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EXHIBIT 10.1
OPERATING AGREEMENT
OF
ONSITE TECHNOLOGY L.L.C.
AN OKLAHOMA LIMITED LIABILITY COMPANY
(MANAGER MANAGED)
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 ADDITIONAL MEMBER . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 ADMISSION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 1
1.4 AFFILIATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 ARTICLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 ASSIGNEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 BUSINESS DAY . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 CAPITAL ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 CAPITAL CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . 2
1.10 CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 COMPANY PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . 2
1.14 CONTRIBUTING MEMBERS . . . . . . . . . . . . . . . . . . . . . . 2
1.15 DEFAULT INTEREST RATE . . . . . . . . . . . . . . . . . . . . . 2
1.16 DELINQUENT MEMBER . . . . . . . . . . . . . . . . . . . . . . . 2
1.17 DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.18 DISPOSITION (DISPOSE) . . . . . . . . . . . . . . . . . . . . . 2
1.19 DISSOCIATION . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.20 ENERGY INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . 2
1.21 INITIAL CAPITAL CONTRIBUTION . . . . . . . . . . . . . . . . . . 3
1.22 INITIAL MEMBERS . . . . . . . . . . . . . . . . . . . . . . . . 3
1.23 MAJORITY OF THE MANAGERS . . . . . . . . . . . . . . . . . . . . 3
1.24 MAJORITY OF THE MEMBERS . . . . . . . . . . . . . . . . . . . . 3
1.25 MANAGEMENT RIGHT . . . . . . . . . . . . . . . . . . . . . . . . 3
1.26 MANAGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.27 MEMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.28 MEMBERSHIP INTEREST . . . . . . . . . . . . . . . . . . . . . . 3
1.29 MONEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.30 NET LOSSES . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.31 NET PROFITS . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.32 NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.33 OPERATING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 4
1.34 ORGANIZATION EXPENSES . . . . . . . . . . . . . . . . . . . . . 4
1.35 PERMITTED TRANSFEREE . . . . . . . . . . . . . . . . . . . . . . 4
1.36 PERSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.37 PROCEEDING . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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1.38 PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.39 REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.40 SHARING RATIO . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.41 SUBSTITUTE MEMBER . . . . . . . . . . . . . . . . . . . . . . . 5
1.42 TAXABLE YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.43 TAXING JURISDICTION . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2
FORMATION
2.1 ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 AGREEMENT, EFFECT OF INCONSISTENCIES WITH ACT . . . . . . . . . 5
2.3 NAME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 REGISTERED AGENT AND OFFICE . . . . . . . . . . . . . . . . . . 6
2.7 PRINCIPAL OFFICE . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3
NATURE OF BUSINESS AND PROPRIETARY RIGHTS
3.1 COMPANY PURPOSES . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 LICENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 RESPONSIBILITIES OF XXXXXX . . . . . . . . . . . . . . . . . . . 7
3.4 INVENTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 4
ACCOUNTING AND RECORDS
4.1 RECORDS TO BE MAINTAINED . . . . . . . . . . . . . . . . . . . . 9
4.2 REPORTS TO MEMBERS . . . . . . . . . . . . . . . . . . . . . . 10
4.3 AUDIT OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . 10
4.4 FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 5
MEMBERS AND MANAGERS
ARTICLE 6
RIGHTS AND DUTIES OF MEMBERS
6.1 MANAGEMENT RIGHTS . . . . . . . . . . . . . . . . . . . . . . 11
6.2 LIABILITY OF MEMBERS . . . . . . . . . . . . . . . . . . . . . 11
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6.3 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 11
6.4 CONFLICTS OF INTEREST . . . . . . . . . . . . . . . . . . . . 12
6.5 NO RETURN OF CAPITAL CONTRIBUTION . . . . . . . . . . . . . . 12
6.6 MEETINGS OF MEMBERS . . . . . . . . . . . . . . . . . . . . . 12
6.7 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE . . . . . . 13
ARTICLE 7
MANAGERS
7.1 MANAGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.2 TERM OF MANAGER . . . . . . . . . . . . . . . . . . . . . . . 14
7.3 AUTHORITY OF MANAGERS TO BIND THE COMPANY . . . . . . . . . . 14
7.4 RESTRICTIONS ON POWERS OF THE MANAGERS . . . . . . . . . . . . 15
7.5 COMPENSATION OF MANAGER . . . . . . . . . . . . . . . . . . . 16
7.6 MANAGERS' STANDARD OF CARE . . . . . . . . . . . . . . . . . . 16
7.7 PRINCIPAL MANAGER AND TITLES . . . . . . . . . . . . . . . . . 17
7.8 MEETINGS OF MANAGERS . . . . . . . . . . . . . . . . . . . . . 17
7.9 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE . . . . . . 18
7.10 PROXIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 8
CONTRIBUTIONS AND CAPITAL ACCOUNTS
8.1 INITIAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . 18
8.2 ADDITIONAL COMMITMENTS . . . . . . . . . . . . . . . . . . . . 18
8.3 ENFORCEMENT OF COMMITMENTS . . . . . . . . . . . . . . . . . . 19
8.4 MAINTENANCE OF CAPITAL ACCOUNTS . . . . . . . . . . . . . . . 19
8.5 DISTRIBUTION OF ASSETS . . . . . . . . . . . . . . . . . . . . 20
8.6 SALE OR EXCHANGE OF INTEREST . . . . . . . . . . . . . . . . . 20
8.7 COMPLIANCE WITH SECTION 704(b) OF THE CODE . . . . . . . . . . 20
ARTICLE 9
ALLOCATIONS AND DISTRIBUTIONS
9.1 ALLOCATIONS OF NET PROFITS AND NET LOSSES FROM OPERATIONS . . 20
9.2 INTERIM DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . 21
9.3 LIMITATIONS ON DISTRIBUTIONS . . . . . . . . . . . . . . . . . 21
ARTICLE 10
TAXES
10.1 ELECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.2 TAXES OF TAXING JURISDICTIONS . . . . . . . . . . . . . . . . 21
10.3 TAX MATTERS PARTNER . . . . . . . . . . . . . . . . . . . . . 21
10.4 ACCRUAL METHOD OF ACCOUNTING . . . . . . . . . . . . . . . . . 22
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ARTICLE II
DISPOSITION OF MEMBERSHIP INTERESTS
11.1 DISPOSITION . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.2 DISPOSITIONS NOT IN COMPLIANCE WITH THIS ARTICLE VOID . . . . 22
11.3 RIGHT OF FIRST REFUSAL . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 12
DISSOCIATION OF A MEMBER
12.1 DISSOCIATION . . . . . . . . . . . . . . . . . . . . . . . . . 23
12.2 RIGHTS UPON DISSOCIATION OF A MEMBER . . . . . . . . . . . . . 24
ARTICLE 13
ADMISSION OF ASSIGNEES AND ADDITIONAL MEMBERS
13.1 RIGHTS OF ASSIGNEES . . . . . . . . . . . . . . . . . . . . . 25
13.2 ADMISSION OF SUBSTITUTE MEMBERS . . . . . . . . . . . . . . . 25
13.3 ADMISSION OF ADDITIONAL MEMBERS . . . . . . . . . . . . . . . 25
ARTICLE 14
DISSOLUTION AND WINDING UP
14.1 DISSOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . 25
14.2 EFFECT OR DISSOLUTION . . . . . . . . . . . . . . . . . . . . 26
14.3 DISTRIBUTION OF ASSETS ON DISSOLUTION . . . . . . . . . . . . 26
14.4 WINDING UP AND CERTIFICATE OF DISSOLUTION . . . . . . . . . 27
ARTICLE 15
INDEMNIFICATION
15.1 RIGHT TO INDEMNIFICATION . . . . . . . . . . . . . . . . . . . 27
15.2 ADVANCEMENT OR EXPENSES . . . . . . . . . . . . . . . . . . . 28
15.3 NON-EXCLUSIVITY . . . . . . . . . . . . . . . . . . . . . . . 28
15.4 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 16
AMENDMENT
16.1 OPERATING AGREEMENT MAY BE MODIFIED . . . . . . . . . . . . . 28
16.2 AMENDMENT OR MODIFICATION OF OPERATING AGREEMENT . . . . . . . 28
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ARTICLE 17
MISCELLANEOUS PROVISIONS
17.1 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 28
17.2 NO PARTNERSHIP INTENDED FOR NONTAX PURPOSES . . . . . . . . . 28
17.3 RIGHTS OR CREDITORS AND THIRD PARTIES UNDER OPERATING
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 29
17.4 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 29
17.5 MULTIPLE COUNTERPARTS . . . . . . . . . . . . . . . . . . . . 29
17.6 NO WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . 29
17.7 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . 29
EXHIBIT A
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OPERATING AGREEMENT
THE INTERESTS IN ONSITE TECHNOLOGY L.L.C. HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE RESOLD OR
TRANSFERRED BY THE MEMBER WITHOUT APPROPRIATE REGISTRATION OR THE AVAILABILITY
OF AN EXEMPTION FROM SUCH REQUIREMENTS.
This Operating Agreement of OnSite Technology L.L.C., an Oklahoma
limited liability company organized pursuant to the Act, is entered into and
shall be effective as of the Effective Date, by and among the Company and the
Persons executing this Agreement as Members.
ARTICLE 1
DEFINITIONS
For purposes of this Operating Agreement, unless the context clearly
indicates otherwise, the following terms shall have the following meanings:
1.1 ACT - The Oklahoma Limited Liability Company Act and any
successor statute, as amended from time to time.
1.2 ADDITIONAL MEMBER - A Member other than an Initial Member or a
Substitute Member who has acquired a Membership Interest from the Company.
1.3 ADMISSION AGREEMENT - The Agreement between an Additional
Member and the Company contemplated in section 13.3.
1.4 AFFILIATE - Any Person directly or indirectly controlling,
controlled or under direct or indirect common control with another Person. For
purposes of this definition, the term "control" when used with respect to any
Person means the possession, directly or indirectly, of power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting stock or by contract or otherwise. For purposes
of this Operating Agreement, the Company shall not be deemed an Affiliate of
any Member.
1.5 ARTICLES - The Articles of Organization of the Company as
properly adopted and amended from time to time by the Members and filed with
the Secretary of State of the State of Oklahoma.
1.6 ASSIGNEE - A Person to whom a Membership Interest has been
transferred but who has not been admitted as a Substitute Member.
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1.7 BUSINESS DAY - Any day other than Saturday, Sunday or any
legal holiday observed by the State of Oklahoma.
1.8 CAPITAL ACCOUNT - The account maintained for a Member or
Assignee determined in accordance with Article 8.
1.9 CAPITAL CONTRIBUTION - Any contribution of Property, services
or the obligation to contribute Property or services made by or on behalf of a
Member or Assignee.
1.10 CODE - The Internal Revenue Code of 1986 and any successor
statute as amended from time to time.
1.11 COMMITMENT - The Capital Contributions that a Member,
Additional Member or Assignee is obligated to make.
1.12 COMPANY - OnSite Technology L.L.C., a limited liability
company formed under the laws of the State of Oklahoma, and any successor
limited liability company.
1.13 COMPANY PROPERTY - Any Property owned by the Company.
1.14 CONTRIBUTING MEMBERS - Those members making contributions as a
result of the failure of a Delinquent Member to make the contributions required
by and described in Article 8.
