KSNE, LLC LIMITED LIABILITY COMPANY OPERATING AGREEMENT
EXHIBIT A-4
KSNE, LLC
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
THIS
LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF KSNE, LLC (this
“Agreement”) is made as of the ____ day of May __, 2002 (the
“Effective Date”) by KeySpan Corporation, a New York corporation
(“KeySpan”), and each Person, if any, subsequently admitted to the
Company as a member in accordance with the terms hereof. These Persons shall be
referred to herein collectively as “Members” and individually as a
“Member.”
KSNE,
LLC (the “Company”) was established pursuant to a Certificate of
Formation filed with the Secretary of State of the State of Delaware by the
Company’s authorized representative on May __, 2002. Accordingly, the sole
Member of the Company, KeySpan, on behalf of itself and any future Members, if
any, hereby adopts this Operating Agreement as follows:
ARTICLE 1
DEFINITIONS
Certain
capitalized terms used in this Agreement shall have the meanings set forth
below:
“Available
Cash” with respect to any fiscal period of the Company shall mean the
net cash of the Company available after appropriate provision for expenses,
liabilities, commitments and contingencies of the Company as determined by the
Board of Managers.
“Capital
Account” means, with respect to any Member, the capital account
maintained for such Person in accordance with Section 3.6 of this Agreement.
“Capital
Contribution” means, with respect to any Member, the amount of money
and the value of other property contributed to the Company with respect to the
Interest held by such Member.
“Certificate
of Formation” means the certificate of formation of the Company as
filed with the Secretary of State of Delaware in accordance with the Company
Act, as amended from time to time.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Company Act”
means the Delaware Limited Liability Company Act, as the same may be amended from
time to time.
“Fiscal
Year” means the Company’s taxable year, and in the case of the
last Fiscal Year, the fraction thereof ending on the date on which the winding
up of the Company is completed.
“Interest”
means a Member’s entire membership interest in the Company, including
without limitation such Member’s share of the Company’s income, gain,
loss and deductions, and of the Company’s cash distributions and all rights
and privileges of membership in the Company accorded under this Agreement or the
Company Act.
“Ownership
Percentage” means, as of any particular time and from time to time, the
ratio, expressed as a percentage, of a Member’s Capital Contribution to the
aggregate Capital Contributions of all Members.
“Person”
means any individual, partnership, limited liability company, corporation,
unincorporated organization or association, trust or other entity.
“Treasury Regulations” means the rules and regulations of the
Internal Revenue Service promulgated under the Code, as in effect from time to
time.
ARTICLE 2
GENERAL TERMS
2.1.
Name. The name of the Company shall be KSNE, LLC.
2.2.
Registered Office and Agent. The location of the registered office of the Company in Delaware
shall be 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000. The
Company’s registered agent at such address shall be Corporation Service
Company. The registered agent and registered office of the Company may be
changed from time to time by the Board of Managers upon giving notice thereof to
the Members and complying with the requirements of the Company Act.
2.3.
Principal Office of the Company.
The location of the principal place of business of the Company shall be Xxx
XxxxxXxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000, or such other location as the Board
of Managers may decide from time to time.
2.4.
Term.
The Company shall have a perpetual existence unless dissolved in accordance
with Article IX herein.
2.5.
Business Purpose.
The Company is organized to engage in any lawful act or activity for which a limited
liability company may be formed under the Company Act.
2
ARTICLE 3
MEMBERS; CAPITAL CONTRIBUTIONS
3.1.
Members.
The name of each Member is set forth on Exhibit A attached to this
Agreement. Exhibit A shall be amended from time to time by the Managers to
reflect the withdrawal of Members or the admission of new or additional Members
pursuant to this Agreement.
3.2.
Initial Capital Contributions.
Set forth on Exhibit A attached to this Agreement are (i) the amount of
the initial Capital Contributions made by each Member and (ii) the Ownership
Percentage held by each Member.
3.3.
