Exhibit B.31.2
OPERATING AGREEMENT
OF
ERI/HEC EFA-Med, LLC
OPERATING AGREEMENT
OF
ERI/HEC EFA-Med, LLC
A Limited Liability Company
ARTICLE I
DEFINITIONS
The following terms used in this Operating Agreement shall have the following
meanings (unless otherwise expressly provided herein):
"Affiliate" shall mean any Person, directly or indirectly, controlling,
controlled by, or under common control with another Person.
"Agent" shall mean, with respect to any Person, any director, officer,
employee, agent, or representative or other Person authorized and acting on
its behalf.
"Arbitration Panel" shall have the meaning set forth in Section 16.1(b).
"Articles of Organization" shall mean the Articles of Organization of
ERI/HEC EFA-Med, LLC, as filed with the Secretary of State of Delaware, as
the same may be amended from time to time.
"Business Day" means any day on which banks are generally open for
business in New York, New York, U.S.
"Capital Account" shall mean as of any given date the Capital
Contribution to the Company by a Member as adjusted up to the date in
question pursuant to Article VII.
"Capital Contribution" of any Member shall mean the amount of money
contributed by such Member to the Company pursuant to this Operating
Agreement plus the agreed upon fair market value of property and services
contributed by such Member, whenever made, including the Initial Capital
Contribution.
"Chairman" shall have the meaning set forth in Section 6.1(b).
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any subsequent federal law of similar import, and to the
extent applicable, the Treasury Regulations.
"Company" shall mean ERI/HEC EFA-Med, LLC, whose internal affairs are
governed by this Operating Agreement.
"Customer" shall mean the United States Navy, acting through the Naval
Facilities Engineering Command Xxxxxxxxx Xxxxxx, 00, XXX 00, XXXXXX
XXXXXXXXX-XXX, Xxxx Xxxxxxx, XX.
"Delaware Act" shall mean the Delaware Limited Liability Company Act, 6
Del. C. Sec. 18-101 et seq.).
"Delivering Party " shall mean, with respect to each Delivery Order, the
Member (or its Affiliate) that fulfills (or has undertaken to fulfill) such
Delivery Order in accordance with the terms hereof.
"Delivery Order" shall mean each delivery order from time to time
awarded to the Company by the Customer under, and in accordance with, the
Prime Contract and the Solicitation.
"Economic Interest" shall mean a Member's share from time to time of the
Company's net profits, net losses and distributions of the Company's assets
pursuant to this Operating Agreement and the Delaware Act, but shall not
include any Voting Interests or other right to participate in the management
or affairs of the Company.
"Entity" shall mean a general partnership, a limited partnership, a
limited liability company, a limited liability partnership, a trust, an
estate, an association, a corporation or any other legal or commercial
entity.
"ERI" shall mean ERI Services, Inc., a Delaware corporation, with
current offices located at 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx.
"FCPA" shall mean the U.S. Foreign Corrupt Practices Act of 1977, as
amended.
"Fiscal Year" shall mean the Company's fiscal year.
"HEC" shall mean HEC Inc., a Massachusetts corporation, with current
offices at 00 Xxxxx Xxxxxxx, Xxxxxx, Xxxxxxxxxxxxx.
"Indemnifying Party" shall have the meaning set forth in Section
14.4(a).
"Indemnitee" shall have the meaning set forth in Section 14.4(a).
"Initial Capital Contribution" shall mean the initial contribution to
the capital of the Company pursuant to this Operating Agreement as set forth
on Exhibit A attached hereto and made a part hereof.
"Interest" shall mean a Member's entire interest in the Company,
including such Member's Economic Interest, Voting Interest, the right to
participate in the management of the business and affairs of the Company, and
the obligations as a Member.
"Management Committee" shall mean the management committee of the
Company formed in accordance with Section 6.1.
"Member" shall mean each of the parties who executes a counterpart of
this Operating Agreement as a Member and each of the parties who may
hereafter become Members as permitted herein.
"Non-Delivering Party" shall mean, with respect to each Delivery Order,
the Member that is not the Delivering Party for such Delivery Order.
"Operating Agreement" shall mean this Operating Agreement, together with
any amendments, modification or other changes hereto.
"Prime Contract" shall mean the indefinite delivery/indefinite quantity
contract No. N47408-00-R-2109 awarded by the Customer to the Company in
response to the Solicitation.