1.15 DEFAULT INTEREST RATE - The lesser of (i) the maximum legal
rate permitted by applicable law or (ii) the then-current prime rate quoted by
the largest commercial bank in the jurisdiction of the Principal Office, plus
three percent.
1.16 DELINQUENT MEMBER - A Member or Assignee who has failed to
meet the Commitment of that Member or Assignee.
1.17 DISTRIBUTION - A transfer of Property to a Member on account
of a Membership Interest.
1.18 DISPOSITION (DISPOSE) - Any sale, assignment, transfer,
exchange, mortgage, pledge, grant, hypothecation, or other transfer, absolute
or as security or encumbrance (including dispositions by operation of law).
1.19 DISSOCIATION - Any action which causes A Person to cease to be
Member as described in Article 12 hereof.
1.20 ENERGY INDUSTRY - The industry of exploration, drilling,
production, refining, transportation and storage of natural gas, natural gas
products, petroleum and petroleum products.
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1.21 INITIAL CAPITAL CONTRIBUTION - The Capital Contribution agreed
to be made by the Initial Members as described in Article 8.
1.22 INITIAL MEMBERS - Those Persons identified in Article 5 who
have executed the Operating Agreement.
1.23 MAJORITY OF THE MANAGERS - A majority by number of all of the
Managers.
1.24 MAJORITY OF THE MEMBERS - Members having Sharing Ratios in
excess of one half of the Sharing Ratios of all the Members entitled to vote
on, consent to, or approve a particular matter. Assignees shall not be
considered Members entitled to vote for the purpose of determining a Majority.
In the case of a Member who has Disposed of that Member's entire Membership
Interest to an Assignee, but who has not ceased to be a Member as provided
below, the Sharing Ratio of such Assignee shall be considered in determining a
Majority of the Members and such Member's vote or consent shall be determined
by such Sharing Ratio.
1.25 MANAGEMENT RIGHT - The right of a Member to participate in the
management of the Company, including the rights to information and to consent
or approve actions of the Company. The rights and authority of a Manager that
is also a Member that exceed those of a Member who is not a Manager are not
considered Management Rights for purposes of the Operating Agreement.
1.26 MANAGER - Any Person named in the Operating Agreement as an
initial Manager of the Company and any Person hereafter appointed as a Manager
of the Company as provided in the Operating Agreement, but this does not
include any Person who has ceased to be a Manager of the Company.
1.27 MEMBER - An Initial Member, Substituted Member or Additional
Member, including, unless the context expressly indicates to the contrary, a
Member-Manager or Assignee.
1.28 MEMBERSHIP INTEREST - The rights of a Member or, in the case
of an Assignee, the rights of the assigning Member in Distributions
(liquidating or otherwise) and allocations of the profits, losses, gains,
deductions, and credits of the Company.
1.29 MONEY - Cash or other legal tender of the United States, or
any obligation that is immediately reducible to legal tender without delay or
discount. Money shall be considered to have a fair market value equal to its
face amount.
1.30 NET LOSSES - The losses and deductions of the Company
determined in accordance with generally accepted accounting principles
consistently applied from year to year employed under the method of accounting
adopted by the Company and as reported separately or in the aggregate, as
appropriate, on the tax return of the Company filed for
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federal income tax purposes.
1.31 NET PROFITS - The income and gains of the Company determined in
accordance with generally accepted accounting principles consistently applied
from year to year employed under the method of accounting adopted by the
Company and as reported separately or in the aggregate, as appropriate, on the
tax return of the Company filed for federal income tax purposes.
1.32 NOTICE - Notice shall be in writing. For the purposes of this
Operating Agreement Notice to the Company shall be considered given when mailed
by certified mail return receipt requested postage prepaid, by overnight
delivery service, or by facsimile addressed to any Manager in care of the
Company at the address or facsimile number of the Principal Office or at such
other addresses and facsimile numbers as a Majority of the Managers may
designate in writing. For purposes of this Operating Agreement notice to a
Member shall be considered given when mailed by certified mail return receipt
requested postage prepaid, by overnight delivery or by facsimile addressed to
the Member at the address or facsimile number reflected in the Operating
Agreement, or at such other address or facsimile number designated in writing
by the Member.
1.33 OPERATING AGREEMENT - This Operating Agreement including all
amendments adopted in accordance with the Operating Agreement and the Act.
1.34 ORGANIZATION EXPENSES - Those expenses incurred in the
organization of the Company excluding the costs of preparation of the Operating
Agreement and Articles.
1.35 PERMITTED TRANSFEREE - Any member of the Member's Immediate
Family, or a corporation, partnership (general or limited), joint venture,
limited liability company, unincorporated association or other business entity
permitted by law controlled by such Member or by members of the Member's
Immediate Family.
1.36 PERSON - An individual, a general partnership, a limited
liability company, a trust, an estate, a corporation or any other legal or
commercial entity permitted to be a member of a limited liability company under
the laws of the State of Oklahoma.
1.37 PROCEEDING - Any administrative, judicial, or other adversary
proceeding, including, without limitation, litigation, arbitration,
administrative adjudication, mediation, and appeal or review of any of the
foregoing.
1.38 PROPERTY - Any property, real or personal, tangible or
intangible, including Money and any legal or equitable interest in such
property, but excluding services and promises to perform services in the
future.
1.39 REGULATIONS - Except where the context indicates otherwise,
the permanent and temporary regulations of the Department of the Treasury under
the Code as such
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regulations may be lawfully changed from time to time.
1.40 SHARING RATIO - With respect to the Initial Members, the
percentage of ownership interest in the Company of each member shall be fifty
percent (50%), as adjusted from time to time pursuant to section 8.3. With
respect to an Assignee or Substitute Member, the Sharing Ratio shall be the
percentage ownership interest in the Company which was purchased from an
assigning or selling Member, so long as said Member is current as to all of its
Commitments.
1.41 SUBSTITUTE MEMBER - An Assignee who has been admitted to all
of the rights of membership pursuant to the Operating Agreement.
1.42 TAXABLE YEAR - The tax. able year of the Company as determined
pursuant to Section 706 of the Code shall be the calendar year.
1.43 TAXING JURISDICTION - Any state, local, or foreign government
that collects tax, interest or penalties, however designated, on any Member's
share of the income or gain attributable to the Company.
ARTICLE 2
FORMATION
2.1 ORGANIZATION - The Members hereby organize the Company as an
Oklahoma limited liability company pursuant to the provisions of the Act.
2.2 AGREEMENT, EFFECT OF INCONSISTENCIES WITH ACT - For and in
consideration of the mutual covenants herein contained and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Members executing the Operating Agreement hereby agree to the
terms and conditions of the Operating Agreement, as it may from time to time be
amended according to its terms. It is the express intention of the Members that
the Operating Agreement shall be the sole source of agreement of the parties,
and, except to the extent a provision of the Operating Agreement expressly
incorporates federal income tax rules by reference to sections of the Code or
Regulations or is expressly prohibited or ineffective under the Act, the
Operating Agreement shall govern, even when inconsistent with, or different
than, the provisions of the Act or any other law or rule. To the extent any
provision of the Operating Agreement is prohibited or ineffective under the
Act, the Operating Agreement shall be considered amended to the smallest degree
possible in order to make the Operating Agreement effective under the Act. In
the event the Act is subsequently amended or interpreted in such a way to make
any provision of the Operating Agreement that was formerly invalid valid, such
provision shall be considered to be valid from the effective date of such
interpretation or amendment. The Members hereby agree that each Member shall be
entitled to rely on the provisions of this Operating Agreement, and no Member
shall be liable to the Company or to any Member for any action or refusal to
act taken in good faith reliance on the terms of this Operating
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Agreement. The Members and the Company hereby agree that the duties and
obligations imposed on the Members of The Company as such shall be those set
forth in this Operating Agreement, which is intended to govern the relationship
among the Company and the Members, notwithstanding any provision of the Act or
common law to the contrary. This Operating Agreement shall in all respects
supersede and replace the Memorandum of Understanding effective January 1, 1995
between National Fuels & Energy, Inc. and Xxxxxx Drilling Company.
2.3 NAME - The name of the Company is OnSite Technology L.L.C. and
all business of tile Company shall be conducted under that name or under any
other name, but in any case, only to the extent permitted by applicable law.
2.4 EFFECTIVE DATE - The Operating Agreement shall become
effective upon the full execution of this Operating Agreement.
2.5 TERM - The Company shall be dissolved and its affairs wound up
in accordance with the Act and the Operating Agreement on January 1, 2025
unless the term shall be extended by amendment to the Operating Agreement and
the Articles, or unless the Company shall be sooner dissolved and its affairs
wound up in accordance with the Act or the Operating Agreement.
2.6 REGISTERED AGENT AND OFFICE - The registered agent for the
service of process and the registered office shall be that Person and location
reflected in the Articles as filed in the office of the Secretary of State of
the State of Oklahoma. The Managers may, from time to time, change the
registered agent or office through appropriate filings with the Secretary of
State of the State of Oklahoma. In the event the registered agent ceases to act
as such for any reason or the registered office shall change, the Managers
shall promptly designate a replacement registered agent or file a notice of
change of address as the case may be. If the Managers shall fail to designate a
replacement registered agent or change of address of the registered office, any
Member may designate a replacement registered agent or file a notice of change
of address.
2.7 PRINCIPAL OFFICE - The Principal Office of the Company in
Oklahoma shall be located at 0 Xxxx Xxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000. The
Company may also maintain offices at such other place or places the Majority of
the Managers deem advisable.
ARTICLE 3
NATURE OF BUSINESS AND PROPRIETARY RIGHTS
3.1 COMPANY PURPOSES - The purposes of the Company are to provide
environmental remediation, reclamation, testing and other associated services
pursuant to the license granted in Section 3.2 hereof and in such other areas
as a Majority of the Members may agree to from time to time and to engage in
any other business or activity that now or hereafter may be necessary,
incidental, proper, advisable or convenient to
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accomplish the foregoing purposes (including, without limitation, obtaining
financing therefore) and that are not forbidden by the law of the jurisdiction
in which the Company engages in that business.
3.2 LICENSE - National Fuels & Energy, Inc. ("NFE") does hereby
grant to the Company, for the purpose of this Operating Agreement, a
non-royalty bearing license to manufacture and have manufactured, to use and
have used and to practice and have practiced NFE's Soil Remediation System(s),
associated proprietary processes, equipment, patents and future inventions and
improvements thereto for use in the reclamation of hydrocarbons as follows:
(a) Exclusive at drill sites in the Energy Industry in the
continental United States and Alaska.
(b) Nonexclusive in the Energy Industry in the continental
United States and Alaska.
(c) Exclusive in the Energy Industry in the countries listed
on Exhibit A hereto.
(d) Nonexclusive in all industries in the countries listed on
Exhibit A hereto.
Except as specifically provided in the following paragraph and Section
14.2(d) of the Operating Agreement, the license granted hereunder is
nontransferable and the Company shall have no right to grant any sublicenses.
The term of this license shall be the later of the Term of this
Operating Agreement or the useful life of any indirect thermal desorption units
("Units") owned by the Company at the time of dissolution of the Company.
Notwithstanding the foregoing, upon dissolution and winding up of the Company,
this license may be assigned and/or sublicensed to any Member which receives a
Unit as part of a Distribution from the Company or any other Person that
purchases a Unit as part of the winding up of the affairs of the Company. The
grantee of such assignment or sublicense shall have no further right to
transfer or sublicense the license. To the extent necessary to carry out the
business of the Company, the Company may assign or sublicense the license to
its Affiliates.
