\n PAGE
\n
\nARTICLE I DEFINITIONS……………………………………………1<\/p>\nARTICLE II FORMATION……………………………………………..6<\/p>\n
ARTICLE III CLASSES OF MEMBERSHIP, CONTRIBUTIONS AND CAPITAL
\n ACCOUNTS………………………………………………7<\/p>\n
ARTICLE IV ALLOCATIONS AND DISTRIBUTIONS……………………………8<\/p>\n
ARTICLE V RIGHTS AND DUTIES OF MEMBERS……………………………13<\/p>\n
ARTICLE VI INDEMNIFICATION OF MEMBERS……………………………..15<\/p>\n
ARTICLE VII MANAGEMENT……………………………………………16<\/p>\n
ARTICLE VIII DISPOSITION OF MEMBERSHIP INTERESTS; OTHER RIGHTS…………17<\/p>\n
ARTICLE IX ACCOUNTING AND RECORDS; CERTAIN TAX MATTERS………………20<\/p>\n
ARTICLE X WITHDRAWALS; ACTION FOR PARTITION; BREACHES………………21<\/p>\n
ARTICLE XI DISSOLUTION AND WINDING UP……………………………..22<\/p>\n
ARTICLE XII AMENDMENT…………………………………………….23<\/p>\n
Article XIII MISCELLANEOUS PROVISIONS……………………………….23
\n<\/c><\/s><\/caption>\n<\/table>\n
-i-<\/p>\n
Amended and Restated Limited Liability Company Operating Agreement<\/p>\n
of<\/p>\n
IDT Holding, L.L.C.<\/p>\n
This Amended and Restated Limited Liability Company Operating
\nAgreement of IDT Holding, L.L.C. (the “COMPANY”), a limited liability company
\norganized pursuant to the Delaware Limited Liability Company Act (the “ACT”), is
\nentered into and shall be effective as of December 10, 1999, by and among The
\nVeritas Capital Fund, L.P., a Delaware limited partnership (“VERITAS”), those
\nemployees of PEI Electronics , Inc., a Delaware corporation (“PEI”), listed on
\nthe signature page hereof and on SCHEDULE A and SCHEDULE B hereto (the “PEI
\nEMPLOYEES”) and those employees of Sierra Tech., Inc., a Delaware corporation
\n(“Sierra”), listed on the signature page hereof and on SCHEDULE A and SCHEDULE B
\nhereto (the “SIERRA EMPLOYEES”).<\/p>\n
WHEREAS, pursuant to the Limited Liability Company Operating
\nAgreement, dated as of August 6, 1999 (the “EXISTING OPERATING AGREEMENT”),
\namong Veritas and certain named employees of PEI (collectively, the “ORIGINAL
\nMEMBERS”), the Company was originally formed; and<\/p>\n
WHEREAS, the Original Members desire to admit Additional Members
\nupon the terms and conditions set forth herein;<\/p>\n
NOW, THEREFORE, in consideration of the mutual terms, covenants and
\nconditions contained herein, the parties hereby agree that the Existing
\nOperating Agreement is hereby amended and restated in its entirety as follows:<\/p>\n
ARTICLE I<\/p>\n
DEFINITIONS<\/p>\n
For purposes of this Agreement unless the context clearly indicates
\notherwise, the following terms shall have the following meanings:<\/p>\n
“ACT” is defined in the Preamble.<\/p>\n
“ADJUSTED INVESTED CAPITAL” means at any time the sum of all amounts
\npaid by any Class A Member in consideration for Integrated Defense Technologies
\nShares plus any additional Capital Contribution made by such Class A Member,
\nless all distributions made up to the time of reference to such Class A Member
\npursuant to SECTION 4.4(b).<\/p>\n
“ADDITIONAL MEMBERS” means those Persons admitted as Members of the
\nCompany pursuant to SECTION 3.3.<\/p>\n
“AFFILIATE” means, with respect to any Person, any Person directly
\nor indirectly controlling, controlled by or under common control with such
\nPerson.<\/p>\n
“AGREEMENT” means this Amended and Restated Limited Liability
\nCompany Operating Agreement, as originally executed and as amended from time to
\ntime, as the context requires. Words such as “herein”, “hereinafter”, “hereto”,
\n“hereby” and “hereunder”, when used with reference to this Agreement, refer to
\nthis Agreement as a whole, unless the context otherwise requires.<\/p>\n
“AVAILABLE CASH” means the gross cash proceeds of the Company from
\nall sources less all amounts used to pay or establish reserves for all Company
\nexpenses, all as determined by the Manager. “Available Cash” shall not be
\nreduced by depreciation, amortization, cost recovery deductions or similar
\nallowances, but shall be increased by any reductions of reserves previously
\nestablished pursuant to the first sentence of this definition.<\/p>\n
“BANKRUPTCY” means, with respect to a Person, the occurrence of any
\nof the following events: (a) the filing by that Person of a petition commencing
\na voluntary case in bankruptcy under applicable bankruptcy laws; (b) entry
\nagainst that Person of an order for relief under applicable bankruptcy laws; (c)
\nwritten admission by that Person of its inability to pay its debts as they
\nmature, or an assignment by that Person for the benefit of creditors; or (d)
\nappointment of a receiver for the property or affairs of that Person.<\/p>\n
“BUSINESS DAY” means each day of the calendar year other than days
\non which banks are required or authorized to close in the State of Delaware.<\/p>\n
“CAPITAL ACCOUNT” means the account maintained for a Member
\ndetermined in accordance with ARTICLE III.<\/p>\n
“CAPITAL CONTRIBUTION” means the amount of capital to be contributed
\nby the Members to the Company as set forth on SCHEDULE A or SCHEDULE B, as the
\ncase may be, as may be modified or supplemented from time to time.<\/p>\n
“CERTIFICATE OF FORMATION” means the document filed with the
\nSecretary of State of Delaware and through which the Company is formed and any
\nduly authorized, executed and filed amendments or restatements thereof.<\/p>\n
“CHANGE OF CONTROL” is defined in SECTION 4.2(b).<\/p>\n
“CLASS A MEMBER” means a Member identified on SCHEDULE A at the time
\nof reference.<\/p>\n
“CLASS A MEMBERSHIP INTEREST” means each Class A Membership Interest
\ndescribed in SECTION 3.1.<\/p>\n
“CLASS A PERCENTAGE INTEREST” means, with respect to any Class A
\nMember, the percentage interest set forth opposite such Class A Member’s name on
\nSCHEDULE A, as it may be modified or supplemented from time to time.<\/p>\n
-2-<\/p>\n
“CLASS B MEMBER” means a Member identified on SCHEDULE B at the time
\nof reference.<\/p>\n
“CLASS B MEMBERSHIP INTEREST” means each Class B Membership Interest
\ndescribed in SECTION 3.1.<\/p>\n
“CLASS B PERCENTAGE INTEREST” means, with respect to any Class B
\nMember, the percentage interest set forth opposite such Class B Member’s name on
\nSCHEDULE B, as it may be modified or supplemented from time to time.<\/p>\n
“CODE” means the Internal Revenue Code of 1986, as amended from time
\nto time (or any corresponding provisions of succeeding law).<\/p>\n
“COMPANY” is defined in the Preamble.<\/p>\n
“DISTRIBUTION” means a transfer of property to a Member on account
\nof a Membership Interest as described in ARTICLE IV.<\/p>\n
“EXISTING OPERATING AGREEMENT” is defined in the Preamble.<\/p>\n
“FAIR MARKET VALUE” is defined in SECTION 8.4(b).<\/p>\n
“FISCAL YEAR” means the fiscal year of the Company, as determined by
\nthe Manager.<\/p>\n
“INTEGRATED DEFENSE TECHNOLOGIES” means Integrated Defense
\nTechnologies, Inc., a Delaware corporation and the holder of all of the issued
\nand outstanding shares of capital stock of PEI and Sierra.<\/p>\n
“INTEGRATED DEFENSE TECHNOLOGIES SHARES” means shares of common
\nstock, par value $.01 per share, of Integrated Defense Technologies.<\/p>\n
“INVESTED CAPITAL” means the amount paid by any Class A Member in
\nconsideration for Integrated Defense Technologies Shares plus any additional
\nCapital Contribution made by such Class A Member.<\/p>\n
“INVESTED CAPITAL CONTRIBUTION DATE” means the date any Class A
\nMember made a contribution of Invested Capital.<\/p>\n
“MANAGER” means the Member that will have the authority and powers
\nset forth in ARTICLE VII.<\/p>\n
“MEMBER” means each Person who is a Class A Member or a Class B
\nMember.<\/p>\n
-3-<\/p>\n
“MEMBERSHIP INTEREST” means the rights of a Member in Distributions
\n(liquidating or otherwise) and allocations of the profits, losses, gains,
\ndeductions, and credits of the Company.<\/p>\n
“NET PROFITS” – and “NET LOSS” means, for each Fiscal Year or other
\nperiod, an amount equal to the Company’s taxable income or loss for such year or
\nperiod, determined in accordance with Code Section 703(a) (for this purpose, all
\nitems of income, gain, loss or deduction required to be stated separately
\npursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
\nwith the following adjustments:<\/p>\n
(a) any income of the Company that is exempt from federal income tax
\n not otherwise taken into account in computing Net Profits or Net Loss
\n shall be added to such taxable income or loss; and<\/p>\n
(b) any expenditures of the Company described in Code Section
\n 705(b)(2)(B) or treated as Code Section 705(b)(2)(B) expenditures pursuant
\n to Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into
\n account in computing Net Profits or Net Loss shall be subtracted from such
\n taxable income or loss.<\/p>\n
“ORIGINAL MEMBERS” is defined in the Preamble.<\/p>\n
“PEI” is defined in the Preamble.<\/p>\n
“PEI CLASS B MEMBER” means a Class B Member employed by PEI.<\/p>\n
“PEI EMPLOYEES” is defined in the Preamble.<\/p>\n
“PEI REDUCTION PERCENTAGE” is defined in SECTION 4.2(a).<\/p>\n
“PEI EMPLOYMENT DATE” is defined in SECTION 4.2(a).<\/p>\n
“PEI TERMINATION DATE” is defined in SECTION 4.2(a).<\/p>\n
“PERCENTAGE INTEREST” means, with respect to any Member, the total
\npercentage interest set forth opposite each Member’s name on SCHEDULE A or
\nSCHEDULE B as the case may be, as it may be modified or supplemented from time
\nto time.<\/p>\n
“PERMITTED TRANSFEREE” is defined in SECTION 8.1.<\/p>\n
“PERSON” means an individual, trust, estate, or any
\nincorporated or unincorporated organization permitted to be a member of a
\nlimited liability company under the laws of the State of Delaware.<\/p>\n
-4-<\/p>\n
“PRIORITY RETURN” means a sum sufficient to result in a pre-tax 15%
\nper annum internal rate of return (compounded annually) on the Adjusted Invested
\nCapital of the Class A Members. Such rate of return shall be calculated
\ncommencing from the Invested Capital Contribution Date.<\/p>\n
“PROCEEDING” means any administrative, judicial, or adversary
\nproceeding, including, without limitation, litigation, arbitration,
\nadministrative adjudication, mediation, and appeal or review of any of the
\nforegoing.<\/p>\n
“PROPERTY” means all of the assets of the Company, both tangible and
\nintangible or any portion thereof.<\/p>\n
“REGULATIONS” means, except where the context indicates otherwise,
\nthe permanent, temporary, proposed, or proposed and temporary regulations of the
\nDepartment of the Treasury under the Code, as such regulations may be lawfully
\nchanged from time to time (including corresponding provisions of succeeding
\nregulations).<\/p>\n
“RULE 144” is defined in SECTION 5.2(i).<\/p>\n
“SALE TRANSACTION” is defined in SECTION 8.2.<\/p>\n
“SECURITIES ACT” means the Securities Act of 1933, as amended.<\/p>\n
“SIERRA” is defined in the Preamble.<\/p>\n
“SIERRA CLASS B MEMBER” means a Class B Member employed by Sierra.<\/p>\n
“SIERRA EMPLOYEES” is defined in the Preamble.<\/p>\n
“SIERRA REDUCTION PERCENTAGE” is defined in SECTION 4.2(B).<\/p>\n
“SIERRA EMPLOYMENT DATE” is defined in SECTION 4.2(B).<\/p>\n
“SIERRA TERMINATION DATE” is defined in SECTION 4.2(B).<\/p>\n
“SUBSIDIARY” means, with respect to any Person, a corporation or
\nother entity of which more than 50% of the voting power of the voting equity
\nsecurities or equity interest is owned, directly or indirectly, by such Person.
