at the time that the Transfer of
Units to such substituted Unitholder is permitted under Section 5.13.  The
Capital Account of any Unitholder whose interest in the LLC shall be increased
or decreased by means of (i) the Transfer to it of all or part of the Units of
another Unitholder or (ii) the forfeiture of Class B Units pursuant to
Section 5.18 shall be appropriately adjusted to reflect such Transfer or
forfeiture.  Any reference in this Agreement to a Capital Contribution of or
Distribution to a Unitholder that has succeeded any other Unitholder shall
include any Capital Contributions or Distributions previously made by or to the
former Unitholder on account of the Units of such former Unitholder transferred
to such Unitholder.

 

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ARTICLE IV
DISTRIBUTIONS AND ALLOCATIONS

 

Section 4.1                                      Distributions.

 

(a)                                  Distributions shall be made only when and
if, and in the amounts, determined by the Board.  Distributions of cash or other
property by the LLC shall be made to the Unitholders in the following order and
priority:

 

(i)                                     First, to the holders of Preferred
Units, an amount equal to the aggregate Unpaid Preferred Yield on the Preferred
Units held by such Unitholders (in the proportion that each Unitholder’s share
of Unpaid Preferred Yield on such Units bears to the aggregate Unpaid Preferred
Yield on all such Units as of the time of such Distribution) until the Unpaid
Preferred Yield in respect of the outstanding Preferred Units is equal to zero;

 

(ii)                                  Second, to the holders of Preferred Units,
an amount equal to the aggregate Unreturned Capital with respect to the
Preferred Units held by such Unitholders (in the proportion that each
Unitholder’s share of Unreturned Capital with respect to such Preferred Units
bears to the aggregate Unreturned Capital with respect to all such Units as of
the time of such Distribution) until the holders of Preferred Units have
received Distributions in respect of such Units pursuant to this
Section 4.1(a)(ii) in an amount equal to the aggregate Unreturned Capital with
respect to such Units as of the time of such Distribution;

 

(iii)                               Third, to holders of Class A Units, an
amount equal to the Unreturned Capital with respect to such Units (in the
proportion that each such Unitholder’s share of Unreturned Capital with respect
to such Class A Units bears to the aggregate Unreturned Capital with respect to
all such Units as of the time of such Distribution) until the holders of Class A
Units have received Distributions in respect of such Units pursuant to this
Section 4.1(a)(iii) in an amount equal to the aggregate Unreturned Capital with
respect to such Units as of the time of such Distribution;

 

(iv)                              Fourth, to the holders of Class A Units, pro
rata in accordance with the number of Class A Units held by each Unitholder,
until such time as each Class A Unitholder shall have achieved an IRR of 30%
with respect to their Preferred Units and Class A Units;

 

(v)                                 Fifth, 100% to the holders of Class B Units,
pro rata in accordance with the number of Class B Units, until holders of
Class B Units have received distributions pursuant to this
Section 4.1(a)(v) equal to 5% of the total distributions under
Section 4.1(a)(iii), Section 4.1(a)(iv) and this Section 4.1(a)(v);

 

(vi)                              Sixth, 95% to the holders of the Class A
Units, pro rata in accordance with the number of Class A Units held by such
holders, and 5% to the

 

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holders of Class B Units, pro rata in accordance with the number of Class B
Units held by such holders.

 

(b)                                 A Distribution pursuant to
Section 4.1(a) shall be made to the Persons shown on Schedule I as Unitholders
as of the date of such Distribution.  Without consent of the Required Members,
no distributions in kind of any of the LLC’s assets shall be made pursuant to
Section 4.1(a), except for distributions of Marketable Securities.

 

Section 4.2                                      Allocations.  Except as
otherwise provided in Section 4.3, Profits and Losses for any Fiscal Year shall
be allocated among the Unitholders in such manner that, as of the end of such
Fiscal Year, the respective Capital Accounts of the Unitholders shall be equal
to the respective net amounts, positive or negative, that would be distributed
to them, determined as if the LLC were to (i) liquidate the assets of the LLC
for an amount equal to their Book Value and (ii) distribute the proceeds of
liquidation pursuant to Section 6.2.

 

Section 4.3                                      Special Allocations.

 

(a)                                  Losses attributable to a partner
nonrecourse debt (as defined in Treasury Regulations Section 1.704-2(b)(4))
shall be allocated in the manner required by Treasury Regulations
Section 1.704-2(i).  If there is a net decrease during a Taxable Year in partner
nonrecourse debt minimum gain (as defined in Treasury Regulations
Section 1.704-2(i)(3)), Profits for such Taxable Year (and, if necessary, for
subsequent Taxable Years) shall be allocated to the Unitholders in the amounts
and of such character as determined according to Treasury Regulations
Section 1.704-2(i)(4).

 

(b)                                 Except as otherwise provided in
Section 4.3(a), if there is a net decrease in the Minimum Gain during any
Taxable Year, each Unitholder shall be allocated Profits for such Taxable Year
(and, if necessary, for subsequent Taxable Years) in the amounts and of such
character as determined according to Treasury Regulations Section 1.704-2(f). 
This Section 4.3(b) is intended to be a minimum gain chargeback provision that
complies with the requirements of Treasury Regulations Section 1.704-2(f), and
shall be interpreted in a manner consistent therewith.

 

(c)                                  If any Unitholder who unexpectedly receives
an adjustment, allocation, or distribution described in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6) has a Deficit Capital Account as
of the end of any Taxable Year, computed after the application of Sections
4.3(a) and 4.3(b) but before the application of any other provision of this
Article IV, then Profits for such Taxable Year shall be allocated to such
Unitholder in proportion to, and to the extent of, such Deficit Capital
Account.  This Section 4.3(c) is intended to be a qualified income offset
provision as described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d), and
shall be interpreted in a manner consistent therewith.

 

(d)                                 Subject to the other provisions of this
Section 4.3, if Profits or Losses are allocated for any Fiscal Year pursuant to
Section 4.3(a), (b), or (c), then subsequent allocations of Profits and Losses
shall be made, to the extent possible, to the

 

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Unitholders in such amounts so that the net Profits and Losses allocated
pursuant to this Section 4.3(d) and Sections 4.3(a), (b), and (c) are equal to
the net Profits and Losses that would have been allocated to the Unitholders if
such allocations pursuant to Sections 4.3(a), (b), and (c) had not been made.

 

Section 4.4                                      Tax Allocations.

