Exhibit 49.2
OPERATING AGREEMENT OF
GREENPORT POWER, LLC
February 10, 2003
OPERATING AGREEMENT
OF
GREENPORT POWER, LLC
This Operating Agreement is made and entered into on the
10th day of February, 2003, by and among Hawkeye Electric, LLC, a
New York limited liability company ("HE"), and Northeast
Generation Services Company, a Connecticut corporation ("NGS"),
as Members of Greenport Power, LLC (the "Company"), and the
Persons who become Members of the Company in accordance with the
provisions hereof and whose names from time to time are set forth
as Members on Schedule 1 hereto.
WHEREAS, HE has specific expertise in, among other things,
electrical and natural gas field service work for public
utilities and power plants on a contract basis;
WHEREAS, NGS has specific expertise in, among other things,
large project feasibility, engineering, procurement and start-up
services and commissioning support of power plants and related
facilities;
WHEREAS, the Members have determined that it is mutually
advantageous for them to combine their expertise to submit a bid
for the engineering, design, procurement and construction of each
of the Projects; and
WHEREAS, the Members desire to form a limited liability
company for such purposes and on the terms and conditions set
forth in this Agreement.
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 and intending to be legally bound, the Members
hereby agree as follows:
ARTICLE I
DEFINED TERMS
1.1 Definitions. Capitalized terms used in this Agreement
without other definition shall, unless expressly stated
otherwise, have the meanings specified in this Section 1.1. The
singular shall include the plural and the masculine shall include
the feminine and neuter, and vice-versa. "Include" or
"including" shall mean "including without limitation."
"Actual Direct Labor Costs" means, with respect to a Member,
the sum of (a) the actual salary and wages payable to such
Member's employees for the Direct Labor of such Member and (b)
Employee Overhead with respect thereto.
"Additional Member" has the meaning set forth in ARTICLE XI
hereof.
"Adjusted Capital Account Deficit" means, with respect to
each Member, the balance in such Member's Capital Account after
(i) increasing such balance with (a) any amount such Member is
obligated to restore under this Agreement, and (b) any amount
such Member is deemed to be obligated to restore under Regulation
Section 1.704-2(g)(1) and 1.704-2(i)(5), and (ii) reducing such balance
with the items described in Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5) and (6).
"Affiliate" means with respect to a specified Person, any
Person that directly or indirectly controls, is controlled by, or
is under common control with, the specified Person. As used in
this definition, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
"Agreement" means this Agreement, as amended, modified,
supplemented or restated from time to time.
"Articles" means the Articles of Organization of the
Company, in the form attached hereto as Exhibit A, and any and
all amendments thereto and restatements thereof filed on behalf
of the Company with the office of the Secretary of State of the
State of New York pursuant to the New York Act, which shall
provide, among other things, for the management of the Company by
a board of managers.
"Board of Managers" has the meaning set forth in Section
4.1(a) hereof.
"Capital Account" means, with respect to a Member, the
account maintained for such Member in accordance with the
provisions of Section 8.3 hereof.
"Capital Contribution" means, with respect to a Member, the
aggregate amount of cash and the fair market value of any other
property (as determined as of the time of contribution and net of
liabilities secured by such property that the Company assumes or
to which the Company's ownership of the property is subject) that
such Member has contributed to the Company.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time (or any corresponding provisions of any
succeeding law).
"Company" has the meaning set forth in the preamble of this
Agreement.
"Covered Person" means: a Member, an Officer, or a Manager;
any Affiliate of a Member, an Officer or a Manager; any officers,
directors, shareholders, partners, employees, representatives or
agents of a Member, an Officer or a Manager, or their respective
Affiliates, or any employee or agent of the Company or its
Affiliates.
"Credit Facility" has the meaning set forth in Section 7.6
of this Agreement.
"Depreciation" means, with respect to each Fiscal Year or
other period, an amount equal to the depreciation, amortization
or other cost recovery deduction allowable with respect to a
Company asset for such year or other period, except that, if the
Gross Asset Value of an asset differs from its adjusted basis for
federal income tax purposes at the beginning of such year or
other period, Depreciation shall be an amount that bears the same
ratio to such beginning Gross Asset Value as the federal income
tax depreciation, amortization or other cost recovery deduction
for such year or other period bears to such beginning adjusted
tax basis; provided, however, that if the federal income tax
depreciation, amortization, or other cost recovery deduction for
such asset for such year is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value
using any reasonable method selected by the Board of Managers.
"Direct Labor" means, with respect to a Member, the direct
labor to be rendered by such Member's employees in connection
with the Project including, without limitation, the HE Employees
and NGS Employees respectively. If the Company hires employees
who perform direct labor that would otherwise have been performed
by such Member's employees, such employees shall be deemed
employees of such Member for the purposes of this Agreement and
the definitions set forth herein.
"Direct Labor Net Proceeds" means the amount equal to 10% of
the Actual Direct Labor Costs of all Members for the Project.
"Direct Labor Sharing Percentage" means, with respect to a
Member, a fraction, expressed as a percentage, the numerator of
which is the Actual Direct Labor Cost of such Member for the
Project and the denominator of which is the Actual Direct Labor
Cost of all Members for the Project.
"Distribution" means any distribution of the Net Cash Flow
during any Fiscal Year made to the Members in accordance with
ARTICLE IX.
"Employee Overhead" means overhead charges allocable to
contractual and statutory benefits and to administration of
employees, including without limitation payroll services, which
shall be as follows: (a) with respect to employees designated as
"Management/Supervisory" (i) by HE, an amount equal to seventy-
five (75%) percent of the salary or wages payable with respect
thereto, and (ii) by NGS, an amount equal to the actual cost of
such overhead as calculated and demonstrated by NGS, estimated at
one hundred (100%) percent of the salary or wages payable with
respect thereto, and (b) with respect to other union employees,
an amount equal to twenty-five ($0.25) cents per employee per
hour.
"Fiscal Year" means, unless otherwise required by law
(a) the period commencing upon the formation of the Company and
ending on December 31 of such calendar year, (b) any subsequent
twelve (12) month period commencing on January 1 and ending on
December 31, or (c) any portion of the period described in clause
(b) of this sentence for which the Company is required to
allocate profits, losses and other items of the Company's income,
gain, loss or deduction pursuant to ARTICLE X hereof.
"Gross Asset Value" means the adjusted basis for federal
income tax purposes of each Company asset, except that (a) the
Gross Asset Value of each asset contributed to the Company by a
Member shall equal its gross fair market value at the time of
such contribution and (b) the Gross Asset Value of each Company
asset shall be adjusted to equal its gross fair market value at
the time of any of the events described in Section 8.3(c). The
Gross Asset Value of each Company asset shall be reduced by
Depreciation with respect to such item.
"Interest" means a Member's limited liability company
interest in the Company, including, but not limited to, such
Member's share of the profits and losses of the Company, the
right to vote and a Member's right to receive distributions of
the Company's assets in accordance with the provisions of this
Agreement and the New York Act.
"Laws" means:
(a) all constitutions, treaties, laws, statutes,
codes, ordinances, orders, decrees, rules, regulations and
municipal by-laws, whether domestic, foreign or international;
(b) all judgments, orders, writs, injunctions,
decisions, rulings, decrees and awards of any governmental body;
(c) all policies, practices and guidelines of any
governmental body; and
(d) any amendment, modification, re-enactment,
restatement or extension of the foregoing, in each case binding
on or affecting the party or Person referred to in the context in
which such word is used;
and "Law" shall mean any one of them.
"Managers" means the three designees who shall oversee the
management of the Company's affairs in accordance with ARTICLE
IV.
"Member" means each of HE and NGS and includes any Person
admitted as an Additional Member or a substitute Member pursuant
to the provisions of this Agreement, in such Person's capacity as
a member of the Company, and "Members" means two (2) or more of
such Persons when acting in their capacities as Members of the
Company. For purposes of the New York Act, the Members shall
constitute one (1) class or group of Members.
"Net Cash Flow" means the excess, if any, of the cash
receipts of the Company (including Capital Contributions) over
the sum of (a) operating expenses (excluding depreciation,
amortization and non-cash charges), (b) expenditures by the
Company for capital assets or capital improvements of Company
property, (c) payments of principal and/or interest required
under any indebtedness of the Company, and (d) Reasonable
Reserves for payments, cash and expenses described in (a) through
(c) herein (provided that any amounts released from a reserve
shall be treated as cash receipts for the period).
"Net Income" or "Net Loss" shall mean with respect to each
Fiscal Year or other period, an amount equal to the Company's
Taxable Income or Tax Loss, as the case may be, for such year or
period, together with the following adjustments:
(a) income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Net
Income or Net Loss pursuant to this definition shall be added to
such Taxable Income or Tax Loss;
(b) any expenditures of the Company described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i) and
not otherwise taken into account in computing Net Income or Net
Loss pursuant to this definition shall be subtracted from such
Taxable Income or Tax Loss;
(c) in the event the Gross Asset Value of any Company
asset is adjusted pursuant to Section 8.3(c) hereof, the amount
of such adjustment shall be taken into account as a gain or loss
on disposition of such asset immediately prior to the event
causing the adjustment for purposes of computing Net Income and
Net Loss;
(d) with respect to each Company asset the Gross Asset
Value of which differs from its adjusted federal income tax
basis, (i) in lieu of the depreciation, amortization, and other
cost recovery deductions taken into account in computing such
Taxable Income or Tax Loss, there shall be taken into account
Depreciation for such fiscal year of the Company or other period;
and (ii) gain or loss resulting from any disposition of such
asset shall be computed by reference to its Gross Asset Value,
rather than its adjusted federal income tax basis; and
(e) notwithstanding any other provision of this
definition of Net Income and Net Loss, any items comprising the
Company's Net Income or Net Loss that are allocated pursuant to
Section 10.2 shall not be taken into account in computing Net
Income or Net Loss.
"New York Act" means the New York Limited Liability Company
Law, as amended from time to time.
"Officer" means an officer of the Company.
"Owner" means the owner of the Project, namely Global Common
Greenport, LLC.
"Percentage Interest" means the Interest of a Member,
expressed as a portion of one hundred percent, as shown on
Schedule 1 hereto, which reflects the Member's ownership interest
in the Company, as adjusted from time to time.
"Person" includes any individual, corporation, association,
partnership (general or limited), joint venture, trust, estate,
limited liability company, or other legal entity or organization.
"Project" means the complete engineering, design,
procurement and construction to support the installation of the
peaking power plant in Greenport, Long Island, New York.
"Project Agreement" means that certain agreement between the
Company and the Owner with respect to the engineering,
procurement and construction of the Project.
"Reasonable Reserves" means reserves calculated in
accordance with generally accepted accounting principles as well
as reserves set aside by the Board of Managers in the Company's
name in order to satisfy the Company's reasonably anticipated
requirements for at least two (2) months of operations, which
shall include, without limitation, reserves against possible
losses and the payment and making provision for the payment, when
due, of obligations of the Company, including obligations owed to
Members, including without limitation obligations for taxes by
virtue of the Company electing to be treated as a partnership for
all federal, state and local purposes, and funds for any other
reasonable Company purposes.