3.3 RESPONSIBILITIES OF XXXXXX - From the effective date of this
Operating Agreement for a period of 365 calendar days, Xxxxxx Drilling
Investment Company ("Xxxxxx") and, where applicable, its Affiliates, at their
sole cost and expense shall actively market and promote the services of NFE's
Soil Remediation System and proprietary processes in the industries and
countries covered by the license of Section 3.2. Specifically Xxxxxx, with
technical support from NFE, shall prepare a brochure, at Xxxxxx'x expense,
promoting the services of NFE's Soil Remediation System and proprietary
processes. The
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brochure shall be distributed to all customers of Xxxxxx and to other potential
customers in Energy Industries, both domestic and international. The initial
mailing list for the brochure shall be mutually agreed upon by Xxxxxx and NFE.
Xxxxxx shall provide sufficient brochures for its offices to reply to customer
requests. Xxxxxx and NFE shall hold a one to two day long training session for
marketing and contract representatives of Xxxxxx to educate them about NFE's
Soil Remediation System and proprietary processes (marketing and contract
representatives working outside of the continental United States may be trained
by videotape). Xxxxxx, with technical support from NFE, shall make at least one
presentation regarding NFE's Soil Remediation System and proprietary processes
to a professional society in the Energy Industry. Xxxxxx, with technical
support from NFE, shall use its best efforts to make a presentation regarding
NFE's Soil Remediation System and proprietary processes at Xxxxxx'x Drilling
Manager's Retreat. Xxxxxx shall present NFE's Soil Remediation System and
proprietary processes at one Energy Industry trade show. After the expiration
of the 365 calendar day period all marketing shall be performed by agents and
representatives of the Company and paid for by the Company, or as otherwise
agreed to by a Majority of the Managers. The Company will not have to pay for
the continuing marketing, after the 365 days, of the Xxxxxx employees charged
by Xxxxxx with marketing Xxxxxx'x drilling expertise/technology around the
world who will continue to market the Company's expertise/technology around the
world. The Company will not have to pay for the continuing marketing of the NFE
employees charged by NFE with marketing NFE's expertise/technology around the
world, who will continue to market the Company's expertise/technology around
the world.
3.4 INVENTIONS - The parties agree that any inventions (either
patentable or nonpatentable), software, patentable work or copyrightable work
(collectively "inventions") which (i) improve, modify, or alter NFE's Soil
Remediation System as in existence on the execution date of this Operating
Agreement and/or (ii) which deliver soil to or remove soil from the system (this
shall not include Xxxxxx'x or its Affiliates' drilling rigs) made by Xxxxxx
and/or NFE, either singly or jointly, under this Operating Agreement shall be
the Property of the Company, Xxxxxx and NFE, with each having the right to use
such invention, software or work for their own purposes, subject to the terms
of this Operating Agreement. Each invention shall be identified in writing with
copies to the Company, Xxxxxx and NFE. The cost of filing and pursuing any
joint patents shall be paid by the Company.
During the term of this Operating Agreement and for two (2) years
after, neither Xxxxxx nor NFE shall sell, license, assign, sublicense or
otherwise dispose of any interest in an invention made pursuant to this
section, without first offering such interest in the invention to the other
Member of this Operating Agreement on the same terms and conditions that such
invention is offered to the third party. The Member to whom such invention is
offered shall have fourteen (14) days from its receipt of written notice
containing the terms being offered to the third party, in which to exercise its
right of first refusal.
During the term of this Operating Agreement, or as a result of the
joint efforts by
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both the Members or their Affiliates since the signing of the Memorandum of
Understanding effective January 1, 1995 between National Fuels & Energy, Inc.
and Xxxxxx Drilling Company through the execution of this Operating Agreement,
neither Xxxxxx nor NFE shall apply for a patent for any of the NFE equipment or
processes or related equipment or processes without the express written consent
of the other party.
For purposes of this section an invention, software, patentable work
or copyrightable work is made under this Operating Agreement if it is either
conceived or reduced to practice during work under the Operating Agreement. For
purposes of this section "inventions" shall mean any discovery, concept, or
idea, whether or not patentable, made during the term of and while performing
work under this Operating Agreement including but not limited to processes,
methods, software, formulas and techniques, improvements thereof, and know-how
relating thereto.
ARTICLE 4
ACCOUNTING AND RECORDS
4.1 RECORDS TO BE MAINTAINED - The Managers shall maintain the
following records at the Principal Office and at each Member's office:
(a) A current list of the full name and last known
business address of each Member, former Member, holder of a Membership
Interest, and Manager;
(b) A copy of the Articles and all amendments thereto;
(c) Copies of the Company's federal, foreign, state and
local income tax returns and reports and financial statements, for the
three most recent years or if such returns and statements were not
prepared for any reason, copies of the information and statements
provided to, or which should have been provided to, The Members to
enable them to prepare their federal, state and local tax returns for
such period;
(d) Copies of the Operating Agreement including all amendments
thereto and copies of any operating agreements no longer in effect;
and
(e) If not set forth in this Operating Agreement, a
writing or other data compilation from which information can be
obtained through retrieval devices into reasonably usable form setting
forth the following:
(1) The amount of Money and a statement of the
agreed value of the other Property or services contributed by
each Member and which each Member has agreed to contribute and
the times at which or events upon the happening of which any
additional contributions agreed to be made by each Member are
to be made;
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(2) The events upon the happening of which the
Company is to be dissolved and its affairs wound up; and
(3) Any other information prepared pursuant to a
requirement in the Operating Agreement.
4.2 REPORTS TO MEMBERS:
(a) The Managers shall provide a balance sheet, a cash
flow statement and an income statement at least annually to the
Members and shall also provide such other reports as the Members may
request from time to time.
(b) The Company, through its Managers, shall provide all
Members and Assignees with those information returns required by the
Code and the laws of any state.
4.3 AUDIT OF THE COMPANY:
(a) The Managers shall develop a formal audit plan of the
Company. The Members may, by vote of a Majority of the Members, have
an independent audit of the books and records of the Company
undertaken. The results of such audit(s) shall be available to all
Members.
(b) Any Member, at its own cost and at a reasonable time
during normal business hours, may, on its own or through an agent,
inspect, copy and/or audit the books and records of the Company. The
frequency of such audits shall be reasonable. In the event that audits
of the Company by Members become unduly burdensome, the Members may,
by vote of the Majority of the Members, restrict the right of each
Member to audit the books and records of the Company and substitute an
annual independent audit of the Company in place of each Member's
right to audit.
4.4 FISCAL YEAR - The fiscal year of the Company shall be from
January 1 to December 31.
ARTICLE 5
MEMBERS AND MANAGERS
The names and addresses of the Initial Members of the Company are (1)
National Fuel & Energy, Inc., 0000 Xx. Xxxxxxxxxxx Xxxxx, Xxxxx X, Xxxxxxxxxxx,
Xxxx 00000, FAX:(000) 000-0000 and (2) Xxxxxx Drilling Investment Company, 0
Xxxx Xxxxx Xxxxxx, Xxxxx, Xxxxxxxx, FAX (000) 000-0000. The Initial Managers
appointed by Xxxxxx Drilling Investment Company are Xxxxx Xxxxx and Xxx
Xxxxxxxx. The Initial Managers appointed by National Fuel & Energy, Inc. are
Xxxx Xxxxxxxx and Xxxxx Xxxxxxxx. The initial
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representative of Xxxxxx Drilling Investment Company is Xxxxxx X. Xxxxxx, Xx.
The initial representative of National Fuel & Energy, Inc. is Xxxx Xxxxxxxx.
The representatives named by each Member shall represent and vote the interests
of that Member. Any notices sent to a Member pursuant to this Operating
Agreement shall be addressed to the Member's representative. A Member may
change its representative by giving written notice to the other Members and the
Managers.
ARTICLE 6
RIGHTS AND DUTIES OF MEMBERS
6.1 MANAGEMENT RIGHTS - Except as provided in 6.4 below, all
Members who have not Dissociated shall be entitled to vote on any matter
submitted to a vote of the Members.
6.2 LIABILITY OF MEMBERS - No Member shall be liable as such for
the liabilities of the Company. The failure of the Company to observe any
formalities or requirements relating to the exercise of its powers or
management of its business or affairs under the Operating Agreement or the Act
shall not be grounds for imposing personal liability on the Members for
liabilities of the Company.
6.3 REPRESENTATIONS AND WARRANTIES - Each Member hereby represents
and warrants to the Company and each other Member that:
(a) if that Member is a corporation, it is duly
organized, validly existing, and in good standing under the law of the
state of its incorporation and is duly qualified and in good standing
as a foreign corporation in the jurisdiction of its principal place of
business (if not incorporated therein) and that it has full
organizational power to execute and agree to the Operating Agreement
and to perform its obligations hereunder and all necessary actions by
the board of directors and/or shareholders necessary for the due
authorization, execution, delivery and performance of this Operating
Agreement have been duly taken;
(d) the Member has duly executed and delivered this
Operating Agreement;
(e) that the Member's authorization, execution, delivery,
and performance of this Operating Agreement do not conflict with any
other agreement or arrangement to which that Member is a party or by
which it is bound;
(f) THAT THE MEMBER IS ACQUIRING ITS INTEREST IN THE
COMPANY FOR THE MEMBER'S OWN ACCOUNT AS AN INVESTMENT AND WITHOUT AN
INTENT TO DISTRIBUTE THE INTEREST; AND
(g) THE MEMBER ACKNOWLEDGES THAT THE INTERESTS HAVE
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NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS AND MAY NOT BE RESOLD OR TRANSFERRED BY THE MEMBER
WITHOUT APPROPRIATE REGISTRATION OR THE AVAILABILITY OF AN EXEMPTION
FROM SUCH REQUIREMENTS.
6.4 CONFLICTS OF INTEREST
(a) Xxxxxx specifically acknowledges that NFE is in the
Soil Remediation Business as its primary business using its own and
other technologies. Xxxxxx specifically acknowledges that NFE intends
to continue to pursue the soil remediation business outside the areas
defined in section 3.2 above, which are set aside for the Company
under this Operating Agreement and that NFE at times and at its sole
discretion may use the services of the NFE employees also named as
representatives and Managers of the Company in these endeavors. Xxxxxx
specifically acknowledges that the pursuit and accomplishment of this
Soil Remediation Business is not a conflict of interest with this
Operating Agreement.
(b) All business opportunities brought to the Company by
the efforts of the Company, its Members, Managers, employees or agents
shall be evaluated by the Managers and a decisions shall be made to
pursue or not to pursue the opportunity. Should the decision of the
Managers be to not pursue the opportunity, NFE shall have the right to
pursue the opportunity on its own outside the Company and the Members
acknowledge that this is not and will not be a "conflict of interest"
under this Operating Agreement.
(c) A Member (or the Member' Affiliates) or a Manager
does not violate a duty or obligation to the Company merely because
the Member's or Manager's conduct furthers said Member's or Manager's
own interest. A Member or Manager may lend money to and transact other
business with the Company. The rights and obligations of a Member or
Manager who lends money to or transacts business with the Company are
the same as those of a person who is not a Member or Manager, subject
to other applicable law. No transaction with the Company shall be
voidable solely because a Member or Manager has a direct or indirect
interest in the transaction if the transaction is fair to the Company
and a Majority of the Members not having a conflict, knowing the
material facts of the transaction and the Member's or Manager's
interest, authorize, approve, or ratify the transaction.
