Exhibit B-94
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
CUSTOM ENERGY HOLDINGS, L.L.C.
A
DELAWARE LIMITED LIABILITY COMPANY
DATED DECEMBER 31, 1999
TABLE OF CONTENTS
Page
ARTICLE 1
THE LIMITED LIABILITY COMPANY 1
1.1 Formation of Limited Liability Company 1
1.2 Registered Office and Agent 2
1.3 Purpose 2
1.4 Principal Place of Business 2
1.5 Property 2
1.6 No State Law Partnership 3
1.7 Limited Authority of Members 3
ARTICLE 2
DEFINITIONS 3
2.1 Definitions 3
(a) "Affiliate" 3
(b) "Capital Account" 3
(c) "Capital Contribution" or "Capital
Contributions" 4
(d) "CEL" 4
(e) "Economic Interest" 4
(f) "Economic Interest Owner" 5
(g) "Liquidation Value" 5
(h) "Majority in Interest" 5
(i) "Management Committee" 5
(j) "Member" 5
(k) "Net Profits" and "Net Losses" 5
(l) "Operating Costs" 6
(m) [omitted] 6
(n) "Person" 6
(o) "Preferred Rate" 6
(p) "Preferred Return" 6
(q) "Preferred Return Account" 7
(r) "Proceeds" 7
(s) "Remaining Liquidation Value" 7
(t) "Residual Capital Account Balance" 7
(u) "SEL" 7
(v) "Series" 7
(w) "Series CE Economic Interest" 7
(x) "Series CE Voting Interest" 7
(y) "Series CEL Common Economic Interest" 7
(z) "Series CEL Preferred Economic Interest" 8
(aa) "Series CEL Common Voting Interest" 8
(bb) "Series CEL Preferred Voting Interest" 8
(cc) "Series SEL Economic Interest" 8
(dd) "Series SEL Voting Interest" 8
(ee) "Subsidiary" 8
(ff) "Unit" 8
(gg) "Voting Interest" 8
2.2 Other Definitional Provisions. 9
ARTICLE 3
MANAGEMENT 9
3.1 Management Committee 9
3.2 Chairman and Other Officers 10
3.3 Meetings 10
3.4 Quorum 10
3.5 Voting 10
3.6 Action Without A Meeting 10
3.7 Telephone Meetings 11
3.8 Waiver of Notice 11
3.9 Salary and Expenses 11
3.10 Powers of Members 11
3.11 Powers of the Management Committee 11
3.12 Duties of Chief Executive Officer 12
3.13 Removal or Resignation of Chief Executive Officer 13
3.14 Compensation of Chief Executive Officer 14
3.15 Restrictions on the Members 14
ARTICLE 4
RIGHTS AND OBLIGATIONS OF MEMBERS 14
4.1 Limitation of Liability 14
4.2 Company Liabilities 14
4.3 Priority and Return of Capital 14
4.4 Liability of a Member or Economic Interest
Owner to the Company 14
4.5 Independent Activities 14
ARTICLE 5
MEETINGS OF MEMBERS 15
5.1 Annual Meeting 15
5.2 Special Meetings 15
5.3 Place of Meetings 15
5.4 Notice of Meetings 15
5.5 Meeting of all Members 15
5.6 Record Date 16
5.7 Quorum 16
5.8 Voting 16
5.9 Proxies 16
5.10 Action by Members without a Meeting 16
5.11 Waiver of Notice 17
5.12 Chairperson of Meeting; Designation of Authorized
Representatives 17
ARTICLE 6
CAPITAL CONTRIBUTIONS 17
6.1 Initial Capital Contributions 17
6.2 Additional Capital Contributions 17
6.2.1 Series CEL Additional Contributions. 17
6.2.2 Series CE and SEL Additional Capital
Contributions 18
6.3 Breach or Violation of Indemnity Obligations 19
6.4 Negative Preference Contributions 19
6.5 Capital Accounts of Members 21
6.6 Adjustment of Interests 21
6.7 Interest and Other Amounts 21
6.8 Amendment of Documents 22
6.9 Withdrawal of Capital Contribution 22
6.10 Loans of Members 22
ARTICLE 7
ALLOCATIONS 22
7.1 Net Profits of Series CE 22
7.2 Net Losses for Series CE 22
7.3 Net Profits of Series SEL 23
7.4 Net Losses for Series SEL 23
7.5 Gross Income, Net Profits and Net Losses
of Series CEL 23
7.5.1 Gross Income Allocation. 23
7.5.2 Net Profits. 23
7.5.3 Net Losses. 24
7.5.4 Contribution and Deduction with Respect
to CEL Phantom Stock Plan 24
7.6 Special Allocations 24
ARTICLE 8
ACCOUNTING, DISTRIBUTIONS AND TAXES 24
8.1 Distribution of Cash for Series SEL 24
8.2 Distribution of Cash for Series CE. 25
8.3 Distribution of Cash for Series CEL. 25
8.4 Other Distributions. 26
8.5 Accounting 27
8.6 Tax Elections 27
8.7 Tax Matters Partner 27
ARTICLE 9
REPRESENTATIONS AND WARRANTIES 28
9.1 In General 28
ARTICLE 10
RESTRICTIONS ON TRANSFER 29
10.1 General. 29
10.2 Transferee Not Member in Absence of Consent. 30
10.3 Right of First Offer 30
10.4 Co-Sale Rights. 31
10.5 Come Along Rights. 31
ARTICLE 11
ADMISSION OF SUCCESSOR MEMBERS OR NEW MEMBERS 32
11.1 Admission of Successor Members or New Members 32
11.2 Financial Adjustments 33
ARTICLE 12
TERM. TERMINATION. AND DISTRIBUTION UPON LIQUIDATION 33
12.1 Term 33
12.2 Withdrawal of a Member 33
12.3 Events of Dissolution 34
12.4 Bankruptcy of a Member 35
12.5 Option to Purchase 36
12.6 Cessation of Business 36
12.7 Winding Up. Liquidation. and Distribution of Assets 36
12.8 Certificate of Cancellation 37
12.9 Return of Contribution Nonrecourse to Other Members 37
ARTICLE 13
MISCELLANEOUS PROVISIONS 37
13.1 Waiver of Right of Partition 37
13.2 Special Provisions Relating to Series CEL. 37
13.3 Notices 38
13.4 Governing Law 38
13.5 Entire Agreement 38
13.6 Binding Agreement 38
13.7 Interpretation 38
13.8 Severability 38
13.9 Waiver 38
13.10Equitable Remedies 39
13.11Attorney's Fees 39
13.12Counterparts 39
13.13Saving Clause 39
13.14Further Documentation 39
13.15Incorporation of Recitals 39
13.16Indemnification. 39
13.17Holdings-Put Option. 40
EXHIBIT A 44
Exhibit B 46
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
CUSTOM ENERGY HOLDINGS, L.L.C.
THIS LIMITED LIABILITY COMPANY AGREEMENT ("LLC Agreement"),
is made and entered into this 31st day of December, 1999, by and
between KLT Energy Services Inc., a Missouri corporation ("KLT"),
Environmental Lighting Concepts, Inc., a Minnesota corporation
("ELC"), MTB Energy, Inc., a Missouri corporation ("MTB") and SE
Holdings, L.L.C., a Delaware limited liability company
("Holdings") (KLT, ELC, MTB and Holdings are each hereinafter
referred to as a "Member").
WHEREAS, the Members organized this limited liability
company under the Delaware Limited Liability Company Act (the
"Delaware Act") on or about May 19, 1997 under the name of Custom
Energy, L.L.C.;
WHEREAS, the Members have decided to change the name of this
Company to Custom Energy Holdings, L.L.C. and to drop down the
operational assets owned by this Company to a newly-formed
Delaware limited liability company to be named Custom Energy,
L.L.C. ("CEL") (the name change and assets drop down hereinafter
are referred to as the "Restructuring");
WHEREAS, after completion of the Restructuring, this Company
shall solely act as a holding company and shall only hold all of
the ownership interests of Custom Energy, L.L.C. and Strategic
Energy, L.L.C., a Delaware limited liability company ("SEL");
WHEREAS, the Members have decided to adjust their respective
ownership interests in this Company, providing for different
sharing of the profits and losses attributable to the operations
of CE and SEL;
NOW, THEREFORE, in consideration of the mutual covenants and
benefits set forth below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE 1
THE LIMITED LIABILITY COMPANY
1.1 Formation of Limited Liability Company. The
Certificate of Formation of Custom Energy, L.L.C. (the "Company")
was filed in the office of the Secretary of State of Delaware
pursuant to the Delaware Act on the 19th day of May, 1997,
amended in the office of the Secretary of State of Delaware
pursuant to the Delaware Act on the 8th day of December,
1999 to amend the Company's name, and is hereby ratified by each
of the Members. All prior agreements concerning the subject
matter of this LLC Agreement are canceled and shall have no
further effect.
1.2 Registered Office and Agent. The address of the
Company's registered office in the State of Delaware is located
at 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, or any other or
additional place or places as the Members may determine from time
to time, and the registered agent at such office is The
Corporation Service Company.
In the event the registered agent ceases to act as such for
any reason or the registered office shall change, the Management
Committee shall promptly designate a replacement registered agent
or registered office as the case may be, and make the appropriate
filings with the secretary of state. If the Management Committee
shall fail to designate a replacement registered agent or
registered office, as the case may be, then any one Member may
designate a replacement registered agent or registered office and
make the appropriate filings in the Office of the Secretary of
State of Delaware.
1.3 Purpose. The purpose and business of the Company shall
be to own or invest in business ventures which undertake (i) to
engage in the business of designing and installing energy
efficient lighting systems and equipment in existing facilities,
including commercial, industrial, retail, health care, municipal,
governmental or school district facilities, (ii) to provide
energy management services and energy audits, including
consulting, contracting for installation of equipment and/or
energy efficient measures, energy control devices, maintenance of
energy related equipment and energy usage monitoring services and
(iii) to provide power supply coordination services, direct power
and gas, and competitive power purchasing strategies to
commercial and industrial customers, and to do all other things
which are reasonably incidental to the foregoing. The Company may
transact any or all other lawful business for which a limited
liability company may be organized under the Delaware Act upon
the affirmative vote or consent of all of the Members of the
Company specifically authorizing any such other lawful business.
1.4 Principal Place of Business. The principal place of
business of the Company shall be 0000 Xxxx, Xxxxxxxx Xxxx, Xxxxxx
00000, or at such other place or places within or without the
State of Delaware as the Management Committee may designate from
time to time.
1.5 Property. All assets, including real and personal
property owned and held by the Company shall be owned by the
Company in the name of the Company and no Member or Economic
Interest Owner shall have any ownership interest in such property
in its individual name or right. Each Member's or Economic
Interest Owner's interest in the Company shall be personal
property for all purposes. Any deed, xxxx of sale, mortgage,
lease, contract of sale or other instrument purporting to convey
or encumber any interest in the property of the Company shall be
signed only as authorized by the affirmative vote or consent of
the Members as provided in this LLC Agreement.
1.6 No State Law Partnership The Members have formed the
Company under the Delaware Act, and intend that the Company shall
not be a partnership (including, without limitation, a limited
partnership) or joint venture, that no Member shall be a partner
of, or a joint venturer with, any other Member for any purpose,
other than for United States federal and state tax purposes, and
that this Agreement shall not be construed to suggest otherwise.
1.7 Limited Authority of Members. No Member shall have any
authority to bind the Company as to any matter except as
expressly provided herein.
ARTICLE 2
DEFINITIONS
2.1 Definitions. As used in this LLC Agreement:
(a) "Affiliate" means, when used with reference to a
specified Person, (i) any Person directly or indirectly
controlling, controlled by or under common control with such
specified Person, (ii) any Person owning or controlling 10
percent or more of the outstanding voting securities of such
specified Person, and (iii) any officer, director or partner of
such specified Person or of any Person specified in (i) or (ii)
above. The term "Affiliate" shall not include any Person
providing legal, accounting or other professional services to the
Company solely on account of providing such services.
(b) "Capital Account" means, with respect to any
Member or Economic Interest Owner, the Capital Account maintained
for such Person in accordance with the following provisions:
(i) To each Person's Capital Account there shall
be credited such Member's or Economic Interest Owner's Capital
Contributions, such Member's or Economic Interest Owner's
distributive share of Net Profits and any items in the nature of
income or gain which are specially allocated pursuant to Article
7 hereof, and the amount of any Company liabilities assumed by
such Member or Economic Interest Owner or which are secured by
any Property distributed to such Member or Economic Interest
Owner.