"Regulations" means the federal income tax regulations
promulgated under the Code, as such regulations may be amended
from time to time (including corresponding provisions of any
succeeding regulations).
"Taxable Income" or "Tax Loss" means with respect to each
Fiscal Year or other period, an amount equal to the Company's
taxable income or loss for such Fiscal Year or period determined
in accordance with Code Section 703(a) (for this purpose, all
items of income, gain, loss or deduction required to be
separately stated pursuant to Code Section 703(a)(1) shall be
included in such taxable income or loss).
"Tax Matters Member" has the meaning set forth in Section
13.1 hereof.
1.2 Headings. The headings and subheadings in this Agreement
are included for convenience and identification only and are in
no way intended to describe, interpret, define or limit the
scope, extent or intent of this Agreement or any provision
hereof.
ARTICLE II
ORGANIZATION
2.1 Formation.
(a) The Members hereby form the Company as a limited
liability company under and pursuant to the provisions of the New York
Act and agree that the rights, duties and liabilities of the Members
shall be as provided in the New York Act, except as otherwise
provided herein.
(b) Upon the execution of this Agreement or a counterpart of
this Agreement, HE and NGS shall be admitted as Members.
(c) HE, as an authorized person within the meaning of the New
York Act, has executed, delivered and filed the Articles.
2.2 Name. The name of the Company formed hereby is Greenport
Power, LLC. The business of the Company may be conducted under
any other name designated by the Board of Managers upon
compliance with all applicable Laws.
2.3 Purpose. The Company is formed for the object and purpose
of submitting a bid for and completing the Project; to engage in
any and all activities necessary, convenient, desirable or
incidental to the foregoing; and to engage in any lawful act or
activity for which limited liability companies may be formed
under the New York Act.
2.4 Term. The term of the Company shall commence on the date
the Articles are filed in the office of the Secretary of State of
the State of New York and shall continue until the Company is
dissolved in accordance with the provisions of this Agreement
(the "Term"). The existence of the Company as a separate legal
entity shall continue until cancellation of the Articles in the
manner required by the New York Act, which the Board of Managers
shall cause to occur upon the occurrence of any of the events
described in Sections 7.1(b), 7.1(c) and 15.4.
2.5 Registered Agent and Office. The Company's registered agent
and office in the State of New York shall be CT Corporation
System, 000 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000. At any time, the
Board of Managers may designate another registered agent and/or
registered office.
2.6 Principal Place of Business. The principal place of
business of the Company shall be 0 Xxxxxx Xxxx, Xxxxxxxxx, XX
00000. At any time, the Board of Managers may change the
location of the Company's principal place of business to another
location.
2.7 Qualification in Other Jurisdictions. The Board of Managers
shall cause the Company to be qualified, formed or registered
under the Laws of any jurisdiction in which the Company transacts
business. HE, as an authorized person within the meaning of the
New York Act, shall execute, deliver and file any certificates
(and any amendments and/or restatements thereof) necessary in
connection therewith.
ARTICLE III
MEMBERS
3.1 Members and their Percentage Interests. The name, mailing
address, and Percentage Interest of each Member shall be listed
on Schedule 1 attached hereto. The Board of Managers shall be
required to update Schedule 1 from time to time as necessary to
accurately reflect the information therein. Any amendment or
revision to Schedule 1 made in accordance with this Agreement
shall not be deemed an amendment to this Agreement. Any
reference in this Agreement to Schedule 1 shall be deemed to be a
reference to Schedule 1 as amended and in effect from time to
time.
3.2 Member's Interest. A Member's Interest shall for all
purposes be personal property. A Member has no interest in
specific Company property.
3.3 Powers of Members. The Members shall have the power to
exercise any and all rights or powers granted to the Members
pursuant to the express terms of this Agreement and the New York
Act.
3.4 Voting. Except as otherwise expressly provided herein or
otherwise required by applicable Laws, whenever this Agreement
requires or permits actions to be taken by the Members, the
decision by the Members owning more than fifty (50%) percent
(individually or in the aggregate) of the Percentage Interests
shall control; provided, however, that at all meetings of the
Members, Members owning more than fifty (50%) percent
(individually or in the aggregate) of the Percentage Interests
shall constitute a quorum for the transaction of business. If a
quorum shall not be present at any meeting of the Members duly
called, the Members present thereat may adjourn the meeting from
time to time, without notice other than announcement at the
meeting, until a quorum shall be present. Any action required or
permitted to be taken by the Members may be taken without a
meeting if all Members consent in writing to the adoption of a
resolution authorizing the action.
3.5 Reimbursements.
(a) The Company shall reimburse the Members for all ordinary
and necessary out-of-pocket expenses incurred by the Members in
connection with the performance of their duties in accordance
with Article VII on behalf of the Company. Such reimbursement
shall be treated as an expense of the Company and shall not be
deemed to constitute a distributive share of profits or a
Distribution or return of capital to any Member.
(b) All third party expenses related to this Agreement
incurred by a Member, whether before, on or after the date of this
Agreement, shall be submitted for approval of the Board of
Managers, and if approved shall be borne by the Company, or as
otherwise determined by the Board of Managers. All legal fees,
fees to third party professionals such as, but not limited to,
engineers, architects and consultants and fees to subcontractors
shall be deemed approved and shall be borne by the Company.
3.6 Partition. Each Member waives any and all rights that it
may have to maintain an action for partition of the Company's
property.
3.7 Withdrawal. Except as otherwise provided in Section 7.1(b),
a Member may not withdraw from the Company without the written
consent of all of the other Members prior to the dissolution and
winding up of the Company.
3.8 Representations and Warranties of Members. Each Member
hereby represents and warrants to the other Member as follows:
(a) Organization and Existence. Such Member is a corporation
or limited liability company duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation or formation. Such Member has full corporate or
similar power and authority to own and lease the properties and
assets it now owns and leases and to carry on its business as and
where such properties and assets are now owned or leased and in
such manner as such business is now conducted. Such Member is
duly licensed or qualified to do business and is in good standing
in the State of New York to the extent necessary or desirable to
fully perform under this Agreement and the Project Agreement.
(b) Authority and Approval. Such Member has the corporate
or similar power and authority to enter into this Agreement and the
other agreements referred to herein to which it is a party, and
to perform its obligations hereunder and thereunder. This
Agreement is a valid and binding obligation of such Member,
enforceable against it in accordance with its terms. When
executed, the other agreements referred to herein to which such
Member is a party will be valid and binding obligations of such
Member enforceable against it in accordance with their respective
terms.
(c) No Conflict. The execution, delivery, and performance
of this Agreement and the other agreements referred to herein do not
and will not (i) conflict with, or cause a default (whether with
or without the passage of time or the giving of notice or both)
under, or require the consent of any person or entity under any
indenture, mortgage, lien, lease, agreement, or instrument to
which such Member is a party or by which it is bound, or (ii)
violate any provision of, or require any consent, authorization,
or approval under, any law or administrative regulation or any
judicial, administrative or arbitral order, award, judgment,
decree or injunction by which such Member is bound.
(d) Investment; Restrictions on Transfer. Each Member is
purchasing its Interest for investment purposes only, and not
with a view toward the distribution or resale thereof. Interests
in the Company shall not be Transferred except in accordance with
the provisions of this Agreement.
ARTICLE IV
MANAGEMENT
4.1 Management of the Company.
(a) The business operations and affairs of the Company shall
be managed by a Board of Managers ("Board of Managers") which shall
consist of three Managers, and each of HE and NGS shall be
entitled to designate one (1) Manager and the Members shall
jointly select a third Manager. The initial Manager designees of
HE and NGS shall be as follows: HE designates Xxxxxxx X.
Xxxxxxxxxx; and NGS designates Xxxxxxx X. Xxxxxxxx.
(b) Except as otherwise provided by Law or this Agreement, at
all meetings of the Board of Managers, a majority of the entire
Board of Managers shall constitute a quorum for the transaction
of business and the act of a majority of the Managers present at
any meeting duly called at which there is a quorum shall be the
act of the Managers. If a quorum shall not be present at any
meeting of the Board of Managers duly called, the Managers
present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall be present. Any action required or permitted to be
taken by the Board of Managers or a committee thereof may be
taken without a meeting if all members of the Board or the
Committee consent in writing to the adoption of a resolution
authorizing the action. Any meeting of Managers may be held by
telephone conference call, provided all of the Managers
participating in the meeting are on the same telephone conference
call and all of the Managers can hear each other and participate
in such conference call.
(c) In the event that any named Manager designated above is
unable to serve, or once having commenced to serve, is removed or
withdraws from the Board of Managers of the Company in accordance
with applicable Law (each, a "Withdrawing Manager"), such
Withdrawing Manager's replacement (the "Substitute Manager") on
the Board of Managers of the Company will be nominated and
designated by the Member that originally nominated the
Withdrawing Manager, provided that the other Members shall have
the right of approval over any new Manager designees, such
approval not to be unreasonably withheld. The Members hereby
agree to take all actions within their respective power,
including, but not limited to, the voting of all Interests
respectively owned by them, to cause the election of such
Substitute Manager as soon as practicable following his or her
nomination and designation.
(d) Except as limited by this Agreement (including without
limitation subsection (e) below) or otherwise provided in the New
York Act or other applicable Laws, the Board of Managers shall
have the exclusive right and power to oversee the management of
the business of the Company and is authorized to do, on behalf of
the Company, all things which are necessary or appropriate to
carry out the Company's purposes. Without limiting the foregoing
and subject to the provisions of subsection (e) below, the Board
of Managers may cause the Company to:
(i) Enter into or execute any agreement, contract,
document, certification or instrument for any work or the
furnishing of any material or equipment for the Project;
(ii) Incur any liability for borrowed money, including
without limitation borrowings under the Credit Facility,
the Defaulted Loans and the Member Loans and determining the
necessity or desirability of guarantees, indemnity agreements
and the credit enhancements by the Members with respect
to the Credit Facility;
(iii) Approve expenses for reimbursement by the Company
incurred by a Member;
(iv) Appoint, remove, select successors to and fill
vacancies with respect to the Officers, Project Manager,
Assistant Project Manager and agents of the Company;
(v) Assign duties to and determine salaries of the
Officers, Project Manager and Assistant Project Manager, and
approve the authority of the Officers, Project Manager and
Assistant Project Manager with respect to taking any actions
described in clause (i) above;
(vi) Determine the markups on the bid(s);
(vii) Specify duties to HE and NGS in addition to the
HE Services and NGS Services;
(viii) Invest all funds of the Company;
(ix) Determine whether failure to perform or negligent
performance of a Member has occurred;
(x) Make a Capital Call;
(xi) Select and determine the duties of the accountant
for the Company;
(xii) Determine the bonding amounts and companies with
respect to Persons handling the funds of the Company; and
(xiii) Determine the extent and amount of insurance to
be purchased and maintained by the Company.