\nUnless otherwise qualified, all references to a “Subsidiary” or to
\n“Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of
\nIntegrated Defense Technologies.<\/p>\n
“TRANSFER” means, as a noun, any voluntary or involuntary transfer,
\nsale, or other disposition and, as a verb, voluntarily or involuntarily to sell,
\nassign, transfer, grant, give away, hypothecate, pledge or otherwise dispose of
\nand shall include any transfer by will, gift or intestate succession.<\/p>\n
-5-<\/p>\n
“VERITAS” is defined in the Preamble.<\/p>\n
ARTICLE II<\/p>\n
FORMATION<\/p>\n
This Limited Liability Company Operating Agreement of IDT Holding,
\nL.L.C., is entered into and shall be effective as of the date first above
\nwritten by and among the Members set forth on the signature pages hereof,
\npursuant to the provisions of the Act, on the following terms and conditions:<\/p>\n
2.1 ORGANIZATION. The Members hereby organize the Company as a Delaware
\nlimited liability company pursuant to the provisions of the Act.<\/p>\n
2.2 NAME. The name of the Company is “IDT Holding, L.L.C.”. All business
\nconducted in the State of Delaware shall be conducted under such name. All
\nbusiness of the Company shall be conducted under that name or under any other
\nname, but in any case, only to the extent permitted by applicable law. The
\nCompany shall hold all of its property in the name of the Company and not in the
\nname of any Member.<\/p>\n
2.3 TERM. The Company shall be dissolved and its affairs wound up in
\naccordance with the Act and this Agreement on December 31, 2020, unless the
\nCompany shall be sooner dissolved and its affairs wound up in accordance with
\nthe Act or this Agreement.<\/p>\n
2.4 REGISTERED AGENT AND OFFICE. The registered agent for the service of
\nprocess and the registered office shall be that Person and location reflected in
\nthe Certificate of Formation as filed in the office of the Secretary of State of
\nDelaware. The Company may, from time to time, change the registered agent or
\noffice through appropriate filings with the Secretary of State. In the event the
\nregistered agent ceases to act as such for any reason or the registered office
\nshall change, the Company shall promptly designate a replacement registered
\nagent or file a notice of change of address, as the case may be.<\/p>\n
2.5 PRINCIPAL OFFICE. The principal office of the Company shall be located
\nc\/o Veritas at 660 Madison Avenue, New York, New York 10021, or at such other
\nplace as may be determined by Veritas. The Company may also have such other
\noffices as the Veritas may determine.<\/p>\n
2.6 PURPOSE. The purpose of the Company is to hold Integrated Defense
\nTechnologies Shares and to engage in any and all lawful businesses and in all
\nactivities necessary, customary, convenient, or incidental to any of the
\nforegoing.<\/p>\n
2.7 STATUTORY COMPLIANCE. The Company shall exist under and be governed
\nby, and this Agreement shall be construed in accordance with, the applicable
\nlaws of the State of Delaware. The Members shall make all filings and
\ndisclosures required by, and shall otherwise <\/p>\n
-6-<\/p>\n
comply with, all such laws. The Members shall execute and file in the
\nappropriate records any assumed or fictitious name certificates and other
\ndocuments and instruments as may be necessary or appropriate with respect to the
\nformation of, and conduct of business by, the Company.<\/p>\n
2.8 TITLE TO PROPERTY. All real and personal property owned by the Company
\nshall be owned by the Company as an entity and no Member shall have any
\nownership interest in such property in its individual name or right, and each
\nMember’s interest in the Company shall be deemed personal property for all
\npurposes. Except as otherwise provided in this Agreement, the Company shall hold
\nall of its real and personal property in the name of the Company and not in the
\nname of any Member.<\/p>\n
2.9 PAYMENTS OF INDIVIDUAL OBLIGATIONS. The Company’s credit and assets
\nshall be used solely for the benefit of the Company, and no asset of the Company
\nshall be transferred or encumbered for or in payment of any individual
\nobligation of a Member.<\/p>\n
ARTICLE III<\/p>\n
CLASSES OF MEMBERSHIP, CONTRIBUTIONS AND CAPITAL ACCOUNTS<\/p>\n
3.1 TWO CLASS OF MEMBERSHIP INTEREST. The Company shall have two classes
\nof Membership Interests, Class A Membership Interests and Class B Membership
\nInterests. Each of the Class A Membership Interests and Class B Membership
\nInterests shall have identical rights, obligations and privileges, except as
\notherwise provided in this Agreement.<\/p>\n
3.2 CONTRIBUTIONS. The names, addresses, Capital Contributions and Class A
\nPercentage Interests of the Class A Members are set forth on SCHEDULE A. The
\nnames, addresses, Capital Contributions and Class B Percentage Interests of the
\nClass B Members are set forth on SCHEDULE B.<\/p>\n
3.3 ADDITIONAL MEMBERS. Following formation, the Company may admit one or
\nmore Additional Members from time to time. The Capital Contributions and
\nPercentage Interests of any Additional Members shall be determined by the
\nManager. Upon the admission to the Company of any Additional Members who are
\nallocated Membership Interests, the Membership Interests of the other Members
\nshall be reduced accordingly on a PRO RATA basis. SCHEDULE A and SCHEDULE B
\nshall be amended from time to time in accordance with the foregoing provisions
\nof this SECTION 3.3 effective as of the effective date of the admission of an
\nAdditional Member to the Company. As a condition to being admitted to the
\nCompany, each Additional Member shall execute an agreement to be bound by the
\nterms and conditions of this Agreement. In no event shall the aggregate Class B
\nPercentage Interests exceed 7.5%.<\/p>\n
3.4 MAINTENANCE OF CAPITAL ACCOUNTS. The Company shall establish and
\nmaintain Capital Accounts for each Member. Each Member’s Capital Account shall
\nbe increased by (i) the amount of any money actually contributed by the Member
\nto the capital of the Company, (ii) the fair market value of any property
\ncontributed by the Member, as determined by the Company <\/p>\n
-7-<\/p>\n
and the contributing Member at arm’s length at the time of contribution (net of
\nliabilities assumed by the Company or subject to which the Company takes such
\nproperty), and (iii) the Member’s share of Net Profits. Each Member’s Capital
\nAccount shall be decreased by (i) the amount of any money actually distributed
\nto the Member from the capital of the Company, (ii) the fair market value of any
\nproperty distributed to the Member, as determined by the Company and the
\ncontributing Member at arm’s length at the time of distribution (net of
\nliabilities of the Company assumed by the Member or subject to which the Member
\ntakes such property), and (iii) the Member’s share of Net Loss.<\/p>\n
The foregoing provisions and the other provisions of this Agreement
\nrelating to the maintenance of Capital Accounts are intended to comply with
\nRegulations Section 1.704-1(b), and shall be interpreted and applied in a manner
\nconsistent with such Regulations and any amendment or successor provision
\nthereto.<\/p>\n
3.5 ADDITIONAL CAPITAL CONTRIBUTIONS. Other than contributions by
\nAdditional Members, no Member shall be required to make any Capital
\nContributions to the Company in excess of the amounts set forth in SCHEDULE A
\nand SCHEDULE B without the unanimous consent of all of the Members.<\/p>\n
3.6 TRANSFERS OF MEMBERSHIP INTERESTS. In the event any Member Transfers
\nany Membership Interest in accordance with the terms of this Agreement, the
\ntransferee shall succeed to the Capital Account, Capital Contributions, Invested
\nCapital and Adjusted Invested Capital of the transferor to the extent it relates
\nto the transferred Interest.<\/p>\n
3.7 OTHER MATTERS.<\/p>\n
(a) Except as otherwise provided in this Agreement, no Member shall demand
\nor receive a return of his Capital Contributions or withdraw from the Company.
\nNo Member shall have the right to withdraw any part of his Capital Contributions
\nfrom the Company prior to its liquidation and termination, unless such
\nwithdrawal is permitted under this Agreement.<\/p>\n
(b) No Member shall receive any interest, salary, or drawing with respect
\nto his Capital Contributions or his Capital Account or for services rendered on
\nbehalf of the Company or otherwise in his capacity as a Member, except as
\notherwise provided in this Agreement or agreed to by the Members.<\/p>\n
ARTICLE IV<\/p>\n
ALLOCATIONS AND DISTRIBUTIONS<\/p>\n
4.1 ALLOCATION OF NET PROFITS AND NET LOSS OF THE COMPANY. Net Profits and
\nNet Loss of the Company in each Fiscal Year shall be allocated to the Members as
\nfollows:<\/p>\n
(a) NET PROFITS. Net Profits shall be allocated among the Members
\nas follows:<\/p>\n
-8-<\/p>\n
(i) first to offset any Net Loss allocated to a Member,<\/p>\n
(ii)next to the Class A Members PRO RATA in accordance with
\n their respective Class A Percentage Interests in an amount equal to
\n their Priority Return,<\/p>\n
(iii) next to the Class B Members PRO RATA in accordance with
\n their respective Class B Percentage Interests in an amount equal to
\n the quotient of (A) the aggregate Class B Percentage Interests and
\n (B) 100%, times the Priority Return allocated under SECTION
\n 4.1(A)(II) and<\/p>\n
(iv)thereafter among the Members PRO RATA in accordance with
\n their respective Percentage Interests.<\/p>\n
(b) NET LOSS. Net Loss shall be allocated in proportion to the
\nMembers’ positive Capital Account balances.<\/p>\n
4.2 REDUCTION OF CLASS B PERCENTAGE INTERESTS. (a) Subject to SECTION
\n4.2(C), in the event that prior to November 1, 2003 or the fifth anniversary of
\nthe date the subject PEI Class B Member was employed by PEI (the “PEI EMPLOYMENT
\nDATE”), whichever is later, the employment of a PEI Class B Member by Integrated
\nDefense Technologies or any of its Subsidiaries on a full time basis terminates
\nfor any reason, then as of the date of such termination of employment (the “PEI
\nTERMINATION DATE”), the Class B Percentage Interest of such PEI Class B Member
\nshall be reduced by the following percentage (the “PEI REDUCTION PERCENTAGE”):<\/p>\n
-9-<\/p>\n
\n\n PEI Termination Date PEI Reduction Percentage
\n ——————– ————————
\n
\n Prior to November 1, 1999 or the first
\n anniversary of the PEI Employment
\n Date, whichever is later……………………………..100%
\n After October 31, 1999 or the first anniversary of the PEI
\n Employment Date, whichever is later, but prior to November
\n 1, 2000 or the second anniversary of the PEI Employment
\n Date, whichever is later………………………………80%
\n After October 31, 2000 or the second anniversary of the PEI
\n Employment Date, whichever is later, but prior to November
\n 1, 2001 or the third anniversary of the PEI Employment
\n Date, whichever is later………………………………60%
\n After October 31, 2001 or the third anniversary of the PEI
\n Employment Date, whichever is later, but prior to November
\n 1, 2002 or the fourth anniversary of the PEI Employment
\n Date, whichever is later………………………………40%
\n After October 31, 2002 or the fourth anniversary of the PEI
\n Employment Date, whichever is later, but prior to November
\n 1, 2003 or the fifth anniversary of the PEI Employment
\n Date, whichever is later………………………………20%
\n After October 31, 2003 or the fifth
\n anniversary of the PEI Employment
\n Date, whichever is later……………………………….0%
\n<\/c><\/s><\/caption>\n<\/table>\n By way of example, if a PEI Class B Member whose EPI Employment Date was
\nprior to November 1, 1998 were to terminate his employment with Integrated
\nDefense Technologies or any of its Subsidiaries on December 31, 2001, his Class
\nB Percentage Interest would be reduced by 40%.<\/p>\n
(b) Subject to SECTION 4.2(c), in the event that prior to August 7, 2004
\nor the fifth anniversary of the date the subject Sierra Class B Member was
\nemployed by Sierra (the “SIERRA EMPLOYMENT DATE”), whichever is later, the
\nemployment of a Sierra Class B Member by Integrated Defense Technologies or any
\nof its Subsidiaries on a full time basis terminates for any reason, then as of
\nthe date of such termination of employment (the “SIERRA TERMINATION DATE”), <\/p>\n
-10-<\/p>\n
the Class B Percentage Interest of such Sierra Class B Member shall be reduced
\nby the following percentage (the “SIERRA REDUCTION PERCENTAGE”):<\/p>\n
\n\n Sierra Termination Date Sierra Reduction Percentage
\n ———————– —————————<\/p>\n
\n Prior to August 7, 2000 or the first
\n anniversary of the Sierra Employment
\n Date, whichever is later …………………………….100%
\n After August 6, 2000 or the first anniversary of the Sierra
\n Employment Date, whichever is later, but prior to August 7,
\n 2001 or the second anniversary of the Sierra Employment
\n Date, whichever is later…………………………….. 80%
\n After August 6, 2001 or the second anniversary of the Sierra
\n Employment Date, whichever is later, but prior to August 7,
\n 2002 or the third anniversary of the Sierra Employment
\n Date, whichever is later…………………………….. 60%
\n After August 6, 2002 or the third anniversary
\n of the Sierra Employment Date, whichever
\n is later, but prior to August 7, 2003 or the
\n fourth anniversary of the Sierra Employment
\n Date, whichever is later…………………………….. 40%
\n After August 6, 2003 or the fourth anniversary of the Sierra
\n Employment Date, whichever is later, but prior to August 7,
\n 2004 or the fifth anniversary of the Sierra Employment
\n Date, whichever is later…………………………….. 20%
\n After August 6, 2004 or the fifth
