LIMITED LIABILITY COMPANY AGREEMENT
OF
LH1, LLC
This LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement"), dated as of
January 10, 2002, of LH1, LLC, a Delaware limited liability company (the
"Company"), is entered into by Cinergy Capital & Trading, Inc., an Indiana
corporation, and CinFuel Resources, Inc., a Delaware corporation, as the Members
of the Company (the "Members");
RECITALS
WHEREAS, the Company was formed on January 10, 2002, by an "authorized
person" within the meaning of the Delaware Limited Liability Company Act (as
amended from time to time, the "Act");
WHEREAS, in accordance with Section 18-201(d) of the Act, it is the
intention of the Members that the Agreement be effective as of the date of
formation, January 10, 2002;
WHEREAS, the Members hold all the limited liability company interest in the
Company as of January 10, 2002; and
WHEREAS, the Members desire to set forth their understandings regarding
their rights, obligations and interests with respect to the affairs of the
Company and the conduct of its business.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members hereby agree as
follows:
ARTICLE I
Definitions
Section 1.1 Definitions. Capitalized terms used but not otherwise defined
herein shall have the meanings assigned to them in the Act.
ARTICLE II
General Provisions
Section 2.1 Company Name. The name of the Company is LH1, LLC. The business
of the Company may be conducted upon compliance with all applicable laws under
any other name designated by the Members.
Section 2.2 Registered Office; Registered Agent.
(a) The Company shall maintain a registered office in the State of
Delaware at, and the name and address of the Company's registered agent in
the State of Delaware is, The Corporation Trust Company, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, 00000.
(b) The business address of the Company is 000 Xxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxx, 00000, or such other place as the Members shall
designate.
Section 2.3 Nature of Business Permitted; Powers. The Company may carry on
any lawful business, purpose or activity. The Company shall possess and may
exercise all the powers and privileges granted by the Act or by any other law or
by this Agreement, together with any powers incidental thereto, so far as such
powers and privileges are necessary or convenient to the conduct, promotion or
attainment of the business purposes or activities of the Company.
Section 2.4 Business Transactions of Members with the Company. In
accordance with Section 18-107 of the Act, the Members may transact business
with the Company and, subject to applicable law, shall have the same rights and
obligations with respect to any such matter as a person who is not a Member.
Section 2.5 Fiscal Year. The fiscal year of the Company (the "Fiscal Year")
for financial statement purposes shall end on December 31 of each year.
Section 2.6 Effective Date. In accordance with Section 18-201(d) of the
Act, it is the intention of the Members that the Agreement be effective as of
the date of formation, January 10, 2002.
ARTICLE III
Member(s)
Section 3.1 Admission of Member(s). The Member(s) are hereby admitted to
the Company in respect of an Interest (as defined in Section 3.2), which is the
sole Interest outstanding as of the effective time of this Agreement. New
member(s) shall be admitted only with the approval of the Members.
Section 3.2 Interests.
(a) The membership interests of the Company shall consist of common
membership interests ("Interests").
(b) All Interests shall be identical with each other in every respect,
except that, should additional member(s) be admitted, Interests of each
member shall reflect its capital account relative to the other member(s).
(c) Interests may, but need not be, evidenced by a certificate of
limited liability interest issued by the Company.
Section 3.3 Liability of Member(s).
(a) All debts, obligations and liabilities of the Company, whether
arising in contract, tort or otherwise, shall be solely the debts,
obligations and liabilities of the Company, and no member shall be
obligated personally for any such debt, obligation or liability of the
Company solely by reason of being a member.
(b) Except as otherwise expressly required by law, a member shall not
have any liability in excess of (i) the amount of its capital contribution
to the Company, (ii) its share of any assets and undistributed profits of
the Company, (iii) its obligation to make other payments, if any, expressly
provided for in this Agreement or any amendment hereto and (iv) the amount
of any distributions wrongfully distributed to it.
Section 3.4 Access to and Confidentiality of Information; Records.
(a) Any member shall have the right to obtain from the Company from
time to time upon reasonable demand for any purpose reasonably related to
the member's interest as a member of the Company, the documents and other
information described in Section 18-305(a) of the Act.