(e) Notwithstanding anything to the contrary in this
Agreement, the Board of Managers shall not have the power to undertake
any of the following actions without the unanimous consent of the
Managers and the Members:
(i) Amend, terminate or cancel this Agreement or the
Articles;
(ii) Enter into or execute any agreement, contract,
document, certification or instrument for any work or the
furnishing of any material or equipment for the Project
involving payments in excess of $100,000 individually or,
in the case of a series of related transactions, in the
aggregate;
(iii) Incur any liability for borrowed money in excess
of $100,000 individually or, in the case of a series of
related transactions, in the aggregate, other than
borrowings under the Credit Facility up to $8,000,000 in the
aggregate (which borrowings up to $8,000,000 are hereby
approved) and other than Defaulted Loans or Member Loans;
(iv) Dissolve or wind up the Company except as
provided in ARTICLE XV hereof;
(v) Sell, lease, transfer, mortgage, pledge or
otherwise dispose of the assets or business of the Company
or any part thereof outside the ordinary course of business;
(vi) Admit any Members;
(vii) Consolidate or merge the Company with any other
company, association, partnership or legal entity; or
(viii) Do any act in contravention of this Agreement.
4.2 Reimbursements. The Company shall reimburse the Managers
for all ordinary, reasonable and necessary out-of-pocket expenses
incurred by the Managers in connection with the performance of
their duties hereunder on behalf of the Company.
4.3 Amicable Resolution. The Members acknowledge that
irreconcilable differences may arise concerning the matters set
forth in of this Agreement. In attempting to resolve any such
differences, including any time that the Members are unable to
reach agreement on any of the actions set forth in Section 4.1(e)
hereof, each Member shall negotiate in good faith and shall use
all reasonable efforts to resolve such differences on an amicable
basis by open discussion between the Members. The Members shall
cooperate to permit the continued conduct of the business without
permitting such differences to affect other areas of the
business.
4.4 Arbitration.
(a) Any disputes between the parties hereto arising out of
or relating to this Agreement, including, without limitation, any
alleged breach hereof, which cannot be resolved in accordance
with Section 4.3 shall be submitted to and settled by arbitration
in accordance with the Construction Industry Mediation and
Arbitration Rules of the American Arbitration Association ("AAA")
then in effect. Such arbitration shall be controlled by the
provisions of this Agreement and shall be conducted by a panel of
three (3) arbitrators in accordance with such rules in New York,
NY, whose decision shall not be appealed or otherwise challenged
on the merits, except that any Member may appeal alleged errors
in application of the Laws by the arbitrators to a court of
competent jurisdiction. In the event of arbitration, each of NGS
and HE shall select one (1) arbitrator and the Members shall
jointly select a third arbitrator. The decision of the three (3)
arbitrators shall be rendered in writing, and judgment on such
award may be entered in any court of competent jurisdiction.
(b) The arbitrators shall award the costs and expenses of the
arbitration, including reasonable attorneys' fees, disbursements,
arbitration expenses, arbitrators' fees and the administrative
fee of the AAA, which award shall reflect the determination of
the arbitrators on the merits.
(c) In addition to the foregoing remedy of arbitration, each
Member shall be entitled to seek from any court of competent
jurisdiction such equitable relief, including specific
performance, as such Member may be entitled under applicable
Laws.
ARTICLE V
MEETINGS
5.1 Meetings of the Managers. Meetings of the Managers may be
called at any time by any Manager. The Managers shall use their
reasonable efforts to hold a meeting of the Managers no less than
monthly during any Fiscal Year. Notice of any meeting shall be
given to all Managers not less than ten (10) days nor more than
sixty (60) days prior to the date of such meeting, and shall
specify the general nature of the business to be transacted. The
Managers shall consult in good faith with the other Managers
regarding mutually satisfactory meeting times. Each Manager may
authorize any Person to act for it by proxy on all matters in
which a Manager is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting.
Every proxy must be signed by the Manager or its respective
attorney-in-fact.
5.2 Meetings of the Members. Any executive officer of a Member
shall be deemed authorized to represent a Member at a meeting.
Meetings of the Members may be called at any time by any Member
or Manager. All notices of meetings of Members should be sent or
otherwise given not less than ten (10) days, nor more than sixty
(60) days, before the date of the meeting. Notice may be waived
in writing by the Members, either before, during or after any
meeting. The notice shall specify (a) the place, date and hour
of the meeting, and (b) the general nature of the business to be
transacted. The Members shall consult in good faith with the
other Members regarding mutually satisfactory meeting times.
Each Member may authorize any Person to act for it by proxy on
all matters in which a Member is entitled to participate,
including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the
Member or its respective attorney-in-fact.
ARTICLE VI
OFFICERS; PROJECT MANAGER
6.1 Officers. The Officers of the Company shall be chosen by
the Board of Managers and shall initially consist of a President,
Vice President and Secretary-Treasurer, who initially shall be as
follows: Xxxxxxx X. Xxxxxxxxxx shall be President; and Xxxxxxx
X. Xxxxxxxx shall be Vice President and Secretary-Treasurer. The
Board of Managers may appoint such other Officers and agents as
they deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall
be determined from time to time by the Board of Managers. For
clarification, the same individual may be both one or more
Officers and a Manager. The salaries, if any, of all Officers
and agents of the Company shall be determined by or in the manner
prescribed by the Board of Managers. The Officers of the Company
shall hold office until their successors are chosen and are
qualified. Any Officer elected or appointed by the Board of
Managers may be removed at any time by the Board of Managers upon
a good faith determination that such Officer is not adequately
performing his or her duties hereunder in a commercially
reasonable manner. Any Officer may resign his or her office at
any time and such resignation shall take effect upon receipt
thereof by the Board of Managers, unless otherwise specified in
the resignation. Any vacancy occurring in any office of the
Company shall be filled by the Board of Managers.
6.2 President. The President shall be the chief executive
officer of the Company and shall have the general powers and
duties of supervision and management of the Company, subject,
however, to the control of the Board of Managers. The President,
at the direction of the Board of Managers, shall have the
authority to execute and deliver such purchase orders, rental
agreements, subcontracts and other agreements approved by (a) a
majority of the Board of Managers in the case of any such orders
or agreements involving payments individually or in the aggregate
up to $100,000, and (b) the entire Board of Managers in the case
of any such orders or agreements involving payments individually
or in the aggregate in excess of $100,000; and in all cases as
are necessary and appropriate to carry out the Project. The
President shall also perform all duties incident to the office of
President and such other duties as may from time to time be
assigned to him or her by the Board of Managers.
6.3 Vice President. The Vice President, at the direction of the
Board of Managers, shall have the authority to execute and
deliver such purchase orders, rental agreements, subcontracts and
other agreements approved by (a) a majority of the Board of
Managers in the case of any such orders or agreements involving
payments individually or in the aggregate up to $100,000, and
(b) the entire Board of Managers in the case of any such orders
or agreements involving payments individually or in the aggregate
in excess of $100,000; and in all cases as are necessary and
appropriate to carry out the Project. The Vice President shall
perform such other duties and shall have such authority as from
time to time may be assigned to him or her by the Board of
Managers or the President.
6.4 The Secretary-Treasurer. (a) The Secretary shall attend,
and keep the minutes of all proceedings of the Board of Managers
and the minutes of, all meetings of the Members and the Managers,
in books provided for that purpose, of which he or she shall be
the custodian; he or she shall attend to the giving and serving
of all notices for the Company; and he or she shall have charge
of the seal of the Company and such other books and papers as the
Board of Managers may direct and he or she shall in general
perform all the duties incident to the office of Secretary and
such other duties as may be assigned to him or her by the Board
of Managers or the President.
(b) Subject to the direction of the Board of Managers, the
provisions of Sections 7.8 and 12.4 and as otherwise generally
set forth in this Agreement, the Treasurer shall have the general
care and custody of all the funds and securities of the Company
which may come into his or her hands and shall deposit the same
to the credit of the Company in such bank or banks or
depositories as from time to time may be designated by the Board
of Managers, and shall pay out and dispose of the same under the
direction of the Board of Managers. The Treasurer shall in
general perform all duties incident to the position of Treasurer
and such other duties as may be assigned to him or her by the
Board of Managers or the President.
(c) The offices of Secretary and Treasurer shall initially
be held by one individual, as Secretary-Treasurer.
6.5 Project Manager and Assistant Project Manager. The Board of
Managers shall appoint a Project Manager and an Assistant Project
Manager for the Project, who shall be responsible for overseeing
the construction operations of such Project, including without
limitation (a) the direction and management of the Project in
accordance with the policies and procedures established by the
Board of Managers, (b) the scheduling, phasing and coordination
of the Project and (c) the contacts with the Owner and the
Owner's authorized representatives. The Project Manager and/or
the Assistant Project Manager, at the direction of the Board of
Managers, shall have the authority to execute and deliver such
purchase orders, rental agreements, subcontracts and other
agreements approved by (x) a majority of the Board of Managers in
the case of any such orders or agreements involving payments
individually or in the aggregate up to $100,000, and (y) the
entire Board of Managers in the case of any such orders or
agreements involving payments individually or in the aggregate in
excess of $100,000; and in all cases as are necessary and
appropriate to carry out the Project. The salaries of the
Project Manager and the Assistant Project Manager shall be
determined by or in the manner prescribed by the Board of
Managers. The Project Manager and Assistant Project Manager
shall be subject to removal and reappointment by the Board of
Managers for failure to perform or the negligent performance in
accordance with the terms of this Agreement, in the discretion of
the Board of Managers.
6.6 Officers as Agents. The Officers, to the extent of their
powers set forth in this Agreement or otherwise vested in them by
action of the Board of Managers, are agents 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.
6.7 Delegation. The Officers may delegate any of their specific
powers under this Agreement to another person or person(s), and
such authority may be general or confined to specific instances.
ARTICLE VII
BUSINESS OF THE COMPANY
7.1 Submission of Bid.
(a) The Members do hereby agree to work together to prepare
and cause the Company to submit a bid or proposal to the Owner for
work to be provided by the Company in connection with the
Project. Such bid or proposal shall be submitted in the name of
the Company; provided, however, no bid or proposal shall be
submitted naming any Member hereto as one of the Company unless
that Member shall have agreed, in writing, to all of the terms,
covenants and conditions contained in such bids or proposals
including, without limitation, the amount of the bid; and
provided, further, that the bid will include markups with respect
to: direct labor; material, equipment and subcontractors; all as
agreed upon by the Board of Managers.
(b) Prior to the submission of any bid or proposal to the
Owner by the Company, any Member may withdraw from this Agreement for
any reason whatsoever and, upon such withdrawal, this Agreement
shall be null and void and of no further force or effect and all
duties and obligations of the Members hereto shall terminate and
no Member shall have any further obligations to the other except
for the provisions of Sections 4.2, 4.3, 4.4, 7.4, 7.11, 15.3,
15.5, 15.6, 16.1, 16.8 and 16.10, which shall survive until the
duly authorized filing of the Articles of Dissolution of the
Company. After any bid or proposal has been submitted, no change
shall be made therein unless such change shall be consented to by
all Members.