 

(a)                                  The income, gains, losses, deductions and
credits of the LLC will be allocated, for federal, state and local income tax
purposes, among the Unitholders in accordance with the allocation of such
income, gains, losses, deductions and credits among the Unitholders for
computing their Capital Accounts, except that if any such allocation is not
permitted by the Code or other applicable law, the LLC’s subsequent income,
gains, losses, deductions and credit will be allocated among the Unitholders so
as to reflect as nearly as possible the allocation set forth herein in computing
their Capital Accounts.

 

(b)                                 Items of the LLC taxable income, gain, loss
and deduction with respect to any property contributed to the capital of the LLC
shall be allocated among the Unitholders in accordance with Code
Section 704(c) so as to take account of any variation between the adjusted basis
of such property to the LLC for federal income tax purposes and its Book Value.

 

(c)                                  If the Book Value of any LLC asset is
adjusted, subsequent allocations of items of taxable income, gain, loss and
deduction with respect to such asset shall take account of any variation between
the adjusted basis of such asset for federal income tax purposes and its Book
Value in the same manner as under Code Section 704(c).

 

(d)                                 Allocations of tax credits, tax credit
recapture and any items related thereto shall be allocated to the Unitholders
according to their interests in such items as determined by the Board taking
into account the principles of Treasury Regulations Section 1.704-1(b)(4)(ii).

 

(e)                                  Allocations pursuant to this Section 4.4
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 Unitholder’s Capital
Account or share of Profits, Losses, Distributions or other LLC items pursuant
to any provision of this Agreement.

 

Section 4.5                                      Curative Allocations.  If the
Board determines, after consultation with counsel experienced in income tax
matters, that the allocation of any item of LLC income, gain, loss, deduction or
credit is not specified in this Article IV (an “unallocated item”), or that the
allocation of any item of LLC income, gain, loss, deduction or credit hereunder
is clearly inconsistent with the Unitholders’ economic interests in the LLC
(determined by reference to the general principles of Treasury Regulations
Section 1.704-1(b) and the factors set forth in Treasury Regulations
Section 1.704-1(b)(3)(ii)) (a “misallocated item”), then the Board may allocate
such unallocated items, or reallocate such misallocated items, to reflect such
economic interests.

 

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Section 4.6                                      Indemnification and
Reimbursement for Payments on Behalf of a Unitholder or Former Unitholder.  If
the LLC is obligated to pay any amount to a governmental agency (or otherwise
makes a payment) because of a present or former Unitholder’s status or otherwise
specifically attributable to a present or former Unitholder (including, without
limitation, federal withholding taxes with respect to foreign Persons, state
personal property taxes, state unincorporated business taxes, etc.), then such
present or former Unitholder (the “Indemnifying Person”) shall indemnify the LLC
in full for the entire amount paid (including, without limitation, any interest,
penalties and expenses associated with such payments).  In the case of a present
Unitholder, the amount to be indemnified shall be charged against the amount
distributable to such Unitholder and against the Capital Account of the
Indemnifying Person.  Whether the Indemnifying Person is a present or former
Unitholder, at the option of the Board, either:

 

(i)                                     promptly upon notification of an
obligation to indemnify the LLC, the Indemnifying Person shall make a cash
payment to the LLC equal to the full amount to be indemnified (and the amount
paid shall be added to the Indemnifying Person’s Capital Account but shall not
be treated as Capital Contributions), or

 

(ii)                                  the LLC shall reduce subsequent
distributions that would otherwise be made to the Indemnifying Person, until the
LLC has recovered the amount to be indemnified (and the amount withheld shall
not be treated as Capital Contributions but will otherwise be treated as having
been paid to the Indemnifying Person for purposes of this Agreement).

 

ARTICLE V
MANAGEMENT

 

Section 5.1                                      Management Authority.  There is
hereby established an advisory board (the “Board of Advisors” or “Board”) to be
comprised of natural persons who shall be elected as set forth in this Article V
(each, an “Advisor”, and collectively, the “Advisors”).  The powers of the LLC
shall be exercised by or under the authority of, and the business and affairs of
the LLC shall be managed under, the Board.  In addition to the powers and
authorities expressly conferred by this Agreement upon the Board, except with
respect to certain responsibilities assigned to the Tax Matters Partner, all
decisions and determinations relating to the LLC and its operations shall be
made by the Board.

 

Section 5.2                                      Number, Election and
Qualifications.  The number of Advisors initially shall be two (2), which number
may be increased or decreased from time to time upon prior written consent of
the Required Members.  The Advisors shall be elected or removed as provided in
Section 5.3.  Advisors need not be residents of the State of Delaware.

 

Section 5.3                                      Designation of Advisors.

 

(a)                                  Each Member shall vote all of his Common
Units and all other voting securities of the LLC over which such Member has
voting control, and shall take all other necessary or desirable actions within
such Member’s control (whether in such

 

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Member’s capacity as a holder of Units, stockholder, Member, Advisor, director,
member of a board committee or officer of the LLC or otherwise, and including,
without limitation, attendance in person or by proxy for purposes of obtaining a
quorum and execution of written consents in lieu of meetings), and the LLC shall
take all necessary or desirable actions within their control (including, without
limitation, calling special board and Member or stockholder meetings), so that
the Board shall consist of individuals designated by the holders of a majority
of the Jefferies Units, acting through ING Furman Selz Investors III L.P. (the
“Jefferies Advisors”).  The Jefferies Advisors shall initially be James Luikart
and Nicholas Daraviras.

 

(b)                                 Any Advisor required to be elected as
described in Section 5.3(a) shall be removed from the Board or any committee
thereof (with or without cause) at the written request of the holder or other
Person that has the right to designate such Advisor under Section 5.3(a), but
only upon such written request and under no other circumstances.

 

(c)                                  In the event that any Advisor required to
be elected as described in Section 5.3(a) ceases to serve as an Advisor or a
member of any committee thereof during such representative’s term of office, the
resulting vacancy on the Board or such committee shall be filled by a
representative designated by the holder or other Person that has the right to
designate such Advisor under Section 5.3(a).

 

(d)                                 Once designated pursuant to this
Section 5.3, an Advisor shall continue in office until the removal of such
Advisor in accordance with the provisions of this Agreement or until the earlier
death or resignation of such Advisor.  Any Advisor may resign at any time by
giving written notice of such Advisor’s resignation to the Board.  Any such
resignation shall take effect at the time the Board receives such notice or at
any later effective time specified in such notice.  Unless otherwise specified
in such notice, the acceptance by the Board of such Advisor’s resignation shall
not be necessary to make such resignation effective.