\n anniversary of the Sierra Employment
\n Date, whichever is later…………………………….. 0%
\n<\/c><\/s><\/caption>\n<\/table>\n By way of example, if a Sierra Class B Member whose Sierra Employment Date
\nwas prior to August 7, 1999 were to terminate his employment with Integrated
\nDefense Technologies or any of its Subsidiaries on December 31, 2002, his Class
\nB Percentage Interest would be reduced by 40%<\/p>\n
-11-<\/p>\n
(c) Upon a Change of Control, the PEI Reduction Percentage and the Sierra
\nReduction Percentage shall be 0%. For purposes of this agreement, “CHANGE OF
\nCONTROL” means the occurrence of any of the following events:<\/p>\n
(i) Veritas ceases to be the owner of a majority of
\n the outstanding Percentage Interests;<\/p>\n
(ii) Integrated Defense Technologies ceases to be the record
\n or beneficial owner (as such term is defined in Rules 13d-3 and
\n 13d-5 under the Securities Exchange Act of 1934, as amended) of a
\n majority in the aggregate of the total voting power of all classes
\n of capital stock of PEI and Sierra then outstanding and normally
\n entitled to vote on the election of directors; or<\/p>\n
(iii) the sale of all or substantially all of the assets of
\n PEI and Sierra to a third party not Affiliated with Veritas.<\/p>\n
(d) Upon a reduction in the Class B Percentage Interest of a Class B
\nMember in accordance with SECTION 4.2(a) or SECTION 4.2(b), the portion of such
\nClass B Member’s Class B Percentage Interest which is so reduced shall be
\nallocated to the Class A Members in proportion to their respective Class A
\nPercentage Interests. In the event of such reduction, such Class B Member shall
\nbe entitled to no payment whatsoever as compensation for such reduction in his
\nor her Class B Percentage Interest.<\/p>\n
4.3 AVAILABLE CASH. Any distributions of Available Cash shall be
\nmade as soon as practicable following the receipt thereof by the Company.<\/p>\n
4.4 DISTRIBUTIONS. Available Cash shall be distributed to the
\nMembers as follows:<\/p>\n
(a) FIRST, to the Class A Members in proportion to their unpaid Priority
\nReturns until such time as they have received cumulative distributions under
\nthis SECTION 4.4 equal to their Priority Return;<\/p>\n
(b) SECOND, to the Class A Members in proportion to their unreturned
\nInvested Capital until such time as they have received cumulative distributions
\nunder this SECTION 4.4 equal to all of their Invested Capital;<\/p>\n
(c) THIRD to the Class B Members PRO RATA in accordance with their
\nrespective Class B Percentage Interests until such time as they have received an
\namount equal to the sum allocated under SECTION 4.1(a)(iii); and<\/p>\n
(d) THEREAFTER, to the Members PRO RATA in accordance with their
\nrespective Percentages Interests.<\/p>\n
-12-<\/p>\n
4.5 AMOUNTS WITHHELD. All amounts withheld pursuant to the Code or any
\nprovision of any state or local tax law with respect to any payment,
\ndistribution or allocation to the Company or the Members shall be treated as
\namounts distributed to the Members pursuant to this Section for all purposes
\nunder this Agreement. The Company is authorized to withhold from distributions,
\nor with respect to allocations, to the Members and to pay over to any federal,
\nstate, or local government any amounts required to be so withheld pursuant to
\nthe Code or any provisions of any other federal, state or local law and shall
\nallocate such amounts to the Members with respect to which such amount was
\nwithheld.<\/p>\n
ARTICLE V<\/p>\n
RIGHTS AND DUTIES OF MEMBERS<\/p>\n
5.1 LIABILITY OF MEMBERS. No Member shall be liable as such for the
\nliabilities of the Company. The failure of the Company to observe any
\nformalities or requirements relating to the exercise of its powers or management
\nof its business or affairs under this Agreement or the Act shall not be grounds
\nfor imposing personal liability on the Members for liabilities of the Company.<\/p>\n
5.2 REPRESENTATIONS AND WARRANTIES. As of the date of this
\nAgreement, each of the Members hereby represents and warrants to each of
\nthe other Members and the Company as follows:<\/p>\n
(a) The Membership Interest being acquired by such Member is being
\npurchased for such Member’s own account and not with a view to, or for sale in
\nconnection with, any distribution or public offering thereof within the meaning
\nof the Securities Act or any applicable state securities laws. Such Member
\nunderstands that his, her or its Membership Interest has not been registered
\nunder the Securities Act or any state securities laws by reason of their
\ncontemplated issuance in transactions exempt from the registration and
\nprospectus delivery requirements thereof and that the reliance of the Company
\nand others upon such exemptions is predicated in part by the representations and
\nwarranties of such Member contained herein. No other Person has any right with
\nrespect to or interest in the Membership Interest acquired by such Member, nor
\nhas such Member agreed to give any Person any such interest or right in the
\nfuture.<\/p>\n
(b) Such Member has the requisite power and authority (whether corporate
\nor otherwise) and legal capacity to enter into, and to carry out his, her or its
\nobligations under, this Agreement. The execution and delivery by such Member of
\nthis Agreement and the consummation by such Member of the transactions
\ncontemplated hereby have been duly authorized by all necessary action (corporate
\nor otherwise) on the part of such Member.<\/p>\n
(c) This Agreement has been duly executed and delivered by such Member and
\nconstitutes a valid and binding obligation enforceable against such Member in
\naccordance with its terms.<\/p>\n
-13-<\/p>\n
(d) Such Member is not subject to, or obligated under, any provision of
\n(i) any agreement, contracts, arrangement or understanding, (ii) any license,
\nfranchise or permit, or (iii) any law, regulation, order, judgment or decree,
\nthat would be breached or violated, or in respect of which a right of
\ntermination or acceleration or any encumbrance or other lien on any of such
\nMember’s assets would be created, by such Member’s execution, delivery and
\nperformance of this Agreement or the consummation of the transactions
\ncontemplated hereby.<\/p>\n
(e) No authorization, consent or approval of, waiver or exemption by, or
\nfiling or registration with, any public body, court or other governmental
\nauthority or any other third party is necessary on such Member’s part for the
\nconsummation of the transactions contemplated by this Agreement that has not
\npreviously been obtained by such Member.<\/p>\n
(f) No Person has or will have, as a result of any act or omission by such
\nMember, any right, interest or valid claim against the Company or any other
\nMember for any commission, fee or other compensation as a finder or broker, or
\nin any similar capacity, in connection with any of the transactions contemplated
\nby this Agreement.<\/p>\n
(g) Neither such Member nor any of its Affiliates is, nor will the Company
\nas a result of such Member holding an interest in the Company be, an “investment
\ncompany” as defined in, or subject to regulation under, the Investment Company
\nAct of 1940, as amended.<\/p>\n
(h) Such Member is acquiring his, her or its interest in the Company based
\nupon his, her or its own investigation, and the exercise by such Member of his,
\nher or its rights and the performance of his, her or its obligations under this
\nAgreement will be based upon his, her or its own investigation, analysis and
\nexpertise. Such Member has such knowledge and experience in financial and
\nbusiness matters such that such Member is capable of evaluating the merits and
\nrisks of the investment contemplated by this Agreement and such Member is able
\nto bear the economic risk of his, her or its investment in the Company
\n(including a complete loss of his, her or its investment). During negotiation of
\nthe transactions contemplated herein, such Member has been afforded full and
\nfree access to books, financial statements, records, contracts, documents and
\nother information concerning the Company and Integrated Defense Technologies and
\nits Subsidiaries, and has been afforded the opportunity to ask questions
\nconcerning the business, operations, financial condition, assets and liabilities
\nof the Company and Integrated Defense Technologies and its Subsidiaries and
\nother relevant matters as such Member has deemed necessary or desirable and has
\nbeen provided with all such information as has been requested.<\/p>\n
(i) Such Member recognizes that no public market exists for the Membership
\nInterest acquired hereunder, and no representation has been made to such Member
\nthat any such public market will exist in the future. Such Member understands
\nthat he, she or it must bear the economic risk of such Member’s investment in
\nthe Company indefinitely unless such Member’s Membership Interest is registered
\npursuant to the Securities Act or an exemption from such registration is
\navailable, and unless the disposition of such Membership Interest is registered
\nor qualified under applicable state securities laws or an exemption from such
\nregistration or qualification is available, and that the Company has no
\nobligation or intention of so registering or <\/p>\n
-14-<\/p>\n
qualifying such Membership Interest. Such Member understands that there is no
\nassurance that any exemption from the Securities Act will be available, or, if
\navailable, that such exemption will allow such Member to dispose of or otherwise
\nTransfer any of or all such Member’s Membership Interest, in the amounts or at
\nthe times any such Member might desire. Such Member understands that at the
\npresent time Rule 144 (other than Rule 144(k) promulgated under the Securities
\nAct by the Securities and Exchange Commission (“RULE 144”)) is not applicable to
\nsale of any of or all such Member’s Membership Interest because such Membership
\nInterest is not registered under Section 12 of the Securities Exchange Act of
\n1934, as amended, and the information concerning the Company specified in Rule
\n144 is not publicly available. Such Member acknowledges that the Company is not
\npresently under any obligation to register under Section 12 of the Securities
\nExchange Act of 1934, as amended, or to make publicly available the information
\nspecified in Rule 144 and that it may never be required to do so.<\/p>\n
ARTICLE VI<\/p>\n
INDEMNIFICATION OF MEMBERS<\/p>\n
6.1 GENERAL. The Company, its receiver or its trustee (to the extent of
\nthe Company’s assets) shall indemnify, save harmless, and pay all judgments and
\nclaims against each Member or any officers, directors or partners of such Member
\nrelating to any liability or damage incurred by reason of any act performed or
\nomitted to be performed by such Member, officer or director in connection with
\nthe business of the Company, including attorneys’ fees and expenses incurred by
\nsuch Member, officer or director in connection with the defense of any action
\nbased on any such act or omission, which attorneys’ fees and expenses may be
\npaid as incurred, including all such liabilities under federal and state
\nsecurities laws (including the Securities Act) as permitted by law.<\/p>\n
6.2 COMPANY EXPENSES. The Company shall indemnify, save harmless, and pay
\nall expenses, costs, or liabilities of any Member who for the benefit of the
\nCompany makes any deposit, acquires any option, or makes any other similar
\npayment or assumes any obligation in connection with any property proposed to be
\nacquired by the Company, which action shall have been consented to by Veritas,
\nand who suffers any financial loss as the result of such action.<\/p>\n
6.3 LIMITATIONS.<\/p>\n
(a) Notwithstanding anything to the contrary in SECTIONS 6.1 and 6.2
\nabove, no Member shall be indemnified from any liability for fraud, bad faith,
\nwillful misconduct, or gross negligence.<\/p>\n
(b) Notwithstanding anything to the contrary in SECTIONS 6.1, 6.2 and
\n6.3(a) above, in the event that any provision of such Sections is determined to
\nbe invalid in whole or in part, the remainder of such Section shall be
\nenforceable to the maximum extent permitted by law.<\/p>\n
-15-<\/p>\n
ARTICLE VII<\/p>\n
MANAGEMENT<\/p>\n
7.1 MANAGEMENT AND AUTHORITY.<\/p>\n
(a) THE MANAGER. The Company shall be managed by Veritas (the
\n“MANAGER”). The Manager shall have such rights, duties and powers as are
\nspecified in this Agreement and the Act.<\/p>\n
(b) GENERAL RIGHTS, DUTIES AND POWERS OF THE MANAGER. The Manager is the
\ngeneral manager and chief executive officer of the Company and shall have
\ncomplete and exclusive control over the management of the business of the
\nCompany.<\/p>\n
(c) SPECIFIC POWERS AND DUTIES OF THE MANAGER. In addition to the general
\npowers given to the Manager by law and by this Agreement, except as expressly
\nlimited by the provisions of this Agreement, the Manager shall have the power to
\nenter into, make, sign, seal, deliver and perform all agreements, contracts,
\ndocuments, instruments and other undertakings and to engage in all activities
\nand transactions as may be necessary or desirable, in the sole discretion of the
\nManager, in order to carry out the business of the Company, all on behalf of the
\nCompany, including, without limitation, the following:<\/p>\n
(i) to admit Additional Members;<\/p>\n
(ii) to acquire, hold, sell, transfer, exchange, pledge and dispose
\n of Integrated Defense Technologies Shares and exercise all rights, powers,
\n privileges, and other incidents of ownership or possession with respect