Additional Contributions. Following admission to the Company and the payment in full of
a Member’s initial Capital Contribution, no Member shall be obligated to
make any additional contribution to the Company’s capital, whether upon
liquidation of the Company or otherwise. Without limiting the generality of the
foregoing, no Member shall have any obligation to restore any deficit balance in
such Member’s Capital Account, and any such deficit balance shall not be
considered a debt owed to the Company or to any other Person for any purpose
whatsoever. Nothing herein shall be construed to prohibit any Member, at its
sole option, from making any additional Capital Contribution to the Company
authorized by the Board of Managers in order to fund all or any part of the
Company’s capital requirements.
3.4.
No Interest on Capital Contributions.
Members shall not be paid interest on their Capital Contributions.
3.5.
Return of Capital Contributions. Except as otherwise provided in this Agreement, no Member
shall have the right to receive the return of any Capital Contribution. If any
Member is entitled to receive a return of a Capital Contribution, the Company
may distribute cash, notes, property, or a combination thereof to the Member in
return of the Capital Contribution. The Company shall not be required to make
any distributions to any Member in any form other than cash.
3.6.
Capital Accounts.
A separate Capital Account shall be maintained for each Member. Capital
Accounts of the Members shall be maintained in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv).
3.7.
Liability; Powers of Members.
The liability of Members shall be limited as provided under the Company Act
and the other laws of Delaware. Members that are not Managers shall take no part
whatever in the control, management, direction or operation of the
Company’s affairs and shall have no power to bind the Company. No Member
shall be an agent of any other Member or of the Company solely by reason of
being a Member.
3
ARTICLE 4
RESTRICTIONS ON TRANSFER
4.1.
Transfers Prohibited.
Except in accordance with this Article 4, no Member nor any of
its transferees (direct or indirect, including without limitation any successors
and assigns) may sell, transfer, pledge, mortgage, assign or otherwise dispose
of (each a “transfer”) all or any portion of its Interest (whether
voluntary or involuntary, including without limitation any transfer by operation
of law).
4.2.
Conditions of Transfer.
No Member may transfer all or any portion of its Interest unless all of the
following conditions are satisfied:
(i)
the transferee is one or more of the following: (a) a Person controlling,
controlled by or under control with the transferor; or (b) any other Person the
proposed transfer to whom has been approved by the Board Managers; and
(ii) the transferee delivers to the Company a
written instrument agreeing to be bound by the terms of this Agreement to the
extent applicable to the transferred Interest.
4.3.
Acknowledgment.
Each Member hereby acknowledges the reasonableness of the prohibitions
contained in this Article 4 in view of the purposes of the
Company and the relationship of the Members. The transfer of any Interest in
violation of the prohibition contained in this Article 4 shall be deemed
invalid, null, and void, and of no force or effect.
4.4.
Admission of Members.
Notwithstanding any other provision hereof to the contrary, if any Person
acquires any Interest by transfer, original issue by the Company or otherwise,
then the Board of Managers, in the exercise of absolute and uncontrolled
discretion, may approve the admission of such Person as a Member, whereupon such
newly admitted Member shall have the right to become a Member, to participate in
the management of the business and affairs of the Company as provided herein and
to exercise, possess and enjoy all of the rights appertaining to the Interest
acquired.
ARTICLE 5
PROFIT, LOSS AND DISTRIBUTIONS
5.1. Allocation of Profit or Loss. All items of Company income, gain, loss, and deduction as determined for book purposes shall be allocated among the Members, and shall be credited or debited to their respective Capital Accounts, in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv), so as to ensure to the maximum extent possible that:
4
(i)
such allocations satisfy the economic effect equivalence test of Treasury
Regulations Section 1.704-1(b)(2)(i) (by allocating items that can have economic
effect in such a manner that the balance of each Member’s Capital Account
at the end of any taxable year (increased by such Member’s “share of
partnership minimum gain” as defined in Treasury Regulations Section
1.704-2) would be positive in the amount of cash that such Member would receive
(or would be negative in the amount of cash that such Member would be required
to contribute to the Company), if (A) the Company sold all of its property for
an amount of cash equal to the book value (as determined pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)) of such property (reduced, but not below
zero, by the amount of nonrecourse debt to which such property is subject) and
(B) all of the cash of the Company remaining after payment of all liabilities
(other than nonrecourse liabilities) of the Company were distributed in
liquidation immediately following the end of such taxable year pursuant to
Section 9.2);
(ii)
all allocations of items that cannot have economic effect (including
credits and nonrecourse deductions) are allocated to the Members in accordance
with their respective Ownership Percentages.