(b) Any demand by a member pursuant to this Section 3.4 shall be in
writing and shall state the purpose of such demand.
Section 3.5 Meetings of Member(s).
(a) An Annual Meeting of the member(s) shall be held once a year on
such date as the members shall designate. Member(s) may participate in 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 a meeting by such means shall
constitute presence in person at such meeting.
(b) Meetings of the member(s) may be called for any purpose or
purposes, at any time, by any member or by the Board of Managers. Member(s)
may participate in 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 a meeting by such means
shall constitute presence in person at such meeting.
(c) Except as otherwise provided by law, if additional member(s) are
admitted, a majority of the member(s), determined in proportion to their
respective Interests in the Company, entitled to vote at the meeting shall
constitute a quorum at all meetings of the member(s).
(d) Any action required to or which may be taken at a meeting of
member(s) may be taken without a meeting, without prior notice and without
a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by all member(s). Any such written consent may be
executed in two or more counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and the same document.
Section 3.6 Vote. Except as specifically set forth herein, the business and
affairs of the Company shall be managed by or under the direction of the
member(s) by majority vote.
Section 3.7 Notice. Meetings of the member(s) may be held at such places
and at such times as the member(s) or Board of Managers may from time to time
determine. Any member or the Board of Managers may at any time call a meeting of
the member(s). Written notice of the time, place, and purpose of such meeting
shall be served by registered or certified prepaid, first class mail, via
overnight courier using a nationally reputable courier, or by fax or cable, upon
each member and shall be given at least two (2) business days prior to the time
of the meeting. No notice of a meeting need be given to any member if a written
waiver of notice, executed before or after the meeting by such member thereunto
duly authorized, is filed with the records of the meeting, or to any member who
attends the meeting without protesting prior thereto or at its commencement the
lack of notice to him or her. A waiver of notice need not specify the purposes
of the meeting.
Section 3.8 Delegation of Powers. Subject to any limitations set forth in
the Act, the member(s) may delegate any of their powers to the Board of Managers
or the officers of the Company or to committees consisting of persons who may or
may not be member(s). Every Manager, officer or committee shall, in the exercise
of the power so delegated, comply with any restrictions that may be imposed on
them by the member(s).
Section 3.9 Withdrawals and Removals of Member(s). No member may resign,
withdraw or be removed as a member of the Company without the written consent of
all of the member(s).
ARTICLE IV
Management
Section 4.1 General. Except as specifically set forth herein, The member(s)
shall have no power to transact any business in the Company's name nor have the
power to sign documents for or otherwise bind the Company. Subject to the
provisions of the Act, the Certificate of Formation, and this Agreement, the
member(s) hereby delegate any or all such powers to the Board of Managers of the
Company (the "Board of Managers") to carry out the business affairs of the
Company on the member(s)' behalf. Any power not reserved to the member(s) or
delegated to the officers shall remain with the Board of Managers. The Board of
Managers shall have the power to make all decisions affecting the business and
affairs of the Company and to take all such actions as it deems necessary or
appropriate to accomplish the purposes of the Company as set forth herein.
Section 4.2 The Board of Managers.
(a) General. Except as specifically set forth herein, the business and
affairs of the Company shall be managed by or under the direction of the
Board of Managers. Other than rights and powers expressly reserved to the
members by this Agreement or the Act, the Board of Managers shall have
full, exclusive, and complete discretion to manage and control the business
and affairs of the Company, to make all decisions affecting the business
and affairs of the Company and to take all such actions as it deems
necessary or appropriate to accomplish the purposes of the Company as set
forth herein.
(b) Duties. The Board of Managers shall be obligated to devote only as
much of their time to the Company's business as shall be reasonably
required in light of the Company's business and objectives. A Manager shall
perform his or her duties in good faith, in a manner he or she believes to
be in the best interests of the Company, and with such care as an
ordinarily prudent person in a like position would use under similar
circumstances.
