<PAGE>

                                                                    EXHIBIT 10.5

                                                                  Execution Copy





                            E*Trade Ventures I, LLC
                     A Delaware Limited Liability Company




                           LIMITED LIABILITY COMPANY
                              OPERATING AGREEMENT



                              September 23, 1999
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                   Page
                                                                                                                   ----
<S>                                                                                                                <C>
ARTICLE I NAME, PURPOSE AND PRINCIPAL OFFICE OF COMPANY..........................................................    1

         1.1.     Name...........................................................................................    1
         1.2.     Agreement......................................................................................    1
         1.3.     Purpose; Powers................................................................................    1
         1.4.     Registered Office and Agent....................................................................    2
         1.5.     Principal Office...............................................................................    2
         1.6.     Definitions....................................................................................    2

ARTICLE II TERM AND TERMINATION OF THE COMPANY...................................................................    4

         2.1.     Term...........................................................................................    4
         2.2.     Termination....................................................................................    4
         2.3.     Extension of Term..............................................................................    4

ARTICLE III INITIAL MEMBERS; CHANGES IN MEMBERSHIP...............................................................    4

         3.1.     Name and Address...............................................................................    4
         3.2.     Admission of Additional Members................................................................    5
         3.3.     Death, Disability or Withdrawal of a Managing Member...........................................    5
         3.4.     Withdrawal of a Member.........................................................................    5

ARTICLE IV MANAGEMENT, DUTIES AND RESTRICTIONS...................................................................    6

         4.1.     Management.....................................................................................    6
         4.2.     Conversion of Status as Managing Member........................................................    7
         4.3.     Liability of Members to the Company and the Other Members......................................    7
         4.4.     Restrictions on the Members....................................................................    7
         4.5.     Additional Restrictions on Non-Managing Members................................................    7
         4.6.     Officers.......................................................................................    8

ARTICLE V CAPITAL CONTRIBUTIONS..................................................................................    8

         5.1.     Capital Commitments and Membership Interests of the Members....................................    8
         5.2.     Liability of the Members.......................................................................    8
         5.3.     Liability of Transferees.......................................................................    9
         5.4.     Defaulting Members.............................................................................    9

ARTICLE VI CAPITAL ACCOUNTS AND ALLOCATIONS......................................................................   10

         6.1.     Capital Accounts...............................................................................   10
         6.2.     Definitions....................................................................................   10
         6.3.     Allocation of Net Income or Loss...............................................................   12
</TABLE>

                                      i.
<PAGE>

<TABLE>
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ARTICLE VII EXPENSES............................................................................................   13

ARTICLE VIII DISTRIBUTIONS......................................................................................   13

         8.1.     Interest......................................................................................   13
         8.2.     Mandatory Distributions.......................................................................   13
         8.3.     Discretionary Distributions...................................................................   13

ARTICLE IX ASSIGNMENT OR TRANSFER OF MEMBERS' INTERESTS.........................................................   14

         9.1.     Restrictions on Transfer of Members' Interests................................................   14
         9.2.     Opinion of Counsel............................................................................   14
         9.3.     Violation of Restrictions.....................................................................   15
         9.4.     Agreement Not to Transfer.....................................................................   15
         9.5.     Multiple Ownership............................................................................   15
         9.6.     Substitute Members............................................................................   15

ARTICLE X VESTING OF PERCENTAGE INTERESTS.......................................................................   15

         10.1.    Vesting of Managing Members' and E*Trade's Interests..........................................   15
         10.2.    Vesting of Other Non-Managing Members' and Additional Members' Interests......................   16

ARTICLE XI DISSOLUTION AND LIQUIDATION OF THE COMPANY...........................................................   16

         11.1.    Liquidation Procedures........................................................................   16

ARTICLE XII FINANCIAL ACCOUNTING AND REPORTS....................................................................   16

         12.1.    Tax Accounting and Reports....................................................................   16
         12.2.    Valuation of Securities and Other Assets Owned by the Company.................................   17
         12.3.    Supervision; Inspection of Books..............................................................   18
         12.4.    Confidentiality...............................................................................   18

ARTICLE XIII OTHER PROVISIONS...................................................................................   18

         13.1.    Execution and Filing of Documents.............................................................   18
         13.2.    Other Instruments and Acts....................................................................   18
         13.3.    Binding Agreement.............................................................................   18
         13.4.    Governing Law.................................................................................   18
         13.5.    Notices.......................................................................................   18
         13.6.    Power of Attorney.............................................................................   18
         13.7.    Amendment Procedure...........................................................................   19
         13.8.    Effective Date................................................................................   19
         13.9.    Entire Agreement..............................................................................   19
         13.10.   Titles; Subtitles.............................................................................   19
         13.11.   Company Name..................................................................................   19
         13.12.   Exculpation...................................................................................   19
         13.13.   Indemnification...............................................................................   19
         13.14.   Limitation of Liability of Members............................................................   20
</TABLE>

                                      ii.
<PAGE>

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         13.15.   Arbitration...................................................................................   20
         13.16.   Tax Matters Partner...........................................................................   20
         13.17.   Taxation as Company...........................................................................   21

ARTICLE XIV MISCELLANEOUS TAX COMPLIANCE PROVISIONS.............................................................   21

         14.1.    Substantial Economic Effect...................................................................   21
         14.2.    Income Tax Allocations........................................................................   22
         14.3.    Withholding...................................................................................   22
</TABLE>

EXHIBIT A         Members' Capital Commitments and Percentage Interests

                                     iii.
<PAGE>

                            E*Trade Ventures I, LLC
                     a Delaware Limited Liability Company



                              OPERATING AGREEMENT

          This Operating Agreement is entered into as of the 23rd day of
September, 1999, by and among (i) Christos M. Cotsakos and Thomas A. Bevilacqua,
as managing members (the "Managing Members"), and (ii) E*Trade Group, Inc.
("E*Trade") and each of the other persons whose names are set forth under the
heading "Non-Managing Members" on Exhibit A attached hereto, as non-Managing
Members (such persons and any additional non-Managing Member admitted after the
date of this Agreement being referred to herein as the "Non-Managing Members").
The Managing Members and the Non-Managing Members are referred to herein
collectively as the "Members."

          The Members have formed the Company by causing a Certificate of
Formation (the "Certificate") conforming to the requirements of the Delaware
Revised Limited Liability Company Act (the "Act") to be filed in the Office of
the Secretary of State for the State of Delaware.


                                   ARTICLE I
                               NAME, PURPOSE AND
                          PRINCIPAL OFFICE OF COMPANY

          1.1. Name. The name of the Company is "E*Trade Ventures I, LLC." The
affairs of the Company shall be conducted under such name or such other name as
the Managing Members may, in their discretion, determine. E*Trade hereby grants
the Company the right, at no cost, to use the "E*Trade" name for the term of the
Company as set forth in Article II hereof.

          1.2. Agreement. In consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members executing this
Agreement hereby agree to the terms and conditions of this Agreement, as it may
be amended from time to time. It is the express intention of the Members that
this Agreement shall be the sole statement of agreement among them, and, except
to the extent a provision of this Agreement expressly incorporates matters by
express reference, this Agreement shall govern even when inconsistent with or
different from the provisions of the Act or any other provision of law.