5.2.
Distributions.
Except
as otherwise provided in Section 9.2 hereof in the case of the dissolution and
liquidation of the Company, Available Cash authorized for distribution pursuant
to Section 5.3(i) shall be distributed to the Members in proportion to their
respective Ownership Percentages.
5.3.
General.
(i) Except as otherwise provided in this
Agreement, the timing and amount of all distributions shall be determined by the
Board of Managers.
(ii) If any assets of the Company shall be
distributed in kind to the Members, such assets shall be valued on the basis of
their fair market value at the date of distribution. Unless the Members
otherwise agree, the fair market value of the assets to be distributed shall be
determined by an independent appraiser who shall be selected by the Members. The
gain or loss for each such asset shall be determined as if the asset had been
sold at its fair market value, and the gain or loss shall be allocated as
provided in Section 5.1 and shall be properly credited or charged to the Capital
Accounts of the Members prior to the distribution of the assets in liquidation
pursuant to Section 9.2.
(iii)
All items of Company income, gain, loss and deduction shall be allocated,
and all distributions shall be made, to the Persons shown on the records of the
Company to have been Members as of the last day of the taxable year for which
the allocation or distribution is to be made. Notwithstanding the foregoing, if
any Interest in the Company shall be transferred during a taxable year, items of
Company income, gain, loss and deduction for such period shall be allocated
among the original Members and the
5
successor on the basis of the number of days
each was a Member during such period; provided, however, that if
the Company has any extraordinary non-recurring items for the taxable year in
which the transfer of Interest occurs, such period shall be segregated into two
or more segments in order to account for income, gain, loss, deductions or
proceeds attributable to such extraordinary non-recurring items of the Company.
(iv)
Notwithstanding the foregoing, the parties hereto intend that the Company
be treated for federal, state and local income tax purposes as disregarded as an
entity separate from KeySpan Corporation within the meaning of Treasury
Regulation Section 301.7701-3(b)(1)(ii). Accordingly, KeySpan Corporation shall
include all items of the Company’s income, gain, deduction and loss in
computing its own income.
ARTICLE 6
BOARD OF MANAGERS; OFFICERS
6.1.
Managers.
The business and affairs of the Company shall be managed by or under the
direction of its Board Managers, who shall exercise all such powers of the
Company in accordance with this Agreement and do all such lawful acts and things
as are not by law or by this Agreement directed or required to be exercised or
done by the Members. The presence of a majority of the Managers shall constitute
a quorum for the transaction of business at any meeting; provided, however, that
if less than a majority of the Managers are present at such meeting, those
present may adjourn the meeting at any time without further notice.
Any
act of the Board of Managers under this Agreement shall require the affirmative
approval of a majority of the Board of Managers acting at a meeting (which may
be held telephonically), or by consent in writing or by electronic transmission
in lieu of a meeting.
6.2.
Designation of Managers. The Company shall have no less than three and no more than six
Managers. The Managers of the Company on the Effective Date shall be those
individuals named on Exhibit B hereto. Members holding a majority of the
Ownership Percentages shall have the power and authority to appoint additional
Managers and, upon the resignation or removal of any Manager by act of Members
holding a majority of the Ownership Percentages, a substitute Manager.
6.3.
Powers of the Board Managers. Without limiting the scope of the authority granted under Section
6.1, the Board of Managers is authorized on the Company’s behalf to make
all decisions as to (a) the sale, loan or other disposition of the
Company’s assets; (b) the purchase or other acquisition of other assets of
all kinds; (c) the management of all or any part of the Company’s
assets; (d) the borrowing of money and the granting of security interests
in the Company’s assets; (e) the prepayment, refinancing or extension
of any loan affecting the Company’s assets; (f) the compromise or
release of any of the
6
Company’s claims or debts; and (g) the employment of
persons, firms or corporations or any other agents for the operation and
management of the Company’s business. In the exercise of management powers,
the Board of Managers may authorize one or more Managers or officers of the
Company to execute and deliver any and all (i) contracts, conveyances,
assignments, leases, sub-leases, licensing agreements, management contracts and
maintenance contracts covering or affecting the Company’s assets; (ii)
checks, drafts and other orders for the payment of the Company’s funds;
(iii) promissory notes, loans, security agreements and other similar documents;
and (iv) other instruments of any other kind relating to the Company’s
affairs, whether like or unlike the foregoing.
