Document:

Intellectual Property Security Agreement

 Exhibit 10.33 
  
 INTELLECTUAL PROPERTY SECURITY AGREEMENT 
  
 This Intellectual Property Security Agreement (this “IP Agreement”) is made as of the 28th day of September, 2005, by and between VERTICAL
COMMUNICATIONS ACQUISITION CORP., a Delaware corporation with its principal place of business at 5 Cambridge Center, Cambridge, Massachusetts (“Grantor”), and SILICON VALLEY BANK, a California-chartered bank, with its principal
place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office located at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton, Massachusetts 02462, doing business under the name “Silicon
Valley East” (“Lender”). 
  
 RECITALS

  
 A. Lender has agreed to make advances of money and to
extend certain financial accommodations to Grantor and ARTISOFT, INC., a Delaware corporation (the “Loan”), pursuant to a certain Loan and Security Agreement of even date herewith (as may be amended, the “Loan Agreement”). The
Loan is secured pursuant to the terms of the Loan Agreement. Lender is willing to enter into certain financial accommodations with Grantor, but only upon the condition, among others, that Grantor shall grant to Lender a security interest in certain
Copyrights, Trademarks, Patents, and Mask Works, and other assets, to secure the obligations of Grantor under the Loan Agreement. Defined terms used but not defined herein shall have the same meanings as in the Loan Agreement. 
  
 B. Pursuant to the terms of the Loan Agreement, Grantor has granted to Lender
a security interest in all of Grantor’s right title and interest, whether presently existing or hereafter acquired in, to and under all of the Collateral (as defined therein). 
  
 NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged and intending to be
legally bound, as collateral security for the prompt and complete payment when due of Grantor’s Indebtedness (as defined below), Grantor hereby represents, warrants, covenants and agrees as follows: 
  
 1. Grant of Security Interest. As collateral security for the prompt and
complete payment and performance of all of Grantor’s present or future indebtedness, obligations and liabilities to Lender (hereinafter, the “Indebtedness”), including, without limitation, under the Loan Agreement, Grantor hereby
grants a security interest in all of Grantor’s right, title and interest in, to and under its registered and unregistered intellectual property collateral (all of which shall collectively be called the “Intellectual Property
Collateral”), including, without limitation, the following: 
  
 (a) Any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished, registered or
unregistered, and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held, including without limitation those set forth on EXHIBIT A attached hereto (collectively, the
“Copyrights”); 
  
 (b) Any and all trade
secret rights, including any rights to unpatented inventions, know-how, operating manuals, license rights and agreements, and confidential information, and any and all intellectual property rights in computer software and computer software products
now or hereafter existing, created, acquired or held; 
  
 (c) Any and all design rights which may be available to Grantor now or hereafter existing, created, acquired or held; 
  
 (d) All patents, patent applications and like protections including, without limitation, improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the 

 
same, including, without limitation, the patents and patent applications set forth on EXHIBIT B attached hereto (collectively, the
“Patents”); 
  
 (e) Any trademark and
service mark rights, slogans, trade dress, and tradenames, trade styles, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Grantor connected with and
symbolized by such trademarks, including, without limitation, those set forth on EXHIBIT C attached hereto (collectively, the “Trademarks”); 
  
 (f) All mask works or similar rights available for the protection of semiconductor chips, now owned or hereafter acquired, including,
without limitation, those set forth on EXHIBIT D attached hereto (collectively, the “Mask Works”); 
  
 (g) Any and all claims for damages by way of past, present and future infringements of any of the rights included above, with the right,
but not the obligation, to sue for and collect such damages for said use or infringement of the intellectual property rights identified above; 
  
 (h) All licenses or other rights to use any of the Copyrights, Patents, Trademarks, or Mask Works and all license fees and royalties
arising from such use to the extent permitted by such license or rights, including, without limitation, those set forth on EXHIBIT E attached hereto; 
  
 (i) All amendments, extensions, renewals and extensions of any of the Copyrights, Trademarks, Patents, or Mask Works; and 
  
 (j) All proceeds and products of the foregoing, including,
without limitation, all payments under insurance or any indemnity or warranty payable in respect of any of the foregoing. 
  
 2. Authorization and Request. Grantor authorizes and requests that the Register of Copyrights and the Commissioner of Patents and Trademarks record this
IP Agreement, or a copy thereof. 
  
 3. Covenants and Warranties.
Grantor represents, warrants, covenants and agrees as follows: 
  
 (a) Grantor is now the sole owner of the Intellectual Property Collateral, except for non-exclusive licenses granted by Grantor to its customers in the ordinary course of business. Lender recognizes that some of the
Intellectual Property Collateral is being acquired by Grantor pursuant to provisions of the Asset Purchase Agreement dated as of September 1, 2005 between Comdial Corporation and Vertical Communications Acquisition Corp. and that as of the date
of this IP Agreement, record ownership for such acquired Intellectual Property Collateral has not been transferred to Grantor. 
  
 (b) Performance of this IP Agreement does not conflict with or result in a breach of any material agreement to which Grantor is bound.

  
 (c) During the term of this IP Agreement,
Grantor will not transfer or otherwise encumber any interest in any Intellectual Property Collateral, except for non-exclusive licenses granted by Grantor in the ordinary course of business or as set forth in this IP Agreement; 
  
 (d) To its knowledge, each of the Patents is valid and
enforceable, and no part of the Intellectual Property Collateral has been judged invalid or unenforceable, in whole or in part, and, except for disputes in the ordinary course of business where an adverse ruling would not have a material adverse
effect to Grantor, no claim has been made that any part of the Intellectual Property Collateral violates the rights of any third party; 

 (e) Grantor shall promptly advise Lender of any material adverse change in the
composition of the Collateral, including but not limited to, any subsequent ownership right of the Grantor in or to any Trademark, Patent, Copyright, or Mask Work specified in this IP Agreement; 
  
 (f) Grantor shall (i) protect, defend and maintain the
validity and enforceability of the Trademarks, Patents, Copyrights, and Mask Works, (ii) use its best efforts to detect infringements of the Trademarks, Patents, Copyrights, and Mask Works and promptly advise Lender in writing of material
infringements detected and (iii) not allow any Trademarks, Patents, Copyrights, or Mask Works to be abandoned, forfeited or dedicated to the public without the written consent of Lender, which shall not be unreasonably withheld, unless Grantor
determines that reasonable business practices suggest that failure to protect, defend or maintain or abandonment is appropriate; 
  
 (g) Grantor shall take such further actions as Lender may reasonably request from time to time to perfect or continue the perfection of
Lender’s interest in the Intellectual Property Collateral; 
  
 (h) This IP Agreement creates, and in the case of after acquired Intellectual Property Collateral, this IP Agreement will create at the time Grantor first has rights in such after acquired Intellectual Property
Collateral, in favor of Lender a valid and perfected first priority security interest and collateral assignment in the Intellectual Property Collateral in the United States securing the payment and performance of the obligations evidenced by the
Loan Agreement; 
  
 (i) To its knowledge, except
for, and upon, the filing of UCC financing statements, or other notice filings or notations in appropriate filing offices, if necessary to perfect the security interests created hereunder, no authorization, approval or other action by, and no notice
to or filing with, any U.S. governmental authority or U.S. regulatory body is required either (a) for the grant by Grantor of the security interest granted hereby, or for the execution, delivery or performance of this IP Agreement by Grantor in
the U.S. or (b) for the perfection in the United States or the exercise by Lender of its rights and remedies thereunder; 
  
 (j) All information heretofore, herein or hereafter supplied to Lender by or on behalf of Grantor with respect to the Intellectual
Property Collateral is accurate and complete in all material respects; 
  
 (k) Grantor shall not enter into any agreement that would materially impair or conflict with Grantor’s obligations hereunder without Lender’s prior written consent, which consent shall not be unreasonably
withheld. Grantor shall not permit the inclusion in any material contract to which it becomes a party of any provisions that could or might in any way prevent the creation of a security interest in Grantor’s rights and interest in any property
included within the definition of the Intellectual Property Collateral acquired under such contracts; and 
  
 (l) Upon any executive officer of Grantor obtaining actual knowledge thereof, Grantor will promptly notify Lender in writing of any event
that materially adversely affects the value of any material Intellectual Property Collateral, the ability of Grantor to dispose of any material Intellectual Property Collateral or the rights and remedies of Lender in relation thereto, including the
levy of any legal process against any of the Intellectual Property Collateral. 
  
 4. Lender’s Rights. Lender shall have the right, but not the obligation, to take, at Grantor’s sole expense, any actions that Grantor is required under this IP Agreement to take but which Grantor fails to
take, after fifteen (15) days’ notice to Grantor. Grantor shall reimburse and indemnify Lender for all reasonable costs and reasonable expenses incurred in the reasonable exercise of its rights under this section 4. 
  
 5. Inspection Rights. Grantor hereby grants to Lender and its employees,
representatives and agents the right to visit, during reasonable hours upon prior reasonable written notice to Grantor, any of Grantor’s plants 

 
and facilities that manufacture, install or store products (or that have done so during the prior six-month period) that are sold utilizing any of the
Intellectual Property Collateral, and to inspect the products and quality control records relating thereto upon reasonable written notice to Grantor and as often as may be reasonably requested, but not more than once in every six (6) months;
provided, however, nothing herein shall entitle Lender access to Grantor’s trade secrets and other proprietary information. 
  
 6. Further Assurances; Attorney in Fact. 
  
 (a) On a continuing basis, Grantor will, upon request by Lender, subject to any prior licenses, encumbrances and restrictions and
prospective licenses, make, execute, acknowledge and deliver, and file and record in the proper filing and recording places in the United States, all such instruments, including appropriate financing and continuation statements and collateral
agreements and filings with the United States Patent and Trademarks Office and the Register of Copyrights, and take all such action as may reasonably be deemed necessary or advisable, or as requested by Lender, to perfect Lender’s security
interest in all Copyrights, Patents, Trademarks, and Mask Works and otherwise to carry out the intent and purposes of this IP Agreement, or for assuring and confirming to Lender the grant or perfection of a security interest in all Intellectual
Property Collateral. 
  
 (b) In addition to
section 6(a) above, Grantor shall not register any of its Copyrights or Mask Works with the Register of Copyrights without first executing and simultaneously registering an IP Agreement, in the identical form of this IP Agreement, with the Register
of Copyrights, listing such Copyrights(s) on Exhibit A thereto and/or such Mask Works on Exhibit D in order to protect and perfect Lender’s security interest in such Copyrights or Mask Works. Promptly after such registration, Grantor shall
forward to the Lender, at the address listed above, a copy of, and the original IP Agreement as filed with the Register of Copyrights. 
  
 (c) Grantor hereby irrevocably appoints Lender as Grantor’s attorney-in-fact, with full authority in the place and stead of Grantor
and in the name of Grantor, Lender or otherwise, from time to time in Lender’s discretion, upon Grantor’s failure or inability to do so, to take any action and to execute any instrument which Lender may deem necessary or advisable to
accomplish the purposes of this IP Agreement, including: 
  
         (i) To modify, in its sole discretion, this IP Agreement without first obtaining Grantor’s approval of or signature to such modification by amending Exhibit A,
Exhibit B, Exhibit C, and Exhibit D hereof, as appropriate, to include reference to any right, title or interest in any Copyrights, Patents, Trademarks or Mask Works acquired by Grantor after the execution hereof or to delete any reference to any
right, title or interest in any Copyrights, Patents, Trademarks, or Mask Works in which Grantor no longer has or claims any right, title or interest; and 
  
         (ii) To file, in its sole discretion, one or more financing or continuation statements and
amendments thereto, relative to any of the Intellectual Property Collateral without the signature of Grantor where permitted by law. 
  
