HYDROSERV GROUP, L.L.C.
LIMITED LIABILITY COMPANY AGREEMENT
Dated as of July 25, 1997
HYDROSERV GROUP, L.L.C.
LIMITED LIABILITY COMPANY AGREEMENT
THIS LIMITED LIABILITY COMPANY AGREEMENT of HydroServ Group,
L.L.C. is dated as of July 25, 1997, by and between Underwater
Unlimited Diving Services, Inc. (UUDSI), a New Hampshire
corporation, and XXXX Global Transmission, Inc. (NGT), a
Massachusetts corporation.
WHEREAS, the Members wish to form a limited liability
company pursuant to and in accordance with the Massachusetts
Limited Liability Company Act in order to conduct the business
described herein; and
WHEREAS, the Members wish to enter into this Agreement to
provide for, among other things, the management of the business
and affairs of the Company, the allocation of profits and losses
among the Members, the respective rights and obligations of the
Members to each other and to the Company, and certain other
matters.
NOW, THEREFORE, the Members hereby agree as follows:
ARTICLE I
DEFINITIONS
Certain capitalized terms used in this Agreement have
specifically defined meanings which are either set forth or
referred to in Exhibit 1, which is attached hereto and
incorporated herein by reference.
ARTICLE 2
FORMATION AND PURPOSE
2.1 Formation, etc. The Members hereby form a limited
liability company pursuant to and in accordance with the Act
effective upon the filing of the Certificate with the Secretary
of State of The Commonwealth of Massachusetts. The rights,
duties and liabilities of the Members shall be determined
pursuant to the Act and this Agreement. To the extent that such
rights, duties or obligations are different by reason of any
provision of this Agreement than they would be in the absence of
such provision, this Agreement shall, to the extent permitted by
the Act, control.
2.2 Name. The name of the Company shall be HydroServ
Group, L.L.C. The business of the Company may be conducted under
that name or, upon compliance with applicable laws, any other
name that the Members deem appropriate or advisable. The Members
shall file any fictitious name certificates and similar filings,
and any amendments thereto, that shall be necessary to permit the
Company to carry on its business under the desired name.
2.3 Registered Office/Agent. The registered office
required to be maintained by the Company in The Commonwealth of
Massachusetts pursuant to the Act shall initially be 00 Xxxxxxxx
Xxxxx, Xxxxxxxxxxx, XX. The name and address of the registered
agent of the Company pursuant to the Act shall initially be Xxxx
X. Xxxxxxxx, 00 Xxxxxxxx Xxxxx, Xxxxxxxxxxx, XX. The Company
may, upon compliance with the applicable provisions of the Act,
change its registered office or registered agent from time to
time in the discretion of the Members.
2.4 Term. The term of the Company (the "Term") shall
continue until December 31, 2006 or such later date as shall be
designated by the Members, unless sooner terminated as
hereinafter provided.
2.5 Purpose. The Company is formed for the object and
purpose of marketing and selling the capabilities and services of
UUDSI and New England Power Company (an affiliate of NGT,
hereinafter referred to as NEP), which are operation and
maintenance, field and construction, as outlined in Attachments 2
and 3 of the business plan contained in Schedule 2. These
capabilities and services will be marketed and sold to
hydroelectric facilities and other similar facilities nationwide.
The Company will also market and sell goods and services for
nonmember, noncompeting companies that service the same market.
The Company will also engage in any and all other activities
necessary, advisable, convenient, or incidental to such
activities.
2.5.1 Exclusive Agent. The Company is the Exclusive Agent
for marketing and selling the capabilities and services of UUDSI
and NEP, as defined in Attachments 2 and 3 of the business plan
in Schedule 2, to customers in the hydro industry in the United
States and Canada.
2.5.2 HydroServ Customers. All present hydro customers of
each Member and all future customers sourced by HydroServ Group,
LLC will be considered to be "HydroServ Customers". Schedule 5
lists present hydro customers of UUDSI, and Schedule 6 lists
those of NEP. The transfer of those customers listed on
Schedules 5 and 6 to HydroServ Customers shall be at no cost,
fee, commission, or other charge.
2.6 Powers. Without limiting the generality of Section
2.5, the Company shall have the power and authority to take any
and all actions necessary, appropriate, proper, advisable,
incidental or convenient to or for the furtherance of the purpose
set forth in Section 2.5, including, but not limited to, the
power:
2.6.1 to conduct its business, carry on its operations
and have and exercise the powers granted to a limited liability
company by the Act in any state, territory, district or
possession of the United States or in any foreign country as may
be necessary, convenient or incidental to the accomplishment of
the purpose of the Company;
2.6.2 to enter into, perform and carry out contracts of
any kind necessary to, in connection with, in furtherance of,
convenient to, or incidental to the accomplishment of the purpose
of the Company;
2.6.3 to purchase, take, receive, subscribe for or
otherwise acquire, own, hold, enter into, invest in, trade, vote,
use, employ, sell, mortgage, lend, pledge, or otherwise dispose
of, and otherwise use and deal in and with, shares and other
equity interests in, obligations of, and other financial
instruments with or in respect of, domestic and foreign
corporations, associations, general, limited and limited
liability partnerships, trusts, limited liability companies,
individuals, international agencies, and the United States
government, and any other national, state, regional, territorial,
local or municipal government and any agency or instrumentality
of any such government;
2.6.4 to acquire by purchase, exchange, lease,
contribution of property or otherwise, own, hold, operate,
maintain, finance, improve, market, lease, sell, distribute,
convey, mortgage, encumber, transfer, demolish or dispose of any
real or personal property;
2.6.5 to lend money, to invest and reinvest its funds
and to take and hold real and personal property for the payment
of funds so loaned or invested;
2.6.6 to negotiate, enter into, renegotiate, extend,
renew, terminate, modify, amend, waive, execute, acknowledge or
take any other action with respect to any lease, contract or
security agreement in respect of any assets or the business of
the Company;
2.6.7 to borrow and issue evidences of indebtedness and
to secure the same by a mortgage, pledge or other lien on the
assets of the Company; provided, however, that without the prior
written consent of the Member in question, the Company shall not
incur any indebtedness that provides for the liability of any
Member;
2.6.8 to open, close, and to make deposits to and
withdrawals from bank and other deposit accounts;
2.6.9 to give or terminate guarantees and indemnities;
2.6.10 to hire, employ and dismiss employees, agents and
representatives, attorneys, accountants, brokers, investment
bankers, appraisers and any other advisors or consultants of the
Company, and define their duties and fix their compensation;
2.6.11 to indemnify any Person in accordance with this
Agreement;
2.6.12 to cease its activities and cancel its
Certificate;
2.6.13 to xxx and be sued, complain and defend, and
participate in administrative or other proceedings, in its name;
2.6.14 to pay, collect, compromise, litigate, arbitrate
or otherwise adjust or settle any and all other claims or demands
of or against the Company or to hold such proceeds against the
payment of contingent liabilities; and
2.6.15 to make, execute, acknowledge and file any and all
documents or instruments necessary, convenient or incidental to
the accomplishment of the purpose of the Company.
2.7 Filing of Certificate. Xxxxxx Xxxxxx is designated as
an authorized person within the meaning of the Act to execute,
deliver and file the Certificate, and any such other Persons as
the Members shall specify are hereby designated as authorized
persons, within the meaning of the Act, to execute, deliver and
file any amendments or restatements of the Certificate and any
other certificates necessary for the Company to qualify to do
business in a jurisdiction in which the Company may wish to
conduct business.
2.8 Foreign Qualification. The Members shall take all
necessary actions to cause the Company to be authorized to
conduct business legally in Massachusetts and any other
jurisdictions which the Members shall determine.
2.9 Responsibilities. The Company in addition to any and
all activities associated with running the Company is responsible
for the following partial list of activities:
(a) management of all hydro marketing and sales
personnel activities;
(b) assisting each Member with the development and
marketing of any and all specific products and
services relating to the specific delivery of that
Member's hydro services to a HydroServ Customer;
(c) assisting UUDSI and NEP in preparation of
proposals; and
(d) interfacing with HydroServ Customers as required.
ARTICLE 3
MEMBERSHIP AND CAPITAL
3.1 Members: Initial Capital Contributions. The Members of
the Company are UUDSI and NGT, each of which is admitted to the
Company as a Member effective upon its execution of this
Agreement. Each Member shall make an initial capital
contribution of $250,000 net of its marketing and sale expenses
for the benefit of the Company incurred since the date this
Agreement is signed; such initial capital contribution shall be
made in accordance with Schedule 7 attached hereto. The initial
capital contribution shall be made promptly after receipt by NGT
of corporate approvals required by NGT in order to make its
contributions, and to make an equity investment in UUDSI of $1
million, such approvals to be in form and substance acceptable to
NGT.
3.2 Maintenance of Capital Accounts. A separate account
(each a "Capital Account") shall be established and maintained
for each Member which shall be increased by (a) such Member's
Capital Contributions and (b) such Member's share of the Net
Profit of the Company, and shall be charged with (c)
Distributions to such Member and (d) such Member's share of the
Net Losses of the Company. It is the intention of the Members
that the Capital Accounts be maintained in accordance with the
provisions of Section 704(b) of the Code and the Regulations
thereunder, that any liabilities be taken into account in
accordance with the provisions of Section 752 of the Code and the
Regulations thereunder, and that this Agreement be interpreted
consistently therewith.
3.3 Percentage Interests. The percentage interest of each
Member in the capital and profits of the Company (each a
"Percentage Interest") shall initially be as follows:
UUDSI 50%
NGT 50%
The Percentage Interests shall be subject to adjustment as
provided in Sections 3.6 and 3.7.4.
3.4 Additional Capital Contributions.
3.4.1 Required Contributions. The Members may from time
to time determine that additional Capital Contributions are
required by the Company (Total Additional Capital Contribution).
In such a case, each Member agrees that upon not less than ten
Business Days following the determination by the Members, such
Member will contribute to the Company as an Additional Capital
Contribution a percentage of the Total Additional Capital
Contribution that is equal to its Percentage Interest adjusted in
accordance with Section 3.4.1.1.
3.4.1.1 Each Member's Additional Capital Contribution will
be adjusted to reflect the relative benefit it or its affiliates
derived from contracts resulting from the marketing and sales
efforts of the Company. Each Member's Additional Capital
Contribution shall be 6% of gross revenue received under such
contract(s) for the past twelve months. To the extent that the
aggregate of all Members' contributions result in more than the
Total Additional Capital Contribution, such contributions will be
proportionally reduced to the Total Additional Capital
Contribution, such reduction calculated based on relative
contributions by each Member. To the extent that the aggregate
of all Members' contributions result in less than the Total
Additional Contribution, the shortfall will be contributed by
each Member on the basis of its Percentage Interest at such time.
3.4.2 Funds Transfers. Capital Contributions required
by this Section 3.4 shall be made by wire transfer of immediately
available funds to the Company's account at such bank as the
Company may from time to time designate in writing.
3.4.3 Voluntary Contributions. Following the Effective
Date, no Member shall be required or permitted to make any
Capital Contributions to the Company except pursuant to this
Section 3.4.
3.5 Return of Capital Contributions. No Member shall have
the right to demand a return of all or any part of its Capital
Contributions, and any return of the Capital Contributions of any
Member shall be made solely from the assets of the Company. No
interest shall be paid to any Member with respect to its Capital
Contributions.
