Document:

exv10w2

 

	 	 	 	 	 

Exhibit 10.2

Portions of this document have been omitted and separately filed with the Securities and
Exchange Commission with a request for confidential treatment. The location of these omissions is
marked by [                    ]. Confidential treatment requested by WQN, Inc.

 

 

 

 

SEAVIEW MEZZANINE FUND LP

AGREEMENT OF LIMITED PARTNERSHIP

 

Dated as of December 8, 2004

 

 

 

Confidential treatment requested by WQN, Inc.

SEAVIEW MEZZANINE FUND LP

Table of Contents

	 	 	 	 	 	 	 	 	 
	Article I General Provisions	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 1.01.
	 	Definitions
	 	 	1	 
	 

	 	Section 1.02.
	 	Name
	 	 	5	 
	 

	 	Section 1.03.
	 	Principal Office; Registered Office; and Qualification
	 	 	5	 
	 

	 	Section 1.04.
	 	Commencement and Duration
	 	 	6	 
	 

	 	Section 1.05.
	 	Admission of Partners
	 	 	6	 
	 

	 	Section 1.06.
	 	Representations of Partners
	 	 	6	 
	 

	 	Section 1.07.
	 	Notices With Respect to Representations of Private Limited Partners
	 	 	8	 
	 

	 	Section 1.08.
	 	Liability of Partners
	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	Article II Purpose and Powers	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 2.01.
	 	Purpose and Powers
	 	 	9	 
	 

	 	Section 2.02.
	 	Venture Capital Operating Company
	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	Article III Management	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.01.
	 	Authority of General Partner
	 	 	10	 
	 

	 	Section 3.02.
	 	Authority of the Private Limited Partners
	 	 	11	 
	 

	 	Section 3.03.
	 	The Investment Adviser/Manager
	 	 	11	 
	 

	 	Section 3.04.
	 	Restrictions on Other Activities of the General Partner and its Affiliates
	 	 	11	 
	 

	 	Section 3.05.
	 	Management Compensation
	 	 	12	 
	 

	 	Section 3.06.
	 	Partnership Expenses
	 	 	12	 
	 

	 	Section 3.07.
	 	Valuation of Assets
	 	 	14	 
	 

	 	Section 3.08.
	 	Standard of Care
	 	 	14	 
	 

	 	Section 3.09.
	 	Indemnification
	 	 	15	 
	 

	 	Section 3.10.
	 	Advisory Board
	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	Article IV Small Business Investment Company Matters	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.01.
	 	SBIC Act
	 	 	17	 
	 

	 	Section 4.02.
	 	Consent or Approval of, and Notice to, SBA
	 	 	17	 
	 

	 	Section 4.03.
	 	Provisions Required by the SBIC Act for Issuers of Debentures
	 	 	18	 
	 

	 	Section 4.04.
	 	Effective Date of Incorporated SBIC Act Provisions
	 	 	18	 
	 

	 	Section 4.05.
	 	SBA as Third Party Beneficiary
	 	 	18	 
	 

	 	Section 4.06.
	 	Interest of the General Partner After Withdrawal
	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	Article V Partners’ Capital Contributions	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.01.
	 	Capital Commitments
	 	 	19	 
	 

	 	Section 5.02.
	 	Capital Contributions by Private Limited Partners
	 	 	19	 
	 

	 	Section 5.03.
	 	Capital Contributions by the General Partner
	 	 	19	 
	 

	 	Section 5.04.
	 	Additional Private Limited Partners and Increased Commitments
	 	 	20	 

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	 	Section 5.05.
	 	Conditions to the Commitments of the General Partner and the Private Limited
Partners
	 	 	20	 
	 

	 	Section 5.06.
	 	Termination of the Obligation to Contribute Capital
	 	 	21	 
	 

	 	Section 5.07.
	 	Notice and Opinion of Counsel
	 	 	21	 
	 

	 	Section 5.08.
	 	Cure, Termination of Capital Contributions and Withdrawal
	 	 	21	 
	 

	 	Section 5.09.
	 	Failure to Make Required Capital Contributions
	 	 	22	 
	 

	 	Section 5.10.
	 	Notice and Consent of SBA with respect to Capital Contribution Defaults
	 	 	22	 
	 

	 	Section 5.11.
	 	Partnership’s Remedies upon Contribution Defaults
	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	Article VI Adjustment of Capital Accounts	 	 	26	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 6.01.
	 	Establishment of Capital Accounts
	 	 	26	 
	 

	 	Section 6.02.
	 	Time of Adjustment of Capital Accounts
	 	 	26	 
	 

	 	Section 6.03.
	 	Adjustments to Capital Accounts
	 	 	26	 
	 

	 	Section 6.04.
	 	Tax Matters
	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	Article VII Distributions	 	 	29	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 7.01.
	 	Distributions to Partners
	 	 	29	 
	 

	 	Section 7.02.
	 	Distributions of Non-cash Assets in Kind
	 	 	29	 
	 

	 	Section 7.03.
	 	Distributions for Payment of Tax
	 	 	29	 
	 

	 	Section 7.04.
	 	Distributions Violative of the Act Prohibited
	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	Article VIII Dissolution, Liquidation, Winding Up and Withdrawal	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 8.01.
	 	Dissolution
	 	 	30	 
	 

	 	Section 8.02.
	 	Winding Up
	 	 	31	 
	 

	 	Section 8.03.
	 	Withdrawal of the General Partner
	 	 	31	 
	 

	 	Section 8.04.
	 	Continuation of the Partnership After the Withdrawal of the General Partner
	 	 	32	 
	 

	 	Section 8.05.
	 	Withdrawals of Capital
	 	 	32	 
	 

	 	Section 8.06.
	 	Withdrawal by ERISA Regulated Pension Plans
	 	 	32	 
	 

	 	Section 8.07.
	 	Withdrawal by Government Plans Complying with State and Local Law
	 	 	32	 
	 

	 	Section 8.08.
	 	Withdrawal by Government Plans Complying with ERISA
	 	 	33	 
	 

	 	Section 8.09.
	 	Withdrawal by Tax Exempt Private Limited Partners
	 	 	33	 
	 

	 	Section 8.10.
	 	Withdrawal by Registered Investment Companies
	 	 	33	 
	 

	 	Section 8.11.
	 	Distributions on Withdrawal
	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	Article IX Accounts, Reports and Auditors	 	 	34	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 9.01.
	 	Books of Account
	 	 	34	 
	 

	 	Section 9.02.
	 	Audit and Report
	 	 	34	 
	 

	 	Section 9.03.
	 	Fiscal Year
	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	Article X Miscellaneous	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 10.01.
	 	Assignability
	 	 	35	 
	 

	 	Section 10.02.
	 	Binding Agreement
	 	 	36	 
	 

	 	Section 10.03.
	 	Gender
	 	 	37	 

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	 	Section 10.04.
	 	Notices
	 	 	37	 
	 

	 	Section 10.05.
	 	Consents and Approvals
	 	 	37	 
	 

	 	Section 10.06.
	 	Counterparts
	 	 	37	 
	 

	 	Section 10.07.
	 	Amendments
	 	 	38	 
	 

	 	Section 10.08.
	 	Power of Attorney
	 	 	38	 
	 

	 	Section 10.09.
	 	Applicable Law
	 	 	39	 
	 

	 	Section 10.10.
	 	Severability
	 	 	39	 
	 

	 	Section 10.11.
	 	Confidentiality
	 	 	39	 
	 

	 	Section 10.12.
	 	Entire Agreement
	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	 	 	Schedule A – Partners and Commitments	 	 	 	 
	 	 	Exhibit I – Valuation Guidelines	 	 	 	 

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SEAVIEW MEZZANINE FUND LP

     AGREEMENT OF LIMITED PARTNERSHIP, dated and effective as of December 8, 2004, among SeaView
GP, LLC, a Delaware limited liability company (in its capacity as a general partner of the
Partnership) and the Private Limited Partners named in Schedule A attached to this Agreement, as
amended from time to time. The parties, in consideration of their mutual agreements stated in this
Agreement, agree to become partners and to form a limited partnership under the Act. The purpose
of the Partnership is to operate as a small business investment company under the SBIC Act,
licensed by SBA for the period and upon the terms and conditions stated in this Agreement. The
parties further agree as follows:

ARTICLE I

GENERAL PROVISIONS

Section 1.01. Definitions.

     For the purposes of this Agreement, the following terms have the following meanings:

     (a) “Act” means the Delaware Limited Partnership Act, as may be amended from time to time and
as set forth in Del. Code. Ann. tit. 6, chapter 17 (or any successor to such statute).

     (b) “Additional Private Limited Partners” has the meaning stated in Section 5.04.

     (c) “Advisory Board” has the meaning stated in Section 3.11.

     (d) “Affiliate” has the meaning stated in the SBIC Act.

     (e) “Agreement” means this agreement of limited partnership, as amended from time to time.
References to this Agreement will be deemed to include all provisions incorporated in this
Agreement by reference.

     (f) “Assets” means common and preferred stock (including warrants, rights and other options
relating to such stock), notes, bonds, debentures, trust receipts and other obligations,
instruments or evidences of indebtedness, and other properties or interests commonly regarded as
securities, and in addition, interests in real property, whether improved or unimproved, and
interests in personal property of all kinds (tangible or intangible), chooses in action, and cash,
bank deposits and so-called “money market instruments”.

     (g) “Assets Under Management” means, as of any specified date, the value of all Assets owned
by the Partnership (the value to be determined as provided in this Agreement), including
contributions requested and due from Partners and uncalled amounts of Commitments that are included
in the Partnership’s Regulatory Capital (as such term is used in the SBIC Act), less the amount of
any liabilities of the Partnership, determined in accordance with generally accepted accounting
principles, consistently applied.

     (h) “Associate” has the meaning stated in the SBIC Act.

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     (i) “Capital Account” means the account of each Partner that reflects its interest in the
Partnership determined in accordance with Section 6.03.

     (j) “Certificate of Limited Partnership” means the certificate of limited partnership with
respect to the Partnership filed for record in the office of the Secretary of State of the State of
Delaware.

     (k) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder
and interpretations thereof promulgated by the Internal Revenue Service, as in effect from time to
time.

     (l) “Combined Capital” has the meaning stated in the SBIC Act.

     (m) “Commitments” means the capital contributions to the Partnership that the Partners have
made or are obligated to make to the Partnership. The amounts and terms of the Commitments of the
General Partner and the Private Limited Partners will be as stated in this Agreement.

     (n) “Commitment Period” means the period commencing on the date on which the Private Limited
Partners first make initial contributions to the Partnership, and ending on the fifth anniversary
of such date.

     (o) “Control Person” has the meaning stated in the SBIC Act.

     (p) “Cumulative Capital Contribution” means the cumulative contributions to the capital of the
Partnership from time to time made by a Private Limited Partner (in no event, exceeding such
Private Limited Partner’s Commitment).

     (q) “Debentures” has the meaning stated in the SBIC Act.

     (r) “Designated Party” means any of the General Partner, any Investment Adviser/ Manager, and
any partner, member, manager, stockholder, director, officer, employee or Affiliate of the General
Partner and any Investment Adviser/ Manager.

     (s) “Distributable Security” has the meaning stated in the SBIC Act.

     (t) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereunder and interpretations thereof promulgated by the Department of Labor, as in
effect from time to time.

     (u) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the regulations
thereunder and interpretations thereof promulgated by the Securities and Exchange Commission, as in
effect from time to time.

     (v) “Final Admission Date” shall have the meaning set forth in Section 5.04.

     (w) “Fiscal Year” has the meaning stated in Section 9.03.

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     (x) “General Partner” means the general partner or general partners of the Partnership, as set
forth in this Agreement, which initially shall be SeaView GP, LLC.

     (y) “Indemnifiable Costs” means all costs, expenses, damages, claims, liabilities, fines and
judgments (including the reasonable cost of the defense, and any sums which may be paid with the
consent of the Partnership in settlement), incurred in connection with or arising from a claim,
action, suit, proceeding or investigation, by or before any court or administrative or legislative
body or authority.

     (z) “Initial Closing” shall mean the closing which shall take place, or which has taken place,
on December 8, 2004.

     (aa) “Investment Advisers Act” means the Investment Advisers Act of 1940, as amended, and the
regulations thereunder and interpretations thereof promulgated by the Securities and Exchange
Commission, as in effect from time to time.

     (bb) “Investment Adviser/Manager” has the meaning stated in the SBIC Act.

     (cc) “Investment Company Act” means the Investment Company Act of 1940, as amended, and the
regulations thereunder and interpretations thereof promulgated by the Securities and Exchange
Commission, as in effect from time to time.

     (dd) “Leverage” has the meaning stated in the SBIC Act.

     (ee) “Leverageable Capital” has the meaning stated in the SBIC Act.

     (ff) “Net Losses” means, with respect to any fiscal period, the excess, if any, of:

     (i) all expenses and losses incurred during the fiscal period by the Partnership from
all sources over

     (ii) the aggregate revenue, income and gains realized during the fiscal period by the
Partnership from all sources.

     For purposes of determining Net Losses:

     (A) items will be taken into account to the extent that (1) they are includable
as items of income, credit, loss or deduction for Federal income tax purposes
(including items described in Section 705(a)(2)(B) of the Code, or treated as so
described in Treasury Regulation § 1.704-1(b)(2)(iv)(i)) or, (2) in the case of
items of income, they constitute income that is exempt from Federal income tax; and

     (B) if any Non-cash Asset is distributed in kind, it will be deemed
sold at the value established at the most recent valuation of the Non-cash Asset
under this Agreement (or such other valuation date as is required under the SBIC
Act) and any unrealized appreciation or depreciation with respect to the Non-cash
Asset will be deemed realized and included in the determination of Net Losses.

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     (gg) “Net Profits” means, with respect to any fiscal period, the excess, if any, of:

     (i) the aggregate revenue, income and gains realized during the fiscal period by the
Partnership from all sources over

     (ii) all expenses and losses incurred during the fiscal period by the Partnership from
all sources.

     For purposes of determining Net Profits:

     (A) items will be taken into account to the extent that (1) they are includable
as items of income, credit, loss or deduction for Federal income tax purposes
(including items described in Section 705(a)(2)(B) of the Code, or treated as so
described in Treasury Regulation § 1.704-1(b)(2)(iv)(i)) or, (2) in the case of
items of income, constitute income that is exempt from Federal income tax; and

     (B) if any Non-cash Asset is distributed in kind, it will be deemed sold at the
value established at the most recent valuation of the Non-cash Asset under this
Agreement (or such other valuation date as is required under the SBIC Act) and any
unrealized appreciation or depreciation with respect to the Non-cash Asset
will be deemed realized and included in the determination of Net Profits.

     (hh) “Non-cash Asset” means any Asset of the Partnership other than cash.

     (ii) “Optionor” has the meaning set forth in Section 5.11(b)(ii).

     (jj) “Optionees” has the meaning set forth Section 5.11(b)(ii).

     (kk) “Optioned Partnership Interest” has the meaning set forth in Section 5.11(b)(ii).

     (ll) “Option Price” has the meaning set forth in Section 5.11(b)(ii)(A).