(c) Board Composition; Removal and Vacancies. The Members shall
initially appoint three (3) Managers to the Board of Managers. If
additional member(s) are added, the number of Managers shall be adjusted to
that smallest number possible that will allow full proportional
representation of each member's membership interest on the Board of
Managers. Each Manager shall serve until the earlier of his or her removal,
resignation, death or retirement. Each member shall vote all of its
membership Interest and shall take all other action necessary or desirable
within its control, (including without limitation, attendance at meetings
in person or by proxy and execution of written consents in lieu of
meetings), so that the designees of other members are duly elected to the
Board of Managers in proportion to the member's membership Interest
percentage. Upon the removal, resignation, death or retirement of a
Manager, or the vacation of office by a Manager for any reason, his or her
successor shall be nominated and elected by the same member as originally
proposed the former Manager. Any successor so elected shall retain his or
her office during such time as the former Manager was entitled to retain
the same.
(d) Restrictions on the Board. The Board of Managers shall not: (i) do
any act in contravention of any applicable law or regulation or provision
of this Agreement; (ii) posses Company property for other than a Company
purpose; or (iii) admit any new member(s) without the unanimous consent of
existing members or without compliance with the provisions of this
Agreement.
(e) Meetings; Notice. Meetings of the Board of Managers may be held at
such places and at such times as the Board of Mangers may from time to time
determine, and if so determined by a quorum of the Board of Managers, no
advance notice of the meeting need be given. Meetings of the Board of
Managers may be called at any time by any two (2) Managers. Written notice
of the time, place and purpose of such meeting shall be served by
registered or certified, prepaid, first-class mail, or by fax or cable upon
each member of the Board of Managers and shall be given at least
twenty-four (24) hours prior to the time of the meeting. No notice need be
given to any Manager if a written waiver of notice, executed before or
after the meeting by such Manager thereunto duly authorized, is filed with
the records of the meeting, or to any Manager who attends the meeting
without protesting prior thereto or at its commencement the lack of notice
to him. A waiver of notice need not specify the purpose of the meeting.
(f) Meetings; Electronic Communications. Meetings of the Board of
Managers shall be held on such dates as the Board of Managers shall agree,
but not less frequently than once during each fiscal year of the Company.
Members of the Board of Managers, or of any committee designated by the
Board, may participate in a meeting of such Board or committee 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 a meeting by such means shall constitute presence in
person at such meeting.
(g) Quorum and Voting. A majority of the Managers shall constitute a
quorum for the transaction of business at a meeting of the Board of
Managers. Action by the Board of Managers must be authorized by the
unanimous vote of the Managers present at the meeting.
(h) Action Without a Meeting. Any action which is required to be, or
which may be, taken at any annual, regular, or special meeting of the Board
of Managers or otherwise, may be taken without a meeting, without prior
notice and without a vote if a consent in writing, setting forth the action
so taken, shall be signed by all the Managers then in office. Any such
written consent may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one
and the same document.
(i) Delegation of Powers. Subject to any limitation set forth in the
Act, the Board of Managers may delegate any of its powers to committees or
to officers consisting of persons who may or may not be Managers. Every
officer or committee shall, in the exercise of the power so delegated,
comply with any restrictions that may be imposed on them by the Board of
Managers.
Section 4.3 Officers.
(a) Election, Term of Office. Officers shall be elected annually by
the Board of Managers. Except as provided in paragraphs (b) or (c) of this
Section 4.3, each officer shall hold office until his or her successor
shall have been chosen and qualified. Any two offices, except those of the
Chief Executive Officer and the Secretary and the President and Secretary,
may be held by the same person, but no officer shall execute, acknowledge
or verify any instrument in more than one capacity if such instrument is
required by law or this Agreement to be executed, acknowledged or verified
by any two or more officers.
(b) Resignations and Removals. Any officer may resign his or her
office at any time by delivering a written resignation to the Board of
Managers. Unless otherwise specified therein, such resignation shall take
effect upon delivery. Any officer may be removed from office with or
without cause by the Board of Managers.
(c) Vacancies and Newly Created Offices. If any vacancy shall occur in
any office by reason of death, resignation, removal, disqualification or
other cause, or if any new office shall be created, such vacancies or newly
created offices may be filled by the Board of Managers.