3.6 Additional Members; New Issuances; Classes of Members.
Except as contemplated by Article 9, no new Members shall be
admitted to the Company without the consent of the Members. Upon
the written consent of the Members, the Company may issue
Interests, which may represent interests in both the capital and
the profits of the Company or which may be interests in only the
future profits of the Company ("Profits Interests") to Persons
who are not yet Members, or may increase the Interest of an
existing Member, for such consideration (including but not
limited to cash, other property or the provision of services) and
on such terms as the Members shall unanimously determine. Upon
the issuance of a new Interest, or an increase in the Percentage
Interest represented by an existing Interest, the Percentage
Interests of all existing Members shall be diluted ratably. Each
Person that is to be issued an Interest shall deliver to the
Company, as a condition of its admission to the Company as a
Member, such documents of the type specified in Section 9.4. l(i)
and (ii) as the Members shall request. The Members shall
constitute a single class of Members for all purposes under the
Act and this Agreement unless and to the extent that this
Agreement specifically provides for different classes or groups
of Members of the Company.
3.7 Defaults in Making Capital Contributions. If any
Member shall default in making any Capital Contribution required
to be made pursuant to Section 3.4.1 (each such Capital
Contribution which is not made, a "Defaulted Capital
Contribution"), and such default shall continue for more than
twenty Business Days after notice from the Company, the following
provisions shall apply:
3.7.1 Member Default Loan. The Member who has not
failed to make the required Capital Contribution shall be
entitled (but not required) to advance to the Company on behalf
of the Member who has failed to make the required Capital
Contribution (the "Defaulting Member") an amount equal to all or
a portion of the Defaulted Capital Contribution. Any amount so
advanced by the non-Defaulting Member shall be considered a
Member Default Loan by the non-Defaulting Member to the
Defaulting Member.
3.7.2 Repayment of Member Default Loan. A Member
Default Loan shall be the obligation of the Defaulting Member,
shall be governed by the internal laws of The Commonwealth of
Massachusetts, shall bear interest at a rate of 12% per annum
which shall be compounded annually., and shall be payable on or
before twenty Business Days after written demand first out of
Distributions which would otherwise be made to the Defaulting
Member and to the extent not sufficient, then out of the general
assets of the Defaulting Member. Payments on Member Default
Loans shall be applied first to accrued interest and then to
principal. The Company shall pay to the Member making the Member
Default Loan instead of to the Defaulting Member any and all
Distributions which would otherwise have been paid to the
Defaulting Member until the Member Default Loan and all interest
thereon has been paid in full; provided, however, that all such
Distributions shall be deemed to have been made first to the
Defaulting Member and subsequently paid by the Defaulting Member
to the non-Defaulting Member as a payment against the Member
Default Loan and interest thereon. No Distributions of any kind
shall be made directly to the Defaulting Member until such time
as the Member Default Loan and all interest thereon has been paid
by or for the account of the Defaulting Member.
3.7.3 Survival of Obligation to Make Capital
Contribution. Notwithstanding the foregoing provisions of this
Section 3.7, the Defaulting Member shall continue to be obligated
to make the required Capital Contribution, except to the extent
that (a) such required Capital Contribution has been made by
repayment of the principal of any Member Default Loan that has
been made to fund such required Capital Contribution or has
otherwise been made by the Defaulting Member or (b) such
Defaulting Member has been relieved of such obligation pursuant
to Section 3.7.4, and the Company may by appropriate action
enforce such obligation of the Defaulting Member. If the non-
Defaulting Member has made a Member Default Loan, any Capital
Contributions made as a result of such enforcement proceedings or
otherwise shall be paid to the Member making the Member Default
Loan until the Member Default Loan and all interest thereon are
paid in full. If the non-Defaulting Member has not made a Member
Default Loan, then the Defaulting Member's obligation to make the
Defaulted Capital Contribution to the Company shall bear interest
until paid at a rate of 12% per annum, which shall be compounded
annually, and shall be payable on demand first out of
Distributions which would otherwise be made to the Defaulting
Member and to the extent not sufficient then out of the general
assets of the Defaulting Member.
3.7.4 Dilution Provisions. (i) If the non-Defaulting
Member has made a Member Default Loan and such Member Default
Loan remains outstanding, then such Member shall have the option,
at any time after the (sixtieth day) following the date on which
the Capital Contribution was originally due, to convert all or a
portion of the principal amount of such loan into an additional
Capital Contribution of the non-Defaulting Member. In the event
of such a conversion by the non-Defaulting Member, the Percentage
Interests of the Members shall be adjusted by decreasing the
Percentage Interest of the Defaulting Member, and increasing the
Percentage Interest of the non-Defaulting Member, by 5 percentage
points for each $100,000 of principal so converted. The
Defaulting Member shall be relieved of its obligation to pay that
portion of the principal amount of the Member Default Loan so
converted, but the Defaulting Member shall continue to be
obligated to pay (i) any interest which had accrued on that
portion of the principal of the Member Default Loan prior to such
conversion and (ii) the principal of, and interest on, that
portion of the Member Default Loan not so converted.
(ii) If the non-Defaulting Member does not make a Member
Default Loan and if the full amount of the required Capital
Contribution of the Defaulting Member is not made within 60 days
after the date on which the Capital Contribution was originally
due, then as of the close of business on such sixtieth day, the
Percentage Interests of the Members shall be adjusted by
decreasing the Percentage Interest of the Defaulting Member, and
increasing the Percentage Interest of the non-Defaulting Member,
by 10 percentage points for each $100,000 not contributed by the
Defaulting Member. The Defaulting Member shall be relieved of
such Member's obligation to make the required Capital
Contribution in question (but not, of such Member's obligation to
pay the interest accrued thereon) to the extent that such
Member's Percentage Interest and is adjusted pursuant to this
Section 3.7.4(ii).
ARTICLE 4
STATUS AND RIGHTS OF MEMBERS
4.1 Limited Liability. Except as otherwise provided by the
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 nor any other Indemnified Person shall be obligated
personally for any such debt, obligation or liability of the
Company. All Persons dealing with the Company shall look solely
to the assets of the Company for the payment of the debts,
obligations or liabilities of the Company.
4.2 No Make Up. In no event shall any Member be required to
pay to the Company, to any other Member or its Affiliate or to
any third party, any deficit balance that may exist from time to
time in such Member's Capital Account.
4.3 Return of Distributions. Except as otherwise expressly
required by law, a Member, in its capacity as such, shall have no
liability either to the Company or any of its creditors in excess
of (a) the amount of its Capital Contributions actually made, (b)
its share of any assets and undistributed profits of the Company,
(c) its obligation to make Capital Contributions and any other
payments expressly provided for in this Agreement, and (d) to the
extent required by law, the amount of any Distributions
wrongfully distributed to it; provided, however, that, to the
maximum extent permitted by applicable law, the obligations of
the Members under Section 3.4 shall be solely for the benefit of
the Company and not the creditors of the Company. Except as
required by law or a court of competent jurisdiction, a Member
shall not be obligated by this Agreement to return any
Distribution to the Company or pay the amount of any Distribution
for the account of the Company or to any creditor of the Company.
However, if any court of competent jurisdiction holds that,
notwithstanding the provisions of this Agreement, any Member is
obligated to return or pay any part of any Distribution, the
obligation shall be that of such Member alone, and not of any
other Member unless the court so provides. The amount of any
Distribution returned to the Company by or on behalf of a Member
or paid by or on behalf of a Member for the account of the
Company or to a creditor of the Company shall be added to the
account or accounts from which it was subtracted when it was
distributed to the Member.
4.4 Specific Limitations. No Member shall have the right
or power to: (a) withdraw or reduce its Capital Contribution
except as a result of the dissolution of the Company or as
otherwise provided by law or in this Agreement, (b) other than
upon the Effective Date or with the approval of the Members, make
voluntary Capital Contributions or to contribute any property to
the Company other than cash, (c) bring an action for partition
against the Company or any Company assets, (d) cause the
termination and dissolution of the Company, except as set forth
in this Agreement, or (e) upon the distribution of its Capital
Contribution require that property other than cash be distributed
in return for its Capital Contribution. Each Member hereby
irrevocably waives any and all rights that it may have to
maintain an action for partition of any of the Company's
property. Except as otherwise set forth in this Agreement, no
Member shall have priority over any other Member either as to the
return of its Capital Contribution or as to Net Profit, Net Loss,
or Distributions; provided, that this provision shall not apply
to the repayment by the Company of loans (as distinguished from
Capital Contributions) which a Member has made to the Company.
Other than upon the termination and dissolution of the Company as
provided by this Agreement, there has been no time agreed upon
when the Capital Contribution of any Member will be returned.
4.5 [Intentionally left blank]
4.6 Confidential Information.
4.6.1 Non-Disclosure. Each Member agrees that, except
as otherwise consented to by the Members, all non-public
information furnished to it pursuant to this Agreement or
otherwise in connection with the Company's operation of its
business, including without limitation, any and all information
concerning the Company's suppliers and customers and the
Company's business dealings with such Persons, will be kept
confidential and will not be disclosed or utilized by such
Member, or by any of its agents, representatives, employees or
Affiliates (or any employee, agent or representative thereof), in
any manner or for any purpose whatsoever, in whole or in part,
except that (a) each Member shall be permitted to disclose such
information to those of its agents, attorneys, accountants,
financial and business consultants, other representatives, and
employees who need to be familiar with such information in
connection with such Member's investment in the Company and who
are charged with an obligation of confidentiality, (b) each
Member shall be permitted to disclose such information to
financial institutions and bona fide prospective purchasers and
capital investors when such Persons have agreed in writing to
maintain confidentiality, (c) each Member shall be permitted to
disclose such information to its members, partners and
stockholders and their members, partners and stockholders so long
as they agree not to utilize such information in their own
business or that of any Affiliate in any way and to keep such
information confidential (including from any Affiliate) on the
terms set forth herein, (d) each Member shall be permitted to
disclose information to the extent required by law, so long as
such Member shall have first afforded the Company with a
reasonable opportunity to contest the necessity of disclosing
such information, (e) each Member shall be permitted to disclose
information to the extent necessary for the enforcement of any
right of such Member arising under this Agreement and (f) each
Member shall be permitted to disclose that information expressly
permitted by the Members to be disclosed. No Member, nor any
officer, agent, representative or Affiliate of a Member, nor any
officer, agent or representative of the Company shall disclose
the terms of this Agreement to any Person except (i) to the
extent required by law or (ii) for legitimate business purposes
approved by the Members.
4.6.2 Precautionary Measures. Each Member shall take
such precautionary measures as may be required to ensure (and
such Member shall be responsible for) compliance with this
Section 4.6 by any of its Affiliates, and its and their
directors, officers, employees and agents and other Persons to
which it may disclose confidential information in accordance with
this Section 4.6.
4.6.3 Destruction or Return of Confidential Information.
In the event a Member shall cease to be a Member, it shall
promptly destroy (and provide a certificate of destruction to the
Company with respect to), or return to the Company, all
confidential information of the Company in its possession.
Notwithstanding the immediately-preceding sentence, a Member that
ceases to be a Member may retain for a stated period, but not
disclose to any other Person, confidential information for the
exclusive purposes of (A) explaining such Member's corporate
decisions with respect to the Company or (B) preparing such
Member's tax returns and defending audits, investigations and
proceedings relating thereto; provided, however, that the Member
must notify the Company in advance of such retention and specify
in such notice the stated period of such retention.
4.6.4 Survival of Provisions Beyond Term. The
obligations of each Member under this Section 4.6 shall survive
both termination of such Member's membership in the Company and
the dissolution and termination of the Company until the earlier
of the second anniversary of such termination or the second
anniversary of the end of the Term.