 

Section 5.4                                      Meetings of the Board. 
Meetings of the Board may be held at such time and place either within or
without the State of Delaware as will from time to time be determined by the
Board.  Meetings of the Board may be called by any Advisor on not fewer than 24
hours written notice to each other Advisor.

 

Section 5.5                                      Quorum.  At all meetings of the
Board, the presence of a majority of the Advisors shall be necessary and
sufficient to constitute a quorum for the transaction of business unless a
greater number is required by law.  The act of a majority of the Advisors will
be the act of the Board, unless a greater number is required by law.  If a
quorum shall not be present at any meeting of the Board, the Advisors present at
the meeting may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum will be present.  An Advisor may
vote or be present at a meeting either in person or by proxy.

 

Section 5.6                                      Attendance and Waiver of
Notice.  Attendance of an Advisor at any meeting will constitute a waiver of
notice of such meeting, except where an Advisor attends

 

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a meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened. 
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the Board need be specified in the notice or waiver of notice
of such meeting.

 

Section 5.7                                      Delegation by the Board.  The
Board may authorize any Person (including, without limitation, any Member or
Advisor) to enter into any document on behalf of the LLC and perform the
obligations of the Company thereunder.  In the absence of any such
authorization, no document or agreement shall be binding on the LLC unless
signed on behalf of the LLC by an Advisor.

 

Section 5.8                                      Issuance of Units.  The Board
will have sole and complete discretion in determining whether to issue Units,
the number of Units to be issued at any particular time, the purchase price for
any Units issued, and all other terms and conditions governing the issuance of
Units; provided, that the Board will not issue Units to any Person unless the
issuance of the Units satisfies the conditions set forth in Section 5.13.  The
purchase price for any Unit will be paid to the LLC in cash or cash equivalents,
or if approved by the Board, any other form of consideration.

 

Section 5.9                                      Actions Without a Meeting and
Telephonic Meetings.  Notwithstanding any provision contained in this Agreement,
any action of the Board may be taken by written consent without a meeting, or
any meeting of the Board may be held by means of a telephonic conference
connection so long as all parties can hear one another.  Any such action taken
by the Board by written consent without a meeting will be effective only if the
written consent or consents are in writing, set forth the action so taken, and
are signed by all Advisors of the Board.

 

Section 5.10                                Indemnification of Each Unitholder,
Member, Terminated Member and Advisor.  Except as limited by law and subject to
the provisions of this Article, each Unitholder, Member, Terminated Member and
Advisor, shall be entitled to be indemnified and held harmless on an as-incurred
basis by the LLC (but only after first making a claim for indemnification
available from any other source and only to the extent indemnification is not
provided by that source) to the full extent permitted under the Act, as in
effect from time to time, against all losses, liabilities and expenses
(including, without limitation, attorneys’ fees and expenses) arising from
proceedings in which such Unitholder, Member, Terminated Member or Advisor, as
the case may be, may be involved, as a party or otherwise, by reason of his
being or having been a Unitholder, Member, Terminated Member or Advisor of the
LLC, or by reason of his involvement in the management of the affairs of the LLC
(including, without limitation, by virtue of acting as an officer, director or
employee of a Subsidiary of the LLC), whether or not he continues to be such at
the time any such loss, liability or expense is paid or incurred but only to the
extent that he (i) acted in good faith and (ii) was neither grossly negligent
nor engaged in willful malfeasance.  The rights of indemnification provided in
this Article will be in addition to any rights to which such Unitholder, Member,
Terminated Member or Advisor may otherwise be entitled by contract or as a
matter of law and shall extend to his successors and assigns.  The right of each
Unitholder, Member, Terminated Member or Advisor to indemnification hereunder
for reasonable expenses (as incurred) (including, without limitation, attorneys’
fees and expenses) incurred by such Unitholder, Member, Terminated Member or
Advisor may be

 

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conditioned upon the delivery by such Unitholder, Member, Terminated Member or
Advisor to the LLC of a written undertaking (reasonably acceptable to the Board)
to repay such amount if such Unitholder, Member, Terminated Member or Advisor is
determined pursuant to this Article or adjudicated to be ineligible for
indemnification, which undertaking shall be an unlimited general obligation but
need not be secured.

 

Section 5.11                                Heirs and Personal Representatives. 
The indemnification provided by this Article shall inure to the benefit of the
Affiliates, heirs and personal representatives of each Unitholder, Member,
Terminated Member or Advisor of the LLC.

 

Section 5.12                                Non-Exclusivity.  The provisions of
this Article shall not be construed to limit the power of the LLC to indemnify
its Unitholders, Members, Terminated Members, Advisors, or agents to the full
extent permitted by law or to enter into specific agreements, commitments or
arrangements for indemnification permitted by law.  The absence of any express
provision for indemnification herein shall not limit any right of
indemnification existing independently of this Article.

 

Section 5.13                                Issuance or Transfer of Interests.

 

(a)                                  Restrictions on Transfer.  Other than a
Permitted Transfer permitted by Section 5.13(c), no Member nor any assignee or
successor in interest to any Member shall (voluntarily or involuntarily)
directly or indirectly, sell, transfer, assign, pledge or otherwise dispose of
(each, a “Transfer”) any Units (or other equity interests in the LLC) or any
economic benefit therein (including a transfer pursuant to a foreclosure sale of
any of the assets of a Member), or in any part thereof, or in any part of the
property of the LLC, without the prior approval of the Board; provided that this
provision shall not restrict Transfers by a Jefferies Member or its Permitted
Transferees or its or their subsequent transferees.

 

(b)                                 Void Transfers.

 

(i)                                     Any purported Transfer of Units or any
economic interest therein not in compliance with this Section 5.13 shall be null
and void ab initio, regardless of any notice provided to the LLC, and shall not
create any obligation or liability of the LCC to the purported transferee, and
any Person purportedly acquiring any Units or any economic benefit therein
purportedly transferred not in compliance with this Section 5.13 shall not be
entitled to admission to the LLC as a substitute Member.

 

(ii)                                  In the case of an attempted Transfer of
any Units or any economic interest therein that is not in compliance with this
Section 5.13, the parties engaging or attempting to engage in such Transfer
shall indemnify and hold harmless the LLC, the Board and the other Members from
all cost, liability and damage that any of such indemnified persons may incur
(including, without limitation, incremental tax liability and attorneys’ fees
and expenses) as a result of such Transfer or attempted Transfer and the
enforcement of this indemnity.