6.4.
Compensation. A Manager shall be entitled to such compensation for services performed for the
Company in his or her capacity as a Manager, or in his or her capacity as an
officer or employee of the Company, as shall be approved by the Members. Upon
substantiation of the amount and purpose thereof, a Manager shall be entitled to
reimbursement for expenses reasonably incurred by such Manager in connection
with the activities of the Company.
6.5.
Duties of the Board of Managers.
(i) Each Manager shall
devote such time to the business and affairs of the Company as is necessary to
carry out the Manager’s duties as set forth in this Agreement.
(ii) Except as otherwise
provided in contractual arrangements, nothing in this Agreement shall be deemed
to restrict in any way the rights of any Manager, any Member, or of any
affiliate of any Manager or any Member, to conduct any other business or
activity whatsoever. The organization of the Company shall be without prejudice
to such Persons’ respective rights (or the rights of their respective
affiliates) to maintain, expand or diversify any such other interests and
activities permitted by this paragraph (ii), and to receive and enjoy profits
and compensation therefrom. Each Member waives any rights the Member might
otherwise have to share or participate in such other interests or activities of
any Manager, any other Members or any of their respective affiliates.
6.6.
Officers.
(i) Enumeration.
The officers of the Company shall be a President, a Treasurer, a Secretary and
such other officers as the Board of Managers may elect or appoint. An individual
may serve in more than one capacity as an officer of the Company. Individuals
who serve as officers of the Company may but need not be Members or Managers.
(ii) President. The President shall be the chief executive officer of
the Company. Subject to the direction of the Board of Managers, the President
shall have general and active charge, control and supervision over the
management and direction of
7
the business, property and affairs of the Company
and have general responsibility for its day-to-day operations. The President
shall preside, when present, at all meetings of the Members and of the Board of
Managers. In the absence or disability of the President, or in case of an
unfilled vacancy in that office, the Board of Managers may designate a
Vice-President or other officer of the Company to perform the duties and
exercise the powers of the President.
(iii) Treasurer. The
Treasurer shall have responsibility for the care and custody of the funds and
books of account of the Company and shall have and exercise all the powers and
duties commonly incident to such office. The Treasurer may endorse for deposit
or collection all checks, notes, drafts and instruments for the payment of
money, payable to the Company or to its order. He shall cause to be kept
accurate books of account of all monies received and paid on account of the
Company.
(iv) Secretary. The
Secretary shall keep accurate records of all meetings and actions of the Members
and the Board of Managers and shall perform all the duties commonly incident to
such office and shall perform such other duties and have such other powers as
the Board of Managers shall from time to time designate or as may be otherwise
provided for in these By-Laws. An Assistant Secretary, upon appointment by the
Board of Managers or the President, shall have all the powers of the Secretary
except as specifically limited by a vote of the Board of Managers or the
President. In the absence of the Secretary and any Assistant Secretary, a
Secretary Pro Tempore may be elected or appointed by the Board of Managers or
the President to perform the Secretary’s duties.
(v) Removal and
Resignation. All officers of the Company shall hold office at the pleasure
of the Managers and may be removed by a vote of the Board of Managers with or
without cause. Any officer may resign by delivering his written resignation to
the Company at its principal office and such resignation shall be effective upon
receipt unless it is specified to be effective at some other time or upon the
happening of some other event.
6.7.
Compensation. An officer of the
Company shall be entitled to such compensation for services performed for the
Company in his or her capacity as an officer or employee, as shall be approved
by the Board of Managers. Upon substantiation of the amount and purpose thereof,
an officer shall be entitled to reimbursement for expenses reasonably incurred
by such officer in connection with the activities of the Company.
6.8.