          1.3. Purpose; Powers.

               (a)  Purpose.  The primary purpose of the Company is to act as
                    -------
the general partner of E*Trade eCommerce Fund, L.P. (the "Fund").
<PAGE>

               (b)  Powers. Subject to all of the terms and provisions hereof,
                    ------
the Company shall have all powers necessary, suitable or convenient for the
accomplishment of the purpose of the Company, including, without limitation, the
following:

                    (1)  to purchase, sell, invest and trade in securities of
     every kind, including, without limitation, capital stock, limited
     partnership interests, bonds, notes, debentures, securities convertible
     into other securities, trust receipts and other obligations, instruments or
     evidences of indebtedness, as well as in rights, warrants and options to
     purchase securities;

                    (2)  to make and perform all contracts and engage in all
     activities and transactions necessary or advisable to carry out the
     purposes of the Company, including, without limitation, the purchase, sale,
     transfer, pledge and exercise of all rights, privileges and incidents of
     ownership or possession with respect to any Company asset or liability; the
     borrowing or lending of money and the securing of payment of any Company
     obligation by hypothecation or pledge of, or grant of a security interest
     in, Company assets; and the guarantee of or becoming surety for the debts
     of others; and

                    (3)  otherwise to have all the powers available to it as a
     limited liability company under the Act.

          1.4. Registered Office and Agent. The initial address of the Company's
registered office in Delaware is 15 East North Street, Dover, Wilmington, County
of Kent, and its initial agent at such address for service of process is
Incorporating Services Limited. The Managing Members may change the registered
office and agent for service of process as they from time to time may determine.

          1.5. Principal Office.  The principal office of the Company shall
initially be located at 4500 Bohannon Street, Menlo Park, California 94025. The
Managing Members may change the location of the principal office of the Company
at any time.

          1.6. Definitions.

               (a)  Additional Members.  This term shall have the meaning
                    ------------------
ascribed to it in Paragraph 3.2.

               (b)  Affiliate.  With reference to any person, any other person
                    ---------
controlling, controlled by or under direct or indirect common control with such
person.

               (c)  Agreement.  This Operating Agreement of E*Trade Ventures I,
                    ---------
LLC, a Delaware limited liability company.

               (d)  Assignee.  This term shall have the meaning ascribed to it
                    --------
in Paragraph 5.4.

               (e)  Bankruptcy.  A person or entity shall be deemed bankrupt if:
                    ----------

                                      2.
<PAGE>

                    (1)  any proceeding is commenced against such person or
     entity as "debtor" for any relief under bankruptcy or insolvency laws, or
     laws relating to the relief of debtors, reorganizations, arrangements,
     compositions or extensions and such proceeding is not dismissed within
     ninety (90) days after such proceeding has commenced, or

                    (2)  such person or entity commences any proceeding for
     relief under bankruptcy or insolvency laws or laws relating to the relief
     of debtors, reorganizations, arrangements, compositions or extensions.

               (f)  Book Value.  This term shall have the meaning ascribed to it
                    ----------
in Paragraph 6.2(a).

               (g)  Capital Account.  This term shall have the meaning ascribed
                    ---------------
to it in Paragraph 6.2(b).

               (h)  Capital Commitment.  This term shall have the meaning
                    ------------------
ascribed to it in Paragraph 5.1.

               (i)  Capital Contribution.  This term shall have the meaning
                    --------------------
ascribed to it in Paragraph 5.1(b).

               (j)  Carry.  The Company's 20% carried interest in the income of
                    -----
the Fund.

               (k)  Certificate.  The Certificate of Formation of E*Trade
                    -----------
Ventures I, LLC, a Delaware limited liability company.

               (l)  Code.  The Internal Revenue Code of 1986, as amended from
                    ----
time to time (and any corresponding provisions of succeeding law).

               (m)  Defaulting Member.  This term shall have the meaning
                    -----------------
ascribed to it in Paragraph 5.4(a).

               (n)  Fiscal Quarter.  This term shall have the meaning ascribed
                    --------------
to it in Paragraph 6.2(c).

               (o)  Fiscal Year.  This term shall have the meaning ascribed to
                    -----------
it in Paragraph 6.2(d).

               (p)  Management Fee.  The management fee receivable by the
                    --------------
Company from the Fund.

               (q)  Net Income or Net Loss.  This term shall have the meaning
                    ----------------------
ascribed to it in Paragraph 6.2(e).

               (r)  Percentage Interest.  This term shall have the meaning
                    -------------------
ascribed to it in Paragraph 6.2(f).

                                      3.
<PAGE>

               (s)  Sale or Exchange.  This term shall have the meaning ascribed
                    ----------------
to it in Paragraph 6.2(g).

               (t)  Securities Act.  The Securities Act of 1933, as amended from
                    --------------
time to time.

               (u)  Securities. Securities of every kind and nature and rights
                    ----------
and options with respect thereto, including stock, notes, bonds, debentures,
evidences of indebtedness and other business interests of every type, including
interests in partnerships, joint ventures, proprietorships and other business
entities.

               (v)  TMP.  This term shall have the meaning ascribed to it in
                    ---
Paragraph 13.16.

               (w)  Termination Date.  This term shall have the meaning ascribed
                    ----------------
to it in Paragraph 2.1.

               (x)  Treasury Regulations.  The Income Regulations promulgated
                    --------------------
under the Code, as such Regulations may be amended from time to time (including
corresponding provisions of succeeding Regulations).


                                  ARTICLE II
                      TERM AND TERMINATION OF THE COMPANY

          2.1. Term. The term of the Company shall continue until one (1) year
after the dissolution of the Fund unless sooner terminated as provided in
Paragraph 2.2 or by operation of law or extended as provided in Paragraph 2.3.
The last day of the term of the Company, as such may be extended as provided
herein, is referred to herein as the "Termination Date."

          2.2. Termination. The Company shall terminate prior to the end of the
period specified in Paragraph 2.1 at the election of the Managing Members. The
Managing Members shall deliver notice of such termination to the Non-Managing
Members.

          2.3. Extension of Term.  The term of the Company may be extended by
the Managing Members. The Managing Members shall provide notice of any such
extension to the Non-Managing Members.


                                  ARTICLE III
                    INITIAL MEMBERS; CHANGES IN MEMBERSHIP

          3.1. Name and Address. The persons listed on Exhibit A are hereby
admitted as Members of the Company. Exhibit A shall be amended from time to time
to reflect changes in the membership of the Company (including the admission of
Additional Members). Any such amended Exhibit A shall supersede all prior
Exhibit A's and become part of this Agreement and shall be kept on file at the
principal office of the Company.

                                      4.
<PAGE>

          3.2. Admission of Additional Members. Persons may be admitted to the
Company as additional members ("Additional Members") on such terms and
conditions as shall be determined by the Managing Members, in their sole
discretion. Each Additional Member shall be admitted only if he shall have
executed this Agreement or an appropriate amendment to it in which he agrees to
be bound by the terms and provisions of this Agreement as they may be modified
by that amendment. Admission of a new Member shall not cause the dissolution of
the Company.