         (iii) Grantor hereby authorizes Lender to file financing statements without notice to
Grantor with all appropriate jurisdictions, as Lender deems appropriate, in order to further perfect or protect Lender’s interest in the Intellectual Property Collateral. 
  
 7. Events of Default. The occurrence of any of the following shall constitute an Event of Default under this IP Agreement:

  
 (a) An Event of Default occurs under the Loan
Agreement; or 
  
 (b) Grantor breaches any
warranty or covenant made by Grantor in this IP Agreement and such breach is not remedied within ten (10) days after the earlier to occur of (i) notice thereof by Lender to Grantor, or (ii) knowledge thereof by Grantor. 

 8. Remedies. Upon the occurrence and continuance of an Event of Default, Lender shall have the right to
exercise all the remedies of a secured party under the Massachusetts Uniform Commercial Code, including, without limitation, the right to require Grantor to assemble the Intellectual Property Collateral and any tangible property in which Lender has
a security interest and to make it available to Lender at a place designated by Lender. Lender shall have a nonexclusive, royalty free license to use the Copyrights, Patents, Trademarks, and Mask Works to the extent reasonably necessary to permit
Lender to exercise its rights and remedies upon the occurrence of and during the continuance of an Event of Default. Grantor will pay any expenses (including reasonable attorney’s fees) incurred by Lender in connection with the exercise of any
of Lender’s rights hereunder, including, without limitation, any expense incurred in disposing of the Intellectual Property Collateral. All of Lender’s rights and remedies with respect to the Intellectual Property Collateral shall be
cumulative. 
  
 9. Indemnity. Grantor agrees to defend, indemnify
and hold harmless Lender and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this IP Agreement, and
(b) all losses or expenses in any way suffered, incurred, or paid by Lender as a result of or in any way arising out of, following or consequential to transactions between Lender and Grantor, whether under this IP Agreement or otherwise
(including without limitation, reasonable attorneys fees and reasonable expenses), except for losses arising from or out of Lender’s gross negligence or willful misconduct. 
  
 10. Termination. At such time as Grantor shall completely satisfy all of the obligations secured hereunder, Lender shall
execute and deliver to Grantor all releases, terminations, and other instruments as may be necessary or proper to release the security interest hereunder. 
  
 11. Course of Dealing. No course of dealing, nor any failure to exercise, nor any delay in exercising any right, power or privilege hereunder shall
operate as a waiver thereof. 
  
 12. Amendments. This IP
Agreement may be amended only by a written instrument signed by both parties hereto. 
  
 13. Counterparts. This IP Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute the same instrument. 
  
 14. Law and Jurisdiction. This IP Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts. GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN
THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND, AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY REASON LENDER CANNOT AVAIL ITSELF OF THE COURTS OF THE COMMONWEALTH
OF MASSACHUSETTS, GRANTOR ACCEPTS JURISDICTION OF THE COURTS AND VENUE IN SANTA CLARA COUNTY, CALIFORNIA. NOTWITHSTANDING THE FOREGOING, THE LENDER SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE GRANTOR OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTION WHICH THE LENDER DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE LENDER’S RIGHTS AGAINST THE GRANTOR OR ITS PROPERTY. 
  
 GRANTOR AND LENDER EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH
PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH 

 
PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. 
  
 15.
Confidentiality. In handling any confidential information, Lender shall exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made: (i) to Lender’s subsidiaries or
affiliates in connection with their present or prospective business relations with Grantor; (ii) to prospective transferees or purchasers of any interest in the Loans; (iii) as required by law, regulation, subpoena, or other order;
(iv) as required in connection with Lender’s examination or audit; and (v) as Lender considers appropriate in exercising remedies under this Agreement. Confidential information does not include information that either: (a) is in
the public domain or in Lender’s possession when disclosed to Lender, or becomes part of the public domain after disclosure to Lender; or (b) is disclosed to Lender by a third party, if Lender reasonably does not know that the third party
is prohibited from disclosing the information. 
  
 [remainder of
page intentionally left blank] 

 EXECUTED as a sealed instrument under the laws of the Commonwealth of Massachusetts on the day and
year first written above. 
  

							
	Address of Grantor:	 	 	  	GRANTOR:
			
	5 Cambridge Center	 	 	  	VERTICAL COMMUNICATIONS ACQUISITION CORP.
				
	Cambridge, MA	 	 	  	By:	  	/s/ DUNCAN G. PERRY
				
	 	 	 	  	Name:	  	Duncan G. Perry
				
	 	 	 	  	Title:	  	TreasurerExhibit 10.1

Exhibit D

SECOND AMENDED AND RESTATED
 OPERATING AGREEMENT
 OF
 MILLENNIUM BROKERAGE GROUP, LLC

A Tennessee Limited Liability Company

DATED AS OF:

October ___, 2005

  

SECOND AMENDED AND RESTATED
 OPERATING AGREEMENT
 OF
 MILLENNIUM BROKERAGE GROUP, LLC

          This SECOND AMENDED AND RESTATED OPERATING AGREEMENT (this “Agreement”) is entered into and shall be effective as of the ____ day of October, 2005, by and between the persons who are identified as Members on Exhibit A attached hereto and who have executed a counterpart of this Agreement as Members pursuant to the provisions of the Act, on the following terms and conditions:

ARTICLE I
 ORGANIZATIONAL MATTERS

          1.1     Name.  The name of the Company shall be Millennium Brokerage Group, LLC, or such other name as the Board may from time to time hereafter designate.

          1.2     Formation.  The Company was formed on December 31, 1998 upon the filing of the Articles of Organization of the Company with the Secretary of State of the State of Tennessee setting forth the information required by the Act.

          1.3     Effective Date.  The Amended and Restated Operating Agreement of the Company was entered into as of the 1st day of February, 2001.  This Agreement is effective as of the date first set forth above (the “Effective Date”).

ARTICLE II
 DEFINITIONS

          In addition to terms otherwise defined herein, the following terms are used herein as defined below:

          “Act” means the Tennessee Limited Liability Company Act, Tennessee Code Annotated Section 48-201-101 et seq., as amended, or any corresponding provision or provisions of any succeeding law.

          “Additional Investment” means any capital contribution by the Enterprise Member which has been unanimously approved by the Board in accordance with Section 4.5(k) hereof.

          “Adjusted Capital Account Deficit” means the deficit balance, if any, in a Member’s Capital Account as of the end of the relevant Year, giving effect to the following adjustments:

	
  
 
  	
  
          (a) credit to such   Capital Account any amounts which such Member is obligated to restore   pursuant to any provision of this Agreement or is deemed to be obligated to   restore pursuant to Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and   1.704-2(i)(5) of the Regulations; and
  

1

  

	
   
  	
  
          (b) debit to such   Capital Account the items described in clauses (4), (5) and (6) of Section   1.704-1(b)(2)(ii)(d) of the Regulations.
  

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith.

          “Advance Diamond Distribution” means a distribution to the Diamond Member which, with respect to both the timing and amount of any such distribution, is within the sole and absolute discretion of the Board.

          “Adverse Terminating Event” means with respect to any Member or any Interest any of the following events, circumstances or occurrences:

	
  
 
  	
  
          (a)          The   Member has breached the Transfer restrictions set forth in Article IX   hereof; or
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)          The   Member attempts to resign or withdraw without the consent of a majority of   the Board.
  

          “Affiliate” means, with respect to a particular person or Entity, any person or Entity that directly or indirectly, through one or more intermediaries controls, is controlled by, or is under common control with, such other person. 

          “Agreement” means this Operating Agreement, as amended from time to time.

          “Articles of Organization” means the Article of Organization of the Company filed with the Secretary of State of the State of Tennessee pursuant to the Act, as amended from time to time.

          “Available Distributable Cash” means all cash, revenues and funds (including proceeds from the sale or other disposition or refinancing of capital assets) received by the Company, less the sum of the following, to the extent paid or set aside by the Company:  (a) all principal and interest payments on indebtedness of the Company and all other sums paid to lenders; (b) all cash expenditures incurred incident to the normal operation of the Company’s business (including the payment of any guaranteed payments); (c) all amounts deemed necessary by the Board acting in good faith to be held by the Company for working capital purposes; and (d) all amounts deemed necessary by the Board acting in good faith to fund capital expenditures of the Company which are not funded by Additional Investment.

          “Bankruptcy” means, as to any Member, the Member’s taking of, acquiescing to the taking of, or becoming (voluntarily or involuntary) the subject of, or any action seeking relief under, or advantage of, any applicable debtor relief, liquidation, receivership, conservatorship, bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar law affecting the rights or remedies of creditors generally, as in effect from time to time. 

2

  

          “Board” means the Board referenced in Section 4.1 hereof.

          “Book Value” shall mean the following as of the Valuation Date: the book value of the Company (total assets minus liabilities) as shown on the Company’s books and records.  Book Value shall be determined, without audit or certification, from the books and records of the Company by the accounting firm regularly employed by the Company, and shall be final and binding in the absence of a showing of gross negligence or willful misconduct.

          “Capital Account” in respect of any Member means the account established for that Member pursuant to Section 6.4 hereof, and as may be adjusted from time to time in accordance with this Agreement.

          “Code” means the Internal Revenue Code of 1986, as amended, and any successor legislation thereto. 

          “Company” means Millennium Brokerage Group, LLC.

          “Continuation Event” has the meaning given to such term in Section 11.2 hereof.

          “Diamond Governors” means the Governors designated by the Diamond Member.

          “Diamond Employees” means William L. Zelenik, John Bohlman, John Gillenwater, Jim Laughlin, Dennis Wall, Steve Weld, John White Robert Williams, Larry Gilkerson, Al Marano, William Rouse and Kathy Ruskin.

          “Diamond Member” means Millennium Holdings, LLC, a Tennessee limited liability company.

          “Dissolution Event” has the meaning given to such term in Section 11.1 hereof.

          “Effective Date” has the meaning set forth in Section 1.3.

          “Enterprise Governors” means the Governors designated by the Enterprise Member.

          “Enterprise Member” means Millennium Holding Company, Inc., a Missouri corporation.

          “Entity” means any corporation, partnership, trust, limited liability company or other entity.

3

  

          “Financial Rights” shall mean a Member’s share of one or more of the Company’s profits, losses and distributions pursuant to this Agreement and the Act, but shall not include any right to participate in the management or affairs of the Company, including the right to vote on, consent to, or otherwise, participate in any decision or decision making of the Members, the Governors or the management of the Company.  A transferee of Financial Rights shall not be treated as a substituted Member hereunder.

          “Governance Rights” means the interest of a Member in the Company with respect to such Member’s right to vote or grant or withhold consents with respect to Company matters as provided herein or in the Act.  Any reference herein to any vote or action of Members shall only refer to those Members entitled to Governance Rights.  If a Member Transfers the Financial Rights, but retains the Governance Rights, the transferring Member shall retain the right to vote or grant or withhold consents with respect to Company matters which may be exercised in connection with the ownership of the Interest transferred as provided in this Agreement, and the transferee of the Interest shall have no right to vote or grant or withhold consents.