4.6.5 Remedies. The Members agree that no adequate
remedy at law exists for a breach or threatened breach of any of
the provisions of this Section 4.6, the continuation of which
unremedied will cause the Company and the other Members to suffer
irreparable harm. Accordingly, the Members agree that the
Company and the other Members shall be entitled, in addition to
other remedies that may be available to them, to immediate
injunctive relief from any breach of any of the provisions of
this Section 4.6 and to specific performance of their rights
hereunder, as well as to any other remedies available at law or
in equity.
4.7 Use of Member's Names and Trademarks. Except as
specifically permitted by a license agreement, the Company, the
Members and their Affiliates shall not use the name or trademark
of any Member or its Affiliates in whole or in part as or in its
name or in connection with public announcements regarding the
Company or marketing or financing activities of the Company,
without the prior consent of such Member or Affiliate, which
shall not be unreasonably withheld.
ARTICLE 5
MANAGEMENT
5.1 Management by the Members. The management of the
Company is fully vested in the Members, acting exclusively in
their membership capacities. Each Member shall designate by
notice to the Company, one or more representatives of such Member
(each, a "Representative") who shall be authorized to speak on
behalf of and take actions on behalf of such Member. A Member's
designation may be changed at any time by notice to the Company.
The Members expressly intend that the Company will not have
"managers," as that term is used in the Act or in Rev. Proc. 95-
10, 1995-3 I.R.B. 20, it being understood that the
Representatives do not constitute "managers," but that each
Representative acts solely as the agent of the Member that
appointed it. Any controversy or dispute arising out of this
Agreement is subject to the dispute resolution provisions of
Section 16.5.
5.2 Meetings of Members; Consents. Deliberations and
actions of the Members (including deliberations and actions by
the Members) shall occur at meetings of the Members or by written
consents executed by the Members in accordance with Section 5.10.
Meetings of the Members, for any purpose or purposes, may be
called by any Member or Members holding Interests representing at
least fifty (50) percent of the aggregate Percentage Interests.
5.3 Place of Meetings. The Members may designate any
place, either within or outside The Commonwealth of
Massachusetts, as the place of meeting for any meeting of the
Members. If no designation is made, the place of meeting shall
be the principal place of business of the Company.
5.4 Notice of Meetings. Except as provided in Section 5.5,
notice stating the place, day and hour of a meeting of Members
shall be delivered in accordance with Section 16.4 not less than
forty-eight (48) hours before the time of the meeting, by or at
the direction of the Member or Members calling the meeting, to
each other Member. The purpose or purposes of such meeting shall
be specified in such notice.
5.5 Meeting of All Members. If the Members consent to the
holding of a meeting of Members at any time and place and attend
such meeting, such meeting shall be valid without call or notice,
and at such meeting any lawful action may be taken.
5.6 Quorum. The Members, represented in person or by
proxy, shall constitute a quorum at any meeting of Members.
5.7 Voting.
(i) Voting by Percentage Interests; Voting Thresholds.
Except as provided otherwise in this Agreement, voting
shall be according to the Members' respective
Percentage Interests; provided, however, that unless
otherwise expressly provided in this Agreement, all
decisions by the Members or by their Representatives
shall require the affirmative vote of each of the
Members. At such time as one or more additional,
nonaffiliated Members are added, the voting
requirements will be reviewed to provide less than
unanimous votes for matters not affecting the limited
liability, nature, or purpose of the Company.
(ii) Disclaimer of Duties. With respect to any vote,
consent or approval at any meeting of the Members or
otherwise under this agreement, each Member may grant
or withhold such vote, consent or approval (a) in its
sole and absolute discretion, (b) with or without
cause, (c) subject to such conditions as it shall deem
appropriate, and (d) without taking into account the
interests of, and without incurring liability to, the
Company, any other Member, or any officer or employee
of the Company. The provisions of this Section 5.7(ii)
shall apply notwithstanding the negligence, gross
negligence, willful misconduct, strict liability or
other fault or responsibility of a Member.
5.8 Representatives and Proxies. At any meeting of
Members, a Member shall be deemed in attendance if at least one
of its Representatives is in attendance. At any meeting of
Members, a Member may instead vote by proxy executed in writing
by the Member or by a duly authorized attorney-in-fact. Such
proxy shall be filed with the Company before or at the time of
the meeting. No proxy shall be valid after eleven (11) months
from the date of its execution, unless otherwise provided in the
proxy.
5.9 Conference Telephone. Any Member may participate in a
meeting of the Members by means of conference telephone or
similar communications equipment which permits all persons
participating in the meeting to hear each other, and
participation in the meeting by means of such equipment shall
constitute presence in person at such meeting.
5.10 Action by Members Without a Meeting. Action required
or permitted to be taken at a meeting of Members may be taken
without a meeting if the action is evidenced by one or more
written consents describing the action taken, signed by the
Members and delivered to the Company for inclusion in the minutes
or for filing with the Company records. Action taken under this
Section 5.10 is effective when the Members have signed the
consent, unless the consent specifies a different effective date.
5.11 Waiver of Notice. When any notice is required to be
given to any Member, a waiver thereof in writing signed by or on
behalf of the Member entitled to such notice, whether before, at
or after the time stated therein, shall be equivalent to the
giving of such notice.
5.12 Duties and Authority of the Members. Each Member shall
have the full power and authority to take any and all actions on
behalf of or with respect to the Company that are permitted under
Massachusetts law to be taken by members of a limited liability
company; provided, however that each Member agrees not to take
any action in the name of or on behalf of the Company unless such
action, and the taking thereof by such Member, shall have been
authorized by the Members or is expressly authorized by this
Agreement. The Members may ratify previously unauthorized
actions taken by a Member in the name of and on behalf of the
Company, which ratification shall cure any breach by such Member
of the prior sentence arising from such actions. Subject to the
two immediately preceding sentences, the powers and authority
granted to the Members hereunder shall include all those
necessary or convenient for the furtherance of the purpose and
powers of the Company and shall include the power and authority
to make all decisions and take all actions with regard to the
management, operations, assets, financing and capitalization of
the Company, including without limitation, the power and
authority to make decisions concerning, and take all actions in
respect of, all those matters specified in Section 2.6.
5.13 Officers. The Members may designate one or more
Persons to be officers of the Company. Any officers so
designated shall have such titles and, subject to the other
provisions of this Agreement, have such authority and perform
such duties as the Members may delegate to them, including the
power to execute documents, and shall serve at the pleasure of
the Members. Unless the authority of the agent designated as the
officer in question is limited or expanded in the document
appointing such officer or is otherwise specified by the Members,
any officer so appointed shall have the same authority to act for
the Company as a corresponding officer of a Massachusetts
corporation would have to act for a Massachusetts corporation in
the absence of a specific delegation of authority; provided,
however, that unless such power is specifically delegated to the
officer in question either for a specific transaction or
generally, no such officer shall have the power to act in a
manner that is not consistent with the Business Plan and Annual
Budget then in effect, to lease or acquire real property, to
borrow an amount of money in excess of $20,000, to issue notes,
debentures, securities, equity or other interests of or in the
Company, to make investments in (other than the temporary
investment of surplus cash), or to acquire securities of any
Person, to give guarantees or indemnities, to merge, consolidate,
liquidate or dissolve the Company or to sell or lease all or any
substantial portion of the assets of the Company. The Members,
in their discretion, may by written instrument signed by such
Members ratify any act previously taken by an officer or agent
acting on behalf of the Company.
5.14 Transactions with Affiliates. Except as otherwise
provided under this Agreement, the Company will not engage in any
transaction with an Affiliate of any Member without the prior
written consent of the other Members.
5.15 Transactions with HydroServ Customers. UUDSI and/or
NEP, as the case may be, shall be solely responsible for
negotiating and closing such transactions in such manner and
pursuant to procedures acceptable to the party involved in the
transaction including without limitation selection of legal
counsel for such purposes and shall be solely responsible for
management of its own operating personnel, transaction pricing,
credit and risk analysis, receivable collections, contract
generation and negotiation, documentation filing and support, tax
and finance accounting and management of all legal and financial
accounting personnel and activities including tax advisory
requirements and analysis. All proposals and letters of proposal
shall include disclaimers clearly setting forth that such
documents do not create or evidence any obligation or commitment
by the Company and by NEP, NGT, and/or UUDSI if not involved in
the transaction.
5.15.1 Bid Proposal Review Team. The success of the
Company and ultimately UUDSI and NEP who depend on the successful
efforts of HydroServ, will depend on well prepared bids and
proposals, that ensure both likelihood of securing the work and
the profitability of that work. Therefore, UUDSI and NEP agree
to each designate a representative, to act in concert with the
President of the Company, as a final review team for all bids and
proposals being submitted to HydroServ Customers.
5.15.2 Transaction Review Team. All transactions,
agreements, contracts, etc. involving the Company, except those
covered by Section 5.15.1 and Schedule No. 1, will be reviewed by
the review team established under Section 5.15.1 and approved by
the designated representatives.
5.16 Income. The Company derives income from other
nonmember, noncompeting companies, who service the same hydro
industry clients, in the form of Marketing Fees. Schedule No. 1
outlines the fee structure.
ARTICLE 6
BUSINESS PLAN, BUDGET
6.1 Business Plan. The initial business plan for the
Company (the "Business Plan") as agreed upon by the Members, is
attached as Schedule 2. At least 60 days prior to the beginning
of the second and each subsequent Fiscal Year, the Members shall
discuss and revise the Business Plan of the Company so that the
Business Plan shall at all times reflect the strategic plan for
the Company for the then current Fiscal Year and the subsequent
four Fiscal Years.
6.2 Annual Budget. The budget for the first Fiscal Year of
the Company, as agreed upon by the Members, is attached as
Schedule 3. The Members shall, at least 45 days before the
beginning of each subsequent Fiscal Year, determine a budget for
the Company for the next Fiscal Year (the budget for the
Company's first Fiscal Year and each subsequent budget, each an
"Annual Budget"); provided that if an Annual Budget is not agreed
upon for any Fiscal Year, the Annual Budget for the preceding
Fiscal Year shall remain in effect. Each Annual Budget shall
include a projected profit and loss statement, cash flow
statement and balance sheet for the next Fiscal Year, and shall
specify and quantify capital expenditures, if any.
ARTICLE 7
DISTRIBUTIONS AND ALLOCATIONS
7.1 Distributions.
7.1.1 In General. Subject to Section 3.7.2, the Company
shall make Distributions at the end of the calendar year in such
amounts as the Members shall unanimously determine; provided,
that all Distributions (other than Distributions in liquidation
of the Company) shall be made ratably to Members in accordance
with their Percentage Interests, and all Distributions in
liquidation of the Company shall be made in proportion to the
Members' Capital Account balances so as to reduce each Member's
Capital Account balance to zero.
7.1.1.1 The Company will receive revenue from marketing
fees paid by nonmember(s). This revenue will be used to cover
operating expenses, as projected in the Business Plan, Schedule
No. 2.
7.1.2 Statutory Bar on Distributions. Notwithstanding
any provision to the contrary contained in this Agreement, the
Company shall not make a Distribution to any Member on account of
its interest in the Company if such Distribution would violate
Section 18-607 of the Act or other applicable law.