(d) Conduct of Business. Subject to the provisions of this Agreement,
the day-to-day operations of the Company shall be managed by its officers
as directed by the Board of Managers and such officers shall have full
power and authority to make all business decisions, enter into all
commitments and take such other actions in connection with the business and
operations of the Company as they deem appropriate and as are authorized by
the Board of Managers. Such officers shall perform their duties in a manner
consistent with this Agreement and with directions which may be given from
time to time by the Board of Managers.
(e) Chief Executive Officer. Subject to the further directives of the
Board of Managers, the Chief Executive Officer shall have general and
active management of the business of the Company subject to the supervision
of the Board of Managers, shall see that all orders and resolutions of the
Board of Managers and member(s) are carried into effect and shall have such
additional powers and authority as are specified by the provisions of this
Agreement and the Board of Managers.
(f) Secretary. The Secretary shall attend all meetings of the
member(s) and record all the proceedings of the meetings and all actions
taken thereat in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. The Secretary shall give,
or cause to be given, notice of all meetings of the member(s), and shall
perform such other duties as may be prescribed by the Board of Managers.
The Assistant Secretary, if there be one, shall, in the absence of the
Secretary or in the event of the Secretary's inability to act, perform the
duties and exercise the powers of the Secretary and shall perform such
other duties and have such other powers as the Board of Managers may from
time to time prescribe.
(g) Other Officers. The Board of Managers from time to time may
appoint such other officers or agents as it may deem advisable, each of
whom shall have such title, hold office for such period, have such
authority and perform such duties as the Board of Managers may determine in
its sole discretion. The Board of Managers from time to time may delegate
to one or more officers or agents the power to appoint any such officers or
agents and prescribe their respective rights, terms of office, authorities
and duties.
(h) Officers as Agents; Authority. The officers, to the extent of
their powers set forth in this Agreement and/or delegated to them by the
Board of Managers, are agents and managers of the Company for the purpose
of the Company's business, and the actions of the officers taken in
accordance with such powers shall bind the Company.
Section 4.4 Reliance by Third Parties. Persons dealing with the Company are
entitled to rely conclusively upon the power and authority of the member(s),
Board of Managers, and officers herein set forth.
Section 4.5 Expenses. Except as otherwise provided in this Agreement, the
Company shall be responsible for and shall pay all expenses out of funds of the
Company determined by the member(s) to be available for such purpose, provided
that such expenses are those of the Company or are otherwise incurred by the
member(s) in connection with this Agreement, including, without limitation:
(a) all expenses related to the business of the Company and all
routine administrative expenses of the Company, including the maintenance
of books and records of the Company, the preparation and dispatch to any
member(s) of checks, financial reports, tax returns and notices required
pursuant to this Agreement or in connection with the holding of any
meetings of the Member(s) and Board of Managers;
(b) all expenses incurred in connection with any litigation or
arbitration involving the Company (including the cost of any investigation
and preparation) and the amount of any judgment or settlement paid in
connection therewith;
(c) all expenses for indemnity or contribution payable by the Company
to any person;
(d) all expenses incurred in connection with the collection of amounts
due to the Company from any person;
(e) all expenses incurred in connection with the preparation of
amendments to this Agreement; and
(f) expenses incurred in connection with the liquidation, dissolution
and winding up of the Company.
ARTICLE V
Finance
Section 5.1 Form of Contribution. The contribution of a member to the
Company must be in cash or property, provided that if there is more than one
member, all member(s) must consent in writing to contributions of property. To
the extent there is more than one member, additional contributions in the same
proportion shall be made by each member, except as may be approved by all
member(s). A capital account shall be maintained for each member, to which
contributions and profits shall be credited and against which distributions and
losses shall be charged. At any time that there is more than one member, capital
accounts shall be maintained in accordance with the tax accounting principles
prescribed by the Treasury Regulations promulgated under Code Section 704 (the
"Allocation Regulations"), so that the tax allocations provided in this
Agreement shall, to the extent possible, have "substantial economic effect"
within the meaning of the Allocation Regulations, or, if such allocations cannot
have substantial economic effect, so that they may be deemed to be "in
accordance with the member(s') interests in the Company" within the meaning of
the Allocation Regulations.