6.5 NO RETURN OF CAPITAL CONTRIBUTION - Absent, the written
consent of all the Members, no Member shall have any right to the withdrawal or
return of any part of the Member's Capital Contribution to the Company.
6.6 MEETINGS OF MEMBERS
(a) Unless otherwise provided in this Operating Agreement, all
decisions
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to be made by the Members shall be by vote of the Majority of the
Members.
(b) All meetings of the Members shall be held at the
principal place of business of the Company or at such other place as
shall be specified or fixed in The notices or waivers thereof;
provided that any or all Members may participate in any such meeting
by means of conference telephone or similar communications equipment
pursuant to this Operating Agreement.
(c) An annual meeting of the Members for the transaction
of such other business as may properly come before the meeting, shall
be held at such place, on such date and at such time as the Managers
shall fix and set forth in the Notice of meeting.
(d) Special meetings of the Members for any proper
purpose or purposes may be called at any time by a Majority of the
Managers or by any Member. Only business within the purpose or
purposes described in the Notice (or waiver thereof) may be conducted
at a special meeting of the Members.
6.7 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE
(a) Any action required or permitted to be taken at any
annual or special meeting of Members may be taken without a meeting,
without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action taken shall be signed by all of the
Members entitled to vote on the action. Every written consent shall
bear the signature and date of signature of each Member. The record
date for determining Members entitled to sign a written consent shall
be the date of first signature by any Member.
(b) Members may participate in and hold a meeting by
means of conference telephone or similar communications equipment by
means of which all Persons participating in the meeting can hear each
other and participation in such meeting shall constitute attendance
and presence at such meeting.
ARTICLE 7
MANAGERS
7.1 MANAGERS - The ordinary and usual decisions concerning the
business affairs of the Company shall be made by the Managers, who may also be
Members. There shall be four initial Managers, who are named in Article 5 of
this Operating Agreement. The number of Managers may be changed by a vote of
the Majority of the Members. Managers need not be Members or residents of the
State of Oklahoma. Each Member shall be entitled to appoint two Managers of the
Company. Any Manager may be replaced at any time by the Member that appointed
him. Any Manager may resign at any time. Such resignation shall be made in
writing and shall take effect at the time specified therein, or
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if no time be specified, at the time of its receipt by the Company. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.
7.2 TERM OF MANAGER- No Manager Shall have any contractual right
to such position. Each Manager shall serve until the earliest of:
(a) The Dissociation of such Manager, if also a Member;
(b) The resignation of such Manager; or
(c) Removal of the Manager by the appointing Member
7.3 AUTHORITY OF MANAGERS TO BIND THE COMPANY - Only the Managers
and agents of the Company authorized by the Managers shall have the authority
to bind the Company. No Member who is not either a Manager or otherwise
authorized as an agent shall take any action to bind the Company, and each
Member shall indemnify the Company for any costs or damages incurred by the
Company as a result of the unauthorized action of such Member. Subject to the
restrictions contained in this Operating Agreement (particularly those in
section 7.4 below) and the.Act, each Manager has the power, on behalf of the
Company, to do all things necessary, appropriate or convenient to carry out the
business and affairs of the Company, including, without limitation:
(a) The institution, prosecution and defense of any
Proceeding in the Company's name;
(b) The purchase, receipt, lease, or other acquisition,
ownership, holding, improvement, use and other dealing with, Property,
wherever located;
(c) The entering into, making and performance of
contracts, agreements, guaranties, and other undertakings binding the
Company; the incurring of liabilities; borrowing money, issuance of
notes, bonds, and other obligations; and the securing of any of its
obligations by mortgage or pledge of any of its Property or income;
(d) The conduct of the Company's business, the
establishment of Company offices, and the exercise of the powers of
the Company within or without the State of Oklahoma;
(e) The appointment of employees and agents of the
Company, the determination of their duties and the establishment of
their compensation;
(f) The making of donations to the public welfare or for
religious, charitable, scientific, literary or educational purposes;
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(g) The making of legal payments or donations, or any
other legal act that furthers the business and affairs of the Company;
(h) The payment of compensation, or additional
compensation to any Member or Employees on account of services
previously rendered to the Company, whether or not an agreement to pay
such compensation was made before such services were rendered;
(i) The collection of sums due the company;
(j) To the extent funds are available, the payment of
debts and obligations of the Company;
(k) The obtaining of insurance of the Company;
(l) The selection, removal and change of authority and
responsibility of lawyers, accountants and other consultants;
(m) The selection and use of a Company seal.
7.4 RESTRICTIONS ON POWERS OR THE MANAGERS - Notwithstanding the
provisions of section 7.3, the Managers may not do or cause the Company to do
any of the following without complying with this Operating Agreement and/or the
Act:
(a) Sell, lease, exchange or otherwise Dispose of (other
than by way of a pledge, mortgage or deed of trust) all or
substantially all of the Company's Property (with or without good
will), other than in the usual and regular course of the Company's
business without the approval of a Majority of the Members;
(b) Be a party to a merger or consolidation without the
approval of a Majority of the Members;
(c) Amend or restate the Articles without the approval of
the Majority of the Members;
(d) Make or authorize any Distributions of Company Money
and/or other Property without the approval of a Majority of the
Members;
(e) Participate in partnership agreements, joint
ventures, or other associations of any kind with any Person or
Persons without the approval of a Majority of the Members;
(f) Indemnify Members or any other Person (except
contractual indemnifications made in the ordinary course of business)
without the approval of a
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Majority of the Members;
(g) Enter into any contract, agreement or similar
arrangement valued in excess of $10,000 without the approval of a
Majority of the Managers;
(h) Make any expenditure in excess of $10,000 without the
approval of a Majority of the Managers;
(i) Sell, convey, mortgage, pledge, lease, exchange, or
otherwise Dispose of Company Property with value in excess of $10,000
without the approval of the Majority of the Managers;
(j) Lend money, invest and reinvest the Company's funds,
or receive or hold Property as security for repayment without the
approval of the Majority of the Managers;
(k) Pay pensions, establish pension plans, pension
trusts, profit sharing plans, and benefit and incentive plans for all
or any of the current Employees and agents of the Company without the
approval of the Majority of the Managers;
(l) Designate individuals with authority to open and/or
maintain bank and investment accounts and arrangements, draw checks
and other orders for the payment of money, or sign or give
instructions with respect to those accounts and arrangements without
the approval of a Majority of the Managers; or
(m) Borrow Money or commit the credit of the Company for
Company activities and make voluntary prepayments or extensions of
debt without the approval of the Majority of the Managers.
7.5 COMPENSATION OF MANAGER - Each Manager may be entitled to
compensation, in an amount to be determined from time to time by the
affirmative vote of a Majority of the Members.
7.6 MANAGERS' STANDARD OF CARE - A Manager's duty of care in the
discharge of the Manager's duties to the Company and the Member shall be to act
in good faith with the care an ordinary person in a like position would
exercise under similar circumstances and in a manner he reasonably believes to
be in the best interests of the Company. In discharging his duties, a Manager
shall be fully protected in relying in good faith upon the records required to
be maintained under Article 4 and upon such information, opinions, reports or
statements by any of the Members, or agents, or by any other Person, as to
matters the Manager reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Company, including information, opinions, reports
or statements as to the value and amount of the assets, liabilities, profits or
losses of the Company or any other facts pertinent to the
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existence and amount of assets from which distributions to Members might
properly be paid.
7.7 PRINCIPAL MANAGER AND TITLES - The Managers may from time to
time, by vote of the Majority of the Managers, name one of the Managers as the
Principal Manager of the Company and delegate to the Principal Manager such
authority and duties as the Majority of the Managers may deem advisable. The
Managers may, from time to time, by majority vote, designate one or more
Managers to be officers of the Company and assign titles to the officers.
Officers must be Managers of the Company. Any officer so designated shall have
such authority and perform such duties as the Managers may from time to time
delegate to said officer. The designation of a title that is the same or
similar to a title authorized by the Oklahoma General Corporation Act shall not
be a delegation of such authority and duties normally associated with that
office under the Oklahoma General Corporation Act, without a specific
authorization by the Majority of the Managers.
7.8 MEETINGS OR MANAGERS
(a) All decisions to be made by the Managers shall be by
vote of the Majority of the Managers.
(b) All meetings of the Managers shall be held at the
principal place of business of the Company or at such other place as
shall be specified or fixed in the Notices or waivers thereof;
provided that any or all Managers may participate in any such meeting
by means of conference telephone or similar communications equipment
pursuant to this Operating Agreement.
(c) An annual meeting of the Managers for the transaction
of such business as may properly come before the meeting, shall be
held at such place, on such date and at such time as the Managers
shall fix and set forth in the Notice of meeting. Regular meetings of
the Managers shall be held at such times and places as shall be
designated from time to time by the Majority of the Managers. Notice
of such regular meetings shall not be required.
(d) Special meetings of the Managers may be called at any
time by any Manager on at least twenty-four (24) hours Notice (which
shall include Notice by phone) to each other Manager. Such Notice need
not state the purpose or purposes of, or the business to be transacted
at, such meeting, except as may be otherwise provided for by the Act.
(e) The Managers at their discretion may submit any act
or contract for approval or ratification at any annual meeting of the
Members, or at any special meeting of the Members called for that
purpose and any act or contract that shall be approved or be ratified
by the Majority of the Members shall be valid and binding on the
Company.
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7.9 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE
(a) Any action required or permitted to be taken at any
annual or special meeting of Managers may be taken without a meeting,
without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action taken shall be signed by all of
the Managers entitled to vote on the action. Every written consent
shall bear the signature and date of signature of each Manager. The
date for determining Managers entitled to sign a written consent shall
be the date of first signature by any Manager.
(b) Managers may participate in and hold a meeting by
means of conference telephone or similar communications equipment by
means of which all Persons participating in the meeting can hear each
other and participation in such meeting shall constitute attendance
and presence at such meeting.
7.10 PROXIES - A Manager may vote either in person or by proxy
executed in writing by the Manager. A telegram, telex, cablegram or similar
transmission by the Manager or a photographic, photostatic, facsimile or
similar reproduction of a writing executed by the Manager shall be treated as
an original document for purposes of this section. Proxies for use at any
meeting shall be filed with the Managers, before or at the time of the meeting
or execution of written consent, as the case may be. No proxy shall be valid
after twelve (12) months from the date of its execution unless otherwise
provided in the proxy. A proxy shall be revocable.
ARTICLE 8
CONTRIBUTIONS AND CAPITAL ACCOUNTS
8.1 INITIAL CONTRIBUTIONS - Each Initial Member shall make an
Initial Capital Contribution of one thousand dollars ($1,000). The Capital
Contributions shall be made upon the effective date of this Operating
Agreement. No interest shall accrue on any Capital Contribution and no Member
shall have the right to withdraw or be repaid any Capital Contribution except
as provided in the Operating Agreement. Each Additional Member shall make the
Initial Capital Contribution described in its Admission Agreement. The value of
the Additional Member's Initial Capital Contribution and the time for making
such contribution shall be set forth in the Admission Agreement.
8.2 ADDITIONAL COMMITMENTS - In addition to the Initial
Capital Contributions and Commitments, a Majority of the Members may determine
from time to time that additional Capital Contributions are needed to enable
the Company to conduct its business. Upon the vote of a Majority of the
Members, the additional Capital Contributions shall become Commitments of the
Members in proportion to their Sharing Ratios. Upon the making of such a
determination by the Members, the Managers shall give Notice to all Members in
writing at least ten Business Days prior to the date on which such contribution
is due. Such Notice shall set forth the amount of additional contribution
needed, the purpose for which
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the contribution is needed, and the date by which the Members should
contribute.