(ii) To each Member's or Economic Interest Owner's
Capital Account there shall be debited the amount of cash and the
Gross Asset Value of any Property distributed to such Member or
Economic Interest Owner pursuant to any provision of this LLC
Agreement, such Member's or Economic Interest Owner's
distributive share of Net Losses and any items in the nature of
expenses or losses which are specially allocated pursuant to
Article 7 hereof, and the amount of any liabilities of such
Member or Economic Interest Owner assumed by the Company or which
are secured by any property contributed by such Member or
Economic Interest Owner to the Company.
(iii) In the event any interest in the Company
is transferred in accordance with the terms of this LLC
Agreement, the transferee shall succeed to the Capital Account of
the transferor to the extent it relates to the transferred
interest.
(iv) In determining the amount of any liability
for purposes of Sections 2.1(b)(i) and 2.1(b)(ii) hereof, there
shall be taken into account Code Section 752(c) and any other
applicable provisions of the Code and Regulations.
The foregoing provisions and the other provisions of this
LLC Agreement relating to the maintenance of Capital Accounts are
intended to comply with Regulations Section 1.704-1(b), and shall
be interpreted and applied in a manner consistent with such
Regulations. In the event the Management Committee shall
determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including,
without limitation, debits or credits relating to liabilities
which are secured by contributed or distributed property or which
are assumed by the Company or the Members and Economic Interest
Owners), are computed in order to comply with such Regulations,
such modification shall be made, provided that it is not likely
to have a material effect on the amounts distributable to any
Member or Economic Interest Owner. Adjustments and modifications
also shall be made as are necessary or appropriate to maintain
equality between the Capital Accounts of the Members and Economic
Interest Owners and the amount of Company capital reflected on
the Company's balance sheet, as computed for book purposes in
accordance with Regulations Section 1.704-1(b)(2)(iv)(g). The
Capital Accounts shall contain appropriate subaccounts for each
Series owned by a Member or Economic Interest Owner.
(c) "Capital Contribution" or "Capital Contributions"
means, with respect to any Member or Economic Interest Owner, the
amount of money and the Gross Asset Value of any property (other
than money) contributed to the Company with respect to the
Economic or Voting Interest of a Series held by such Member or
Economic Interest Owner pursuant to the terms of this LLC
Agreement. The Capital Contributions of the Members as of the
date of this Amended and Restated LLC Agreement are set forth on
Exhibit A hereto, which is incorporated herein by this reference.
(d) "CEL" shall mean Custom Energy, L.L.C., a Delaware
limited liability company.
(e) "Economic Interest" shall mean, for each Series,
the ownership interest of a Person in the Company's Net Profits,
Net Losses and the distribution of Net Profits and/or the
Company's assets pursuant to this LLC Agreement and the Delaware
Act, but shall not include any right to vote on, consent to or
otherwise participate in any decision of the Members in the
management of the Company, nor any right to appoint a
representative of the Management Committee. Series CE Economic
Interests, Series CEL Common Economic Interests, Series CEL
Preferred Economic Interests and Series SEL Economic Interests
are, individually and collectively, "Economic Interests" of the
Company.
(f) "Economic Interest Owner" shall mean any Person
who owns an Economic Interest in a Series, but is not a Member.
(g) "Liquidation Value" shall mean with respect to the
Series CEL Preferred Economic Interest the amount set forth in
Exhibit A.
(h) "Majority in Interest" shall mean fifty-one
percent (51%) or more of the Voting Interests of a Series held by
the Members determined pursuant to an affirmative vote or consent
of the Members at the time the Majority in Interest provision
applies.
(i) "Management Committee" shall mean the committee of
the Company, appointed by the Members and established pursuant to
Article 3 of this LLC Agreement.
(j) "Member" shall mean any person executing this LLC
Agreement from time to time and as otherwise admitted as a member
of the Company as provided in Section 11.1 of this LLC Agreement.
(k) "Net Profits" and "Net Losses" means, for each
Series and for each fiscal year, an amount equal to the Company's
taxable income or loss attributable to such Series for such
fiscal year, determined in accordance with Code Section 703(a)
(for these purposes, all items of income, gain, loss, or
deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(i) Any income of the Company that is exempt from
federal income tax and not otherwise taken into account in
computing Net Profits or Net Losses pursuant to this Section
2.1(k) shall be added to such taxable income or loss;
(ii) Any expenditures of the Company described in
Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Net Profits or Net Losses pursuant to this Section
2.1(k) shall be subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of
any Company asset is adjusted pursuant to Section (b)(ii) or
Section (b)(iii) of Exhibit B hereof, the amount of such
adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Net Profits
or Net Losses for the applicable Series;
(iv) Gain or loss resulting from any disposition
of property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the
Gross Asset Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its
Gross Asset Value;
(v) 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, computed in accordance
with (d) of Exhibit B hereof;
(vi) To the extent an adjustment to the adjusted
tax basis of any Company asset is required pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into
account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Member's or Economic
Interest Owner's interest in the Company, the amount of such
adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment
decreases the basis of the asset) from the disposition of the
asset and shall be taken into account for purposes of computing
Net Profits or Net Losses; and
(vii) Notwithstanding any other provision of
this Section 2.1(k), any items which are specially allocated
pursuant to Article 7 hereof shall not be taken into account in
computing Net Profits or Net Losses.
The amounts of the items of Company income, gain, loss or
deduction available to be specially allocated pursuant to Article
7 hereof shall be determined by applying rules analogous to those
set forth in Sections (e)(i) through (e)(iv) of Exhibit B. The
Net Profits or Net Losses (or items of income, gain, loss or
deduction) for the Series CEL interests shall be the Company's
Net Profits or Net Losses (or items of income, gain, loss or
deduction) realized by CEL and the Net Profits and Losses (or
items of income, gain, loss or deduction) for the Series SEL
interests attributable to shall be the Company's Net Profits or
Net Losses (or items of income, gain, loss or deduction) realized
by SEL. The Series CE Net Profits or Net Losses (or items of
income, gain, loss or deduction) shall be the Company's Net
Profits and Net Losses (or items of income, gain, loss or
deduction) not realized by CEL or SEL.
(l) "Operating Costs" shall mean, with respect to each
Series and for any period, all cash expenditures incurred
incident to the normal operation of the Company's business and
any amounts determined by the Management Committee, from time to
time, to be reasonably necessary to provide a reserve for the
operations, expenses, debt payments, capital improvements, and
contingencies of the Company with respect to such Series.
(m) [omitted]
(n) "Person" shall include any individual, trust,
estate, corporation, partnership, limited liability company,
association or other entity.
(o) "Preferred Rate" shall mean 10.5 percent annually,
except during the time that there is a positive balance in the
Preferred Return Account such rate shall be 14 percent annually.
(p) "Preferred Return" shall mean an aggregate amount
equal to that rate of return which is the Preferred Rate per
annum (compounded quarterly) on the Remaining Liquidation Value
and any balance in the Preferred Return Account.
(q) "Preferred Return Account" shall mean, with
respect to each Series CEL Preferred Economic Interest holder, an
amount, from time to time, equal to the amount of Preferred
Return payable to such holder less the amount distributed to such
holder pursuant to Section 8.3.1 of this LLC Agreement.
(r) "Proceeds" shall mean, with respect to any period
and for each Series, gross receipts received by the Company from
all sources during such period, including, without limitation,
all sales, other dispositions, and refinancing of the Company's
property, but does not include Capital Contributions as provided
for in Article 6 of this LLC Agreement.
(s) "Remaining Liquidation Value" means with respect
to a Series CEL Preferred Economic Interest the Liquidation Value
less all prior distributions made by the Company to the holder of
such interest pursuant to Section 8.3.3 of this LLC Agreement.
(t) "Residual Capital Account Balance" means the
excess (if any) of the amount of a Member's or Economic Interest
Owner's positive Adjusted Capital Account Balance over the amount
of such Member's or Economic Interest Owner's Preference
Contributions Account balance.
(u) "SEL" shall mean Strategic Energy, L.L.C., a
Delaware limited liability company.
(v) "Series" shall mean a division of Economic
Interest or Voting Interest, having separate rights, power and
duties, with respect to specified property or obligations of the
Company, or profits and losses associated with specified property
or obligations, as set forth in this LLC Agreement.
(w) "Series CE Economic Interest" shall mean the
ownership interest of a Person, expressed in Units, in the
Company's Net Profits, Net Losses and the distribution of cash or
property and/or the Company's assets which do not arise from and
are not associated with any other Series of Economic Interest.
(x) "Series CE Voting Interest" shall mean the voting
rights of a Person, expressed in Units, in the Company (including
without limitation, the right to appoint representatives to the
Management Committee as herein provided), with respect to matters
which do not pertain to and do not arise out of the Company's
ownership interest in CEL and SEL, as set forth in this LLC
Agreement.
(y) "Series CEL Common Economic Interest" shall mean
the ownership interest of a Person, expressed in Units, in the
Company's Net Profits, Net Losses and the distribution of cash or
property and/or the Company's assets arising from or associated
with the Company's ownership interest in CEL, as set forth in
this LLC Agreement.
(z) "Series CEL Preferred Economic Interest" shall
mean the ownership interest of a Person, expressed in Units, in
the Company's profits, losses and the distribution of cash or
property and/or the Company's assets arising from or associated
with the Company's ownership interests in CEL, as set forth in
this LLC Agreement.
(aa) "Series CEL Common Voting Interest" shall mean the
voting rights of a Person, expressed in Units, in the Company
(including without limitation, the right to appoint
representatives to the Management Committee as herein provided),
with respect to matters pertaining to or arising out of the
Company's ownership interest in CEL, as set forth in this LLC
Agreement.
(bb) "Series CEL Preferred Voting Interest" shall mean
the voting rights of a Person, expressed in Units, in the Company
(including without limitation, the right to appoint
representatives to the Management Committee as herein provided),
with respect to matters pertaining to or arising out of the
Company's ownership interest in CEL, as set forth in this LLC
Agreement.
(cc) "Series SEL Economic Interest" shall mean the
ownership interest of a Person, expressed in Units, in the
Company's Net Profits, Net Losses and the distribution of cash or
property and/or the Company's assets arising from or associated
with the Company's ownership interests in SEL, as set forth in
this LLC Agreement.
(dd) "Series SEL Voting Interest" shall mean the
voting rights of a Person, expressed in Units, in the Company
(including without limitation, the right to appoint
representatives to the Management Committee as herein provided),
with respect to matters pertaining to or arising out of the
Company's ownership interest in SEL, as set forth in this LLC
Agreement.
(ee) "Subsidiary" means, with respect to the Company,
any Person of which securities or other ownership interests
having ordinary voting power to elect at least a majority of the
board of directors or other persons performing similar functions
are at the same time directly owned or indirectly owned by the
Company.
(ff) "Unit" shall mean a fraction of an Economic
Interest or a Voting Interest, as the case may be, the numerator
of which shall be one (1), and the denominator of which shall be
the total number of issued and outstanding Units of the Company.
(gg) "Voting Interest" shall mean, with respect to any
Member and for each Series, such Person's ownership of voting
rights in the Company (including without limitation the right to
appoint representatives to the Management committee as herein
provided), as set forth in this Agreement. Series CE Voting
Interests, Series CEL Common Voting Interests, Series CEL
Preferred Voting Interests and Series SEL Voting Interests are,
individually and collectively, "Voting Interests".
2.2 Other Definitional Provisions.
(a) Exhibit B hereto contains definitions of certain
additional terms used therein.
(b) As used in this Agreement, accounting terms not
defined in this Agreement shall have the respective meanings
given to them under generally accepted accounting principles.
(c) The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision
of this Agreement, and Article, section, subsection, schedule and
exhibit references are to this Agreement unless otherwise
specified.
(d) Words of the masculine gender shall be deemed to
include the feminine or neuter genders, and vice versa, where
applicable.
(e) Words of the singular number shall be deemed to
include the plural number, and vice versa, where applicable.
ARTICLE 3
MANAGEMENT
3.1 Management Committee. The business and affairs of
the Company shall be controlled and managed by a Management
Committee which, subject to the provisions and limitations
contained in this LLC Agreement and any applicable law, shall
have the power and authority to take, or cause to be taken, any
and all actions necessary and proper to conduct the business
affairs of the Company and carry out its duties as described in
this LLC Agreement. The Members acknowledge and agree that this
Company acts solely as a holding company for the ownership
interests in subsidiary operating companies, and that each such
operating company is managed by its own management committee.
The Company and its Management Committee shall have the
authority, as set forth in this LLC Agreement, only as to
decisions with respect to the management of this Company and the
sale of its assets (subject in certain cases to the approval of
the respective Subsidiary management committees)..