\n thereto (including voting such stock);<\/p>\n
(iii) to open, maintain and close bank accounts and draw
\n checks or other orders for the payment of money;<\/p>\n
(iv) to borrow or raise monies and to secure the payment or
\n performance of obligations of the Company by mortgage, hypothecation,
\n pledge or other security assignment of all or any part of the assets of
\n the Company; and<\/p>\n
(d) to otherwise deal in any manner with the assets of the Company.<\/p>\n
7.2 MANAGER’S STANDARD OF CARE. The Manager’s duty of care in the
\nperformance of its duties to the Company and the other Members is limited to the
\nperformance of such duties in good faith and with that degree of care that an
\nordinarily prudent Person in a like position would use under similar
\ncircumstances. In performing such duties, the Manager shall be entitled to rely
\non information, opinions, reports or statements, including financial statements
\nand other financial data, in each case presented or prepared by (i) one or more
\nagents or employees of the Company, or (ii) counsel, public accountants or other
\nPersons as to matters that the Manager believes to be within such Person’s
\nprofessional or expert competence. Except in the case of gross negligence <\/p>\n
-16-<\/p>\n
or willful misconduct, the Manager shall not be liable to the Company or any
\nMember for damages for any act or omission taken or suffered by the Manager in
\nconnection with this Agreement or the conduct of the business of the Company.<\/p>\n
7.3 COMPENSATION OF MANAGER.<\/p>\n
(a) The Manager shall not receive any fees for its services in
\nadministering the Company.<\/p>\n
(b) The Manager shall be entitled to reimbursement from the Company for
\nall out-of-pocket costs and expenses incurred by it, in its reasonable
\ndiscretion, for or on behalf of the Company.<\/p>\n
ARTICLE VIII<\/p>\n
DISPOSITION OF MEMBERSHIP INTERESTS; OTHER RIGHTS<\/p>\n
8.1 RESTRICTIONS ON TRANSFER. No Member, other than Veritas and its
\nTransferees, may directly or indirectly, Transfer all or a portion of his or her
\nMembership Interest except to a Permitted Transferee or as otherwise expressly
\nprovided in this Agreement. Any purported Transfer in violation of this
\nAgreement shall be null and void AB INITIO and the Company shall not recognize
\nany such Transfer or accord to any purported transferee any rights as a Member
\nof the Company. Each individual Member shall have the right during his or her
\nlifetime and in the event of his or her death to Transfer any or all of the
\nMembership Interest owned by him or her, to a Permitted Transferee, provided
\nthat at the time of any such Transfer, each such transferee agrees in writing
\n(in form and substance satisfactory to the Company) to be bound by all of the
\nprovisions of this Agreement applicable to the Transferring individual Member so
\nlong as he, she or it continues to own any of the Membership Interest so
\nTransferred. As used herein, “PERMITTED TRANSFEREE” means such individual
\nMember’s spouse or issue, including adopted children, or to a trust for the
\nexclusive benefit of such individual Member’s spouse or issue.<\/p>\n
8.2 TAG-ALONG RIGHTS. In the event of a proposed Sale Transaction, Veritas
\nshall not Transfer any portion of its Membership Interest until the other
\nMembers have been given the opportunity, at their option, exercisable within 10
\ndays after the date of Veritas’ written notice of the proposed Sale Transaction,
\nto sell to the proposed Transferee at the same price and upon the same terms and
\nconditions offered to Veritas, up to that percentage of the Membership Interest
\nheld by the other Members as is equivalent to the percentage of the Membership
\nInterest held by Veritas that Veritas proposes to Transfer. In order to be
\nentitled to exercise their rights to sell their Membership Interests pursuant to
\nthis SECTION 8.2, the other Members must agree to make to the Transferee
\nsubstantially the same representations, warranties, covenants, indemnities and
\nagreements as Veritas agrees to make in connection with the proposed Sale
\nTransaction.<\/p>\n
As used herein, “SALE TRANSACTION” means the Transfer by Veritas
\nand\/or any of its Transferees, in one transaction or a series of transactions
\n(other than pursuant to a public <\/p>\n
-17-<\/p>\n
offering under the Securities Act or pursuant to Rule 144 ), of all or any
\nportion of its or their Membership Interests to one or more Persons or group of
\nPersons (other than an Affiliate) and, as a result of which, such Person or
\ngroup of Persons would own a majority of the outstanding Percentage Interests of
\nthe Company.<\/p>\n
8.3 DRAG-ALONG RIGHTS. In the event of a proposed Sale Transaction,
\nVeritas and\/or its Transferees may require that each other Member Transfer his
\nor her Membership Interest in the Sale Transaction. Each Member will receive in
\nthe Sale Transaction in respect of his or her Membership Interest his or her PRO
\nRATA portion of the entire consideration to be received by all the Members in or
\nfollowing the Sale Transaction. Veritas and\/or its Transferees shall notify the
\nother Members at least 10 days in advance of entering into a definitive
\nagreement in connection with a proposed Sale Transaction. In any such agreement,
\nthe other Members will be required to make the same representations, warranties,
\ncovenants, indemnities and agreements Veritas and\/or its Transferees agree to
\nmake in connection with the proposed Sale Transaction.<\/p>\n
8.4 PURCHASE RIGHT.<\/p>\n
(a) Veritas (and\/or its Transferees) is hereby granted the right to
\npurchase the entire Membership Interest (or at the discretion of Veritas any
\nportion of the Membership Interest) held by any Member who is a PEI Employee or
\na Sierra Employee or who is a Permitted Transferee of a PEI Employee or a Sierra
\nEmployee in the event the employment of such Member (or the transferor of such
\nMember) by PEI or Sierra, as the case may be, on a full time basis terminates
\n(i) for cause or such Member voluntarily terminates his employment, with respect
\nto such Member’s Class A Membership Interest, or (ii) for any reason, with
\nrespect to such Member’s Class B Membership Interest. Veritas may exercise this
\nright at any time within the 60-day period immediately following the date such
\nMember (or transferor of such Member) ceases to be a full-time employee of PEI
\nor Sierra, as the case may be.<\/p>\n
(b) For purposes hereof, “TERMINATION FOR CAUSE” means termination of such
\nMember’s employment by PEI or Sierra, as the case may be, by reason of (i) such
\nMember’s willful dishonesty towards, fraud upon, or deliberate injury or
\nattempted injury to, or breach of fiduciary duty to PEI or Sierra, as the case
\nmay be; or (ii) conduct by such Member, in connection with the performance of
\nthe duties contemplated that would result in serious prejudice to the interests
\nof PEI or Sierra, as the case may be, if such Member were to continue to be
\nemployed, including, without limitation, the conviction of a felony or a good
\nfaith determination by the Board of Directors of PEI or Sierra, as the case may
\nbe, that such Member has committed acts involving moral turpitude; or (iii) such
\nMember’s failure to follow reasonable instructions or directions of the Board of
\nDirectors of PEI or Sierra, as the case may be, or any policy, rule or procedure
\nof PEI or Sierra, as the case may be, in force from time to time.<\/p>\n
(c) The purchase price at which Veritas may exercise its purchase right
\nshall be (i) with respect to any Class A Membership Interest, (x) for any period
\nuntil the third anniversary of the Invested Capital Contribution Date, the
\nInvested Capital of the Member plus 50% of the amount by which, if any, the Fair
\nMarket Value of the Class A Membership Interest exceeds the Invested <\/p>\n
-18-<\/p>\n
Capital of the Member, or the Fair Market Value of the Class A Membership
\nInterest, whichever is lower, and (y) for any period after the third anniversary
\nof the Invested Capital Contribution Date, the Fair Market Value of the Class A
\nMembership Interest; and (ii) with respect to any remaining Class B Membership
\nInterest after application of the PEI Reduction Percentage or the Sierra
\nReduction Percentage, as the case may be, the Fair Market Value of the Class B
\nMembership Interest. For purposes of this Agreement “FAIR MARKET VALUE” of the
\nMembership Interest shall be determined by the Board of Directors of Integrated
\nDefense Technologies based on the most recent financial statements of PEI and
\nSierra available on the date such Member ceases to be a full time employee of
\nPEI or Sierra, as the case may be.<\/p>\n
(d) The purchase right shall be exercisable by written notice delivered to
\nthe Member prior to the expiration of the 60-day purchase period referred to in
\nSECTION 8.4(a). The notice shall indicate the portion of the Membership Interest
\nto be purchased, the purchase price and the date on which the purchase is to be
\neffected, such date to be not more than 30 days after the date of notice.<\/p>\n
8.5 MANDATORY SALE.<\/p>\n
(a) Any Member who is a PEI Employee or a Sierra Employee or who is a
\nPermitted Transferee of a PEI Employee or a Sierra Employee shall sell his
\nentire Class A Membership Interest to Veritas at a purchase price equal to the
\nInvested Capital of the Member or the Fair Market Value of the Membership
\nInterest, whichever is greater, in the event the employment of such Member (or
\nthe transferor of such Member) by PEI or Sierra, as the case may be, is
\nterminated without cause (as defined in SECTION 8.4(b) above).<\/p>\n
(b) The sale shall take place within 60 days following the termination of
\nsuch Member’s employment by PEI or Sierra, as the case may be.<\/p>\n
8.6 LEGENDS. If at any time Membership Interests are represented by
\ncertificates, then each such certificate shall have stamped, printed or typed
\nthereon, in addition to any other legend required by law, the following legends:<\/p>\n
THIS CERTIFICATE AND THE MEMBERSHIP INTEREST REPRESENTED HEREBY ARE
\n SUBJECT TO AND SHALL BE TRANSFERABLE ONLY IN ACCORDANCE WITH THE
\n PROVISIONS OF A CERTAIN AMENDED AND RESTATED LIMITED LIABILITY COMPANY
\n OPERATING AGREEMENT OF IDT HOLDING, L.L.C. DATED AS OF AUGUST 7, 1999,
\n AMONG THE MEMBERS NAMED THEREIN, A COPY OF WHICH IS ON FILE AT THE
\n OFFICE OF THE COMPANY.<\/p>\n
THE MEMBERSHIP INTEREST REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
\n REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES
\n AND REGULATIONS THEREUNDER (THE “ACT”), OR UNDER <\/p>\n
-19-<\/p>\n
THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED,
\n ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
\n EFFECTIVE REGISTRATION STATEMENT FOR THE MEMBERSHIP INTEREST UNDER THE
\n ACT AND APPLICABLE STATE LAWS OR AN EXEMPTION THEREFROM.<\/p>\n
ARTICLE IX<\/p>\n
ACCOUNTING AND RECORDS; CERTAIN TAX MATTERS<\/p>\n
9.1 RECORDS TO BE MAINTAINED.<\/p>\n
(a) The Company shall maintain at its principal office separate books of
\naccount for the Company which shall reflect a true and accurate record of all
\ncosts and expenses incurred, all charges made, all credits made and received,
\nand all income derived in connection with the operation of the Company business
\nin accordance with generally accepted accounting principles consistently applied
\nand, to the extent inconsistent therewith, in accordance with this Agreement.
\nEach Member shall, at his sole expense, have the right, at any time without
\nnotice to any other Member, to examine, copy, and audit the Company’s books and
\nrecords during normal business hours.<\/p>\n
(b) The Company shall maintain the following records at its
\nprincipal office:<\/p>\n
(i) A current list of the full name and last known business
\n address of Member;<\/p>\n
(ii) A copy of the Certificate of Formation and all
\n amendments thereto;<\/p>\n
(iii) Copies of the Company’s federal, foreign, state and local
\n income tax returns and reports, if any, for the six most recent years;<\/p>\n
(iv) Copies of this Agreement, including all amendments
\n thereto;<\/p>\n
(v) Any financial statements of the Company for the six most
\n recent Fiscal Years;<\/p>\n
(vi) A writing or other data compilation from which information can
\n be obtained through retrieval devices into reasonably usable form setting
\n forth the following:<\/p>\n
(A) the amount of cash and a description and statement of the
\n agreed value of the other property or services contributed by each
\n Member and which each Member has agreed to contribute;<\/p>\n
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(B) any right of a Member to receive, or of the Company to
\n make, distributions to a Member which include a return of all or any
\n part of Member’s Capital Contribution; and<\/p>\n
(C) any events upon the happening of which the Company is to
\n be dissolved and its affairs wound up.<\/p>\n
9.2 REPORTS.<\/p>\n
(a) The Company shall be responsible for the preparation of financial
\nreports of the Company and the coordination of financial matters of the Company
\nwith the Company’s accountants.<\/p>\n
(b) Within ninety (90) days after the end of each Fiscal Year and within
\nsixty (60) days after the end of any fiscal quarter, the Company shall cause
\neach Member to be furnished with a copy of the balance sheet of the Company as
\nof last day of the applicable period, a statement of income or loss of the
\nCompany such period, and a statement of the Company’s cash flow for such period.