7.1.3 Withholding. All amounts withheld pursuant to the
Code or any provision of any federal, state, local or foreign tax
law with respect to any payment, distribution, or allocation to
the Company or the Members shall be treated as amounts
distributed to the Members pursuant to Section 7.1 for all
purposes under this Agreement. The Company shall withhold from
Distributions to, and with respect to allocations to, the Members
and to pay over to the appropriate federal, state, local or
foreign government any amounts required to be so withheld, and
shall allocate any such amounts to the Members in respect of
whose Distribution or allocation the tax was withheld.
7.1.4 Property Distributions and Installment Sales. The
Members may from time to time determine to distribute property
other than cash to the Members. In such a case, such in-kind
Distribution shall be made to the Members entitled thereto in the
same proportions as the Members would have been entitled to cash
distributions. The amount by which the fair market value of any
property to be distributed in kind to the Members exceeds or is
less than the Book Value of such property shall, to the extent
not otherwise recognized by the Company, be taken into account in
determining Net Profit and Net Loss and determining the Capital
Accounts of the Members as if such property had been sold at its
fair market value immediately prior to its distribution. If any
assets are sold in transactions in which, by reason of the
provisions of section 453 of the Code or any successor thereto,
gain is realized but not recognized, such gain shall be taken
into account when realized in computing gain or loss of the
Company for purposes of allocation of Net Profit or Net Loss
under this Article 7, and, if such sales shall involve
substantially all the assets of the Company, the Company shall be
deemed to have been dissolved and terminated notwithstanding any
election by the Members to continue the Company for purposes of
collecting the proceeds of such sales.
7.2 Allocations of Net Profits. Subject to Section 7.4,
the Net Profit of the Company shall be allocated among the
Members ratably in accordance with their Percentage Interests.
7.3 Allocation of Net Losses. Subject to Section 7.4, the
Net Loss of the Company shall be allocated among the Members
ratably in accordance with their Percentage Interests.
7.4 Other Allocation Provisions. Prior to making the
allocations of Net Profit or Net Loss for the Fiscal Year in
accordance with Sections 7.2 and 7.3, income, gain, loss,
deduction and credit (and items thereof) shall be allocated in
accordance with the provisions of this Section 7.4 to the extent
required by the Code and applicable Regulations. Any amounts
allocated pursuant to this Section 7.4 shall not again be
allocated under Section 7.2 or 7.3.
7.4.1 Qualified Income Offset; Nonrecourse and Member
Nonrecourse Deductions. There is hereby included in the
Agreement such provisions governing the allocation of income,
gain, loss, deduction and credit (and items thereof) as may be
necessary to provide that the Company's allocation provisions
contain a so-called "Qualified Income Offset" and comply with all
provisions relating to the allocation of so-called "Nonrecourse
Deductions" and "Members Nonrecourse Deductions" and the charge
back thereof as set forth in the Regulations under Section 704(b)
of the Code; provided, however, that the incorporation of such
provisions shall affect only the allocation of income, gain,
losses and deductions as between Members and shall not otherwise
affect the amount or timing of any Distribution of cash or
property to any Member provided for in this Agreement.
Allocations of Nonrecourse Deductions shall be made ratably among
the Members in accordance with their Percentage Interests. In
allocating Net Profits pursuant to Section 7.4.2 hereof, the
Members shall take into account (and, if necessary, modify the
allocations to reflect) anticipated future allocations under the
minimum gain chargeback rules of Regulation Section 1.704-2.
7.4.2 Special Adjustments. To the extent that an
adjustment to the adjusted tax basis of any Company asset is
required pursuant to Section 734(b) or Section 743(b) of the Code
and is required, pursuant to Regulation Section 1.704-
1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts
shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases such
basis), and such gain or loss shall be specially allocated to the
Members in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such
Section of the Regulations.
7.4.3 Recourse Indebtedness. In the event that
indebtedness of the Company is recourse to one or more, but not
all, of the Members, the Members, with the advice of independent
accountants, shall make such modifications to the allocation
provisions of Sections 7.2 and 7.3 as it shall determine to be
appropriate.
7.4.4 Limitation on Net Losses. Notwithstanding any
other provision of this Agreement to the contrary, Net Loss shall
not be allocated to any Member if such allocation would cause
such Member to have an Adjusted Capital Account Deficit or
increase such Member's Adjusted Capital Account Deficit. To the
extent an allocation of Net Loss would cause or increase an
Adjusted Capital Account Deficit as to any Member, the limitation
set forth in this Section 7.4.4 shall be applied on a Member by
Member basis in accordance with the Members' respective
Percentage Interests so as to allocate the maximum permissible
Net Loss to each Member without causing any Member to have an
Adjusted Capital Account Deficit.
7.5 Changes in Members' Interests. If during any Fiscal
Year of the Company there is a change in any Member's Interest in
the Company, the Members shall confer with the tax advisors to
the Company and, in conformity with such advice allocate the Net
Profit or Net Loss to the Members so as to take into account the
varying Interests of the Members in the Company in a manner that
complies with the provisions of Section 706 of the Code and the
Regulations thereunder.
7.6 Tax Allocations.
7.6.1 In General. Subject to Section 7.6.2, each item
of income, gain, loss and deduction, as determined for federal
income tax purposes, shall be allocated among the Members in the
same manner as its correlative item of "book" income, gain, loss
or deduction is allocated pursuant to Sections 7.2 through 7.5.
7.6.2 Section 704(c) Allocations. In the event there is
a difference between the Book Value at which any property is
accepted as a contribution to the capital of the Company (or
deemed accepted pursuant to Regulation Section 1.704-
1(b)(2)(iv)(g)) and the adjusted tax basis of such property to
the Company, the Company shall, solely for federal income tax
purposes, specially allocate the income, gain, loss and deduction
attributable to such property as and to the extent required by
Section 704(c) of the Code and any applicable Regulations under
Section 704(b) or Section 704(c) of the Code.
7.7 Tax Credits. All items of federal income tax credit
shall be allocated among the Members in accordance with their
Percentage Interests.
7.8 Adjustment of Capital Accounts. Unless the Members
shall determine otherwise, the Book Values of all the Company's
assets shall be adjusted to equal their respective gross fair
market values, as determined by the Members (and the Capital
Accounts of the Members shall be adjusted accordingly by treating
any increase in Book Value as an item of Book Gain and any
decrease in Book Value as an item of Book Loss), as of the
following times: (a) the acquisition of an additional Interest in
the Company by any new or existing Member in exchange for more
than a de minimis additional Capital Contribution; (b) the
distribution by the Company to a Member of more than a de minimis
amount of assets of the Company as consideration for an Interest;
and (c) the liquidation of the Company; provided, however, that
adjustments pursuant to clauses (a) and (b) above shall be made
only if the Members reasonably determine that such adjustments
are necessary or appropriate to reflect the relative economic
interests of the Members in the Company.
7.9 Interpretation. It is the intent of the Members that
the Company be treated as a partnership for federal tax purposes
and that the provisions hereof relating to each Member's
distributive share of income, gain, loss, deduction, and credit
(and items thereof) comply with the provisions of Sections
704(b), 704(c), 706 and other relevant provisions of the Code and
the applicable Regulations. In furtherance of the foregoing, the
Members hereby agree that they will seek to resolve any ambiguity
in the provisions of this Agreement in a manner that will
preserve and protect the tax allocations provided for in this
Article 7 for federal income tax purposes and, subject to the
last sentence hereof, to adopt such curative provisions to offset
the effect of the allocations required by Section 7.4 as they may
deem necessary. Notwithstanding the foregoing, no Member shall
have the right to require or compel any distribution of cash or
property not authorized or provided for by the provisions of this
Agreement or to alter any distribution of cash or property
provided for by the provisions of this Agreement on the ground
that such action is necessary to cause the provisions hereof to
conform to the provisions of the Regulations.
7.10 Loans to Company. Nothing in this Agreement shall
prevent any Member from making secured or unsecured loans to the
Company by agreement with the Company.
ARTICLE 8
TAX MATTERS MEMBER
8.1 Tax Matters Member. Unless and until another Member is
designated as the Tax Matters Member by the Members, NGT shall be
the tax matters partner of the Company as provided in the
Regulations under Code Section 6231 and analogous provisions of
state law ("Tax Matters Member"). The Tax Matters Member shall
represent the Company, at the Company's expense, in connection
with all examinations of the Company's affairs by tax authorities
including any resulting administrative or judicial proceedings.
8.2 Indemnity of Tax Matters Member. The Company shall
indemnify and reimburse the Tax Matters Member for all reasonable
expenses (including legal and accounting fees) incurred as Tax
Matters Member pursuant to this Article 8 in connection with any
administrative or judicial proceeding with respect to the tax
liability of the Members as long as the Tax Matters Member has
determined in good faith that its course of conduct was in, or
not opposed to, the best interest of the Company. The payment of
all such expenses shall be made before any Distributions are made
to the Members. The taking of any action and the incurring of
any expense by the Tax Matters Member in connection with any such
proceeding, except to the extent provided herein or required by
law, is a matter in the sole discretion of the Tax Matters Member
and the provisions on limitations of liability of the Tax Matters
Member and indemnification set forth in Article 13 shall be fully
applicable to the Tax Matters Member in its capacity as such.
8.3 Information Furnished. To the extent and in the manner
provided by applicable law and the Regulations, the Tax Matters
Member shall furnish the name, address, profits interest, and
taxpayer identification number of each Member to the Internal
Revenue Service.
8.4 Notice of Proceedings, etc. The Tax Matters Member
shall use its best efforts to keep each Member informed of any
administrative and judicial proceedings for the adjustment at the
Company level of any item required to be taken into account by a
Member for income tax purposes or any extension of the period of
limitations for making assessments of any tax against a Member
with respect to any Company item, or of any agreement with the
Internal Revenue Service that would result in any material change
either in income or loss as previously reported.
8.5 Notices to Tax Matters Member. Any Member that
receives a notice of an administrative proceeding under Code
Section 6233 relating to the Company shall promptly notify the
Tax Matters Member of the treatment of any Company item on such
Member's federal income tax return that is or may be inconsistent
with the treatment of that item on the Company's return. Any
Member that enters into a settlement agreement with the Internal
Revenue Service or any other government agency or official with
respect to any Company item shall notify the Tax Matters Member
of such agreement and its terms within sixty days after its date.
ARTICLE 9
TRANSFER OF INTERESTS
9.1 Transfer of Interests. No Member shall sell, assign,
exchange, convey, gift, pledge, mortgage, encumber, dispose of or
otherwise transfer (herein, whether used as a noun or a verb,
collectively called a 'Transfer') all or any part of its Interest
except in strict accordance with this Article 9. Any attempted
Transfer of all or any part of an Interest, other than in strict
accordance with this Article 9, shall be, and is hereby declared,
null and void ab initio. The Members agree that a breach of the
provisions of this Article 9 may cause irreparable injury to the
Company and to the other Members for which monetary damages (or
other remedy at law) are inadequate in view of (i) the
complexities and uncertainties in measuring the actual damages
that would be sustained by reason of the failure of a Member to
comply with such provision and (ii) the uniqueness of the Company
business and the relationship among the Members. Accordingly,
the Members agree that the provisions of this Article 9 may be
enforced by specific performance.