          “Governor” means a member of the Board as designated in, or selected pursuant to, Section 4.2 hereof.

          “Interest” means the ownership interest of a Member in the Company, including Financial Rights and Governance Rights.  A Member’s Interest shall be considered personal property for all purposes.

          “Investment Amount” means the amount paid by the Enterprise Member pursuant to the Purchase Agreement for its Interests in the Company plus any Additional Investment by the Enterprise Member in accordance with Section 4.5(k) of this Agreement.  On the Effective Date, the Investment Amount shall equal fifteen million dollars ($15,000,000), which amount shall be adjusted as provided in the Purchase Agreement. 

          “Involuntary Transfer” means any involuntary Transfer of an Interest, including an involuntary Transfer as a result of, or in connection with, a Member’s Bankruptcy.

          “Involuntarily Transferred Interest” means any Interest that is the subject of an Involuntary Transfer.

          “Majority in Interest of the Members” means Members having Governance Rights (based on the Percentage Interest owned, or the Percentage Interest transferred where Governance Rights are retained), in excess of fifty percent (50.0%) of the total Governance Rights held by all Members who have Governance Rights.

          “Matching Account” shall mean that account established with respect to the Diamond Member in order to establish the cumulative amount of matching distributions to which the Diamond Member shall be entitled pursuant to Section 8.2(c).  On the last day of each fiscal

4

  

quarter, the Matching Account shall be credited (increased) with an amount equal to the product of (A) the Priority Return of the Enterprise Member that has accrued with respect to such quarter, multiplied by (B) a fraction, the numerator of which is the Percentage Interest of the Diamond Member on the last date of such quarter and the denominator of which is the Percentage Interest of the Enterprise Member on that date; provided, however, that in the event the Diamond Member’s Percentage Interest changes during the fiscal quarter, the Matching Account shall be credited as of immediately before the change in the Diamond Percentage Interest based upon the Priority Return that has accrued since the end of the previous quarter in the manner set forth in this sentence, and the increase at the end of such fiscal quarter shall take into account only the Priority Return that has accrued since the date of the change of Diamond’s Percentage Interest.

          “Member Nonrecourse Debt” has the same meaning as the term “partner nonrecourse debt” in Section 1.704-2(b)(4) of the Regulations.

          “Member Nonrecourse Debt Minimum Gain” means “partner nonrecourse debt minimum gain,” as such term is defined in Regulations Section 1.704-2(i)(2).

          “Member Nonrecourse Deductions” means any item of partnership loss, deduction, or expenditure under Section 705(a)(2)(B) of the Code that is attributable to a Member Nonrecourse Debt, as determined pursuant to Regulations Section 1.704-2(i)(2).

          “Members” means those persons set forth on the attached Exhibit A who have been admitted as Members to the Company pursuant to this Agreement, so long as they remain Members.  Reference to a “Member” means any one of the Members.  In the case of an Interest as to which the Governance Rights and Financial Rights are held by different persons, the person holding the Governance Rights shall be considered the Member.

          “Minimum Gain” has the meaning given the term “partnership minimum gain” set forth in Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

          “Net Profit” or “Net Loss” means, for each Year, an amount equal to the Company’s taxable income or loss (after the adjustments described below) for each Year or other applicable period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments:

	
  
 
  	
  
          (i)          Expenditures   described in Section 705(a)(2)(B) of the Code, not otherwise taken into   account in determining Net Profit or Net Loss, shall be included as an   expense in the determination of Net Profit and Net Loss; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (ii)         Income   exempt from taxation shall be included in the determination of Net Profit and   Net Loss; and
  

5

  

	
  
 
  	
  
          (iii)           Items which   are specially allocated pursuant to Section 7.4 hereof (except for   Nonrecourse Deductions) shall be eliminated by adding them or subtracting   them, as the case may be, in the determination of Net Profit and Net Loss.
  

          “Nonrecourse Deductions” has the meaning set forth in Regulations Sections 1.704-2(b)(1) and 1.704-2(c).

          “Nonrecourse Liability” has the meaning set forth in Section 1.704-2(b)(3) of the Regulations.

          “Percentage Interest” means, with respect to any Member, the percentage interest set forth opposite that Member’s name on Exhibit A attached hereto.  In the event any Interest is Transferred in accordance with the provisions of this Agreement, the transferee of such interest shall succeed to the Percentage Interest of his transfer or to the extent it relates to the Transferred Interest.

          “Permitted Transfer” has the meaning given to such term in Section 9.2 hereof.

          “Priority Distribution” means the distribution of the Priority Return to the Enterprise Member pursuant to Section 8.2(b) hereof.

          “Priority Return” means an amount equal to twenty-three and one-tenth percent (23.1%) before tax return per annum (prorated for any partial Year) on the from time to time Investment Amount commencing January 1, 2006.  No Priority Return shall accrue for any period prior to such date.

          “Prime Rate” means the prime rate as published in the Wall Street Journal from time to time.

          “Purchase Agreement” means that certain Membership Interest Purchase Agreement by and between Enterprise Financial Services Corp. and Millennium Brokerage Group, LLC, William L. Zelenik, John Bohlman, John Gillenwater, Jim Laughlin, Dennis Wall, Steve Weld, John White, Robert Williams and the Diamond Member, of even date herewith pursuant to which the Enterprise Member acquired Interests in the Company from the Diamond Employees on the terms and conditions contained therein.

          “Qualified Acquisition” has the meaning set forth in Section 4.10(c).

          “Regulations” means the federal income tax regulations promulgated under the Code, as such regulations may be amended from time to time, including proposed, temporary and final regulations.

          “Successor” means a Member’s executor, administrator, guardian, conservator, other legal representative or successor.

6

  

          “Tax Matters Partner” has the meaning given to such term in Section 13.6 hereof.

          “Terminating Event” means with respect to any Member or any Interest any of the following events, circumstances or occurrences:

	
  
 
  	
  
          (a)   If a Member that is an individual becomes adjudged incompetent by any court;   or
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)   If a Member resigns or withdraws as a Member with the unanimous consent of   the Board, and is not at the time of withdrawal the subject of an Adverse   Terminating Event.
  

          “Transfer” or “Transferred” shall mean the sale, conveyance, alienation, assignment, transfer, pledge, encumbrance, hypothecation or other disposition (whether voluntarily, involuntary, by operation of law or otherwise) of all or a portion of any Interest.

          “Undistributed Matching Return” means, as of any date of its calculation, the excess of the balance of the Matching Account with respect to the Diamond Member at that time, over the aggregate amount of previous distributions to the Diamond Member pursuant to Sections 8.2(a) and (c).

          “Undistributed Priority Return” means, as of any date of its calculation, the excess of the cumulative Priority Return to the Enterprise Member at that time over the aggregate amount of previous distributions to the Enterprise Member pursuant to Section 8.2(b).

          “Valuation Date” means the last day of the month preceding a Terminating Event.

          “Year” means the fiscal year of the Company, which shall be the calendar year.

          “Year of Liquidation” means the Year in which the Company is liquidated and final distributions are made to Members.

          Words used herein, regardless of the number and gender used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires, and, as used herein, unless the context clearly requires otherwise, the words “hereof,” “herein,” and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provisions hereof.

7

  

ARTICLE III
 OFFICES AND TERM OF COMPANY

          3.1      Purpose.  The purpose of the Company shall be (a) to engage in the life insurance brokerage business, representing and marketing the products of various insurance carriers and (b) to engage in any lawful business that may be engaged in by a limited liability company organized under the Act, as such business activities may be determined by the Board from time to time.

          3.2      Offices.  

	
  
 
  	
  
          (a)   The principal office of the Company, and such additional offices as the Board   may determine to establish, shall be located at such place or places inside   or outside the State of Tennessee as the Board may designate from time to   time.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)   The address of the Company’s registered office in Tennessee is 611 Commerce   Street, Suite 2606, Nashville, Tennessee    37203, County of Davidson.  The   name of its registered agent at that address is William L. Zelenik.  The Company may from time to time   establish such other registered office and registered agent within the State   of Tennessee as may be designated by the Board.
  

          3.3      Members.  The name and business, mailing or residence address of each Member of the Company are as set forth on Exhibit A attached hereto, as the same may be amended from time to time.

          3.4      Term.  The term of the Company shall be perpetual unless the Company is dissolved and terminated in accordance with Article XI of this Agreement.

ARTICLE IV
 MANAGEMENT OF THE COMPANY

          4.1      Management by Board of Governors.  Subject to the delegation of rights and powers as provided for herein, the Board of Governors shall have the sole right to manage the business of the Company and shall have all powers and rights necessary, appropriate or advisable to effectuate and carry out the purposes and business of the Company.  No Member, by reason of its status as such, shall have any authority to act for or bind the Company, but shall have only the right to vote on or approve the actions specified herein or in the Act to be voted on or approved by the Members.  At any time that there is only one Member, any and all action provided for herein to be taken or approved by the “Members” shall be taken or approved by the sole Member.

8

  

          4.2      Members of the Board of Governors.  The Board shall consist of five (5) Governors or such other number as the Board shall determine by the unanimous vote of the Governors.  Governors do not have to be Members.  At all times during which the Diamond Member or its Affiliates own any Interests, there shall be at least three Governors who have been appointed by the Enterprise Member and who shall be designated as the “Enterprise Governors” and two Governors who have been appointed by the Diamond Member and who shall be designated as the “Diamond Governors.”  The Board shall initially be composed of the following individuals:

	
  Enterprise   Governors
  	
   
 	
  Diamond   Governors
  
	
  

  	
   
  	
  

  
	
   
  	
   
  	
   
  
	
   
  	
   
  	
   
  
	
   
  	
   
  	
   
  

Governors shall serve for a term of one (1) year and thereafter until their respective successors are duly elected, or until their earlier death, retirement, incapacity or removal.  Election of Governors shall be by a Majority in Interest of the Members, voting in proportion to their respective Percentage Interests on the record date for the Members entitled to vote; provided, however, that the Member(s) entitled to designate Governors as such Member’s Governors shall alone have the power to elect such Governors.  Vacancies on the Board of Governors from whatever cause shall be filled by the appointment of a successor Governor by (i) the Member(s) that designated the Governor, or (ii) if the Governor was not a Member designated Governor or if there are no Governors, by a vote of a Majority in Interest of the Members.  A Governor may be removed with or without cause by a vote of a Majority in Interest of the Members, provided that Governors
designated by Members may only be removed by the Member(s) that designated such Governor; provided further that if such Member shall cease to be a Member, the Governors designated by such Member may be removed by the Board.

          4.3      Meetings.

	
  
 
  	
  
          (a)   Place of Meetings.  All   meetings of the Board may be held at any place that has been designated from   time to time by resolution of the Board.    In the absence of such a designation, regular meetings shall be held   at the principal place of business of the Company.  Any meeting, regular or special, may be held by conference   telephone or similar communication equipment so long as all Governors   participating in the meeting can hear one another, and all Governors   participating by telephone or similar communication equipment shall be deemed   to be present in person at the meeting.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (b)   Regular Meetings.  Regular   meetings of the Board shall be held at such times and at such places as shall   be fixed by majority approval of the Governors, provided  that the Board shall hold meetings not   less than four (4) times annually following each calendar quarter upon notice   by any Governor or by the Chief Executive Officer.
  