8.3 ENFORCEMENT OF COMMITMENTS - In the event any Member becomes a
Delinquent Member and fails to perform the Delinquent Member's Commitment, the
Managers shall give the Delinquent Member a Notice of the failure to meet the
Commitment. If the Delinquent Member fails to perform the Commitment (including
any costs associated with the failure to perform the Commitment and interest on
such obligation at the Default Interest Rate) within ten Business Days of the
giving of Notice, the Managers may take such action, including but not limited
to enforcing the Commitment in the court of appropriate jurisdiction in the
state in which the Principal Office is located or the state of the Delinquent
Member's address as reflected in the Operating Agreement. Each Member expressly
agrees to the jurisdiction of such courts but only for the enforcement of
Commitments. The Members who are not delinquent may elect to contribute the
delinquent portion of the Commitment in proportion to such Members' Sharing
Ratios. The Contributing Members, at their sole option (with said option to be
determined by each of the Contributing Members at the time the Commitment is
agreed to), shall be entitled to:
(a) Treat the amounts contributed pursuant to this section
as a loan from the Contributing Members bearing interest at the
Default Interest Rate secured by the Delinquent Member's interest in
the Company. Until they are fully repaid the Contributing Members
shall be entitled to all Distributions to which the Delinquent Member
would have been entitled; or
(b) Have the Sharing Ratios adjusted to reflect the amounts
paid in by the Contributing Members. Each Contributing Member's
Sharing Ratio shall be increased by adding to it a Sharing Ratio
adjustment (expressed as a percentage) the numerator of which is the
amount of the delinquent contribution made by such Member and the
denominator is the total of all Capital Accounts after giving effect
to all contributions and Commitments, including any delinquent
commitments. The Delinquent Member's Sharing Ratio shall be decreased
by subtracting from it all Sharing Ratio adjustments made to
Contributing Members' Sharing Ratios.
Notwithstanding the foregoing, no Commitment or other obligation to make an
additional contribution may be enforced by a creditor of the Company or other
Person other than the Company unless the Member expressly consents to such
enforcement or to the assignment of the obligation to such creditor.
8.4 MAINTENANCE OF CAPITAL ACCOUNTS - The Company shall establish
and maintain Capital Accounts for each Member and Assignee. Each Member's
Capital Account shall be increased by (1) the amount of any Money actually
contributed by the Member to the capital of the Company, (2) the fair market
value of any Property contributed, as determined by the Company and the
contributing Member at arm's length at the time of contribution (net of
liabilities assumed by the Company or subject to which the company takes such
Property, within the meaning of Section 752 of the Code), and (3) the Member's
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share of Net Profits and of any separately allocated items of income or gain
except adjustments provided by the Code pursuant to Section 704(c) and the
Regulations thereunder, to prevent the shifting of tax consequences among
partners with respect to precontribution gain or loss (including any gain and
income from unrealized income with respect to accounts receivable allocated to
the Member to reflect the difference between the book value and tax basis of
assets contributed by the Member). Each Member's Capital Account shall be
decreased by (1) the amount of any Money distributed to the Member by the
Company, (2) the fair market value of any Property distributed to the Member,
as determined by the Company and said Member at arm's length at the time of
Distribution (net of liabilities of the Company assumed by the Member or
subject to which the Member takes such Property within the meaning of Section
752 of the Code), and (3) the Member's share of Net Losses and of any
separately allocated items of deduction or loss (including any loss or
deduction allocated to the Member to reflect the difference between the book
value and tax basis of assets contributed by the Member).
8.5 DISTRIBUTION OF ASSETS - If the Company at any time
distributes any of its assets in-kind to any Member, the Capital Account of
each Member shall be adjusted to account for each Member's allocable share (as
determined under Article 9 below) of the Net Profits or Net Losses that would
have been realized by the Company had it sold the assets that were distributed
at their respective fair market values immediately prior to their distribution.
8.6 SALE OR EXCHANGE OF INTEREST - In the event of a sale or
exchange of some or all of a Member's interest in the Company, the Capital
Account of the transferring Member shall become the Capital Account of the
Assignee, to the extent it relates to the portion of the interest transferred.
8.7 COMPLIANCE WITH SECTION 704(B) OF THE CODE - The provisions of
this Article 8 as they relate to the maintenance of Capital Accounts are
intended, and shall be construed, and, if necessary, modified to cause the
allocations of profits, losses, income, gain and credit pursuant to Article 9
to have substantial economic effect under the Regulations promulgated under
Section 704(b) of the Code, in light of the distributions made pursuant to
Articles 9 and 14 and the Capital Contributions made pursuant to this Article
8. Notwithstanding anything herein to the contrary, this Operating Agreement
shall not be construed as creating a deficit restoration obligation or
otherwise personally obligate any Member to make a Capital Contribution in
excess of the Initial Contribution or any additional Commitments duly
authorized under Section 8.2.
ARTICLE 9
ALLOCATIONS AND DISTRIBUTIONS
9.1 ALLOCATIONS OF NET PROFITS AND NET LOSSES FROM OPERATIONS -
Except as may be required by section 704(c) of the Code net profits, net
losses, and other items of income, gain, loss, deduction and credit shall be
apportioned among the Members in proportion to their Sharing Ratios.
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9.2 INTERIM DISTRIBUTIONS - From time to time, the Majority of the
Members may determine in their reasonable judgment to what extent, if any, the
Company's Money on hand exceeds the current and anticipated needs, including,
without limitation, needs for operating expenses, debt service, capital
expenditures, acquisitions, reserves, and Mandatory Distributions, if any. To
the extent such excess exists, at the direction of the Members the Managers may
make Distributions to the Members in accordance with their Sharing Ratios. Such
Distributions shall be in Money or Property (which need not be distributed
proportionately) or partly in both, as determined by the Members.
9.3 LIMITATIONS ON DISTRIBUTIONS - No Distribution shall be
declared and paid unless, after the Distribution is made (a) the assets of the
Company are in excess of all liabilities of the Company, except liabilities to
Members on account of their Capital Accounts and liabilities to Members holding
preferential rights upon Dissolution and (b) the Company would be able to pay
its debts as they become due in the ordinary course of business.
ARTICLE 10
TAXES
10.1 ELECTIONS - The Managers may make any tax elections for the
Company allowed under the Code or the tax laws of any state or other
jurisdiction having taxing jurisdiction over the Company.
10.2 TAXES OF TAXING JURISDICTIONS - To the extent that the laws of
any Taxing Jurisdiction require, each Member and Assignee (or such Members as
may be required by the Taxing Jurisdiction) will submit an agreement indicating
that the Member will make timely income tax payments to the Taxing Jurisdiction
and that the Member accepts personal jurisdiction of the Taxing Jurisdiction
with regard to the collection of income taxes attributable to the Member's
income, and interest, and penalties assessed on such income. If the Member
fails to provide such agreement, the Company may withhold and pay over to such
Taxing Jurisdiction the amount of tax, penalty and interest determined under
the laws of the Taxing Jurisdiction with respect to such income. Any such
payments with respect to the income of a Member shall be treated as a
distribution for purposes of Article 9.
The Managers may, where permitted by the rules of any Taxing
Jurisdiction, file a composite, combined or aggregate tax return reflecting the
income of the Company and pay the tax, interest and penalties of some or all of
the Members on such income to the Taxing Jurisdiction, in which case the
Company shall inform the Members of the amount of such tax, interest and
penalties so paid.
10.3 TAX MATTERS PARTNER - Xxxxxx Drilling Investment Company is
designated as the tax matters partner of the Company pursuant to Section 623
1(a)(7) of the Code. The tax matters partner shall take such action as may be
necessary to cause each other Member to become a notice partner within the
meaning of Section 6223 of the Code. Any Member who
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is designated tax matter partner may not take any action contemplated by
sections 6222 through 6232 of the Code without the consent of the Majority of
the Managers.
10.4 ACCRUAL METHOD OF ACCOUNTING - The records of the Company
shall be maintained on an accrual method of accounting.
ARTICLE II
DISPOSITION OF MEMBERSHIP INTERESTS
11.1 DISPOSITION - Subject to the provisions of section 11.3 below,
any Member or Assignee may dispose of all or a portion of the Member's or
Assignee's Membership Interest upon compliance with this Section 11.1. No
Membership Interest shall be Disposed of:
(a) unless the transfer of such interest is agreed to by a
Majority of the Members;
(b) if such disposition, alone or when combined with
other transactions, would result in a termination of the Company
within the meaning of Section 708 of the Code;
(c) without an opinion of counsel, provided by the Member
seeking to transfer its interest, satisfactory to the non-transferring
Members that such Disposition is subject to an effective registration
under, or exempt from the registration requirements of, the applicable
state and federal securities laws;
(d) without an opinion of counsel, provided by the Member
seeking to transfer its interest, satisfactory to the non-transferring
Members that such Disposition would not affect the qualification of
the Company as a limited liability company under the Act;
(e) without an opinion of counsel, provided by the Member
seeking to transfer its interest, satisfactory to the non-transferring
Members that such Disposition would not affect the classification of
the Company as a partnership for federal income tax purposes; and
(f) unless and until the Company receives from the
Assignee the information and agreements that the Managers may
reasonably require, including but not limited to, the granting of a
right of first refusal consistent with section 11.3 below, any
taxpayer identification number and any agreement that may be required
by any Taxing Jurisdiction.
11.2 DISPOSITIONS NOT IN COMPLIANCE OR WITH THIS ARTICLE VOID. Any
attempted Disposition of a Membership Interest, or any part thereof, not in
compliance with Section 11.1 shall be, and is declared to be, null and void.
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11.3 RIGHT OF FIRST REFUSAL - The Members (and any Assignees)
hereby grant unto each other (or their Affiliates) a right of first refusal
(which may be exercised at any time within sixty (60) days after receipt of
Notice of a proposed sale and of the price, terms and conditions of sale and
the identity of the proposed purchaser) to purchase a selling Member's
Membership Interest on the same terms, conditions and considerations upon which
the selling Member plans to sell its Membership Interest to a good faith third
party prospective purchaser in proportion to the Sharing Ratios (determined at
the time Notice is sent) of the non-selling Members. If one or more of the
non-selling Members elects not to exercise its right hereunder, the remaining
non-selling Members shall have the right to exercise such right of first
refusal in proportion to their Sharing Ratios. No right of first refusal shall
apply to any sale or transfer of any Membership Interest to a related Person,
as described in Section 1.752-4(b) of the Regulations or to another Member.