The Management Committee shall consist of four (4)
representatives, one (1) of whom shall be appointed by KLT, one
(1) of whom shall be appointed by MTB, one (1) of whom shall be
appointed by ELC, and one (1) of whom shall be appointed by
Holdings. In the event of the resignation or death of a
representative, the vacancy shall be promptly filled by a nominee
of the Member who appointed the departing representative. The
appointment of each representative on the Management Committee
subsequent to the initial representatives named this Section 3.1
shall be evidenced by an appointment, and acceptance of
appointment, in a writing delivered to the Company by the Member
entitled to appoint such representative. Each representative
will serve on the Management Committee at the pleasure of the
Member appointing him or her. The Management Committee shall, as
of the date of this LLC Agreement, consist of Xxxxxx X. Xxxxxx
appointed by KLT), Xxxxxxx X. Xxxxx (appointed by ELC), L. Xxx
Xxxxxxx (appointed by MTB), and Xxxxxxx X. Xxxxxx (appointed by
Holdings).
If a Member transfers all of its Economic Interests in
all Series and the transferee thereof is admitted as a Member of
the Company as provided in Section 11.1 of this LLC Agreement,
then the transferee of such Economic Interest shall succeed to
such Member's rights to appoint representatives to the Management
Committee as provided in this Section 3.1.
3.2 Chairman and Other Officers. A representative on the
Management Committee shall serve as the Chairman of the
Management Committee and as Chief Executive Officer of the
Company. The initial Chairman of the Management Committee and
Chief Executive Officer of the Company shall be Xxxxxxx X. Xxxxx.
The Chief Executive Officer shall have those duties and
responsibilities as are outlined in Section 3.12 hereof. The
Company shall have such other officers as may be appointed by the
Management Committee, or in the absence of such appointment, as
designated by the Chairman of the Management Committee. The
Chairman of the Management Committee shall preside at all
meetings of the Management Committee, and shall have such other
duties and responsibilities as may be assigned by the Management
Committee from time to time.
3.3 Meetings. The Management Committee shall have
quarterly meetings within eight weeks after the end of each
fiscal quarter. Meetings of the Management Committee may be
called by either the Chairman of the Management Committee, or by
another representative on the Management Committee, by written
notice designating the time and place of the meeting sent to each
representative not fewer than five (5) nor more than ten (10)
days before the date of the meeting to the address of the Member
appointing such representative. If no place is designated, then
the meeting shall be held at the Company's principal place of
business. If all of the representatives to the Management
Committee meet at any time and place, the meeting shall be valid
without call or notice and any lawful action may be taken at such
meeting.
3.4 Quorum. The presence of three (3) representatives of
the Management Committee shall constitute a quorum at any duly
called meeting of the Management Committee.
3.5 Voting. Each representative on the Management
Committee shall be entitled to an equal vote upon each matter
submitted or required to be submitted to a vote at a meeting of
the Management Committee. An affirmative vote of three
representatives shall be required to approve the action to be
taken by the Management Committee.
3.6 Action Without A Meeting. Any action which is required
or permitted to be taken at a meeting of the Management Committee
may be taken without a meeting, without prior notice and without
a vote, if a consent in writing, setting forth the actions so
taken, is signed by each of the representatives to the Management
Committee and filed with the Company.
3.7 Telephone Meetings. Representatives of the Management
Committee may participate in a meeting of the Management
Committee by means of conference telephone or other similar
communication equipment whereby all persons participating in the
meeting can hear each other. Participation in the meeting in
this manner constitutes presence in person at the meeting.
3.8 Waiver of Notice. Whenever any notice is required to
be given to any representative to the Management Committee, a
waiver of the notice in writing signed by the person entitled to
the notice, whether before, at or after the time stated therein,
and delivered to the Company for inclusion in the minutes or
filing with the Company's records, shall be deemed equivalent to
the giving of such notice.
3.9 Salary and Expenses. Representatives serving on the
Management Committee, as such, shall not receive any stated
salary for their services on the Management Committee, but by
resolution of the Management Committee may receive reimbursement
of expenses of attendance at each meeting of the Management
Committee.
3.10 Powers of Members. The Members shall have the sole and
exclusive power to approve the following, upon the unanimous
consent of all Members holding Series CE Voting Interests, or
Voting Interests in the relevant Series as the case may be:
3.10.1 Amend this LLC Agreement;
3.10.2 Take any action or fail to take any action
with respect to any Series in contravention of this LLC
Agreement;
3.10.3 Dissolve and wind up the business of the
Company or any Series, or the taking of any corporate or other
action by or on behalf of the Company in furtherance of the
foregoing (except as contemplated in Sections 3.11 and 13.2);
3.10.4 Require additional Capital Contributions to a
Series or modify a Member's or Economic Interest Owner's
obligation to make a Capital Contribution to a Series (except as
provided in Article 6 of this LLC Agreement);
3.10.5 Assume, incur, or guarantee or become liable
for any indebtedness or borrowed money on behalf of a Series of
the Company if such indebtedness or borrowed money is recourse to
any of the Members of the Series.
3.11 Powers of the Management Committee. Except as set
forth in Section 3.10 above, the Management Committee shall have
the power to do the following, without the consent of the
Members; provided, however, that any such action affecting the
rights, obligations, assets or business of a Series must also be
approved by the Management Committee of SEL and/or CEL, as
applicable:
3.11.1 Merge or consolidate or agree to merge or
consolidate the Company with or into any other entity;
3.11.2 Make an acquisition of, or investment in, any
business enterprise or venture by a Series;
3.11.3 Assume, incur or guarantee or become liable
for any indebtedness or borrowed money on behalf of the Company
or a Series;
3.11.4 Take such other actions specified in this LLC
Agreement as requiring the consent or approval of the Management
Committee;
3.11.5 Sell, exchange, lease, mortgage, pledge or
otherwise dispose of all or a substantial portion of the property
and assets of the Company or Series in a single transaction or
series of related transactions;
3.11.6 Make any distributions to the Members or
Economic Interest Owners holding an Economic Interest in a
Series, except as otherwise provided in or contemplated by this
LLC Agreement;
3.11.7 File any registration statement (other than a
Form S-8) or any amendments thereto with the Securities and
Exchange Commission ("SEC") registering any of the Voting
Interests, Economic Interests or other securities of the Company
or file or prepare a prospectus in accordance with Rule 424(b) as
promulgated by the SEC;
3.11.8 The partition of any assets of a Series of
the Company or any distribution of any assets of a Series of the
Company;
3.11.9 Admit any substitute or additional Members or
Economic Interest Owners in any Series (except as provided in
Articles 6 or 10 of this LLC Agreement);
3.11.10 The sale, assignment or transfer of a Voting
Interest or Economic Interest of a Series, except as otherwise
expressly permitted by this LLC Agreement.
3.12 Duties of Chief Executive Officer. The Chief Executive
Officer shall be responsible for the management of the day to day
business and affairs of the Company and as otherwise directed by
the Management Committee from time to time. Any decision or act
of the Chief Executive Officer within the scope of the Chief
Executive Officer's authority granted hereunder shall control and
bind the Company. The Chief Executive Officer may, at his sole
discretion, delegate his duties and responsibilities hereunder to
other officers of the Company. Except as set forth in Sections
3.10 and 3.11 above, the Chief Executive Officer shall have the
power to do the following, without the consent of the Members or
the Management Committee:
3.12.1 Control of the day-to-day operations of the
Company;
3.12.2 Carrying out and affecting all directions of
the Management Committee;
3.12.3 Providing for the accounting function for the
Company;
3.12.4 Applying for and obtaining all appropriate
insurance coverage;
3.12.5 Temporary investment of the Company's funds
and short-term investments providing for appropriate safety of
principal;
3.12.6 Engaging in any kind of activity and
performing and carrying out all contracts of any kind necessary
to, in connection with or incidental to the accomplishment of the
purposes and business of the Company, so long as said activities
and contracts are in the ordinary course of business;
3.12.7 Negotiate, execute and perform all
agreements, and exercise all rights and remedies of the Company
in connection with the foregoing; and
3.12.8 Providing quarterly and annual operating and
financial reports to the Management Committee.
3.13 Removal or Resignation of Chief Executive Officer. The
Management Committee may remove and replace the Chief Executive
Officer, in its sole and absolute discretion if, at any time or
from time to time, it becomes dissatisfied with the Chief
Executive Officer's performance under this Agreement (regardless
of whether such dissatisfaction shall constitute legal "cause"
for termination). A Person who has been removed as Chief
Executive Officer shall continue to be a Member or Economic
Interest Owner for all other purposes of this Agreement, if the
Chief Executive Officer is also a Member or Economic Interest
Owner in the Company.
The Chief Executive Officer of the Company may resign
at any time by giving sixty (60) days advance written notice to
each of the representatives to the Management Committee. The
resignation of a Chief Executive Officer shall take effect sixty
(60) days from the date of the notice or at such later time as
shall be specified in the notice and, unless otherwise specified
in the notice, the acceptance of the resignation shall not be
necessary to make it effective. The resignation of a Chief
Executive Officer who is also a Member or Economic Interest Owner
shall not affect the Chief Executive Officer's rights as a Member
or Economic Interest Owner and shall not constitute a withdrawal
of the Member or Economic Interest Owner from the Company.
3.14 Compensation of Chief Executive Officer. The
compensation of the Chief Executive Officer shall be fixed from
time to time by the Management Committee, and no Chief Executive
Officer shall be prevented from receiving any such compensation
because the Chief Executive Officer is also a Member or Economic
Interest Owner of the Company.
3.15 Restrictions on the Members. No Member or Economic
Interest Owner individually shall have the authority to do any
binding act on behalf of the Company without the approval of the
Members as provided in this LLC Agreement.
ARTICLE 4
RIGHTS AND OBLIGATIONS OF MEMBERS
4.1 Limitation of Liability. Each Member's and Economic
Interest Owner's liability shall be limited as set forth in this
LLC Agreement, the Delaware Act and other applicable law. To the
maximum extent allowed by the Delaware Act and other applicable
law, the debts, liabilities and obligations incurred, contracted
for or otherwise existing with respect to a particular Series
shall be enforceable against the assets of such Series only, and
not against the assets of the Company generally.
4.2 Company Liabilities. A Member or Economic Interest
Owner will not be personally liable for any debts or losses of
the Company beyond the Member's or Economic Interest Owner's
respective capital contributions and any obligation of the
Members and Economic Interest Owners to make additional Capital
Contributions as provided in this LLC Agreement, except as
required by law.
4.3 Priority and Return of Capital. Except as otherwise
expressly provided in this LLC Agreement, no Member or Economic
Interest Owner shall have priority over any other Member or
Economic Interest Owner, either for the return of Capital
Contributions or for Net Profits, Net Losses or distributions;
provided that this Section shall not apply to loans (as
distinguished from Capital Contributions) which a Member has made
to the Company.
4.4 Liability of a Member or Economic Interest Owner to the
Company. A Member or Economic Interest Owner who rightfully
receives a return in whole or in part of its Capital Contribution
is liable to the Company only to the extent now or hereafter
provided by the Delaware Act.
4.5 Independent Activities. Except as may otherwise be
agreed upon in writing between the Company and a Member or
Economic Interest Owner, each Member or Economic Interest Owner
shall be required to devote only such time to the affairs of the
Company as such Member or Economic Interest Owner determines in
its sole discretion, and each such Member or Economic Interest
Owner shall be free to serve any other Person in any capacity
that it may deem appropriate in its discretion; provided,
however, that no Member or Economic Interest Owner shall either
directly or indirectly engage in any activities which in any way
concern or are related to the license, sale, provision, use or
marketing of products, services or activities which are licensed,
sold, provided, used or marketed by the Company or its
Subsidiaries, or which activities otherwise are competitive with
the Company or its Subsidiaries or otherwise, without first
acquiring the written approval of each of the representatives of
the Management Committee not appointed by the Member or Economic
Interest Owner requesting or requiring such approval, and except
as otherwise permitted by the Employment Agreement between Xxxxxx
Xxxx and CEL as successor to Power Systems Solutions, L.L.C.,
Missouri limited liability company ("PSS"), the Employment
Agreement between L. Xxx Xxxxxxx and CEL as successor to PSS, and
that certain Amended and Restated Noncompete Agreement between
Xxxxxxx Cillissen and CEL.
ARTICLE 5
MEETINGS OF MEMBERS
5.1 Annual Meeting. The annual meeting of the Members
shall be held on the second Tuesday in April or at such other
time as shall be determined by the Members for the purpose of the
transaction of such business as may come before the meeting. The
matters requiring the consent of the Members are set forth in
Section 3.10.