(c) If any or all bids or proposals submitted to the Owner
by the Company are accepted by such Owner, the Members shall execute
such documents and shall take such other steps as such Owner may
require to make the Project Agreement a legal and binding
agreement among the Company and Owner. If required by the Owner,
the Members shall, jointly and severally, guarantee the
performance by the Company of the Company's obligations under the
Project Agreement. Notwithstanding any such joint and several
guarantee to the Owner, the Members agree, as among themselves,
that no Member's aggregate liability under such guarantees shall
exceed its Percentage Interest in the total sum actually paid or
accrued with respect to the Project. If none of the bids or
proposals are accepted by the Owner, this Agreement shall be null
and void and of no further force or effect and all duties and
obligations of the Members hereto shall terminate and no Member
shall have any further obligations to the other except for the
provisions of Sections 4.2, 4.3, 4.4, 7.4, 7.11, 15.3, 15.5,
15.6, 16.1, 16.8 and 16.10, which shall survive until the duly
authorized filing of the Articles of Dissolution of the Company.
(d) Any negotiations with the Owner, subsequent to the
submission of the bid(s), but prior to the award, shall include
at least one authorized representative of each Member (who may be
Managers), and all the Members must concur before any agreements
so negotiated are binding.
(e) With respect to the Project, (i) if the Company does
not enter into a Project Agreement with the Owner, then no Member may
enter into a contract to perform any services contemplated for
such Project without the written consent of the other Members,
and (ii) in the event a Member withdraws from this Agreement for
any reason whatsoever, upon such withdrawal, such Member may not
enter into a contract to perform any services contemplated for
the Project without the written consent of the other Members.
7.2 HE Responsibilities and Obligations.
(a) HE shall provide to the Company those certain services
set forth in the Project Agreement with respect to the bid and/or
proposal in connection with the Project, and all other duties as
specified by the Board of Managers.
(b) HE shall also provide to the Company the services of HE
employees ("HE Employees") for Direct Labor at HE's Actual Direct
Labor Costs. HE agrees not to materially increase the
compensation of, including, without limitation, wages, salaries
and other benefits of, or terminate, any of the HE Employees
without prior written consent of the Board of Managers. The HE
Employees shall provide services to the Company on a full-time
basis, or a part-time basis if so agreed by the Board of Managers
and HE, but shall remain employees of HE and shall be paid by,
and receive benefits from, HE. In the event any of the HE
Employees from time to time are unwilling or unable to provide
reasonably satisfactory services to the Company, as determined by
the Board of Managers and HE (each such employee, a "Terminated
HE Employee"), then HE shall supply from time to time replacement
or supplemental employees of HE to render services to the Company
as HE Employees. Neither the Board of Managers nor the Company
shall have any obligations to any Terminated HE Employee after
the date on which such Terminated HE Employee ceases to render
services to the Company as an HE Employee; provided that the
Company shall reimburse HE for wages, salary and other benefits
accrued by each Terminated Employee prior and up to the date on
which each such Terminated HE Employee ceases to render services
to the Company as an HE Employee.
7.3 NGS Responsibilities and Obligations.
(a) NGS shall provide to the Company those certain services
set forth in the Project Agreement with respect to the bid and/or
proposal in connection with the Project, and all other duties as
specified by the Board of Managers.
(b) NGS shall also provide to the Company the services of NGS
employees (the "NGS Employees") for Direct Labor at NGS's Actual
Direct Labor Costs. NGS agrees not to materially increase the
compensation of, including, without limitation, wages, salaries
and other benefits of, or terminate, any of the NGS Employees
without prior written consent of the Board of Managers. The NGS
Employees shall provide services to the Company on a full-time
basis, or a part-time basis if so agreed by the Board of Managers
and NGS, but shall remain employees of NGS and shall be paid by,
and receive benefits from, NGS. In the event any of the NGS
Employees from time to time are unwilling or unable to provide
reasonably satisfactory services to the Company, as determined by
the Board of Managers and NGS (each such employee, a "Terminated
NGS Employee"), then NGS shall supply from time to time
replacement or supplemental employees of NGS to render services
to the Company as NGS Employees. Neither the Board of Managers
nor the Company shall have any obligations to any Terminated NGS
Employee after the date on which such Terminated NGS Employee
ceases to render services to the Company as an NGS Employee;
provided that the Company shall reimburse NGS for wages, salary
and other benefits accrued by each Terminated Employee prior and
up to the date on which each such Terminated NGS Employee ceases
to render services to the Company as an NGS Employee
7.4 Payment for Services and Employees. With respect to the
provisions of Sections 7.2 and 7.3 above, the Company shall
reimburse each of HE and NGS on a monthly basis for all Actual
Direct Labor Costs. Within ten (10) days after the end of each
calendar month following the execution of this Agreement, each of
HE and NGS shall invoice the Company (with reasonably appropriate
back-up including, without limitation, a payroll record certified
by such Member or the applicable payroll company, if any), and
within ten (10) days of its receipt of such invoice, the Company
shall reimburse each of HE and NGS for all such Actual Direct
Labor Costs.
7.5 Union Employees. If so desired by any Member, the Company
shall coordinate with applicable labor unions with respect to
employment of certain individuals in connection with and for the
duration of the Project. The Company shall be responsible for
the wages of such individuals for the duration of their
employment by the Company but shall cause applicable labor unions
to retain all responsibility and obligation for the costs and
provisions of benefits to such individuals.
7.6 Credit Facility. The Company may borrow funds for working
capital in such amount(s) as determined by the Board of Managers
(the "Credit Facility"). The Members agree to cooperate and do
all such acts commercially reasonable to enable the Company to
obtain such Credit Facility, including without limitation
executing and providing such guarantees, indemnity agreements and
other credit enhancements and agreements as necessary or
desirable to obtain satisfactory credit terms in the opinion of
the Board of Managers. Notwithstanding whether the lender(s)
under the Credit Facility require joint and several liability in
connection with any guarantees, indemnity agreements and other
credit enhancements and agreements with respect to the Credit
Facility, the Members agree, as among themselves, that no
Member's aggregate liability shall exceed its Percentage Interest
in the total sum actually paid or accrued with respect to the
Project.
7.7 Bonding. To the extent the Company is required to provide
Bonds, as hereinafter defined, with respect to the Project, the
Members, individually and in combination, shall take such steps
and execute and provide such guarantees, indemnity agreements and
other credit enhancements and agreements as may be required to
enable the Company to obtain the Bonds. If less than all Members
have liability to the surety issuing the Bonds on behalf of the
Company, (a) the Member(s) without such liability shall, at the
request of the Member(s) having such liability, enter into a
subcontract with the Company to perform such Member's Direct
Labor and shall provide a performance bond in favor of the
Company in the amount such that the proportionate liability for
Bonds of each Member shall be its respective Percentage Interest,
or (b) the Company shall otherwise indemnify the Member(s) having
such liability with respect to such liability (such that such
Member's liability shall be limited to its Percentage Interest
with respect to the aggregate amount thereof). The term "Bonds"
shall mean all payment, performance, completion bonds and all
other bonds, guarantees, indemnity agreements, and other credit
enhancements and agreements as may be required in connection with
the Project. Payment for all Bonds (whether in favor of the
Owner or the Company) shall be a direct cost of the Company.
Alternatively, the Members shall have the option, at each of
their discretion, to directly provide any payment and performance
bonds or other bonds or similar guarantees required with respect
to the Project and shall coordinate with the Company and the
other Members in connection therewith.
7.8 Insolvency.
(a) Upon the bankruptcy or insolvency of any Member, or
should any party commit any act of bankruptcy or take advantage of any
bankruptcy, reorganization, composition or arrangement statute,
then, from and after such date, such Member, its successors or
assigns (hereinafter referred to as the "insolvent party") and
its representative(s) shall cease to have any voice in the
management of the Company and the Project (anything in this
Agreement to the contrary notwithstanding). All actions and
decisions with respect to the Company and the Project shall
thereafter be taken solely by the remaining Member(s), their
designees to the Board of Managers and the Officers appointed
thereby. Any Manager designee to the Board of Managers of such
insolvent party pursuant to Section 4.1(a) shall immediately
become, and continue to be, designated (jointly, as applicable)
by the Member(s) who are not insolvent parties.
(b) Notwithstanding the foregoing, the insolvent party shall
retain its Interest for economic purposes only and shall have
such economic rights and liabilities as set forth in this
Agreement in accordance with its Percentage Interest.
7.9 Company Funds.
(a) All funds of the Company (whether by virtue of payments
under the Project Agreement, the Credit Facility, Capital
Contributions, Member Loans or otherwise) shall be invested in
certificates of deposit, money market accounts or other short
term investments approved by the Board of Managers, such that
such funds will earn interest without interfering with the
payment of current obligations of the Company as they become due.
(b) All monies (i) contributed or advanced to the Company by
the Members of the Company, (ii) borrowed by the Company, (iii)
received as payments or otherwise under the Project Agreement or
(iv) otherwise received by the Company, shall be treated and
regarded as, and are hereby declared to be, trust funds for the
performance of the Project Agreement and for no other purpose
until the Project Agreement shall have been fully completed and
accepted by the Owner, and until all obligations of the Members
shall have been paid, otherwise discharged, or provided for by
adequate reserves. Such reserves shall likewise be treated as
"trust funds" until they shall have served the purposes for which
they were created.
7.10 Construction Costs.
(a) For the purpose of determining profit and loss,
construction costs to be charged to the Company shall include the
costs of all subcontracts, labor, material, plant and equipment
purchased or rented, bonds, insurance, taxes on labor and material,
legal and accounting fees, liabilities not secured by insurance, and all
other expenses and obligations incurred or suffered in or about
the performance of the Project Agreement, which expenses and
obligations are of a nature which under generally accepted
accounting principles would be properly charged as a cost of
performance of the Project Agreement.
(b) Construction costs shall not include any charge
against the Company for any overhead expense or charge for the main or branch
offices of any Member, nor any charge for the time or travel
expense of any officer, employee or agent of any Member then
engaged in the business of the Company, except as such charge may
be approved by the Board of Managers.
(c) Any property, including equipment, made available by a
Member to the Company in connection with the performance by the
Company of its obligations under the Project Agreement shall be
billed by such Member to the Company at seventy-five (75%)
percent of Blue Book rates, or if not included in the Blue Book,
at fair market rates.
7.11 Member Nonperformance.
(a) Upon not less than seven (7) days' written notice from
the Board of Managers, if a Member substantially fails to perform or
negligently performs in accordance with the terms of this
Agreement, in the discretion of the Board of Managers, through no
fault of the other Members (a "Non-Performing Member"), such Non-
Performing Member shall cease to have any voice in the management
of the Company and the Project (anything in this Agreement to the
contrary notwithstanding). All actions and decisions with
respect to the Company and the Project shall thereafter be taken
solely by the remaining Member(s), their designees to the Board
of Managers and the Officers appointed thereby. Any Manager
designee to the Board of Managers of such Non-Performing Member
pursuant to Section 4.1(a) shall immediately become, and continue
to be, designated (jointly, as applicable) by the Member(s) who
are not Non-Performing Members.