"Person" shall mean an individual or Entity, and the heirs, executors,
administrators, legal representatives, successors, and assigns of such
"Person" as applicable, where the context so permits.
"Proposal" shall mean, with respect to each Delivery Order, the proposal
with respect thereto prepared by the Delivering Party.
"Site Assignment" shall mean the selection and assignment of a site for
which a Proposal will be prepared.
"Solicitation" shall mean Solicitation No. N47408-00-R-2109 Energy
Savings Performance Contract for EFA-MED Mediterranean Area issued by the
Customer.
"Stated Margin" shall mean, with respect to each Delivery Order, the
stated Implementation Margin in column D of Schedule H-2 to be received by
the Delivering Party as set forth in the final financial schedule in the
Proposal for such Delivery Order delivered to the Customer.
"Third Party Claims" shall have the meaning set forth in Section
14.4(a).
"Transferring Member" shall mean a Member that Transfers, or proposes to
Transfer (as the context requires), its Interest.
"Transfer" shall mean any sale, gift, assignment, transfer, pledge,
encumbrance, exchange or other disposition, with or without consideration.
"Transferee" shall mean the Person to whom the Transferring Member
Transfers its Interest.
"Treasury Regulations" shall include proposed, temporary and final
regulations promulgated under the Code.
"Unanimous Vote" shall mean the affirmative vote of all of the Members
or all of the representatives on the Management Committee, as the context
requires.
"Vice Chairman" shall have the meaning set forth in Section 6.1(c).
"Voting Interest" shall mean the right of each Member to vote on,
consent to or otherwise participate in any decisions of Members.
ARTICLE II
FORMATION OF COMPANY
2.1 - Formation. The Company was formed as a limited liability company
under the Delaware Act by the filing of its Articles of Organization with the
Secretary of the State of Delaware. Except as provided in this Operating
Agreement, all rights, liabilities, and obligations of the Members, both as
between themselves and with respect to Persons not parties to this Operating
Agreement, shall be as provided in the Delaware Act, and this Agreement shall
be construed in accordance with the provisions of the Delaware Act. To the
extent that the rights or obligations of any Member are different by reason
of any provision of this Operating Agreement from what they would be in the
absence of such provision, this Operating Agreement shall, to the extent
permitted by the Delaware Act, control.
2.2 - Name. The name of the Company is ERI/HEC EFA-Med, LLC.
2.3 - Principal Place of Business. The principal place of business of
the Company shall be 00 Xxxxx Xxxxxxx, Xxxxxx, XX, 00000. The Company may
locate its place of business at any other place or places as the Members may
from time to time deem advisable.
2.4 - Term. The term of the Company shall be as set forth in the
Articles of Organization, unless the Company is earlier dissolved in
accordance with either the provisions of this Operating Agreement or the
Delaware Act.
2.5 - Initial Members. The names and addresses, Initial Capital
Contribution, initial Economic Interest and initial Voting Interest of each
of the initial Members are set forth on Exhibit A. Each Member may change
its address by notifying the other Members and the Company of such change in
the manner set forth in Section 17.1.
2.6 - Agent for Service of Process. The agent for service of process
for the Company shall be CT Corporation, 000 Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxx, XX 00000 , or such other as may be designated by the Management
Committee.
ARTICLE III
BUSINESS OF COMPANY
3.1 - Limitation on Business. The Company shall limit its business to
the execution, delivery and performance of the Prime Contract, the
Solicitation and activities related thereto, including the preparation,
submission and fulfillment of Delivery Orders. Delivery Orders will be
assigned and fulfilled in accordance with Article 8 hereof. Unless otherwise
approved by Unanimous Vote of the Members, the Company shall not conduct any
business or activities other than those reasonably related to, or otherwise
reasonably necessary in fulfillment of, the Prime Contract, the Solicitation
and the Delivery Orders.
3.2 - Powers. In order to carry out its purposes, the Company is
empowered and authorized to do any and all acts necessary, appropriate,
proper, advisable, incidental to or convenient for the furtherance and
accomplishment of its purposes, and for the protection and benefit of the
Company, including, but not limited to, (a) the incurring of indebtedness,
secured or unsecured, for any purpose of the Company, (b) disposing of any or
all or substantially all of the assets of the Company, (c) entering into
agreements of indemnification as may be necessary, proper, advisable,
incidental to or convenient for the furtherance of its purposes, and (d)
exercising any other such powers that may be exercised by a limited liability
company under the Delaware Act.