\nAnnual statements shall also include a statement of the Members’ Capital
\nAccounts and changes therein for such Fiscal Year. Annual statements shall be
\nreviewed by the accountants.<\/p>\n
9.3 TAX RETURNS; INFORMATION. The Company shall arrange for the
\npreparation of all income and other tax returns of the Company and shall cause
\nthe same to be filed in a timely manner. The Company shall furnish to each
\nMember a copy of each such return, together with any schedules or other
\ninformation each Member may require in connection with such Member’s own tax
\naffairs.<\/p>\n
9.4 TAX MATTERS MEMBER. Veritas is specifically authorized to act
\nas the Tax Matters Member under the Code and in any similar capacity under
\nstate or local law.<\/p>\n
ARTICLE X<\/p>\n
WITHDRAWALS; ACTION FOR PARTITION; BREACHES<\/p>\n
10.1 WAIVER OF PARTITION. No Member shall, either directly or indirectly,
\ntake any action to require partition, file a bill for Company accounting or
\nappraisement of the Company or of any of its assets or properties or cause the
\nsale of any Company property; and, notwithstanding any provisions of applicable
\nlaw to the contrary, each Member (and each of his legal representatives,
\nsuccessors, or assigns) hereby irrevocably waives any and all rights it may have
\nto maintain any action for partition or to compel any sale with respect to his
\nCompany interest, or with respect to any assets or properties of the Company,
\nexcept as expressly provided in this Agreement.<\/p>\n
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10.2 COVENANT NOT TO WITHDRAW OR DISSOLVE. Notwithstanding any provision
\nof the Act, but except as otherwise provided in this Agreement, each Member
\nhereby covenants and agrees that the Members have entered into this Agreement
\nbased on their mutual expectation that all Members will continue as Members and
\ncarry out the duties and obligations undertaken by them hereunder and that,
\nexcept as otherwise expressly required or permitted hereby, each Member hereby
\ncovenants and agrees not to (a) take any action to file a certificate of
\ndissolution or its equivalent with respect to itself, (b) take any action that
\nwould cause voluntary bankruptcy of such Member, (c) withdraw or attempt to
\nwithdraw from the Company, (d) exercise any power under the Act to dissolve the
\nCompany, (e) transfer all or any portion of his interest in the Company, (f)
\npetition for judicial dissolution of the Company, or (g) demand a return of such
\nMember’s contributions or profits (or a bond or other security for the return of
\nsuch contributions or profits) without the unanimous consent of the Members.<\/p>\n
ARTICLE XI<\/p>\n
DISSOLUTION AND WINDING UP<\/p>\n
11.1 DISSOLUTION; LIQUIDATING EVENTS. The Company shall be
\ndissolved and its affairs wound up upon the first to occur of the
\nfollowing events:<\/p>\n
(a) the expiration of the term of this Agreement, unless the
\nbusiness of the Company is continued with the written consent of the
\nManager;<\/p>\n
(b) the determination the Manager; and<\/p>\n
(c) the sale of substantially all of the assets of the Company.<\/p>\n
11.2 EFFECT OF DISSOLUTION. Upon dissolution, the Company shall cease
\ncarrying on as distinguished from the winding up of the Company business, but
\nthe Company is not terminated, but continues until the winding up of the affairs
\nof the Company is completed and the certificate of dissolution has been issued
\nby the Secretary of State of the State of Delaware.<\/p>\n
11.3 DISTRIBUTION OF ASSETS ON DISSOLUTION. Upon the winding up of
\nthe Company, the Company’s assets shall be distributed:<\/p>\n
(a) to creditors, including Members who are creditors to the
\nextent by law, in satisfaction of Company liabilities; and<\/p>\n
(b) to Members in accordance with SECTION 4.4. Such distributions shall be
\nin cash or property (which need not be distributed proportionately) or partly in
\nboth, as determined by the Manager.<\/p>\n
11.4 WINDING UP AND CERTIFICATE OF DISSOLUTION. The winding up of the
\nCompany shall be completed when all debts of the Company have been paid and
\ndischarged or reasonably adequate provision therefor has been made, and all of
\nthe remaining assets of the Company have <\/p>\n
-22-<\/p>\n
been distributed to the Members. Upon the completion of winding up of the
\nCompany, a certificate of dissolution shall be delivered to the Secretary of
\nState of the State of Delaware for filing. The certificate of dissolution shall
\nset forth the information required by the Act.<\/p>\n
ARTICLE XII<\/p>\n
AMENDMENT<\/p>\n
12.1 AGREEMENT MAY BE AMENDED. This Agreement may be amended by Veritas;
\nprovided, however, that no such amendment may, except as otherwise herein
\nprovided, (a) adversely affect a Member’s Percentage Interest, or (b) adversely
\naffect any payments to which a Member or a former Member has become entitled
\npursuant to this Agreement.<\/p>\n
ARTICLE XIII<\/p>\n
MISCELLANEOUS PROVISIONS<\/p>\n
13.1 ENTIRE AGREEMENT. This Agreement represents the entire agreement
\namong all the Members and between the Members and the Company with respect to
\nthe subject matter hereof, and supersedes any and all prior agreements and
\nunderstandings with respect to the subject matter hereof.<\/p>\n
13.2 LOANS BY MEMBERS. Loans by Members to the Company shall be
\nmade voluntarily and only upon such terms and conditions as the Members
\nmay determine.<\/p>\n
13.3 NO PARTNERSHIP INTENDED FOR NONTAX PURPOSES. The Members have formed
\nthe Company under the Act, and expressly do not intend hereby to form a
\npartnership under any partnership or limited partnership act. The Members do not
\nintend to be partners one to another, or partners as to any third party. To the
\nextent any Member, by word or action, represents to another person that any
\nother Member is a partner or that the Company is a partnership, the Member
\nmaking such wrongful representation shall be liable to any other Member who
\nincurs personal liability by reason of such wrongful representation.<\/p>\n
13.4 RIGHTS OF CREDITORS AND THIRD PARTIES UNDER AGREEMENT. This Agreement
\nis entered into among the Company and the Members for the exclusive benefit of
\nthe Company, its Members, and their successors and assigns. This Agreement is
\nexpressly not intended for the benefit of any creditor of the Company or any
\nother Person. Except and only to the extent provided by applicable statute, no
\nsuch creditor or third party shall have any rights under this Agreement or any
\nagreement between this Company and any Member with respect to any Capital
\nContribution or otherwise.<\/p>\n
13.5 NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement shall
\nconfer upon any Member any right to continue in the service of Integrated
\nDefense Technologies, PEI or Sierra (or any parent corporation, Subsidiary, or
\nAffiliate thereof) for any period of time <\/p>\n
-23-<\/p>\n
or restrict in any way the rights of the Integrated Defense Technologies, PEI or
\nSierra (or any parent corporation, Subsidiary or Affiliate thereof), to
\nterminate any such Member’s employment at any time for any reason whatsoever,
\nwith or without cause.<\/p>\n
13.6 NO WAIVER. The failure of the Company or Veritas (or assignees of the
\nCompany or Veritas) in any instance to exercise any rights granted under this
\nAgreement shall not constitute a waiver of any other rights that may
\nsubsequently arise under the provisions of this Agreement or any other agreement
\nbetween or among the Company, Veritas and a Member. No waiver of any breach or
\ncondition of this Agreement shall be deemed to be a waiver of any other or
\nsubsequent breach or condition, whether of like or different nature.<\/p>\n
13.7 NOTICES. Any notice, payment, demand, or communication required or
\npermitted to be given by any provision of this Agreement shall be in writing and
\nsent by overnight courier, or by telephone or facsimile, if such telephone
\nconversation or facsimile is followed by a hard copy of the telephone
\nconversation or facsimilied communication sent by overnight courier, charges
\nprepaid, addressed as reflected on SCHEDULE A or SCHEDULE B or to such other
\naddress as such Person may from time to time specify by notice to the Members.
\nAny such notice shall be deemed to be delivered, given, and received as of the
\ndate so delivered.<\/p>\n
13.8 BINDING EFFECT. Except as otherwise provided in this Agreement, every
\ncovenant, term and provision of this Agreement shall be binding upon and inure
\nto the benefit of the Members and their respective successors, transferees and
\nassigns.<\/p>\n
13.9 CONSTRUCTION. Every covenant, term, and provision of this Agreement
\nshall be construed simply according to its fair meaning and not strictly for or
\nagainst any Member.<\/p>\n
13.10 HEADINGS. Section and other headings contained in this Agreement are
\nfor reference purposes only and are not intended to describe, interpret, define,
\nor limit the scope, extent, or intent of this Agreement or any provision hereof.<\/p>\n
13.11 SEVERABILITY. Every provision of this Agreement is intended to be
\nseverable. If any term or provision hereof is illegal or invalid for any reason
\nwhatsoever, such illegality or invalidity shall not affect the validity or
\nlegality of the remainder of this Agreement.<\/p>\n
13.12 INCORPORATION BY REFERENCE. Each Schedule attached to this
\nAgreement and referred to herein is incorporated in this Agreement by
\nreference and made a part hereof as if fully set forth herein.<\/p>\n
13.13 FURTHER ACTION. Each Member agrees to perform all further acts and
\nexecute, acknowledge, and deliver any documents which may be reasonably
\nnecessary, appropriate, or desirable to carry out the provisions of this
\nAgreement.<\/p>\n
-24-<\/p>\n
13.14 VARIATION OF PRONOUNS. All pronouns and any variations
\nthereof shall be deemed to refer to masculine, feminine, or neuter,
\nsingular or plural, as the identity of the Person or Persons may require.<\/p>\n
13.15 GOVERNING LAW. The laws of the State of Delaware (without reference
\nto its choice of laws principles) shall govern the validity of this Agreement,
\nthe construction of its terms, and the interpretation of the rights and duties
\nof the Members.<\/p>\n
13.16 COUNTERPART EXECUTION. This Agreement may be executed in any
\nnumber of counterparts with the same effect as if all of the Members had
\nsigned the same document. All counterparts shall be construed together
\nand shall constitute one agreement.<\/p>\n
13.17 CONSENT TO JURISDICTION. Each Member hereby irrevocably and
\nunconditionally consents to submit to the exclusive jurisdiction of the courts
\nof the State of New York or the United States of America located in New York
\nCity for any actions, suits or proceedings arising out of or relating to this
\nAgreement and the transactions contemplated hereby and agrees not to commence
\nany action, suit or proceeding relating hereto except in such courts, and
\nfurther agrees that service of any process, summons, notice or document by
\nUnited States registered or certified mail shall be effective service of process
\nfor any action, suit or proceeding brought in any court. Each of the parties
\nhereto hereby irrevocably and unconditionally waives any objection to personal
\njurisdiction and the laying of venue of any action, suit or proceeding arising
\nout of this Agreement or the transactions contemplated hereby, in the courts of
\nthe State of New York or the United States of America located in the New York
\nCity, and hereby further irrevocably and unconditionally waives and agrees not
\nto plead or claim in any such court that any such action, suit or proceeding
\nbrought in any such court has been brought in an inconvenient forum.<\/p>\n
-25-<\/p>\n
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
\nof the date first above written.<\/p>\n
THE VERITAS CAPITAL FUND, L.P.<\/p>\n
By Veritas Capital Management, L.L.C.