(b) Notwithstanding the foregoing, the Non-Performing
Member shall retain its Interest for economic purposes only and shall
have such economic rights and liabilities as set forth in this
Agreement in accordance with its Percentage Interest.
ARTICLE VIII
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
8.1 Initial Capital Contributions. Each Member shall make an
initial Capital Contribution to the Company in the amount of
$500.
8.2 Additional Capital Contributions.
(a) If at any time and from time to time during the Term,
funds are needed by the Company for working capital or to pay any
liabilities, costs, expenses, fees and obligations of the
Company, the Board of Managers shall first use commercially
reasonable efforts to borrow such funds. The obligations of the
Members with respect to any such borrowed money shall be as
described in Section 7.6 with respect to the Credit Facility. In
the event the Board of Managers is unable to obtain any
additional borrowed money, the Board of Managers may call for the
Members to make Capital Contributions or loans to the Company
("Member Loans"), in such amounts and at such times as the Board
of Managers shall specify (each, a "Capital Call") in accordance
with this Section 8.2. If a Capital Call is made by the Board of
Managers, the amount of each Member's obligation for Capital
Contributions and/or Member Loans shall be in accordance with
their respective Percentage Interests.
(b) Any Capital Call pursuant to Section 8.2(a) shall be
made by the Board of Managers by its delivery to the Members of not
less than twenty (20) days' prior written notice (a "Capital Call
Notice"), setting forth the amounts to be contributed or loaned
by each Member, the reason for the Capital Call, the date the
capital is required (the "Due Date") and a certification that
such amounts will be used for working capital or to satisfy
liabilities, costs, expenses, fees and obligations of the
Company. All Capital Contributions and/or Member Loans shall be
made in cash unless otherwise agreed by all the Members. The
terms of any Member Loan are as follows: The Member Loan shall
be deemed to be a demand loan and interest shall accrue on the
Member Loan at such Member's cost, or upon such other terms as
such Member and the Board of Managers shall determine.
(c) Following the Due Date, the Company shall promptly
notify each Member of the failure by any Member (a "Defaulting Member")
to make its respective Capital Contribution and/or Member Loan
pursuant to the Capital Call Notice (such failure to make a
Capital Contribution and/or Member Loan by the Due Date is
referred to herein as a "Funding Breach"). The Defaulting Member
shall have ten (10) days (the "Capital Call Cure Period") from
the date of notice of the Funding Breach to cure such Funding
Breach by delivering to the Company the Capital Contribution
and/or Member Loan requested under the Capital Call Notice
together with interest thereon calculated at the rate of fifteen
(15%) percent per annum from the date of the Funding Breach to
the date of payment.
(d) If a Defaulting Member shall fail to deliver its Capital
Contribution and/or Member Loan together with interest thereon as
provided in Section 8.2(c) within the Capital Call Cure Period,
then a funding default (a "Funding Default") shall have occurred
and the Company shall provide notice of such Funding Default to
all of the Members thereafter and for a period of ten (10) days
after the issuance of such notice, the non-defaulting Members
(the "Non-Defaulting Members") shall have the option, but shall
not be required, to make a Capital Contribution and/or Member
Loan in the amount of all or any part of the Funding Default to
the Company without payment of any penalty or interest up to the
greater of (i) the product of (A) the amount of the Funding
Default multiplied by (B) a fraction, the numerator of which is
such Member's Percentage Interest and the denominator of which is
the sum of the Percentage Interests of the Non-Defaulting
Member(s) and (ii) the sum of (A) the amount of the Funding
Default less (B) the amount that the other Non-Defaulting
Member(s) have committed to (and shall) make available in the
form of a Capital Contribution and/or Member Loan with respect to
the Funding Default (subject to the limits on their proportionate
participation as described in clause (i) above).
(e) To the extent the Funding Default is met by virtue of a
Member Loan(s), such amounts shall be referred to as a "Defaulted
Loan." The Defaulted Loan shall be deemed to be a demand loan to
the Company and interest shall accrue on the Defaulted Loan, at a
rate equal to ten (10%) percent per annum above the Prime Rate
("Defaulted Loan Interest"). Any Distributions payable to a
Defaulting Member under Section 9.1(b) shall be reduced by the
amount of the Defaulted Loan Interest, with respect to a Funding
Default by such Defaulting Member, accrued to the date of such
Distribution.
(f) To the extent the Funding Default is met by virtue of a
Capital Contribution(s), the Percentage Interests of the Members
shall be adjusted in accordance with the following:
(i) Each Member's initial capital ("Initial Capital")
shall be the sum of such Member's initial Capital
Contribution plus the product of such Member's Percentage
Interests and the aggregate outstanding principal
amount of the Credit Facility pursuant to outstanding
principal 8.2(a), as applicable. Each Member's existing
capital ("Existing Capital") shall be the sum of the Member's
Initial Capital and the amount of the total Capital
Contributions made by the Member under this Section 8.2.
(ii) Each Member's new Percentage Interest after each
Capital Call satisfied by virtue of a Capital Contribution
shall be the percentage derived by dividing such Member's
Existing Capital by the aggregate of the Members' Existing
Capital (the "Pre-Adjustment Percentage Interest"), adjusted
as follows:
(A) with respect to the Defaulting Member,
subtract from such Defaulting Member's Percentage
Interest in effect immediately prior to the Capital
Call such Defaulting Member's Pre-Adjustment Percentage
Interest;
(B) multiply the difference calculated pursuant to
clause (A) by two (2) (the "Adjustment");
(C)(1) with respect to the Defaulting Member,
subtract from such Defaulting Member's Percentage
Interest in effect immediately prior to the Capital
Call the Adjustment;
(2) with respect to the Members other than
Defaulting Members, add to such Member's Pre-Adjustment
Percentage Interest an amount equal to the product of
(x) one-half (1/2) of the Adjustment multiplied by
(y) a fraction, the numerator of which is such Member's
Pre-Adjustment Percentage Interest and the denominator
of which is the sum of the Pre-Adjustment Percentage
Interests of all Members other than Defaulting Members.
For example, for illustrative purposes only, if
(1) each Member has made a $1,000,000 initial Capital
Contribution, (2) the aggregate outstanding principal
amount of the Credit Facility is $3,000,000, (3) a
Capital Call is made in the amount of $1,000,000, and
(4) HE contributes $700,000 and NGS contributes
$300,000, all in the form of Capital Contributions,
their respective Percentage Interests after such
Capital Call, shall be determined as follows:
Initial Capital Existing Capital Pre-
Adjustment
Percentage
Interest
HE: 1,000,000 + (.5 X 3,000,000) = 2,500,000 2,500,000 + 700,000 = 3,200,000 3,200,000 = 53%
---------
6,000,000
NGS: 1,000,000 + (.5 X 3,000,000) = 2,500,000 2,500,000 + 300,000 = 2,800,000 2,800,000 = 47%
---------
6,000,000
Adjustment New Percentage
Interest
HE: -- 53 + (6 X 53) = 56%
- --
(2 53)
NGS: 2 (50-47) = 6 50 - 6 = 44%
(g) No Member shall be entitled to withdraw any part of its
Capital Contribution or to receive any Distribution from the
Company, except as expressly provided in this Agreement or as
determined by the unanimous consent of the Members.
(h) No Member shall be paid interest on any Capital
Contribution.
8.3 Capital Accounts. An individual Capital Account shall be
maintained for each Member in accordance with the following
provisions and the provisions of Sections 12.1, 12.2 and 12.3:
(a) Each Member's Capital Account shall be credited with (i)
the amount of cash contributed by such Member to the Company; (ii)
the fair market value of any property contributed to the Company
by such Member (net of liabilities secured by such contributed
property that the Company is considered to assume or take subject
to under Code Section 752); (iii) the amount of such Member's
allocable share of Net Income and any items of Company gain or
income that are specially allocated to such Member pursuant to
Section 10.2 hereof; and (iv) the amount, if any, of any Company
liabilities that are assumed by such Member or secured by any
Company property distributed to such Member by the Company.
(b) Each Member's Capital Account shall be charged with (i)
the amount of cash distributed to such Member by the Company; (ii)
the amount of such Member's allocable share of Net Loss and any
items of Company loss and deduction that are specially allocated
to such Member pursuant to Section 10.2 hereof; (iii) the Gross
Asset Value of any property distributed to such Member by the
Company (net of liabilities secured by such distributed property
that such Member is considered to assume or take subject to under
Code Section 752); and (iv) the amount, if any, of any
liabilities of such Member assumed by the Company or secured by
any property contributed by such Member to the Company.
(c) In the event of (i) the acquisition of an additional
Interest in the Company by any new or existing Member in exchange
for more than a de minimis Capital Contribution, (ii) the
distribution by the Company to a Member of more than a de minimis
amount of cash or assets of the Company as consideration for an
Interest in the Company, (iii) the liquidation of the Company for
federal income tax purposes pursuant to Regulation Section 1.704-
1(b)(2)(ii)(g), or (iv) an election under Code Sections 734(b) or
743(b), but only as provided in Regulation Section 1.704-1(b)(2)(iv)(m),
the Gross Asset Values of the Company's properties shall be
adjusted (limited, in the case of the events described in clauses
(i) and (ii), to adjustments which the Members determine are
necessary or appropriate to reflect the relative economic
interests of the Members) to equal their then fair market values
(as determined by the Manager), and the Capital Accounts of each
Member shall be credited or charged with such Member's share (as
determined under ARTICLE X hereof) of the Net Income or Net Loss
resulting from such adjustments.
(d) In the event that any Interest in the Company is
transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor
to the extent it relates to the transferred Interest.
(e) The foregoing provisions and the other provisions of the
Agreement relating to the maintenance of Capital Accounts are
intended to comply with Regulation Section 1.704-(b), and shall be
interpreted and applied in a manner consistent with such
Regulation.
ARTICLE IX
DISTRIBUTIONS
9.1 Distributions Generally.
(a) Notwithstanding any provision to the contrary contained
herein, the Company shall not make a Distribution to any Member
on account of its Interest if such distribution would violate any
provision of the New York Act or other applicable law.
(b) Subject to Section 9.2, the Company shall make
Distributions to each of the Members of cumulative Net Cash Flow at
such times and in such amounts as determined by the Board of Managers
in the following order of priority:
(i) first, to the Members who have made Defaulted Loans
until such Members shall have received pursuant to this
Section 9.1(b)(i) amounts equal to all accrued and unpaid
Defaulted Loan Interest with respect to their respective
Defaulted Loans, if any, as of the end of such Fiscal Year;
(ii) then, to the Members who have made Defaulted Loans
until such Members shall have received pursuant to this
Section 9.1(b)(ii) amounts in the aggregate equal to their
respective outstanding principal amount of Defaulted Loans;
(iii) then, to the Members who have made Member Loans
until such Members shall have received pursuant to this
Section 9.1(b)(iii) amounts equal to all accrued and unpaid
Member Loan Interest with respect to their respective Member
Loans, if any, as of the end of such Fiscal Year;
(iv) then, to the Members who have made Member Loans
until such Members shall have received pursuant to this
Section 9.1(b)(iv) amounts in the aggregate equal to their
respective outstanding principal amount of Member Loans;
(v) then, to the Members who have made Capital
Contributions until such Members shall have received pursuant
to this Section 9.1(b)(v) amounts in the aggregate equal to
their respective Capital Contributions;
(vi) then, subject to the provisions of Section 9.1(e)
below, to the Members in accordance with their respective
Labor Sharing Percentage, until such Members shall have
received Direct pursuant to this Section 9.1(b)(vi) amounts
equal to the aggregate amount of the Direct Labor Net
Proceeds;
(vii) thereafter, the balance to the Members in
accordance with their respective Percentage Interests.