ARTICLE IV
RIGHTS AND OBLIGATIONS OF MEMBERS
4.1 - Limitation of Liability. Each Member's liability shall be limited
as set forth in this Operating Agreement, the Delaware Act and other
applicable law.
4.2 - List of Members. Any Member shall be entitled to, at any time, a
list showing the names, addresses and Interests of all Members.
4.3 - Company Debt Liability. Members shall not be personally liable
for debts or losses of the Company beyond their respective Capital
Contributions and any obligation of any such Member to make Capital
Contributions, or as otherwise required by law.
4.4 - Priority and Return of Capital. Except as expressly provided
herein, no Member shall have priority over any other Member, either as to the
return of Capital Contributions or as to net profits, net losses or
distributions; provided that this Section shall not apply to repayment of any
loans (as distinguished from Capital Contributions) which a Member has made
to the Company with the approval of the Management Committee.
ARTICLE V
MEETINGS OF MEMBERS
5.1 - Annual Meeting. The annual meeting of Members shall be held on
the first Tuesday after the end of the second fiscal quarter of the Company
or at such other time as shall be determined by resolution of the Management
Committee for the purpose of the transaction of such business as may come
before the meeting. To the extent possible, the annual meeting of the
Members shall occur immediately before the annual meeting of the Management
Committee.
5.2 - Special Meetings. Special meetings of Members, for any purpose,
unless otherwise prescribed by statute, may be called by any Member. No
meetings shall be conducted without the presence of a quorum (as described in
Section 5.7). In the event that a quorum shall not be present at any
meeting, such meeting shall be rescheduled. Each Member shall use its best
efforts to ensure that its representatives are present at each properly
scheduled meeting.
5.3 - Place of Meetings. Unless otherwise agreed by the Members, the
place of each meeting, regular or special, shall alternate between the
principal offices of each Member.
5.4 - Notice of Meetings. Except as provided in Section 5.5, written
notice stating the place, day and hour of the meeting and the purpose or
purposes for which the meeting is called shall be delivered not less than ten
(10) nor more than fifty (50) days before the date of the meeting by, or at
the direction of, the Member calling the meeting to the other Member.
5.5 - Meeting of all Members. If all Members shall meet at any time and
place, and consent to the holding of a meeting at such time and place, such
meeting shall be valid without call or notice, and at such meeting lawful
action may be taken. Members may participate in meetings through telephonic,
video conferencing or similar means.
5.6 - Record Date. For the purpose of determining Members entitled to
notice of or to vote at any meeting of members or any adjournment thereof, or
Members entitled to receive payment of any distribution, or in order to make
a determination of Members for any other purpose, the date on which notice of
the meeting is mailed or the date on which the resolution declaring such
distribution is adopted, as the case may be, shall be the record date for
such determination of Members. When a determination of Members entitled to
vote at any meeting of Members has been made as provided in this Section,
such determination shall apply to any adjournment thereof.
5.7 - Quorum. The presence of two duly elected officers of each Member,
represented in person, by phone or by proxy, shall constitute a quorum at any
meeting of Members.
5.8 - Manner of Acting. If a quorum is present, a Unanimous Vote shall
be the act of Members.
5.9 - Proxies. At all meetings of Members, a Member may vote in person
or by proxy executed in writing by such Member or by a duly authorized
attorney-in-fact. Such proxy shall be filed with the Company before or at
the time of the meeting. No proxy shall be valid after eleven (11) months
from the date of its execution, unless otherwise provided in the proxy.
5.10 - Action by Members Without a Meeting. Action required or
permitted to be taken at a meeting of Members may be taken without a meeting
if the action is evidenced by one or more written consents describing the
action taken, signed by all the Members. Such consent shall be delivered to
the Company for inclusion in the minutes or for filing with the Company
records. Action taken under this Section is effective when all Members have
signed the consent, unless the consent specifies a different effective date.
5.11 - Waiver of Notice. When any notice is required to be given to any
Member, a waiver thereof in writing signed by such Member, whether before,
at, or after the time stated therein, shall be equivalent to the giving of
such notice.
ARTICLE VI
MANAGEMENT COMMITTEE
6.1 - Management Committee.