     (mm) “Outstanding Leverage” means the total amount of outstanding securities (including, but
not limited to, Debentures) issued by the Partnership, which qualify as Leverage and have not been
redeemed or repaid as provided in the SBIC Act.

     (nn) “Partners” means the General Partner and the Private Limited Partners.

     (oo) “Partnership” means the limited partnership established by this Agreement.

     (pp) “                     percent (___%) in interest of the Private Limited Partners” means Private Limited
Partners whose Capital Accounts represent such percentage of the Capital Accounts of all Private
Limited Partners as of the time of determination.

     (qq) “Priority Return” has the meaning set forth in Section 6.03(a)(iii)(B).

     (rr) “Private Limited Partners” means any limited partners of the Partnership.

     (ss) “Regulatory Capital” has the meaning stated in the SBIC Act.

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     (tt) “Remaining Portion” has the meaning set forth in Section 5.11(b)(ii)(B).

     (uu) “SBA” means the United States Small Business Administration.

     (vv) “SBA Agreements” has the meaning stated in Section 10.12.

     (ww) “SBIC” means a small business investment company licensed under the SBIC Act.

     (xx) “SBIC Act” means the Small Business Investment Act of 1958, as amended, and the rules and
regulations thereunder and interpretations thereof promulgated by SBA, as in effect from time to
time.

     (yy) “SEC” means the Securities and Exchange Commission.

     (zz) “Securities Act” means the Securities Act of 1933, as amended, and the regulations
thereunder and interpretations thereof promulgated by the SEC, as in effect from time to time.

     (aaa) “Special Private Limited Partner” has the meaning stated in Section 4.06 and Section
8.03(c).

Section 1.02. Name.

     (a) The name of the Partnership will be “SeaView Mezzanine Fund LP.”

     (b) Subject to the prior approval of SBA, the General Partner has the power at any time to:

     (i) change the name of the Partnership; and

     (ii) qualify the Partnership to do business under any name when the Partnership’s name
is unavailable for use, or may not be used, in a particular jurisdiction.

     (c) The General Partner will give prompt notice of any action taken under this Section to each
Partner and SBA.

Section 1.03. Principal Office; Registered Office; and Qualification.

     (a) The principal office of the Partnership will be at 30 Kennedy Plaza, Suite 400,
Providence, Rhode Island 02903, or such other place as may from time to time be designated by the
General Partner, subject to the approval of SBA.

     (b) The registered office of the Partnership in the State of Delaware will be located at c/o
United Corporate Services, Inc., 15 East North Street, in the city of Dover, County of Kent, State
of Delaware 19901. The name of the initial registered agent for the Partnership will be United
Corporate Services, Inc. The General Partner may from time to time change the registered agent and
registered office of the Partnership.

     (c) The General Partner will qualify the Partnership to do business in each jurisdiction where
the activities of the Partnership make such qualification necessary.

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     (d) The General Partner will give prompt notice of any action taken under this Section to each
Partner and SBA.

Section 1.04. Commencement and Duration.

     (a) The Partnership will commence upon the filing for record of the Certificate of Limited
Partnership in the office of the Secretary of State of the State of Delaware.

     (b) The Partnership will be dissolved and wound up at the time and in the manner provided for
in Section 8.01 hereof.

Section 1.05. Admission of Partners.

     (a) No person may be admitted as a General Partner or a Private Limited Partner without
subscribing and delivering to the Partnership a counterpart of this Agreement, or other written
instrument, which sets forth:

     (i) the name and address of the Partner,

     (ii) the Commitment of the Partner, and

     (iii) the agreement of the Partner to be bound by the terms of this Agreement.

     (b) Without the prior approval of SBA, no person may be admitted as:

     (i) a General Partner, or

     (ii) a Private Limited Partner with an ownership interest of ten percent (10%) or more
of the Partnership’s capital.

     (c) The General Partner will compile, and amend from time to time as necessary, Schedule A
attached to this Agreement, which will list:

     (i) the name and address of the General and each Private Limited Partner, and

     (ii) the Commitment of the General Partner and each Private Limited Partner to the
Partnership.

     (d) The addition to the Partnership at any time of one or more Partners will not be a cause
for dissolution of the Partnership, and all the Partners will continue to be subject to the
provisions of this Agreement in all respects.

Section 1.06. Representations of Partners.

     (a) This Agreement is made with the General Partner in reliance upon the General Partner’s
representation to the Partnership and SBA, that:

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     (i) it is duly organized, validly existing and in good standing under the laws of the
State of Delaware, and is qualified to do business under the laws of each state where such
qualification is required to carry on the business of the Partnership;

     (ii) it has full power and authority to execute and deliver this Agreement and to act
as General Partner under this Agreement;

     (iii) this Agreement has been authorized by all necessary actions by it, has been duly
executed and delivered by it, and is a legal, valid and binding obligation of it,
enforceable according to its terms; and

     (iv) the execution and delivery of this Agreement and the performance of its
obligations under this Agreement will not conflict with, or result in any violation of, or
default under, any provision of any governing instrument applicable to it, or any agreement
or other instrument to which it is a party or by which it or any of its properties is bound,
or any provision of law, statute, rule or regulation, or any ruling, writ, order, injunction
or decree of any court, administrative agency or governmental body applicable to it.

     (b) This Agreement is made with each Private Limited Partner in reliance upon each Private
Limited Partner’s representation to the General Partner, the Partnership and SBA, that:

     (i) it has full power and authority to execute and deliver this Agreement and to act as
a Private Limited Partner under this Agreement; this Agreement has been authorized by all
necessary actions by it; this Agreement has been duly executed and delivered by it; and this
Agreement is a legal, valid and binding obligation of it, enforceable against it according
to its terms;

     (ii) the execution and delivery of this Agreement and the performance of its
obligations under this Agreement do not require the consent of any third party not
previously obtained, and will not conflict with, or result in any violation of, or default
under, any provision of any governing instrument applicable to it, or any agreement or other
instrument to which it is a party or by which it or any of its properties is bound, or any
provision of law, statute, rule or regulation, or any ruling, writ, order, injunction or
decree of any court, administrative agency or governmental body applicable to it;

     (iii) if the Private Limited Partner is a bank (as the term is used in the SBIC Act, at
15 U.S.C. § 682(b)), the total amount of such Private Limited Partner’s investments in
SBICs, including such Private Limited Partner’s interest in the Partnership, does not exceed
five percent (5%) of such Private Limited Partner’s capital and surplus;

     (iv) unless otherwise disclosed to the Partnership in writing, the Private Limited
Partner is a citizen or resident of the United States, an entity organized under the laws of
the United States or a state within the United States or an entity engaged in a trade or
business within the United States;

     (v) unless otherwise disclosed to the Partnership in writing, the Private Limited
Partner is not subject to Title I of ERISA;

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     (vi) it is investing in the Partnership for its own account for investment, not for the
interest of any other person, not for resale of any such equity interest in the Partnership
to any other person and not with a view to or in connection with a sale or distribution, as
such term is defined in the Securities Act;

     (vii) it is an “accredited investor” (as such term is defined in Regulation D under the
Securities Act), is knowledgeable and experienced in businesses of the sort conducted by the
Partnership, and acknowledges that it has had the opportunity to make inquiry of the General
Partner and the Investment Adviser concerning the business, investment strategies,
prospects, and financial condition of the Partnership and has received answers to its
inquiries that it considers fully responsive and satisfactory. Further, it has not relied
on the SBA’s review of the Partnership, the General Partner or the Investment
Adviser/Manager in deciding whether to invest;

     (viii) it understands that the equity interests in the Partnership have not been
registered under the Securities Act and are being sold and transferred to it in a
transaction exempt from such registration requirements; that there is no public market for
such equity interests; and that such Private Limited Partner may be required to hold such
equity interests indefinitely;

     (ix) its overall commitment to investments which are not readily marketable is not
disproportionate to its net worth and the investment in equity interests of the Partnership
will not cause such overall commitment to become excessive; and

     (x) it understands that an investment in the Partnership involves significant risks,
and it has carefully reviewed and is aware of all of the risk factors related to such
investment.

     (c) Each Partner who has disclosed to the Partnership in writing that it is not a person
described in Section 1.06(b)(iv), agrees to provide the Partnership with any information or
documentation necessary to permit the Partnership to fulfill any tax withholding or other
obligation relating to the Partner, including but not limited to any documentation necessary to
establish the Partner’s eligibility for benefits under any applicable tax treaty.

Section 1.07. Notices With Respect to Representations of Private Limited Partners. 

     (a) If any representation made by a Private Limited Partner in Section 1.06(b)(i), (ii) or
(iii) ceases to be true, then the Private Limited Partner will promptly provide the Partnership
with a correct separate written representation covering the same matters as each such Section.

     (b) The Partnership will give SBA prompt notice of any corrected representation received from
any Private Limited Partner under Section 1.07(a).

Section 1.08. Liability of Partners.

     (a) Losses, liabilities and expenses incurred by the Partnership during any fiscal year will
be allocated among the Partners in accordance with the procedures for allocating Net Losses as
provided in Section 6.03.

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     (b) The General Partner has the liability for the liabilities of the Partnership provided for
in the Act and the SBIC Act. The General Partner will not:

     (i) be obligated to restore by way of capital contribution or otherwise any deficits in
the respective Capital Accounts of the Private Limited Partners should such deficits occur,
or

     (ii) have any greater obligation with respect to any Outstanding Leverage than is
required by the SBIC Act or by SBA.

     (c) Except as otherwise provided under the Act and the SBIC Act, no Private Limited Partner
will be liable for any loss, liability or expense whatsoever of the Partnership. Notwithstanding
the preceding sentence, a Private Limited Partner will remain liable for any portion of such
Private Limited Partner’s Commitment not paid to the Partnership only through the Commitment
Period.

     (d) If a Private Limited Partner is required to return to the Partnership, for the benefit of
creditors of the Partnership, amounts previously distributed to the Private Limited Partner, the
obligation of the Private Limited Partner to return any such amount to the Partnership will be the
obligation of the Private Limited Partner and not the obligation of the General Partner. No
Private Limited Partner will be liable under this Agreement for the obligations under this
Agreement of any other Partner.

     (e) Nothing in this Agreement limits any liability of any Partner under any agreement between
the Partner and SBA.

ARTICLE II

PURPOSE AND POWERS

Section 2.01. Purpose and Powers.

     (a) The Partnership is organized solely for the purpose of operating as a small business
investment company under the SBIC Act and conducting the activities described under Title III of
the SBIC Act. The Partnership has the powers and responsibilities, and is subject to the
limitations, provided in the SBIC Act. The operations of the Partnership and the actions taken by
the Partnership and the Partners will be conducted and taken in compliance with the SBIC Act.

     (b) Subject to Section 2.01(a), the Partnership may make, manage, own and supervise
investments of every kind and character in conducting its business as a small business investment
company.

     (c) Subject to the provisions of the SBIC Act, the Partnership shall have all powers
necessary, suitable or convenient for the accomplishment of the purposes set forth in Section
2.01(a) and Section 2.01(b), alone or with others, as principal or agent, including without
limitation the following:

     (i) to engage in any lawful act or activity for which limited partnerships may be
organized under the Act.

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Section 2.01. Venture Capital Operating Company.

     At any time that a Private Limited Partner is subject to Title I of ERISA and 25% or more in
interest of all Private Limited Partners (as measured by their aggregate Capital Accounts) are
“benefit plan investors” (within the meaning of Department of Labor Regulation Section
2510.3101(f)(2), 51 Fed. Reg. 41,282 (November 13, 1986) or any amendment or successor
regulation), the Partnership will use its best efforts to ensure that the Partnership qualifies as
a “venture capital operating company” (within the meaning of Department of Labor Regulation §
2510.3101(d), 51 Fed. Reg. 41,281 (November 13, 1986) or any amendment or successor regulation).

ARTICLE III

MANAGEMENT

Section 3.01. Authority of General Partner.

     (a) The management and operation of the Partnership and the formulation of investment policy
is vested exclusively in the General Partner.

     (b) The acts of the General Partner in carrying on the business of the Partnership will bind
the Partnership.

     (c) In the case of any General Partner other than a natural person, at any time that the
Partnership is licensed as an SBIC, the General Partner will not allow any person to serve as a
general partner, director, officer or manager of the General Partner, unless such person has been
approved by SBA.

     (d) So long as the General Partner remains the general partner of the Partnership:

     (i) it will comply with the requirements of the SBIC Act, including, without
limitation, 13 C.F.R. § 107.160(a) and (b), as in effect from time to time; and

     (ii) in the case of any General Partner other than a natural person, except as set
forth in Section 3.01(d)(iii), it will devote all of its activities to the conduct of the
business of the Partnership and will not engage actively in any other business, unless its
engagement is related to and in furtherance of the affairs of the Partnership.

     (iii) The General Partner may, however:

     (A) act as the general partner or Investment Adviser/Manager for one or more
other SBICs, and

     (B) receive, hold, manage and sell Assets received by it from the Partnership
(or other SBIC for which it acts as general partner or Investment Adviser/Manager),
or through the exercise or exchange of Assets received by it from the Partnership
(or other SBIC for which it acts as general partner or Investment Adviser/Manager).

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Section 3.02. Authority of the Private Limited Partners.

     The Private Limited Partners will take no part in the control of the business of the
Partnership, and the Private Limited Partners will not have any authority to act for or on behalf
of the Partnership, except as is specifically permitted by this Agreement.

Section 3.03 The Investment Adviser/Manager.

     (a) Subject to the SBIC Act, the General Partner may delegate any part of its authority to an
Investment Adviser/Manager.

     (b) Any agreement delegating any part of the authority of the General Partner to an Investment
Adviser/Manager will:

     (i) be in writing, executed by the General Partner, the Partnership and the Investment
Adviser/Manager,

     (ii) specify the authority so delegated, and

     (iii) expressly require that such delegated authority will be exercised by the
Investment Adviser/Manager in conformity with the terms and conditions of such agreement,
this Agreement and the SBIC Act.

     (c) Each agreement with an Investment Adviser/Manager under Section 3.03(a) will be binding in
accordance with its terms upon the General Partner and any succeeding General Partner.

     (d) Each agreement with an Investment Adviser/Manager, and any material amendment to any such
agreement, is subject to the prior approval of SBA.

     (e) The initial Investment Advisor/Manager shall be SeaView Mezzanine Capital Advisers, LLC.

Section 3.04. Restrictions on Other Activities of the General Partner and its Affiliates.

     (a) Except as provided in the SBIC Act and as otherwise specifically provided in this
Agreement, no provision of this Agreement will be construed to preclude any (i) Partner, (ii)
Investment Adviser/Manager, or (iii) Affiliate, general partner, member, manager or stockholder of
any Partner or Investment Adviser/Manager, from engaging in any activity whatsoever or from
receiving compensation therefore or profit from any such activity. Such activities may include, without limitation, (A) receiving compensation from issuers of securities for investment
banking services, (B) managing investments, (C) participating in investments, brokerage or
consulting arrangements or (D) acting as an adviser to or participant in any corporation,
partnership, limited liability company, trust or other business person..

Section 3.05. Management Compensation.