          3.3. Death, Disability or Withdrawal of a Managing Member.

               (a)  In the case of a Managing Member's death, permanent physical
or mental disability or withdrawal from the Company, the Company shall not
dissolve or terminate, but its business shall be continued without interruption
or without any break in continuity by the remaining Members, with the remaining
Managing Member continuing to serve as the sole Managing Member unless he
appoints an additional Managing Member, in his sole discretion. Any deceased,
disabled or withdrawn Managing Member (or the holder of his interest) shall
become a Non-Managing Member, and the interest of such Managing Member shall
become a Non-Managing Member's interest. Such former Managing Member or the
holder of such interest shall have no right to participate in the management of
the Company and no right to consent to or vote upon any matter, except as
provided in Paragraph 13.7.

               (b)  If such change in the former Managing Member's status shall
result in multiple ownership of any Non-Managing Member's interest, one or more
trustees or nominees may be required to be designated to represent a portion of
or the entire Non-Managing Member's interest for the purpose of receiving all
notices which may be given and all payments which may be made under this
Agreement, and for the purpose of exercising all rights which such Non-Managing
Member has pursuant to the provisions of this Agreement.

          3.4. Withdrawal of a Member.

               (a)  Except with the consent of the Managing Members, the
interest of a Member may not be withdrawn from the Company in whole or in part
except in the event of the death or declaration of legal incompetency of such
Member and in such event only if the election to withdraw is given by the
personal representative or representatives of such Member in writing to the
Managing Members within three (3) months after the date of the appointment of
such personal representative or representatives, or within six (6) months from
the date of death or declaration of legal incapacity of such Member, whichever
is earlier. In the event of such election to withdraw, the interest of such
Member shall be withdrawn in its entirety and shall be valued as of the date of
withdrawal pursuant to the provisions of Paragraph 12.2 and paid for in the
manner hereinafter provided by this paragraph. The Managing Members shall be
entitled, in their sole discretion, to make the distribution in respect of the
interest of the withdrawing Member in cash, in kind or pursuant to a promissory
note due upon termination of the Company, or in any combination thereof. If any
distribution is to be made in kind and if such distribution cannot be made in
full because of restrictions on the transfer of Securities or for any other
reason, distribution may be delayed until an effective transfer and distribution
may be made, and Securities that will be transferred in respect of the
withdrawing Member's interest shall be designated. Such designated Securities
will nevertheless be subject to the full right and power of the

                                      5.
<PAGE>

Managing Members to deal with them in the best interests of the Company,
including the right to substitute other Securities of equivalent value.

               (b)  In the event of the withdrawal of any Member pursuant
hereto, the Percentage Interests and Capital Accounts of the withdrawing Member
and the remaining Members shall be appropriately adjusted, including any
adjustments required as a result of any vesting provisions applicable to the
withdrawing Member's interest.

               (c)  The withdrawal of a Member shall not be cause for
dissolution of the Company.

                                  ARTICLE IV
                      MANAGEMENT, DUTIES AND RESTRICTIONS

          4.1. Management. The Managing Members shall have the sole and
exclusive control of the management and conduct of the affairs of the Company.
Any action shall, unless otherwise specified by the Managing Members, require
approval of both Managing Members (or the sole remaining Managing Member). The
right, power and authority of the Managing Members to carry on the affairs of
the Company and to do any and all acts on behalf of the Company shall, subject
to any specific limitations set forth in this Agreement and the Limited
Partnership Agreement of the Fund, include without limitation the following:

               (a)  To cause the Company to perform the duties and exercise the
rights of the general partner of the Fund.

               (b)  To purchase, hold, sell or otherwise effect transactions in
Securities (whether marketable or unmarketable) and other investments of the
Company.

               (c)  To incur indebtedness on behalf of the Company and the Fund.

               (d)  To guarantee indebtedness on behalf of the Company and the
Fund.

               (e)  To loan money to any of the Members upon such terms and
conditions as the Managing Members may prescribe.

               (f)  To deposit or hold Securities and other assets of the
Company in the Company's name or in such street or nominee names as may be
determined from time to time by the Managing Members, at such securities firms,
banks or depositories as shall be designated by the Managing Members. All
withdrawals therefrom or directions with respect thereto shall be made on the
signature of either Managing Member.

               (g)  To provide management services or to designate an entity or
entities to manage the Fund and to receive fees from the Fund and to enter into
an agreement or agreements with such an entity or entities upon such terms and
conditions as the Managing Members shall deem appropriate for the management of
the Fund. Such an agreement or agree-

                                      6.
<PAGE>

ments may be entered into with firms or business entities controlled by or
comprised of either or both Managing Members or an Affiliate of either or both
Managing Members.

               (h)  Generally, to perform all acts deemed by the Managing
Members appropriate or incidental to the foregoing and to carry out the purposes
and business of the Company and the Fund.

          4.2. Conversion of Status as Managing Member. Any Managing Member who
has become a Non-Managing Member shall not participate in the control,
management and direction of the business of the Company or the Fund.

          4.3. Liability of Members to the Company and the Other Members. No
Member shall be liable to any other Member for honest mistakes in judgment or
for action or inaction taken in good faith for a purpose that was reasonably
believed to be in the best interests of the Company, or for losses due to such
mistakes, action or inaction, or for the negligence, dishonesty or bad faith of
any employee, broker or other agent of the Company; provided that such employee,
broker or agent was selected, engaged or retained with reasonable care. Each
Managing Member and, with the consent of the Managing Members, a Non-Managing
Member, may consult with counsel and accountants on matters relating to Company
affairs and shall be fully protected and justified in acting in accordance with
the advice of counsel or accountants, provided that such counsel or accountants
shall have been selected with reasonable care. Notwithstanding any of the
foregoing to the contrary, the provisions of this Paragraph 4.3 shall not be
construed so as to relieve (or attempt to relieve) any person of any liability
incurred (i) as a result of recklessness or intentional wrongdoing, or (ii) to
the extent (but only to the extent) that such liability may not be waived,
modified or limited under applicable law, provided that this Paragraph 4.3 shall
be construed so as to effectuate the provisions hereof to the fullest extent
permitted by law.

          4.4. Restrictions on the Members.

               (a)  Except with the consent of the Managing Members or as
otherwise specifically permitted by this Agreement, no Member shall mortgage,
encumber, pledge or otherwise dispose of his or her interest in the Company or
in the Company's assets or property or enter into any agreement as a result of
which any other person shall have rights as a Member of the Company.

               (b)  No Member may buy from or sell to the Company any Securities
without the prior written consent of the Managing Members except purchases or
sales explicitly permitted by this Agreement.

               (c)  No Member shall do any act in contravention of this
Agreement or the Fund's Limited Partnership Agreement.

          4.5. Additional Restrictions on Non-Managing Members.

               (a)  The Non-Managing Members shall take no part in the control
or management of the affairs of the Company nor shall Non-Managing Members have
any power or

                                      7.
<PAGE>

authority to act for or on behalf of the Company as a result of this Agreement
except as expressly authorized from time to time by the Managing Members.

               (b)  Except as otherwise required by law or as expressly provided
herein, the Non-Managing Members shall have no rights to vote, call meetings of
the Members or otherwise exercise any similar rights or powers.

          4.6. Officers. The Managing Members may appoint such officers of the
Company as they shall deem advisable and shall have the discretion to remove any
officers at any time.