(a) Unless otherwise approved by a Unanimous Vote of the Members, the
Management Committee shall consist of a total of four (4) representatives,
two of which shall be appointed by ERI and two of which shall be appointed by
HEC. Each Member shall be entitled to remove, at any time by written notice
to the other Member, the representative on the Management Committee appointed
by such Member. Each Member also shall have the right to designate an
alternate representative for each representative who shall serve in the place
of the originally-appointed representative if such representative is absent
or unable to attend a meeting. If a vacancy exists on the Management
Committee or with respect to any alternate, whether due to death,
resignation, removal or otherwise, the Member entitled to appoint a
representative for such vacant position shall take the action necessary to
cause such vacancy to be filled; provided that in the case of a vacancy for a
representative, its alternate shall serve until such replacement.
(b) The initial Chairman of the Management Committee (the "Chairman")
shall be appointed by ERI at the first meeting of the Management Committee
and shall serve until his or her successor is appointed. At the first annual
meeting of the Management Committee, the successor Chairman shall be
appointed by HEC; thereafter, on an annual basis, as determined at the annual
meeting of the Management Committee, the Chairman's position shall rotate
between ERI and HEC. If a vacancy occurs in the position of Chairman for
whatever reason, including removal by the Member appointing the Chairman, the
Member that appointed the previous Chairman shall take the action necessary
to fill such vacancy until the next annual meeting.
(c) The initial Vice Chairman of the Management Committee (the "Vice
Chairman") shall be appointed by HEC at the first meeting of the Management
Committee and shall serve until his or her successor is appointed. At the
first annual meeting of the Management Committee, the successor Vice Chairman
shall be appointed by ERI; thereafter, on an annual basis, as determined at
the annual meeting of the Management Committee, the Vice Chairman's position
shall rotate between ERI and HEC. If a vacancy occurs in the position of
Vice Chairman for whatever reason, including removal by the Member appointing
the Vice Chairman, the Member that appointed the Vice Chairman shall take the
action necessary to fill such vacancy until the next annual meeting.
(d) Each Member shall take such action as is necessary to effect the
foregoing appointments and constitution of the Management Committee. It is
the intent of the parties that at any particular time, the Chairman and the
Vice Chairman shall be appointed by different Members.
(e) Representatives on the Management Committee shall not receive any
compensation whatsoever for their services; provided, however, that the
Company shall reimburse the Chairman and Vice Chairman for all costs and
expenses reasonably incurred by them in connection with the management of the
Company pursuant to this Article VI. No representative shall be prohibited
from serving the Company or any of its Affiliates in any other capacity and
receiving appropriate compensation for such service.
6.2. - Authority.
(a) Subject to the terms of this Operating Agreement and to the fullest
extent permitted by applicable law, the Management Committee shall have
complete and exclusive power to direct and control the business and affairs
of the Company. No Member shall have the right to bind or otherwise act on
behalf of the Company absent written authorization from the Management
Committee, signed by at least one (1) representative of each Member.
(b) The Management Committee shall appoint such committees as it deems
appropriate, and may dismiss any of them, with or without cause.
6.3. - Meetings.
(a) The Members shall convene the first meeting of the Management
Committee within fifteen (15) days after the execution of this Operating
Agreement. The Management Committee shall meet at least once in each fiscal
quarter of the Company at the principal offices of each Member, on an
alternating basis, or at such locations as may be determined by the
Management Committee. The annual meeting of the Management Committee shall
occur immediately after the annual meeting of the Members. An agenda and
full details shall be delivered by the Chairman to each representative at
least three (3) days prior to such regular meeting; provided that additional
items may be considered beyond those set forth on the agenda and any
representative may include items on the agenda by written request to the
Chairman after the distribution of such agenda.
(b) The Chairman or the Vice Chairman shall be entitled to convene
special meetings of the Management Committee at any time on at least five (5)
Business Days' advance written notice to the other representatives. The
Members anticipate that special meetings will be required to review and act
upon Site Assignments and/or Proposals and acknowledge that prompt action
upon Site Assignments and Proposals is essential to the procurement of
Delivery Orders. Notice of a special meeting shall contain an agenda in full
detail (including, if appropriate, a copy or summary of any Proposal to be
acted upon) and shall state the purpose or purposes for which such special
meeting is being called. Notices of meetings shall include the date, time
and location (which, in the absence of agreement, shall alternate between the
principal offices of each Member) of such meeting.