ARTICLE 12
DISSOCIATION OF A MEMBER
12.1 DISSOCIATION - A Person shall cease to be a Member upon the
happening of any of the following events:
(a) the resignation of the Member;
(b) the Member makes an assignment for the benefit of
creditors; files a voluntary petition in bankruptcy; is adjudicated as
bankrupt or insolvent; files a petition or answer seeking for itself
any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or
regulation; files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in any
proceeding of this nature; or seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of the Member or of
all or any substantial part of its properties;
(c) after one hundred and twenty (120) days from the
commencement of any proceeding against the Member seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any statute, law or regulation,
the proceeding has not been dismissed, or if within ninety (90) days
after the appointment without its consent or acquiescence of a
trustee, receiver or liquidator of the member or of all or any
substantial part of its properties, the appointment is not vacated or
stayed or within ninety (90) days after the expiration of any stay,
the appointment is not vacated;
(d) in the case of a Member who is a natural person, the
death of the Member or the entry of an order by a court of competent
jurisdiction adjudicating The Member incompetent to manage the
Member's person or his estate;
(e) in the case of a Member who is acting as a Member by
virtue of being
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a trustee of a trust, the termination of the trust (but not merely the
substitution of new trustee);
(f) in the case of a Member that is a separate limited
liability corporation, the dissolution and commencement of winding up
of the separate limited company;
(g) in the case of a Member that is a corporation, the
filing of a certificate of dissolution, or its equivalent, for the
corporation or the revocation of its charter and the lapse of ninety
(90) days after notice to the corporation of revocation without a
reinstatement of its charter; or
(h) in the case of an estate, the distribution by the
fiduciary of the estate's entire interest in the Company.
12.2 RIGHTS UPON DISSOCIATION OF A MEMBER
(a) The Dissociation of a Member shall not entitle said
Member to receive the fair market value of the Member's interest in
the Company as permitted under Section 2027 of the Act.
(b) Upon the occurrence of an event of Dissociation as
defined in section 12.1, after which the Company is continued, the
Members which are not dissociated may elect, within thirty (30) days
of the decision to continue the Company, to purchase the Membership
Interest in the Company of the Member who was dissociated, upon such
terms and conditions as the Members which are not dissociated and the
Member who was dissociated (or its legal representative) may agree. In
the event that no such agreement can be reached, all or part of the
Members which have not dissociated shall have an option, to be
exercised within ninety (90) days after the occurrence of the event of
Dissociation, to purchase the Membership Interest of the Member who
was dissociated for a Money purchase price equal to the value of the
Capital Account of the dissociated Member as of the end of the
calendar month preceding the occurrence of the event of Dissociation,
adjusted as if all Company Property was sold at fair market value and
all liabilities of the Company were paid and the Company was
liquidated in accordance with Article 14. The right to purchase shall
be exercised in proportion to the Sharing Ratios of the Members which
have not dissociated. If one or more of the Members which have not
dissociated elects not to exercise its right hereunder, the other
Members may exercise such right in proportion to their Sharing Ratios.
The rights under this section shall be exercised by giving Notice to
the dissociated Member or its legal representative.
(c) In the event that Xxxxxx voluntarily resigns from the
Company prior to January 1, 1997, Xxxxxx agrees that it shall not use,
market, sell or sell the services
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of NFE's Soil Remediation System and proprietary processes for a
period five (5) years from such resignation.
ARTICLE 13
ADMISSION OF ASSIGNEES AND ADDITIONAL MEMBERS
13.1 RIGHTS OF ASSIGNEES. Subject to Article 11, a Member may
assign its Membership Interest in the Company without the consent of the other
Members. A Member may not assign its Management Right without the consent of
all of the other Members. The Assignee of a Membership Interest shall have no
Management Rights, no right to participate in the business and affairs of the
Company and no right to become a Member. The Assignee shall only be entitled to
receive the Distributions and return of capital, and to be allocated the Net
Profits and Net Losses attributable to the Membership Interest.
13.2 ADMISSION OF SUBSTITUTE MEMBERS - Upon the vote of all of the
non-assigning Members, an Assignee of a Membership Interest may be admitted as
a Substitute Member and admitted to all the rights of the Member who initially
assigned the Membership Interest. The non-assigning Members may grant or
withhold the approval of such admission for any reason in their sole and
absolute discretion. If so admitted, the Substitute Member shall have all the
rights and powers and shall be subject to all the restrictions and liabilities
(including all terms of the Operating Agreement) of the Member originally
owning the Membership Interest. Further, at the sole discretion of the
non-assigning Members, the Substitute Member shall be required to make all of
the warranties and representations required of a Member under the Operating
Agreement. The admission of a Substitute Member, without more, shall not
release the Member originally assigning the Membership Interest from any
liability to the Company that may have existed prior to the approval.
13.3 ADMISSION OF ADDITIONAL MEMBERS - The Members, by unanimous
vote, may permit the admission of Additional Members and determine the Capital
Contributions of such Members. Additional Members may be required to enter into
an Admission Agreement with the Company setting forth the terms of the
admission to membership, the Capital Contribution to be made by the Additional
Member and the agreed value of any property to be contributed to the Company by
the Additional Member.
ARTICLE 14
DISSOLUTION AND WINDING UP
14.1 DISSOLUTION - The Company shall be dissolved and its affairs
wound up, upon the first to occur of the following events:
(a) the expiration of the Term;
(b) the unanimous written consent of all of the Members;
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(c) the Dissociation of any Member unless the business of the
Company is continued with the consent of all of the remaining Members,
and there is more than one remaining Member:
14.2 EFFECT OF DISSOLUTION - Upon dissolution, the Company shall
cease carrying on business and the Managers shall wind up the Company's
business. The Company shall not be terminated, but shall continue in existence
until the winding up of the affairs of the Company is completed and a
Certificate of Dissolution has be issued by the Secretary of State of the State
of Oklahoma.
(a) The Managers will prepare an accounting with respect
to all Company accounts and the Capital Account of each Member and
Assignee and with respect to the Company's assets and liabilities and
its operations from the date of the last previous financial statements
and/or tax return of the Company to the date of Dissolution.
(b) Except as limited in subsection 14.2(c) below, to the
extent required to pay debts or make an orderly distribution of
assets, the Managers, at their discretion, may sell any Property of
the Company for Money.
(c) Except as necessary to pay the debts of the Company,
the intellectual property (which shall include, patents, copyrights,
trademarks, technology and other similar rights and/or personal
property) of the Company, excluding the intellectual property
initially brought to this Operating Agreement and licensed to the
Company as indicated in Section 3.2, and subject to the rights defined
in Section 3.4, shall not be sold. Upon Dissolution, the Members shall
negotiate an equitable division of the Company's intellectual property
as defined and conditioned in the aforementioned Section 3.2 and
Section 3.4.
(d) Any Member or other Person which receives or
purchases a Unit as part of the Distribution of assets on dissolution
of the Company shall also be receive a sublicense of the license
described in Section 3.2. The sublicense shall be granted by the
Company prior to Dissolution and shall survive the Dissolution of the
Company. Such sublicense shall be nontransferable and without the
right to grant further sublicenses. The sublicense shall terminate at
the end of the useful life of the Unit received as part of the
Distribution of assets on dissolution of the Company.
14.3 DISTRIBUTION OR ASSETS ON DISSOLUTION - Upon the winding up of
the Company, the Company Property shall be distributed:
(a) to creditors, including Members who are creditors, to
the extent permitted by law, in satisfaction of Company Liabilities;
(b) to Members in accordance with positive Capital
Account balances
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taking into account all Capital Account adjustments for the Company's
taxable year in which the liquidation occurs. Liquidation proceeds
shall be paid within sixty (60) days of the end of the Company's
taxable year or, if later, within ninety (90) days after the date of
liquidation. Such distributions shall be in Money or Property (which
need not be distributed proportionately) or partly in both, as
determined by the Managers.
14.4 WINDING UP AND CERTIFICATE OR DISSOLUTION - The winding up of
the Company shall be completed when all debts, liabilities, and obligations of
the company have been paid and discharged or reasonably adequate provision
therefor has been made, and all of the remaining Property and assets of the
Company have been distributed to the Members. Upon the completion of winding up
of the Company, a certificate of dissolution shall be delivered to the
Secretary of State for filing. The certificate of dissolution shall set forth
the information required by the Act.
ARTICLE 15
INDEMNIFICATION
15.1 RIGHT to INDEMNIFICATION - To the maximum extent permitted by
law, the Company shall indemnify and hold harmless all Members and Managers,
their respective Affiliates, and the employees and agents of the Company (each
an "Indemnified Party") from and against any and all losses, claims, demands,
costs, damages, liabilities, expenses (including reasonable attorneys' fees),
judgments, fines, settlements, penalties and other expenses actually and
reasonably incurred by an Indemnified Party in connection with any and all
claims, demands, actions, suits or Proceedings, whether civil, criminal,
administrative or investigative in which the Indemnified Party may be involved
or threatened to be involved, as a party or otherwise, arising out of or
incidental to the business of the Company or by reason of the fact that the
Indemnified Party is or was a Member, Manager, agent, employee or an Affiliate
of a Member. Provided, however, the Indemnified Party shall only be entitled to
indemnification if (a) the Indemnified Party's conduct did not constitute
willful misconduct or gross negligence; (b) the action is not based on breach
of this Operating Agreement; (c) the Indemnified Party acted in good faith and
in a manner such Person reasonably believed to be in or not opposed to the best
interests of the Company and within the Indemnified Party's authority; (d) the
conduct of the Indemnified Party was not a conflict of interest as defined by
section 6.4 of the Operating Agreement; and (e) with respect to a criminal
action or proceeding, the Indemnified Party had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent shall not, in and of itself, create a presumption or otherwise
constitute evidence that the Indemnified Party acted in a manner which would
void this indemnification right. The indemnification rights and obligations of
this section shall apply in the event of the negligence, either sole or
concurrent, active or passive, of the Indemnified Party, if not otherwise
prohibited or voided by this section.
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15.2 ADVANCEMENT OR EXPENSES - Expenses incurred by an Indemnified
Party in defending any claim, demand, action, suit or Proceeding pursuant to
section 15.1 may, from time to time, be advanced by the Company upon a vote of
a Majority of the Members, prior to final disposition of such claim, demand,
action, suit or Proceeding upon receipt by the Company of an undertaking by or
on.behalf of the Indemnified Party to repay such amount if it shall ultimately
be determined that such party is not entitled to be indemnified as authorized
in section 15.1.
15.3 NON-EXCLUSIVITY - The indemnification provided by section 15.1
shall be in addition to any other rights to which an Indemnified Party may be
entitled under any agreement, vote of the Members, as a matter of law or
equity, or otherwise and shall inure to the benefit of the successors,
assignees, heirs, personal representatives and administrators of the
Indemnified Party.
15.4 INSURANCE - The Company may, but shall not be obligated to,
purchase and maintain reasonable and customary insurance, at the Company's
expense, on behalf of the Company and any Indemnified Party against any
liability that may be asserted against or expense that may be incurred by an
Indemnified Party in connection with the business of the Company regardless of
whether the Company would have the power to indemnify such Indemnified Party
against such liability under the provisions of this Operating Agreement or the
Act.
ARTICLE 16
AMENDMENT
16.1 OPERATING AGREEMENT MAY BE MODIFIED - The Operating Agreement
may be modified as provided in this Article 16 (as the same may, from time to
time be amended). No Member or Manager shall have any vested rights in the
Operating Agreement which may not be modified through an amendment to the
Operating Agreement.
16.2 AMENDMENT OR MODIFICATION OF OPERATING AGREEMENT - The
Operating Agreement may be amended or modified from time to time only by a
written instrument adopted and executed by all of the Members.
ARTICLE 17
MISCELLANEOUS PROVISIONS
17.1 ENTIRE AGREEMENT - The Operating Agreement represents the
entire agreement among all the Members and between the Members and the Company.
17.2 NO PARTNERSHIP INTENDED FOR NONTAX PURPOSES - The Members have
formed the Company under the Act, and expressly do not intend hereby to form a
partnership under either the Oklahoma Uniform Partnership Act nor the Oklahoma
Uniform Limited Partnership Act. The Members do not intended be partners one to
another, or partners as
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to any third party. To the extent any Member, by word or action, represents to
another person that any other Member is a partner or that the Company is a
partnership, the Member making such wrongful representation shall be liable to
any other Member who incurs personal liability by reason of such wrongful
representation.