 

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(c)                                  Permitted Transfers.  For purposes of this
Agreement, a Permitted Transfer shall mean a Transfer by any Member or Permitted
Transferee to any Permitted Transferee.  As used herein, “Permitted Transferee”
shall mean a Transferee who agrees in writing to be bound by the terms of this
Agreement and who is:

 

(A)                              in the case of any Member or Permitted
Transferee who is a natural person, such Member’s or Permitted Transferee’s
spouse, children or grandchildren (in each case, natural or adopted), any trust
for the exclusive benefit of such Member or Permitted Transferee or such
Member’s or Permitted Transferee’s spouse, children or grandchildren (in each
case, natural or adopted), or any corporation, partnership or limited liability
company in which the direct and beneficial owner of all of the equity interest
is such individual Member or Permitted Transferee or such Member’s or Permitted
Transferee’s spouse, children or grandchildren (in each case, natural or
adopted); or

 

(B)                                in the case of any Member or Permitted
Transferee who is, in each case, a natural person, the heirs, executors,
administrators or personal representatives upon the death of such Member or
Permitted Transferee or upon the incompetency or disability of such Member or
Permitted Transferee for purposes of the protection and management of such
Member’s or Permitted Transferee’s assets.

 

(d)                                 In addition to the other restrictions
contained herein on Transfer and issuance of Units, issuances and Transfers of
Units or other equity securities of the LLC (including, without limitation, by
operation of law) will not be effective unless all of the following conditions
are satisfied:

 

(i)                                     The issuance or Transfer, as applicable,
shall comply with all applicable laws, including, without limitation, any
applicable securities laws and any applicable laws promulgated by any applicable
state liquor authority.

 

(ii)                                  The issuance or Transfer, as applicable,
shall not affect the LLC’s existence or qualification as a limited liability
company under the Act.

 

(iii)                               The issuance or Transfer, as applicable,
shall not cause the LLC to be classified as other than a partnership for United
States federal income tax purposes.

 

(iv)                              The issuance or Transfer, as applicable, shall
not result in a termination of the LLC under Code Section 708, unless the Board
determines that any such termination will not have a material adverse impact on
the Members.

 

(v)                                 The issuance or Transfer, as applicable,
shall not cause the application of the tax-exempt use property rules of Code
Sections 168(g)(l)(B) and 168(h) to the LLC or its Members.

 

(vi)                              The issuance or Transfer, as applicable, shall
not result in the LLC being treated as a “publicly traded partnership” within
the meaning of Section 7704 of the Code.

 

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(vii)                           The issuance or Transfer, as applicable, shall
not result in the LLC having more than 100 beneficial owners for purposes of the
Investment Company Act of 1940, as amended.

 

(viii)                        In the case of a Transfer, the transferor and the
transferee shall provide such legal opinions and documentation as the Board
shall reasonably request (if any).

 

(ix)                                The acquiring person shall have agreed to be
bound by this Agreement and shall have executed a joinder substantially in the
form attached hereto as Exhibit A.

 

(e)                                  Notwithstanding anything to the contrary
contained in this Section 5.13 or elsewhere in this Agreement, no transferee of
any LLC interest (but excluding transferees that were Members immediately prior
to such a Transfer, who automatically shall become Members with respect to any
additional Units they so acquire) shall become a Member in respect of the
interest so transferred unless such transferee is admitted as a Member pursuant
to Section 5.14.

 

(f)                                    Following the Transfer of any LLC
interest permitted under this Section 5.13, the transferee of such interest
(i) shall be treated as having made all of the Capital Contributions made by,
and received all of the Distributions received by, the transferor in respect of
such interest and (ii) shall have the rights and obligations of a Unitholder so
long as such transferee owns any Units.  No transferee of a LLC interest may
further Transfer such interest without complying with the provisions of this
Section 5.13.

 

(g)                                 The transferor and transferee of any LLC
interest shall be jointly and severally obligated to reimburse the LLC for all
reasonable expenses (including, without limitation, attorneys’ fees and
expenses) incurred in connection with any Transfer or proposed Transfer, whether
or not consummated.

 

(h)                                 Any Member who Transfers all of the Units or
other equity securities of the LLC owned by it in accordance with this
Section 5.13 will thereupon cease to be a Member and shall become a Terminated
Member.

 

Section 5.14                                Admission of New Members. 
Notwithstanding anything to the contrary in this Agreement, additional Persons
may be admitted to the LLC as Members (“New Members”) only upon the approval of
the Required Members and upon such terms and conditions as are established by
the Required Members, which may include the establishment of classes or groups
of Members having different relative rights, powers and duties, including,
without limitation, rights and powers that are superior or inferior to those of
existing Members, or the right to vote as a separate class or group on matters
specified by amendment of this Agreement; provided, however, that any Permitted
Transferee shall be admitted as a New Member upon such Permitted Transferee’s
agreement to be bound by the terms and conditions of this Agreement and
execution of a joinder substantially in the form attached hereto as Exhibit A. 
New Members shall be admitted at the time when all conditions to their admission
have been

 

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satisfied, as determined by the Board, and Schedule I and this Agreement shall
be amended or restated accordingly.

 

Section 5.15                                Withdrawal, Expulsion or Other
Termination of Members.  A Member may withdraw from the LLC but only if he has
given the LLC at least 30 days’ written notice in advance of the effective date
of such withdrawal and upon such withdrawal such Person shall cease to be a
Member.  A Member shall automatically cease to be a Member as a result of his
death or legal incapacity.  Any Member who is an employee or officer of the LLC
or any of its Subsidiaries and whose employment with the LLC or any of its
Subsidiaries is terminated for any reason shall cease to be a Member upon such
termination.  Any Person who has ceased to be a Member (including, without
limitation, by such withdrawal, death, legal incapacity or termination) or the
estate of or successor in interest to such Person shall be a “Terminated
Member”.

 

Section 5.16                                Share of a Terminated Member.  In
the event that a Member becomes a Terminated Member, such Terminated Member or
his or her estate or other legal representative (as applicable) shall retain or
succeed to such Terminated Member’s Units and Capital Account (if any) as
adjusted pursuant to the terms hereof and shall have the rights of a Unitholder
if and for so long as such Person owns any such Units.

 

Section 5.17                                Effect of Termination of a Member.

 

(a)                                  The death, withdrawal, incapacity,
bankruptcy or other termination of a Member shall not affect the existence of
the LLC, and the remaining Members shall continue the business of the LLC under
the terms of this Agreement.  Thereafter, the Terminated Member shall no longer
be a Member for purposes of this Agreement and shall have only the rights of a
Unitholder so long as such Person owns any Units.