9

  

	
  
 
  	
  
          (c)   Special Meetings.  Special   meetings of the Board for any purpose or purposes may be called at any time   by any Governor or by the Chief Executive Officer.  Notice of the time and place of a special meeting shall be   given at least five (5) business days before the date of the meeting and   shall be delivered personally to each Governor and sent by first-class mail,   by telegram, telecopy, e-mail (or similar electronic means) or by nationally   recognized overnight courier, charges prepaid, addressed to each Governor at   that Governor’s address as it is shown on the records of the Company.  The notice need not specify the purpose of   the meeting.
  
	
  
 
  	
  
 
  
	
   
  	
  
          (d)   Quorum.  A majority in number   of the Governors shall constitute a quorum for the transaction of business at   a meeting of the Board, except to adjourn as provided in Section 4.3(f)   below.  Notwithstanding the foregoing   sentence, a quorum shall not be established unless and until at least one (1)   Enterprise Governor and one (1) Diamond Governor are present at any meeting   of the Board.  Every act or decision   done or made by the affirmative vote of a majority of the Governors present   at a meeting duly held at which a quorum is present shall be regarded as the   act of the Board, except to the extent that the vote of a greater number of   Governors is required by this Agreement or applicable law.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (e)   Waiver of Notice.  Notice of   any meeting need not be given to any Governor who either before or after the   meeting signs a written waiver of notice, a consent to holding the meeting,   or an approval of the minutes.  The   waiver of notice or consent need not specify the purpose of the meeting.  All such waivers, consents, and approvals   shall be filed with the records of the Company or made a part of the minutes   of the meeting.  Notice of a meeting   shall also be deemed waived with respect to any Governor who attends the   meeting without protesting before or at its commencement the lack of notice   to that Governor.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (f)   Adjournment.  A majority of the   Governors present, whether or not constituting a quorum of the Board, may   adjourn any meeting to another time and place.  Notice of the time and place of holding an adjourned meeting   need not be given unless the meeting is adjourned for more than forty-eight   (48) hours, in which case notice of the time and place shall be given before   the time of the adjourned meeting in the manner specified in Section   4.3(c) hereof.
  

10

  

	
  
 
  	
  
          (g)   Action Without a Meeting.  Any   action to be taken by the Board at a meeting may be taken without such   meeting by the written consent of a majority of the Governors then in office   (or such greater number of Governors as is required to authorize or take such   action under the terms of this Agreement or applicable law).  Any such written consent may be executed   and given by telecopy or similar electronic means.  Such written consents shall be filed with the minutes of the   proceedings of the Board.  If any   action is so taken by the Board by the written consent of less than all of   the Governors, prompt notice of the taking of such action shall be furnished   to each Governor who did not execute such written consent, provided that the   effectiveness of such action shall not be impaired by any delay or failure to   furnish such notice.
  

          4.4      Officers.  The officers of the Company shall be as designated by the Board, and must include a Chief Executive Officer and a Secretary.  The Company may also have, at the discretion of the Board, such other officers as may be appointed in accordance with the provisions of this Section 4.4.  Any number of offices may be held by the same person, except that the offices of Chief Executive Officer and Secretary cannot be held by the same person.  The current officers of the Company are set forth on Exhibit B.  The salaries or other compensation, if any, of the officers and agents of the Company shall be fixed from time to time by the Board.

	
  
 
  	
  
          (a)   Election of Officers.  The   officers of the Company shall be chosen by the Chief Executive Officer with   the approval of the Board, and each shall serve at the pleasure of the Board.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)   Removal and Resignation of Officers.    Subject to the requirements set forth in Section 4.5, any   officer may be removed, with or without cause, by the Chief Executive Officer   with the approval of the Board at any regular or special meeting of the Board   or by such officer, if any, upon whom such power of removal may be conferred   by the Board.  Any officer may resign   at any time by giving written notice to the Company.  Any resignation shall take effect at the   date of the receipt of that notice or at any later time specified in that   notice; and unless otherwise specified in notice of a resignation, the   acceptance of the resignation shall not be necessary to make it   effective.  Any resignation is without   prejudice to the rights, if any, of the Company under any contract to which   the officer is a party.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (c)   Vacancies in Offices.  A   vacancy in any office because of death, resignation, removal, disqualification   or other cause shall be filled in the manner prescribed in this Agreement for   regular appointment to that office.    The Chief Executive Officer may make temporary appointments to a   vacant office pending action by the Board.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (d)   Chief Executive Officer.  The   Chief Executive Officer shall have responsibility for implementation of the   policies of the Company, as determined and directed by the Board, and for the   administration of the business affairs of the Company.  He or she shall preside at all meetings of   the Members.  He or she shall have the   general powers and duties of management usually vested in the office of chief   executive officer of a corporation and shall have such other powers and   duties as may be prescribed by the Board or this Agreement.  At all times, the Chief Executive Officer   shall report directly to the Chief Executive Officer of Enterprise Financial   Services Corp.
  

11

  

	
  
 
  	
  
          (e)   Secretary.  The Secretary shall   keep or cause to be kept at the principal place of business of the Company or   such other place as the Board may direct a book of minutes of all meetings   and actions of the Board, committees or other delegates of the Board and the   Members with the time and place of holding, whether regular or special, and   if special, how authorized, the notice given, the names of those present at   Board meetings or committee or other delegate meetings, the Percentage   Interest represented at meetings of Members and the proceedings.  The Secretary shall give or cause to be   given notice of all meetings of the Members and of the Board (or committees   or other delegates thereof) required to be given by this Agreement or by   applicable law and shall have such other powers and perform such other duties   as may be prescribed by the Board or the Chief
Executive Officer or by this   Agreement.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (f)   Compensation.  The salaries or   other compensation, if any, of the officers and agents of the Company shall   be fixed from time to time by the Board of Governors, and no officer shall be   prevented from receiving such salary by reason of the fact that he or she is   also a Member of the Company.  The   payments made pursuant to this Section 4.4(f) to the officers that are   Members shall be deemed to be guaranteed payments for federal income tax   purposes as described in Code Section 707(c).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (g)   Employment Agreements.  The   Members acknowledge that the Company may enter into employment agreements   with certain officers of the Company, particularly in connection with the   closing of the Purchase Agreement, and that such employment agreements may   set forth the terms and conditions upon which such officers’ employment with   the Company will be governed, including, but not limited to, the compensation   to be paid to such officers and the rights of such officers with respect to   resignation and removal.  In the event   that an officer has entered into an employment agreement with the Company,   the provisions of such officer’s employment agreement shall be enforced   notwithstanding anything in this Section 4.4 to the contrary.
  

           4.5       Major Decisions.  The following matters must be unanimously approved by the Board:

	
  
 
  	
  
          (a)   The issuance of any equity interest in the Company or the admission of an   additional Member of the Company (other than a Permitted Transfer as set   forth in Section 9.2);
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)   Any material change from the distribution procedure specified in Article VIII   (except as otherwise permitted herein);
  

12

  

	
  
 
  	
  
          (c)   The entry into any merger, share exchange, business combination or   consolidation with any other company or other entity; the sale, lease or   transfer of all or substantially all of the Company’s properties or assets;   or the liquidation, dissolution or winding up the Company’s affairs;
  
	
  
 
  	
  
 
  
	
   
  	
  
          (d)   Causing a fundamental change in the nature of the Company’s business;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (e)   The amendment, restatement or repeal of the Articles of Formation or this   Agreement except that this Agreement may also be amended by a unanimous vote   of the Members in accordance with Section 14.7 of this Agreement;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (f)   Making any loan or advance to, or owning any stock or other securities of,   any other Entity;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (g)   Authorizing or effecting the acquisition in any manner, directly or   indirectly, for a purchase price (including liabilities assumed) in excess of   $150,000, of a business unit or going concern of any person or Entity by the   Company but excluding any Qualified Acquisition, which will be subject to the   provisions of Section 4.10;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (h)   Entering into any extraordinary agreements or arrangements which involve the   payment of more than $150,000 outside of the Company’s ordinary course of   business, consistent with past practice;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (i)   a change in the location of the principal place of business of the Company;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (j)   Terminating the employment of William L. Zelenik or removing him as Chief   Executive Officer (excluding the vote of William L. Zelenik, who shall not be   permitted to vote on such action); and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (k)   Approval of an additional capital contribution by the Enterprise Member or   the Diamond Member.
  

          4.6      Authorized Decisions.  Subject to the Board approval requirements set forth in Section 4.5, the Chief Executive Officer shall have the right, power and authority to:

	
  
 
  	
  
          (a)   Execute and deliver any and all documents, instruments or agreements on   behalf of the Company in the ordinary course of business;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)   Prepare the Company’s annual operating budget and capital expense budget and   submit such budgets to the Board, in accordance with the procedures and   schedules determined by the Board;
  

13

  

	
  
 
  	
  
          (c)   Except as specifically set forth in Section 4.5 hereof, make any and   all day to day decisions on behalf of the Company;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (d)   Manage or administer the management of the Company and employ such persons,   firms and corporation as may be necessary or advisable for the conduct of the   business of the Company, including, without limitation, any and all   documents, instruments, agreements, and contracts, and any and all   modifications, amendments, and renewals of same, with such contractors,   managers, consultants, brokers, attorneys, accountants and such other parties   as the officers shall select, on such terms and for such compensation as the   officers shall determine; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (e)   Prosecute, defend, adjust, compromise, settle, refer to mediation or   otherwise deal with any claims in favor of or against the Company and to   execute and deliver any and all documents, instruments, agreements,   certificates, affidavits, or pleadings in connection therewith, and any   modifications, amendments or extensions thereof, as may be necessary or   appropriate.
  

          4.7      Authority to Terminate Employment of Diamond Employees.  Notwithstanding any other provision of this Agreement, the termination of employment of any Diamond Employee shall require approval of the Chief Executive Officer and the Board.

          4.8      Authority to Bind the Company.  Except as otherwise provided by the Board, when the taking of such action has been authorized by the Board, any officer(s) or other person(s) specifically authorized by the Board may execute any contract or other agreement or document on behalf of the Company and may execute on behalf of the Company and file with the Secretary of State of the State of Tennessee any certificates or filings provided for in the Act.

          4.9      Duty of Good Faith.  Each Governor and each Member shall have an obligation to the Company of good faith and fair dealing in all actions on behalf of or associated with the Company.

          4.10    Duty to Company.  

	
  
 
  	
  
          (a)   The members of the Board shall not be required to manage the Company as their   sole and exclusive function, but may have other business interests and may   engage in other activities in addition to those relating to the Company.  Neither the Company nor any Member shall   have any right, by virtue of this Agreement, to share or participate in any   other investments or activities of the members of the Board and the Members   or to the income or proceeds derived therefrom.  The members of the Board and the Members shall incur no   liability to the Company or to any of the Members as a result of engaging in   any other business or venture.
  