(c) A quorum for the transaction of any business required to be taken by
the Management Committee shall be met if all of representatives (or their
respective alternates) are present in person, by phone or by proxy.
Representatives may participate in meetings through telephonic, video
conferencing or similar means. If a member of the Management Committee
cannot be so present at a meeting, and such representative's alternative also
is unavailable, then such representative may appoint a proxy to attend in
such representative's place. The representatives may waive notice of any
meeting.
(d) Action required or permitted to be taken at a meeting of the
Management Committee may be taken without a meeting if the action is
evidenced by one or more written consents describing the action taken, signed
by all the representatives of the Management Committee. Such consent shall
be delivered to the Company for inclusion in the minutes or for filing with
the Company records. Action taken under this Section is effective when all
representatives have signed the consent, unless the consent specifies a
different effective date.
6.4. - Committee Action.
(a) A Unanimous Vote of the Management Committee shall be required for
a decision at any meeting in which a quorum exists.
(b) Minutes reflecting the actions taken at all meetings of the
Management Committee shall be kept and shall be the responsibility of the
Member who had designated the then-current Chairman of the Management
Committee or, in the case of a Special Meeting, of the Member who called such
meeting. The keeper of the minutes need not be a member of the Management
Committee. Copies of the minutes shall be maintained at the principal office
of the Company and shall be transmitted to each member of the Management
Committee or committee thereof taking the action promptly after the meeting
in question.
ARTICLE VII
CONTRIBUTIONS; CAPITAL ACCOUNTS
7.1 - Members' Capital Contributions. Simultaneously with the execution
and delivery hereof, each Member shall contribute the amount set forth in
Exhibit A for such Member as its share of the Initial Capital Contribution.
7.2 - Additional Contributions. The Management Committee shall
determine, by Unanimous Vote, the timing and amount of any additional Capital
Contributions required for the administration or conduct of business of the
Company. Except for the Initial Capital Contribution, no Member shall be
required to make any Capital Contribution. Except as otherwise provided for
in this Article VII, no Member has the right to make a voluntary Capital
Contribution. In the event that a Member elects not to make a Capital
Contribution as called for by the Management Committee, such amount due shall
be deducted from the next Special Allocation due such Member pursuant to
Section 9.2. The Member shall not receive any Special Allocation pursuant to
Section 9.2 until such Member has paid all Capital Contributions called for
under this Section 7.2.
7.3 - Capital Accounts. A separate Capital Account will be maintained
for each Member in accordance with applicable tax law. At no time during the
term of the Company or upon the dissolution and liquidation thereof shall a
Member with a negative balance in his Capital Account have any obligation to
the Company or the other Members to restore such negative balance.
7.4 - Interest On and Return of Capital Contributions. No Member shall
be entitled to interest on its Capital Contribution or any undistributed
amounts, or to return of its Capital Contribution. Each Member acknowledges
that this is essential to protect the Members' mutual Interests in the
Company.
7.5 - Disbursements. The Company shall pay all costs and expenses of
the business, including financing costs and related expenses, taxes which are
the obligation of the Company and other carrying charges, and all operating
expenses. The Company may set aside funds for any items that are proper
Company purposes, including operating expenses, debt service, capital
improvements, replacements, repairs, other capital requirements, and
liabilities, contingent or otherwise, of the Company, in each case as
determined by the Chairman.
7.6 Succession to Transferor's Capital Account. In the event all
or a portion of a Membership Interest is transferred pursuant to the terms of
this Operating Agreement, the transferee shall succeed to the Capital Account
(or portion thereof) of the transferor which relates to the transferred
interest.