                                   ARTICLE V
                             CAPITAL CONTRIBUTIONS

          5.1. Capital Commitments and Membership Interests of the Members. Set
forth opposite the name of each Member listed on Exhibit A attached hereto is
such Member's "Capital Commitment" to the Company and its resulting percentage
membership interest in the Company ("Percentage Interest"). Each Member's
Capital Commitment represents the aggregate amount of capital that such Member
has agreed to contribute to the Company in accordance with the terms hereof in
order to fund the Company's capital commitment to the Fund.

               (a)  In the event that the capital commitment of the Company to
the Fund is increased, the Capital Commitments of the Members shall be increased
in an amount, in the aggregate, equal to such increased obligation to the Fund.
Such aggregate increased commitment shall be shared between the Members in
proportion to their Capital Commitments.

               (b)  The Managing Members shall provide at least twelve (12)
business days' prior written notice of any required contribution to the capital
of the Company, specifying the amount thereof. The Members shall make their
contributions to the Company's capital in cash, except as otherwise determined
by the Managing Members. No Member shall be required to contribute any amount in
excess of such Member's Capital Commitment (as such Capital Commitment may be
increased pursuant to subparagraph (a)) without such Member's written consent.
Any capital contributions hereunder with respect to the Capital Commitments of
the Members (each a "Capital Contribution") shall be made in such amount as
shall be specified by the Managing Members and any such contributions required
hereunder shall be in proportion to the Members' respective Capital Commitments.

               (c)  In addition to the Capital Commitments set forth on Exhibit
A, E*Trade shall make Capital Contributions (up to a maximum of $250,000) to
fund any excess of the Company's operating expenses in excess of the Management
Fee. E*Trade's Percentage Interest shall not be increased as a result of such
Capital Contributions.

          5.2. Liability of the Members.

               (a)  Except as expressly set forth herein, or as otherwise
required by law, no Member shall be liable for any debts or obligations of the
Company.

                                      8.
<PAGE>

               (b)  Each Member acknowledges the obligation of the Company
pursuant to the Limited Partnership Agreement of the Fund to contribute to the
capital of the Fund cash or Securities to satisfy the Company's "clawback"
obligation to the Fund. Each Member agrees that, in the event the Company is
required to make a "clawback" payment pursuant to the Limited Partnership
Agreement of the Fund, he or she will return any or all distributions made to
him or her pursuant to this Agreement attributable to the Company's carried
interest in the Fund as may be required to satisfy such obligation, with each
Member being severally (but not jointly) liable, in proportion to their
respective shares in such distributions.

          5.3. Liability of Transferees. For purposes of this Agreement, any
transferee of an interest in the Company, whether or not admitted as a
substitute Member or treated as a transferee or successor in interest who has
not been admitted as a substitute Member (an "Assignee") hereunder, shall be
treated as having contributed the amounts contributed to the Company by the
transferor, as having received distributions made to the transferor, and as
having been allocated any Net Income or Net Loss allocated to the transferor of
the interest in the Company held by the transferee. In addition, the transferee
shall be liable for the transferor's liability for future contributions to the
Company. Notwithstanding the above, the transfer of an interest shall not
relieve the transferor from any liability hereunder except to the extent that
the transferee has actually made all contributions or payments required of the
transferor.

          5.4. Defaulting Members.

               (a)  If a Non-Managing Member fails to pay any amount which it is
required to pay to the Company on or before the date when such amount is due and
payable, such Non-Managing Member shall be deemed to be in default hereunder (a
"Defaulting Member"), and written notice of default shall be given to such Non-
Managing Member by the Managing Members. The Company shall be entitled to
enforce the obligations of each Non-Managing Member to make the contributions to
capital specified in this Agreement, and the Company shall have all remedies
available at law or in equity in the event any such contribution is not so made.
In the event of any legal proceedings relating to a default by a Defaulting
Member, such Defaulting Member shall pay all costs and expenses incurred by the
Company, including attorneys' fees, if the Company shall prevail. Further, such
Defaulting Member shall be obligated to pay the Company interest with respect to
the amount of any capital contribution not made when required by this Agreement,
with such interest commencing on the date such contribution is initially due and
ending on the date such contribution is made to the Company. Such interest shall
be calculated on the basis of the then current reference rate announced by Wells
Fargo Bank, N.A., or by any other U.S. commercial bank with capital in excess of
Five Hundred Million Dollars ($500,000,000) selected by the Managing Members,
plus two percent (2%) per annum.

               (b)  In addition to the remedies provided under Paragraph 5.4(a),
if the Defaulting Member does not remedy a default in the payment of a required
contribution within ten (10) business days of the receipt of the notice
specified in Paragraph 5.4(a): (i) the Defaulting Member shall no longer have
the right (if any) to vote on any Company matter, and (ii) if the Managing
Members so elect, the other Members shall have the option to pay the remaining
capital contributions of the Defaulting Member in accordance with any procedures
and in such proportions as may be established by the Managing Members. In such
event, such

                                      9.
<PAGE>

Defaulting Member shall be deemed to have withdrawn from the Company and to have
forfeited its interest in the Net Income and Net Losses of the Company. Such
Defaulting Member shall be entitled to receive only the amount of its Capital
Account at the time of the default, with such amount payable, without interest,
to the Defaulting Member upon the dissolution of the Company.

                                  ARTICLE VI
                       CAPITAL ACCOUNTS AND ALLOCATIONS

          6.1. Capital Accounts. A Capital Account shall be maintained on the
Company's books for each Member. In the event any interest in the Company is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to the
transferred interest.

          6.2. Definitions. Unless the context requires otherwise, the following
terms have the meanings specified below for purposes of this Agreement:

               (a)  Book Value.  The Book Value with respect to any asset shall
                    ----------
be the asset's adjusted basis for federal income tax purposes, except as
follows:

                    (1)  The initial Book Value of any asset contributed by a
     Member to the Company shall be the fair market value of such asset at the
     time of contribution, as determined by the contributing Member and the
     Company.

                    (2)  In the discretion of the Managing Members, the Book
     Values of all Company assets may be adjusted to equal their respective fair
     market values, as determined by the Managing Members, and the amount of
     such adjustment shall be treated as Net Income or Net Loss and allocated to
     the Capital Accounts of the Members, as of the following times: (A) the
     acquisition of an additional interest in the Company by any new or existing
     Member in exchange for more than a de minimis capital contribution; and (B)
     the distribution by the Company to a Member of more than a de minimis
     amount of Company assets in connection with an adjustment of such Member's
     interest in the Company.

                    (3)  The Book Values of all Company assets shall be adjusted
     to equal their respective fair market values, as determined by the Managing
     Members, and the amount of such adjustment shall be treated as Net Income
     or Net Loss and allocated to the Capital Accounts of the Members, as of the
     following times: (A) the date the Company is liquidated within the meaning
     of Treasury Regulation Section 1.704-1(b)(2)(ii)(g); and (B) the
     termination of the Company pursuant to the provisions of this Agreement.

                    (4)  The Book Values of the Company's assets shall be
     increased or decreased to the extent required under Treasury Regulation
     Section 1.704-1(b)(2)(iv)(m) in the event that the adjusted tax basis of
     the Company's assets is adjusted pursuant to Code Section 732, 734 or 743.