9.2 Restrictions on Transfer. No Member shall at any time
Transfer to another Person, other than in a Required Regulatory
Transfer, less than all of its Interest. Prior to the second
anniversary of the Effective Date, no Member shall Transfer its
Interest in the Company, unless such Transfer is first approved
by the other Member(s), which approval may be granted or withheld
in the sole and absolute discretion of such other Member;
provided, however, that (i) NGT may at any time prior to such
date, Transfer, without consent of the other Member(s) all of its
Interest to a non-affiliated, new owner of substantially all of
the hydroelectric facilities currently owned by its Affiliate,
New England Power Company; (ii) any Member may, at any time prior
to such date, Transfer, without the consent of the other
Member(s), all of its Interest to an Affiliate and (iii) any
Member may, without the consent of the other Member(s), make a
Required Regulatory Transfer of the Required Portion of its
Interest at any time prior to such date, but only after it has
complied with the terms of Section 9.3; and provided, further,
however that any such Transfer is made in accordance with the
Securities Act of 1933, as amended, to the extent applicable
thereto.
9.3 Right of First Refusal.
9.3.1 Offer.
(i) (A) If any Member received a bona fide offer
(an "Offer") from any Person (other than an Affiliate)
to purchase on or after the second anniversary of the
Effective Date all of its Interest or (B) if a Member
either is notified by a United States federal or
Massachusetts governmental agency that it must make a
Required Regulatory Transfer, or determines and
demonstrates to the satisfaction of the other Member
that it must make a Required Regulatory Transfer of all
or any portion of its Interest prior to the third
anniversary of the Effective Date, and the Transfer
proposed to be effected by the Member is approved by
the requisite governmental agency; and
(ii) if such Member (for purposes of this Section
9.3, the "Selling Member") desires to Transfer all of
its Interest pursuant to such Offer, or the Required
Portion of such Interest in such Required Regulatory
Transfer,
it shall give written notice (the "Notice of Sale") to the other
Members of (i) that portion of its Interest subject to such
Offer, or proposed to be transferred in the Required Regulatory
Transfer (which in the case of a Required Regulatory Transfer
shall not be more than the Required Portion of its Interest and
otherwise shall not be less than all of its Interest) (the
"Offered Interest"), (ii) in the case of an Offer, the price
offered (the "Offered Price"), (iii) the specific terms of the
proposed transfer and (iv) the name of the proposed transferee,
or in the case of a Proposed Regulatory Transfer in which there
is to be more than one transferee, the proposed transferees).
The receipt of the Notice of Sale by the other Member shall
constitute an offer by the Selling Member to sell (i) in the case
of an Offer, the Offered Interest and (iii) in the case of a
Required Regulatory Transfer, either the Offered Interest or the
entire Interest of the Selling Member (the "Entire Interest"), at
the election of the other Member, to the other Member at the
Right of First Refusal Price, which offer shall remain
outstanding for a period of 30 days after receipt of the Notice
of Sale by the other Member. In the case of an Offer, the term
"Right of First Refusal Price" shall mean the Offered Price,
provided, that, if all of a portion of the Offered Price is to be
paid other than in cash, the term "Right of First Refusal Price"
shall mean the sums of (i) the dollar amount of that portion of
the Offered Price payable in cash and (ii) the Fair Value of that
portion of the Offered Price payable in non-cash consideration,
and provided, further, that if the Offer giving rise to the
application of this Section 9.3.1 is an Offer not only for the
Offered Interest, but also for additional property of the Selling
Member (or one or more Affiliates of the Selling Member, in which
case the additional property may include stock of an Affiliate of
such Affiliate), the term "Right of First Refusal Price" shall
mean the Fair Value of the Offered Interest. In the case of a
Required Regulatory Transfer, the term "Right of First Refusal
Price" shall mean the Fair Value of the Required Portion of the
Interest or the entire Interest, as appropriate.
9.3.2 Acceptance. During the 30-day period following
receipt of the Notice of Sale by the non-Selling Member, such
other Member may accept such offer by giving written notice (a
"Notice of Purchase") of its intention to purchase all of the
Offered Interest or the Entire Interest, at such Member's
election, at the Right of First Refusal Price and otherwise on
the terms specified in the Notice of Sale.
9.3.3 Closing. If the non-Selling Member gives a Notice
of Purchase for the Offered Interest or the Entire Interest, as
the case may be, pursuant to this Section 9.3, the purchase of
the Offered Interest or the Entire Interest, as the case may be,
pursuant to this Section 9.3 shall be made within 30 days after
the date of such Notice of Purchase at the Right of First Refusal
Price otherwise on terms identical in all material respects to
the terms specified in the Notice of Sale.
9.3.4 Transfer to Original Offeror. If the other Member
does not give a Notice of Purchase for at least all of the
Offered Interest, or if payment therefor is not made within 30
days after receipt of the Notice of Purchase by the Selling
Member, the Selling Member shall have 75 days from the giving of
the Notice of Sale (or such longer period of time as may be
required for any regulatory approvals) in which to Transfer the
Offered Interest to the purchaser specified in the Notice of Sale
at a price not lower than the Offered Price, and on terms and
conditions not more favorable to said purchaser than the terms
specified in the Notice of Sale.
9.4 Requirements Applicable to All Transfers.
9.4.1 No Transfer of all or any part of a Member's
Interest may be made pursuant to Section 9.2 or 9.3 unless such
Transfer would not cause a termination of the Company for federal
income tax purposes under Section 708 of the Code; and until each
of the Members shall have received such of the following (to the
extent applicable to the proposed Transfer) as it may have
requested:
(i) a copy of the instrument pursuant to which the
Transfer is to be effected, which shall specify the
name and business address of the transferor and the
transferee, the portion of the transferor's Interest
that is being transferred and the Percentage Interest
represented thereby, and which shall contain (A)
representations and warranties by the transferor and
the transferee that the Transfer and admission of the
transferee as a Member are being made in accordance
with applicable laws and (B) representations and
warranties by the transferee to the same effect as
those contained in Article 14 hereof;
(ii) the agreement in writing of the transferee to
comply with all of the terms and provisions of this
Agreement;
(iii) an opinion of responsible counsel (who may be
counsel for the Company), satisfactory in form and
substance to the Members to the effect that:
(A) such Transfer would not violate the
Securities Act of 1933, as amended, or any
state securities or blue sky laws applicable
to the Company or the Interest to be
transferred;
(B) such Transfer would not cause the Company to
be considered a publicly traded partnership
under section 7704(b) of the Code;
(C) such Transfer would not cause the Company to
lose its status as a partnership for federal
income tax purposes;
(D) such Transfer would not cause a termination
of the Company for federal income tax
purposes; and
9.4.2 The transferring Member and its transferee
shall pay, or reimburse the Company for, all reasonable costs and
expenses incurred by the Company in connection with the Transfer
and admission of the transferee as a Member, including any legal
fees incurred in connection with the legal opinions referred to
in Section 9.4.1, on or before the tenth business day after the
receipt by such Persons of the Company's invoice for the amount
due. If payment is not made by the date due, the Person owing
that amount shall pay interest on the unpaid amount from the date
due until paid at a rate per annum equal to the prime rate, as
announced from time to time in the Wall Street Journal, plus two
percentage points.
9.4.3 Each Member hereby severally agrees that it
will not transfer all or any part of its Interest in the Company
except as permitted by this Agreement.
9.4.4 The transferee of an Interest shall be admitted
as a Member of the Company provided that the Transfer is effected
in strict compliance with this Article 9. Each transferee shall
succeed to the same portion of the balance of the Capital Account
of the transferor, as of the effective date of the Transfer, as
the transferred Interest bears to the entire Interest of the
transferor immediately prior to such Transfer.
9.4.5 If a Member transfers its entire Interest, the
Company shall not dissolve if the business of the Company is
continued without dissolution in accordance with clause (c) of
Section 12.2 hereof.
9.4.6 No Transfer of an Interest shall effect a
release of the transferring Member from any liabilities to the
Company or the other Members arising from events occurring prior
to the Transfer.
9.5 Buy-Sell Right.
9.5.1 Each Member (the "Buy-Sell Offeror") shall have
the right at any time (including at any time following the
receipt of a Notice of Sale from the other Member but prior to
the delivery of a Notice of Purchase , but not including after a
dissolution of the Company pursuant to any event specified in
Section 12.2 hereof, except that after a dissolution of the
Company pursuant to an event specified in Section 12.2 (d) (other
than a withdrawal) the remaining Member shall have such right) to
withdraw from the Company (notwithstanding the pendency of any
arbitration proceeding or request for arbitration, or of the
enforcement of any claim against a Member for breach of or for
default under the terms of this Agreement) by giving to the other
Member (the Buy-Sell Offeree") a notice of intention to withdraw,
which notice shall contain an offer (the "Buy-Sell Offer")
stating the cash price (the "Buy-Sell Offer Price") at which the
Buy-Sell Offeror is willing to purchase or sell an undivided 100%
interest in the Company, including all of the business,
properties, assets, name and goodwill owned by the Company (the
"Company Property").
9.5.2 Upon its receipt of the notice and Buy-Sell
Offer given and delivered pursuant to Section 9.5.1, the Buy-Sell
Offeree shall be obligated, in accordance with the procedures set
forth in this Section 9.5, either to:
(i) purchase the Buy-Sell Offeror's Interest for cash
at a purchase price equal to the Buy-Sell Offer
price specified in the Buy-Sell Offer, multiplied
by the Buy-Sell Offeror's Percentage Interest at
the time such offer to buy is accepted; or
(ii) sell to the Buy-Sell Offeror the Buy-Sell
Offeree's Interest for cash at a purchase price
equal to such Buy-Sell Offer Price multiplied by
the Buy-Sell Offeree's Percentage Interest at the
time such offer to sell is accepted.
9.5.3 The Buy-Sell Offeree shall give written notice
of its election to the Buy-Sell Offeror within 60 days after the
Buy-Sell Offeree's receipt of the Buy-Sell Offer. Failure of the
Buy-Sell Offeree to give the Buy-Sell Offeror notice within such
60-day period that the Buy-Sell Offeree has elected under Section
9.5.2(i) shall be conclusively deemed to be an election under
Section 9.5.2(ii) above.
9.5.4 If the Buy-Sell Offeree elects to proceed under
Section 9.5.2(i) above, the Buy-Sell Offeree shall purchase the
Buy-Sell Offeror's Interest as provided in this Section 9.5. If
the Buy-Sell Offeree elects to proceed under Section 9.5.2(ii)
above, the Buy-Sell Offeror shall purchase the Buy-Sell Offeree's
Interest as provided in this Section 9.5.
9.5.5 If, following an election by the Buy-Sell
Offeree to purchase or sell under this Section 9.5, the party
which is then obligated to purchase is not ready, willing or able
to consummate the purchase in accordance with Sections 9.5.6 and
9.5.7 below, such party shall be deemed to be in breach of and
default under the terms of this Agreement (hereinafter, the "Buy-
Sell Defaulting Member"). The non-defaulting Member, in addition
to all other rights and remedies available to it against the Buy-
Sell Defaulting Member, shall have the right (but not the
obligation) to purchase the Interest of the Buy-Sell Defaulting
Member as if the Buy-Sell Defaulting Member had made an election
under Section 9.5.2(ii) hereof. If the non-defaulting Member
exercises such right to purchase the Interest of the Buy-Sell
Defaulting Member, it shall give notice of such exercise not
later than 30 days after the date on which the Closing would
otherwise have occurred under Section 9.5.6(i) hereof, and the
Closing of such purchase by the non-defaulting Member shall take
place not later than 30 days after such notice of exercise.
9.5.6 (i) The closing ("Buy-Sell Closing") of any
sale pursuant to this Section 9.5 shall be held at a mutually
acceptable place, on a mutually acceptable date not more than 30
days after receipt by the Buy-Sell Offeror of the written notice
of election, or the expiration of the time of the Buy-Sell
Offeree to so elect, as provided in Section 9.5.3.