5.2 Special Meetings. Special meetings of the Members, for
any purpose or purposes, unless otherwise prescribed by statute,
may be called by any Member or Members holding at least one-fifth
(1/5) of all Series CE Voting Interests held by the Members.
5.3 Place of Meetings. The Members may designate any
place, either within or outside the state of Delaware, as the
place of meeting for any meetings of the Members. If no
designation is made, or if a special meeting be otherwise called,
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
below, for any annual meeting held at such time as provided in
Section 5.1 above, and for all special meetings, written notice
stating the place, day, and hours of the meeting and the purpose
or purposes for which the meeting is called shall be delivered
not fewer than ten (10) nor more than sixty (60) days before the
date of the meeting, either personally or by mail, by or at the
direction of the Members calling the meeting, to each Member
entitled to vote at the meeting. If mailed, the notice shall be
deemed to be delivered two (2) calendar days after being
deposited in the United States mail, addressed to the Member at
the Member's address as it appears on the books of the Company,
with postage thereon prepaid.
5.5 Meeting of all Members. If all of the Members shall
meet at any time and place, either within or outside of the state
of Delaware, and consent to the holding of a meeting at that time
and place, the meeting shall be valid without call or notice, and
at the meeting lawful action may be taken.
5.6 Record Date. For the purpose of determining Members
entitled to notice of or to vote at any meeting of Members or any
adjourned meeting, the date on which notice of the meeting is
mailed shall be the record date for the determination of Members.
When a determination of Members entitled to vote at any meeting
of Members has been made as provided in this Section, the
determination shall apply to any adjourned meeting.
5.7 Quorum. Three Members, represented in person or by
proxy, shall constitute a quorum at any meeting of Members. In
the absence of a quorum at any meeting of Members, the Members
represented may adjourn the meeting from time to time for a
period not to exceed sixty (60) days without further notice.
However, if the adjournment is for more than sixty (60) days, or
if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be
given to each Member of record entitled to vote at the meeting.
At any adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally noticed.
5.8 Voting. If a quorum is present, the affirmative vote
of three Members of the relevant Series (or in the case of Series
CEL, the lesser of three Members or all Members whose
representative on the CEL management committee at such time may
cast votes) shall be the act of the Members respecting such
Series, unless the vote of a greater proportion or number is
required by this LLC Agreement, the Company's Certificate of
Formation or the Delaware Act. Unless otherwise expressly
provided in this LLC Agreement or required under applicable law,
Members who have an interest (economic or otherwise) in the
outcome of any particular matter upon which the Members vote or
consent, their vote shall be counted in the determination of
whether the requisite matter was approved by the Members.
5.9 Proxies. At all meetings of Members a Member may vote
in person or by proxy executed in writing by the Member or a duly
authorized attorney-in-fact. The proxy shall be delivered to any
one (1) or more of the remaining Members before or at the time of
the meeting. No proxy shall be valid after three (3) years from
the date of its execution, unless otherwise provided in the
proxy.
5.10 Action by Members without a Meeting. Any 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
counterparts of a written consent describing the action taken and
signed by each Member entitled to vote, which consent shall be
included in the minutes or filed with the Company records.
Action taken under this Section is effective when all Members
entitled to vote have signed the consent, unless the consent
specifies a different effective date. The record date for
determining Members entitled to take action without a meeting
shall be the date the first Member signs a written consent.
5.11 Waiver of Notice. When any notice is required to be
given to any Member, a waiver of the notice in writing signed by
the person entitled to the notice, whether before, at, or after
the given time stated therein, and delivered to the Company for
inclusion in the minutes or filing with the Company records,
shall be equivalent to the giving of the notice. A Member's
attendance at any meeting shall constitute a waiver: (i) to lack
of notice or defective notice of the meeting, unless the Member
at the beginning of the meeting objects to the holding of the
meeting or transacting business at the meeting; and (ii) to
consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice,
unless such person objects to considering the matter when it is
presented.
5.12 Chairperson of Meeting; Designation of Authorized
Representatives. Each meeting of Members shall be conducted by
the Chairman or such other Person as the Chairman may appoint
pursuant to such rules for the conduct of the meeting as the
Chairman or such other Person deems appropriate. Each Member
shall designate to the Chairman, in writing, one (1) authorized
representative of the Member who will vote or consent on all
matters under this LLC Agreement for such Member. Such
designation will continue until revoked in writing. Within
thirty (30) days of the execution of this Agreement, the Members
shall designate their initial authorized representative.
ARTICLE 6
CAPITAL CONTRIBUTIONS
6.1 Initial Capital Contributions. A Capital Account shall
be maintained for each Member as provided in Section 2.1(b)
above, which shall include the initial Capital Contribution of
each Member as set forth on Exhibit A, attached hereto. The
number of Units of Voting Interest and Economic Interest of each
Member in each Series shall be as also set forth in Exhibit A.
No Member shall have any interest or rights in the capital
contributed by any other Member.
6.2 Additional Capital Contributions.
6.2.1 Series CEL Additional Contributions. If the
holders of all of the Series CEL Common Economic Interests
determine that CEL needs an Additional Capital Contribution, the
Management Committee of the Company shall require the holders of
the Series CEL Common Economic Interests to make an Additional
Capital Contribution in the amount so determined by such Series
CEL Economic Interest holders. Unless otherwise agreed by the
Series CEL Common Economic Interest holders, each such holder
shall within thirty (30) days of such determination contribute
their respective share of the additional contribution to the
capital of the Company, which share shall be determined on a pro
rata basis with reference to the relationship of each respective
Member's or Economic Interest Owner's Economic Interest of such
Series to the total of the Economic Interests of all of the
Members and Economic Interest Owners of such Series. The
Chairman shall make such determination and provide notice to each
Member and Economic Interest Owner of such Series within ten (10)
days of such vote or consent of the call for such additional
contribution, the amount to be contributed by such person,
and the date on which such contribution is due. Unless otherwise
agreed to by the affirmative vote or consent of all of the
Members holding such Series, all such additional Capital
Contributions shall be made in cash. No voluntary contributions
to capital shall be made by any Member or Economic Interest Owner
absent the affirmative vote or consent of all of the Members. If
all of the Series CEL Common Economic Interest holders determine
to allow such additional capital contribution by a person who is
not presently a Series CEL Common Economic Interest holder, such
person shall be admitted as a Member of the Company and shall be
issued a number of Series CEL Common Equity Interest units as may
be determined by the then existing Series CEL Common Economic
Interest holders. Any Additional Capital Contributions made to
the Company pursuant to this Section 6.2.1 shall be immediately
made to CEL and any Member making an Additional Capital
Contribution pursuant to this Section 6.2.1 is hereby authorized
to make such Contribution directly to CEL on the Company's
behalf. If not all Members make their proportionate
contribution, the amount of any Additional Capital Contribution
for such particular capital call shall be returned immediately.
6.2.2 Series CE and SEL Additional Capital
Contributions. The Members and Economic Interest Owners
recognize that Series CE or SEL of the Company may require
additional capital from time to time in order to accomplish the
purposes and the business for which the Company is formed. If by
an affirmative vote or consent all of the Members holding Voting
Interests in such particular Series determine in good faith that
additional Capital Contributions for a particular Series are
necessary for the operation of the Company or its Subsidiaries,
each Member and Economic Interest Owner of such Series shall
within thirty (30) days of such vote or consent contribute their
respective share of the additional contribution to the capital of
the Company as determined by all of the Members of such Series
pursuant to such affirmative vote or consent, which share shall
be determined on a pro rata basis with reference to the
relationship of each respective Member's or Economic Interest
Owner's Economic Interest of such Series to the total of the
Economic Interests of all of the Members and Economic Interest
Owners of such Series. The Chairman shall make such
determination and provide notice to each Member and Economic
Interest Owner of such Series within ten (10) days of such vote
or consent of the call for such additional contribution, the
amount to be contributed by such person, and the date on which
such contribution is due. Unless otherwise agreed to by the
affirmative vote or consent of all of the Members holding such
Series, all such additional Capital Contributions shall be made
in cash. No voluntary contributions to capital shall be made by
any Member or Economic Interest Owner absent the affirmative vote
or consent of all of the Members. Any Additional Capital
Contributions made to the Company for the benefit of SEL pursuant
to this Section 6.2.2 shall be immediately made to SEL and any
Member making an Additional Capital Contribution pursuant to this
Section 6.2.2 is hereby authorized to make such Contribution
directly to SEL on the Company's behalf. If not all Members make
their proportionate contribution, the amount of any Additional
Capital Contribution for such particular capital call shall be
returned immediately.
6.3 Breach or Violation of Indemnity Obligations.
6.3.1 None of the terms, covenants, obligations or
rights contained in Section 6.2 and this Section 6.3 are or shall
be deemed to be for the benefit of any Person or entity other
than the Members, Economic Interest Owners, and the Company, and
no such third person shall under any circumstances have any right
to compel any actions or payments by the Members or Economic
Interest Owners.
6.3.2 Any breach or violation by a Member
(including a Member possessing only voting rights as provided for
under this LLC Agreement) of any indemnity obligations contained
in this LLC Agreement will result in such Member or Economic
Interest Owner being deemed a "Non-Contributing Person" by reason
of the failure to make an additional Capital Contribution in the
amount of the losses, damages, costs and expenses (including
reasonable attorneys' fees) incurred by the Company or the non-
breaching Members by reason of such breach or violation. If the
deemed Non-Contributing Person fails to cure such breach or
violation to the satisfaction of the Management Committee and the
non-breaching Members within thirty (30) days after its receipt
of notice of such breach or violation from the Management
Committee (which notice shall be sent pursuant to a unanimous
vote of the Management Committee determined in good faith, except
that any representative of the Non-Contributing Person in the
Management Committee shall not be permitted to vote on such
action), the deemed Non-Contributing Person shall relinquish all
voting rights associated with its Voting and Economic Interest
for all Series, and the Negative Preference Contribution Account
of the Non-Contributing Person will be decreased by an amount
equal to the value of such damages as determined by the
Management Committee. Thereafter, the deemed Non-Contributing
Person may cure such breach or violation by making a cure
contribution; provided, however, that should it ultimately be
determined by the affirmative vote or consent of a Majority in
Interest or by a court of competent jurisdiction that any such
damages were not attributable to a breach or violation of this
LLC Agreement by such deemed Non-Contributing Person, such deemed
Non-Contributing Person shall immediately be reinvested with any
and all voting rights lost on account the operation of this
Section 6.3.2 and any economic consequences of the tentative
operation of this Section 6.3.2 on the Non-Contributing Person
(such as a loss of distributions or payment by such Non-
Contributing Person of any Cure Contribution or other payment in
respect of such alleged breach or violation) shall be properly
cured and reversed.
6.4 Negative Preference Contributions.
6.4.1 A "Negative Preference Contribution Account"
which shall be a memorandum account, shall be maintained for each
Member with respect to its Series SEL Economic Interests.
6.4.2 Each Member's Negative Preference
Contribution Account shall have an initial balance of zero and be
decreased as follows:
6.4.2.1 In the case of Holdings, the initial
balance in its Negative Preference Contribution Account shall be
decreased by: (A) the amount of any "Indemnifying Losses" (as
hereinafter defined) which are incurred by the Company by reason
of the breach by Holdings of any of the terms, conditions,
covenants, representations, or warranties contained in the
Exchange Agreement (as hereinafter defined); (B) an amount as
determined for such Member as set forth in Section 6.3.2; and (C)
an amount equal to a return thereon at the rate of eight percent
(8%) per annum (the daily portion of which shall be deemed
deducted from the Negative Preference Contribution Account on a
daily basis).
6.4.2.2 In the case of all other Members
(excluding Holdings), the initial balance in their respective
Negative Preference Contribution Account shall be decreased by:
(A) such Member's "Proportionate Pre-Closing Percentage" of the
value of any Indemnifying Losses incurred by Holdings by reason
of the breach by the Company of any terms, conditions, covenants,
representations, or warranties contained in the Exchange
Agreement; and (B) an amount equal to a return thereon at the
rate of eight percent (8%) per annum (the daily portion of which
shall be deemed deducted from the Negative Preference
Contribution Account on a daily basis).
6.4.3 Each Member's Negative Preference
Contribution Account shall be increased (but not above zero) by
the amount of each distribution for all Series to which each
Member was otherwise entitled pursuant to Sections 8.2.1 or
12.7(d) hereof (in each case, as of the time of such deemed
distribution).
6.4.4 Definitions. For purposes of this Section
6.4, the following terms shall have the following meanings:
6.4.4.1 The term Indemnifying Losses" shall mean
the Indemnifying Losses" as such term is defined in that certain
Exchange Agreement (the "Exchange Agreement") dated as of the
22nd day of October, 1998, by and among the Company, Holdings and
Strategic Energy, L.L.C., a Delaware limited liability company
("SEL").