(c) With respect to a Defaulting Member, the first
Distributions payable under subsection (b) above shall be reduced by the
aggregate amount of the Defaulted Loan Interest, in all cases without
regard to which of clauses (i) through (vii) the Distribution is
made. With respect to any Member, no Member shall receive a
Distribution to the extent that it would result in such Member's Capital
Account becoming negative. The amount of any Distribution not made to a
Member because of the application of the preceding sentence, shall
instead be distributed to Members with positive Capital Accounts in
accordance with and subject to the limitation imposed by the
preceding sentence.
(d) The Company shall distribute to each Member within 90
days after the close of each Fiscal Year an amount, if any, equal to
(i) the sum of the net Taxable Income allocated to such Member
for all periods multiplied by 45%, over (ii) the sum of the
amounts distributed to such Member pursuant to Section 9.1(b)
hereof and this Section 9.1(d). Future Distributions otherwise
payable to such Member pursuant to Section 9.1(b) hereof shall be
reduced by the amount distributed pursuant to this Section
9.1(d).
(e) Notwithstanding the provisions of Section 9.1(b) above,
and in particular Section 9.1(b)(vi), payments in excess of actual
costs of the Members with respect to the Project may not be made
until completion of the Project as determined by the Board of
Managers. The timing and amount of any Distributions of funds of
the Company other than pursuant to Section 9.1(b) and 9.1(d)
shall be determined by the Board of Managers.
9.2 Apportionment of Distributions. Distributions shall be made
to Members with a positive Capital Account in proportion to their
respective Direct Labor Sharing Percentage or Percentage
Interests, as the same may vary during the Fiscal Year or other
period to which such Distributions relate.
ARTICLE X
ALLOCATIONS
10.1 Allocations of Net Income and Net Losses. Subject to
Section 10.3(d) hereof, and after making any allocations (if any)
required by Section 10.2 hereof, Net Income and Net Loss shall be
allocated among the Members in such a manner that, as of the end
of each Fiscal Year (or other period), the Adjusted Capital
Account Balance of each Member is equal to the respective net
amounts, positive or negative, that would be distributed to them
under this Agreement, determined as if the Company were to
(a) sell the assets of the Company for an amount of cash equal to
their Gross Asset Value, (b) pay the liabilities of the Company
(provided, in the case of nonrecourse liabilities secured by
property, the amount of each such liability taken into account
shall be limited to the Gross Asset Value of the asset or assets
securing such liability), and (c) distribute the proceeds
pursuant to Section 9.1(b) hereof.
10.2 Regulatory Allocations.
(a) In order to comply with the "qualified income offset"
requirement of the Regulations under Code Section 704(b), and
notwithstanding any other provision of this Agreement to the
contrary, except Section 10.2(b), in the event a Member for any
reason (whether or not expected) has an Adjusted Capital Account
Deficit, items of Net Income (consisting of a pro rata portion of
the items thereof) shall be allocated to such Member in an amount
and manner sufficient to eliminate as quickly as possible the
Adjusted Capital Account Deficit.
(b) In order to comply with the "minimum gain chargeback"
requirements of Regulation Section 1.704-2(f)(1) and Section
1.704-2(i)(4), and notwithstanding any other provision of this Agreement
to the contrary, in the event there is a net decrease in a Member's
share of Company minimum gain (as defined in Regulation Section 1.704-
2(d)(1)) and/or Member nonrecourse debt minimum gain (as defined
in Regulation Section 1.704-2(i)(2)) during a Company taxable year,
such Member shall be allocated items of income and gain for that
year (and if necessary, for other years) as required by and in
accordance with Regulation Section 1.704-2(f)(1) and Section
1.704-2(i)(4) before any other allocation is made.
(c) All items of deduction and loss that, pursuant to
Regulation Section 1.704-2(i), are attributable to a nonrecourse debt
for which a Member (or a Person related to such Member under Treasury
Regulation Section 1.752-4(b)) bears the economic risk of loss (within
the meaning of Regulation Section 1.752-2), shall be allocated to such
Member as required by Regulation Section 1.704-2(c). Nonrecourse
deductions (as defined in Regulation Section 1.704-2(b)(3)) for any
Fiscal Year shall be allocated to the Members in the same
proportion as Losses are allocated to the Members for such Fiscal
Year.
10.3 Other Allocation Rules.
(a) Each separate item of income, gain, deduction, loss and
credit of the Company shall be allocated among the Members in the
same proportion as the portion of the total Net Income or Net
Loss for the period which is credited or charged to the Capital
Account of each Member bears to the total Net Income or Net Loss
for such period.
(b) If the Percentage Interests of the Members change
during a year, then, unless otherwise determined by the unanimous
consent of the Members, Net Income or Net Loss for such year shall be
allocated among the Members for the periods before and after the
date on which the change in Percentage Interests became
effective, based on an interim closing of the books. This
Section 10.3(b) shall apply both for purposes of computing a
Member's Capital Account and for allocation purposes.
(c) Income, gain, loss and deductions of the Company shall,
solely for federal income tax purposes, be allocated among the
Members in accordance with Section 704(c) of the Code, so as to
take account of any difference between the adjusted basis of the
assets of the Company for federal income tax purposes and their
respective Gross Asset Values, and otherwise shall be allocated
in the same manner as the related book items were allocated under
Sections 10.1 and 10.2 hereof. Except as otherwise determined by
the unanimous consent of the Members, any allocations required by
Section 704(c) of the Code shall be effectuated using the
traditional method described in Treasury Regulation Section 1.704-
3(b)(1).
(d) In addition to the foregoing, the Members shall be
authorized to make such determinations, characterizations and
allocations with respect to income, gain, loss, deductions,
credits or other tax-related items of the Company, and such
adjustments to the Member's Capital Accounts maintained in
accordance with Section 8.2 hereof, that the Board determines is
necessary or desirable to enable the Company's determinations,
characterizations and allocations pursuant to this Agreement to
be in accordance with Subchapter K of Chapter 1 of Subtitle A of
the Code and any applicable Regulations promulgated thereunder.
ARTICLE XI
TRANSFERS; ADDITIONAL MEMBERS
11.1 Transfers of Interests Generally. Except as provided in
Sections 7.8 and 7.11 and this ARTICLE XI, no Member may,
directly or indirectly, transfer, assign, convey, sell,
hypothecate, pledge, alienate or otherwise grant an interest in
(collectively, a "Transfer") the whole or any part of its
Interest to another Person (including, without limitation, a
Member) without the unanimous approval of the Members; provided,
however, that a Member may Transfer the whole or any part of its
Interest without the requirement for such approval to any of its
Affiliates only so long as (a) the other Members are reasonably
satisfied with the financial condition of such Affiliate and
(b) if so required under the Project Agreement, the Owner has
approved of the Transfer to such Affiliate. In any and all
cases, the transferor shall remain responsible for the
performance of all of its obligations hereunder, including
without limitation for any liability hereunder proportionate to
its Percentage Interest. Any Transfer of any Interest in
violation of Sections 7.8 or 7.11 or this ARTICLE XI shall be
null and void and of no effect for any purpose. No consent of
the Members to one or more Transfers shall be deemed consent to
any other of the same.
11.2 Admission of Additional Members.
(a) By unanimous approval of the Members, the Company is
authorized to admit any Person as an additional member of the
Company (each, an "Additional Member" and collectively, the
"Additional Members"). Each such Person shall be admitted as an
Additional Member at the time such Person (i) executes this
Agreement or a counterpart of this Agreement and (ii) is named as
a Member on Schedule 1 hereto. The legal fees and expenses
associated with such admission shall be borne by the Company.
(b) Additional Members shall not be entitled to any
retroactive allocation of the Company's income, gains, losses,
deductions, credits or other items; provided that, subject to the
restrictions of 706(d) of the Code, Additional Members shall be
entitled to their respective share of the Company's income,
gains, losses, deductions, credits and other items arising under
contracts entered into before the effective date of the admission
of any Additional Members to the extent that such income, gains,
losses, deductions, credits and other items arise after such
effective date. To the extent consistent with 706(d) of the
Code and Treasury Regulations promulgated thereunder, the
Company's books may be closed at the time Additional Members are
admitted (as though the Company's tax year had ended) or the
Company may credit to the Additional Members pro rata allocations
of the Company's income, gains, losses, deductions, credits and
items for that portion of the Company's Fiscal Year after the
effective date of the admission of the Additional Members.
ARTICLE XII
BOOKS AND RECORDS
12.1 Accountants. The Company shall retain an accountant to
perform such duties as may be determined by the Board of
Managers. For the purposes of this Agreement, certified figures
of the accountant shall be final, conclusive and binding upon the
Company and the Members.
12.2 Books, Records and Financial Statements.
(a) At all times during the Term, Company shall maintain,
at its principal place of business, separate books of account for the
Company that shall show a true and accurate record of all costs
and expenses incurred, all charges made, all credits made and
received and all income derived in connection with the operation
of the Company business in accordance with generally accepted
accounting principles consistently applied, and, to the extent
inconsistent therewith, in accordance with this Agreement. Such
books of account, together with a copy of this Agreement and of
the Articles, shall at all times be maintained at the principal
place of business of the Company and shall be open to inspection
and examination at reasonable times by each Member and its duly
authorized representative for any purpose reasonably related to
such Member's Interest in the Company.
(b) The Company, and the Tax Matters Member on behalf of the
Company, shall prepare and maintain, or cause to be prepared and
maintained, the books of account of the Company.
12.3 Accounting Method. For both financial and tax reporting
purposes and for purposes of determining profits and losses, the
books and records of the Company shall be kept on the accrual
method of accounting applied in a consistent manner in accordance
with generally accepted accounting principles and shall reflect
all Company transactions and be appropriate and adequate for the
Company's business.
12.4 Bank Accounts.
(a) One or more joint bank accounts (hereinafter called the
"Joint Account(s)") shall be opened in such financial
institutions as may be determined by the Board of Managers. Such
Joint Account(s) may include (i) a general account, (ii) a field
account and (iii) a payroll account. All revenues, working
capital and other funds of the Company (whether pursuant to the
Project Agreement, Credit Facility, Member Loans, Capital
Contributions or otherwise) shall be deposited in the general
account and may be drawn upon as required for deposits to the
field and payroll accounts. Checks under the amount of $50,000
must be approved by at least one of the applicable Project
Manager, the President or the Vice President. Checks equal to or
over the amount of $50,000 must be approved by at least two (2)
of the Managers. All authorized signatories and other Persons
handling funds of the Company shall be bonded in such amounts and
in such companies as the Board of Managers shall determine.