17.3 RIGHTS OF CREDITORS AND THIRD PARTIES UNDER OPERATING
AGREEMENT - The Operating Agreement is entered into among the Company and the
Members for the exclusive benefit of the Company, its Members, and their
successors and assignees. The Operating Agreement is expressly not intended
for the benefit of any creditor of the Company or any other Person. Except and
only to the extent provided by applicable statute, no such creditor or third
party shall have any rights under the Operating Agreement, Admission Agreement
or any agreement between the Company and any Member with respect to any Capital
Contribution or otherwise.
17.4 GOVERNING LAW - This Contract shall be construed, governed
interpreted, enforced and litigated, and the relations between the parties
determined in accordance with the laws of the State of Oklahoma.
17.5 MULTIPLE COUNTERPARTS - This Operating Agreement may be
executed in several counterparts, each of which shall be an original, and all
of which, when taken together, shall constitute but one and the same agreement.
17.6 NO WAIVER - No Waiver by any party of any default by any other
party in the performance of any provision, condition or requirement herein
shall be deemed to be a waiver of, or in any manner release the other party
from, performance of any other provision, condition or requirement herein, nor
deemed to be a waiver of, or in any manner release the other party from, future
performance of the same provision, condition or requirement; nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right or any like right accruing to it
thereafter.
17.7 SEVERABILITY - in the event any provision of this Operating
Agreement should be deemed inconsistent with or contrary to any federal, state
or municipal law, rule or regulation, said provision shall be deemed modified
to the least extent necessary to be valid or, if not possible, deleted and this
Operating Agreement shall continue in full force and effect without affecting
the enforceability of the remaining provisions, duties and liabilities set
forth herein.
SPACE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, we have hereunto set our hand and seals on the
date set forth beside out names.
INITIAL MEMBERS:
NATIONAL FUELS AND ENERGY, INC.
/s/ XXXX XXXXXXXX
--------------------------
Name: Xxxx Xxxxxxxx
Title:President
Date: August 1, 1995
XXXXXX DRILLING INVESTMENT COMPANY
/s/ XXXXXX X. XXXXXXXXX
-----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title:President
Date: August 1, 1995
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CORPORATE ACKNOWLEDGMENT
THE STATE OF UTAH )
)
COUNTY OF UTAH )
BEFORE ME, the undersigned authority, on this day personally appeared
Xxxx Xxxxxxxx, known to me to be the person whose name is subscribed to the
foregoing instrument, as President of National Fuels and Energy, Inc., a
corporation, and acknowledged to me that he executed the same for the purposes
and consideration therein expressed in the capacity stated, and as the act and
deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 1st day of August, 1995.
/s/ XXXXX X. XXXXXX
------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF UTAH
(LS.)
My Commission Expires:
6-23-99
---------
CORPORATE ACKNOWLEDGMENT
THE STATE OF OKLAHOMA )
)
COUNTY OF TULSA )
BEFORE ME, THE undersigned authority, on this day personally appeared Xxxxxx X
Xxxxxxxxx known to me to be the person whose name is subscribed to the
foregoing instrument, as President of Xxxxxx Drilling Investment Company, a
corporation, and acknowledged to me that he executed the same for the purposes
and consideration therein expressed, in the capacity stated, and as the act and
deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 1st day of August, 1995.
/s/ XXXXXX X. XXXXXX
------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF OKLAHOMA
(L.S.)
--------------
My Commission Expires:
9-9-97
------------
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EXHIBIT A
Argentina
China
Columbia
Indonesia
Kazakhstan
New Zealand
Pakistan
Papua New Guinea
Peru
Philippines
Russia
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FIRST AMENDMENT TO THE
OPERATING AGREEMENT OF ONSITE TECHNOLOGY L.L.C.
(An Oklahoma Limited Liability Company)
This First Amendment to the Operating Agreement of OnSite Technology
L.L.C., an Oklahoma limited liability company is entered into this 31st day of
January, 1996 by and among the Company and the Persons executing this Amendment
as Members.
WHEREAS the Company and the Members entered into the Operating
Agreement effective August 1, 1995; and
WHEREAS the Company and the Members desire to amend the Operating
Agreement; and
WHEREAS the parties have to date each contributed substantial cash,
property and/or services to and for the benefit of the Company; and
WHEREAS the parties have to date contributed equally to the Capital
Accounts of the Company with each Member hereto having a 50% Sharing Ratio and
owning 50% of the total of all Capital Accounts of the Company; and
WHEREAS no Member is currently a Delinquent Member; and
WHEREAS upon full execution of this document and the making of the
contributions reflected on Exhibit A hereto each Member will have a 50% Sharing
Ratio and own 50% of the total of all Capital Accounts of the Company; and
WHEREAS upon full execution of this document there will be no further
monetary obligations owed by the Members with respect to the manufacture of the
Company's first remediation unit, except the additional capital contributions
to the Company described in Exhibit A hereto; and
WHEREAS it is the intent of the Members, except as may otherwise be
provided in the Operating Agreement, as amended, that all costs or expenditures
incurred in the manufacture, use, and practice of NFE's Soil Remediation
System(s) including, but not limited to, the Company's second remediation unit
being manufactured, shall be borne by the Company, and any costs and
expenditures incurred by a Member on the Company's behalf shall be reimbursed
by the Company (this shall not include the costs of development of any
intellectual property or invention that is solely owned by one Member);
NOW THEREFORE, in consideration of the above recitals and the mutual
covenants and premises herein contained, the parties hereto agree as follows:
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I.
The following paragraph shall be added at the end of section 3.1:
"The Members agree that during the Term of the Operating Agreement, the Company
will use its best efforts to manufacture and market indirect thermal
descorption units utilizing NFE's Soil Remediation System(s) and will exert its
best efforts to create a world-wide demand for the units and the Company's
services and to increase and extend its business in the manufacture, use and
marketing of indirect thermal descorption units utilizing NFE's Soil
Remediation System(s)."
II.
Section 3.2 and Exhibit A are deleted in their entireties, and replaced with
the following:
3.2 LICENSE - National Fuel & Energy, Inc. ("NFE") does hereby
grant to the Company, for the purpose of this Operating Agreement, a
non-royalty bearing, exclusive, world-wide license to manufacture and have
manufactured, to use and have used and to practice and have practiced NFE's
Soil Remediation System(s) using indirect thermal descorption, associated
proprietary processes, equipment, patents and future inventions and
improvements thereto for use in the reclamation of hydrocarbons (hereinafter
referred to sometimes as "NFE's Soil Remediation System(s)"). NFE does not
retain the right to practice the licensed technology while it is a Member of
the Company. The Company shall have the right to grant sublicenses as it deems
necessary and/or beneficial. Except as specifically provided in Section 14.2(d)
of this Operating Agreement, the license granted hereunder may not be assigned
without the consent of NFE. Except as may otherwise be provided herein
(specifically, but not limited to, Section 14.2(d)), the term of the license to
NFE's Soil Remediation System(s) granted herein shall end at the end of the
Term of the Operating Agreement. Upon completion of the winding up of the
affairs of the Company and the issuance of a Certificate of Dissolution by the
Secretary of State of the State of Oklahoma, the license granted herein shall
be modified, terminated or extended per the terms of section 14.2(d) of this
Agreement.
Notwithstanding anything that may be contained in this Operating
Agreement to the contrary, it is understood and agreed that if for any reason
whatsoever NFE ceases to be a Member of the Company, whether by Dissociation
or otherwise, NFE shall have the right to manufacture and have manufactured, to
use and have used and to practice and have practiced NFE's Soil Remediation
System(s), as licensed pursuant to this Section 3.2, and no Member or the
Company shall take any action to attempt to interfere with such right of NFE in
the foregoing described circumstances."
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III.
The following paragraph shall be added at the end of section 3.3:
"For so long as the Members agree, Xxxxxx shall provide reasonable
administrative services in die following areas: purchasing, expediting,
transportation, safety, insurance, investment banking and finance and support
and contacts, tax support, and legal (no litigation services provided). The
obligation of Xxxxxx to provide such reasonable administrative services shall
not require Xxxxxx to hire additional personnel or pay for outside consultants
or incur significant out-of-pocket costs payable to unaffiliated companies."
IV.
Section 3.4 shall be deleted in its entirety and replaced with the following:
"3.4 INVENTIONS - The parties agree that any inventions (either patentable
or non-patentable), software, patentable work or copyrightable work
(collectively "inventions") which (i) improve, modify, or alter NFE's Soil
Remediation System as in existence on the execution date of this Operating
Agreement and/or (ii) which deliver soil to or remove soil from the system
(this shall not include Xxxxxx'x or its Affiliates' drilling rigs) made by
Xxxxxx and/or NFE, either singly or jointly, under this Operating Agreement
shall be the property of NFE, the Company and Xxxxxx, jointly. Each invention
shall be identified in writing with copies to the Company, Xxxxxx and NFE. The
cost of filing and pursuing any joint patents shall be paid by the Company. The
owner(s) of any invention made hereunder shall grant to the Company a license
equal in scope to the license granted under Section 3.2 hereunder and shall
further grant such licenses as required by Section 14.2(d) hereunder. Except as
otherwise provided in this Section 3.4, all inventions of NFE, shall remain the
property of NFE, including but not limited to NFE's Soil Remediation System and
any other inventions licensed hereunder to the Company by NFE. Except as
otherwise provided in this Section 3.4, all inventions of Xxxxxx, shall remain
the property of Xxxxxx.
During the term of this Agreement, no party shall assign, sell or
transfer its interest in any invention without the express written consent of
the other Members.
For purposes of this section and section 14.2 an invention, software,
patentable work or copyrightable work is made under this Operating Agreement if
it is either conceived or reduced to practice during work under the Operating
Agreement. For purposes of this section "inventions" shall mean any discovery,
concept, or idea, whether or not patentable, made during the term of and while
performing work under this Operating Agreement including but not limited to
processes, methods, software, formulas and techniques, improvements thereof,
and know-how relating thereto."
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V.
Section 6.4 shall be deleted in its entirety and replaced with the following:
"6.4 CONFLICTS OF INTEREST
(a) No Member shall engage in the soil remediation business using
indirect thermal description without the express written permission of all
other Members. Xxxxxx specifically acknowledges that NFE intends to continue to
pursue the soil remediation business other than by use of indirect thermal
desorption and that NFE at times and at its sole discretion may use the
services of the NFE employees also named as representatives and Managers of the
Company in these endeavors. Xxxxxx specifically acknowledges that the pursuit
and accomplishment of this soil remediation business is not a conflict of
interest with this Operating Agreement. NFE shall have the right to pursue on
its own outside the Company any and all business opportunities that are brought
to the Company by the efforts of the Company, its Members, Managers, employees,
agents or otherwise, provided that (i) such business opportunities do not
involve indirect thermal description and (ii) a decision has been made by the
Managers of the Company not to pursue the opportunity. Xxxxxx shall have the
right to pursue on its own outside the Company any and all business
opportunities that are brought to the Company by the efforts of the Company,
its Members, Managers, employees, agents or otherwise, provided that (i) such
business opportunities do not involve indirect thermal description and (ii) a
decision has been made by the Managers of the Company not to pursue the
opportunity.