6.4.4.2 The term "Proportionate Pre-Closing
Percentage" shall mean the ownership interest of a Member (other
than Holdings) in the Company prior to the issuance of 3,333,334
Units of Economic Interest to Holdings pursuant to the Exchange
Agreement, which, for purposes of this LLC Agreement, shall be as
follows: (i) KLT shall have a 62.88% Proportionate Pre-Closing
Percentage; (i) MTB shall have a 29.47% Proportionate Pre-Closing
Percentage; and (i) ELC shall have a 7.65% Proportionate Pre-
Closing Percentage.
6.4.5 The Company shall decrease a Member's
Negative Preference Contribution Account pursuant to Section
6.4.2 after incurring Indemnifying Losses provided that the
Company shall have given such Member twenty (20) days written
notice (which notice shall be sent pursuant to a unanimous vote
of the Management Committee determined in good faith, except that
any representative of the breaching Member in the Management
Committee shall not be permitted to vote on such action), of an
opportunity to cure the Indemnifying Losses and the facts related
thereto. The Company shall reimburse such Member for its damages
and attorneys' fees to the extent a Majority in Interest or a
court of law determines that the Company incorrectly applied the
Indemnifying Losses to a Member's Negative Preference
Contribution Account.
6.5 Capital Accounts of Members. The amount of any
additional Capital Contribution made by any Member or Economic
Interest Owner shall be added to the Capital Account of such
contributing Member or Economic Interest Owner for the applicable
Series as of the date of expiration of the thirty (30) day
periods and/or ten (10) day period, as the case may be, set out
in Sections 6.2.1 and 6.2.2 above. Any increase in a Member's or
Economic Interest Owner's Preference Contribution Account
pursuant to Section 6.3.2 shall not be added to such Member's or
Economic Interest Owner's Capital Account for each Series.
6.6 Adjustment of Interests. If additional Capital
Contributions are made in accordance with Sections 6.2.1 and
6.2.2 above, or in conjunction with the admission of a new Member
pursuant to Article 11 of this LLC Agreement, the Economic and
Voting Interests of each Member and Economic Interest Owner shall
be adjusted for the applicable Series (which shall be reflected
on a revised Exhibit A) to reflect such additional contributions
in accordance with the following formula:
6.6.1 Each Member's and Economic Interest Owner's
Economic and Voting Interests shall be adjusted to the same ratio
as the Member's or Economic Interest Owner's total Adjusted
Capital Account bears to the total Adjusted Capital Accounts of
all the Members and Economic Interest Owners as of the adjustment
date. The adjustment date shall be the date of the expiration of
the thirty (30) day period and/or ten (10) day period, as the
case may be, set out in Sections 6.2.1 and 6.2.2 above or the
date a new Member is admitted, as the case may be.
6.6.2 This Economic and Voting Interests adjustment
shall be made after every additional Capital Contribution,
whether such additional Capital Contribution is the result of the
admission of a new Member or a call for additional contributions.
In the event that there is any transfer in whole or in part, of a
Member's or Economic Interest Owner's Voting or Economic
Interests in the Company, then the transferee of such Member or
Economic Interest Owner shall stand in the same position as the
Member or Economic Interest Owner whose interest they have
acquired, unless all of the Members have agreed otherwise.
6.7 Interest and Other Amounts. No Member or Economic
Interest Owner shall receive any interest, salary, or drawing
with respect to its Capital Contributions or its Capital Account
or for services rendered to or on behalf of the Company or
otherwise in its capacity as a Member or Economic Interest Owner,
except as otherwise provided in this LLC Agreement or other
agreement approved and ratified by all of the Members between the
Company and such Member or Economic Interest Owner.
6.8 Amendment of Documents. Except as provided above or
pursuant to a Member's or Economic Interest Owner's acquisition
of an additional Economic Interest as permitted under this LLC
Agreement, any adjustments in Economic or Voting Interests for
any Series shall be effectuated by amending this LLC Agreement
and the execution and filing of any other documents required by
the Delaware Act.
6.9 Withdrawal of Capital Contribution. Except as otherwise
provided in this LLC Agreement, the affirmative vote or consent
of all of the Members shall be required to modify, compromise or
release the amount and/or character of a Member's or Economic
Interest Owner's Capital Contribution, or any promise made by a
Member as consideration for the acquisition of an interest in the
Company. Under circumstances requiring the return of any Capital
Contribution, no Member or Economic Interest Owner shall have the
right to receive any property of the Company, other than cash,
except as may be specifically provided herein.
6.10 Loans of Members. A Member or Economic Interest Owner
may loan cash or other property to the Company, should additional
funds be required, upon such terms as all of the Members shall
agree by affirmative vote or consent. Loans by any Member or
Economic Interest Owner to the Company shall not be considered as
contributions to the capital of the Company. Except as otherwise
provided in this LLC Agreement, none of the Members or Economic
Interest Owners shall be obligated to make any loan or advance to
the Company.
ARTICLE 7
ALLOCATIONS
7.1 Net Profits of Series CE. After giving effect to the
special allocations set forth in this Article 7, Net Profits
attributable to Series CE for any fiscal year shall be allocated
among the Members and Economic Interest Owners of Series CE as
follows and in the following order of priority:
7.1.1 First, to the Series CE Common Economic
Interest holders with a Negative Preference Contribution Account
balance, until an amount of Net Profit allocated pursuant to this
Section 7.1.1 (taking into account the Net Profit allocated
pursuant to this Section 7.1.1 for all prior years and the
current year) shall equal the aggregate accrued return described
in Section 6.4.2.1(B) or 6.4.2.2(B) (as applicable), in
proportion of such Members aggregate Negative Preference
Contribution Account balance;
7.1.2 Next, to the Series CE Economic Interest
holders in proportion to their respective number of Series CE
Economic Interest units.
7.2 Net Losses for Series CE. After giving effect to the
special allocations set forth in this Article 7, Net Losses
attributable for Series CE Economic Interest holders for any
fiscal year shall be allocated among the Series CE Economic
Interest holders in proportion to their respective number of
Series CE Economic Interest units.
7.3 Net Profits of Series SEL. After giving effect to the
special allocations set forth in this Article 7, Net Profits
attributable to Series SEL for any fiscal year shall be allocated
among the Series SEL Economic Interest holders in proportion to
their respective number of Series SEL Economic Interest units.
7.4 Net Losses for Series SEL. After giving effect to the
special allocations set forth in this Article 7, Net Losses
attributable to Series SEL for any fiscal year shall be allocated
among the Series SEL Economic Interest holders in proportion to
their respective number of Series SEL Economic Interest units.
7.5 Gross Income, Net Profits and Net Losses of Series CEL.
After giving effect to the special allocations set forth in this
Article 7, gross income, Net Profits and Net Losses as determined
after taking into account allocations of gross income pursuant to
Section 7.5.1 attributable to Series CEL for any fiscal year
shall be allocated among the Members and Economic Interest Owners
of Series CEL as follows.
7.5.1 Gross Income Allocation. The Company shall
allocate gross income realized by CEL to the holders of a Series
CEL Preferred Economic Interest in an amount equal to the
Preferred Return which had accrued during such fiscal year.
7.5.2 Net Profits.
7.5.2.1 First, to the holders of Series CEL
Common Economic Interests, in an amount equal to the Net Loss
allocated to such holders pursuant to Section 7.5.3.3 (and not
previously offset by this Section 7.5.2.1), in proportion to
their respective number of Series CEL Common Economic Interest
units;
7.5.2.2 Next, to the holders of the Series CEL
Preferred Economic Interest holders, in an amount equal to the
Net Loss allocated to such holders pursuant to Section 7.5.3.2
(and not previously offset by this Section 7.5.2.2), in
proportion to the Net Loss allocated pursuant to such Section
7.5.3.2;
7.5.2.3 Next, to the holders of to the holders
of Series CEL Common Economic Interests, in an amount equal to
the Net Loss allocated to such holders pursuant to Section
7.5.3.1 (and not previously offset by this Section 7.5.2.3),in
proportion to the Net Loss allocated pursuant to such Section
7.5.3.1;
7.5.2.4 Then, to the holders of Series CEL
Common Economic Interests, in proportion to their respective
number of Series CEL Common Economic Interest units.
7.5.3 Net Losses. Net Losses
attributable to Series CEL for any fiscal year shall be allocated
among the Members and Economic Interest Owners of Series CEL as
follows and in the following order of priority:
7.5.3.1 First, to the holders of Series CEL
Common Economic Interests, to the extent of their positive
Capital Account balances, in proportion to their respective
number of Series CEL Common Economic Interest units;
7.5.3.2 Next, to the holders of the Series CEL
Preferred Economic Interest holders, to the extent of their
respective Remaining Liquidation Values, in proportion to their
respective amounts of Remaining Liquidation Value.
7.5.3.3 Then, to the holders of Series CEL
Common Economic Interests, in proportion to their respective
number of Series CEL Common Economic Interest units.
7.5.4 Contribution and Deduction with Respect to
CEL Phantom Stock Plan. MTB shall contribute to CEL an amount
equal to CEL's obligation under the Custom Energy Phantom Stock
Plan (the "Phantom Plan") with respect to the SEL Component, as
defined in the Phantom Plan, of any such payment obligation. To
the extent MTB makes such contribution to CEL, MTB will be
allocated the deduction attributable to CEL's payment of the SEL
Component equal to such contribution amount. MTB is not entitled
to receive any additional units as a result of such contribution.
7.6 Special Allocations. Notwithstanding the prior
allocation provisions, the special allocations set forth in
Exhibit B shall be made in the order set forth therein.
ARTICLE 8
ACCOUNTING, DISTRIBUTIONS AND TAXES
8.1 Distribution of Cash for Series SEL. Within 45 days
after the close of each quarter of each fiscal year, or more
frequently upon the affirmative vote or consent of the Management
Committee of SEL, cash received by the Company from distributions
from SEL shall be distributed to the Members and Economic
Interest Owners for such Series as follows:
8.1.1 First, to the Series SEL Members and Economic
Interest Owners in proportion to the number of their respective
SEL Economic Interest Units in an amount equal to forty-five
percent (45%) of the Net Profits of the Company attributable to
Series SEL with respect to such period (and prior periods if not
previously distributed), or such greater amount as may be
determined upon the affirmative vote or consent of all of the SEL
Management Committee or required to pay any "Accrued Flow-Through
Tax Liability" attributed to the Members from the Company;
8.1.2 Next, to the Series SEL Members and Economic
Interest Owners in proportion to their respective number of
Series SEL Economic Interest units.
Further, notwithstanding the foregoing, no distributions
shall be made unless, after distribution is made, the assets of
the Company attributable to such Series are in excess of the
liabilities of the Company attributable to such Series, except
amounts payable to Members or Economic Interest Owners on account
of Capital Contributions.
For purposes of this Article 8, the term "Accrued
Flow-Through Tax Liability" shall mean any federal or state tax
liability assessed against the Members by virtue of any Net
Profits of the Company.
8.2 Distribution of Cash for Series CE. Within 45 days
after the close of each quarter of each fiscal year, or more
frequently upon the affirmative vote or consent of the Management
Committee, available cash of the Company (other than cash
received by the Company from distributions from CEL or SEL) shall
be distributed to the Members and Economic Interest Owners for
such Series as follows:
8.2.1 First, to the Series CE Members and Economic
Interest Owners with a Negative Preference Contribution Account
balance in proportion to their respective Negative Preference
Contribution Account balances, up to the amount necessary to
reduce all such Preference Contribution Account balances to zero;
8.2.2 Next, to the Series CE Members and Economic
Interest Owners in proportion to the number of their respective
CE Economic Interest Units in an amount equal to forty-five
percent (45%) of the Net Profits of the Company attributable to
Series CE with respect to such period (and prior periods if not
previously distributed), or such greater amount as may be
determined upon the affirmative vote or consent of all of the
Management Committee or required to pay any "Accrued Flow-Through
Tax Liability" attributed to the Members from the Company;
8.2.3 Next, to the Series CE Members and Economic
Interest Owners in proportion to their respective number of
Series CE Economic Interest units.
Further, notwithstanding the foregoing, no distributions
shall be made unless, after distribution is made, the assets of
the Company attributable to such Series are in excess of the
liabilities of the Company attributable to such Series, except
amounts payable to Members or Economic Interest Owners on account
of Capital Contributions.