                                      10.
<PAGE>

                    (5)  The Book Value of a Company asset shall be adjusted by
     the depreciation, amortization or other cost recovery deductions, if any,
     taken into account by the Company with respect to such asset in computing
     Net Income or Net Loss.

               (b)  Capital Account. An account maintained by the Company with
                    ---------------
respect to each Member in accordance with the following provisions:

          The Capital Account of each Member shall be increased by:
                                                      ---------

     (1)  the amount of money and the fair market value of any property
          contributed to the Company by such Member (in the case of a
          contribution of property, net of any liabilities secured by such
          property that the Company is considered to assume or hold subject to
          for purposes of Section 752 of the Code),

     (2)  such Member's share of Net Income (or items thereof) allocated to his
          Capital Account pursuant to this Agreement, and

     (3)  any other amounts required by Treasury Regulation Section 1.704-1(b),
          provided the Managing Member determines that such increase is
          consistent with the economic arrangement among the Members as
          expressed in this Agreement.

and shall be decreased by:
             ---------

     (A)  the amount of money and the fair market value of any property
          distributed by the Company (determined pursuant to Paragraph 12.2
          hereof as of the date of distribution) to such Member pursuant to the
          provisions of this Agreement (net of any liabilities secured by such
          property that such Member is considered to assume or hold subject to
          for purposes of Section 752 of the Code),

     (B)  such Member's share of or Net Loss (or items thereof) allocated to his
          Capital Account pursuant to this Agreement, and

     (C)  any other amounts required by Treasury Regulation Section 1.704-1(b),
          provided the Managing Member determines that such decrease is
          consistent with the economic arrangement among the Members as
          expressed in this Agreement.

               (c)  Fiscal Quarter. The Fiscal Quarters of the Company shall
                    --------------
begin on January l, April 1, July 1 and October 1, and end on March 31, June 30,
September 30 and December 31, respectively, except that the Company's first
Fiscal Quarter shall begin on the date of this Agreement and end on the next
regular quarterend.

               (d)  Fiscal Year. The Company's first Fiscal Year shall begin on
                    -----------
the date of this Agreement and end on December 31, 1999. Thereafter, the
Company's Fiscal Year shall commence on January 1 of each year and end on
December 31 of such year or, if earlier, the date the Company terminated during
such year. The Managing Members may at any time elect a different Fiscal Year if
permitted by the Code and the applicable Treasury Regulations.

                                      11.
<PAGE>

               (e)  Net Income and Net Loss. The net book income or loss of the
                    -----------------------
Company for any relevant period, as computed in accordance with federal income
tax principles and as adjusted pursuant to the following provisions, under the
method of accounting elected by the Company for federal income tax purposes. The
Net Income or Loss of the Company shall be computed, inter alia, by:

                    (1)  including as income or deductions, as appropriate, any
     tax-exempt income and related expenses that are neither properly included
     in the computation of taxable income nor capitalized for federal income tax
     purposes;

                    (2)  including as a deduction when paid or incurred
     (depending on the Company's method of accounting) any amounts utilized to
     organize the Company or to promote the sale of (or to sell) an interest in
     the Company, except that amounts for which an election is properly made by
     the Company under Section 709(b) of the Code shall be accounted for as
     provided therein;

                    (3)  including as a deduction any losses incurred by the
     Company in connection with the sale or exchange of property notwithstanding
     that such losses may be disallowed to the Company for federal income tax
     purposes under the related party rules of Code Section 267(a)(1) or 707(b);
     and

                    (4)  calculating the gain or loss on disposition of Company
     assets and the depreciation, amortization or other cost recovery
     deductions, if any, with respect to the Company's assets by reference to
     their Book Value rather than their adjusted tax basis.

               (f)  Percentage Interest. The Percentage Interest for each Member
                    -------------------
shall generally be as set forth on Exhibit A, as it may be amended from time to
time, and shall generally be determined by dividing the amount of each Member's
Capital Commitment by the sum of the Capital Commitments of all of the Members
(except as otherwise specifically provided in this Agreement). The sum of the
Members' Percentage Interests shall be one hundred percent (100%).

               (g)  Sale or Exchange. A sale, exchange, liquidation or similar
                    ----------------
transaction, event or condition with respect to any assets (except realizations
of purchase discounts on commercial paper, certificates of deposit or other
money-market instruments) of the Company of the type that would cause any
realized gain or loss to be recognized for income tax purposes under the Code
(as determined without giving effect to the related party rules of Code Sections
267(a)(1) and 707(b)).

          6.3. Allocation of Net Income or Loss.

               (a)  All Net Income or Loss of the Company attributable to the
Company's investment in the Fund shall be allocated among the Members in
proportion to their Percentage Interests.

               (b)  All Net Income or Loss attributable to the Company's Carry
shall be allocated among the Members in proportion to their Percentage
Interests; provided that the

                                      12.
<PAGE>

Managing Members may, in their discretion, determine to allocate up to 20% of
E*Trade's allocable share of the Net Income attributable to the Carry realized
in a particular year to other Members. The Managing Members shall make any
determination to make such an allocation within two months after the end of each
Fiscal Year.

               (c)  All Net Income or Loss attributable to the Company's
operations shall be allocated entirely to E*Trade. For this purpose, Net Income
or Loss attributable to the Company's operations shall mean the Management Fee
received by the Company reduced by all expenses of the Company other than
expenses directly attributable to the Company's investment in the Fund or the
Company's Carry, as determined by the Managing Members, in their discretion.

                                  ARTICLE VII
                                   EXPENSES

          The Company will pay all costs and expenses incurred in connection
with its activities. The Members shall be entitled to reimbursement by the
Company for expenses incurred by them relating to the Company's business, as
determined by the Managing Members in their discretion.

                                 ARTICLE VIII
                                 DISTRIBUTIONS

          8.1. Interest. No interest shall be paid to any Member on account of
his interest in the capital of, or on account of his investment in, the Company.

          8.2. Mandatory Distributions. Promptly upon receipt of any tax
distributions from the Fund, the Managing Members shall distribute such tax
distributions to the Members in proportion to their interests in the taxable
income of the Company for the period to which such distributions relate.

          8.3. Discretionary Distributions. The Managing Members may in their
discretion make additional distributions of cash or Securities among the Members
(not including any Defaulting Members).

               (a)  The distribution pursuant to this Paragraph 8.3 shall be
made among the Members as follows (with the source of a particular distribution
being in the discretion of the Managing Members):

                    (1)  To E*Trade to the extent attributable to any excess of
     the Management Fee received over the Company's operating expenses (taking
     into account as current or projected expenses any payments of compensation
     to the Managing Members for their management of the Company if they are no
     longer employed by E*Trade).

                                      13.
<PAGE>

                    (2)  Among the Members in proportion to their respective
     shares of the cumulative amount of undistributed Net Income attributable to
     the Company's Carry to the extent made from such undistributed Net Income.

                    (3)  Among the Members in proportion to their respective
     shares of the cumulative amount of undistributed Net Income attributable to
     the Company's investment in the Fund to the extent made from such
     undistributed Net Income.

                    (4)  Among the Members in proportion to their Capital
     Contributions to the extent constituting a return of capital.