14

  

	
  
 
  	
  
          (b)   Notwithstanding the provisions of the immediately preceding subsection (a),   the Members, except to the extent set forth in subsection (c) below shall not   be permitted to own any ownership interest in and/or lend funds to any entity   that directly or indirectly engages in the business of brokering,   representing or marketing the products of various life insurance carriers   (any such entity, a “Wholesale Life Insurance Business”); provided however   that this subsection (b) shall not prevent (i) the members of the Diamond   Member from engaging in personal life insurance production, as such term is   commonly understood within the life insurance industry or (ii) the Enterprise   Member of its Affiliates from owning, lending funds to or otherwise investing   in an entity that sells life insurance at retail.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (c)   Notwithstanding the provisions of the immediately preceding subsection (a),   so long as the Diamond Member and the Enterprise Member are members of the   Company, if the Enterprise Member or any of its Affiliates contemplates   purchasing any equity ownership interest in,    purchasing the assets of, or lending funds to an entity that is   primarily engaged in a Wholesale Life Insurance Business (a “Qualifying   Acquisition”), then the Enterprise Member shall give the Company forty five   (45) calendar days prior written notice of such Qualifying Acquisition, which   notice shall set forth in reasonable detail the terms on which such   Qualifying Acquisition will be made (the “Acquisition Notice”).  The Company may, not later than thirty   (30) days after receipt of the Acquisition Notice, elect to make such   Qualifying Acquisition.  Notwithstanding   the
provisions of Section 4.5, such election by the Company shall be   made by vote of the Diamond Governors, provided that any such election shall   not be valid unless the Diamond Governors simultaneously approve an   Additional Investment by the Enterprise Member in an amount necessary to fund   such Qualifying Acquisition.  If the   Company timely elects to exercise its rights pursuant to the preceding   sentence, the Enterprise Member or its Affiliate shall grant the Company the   right to make the Qualifying Transaction, to the extent that the Enterprise   Member determines to consummate the Qualifying Transaction.  If the Company does not timely make such   election, its rights pursuant to this subsection (c) with respect to such   Qualifying Acquisition shall be irrevocably waived and the Enterprise Member   and or any of its Affiliates may consummate such Qualifying Acquisition on   the substantially the same terms set forth in the Acquisition Notice.  To the extent the
terms of the Qualifying   Acquisition are changed so that they are not substantially the same as set   forth in the Acquisition Notice, the Enterprise Member shall again be subject   to this Section 4.10(c) and shall be required to comply with the terms   of this Section 4.10(c).
  

ARTICLE V
 MEMBERS

          5.1     Rights or Powers.  The Members shall not have any right or power to take part in the management or control of the Company or its business and affairs or to act for or bind the Company in any way.  Notwithstanding the foregoing, the Members have all the rights and powers specifically set forth in this Agreement and, to the extent not inconsistent with this Agreement, in the Act.

15

  

          5.2      Voting Rights.  No Member has any voting right except with respect to those matters specifically reserved for a Member vote which are set forth in this Agreement and as required in the Act.

          5.3      Meetings of Members.  Meetings of Members shall be held at any place designated by the Board.  In the absence of any such designation, meetings of Members shall be held at the principal place of business of the Company.  Any meeting of the Members may be held by conference telephone or similar communication equipment so long as all Members participating in the meeting can hear one another, and all Members participating by telephone or similar communication equipment shall be deemed to be present in person at the meeting.

	
  
 
  	
  
          (a)   Call of Meetings.  Meetings of   the Members may be called at any time by the Board or by the Chief Executive   Officer for the purpose of taking action upon any matter requiring the vote   or authority of the Members as provided herein or in the Agreement or upon   any other matter as to which such vote or authority is deemed by the   Governors to be necessary or desirable.    Meetings of the Members to act on any matter upon which Members may   vote as provided in the Agreement or the Act shall be called promptly by the   Board upon the written request of a Majority in Interest of the Members.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (b)   Notice of Meetings of Members.    All notices of meetings of Members shall be sent or otherwise given   not less then ten (10) nor more than ninety (90) days before the date of the   meeting.  The notice shall specify (i)   the place, date and hour of the meeting, and (ii) the general nature of the   business to be transacted.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (c)   Manner of Giving Notice.    Notice of any meeting of Members shall be given personally to each   Member or sent by first class mail, by telegram, telecopy, e-mail (or similar   electronic means) or by a nationally recognized overnight courier, charges   prepaid, addressed to the Member at the address of that Member appearing on   the books of the Company or given by the Member to the Company for the   purpose of notice.  Notice shall be   deemed to have been given at the time when delivered either personally, or at   the time when deposited in the mail or with a nationally recognized overnight   courier, or when sent by telegram, telecopy or e-mail (or similar electronic   means).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (d)   Adjourned Meeting; Notice.  Any   meeting of Members, whether or not a quorum is present, may be adjourned from   time to time by the vote of the majority of the Percentage Interests   represented at that meeting, either in person or by proxy.  When any meeting of Members is adjourned   to another time or place, notice need not be given of the adjourned meeting,   unless a new record date of the adjourned meeting is fixed or unless the   adjournment is for more than sixty (60) days from the date set for the   original meeting, in which case the Board shall set a new record date and   shall give notice in accordance with the provisions of this Section 5.3.  At any adjourned meeting, the Company may   transact any business that might have been transacted at the original   meeting.
  

16

  

	
  
 
  	
  
          (e)   Quorum; Voting.  At any meeting   of the Members, a Majority in Interest of those Members having Governance   Rights (considering only those Interests as to which a Member has Governance   Rights), present in person or by proxy, shall constitute a quorum for all   purposes, unless or except to the extent that the presence of Members holding   a higher aggregate Percentage Interest is required by the Agreement or   applicable law.  Except as otherwise   required by the Agreement or applicable law, all matters shall be determined   by a Majority in Interest of the Members.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (f)   Waiver of Notice by Consent of Absent Members. When any notice is   required to be given to any Member, a waiver thereof in writing signed by the   person entitled to such notice, whether before, at or after the time stated   therein, shall be equivalent to the giving of such notice.  Attendance by a Member at a meeting is a   waiver of notice of such meeting, unless the Member objects at the beginning   of the meeting to the transaction of business because the meeting is not   lawfully called or convened and does not otherwise participate in the   consideration of any matter at the meeting.
  
	
  
 
  	
  
 
  
	
   
  	
  
          (g)   Member Action by Written Consent Without a Meeting. Action required or   permitted to be taken at a meeting of the Members may be taken without a   meeting if the action is evidenced by one or more written consents describing   the action taken, signed in one or more counterparts by all of the Members   and delivered to the Secretary of the Company for filing with the Company   records.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (h)   Proxies.  At all meetings of   the Members, a Member may vote in person or by proxy executed in writing by a   Member or by a duly authorized attorney-in-fact.  Such proxy shall be filed with the Company before or at the   time of the meeting.  No proxy shall   be valid after eleven (11) months from the date of its execution, unless   otherwise provided in the proxy.
  

          5.4     Members Liability.  No Member shall be liable under a judgment, decree or order of a court, or in any other manner for the debts or any other obligations or liabilities of the Company.  A Member shall not be required to restore a deficit balance in its Capital Account or to lend any funds to the Company or, after its capital contributions have been made, to make any additional contributions, assessments or payments to the Company, provided that a Member may be required to repay distributions made to it as provided in the Act.  The Governors shall not have any personal liability for the repayment of any capital contributions of any Member.

          5.5     Transactions Between a Member and the Company.  Except as otherwise provided by applicable law, any Member may, but shall not be obligated to, lend money to the Company, act as surety for the Company and transact other business with the Company and has the same rights and obligations when transacting business with the Company as a person or entity who is not a Member.   A Member may also be an employee or be retained as an agent of the Company.  The existence of these relationships and acting in such capacities will not result in the Member being deemed to be participating in the control of the business of the Company or otherwise affect the limited liability of the Member.

17

  

ARTICLE VI
 CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS; CAPITAL ACCOUNTS

          6.1     Capital Contributions; Percentage Interests.  As of the date hereof, the Members have the capital accounts set forth on Exhibit A attached hereto and are granted the Percentage Interests set forth on Exhibit A.  Without any further action by the Members or by the Board, Exhibit A shall be appropriately amended to reflect changes to the Percentage Interests of the Members as new Members are admitted and as the Percentage Interests of existing Members are changed pursuant to the terms and conditions of this Agreement.  Notwithstanding the foregoing, in no event shall the Percentage Interests be adjusted to reflect any additional capital contributions by the Enterprise Member.  Except as unanimously approved by the Board as provided in Section 4.5(k) hereof, the Members shall have no right or obligation to make any
further capital contributions to the Company.

          6.2     Loans by Members.  In order to satisfy its financial needs, the Company may borrow funds from the Members and pledge or mortgage any property of the Company and revenues attributable to such property.  Unless otherwise designated in the loan agreements or accompanying documents, repayment of principal and interest on such loans will be solely the obligation of the Company and not of the Members.  Any loans to the Company from Members shall bear interest at the Prime Rate.

          6.3     Return of Capital.  No Member or Governor shall have any liability for the return of any Member’s capital contributions.  A Member shall not receive out of the Company’s property all or any part of such Member’s capital contributions except as provided in Sections 8.2 and 8.3 hereof.

          6.4     Capital Accounts.  The Company shall maintain for each Member an account designated as such Member’s Capital Account.  Each such Capital Account shall be credited (a) with the cash contributions of the respective Members, (b) with the fair market value of contributions of property by the respective Members (net of liabilities secured by such contributed property) and (c) with the respective Member’s share, determined as provided herein, of Net Profit.  Each Member’s Capital Account shall be debited (x) with the respective Member’s share, determined as provided herein, of Net Loss, (y) with the cash distributed to the respective Members and (z) with the fair market value of distributions of property to the respective Members (net of liabilities secured by such distributed property).  The Capital Accounts shall be
maintained in accordance with Section 1.704-1(b)(2)(iv) of the Regulations, and the items of income, profit, gain, expenditures, deductions and losses which increase or decrease such capital accounts shall be those items which, pursuant to such Regulations, affect the balance of capital accounts.

18

  

ARTICLE VII
 ALLOCATION OF PROFITS AND LOSSES
 FOR FEDERAL INCOME TAX PURPOSES

          As of the end of each Year, the Company’s Net Profit or Net Loss and each item of income, gain, loss and deduction related thereto, as well as other items of income, gain, loss or deduction which are subject to special allocation provisions, shall be allocated to the Capital Accounts of the Members and for federal income tax purposes pursuant to the following Sections of this Article VII.

          7.1      Allocation of Net Loss.  After giving effect to the special allocations set forth in Section 7.3 and Section 7.4 hereof, if there is a Net Loss for any Year, such Net Loss shall be allocated to all Members in proportion to their Percentage Interests.

          Notwithstanding the foregoing, no allocation of Net Loss shall be allocated to any Member if such allocation would cause such Member to have an Adjusted Capital Account Deficit.  The amount of the allocation of Net Loss which would otherwise have caused a Member to have an Adjusted Capital Account Deficit shall instead be allocated to those Members who would not have an Adjusted Capital Account Deficit as a result of the allocation in proportion to their Percentage Interests.