(b) A Member (or the Member's Affiliates) or a Manager does not
violate a duty or obligation to the Company merely because the Member's or
Manager's conduct furthers said Member's or Manager's own interest. A Member or
Manager may lend money to and transact other business with the Company. The
rights and obligations of a Member or Manager who lends money to or transacts
business with the Company are the same as those of a person who is not a Member
or Manager, subject to other applicable law. No transaction with the Company
shall be voidable solely because a Member or Manager has a direct or indirect
interest in the transaction if the transaction is fair to the Company and a
Majority of the Members not having a conflict, knowing the material facts of
the transaction and the Member's or Manager's interest, authorize, approve, or
ratify the transaction."
VI.
Section 6.6(c) is deleted in its entirety. Section 6.60(d) is renumbered
6.6(c).
VII.
Section 8.2 is deleted in its entirety- and replaced with the following:
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"8.2 ADDITIONAL COMMITMENTS - For the purpose of financing the
Company's first remediation unit, the parties -agree to make further Capital
Contributions as noted on Exhibit A hereto, if they have not already done so.
In addition to the Initial Capital Contributions and Commitments and the
further Capital Contributions noted on Exhibit A, a Majority of the Members may
determine from time to time that additional Capital Contributions are needed to
enable the Company to conduct its business. Upon the vote of a Majority of the
Members, the additional Capital Contributions shall become Commitments of the
Members in proportion to their Sharing Ratios. Upon the making of such a
determination by the Members, the Managers shall give Notice to all Members in
writing at least ten Business Days prior to the date on which such contribution
is due. Such Notice shall set forth the amount of additional contribution
needed, the purpose for which die contribution is needed, and the date by which
the Members should contribute."
VIII.
Subsection 14.2(c) is deleted in its entirety and replaced with the following:
"(c) Except as necessary to pay the debts of the Company, the
intellectual property (which shall include patents, copyrights, trademarks,
technology and other similar rights and or personal property) of the Company
shall not be sold. Upon Dissolution, the Members shall negotiate an equitable
division of the Company's intellectual property."
IX.
Subsection 14.2(d) is deleted in its entirety and replaced with the following:
"(d) Upon Dissolution of the Company the license granted in Section
3.2 shall become nonexclusive and nontransferable, with no right to grant
sublicenses, and shall be assigned to each Member for so long as said Member
owns an indirect thermal desorption unit formerly owned by the Company. Such
license shall only be applicable to the use of the unit(s) received upon
liquidation of the Company. Members will grant any cross licenses necessary for
the use of said units. Further, any Member, except those Members which caused
the Dissolution by an act of Dissociation, shall be entitled to receive from
NFE or its successor in interest, a royalty bearing, nonexclusive,
nontransferable license, with no right to grant sublicenses, of identical scope
to the license granted in Section 3.2 hereof on commercially reasonable terms.
Upon Dissolution of the Company, each Member shall have the right to use any
invention in which it owns a joint interest pursuant to Section 3.4 without
payment of a license fee or royalty due to any other joint owner of such
invention. Upon dissolution any joint owner shall have the right to assign,
sell or transfer its interest in such inventions and to grant licenses and
sublicenses; in such inventions upon commercially reasonable terms. Any
royalties or license fees due under any such licenses and/or sublicenses shall
be shared pro rata between the joint owners of such licensed or sublicensed
inventions. The right of any joint owner to assign or transfer
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its interest in any invention shall be subject to a right of first refusal held
by any other joint owners of such invention. The joint owners of any inventions
hereby grant unto each other a right of first refusal (which may be exercised
at any time within thirty (30) days after receipt of Notice of a proposed sale,
assignment or transfer of any invention and of the price, terms and conditions
of sale and the identity of the proposed purchaser, assignee or transferee) to
purchase a selling joint owner's interest in any invention on the same terms,
conditions and considerations upon which the selling joint owner plans to sell
its interest in any invention to a good faith third party prospective
purchaser. If one or more of the non-selling joint owners of any invention
elects not to exercise its right hereunder, the remaining non-selling joint
owners shall have the right to exercise such right of first refusal pro rata.
No right of first refusal shall apply to any sale or transfer to a related
Person, as described in Section 1.752-4(b) of the Regulations or to another
joint owner of such invention. This subsection shall survive the termination
of this Operating Agreement.
X
The following paragraph shall be added as a new Section 17.8:
"17.8 FURTHER ASSURANCES - The Members hereby agree that from time
to time as and when reasonably requested by a Member or the Company, any Member
so requested shall execute and deliver, or cause to be executed and delivered,
such documents and instruments, including, but not limited to, bills of sale,
and shall take, or cause to be taken, such further or other action as may be
reasonably necessary to effectuate the intent of this Operating Agreement, as
amended, and to transfer, assign and deliver to the Company, or to the other
Member, as the case may be, or their permitted assigns, any personal, real,
intellectual or other property rights or interests belonging to the Company or
such Member, or their permitted assigns, and to consummate and to effect the
other transactions expressly required to be performed by Members hereunder.
Without limiting the intent of the foregoing sentence, the Members shall
execute and deliver, or cause to be executed and delivered, free and clear of
all liens and encumbrances, a xxxx(s) of sale granting, selling, quitclaiming
and conveying to the Company all of the Members' rights, title and interests in
and to the Company's first remediation unit."
XI
The following PARAGRAPH shall be added as a new Section 17.9:
"17.9 CONFIDENTIALITY - The Members anticipate that under this
Operating Agreement it may be necessary for one Member to transfer or disclose
to another or the Company information of a proprietary, technical or
confidential business nature. Confidential information, which may include
formulae, processes, trade secrets and know-how, to the extent possible, will be
clearly identified by the disclosing Member as
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45
proprietary at the time of disclosure and is hereinafter called "Proprietary
Information." Proprietary Information communicated by either Member may be
either technical or business in nature. Each Member agrees that it will use
the same reasonable efforts to protect Proprietary Information as are used to
protect its own proprietary or confidential information. The limitations on
reproduction or disclosure of Proprietary Information shall not apply to, and
neither Member shall be liable for reproduction or disclosure of Proprietary
Information with respect to which any of the following conditions exist: (i)
If, prior to the receipt thereof under this Operating Agreement, it has been
developed independently by the Member receiving it provided such development is
not due to a breach of this Operating Agreement or any other agreement, or has
been lawfully received from other sources, provided such other source did not
receive it due to a breach of this Operating Agreement or any other agreement;
(ii) If, subsequent to the receipt thereof under this Operating Agreement, it
is published by the Member furnishing it or is disclosed by the Member
furnishing it to others without restriction; or it has been lawfully obtained
by the Member receiving it from other sources, provided such other source did
not receive it due to a breach of this or any other Agreement; or if
Proprietary Information otherwise comes within the public knowledge or becomes
generally known to the public; or (iii) If any part of Proprietary Information
has been or hereafter shall be disclosed in a United States patent issued to
the Member furnishing Proprietary Information hereunder, after the issuance of
said patent, the limitations on Proprietary Information as are disclosed in the
patent shall be only that afforded by United States patent laws."
XII
The following paragraph shall be added as a new Section 17.10:
"17.10 PATENT INFRINGEMENT - JOINT ACTION - The Members will promptly
advise each other in writing of any infringements by third parties relating to
patent rights or other proprietary rights claimed by the Member or the Company
and any claims raised against either of them based on asserted infringements of
such rights by third parties. Any Member or the Company shall have the right to
institute action for infringement of any patent required to be licensed to the
Company or Member pursuant to this Operating Agreement. It is agreed that in
any such suit (i) the Members mutually agree to institute such suit; (ii) the
suit shall be instituted in the names of the Members possessing or entitled to
the license and the owner of the patent; and (iii) the expense of such suit or
suits shall be borne by the Company, provided there has been no Dissociation of
a Member or dissolution of the Company. In the event there has been the
Dissociation of a Member or the dissolution of the Company the cost of any suit
shall be shared equally by the plaintiffs; and the recoveries, if any, whether
by judgment, award, decree, or settlement, will be shared in the same
proportion. In the event the parties do not mutually agree to institute any
such action, either Member hereto can institute the action and join the other
as a party plaintiff in the suit if so required by law; the Member so
instituting the action will pay the entire cost of the litigation and will be
entitled to retain the entire amount of
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46
the recoveries, if any, by way of judgment, award, decree or settlement
resulting therefrom."
Except as modified and amended hereby, all terms of the Operating
Agreement are hereby ratified and confirmed.
IN WITNESS WHEREOF, we have hereunto set our hand and seals on the
date set forth beside out names.
ONSITE TECHNOLOGY L.L.C.
/s/ XXXXX X. XXXXXXX
--------------------------
Name: XXXXX X. XXXXXXX
Title: President
Date: July 10, 1996
MEMBERS:
NATIONAL FUEL & ENERGY, INC.
/s/ XXXXX X. XXXXXXX
--------------------------
Name: Xxxxx Xxxxxxx
Title: President
Date: July 10, 1996
XXXXXX DRILLING INVESTMENT COMPANY
/s/ XXXXXX X. XXXXXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
Date: July 11, 1996
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47
ACKNOWLEDGMENT
THE STATE OF TEXAS )
)
COUNTY OF XXXXXX )
BEFORE ME, the undersigned authority, on this day personally appeared
XXXXX X. XXXXXXX known to me to be the person whose name is subscribed to the
foregoing instrument, as President of Onsite Technology L.L.C., a limited
liability company, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed in the capacity stated, and as the
act and deed of said limited liability company.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 10th day of July, 1996.
/s/ XXXXXX XXXX
-------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
(L.S.)
My Commission Expires:
11-9-97
---------------
CORPORATE ACKNOWLEDGMENT
THE STATE OF TEXAS )
)
COUNTY OF XXXXXX )
BEFORE ME, the undersigned authority, on this day personally appeared
Xxxxx Xxxxxxx known to me to be the person whose name is subscribed to the
foregoing instrument, as President of National Fuel & Energy, Inc., a
corporation, and acknowledged to me that he executed the same for the purposes
and consideration therein expressed in the capacity stated, and as the act and
deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 10th day of July, 1996.
/s/ XXXXXX XXXX
-------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
(L.S.)
My Commission Expires:
11-9-97
---------------
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48
CORPORATE ACKNOWLEDGMENT
THE STATE OF OKLAHOMA )
)
COUNTY OF TULSA )
BEFORE ME, the undersigned authority, on this day personally appeared Xxxxxx X.
Xxxxxxxxx known to me to be the person whose name is subscribed to the
foregoing instrument, as President of Xxxxxx Drilling Investment Company, a
corporation, and acknowledged to me that he executed the same for the purposes
and consideration therein expressed, in the capacity stated, and as the act and
deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 11th day of July, 1996.
/s/ XXXXX XXXX
--------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF OKLAHOMA
(L.S.)
-------------
My Commission Expires:
7/18/98
----------------
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EXHIBIT A
Additional Capital Contribution
Xxxxxx Drilling Investment Company - $533,353.58 ($355,569.05 shall be credited
to Xxxxxx'x capital account. $177,784.53 shall be credited to NFE's capital
account in consideration of the exclusive worldwide license granted in this
First Amendment to the Operating Agreement.) (Has already been made)
National Fuel & Energy, Inc. - $177,784.52 (Has already been made).
Upon full execution of this First Amendment to the Operating Agreement of
OnSite Technology L.L.C. and the making of the contributions reflected on this
Exhibit A each Member will have a 50% sharing Ratio and own 50% of the total of
all Capital Accounts of the Company.
11