8.3 Distribution of Cash for Series CEL. Within forty
five (45) days after the close of each quarter of each fiscal
year, or more frequently upon the affirmative vote or consent of
all of the management committee of CEL, cash received by the
Company from distributions from CEL shall be distributed to the
Members and Economic Interest Owners for such Series as follows:
8.3.1 First, to each holder of Series CEL Preferred
Economic Interest, an amount equal to any balance in such
holder's Preferred Return Account;
8.3.2 Next, an amount equal to 45% of the Net
Profits with respect to such period (and prior periods if not
previously distributed), if any, to the Members and Economic
Interest Owners holding Series CEL Common Economic Interests in
proportion to their respective number of Series CEL Economic
Interest Units;
8.3.3 Next, an amount, as designated by the CEL
Management Committee, on or before the dates specified below, to
the holders of Series CEL Preferred Economic Interest, as set
forth below:
Calendar Year Distribution amount
2000 $500,000
2001 $1,000,000
2002 $1,500,000
2003 $2,000,000
2004 $2,000,000
2005 Remaining Liquidation Value
Upon the payments of the above amounts, a proportionate share of
the Series CEL Preferred Economic Interest units shall be
canceled so that upon the final payment no such units shall be
outstanding; and
8.3.4 Then, to the Members and Economic Interest
Owners holding Series CEL Common Economic Interests in proportion
to their respective number of SEL Economic Interest Units.
Further, notwithstanding the foregoing, no distributions
shall be made unless, after distribution is made, the assets of
the Company attributable to such Series are in excess of the
liabilities of the Company attributable to such Series, except
amounts payable to Members or Economic Interest Owners on account
of Capital Contributions.
8.4 Other Distributions. Notwithstanding anything to the
contrary in this LLC Agreement, the Members expressly agree that
all the gain or income, and all associated tax consequences,
resulting from the sale of those certain PSE&G Rebate Streams set
forth in Exhibit C to this Agreement shall be distributed to KLT
and MTB in accordance to their respective pre-merger percentages
in PSS, as set forth in Section 6.4.4.2 within thirty (30) days
after the Company's receipt of the proceeds from the sale of the
PSE&G Rebate Stream. Further, any tax consequences associated
with the reconciliation of the book/tax difference of the PSE&G
Rebate Stream shall also be distributed to KLT and MTB in
accordance to their respective pre-merger percentages in PSS, as
set forth in Section 6.4.4.2.
8.5 Accounting. The fiscal and tax year of the Company
shall be the calendar year. For tax purposes, the records of the
Company shall be maintained on an accrual method of accounting.
The books of account of the Company shall be kept and maintained
at all times at the principal place of business of the Company or
such other location as determined by the Management Committee.
Each Member shall have the right at all reasonable times during
usual business hours to audit, examine and make copies of or
extracts from the books of account of the Company, and a list of
the names and addresses of all of the Members and Economic
Interest Owners. Such right may be exercised through any agent of
such Member. Each Member shall bear all expenses incurred in any
examination made for its account.
As soon as reasonably practicable after the end of each
calendar month, the Chief Executive Officer shall furnish each
Member and Economic Interest Owner with an interim unaudited
balance sheet of the Company as of the last day of such calendar
month, an unaudited statement of profit or loss of the Company
for such calendar month, and an unaudited statement of cash
receipts and disbursements for such calendar month, each
separately stating such amounts for each Series and each prepared
in accordance with generally accepted accounting principles. As
soon as reasonably practicable after the end of each fiscal and
tax year, the Chief Executive Officer shall furnish each Member
and Economic Interest Owner with: (i) a balance sheet of the
Company as of the last day of such fiscal or tax year, a
statement of profit or loss of the Company for such year, and a
statement of cash receipts and disbursements, each separately
stating such amounts for each Series and each prepared in
accordance with generally accepted accounting principles and
audited by the Company's independent certified public
accountants; (ii) a statement showing the amounts allocated to or
allocated against each Member and Economic Interest Owner
pursuant to Article 7 of this LLC Agreement during or in respect
of such year, and any items of income, deduction, credit, or loss
allocated to them; and (iii) a copy of the federal income tax
return of the Company.
8.6 Tax Elections. Upon the affirmative vote or consent of
the Management Committee, the Tax Matters Member shall make any
tax election for the Company allowed under the Internal Revenue
Code of 1986, as amended; provided, however, that upon the
request of a transferring or distributing Member (of LLC
property), the Tax Matters Member shall make an election to cause
the basis of Company property to be adjusted for federal income
tax purposes as provided by Section 734 and 743 of the Internal
Revenue Code of 1986, as amended, pursuant to such transfer of an
Economic Interest or the death of or distribution of property to
such Member or Economic Interest Owner provided further however,
that the requesting Member shall reimburse the Company for all
incremental reporting costs associated therewith.
8.7 Tax Matters Partner. KLT is hereby designated as the
Tax Matters Partner of the Company pursuant to applicable
provisions of the Internal Revenue Code of 1986, as amended, and
the regulations thereunder. If KLT ceases to be a Member, its
status as Tax Matters Partner shall cease, and a successor Tax
Matters Partner shall be as chosen by the affirmative vote or
consent of all of the Members.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
9.1 In General. As of the date hereof, each Member (each a
"Representing Party") makes each of the following representations
and warranties applicable to such Member:
9.1.1 If such Representing Party is a corporation,
partnership, trust, limited liability company, limited liability
partnership or any other legal entity, it is duly organized or
duly formed, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation or formation and
has the power and authority as an entity to own its property and
carry on its business as owned and carried on at the date hereof
and as contemplated hereby. Such Representing Party is duly
licensed or qualified to do business and in good standing in each
of the jurisdictions in which the failure to be so licensed or
qualified would have a material adverse effect on its financial
condition or its ability to perform its obligations hereunder.
Such Representing Party has the power and authority as an entity
to execute and deliver this LLC Agreement and to perform its
obligations hereunder and the execution, delivery, and
performance of this LLC Agreement has been duly authorized by all
necessary actions of the Representing Party entity. This LLC
Agreement constitutes the legal, valid, and binding obligation of
such Representing Party.
9.1.2 Neither the execution, delivery, and
performance of this LLC Agreement nor the consummation by such
Representing Party of the transactions contemplated hereby (i)
will conflict with, violate, or result in a breach of any of the
terms, conditions, or provisions of any law, regulation, order,
writ, injunction, decree, determination, or award of any court,
any governmental department, board, agency, or instrumentality,
domestic or foreign, or any arbitrator, applicable to such
Representing Party, (ii) will conflict with, violate, result in a
breach of, or constitute a default under any of the terms,
conditions, or provisions of the articles of incorporation,
bylaws, partnership agreement, certificate of formation, articles
of organization, or other formation and operating documents of
such Representing Party, or of any material agreement or
instrument to which such Representing Party is a party or by
which such Representing Party is or may be bound or to which any
of its material properties or assets is subject, (iii) will
conflict with, violate, result in a breach of, constitute a
default under (whether with notice or lapse of time or both),
accelerate or permit the acceleration of the performance required
by, give to others any material interests or rights, or require
any consent, authorization or approval under any indenture,
mortgage, lease agreement, or instrument to which such
Representing Party is a party or by which such Representing Party
is or may be bound, or (iv) will result in the creation or
imposition of any lien upon any of the material properties or
assets of such Representing Party.
9.1.3 Any registration, declaration or filing with,
or consent, approval, license, permit or other authorization or
order by, any governmental or regulatory authority, domestic or
foreign, that is required in connection with the valid execution,
delivery, acceptance and performance by such Representing Party
under this LLC Agreement or the consummation by such Representing
Party of any transaction contemplated hereby has been completed,
made or obtained on or before the effective date of this LLC
Agreement.
9.1.4 There are no actions, suits, proceedings or
investigations pending or, to the knowledge of such Representing
Party, threatened against or affecting such Representing Party or
any of their properties, assets, or businesses in any court or
before or by any governmental department, board, agency, or
instrumentality, domestic or foreign, or any arbitrator which
could, if adversely determined (or, in the case of an
investigation could lead to any action, suit, or proceeding,
which if adversely determined could) reasonably be expected to
materially impair such Representing Party's ability to perform
its obligations under this LLC Agreement or to have a material
adverse effect on the consolidated financial condition of such
Representing Party; and such Representing Party has not received
any currently effective notice of any default, and such
Representing Party is not in default, under any applicable order,
writ, injunction, decree, permit, determination, or award of any
court, any governmental department, board, agency or
instrumentality, domestic or foreign, or any arbitrator which
could reasonably be expected to materially impair such
Representing Party's ability to perform its obligations under
this LLC Agreement or to have a material adverse effect on the
consolidated financial condition of such Representing Party.
9.1.5 Such Member acquired its interest in the
Company based upon its own investigation, and the exercise by
such Member of its rights and the performance of its obligations
under this LLC Agreement will be based upon its own
investigation, analysis and expertise. Such Member's acquisition
of its interest in the Company has been made for its own account
for investment, and not with a view to the sale or distribution
thereof.
ARTICLE 10
RESTRICTIONS ON TRANSFER
10.1 General.
10.1.1 Except as otherwise specifically provided in
this LLC Agreement (including but not limited to Section 10.3),
neither a Member nor an Economic Interest Owner shall have the
right without the affirmative vote or consent of the Management
Committee to sell, assign, encumber, pledge, hypothecate,
transfer, exchange, distribute or otherwise transfer for
consideration, gift, bequeath, distribute or otherwise transfer
for no consideration (whether or not by operation of law, except
in the case of bankruptcy) (each such action a "Transfer") all or
part of its interest in the Company, except for transfers of
Voting or Economic Interests from one Member to another and
transfers of Voting or Economic Interests from one Member to an
Affiliate of that Member. The transfer of the Economic Interest
of a Bankrupt Member or Economic Interest Owner shall be governed
by Sections 12.4 and 12.5 below. Any purported Transfer of any
interest in the Company in contravention of this LLC Agreement
shall be null and void and of no force or effect.
10.1.2 Subject to the provisions of Section 10.1.1
above and except as otherwise permitted pursuant to Section
10.1.1, all Transfers shall also be subject to the following
rules and conditions: (i) the Transfer shall be in compliance
with all applicable federal and state securities laws; (ii) the
Transfer shall not result in any materially adverse tax
consequence to the Company or any remaining Member; (iii) the
Transfer shall not result in the Company being required to
register as an investment company under the Investment Company
Act of 1940, as amended, or any regulations promulgated
thereunder; and (iv) if the Transfer is to a person or entity
that is not a Member or an Affiliate of any Member, such Transfer
shall be subject to the provisions of Sections 10.3, 10.4 and
10.5, of this LLC Agreement.
10.2 Transferee Not Member in Absence of Consent.
Notwithstanding anything contained in this LLC Agreement to the
contrary, and except for those transfers permitted under Section
10.1 hereof, if the Management Committee does not by affirmative
vote or consent approve of the proposed Transfer of a Member's or
Economic Interest Owner's Economic Interest in the Company to a
transferee or donee who is not a Member immediately before the
Transfer and the admission of such transferee as a Member as
provided in Article 11 below, the proposed transferee or donee
shall have no right to participate in the management of the
business and affairs of the Company, including, without
limitation, any rights to appoint representatives to the
Management Committee, or to become a Member. Subject to the
satisfaction of the requirements of Section 10.1 above, the
transferee or donee shall be merely an Economic Interest Owner.
Furthermore, except as agreed upon by the Management Committee or
as otherwise provided in this LLC Agreement or the Delaware Act,
upon a Member's transfer of its Economic Interest, such Member's
rights to participate in the management and affairs of the
Company, including, without limitation, its voting rights, and
any rights to appoint representatives to the Management
Committee, shall cease.
10.3 Right of First Offer.
10.3.1 Notwithstanding anything herein to the
contrary (including but not limited to Section 10.1.1), if any
Member (the "Transferring Member") intends to transfer all or a
portion of its Voting Interest or Economic Interest (the "Sale
Interest") to any Person or entity who is not a Member or
Affiliate of any Member of the Company (a "Third Party"), the
Transferring Member shall give written notice (the "Transfer
Notice") to the other Members of the same Series (the "Non-
Transferring Members") of such intention. The Transfer Notice,
in addition to stating the fact of the intention to transfer,
shall set forth: (i) the amount of Sale Interest proposed to be
transferred; (ii) the name and address of the Third Party; (iii)
the proposed amount of consideration and terms and conditions of
payment offered by the Third Party; and (iv) that the Third Party
has been informed of the Transfer Notice provided for in this
Section 10.3. Each of the Non-Transferring Members may, within
thirty (30) days of its receipt of a Transfer Notice, exercise an
option to purchase its pro-rata portion of the Sale Interest
intended to be transferred by the Transferring Member as
indicated in the Transfer Notice. Each of the Non-Transferring
Members must exercise its option to purchase its pro-rata portion
of the Sale Interest on the terms of the Transfer Notice or
forfeit its option granted hereunder. The
Non-Transferring Member(s), if any, shall exercise its or their,
as the case may be, option by delivering written notice (the
"Acceptance Notice") to the Transferring Member within the time
period specified above.