               (b)  Immediately prior to any distribution in kind of Securities
(or other assets) pursuant to any provision of this Agreement, the difference
between the fair market value and the Book Value of any Securities (or other
assets) distributed shall be allocated to the Capital Accounts of the Members as
Net Income or Net Loss pursuant to Article VI.

               (c)  Securities distributed in kind pursuant to this Paragraph
8.3 shall be subject to such conditions and restrictions as the Managing Members
determine are legally required.

                                  ARTICLE IX
                 ASSIGNMENT OR TRANSFER OF MEMBERS' INTERESTS

          9.1. Restrictions on Transfer of Members' Interests. No Member may
sell, assign, pledge, mortgage or otherwise dispose of all or any portion of his
interest in the Company without the consent of the Managing Members.

          9.2. Opinion of Counsel. Notwithstanding any other provision of this
Agreement, no transfer or other disposition of an interest in the Company shall
be permitted until the Managing Members shall have received, or waived receipt
of, an opinion of counsel reasonably satisfactory to them that the effect of
such transfer or disposition would not:

               (a)  result in a violation of the Securities Act;

               (b)  require the Company to register as an investment company
under the Investment Company Act of 1940, as amended;

               (c)  require the Company or the Fund to register as an investment
adviser under the Investment Advisers Act of 1940, as amended;

               (d)  result in a termination of the Company for tax purposes, if
such termination would have a material adverse effect on the Members;

               (e)  result in a violation of any law, rule or regulation by the
Members or the Company;

                                      14.
<PAGE>

                (f)  cause the Company to be characterized as a "publicly traded
partnership" (within the meaning set forth in Sections 512, 7704(b) and 469(k)
of the Code) or materially increase the risk that the Company will be so
characterized.

          Such legal opinion shall be provided to the Managing Members by the
Company's counsel. All costs associated with such opinion shall be borne by the
transferring Member.

          9.3.  Violation of Restrictions. In the event of any purported
transfer or other disposition of any Member's interest in the Company in
violation of the provisions of this Article IX, without limiting any other
rights of the Company, the Managing Members shall have the option, in their sole
discretion, to treat the Member as having withdrawn from the Company and to
purchase or cause the Company to purchase such Member's interest for cash at a
price equal to the value thereof determined by the Managing Members as of a date
selected by them. In the event of purchase, the terminated Member's and the
remaining Members' interests in the Company shall be appropriately adjusted, and
the subject Member (and his purported transferee) shall have no further interest
in the Company except to receive the purchase price, if any, for his interest as
determined by the Managing Members. Such option must be exercised, if at all, by
written notice to the affected Member (or his successor(s) in interest) given
not later than ninety (90) days after the Managing Members are advised in
writing of the purported transfer or disposition, and the purchase or withdrawal
shall be consummated on the date specified in such notice, which shall not be
later than sixty (60) days after it is given.

          9.4.  Agreement Not to Transfer. Each of the Members agrees with all
other Members that he, she or it will not make any disposition of his, her or
its interest in the Company, except as permitted by the provisions of this
Article IX.

          9.5.  Multiple Ownership. In the event of any disposition which shall
result in multiple ownership of any Member's interest in the Company, the
Managing Members may require one or more trustees or nominees to be designated
to represent a portion of or the entire interest transferred for the purpose of
receiving all notices which may be given and all payments which may be made
under this Agreement and for the purpose of exercising all rights which the
transferor as a Member had pursuant to the provisions of this Agreement.

          9.6.  Substitute Members. No transferee of a Member's interest may be
admitted to the Company as a substitute Member without the consent of the
Managing Members, which consent shall be subject to the sole discretion of the
Managing Members and shall not be subject to challenge by any transferor or
transferee.

                                   ARTICLE X
                        VESTING OF PERCENTAGE INTERESTS

          10.1. Vesting of Managing Members' and E*Trade's Interests. The
Managing Members' and E*Trade's interests in the Company shall be one hundred
percent (100%) vested as of the date hereof.

                                      15.
<PAGE>

          10.2. Vesting of Other Non-Managing Members' and Additional Members'
Interests. The interest in the Company of any Non-Managing Member (other than
E*Trade) and of any Additional Member shall vest in accordance with a vesting
schedule (if any) established by the Managing Members for such other Non-
Managing Member or Additional Member. Any amounts allocated Non-Managing Members
or Additional Members that, for any reason, do not vest shall revert to the
Members whose interest in such amounts were diluted by the original allocation
of such amounts to such Non-Managing Member or Additional Member.

                                  ARTICLE XI
                  DISSOLUTION AND LIQUIDATION OF THE COMPANY

          11.1. Liquidation Procedures. Upon termination of the Company in
accordance with Article II:

                (a) The affairs of the Company shall be wound up and the Company
shall be dissolved. The Managing Members shall serve as the liquidators.

                (b) Distributions in dissolution may be made in cash or in kind
or partly in cash and partly in kind.

                (c) The Managing Members shall use their best judgment as to the
most advantageous time for the Company to sell investments or to make
distributions in kind provided that any such sales shall be made as promptly as
is consistent with obtaining the fair value thereof.

                (d) The proceeds of dissolution shall be applied to payment of
liabilities of the Company and distributed to the Members in the following
order:

                    (1)  to the creditors of the Company in the order of
     priority established by law;

                    (2)  to the Members, in respect of the positive balances in
     their Capital Accounts, after all Net Income or Net Loss arising upon the
     liquidation (including amounts arising in connection with a distribution of
     Securities) has been allocated among the Members.

                                  ARTICLE XII
                       FINANCIAL ACCOUNTING AND REPORTS

          12.1. Tax Accounting and Reports. The Managing Members shall cause the
Company's tax return and IRS Form 1065, Schedule K-1, to be prepared and
delivered in a timely manner to the Non-Managing Members (but in no event later
than ninety (90) days after the close of each of the Company's Fiscal Years).

                                      16.
<PAGE>

          12.2. Valuation of Securities and Other Assets Owned by the Company.

                (a) Subject to the specific standards set forth below, the
valuation of Securities and other assets and liabilities under this Agreement
shall be at fair market value. In determining the value of the interest of any
Member or in any accounting between the Members, no value shall be placed on the
goodwill or the name of the Company. Upon dissolution of the Company, the
Company's name and any goodwill associated with the name shall be distributed to
E*Trade.

                (b) The following criteria shall be used for determining the
fair market value of Securities.

                    (1)  Securities not subject to investment letter or other
     similar restrictions on free marketability:

                         (A)  If traded on one (1) or more securities exchanges
          or traded on NASDAQ, the value of each Security shall be deemed to be
          the Security's closing price as reported in the Wall Street Journal or
                                                          -------------------
          another nationally recognized publication or service that reports such
          data for the valuation date.

                         (B)  If actively traded over-the-counter (but not on
          NASDAQ), the value shall be deemed to be the closing bid price of such
          Security on the valuation date.

                         (C)  If there is no active public market, the Managing
          Members shall make a determination of the fair market value on the
          valuation date, taking into consideration developments concerning the
          issuing company subsequent to the acquisition of its Securities, the
          pricing of other private placements of Securities by the issuer, the
          price of the Securities of other companies comparable to the issuer,
          any financial data and projections of the issuing company provided to
          the Managing Members and such other factor or factors as the Managing
          Members may deem relevant.