(b) All payments received by the Company shall be promptly
deposited in the Joint Account(s) and invoices received by the
Company shall be paid by check drawn against the Joint
Account(s).
(c) Records of the Company which are required pursuant to law to
be retained beyond the duration of this Agreement shall be
retained at such place or places as determined by the Board of
Managers and the costs thereof shall be shared by the Members in
proportion to their Percentage Interests.
ARTICLE XIII
TAX MATTERS
13.1 Tax Matters Member.
(a) HE is hereby designated as "Tax Matters Member" of the
Company for purposes of Section 6231(a)(7) of the Code. HE may
not choose a forum for the resolution of tax matters or extend
any statute of limitation without the written consent of all of
the Members.
(b) The Tax Matters Member shall, within ten (10) days of the
receipt of any notice from the Internal Revenue Service in any
administrative proceeding at the Company level relating to the
determination of any Company item of income, gain, loss,
deduction or credit, mail or otherwise deliver a copy of such
notice to each Member.
13.2 Taxation as Partnership. The Company shall be treated as a
partnership for U.S. federal income tax purposes. The Tax
Matters Member shall cause the Company to elect such treatment
under the Code and under the laws of any relevant jurisdiction
that permits such an election.
13.3 Tax Returns; Elections.
(a) The Tax Matters Member shall cause all income tax and
information returns for the Company to be prepared by the
Company's accountant and shall cause such tax returns to be
timely filed with the appropriate authorities. All decisions
regarding tax elections shall be made by the Tax Matters Member.
Copies of such tax and information returns shall be kept at the
principal office of the Company or at such other place as the Tax
Matters Member shall determine and shall be available for
inspection by the Members or their representatives during normal
business hours. The Tax Matters Member shall furnish each Member
within ninety (90) days after the end of each fiscal year with
such information as may be necessary to enable each Member to
file his, her or its federal income tax return and any required
state or local income tax return. The Tax Matters Member shall
cause the Company to pay, out of available cash and other assets,
any taxes payable by the Company.
(b) Each Member agrees to report, on his, her or its own
income tax returns each year, each item of income, gain, loss,
deduction and credit as reported by the Company to such Member on the
Schedule K-1 (or other similar tax report) issued by the Company
to such Member for such year. Except as otherwise required by
law, no Member shall take any tax reporting position that is
inconsistent in any respect with any tax reporting positions
taken by the Company or any entity in which the Company owns any
equity interest, and, in the event of a breach by such Member of
the provisions of this Section 13.3(b), shall be liable to the
Company and the Members for any and all costs, liabilities and
damages (including consequential damages) incurred by any of them
on account of such breach.
13.4 Organizational Expenses. The Company shall elect to deduct
expenses incurred in its organization over a sixty (60) calendar
month period as provided in Code Section 709.
ARTICLE XIV
LIABILITY, EXCULPATION, INDEMNIFICATION, TERMINATION
14.1 Liability. Except as otherwise provided by the New York
Act, the debts, obligations and liabilities of the Company,
whether arising in contract, tort or otherwise, shall be solely
the debts, obligations and liabilities of the Company, and no
Member or Manager shall be obligated personally for any such
debt, obligation or liability of the Company solely by reason of
being a Member or Manager.
14.2 Exculpation.
(a) No Covered Person shall be liable to the Company or any
other Covered Person for any loss, damage or claim incurred by
reason of any act or omission performed or omitted by such
Covered Person in good faith on behalf of the Company and in a
manner reasonably believed to be within the scope of authority
conferred on such Covered Person by this Agreement, except as set
forth in Section 14.4.
(b) A Covered Person shall be fully protected in relying in
good faith upon the records of the Company and upon such information,
opinions, reports or statements presented to the Company by any
Person as to matters the Covered Person 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,
losses or Net Cash Flow or any other facts pertinent to the
existence and amount of assets from which Distributions to
Members might properly be paid, except as set forth in Section
14.4.
14.3 Indemnification by the Company.
(a) A Covered Person shall be entitled to indemnification
from the Company for any loss, damage, cost or expense (including
attorney's fees) ("Losses") incurred by such Covered Person by
reason of any act or omission performed or omitted by such
Covered Person in good faith on behalf of the Company and in a
manner reasonably believed to be within the scope of authority
conferred on such Covered Person by this Agreement, except as set
forth in Section 14.4 and except that no Covered Person shall be
entitled to be indemnified in respect of any Loss incurred by
such Covered Person by reason of bad faith or actual and
deliberate dishonesty (if such acts were material to the cause of
action so adjudicated), gross negligence or willful misconduct
with respect to such acts or omissions or if such Covered Person
personally gained in fact a financial profit or other advantage
to which he, she or it was not legally entitled; provided,
however, that any indemnity under this Section 14.3 shall be
provided out of and to the extent of Company assets and insurance
only, and no Member shall have any personal liability with
respect to such indemnity.
(b) Such claims, causes of action, injury and Losses shall
include, without limitation, any losses arising from any claim or
cause of action brought under the provisions of the Workers'
Compensation statutes of any State including, without limitation,
the State of New York by any of the indemnifying party's
employees or the employees of any of the indemnifying party's
subcontractors or suppliers.
(c) Expenses (including legal fees) incurred by a Covered
Person in defending any claim, demand, action, suit or proceeding shall,
from time to time in the discretion of the Board of Managers, be
advanced by the Company prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the
Company of an undertaking by or on behalf of the Covered Person
to repay such amount if it shall be determined that the Covered
Person is not entitled to be indemnified as authorized in clause
Section 14.3(a).
14.4 Indemnification by the Members.
(a) To the extent claims, causes of action, injury or Losses
are not covered by the insurance required to be provided pursuant to
Section 14.5(a), each Member to this Agreement shall protect,
hold harmless and indemnify the Company and each other from and
against any and all claims, causes of action, injury and Losses
arising directly or indirectly out of (but only to the extent
caused by) a tortious act or the negligent performance of any HE
Services or NGS Services, respectively, or any other services
rendered or the Project Agreement by the indemnifying party, its
agents, employees, representatives or subcontractors or any
employee of any of them unless such claims, causes of action,
injury or Losses, are caused in whole or in part by the
indemnified party, its agents, employees, representatives, or
subcontractors, or any employee of any of them. This
indemnification shall not be construed to negate, abridge or
reduced other rights or obligations of indemnity or contribution
which would otherwise exist as to a covered Person described in
this Section 14.4.
(b) Such claims, causes of action, injury and Losses shall
include, without limitation, any losses arising from any claim or
cause of action brought under the provisions of the Workers'
Compensation statutes of any State including, without limitation,
the State of New York by any of the indemnifying party's
employees or the employees of any of the indemnifying party's
subcontractors or suppliers. In furtherance thereof, each Member
waives the immunity that such Member may have pursuant to the
Workers' Compensation provision to, but only with respect to, the
other Members and then only to the extent necessary to effectuate
fully the provisions of this indemnity.
14.5 Insurance.
(a) The Company shall purchase and maintain insurance, to the
extent and in such amounts as the Board of Managers shall deem
reasonable, on behalf of Covered Persons and such other Persons
as the Board of Managers shall determine, against any liability
that may be asserted against or expenses that may be incurred by
any such Person in connection with the activities of the Company
or such indemnities, regardless of whether the Company would have
the power to indemnify such Person against such liability under
the provisions of this Agreement, including without limitation
insurance as will protect from claims set forth below:
(i) claims under Workers Compensation, disability
benefit and other similar employee benefit acts which are
applicable to the HE Services or NGS Services, or any other
services rendered pursuant to this Agreement or the Project
Agreement;
(ii) claims for damages because of bodily injury,
occupational sickness or disease, or death of the Company's
employees or the HE Employees or NGS Employees;
(iii) claims for damages because of bodily injury,
sickness or disease, or death of any person other than the
Company's employees or the HE Employees or NGS Employees;
(iv) claims for damages insured by usual personal
injury liability coverage which are sustained (A) by a Person
as a result of an offense directly or indirectly related to
employment of such Person by the Company, or (B) by another
Person;
(v) claims for damages because of injury to or
destruction of tangible property, including loss of use
resulting therefrom;
(vi) claims for damages because of bodily injury, death
or a person or property damage arising out of ownership,
maintenance or use of a motor vehicle;
(vii) claims for damages to the construction documents
and other valuable papers needed to fulfill obligations under
this Agreement; and
(viii) claims for damages arising out of the Company's
negligent acts, errors or omissions in the performance of
professional services.
The insurance required hereby shall be written for
not less than the limits of liability specified in the Project
Agreement or as required by Law, whichever coverage is greater.
Coverages, with the exception of clause (viii), whether written
on an occurrence or claims-made basis, shall be maintained
without interruption from date of commencement of this Agreement
or any HE Services or NGS Services, or any other services
performed under this Agreement (whichever is earlier) until all
services to be performed by the Members and the Company have been
completed or until such time as this Agreement has been
terminated. The Company will maintain the coverage required
hereby, if available, with respect to each project for three (3)
years following the date of substantial completion of such
Project. Such policies shall include the Members as additional
insureds.
(b) Each Member and, where applicable, the Company shall
procure fidelity coverage protecting against loss due to fraudulent or
dishonest acts. Each Member shall indemnify the Company and the
other Members for losses caused by fraudulent or dishonest acts
of its principals and employees to the extent not covered by
fidelity insurance available to the Company. In addition, any
Member performing professional services on behalf of or for the
Company shall procure errors or omissions coverage with respect
to the performance of such professional services under this
Agreement or the Project Agreement. Such policy shall contain a
waiver of subrogation in favor of the other Members and the
Company and shall include the Company and the other Members as
additional insureds.
(c) The Company may enter into indemnity contracts with
Covered Persons and such other Persons as the Board of Managers shall
determine and adopt written procedures pursuant to which
arrangements are made for the advancement of expenses and the
funding of obligations under Section 14.3 hereof and containing
such other procedures regarding indemnification as are
appropriate.
14.6 Outside Businesses. Any Member or Affiliate thereof may
engage in or possess interests in other businesses and business
ventures of any nature or description, independently or with
others, including, without limitation, businesses and business
ventures providing the same services as being provided by the
Company and the Company and the Members shall have no rights by
virtue of this Agreement in and to such other businesses and
business ventures or the income or profits derived therefrom.
ARTICLE XV
DISSOLUTION, LIQUIDATION AND TERMINATION
15.1 No Dissolution. The Company shall not be dissolved by the
admission of Additional Members or substitute Members in
accordance with the terms of this Agreement.
15.2 Events Causing Dissolution. The Company shall be dissolved
and its affairs shall be wound up upon the occurrence of any of
the following events:
(a) the unanimous consent of the Members;
(b) the unanimous consent of the Board of Managers; or
(c) the entry of a decree of judicial dissolution of the
Company under Section 701(a)(5) of the New York Act.