10.3.2 The purchase price for the Sale Interest
purchased pursuant to this Section 10.3 shall be as set forth in
the Transfer Notice. The closing of the sale and purchase shall
take place within sixty (60) days after the delivery to the
Transferring Member of the Acceptance Notice.
10.3.3 If not all of the Non-Transferring Members
elect to exercise their respective option to purchase its pro-
rata interest in the remaining portion of the Sale Interest
pursuant to Section 10.3(a) above, then the Transferring Member
may transfer the Sale Interest according to the terms of the
Transfer Notice at any time within one hundred eighty (180) days
after the expiration of the thirty (30) day period specified in
Section 10.3.1 above. Such transfer shall not require consent
pursuant to Section 10.1.1, but shall be subject to all other
terms, covenants and conditions of this LLC Agreement.
10.4 Co-Sale Rights. If any Member other than Holdings (the
"Existing Member(s)") desires to transfer a Sale Interest to a
Third Party (the "Third Party Sale"), such Existing Member shall
first give written notice (a "Third Party Sale Notice") to
Holdings, and Holdings may elect, in its sole discretion, to
participate in such sale and sell a proportionate share
(determined with respect to the ratio of the Sale Interest to the
Voting Interest or Economic Interest, as the case may be, owned
by the Existing Member) of its Voting Interest or Economic
Interest, as the case may be, then owned by Holdings to the same
Third Party on the same terms and conditions as the Existing
Member (the "Co-Sale Right"). Such Third Party Sale Notice shall
set forth: (i) the amount of Sale Interest proposed to be
transferred; (ii) the name and address of the Third Party; (iii)
the proposed amount of consideration and terms and conditions of
payment offered by the Third Party; and (iv) that the Third Party
has been informed of the Co-Sale Right provided for in this
Section 10.4. Holdings shall notify the Existing Member within
thirty (30) days of receipt of the notice of the Third Party
Sale, whether Holdings shall exercise its Co-Sale Right, and if
Holdings does not give such notice in a timely manner, such right
shall expire with respect to such instance. Upon the
consummation of a sale by Holdings pursuant to its exercise of
its Co-Sale Right in connection with a Third Party Sale, Holdings
shall make available for transfer the certificate representing
the respective Voting Interest or Economic Interest being
transferred, as the case may be, and shall be entitled to receive
its pro rata share of the proceeds of such Third Party Sale
simultaneously with such transfer. The Co-Sale Right may be
exercised any number of times but may not be transferred by
Holdings under any circumstances. To the extent the Third Party
refuses to purchase the Voting Interest or Economic Interest, or
any part thereof, from Holdings, the Existing Member shall not be
permitted to transfer the Sale Interest to such Third Party.
10.5 Come Along Rights. Notwithstanding the other
provisions of this Article 10, if all but one of the Members (the
"Selling Members") negotiate a bona fide disposition of all the
Voting and Economic Interests owned by the Selling Members to a
Third Party, which disposition has complied with the procedures
of this Article 10, the other Member (the "Other Member") shall,
upon the written request of the Selling Members, sell to the
Third Party all Voting and Economic Interests owned by the Other
Member at the time on the same terms and conditions on which the
Voting and Economic Interests of the Selling Members are
negotiated to be sold to the Third Party by the Selling Members.
The Selling Members shall give the Other Member written notice,
executed by each Selling Member, of any proposed disposition
under this Section 10.5 at least thirty (30) days prior to the
date on which such disposition is scheduled to be consummated,
including the terms and conditions thereof. Provided, however,
that the obligations of KLT to sell pursuant to this Section 10.5
shall be conditioned upon KLT obtaining all required approvals
under that certain Agreement and Plan of Merger among Western
Resources, Inc., Kansas City Power & Light Company and other
named parties, dated as of March 18, 1998, as amended from time
to time, which condition shall terminate and be of no further
effect upon the consummation of such merger. KLT agrees to use
commercially reasonable best efforts to obtain any such required
approvals.
ARTICLE 11
ADMISSION OF SUCCESSOR MEMBERS OR NEW MEMBERS
11.1 Admission of Successor Members or New Members. A
Person, including a transferee or donee of a Member or other
Person owning an Economic Interest, shall be deemed admitted as a
Member of the Company only upon the satisfactory completion of
the following:
(a) Except for those Transfers permitted pursuant to
Section 10.1.1, the Management Committee shall have consented to
the admission of the Person as a Member of the Company and, in
the case of a new Member, the Management Committee shall have
consented to the amount and character of the proposed Capital
Contribution of such new Member.
(b) The Person shall have accepted and agreed to be
bound by the terms and provisions of this LLC Agreement and such
other documents or instruments as the Management Committee may
require.
(c) The Person shall have executed a counterpart of
this LLC Agreement to evidence the consents and agreements above,
and any changes in the Certificate of Formation of the Company
and this LLC Agreement shall have been executed and filed as
deemed necessary by the Management Committee.
(d) If the Person is a corporation, partnership,
limited liability company, trust, association or other entity,
the Person shall have provided the Management Committee with
evidence satisfactory to counsel for the Company of its authority
to become a Member under the terms and provisions of this LLC
Agreement.
(e) If required by the Management Committee, counsel
for the Company or a qualified counsel for the transferee or
donee or new Member, which counsel shall have been approved of by
the Members, shall have rendered an opinion to the Members that
the admission of the Person as a Member is in conformity with the
Delaware Act and that none of the actions in connection with the
admission will cause the termination or dissolution of the
Company or will adversely affect its classification as a
partnership for federal and state income tax purposes.
(f) The Person, as required by the Management
Committee, shall have paid all reasonable legal fees of the
Company and the Members and filing costs in connection with its
admission as a Member.
11.2 Financial Adjustments. No new Members shall be
entitled to any retroactive allocation of losses, income, or
expense deductions incurred by the Company. The Company shall, at
its option, at the time a Member is admitted, do one of the
following (i) close the Company's books (as though the Company's
tax year had ended) or (ii) make pro rata allocations of loss,
income, and expense deductions to a new Member for that portion
of the Company's tax year in which a Member was admitted in
accordance with the provisions of Section 706 of the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations
promulgated thereunder.
ARTICLE 12
TERM. TERMINATION. AND DISTRIBUTION UPON LIQUIDATION
12.1 Term. The term of the Company commenced on the date
the Certificate of Formation for the Company is filed in the
Office of the Delaware Secretary of State in accordance with the
Delaware Act and shall continue until December 31, 2047, unless
earlier dissolved by the unanimous written consent of all of the
Members, or the provisions of the Certificate of Formation, this
LLC Agreement or the Delaware Act.
12.2 Withdrawal of a Member. A Member may withdraw, retire
or resign from the Company at any time upon giving ninety (90)
days prior written notice of such withdrawal to the remaining
Members; provided, however, that absent the approval of such
withdrawal by the affirmative vote or consent of all of the
remaining Members within such ninety (90) day notice period, such
a withdrawal shall be deemed a breach of this LLC Agreement
allowing the Company to recover from the withdrawing Member
damages for such breach as reasonably determined by the remaining
Members, including, without limitation, attorneys' fees, and
offset such damages against the amounts otherwise distributable
to the withdrawing Member.
Subject to the remaining provisions of this LLC Agreement,
upon the withdrawal of a Member, the withdrawing Member shall be
entitled to the "net asset value" of its aggregate Economic
Interest in each Series it owns, which amount shall be the value
of the Series' assets, net of the debts, liabilities and
obligations attributable to the Series; less any deficit balance
in the withdrawing Member's Capital Account, such consideration
which the Company shall pay in cash at the closing, which closing
shall be within thirty (30) days of the date such purchase price
is determined at such time and place as designated by the
Company. For purposes of this determination, the value of the
Company's assets, other than cash, certificates of deposit and
other instruments the value of which are readily ascertainable,
shall be determined with reference to the fair market value of
such assets as determined by the Company's regularly employed
independent certified public accountant, which determination
shall be final, binding and conclusive upon all parties.
Notwithstanding the foregoing, if such withdrawal is deemed
to be a breach of this LLC Agreement as provided above, then the
amount to which the withdrawing Member is entitled for its
Economic Interest shall not include any amount attributable to
the goodwill of the Company and shall be reduced by an amount
equal to any damages attributable to such breach as described
above.
12.3 Events of Dissolution. Unless the continuation of the
Company's business is approved by the affirmative vote or consent
of all of the remaining Members within ninety (90) days of an
event of withdrawal, the Company shall immediately dissolve upon
an event of withdrawal. An event of withdrawal shall include:
12.3.1 The withdrawal, retirement or resignation of
a Member absent the approval of the remaining Members and the
failure to purchase a withdrawing Member's Economic Interest as
provided in Section 12.2 above;
12.3.2 In the case of a Member that is a natural
person, the death or insanity of such Member or the entry by a
court of competent jurisdiction adjudicating such Member
incompetent to manage his person or his estate;
12.3.3 A Member becoming a Bankrupt Member (as
defined in Section 12.4 below);
12.3.4 In the case of a Member that is a trust, the
termination of the trust or the distribution of such trust's
entire interest in the Company, but not merely the substitution
of a new trustee;
12.3.5 In the case of a Member that is a general or
limited partnership, the dissolution and commencement of winding
up of such partnership or a distribution of its entire interest
in the Company;
12.3.6 In the case of a Member that is a
corporation, the filing of articles of dissolution, or their
equivalent, for the corporation or revocation of its charter or
its distribution of its entire interest in the Company;
12.3.7 In the case of a Member that is an estate,
the distribution by the fiduciary of the estate's entire interest
in the Company;
12.3.8 In the case of a Member that is a limited
liability company, the filing of a certificate of cancellation or
articles of dissolution or termination, or their equivalent, for
the limited liability company or a distribution of its entire
interest in the Company;
12.3.9 December 31, 2047;
12.3.10 The affirmative vote or consent by all of the
Members to dissolve, wind up and liquidate the Company;
12.3.11 The happening of any other event that makes
it unlawful or impossible to carry on the business of the
Company; or
12.3.12 Any event which causes there to be only one
(1) Member.
Except as otherwise provided in this LLC Agreement or the
Delaware Act, upon the occurrence of an event of withdrawal as
described in subsection (a) through (h) above, the Member subject
of such an event shall cease to be a Member and shall thereafter
be an Economic Interest Owner. An event of withdrawal shall not
include a Transfer of a Member's interest pursuant to Article 10
above.
12.4 Bankruptcy of a Member. A "Bankrupt Member" shall mean
any Member or Economic Interest who:
12.4.1 makes an assignment for the benefit of its
creditors;
12.4.2 files a voluntary petition in bankruptcy;
12.4.3 files a petition or answer seeking for itself
any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law
or regulation or files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed
against it in any proceeding of such nature;
12.4.4 seeks, consents or acquiesces in the
appointment of a trustee, receiver or liquidator of the Member or
Economic Interest Owner or of all or any substantial part of its
property; or
12.4.5 is the subject of any proceeding seeking
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law
or regulation, and one hundred twenty (120) days after
commencement of such proceeding, the proceeding has not been
dismissed; or without the Members' or Economic Interest Owners'
consent or acquiescence has had a trustee, receiver or liquidator
appointed for itself or for a substantial part of its property
and the appointment is not vacated or stayed, or within ninety
(90) days after the expiration of any such stay, the appointment
is not vacated.
12.5 Option to Purchase. The remaining Members shall have
the option to purchase the Economic Interest of a Bankrupt Member
for the purchase price determined and paid in accordance with the
methodology, terms and conditions provided in Section 12.2 above
for the purchase of a withdrawing Member's interest; provided,
however, that no discounts shall be made to the purchase price
for any deemed breach of the LLC Agreement. If the remaining
Members do not elect to acquire all of the Bankrupt Member's
interest, the interest shall be transferred in accordance with
Article 10 above, or if not transferred, retained by the Bankrupt
Member. If the remaining Members exercise their option hereunder
and the Bankrupt Member fails to assign its interest in the
Company at the time and place fixed for closing, then the
remaining Members may enforce the obligation of the Bankrupt
Member by an action for specific performance.
12.6 Cessation of Business. In the event of the occurrence
of any event effecting the dissolution of the Company, the
Company shall cease to carry on its business, except insofar as
may be necessary for the winding up of its business, but its
separate existence shall continue until the Chairman has filed a
certificate of cancellation in the office of Delaware Secretary
of State or until a decree terminating the Company has been
entered by a court of competent jurisdiction.