Exculpation. No act or omission of any Manager, or any Member or officer of the Company, shall
subject the Manager, Member or officer to any liability to the Company or the
Members, unless such Person engaged in fraud, gross negligence, willful
misconduct, intentional breach of this Agreement or knowing violation of the
criminal law.
ARTICLE 7
MEETINGS OF THE MEMBERS
7.1. Meetings. Meetings of the Members for any purpose or purposes may be called by the Board of Managers and shall be called upon the written request of Members
8
having aggregate Ownership Percentages of not less than thirty-five percent (35%).
Requests for meetings shall state the purpose or purposes of the proposed
meeting.
7.2.
Presiding Officer. Meetings of the Members shall be presided over by
a Manager, or, if no Manager is present, by a chairperson to be chosen at the
meeting by Members present in person or by proxy who own at least the majority
of Ownership Percentages represented at the meeting.
7.3.
Quorum.
The holders of a majority of Ownership Percentages present in person or by
proxy shall be necessary to and shall constitute a quorum for the
transaction of business at all meetings of the Members, except as otherwise
required by this Agreement or the Company Act.
7.4.
Voting. Except as otherwise provided in this Agreement, the Members shall be entitled to vote
in person or by proxy (which shall be in writing or provided by electronic
transmission) at every meeting of the Members in proportion to their respective
Ownership Percentages, but no proxy shall be voted on after three years from its
date, unless the proxy provides for a longer period. When a quorum is present at
any meeting, the affirmative vote of Members holding a majority in Ownership
Percentages voted on any question brought before such meeting shall decide such
question, unless the question is one upon which by express provision of the
Company Act or this Agreement a different vote is required, in which case such
express provision shall govern and control the decision of such question.
7.5.
Action by Consent. Whenever the vote of the Members at a meeting thereof is required
or permitted to be taken for or in connection with any action, by any provisions
of the Company Act or this Agreement, the meeting and vote of Members may be
dispensed with if not less than the number of Members which would have
constituted a quorum, if such meeting were held, shall consent in writing or by
electronic transmission to such action being taken; provided that the
consent shall be provided by Members having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all Members entitled to vote thereon were present and voted, and
provided that prompt notice must be given to all Members of the taking of
action without a meeting and by less than unanimous written consent.
9
ARTICLE 8
RECORDS; FINANCIAL REPORTS
8.1.
Records. The Board of Managers shall cause the Company to keep at its principal place of business the
following:
(i)
a current list in alphabetical order of the full name and the last known
street address of each Member;
(ii)
a copy of the Certificate of Formation and all amendments thereto;
(iii)
a copy of this Agreement and all amendments hereto; and
(iv) copies of all actions taken at a meeting
or by written consent of the Members with respect to which records are required
to be maintained by the Company pursuant to the other provisions of this
Agreement.
8.2.
Accounting Policies; Fiscal Year. The books and records of the Company shall be kept on
such method of accounting as the Board of Managers shall select. The financial
statements of the Company shall be prepared in accordance with generally
accepted accounting principles consistently applied, and shall be appropriate
and adequate for the Company’s business and for carrying out all provisions
of this Agreement. The Fiscal Year of the Company shall be a calendar year.
8.3.
Members’ Audit and Inspection Rights. Each Member shall have
the right to examine and audit the accounts and financial records of the Company
and to inspect and make copies of all books, records documents and materials as
such Member may deem appropriate during regular business hours at its sole cost
and expense. The parties agree to take appropriate corrective action with
respect to any errors so discovered.
ARTICLE 9
DISSOLUTION; LIQUIDATION; WINDING UP AND TERMINATION
9.1. Dissolution. The Company shall be dissolved upon the happening of any of the events set forth in Section 18-801 of the Company Act. Upon dissolution of the Company, the Board of Managers or a liquidating trustee, if one is appointed, shall wind up the affairs of the Company and, in their, his or its sole and absolute discretion, liquidate the assets of the Company. The Board of Managers or such liquidating trustee shall, in their, his or its absolute discretion, determine the time, manner and terms of any sale or other disposition of the Company’s investments, properties and assets for the purpose of obtaining, in their, his or its opinion, fair value for such assets.
10
9.2.