     (a) During the five-year period commencing on the Initial Closing, Management Compensation
with respect to each year during such period shall be [                    ] of the sum of (i)

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the Partnership’s Regulatory Capital, (ii) any previous permitted distributions under Section 7 hereof,
and (iii) an assumed two tiers of Outstanding Leverage on the amounts described in clauses (i) and
(ii).

     (b) During the subsequent period following the five-year period described in subsection (a)
above, Management Compensation with respect to each year during such subsequent period shall be
[                    ] of the Partnership’s Combined Capital as of the start of business on the first day of
each such year.

     (c) The Management Compensation shall not be modified in any respect except (i) upon the
written approval of 67 2/3% in Interest of the Private Limited Partners and the General Partner,
and (ii) with the prior written approval of SBA.

     (d) If the Partnership fails to pay any Management Compensation provided herein, for any
reason, the unpaid amount shall continue to be due and payable, or shall become due and payable, at
the earliest date on which the payment of such amount or any portion thereof could be made without
violation of the SBIC Act. Until paid, the unpaid amount shall accrue interest compounded on a
monthly basis at the highest prime rate reported in The Wall Street Journal, from time to time,
during the period of non-payment. 

     (e) Management Compensation shall be reduced (but not below zero) by the amount of any fees
or other amounts paid to the General Partner or Investment Adviser/Manager, as the case may be,
which the SBIC Act requires to be deducted from Management Compensation.

     The Partnership will not pay any Management Compensation with respect to any fiscal year in
excess of the amount of Management Compensation approved by SBA.

Section 3.06. Payment of Management Compensation

     (a) The Management Compensation may be paid by the Partnership to the General Partner or, at
the General Partner’s direction, in whole or in part to an Investment Adviser/Manager.

     (b) Management Compensation shall be paid in advance in four (4) quarterly installments on the
first business day of each quarter of each year. During the initial five-year period described in
Section 3.05 (a) above, Regulatory Capital shall be calculated as of the start of business on the first day of each quarter. For partial years (such as the final partial year of the
Partnership), Management Compensation shall be prorated based on the number of days in such partial
years.

Section 3.07 Partnership Expenses.

     (a) The General Partner (or an Investment Adviser/Manager) will pay:

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     (i) the compensation of all professional and other employees of the Partnership, the
General Partner or an Investment Adviser/Manager who provide services to the Partnership;

     (ii) the cost of providing support, management and general services to the Partnership
(other than the costs paid by the Partnership as provided in Section 3.07(b)), including,
without limitation:

     (A) office expenses,

     (B) travel,

     (C) business development,

     (D) office and equipment rental,

     (E) bookkeeping, and

     (F) the development, investigation and monitoring of investments; and

     (iii) all other expenses of the Partnership not authorized to be paid by the
Partnership under Section 3.07(b).

     (b) The Partnership will pay the following Partnership expenses:

     (i) all interest and expenses payable by the Partnership on any indebtedness incurred
by the Partnership;

     (ii) all amounts payable to SBA under the SBIC Act, and all amounts payable in
connection with any Leverage commitment and any Outstanding Leverage;

     (iii) taxes payable by the Partnership to Federal, state, local and other governmental
agencies;

     (iv) Management Compensation;

     (v) expenses incurred in the actual or proposed acquisition or disposition of Assets,
including without limitation, accounting fees, brokerage fees, legal fees, transfer taxes
and costs related to the registration or qualification for sale of Assets;

     (vi) legal, insurance (including any insurance as contemplated in Section 3.08 (m)),
accounting and auditing expenses;

     (vii) all expenses incurred by the Partnership in connection with commitments for or
issuance of Leverage;

     (viii) fees or dues in connection with the membership of the Partnership in any trade
association for small business investment companies or related enterprises; and

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     (ix) fees and expenses incurred in connection with communication with the Private
Limited Partners such as printing and mailing costs, and costs associated with periodic
meetings of such Private Limited Partners.

     (c) All Partnership expenses paid by the Partnership will be made against
appropriate supporting documentation. The payment by the Partnership of Partnership expenses will
be due and payable as billed.

Section 3.08. Valuation of Assets.

     (a) The Partnership will adopt written guidelines for determining the value of its Assets.
Assets held by the Partnership will be valued by the General Partner in a manner consistent with
the Partnership’s written guidelines and the SBIC Act. The Valuation Guidelines attached to this
Agreement as Exhibit I are the Partnership’s written guidelines for valuation.

     (b) To the extent that the SBA or the SBIC Act requires any Asset held by the Partnership to
be valued other than as provided in this Agreement, the General Partner will value the Asset in
such manner as it determines to be consistent with the SBA or the SBIC Act.

     (c) Assets held by the Partnership will be valued at least annually (or more often, as SBA may
require), and will be valued at least semiannually (or more often, as SBA may require) at any time
that the Partnership has Outstanding Leverage.

Section 3.09. Standard of Care.

     (a) No Designated Party will be liable to the Partnership or any Partner for any action taken
or omitted to be taken by it or any other Partner or other person in good faith and in a manner it
reasonably believed to be in or not opposed to the best interests of the Partnership, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe its conduct was
unlawful.

     (b) Neither any Private Limited Partner, nor any member of any Partnership committee or board
who is not an Affiliate of the General Partner, will be liable to the Partnership or any Partner as
the result of any decision made in good faith by the Private Limited Partner or member, in its
capacity as such.

     (c) Any Designated Party, any Private Limited Partner and any member of a Partnership
committee or board, may consult with independent legal counsel selected by it and will be fully protected, and will incur no liability to the Partnership or any Partner, in acting
or refraining to act in good faith in reliance upon the opinion or advice of such counsel.

     (d) This Section does not constitute a modification, limitation or waiver of Section 314(b) of
the SBIC Act, or a waiver by SBA of any of its rights under Section 314(b).

     (e) In addition to the standards of care stated in this Section, this Agreement may also
provide for additional (but not alternative) standards of care that must also be met.

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Section 3.10. Indemnification.

     (a) The Partnership will indemnify and hold harmless, but only to the extent of Assets Under
Management (less any Outstanding Leverage not included as a liability in the computation of Assets
Under Management), any Designated Party, from any and all Indemnifiable Costs which may be incurred
by or asserted against such person or entity, by reason of any action taken or omitted to be taken
on behalf of the Partnership and in furtherance of its interests.

     (b) The Partnership will indemnify and hold harmless, but only to the extent of Assets Under
Management (less any Outstanding Leverage not included as a liability in the computation of Assets
Under Management), the Private Limited Partners, and members of any Partnership committee or board
who are not Affiliates of the General Partner or any Investment Adviser/Manager from any and all
Indemnifiable Costs which may be incurred by or asserted against such person or entity, by any
third party on account of any matter or transaction of the Partnership, which matter or transaction
occurred during the time that such person has been a Private Limited Partner or member of any
Partnership committee or board.

     (c) The Partnership has power, in the discretion of the General Partner, to agree to indemnify
on the same terms and conditions applicable to persons indemnified under Section 3.10(b), any
person who is or was serving, under a prior written request from the Partnership, as a consultant
to, agent for or representative of the Partnership as a director, manager, officer, employee, agent
of or consultant to another corporation, partnership, limited liability company, joint venture,
trust or other enterprise, against any liability asserted against such person and incurred by the
person in any such capacity, or arising out of the person’s status as such.

     (d) No person may be entitled to claim any indemnity or reimbursement under Section 3.10(a),
(b) or (c) in respect of any Indemnifiable Cost that may be incurred by such person which results
from the failure of the person to act in accordance with the provisions of this Agreement and the
applicable standard of care stated in Section 3.09. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, will not, of itself, preclude a determination that such person acted in accordance with
the applicable standard of care stated in Section 3.09.

     (e) To the extent that a person claiming indemnification under Section 3.10(a), (b) or (c) has
been successful on the merits in defense of any action, suit or proceeding referred to in Section
3.10(a), (b) or (c) or in defense of any claim, issue or matter in any such action, suit or
proceeding, such person must be indemnified with respect to such matter as provided in such
Section. Except as provided in the foregoing sentence and as provided in Section 3.10(h) with
respect to advance payments, any indemnification under this Section will be paid only upon determination that the
person to be indemnified has met the applicable standard of conduct stated in Section 3.09(a) or
Section 3.09(b).

     (f) A determination that a person to be indemnified under this Section has met the applicable
standard stated in Section 3.09(a) or Section 3.09(b) may be made by (i) the General Partner, with
respect to the indemnification of any person other than a person claiming indemnification under
Section 3.10(a), (ii) a committee of the Partnership whose members are not affiliated with the
General Partner or any Investment Adviser/Manager with respect to

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indemnification of any person indemnified under Section 3.10(a) or (iii) at the election of
the General Partner, independent legal counsel selected by the General Partner, with respect to the
indemnification of any person indemnified under this Section, in a written opinion.

     (g) In making any determination with respect to indemnification under (f), the General
Partner, a committee of the Partnership whose members are not affiliated with the General Partner
or any Investment Adviser/Manager or independent legal counsel, as the case may be, is authorized
to make the determination on the basis of its evaluation of the records of the General Partner, the
Partnership or any Investment Adviser/Manager to the Partnership and of the statements of the party
seeking indemnification with respect to the matter in question and is not required to perform any
independent investigation in connection with any determination. Any party making any such
determination is authorized, however, in its sole discretion, to take such other actions (including
engaging counsel) as it deems advisable in making the determination.

     (h) Expenses incurred by any person in respect of any Indemnifiable Cost may be paid by the
Partnership before the final disposition of any such claim or action upon receipt of an undertaking
by or on behalf of such person to repay such amount unless it is ultimately determined as provided
in Section 3.10(e) or (f) that the person is entitled to be indemnified by the Partnership as
authorized in this Section.

     (i) The rights provided by this Section will inure to the benefit of the heirs, executors,
administrators, successors, and assigns of each person eligible for indemnification under this
Agreement.

     (j) The rights to indemnification provided in this Section are the exclusive rights of all
Partners to indemnification by the Partnership. No Partner may have any other rights to
indemnification from the Partnership or enter into, or make any claim under, any other agreement
with the Partnership (whether direct or indirect) providing for indemnification.

     (k) The Partnership may not enter into any agreement with any person (including, without
limitation, any Manager and/or Investment Adviser, Partner or any person that is an employee,
officer, director, partner or shareholder, or an Affiliate, Associate or Control Person of any
Partner) providing for indemnification of any such person (i) except as provided for under this
Section, and (ii) unless such agreement provides for a determination with respect to the
indemnification as provided under Section 3.10(f).

     (l) The provisions of this Section do not apply to indemnification of any person that is not
at the expense (whether in whole or in part) of the Partnership.

     (m) The Partnership may purchase and maintain insurance on its own behalf, or on behalf of any
person or entity, with respect to liabilities of the types described in this Section. The
Partnership may purchase such insurance regardless of whether the person is acting in a capacity
described in this Section or whether the Partnership would have the power to indemnify the person
against such liability under the provisions of this Section.

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Section 3.11. Advisory Board.

     The advisory board (the “Advisory Board”) shall be comprised of five (5) representatives, two
(2) representatives designated by the Private Limited Partners and three (3) representatives
designated by the General Partner, and shall review the business and affairs of the Partnership,
including operational issues, ongoing SBA compliance, assets acquired or sold by the Partnership,
management of portfolio investments and disposition, and prospective and ongoing investments into
portfolio companies (to ensure that such assets and investments comply with the SBIC Act) (the
“Partnership Matters”), on an “as needed” basis, but no less than on an annual basis. The Advisory
Board shall make recommendations to the General Partner with respect to the Partnership Matters;
provided that, the Advisory Board shall have no authority to participate in the
investment or exit decisions of the General Partner or Investment Adviser/Manager, or to act on
behalf of the Partnership or to bind the Partnership in any manner.

ARTICLE IV

SMALL BUSINESS INVESTMENT COMPANY MATTERS

Section 4.01. SBIC Act.

     The provisions of this Agreement must be interpreted to the fullest extent possible in a
manner consistent with the SBIC Act. If any provision of this Agreement conflicts with any
provision of the SBIC Act (including, without limitation, any conflict with respect to the rights
of SBA or the respective Partners under this Agreement), the provisions of the SBIC Act will
control.

Section 4.02. Consent or Approval of, and Notice to, SBA.

     (a) The requirements of the prior consent or approval of, and notice to, SBA in this Agreement
will be in effect at any time that the Partnership is licensed as an SBIC or has Outstanding
Leverage. These requirements will not be in effect if the Partnership is not licensed as an SBIC
and does not have any Outstanding Leverage.

     (b) Except as provided in the SBIC Act, a consent or approval required to be given by SBA
under this Agreement will be deemed given and effective for purposes of this Agreement only if the
consent or approval is:

     (i) given by SBA in writing, and

     (ii) delivered by SBA to the party requesting the consent or approval in the manner
provided for notices to such party under Section 10.04.

Section 4.03 Provisions Required by the SBIC Act for Issuers of Debentures.

     (a) The provisions of 13 C.F.R. § 107.1810(i) are incorporated by reference in this Agreement
as if fully stated in this Agreement.

     (b) The Partnership and the Partners consent to the exercise by SBA of all of the rights of
SBA under 13 C.F.R. § 107.1810(i), and agree to take all actions that SBA may require in accordance
with 13 C.F.R. § 107.1810(i).

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     (c) This Section will be in effect at any time that the Partnership has outstanding
Debentures, and will not be in effect at any time that the Partnership does not have outstanding
Debentures.

     (d) Nothing in this Section may be construed to limit the ability or authority of SBA to
exercise its regulatory authority over the Partnership as a licensed small business investment
company under the SBIC Act.

Section 4.04. Effective Date of Incorporated SBIC Act Provisions.

     (a) Any section of this Agreement which relates to Debentures issued by the Partnership and
incorporates or refers to the SBIC Act or any provision of the SBIC Act (including, without
limitation, 13 C.F.R. §§ 107.1810(i), 107.1820, 107.1830, and 107.1850) will, with respect to each
Debenture, be deemed to refer to the SBIC Act or such SBIC Act provision as in effect on the date
on which the Debenture was purchased from the Partnership.

     (b) Section 4.04(a) will not be construed to apply to:

     (i) the provisions of the SBIC Act which relate to the regulatory authority of SBA
under the SBIC Act over the Partnership as a licensed small business investment company; or

     (ii) the rights of SBA under any other agreement between the Partnership and SBA.

     (c) The parties acknowledge that references in this Agreement to the provisions of the SBIC
Act relating to SBA’s regulatory authority refer to the provisions as in effect from time to time.

Section 4.05. SBA as Third Party Beneficiary.

     SBA will be deemed an express third party beneficiary of the provisions of this Agreement to
the extent of the rights of SBA under this Agreement and under the Act. SBA will be entitled to
enforce the provisions (including, without limitation, the obligations of each Partner to make
capital contributions to the Partnership) for its benefit, as if SBA were a party to this
Agreement.

Section 4.06. Interest of the General Partner After Withdrawal. 

     If the General Partner withdraws as a general partner of the Partnership by notice from SBA as
provided in the SBIC Act or otherwise, then the entire interest of the General Partner in the
Partnership will be converted into an interest as a Special Private Limited Partner on the terms
provided in Section 8.03(c).

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ARTICLE V

PARTNERS’ CAPITAL CONTRIBUTIONS

Section 5.01. Capital Commitments.