 

(b)                                 A Terminated Member’s continuing share of
the LLC’s income, expenses, gains, losses, etc. shall not be regarded as an
interest in the LLC but shall represent only his continuing right to receive a
portion of the Distributions, if any, made by the LLC.  Such Terminated Member
shall not be entitled to participate in any LLC decision or determination
(including but not limited to voting or consent rights with respect to
amendments to this Agreement, calculation of a majority of Units, or otherwise,
except as provided herein), and his successors and assigns will acquire only the
rights of a Unitholder.

 

Section 5.18                                Forfeiture of Class B Units upon
Termination of Employment of Executive.  Upon (i) the death or Disability of an
Executive, (ii) termination by the LLC or its subsidiaries of an Executive’s
employment with the LLC or any of its Subsidiaries with or without cause or
(iii) the voluntary resignation by an Executive, all Class B Units held by such
Executive or his or her Permitted Transferees shall immediately be forfeited to
the LLC without further act or deed by the LLC and without payment of any
consideration therefor, and upon such forfeiture such Executive and his or her
Permitted Transferees shall cease to be a Member and shall cease to be entitled
to any Distributions or other payments on account of such Class B Units and
instead all such Distributions or other payments shall inure to the benefit of
the holders of other Units; provided however that if Executive’s employment with
the LLC or its

 

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Subsidiaries is terminated due to the death of Executive, then Executive shall
not forfeit that portion of his Class B Units equal to the number of his Class B
Units multiplied by a fraction, the numerator of which is the number of full
years between the date hereof and the date of his death (but no greater than 3)
and the denominator of which is equal to 3.

 

Section 5.19                                LLC Funds.  Except as specifically
provided in this Agreement or with the approval of the Board, the LLC shall not
pay to or use for the benefit of any Unitholder, funds, assets, credit, or other
resources of any kind or description of the LLC.  Funds of the LLC shall (i) be
deposited only in the accounts of the LLC in the LLC’s name, (ii) not be
commingled with funds of any Unitholder, and (iii) be withdrawn only upon such
signature or signatures as may be designated in writing from time to time by the
Board.

 

Section 5.20                                Devotion of Time.  The Advisors
shall not be obligated and shall not be expected to devote all of their time or
business efforts to the affairs of the LLC.

 

Section 5.21                                Payments to Advisors;
Reimbursements.  Except as otherwise determined by the Board, no Advisor shall
be entitled to remuneration by the LLC for services rendered in its capacity as
an Advisor (other than for reimbursement of reasonable out-of-pocket expenses of
such Advisor).  The LLC will cause its Subsidiaries to reimburse the Advisors
for their reasonable out-of-pocket expenses incurred in connection with their
attendance at Board meetings.

 

ARTICLE VI
DURATION; TERMINATION

 

Section 6.1                                      Duration.  The LLC shall
terminate upon (i) the sale or other disposition by the LLC of all of the assets
(including, without limitation, cash) it then owns, (ii) the dissolution of the
LLC by action of the Board and the Required Members or (iii) any other event
that would cause the dissolution of a limited liability company under the Act
(each of the foregoing events, a “Dissolution Event”).

 

Section 6.2                                      Liquidation of LLC Interests.

 

(a)                                  Upon dissolution of the LLC, the Board
shall appoint one Member (or any other Person) to serve as the “Liquidator,” who
shall act at the direction of the Board, unless and until a successor Liquidator
is appointed as provided herein.  The Liquidator shall agree not to resign at
any time without 30 days’ prior written notice.  The Liquidator may be removed
at any time, with or without cause, by notice of removal and appointment of a
successor Liquidator approved by the Board.  Within 30 days following the
occurrence of any such removal, a successor Liquidator may be elected by the
Board.  The successor Liquidator shall succeed to all rights, powers and duties
of the former Liquidator.  The right to appoint a successor or substitute
Liquidator in the manner provided herein shall be recurring and continuing for
so long as the functions and services of the Liquidator are authorized to
continue under the provisions hereof, and every reference herein to the
Liquidator shall be deemed to refer also to any such successor or substitute
Liquidator appointed in the manner herein provided.  Except as expressly
provided in this Article VI and subject to the Board’s right to remove the

 

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Liquidator, the Liquidator appointed in the manner provided herein shall have
and may exercise, without further authorization or consent of any of the parties
hereto, all of the powers conferred upon the Board under the terms of this
Agreement (for and during such period of time as shall be reasonably required in
the good faith judgment of the Liquidator to complete the winding up and
liquidation of the LLC as provided for herein).  The Liquidator shall receive as
compensation for its services (i) no additional compensation, if the Liquidator
is an employee of the LLC or any of its Subsidiaries, or (ii) if the Liquidator
is not such an employee, a reasonable fee plus out-of-pocket costs or such other
compensation as the Board may approve.

 

(b)                                 The Liquidator shall liquidate the assets of
the LLC, and apply and distribute the proceeds of such liquidation, in the
following order of priority, unless otherwise required by mandatory provisions
of applicable law:

 

(i)                                     First, to the payment of the LLC’s debts
and obligations to its creditors, including, without limitation, sales
commissions and other expenses incident to any sale of the assets of the LLC.

 

(ii)                                  Second, to the establishment of and
additions to such reserves as the Liquidator may deem necessary or appropriate.

 

(iii)                               Third, to the Unitholders, in accordance
with Section 4.1.

 

The reserves established pursuant to subparagraph (ii) shall be paid over by the
Liquidator to a bank or other financial institution, to be held in escrow for
the purpose of paying any such contingent or unforeseen liabilities or
obligations and, at the expiration of such period as the Liquidator deems
advisable, such reserves shall be distributed to the Unitholders in accordance
with Section 4.1.  The allocations and distributions provided for in this
Agreement are intended to result in the Capital Account of each Unitholder
immediately prior to the distribution of the LLC’s assets pursuant to this
Section 6.2(b) being equal to the amount distributable to such Unitholder
pursuant to this Section 6.2(b).  The Board is authorized to make appropriate
adjustments in the allocation of Profits and Losses as necessary to cause the
amount of each Unitholder’s Capital Account immediately prior to the
distribution of the LLC’s assets pursuant to this Section 6.2(b) to equal the
amount distributable to such Unitholder pursuant to this Section 6.2(b).