                    (2)  In the case of Securities subject to legal or
     contractual restrictions on free marketability, appropriate adjustments to
     the value determined under Paragraph 12.2(b)(1) above shall be made to
     reflect the effect of the restrictions on transfer.

                    (3)  The value of the Company's interest in the Fund shall
     be the fair market value of the Company's interest in the Securities (and
     other assets) of the Fund.

                    (4)  If the Managing Members in good faith determine that,
     because of special circumstances, the valuation methods set forth in this
     Paragraph 12.2 do not fairly determine the value of a Security, the
     Managing Members shall make such adjustments or use such alternative
     valuation method as they deem appropriate.

                                      17.
<PAGE>

          12.3. Supervision; Inspection of Books. Proper and complete books of
account of the affairs of the Company shall be kept under the supervision of the
Managing Members at the principal office of the Company. Such books shall be
open to inspection by a Non-Managing Member, at any reasonable time, upon
reasonable notice, during normal business hours.

          12.4. Confidentiality. All information provided to Non-Managing
Members under this Article XII shall be used by Non-Managing Members in
furtherance of their interests as Non-Managing Members and, subject to
disclosures required by applicable law, each Non-Managing Member hereby agrees
to maintain the confidentiality of such financial statements and other
information provided to Non-Managing Members hereunder.

                                 ARTICLE XIII
                               OTHER PROVISIONS

          13.1. Execution and Filing of Documents. The Managing Members shall
execute and file a Certificate conforming to the requirements of the Act in the
office of the Secretary of State for the State of Delaware and shall execute a
fictitious business name statement and file or cause such statement to be filed
if required by Delaware law.

          13.2. Other Instruments and Acts. The Members agree to execute any
other instruments or perform any other acts that are or may be necessary to
effectuate and carry on the Company.

          13.3. Binding Agreement. This Agreement shall be binding upon the
transferees, successors, assigns and legal representatives of the Members.

          13.4. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware as applied to agreements among Delaware
residents made and to be performed entirely within Delaware.

          13.5. Notices. Any notice or other communication that a Member desires
to give to another Member shall be in writing and shall be deemed effectively
given upon personal delivery or upon deposit in any United States mail box, by
registered or certified mail, postage prepaid, or upon transmission by telegram
or telecopy, addressed to the other Member at the address shown in the exhibits
attached to this Agreement or at such other address as a Member may designate by
fifteen (15) days' advance written notice to the other Members.

          13.6. Power of Attorney. By signing this Agreement, each Non-Managing
Member designates and appoints each of the Managing Members as its true and
lawful attorney, in its name, place and stead to make, execute, sign and file
such instruments, documents or certificates that may from time to time be
required of the Company by the laws of the United States of America, the laws of
the State of Delaware or any other state in which the Company shall conduct its
investment activities in order to qualify or otherwise enable the Company to
conduct its affairs in such jurisdictions; provided, however, that in no event
shall the Managing Members be deemed to have the authority under this Paragraph
13.6 to take any action that would result in any Non-Managing Member losing the
limitation on liability afforded hereunder.

                                      18.
<PAGE>

          13.7.  Amendment Procedure. This Agreement (and any exhibits to this
Agreement) may be amended only with the written consent of the Managing Members.
No amendment shall, however, (i) enlarge the obligations of any Member under
this Agreement without the written consent of such Member, (ii) dilute the
relative interest of any Member in the Net Income, Net Loss, distributions or
capital of the Company without the written consent of such Member (except such
dilution as may result from additional capital contributions from the Members or
the admission of Additional Members as specifically permitted pursuant to this
Agreement or as a result of a termination or withdrawal of a Non-Managing
Member), or (iii) alter or waive the terms of this Paragraph 13.7 or Paragraphs
13.14 and 13.17. The Managing Members shall promptly furnish copies of any
amendments to this Agreement and the Company's Certificate to all Members.

          13.8.  Effective Date. This Agreement shall be effective on the date
set forth in the first paragraph of this Agreement.

          13.9.  Entire Agreement. This Agreement constitutes the entire
agreement of the Members and supersedes all prior agreements between the Members
with respect to the Company.

          13.10. Titles; Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and shall not be considered in the
interpretation of this Agreement.

          13.11. Company Name. The Company shall have the exclusive ownership
and right to use the Company name (and any name under which the Company shall
elect to conduct its affairs) as long as the Company continues.

          13.12. Exculpation. Neither the Managing Members nor their Affiliates
shall be liable to a Non-Managing Member or the Company for honest mistakes of
judgment, for action or inaction taken reasonably and in good faith for a
purpose that was reasonably believed to be in the best interests of the Company,
for losses due to such mistakes, action or inaction, or to the negligence,
dishonesty or bad faith of any employee, broker or other agent of the Company,
the Managing Members or their Affiliates provided that such employee, broker or
agent was selected, engaged or retained and supervised with reasonable care,
provided that this Paragraph 13.12 shall not extend to any action which
constitutes fraud, willful misconduct or gross negligence. The Managing Members
may consult with counsel and accountants in respect of Company affairs and be
fully protected and justified in any action or inaction that is taken in
accordance with the advice or opinion of such counsel or accountants, provided
that they shall have been selected with reasonable care. Notwithstanding any of
the foregoing to the contrary, the provisions of this Paragraph 13.12 and of
Paragraph 13.13 hereof shall not be construed so as to relieve (or attempt to
relieve) any person of any liability by reason of recklessness or intentional
wrongdoing or to the extent (but only to the extent) that such liability may not
be waived, modified or limited under applicable law, but shall be construed so
as to effectuate the provisions of this Paragraph 13.12 and of Paragraph 13.13
to the fullest extent permitted by law.

          13.13. Indemnification. The Company agrees to indemnify, out of the
assets of the Company only, the Managing Members and their Affiliates (and their
agents), to the fullest extent permitted by law and to save and hold them
harmless from and in respect of all (a) reason-

                                      19.
<PAGE>

able fees, costs, and expenses paid in connection with or resulting from any
claim, action or demand against the Managing Members, their Affiliates or any
agent thereof, the Company or their agents that arise out of or in any way
relate to the Company, its properties, business or affairs and (b) such claims,
actions and demands and any losses or damages resulting from such claims,
actions and demands, including amounts paid in settlement or compromise of any
such claim, action or demand; provided, however, that this indemnity shall not
extend to conduct not undertaken in good faith nor to any fraud, willful
misconduct or gross negligence. Any person receiving an advance with respect to
expenses shall be required to agree to return such advance to the Company in the
event it is subsequently determined that such person was not entitled to
indemnification hereunder. Any indemnified party shall promptly seek recovery
under any other indemnity or any insurance policies by which such indemnified
party may be indemnified or covered or from any portfolio company in which the
Company has an investment, as the case may be. No payment or advance may be made
to any person under this Paragraph 13.13 to any person who may have a right to
any other indemnity (by insurance or otherwise) unless such person shall have
agreed, to the extent of any other recovery, to return such payments or advances
to the Company.

          13.14. Limitation of Liability of Members. Except as otherwise
expressly provided herein or as required by Delaware law, no Member shall be
bound by, nor be personally liable for, the expenses, liabilities or obligations
of the Company in excess of the balance of such Member's Capital Commitment to
the Company.