(ii) At the Buy-Sell Closing, the selling party shall
execute and deliver to the purchasing party all bills
of sale and other instruments of transfer and
conveyance, in form and substance satisfactory to the
purchasing party, as may be necessary to convey,
transfer, assign and deliver to the purchasing party
ownership of all of the selling party's Interest. It
is the intention of the parties that such transfer of
the selling party's Interest shall result in vesting
ownership of all of the Company Property in the
purchasing party, free and clear of all liens and
encumbrances other than those of the Company incurred
in accordance with this Agreement. The selling party
agrees, from time to time at the request of the
purchasing party, at or after the date of Buy-Sell
Closing to execute and deliver such instruments of
conveyance, assignment, transfer and consent as may be
required or advisable for the effective conveyance,
assignment, transfer and consent as may be required or
advisable for the effective conveyance and transfer of
the business, properties, assets, name, goodwill, and
rights included in the selling party's Interest in the
Company or otherwise to vest ownership of all of the
Company Property in the purchasing party.
(iii) At the Buy-Sell Closing, the purchasing party
shall pay to the selling party the purchase price
determined as of the date of the Buy-Sell Closing
pursuant to this Section 9.5 in cash or by a
cashier's or certified check from a bank
acceptable to the selling party.
9.5.7 At the Buy-Sell Closing, the purchasing party
shall by a legally enforceable agreement, effective upon the
effectiveness of the sale of the selling party's Interest
pursuant to this Section 9.5:
(i) assume and become obligated to pay or discharge any
indebtedness, lien, mortgage or encumbrance on the
Company Property incurred in accordance with this
Agreement to the extent that the selling party has
personal liability with respect thereto;
(ii) assume and become obligated to pay, or perform or
discharge the obligations and liabilities that the
selling party may have incurred in accordance with this
Agreement to third parties as a Member in the Company
(other than liabilities for which the purchasing party
may have a claim against the selling party due to the
selling party's breach of, or default under, the terms
of this Agreement);
(iii) assume or become obligated to pay or perform or
discharge the obligations and liabilities that the
selling party or any Affiliate of the selling party may
have incurred to third parties as a guarantor of
obligations of the Company or to support financing
arrangements of the Company in some other manner
contemplated by this Agreement or agreed to by all
Members, such as an agreement to maintain the working
capital of the Company;
(iv) release and discharge the selling party of all
obligations and liabilities (except those on account of
or arising our of any material breach of or default
under the terms of this Agreement) to the purchasing
party or the Company incurred hereunder or otherwise in
connection with the operation of the business of the
Company in accordance with this Agreement; and
(v) save, defend and indemnify the selling party and its
Affiliates against and hold them harmless from any and
all liabilities specified in subsections (i) through
(iv) of this Section 9.5.7.
9.6 Enforcement of Buy-Sell. If either Member shall
default in the performance of its obligations under Section 9.5
of this Agreement, the other Member shall have the right to bring
any proceedings or action at law, in equity (including for
specific performance), or otherwise to enforce the performance of
such obligations or any claim arising out of such default,
notwithstanding any of the provisions of Section 16.5 hereof. It
is understood and agreed by the parties hereto that the remedies
available hereunder to enforce the performance of a Member's
duties and obligations under Section 9.5 hereof shall include
(but not be limited to) the right of specific performance, and
the party seeking specific performance shall not be required to
post any bond.
9.7 Termination of Marketing Relationship. Upon the sale
of a Member's Interest pursuant to Section 9.5, the Company will
terminate its marketing relationship with such selling Member.
ARTICLE 10
BOOKS, RECORDS, ACCOUNTING, AND REPORTS
10. 1 Books and Records. The Company shall maintain at
its principal office all of the following:
10.1.1 A current list of the full name and last known
business address of each Member together with true and full
information regarding the amount of cash and a description and
statement of the agreed value of any other property or services
contributed by each Member and which each Member has agreed to
contribute in the future, and the date on which each Member
became a member of the Company;
10.1.2 A copy of the Certificate, this Agreement,
including any and all amendments to either thereof, together with
executed copies of any powers of attorney pursuant to which the
Certificate, this Agreement or any amendment has been executed;
10.1.3 Copies of the Company's federal, state, and
local income tax or information returns and reports, if any, for
the six most recent taxable years;
10.1.4 The audited financial statements of the Company
for the six most recent Fiscal Years; and
10.1.5 The Company's books and records for at least the
current and past five Fiscal Years.
10.2 Delivery to Members; Inspection. Upon the request of
any Member for any purpose reasonably related to such Member's
Interest as a Member of the Company:
10.2.1 The Company shall promptly deliver to the
requesting Member, at the expense of the Company, a copy of the
information required to be maintained by Sections 10.1.1 -
through 10.1.4.
10.2.2 The Members may review, at the Company's office
during normal business hours, the Company's federal, state and
local income tax or information returns prior to the filing
thereof and the Company's books and records referred to in
Section 10.1.5.
10.2.3 The Company will provide any Member at such
Member's expense such other information regarding the business
affairs of the Company as the Member shall reasonably request.
10.3 Financial Statements. The Members shall maintain or
cause to be maintained books of account reflecting the operations
of the Company and shall cause to be prepared for the Members (i)
monthly and quarterly financial statements which financial
statements shall show variances from the Annual Budget, and (ii)
audited annual financial statements of the Company prepared in
accordance with generally accepted accounting principles. Until
the Members determine otherwise, an Affiliate of NGT will provide
services to the Company as required by this Article 10.
10.4 Filings. At the Company's expense the Members shall
cause the income tax returns for the Company to be prepared and
timely filed with the appropriate authorities and to have
prepared and to furnish to each Member such information with
respect to the Company as is necessary to enable the Members to
prepare and timely file their federal and state income tax
returns. The Members, at the Company's expense, shall also cause
to be prepared and timely filed, with appropriate federal and
state regulatory and administrative bodies, all reports required
to be filed by the Company with those entities under then current
applicable laws, rules, and regulations. The reports shall be
prepared on the accounting or reporting basis required by the
regulatory bodies.
ARTICLE 11
AMENDMENTS TO AGREEMENT
11.1 Amendments. This Agreement may be amended or modified
with the prior written consent of the Members.
11.2 Filings. The Members shall cause to be prepared and
filed any amendment to the Certificate that may be required to be
filed under the Act as a consequence of any amendment to this
Agreement.
11.3 Binding Effect. Any modification or amendment to this
Agreement pursuant to Section 11.1 shall be binding on all
Members.
ARTICLE 12
DISSOLUTION OF COMPANY
12.1 Termination of Membership. No Member shall resign or
withdraw from the Company during the first 24 months following
its initial capital contribution except as provided below and
except that, subject to the restrictions set forth in Article 9,
any Member may Transfer its Interest in the Company and the
transferee may become a Member in place of the Member which
transferred its Interest. If any Member ceases to be a Member
for any reason, the business of the Company may be continued by
the remaining Members (so long as there are two such remaining
Members) as provided in clause (c) of Section 12.2.
(a) After that 24 month time period, a Member may terminate
its membership in the Company upon giving at least ninety (90)
days prior written notice to the other Member(s) if the Company
has not met the performance standards set forth in Schedule No. 4
and a mutually agreed upon remedial action plan has not corrected
the performance problem within a reasonable time;
(b) Without regard to that 24 month time period, a Member
may terminate its membership in the Company upon written notice
to the other Member(s) for the following reasons:
(i) if the other Member(s) shall fail to perform
or observe, within 30 days after written
notice of such failure, any material respect
any of the covenants, conditions or
agreements to be performed or observed under
this Agreement; or
(ii) any representation or warranty made by
another Member in any other agreement or in
any other document or certificate furnished
to the other party in connection herewith or
therewith or pursuant hereto or thereto shall
prove to have been incorrect in any material
respect when made; or
(iii) another Member sells or merges substantially
all of its assets with a third party
(excluding a transfer under Article 9) and/or
voluntarily suspends substantially all of its
operations or the franchises, concessions,
permits, rights or privileges required for
the conduct of the business and operations of
it are revoked, canceled or otherwise
terminated; or
(iv) if the purchaser of the hydro facilities of
NGT's affiliate, New England Power Company,
elects not take NGT's interest in the
Company, then within one year after such
election; or
(v) another Member shall (i) commence any case,
proceeding or other action (A) under any
existing or future applicable law of any
jurisdiction, domestic or foreign, relating
to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order
for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization,
arrangement, adjustment, winding-up,
liquidation, dissolution, composition or
other relief with respect to it or its debts,
or (B) seeking appointment of a receiver,
trustee, custodian or other similar official
for it or for all or any substantial part of
its assets, or shall make a general
assignment for the benefit of its creditors;
or (ii) there shall be commenced against it
any case, proceeding or other action of a
nature referred to in clause (i) above which
(A) results in the entry of an order for
relief or any such adjudication or
appointment or (B) remains undismissed,
undischarged or unbounded for a period of
sixty (60) days; or (iii) there shall be
commenced against it any case, proceeding or
other action seeking issuance of a warrant of
attachment, execution, distraint or similar
process against all or any substantial part
of its assets which results in the entry of
an order for any such relief which shall not
have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the
entry thereof; or (iv) it shall take any
action in furtherance of, or indicating its
consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) it shall
generally not, or shall be unable to, or
shall admit in writing its inability to, pay
its debts as they become due.
(c) Without regard to that 24-month time period, in the
event a member terminates its membership, the terminating
Member's capital account shall be returned as though there had
been a liquidation as provided in Section 12.4. The terminating
Member shall pay a residual fee of 2.5% of gross project revenue
from a HydroServ customer for a period of two years, such fee to
be paid to the Company or if the Company has been liquidated, to
the other Members.
12.2 Events of Dissolution or Liquidation. The Company shall
be dissolved upon the happening of any of the following events:
(a) December 31, 2006 unless such date is extended pursuant to
Section 2.4, (b) the unanimous written determination of the
Members, (c) the resignation, withdrawal, expulsion, bankruptcy
or dissolution of any Member, unless there are at least two
remaining Members and the business of the Company is continued by
the consent of a Majority in Interest of the Members remaining
within 90 days following the occurrence of any such event, or (d)
the entry of a decree of judicial dissolution under Section 18-
802 of the Act.
12.3 Liquidation. If the Company is dissolved and not
continued, the Company shall immediately commence to wind up its
affairs. A reasonable period of time shall be allowed for the
orderly termination of the Company's business, discharge of its
liabilities, and distribution or liquidation of the remaining
assets so as to enable the Company to minimize the normal losses
attendant to the liquidation process. The Company's property and
assets or the proceeds from the liquidation thereof shall,
subject to the requirements of the Act, be distributed in
accordance with Section 12.4. A full accounting of the assets and
liabilities of the Company shall be taken and a statement thereof
shall be furnished to each Member within 30 days after the
distribution of all of the assets of the Company. Such
accounting and statements shall be prepared under the direction
of the Members. Upon such final accounting, the Company shall
terminate and an authorized person, appointed pursuant to Section
2.7, shall cancel the Certificate in accordance with the Act.
12.4 Distributions to Members. Distributions to Members
upon liquidation shall be madein accordance with the Members'
Capital Account balances. Notwithstanding Section 12.3 or the
first sentence of this Section 12.4, the Company shall not make
any Distribution pursuant to this Section 12.4 unless the Members
shall have determined that the Company has sufficient assets to
pay all accrued and contingent liabilities of which the Members
are aware after making reasonable inquiry.