 

(c)                                  The provisions of Section 6.2(b) that
require the liquidation of the assets of the LLC notwithstanding, but subject to
the order of priorities set forth in Section 6.2(b), if upon dissolution of the
LLC the Board determines that an immediate sale of part or all of the LLC’s
assets would be impractical or could cause undue harm to the Unitholders, then
the Board may, in its sole discretion, defer the liquidation of any assets
except those necessary to satisfy LLC liabilities and reserves, and may, in its
absolute discretion, distribute to the Unitholders, such assets in kind or as
tenants in common.  For purposes of any such distribution, the Board will
determine the fair market value of any property to be distributed in accordance
with any valuation procedure that the Board reasonably deems appropriate.

 

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(d)                                 A reasonable time will be allowed for the
orderly winding up of the business and affairs of the LLC and the liquidation of
its assets pursuant to Section 6.2(b) in order to minimize any losses otherwise
attendant upon such winding up.  Distributions upon liquidation of the LLC (or
any Unitholder’s interest in the LLC) and related adjustments will be made by
the end of the Fiscal Year of the liquidation (or, if later, within 90 days
after the date of such liquidation) or as otherwise permitted by Treasury
Regulations Section 1.704-1(b)(2)(ii)(b).

 

ARTICLE VII
VALUATION

 

Section 7.1                                      Valuation.  With respect to the
valuation of any property distributed to any Unitholder, such property shall be
valued at the fair market value thereof determined in good faith by the Board. 
With respect to the valuation of any Units, the fair market value of each Unit
shall be the fair market value of such Unit as determined by the Board in its
good faith judgment.

 

ARTICLE VIII
BOOKS OF ACCOUNT

 

Section 8.1                                      Books.  The LLC shall maintain
complete and accurate books of account of the LLC’s affairs at the LLC’s
principal office, which books shall be open to inspection by any Member (or his
or its authorized representative) to the extent required by the Act in
accordance with Section 2.10.

 

Section 8.2                                      Tax Allocations and Reports.

 

(a)                                  Within 120 days after the end of each
Fiscal Year, or as soon as reasonably practicable thereafter, the Board shall
cause the LLC to furnish each Unitholder or Member with a form K-1 for such
Fiscal Year.  The LLC will use reasonable efforts to deliver or cause to be
delivered as soon as practicable during each Fiscal Year (and, in any event,
will deliver not later than May 31 of each Fiscal Year), to each Unitholder or
Member all information necessary for the preparation of such Person’s United
States federal income tax returns and, if applicable, any state, local and
foreign income tax returns, including a statement showing such Person’s share of
income, gains, losses, deductions and credits for such year for United States
federal income tax purposes (and, if applicable, state, local or foreign income
tax purposes) and the amount of any Distributions made to or for the account of
such Person.  Upon the written request of any such Unitholder or Member made not
later than 30 days after the end of each Fiscal Year and at the sole expense of
such Person, the LLC will use reasonable efforts to deliver or cause to be
delivered any additional information necessary for the preparation of any state,
local and foreign income tax returns that must be filed by such Person.

 

(b)                                 The Tax Matters Partner will determine
whether to make or revoke any available election pursuant to the Code; provided,
that the Members intend that the LLC be treated as a partnership for U.S.
federal and any applicable state income tax

 

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purposes, and no such election to the contrary shall be permitted.  Each
Unitholder will, upon request, supply the information necessary to give proper
effect to any such election.

 

(c)                                  The LLC hereby designates ING Furman Selz
Investors III L.P. to act as the “Tax Matters Partner” (as defined in
Section 6231(a)(7) of the Code) in accordance with Sections 6221 through 6233 of
the Code.  The Tax Matters Partner is authorized and required to represent the
LLC (at the LLC’s expense) in connection with all examinations of the LLC’s
affairs by tax authorities, including resulting administrative and judicial
proceedings, and to expend LLC funds for professional services and costs
associated therewith; provided, that the Tax Matters Partner may be removed and
replaced by, and shall act in such capacity at the direction of, the Board. 
Each Unitholder agrees to cooperate with the Tax Matters Partner and to do or
refrain from doing any or all things reasonably requested by the Tax Matters
Partner with respect to the conduct of such proceedings.  Subject to the
foregoing proviso, the Tax Matters Partner will have sole discretion to
determine whether the LLC (either on its own behalf or on behalf of the
Unitholders) will contest or continue to contest any tax deficiencies assessed
or proposed to be assessed by any taxing authority.  Any deficiency for taxes
imposed on any Unitholder (including penalties, additions to tax or interest
imposed with respect to such taxes) will be paid by such Unitholder, and if paid
by the LLC, will be recoverable from such Unitholder (including by offset
against distributions otherwise payable to such Unitholder).

 

ARTICLE IX
MISCELLANEOUS

 

Section 9.1                                      Amendments.  This Agreement and
the Schedules hereto may be amended only by the prior written consent of the
Required Members; provided, that any such amendment that adversely affects one
Member and is prejudicial to such Member relative to all other Members cannot be
effected without the consent of such Member; provided, further, that (a) any
amendment (other than pursuant to Section 5.14) that materially and adversely
affects a Unitholder’s or Member’s allocations or distributions under Article IV
(as compared with its effect on other, similarly situated Unitholders and
Members) shall not be effective with respect to such Unitholder or Member,
unless a majority in interest of all such Unitholders and Members whose
allocations or distributions would be materially and adversely affected by such
amendment (measured by the number of Units held by them) consent thereto in
writing, and (b) no amendment to any Member’s rights under Section 5.3 may be
made without the prior written consent of such Member.

 

Section 9.2                                      Successors.  Except as
otherwise provided herein, this Agreement shall inure to the benefit of and be
binding upon the Unitholders, the Members, the Terminated Members and their
legal representatives, heirs, successors and permitted assigns.

 

Section 9.3                                      Governing Law; Severability. 
All issues and questions concerning the application, construction, validity,
interpretation and enforcement of this Agreement and the Exhibits and Schedules
to this Agreement will be governed by, and construed in accordance with, the
laws of the State of Delaware, and specifically the Act, without giving effect
to any choice of law or conflict of law rules or provisions (whether of the
State of Delaware or any

 

28

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other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.  If it is determined by a court
of competent jurisdiction that any provision of this Agreement is invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this Agreement.

 

Section 9.4                                      Notices.  All notices, demands
and other communications to be given or delivered under or by reason of
provisions under this Agreement (a) shall be in writing, (b) must be delivered
personally, via a nationally recognized overnight delivery service (delivery
charges prepaid) or via facsimile along with telephonic confirmation, and
(c) shall be effective only upon actual receipt by the recipient.  All such
notices, demands and other communications shall be sent (i) in the case of any
Member, Advisor or Unitholder, to the addresses or facsimile numbers set forth
in Schedule I hereto or to such other addresses or facsimile numbers as have
been supplied in writing to the LLC and (ii) in the case of the LLC, to The
Sheridan Group Holdings, LLC, c/o Jefferies.