Application of Proceeds. The proceeds from liquidation shall be applied in the following order:
(i)
First, to third party creditors, in the order or priority as provided by the Company Act;
(ii) Second, to a reserve
account in such amount as the Board of Managers or liquidating trustee deems
reasonably necessary for any contingent or unforeseen liabilities or obligations
of the Company. Such reserve account may be paid to a bank, to be held in escrow
for the purpose of paying any such contingent or unforeseen liabilities or
obligations and, at the expiration of such period as the Board of Managers or
liquidating trustee may deem advisable, the amount in such reserve account shall
be distributed to the Members in the manner set forth in the balance of this
Section 9.2; and
(iii) Third, after taking
into account the allocations of items of Company income, gain, loss or deduction
pursuant to Section 5.1, if any, and distributions of cash or property pursuant
to Section 5.2, if any, to the Members, in accordance with the balances of their
respective Capital Accounts.
9.3.
Certificate of Cancellation. When the Board of Managers or liquidating trustee have
complied with the foregoing liquidation plan, the Board of Managers or the
liquidating trustee shall execute and cause to be filed an appropriate
Certificate of Cancellation under the Company Act.
ARTICLE 10
NOTICES
10.1.
Notice of Meetings of Members. Unless otherwise required by law or this Agreement, notice of a
meeting of Members, stating the place, date, hour and purpose thereof, shall be
given to each Member not less than twenty-four (24) hours nor more than thirty
(30) days before the date fixed for the meeting.
10.2.
Method of Giving Notice.
All notices, requests, demands, and other communications under this
Agreement shall be in writing or provided by electronic transmission and shall
be deemed to have been duly given to a party (i) on the date of receipt if
delivered personally to a Member or delivered by electronic transmission,
(ii) on the fifth day after mailing if mailed to the party to whom notice
is to be given, by first class mail, registered or certified, postage prepaid,
or (iii) on the weekday when delivery is guaranteed if sent by overnight
delivery by Federal Express or other nationally recognized air courier, expenses
prepaid, in each case to the address of such party set forth on Exhibit
A hereto or otherwise maintained in the records of the Company.
11
ARTICLE 11
INDEMNIFICATION
11.1.
Definitions. For purposes of this Article 11:
“Manager”
includes (i) a person serving as a Manager or an officer of the Company or
in a similar executive capacity appointed by the Managers and exercising rights
and duties delegated by the Managers, (ii) a person serving at the request
of the Company as a director, Manager, officer, employee or other agent of
another organization, and (iii) any person who formerly served in any of
the foregoing capacities;
“expenses”
means all expenses, including attorneys’ fees and disbursements, actually
and reasonably incurred in defense of a proceeding or in seeking indemnification
under this Article, and except for proceedings by or in the right of the Company
or alleging that a Manager received an improper personal benefit, any judgments,
awards, fines, penalties and reasonable amounts paid in settlement of a
proceeding; and
“proceeding”
means any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, and any claim which could be
the subject of a proceeding.
11.2.
Right to Indemnification. Except as limited by law and subject to the provisions of
this Article, the Company shall indemnify each of its Managers against all
expenses incurred by them in connection with any proceeding in which a Manager
is involved as a result of serving in such capacity, except that no
indemnification shall be provided for a Manager regarding any matter as to which
it shall be finally determined that such Manager did not act in good faith and
in the reasonable belief that its action was in the best interests of the
Company. Subject to the foregoing limitations, such indemnification may be
provided by the Company with respect to a proceeding in which it is claimed that
a Manager received an improper personal benefit by reason of its position,
regardless of whether the claim arises out of the Manager’s service in such
capacity, except for matters as to which it is finally determined that an
improper personal benefit was received by the Manager.
11.3.
Award of Indemnification. The determination of whether the Company is authorized to
indemnify a Manager hereunder and any award of indemnification shall be made in
each instance (a) by a majority of the Managers who are not parties to the
proceeding in question, (b) by independent legal counsel appointed by the
Managers or the Members or (c) by the holders of a majority of the
Membership Interests of the Members who are not parties to the proceeding in
question. If indemnification is denied, the applicant may seek an independent
determination of its right to indemnification by a court having jurisdiction,
and in such event, the applicant shall have the burden of proving that the
applicant was eligible for indemnification under this Article. Notwithstanding
the foregoing, in the case of a proceeding by or in the right of the Company in
which a
12
Manager is adjudged liable to the Company, indemnification hereunder
shall be provided to such Manager only upon a determination by a court having
jurisdiction that in view of all the circumstances of the case, such Manager is
fairly and reasonably entitled to indemnification for such expenses as the court
shall deem proper.