\n General Partner<\/p>\n
By: \/s\/ Robert B. McKeon
\n ———————————–
\n Robert B. McKeon, Member<\/p>\n
[PEI EMPLOYEES AND PERMITTED TRANSFEREES]<\/p>\n
[SIERRA EMPLOYEES AND PERMITTED TRANSFEREES]<\/p>\n
-26-<\/p>\n
Amendment No. 1 to the
\n Amended and Restated Limited Liability Company Operating Agreement of
\n IDT Holding, L.L.C.<\/p>\n
This Amendment No. 1 (this “AMENDMENT”) to the Amended and Restated
\nLimited Liability Company Operating Agreement of IDT Holding, L.L.C., a Delaware
\nlimited liability company (the “COMPANY”), is entered into as of February 25,
\n2000 by and among The Veritas Capital Fund, L.P., a Delaware limited partnership
\n(“Veritas”), and the Persons listed as Additional Members on the signature page
\nhereof (the “ADDITIONAL MEMBERS”).<\/p>\n
WHEREAS, the Company was formed pursuant to that certain Limited Liability
\nCompany Operating Agreement dated as of August 6, 1999 among Veritas and certain
\nnamed employees of PEI, as amended by that certain Amended and Restated Limited
\nLiability Company Operating Agreement dated as of December 10, 1999 among
\nVeritas and certain named employees of PEI and Sierra (the “OPERATING
\nAGREEMENT”);<\/p>\n
WHEREAS, the Members desire to admit the Additional Members to the
\nCompany, including, without limitation non-employee directors of Integrated
\nDefense Technologies (“DIRECTOR CLASS B MEMBERS”), and to make certain
\namendments to the Operating Agreement;<\/p>\n
NOW, THEREFORE, in consideration of the mutual agreements made herein, the
\nMembers hereby agree to amend the Operating Agreement as follows:<\/p>\n
1. Unless otherwise defined herein, capitalized terms shall have the
\nmeanings ascribed to them in the Operating Agreement.<\/p>\n
2. Effective as of the date hereof, the Persons listed as Additional
\nMembers on the signature page hereof are hereby admitted to the Company.<\/p>\n
3. SCHEDULE A and SCHEDULE B to the Operating Agreement are hereby amended
\nin the forms annexed hereto to reflect the names, addresses, Capital
\nContributions, Class A Percentage Interests and Class B Percentage Interests of
\nthe Members after the admission of the Additional Members to the Company, the
\nincreased Class B Percentage Interest of certain Class B Members and the
\ndecreased Class B Percentage Interest of certain Class B Members.<\/p>\n
4. For purposes of the Operating Agreement, employees of Excalibur Systems
\nLimited, an Ontario corporation and a wholly-owned subsidiary of Sierra
\n(“EXCALIBUR”), shall be deemed to be Sierra Employees. The Sierra Employment
\nDate of the Additional Member who is an employee of Excalibur shall be deemed to
\nbe January 31, 2000 for purposes of Section 4.2(c) of the Operating Agreement.<\/p>\n
5. Section 4.2(c) is hereby amended to read in its entirety as
\nfollows:<\/p>\n
“(c) Upon a Change of Control, the PEI Reduction Percentage, the
\n Sierra Reduction Percentage and the Director Reduction Percentage (as
\n defined in Section <\/p>\n
4.2(e)) shall be 0%. For purposes of this Agreement, “CHANGE OF
\n CONTROL” means the occurrence of any of the following events:<\/p>\n
(i) Veritas ceases to be the owner of a majority of
\n the outstanding Percentage Interests;<\/p>\n
(ii) Integrated Defense Technologies ceases to be the record
\n or beneficial owner (as such term is defined in Rules 13d-3 and
\n 13d-5 under the Securities Exchange Act of 1934, as amended) of a
\n majority in the aggregate of the total voting power of all classes
\n of capital stock of PEI and Sierra then outstanding and normally
\n entitled to vote on the election of directors; or<\/p>\n
(iii) the sale of all or substantially all of the assets of
\n PEI and Sierra to a third party not Affiliated with Veritas.”<\/p>\n
6. Section 4.2(d) is hereby amended to read in its entirety as
\nfollows:<\/p>\n
“(d) Upon a reduction in the Class B Percentage Interest of a Class
\n B Member in accordance with SECTION 4.2(a), SECTION 4.2(b) or SECTION
\n 4.2(e), the portion of such Class B Member’s Class B Percentage Interest
\n which is so reduced shall be allocated to the Class A Members in
\n proportion to their respective Class A Percentage Interests. In the event
\n of such reduction, such Class B Member shall be entitled to no payment
\n whatsoever as compensation for such reduction in his or her Class B
\n Percentage Interest.”<\/p>\n
7. A new Section 4.2(e) is hereby added to read as follows:<\/p>\n
“(e) Subject to SECTION 4.2(c), in the event that prior to August 7,
\n 2004 or the fifth anniversary of the date the subject Director Class B
\n Member became a director of Integrated Defense Technologies (the
\n “DIRECTORSHIP DATE”), whichever is later, a Director Class B Member ceases
\n to be a director of Integrated Defense Technologies for any reason, then
\n as of the date of the termination of such directorship (the “DIRECTORSHIP
\n TERMINATION DATE”), the Class B Percentage Interest of such Director Class
\n B Member shall be reduced by the following percentage (the “DIRECTOR
\n REDUCTION PERCENTAGE”):<\/p>\n
-2-<\/p>\n
\n\n Directorship Termination Date Director Reduction Percentage
\n —————————– —————————–
\n
\n Prior to August 7, 2000 or the first
\n anniversary of the Directorship
\n Date, whichever is later …………………………….100%
\n After August 6, 2000 or the first anniversary of the
\n Directorship Date, whichever is later, but prior to August
\n 7, 2001 or the second anniversary of the Directorship Date,
\n whichever
\n is later…………………………………………… 80%
\n After August 6, 2001 or the second anniversary of the
\n Directorship Date, whichever is later, but prior to August
\n 7, 2002 or the third anniversary of the Directorship Date,
\n whichever
\n is later…………………………………………… 60%
\n After August 6, 2002 or the third anniversary
\n of the Directorship Date, whichever
\n is later, but prior to August 7, 2003 or the
\n fourth anniversary of the Directorship
\n Date, whichever is later…………………………….. 40%
\n After August 6, 2003 or the fourth anniversary of the
\n Directorship Date, whichever is later, but prior to August
\n 7, 2004 or the fifth anniversary of the Directorship Date,
\n whichever is later………………………………….. 20%
\n After August 6, 2004 or the fifth
\n anniversary of the Directorship
\n Date, whichever is later…………………………….. 0%
\n<\/c><\/s><\/caption>\n<\/table>\n By way of example, if a Director Class B Member whose Directorship
\n Date was on or prior to August 7, 1999 were to cease serving as a director
\n of Integrated Defense Technologies on December 31, 2002, his Class B
\n Percentage Interest would be reduced by 40%.”<\/p>\n
8. A new Section 8.4(e) is hereby added to read as follows:<\/p>\n
“(e) Veritas (and\/or its Transferees) is hereby granted the right to
\n purchase any remaining Class B Membership Interest held by any Director
\n Class B Member (or any <\/p>\n
-3-<\/p>\n
Permitted Transferee of any Director Class B Member) after application
\n of the Director Reduction Percentage (or at the discretion of Veritas
\n any portion thereof) in the event such Director Class B Member ceases
\n to be a director of Integrated Defense Technologies for any reason at
\n the Fair Market Value thereof (as determined in accordance with SECTION
\n 8.4(c)). This purchase right shall be exercisable by written notice
\n delivered to the Director Class B Member within the 60-day period
\n immediately following the date such Director Class B Member ceases to
\n be a director of Integrated Defense Technologies.”<\/p>\n
9. All other terms of the Operating Agreement shall remain in full force
\nand effect and by their execution of this Amendment, the Additional Members make
\nthe representations and warranties set forth in Section 5.2 of the Operating
\nAgreement and agree to be bound by all of the terms and conditions of the
\nOperating Agreement applicable to the Members.<\/p>\n
10. This Amendment may be executed in several counterparts, and all
\ncounterparts so executed shall constitute one agreement, binding on all of the
\nparties hereto, notwithstanding that all of the parties are not signatory to the
\noriginal or the same counterpart.<\/p>\n
-4-<\/p>\n
IN WITNESS WHEREOF, each of Veritas and the Additional Members has
\nexecuted this Amendment as of the date first above written.<\/p>\n
THE VERITAS CAPITAL FUND, L.P.<\/p>\n
By: \/s\/ Robert B. McKeon
\n ——————————-
\n Authorized Signature<\/p>\n
ADDITIONAL MEMBERS:<\/p>\n
[Director Class B Member]<\/p>\n
[PEI Class B Members]<\/p>\n
-5-<\/p>\n
Amendment No. 2 to the
\n Amended and Restated Limited Liability Company Operating Agreement of
\n IDT Holding, L.L.C.<\/p>\n
This Amendment No. 2 (this “AMENDMENT”) to the Amended and Restated
\nLimited Liability Company Operating Agreement of IDT Holding, L.L.C., a Delaware
\nlimited liability company (the “COMPANY”), is entered into as of June 1, 2000 by
\nand among The Veritas Capital Fund, L.P., a Delaware limited partnership
\n(“Veritas”), and the Persons listed as Additional Members on the signature page
\nhereof (the “ADDITIONAL MEMBERS”).<\/p>\n
WHEREAS, the Company was formed pursuant to that certain Limited Liability
\nCompany Operating Agreement dated as of August 6, 1999 among Veritas and certain
\nnamed employees of PEI, as amended by that certain Amended and Restated Limited
\nLiability Company Operating Agreement dated as of December 10, 1999 among
\nVeritas and certain named employees of PEI and Sierra, and as further amended by
\nAmendment No. 1 to the Amended and Restated Limited Liability Company Operating
\nAgreement dated as of February 25, 2000 among Veritas and the Additional Members
\nnamed therein (the “OPERATING AGREEMENT”);<\/p>\n
WHEREAS, the Members desire to admit the Additional Members to the
\nCompany, to increase the Class B Percentage Interest of certain Class B Members,
\nand to eliminate the Class B Interest of a certain Class B Member;<\/p>\n
NOW, THEREFORE, in consideration of the mutual agreements made herein, the
\nMembers hereby agree to amend the Operating Agreement as follows:<\/p>\n
1. Unless otherwise defined herein, capitalized terms shall have the
\nmeanings ascribed to them in the Operating Agreement.<\/p>\n
2. Effective as of the date hereof, the Persons listed as Additional
\nMembers on the signature page hereof are hereby admitted to the Company.<\/p>\n
3. SCHEDULE A and SCHEDULE B to the Operating Agreement are hereby amended
\nin the forms annexed hereto to reflect the names, addresses, Capital
\nContributions, Class A Percentage Interests and Class B Percentage Interests of
\nthe Members after the admission of the Additional Members to the Company, the
\nincreased Class B Percentage Interest of certain Class B Members and the
\nelimination of the Class B Percentage Interest of a certain Class B Member.<\/p>\n
4. All other terms of the Operating Agreement shall remain in full force
\nand effect and by their execution of this Amendment, the Additional Members make
\nthe representations and warranties set forth in Section 5.2 of the Operating
\nAgreement and agree to be bound by all of the terms and conditions of the
\nOperating Agreement applicable to the Members.<\/p>\n
5. This Amendment may be executed in several counterparts, and all
\ncounterparts so executed shall constitute one agreement, binding on all of the
\nparties hereto, notwithstanding that all of the parties are not signatory to the
\noriginal or the same counterpart.<\/p>\n
IN WITNESS WHEREOF, each of Veritas and the Additional Members has
\nexecuted this Amendment as of the date first above written.<\/p>\n
THE VERITAS CAPITAL FUND, L.P.<\/p>\n
By: \/s\/ Robert b. McKeon
\n ——————————-
\n Authorized Signature<\/p>\n
ADDITIONAL MEMBERS:<\/p>\n
[PEI Class B Members]<\/p>\n
[Sierra Class B Members]<\/p>\n
-2-<\/p>\n
Amendment No. 3 to the
\n Amended and Restated Limited Liability Company Operating Agreement of
\n IDT Holding, L.L.C.<\/p>\n
This Amendment No. 3 (this “AMENDMENT”) to the Amended and Restated
\nLimited Liability Company Operating Agreement of IDT Holding, L.L.C., a Delaware
\nlimited liability company (the “COMPANY”), is entered into as of September 29,
\n2000 by and among The Veritas Capital Fund, L.P., a Delaware limited partnership
\n(“Veritas”), and the Persons listed as Additional Members on the signature page
\nhereof (the “ADDITIONAL MEMBERS”).<\/p>\n
WHEREAS, the Company was formed pursuant to that certain Limited Liability
\nCompany Operating Agreement dated as of August 6, 1999 among Veritas and certain
\nnamed employees of PEI, as amended by that certain Amended and Restated Limited
\nLiability Company Operating Agreement dated as of December 10, 1999 among
\nVeritas and certain named employees of PEI and Sierra, as further amended by
\nAmendment No. 1 to the Amended and Restated Limited Liability Company Operating