 

Section 9.5                                      Singular; Plural; Gender. 
Wherever from the context it appears appropriate, each term stated in either the
singular or the plural shall include the singular and the plural, and pronouns
stated in either the masculine, the feminine or the neuter gender shall include
the masculine, feminine and neuter.

 

Section 9.6                                      Entire Agreement; Headings;
Counterparts.  Except as otherwise expressly set forth herein, this Agreement
embodies the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, that may have related to the subject matter hereof in any way. 
Descriptive headings are for convenience only and shall not control or affect
the meaning or construction of any provision of this Agreement.  This Agreement
may be executed in any number of counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts together shall
constitute one agreement.

 

Section 9.7                                      No Third Party Beneficiaries. 
Except for the provisions of Section 5.10, nothing in this Agreement is
intended, nor shall anything herein be construed, to confer any rights, legal or
equitable, in any Person other than the Unitholders and, to the extent provided
herein, the Terminated Members, and their respective legal representatives,
heirs, successors and permitted assigns.

 

Section 9.8                                      No Action for Partition.  No
Unitholder or Terminated Member will have any right to maintain any action for
partition with respect to the property of the LLC.

 

Section 9.9                                      Business Days.  If any time
period for giving notice or taking action under this Agreement expires on a day
which is a Saturday, Sunday or holiday in the State of New York, the time period
will be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.

 

Section 9.10                                No Strict Construction.  The parties
to this Agreement have participated jointly in the negotiation and drafting of
this Agreement.  In the event an ambiguity or question of intent or
interpretation arises, this Agreement will be construed as if drafted jointly

 

29

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by the parties to this Agreement, and no presumption or burden of proof will
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.

 

Section 9.11                                Manner of Distributions. 
Distributions by the Company may be made in cash or in kind in the manner
determined by the Board.

 

Section 9.12                                Compliance with the Act.  Each
Member agrees not to take any action or fail to take any action which,
considered alone or in the aggregate with other actions or events, would result
in the termination of the Company under the Act.

 

Section 9.13                                Further Assurances.  Each of the
Members hereby agrees to take or cause to be taken such further actions, to
execute, acknowledge, deliver and file or cause to be executed, acknowledged,
delivered and filed such further documents and instruments, and to use best
efforts to obtain such consents, as may be necessary or as may be reasonably
requested to fully effectuate the purposes, terms and conditions of this
Agreement.

 

Section 9.14                                No Waiver of Remedies.  The failure
of a Member to insist on the strict performance of any covenant or duty required
by this Agreement, or to pursue any remedy under this Agreement, shall not
constitute a waiver of the breach or the remedy.

 

Section 9.15                                Remedies Cumulative.  The remedies
of the Members under this Agreement are cumulative and shall not exclude any
other remedies to which the Member may be lawfully entitled.  Each of the
parties confirms that damages at law may be an inadequate remedy for a breach or
threatened breach of any provision hereof.  The respective rights and
obligations hereunder shall be enforceable by specific performance, injunction
or other suitable remedy, but nothing herein contained is intended to or shall
limit or affect any rights at law or by statute or otherwise of any party
aggrieved as against the other parties for a breach or threatened breach of any
provision hereof, it being the intention by this Section to make clear the
agreement of the parties that the respective rights and obligations of the
parties hereunder shall be enforceable in equity as well as at law or otherwise.

 

Section 9.16                                Jurisdiction and Venue.  ALL
JUDICIAL PROCEEDINGS BROUGHT BY OR AGAINST THE LLC OR THE MEMBERS WITH RESPECT
TO THIS AGREEMENT, ANY OTHER AGREEMENT CONTEMPLATED HEREBY OR ANY TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF DELAWARE.  BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, THE LLC AND EACH MEMBER ACCEPT FOR ITSELF AND HIMSELF AND IN
CONNECTION WITH ITS OR HIS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREE TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.  THE
LLC AND EACH MEMBER HEREBY WAIVE ANY CLAIM THAT SUCH JURISDICTION IS AN
INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE.

 

Section 9.17                                Waiver of Jury Trial.  EACH PARTY TO
THIS AGREEMENT HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL
BY

 

30

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JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR
ARISING OUT OF THIS AGREEMENT OR THE VALIDITY, PROTECTION, INTERPRETATION,
COLLECTION OR ENFORCEMENT THEREOF.

 

* * * * *

 

31

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
as of the date first above written.

 

 

THE SHERIDAN GROUP HOLDINGS
(JEFFERIES), LLC

 

 

 

 

 

By:

/s/ Nicholas Daraviras

 

 

 

Nicholas Daraviras, a Jefferies Advisor

 

 

 

 

 

ING FURMAN SELZ INVESTORS III L.P.

 

 

 

ING BARINGS U.S. LEVERAGED EQUITY PLAN
LLC

 

 

 

ING BARINGS GLOBAL LEVERAGED EQUITY
PLAN LTD.

 

 

 

By:

FS Private Investments III LLC, Manager

 

 

 

 

 

By:

/s/ James Luikart

 

 

Its:

Managing Member

 

 

 

 

 

/s/ John A. Saxton

 

 

John A. Saxton

 

32

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

 

Schedule I

 

LIST OF MEMBERS
DATED AS OF MAY 10, 2005

 

Name and Address of
Member

 

Initial Capital
Contribution

 

Number of
Preferred Units

 

Number of
Class A
Common Units

 

Number of
Class B Units

 

Initial Capital
Account
Balance

 

ING Furman Selz Investors III L.P.
c/o FS Private Investments III LLC
520 Madison Avenue
12th Floor
New York, New York 10022
Attn: Mr. Brian Friedman
Telephone: (212) 284-1701
Facsimile: (212) 284-1717

 

with a copy to:

 

Dechert LLP
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attention: Carmen J. Romano, Esq.
Telephone: (215) 994-4000
Facsimile: (215) 994-2222

 

13,385.22554 shares of Preferred Stock of TSG Holdings and 159,347.922 shares of
Common Stock of TSG Holdings, which shares of Preferred Stock and Common Stock
were acquired on August 21, 2003 for an aggregate cash purchase price of
$14,978,704.76. The shares of Preferred Stock are being contributed to the LLC
in exchange for the Preferred Units and are valued at the date of contribution
to the LLC at $1,179.105 per share of Preferred Stock, and the shares of Common
Stock are being contributed to the LLC in exchange for the Common Units and are
valued at the date of contribution to the LLC at $19.80 per share of Common
Stock.