11.4.
Successful Defense.
Notwithstanding any contrary provisions of this Article, if a
Manager has been wholly successful on the merits in the defense of any
proceeding in which it was involved by reason of its position as Manager or as a
result of serving in such capacity (including termination of investigative or
other proceedings without a finding of fault on the part of the Manager), the
Manager shall be indemnified by the Company against all expenses incurred by the
Manager in connection therewith.
11.5.
Advance Payments. Except as limited by law, expenses incurred by a Manager in
defending any proceeding, including a proceeding by or in the right of the
Company, shall be paid by the Company to the Manager in advance of final
disposition of the proceeding upon receipt of its written undertaking to repay
such amount if the Manager is determined pursuant to this Article or adjudicated
to be ineligible for indemnification, which undertaking shall be an unlimited
general obligation but need not be secured and may be accepted without regard to
the financial ability of the Manager to make repayment; provided, however, that
no such advance payment of expenses shall be made if it is determined pursuant
to Section 4.3 of this Article on the basis of the circumstances known at
the time (without further investigation) that the Manager is ineligible for
indemnification.
11.6.
Insurance. The Company shall have power to purchase and maintain insurance on behalf of any
Manager, officer, agent or employee against any liability or cost incurred by
such person in any such capacity or arising out of its status as such, whether
or not the Company would have power to indemnify against such liability or cost.
11.7.
Heirs and Personal Representatives.
The indemnification provided by this Article shall inure to the
benefit of the heirs and personal representatives of each Manager.
11.8.
Non-Exclusivity. The provisions of this Article shall not be construed to
limit the power of the Company to indemnify its Managers, Members, officers,
employees or agents to the full extent permitted by law or to enter into
specific agreements, commitments or arrangements for indemnification permitted
by law. The absence of any express provision for indemnification herein shall
not limit any right of indemnification existing independently of this Article.
11.9.
Amendment. The provisions of this Article may be amended or repealed in accordance with
Section 12.3; however, no amendment or repeal of such provisions that
adversely affects the rights of a Manager under this Article with respect to its
acts or omissions at any time prior to such amendment or repeal shall apply to
such Manager without its consent.
13
11.10. Limitation. The indemnification to be provided by the Company hereunder shall be paid only from the assets of the Company, and no Member shall have any personal obligation, or any obligation to make any Capital Contribution, with respect thereto.
ARTICLE 12
GENERAL
12.1.
Applicable Law.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF DELAWARE (WITHOUT GIVING EFFECT TO SUCH JURISDICTION'S CONFLICT OF LAWS PROVISIONS).
12.2.
Headings; Construction.
The headings used in this Agreement are for convenience only and do not
constitute substantive matters and shall not be considered in construing this Agreement.
12.3.
Amendments and Waivers. This Agreement may be amended (including a termination or
extension) by a written instrument executed by Members having at least 66 2/3%
of the aggregate Ownership Percentages held by all Members. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
14
IN WITNESS WHEREOF, in order to evidence the adoption of the foregoing as the Limited Liability Company Operating Agreement of the Company, the undersigned has executed this Agreement as of the date first written above.
KEYSPAN CORPORATION By:____________________________________ Name: Title:
15
EXHIBIT A
Members
Name Contribution Ownership Percentage ----- ------------ -------------------- KeySpan Corporation $100.00 100% Xxx XxxxxXxxx Xxxxxx Xxxxxxxx, Xxx Xxxx 00000
EXHIBIT B
Board of Managers
Name Address
---- -------
Xxxxxx X. Xxxxxxxxx Xxx XxxxxXxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Xxxxxxx X. Xxxx, Xx. Xxx XxxxxXxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Xxxxxxx X. Xxxxxx Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