     The Private Limited Partners and the General Partner commit to make capital contributions to
the Partnership in the amounts set forth beneath their respective names on the signature pages of
this Agreement (and its counterparts) executed by each such Partner.

Section 5.02. Capital Contributions by Private Limited Partners.

     (a) All capital contributions to the Partnership by Private Limited Partners must be in cash,
except as provided in this Agreement and approved by SBA.

     (b) Each Private Limited Partner will pay as its initial capital contribution to the
Partnership, an amount equal to the product of (i) 10% and (ii) such Private Limited Partner’s
Commitment. The initial capital contribution will be made at the Initial Closing of the
Partnership, or on such other date as determined by the General Partner in its sole discretion.
The General Partner will give the Private Limited Partners written notice of the amount and due
date of the initial capital contribution. Such notice shall be given at least fifteen (15) days
before the date on which the initial capital contribution is due, except that such notice may be
waived by any Private Limited Partner.

     (c) After the date of the initial capital contribution(s), the Private Limited Partners will
pay the remaining balance of their respective Commitments in such amounts and at such times as will
be determined by the General Partner in its sole discretion; provided, however, that if the
Commitments of all Partners (not including any Commitment of the SBA) as of the Final Admission
Date total Ten Million Dollars ($10,000,000) or less, then (i) the maximum amount any Private
Limited Partner shall be required to pay in the aggregate during the first two (2) full fiscal
years of the Partnership shall not exceed the product of (x) $2,500,000 and (y) such Private
Limited Partner’s Commitment divided by the total Commitments of the Partners and (ii) during each
of the following three (3) full fiscal years of the Partnership shall not exceed twenty-five
percent (25%) of each such Partner’s respective Commitment during each such following fiscal year.
The General Partner will give the Private Limited Partners notice before any such payment is due.
Each such notice will be given not less than fifteen (15) days before the payment to which such
notice relates is due, and will specify the date the payment will be due and the percentage of the
Private Limited Partners’ Commitments then due. Subject to Section 5.02(d), the Private Limited
Partners shall not be required to pay any remaining unpaid balance of their Commitment after the
end of the Commitment Period.

     (d) Notwithstanding Section 5.02(c), from and after the last day of the Commitment Period, the
Private Limited Partners shall be required to pay any remaining balance of their Commitments only
to the extent that either (i) the proceeds of such payments are to be used by the Partnership for
the purposes of paying Partnership expenses and purchasing securities that are issued by entities
that have previously issued securities to the Partnership; and (ii) such payments are required to
be made by SBA.

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Section 5.03. Capital Contributions by the General Partner.

     (a) All capital contributions to the Partnership by the General Partner must be in cash,
except as provided in this Agreement and approved by SBA.

     (b) The General Partner must pay its Commitment in installments at the same times and in the
same pro rata percentage amounts as the Private Limited Partners.

     (c) If the Commitment of the General Partner is increased as a result of an increase in the
Commitments of the Private Limited Partners or the admission of any Additional Private Limited
Partner, the amount of the increased Commitment of the General Partner will be payable by the
General Partner in installments, the first of which will be due upon the effectiveness of the
increased Commitments of the Private Limited Partners and each subsequent installment will be due
at the same times and in the same percentage amounts as the Private Limited Partners.

Section 5.04. Additional Private Limited Partners and Increased Commitments.

     (a) From time to time after the date of this Agreement and on or before December 31, 
2005 (the “Final Admission Date”), the General Partner may admit one or more new Private
Limited Partners (the “Additional Private Limited Partners”) or permit any Private Limited Partner
to increase its Commitment; provided that each Additional Private Limited Partner
(and Private Limited Partner increasing its Commitment) shall execute and deliver to the
Partnership a counterpart of this Agreement, or other written instrument, which sets forth:

     (i) the name and address of the Private Limited Partner,

     (ii) the Commitment of the Private Limited Partner, and

     (iii) in the case of an Additional Private Limited Partner, the agreement of the
Additional Private Limited Partner to be bound by the terms of this Agreement.

     (b) Schedule A attached to this Agreement will be amended to reflect such Additional Private
Limited Partner’s name, address and Commitment (or the increase in the Private Limited Partner’s
Commitment, as the case may be).

     (c) Before the Private Limited Partners and the General Partner are required to make
additional Capital Contributions following the admission of an Additional Private Limited Partner,
each Additional Private Limited Partner that is admitted to the Partnership or that increases its
Commitment to the Partnership after the date of the Initial Closing will be required to make a
Capital Contribution in an amount equal to the sum of each Capital Contribution that the Additional Private Limited Partner would have made had the Additional Private Limited Partner
been a Private Limited Partner from the date of the Initial Closing. In addition, each Additional
Private Limited Partner shall be required to pay to the Partnership an additional amount equal to
the highest prime rate per annum reported in The Wall Street Journal, from time to time, on its pro
rata share of each Capital Contribution described above from the date of the Initial Closing and up
to but excluding the date of the Additional Private Limited Partner’s Capital Contribution under
this Section 5.04 (the “Interest Component”). The Interest Component will be an obligation of the
Additional Private Limited Partner that is in addition to its Commitment. The Capital

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Contribution made by such Additional Private Limited Partner (including the Interest Component) may be
distributed to the Private Limited Partners that participated in the earlier Capital Contributions
pro rata based upon their relative shares of the total Capital Contributions made, and such
distributions may be redrawn by the Partnership as part of such Private Limited Partners’
respective Commitments. For purposes of this Section 5.04, a Private Limited Partner that
increases its Commitment shall be treated as an Additional Private Limited Partner with respect to
the amount by which its Commitment is increased. For all purposes of calculations under this
Agreement, the Interest Component received by the Partnership from Additional Private Limited
Partners and paid to the Private Limited Partners pursuant to this Section 5.04 will not be treated
as received and distributed by the Partnership, but rather will be treated by all Private Limited
Partners and the Partnership as if such Interest Component was paid by the Additional Private
Limited Partners directly to the Private Limited Partners receiving such Interest Component.

     (d) In the event that Additional Private Limited Partners are admitted to the Partnership or
the General Partner allows an existing Private Limited Partner to increase its Commitment and in
connection with such event a portion of the capital previously contributed by the Private Limited
Partners to the Partnership is returned by the Partnership to the Private Limited Partners as
described in this Section 5.04, then such returned capital will be added back to the unfunded
Commitment of the Private Limited Partners and may be redrawn by the Partnership as if it had not
been contributed a first time.

     (e) Allocations of Net Profits and Net Losses attributable to periods subsequent to the
Initial Closing shall be adjusted by the General Partner as necessary to cause, as quickly as
possible under the Code, the respective Capital Account Balances of the Private Limited Partners to
have the same balances that they would have had if all private Limited Partners had been admitted
to the Partnership and committed all of their Commitments at the Initial Closing and made Capital
Contributions with respect to such Commitments as and when due under this Agreement.

Section 5.05 Conditions to the Commitments of the General Partner and the Private Limited Partners.

     (a) Notwithstanding any provision in this Agreement to the contrary, on the earlier of (i) the
completion of the liquidation of the Partnership or (ii) one year from the commencement of the
liquidation, the General Partner and the Private Limited Partners will be obligated to contribute
any amount of their respective Commitments not previously contributed to the Partnership, if and to
the extent that the other Assets of the Partnership have not been sufficient to permit at that time
the redemption of all Outstanding Leverage, the payment of all amounts due with respect to the Outstanding Leverage as provided in the SBIC Act, and the payment of all other amounts owed by the
Partnership to SBA.

     (b) The provisions of this Section do not apply to the Commitment of any Private Limited
Partner whose obligation to make capital contributions has been terminated or who has withdrawn
from the Partnership, with the consent of SBA, under a provision of this Article 5 or any
agreement, release, settlement or action under any provision of this Agreement. No Private Limited
Partner or General Partner has any right to delay, reduce or offset any obligation to

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contribute capital to the Partnership called under this Section by reason of any counterclaim or right to
offset by the Partner or the Partnership against SBA.

Section 5.06 Termination of the Obligation to Contribute Capital.

     (a) Any Private Limited Partner may elect to terminate its obligation in whole or
in part to make a capital contribution required under this Agreement, or, upon demand by the
General Partner, will no longer be entitled to make such capital contribution, if the Private
Limited Partner or the General Partner obtains an opinion of counsel as provided under Section 5.07
to the effect that making such contribution would require the Private Limited Partner to withdraw
from the Partnership under Section 8.06 through Section 8.10.

     (b) Upon receipt by the General Partner of a notice and opinion as provided under Section
5.07, unless cured within the period provided under Section 5.08, the Commitment of the Private
Limited Partner delivering the opinion will be deemed to be reduced by the amount of such unfunded
capital contribution and this Agreement will be deemed amended to reflect a corresponding reduction
of aggregate Commitments to the Partnership.

Section 5.07 Notice and Opinion of Counsel.

     (a) A copy of any opinion of counsel issued as described in Section 5.06 or Section 8.06
through Section 8.10 must be sent by the General Partner to SBA, together with (i) the written
notice of the election of the Private Limited Partner or (ii) the written demand of the General
Partner, to which the opinion relates.

     (b) An opinion rendered to the Partnership as provided in Section 5.06 or Section 8.06 through
Section 8.10 will be deemed sufficient for the purposes of those Sections only if the General
Partner and SBA each approve (i) the counsel rendering the opinion, and (ii) the form and substance
of the opinion.

Section 5.08 Cure, Termination of Capital Contributions and Withdrawal.

     (a) Unless within ninety (90) days after the giving of written notice and opinion of counsel,
as provided in Section 5.06, the Private Limited Partner or the Partnership eliminates the
necessity for termination of the obligation of the Private Limited Partner to make further capital
contributions or for the withdrawal of the Private Limited Partner from the Partnership in whole or
in part to the reasonable satisfaction of the Private Limited Partner and the General Partner, the
Private Limited Partner will withdraw from the Partnership in whole or in part to the extent
required, effective as of the end of the ninety (90) day period.

     (b) Subject to the provisions of Section 5.10, in its discretion the General Partner may waive
all or any part of the ninety (90) day cure period and cause such termination of capital
contributions or withdrawal to be effective at an earlier date as stated in the waiver.

     (c) Any distributions made to a Private Limited Partner with respect to such Partner’s
withdrawal under this Section will be subject to and made as provided in Section 8.11.

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Section 5.09  Failure to Make Required Capital Contributions.

     The Partnership is entitled to enforce the obligations of each Partner to make the
contributions to capital specified in this Agreement. The Partnership has all rights and remedies
available at law or equity if any such contribution is not so made.

Section 5.10 Notice and Consent of SBA with respect to Capital Contribution Defaults.

	 	(a)	 	The Partnership must give SBA prompt written notice of any failure by a Private
Limited Partner to make any capital contribution to the Partnership required under this
Agreement when due, which failure continues beyond any applicable grace period
specified in this Agreement.

     (b) Unless SBA has given its prior consent or the provisions of subsection (c) of this Section
have become applicable, the Partnership will not (i) take any action (including entering into any
agreement (whether oral or written), release or settlement with any Partner) which defers, reduces,
or terminates the obligations of the Partner to make contributions to the capital of the
Partnership, or (ii) commence any legal proceeding or arbitration, which seeks any such deferral,
reduction or termination of such obligation. Without the consent of SBA (including SBA’s deemed
consent under subsection (c) of this Section) no such agreement, release, settlement or action
taken will be effective with respect to the Partnership or any Partner.

     (c) If the Partnership has given SBA at least thirty (30) days prior written notice of any
proposed legal proceeding, arbitration or other action described under subsection (b) of this
Section with respect to any default by a Private Limited Partner in making any capital contribution
to the Partnership, and the Partnership has not received written notice from SBA that it objects to
the proposed action within the thirty (30) day period, then SBA will be deemed to have consented to
the proposed Partnership action.

     (d) Any notice given by the Partnership to SBA under this Section must:

     (i) be given by separate copies directed to each of the Investment Division and the
Office of the General Counsel of SBA;

     (ii) explicitly state in its caption or first sentence that the notice is being given
with respect to a specified default by a Private Limited Partner in making a capital
contribution to the Partnership and a proposed legal proceeding, arbitration, agreement,
release, settlement or other action with respect to that default; and

     (iii) state the nature of the default, the identity of the defaulting Private Limited
Partner, and the nature and terms of the proposed legal proceeding, arbitration, agreement,
release, settlement or other action with respect to that default.

(e) Any failure by the Partnership to comply with this Section 5.10 shall not affect the
obligations of the Private Limited Partners to make capital contributions pursuant to the
terms and conditions of this Agreement.

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Section 5.11. Partnership’s Remedies upon Contribution Defaults.

     (a) In the event that any Private Limited Partner fails to make a contribution required under
this Agreement within thirty (30) days after the date such contribution is due, then the General
Partner may, in its sole discretion, elect:

     (i) To charge such Private Limited Partner interest at an annual rate equal to fifteen
percent (15%) on the amount due from the date such amount became due until the earlier of
(i) the date on which such payment is received by the Partnership from such Private Limited
Partner, or (ii) the date of any notice given to such Private Limited Partner by the General
Partner pursuant to Section 5.11(b), or (iii) the date on which such payment is received by
the Partnership under Section 5.11(c); and/or

     (ii) to declare, but only with the consent of SBA given as provided in Section 5.10, by
notice to such Private Limited Partner, that:

     (A) such Private Limited Partner’s Commitment shall be deemed to be reduced to
an amount equal to such the amount of contributions of capital timely made by such
Private Limited Partner pursuant to this Agreement, and

     (B) upon such notice (i) such Private Limited Partner shall have no right to
make any capital contribution thereafter (including the contribution as to which the
default occurred and any contribution otherwise required to be made thereafter
pursuant to the terms of this Agreement) and (ii) this Agreement shall be deemed
amended to reflect such reduced Commitment.

     (iii) Any distributions to which such Private Limited Partner is entitled shall be
reduced by the amount of any interest charged pursuant to Section 5.11(a)(i), and such
interest shall be deemed to be income to the Partnership.

     (b) In the event that any Private Limited Partner fails to make a contribution required under
this Agreement within thirty (30) days after notice by the General Partner to such Private Limited
Partner that it has failed to make its contribution on the date such contribution was due, the
General Partner may in its sole discretion, but only with the consent of SBA given as provided in
Section 5.10, elect to: (x) declare, by notice of forfeiture (a “Forfeiture Notice”) to such
Private Limited Partner, that fifty percent (50%) of the interest of such Private Limited Partner
in the Partnership (including amounts in its Capital Account as well as any interest in future
profits, losses or distributions of the Partnership) is forfeited, effective as of the date of such
Private Limited Partner’s failure to make such required contribution; and/or (y) to declare by
notice of default (“Default Notice”) to such Private Limited Partner that such Private Limited
Partner is in default.

     (i) As of the date any Forfeiture Notice is given to a Private Limited Partner (A) such
Private Limited Partner shall cease to be a Partner with respect to such forfeited interest;
provided, however, that such forfeited Private Limited Partner shall cease
to have any liability for the payment of the forfeited percentage of any capital
contributions due at such time or in the future and (B) the forfeited percentage of such
Private Limited Partner’s Capital Account shall be held by the Partnership and reallocated
among the Capital Accounts of the Partners Private Limited Partners (other than such
forfeited Private

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Limited Partner) to be apportioned among such Private Limited Partners in accordance
with their respective aggregate capital contributions.