          7.2      Allocation of Net Profit.  After giving effect to the special allocations set forth in Section 7.3 and Section 7.4 hereof, if there is a Net Profit for any Year, such Net Profit shall be allocated in the following manner:

	
  
 
  	
  
          (a)   First, to the Members who received an allocation of Net Loss pursuant to the   last sentence of Section 7.1 hereof (i.e., which would have been   allocated to another Member but for the creation of an Adjusted Capital   Account Deficit for that Member), an amount of Net Profit equal to the   allocations of Net Loss previously made pursuant to such last sentence of Section   7.1 hereof (without duplication) in reverse order to which such prior Net   Losses were allocated; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)   Second, to the Diamond Member in an amount equal to the excess of (x) the   cumulative Advance Diamond Distributions as of the end of the current Year,   for the current Year and all prior Years, over (y) the cumulative allocations   of net Profit to the Diamond Member pursuant to this Section 7.2(b)   for all prior Years;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (c)   Third, to the Enterprise Member to the extent of the excess of (x) the   cumulative Priority Distributions to the Enterprise Member pursuant to Section   8.2(b) as of the end of the current Year, for the current Year and all   prior Years, over (y) cumulative allocations of Net Profit to the Enterprise   Member pursuant to this Section 7.2(c) for all prior Years; and
  

19

  

	
  
 
  	
  
          (d)   Fourth, to the Diamond Member, the excess of (x) the cumulative distributions   to the Diamond Member pursuant to Section 8.2(c) as of the end of the   current Year, for the current Year and all prior Years, over (y) cumulative   allocations of Net Profit to such Diamond Member pursuant to this Section   7.2(d) for all prior Years; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (e)   Thereafter, any remaining amount to all Members pro rata in accordance with   their Percentage Interests.
  

          7.3      Special Allocations.  Prior to the allocations pursuant to Section 7.1 and Section 7.2 hereof, items of income, gain, loss and deduction for the Year shall be allocated in accordance with the following provisions of this Section 7.3 to the extent such provisions are applicable, and any items so allocated (except Nonrecourse Deductions) shall not be taken into account in determining Net Profit or Net Loss.

	
  
 
  	
  
          (a)   Minimum Gain Chargeback. Notwithstanding any other provision of this   Article VII, if there is a net decrease in the Company’s Minimum Gain,   special allocations shall be to the Members to comply with the minimum gain   chargeback requirement in Regulation § 1.704-2(f).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)   Member Nonrecourse Debt Minimum Gain Chargeback. Notwithstanding any   other provision of this Article VII, if there is a net decrease in Member   Nonrecourse Debt Minimum Gain during any Year, special allocations shall be   made to each such Member to comply with the minimum gain chargeback   requirement in Regulation § 1.704-2(i)(4).
  
	
  
 
  	
  
 
  
	
   
  	
  
          (c)   Qualified Income Offset. If any Member receives any adjustment,   allocation or distribution described in clauses (4), (5) and (6) of   Regulation § 1.704-1(b)(2)(ii)(d), the Member shall be allocated items of the   Company’s income and gain consistent with the “qualified income offset”   provisions of Regulation § 1.704-1(b)(2)(ii)(d)(3); provided that an   allocation pursuant to this Section 7.3(c) shall be made only if and   to the extent that the Member would have an Adjusted Capital Account Deficit   after all other allocations provided for in this Article VII have been   tentatively made as if this Section 7.3(c) were not in the Agreement.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (d)   Nonrecourse Deductions.  For   any Year in which there are allocations of Nonrecourse Deductions or Member   Nonrecourse Deductions, items shall be allocated to the Members as a part of   the allocations of Net Profit or Net Loss for that year in accordance with   the requirements of Regulations Sections 1.704-2(e)(2) and 1.704-2(i)(1).
  

          7.4      Curative Allocations.  The allocations set forth in Sections 7.3(a), 7.3(b), 7.3(c), 7.3(d) and 7.3(e) (the “Regulatory Allocations”) are intended to comply with certain requirements of the Regulations.  It is the intent of the Members that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special

20

  

allocations of other items of Company income, gain, loss or deduction pursuant to this Section 7.4.  Therefore, notwithstanding any other provision of this Article VII (other than the Regulatory Allocations), the Board shall make such offsetting special allocations of Company income, gain, loss or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Member’s Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of the Agreement and all Company items were allocated pursuant to Sections 7.1 and 7.2.

          7.5     Tax Allocations:  Code Section 704(c).  In accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial fair market value at the time of its contribution to the Company using any method selected by the Board of Governors.

          In the event the book value of any Company asset is adjusted pursuant to the “revaluation” provisions of the Regulations, subsequent allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its adjusted book value in the same manner as under Code Section 704(c) and the Regulations thereunder.

          Any elections or other decisions relating to such allocations shall be made by the Board in any manner that reasonably reflects the purpose and intention of this Agreement; provided, however, it is expressly acknowledged and agreed that the Company shall make the election to adjust the basis of the Company property pursuant to Code Sections 754 and 743(b) in connection with Transfers of Interests.  Allocations pursuant to this Section 7.5 are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Net Profit, Net Loss, other items, or distributions pursuant to any provision of this Agreement.

          7.6     Allocations for Year of Liquidation.  Notwithstanding the allocation provisions set forth in Section 7.1 and Section 7.2, but subject to Section 7.3 and Section 7.4, Net Profit or Net Loss realized in connection with the dissolution of the Company in accordance with Article IX shall be allocated to the Members in a manner so that the distributions to each Member pursuant to Section 8.3 shall, to the greatest extent possible, be equal to that amount that each such Member would receive under Section 8.2 if the amounts to be distributed by the Company in connection with such dissolution were instead distributed under such Section 8.2.

          7.7     Adjustment Upon Transfer of Member’s Interest or Change in Interest.  For any Year during which a Member transfers all or part of his Interest, or during which there is a change in the Percentage Interest assigned to any Member, the adjustment for allocation of Net Profit or Net Loss and certain specific items of income, gain, loss and deduction between the transferor and transferee Members or regarding a Member having a different Percentage Interest during portions of the Year, shall be made in the following manner:

21

  

	
  
 
  	
  
          (a)   For purposes of the allocations pursuant to Sections 7.1, 7.2(a)   and 7.2(b) hereof, the transferee Member shall inherit a pro-rata   portion of the historical allocations of Net Profit and Net Loss to the   transferor Member; and
  
	
   
  	
  
 
  
	
  
 
  	
  
          (b)   Unless the Board determines to use another method, allocations pursuant to Sections   7.1 and 7.2 hereof shall be adjusted between the transferor and   transferee Member, or between each Member having different Percentage   Interests during different portions of the Year, according to the “pro-rata   method” described in Regulations Section 1.706-1(c)(2)(ii); that is, all such   items for the entire Year shall be allocated between the transferor and   transferee Members according to the number of days in the Year that the   Interest was held by each, or between each Member having a different Percentage   Interest according to the number of days in the Year that each discrete   Percentage Interest was assigned to that Member.
  

ARTICLE VIII
 DISTRIBUTIONS

          8.1     Distribution Procedure.  Except as provided in Sections 8.2, 8.3, and 8.4 hereof for final distributions upon liquidation, the Board shall determine when distributions shall be made to Members and the total amount to be distributed.

          8.2     Distributions of Available Distributable Cash.  Except as otherwise provided in Section 8.3 hereof, distributions of all or any portion of Available Distributable Cash shall be made quarterly within fifteen (15) days after the end of each fiscal quarter and on each of the Second and Third Installment Closing Dates (as defined in the Purchase Agreement).  Such distributions shall be apportioned among the Members as follows:

	
  
 
  	
  
          (a)   First, to the Diamond Member, in an amount equal to any Advance Diamond   Distribution approved by the Board;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)   Second, to the Enterprise Member, a Priority Distribution to the extent of   the Enterprise Member’s Undistributed Priority Return calculated as of the   end of the previous fiscal quarter or as of the Second Installment Closing   Date or Third Installment Closing Date, as the case may be;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (c)   Third, to the Diamond Member, to the extent of the Diamond Member’s   Undistributed Matching Return, calculated as of the end of the previous   fiscal quarter or as of the Second Installment Closing Date or Third   Installment Closing Date, as the case may be; and
  

22

  

	
   
  	
  
          (d)   Fourth, any remaining amount to all Members pro rata in accordance with their   Percentage Interests.
  

          8.3      Distributions Upon Liquidation.  Upon liquidation of the Company pursuant to Section 11.3 hereof, assets remaining after payment of all Company debts and obligations in accordance with the Act shall be distributed in accordance with the positive balance in the Members’ Capital Accounts.  In determining the final balance of the Capital Accounts, any assets which are distributed in kind shall be treated as if they were sold at their fair market value, as determined by the Board, with an allocation to the Capital Accounts of the deemed profit or loss on such sale pursuant to Article VII hereof, and with the distribution reducing the recipient Members’ Capital Accounts in an amount equal to the fair market value of the assets distributed.

          8.4      Distributions for Periods Prior to 2006.  Notwithstanding Section 8.2, the Company shall distribute Available Distributable Cash as of December 31, 2005 no later than January 15, 2006 sixty percent (60%) to the Enterprise Member and forty percent (40%) to the Diamond Member.

ARTICLE IX
 TRANSFER OF INTERESTS;
 ADMISSION OF NEW MEMBERS

          9.1      Restrictions on Transfers.  Except as otherwise permitted by this Agreement and as contemplated by the Purchase Agreement, no Member shall Transfer all or any portion of such Member’s Interest without the prior written consent of the other Member.  Each Member hereby acknowledges the reasonableness of the restrictions on Transfer imposed by this Agreement in view of the Company’s purposes and the relationship of the Members.  Accordingly, the restrictions on Transfer contained herein shall be specifically enforceable.

          9.2      Permitted Transfers.  A Member may at any time Transfer all or any portion of such Member’s Interest meeting the qualifications and limitations of this Section 9.2 (any such Transfer being referred to hereinafter as a “Permitted Transfer”).

	
  
 
  	
  
          (a)   Transfers of Interests by the Enterprise Member to an Affiliate.  The Enterprise Member may Transfer all or   any portion of its Interest to any of its Affiliates provided that such   transferee Affiliate agrees to be bound by the terms of this Agreement and   expressly agrees to assume all of the Enterprise Member’s obligations under   the Purchase Agreement.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)   Transfers of Interests Pursuant to the Purchase Agreement.  The Diamond Member may transfer Interests   to the Enterprise Member pursuant to the terms of the Purchase Agreement.
  

23

  

          9.3     Prohibited Transfers.  Any purported Transfer of Interests that is not a Permitted Transfer shall be null and void and of no force or effect whatever; provided that, if the Company is required to recognize a Transfer that is not a Permitted Transfer, the rights with respect to the Transferred Interest shall be strictly limited to the transferor’s rights to allocations and distributions as provided by this Agreement with respect to the Transferred Interests, which allocations and distributions may be applied (without limiting any other legal or equitable rights of the Company) to satisfy any debts, obligations or liabilities for damages that the transferor or transferee of such Interests may have to the Company.  In the case of a Transfer or attempted Transfer of Interests that is not a Permitted Transfer, the parties engaging or attempting to
engage in such Transfer shall be liable to indemnify and hold harmless the Company and the other Members from all expenses that the Company or any of such indemnified Members may incur (including incremental tax liabilities, lawyers’ fees and expenses) as a result of such Transfer or attempted Transfer and efforts to enforce the indemnity granted hereby.

          9.4     Rights of Unadmitted Assignees.  If Interests are transferred to a Person who is not admitted as a substituted Member pursuant to Section 9.5, such Interests shall automatically be converted to a Financial Right only, and a holder of such Interests shall thereafter be deemed an assignee for all purposes hereunder, with the same Financial Right as was held by the transferor prior to the transfer, but without any other rights of a Member unless the holder of such Financial Right is admitted as a substituted Member pursuant to Section 9.5 hereof.