12.7 Winding Up. Liquidation. and Distribution of Assets.
Upon dissolution, an accounting shall be made of the accounts of
the Company and of the Company's assets, liabilities and
operations, from the date of the last previous accounting until
the date of dissolution and the Chairman shall immediately
proceed to wind up the affairs of the Company. If the Company is
dissolved and its affairs are to be wound up, the Chairman shall:
(a) Collect and sell or otherwise liquidate all of the
Company's assets as promptly as practicable (except to the extent
a Majority in Interest may determine to distribute any assets to
the Members and Economic Interest Owners in kind);
(b) Allocate any Net Profits or Net Losses resulting
from such sale or other disposition of the Company's assets to
the Members' and Economic Interest Owners' Capital Accounts for
each Series in accordance with Section 2.1(c) above;
(c) Discharge all debts, liabilities and obligations
of the Company, including those to Members and Economic Interest
Owners who are creditors, to the extent otherwise permitted by
law, other than debts, liabilities and obligations to Members and
Economic Interest Owners for distributions, and establish such
reserves as the Management Committee may deem reasonably
necessary to provide for contingencies or liabilities of the
Company (for purposes of determining the Capital Accounts of the
Members and Economic Interest Owners, the amounts of such
reserves shall be deemed to be an expense of the Company);
(d) Distribute the remaining assets, separately by
Series, to the Members and Economic Interest Owners for each
Series either in cash or in kind, with any assets distributed in
kind being valued for this purpose at their fair market value, in
accordance with such Members' positive Capital Account balances
and the allocation provisions of Article 7. If CEL Series assets
are distributed in kind, the CEL assets will be first distributed
to the Series CEL Common Economic Interest holders.
If any assets of the Company are to be distributed in kind,
the fair market value of those assets as of the date of
dissolution, other than cash, certificates of deposit and other
instruments the value of which are readily ascertainable, shall
be as determined as provided in Section 12.2 above. Those assets
shall be deemed to have been sold as of the date of dissolution
for their fair market value, and the Capital Accounts of the
Members and Economic Interest Owners shall be adjusted pursuant
to the provisions of this LLC Agreement to reflect such deemed
sale;
(e) Upon completion of the winding up, liquidation and
distribution of the assets, the Company shall be deemed
terminated; and
(f) The remaining Members shall comply with any
applicable requirements of the Delaware Act pertaining to the
winding up of the affairs of the Company and the final
distribution of its assets.
12.8 Certificate of Cancellation. When all debts,
liabilities, and obligations have been paid and discharged or
adequate provisions have been made therefor and all of the
remaining assets have been distributed to the Members and
Economic Interest Owners, the Chairman shall execute a
certificate of cancellation setting forth the information
required by the Delaware Act and shall be delivered to the
Delaware Secretary of State.
12.9 Return of Contribution Nonrecourse to Other Members.
Except as provided by law or as expressly provided in this LLC
Agreement, upon dissolution, each Member and Economic Interest
Owner shall look solely to the assets of the Company for the
return of its Capital Contributions. If the Company assets
remaining after the payment or discharge of the debts and
liabilities of the Company is insufficient to return the Capital
Contributions of the Members and Economic Interest Owners, the
Members and Economic Interest Owners shall have no recourse
against any other Member or Economic Interest Owner.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 Waiver of Right of Partition. It is specifically
agreed that no Member or Economic Interest Owner shall have the
right to ask for partition of the assets owned or hereafter
acquired by the Company, nor shall any such Member or Economic
Interest Owner have the right to any specific assets of the
Company on the liquidation or winding up of the Company, except
upon the affirmative vote or consent of all Members.
13.2 Special Provisions Relating to Series CEL. If the
Liquidation Value of all of the Series CEL Preferred Economic
Interest units have been paid, upon the request of all of the
Series CEL Common Economic Interest holders, the Company shall
distribute CEL to such holders.
13.3 Notices. Except as otherwise provided in this LLC
Agreement, any notice required or permitted herein shall be in
writing and shall be deemed to have been delivered, whether
actually received or not, two (2) calendar days after being
deposited in the United States mail, by registered mail, return
receipt requested, postage prepaid, addressed to the party
entitled thereto at the last address of such party provided by
such party to the Company. Any notice to the Company shall be
sent to the Company's principal place of business.
13.4 Governing Law. This LLC Agreement has been made and
executed in accordance with the Delaware Act and is to be
construed, enforced, and governed in accordance therewith and
with the laws of the State of Delaware. The parties agree that
all actions or proceedings arising directly or indirectly from
this LLC Agreement shall be commenced and litigated only in the
District Court of Xxxxxxx County, Kansas, or the United States
District Court for the District of Kansas, located in Kansas
City, Kansas. The parties hereby consent to the jurisdiction
over them of the District Court of Xxxxxxx County, Kansas, or the
United States District Court for the District of Kansas, in all
actions or proceedings arising directly or indirectly from this
LLC Agreement.
13.5 Entire Agreement. Except as otherwise provided herein,
this LLC Agreement together with the recitals and Exhibits
hereto, each of which are incorporated herein by this reference,
constitutes the entire agreement among the Members on the subject
matter hereof and may not be changed, modified, amended, or
supplemented except in writing, signed by all of the Members. All
other oral or written agreements, promises, and arrangements in
relation to the subject matter of this LLC Agreement are hereby
rescinded.
13.6 Binding Agreement. Subject to the restrictions and
encumbrances set forth herein, the terms and provisions of this
LLC Agreement shall be binding upon, be enforceable by and inure
to the benefit of the Members, Economic Interest Owners and their
respective heirs, executors, administrators, personal
representatives, successors, and assigns.
13.7 Interpretation. The descriptive headings contained in
this LLC Agreement are for convenience only and are not intended
to define the subject matter of the provisions of this LLC
Agreement and shall not be resorted to for interpretation
thereof.
13.8 Severability. If any provision of this LLC Agreement
or the application thereof to any individual or entity or
circumstance shall be invalid or unenforceable to any extent, the
remainder of this LLC Agreement and the application of such
provisions to other individuals or entities or circumstances
shall not be affected thereby and shall be enforced to the
greatest extent permitted by law.
13.9 Waiver. No consent or waiver, express or implied, by
any Member or Economic Interest Owner to or of any breach or
default by any other Member or Economic Interest Owner in the
performance by such other Member or Economic Interest Owner of
its obligations under this LLC Agreement shall be deemed or
construed to be a consent or waiver to or of any other breach or
default in the performance by such other Member or Economic
Interest Owner of the same or any other obligations hereunder.
The failure on the part of any Member or Economic Interest Owner
to complain of any act or failure to act of any of the other
Members or Economic Interest Owners or to declare any of the
other Members or Economic Interest Owners in default,
irrespective of how long such failure continues, shall not
constitute a waiver by such Member or Economic Interest Owner of
its rights under this LLC Agreement.
13.10 Equitable Remedies. The rights and remedies of
any of the Members or Economic Interest Owners hereunder shall
not be mutually exclusive. Each of the Members and Economic
Interest Owners confirms that damages at law may be an inadequate
remedy for a breach or threatened breach of this LLC Agreement
and agrees that in the event of a breach or threatened breach of
any provision hereof, the respective rights and obligations
hereunder shall be enforceable by specific performance,
injunction or other equitable remedy, but nothing herein
contained is intended to, nor shall it, limit or affect any right
or rights at law or by statute or otherwise of a Member or
Economic Interest Owners aggrieved as against a party for a
breach or threatened breach of any provision hereof; it being the
intention hereof to make clear the agreement of the Members and
Economic Interest Owners that the respective rights and
obligations of the Members and Economic Interest Owners hereunder
shall be enforceable in equity as well as at law or otherwise.
13.11 Attorney's Fees. In the event of a default by a
Member or Economic Interest Owner under this LLC Agreement, the
non-defaulting Members and Economic Interest Owners shall be
entitled to recover all costs and expenses, including attorney's
fees, incurred as a result of said default or in connection with
the enforcement of this LLC Agreement.
13.12 Counterparts. This LLC Agreement may be executed
in two (2) or more counterparts, all of which taken together
shall constitute one (1) instrument.
13.13 Saving Clause. In the event any provision of this
LLC Agreement shall be, or shall be found to be, contrary to the
Delaware Act, such provision shall be deemed amended so as to
conform with such Act.
13.14 Further Documentation. Each of the parties hereto
agrees in good faith to execute such further or additional
documents as may be necessary or appropriate to fully carry out
the intent and purpose of this LLC Agreement.
13.15 Incorporation of Recitals. The preamble and
recitals to this LLC Agreement are hereby incorporated by
reference and made an integral part hereof.
13.16 Indemnification. The Company shall indemnify any
Member, representative on the Management Committee, Chairman or
officer of the Company (each referred to as an "Indemnified
Party") who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, arbitration, suit
or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of the
Company, by reason of the fact that such Indemnified Party is or
was a Member, representative on the Management Committee,
Chairman or officer of the Company or is or was serving at the
request of the Company as a director or officer of another
corporation, partnership, joint venture, trust, or other
enterprise, against liability incurred in connection with such
action, arbitration, suit or proceeding, including attorneys'
fees, judgments, fines and amounts paid in settlement actually
and reasonably incurred by such Indemnified Party in connection
with such action, arbitration, suit or proceeding, including any
appeal thereof, if such Indemnified Party acted in good faith and
in a manner such Indemnified Party reasonably believed to be in
or not opposed to the best interests of the Company and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe such Indemnified Party's conduct was unlawful,
except that no indemnification shall be made in respect of any
claim, issue or matter as to which such Indemnified Party shall
have been adjudged to be liable for gross negligence or gross
misconduct in the performance of such Indemnified Party's duty to
the Company unless and only to the extent that the court or
arbitration in which the action, arbitration or suit was brought
determines upon application that, despite the adjudication of
liability and in view of all the circumstances of the case, such
Indemnified Party is fairly and reasonably entitled to indemnity
for such expenses which the court or arbitration shall deem
proper. The termination of any action, arbitration, suit, or
proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the Indemnified Party did not act in
good faith and in a manner which such Indemnified Party
reasonably believed to be in or not opposed to the best interests
of the Company and, with respect to any criminal action or
proceeding, had reasonable cause to believe that such Indemnified
Party's conduct was unlawful.
13.17 Holdings' Put Option.
(a) Grant of Put Option. Holdings shall have the
option (the "Holdings Put Option") to sell all or part of
Holdings' Economic or Voting Interests in all or any Series (the
"Put Interest") to the Company, upon written notice to the
Company, if the Company has not, by January 31, 2004 (the
"Triggering Date"): (i) consummated an initial public offering;
(ii) merged with or into another entity; or (iii) dissolved or
liquidated its assets. Holdings (including its permitted
successors and assigns) shall have a period of ninety (90) days
after the Triggering Date to exercise the Holdings Put Option.
The events described in clauses (i), (ii) and (iii) of this
Section 13.17(a) shall hereinafter be referred to as the
"Triggering Events").
(b) Purchase Price. The purchase price payable by the
Company upon the exercise by Holdings of the Holdings Put Option
shall equal the "fair market value" of the Put Interest. The
"fair market value" of the Put Interest shall be determined by
the mutual agreement of the Company and Holdings or, if the
Company and Holdings cannot agree upon such value, then by
appraisal by one or more third party appraisers selected by the
Company and Holdings with significant experience in valuing
companies of the size and otherwise similarly situated as the
Company.
(c) No Breach Upon Repurchase. Notwithstanding
anything in Section 12.2 hereof to the contrary, the exercise by
Holdings of the Holdings Put Option shall not be deemed a breach
of this LLC Agreement and the repurchase by the Company of the
Put Interest upon the exercise of the Holdings Put Option shall
be expressly permitted notwithstanding anything herein to the
contrary.
(d) Termination of Holdings Put Option. The Holdings
Put Option shall terminate immediately and without notice if any
of the Triggering Events occur before the Triggering Date.
IN WITNESS WHEREOF, the parties hereto have signed this LLC
Agreement on the date first above written.
KLT ENERGY SERVICES INC.,
a Missouri corporation
By: /s/M. G. English
Name: M. G. English
Title: Secretary
MTB ENERGY, INC.
a Missouri corporation
By: /s/Xxx Xxxxxxx
Name: Xxx Xxxxxxx
Title: President
ENVIRONMENTAL LIGHTING CONCEPTS, INC.
a Minnesota corporation
By: /s/Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: President
SE HOLDINGS, L.L.C.,
a Delaware limited liability
company
By: /s/Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: CEO & Pres.