\nAgreement dated as of February 25, 2000 among Veritas and the Additional Members
\nnamed therein, and as further amended by Amendment No. 2 to the Amended and
\nRestated Limited Liability Company Operating Agreement dated as of June 1, 2000
\namong Veritas and the Additional Members named therein (collectively, the
\n“OPERATING AGREEMENT”);<\/p>\n
WHEREAS, the Members desire to amend the Operating Agreement to reflect an
\nincreased Capital Contribution from Veritas and to admit the Additional Members
\nto the Company;<\/p>\n
NOW, THEREFORE, in consideration of the mutual agreements made herein, the
\nMembers hereby agree to amend the Operating Agreement as follows:<\/p>\n
1. Unless otherwise defined herein, capitalized terms shall have the
\nmeanings ascribed to them in the Operating Agreement.<\/p>\n
2. Effective as of the date hereof, (a) Veritas shall increase its Capital
\nContribution as reflected on SCHEDULE A hereto and (b) the Persons listed as
\nAdditional Members on the signature page hereof are hereby admitted to the
\nCompany.<\/p>\n
3. SCHEDULE A and SCHEDULE B to the Operating Agreement are hereby amended
\nin the forms annexed hereto to reflect the names, addresses, Capital
\nContributions, Class A Percentage Interests and Class B Percentage Interests of
\nthe Members after the increased Capital Contribution of Veritas, the admission
\nof the Additional Members to the Company and the termination of employment of a
\ncertain PEI Class B Member effective as of the date hereof.<\/p>\n
4. The definition of “Change of Control” in Article I of the Operating
\nAgreement is hereby amended to read in its entirety as follows:<\/p>\n
“‘CHANGE OF CONTROL’ is defined in SECTION 4.2(c).”<\/p>\n
5. The definition of “Fair Market Value” in Article I of the Operating
\nAgreement is hereby amended to read in its entirety as follows:<\/p>\n
“‘FAIR MARKET VALUE’ is defined in SECTION 8.4(c).”<\/p>\n
6. The first sentence of Section 8.1 of the Operating Agreement is hereby
\namended to read as follows:<\/p>\n
“No Member, other then Veritas and its Transferees, may
\n directly or indirectly, Transfer all or a portion of his, her or its
\n Membership Interest except to a Permitted Transferee or as otherwise
\n expressly provided in this Agreement; PROVIDED, HOWEVER, that
\n Veritas and any other Class A Member that is not an individual may
\n Transfer all or a portion of their Membership Interests to
\n Affiliates.”<\/p>\n
7. Section 11.3(b) of the Operating Agreement is hereby amended to read in
\nits entirety as follows:<\/p>\n
“(b) to Members in accordance with SECTION 4.4. Such
\n distribution shall be in cash or property (which shall be
\n distributed proportionally) or partly in both, as determined in good
\n faith by the Manager.”<\/p>\n
8. All other terms of the Operating Agreement shall remain in full force
\nand effect and by their execution of this Amendment, the Additional Members make
\nthe representations and warranties set forth in Section 5.2 of the Operating
\nAgreement and agree to be bound by all of the terms and conditions of the
\nOperating Agreement applicable to the Members.<\/p>\n
9. This Amendment may be executed in several counterparts, and all
\ncounterparts so executed shall constitute one agreement, binding on all of the
\nparties hereto, notwithstanding that all of the parties are not signatory to the
\noriginal or the same counterpart.<\/p>\n
-2<\/p>\n
IN WITNESS WHEREOF, each of Veritas and the Additional Members has
\nexecuted this Amendment as of the date first above written.<\/p>\n
THE VERITAS CAPITAL FUND, L.P.<\/p>\n
By: \/s\/ Robert B. McKeon
\n ——————————-
\n Authorized Signature<\/p>\n
-3-<\/p>\n
[ADDITIONAL MEMBERS]<\/p>\n
-4-<\/p>\n
Amendment No. 4 to the
\n Amended and Restated Limited Liability Company Operating Agreement of
\n IDT Holding, L.L.C.<\/p>\n
This Amendment No. 4 (this “AMENDMENT”) to the Amended and Restated
\nLimited Liability Company Operating Agreement of IDT Holding, L.L.C., a Delaware
\nlimited liability company (the “COMPANY”), is entered into as of June 1, 2001 by
\nand among The Veritas Capital Fund, L.P., a Delaware limited partnership
\n(“Veritas”), and the Persons listed as Additional Members on the signature page
\nhereof (the “ADDITIONAL MEMBERS”).<\/p>\n
WHEREAS, the Company was formed pursuant to that certain Limited Liability
\nCompany Operating Agreement dated as of August 6, 1999 among Veritas and certain
\nnamed employees of PEI, as amended by that certain Amended and Restated Limited
\nLiability Company Operating Agreement dated as of December 10, 1999 among
\nVeritas and certain named employees of PEI and Sierra, as further amended by
\nAmendment No. 1 to the Amended and Restated Limited Liability Company Operating
\nAgreement dated as of February 25, 2000 among Veritas and the Additional Members
\nnamed therein, as further amended by Amendment No. 2 to the Amended and Restated
\nLimited Liability Company Operating Agreement dated as of June 1, 2000 among
\nVeritas and the Additional Members named therein, and as further amended by
\nAmendment No. 3 to the Amended and Restated Limited Liability Company Operating
\nAgreement dated as of September 29, 2000 among Veritas and the Additional
\nMembers named therein (the “OPERATING AGREEMENT”);<\/p>\n
WHEREAS, on September 29, 2000 Integrated Defense Technologies acquired
\nMetric Systems Corporation, a Florida corporation (“METRIC”), Enterprise
\nElectronics Corporation, an Alabama corporation (“ENTERPRISE”), and Continental
\nElectronics Corporation, a Nevada corporation (“CONTINENTAL”);<\/p>\n
WHEREAS, the Members desire to admit the Additional Members to the
\nCompany, including, without limitation certain employees of Metric, Enterprise
\nand Continental, and to make certain amendments to the Operating Agreement;<\/p>\n
NOW, THEREFORE, in consideration of the mutual agreements made herein, the
\nMembers hereby agree to amend the Operating Agreement as follows:<\/p>\n
1. Unless otherwise defined herein, capitalized terms shall have the
\nmeanings ascribed to them in the Operating Agreement.<\/p>\n
2. Effective as of the date hereof, the Persons listed as Additional
\nMembers on the signature pages hereof are hereby admitted to the Company.<\/p>\n
3. SCHEDULE A and SCHEDULE B to the Operating Agreement are hereby amended
\nin the forms annexed hereto to reflect the names, addresses, Capital
\nContributions, Class A Percentage Interests and Class B Percentage Interests of
\nthe Members after the admission of the Additional Members to the Company and the
\ndecreased or eliminated Class B Percentage Interests of certain Class B Members.<\/p>\n
4. For purposes of the Operating Agreement, employees of Integrated
\nDefense Technologies shall be deemed to be PEI Employees and Class B Members
\nemployed by Integrated Defense Technologies shall be deemed to be PEI Class B
\nMembers.<\/p>\n
5. Article I is hereby amended by adding the following definitions:<\/p>\n
“‘CONTINENTAL CLASS B MEMBER’ means a Class B Member employed by
\n Continental.”<\/p>\n
“‘ENTERPRISE CLASS B MEMBER’ means a Class B Member employed by
\n Enterprise.”<\/p>\n
“‘IDT EMPLOYEE’ means a Member who is an employee of Integrated
\n Defense Technologies or any of its Subsidiaries.”<\/p>\n
“‘METRIC CLASS B MEMBER’ means a Class B Member employed by Metric.”<\/p>\n
6. Section 4.2(c) is hereby amended to read in its entirety as follows:<\/p>\n
“(c) Upon a Change of Control, the PEI Reduction Percentage, the
\n Sierra Reduction Percentage, the Director Reduction Percentage (as defined
\n in Section 4.2(e)) and the Metric\/Enterprise\/Continental Reduction
\n Percentage (as defined in Section 4.2(f)) shall be 0%. For purposes of
\n this Agreement, “CHANGE OF CONTROL” means the occurrence of any of the
\n following events:<\/p>\n
(i) Veritas ceases to be the owner of a majority of the
\n outstanding Percentage Interests;<\/p>\n
(ii) Integrated Defense Technologies ceases to be the direct
\n or indirect beneficial owner (as such term is defined in Rules 13d-3
\n and 13d-5 under the Securities Exchange Act of 1934, as amended) of
\n a majority in the aggregate of the total voting power of all classes
\n of capital stock of PEI, Sierra, Metric, Enterprise and Continental
\n then outstanding and normally entitled to vote on the election of
\n directors; or<\/p>\n
(iii) the sale of all or substantially all of the assets of
\n Integrated Defense Technologies and its Subsidiaries to a third
\n party not Affiliated with Veritas.”<\/p>\n
7. Section 4.2(d) is hereby amended to read in its entirety as follows:<\/p>\n
-2-<\/p>\n
“(d) Upon a reduction in the Class B Percentage Interest of a Class
\n B Member in accordance with SECTION 4.2(a), SECTION 4.2(b), SECTION
\n 4.2(e), or SECTION 4.2(f), the portion of such Class B Member’s Class B
\n Percentage Interest which is so reduced shall be allocated to the Class A
\n Members in proportion to their respective Class A Percentage Interests. In
\n the event of such reduction, such Class B Member shall be entitled to no
\n payment whatsoever as compensation for such reduction in his or her Class
\n B Percentage Interest.”<\/p>\n
8. A new Section 4.2(f) is hereby added to read as follows:<\/p>\n
“(f) Subject to SECTION 4.2(c), in the event that prior to September
\n 30, 2005 or the fifth anniversary of the date the subject Metric Class B
\n Member, Enterprise Class B Member or Continental Class B Member was
\n employed by Metric, Enterprise or Continental, as the case may be (the
\n “METRIC\/ENTERPRISE\/CONTINENTAL EMPLOYMENT DATE”), whichever is later, the
\n employment of a Metric Class B Member, Enterprise Class B Member or
\n Continental Class B Member by Integrated Defense Technologies or any of
\n its Subsidiaries on a full time basis terminates for any reason, then as
\n of the date of the termination of such employment (the
\n “METRIC\/ENTERPRISE\/CONTINENTAL TERMINATION DATE”), the Class B Percentage
\n Interest of such Metric Class B Member, Enterprise Class B Member or
\n Continental Class B Member, as the case may be, shall be reduced by the
\n following percentage (the “METRIC\/ENTERPRISE\/CONTINENTAL REDUCTION
\n PERCENTAGE”):<\/p>\n
-3-<\/p>\n
\n\n Metric\/Enterprise\/Continental Metric\/Enterprise\/Continental
\n Termination Date Reduction Percentage
\n —————- ——————–<\/p>\n
\n Prior to September 30, 2001 or the first
\n anniversary of the Metric\/Enterprise\/
\n Continental Employment Date,
\n whichever is later ……………………………………………..100%
\n After September 30, 2001 or the first anniversary of the
\n Metric\/Enterprise\/ Continental Employment Date, whichever
\n is later, but prior to September 30, 2002 or the second
\n anniversary of the Metric\/Enterprise\/
\n Continental Employment Date,
\n whichever is later……………………………………………… 80%
\n After September 30, 2002 or the second
\n anniversary of the Metric\/Enterprise\/
\n Continental Employment Date, whichever is later, but prior
\n to September 30, 2003 or the third anniversary of the
\n Metric\/ Enterprise\/Continental Employment
\n Date, whichever is later……………………………………….. 60%
\n After September 30, 2003 or the third
\n anniversary of the Metric\/Enterprise\/
\n Continental Employment Date, whichever is later, but prior
\n to September 30, 2004 or the fourth anniversary of the
\n Metric\/ Enterprise\/Continental Employment Date,
\n whichever is later…………………………………………….. 40%
\n After September 30, 2004 or the fourth
\n anniversary of the Metric\/Enterprise\/
\n Continental Employment Date, whichever is later, but prior
\n to September 30, 2005 or the fifth anniversary of the
\n Metric\/ Enterprise\/Continental Employment Date,
\n whichever is later……………………………………………… 20%
\n After September 30, 2005 or the fifth
\n anniversary of the Metric\/Enterprise\/
\n Continental Employment Date,
\n whichever is later……………………………………………… 0%
\n<\/c><\/s><\/caption>\n<\/table>\n -4-<\/p>\n
By way of example, if a Metric Class B Member whose
\n Metric\/Enterprise\/Continental Employment Date was on or prior to September
\n 30, 2000 were to terminate his employment with Integrated Defense
\n Technologies or any of its Subsidiaries on December 31, 2003, his Class B
\n Percentage Interest would be reduced by 40%.”<\/p>\n
9. Section 8.4(a) is hereby amended to read in its entirety as follows:<\/p>\n
“(a) Veritas (and\/or its Transferees) is hereby granted the right to
\n purchase the entire Membership Interest (or at the discretion of Veritas
\n any portion of the Membership Interest) held by any Member who is an IDT
\n Employee, or who is a Permitted Transferee of an IDT Employee, in the
\n event the employment of such Member (or the Transferor of such Member) by
\n Integrated Defense Technologies or any of its Subsidiaries on a full time
\n basis terminates (i) for cause or such Member voluntarily terminates his