12.5 No Action for Dissolution. The Members acknowledge
that irreparable damage would be done to the goodwill and
reputation of the Company if any Member should bring an action in
court to dissolve the Company under circumstances where
dissolution is not required by Section 12.2. This Agreement has
been drawn carefully to provide fair treatment of all parties and
equitable payment in liquidation of the Interests of all Members.
Accordingly, except where the Members have failed to liquidate
the Company as required by Section 12.2 and except as
specifically provided in Section 18-802(a) of the Act, each
Member hereby waives and renounces its right to initiate legal
action to seek dissolution or to seek the appointment of a
receiver or trustee to liquidate the Company.
12.6 No Further Claim. Upon dissolution, each Member shall
look solely to the assets of the Company for the return of its
Capital Contributions, and if the Company's property remaining
after payment or discharge of the debts and liabilities of the
Company, including debts and liabilities owed to one or more of
the Members, is insufficient to return the aggregate Capital
Contributions of each Member, a Member shall have no recourse
against the Company or any other Member except to the extent that
the other Member has received Distributions in excess of those to
which such Member was entitled to under the terms of this
Agreement.
ARTICLE 13
INDEMNIFICATION
13.1 General. To the maximum extent permitted by law, the
Company shall indemnify, defend, and hold harmless each Member,
including the Tax Matters Member, and each Member's officers,
trustees, directors, partners, members, shareholders, employees,
and agents [(and each such Person's officers, trustees,
directors, partners, members, shareholders, employees and
agents)], and the employees, officers, and agents of the Company
(all indemnified persons being referred to as "Indemnified
Persons"), from any liability, loss, or damage incurred by the
Indemnified Person by reason of any act performed or omitted to
be performed by the Indemnified Person in connection with the
business of the Company and from liabilities or obligations of
the Company imposed on such Person by virtue of such Person's
position with the Company, including attorneys' fees and costs
and any amounts expended in the settlement of any such claims of
liability, loss, or damage; provided, however, that, if the
liability, loss, damage, or claim arises out of any action or
inaction of an Indemnified Person, indemnification under this
Section 13.1 shall be available only if (a) either (i) the
Indemnified Person, at the time of such action or inaction,
determined, in good faith, that its or his course of conduct was
in, or not opposed to, the best interests of the Company, or (ii)
in the case of inaction by the Indemnified Person, the
Indemnified Person did not intend its or his inaction to be
harmful or opposed to the best interests of the Company, and (b)
the action or inaction did not constitute fraud by the
Indemnified Person, and provided, further, that indemnification
under this Section 13.1 shall be recoverable only from the assets
of the Company and not from any assets of the Members. The
Company may pay or reimburse attorneys' fees of an Indemnified
Person as incurred, if such Indemnified Person executes an
undertaking to repay the amount so paid or reimbursed if there is
a final determination by a court of competent jurisdiction that
such Indemnified Person is not entitled to indemnification under
this Article 13. The Company may pay for insurance covering
liability of the Indemnified Persons for negligence in operation
of the Company's affairs.
13.2 Persons Entitled to Indemnity. Any Person who is
within the definition of "Indemnified Person" at the time of any
action or inaction in connection with the business of the Company
shall be entitled to the benefits of this Article 13 as an
"Indemnified Person" with respect thereto, regardless whether
such Person continues to be within the definition of "Indemnified
Person" at the time of such Person's claim for indemnification or
exculpation hereunder.
13.3 Procedure Agreements. The Company may enter into an
agreement with any of its officers, employees and agents setting
forth procedures consistent with applicable law for implementing
the indemnities provided in this Article 13.
13.4 Extent of Duties. No Indemnified Person shall be
liable, in damages or otherwise, to the Company or to any Member
for any loss that arises out of any act performed or omitted to
be performed by it or him pursuant to the authority granted by
this Agreement if (a) either (i) the Indemnified Person, at the
time of such action or inaction, determined, in good faith, that
such Person's course of conduct was in, or not opposed to, the
best interests of the Company, or (ii) in the case of inaction by
the Indemnified Person, the Indemnified Person did not intend
such Person's inaction to be harmful or opposed to the best
interests of the Company, and (b) the conduct of the Indemnified
Person did not constitute fraud [or a Violation of the Business
Judgment Rule] by such Indemnified Person.
13.5 Fiduciary and Other Duties.
13.5.1 To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Company or to any other
Indemnified Person, an Indemnified Person acting under this
Agreement shall not be liable to the Company or to any other
Indemnified Person for its good faith reliance on the provisions
of this Agreement. The provisions of this Agreement, to the
extent that they restrict the duties (including fiduciary duties)
of an Indemnified Person otherwise existing at law or in equity,
are agreed by the parties hereto to replace such other duties of
such Indemnified Person. The provisions of this Section 13.5.1
shall not be construed to relieve any Indemnified Person from
liability for such Person's fraud or a Violation of the Business
Judgment Rule.
13.5.2 Whenever in this Agreement an Indemnified
Person is permitted or required to make a decision (a) in its
"discretion" (without qualification as to how the discretion is
to be exercised) or under a grant of similar authority or
latitude, the Indemnified Person shall act reasonably and in good
faith based on facts known to the Person at the time, (b) in its
"sole discretion" or under a grant of similar authority or
latitude, the Indemnified Person shall be entitled to consider
only such interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Company
or any other Person, and (c) under an express standard, the
Indemnified Person shall act under such express standard and
shall not be subject to any other general standard imposed by
this Agreement or applicable law.
ARTICLE 14
REPRESENTATIONS AND COVENANTS BY THE MEMBERS
Each Member hereby represents, warrants and covenants to the
Company and each other Member that the following statements are
true and correct as of the Effective Date and shall be true and
correct at all times thereafter that such Member is a Member:
14.1 Organization, Corporate Authority. It is duly
incorporated, organized or formed (as applicable), validly
existing, and (if applicable) in good standing under the laws of
the jurisdiction of its incorporation, organization or formation;
if required by applicable law, it is duly qualified and in good
standing in the jurisdiction of its principal place of business,
if different from its jurisdiction of incorporation, organization
or formation; and it has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder
and has obtained any regulatory approvals that may be required,
and if such approvals are subject to any conditions, has
disclosed such conditions to the other Members; and all necessary
actions by the board of directors, shareholders, managers,
members, partners, trustees, beneficiaries, or other applicable
Persons necessary for the due authorization, execution, delivery,
performance of this Agreement by it have been duly taken.
14.2 Legal, Valid and Binding Obligation. It has duly
executed and delivered this Agreement and the other documents
contemplated herein, and they constitute the legal, valid and
binding obligation of such Member enforceable against it in
accordance with their terms (except as may be limited by
bankruptcy, insolvency or similar laws of general application and
by the effect of general principles of equity, regardless of
whether considered at law or in equity), its authorization,
execution, delivery, and performance of this Agreement does not
and will not (i) conflict with, or result in a breach, default or
violation of (A) the organizational documents of such Member, (B)
any contract or agreement to which such Member is a party or is
otherwise subject, or (C) any law, order, judgment, decree, writ,
injunction or arbitral award to which that Member is subject; or
(ii) require any consent, approval or authorization from, filing
or registration with, or notice to, any governmental authority or
other Person, unless such requirement has already been satisfied.
14.3 Investment Intent. It is acquiring its Interest with
the intent of holding the same for investment for its own account
and without the intent or a view of participating directly or
indirectly in any distribution of such Interests within the
meaning of the Securities Act or any applicable state securities
laws.
14.4 Securities Regulation. It acknowledges and agrees that
its Interest is being issued and sold in reliance on the
exemption from registration contained in Section 4(2) of the
Securities Act and exemptions contained in applicable state
securities laws, and that its Interest cannot and will not be
sold or transferred except in a transaction that is exempt under
the Securities Act and those state acts or pursuant to an
effective registration statement under the Securities Act and
those state acts or in a transaction that is otherwise in
compliance with the Securities Act and those state acts. It
understands that it has no contractual right for the registration
under the Securities Act of its Interest for public sale and
that, unless its Interest is registered or an exemption from
registration is available, its Interests may be required to be
held indefinitely.
14.5 Information. It has received all documents, books, and
records pertaining to an investment in the Company requested by
it. It has had a reasonable opportunity to ask questions of and
receive answers from the other Members concerning the Company,
and all such questions have been answered to its satisfaction.
14.6 Tax Position. Unless it provides prior written notice
to the Company, it will not take a position on its federal income
tax return, in any claim for refund, or in any administrative or
legal proceedings that is inconsistent with any information
return filed by the Company or with the provisions of this
Agreement.
ARTICLE 15
COMPANY REPRESENTATIONS
In order to induce the Members to enter into this Agreement
and to make the Capital Contributions contemplated hereby, the
Company hereby represents and warrants to each Member as follows:
15.1 Legal Existence. The Company is a duly formed and
validly existing limited liability company under the Act and the
Certificate has been duly filed as required by the Act. The
Company has all necessary power and authority under the Act to
issue the Interests to be issued to the Members hereunder.
15.2 Valid Issuance. When the Interest is issued to the
Member as contemplated by this Agreement and the Capital
Contributions required to be made by such Member are made, the
Interest issued to the Member will be duly and validly issued and
except as specifically provided in the Agreement, no liability
for any additional capital contributions or for any obligations
of the Company will attach thereto.
15.3 Options, etc. Except as set forth in this Agreement,
the Company does not have outstanding any rights or options to
subscribe for or purchase any warrants or other agreements
providing for or requiring the issuance of Interests in the
Company to any Person or any obligation to purchase or otherwise
acquire any Interests in the Company.
ARTICLE 16
MISCELLANEOUS
16.1 Additional Documents. At any time and from time to
time after the date of this Agreement, upon the request of the
Members, each Member shall do and perform, or cause to be done
and performed, all such additional acts and deeds, and shall
execute, acknowledge, and deliver, or cause to be executed,
acknowledged, and delivered, all such additional instruments and
documents, as may be required to effectuate the purposes and
intent of this Agreement.
16.2 Execution of Papers. The Members agree to execute such
instruments, documents and papers as the Members deem necessary
or appropriate to carry out the intent of this Agreement.
16.3 General. This Agreement: (a) shall be binding upon the
executors, administrators, estates, heirs, and legal successors
of the Members; (b) shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts;
(c) may be executed in more than one counterpart as of the day
and year first above written; and (d) contains the entire
contract among the Members as to the subject matter hereof. The
waiver of any of the provisions, terms, or conditions contained
in this Agreement shall not be considered as a waiver of any of
the other provisions, terms, or conditions hereof.
16.4 Notices, Etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be
deemed effectively given upon personal delivery or receipt (which
may be evidenced by a return receipt if sent by registered mail
or by signature if delivered by courier or delivery service),
addressed as set forth below, or at such other address as such
Person shall have furnished to the Company in writing as the
address to which notices are to be sent hereunder and if to any
Member at the address of such Member in the records of the
Company.