     (ii) If the General Partner so elects to declare by Default Notice that such Private
Limited Partner is in default (such Private Limited Partner being hereinafter referred to as
the “Optionor”), then the other Private Limited Partners of the Partnership which are not in
default (the “Optionees”) and the General Partner shall have the right and option to acquire
one hundred percent (100%) of the Partnership interest, which shall include one hundred
percent (100%) of the Capital Account (the “Optioned Partnership Interest”) of the Optionor
on the following terms:

     (A) The General Partner shall give the Private Limited Partners notice promptly
after declaration of any such default. Such notice shall advise each Optionee of
the portion of the Optioned Partnership Interest available to it and the price
therefor. The portion available to each Optionee shall be that portion of the
Optioned Partnership Interest that bears the same ratio to the Optioned Partnership
Interest as each Optionee’s capital contributions to the Partnership bears to the
aggregate capital contributions to the Partnership, exclusive of the capital
contributions to the Partnership of the Optionor. The aggregate price for the
Optioned Partnership Interest shall be the assumption of the unpaid Commitment
obligation (both that portion then due and amounts due in the future) of the
Optionor (the “Option Price”). The Option Price for each Optionee shall be prorated
according to the portion of the Optioned Partnership Interest purchased by each such
Optionee so that the percentage of the unpaid Commitment assumed by each Optionee is
the same as the percentage of the Optioned Partnership Interest purchased by such
Optionee. The option granted hereunder shall be exercisable by each Optionee in
whole only at any time within thirty (30) days of the date of the notice from the
General Partner by the delivery to the General Partner of (1) a notice of exercise
of option, and (2) the capital contribution due in accordance with clause (E)(1).
The General Partner shall forward the above notices of exercise of option received
to the Optionor.

     (B) Should any Optionee not exercise its option within the period provided in
subsection (A), the General Partner, within fifteen (15) days of the end of such
period, shall notify the other Optionees who have previously exercised their options
in full, which Optionees shall have the right and option ratably among them to
acquire the portion of the Optioned Partnership Interest not so acquired (the
“Remaining Portion”) within fifteen (15) days of the date of the notice specified in
this subsection on the same terms as provided in subsection (A).

     (C) The amount of the Remaining Portion not acquired by the Optionees pursuant
to subsection (B) may be acquired by the General Partner within fifteen (15) days of
the expiration of the period specified in subsection (B) on the same terms as set
forth in subsection (A).

     (D) The amount of the Remaining Portion not acquired by the Optionees and the
General Partner pursuant to subsection (C) may, if the General Partner

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deems it in the best interest of the Partnership, be sold to any other persons
on terms not more favorable to such purchaser than the Optionees’ option (and the
General Partner may admit any such third party purchaser as a Private Limited
Partner, subject to the approval of SBA, if required under the SBIC Act). Any
consideration received by the Partnership for such amount of the Optionor’s interest
in the Partnership in excess of the Option Price therefor shall be retained by the
Partnership and allocated among the Partners’ Capital Accounts in proportion to the
respective Partners’ capital contributions.

     (E) Upon exercise of any option hereunder, such Optionee (or the General
Partner, if it has exercised its rights pursuant to subsection (C)) shall be deemed
to have assumed the portion of the Optionor’s unpaid Commitment that constitutes the
Option Price for the portion of the Optioned Partnership Interest purchased by such
Optionee, and shall be obligated (1) to contribute to the Partnership the portion of
the capital contribution then due from the Optionor equal to the percentage of the
Optioned Partnership Interest purchased by such Optionee and (2) to pay the same
percentage of any further contributions which would have otherwise been due from
such Optionor.

     (F) Upon the purchase by the General Partner of any portion of the Optioned
Partnership Interest in the Partnership pursuant to subsection (C), the General
Partner shall also become a Private Limited Partner to the extent of such interest.

     (G) Upon the purchase of any portion of any Optioned Partnership Interest by an
Optionee, the General Partner or other person pursuant to this Section, the Optionor
shall have no further rights or obligations under this Agreement with respect to
such portion.

     (H) Upon the purchase of any portion of the Optioned Partnership Interest, for
purposes of computing such purchaser’s aggregate capital contributions, such
purchaser shall be deemed to have aggregate capital contributions (or the aggregate
capital contributions of any Optionee, shall be increased by an amount) equal to the
percentage of the defaulting Private Limited Partner’s aggregate capital
contribution which the purchased portion of the Optioned Partnership Interest
represents of the defaulting Private Limited Partner’s entire Partnership interest,
and the aggregate capital contributions of such defaulting Private Limited Partner
shall be reduced by a corresponding amount.

     (c) Withholding and Application of a Private Limited Partner’s Distributions. No part
of any distribution shall be paid to any Private Limited Partner from which there is then due and
owing to the Partnership, at the time of such distribution, any amount required to be paid to the
Partnership by such Private Limited Partner. At the election of the General Partner, which it may
make in its sole discretion, the Partnership may either (i) apply all or part of any such withheld
distribution in satisfaction of the amount then due to the Partnership from such Private Limited
Partner or (ii) withhold such distribution until all amounts then due are paid to the Partnership
by such Private Limited Partner. Upon payment of all amounts due to the Partnership (by
application

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of withheld distributions or otherwise), the General Partner shall distribute any unapplied
balance of any such withheld distribution to such Private Limited Partner. No interest shall be
payable on the amount of any distribution withheld by the Partnership pursuant to this Section.

     (d) General Partner’s Option to Bring Action. The General Partner may bring an action
in any court of competent jurisdiction to collect any contributions required under this Agreement
with or without notice to the Private Limited Partner failing to make such contributions and
whether or not the General Partner exercises any of the foregoing remedies.

     (e) Remedies. The remedies available to the Partnership under this Section 5.11 are
non-cumulative and non-exclusive. Subject to Section 5.10, and as set forth in this Section 5.11,
the General Partner may elect to exercise any number of the remedies set forth herein. The General
Partner shall not be precluded from exercising any remedy contained herein by virtue of the General
Partner’s election to exercise or not to exercise any other remedy herein.

ARTICLE VI

ADJUSTMENT OF CAPITAL ACCOUNTS

Section 6.01. Establishment of Capital Accounts. 

     There will be established on the books of the Partnership a Capital Account for each Partner
in accordance with the definitions and methods of allocation prescribed in this Agreement.

Section 6.02. Time of Adjustment of Capital Accounts.

     Allocations will be made to the Capital Account of each Partner in accordance with Section
6.03, as of the following dates:

     (a) the close of each Fiscal Year of the Partnership;

     (b) the Final Admission Date;

     (c) the day before the dissolution of the Partnership;

     (d) the date of a distribution;

     (e) such other dates of admission, if any, of any Additional Private Limited Partner after the
Initial Closing and prior to the Final Admission Date; and

     (f) such other dates as this Agreement may provide.

Section 6.03. Adjustments to Capital Accounts.

     (a) As of the times stated in Section 6.02, allocations will be made to the Capital Accounts
of the Partners in the following order and amounts:

     (i) The amount of any capital contributions paid by each Partner during such period
will be credited to the Partner’s Capital Account; provided, however, that any such

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capital contribution will be credited to the Partner’s Capital Account on the later of
the date the capital contribution was due or the date on which the capital contribution was
actually received by the Partnership; provided that any capital contributions made prior to
the Final Admission Date will be credited to the contributing Partner’s Capital Account as
of the effective date of this Agreement;

     (ii) The amount of any distributions made to each Partner during the period will be
debited against the Partner’s Capital Account;

     (iii) Net Profits for each Fiscal Year will be allocated to the Capital Accounts of the
Partners as follows:

     (A) First, Net Profits shall be allocated to Partners who have previously been
allocated Net Losses, until the cumulative Net Profits allocated under this Section
6.03(a)(iii)(A) to each Partner equals the cumulative Net Losses allocated to such
Partner pursuant to Section 6.03(a)(iv) (or in proportion to such Net Losses if the
total amount to be allocated under this Section 6.03(a)(iii)(A) is less than such
Net Losses).

     (B) Second, Net Profits shall be allocated to each Private Limited Partner as a
Priority Return in an amount equal to [___] of the weighted average of such
Private Limited Partner’s Cumulative Capital Contribution (but not compounded) over
such Fiscal Year (the “Priority Return”). In the event a Private Limited Partner’s
Cumulative Capital Contribution is held by the Partnership for only a portion of a
Fiscal Year, the allocations made under this Section shall be appropriately adjusted
by the General Partner.

     (C) Third, Net Profits shall be allocated to Private Limited Partners to the
extent of any previously unallocated shortfall in the Priority Return of such
Private Limited Partners for any prior Fiscal Year.

     (D) Fourth, Net Profits shall be allocated to the General Partner as a Priority
Return in an amount equal to [___] of the amount allocated to the Private
Limited Partners in Section 6.03(a)(iii)(B), above.

     (E) Fifth, Net Profits shall be allocated to the General Partner to the extent
of any previously unallocated shortfall in the Priority Return of the General
Partner for any prior Fiscal Year.

     (F) Sixth, the balance of Net Profits, if any, for the Fiscal Year shall be
allocated [___] to the Private Limited Partners and [___] to the
General Partner. The allocation of such Net Profits among the Private Limited
Partners shall be in proportion to the weighted average of their respective Capital
Accounts during such Fiscal Year.

     (iv) Net Losses will be allocated:

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     (A) first, to the General Partner and Private Limited Partners, to be
apportioned among them in accordance with their respective positive Capital
Accounts, but only to the extent such allocations do not create or increase a
deficit balance to a Partner’s Capital Account; and

     (B) second, to the General Partner and Private Limited Partners, to be
apportioned among them in accordance with their respective Commitments.

     (b) To the extent not otherwise accomplished by the provisions of Section 6.03(a), including
Section 6.03(a)(iii)(A), the Capital Accounts of the Partners will be adjusted to affect any
allocation of any item of income, gain, loss, deduction or credit to a Partner required by the
Code.

Section 6.04. Tax Matters.

     (a) If at the end of a Fiscal Year of the Partnership, a Private Limited Partner unexpectedly
receives an adjustment, allocation, or distribution described in clauses (4), (5) and (6) of
Treasury Regulation § 1.704-1(b)(2)(ii) and that adjustment, allocation, or distribution reduces
that Private Limited Partner’s Capital Account below zero, then the Private Limited Partner will be
allocated all items of income and gain of the Partnership for that year and for all subsequent
fiscal years until the deficit balance has been eliminated as provided in Treasury Regulation §
1.704-1(b)(2)(ii)(d), as quickly as possible. If any such unexpected adjustment, allocation or
distribution creates a deficit balance in the Capital Accounts of more than one Private Limited
Partner in any fiscal year, all items of income and gain of the Partnership for the fiscal year and
all subsequent fiscal years will be allocated among all such Private Limited Partners in proportion
to their respective deficit balances until such negative balances have been eliminated. If any
allocation is made pursuant to this paragraph, subsequent allocations shall be made (in a manner
consistent with this paragraph) to offset the effects of such prior allocation. This provision is
intended to qualify as a “qualified income offset” within the meaning of Treasury Regulation §
1.704-1(b)(2)(ii)(d).

     (b) For Federal, state and local income tax purposes, each item of Partnership income, credit,
gain or loss will be allocated among the Partners as provided in Section 6.03.

     (c) The General Partner has the power to make such allocations and to take such actions
necessary under the Code or other applicable law to effect and to maintain the substantial economic
effect of allocations made to the Partners under Section 704(b) of the Code. All allocations made
and other actions taken by the General Partner under this paragraph will be consistent to the
maximum extent possible with the provisions of this Agreement.

     (d) The General Partner is the “tax matters partner,” as the term is used in the Code.

     (e) The General Partner shall keep the Partners informed of all administrative and judicial
proceedings with respect to Partnership tax returns or the adjustment of Partnership items. Any
Partner who enters into a settlement agreement with respect to Partnership items must promptly give
the General Partner notice of the settlement agreement and terms that relate to Partnership items.

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     (f) In the event of any admission of any Additional Private Limited Partner or transfer by any
Private Limited Partner of its Partnership interest, the General Partner will allocate items of
income, credit, gain or loss in accordance with the Code and may make such elections under the Code
as the General Partner determines to be necessary or appropriate.

ARTICLE VII

DISTRIBUTIONS

Section 7.01. Distributions to Partners.

     (a) The Partnership may make distributions of cash and/or property, if any, at such times as
the SBIC Act permits and as are determined by the General Partner in its sole discretion.

     (b) All distributions shall be made in the following order and amounts:

     (i) first, distributions with respect to any Fiscal Year shall be made to each Partner
in proportion to the amount of Net Profits for such Fiscal Year allocated to such Partner’s
Capital Account in accordance to Section 6.03(a)(iii); and

     (ii) second, all other distributions shall be made to each Partner in proportion to
such Partner’s Capital Account.

     (c) The amounts of any distributions made pursuant to this Section 7.01 will be debited to the
Partners’ Capital Accounts, as provided in Section 6.03(a)(ii) and Section 6.02(d).

Section 7.02. Distributions of Non-cash Assets in Kind. 

     (d) Subject to the provisions of the SBIC Act and the provisions of this Section, the
Partnership at any time may distribute Non-cash Assets in kind.

     (e) Any
distribution of Non-cash Assets will be made pro rata among the Partners (based upon
the respective amounts which each Partner would be entitled to receive if the distribution were
made in cash) with respect to the distribution of each Non-cash Asset.

     (f) Distributions of Non-cash Assets in kind before the dissolution of the Partnership will be
made only (i) if the Non-cash Assets are Distributable Securities or (ii) with the prior approval
of not less than fifty percent (50%) in interest of the Private Limited Partners.

     (g) Subject to the SBIC Act, Non-cash Assets distributed in kind under this Section 7.02 will
be subject to such conditions and restrictions as are legally required, including, without
limitation, such conditions and restrictions required to assure compliance by the Partners and/or
the Partnership with the aggregation rules and volume limitations under Rule 144 promulgated under
the Securities Act.

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Section 7.03. Distributions for Payment of Tax.

     (a) Subject to the SBIC Act, notwithstanding anything contained in this Agreement to the
contrary, the Private Limited Partners and the General Partner will be entitled to receive cash
distributions from the Partnership for any Fiscal Year (after taking into account any other
distributions received by the Private Limited Partners with respect to that Fiscal Year) in amounts
reasonably calculated to be sufficient to enable the Private Limited Partners (and the partners of
the General Partner, if any) to discharge any Federal, state and local income tax liability,
excluding penalties, attributable to such Partners’ share of Net Profits of the Partnership for
such Fiscal Year. Such distributions will be debited to the Private Limited Partners’ Capital
Accounts, as provided in Section 6.03(a)(ii).

     (b) Subject to the SBIC Act, the Partnership will at all times be entitled to make payments
with respect to any Partner in amounts required to discharge any legal obligation of the
Partnership to withhold or make payments to any governmental authority with respect to any Federal,
state or local tax liability of the Partner arising as a result of the Partner’s interest in the
Partnership. Each such payment will be debited to such Partner’s Capital Account, as provided in
Section 6.03(a)(ii).