\n employment, with respect to such Member’s Class A Membership Interest, or
\n (ii) for any reason, with respect to such Member’s Class B Membership
\n Interest. Veritas may exercise this right at any time within the 60-day
\n period immediately following the date such Member (or Transferor of such
\n Member) ceases to be a full-time employee of Integrated Defense
\n Technologies or any of its Subsidiaries.”<\/p>\n
10. Section 8.4(b) is hereby amended to read in its entirety as follows:<\/p>\n
“(b) For purposes hereof, “TERMINATION FOR CAUSE” means termination
\n of such Member’s employment by Integrated Defense Technologies or any of
\n its Subsidiaries by reason of (i) such Member’s willful dishonesty
\n towards, fraud upon, or deliberate injury or attempted injury to, or
\n breach of fiduciary duty to Integrated Defense Technologies or any of its
\n Subsidiaries; or (ii) conduct by such Member, in connection with the
\n performance of the duties contemplated that would result in serious
\n prejudice to the interests of Integrated Defense Technologies or any of
\n its Subsidiaries, if such Member were to continue to be employed,
\n including, without limitation, the conviction of a felony or a good faith
\n determination by the Board of Directors of Integrated Defense Technologies
\n or any of its Subsidiaries that such Member has committed acts involving
\n moral turpitude; or (iii) such Member’s failure to follow reasonable
\n instructions or directions of the Board of Directors of Integrated Defense
\n Technologies or any of its Subsidiaries, or any policy, rule or procedure
\n of Integrated Defense Technologies or any of its Subsidiaries, in force
\n from time to time.”<\/p>\n
11. Section 8.4(c) is hereby amended to read in its entirety as follows:<\/p>\n
“(c) The purchase price at which Veritas may exercise its right
\n shall be (i) with respect to any Class A Membership Interest, (x) for any
\n period until the third anniversary of the Invested Capital Contribution
\n Date, the Invested Capital of the Member plus 50% of the amount by which,
\n if any, the Fair Market Value of the Class A Membership Interest exceeds
\n the Invested Capital of the Member, or the Fair Market Value of the <\/p>\n
-5-<\/p>\n
Class A Membership Interest, whichever is lower, and (y) for any period
\n after the third anniversary of the Invested Capital Contribution Date, the
\n Fair Market Value of the Class A Membership Interest; and (ii) with
\n respect to any remaining Class B Membership Interest after application of
\n the PEI Reduction Percentage, the Sierra Reduction Percentage or the
\n Metric\/Enterprise\/Continental Reduction Percentage, as the case may be,
\n the Fair Market Value of the Class B Membership Interest. For purposes of
\n this Agreement “FAIR MARKET VALUE” of the Membership Interest shall be
\n determined by the Board of Directors of Integrated Defense Technologies
\n based on the most recent financial statements of Integrated Defense
\n Technologies and its Subsidiaries available on the date such Member ceases
\n to be a full time employee of Integrated Defense Technologies or any of
\n its Subsidiaries.”<\/p>\n
12. Section 8.5 is hereby amended to read in its entirety as follows:<\/p>\n
“8.5 MANDATORY SALE.<\/p>\n
(a) Any Member who is an IDT Employee or who is a Permitted
\n Transferee of an IDT Employee shall sell his entire Class A Membership
\n Interest to Veritas at a purchase price equal to the Invested Capital of
\n the Member or the Fair Market Value of the Membership Interest, whichever
\n is greater, in the event the employment of such Member (or the Transferor
\n of such Member) by Integrated Defense Technologies or any of its
\n Subsidiaries, is terminated without cause (as defined in SECTION 8.4(b)
\n above).<\/p>\n
(b) The sale shall take place within 60 days following the
\n termination of such Member’s employment by Integrated Defense Technologies
\n or any of its Subsidiaries.”<\/p>\n
13. All other terms of the Operating Agreement shall remain in full force
\nand effect and by their execution of this Amendment, the Additional Members make
\nthe representations and warranties set forth in Section 5.2 of the Operating
\nAgreement and agree to be bound by all of the terms and conditions of the
\nOperating Agreement applicable to the Members.<\/p>\n
14. This Amendment may be executed in several counterparts, and all
\ncounterparts so executed shall constitute one agreement, binding on all of the
\nparties hereto, notwithstanding that all of the parties are not signatory to the
\noriginal or the same counterpart.<\/p>\n
-6-<\/p>\n
IN WITNESS WHEREOF, each of Veritas and the Additional Members has
\nexecuted this Amendment as of the date first above written.<\/p>\n
THE VERITAS CAPITAL FUND, L.P.<\/p>\n
By: \/s\/ Robert B. McKeon
\n ——————————-
\n Authorized Signature<\/p>\n
ADDITIONAL MEMBERS:<\/p>\n
[DIRECTOR CLASS B MEMBER]<\/p>\n
[PEI CLASS B MEMBERS]<\/p>\n
[METRIC CLASS B MEMBERS]<\/p>\n
[ENTERPRISE CLASS B MEMBERS]<\/p>\n
[CONTINENTAL CLASS B MEMBERS]<\/p>\n
-7-<\/p>\n
Amendment No. 6 to the
\n Amended and Restated Limited Liability Company Operating Agreement of
\n IDT Holding, L.L.C.<\/p>\n
This Amendment No. 6 (this “AMENDMENT”) to the Amended and Restated
\nLimited Liability Company Operating Agreement of IDT Holding, L.L.C., a Delaware
\nlimited liability company (the “COMPANY”), is entered into as of February 5,
\n2002 by and among The Veritas Capital Fund, L.P., a Delaware limited partnership
\n(“VERITAS”), and the Members listed on the signature page hereof (the
\n“MEMBERS”).<\/p>\n
WHEREAS, the Company was formed pursuant to that certain Limited Liability
\nCompany Operating Agreement dated as of August 6, 1999 among Veritas and certain
\nnamed employees of PEI, as amended by that certain Amended and Restated Limited
\nLiability Company Operating Agreement dated as of December 10, 1999 among
\nVeritas and certain named employees of PEI and Sierra, as further amended by
\nAmendment No. 1 to the Amended and Restated Limited Liability Company Operating
\nAgreement dated as of February 25, 2000 among Veritas and the Additional Members
\nnamed therein, as further amended by Amendment No. 2 to the Amended and Restated
\nLimited Liability Company Operating Agreement dated as of June 1, 2000 among
\nVeritas and the Additional Members named therein, as further amended by
\nAmendment No. 3 to the Amended and Restated Limited Liability Company Operating
\nAgreement dated as of September 29, 2000 among Veritas and the Additional
\nMembers named therein, as further amended by Amendment No. 4 to the Amended and
\nRestated Limited Liability Company Operating Agreement dated as of June 1, 2001
\namong Veritas and the Additional Members named therein, and as further amended
\nby Amendment No. 5 to the Amended and Restated Limited Liability Operating
\nAgreement dated as of October 1, 2001 among Veritas and the Additional Members
\nnamed therein (the “OPERATING AGREEMENT”);<\/p>\n
WHEREAS, Integrated Defense Technologies, Inc., a subsidiary of the
\nCompany, proposes to offer shares of its common stock (“IDT SHARES”) in an
\ninitial public offering (the “IPO”); and<\/p>\n
WHEREAS, Veritas and the Members have determined to amend the
\nOperating Agreement in light of the IPO;<\/p>\n
NOW, THEREFORE, in consideration of the mutual agreements made herein,
\nVeritas and the Members hereby agree to amend the Operating Agreement as
\nfollows:<\/p>\n
1. Unless otherwise defined herein, capitalized terms shall have the
\nmeanings ascribed to them in the Operating Agreement.<\/p>\n
2. The last sentence of Section 3.3 is hereby amended to read as follows:<\/p>\n
“In no event shall the aggregate Class B Percentage Interests exceed
\n5.8816%.”<\/p>\n
3. Section 4.1(a) is hereby amended to read in its entirety as follows:<\/p>\n
“4.1 ALLOCATION OF NET PROFITS AND NET LOSS OF THE COMPANY. Net
\nProfits and Net Loss of the Company in each Fiscal Year shall be allocated to
\nthe Members as follows:<\/p>\n
(a) NET PROFITS. Net Profits shall be allocated among the
\nMembers as follows:<\/p>\n
(i) first to offset any Net Loss allocated to a Member;<\/p>\n
(ii) next to the Class B Members PRO RATA in accordance
\n with their respective Class B Percentage Interests in an
\n amount equal to the quotient of (A) the aggregate Class B
\n Percentage Interests and (B) 100%, times the amounts
\n distributed to the Class A Members under Section 4.4(a) and to
\n the Class B Members under Section 4.4(b)(ii); and<\/p>\n
(iii) thereafter among the Members PRO RATA in
\n accordance with their respective Percentage Interests.”<\/p>\n
4. Section 4.4 is hereby amended to read in its entirety as follows:<\/p>\n
“4.4 DISTRIBUTIONS. Available Cash shall be distributed to the
\nMembers as follows:<\/p>\n
(a) FIRST to the Class A Members in proportion to their unreturned
\nInvested Capital until such time as they have received cumulative distributions
\nunder this SECTION 4.4 equal to all of their Invested Capital;<\/p>\n
(b) SECOND to the Class B Members PRO RATA in accordance with their
\nrespective Class B Percentage Interests until such time as they have received an
\namount equal to (i) the quotient of (A) the aggregate Class B Percentage
\nInterests and (B) 100%, times the amount distributed to the Class A Members
\nunder Section 4.4(a) plus (ii) such additional amounts so that the distributions
\nto the Class B Members under this Section 4.4(b) divided by the total amounts
\ndistributed under Sections 4.4(a) and 4.4(b) equals the aggregate of the Class B
\nPercentage Interests, when expressed as a percentage; and<\/p>\n
(c) THEREAFTER, to the Members PRO RATA in accordance with their
\nrespective Percentage Interests.”<\/p>\n
5. A new Section 4.6 is hereby added to read as follows:<\/p>\n
2<\/p>\n
4.6 SPECIAL RESTRICTIONS ON POST-IPO SALES BY AFFECTED CLASS A
\n MEMBERS AND CLASS B MEMBERS. Notwithstanding the foregoing provisions of
\n this Article IV, the Class A Members identified on SCHEDULE 1 to this
\n Amendment (the “AFFECTED CLASS A MEMBERS”) and the Class B Members shall
\n not be allocated income from or be entitled to distributions from the sale
\n of IDT Shares occurring within 180 days after the public offering date set
\n forth on the final prospectus used to sell IDT Shares in connection with
\n the IPO (the “RESTRICTION PERIOD”). After the termination of the
\n Restriction Period, distributions and allocations will be made first to
\n the Affected Class A Members and the Class B Members in amounts they would
\n have been allocated and received but for the application of this Section
\n 4.6 (the “IPO MAKEUP”). After the IPO Makeup and the expiration of the
\n Restriction Period, the Affected Class A Members and the Class B Members
\n shall participate under this Article IV as if this Section 4.6 had not
\n been in effect.”<\/p>\n
6. A new Section 4.7 is hereby added to read as follows:<\/p>\n
“4.7 DISTRIBUTION OF TAX ADVANCES. Veritas, in its discretion, may
\n cause the Company to make an advance (“TAX ADVANCE”) to the Class A
\n Members and\/or for the Class B Members as a group to the extent that cash
\n distributions are insufficient to pay the combined Federal, state and
\n local income tax liabilities of such Members assuming for this purpose
\n that all such Members are required to pay Federal, state and local income
\n tax on such income at the highest rate applicable to such income. Tax
\n Advances shall be repaid by reducing the amount of current or succeeding
\n distributions which would otherwise be paid to such Members, or if such
\n distributions are not sufficient for that purpose, by reducing the
\n proceeds of liquidation otherwise payable to such Members.”<\/p>\n
7. SCHEDULE A and SCHEDULE B to the Operating Agreement are hereby amended
\nin the forms attached hereto to reflect the names, addresses, Capital
\nContributions, Class A Percentage Interests and Class B Percentage Interests of
\nthe Member after giving effect to the amendments to the Operating Agreement
\neffected by this Amendment.<\/p>\n
8. All other terms of the Operating Agreement shall remain in full force
\nand effect.<\/p>\n
9. This Amendment may be executed in several counterparts, and all
\ncounterparts so executed shall constitute one agreement, binding on all of the
\nparties hereto, notwithstanding that all of the parties are not signatory to the
\noriginal or the same counterpart.<\/p>\n
3<\/p>\n
IN WITNESS WHEREOF, each of Veritas and the Members has executed this
\namendment as of the date first above written.<\/p>\n
THE VERITAS CAPITAL FUND, L.P.<\/p>\n
By: \/s\/ Robert B. McKeon
\n ——————————-
\n Authorized Signature<\/p>\n
[MEMBERS]<\/p>\n
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