          9.5     Admission of Substituted Members.  Subject to the other provisions of this Article IX, a transferee of Interests may be admitted to the Company as a substituted Member only upon satisfaction of the conditions set forth in this Section 9.5:

	
  
 
  	
  
          (a)   The Interests with respect to which the transferee is being admitted were   acquired by means of a Permitted Transfer;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)   The transferee of Interests shall, by written instrument in form and   substance reasonably satisfactory to the Board (i) accept and adopt the terms   and provisions of this Agreement, including this Article IX, and (ii)   assume the obligations of the transferor Member under this Agreement with   respect to the Transferred Interests.    The transferor Member shall be released from all such assumed   obligations except (x) those obligations or liabilities of the transferor   Member arising out of a breach of this Agreement by the transferor Member and   (y) in the case of a Transfer to any Person other than a Member, those   obligations or liabilities of the transferor Member based on events   occurring, arising or maturing prior to the date of Transfer; and
  
	
   
  	
  
 
  
	
  
 
  	
  
          (c)   The transferee and transferor shall each execute and deliver such other   instruments as the Board reasonably deems necessary or appropriate to effect,   and as a condition to, such Transfer, including amendments to the Articles of   Organization or any other instrument filed with the State of Tennessee or any   other state or governmental authority.
  

24

  

          9.6     Representations and Warranties.  Each Member hereby represents and warrants to the Company that his acquisition of his Interest is made for his own account for investment purposes only, and not with a view to the resale or distribution of such Interest.  Each Member agrees that he will not Transfer any or all of his Interest to any person or entity who or which does not similarly represent, warrant and agree as provided in this Section 9.6.

          9.7     Rights and Obligations of Former Members.  A Member who Transfers all of such Member’s Interest or whose Interest is otherwise terminated pursuant to the terms hereof shall cease to be a Member; provided, however, that such former Member or any Successor shall remain liable to the Company (a) for any obligations of such Member for wrongful distributions under the Act, (b) for any failure to comply with the standards of conduct set forth in the Act and (c) pursuant to any agreements with the Company.

          9.8     Amendments to Exhibit A.  An appropriate amendment to Exhibit A hereto shall be made upon any Transfer or termination of any Interest as described in this Article IX or in Article X.

          9.9     Transfers of Interests of the Diamond Member; Operating Agreement of Diamond Member.  In furtherance of the purposes of this Agreement, the Diamond Member shall not permit any of its members to Transfer all or any portion of any ownership interest in the Diamond Member without the prior written consent of the Enterprise Member.  The Diamond Member represents and warrants that it has delivered to the Company a true, accurate and complete copy of the Diamond Member’s operating agreement as in effect as of the date hereof and further covenants that such operating agreement shall not be modified or amended nor any provision thereof waived without the prior written consent of the Enterprise Member.  

ARTICLE X
 TERMINATION OF INTERESTS, REPURCHASE OF INTERESTS

          10.1    Termination of an Interest.  A Member’s Interest shall be automatically terminated on the occurrence of any Terminating Event or Adverse Terminating Event; provided, however, that in the case of an Adverse Terminating Event that is the result of an Involuntary Transfer, the Member’s Interest shall be terminated only with respect to such Involuntarily Transferred Interest.  Upon the occurrence of any Terminating Event or Adverse Terminating Event, the Governance Rights of the Member whose Interest is being terminated shall be extinguished, and the rights of such former Member or such former Member’s Successor shall automatically be converted solely to Financial Rights which will be liquidated pursuant to Section 10.3.

          Upon the occurrence of any Terminating Event or Adverse Terminating Event respecting any Interest described in this Section 10.1, the Company shall cause Exhibit A hereto to be amended appropriately.

25

  

          10.2    Occurrence of Terminating Event or Adverse Terminating Event.

	
  
 
  	
  
          (a)   In the event a Terminating Event shall occur with respect to any Member,   within a period of ninety (90) days after such Terminating Event, the Company   shall liquidate such former Member’s Interest in the Company pursuant to Section   10.3 below.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)   In the event the Company determines that an Adverse Terminating Event has   occurred with respect to any Member, then the Company shall give written   notice thereof to such Member and, within a period of one hundred twenty   (120) days from the date of such notice, the Company shall liquidate such   Member’s Interest or the portion of such Member’s Interest that was the   subject of an Involuntary Transfer giving rise to the Adverse Terminating   Event.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (c)   If a Member has transferred his or her Financial Rights, but retained the   Governance Rights associated with the Member’s Interest, the occurrence of an   Adverse Terminating Event or a Terminating Event with respect to the Member   shall subject the Interest held by the transferee, as well as the Governance   Rights of the Member, to the provisions of Article X hereof.
  

          10.3    Payment for Terminated Interests.  

	
  
 
  	
  
          (a)   When any Member’s Interest in the Company is liquidated because of the   occurrence of a Terminating Event, the amount the Company will pay for the   Interest owned by the former Member shall equal the Member’s Percentage   Interest of the Book Value of the Company determined as of the Valuation   Date.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)   When the Company liquidates any Member’s Interest in the Company as a result   of an Adverse Terminating Event, the amount to be paid by the Company to such   Member shall be One Hundred Dollars ($100).    In the event of an Involuntary Transfer that was an Adverse   Terminating Event as to a portion of a Member’s Interest, a Member may retain   any Interest not the subject of the Transfer.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (c)   If the Company liquidates any Member’s Interest in the Company as provided in   this Article X, the Company shall pay any such amounts owed therefor   to such former Member or its Successor in a lump sum within ninety (90) days   following the Terminating Event or Adverse Terminating Event or, at the   discretion of the Company, in up to eight (8) equal quarterly payments plus   interest at the Prime Rate on the unpaid principal balance calculated   commencing on the date of payment of the first installment.  If Company elects to pay for a liquidated   Company Interest in quarterly installments, the first such installment will   be paid to the former Member or his Successor on the first day of the fourth   month after the Terminating Event or Adverse Terminating Event.  Each subsequent installment shall be paid   on the first day of each successive three (3) month period until
the full   amount owed to the Member or his successor in interest has been paid.  The Company’s obligation to pay the Member   in quarterly installments under this Section 10.3 will be evidenced by   a promissory note executed by the Chief Executive Officer on behalf of the   Company, which note may be prepaid at any time without penalty.
  

26

  

          10.4    Exclusive Right.  No Member shall be entitled to claim any further or different distribution upon termination under the Act; the provisions of this Agreement being exclusive.

ARTICLE XI
 DISSOLUTION; WINDING-UP

          11.1    Dissolution.  The Company shall be dissolved and its affairs wound up and terminated upon the first to occur of the following events (each, a “Dissolution Event”):

	
  
 
  	
  
          (a)   The determination in writing to dissolve the Company by the unanimous consent   of the Members;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)   At any time when there are no Members;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (c)   The sale or other disposition of all or substantially all of the assets of   the Company in one transaction or a series of related transactions;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (d)   The occurrence of a Continuation Event followed within 90 days by a   determination of the requisite percentage of ownership interests to dissolve   the Company as described in Section 11.2 hereof; or
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (e)   The entry of a decree of judicial dissolution under the Act.
  

Upon the occurrence of a Dissolution Event, the Company shall be wound up and liquidated pursuant to Section 11.3 hereof.

          11.2    Continuation Event.  Neither the death, retirement, resignation, expulsion, bankruptcy or dissolution of any Member nor the occurrence of any other event that terminates the continued membership of any Member (each, a “Continuation Event”) shall cause the Company to be dissolved or its affairs to be wound up, and upon the occurrence of any such Continuation Event, the Company shall be continued without dissolution, unless within ninety (90) days following such Continuation Event, a Majority in Interest of the Members agree in writing to dissolve the Company.

          11.3   Winding Up of the Company.  Upon dissolution of the Company pursuant to Section 11.1 hereof, the Chief Executive Officer, or if there is no Chief Executive Officer, such person as is designated by a Majority in Interest of the Members (the remaining Governors or such person being herein referred to as the “Liquidator”), shall proceed to wind up the business and affairs of the Company upon such terms, price and conditions as are determined by the Liquidator in accordance with this Agreement and the requirements of the Act.  This Agreement shall remain in full force and effect and continue to govern the rights and obligations of the 

27

  

Members and Governors and the conduct of the Company during the period of winding up the Company’s affairs.  The Liquidator, if other than the Chief Executive Officer, shall have and may exercise, without further authorization or consent of Members, all of the powers conferred upon the Chief Executive Officer under the terms of this Agreement to the extent necessary or desirable in the good faith judgment of the Liquidator to carry out the duties and functions of the Liquidator hereunder for and during such period of time as shall be reasonably required in the good faith judgment of the Liquidator to complete the winding up and liquidation of the Company.  The Liquidator shall liquidate the assets of the Company, collect the debts and obligations due to the Company, and pay or provide for payment of all liabilities and obligations of the Company, after which the Liquidator shall distribute the remaining assets of the Company to the Members in the
order of priority described in Section 8.3 hereof.  The Liquidator may distribute assets in kind; provided, however, that the Liquidator shall determine the fair market value by appraisal or other reasonable means of all assets so distributed in kind.

          11.4   Resignation of a Member.  If a Terminating Event or Adverse Terminating Event occurs with respect to a Member, such Member’s right to any payments or distributions shall be determined exclusively under the provisions of Article X hereof with respect to liquidation of the Interest of the Member following a Terminating Event or an Adverse Terminating Event, and no Member shall be entitled to claim any further or different distribution upon resignation under the Act or otherwise. 

ARTICLE XII
 LIMITATION ON LIABILITY; INDEMNIFICATION

          12.1    Limitation on Liability.  The debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member, Governor or officer of the Company shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member, Governor and/or officer.

          12.2    Standard of Care; Indemnification of Governors, Officers, Employees and Agents.

	
  
 
  	
  
          (a)   No Governor or officer of the Company shall have any personal liability   whatsoever to the Company or any Member on account of such Governor’s or   officer’s status as a Governor or officer or by reason of such Governor’s or   officer’s acts or omissions in connection with the conduct of the business of   the Company; provided, however, that nothing contained herein shall protect   any Governor or officer against any liability to the Company or the Members   to which such Governor or officer would otherwise be subject by reason of (i)   any act or omission of such Governor or officer that involves actual fraud,   gross negligence or willful misconduct or (ii) any transaction from which   such Governor or officer derived improper personal benefit.
  