ARTICLE VI
Allocations, Distribution and Withholding
Section 6.1 Allocations. The Net Profit and Net Loss of the Company,
including each item of income, gain, loss, deduction and credit shall be
allocated with respect to each Fiscal Year (or portion thereof) among the
members in proportion to their membership interest percentages.
Section 6.2 Distributions. Distributions may be made to the members at such
times as determined in the sole discretion of the Board of Managers, or at such
other times as the members by unanimous consent shall determine.
Section 6.3 Distribution in Kind. Notwithstanding the provisions of Section
18-605 of the Act, a member may receive distributions from the Company in any
form other than cash, and may be compelled to accept a distribution of any asset
in kind from the Company.
Section 6.4 Withholding. The Company is authorized to withhold from
distributions to a member, or with respect to allocations to a member, and to
pay over to a federal, state or local government, any amounts required to be
withheld pursuant to the Internal Revenue Service Code or any provisions of any
other federal, state or local law. Any amounts so withheld shall be treated as
having been distributed to such member for all purposes of this Agreement, and
shall be offset against the current or next amounts otherwise distributable to
such member.
ARTICLE VII
Assignment of Interests
Section 7.1 Assignment of Interests. A member may assign and transfer all
or any part of its Interest upon the written consent of all other members, if
any. Provided that a transfer is permitted in accordance with the preceding
sentence and the transferee agrees to be bound by the terms of this Agreement by
executing a counterpart hereto or the transferee and members execute an Amended
and Restated LLC Agreement of the Company, such transferee shall be deemed
admitted as a member of the Company to the extent of such transferred Interest,
and immediately thereafter the transferor shall be deemed withdrawn as a member
of the Company to the extent of such transferred Interest.
ARTICLE VIII
Dissolution
Section 8.1 Duration. The duration of the Company shall be perpetual.
Section 8.2 Winding Up. Subject to the provisions of the Act, the Member
or, if additional member(s) are admitted, the member(s) (acting by written
consent of all member(s)) shall have the right to wind up the Company's affairs
in accordance with Section 18-803 of the Act (and shall promptly do so upon
dissolution of the Company) and shall also have the right to act as or appoint a
liquidating trustee in connection therewith.
Section 8.3 Distribution of Assets. Upon the winding up of the Company, the
assets shall be distributed in the manner provided in Section 18-804 of the Act.
ARTICLE IX
Tax Characterization
Section 9.1 Tax Treatment. The Company shall timely make all necessary
elections and filings for federal, state, and local tax purposes such that it
will be treated as a partnership for federal, state, and local tax purposes.
ARTICLE X
Exculpation and Indemnification
Section 10.1 Exculpation. Notwithstanding any other provisions of this
Agreement, whether express or implied, or obligation or duty at law or in
equity, any member, or any Manager, officers, stockholders, partners, employees,
representatives or agents of any of the foregoing, nor any officer, employee,
representative, Manager or agent of the Company or any of its affiliates
(individually, a "Covered Person" and collectively, the "Covered Persons") shall
be liable to the Company or any other person for any act or omission (in
relation to the Company, this Agreement, any related document or any transaction
or investment contemplated hereby or thereby) taken or omitted in good faith by
a Covered Person and in the reasonable belief that such act or omission is in or
is not contrary to the best interests of the Company and is within the scope of
authority granted to such Covered Person by the Agreement, provided that such
act or omission does not constitute fraud, willful misconduct, bad faith, or
gross negligence.
Section 10.2 Indemnification. To the fullest extent permitted by law, the
Company shall indemnify and hold harmless each Covered Person from and against
any and all losses, claims, demands, liabilities, expenses, judgments, fines,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings, civil, criminal, administrative or investigative, in which
the Covered Person may be involved, or threatened to be involved, as a party or
otherwise, by reason of its management of the affairs of the Company or which
relates to or arises out of the Company or its property, business or affairs. A
Covered Person shall not be entitled to indemnification under this Section 10.2
with respect to any claim, issue or matter in which it has engaged in fraud,
willful misconduct, bad faith or gross negligence.