Section 7.04. Distributions Violative of the Act Prohibited. 

     Notwithstanding anything contained in this Agreement to the contrary, no distribution may be
made by the Partnership if and to the extent that such distribution would violate Section 17-607 of
the Act.

ARTICLE VIII

DISSOLUTION, LIQUIDATION, WINDING UP AND WITHDRAWAL

Section 8.01. Dissolution. 

     (a) The Partnership will be dissolved upon the first to occur of the following:

     (i) subject to Section 8.04 of this Agreement, an event of withdrawal (as defined in
Sections 17-101(3) and 17-402 of the Act) of the General Partner;

     (ii) the later of:

     (A) ten (10) years from the formation of the Partnership; or

     (B) two years after all Outstanding Leverage has matured; or

     (iii) the determination of the Partners to dissolve and terminate the Partnership as
provided in Section 8.01(c).

     (b) The Partnership will not dissolve upon the withdrawal, dissolution, bankruptcy, death or
adjudication of incompetence or insanity of any Private Limited Partner.

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     (c) Fifty percent (50%) or more in interest of the Private Limited Partners may elect to
dissolve the Partnership by giving notice to each Partner and SBA of the election. Any notice of
an election to dissolve the Partnership may only be given:

     (i) on or after ten (10) years from the formation of the Partnership;

     (ii) if all Outstanding Leverage has been repaid or redeemed; and

     (iii) if all amounts due SBA, its agent or trustee have been paid.

Any election to dissolve the Partnership given under this Section 8.01(c)
will not be effective until the later of: (A) thirty (30) days from the date
the notice is given to all parties or (B) the effective date of dissolution
stated in the notice.

     (d) Fifty percent (50%) in interest of the Private Limited Partners and the General Partner
may elect to extend the term of the Partnership beyond the times set forth in Section 8.01(a) and
Section 8.01(c)(i) at any time within sixty (60) days prior to such date(s). Such date(s) can be
extended by any such election for additional period(s) of up to one year, subject to a maximum
extension in the aggregate of two years.

Section 8.02. Winding Up.

     (a) Subject to the SBIC Act and Section 8.03, when the Partnership is dissolved, the property
and business of the Partnership will be liquidated by the General Partner or if there is no General
Partner or the General Partner is unable to act, a person designated by the holders of fifty
percent (50%) or more in interest of the Private Limited Partners.

     (b) Within a reasonable period (and subject to the requirements of Treasury Regulation §§
1.704-1(b)(ii)(g) and 1.704-1(b)(2)(ii)(b)(2)) after the effective date of dissolution of the
Partnership, the affairs of the Partnership will be wound up and the Partnership’s assets will be
distributed as provided in the SBIC Act and the Act.

Section 8.03. Withdrawal of the General Partner.

     (a) Except as provided in Section 4.03, the General Partner may not withdraw as the general
partner of the Partnership without the approval of twenty five percent (25%) in interest of the
Private Limited Partners.

     (b) To the extent required by the SBIC Act, no transfer of the interest of the General
Partner, or any portion of such interest, will be effective without the consent of SBA.

     (c) Except as provided in Section 8.03(b), Section 10.01(b), Section 10.01(d), or Section
10.01(f), any person who acquires the interest of the General Partner, or any portion of such
interest, in the Partnership, will not be a General Partner but will become a special private
limited partner (a “Special Private Limited Partner”) upon such person’s written acceptance and
adoption of all the terms and provisions of this Agreement. Such person will acquire no more than
the interest of the General Partner in the Partnership as it existed on the date of the transfer,
but will not

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be entitled to any priority given to the Private Limited Partners, their successors and
assigns, in respect of the interest. No such person will have any right to participate in the
management of the affairs of the Partnership or to vote with the Private Limited Partners, and the
interest acquired by such person will be disregarded in determining whether any action has been
taken by any percentage of the limited partnership interests.

     (d) Upon an event of withdrawal of the General Partner without continuation of the Partnership
as provided in Section 8.04, the affairs of the Partnership will be wound up in accordance with the
provisions of Section 8.02.

Section 8.04. Continuation of the Partnership After the Withdrawal of the General Partner.

     Upon the occurrence of an event of withdrawal (as defined in the Act) of the General Partner,
the Partnership will not be dissolved, if, within ninety (90) days after the event of withdrawal,
fifty percent (50%) or more in interest of the Private Limited Partners agree in writing to
continue the business of the Partnership and to the appointment of one or more additional general
partners (subject to the approval of SBA), effective as of the date of withdrawal of the General
Partner.

Section 8.05. Withdrawals of Capital.

     Except as specifically provided in this Agreement, withdrawals by a Partner of any amount of
its Capital Account are not permitted.

Section 8.06. Withdrawal by ERISA Regulated Pension Plans.

     Notwithstanding any other provision of this Agreement, any Private Limited Partner that is an
“employee benefit plan” within the meaning of, and subject to the provisions of, ERISA, may elect
to withdraw from the Partnership in whole or in part, or upon demand by the General Partner must
withdraw from the Partnership in whole or in part, if either such Private Limited Partner or the
General Partner obtains an opinion of counsel to the effect that, as a result of ERISA, (i) the
withdrawal of the Private Limited Partner from the Partnership to such extent is required to enable
the Private Limited Partner to avoid a violation of, or breach of the fiduciary duties of any
person under ERISA (other than a breach of the fiduciary duties of any such person based upon the
investment strategy or performance of the Partnership) or any provision of the Code related to
ERISA or (ii) all or any portion of the Assets of the Partnership (as opposed to the Private
Limited Partner’s partnership interest) constitute assets of the Private Limited Partner for
purposes of ERISA and are subject to the provisions of ERISA to substantially the same extent as if
owned directly by the Private Limited Partner.

Section 8.07. Withdrawal by Government Plans Complying with State and Local Law.

     Notwithstanding any other provision of this Agreement, any Private Limited Partner that is a
“government plan” within the meaning of ERISA may elect to withdraw from the Partnership in whole
or in part, or upon demand by the General Partner must withdraw from the Partnership in whole or in
part, if either such Private Limited Partner or the General Partner obtains an opinion of counsel
to the effect that as a result of state statutes, regulations, case law, administrative
interpretations or similar authority applicable to the “government plan”, the withdrawal of such

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Private Limited Partner from the Partnership to such extent is required to enable the Private
Limited Partner or the Partnership to avoid a violation (other than a violation based upon the
investment performance of the Partnership) of the applicable state law.

Section 8.08. Withdrawal by Government Plans Complying with ERISA.

     Notwithstanding any other provision of this Agreement, any Private Limited Partner that is a
“government plan” within the meaning of ERISA may elect to withdraw from the Partnership in whole
or in part, if the “government plan” obtains an opinion of counsel to the effect that, as a result
of ERISA, (i) the withdrawal of the “government plan” from the Partnership to such extent would be
required if it were an “employee benefit plan” within the meaning of, and subject to the provisions
of, ERISA, to enable the “government plan” to avoid a violation of, or breach of the fiduciary
duties of any person under ERISA (other than a breach of the fiduciary duties of any such person
based upon the investment strategy or performance of the Partnership) or any provision of the Code
related to ERISA or (ii) all or any portion of the Assets of the Partnership would constitute
assets of the “government plan” for the purposes of ERISA, if the “government plan” were an
“employee benefit plan” within the meaning of, and subject to the provisions of, ERISA and would be
subject to the provisions of ERISA to substantially the same extent as if owned directly by the
“government plan.”

Section 8.09. Withdrawal by Tax Exempt Private Limited Partners.

     Notwithstanding any other provision of this Agreement, any Private Limited Partner that is
exempt from taxation under Section 501(a) or 501(c)(3) of the Code may elect to withdraw from the
Partnership in whole or in part, if the Private Limited Partner obtains an opinion of counsel to
the effect that as a result of applicable statutes, regulations, case law, administrative
interpretations or similar authority, the withdrawal of the Private Limited Partner from the
Partnership to such extent is required to enable the tax exempt Private Limited Partner to avoid
loss of its tax exempt status under Section 501(a) or 501(c)(3) of the Code.

Section 8.10. Withdrawal by Registered Investment Companies.

     Notwithstanding any other provision of this Agreement, any Private Limited Partner that is an
“investment company” subject to registration under the Investment Company Act, may elect to
withdraw from the Partnership in whole or in part, or upon demand by the General Partner must
withdraw from the Partnership in whole or in part, if either such Private Limited Partner or the
General Partner obtains an opinion of counsel to the effect that, as a result of the Investment
Company Act, the withdrawal of the Private Limited Partner from the Partnership to such extent is
required to enable such Private Limited Partner or the Partnership to avoid a violation of
applicable provisions of the Investment Company Act or the requirement that the Partnership
register as an investment company under the Investment Company Act.

Section 8.11. Distributions on Withdrawal.

     (a) Subject to the provisions of this Section, upon withdrawal under any provision of this
Agreement, a Private Limited Partner will have the rights to distributions provided in the Act with
respect to distributions to be made to limited partners upon withdrawal from a limited partnership.

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     (b) The Partnership will not make any distribution to any Partner in connection with its
withdrawal under any provision of this Agreement or the Act, unless the distribution is permitted
by the SBIC Act and SBA has given its consent to such distribution before the distribution is made.

     (c) Except in the case of distributions made as permitted under subsection (b), the right of
any Partner to receive any distribution from the Partnership as a result of such Partner’s
withdrawal, including any right any Partner may have as a creditor of the Partnership with respect
to the amount of any such distribution, is subordinate to any amount due to SBA by the
Partnership. 

ARTICLE IX

ACCOUNTS, REPORTS AND AUDITORS

Section 9.01. Books of Account.

     (a) The Partnership shall maintain books and records in accordance with the provisions of the
SBIC Act regarding financial accounts and reporting and, except as otherwise provided in this
Agreement, generally accepted accounting principles.

     (b) The books and records of the Partnership shall be kept at the principal place of business
of the Partnership. Each Partner will have access, upon reasonable notice and during regular
business hours, to all books and records of the Partnership for all proper purposes as a Partner of
the Partnership. Each Partner will have the right to receive copies of such books and records,
subject to payment of the reasonable costs of such copies.

     (c) The Partnership will not be required to disclose, however, any confidential or proprietary
information received by the Partnership in connection with its investment operations, except for
any disclosure to SBA required by the SBIC Act.

Section 9.02 Audit and Report.

     (a) The financial statements of the Partnership must be audited and certified as of the end of
each fiscal year by a firm of independent certified public accountants selected by the Partnership.

     (b) Within ninety (90) days from and after the end of each fiscal year, the Partnership must
prepare and mail to each Partner a report prepared in accordance with the provisions of the SBIC
Act regarding financial reporting, setting forth as at the end of the fiscal year:

     (i) a balance sheet of the Partnership;

     (ii) a statement of operations for the year;

     (iii) a statement of cash flows;

     (iv) a statement of changes in partners’ capital, and such Partner’s Closing Capital
Account;

     (v) a statement of the Assets, valued as provided under this Agreement;

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     (vi) the amount of such Partner’s share in the Partnership’s taxable income or loss for
the year, in sufficient detail to enable it to prepare its Federal, state and other tax
returns;

     (vii) any other information the General Partner, after consultation with any Private
Limited Partner requesting the same, deems necessary or appropriate;

     (viii) upon request by any Partner, such other information as is needed by such Partner
in order to enable it to file any of its tax returns; and

     (ix) such other information as any Partner may reasonably request for the purpose of
enabling it to comply with any reporting or filing requirements imposed by any statute,
rule, regulation or otherwise by any governmental agency or authority.

The items set forth in clauses (i), (ii), (iii), (iv) and (v) will be certified by
the firm of independent certified public accountants selected by the Partnership.

     (c) Within forty-five (45) days from and after the end of each of the first three fiscal
quarters of the Partnership, the Partnership will prepare and mail to each Partner a report of the
General Partner prepared in accordance with the provisions of the SBIC Act regarding financial
reporting setting forth the information described in Section 9.02(b) (i), (ii), (iii) and (v),
identifying the securities held by the Partnership and stating the amount of each security held and
the cost and value thereof as determined under Section 3.08.

Section 9.03. Fiscal Year.

     The Fiscal Year of the Partnership will be a twelve-month year (except for the first and last
partial years, if any) ending on December 31 unless otherwise required by Section 708(b) of the
Code.

ARTICLE X

MISCELLANEOUS

Section 10.01. Assignability.

     (a) No Private Limited Partner may assign, pledge or otherwise grant a security interest in
its or his interest in the Partnership or in this Agreement, except:

     (i) by operation of law;

     (ii) to a receiver or trustee in bankruptcy for that Partner; or

     (iii) with the prior written consent of the General Partner (which consent may be
withheld in the reasonable discretion of the General Partner).

     (b) No General Partner or Private Limited Partner may transfer any interest of ten percent
(10%) or more in the capital of the Partnership without the prior approval of SBA.

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     (c) The General Partner may not assign, pledge or otherwise grant a security interest in its
interest in the Partnership or in this Agreement, except with the prior consent of SBA and the
prior approval of fifty percent (50%) or more in interest of the Private Limited Partners.

     (d) No transfer of any interest in the Partnership will be allowed if such transfer or the
actions to be taken in connection with that transfer would:

     (i) result in any violation of the SBIC Act;

     (ii) result in a violation of any law, rule or regulation by the Partnership;

     (iii) cause the termination of the Partnership under Section 708(b) of the Code, unless
the Partnership first receives an opinion of tax counsel satisfactory to the Partnership
that such termination would have no adverse tax impact on the Partnership or any
non-transferring Partner;

     (iv) result in the transfer of a limited partnership interest with a cost of less than
$250,000 or cause the Partnership to be classified as a “publicly traded partnership” within
the meaning of Section 469(k)(2) of the Code or for the purposes of Section 512(c)(2) of the
Code;

     (v) result in a violation of the Securities Act or any applicable state securities
laws;

     (vi) require the Partnership to register as an investment company under the Investment
Company Act; or

     (vii) require the Partnership, the General Partner or the Investment Adviser/Manager to
register as an investment adviser under the Investment Advisers Act or any applicable state
laws.

     (e) If a natural person Private Limited Partner dies or become incapacitated, his or her legal
representative will, upon execution of a counterpart of this Agreement, be substituted as a Private
Limited Partner, subject to all the terms and conditions of this Agreement.

     (f) Any transferee of any interest in the Partnership by a transfer in compliance with this
Section will become a substituted Partner under this Agreement upon delivery and execution of a
counterpart of this Agreement, will have the same rights and responsibilities under this Agreement
as its assignor and will succeed to the Capital Account and balances thereof.

Section 10.02. Binding Agreement.

     Subject to the provisions of Section 10.01, this Agreement is binding upon, and inures to the
benefit of, the heir, successor, assign, executor, administrator, committee, guardian, conservator
or trustee of any Partner.

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Section 10.03. Gender.

     As used in this Agreement, masculine, feminine and neuter pronouns include the masculine,
feminine and neuter; and the singular includes the plural.

Section 10.04. Notices.