28

  

	
  
 
  	
  
          (b)   The Company shall indemnify and hold harmless each Governor and officer and   the Affiliates of any Governor or officer (each an “Indemnified Person”)   against any and all losses, claims, damages, expenses and liabilities   (including, but not limited to, any investigation, legal and other reasonable   expenses incurred in connection with, and any amounts paid in settlement of,   any action, suit, proceeding or claim) of any kind or nature whatsoever that   such Indemnified Person may at any time become subject to or liable for by   reason of the formation, operation or termination of the Company, or the   Indemnified Person’s acting as a Governor or officer under this Agreement, or   the authorized actions of such Indemnified Person in connection with the   conduct of the affairs of the Company (including, without limitation,   indemnification against negligence); provided,
however, that   such Indemnified Person was not guilty of gross negligence or willful   misconduct with respect to such acts or omissions and that no Indemnified   Person shall be entitled to indemnification if and to the extent that the   liability otherwise to be indemnified for results from (i) any act or   omission of such Indemnified Person that involves actual fraud or willful   misconduct or (ii) any transaction from which such Indemnified Person derived   improper personal benefit. The indemnities hereunder shall survive   termination of the Company. Each Indemnified Person shall have a claim   against the property and assets of the Company for payment of any indemnity   amounts from time to time due hereunder, which amounts shall be paid or   properly reserved for prior to the making of distributions by the Company to   Members. If the Board of Governors determines that the facts then known would   not preclude indemnification, costs and expenses that are subject to   indemnification
hereunder shall, at the request of any Indemnified Person, be   advanced by the Company to or on behalf of such Indemnified Person prior to   final resolution of a matter, so long as such Indemnified Person shall have   provided the Company with a written undertaking to reimburse the Company for   all amounts so advanced if it is ultimately determined that the Indemnified   Person is not entitled to indemnification hereunder.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (c)   The contract rights to indemnification and to the advancement of expenses   conferred in this Section 12.2 shall not be exclusive of any other   right that any person may have or hereafter acquire under any statute,   agreement, vote of the Governors or Members or otherwise.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (d)   The Company may maintain insurance, at its expense, to protect itself and any   Governor, officer, employee or agent of the Company or another Entity against   any expense, liability or loss, whether or not the Company would have the   power to indemnify such person against such expense, liability or loss under   the Act.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (e)   The Company may, to the extent authorized from time to time by the Board of   Governors, grant rights to indemnification and to advancement of expenses to   any employee or agent of the Company to the fullest extent of the provisions   of this Section 12.2 with respect to the indemnification and   advancement of expenses of Governors and officers of the Company.
  

29

  

	
  
 
  	
  
          (f)   Notwithstanding the foregoing provisions of this Section 12.2, the   Company shall indemnify an Indemnified Person in connection with a proceeding   (or part thereof) initiated by such Indemnified Person only if such   proceeding (or part thereof) was authorized by the Board of Governors of the   Company; provided, however, that an Indemnified Person shall be entitled to   reimbursement of his or her reasonable counsel fees with respect to a   proceeding (or part thereof) initiated by such Indemnified Person to enforce   his or her right to indemnity or advancement of expenses under the provisions   of this Section 12.2 to the extent the Indemnified Person is   successful on the merits in such proceeding (or part thereof).
  

ARTICLE XIII
 FISCAL MATTERS

          13.1   Books and Records.  Full and accurate books and records of the Company (including without limitation all information and records required by the Act) shall be maintained at its principal place of business showing all receipts and expenditures, assets and liabilities, profits and losses, and all other records necessary for recording the Company’s business and affairs.  All Members shall have the right to inspect and copy the books and records of the Company during regular business hours, at the Company’s principal place of business, upon provision of notice in writing by any Member to the Company at least five (5) business days before the date on which such Member desires to inspect and copy said books and records.  It is acknowledged that the Enterprise Member’s ultimate parent is a financial institution whose equity is publicly traded and
registered and/or subject to the Securities Act of 1933 and the Securities Exchange Act of 1934.  As a consequence, it is acknowledged that the books, records and internal controls of the Company must be maintained in accordance with all laws applicable to the Enterprise Member’s ultimate parent corporation.

          13.2   Accounting Decisions; Fiscal Year.  All decisions as to accounting matters, except as expressly provided in this Agreement, shall be made by the Board; provided that the Company shall use generally accepted accounting principles in the maintenance of its financial books and records and the preparation of its financial statements.  The fiscal year of the Company shall be the calendar year.

          13.3   Tax Status; Elections.  Notwithstanding any provision hereof to the contrary, solely for purposes of the federal income tax laws, each of the Members hereby recognizes that the Company will be subject to all provisions of Subchapter K of Chapter 1 of Subtitle A of the Code; provided, however, the filing of a U.S. Partnership Return of Income shall not be construed to extend the purposes of the Company or expand the obligations or liabilities of the Members.

          13.4   Reports and Statements.  As soon as practicable after the end of each Year, but no later than ninety (90) days thereafter, the Company shall deliver to the Members a report containing a detailed list of the assets and liabilities of the Company.  Further, as promptly as practicable after the close of each Year, and no later than ninety (90) days thereafter, the

30

  

Company shall supply all other information necessary to enable each Member to prepare his federal and state income tax returns, and the Company shall supply such other information as each Member may reasonably request for the purpose of enabling him to comply with any reporting requirements imposed by any United States or state governmental agency or authority.

          13.5   Bank Accounts.  All funds of the Company shall be deposited in its name at the Company’s principal financial institution or other financial institutions approved by the Board.

          13.6   Tax Matters Partner.  The “Tax Matters Partner” shall mean the Member responsible for all administrative and judicial proceedings for the assessment and collection of tax deficiencies or the refund of tax overpayment arising out of any Member’s distributive share of items of income, deduction, credit and/or of any other “partnership item” (as that term is defined in the Code or in the Regulations) allocated to the Members affecting any member’s tax liability.  The Tax Matters Partner shall promptly give notice to all Members of any administrative or judicial proceeding pending before the Internal Revenue Service involving any Company item and the progress of any such proceeding.  Such notice shall be in compliance with such regulations as are issued by the Internal Revenue Service.  The Tax Matters Partner shall have
all the powers provided to a “tax matters partner” in Sections 6221 through 6233 of Code, including the specific power to extend the statute of limitations with respect to any matter which is attributable to any Company item or affecting any item pending before the Internal Revenue Service and to select the forum to litigate any tax issue or liability arising from Company items.  The Tax Matters Partner shall be the Member designated as such from time to time by the Board. The Tax Matters Partner shall be entitled to reimbursement for any and all reasonable expenses incurred with respect to any administrative and/or judicial proceedings affecting the Company.  The Tax Matters Partner shall be responsible for timely tax returns, franchise tax returns and annual reports of the Company.

ARTICLE XIV
 MISCELLANEOUS; GENERAL PROVISIONS

          14.1   Notices.  All notices given pursuant to this Agreement shall be in writing and shall be deemed effective when personally delivered or when placed in the United States mail, registered or certified with return receipt requested, or when sent by facsimile transmission followed by confirmatory letter.  For purposes of notice, the addresses of the Members shall be as stated under their names on the attached Exhibit A; provided, however, that each Member shall have the right to change his address with notice hereunder to any other location by the giving of thirty (30) days notice to the Company in the manner set forth above.

          14.2   Attorneys’ Fees.  If any litigation is initiated by the Company against any Member or by any Member against another Member or the Company relating to this Agreement or the subject matter hereof, the person prevailing in such litigation shall be  entitled to recover, in addition to all damages allowed by law and other relief, all court costs and reasonable attorneys’ fees incurred in connection therewith.

31

  

          14.3    Successors and Assigns.  This Agreement shall be binding upon and shall inure to the benefit of the Members, and their respective heirs, legal representatives, successors and permitted assigns; provided, however, that nothing contained herein shall negate or diminish the restrictions set forth in Articles IX and X hereof.

          14.4    Construction.  Every covenant, term, and provision of this Agreement shall be construed simply according to its fair meaning and not strictly for or against any Member.  The failure by any party to specifically enforce any term or provision hereof or any rights of such party hereunder shall not be construed as the waiver by that party of its rights hereunder.  The waiver by any party of a breach or violation of any provision of this Agreement shall not operate as, or be construed to be, a waiver of any subsequent breach of the same or other provision hereof.

          14.5    Waiver of Partition Right.  Notwithstanding any statute or principle of law to the contrary, each Member hereby agrees that, during the term of the Company, he or it shall have no right (and hereby waives any right that he or it might otherwise have had) to cause any Company property to be partitioned and/or distributed in kind.

          14.6    Entire Agreement.  This Agreement contains the entire agreement among the Members relating to the subject matter hereof, and all prior agreements relative hereto which are not contained herein are terminated.

          14.7    Amendments.  Except as otherwise expressly provided in this Section 14.7, amendments or modifications may be made to this Agreement only by setting forth such amendments or modifications in a document approved by the unanimous consent of the Members; any alleged amendment or modification herein which is not so documented shall not be effective as to any Member.  Notwithstanding the foregoing, the Board may, without the consent of any Member, amend any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith to reflect:

	
  
 
  	
  
          (a)   a change in the location of the principal place of business of the Company,   or a change in the registered office or the registered agent of the Company;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)   admission of a Member into the Company or termination of any Member’s   Interest in the Company in accordance with this Agreement;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (c)   a change (i) that is of an inconsequential nature and does not adversely   affect any Member in any material respect; (ii) that is necessary or   desirable to satisfy any requirements, conditions or guidelines contained in   any opinion, directive, order, ruling or regulation of any federal or state   agency or contained in any federal or state statute, compliance with any of   which the Board deems to be in the best interest of the Company and the   Members; (iii) that is necessary or desirable so that the method of tax   allocations will comply with applicable provision of the Code, the   Regulations or rulings of the Internal Revenue Service; or (iv) that is   required or contemplated by this Agreement;
  

32

  

          14.8    Severability.  This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations.  If any provision of this Agreement or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, but the extent of such invalidity or unenforceability does not destroy the basis of the bargain among the Members as expressed herein, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby, but rather shall be enforced to the greatest extent permitted by law.

          14.9    Gender and Number.  Whenever required by the context, as used in this Agreement, the singular number shall include the plural and the neuter shall include the masculine or feminine gender, and vice versa.

          14.10   Exhibits.  Each Exhibit to this Agreement is incorporated herein for all purposes.

          14.11   Additional Documents.  Each Member, upon the request of any Governor, agrees to perform all further acts and execute, acknowledge and deliver any documents that may be reasonably necessary, appropriate or desirable to carry out the provisions of this Agreement.

          14.12   Section Headings.  The section headings appearing in this Agreement are for convenience of reference only and are not intended, to any extent or for any purpose, to limit or define the text of any section.

          14.13   Counterparts.  This Agreement may be executed in counterparts, each of which shall be an original but all of which shall constitute but one document.

[Remainder of page intentionally left blank; signature page to follow.]

33

  

          IN WITNESS WHEREOF, the undersigned have duly executed this Agreement effective as of the Effective Date.

	
  
 
  	
  
MEMBERS:
  
	
  
 
  	
  
 
  
	
  
 
  	
  
MILLENNIUM   HOLDING COMPANY, INC.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
 
  
	
   
  	
  
 
  	
  

  
	
  
 
  	
  
 
  	
  
Frank H.   Sanfilippo, President
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
MILLENNIUM   HOLDINGS, LLC
  
	
  
 
  	
  
 
  	

  
	
  
 
  	
  
 
  	
  
	
  
 
  	
  
By:
  	
  
 
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Title:
  	
  
 
  
	
   
  	
  
 
  	
  

  

34

  

EXHIBIT A

Members of Millennium Brokerage Group, LLC

	
  
Member   Name and Address
  	
   
 	
  
Percentage   Interest
  	
   
 	
  
Capital
Accounts
  	
   
 
	
  

  	
  
 
  	
  

  	
  

  	
  
 
  	
  

  	
  

  	
  
 
  
	
  Millennium   Holding Company, Inc.
  	
  
 
  	
  
 
  	
  
60
  	
  
%
  	
  
$
  	
  
X,000.00
  	
  
 
  
	
  
Millennium   Holdings, LLC
  	
  
 
  	
  
 
  	
  
40
  	
  
%
  	
  
$
  	
  
X,000.00
  	
  
 
  
	
  
Total
  	
  
 
  	
  
 
  	
  
100
  	
  
%
  	
  
$
  	
  
XX,000.00
  	
  
 
  

  

EXHIBIT B

Officers of Millennium
Brokerage Group, LLC

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}]]