ARTICLE XI
Miscellaneous
Section 11.1 Amendment to this Agreement. Except as otherwise provided in
this Agreement, this Agreement may be amended by, and only by, a written
instrument executed by all the Members.
Section 11.2 Successors; Counterparts. Subject to Article VIII, this
Agreement (a) shall be binding as to the executors, administrators, estates,
heirs, assigns and legal successors, or nominees or representatives, of the
Members and (b) may be executed in several counterparts with the same effect as
if the parties executing the several counterparts had all executed one
counterpart.
Section 11.3 Governing Law; Severability. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflict of laws thereof. In particular, this
Agreement shall be construed to the maximum extent possible to comply with all
the terms and conditions of the Act. If, nevertheless, it shall be determined by
a court of competent jurisdiction that any provisions or wording of this
Agreement shall be invalid or unenforceable under the Act or other applicable
law, such invalidity or unenforceability shall not invalidate the entire
Agreement and this Agreement shall be construed so as to limit any term or
provision so as to make it enforceable or valid within the requirements of
applicable law, and, in the event such term or provisions cannot be so limited,
this Agreement shall be construed to omit such invalid or unenforceable terms or
provisions. If it shall be determined by a court of competent jurisdiction that
any provisions relating to the distributions and allocations of the Company or
to any expenses payable by the Company are invalid or unenforceable, this
Agreement shall be construed or interpreted so as (a) to make it enforceable or
valid and (b) to make the distributions and allocations as closely equivalent to
those set forth in this Agreement as is permissible under applicable law.
Section 11.4 Filings. Xxxxxxx Xxxxxx was an "authorized person" within the
meaning of the Act for purposes of filing the original Certificate of Formation
of the Company with the State of Delaware on January 10, 2002. Following the
execution and delivery of this Agreement, the Members each with the ability to
act independently shall be "authorized persons" within the meaning of the Act,
and shall prepare any documents required to be filed and recorded under the Act,
and the Members shall promptly cause each such document required to be filed and
recorded in accordance with the Act and, to the extent required by local law, to
be filed and recorded or notice thereof to be published in the appropriate place
in each jurisdiction in which the Company may hereafter establish a place of
business. The Members shall also promptly cause to be filed, recorded and
published such statements of fictitious business name and any other notices,
certificates, statements or other instruments required by any provision of any
applicable law of the United States or any state or other jurisdiction which
governs the conduct of its business from time to time.
Section 11.5 Headings. Section and other headings contained in this
Agreement are for reference purposes only and are not intended to describe,
interpret, define or limit the scope or intent of this Agreement or any
provision hereof.
Section 11.6 Further Assurances. Each Member agrees to perform all further
acts and execute, acknowledge and deliver any documents that may be reasonably
necessary to carry out the provisions of this Agreement.
Section 11.7 Notices. All notices, requests and other communications to any
member shall be in writing (including telecopier or similar writing) and shall
be given to such member (and any other person designated by such member) at its
address or telecopier number set forth in a schedule filed with the records of
the Company or such other address or telecopier number as such member may
hereafter specify for the purpose by notice. Each such notice, request or other
communication shall be effective (a) if given by telecopier, when transmitted to
the number specified pursuant to this Section and the appropriate confirmation
is received, (b) if given by mail, 72 hours after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid,
or (c) if given by any other means, when delivered at the address specified
pursuant to this Section.
Section 11.8 Books and Records; Accounting. The Members shall keep or cause
to be kept at the address of the Company (or at such other place as the Members
shall determine in their discretion) true and full books and records regarding
the status of the business and financial condition of the Company.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of
the date first above written.
CINERGY CAPITAL & TRADING, INC. CINFUEL RESOURCES, INC.
By: By:
------------------------------ ----------------------------
Xxxxxxx X. Cyrus X. Xxxxxx Xxxxxx
President Executive Vice President