15.3 Liquidation. Upon dissolution of the Company, the Members
shall carry out the winding up of the Company and shall
immediately begin winding up the Company's affairs; provided,
however, that a reasonable time shall be allowed for the orderly
liquidation of the assets of the Company and the satisfaction of
liabilities to creditors so as to enable the Members to minimize
the normal losses attendant upon a liquidation. The Members
shall continue to share profits and losses during liquidation in
the same proportions, as specified in ARTICLE X hereof, as before
liquidation. The proceeds of liquidation shall be distributed by
the end of the Fiscal Year during which such liquidation occurs
or, if later, within ninety (90) days after the date of such
liquidation in the following order and priority:
(a) to creditors of the Company, including Members who are
creditors (including without limitation with respect to repayment
of the Credit Facility and payment for HE Employees and NGS
Employees, as applicable, and for HE Services and NGS Services,
as applicable, and any payments due under Section 7.11), to the
extent otherwise permitted by Law, in satisfaction of the
liabilities of the Company (whether by payment or the making of
reasonable provision for payment thereof), other than liabilities
for Defaulted Loans, Defaulted Loan Interest, Member Loans,
Member Loan Interest and Distributions; and
(b) to the Members in proportion to their Capital Account
balances after taking into account all adjustments thereto.
15.4 Termination. This Agreement shall remain in full force and
effect until terminated by the entire Board of Managers hereto or
until the Project Agreement has been performed and all of the
assets of the Company, after payment of or due provision for all
debts, liabilities and obligations of the Company, shall have
been distributed to the Members in the manner provided for in
this ARTICLE XV, and the Articles shall have been canceled in the
manner required by the New York Act.
15.5 Claims of the Members. The Members and former Members shall
look solely to the Company's assets for the return of their
Capital Contributions, and if the assets of the Company remaining
after payment of or due provision for all debts, liabilities and
obligations of the Company are insufficient to return such
Capital Contributions, the Members and former Members shall have
no recourse against the Company or any other Member.
15.6 Rights to Intellectual Property.
(a) In the normal course of their respective business
interests, each Member has, independently of the other, developed
intellectual property, designs drawings, specifications and other
instruments of service which are protected by various patents and
copyrights ("Existing Intellectual Property"). Each Member shall
have a limited nonexclusive royalty-free license, without the
right to sublicense, to use the Existing Intellectual Property of
the other to the extent such use may be necessary or desirable to
perform the work contemplated by the Project Agreement. Except
to the extent of such limited license, each Member shall retain
all rights and privileges of patent and copyright ownership in
its respective Existing Intellectual Property.
(b) Intellectual property, designs, drawings, specifications
and other instruments of service developed by a Member, independently
of the other and in furtherance of the performance by that Member
of the specific services required of it as set forth in ARTICLE
VII, shall be the property of that Member and may be copyrighted
and/or patented by that Member in its own name ("Unilateral
Intellectual Property"). Each Member shall have a limited
nonexclusive royalty-free license, without the right to
sublicense, to use the Unilateral Intellectual Property of the
other to the extent such use may be necessary or desirable to
perform the work contemplated by the Project Agreement. Except
to the extent of such limited license, each Member shall retain
all rights and privileges of patent and copyright ownership in
its respective Unilateral Intellectual Property.
(c) Intellectual property, designs, drawings, specifications
and other instruments of service developed by the Company, or by the
Members acting together pursuant to this Agreement shall be
copyrighted in the name of the Company and shall be considered
the joint property of each of the Members to this Agreement
("Joint Intellectual Property"). Each Member shall have the
rights and privileges of ownership with respect to the Joint
Intellectual Property insofar as is consistent with this
Agreement, and each Member shall be entitled to use, reproduce
and sublicense the same and prepare documents for other projects
outside of the scope of the Project and this Agreement based on
the Joint Intellectual Property.
(d) Intellectual property, designs, drawings, specifications
and other instruments of service prepared specifically for the
Project by consultants to the Company or any Member shall be
copyrighted and/or patented in the name of the Company and shall
be considered joint property of each of the Members to this
Agreement ("Consultant Prepared Intellectual Property"). Each
Member shall have the rights and privileges of ownership with
respect to Consultant Prepared Intellectual Property insofar as
is consistent with this Agreement and each Member shall be
entitled to use, reproduce and sublicense the same and prepare
documents for other projects outside of the scope of the Project
and this Agreement based on Consultant Prepared Intellectual
Property.
(e) Notwithstanding anything to the contrary contained
herein, nothing herein shall operate or be deemed to limit any common
Law or other right which a Member or any other Person previously had
or hereafter may have to use, reproduce or prepare documents for
other projects outside of the scope of the Project and this
Agreement from any intellectual property, designs, drawings,
specifications and other instrument of service including, without
limitation, Existing Intellectual Property, Joint Intellectual
Property and Consultant Prepared Intellectual Property.
(f) The Joint Intellectual Property and the Consultant Prepared
Intellectual Property shall not be deemed assets of value
distributed to a Member for the purposes of Section 15.3 above
except as otherwise required by law.
ARTICLE XVI
MISCELLANEOUS
16.1 Notices. All notices provided for in this Agreement shall
be in writing, duly signed by the party giving such notice, and
shall be delivered, mailed via an overnight courier service, sent
by facsimile or mailed by registered or certified mail, as
follows:
(a) If given to the Company at the address specified in Section
2.6 of this Agreement;
(b) if given to a Manager, at such Manager's mailing address as
provided to the Company; or
(c) if given to any Member at the address set forth opposite
such Member's name on Schedule 1 attached hereto, or at such
other address as such Member may hereafter designate by written
notice to the Company. All such notices shall be deemed to have
been given when received.
16.2 Failure to Pursue Remedies. The failure of any party to
seek redress for violation of, or to insist upon the strict
performance of, any provision of this Agreement shall not prevent
a subsequent act, which would have originally constituted a
violation, from having the effect of an original violation.
16.3 Cumulative Remedies. The rights and remedies provided by
this Agreement are cumulative and the use of any one right or
remedy by any party shall not preclude or waive its right to use
any or all other remedies. Said rights and remedies are given in
addition to any other rights the parties may have by Law or
otherwise.
16.4 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of all of the parties and, to the extent
permitted by this Agreement, their successors, legal
representatives and assigns.
16.5 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision were
omitted.
16.6 Counterparts. This Agreement may be executed in any number
of counterparts with the same effect as if all parties hereto had
signed the same document. All counterparts shall be construed
together and shall constitute one instrument.
16.7 Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject
matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
16.8 Governing Law. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES
HEREUNDER SHALL BE INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED
BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
The Members hereto irrevocably and unconditionally consent to the
jurisdiction of the United States District Court of the Southern
District of New York (to the extent such Court is not otherwise
precluded from exercising jurisdiction with respect to a
particular action arising under or relating to the Agreement;
otherwise, the Members submit to the jurisdiction of any Court of
competent jurisdiction in the Courts of the City and County of
New York, State of New York), and the Members hereby waive any
objection relating to the basis for personal or in rem
jurisdiction, any defense of forum non conveniens and any
objection to venue which might be asserted therein. New York,
New York shall be the exclusive venue for resolving any
controversy under or relative to this Agreement. Delivery of
service of process on a Member at its principal executive offices
or mailing to such offices in accordance with the applicable
procedural law shall be given the same effect as personal service
in the State of New York.
16.9 No Strict Construction. The Members have participated
jointly in the negotiation and drafting of the Agreement. In the
event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly
by the Members, and no presumption or burden of proof shall arise
favoring or disfavoring any Member by virtue of the authorship
of any of the provisions of this Agreement.
16.10 Confidentiality. The Members agree that each of them
will treat in confidence this Agreement and all documents,
materials and other information concerning this Agreement or the
Company. This provision shall survive the termination of this
Agreement and the withdrawal of any Member from the Company.
16.11 No Reliance by Third Parties. The provisions of this
Agreement are not for the benefit of any creditor or other Person
other than a Member to whom any losses, debts, claims, expenses
or encumbrances are owed by, or who otherwise has any claim
against, the Company or any Member, and no creditor or other
Person shall obtain any rights under this paragraph or by reason
of this paragraph, or shall be able to make any claim in respect
of any debts, liabilities, or obligations against the Company or
any Member. Without limitation of the foregoing, nothing
expressed or implied shall be construed to confer upon any
Person, except the Members and Managers, any rights or remedies
under or by reason of this Agreement.
16.12 Amendments. Any amendment to this Agreement shall be
adopted and be effective as an amendment hereto if it received
the affirmative vote of all of the Members, provided that such
amendment be in writing and executed by all of the Members.
16.13 Enforcement. In the event that any Member shall
violate any of the restrictions on competition set forth under
Section 7.1(e), the transfer restrictions set forth under ARTICLE
XII or the use and ownership restrictions with respect to the
intellectual property set forth under Section 15.6, such Member
hereby consents to the granting of a temporary or permanent
injunction against it and/or its Affiliate(s), as applicable, by
any court of competent jurisdiction, prohibiting it and/or its
Affiliate(s), as applicable, from violating such provisions. The
Members acknowledge and agree that any such breach or threatened
breach of such provisions will cause irreparable injury to the
Company and the other Member(s) and that money damages shall not
provide an adequate remedy to the Company or the other Member(s).
Such right and remedy shall be in addition to, and not in lieu
of, any other rights and remedies available to the Company or the
other Member(s) at Law or equity. Each of the Members hereby
waive any requirement that the Company or the other Member(s)
post a bond or bonds in connection with any such temporary or
permanent injunction.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above stated.
HAWKEYE ELECTRIC, LLC
By: /s/ Xxxxxxx X. Xxxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President
NORTHEAST GENERATION SERVICES COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and
Chief Operating Officer
SCHEDULE 1
Members
Name Mailing Address Percentage
Interest
Hawkeye Electric, LLC 0 Xxxxxx Xxxx 00%
Xxxxxxxxx, XX 00000
Northeast Generation 000 Xxxxxx Xxxx Xxxx 50%
Services Company Xxxxx Xxxx, XX 00000
EXHIBIT A
Articles Of Organization
of
Greenport Power, LLC
Under Section 203 of the Limited Liability Company Law
FIRST: The name of the limited liability company is: GREENPORT
POWER, LLC.
SECOND: The county within this state in which the office
of the limited liability company is to be located is: Suffolk County.
THIRD: The secretary of state is designated as agent of
the limited liability company upon whom process against it may be
served. The post office address within or without this state to
which the secretary of state shall mail a copy of any process
against the limited liability company served upon him or her is:
c/o CT Corporation System, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000.
FOURTH: The name of the registered agent of the company
within the State of New York is CT Corporation System (the "Agent").
The address of the Agent is 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000. The Agent is to be the agent of the company upon whom process
against the company may be served.
FIFTH: The company is to be managed by a Board of
Managers, the members of which Board of Managers shall be designated
by the members of the company as provided in the operating agreement
of the company.
[organizer/authorized person]