          13.15. Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in San Francisco, California, in accordance with the rules, then
obtaining, of the American Arbitration Association. Any award shall be final,
binding and conclusive upon the parties. A judgment upon the award rendered may
be entered in any court having jurisdiction thereof.

          13.16. Tax Matters Partner. Thomas A. Bevilacqua shall be the
Company's Tax Matters Partner under the Code ("TMP"). The TMP shall have the
right to resign by giving thirty (30) days' written notice to the Members. Upon
the resignation, dissolution or Bankruptcy of the TMP, a successor TMP shall be
elected by a majority in interest of the other Members. The TMP shall employ
experienced tax counsel to represent the Company in connection with any audit or
investigation of the Company by the Internal Revenue Service ("IRS") and in
connection with all subsequent administrative and judicial proceedings arising
out of such audit. The fees and expenses of such, and all expenses incurred by
the TMP in serving as the TMP, shall be Company expenses and shall be paid by
the Company. Notwithstanding the foregoing, it shall be the responsibility of
the Members, at their expense, to employ tax counsel to represent their
respective separate interests. If the TMP is required by law or regulation to
incur fees and expenses in connection with tax matters not affecting each of the
Members, then the TMP may, in his sole discretion, seek reimbursement from or
charge such fees and expenses to the Members on whose behalf such fees and
expenses were incurred. The TMP shall keep the Members informed of all
administrative and judicial proceedings, as required by Section 6223(g) of the
Code, and shall furnish a copy of each notice or other communication received by
the TMP from the IRS to each Member, except such notices or communications as
are sent directly to such Member by the IRS. The relationship of the TMP to the
Members is that of a fiduciary, and the TMP has a fiduciary obligation to
perform his duties as TMP in such manner as will serve the

                                      20.
<PAGE>

best interests of the Company and all of the Company's Members. To the fullest
extent permitted by law, the Company agrees to indemnify the TMP and his agents
and save and hold them harmless from and in respect to all (i) reasonable fees,
costs and expenses in connection with or resulting from any claim, action or
demand against the TMP, the Managing Members or the Company that arise out of or
in any way relate to the TMP's status as TMP for the Company, and (ii) all such
claims, actions and demands and any losses or damages therefrom, including
amounts paid in settlement or compromise of any such claim, action or demand;
provided that this indemnity shall not extend to conduct by the TMP adjudged (i)
not to have been undertaken in good faith to promote the best interests of the
Company or (ii) to have constituted recklessness or intentional wrongdoing by
the TMP.

          13.17. Taxation as Company. The Managing Members, while serving as
such, agree to use their best efforts to avoid taking any action that would
cause the Company to be classified as other than a partnership for federal
income tax purposes.

                                  ARTICLE XIV
                    MISCELLANEOUS TAX COMPLIANCE PROVISIONS

          14.1.  Substantial Economic Effect. The provisions of this Agreement
are intended to comply generally with the provisions of Treasury Regulation
Section 1.704-1, and shall be interpreted and applied in a manner consistent
with such Regulations; and, to the extent the subject matter thereof is
otherwise not addressed by this Agreement, the provisions of Treasury
Regulations Section 1.704-1 are hereby incorporated by reference unless the
Managing Members shall determine that such incorporation will result in economic
consequences inconsistent with the economic arrangement among the Members as
expressed in this Agreement. In the event the Managing Members shall determine
that it is prudent to modify the manner in which the Capital Accounts, or any
debits or credits thereto, are computed or allocated or the manner in which
distributions and contributions upon liquidation (or otherwise) of the Company
(or any Member's interest therein) are effected in order to comply with such
Regulations and other applicable tax laws, or to assure that the Company is
treated as a partnership for tax purposes, or to achieve the economic
arrangement of the Members as expressed in this Agreement, then, notwithstanding
anything in this Agreement to the contrary, the Managing Members may make such
modification, provided that it is not likely to have a material detrimental
effect on the tax consequences and total amounts distributable to any Non-
Managing Member pursuant to Articles VIII and XI as applied without giving
effect to such modification. The Managing Members shall also (i) make any
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Members and the amount of Company capital reflected on
the Company's balance sheet, as computed for book purposes pursuant to this
Agreement, in accordance with Regulations Section 1.704-1(b)(2)(iv)(g), and (ii)
make any appropriate modifications in the event unanticipated events (such as
the incurrence of nonrecourse indebtedness) might otherwise cause the
allocations under this Agreement not to comply with Treasury Regulations Section
1.704, provided in each case that the Managing Members determine that such
adjustments or modifications shall not result in economic consequences
inconsistent with the economic arrangement among the Members as expressed in
this Agreement.

                                      21.
<PAGE>

          14.2. Income Tax Allocations.

                (a)  Except as otherwise provided in this paragraph or as
otherwise required by the Code and the rules and Treasury Regulations
promulgated thereunder, income, gain, loss, deduction, or credit of the Company
for income tax purposes shall be allocated in the same manner the corresponding
book items are allocated pursuant to this Agreement.

                (b)  In accordance with Code Section 704(c) and the Treasury
Regulations thereunder, income, gain, loss and deduction with respect to any
asset contributed to the capital of the Company shall, solely for tax purposes,
be allocated between the Members so as to take account of any variation between
the adjusted basis of such property to the Company for federal income tax
purposes and its initial Book Value.

                (c)  In the event the Book Value of any Company asset is
adjusted pursuant to the terms of this Agreement, subsequent allocations of
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) and
the Treasury Regulations thereunder.

          14.3. Withholding.

          The Company shall at all times be entitled to make payments with
respect to any Member in amounts required to discharge any obligation of the
Company to withhold or make payments to any governmental authority with respect
to any federal, state, local or other jurisdictional tax liability of such
Member arising as a result of such Member's interest in the Company. Any such
withholding payment shall be charged to the Member's Capital Account.



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                                      22.
<PAGE>

          IN WITNESS WHEREOF, the Members have executed this Agreement as of the
date first above written.

                                             MANAGING MEMBERS

                                             /s/ CHRISTOS M. COTSAKOS
                                             __________________________________
                                             Christos M. Cotsakos

                                             /s/ THOMAS A. BEVILACQUA
                                             __________________________________
                                             Thomas A. Bevilacqua



                                             NON-MANAGING MEMBER

                                             E*Trade Group, Inc.


                                             By: /s/ THOMAS A. BEVILACQUA
                                                -------------------------------

                                             Title:____________________________

                                      23.
<PAGE>

                                   EXHIBIT A

                         MEMBERS' CAPITAL COMMITMENTS
                           AND PERCENTAGE INTERESTS

                                               Capital      Percentage
Name/Address                                 Commitment      Interest
----------------------------------------------------------------------------

Managing Members:

Christos M. Cotsakos                          $ 87,500          25%
Thomas A. Bevilacqua                            87,500          25%


Non-Managing Member:

E*Trade Group, Inc.                            175,000          50%*
                                              --------        ------
                                              $350,000         100%


____________________

  *  Subject to reduction (but not below 40%), with respect to the allocation of
     the Company's Carry, as described in Section 6.3(b) of the Agreement.

                                      A-1