 

13,385.22554

 

159,347.922

 

0

 

$

18,937,675.22

 

 

 

 

 

 

 

 

 

 

 

 

 

1

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

 

Name and Address of
Member

 

Initial Capital
Contribution

 

Number of
Preferred Units

 

Number of
Class A
Common Units

 

Number of
Class B Units

 

Initial Capital
Account
Balance

 

ING Barings U.S. Leveraged
Equity Plan LLC

c/o FS Private Investments III LLC
520 Madison Avenue
12th Floor
New York, New York 10022
Attn: Mr. Brian Friedman
Telephone: (212) 284-1701
Facsimile: (212) 284-1717

 

 

with a copy to:

 

Dechert LLP
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attention: Carmen J. Romano, Esq.
Telephone: (215) 994-4000
Facsimile: (215) 994-2222

 

4,729.47709 shares of Preferred Stock of TSG Holdings and 56,303.299 shares of
Common Stock of TSG Holdings, which shares of Preferred Stock and Common Stock
were acquired on August 21, 2003 for an aggregate cash purchase price of
$5,292,510.08. The shares of Preferred Stock are being contributed to the LLC in
exchange for the Preferred Units and are valued at the date of contribution to
the LLC at $1,179.105 per share of Preferred Stock, and the shares of Common
Stock are being contributed to the LLC in exchange for the Common Units and are
valued at the date of contribution to the LLC at $19.80 per share of Common
Stock.

 

4,729.47709

 

56,303.299

 

0

 

6,691,355.40

 

 

2

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

 

Name and Address of
Member

 

Initial Capital
Contribution

 

Number of
Preferred Units

 

Number of
Class A
Common Units

 

Number of
Class B Units

 

Initial Capital
Account
Balance

 

ING Barings Global Leveraged
  Equity Plan Ltd.
c/o FS Private Investments III LLC
520 Madison Avenue
12th Floor
New York, New York 10022
Attn: Mr. Brian Friedman
Telephone: (212) 284-1701
Facsimile: (212) 284-1717

 

with a copy to:

 

Dechert LLP
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attention: Carmen J. Romano, Esq.
Telephone: (215) 994-4000
Facsimile: (215) 994-2222

 

 

1,095.00113 shares of Preferred Stock of TSG Holdings and 13,035.728 shares of
Common Stock of TSG Holdings, which shares of Preferred Stock and Common Stock
were acquired on August 21, 2003 for an aggregate cash purchase price of
$1,225,358.41. The shares of Preferred Stock are being contributed to the LLC in
exchange for the Preferred Units and are valued at the date of contribution to
the LLC at $1,179.105 per share of Preferred Stock, and the shares of Common
Stock are being contributed to the LLC in exchange for the Common Units and are
valued at the date of contribution to the LLC at $19.80 per share of Common
Stock.

 

1,095.00113

 

13,035.728

 

0

 

1,549,228.72

 

 

 

 

 

 

 

 

 

 

 

 

 

John A. Saxton

 

$

100.00

 

0

 

0

 

100

 

100.00

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL:

 

 

 

19,209.70376

 

228,686.949

 

100

 

$

27,178,359.34

 

 

3

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

 

EXHIBIT A

 

FORM OF JOINDER TO

LIMITED LIABILITY COMPANY AGREEMENT

 

THIS JOINDER to the Limited Liability Company Agreement, dated as of
                            , 2005, by and among The Sheridan Group Holdings
(Jefferies), LLC, a Delaware limited liability company (the “LLC”), and certain
Members of the LLC (the “Agreement”), is made and entered into as of
                   by and between the LLC and                                   
(“Holder”).  Capitalized terms used herein but not otherwise defined shall have
the meanings set forth in the Agreement.

 

WHEREAS, Holder has acquired certain Units and the Agreement and the LLC
requires Holder, as a Unitholder, to become a party to the Agreement, and Holder
agrees to do so in accordance with the terms hereof.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Joinder hereby agree as follows:

 

1.                                       Agreement to be Bound.  Holder hereby
agrees that upon execution of this Joinder, it shall become a party to the
Agreement and shall be fully bound by, and subject to, all of the covenants,
terms and conditions of the Agreement as though an original party thereto and
shall be deemed a Unitholder for all purposes thereof.  In addition, Holder
hereby agrees that all Units held by Holder shall be deemed Units for all
purposes of the Agreement.

 

2.                                       Successors and Assigns.  Except as
otherwise provided herein, this Joinder shall bind and inure to the benefit of
and be enforceable by the LLC and its successors and assigns and Holder and any
subsequent holders of Units and the respective successors and assigns of each of
them, so long as they hold any Units.

 

3.                                       Counterparts.  This Joinder may be
executed in separate counterparts each of which shall be an original and all of
which taken together shall constitute one and the same agreement.

 

4.                                       Notices.  For purposes of Section 10.4
of the Agreement, all notices, demands or other communications to the Holder
shall be directed to:

 

[Name]

[Address]

[Facsimile Number]

 

5.                                       Governing Law.  All issues and
questions concerning the application, construction, validity, interpretation and
enforcement of this Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware and the Act, without

 

1

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

 

giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.

 

6.                                       Jurisdiction and Venue.  ALL JUDICIAL
PROCEEDINGS BROUGHT BY OR AGAINST THE LLC OR THE MEMBERS WITH RESPECT TO THIS
AGREEMENT, ANY OTHER AGREEMENT CONTEMPLATED HEREBY OR ANY TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF DELAWARE.  BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, THE LLC AND EACH MEMBER ACCEPT FOR ITSELF AND HIMSELF AND IN
CONNECTION WITH ITS OR HIS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREE TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.  THE
LLC AND EACH MEMBER HEREBY WAIVE ANY CLAIM THAT SUCH JURISDICTION IS AN
INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE.

 

6.                     Waiver of Jury Trial.  EACH PARTY TO THIS AGREEMENT
HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THIS AGREEMENT OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR
ENFORCEMENT THEREOF.

 

7.                                       Descriptive Headings.  The descriptive
headings of this Joinder are inserted for convenience only and do not constitute
a part of this Joinder.

 

*  *  *  *  *

 

2

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

 

IN WITNESS WHEREOF, the parties hereto have executed this Joinder as of the date
first above written.

 

 

THE SHERIDAN GROUP HOLDINGS (JEFFERIES),
LLC

 

 

 

 

 

By:

 

 

 

Name:

 

Title:

 

 

 

 

 

[HOLDER]

 

 

 

 

 

By:

 

 

 

3

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