     (a) All notices under this Agreement must be in writing and may be given by personal delivery,
telex, telegram, private courier service or registered or certified mail.

     (b) A notice is deemed to have been given:

     (i) by personal delivery, telex, telegram, or private courier service, as of the day of
delivery of the notice to the addressee; and

     (ii) by mail, as of the fifth (5th) day after the notice is mailed.

     (c) Notices must be sent to:

     (i) the Partnership, at the address of the General Partner in the Certificate of
Limited Partnership, or such other address or addresses as to which the Partners have been
given notice;

     (ii) the Private Limited Partners, at the addresses in Schedule A attached to this
Agreement (as Schedule A may be amended from time to time) or such other addresses as to
which the Partnership has been given notice; and

     (iii) SBA, at the address of the Investment Division of SBA and, if so required under
any Section of this Agreement, in duplicate at the address of the Office of the General
Counsel of SBA.

Section 10.05. Consents and Approvals.

     A consent or approval required to be given by any party under this Agreement will be deemed
given and effective for purposes of this Agreement only if the consent or approval is:

     (i) given by such party in writing, and

     (ii) delivered by such party to the party requesting the consent or approval in the
manner provided for notices to such party under Section 10.04.

Section 10.06. Counterparts.

     This Agreement and any amendment to this Agreement may be executed in more than one
counterpart with the same effect as if the parties executed one counterpart as of the day and year
first above written on this Agreement or any such amendment. To be effective, each separate
counterpart must be executed by the General Partner.

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Section 10.07. Amendments.

     (a) This Agreement may not be amended except by an instrument in writing executed by the
holders of fifty percent (50%) or more in interest of the Private Limited Partners who have not
withdrawn as of the effective date of that amendment and the General Partner, and approved by SBA.

     (b) In addition to the requirements in Section 10.06 and Section 10.07(a), any amendment that
(i) increases the amount of a Private Limited Partner’s Commitment requires that Partner’s consent,
(ii) may cause a Private Limited Partner to become liable as a general partner of the Partnership
requires the written consent of all Partners, or (iii) amends this Section, requires the consent of
all Partners.

     (c) Each Private Limited Partner consents to:

     (i) the admission of Additional Private Limited Partners and the increase in any
Private Limited Partner’s Commitment in accordance with Section 5.04;

     (ii) the transfer of a Partner’s interest in accordance with Section 10.01 and the
admission of a substituted Partner under such transfer;

     (iii) any amendment of this Agreement or the Certificate of Limited Partnership
necessary to effect such transfer or admission; and

     (iv) any amendment of this Agreement or the Certificate of Limited Partnership to
comply with or conform to any amendments of applicable laws governing the Partnership.

     (d) The General Partner must distribute to each Private Limited Partner and SBA a copy of:

     (i) any Certificate of Amendment to the Certificate of Limited Partnership, and

     (ii) any amendment to this Agreement.

     (e) Copies of any Certificate of Amendment to the Certificate of Limited Partnership, and any
amendment to this Agreement must be distributed in the same manner as provided for notices in
Section 10.04.

Section 10.08. Power of Attorney.

     (a) Each Private Limited Partner appoints the General Partner, and each manager of the General
Partner, as its true and lawful representative and attorney-in-fact, in its name, place and stead,
to make, execute, sign and file:

     (i) any amendments of this Agreement necessary to reflect:

     (A) the transfer of a Partner’s interest in accordance with Section 10.01;

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Confidential treatment requested by WQN, Inc.

     (B) the admission of a substituted Private Limited Partner under Section 10.01;

     (C) the admission of an Additional Private Limited Partner under Section 5.04;

     (D) an amendment of this Agreement adopted by the Partners under Section 10.07;
and

     (ii) all instruments, documents and certificates which, from time to time, may be
required by the law of the United States of America, the State of Delaware or any other
state in which the Partnership determines to do business, or any political subdivision or
agency thereof, to execute, implement and continue the valid and subsisting existence of the
Partnership and in conformance to the provisions of this Agreement.

     (b) The General Partner and its partners, as representatives and attorneys-in-fact, do not
have any rights, powers or authority to amend or modify this Agreement when acting in such
capacity, except as expressly provided in this Agreement. This power of attorney is coupled with
an interest and will continue in full force and effect notwithstanding the subsequent death or
incapacity of such party.

Section 10.09. Applicable Law.

     This Agreement is governed by, and construed in accordance with, applicable Federal laws and
the laws of the State of Delaware.

Section 10.10. Severability.

     If any one or more of the provisions contained in this Agreement, or any application of any
such provision, is invalid, illegal, or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained in this Agreement and all other applications
of any such provision will not in any way be affected or impaired.

Section 10.11. Confidentiality

     The parties acknowledge that all information and documents exchanged and/or received by any
party hereto regarding the Partnership and/or the parties is of a confidential nature (the
“Confidential Information”). Each party covenants and agrees, that it shall hold in strict
confidence from and after the date hereof all of the Confidential Information and shall not, at any
time following the date hereof, or except as otherwise provided herein, directly or indirectly,
divulge, disclose or make use of, for any purpose whatsoever, any of the Confidential Information.
The provisions of this Section shall not apply to any information which, through no act or omission
of the party so charged, is already or becomes in the public domain, or which is required to be
disclosed by law or by order of a court. Each of the parties recognize that irreparable damage
would result from a breach of the covenant herein contained, and agrees that the party so injured
shall be entitled to injunctive and other equitable relief in the event of such a breach.

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Section 10.12. Entire Agreement.

     This Agreement, and all other written agreements executed by or on behalf of the General
Partner and/or the Private Limited Partners and executed or approved by SBA, up to and including
the date of this Agreement (such other written agreements, collectively, the “SBA Agreements”),
state the entire understanding among the parties relating to the subject matter of this Agreement
and the SBA Agreements. Any and all prior conversations, correspondence, memoranda or other
writings are merged in, and replaced by this Agreement and the SBA Agreements, and are without
further effect on this Agreement and the SBA Agreements. No promises, covenants, representations
or warranties of any character or nature other than those expressly stated in this Agreement and
the SBA Agreements have been made to induce any party to enter into this Agreement or any SBA
Agreement.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement as of December
8, 2004.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	General Partner:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	[ ________________________ ]	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	Manager
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Commitment Amount:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	[ ________________________ ]
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Private Limited Partner:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	[ ________________________ ]	 	 
	 	 	 	 	[ ________________________ ]	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name: [ ________________________ ] 
	 	 	 	 	 	 	Title: [ ________________________ ]
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Commitment Amount:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	[ ________________________ ]
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Address of Private Limited Partner:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	[ ________________________ ]	 	 
	 	 	 	 	[ ________________________ ]	 	 
	 	 	 	 	[ ________________________ ]	 	 
	 	 	 	 	Attn: [ ________________________ ]	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Federal Tax I.D.
Number: [ ____________________ ]	 	 

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Confidential treatment requested by WQN, Inc.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Private Limited Partner:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	[ ________________________ ]	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name: [ ________________________ ]
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Commitment Amount:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	[ ________________________ ]
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Address of Private Limited Partner:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

	 	 	 	 	 
	Federal Tax I.D. Number:

	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Private Limited Partner:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	[ ________________________ ]	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name: [ ________________________ ]
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Commitment Amount:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	[ ________________________ ]
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Address of Private Limited Partner:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

	 	 	 	 	 
	Federal Tax I.D. Number:

	 	 	 	 
	 

	 	 	 	 

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Confidential treatment requested by WQN, Inc.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Private Limited Partner:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	[ ________________________ ]	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name: [ ________________________ ]
	 	 	 	 	 	 	Title: [ ________________________ ]
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Commitment Amount:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	[ ________________________ ]
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Address of Private Limited Partner:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

	 	 	 	 	 
	Federal Tax I.D. Number:

	 	 	 	 
	 

	 	 	 	 

3

 

JOINDER AGREEMENT

OF

SEAVIEW MEZZANINE FUND LP

     The undersigned has received and reviewed a copy of the Limited Partnership Agreement, dated
as of December 8, 2004 (the “Agreement”), of SeaView Mezzanine Fund LP, a Delaware limited
partnership (the “Partnership”). In consideration of the admission of the undersigned as a limited
partner of the Partnership, the undersigned hereby joins in the Agreement, the terms of which are
incorporated herein by reference, and hereby agrees to be bound by the terms of the Agreement and
to abide by all of its provisions. This Joinder Agreement is binding upon the undersigned and the
undersigned’s heirs, executors, personable representatives, administrators, legal representatives,
successors, and permitted assigns, and is for the benefit of the Partnership and all of its
partners.

     IN WITNESS WHEREOF, this Joinder Agreement has been duly executed by the undersigned on this
23rd day of June, 2005.

	 	 	 	 	 
	 	 	 
	 	Investor:  	WQN, Inc. 	 
	 	 	 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	     /s/ B. Michael Adler
 	 
	 	 	Name:  	B. Michael Adler 	 
	 	 	Title:  	CEO 	 
	 

	 	 	 	 
	 	 	 
	 	By:  	*/s/ James F. Stone
 	 
	 	 	James F. Stone, attorney-in-fact 	 
	 	 	 	 
	 

9exv10w7

 

Exhibit 10.7

TALEO CORPORATION

LOUIS TETU EMPLOYMENT AGREEMENT

     This Agreement is entered into effective as of March 28, 2005 (the “Effective Date”) by and
between Taleo Canada Inc. (“Taleo Canada”), a wholly owned subsidiary of Taleo Corporation, a
Delaware corporation (“Taleo” and collectively with Taleo Canada (collectively, the “Company”)) and
Louis Tetu (“Executive”).

     1. Duties and Scope of Employment.

          (a) Term, Position and Duties. As of the Effective Date, Executive will serve as the
Taleo’s executive Chairman of the Board. Executive will be a full-time employee of the Company and
will render such business and professional services as will reasonably be assigned to him by the
Taleo’s Chief Executive Officer (“CEO”) or Board of Directors (the “Board”), including serving as a
senior advisor to the CEO, and providing executive sponsorship for sales opportunities or any
special project as directed by the CEO. The period of Executive’s employment under this Agreement
shall commence on the Effective Date and continue through December 31, 2006, and is referred to
herein as the “Employment Term.” The Executive’s services shall be performed at the Company’s
offices in Quebec, QC, Canada.

          (b) Board Membership. Executive will continue to serve as a director of Taleo. If
Taleo’s stock becomes publicly traded, Executive’s continued service as a member of the Board will
be subject to Taleo’s corporate governance policies for the nomination of directors applicable to
all directors and any required stockholder approval.

          (c) Obligations. During the Employment Term, Executive will devote Executive’s full
business efforts and time to the Company but the Executive may serve on up to two other boards of
directors, subject to the Board’s reasonable determination that such service does not conflict with
his obligations to the Company. For the duration of the Employment Term, Executive agrees not to
actively engage in any other employment, occupation, or consulting activity for any direct or
indirect remuneration without the prior approval of the Board; provided, however, that Executive
may, without the approval of the Board, serve in any capacity with any civic, educational, or
charitable organization, provided such services do not interfere with Executive’s obligations to
Company.

     2. At-Will Employment. Executive and the Company agree that Executive’s employment
with the Company constitutes “at-will” employment. Executive and the Company acknowledge that this
employment relationship may be terminated at any time, upon written notice to the other party, with
or without good cause or for any or no cause, at the option either of the Company or Executive.
However, as described in this Agreement, Executive may be entitled to severance benefits depending
upon the circumstances of Executive’s termination of employment. Upon the termination of
Executive’s employment with the Company for any reason during the Employment Term, Executive will
be entitled to payment on his termination date of all accrued but unpaid salary, vacation, any
earned bonuses, expense reimbursements, and other benefits due to

 

 

     Executive through his termination
date under any Company-provided or paid plans, policies, and arrangements.

     3. Compensation.

          (a) Base Salary. As of the Effective Date, Taleo Canada will pay Executive an annual
base salary of Canadian $250,000 as compensation for his services (the “Base Salary”). The Base
Salary will be paid periodically in accordance with Taleo Canada’s normal payroll practices (but no
less frequently than once per month) and be subject to the usual, required withholding.

          (b) Annual Bonus. Executive’s annual target bonus will be Canadian $50,000 (“Target
Bonus”), which will be pro-rated at 75% for the year ending December 31, 2005. Executive’s annual
bonus will be determined based upon achievement of performance goals approved by the Board.
Executive will have the opportunity to discuss the nature of such performance goals with the Board
prior to such performance goals being approved by the Board. Executive’s annual bonus, if any,
will be payable annually at the end of the fiscal year; provided, however, Executive’s actual bonus
earned for any fiscal year will be paid within 45 days following the end of the Company’s fiscal
year.

          (c) Stock Options. Executive will be eligible to be granted options to purchase up to
100,000 shares of Taleo common stock at the discretion of the Board, based upon Executive achieving
the performance goals for a fiscal year.

               (i) Any stock option will be for such number of shares of Taleo Class A common stock as
determined by the Compensation Committee of the Board (the “Stock Option”). Any Stock Option will
have a per-share exercise price equal to the fair market value of a share on the date of grant,
will vest over a 4-year period, with 25% of the shares vesting on the first anniversary of the
Effective Date, and 1/48th of the total shares vesting monthly thereafter, or at such
other vesting schedule as determined by the Board, subject to Executive continuing to remain a
“Service Provider” (as defined in the Company’s 1999 Stock Plan, the “Option Plan”) to the Company
on each vesting date;

               (ii) Any Stock Option shall have (x) a ten-year maximum term, and (y) otherwise have the same
terms and conditions as stock options held by other senior executives of the Company, subject to
Section 6. Any Stock Option granted to Executive may be exercised (a) with cash, (b) with
previously owned Taleo common shares and/or (c) if Taleo’s stock is publicly traded and it is
legally permissible, via a “cashless exercise” program in which payment may be made all or in part
by delivery of an irrevocable direction to a securities broker to sell common shares and to deliver
all or part of the sale proceeds to Taleo in payment of the aggregate option exercise and any
applicable tax withholding obligations relating to the exercised option. In the event of any
conflict in the express terms between this Agreement and the Option Plan and any Stock Option
agreement executed by and between Executive and the Company, the express terms of this Agreement
shall prevail and govern. Subject to the preceding provisions of this Section 3(c), a Stock Option
will be subject to the terms, definitions and provisions of the Option Plan and the stock option
agreements by and between the Executive and the Company (the “Option Agreement”), all of which
documents are incorporated herein by reference.

2

 

               (iii) The Stock Options currently held by Executive are attached hereto as Exhibit A.

     4. Employee Benefits. During the Employment Term, Executive will be eligible to
participate in accordance with the terms of all Company employee benefit plans, policies, and
arrangements that are applicable to other senior executives of the Company, as such plans,
policies, and arrangements may exist from time to time. Executive will be entitled to five (5)
weeks of paid annual vacation.

     5. Expenses. The Company will reimburse Executive for reasonable travel,
entertainment, and other expenses incurred by Executive in the furtherance of the performance of
Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in
effect from time to time.