16.5 Disputed Matters. Any controversy or dispute arising
out of this Agreement, the interpretation of any of the
provisions hereof, or the action or inaction of any Member
hereunder shall first be discussed in good faith among the
Members. If such good faith discussions do not lead to a
resolution of the controversy or dispute then the Members shall
meet with a mutually acceptable mediator to further attempt to
resolve such controversy or dispute. If the Members are still
unable to resolve such controversy or dispute after consulting
with a mediator, the matter shall be submitted to arbitration in
Boston, Massachusetts before the American Arbitration Association
under the commercial arbitration rules then obtaining of said
Association. Any award or decision obtained from any such
arbitration proceeding shall be final and binding on the parties,
and judgment upon any award thus obtained may be entered in any
court having jurisdiction thereof. To the fullest extent
permitted by law, no action at law or in equity based upon any
claim arising out of or related to this Agreement shall be
instituted in any court by any Member except (a) an action to
compel arbitration pursuant to this Section 16.5 or (b) an action
to enforce an award obtained in an arbitration proceeding in
accordance with this Section 16.5. The responsibility for paying
the costs and expenses of the arbitration, including compensation
to the arbitrator and any experts retained by the arbitrator,
shall be allocated among the Members who are parties to the
arbitration in a manner determined by the arbitrator to be fair
and reasonable under the circumstances. Each such Member shall
be responsible for the fees and expenses of its respective
counsel, consultants and witnesses, unless the arbitrator
determines that compelling reasons exist for allocating all or a
portion of such costs and expenses to one or more of the other
Members who are parties to the arbitration.
16.6 Gender and Number. Whenever required by the context,
as used in this Agreement, the singular number shall include the
plural, the plural shall include the singular, and all words
herein in any gender shall be deemed to include the masculine,
feminine and neuter genders.
16.7 Severability. If any provision of this Agreement is
determined by a court to be invalid or unenforceable, that
determination shall not affect the other provisions hereof, each
of which shall be construed and enforced as if the invalid or
unenforceable portion were not contained herein. That invalidity
or unenforceability shall not affect any valid and enforceable
application thereof, and each said provision shall be deemed to
be effective, operative, made, entered into or taken in the
manner and to the full extent permitted by law.
16.8 Headings. The headings used in this Agreement are used
for administrative convenience only and do not constitute
substantive matter to be considered in construing the terms of
this Agreement.
16.9 No Third Party Rights. The provisions of this
Agreement are for the benefit of the Company and the Members and
no other Person, including creditors of the Company shall have
any right or claim against the Company or any Member by reason of
this Agreement or any provision hereof or be entitled, to enforce
any provision of this Agreement.
16.10 Rights to Trademark HydroServ Group. In
consideration hereof, UUDSI shall transfer all of its rights in
and to the trademark "HydroServ Group," registered by UUDSI in
order to market and sell Hydro Services on behalf of both parties
prior to the completion of this Agreement, to the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first set forth above.
UNDERWATER UNLIMITED DIVING
SERVICES, INC.
s/ Xxxxx Xxxx
By:
Name: Xxxxx Xxxx
Title: President
XXXX GLOBAL TRANSMISSION, INC.
s/ Xxxx X. Xxxxxxxx
By:
Name: Xxxx X. Xxxxxxxx
Title: Treasurer
EXHIBIT I
DEFINED TERMS
"Act" shall mean the Massachusetts Limited Liability Company
Act (MGL c. 156C), as amended and in effect from time to time.
"Adjusted Capital Account Deficit" means, with respect to
any Member, the deficit balance, if any, in such Member's Capital
Account as of the end of the relevant Fiscal Year, after giving
effect to the following adjustments:
(a) credit to such Capital Account any amounts which
such Member is obligated to restore pursuant to any provision of
this Agreement or is deemed to be obligated to restore pursuant
to the next to the last sentences of the Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5) after taking into account any
changes during such year in Company minimum gain and Member
minimum gain (as determined under such Regulations); and
(b) debit to such Capital Account the items described
in Section 1.704-1 (b)(2)(ii)(d)(4), (5) and (6) of the
Regulations.
"Affiliate" shall mean, with respect to any specified
Person, any Person that directly or through one or more
intermediaries controls or 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 or authority to direct or cause the direction of the
management and policies of a Person, whether through ownership of
voting securities, by contract or otherwise.
"Alternative Representative" is defined in Section 5.2.1.
"Annual Budget" is defined in Section 6.2.
"Agreement" shall mean the Limited Liability Company
Agreement of the Company dated as of July , 1997, as amended
from time to time.
"Book Gain" or "Book Loss" shall mean the gain or loss
recognized by the Company for Code Section 704(b) book purposes
in any Fiscal Year or other period by reason of the sale,
exchange or other disposition of any asset of the Company. Such
Book Gain or Book Loss shall be computed by reference to the Book
Value of such asset as of the date of such sale, exchange or
other disposition, rather than by reference to the tax basis of
such asset as of such date, and each and every reference herein
to "gain" or "loss" shall be deemed to refer to Book Gain or Book
Loss, rather than to tax gain or tax loss, unless otherwise
expressly provided herein.
"Book Value" of an asset shall mean, as of any particular
date, the value at which the asset is properly reflected on the
books and records of the Company as of such date. The initial
Book Value of each asset shall be its cost, unless such asset was
contributed to the Company by a Member, in which case the initial
Book Value shall be the fair market value, as agreed to by the
Members, and such Book Value shall thereafter be adjusted for
Depreciation with respect to such asset rather than for the cost
recovery deductions to which the Company is entitled for income
tax purposes with respect thereto and shall be adjusted as
appropriate pursuant to Section 7.9.
"Business Day" shall mean a day when national banks are open
for business in Boston, Massachusetts.
"Business Plan" is defined in Section 6.1.
"Capital Account" is defined in Section 3.2.
"Capital Contribution" shall mean with respect to any
Member, the amount of cash and the Book Value of any other
property contributed to the Company with respect to the Interest
held by such Member (net of liabilities secured by such
contributed property or that the Company is considered to assume
or take the property subject to pursuant to Code section 752).
"Certificate" shall mean the Certificate of Formation of the
Company filed July ___, 1997 and any and all amendments thereto
and restatements thereof filed on behalf of the Company as
permitted hereunder with the office of the Secretary of State of
The Commonwealth of Massachusetts.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the corresponding provisions of
any future federal tax law.
"Company" shall mean the limited liability company formed
under and pursuant to the Act and this Agreement.
"Defaulted Capital Contribution" is defined in Section 3.7.
"Defaulting Member" is defined in Section 3.7.1.
"Depreciation" shall mean for each Fiscal Year or other
period, an amount equal to the depreciation, amortization or
other cost recovery deduction allowable with respect to an asset
for such year or other period, except if the Book Value of an
asset differs from its adjusted basis for federal income tax
purposes at the beginning of any such year or other period,
Depreciation shall be an amount that bears the same relationship
to the Book Value of such asset as the depreciation,
amortization, or other cost recovery deduction computed for tax
purposes with respect to such asset for the applicable period
bears to the adjusted tax basis of such asset at the beginning of
such period, or if such asset has a zero adjusted tax basis,
Depreciation shall be an amount determined under any reasonable
method selected by the Members, with the advice of its
independent accountants.
"Distribution" shall mean the amount of cash and the Book
Value of any other property distributed to a Member in respect of
the Member's Interest in the Company (net of liabilities secured
by such distributed property or that the Member is considered to
assume or take the property subject to pursuant to Code section
752).
"Effective Date" shall mean July 25, 1997.
"Exclusive Agent" is defined in Section 2.5.1.
"Fiscal Year" shall mean the fiscal year of the Company
which shall end on December 31 in each year or on such other date
in each year as the Members shall otherwise elect.
"HydroServ Customer" is defined in Section 2.5.2.
"Indemnified Persons" is defined in Section 13.1.
"Interest" shall mean the entire interest of a Member in the
capital and profits of the Company, including the right of such
Member to any and all benefits to which a Member may be entitled
as provided in this Agreement, together with the obligations of
such Member to comply with all the terms and provisions of this
Agreement.
"Majority in Interest" shall mean, as applied to all the
Members, or a specified group of Members, Members who in the
aggregate hold more than a 50 % interest in each of the profits
and capital of the Company owned by all Members or by the
specified group of Members, as the case may be.
"Marketing Fee" is defined in Section 5.16 and Schedule No.
1.
"Member Default Loan" shall mean any loan made to a
Defaulting Member as contemplated by Section 3.7.1.
"Member Nonrecourse Deductions" shall mean "partner non-
recourse deductions" as defined in Regulations Section 1.704-
2(i)(1).
"Members" shall mean the Persons listed as members on the
signature page to the Agreement and any other Person that both
acquires an Interest in the Company and is admitted to the
Company as a Member pursuant to the Agreement.
"Net Profit" and "Net Loss" shall mean, for each Fiscal Year
or other period, an amount equal to the Company's taxable income
or loss, respectively, for such year or period, determined in
accordance with Section 703(a) of the Code (taking into account
all items of income, gain, loss, or deduction required to be
stated separately pursuant to Section 703(a)(1) of the Code),
with the following adjustments:
(a) any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Net
Profit or Net Loss pursuant to this provision shall be added to
such taxable income or reduce such taxable loss;
(b) any expenditures of the Company described in Section
705(a)(2)(B) of the Code (relating to expenditures which are
neither deductible nor properly chargeable to capital) or treated
as Code Section 705(a)(2)(B) expenditures pursuant to Section
1.704-1(b)(2)(iv)(i) of the Regulations, and not otherwise taken
into account in computing Net Profit or Net Loss pursuant to this
provision, shall be subtracted from such taxable income or
increase such taxable loss;
(c) Book Gain or Book Loss from the sale or other
disposition of any asset of the Company shall be taken into
account in lieu of any federal income tax gain or loss recognized
by the Company by reason of such sale or other disposition; and
(d) in lieu of the depreciation, amortization and other
cost recovery deductions taken into account in computing such
taxable income or loss, there shall be taken into account
Depreciation for such fiscal year or other period, computed as
provided in this Agreement.
"Nonrecourse Deduction" shall have the meaning set forth in
Regulations Section 1.704-2(b)(1).
"Notice of Purchase" is defined in Section 9.3.1.
"Notice of Sale" is defined in Section 9.3.1.
"Offered Interest" is defined in Section 9.3.1.
"Percentage Interest" is defined in Section 3.3.
"Permitted Percentage" is defined in Section 9.3.1.
"Person" shall mean an individual, partnership, joint
venture, association, corporation, trust, estate, limited
liability company, limited liability partnership, or any other
legal entity.
"Profits Interest" is defined in Section 3.6.
"PUHCA" shall mean the Public Utility Holding Company Act of
1935.
"Qualified Income Offset" shall have the meaning set forth
in Regulations Section 1.704-1 (b)(2)(ii)(d).
"Regulations" shall mean the Treasury regulations, including
temporary regulations, promulgated under the Code, as such
regulations may be amended from time to time (including the
corresponding provisions of any future regulations).
"Representative" is defined in Section 5.1.
"Required Portion" shall mean in respect of any Interest all
or a portion of which is required to be transferred in a Required
Regulatory Transfer, the smallest portion of such Interest that
must be transferred in order to satisfy the requirements of such
Required Regulatory Transfer.
"Required Regulatory Transfer" shall mean any Transfer by a
Member of all or a portion of its Interest which is required to
be effected by any regulation, rule, administrative order or
other administrative pronouncement of binding legal effect of any
state public utility commission (or other similar agency).
"Members" shall mean NGT and UUDSI and, if such Members
together do not constitute a Majority in Interest of the Members,
such other Members as shall be necessary to cause the Members to
constitute a Majority in Interest of the Members.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Selling Member" is defined in Section 9.3.
"Tax Matters Member" is defined in Section 8.1.
"Term" is defined in Section 2.4.
"Transaction" is defined in Section 5.15.
"Transfer" is defined in Section 9.1.1.
"Violation of the Business Judgment Rule" means conduct
which is materially inconsistent with the obligation to be
reasonably informed and to act in good faith or which is
reckless, grossly negligent, willful misconduct or constitutes a
knowing violation of law.