     6. Severance.

          (a) Termination Without Cause or Resignation for Good Reason. If Executive’s
employment is terminated by the Company without Cause or by Executive for Good Reason, or by reason
of Executive’s death of disability then, subject to Section 7, Executive will receive: (i) a
lump-sum payment equal to the lesser of Executive’s annual Base Salary, or the amount of
Executive’s Base Salary owing for the remaining Employment Term, paid within 30 days of termination
of employment, (ii) reimbursement for any applicable premiums Executive pays to continue coverage
for Executive and Executive’s eligible dependents under the Company’s health insurance plan for the
lesser of the remainder of the Employment Term or twelve months after the date of termination, or,
if earlier, until Executive is eligible for similar benefits from another employer (provided
Executive validly elects to continue coverage under applicable law), (iii) a post-termination
exercise period of twelve (12) months under all Stock Options, and (iv) immediate vesting of all
unvested Stock Options. If a termination described in the preceding sentence occurs within 60 days
before or 12 months following a Change of Control, Executive will receive (A) a lump-sum payment
equal to the lesser of Executive’s annual Base Salary or the amount of Executive’s Base Salary
owing for the then remaining Employment Term, plus 100% of the annual Target Bonus amount for the
year of termination and (B) immediate vesting with respect to all unvested Stock Options that are
held by Executive. Executive’s vested Stock Options will remain exercisable in accordance with the
terms of the 1999 Stock Plan and the corresponding Option Agreements and thereafter will expire to
the extent not exercised.

          (b) Voluntary Termination without Good Reason; Termination for Cause. If Executive’s
employment with the Company terminates voluntarily by Executive without Good Reason or is
terminated for Cause by the Company, then (i) all further vesting of Executive’s outstanding
unvested Stock Options will terminate immediately, and Executive will receive a post-termination
exercise period of twelve (12) months under all Stock Options, (ii) all payments of compensation by
the Company to Executive hereunder will terminate immediately (except as to amounts already
earned), (iii) Executive will be paid all accrued but unpaid salary, vacation, any earned bonuses,
expense reimbursements and other benefits due to Executive through his termination date under any
Company-provided or paid plans, policies, and arrangements, and (iv) Executive will be eligible for
severance benefits only in accordance with the Company’s then established policies and practices.

3

 

          (c) Sole Right to Severance. This Agreement is intended to represent Executive’s sole
entitlement to severance payments and benefits in connection with the termination of his
employment. To the extent Executive receives severance or similar payments and/or benefits under
any other Company plan, program, agreement, policy, practice, or the like, severance payments and
benefits due to Executive under this Agreement will be correspondingly reduced (and vice-versa).

     7. Conditions to Receipt of Severance; No Duty to Mitigate.

          (a) Separation Agreement and Release of Claims. The receipt of any severance pursuant
to Section 6 will be subject to Executive signing and not revoking a separation agreement and
release of claims in a form reasonably acceptable to the Company. Such agreement will provide
(among other things) that Executive will not disparage the Company, its directors, or its executive
officers for 12 months following the date of termination and the Company will instruct its officers
and directors not to disparage the Executive. No severance will be paid or provided until the
separation agreement and release agreement becomes effective.

          (b) No Duty to Mitigate. Executive will not be required to mitigate the amount of any
payment contemplated by this Agreement, nor will any earnings that Executive may receive from any
other source reduce any such payment.

          (c) Nonsolicitation. In the event of a termination of Executive’s employment that
otherwise would entitle Executive to the receipt of severance pursuant to Section 6, Executive
agrees that, during the 12-month period following termination of employment, Executive, directly or
indirectly, whether as employee, owner, sole proprietor, partner, director, founder or otherwise,
will (i) not solicit, induce, or influence any person to modify his or her employment or consulting
relationship with the Company (the “No-Inducement”) and (ii) not solicit business in competition
with the Company from any of the Company’s customers and users (the “No-Solicit”). If Executive
breaches the No-Inducement or No-Solicit, all continuing payments and benefits to which Executive
otherwise may be entitled pursuant to Section 6 will cease immediately.

     8. Definitions.

          (a) Cause. For purposes of this Agreement, “Cause” means (i) Executive’s conviction
of, or plea of nolo contendere to, a felony, (ii) Executive’s repeated failure to follow lawful,
reasonable instructions of the Board, (iii) Executives breach of this Agreement, or (iv)
Executive’s violation or breach of any fiduciary or contractual duty to the Company which results
in material damage to the Company or its business; provided that if any of the foregoing events is
capable of being cured, the Company will provide written notice to Executive describing the nature
of such event and Executive will thereafter have 30 days to cure such event (including the
opportunity to present his case to the full Board with the assistance of his own counsel). The
foregoing shall not be deemed an exclusive list of all acts or omissions that the Company may
consider as grounds for the termination of Executive’s employment, but it is an exclusive list of
the acts or omissions that shall be considered “Cause” for the termination of Executive’s
employment by the Company. Executive shall continue to receive the compensation and benefits
provided by this Agreement during the 30 day period after he receives the written notice of the
Company’s intention to terminate his employment for Cause.

4

 

          (b) Change of Control. For purposes of this Agreement, “Change of Control” means (i)
a sale of all or substantially all of the Company’s assets, (ii) any merger, consolidation, or
other business combination transaction of the Company with or into another corporation, entity, or
person, other than a transaction in which the holders of at least a majority of the shares of
voting capital stock of the Company outstanding immediately prior to such transaction continue to
hold (either by such shares remaining outstanding or by their being converted into shares of voting
capital stock of the surviving entity) a majority of the total voting power represented by the
shares of voting capital stock of the Company (or the surviving entity) outstanding immediately
after such transaction, (iii) the direct or indirect acquisition (including by way of a tender or
exchange offer) by any person, or persons acting as a group, of beneficial ownership or a right to
acquire beneficial ownership of shares representing a majority of the voting power of the then
outstanding shares of capital stock of the Company, (iv) a contested election of Directors, as a
result of which or in connection with which the persons who were Directors before such election or
their nominees cease to constitute a majority of the Board, (v) a dissolution or liquidation of the
Company or (vi) any definition provided by the Option Plan.

          (c)  Disability. For purposes of this Agreement, Disability shall have the same
defined meaning as in the Company’s long-term disability plan.

          (d) Good Reason. For purposes of this Agreement, “Good Reason” means the occurrence
of any of the following without Executive’s express written consent: (i) a reduction in Executive’s
position or duties other than a reduction in position or duties solely by virtue of the Company
being acquired and made part of a larger entity so long as Executive continues in his same role on
an adjusted basis serving as a senior executive in a division or subsidiary with no material
reduction in the Executive’s operational responsibilities and duties in effect prior to the Change
of Control, rather than as Chairman of the successor entity, (ii) a reduction in Executive’s Base
Salary or Target Bonus other than a one-time reduction that in the aggregate does not exceed 10%
that also is applied to substantially all of the Company’s other senior executives, (iii)
relocation of Executive’s primary place of business for the performance of his duties to the
Company to a location that is more than 30 miles from its location as of the Effective Date, or
(iv) any material breach or material violation of a material provision of this Agreement by the
Company (or any successor to the Company).

     9. Trading Plan. If the Company’s stock becomes publicly traded, then Executive may
elect to establish a trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of
1934 provided that such trading plan shall be subject to the reasonable approval of the Board of
Directors consistent with policies established by the Board applicable to all Section 16 officers.

     10. Indemnification and Insurance. Executive will be covered under the Company’s
insurance policies and, subject to applicable law, will be provided indemnification to the maximum
extent permitted by Taleo’s bylaws, Certificate of Incorporation, and standard form of
Indemnification Agreement, with such insurance coverage and indemnification to be in accordance
with Taleo’s standard practices for senior executive officers but on terms no less favorable than
provided to any other Company senior executive officer or director.

     11. Confidential Information. During the Employment Term, Executive further agrees
to execute any updated versions of the Confidential Information Agreement (any such updated version

5

 

also referred to as the “Confidential Information Agreement”) as may be required of substantially
all of the Company’s executive officers.

     12. Assignment. This Agreement will be binding upon and inure to the benefit of (a)
the heirs, executors, and legal representatives of Executive upon Executive’s death and (b) any
successor of the Company. Any such successor of the Company will be deemed substituted for the
Company under the terms of this Agreement for all purposes. For this purpose, “successor” means
any person, firm, corporation, or other business entity which at any time, whether by purchase,
merger, or otherwise, directly or indirectly acquires all or substantially all of the assets or
business of the Company. None of the rights of Executive to receive any form of compensation
payable pursuant to this Agreement may be assigned or transferred except by will or the laws of
descent and distribution. Any other attempted assignment, transfer, conveyance, or other
disposition of Executive’s right to compensation or other benefits will be null and void.

     13. Notices. All notices, requests, demands, and other communications called for
hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered
personally, (b) one day after being sent by a well established commercial overnight service, or (c)
four days after being mailed by registered or certified mail, return receipt requested, prepaid and
addressed to the parties or their successors at the following addresses, or at such other addresses
as the parties may later designate in writing:

	 
	If to the Company:

	 

	Attn: Chief Executive Officer

	Taleo Corporation

	575 Market Street

	San Francisco, CA 94105

	 

	If to Executive:

	 

	at the last residential address known by the Company as provided by Executive in
writing.

     14. Severability. If any provision hereof becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable, or void, this Agreement will continue in full
force and effect without said provision.

     15. Arbitration.

          (a) General. In consideration of Executive’s service to the Company, its promise to
arbitrate all employment related disputes, and Executive’s receipt of the compensation, pay raises,
and other benefits paid to Executive by the Company, at present and in the future, Executive agrees
that any and all controversies, claims, or disputes with anyone (including the Company and any
employee, officer, director, shareholder, or benefit plan of the Company in their capacity as such
or otherwise) arising out of, relating to, or resulting from Executive’s service to the Company
under this Agreement or otherwise or the termination of Executive’s service with the Company,
including any breach of this Agreement, will be subject to binding arbitration under the
Arbitration Rules set

6

 

forth in California Code of Civil Procedure Section 1280 through 1294.2,
including Section 1283.05 (the “Rules”) and pursuant to California law. Disputes which Executive
agrees to arbitrate, and thereby agrees to waive any right to a trial by jury, include any
statutory claims under state or federal law, including, but not limited to, claims under Title VII
of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age
Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the California
Fair Employment and Housing Act, the California Labor Code, claims of harassment, discrimination,
or wrongful termination, and any statutory claims. Executive further understands that this
Agreement to arbitrate also applies to any disputes that the Company may have with Executive.

          (b) Procedure. Executive agrees that any arbitration will be administered by the
American Arbitration Association (“AAA”) and that a neutral arbitrator will be selected in a manner
consistent with its National Rules for the Resolution of Employment Disputes. The arbitration
proceedings will be held in San Francisco County, California and will allow for discovery according
to the rules set forth in the National Rules for the Resolution of Employment Disputes or
California Code of Civil Procedure. Executive agrees that the arbitrator will have the power to
decide any motions brought by any party to the arbitration, including motions for summary judgment
and/or adjudication and motions to dismiss and demurrers, prior to any arbitration hearing.
Executive agrees that the arbitrator will issue a written decision on the merits. Executive
understands the Company will pay for any administrative or hearing fees charged by the arbitrator
or AAA except that Executive will pay the first $200.00 of any filing fees associated with any
arbitration Executive initiates. Executive agrees that the arbitrator will administer and conduct
any arbitration in a manner consistent with the Rules and that to the extent that the AAA’s
National Rules for the Resolution of Employment Disputes conflict with the Rules, the Rules will
take precedence.

          (c) Remedy. Except as provided by the Rules, arbitration will be the sole, exclusive,
and final remedy for any dispute between Executive and the Company. Accordingly, except as
provided for by the Rules, neither Executive nor the Company will be permitted to pursue court
action regarding claims that are subject to arbitration. Notwithstanding, the arbitrator will not
have the authority to disregard or refuse to enforce any lawful Company policy, and the arbitrator
will not order or require the Company to adopt a policy not otherwise required by law which the
Company has not adopted.

          (d) Availability of Injunctive Relief. In addition to the right under the Rules to
petition the court for provisional relief, Executive agrees that any party also may petition the
court for injunctive relief where either party alleges or claims a violation of this Agreement or
the Confidentiality Agreement or any other agreement regarding trade secrets, confidential
information or nonsolicitation.

          (e) Administrative Relief. Executive understands that this Agreement does not
prohibit Executive from pursuing an administrative claim with a local, state, or federal
administrative body such as the Department of Fair Employment and Housing, the Equal Employment
Opportunity Commission, or the workers’ compensation board. This Agreement does, however, preclude
Executive from pursuing court action regarding any such claim.

          (f) Voluntary Nature of Agreement. Executive acknowledges and agrees that Executive
is executing this Agreement voluntarily and without any duress or undue influence by the

7

 

Company or
anyone else. Executive further acknowledges and agrees that Executive has carefully read this
Agreement and that Executive has asked any questions needed for Executive to understand the terms,
consequences, and binding effect of this Agreement, including that Executive is waiving Executive’s
right to a jury trial. Finally, Executive agrees that Executive has been provided an opportunity
to seek the advice of an attorney of Executive’s choice before signing this Agreement.

     16. Integration. This Agreement represents the entire agreement and understanding
between the parties as to the subject matter herein and supersedes all prior or contemporaneous
agreements whether written or oral. No waiver, alteration, or modification of any of the
provisions of this Agreement will be binding unless in a writing that specifically references this
Section and is signed by duly authorized representatives of the parties hereto.

     17. Waiver of Breach. The waiver of a breach of any term or provision of this
Agreement, which must be in writing, will not operate as or be construed to be a waiver of any
other previous or subsequent breach of this Agreement.

     18. Survival. The Confidential Information Agreement, the Company’s and Executive’s
responsibilities under Sections 6, 7, 10, 11, 13 and 15 will survive the termination of this
Agreement.

     19. Headings. All captions and section headings used in this Agreement are for
convenient reference only and do not form a part of this Agreement.

     20. Tax Withholding. All payments made pursuant to this Agreement will be subject to
withholding of applicable taxes.

     21. Governing Law. This Agreement will be governed by the laws of the State of
California (with the exception of its conflict of laws provisions).

     22. Acknowledgment. Executive acknowledges that he has had the opportunity to discuss
this matter with and obtain advice from his private attorney, has had sufficient time to, and has
carefully read and fully understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.

     23. Counterparts. This Agreement may be executed in counterparts, and each
counterpart will have the same force and effect as an original and will constitute an effective,
binding agreement on the part of each of the undersigned.

8

 

     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by a duly authorized officer, as of the day and year written below.

COMPANY:

TALEO CORPORATION

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Michael P. Gregoire
	 	 	 	Date:	 	June 22, 2005
	 

	 	 
	 	 	 	 	 	 
	 

	 	Michael P. Gregoire	 	 	 	 	 	 
	Title:

	 	President and Chief Executive Officer	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	EXECUTIVE:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	/s/ Louis Tetu
	 	 	 	Date:	 	June 22, 2005
	 

	 	 
	 	 	 	 	 	 
	Louis Tetu	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	TALEO CANADA INC.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Martin Ouellet	 	 	 	Date:	 	June 22, 2005
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title: Director	 	 	 	 	 	 

[SIGNATURE PAGE TO LOUIS TETU EMPLOYMENT AGREEMENT]

9

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