ARTICLE VIII
DELIVERY ORDERS
8.1 - Intake; Delegation. Delivery Orders shall be assigned to each
Member for fulfillment such that after the expiration of the Prime Contract,
each Member shall have received the opportunity to earn, in the aggregate, a
substantially similar Stated Margin. Upon learning of a potential Site
Assignment and the Customer's request for a Proposal for such site, the
Member shall notify the Management Committee of such opportunity, including
such details as may be available to such Member at such time. The Management
Committee, acting by Unanimous Vote , shall have the full power and authority
to grant the Site Assignment and delegate responsibility for the preparation
of such Proposal and fulfillment of the underlying Delivery Order to either
Member consistent with Schedule 8.1 and the provision of quality and timely
services to the Customer. If the Management Committee cannot agree on the
delegation of the Site Assignment and Proposal and corresponding Delivery
Order for whatever reason, such Site Assignment, Proposal and Delivery Order
shall be delegated to a Member based on the geographic location set forth in
Schedule 8.1 attached hereto, with each Member having the exclusive right to
fulfill Delivery Orders in the geographic regions/countries assigned to it in
Schedule 8.1. In either case, however, the Management Committee shall be
bound by the following:
(a) if the Customer from time to time adds or removes any geographic
regions/countries, the Members shall, in good faith, negotiate
appropriate revisions to Schedule 8.1 consistent with the foregoing
principles, with due regard, for maintaining the right of each Member to
continue to fulfill Delivery Orders in geographic regions/countries that
such Member has previously performed or is performing Delivery Orders;
and
(b) from and after August 1, 2002 , as part of the Management
Committee's review of each proposed Site Assignment, the Management
Committee shall review the aggregate Stated Margins under fully executed
Delivery Orders assigned to each Member (including the Stated Margins on
any pending Site Assignments, Proposals and/or outstanding Delivery
Orders, but excluding the Stated Margins on any Site Assignments,
Proposals or Delivery Orders for which responsibility has been taken by
a Member after such responsibility has been declined by another Member
pursuant to Section 8.2). If the aggregate Stated Margins of one Member
exceed those of the other Member by more than twenty (20%), the
Management Committee shall delegate such Delivery Order to the Member
with such deficiency (unless such Member expressly consents to a
different arrangement).
8.2 - Declined Assignment. No Member shall be required to accept a Site
Assignment, Proposal and/or Delivery Order. If a Member declines a
delegation of a Site Assignment, Proposal and/or Delivery Order, the other
Member shall have the right, not the obligation, to undertake the obligations
pertaining to such Site Assignment, Proposal and/or Delivery Order. In the
event that a Member declines to undertake or accept a Site Assignment,
Proposal and/or Delivery Order within a geographic region/country assigned to
it in Schedule 8.1, and the other Member accepts responsibility for such Site
Assignment. Proposal and/or Delivery Order, then the declining Member shall
automatically and irrevocably forfeit its right to the special allocation to
the Non-Delivering Party applicable to such Delivery Order under Section 9.2,
such that the Delivering Party shall be entitled to retain one hundred
percent (100%) of the Stated Margin.
8.3 - Proposal Development. After acceptance of responsibility for a
Delivery Order, the Delivering Party shall enter into a subcontracting
agreement with the Company and shall be solely responsible for the
development and preparation of the Proposal, including the site survey(s)
required to be conducted under the Prime Contract, for the underlying
Delivery Order. The Delivering Party shall keep the Management Committee
reasonably informed through quarterly reports given at Management Committee
meetings of its efforts with respect to, and the results of, the site
survey(s) and other material elements of the Proposal.
8.4 - Documentation; Quality Control.
(a) The Management Committee shall develop and establish a uniform set
of standards applicable to all documentation, including Proposals submitted
or to be submitted to the Customer pursuant to the Prime Contract and any
partial novation or subcontracting arrangements contemplated by the Members.
To the fullest extent reasonably possible, each Delivering Party shall
adhere to such documentation standards. In any event, when submitting a
Proposal to the Management Committee in accordance with Section 8.6, the
Delivering Party shall specifically identify in writing any and all variances
from such standards and a reasonable explanation thereof.
(b) The Management Committee shall develop and establish a quality
assurance/quality control program applicable to all Proposals. The program
will include the technical review of all Proposals by representatives of the
Delivering Party and the Non-Delivering Party, in a cooperative effort to
ensure the consistency and quality of all work proposed to the Customer.
8.5 - Internal Submission. Prior to the submission of any Proposal to
the Customer with respect to a Delivery Order, the Delivering Party shall
submit such Proposal to the Management Committee. No Proposal shall be
submitted to the Customer unless the Management Committee has authorized such
submission by Unanimous Vote. All Proposals shall be submitted by the
Company and signed by a member of the Management Committee appointed by each
Member. If the Management Committee fails to authorize the submission of any
Proposal to the Customer, the Non-Delivering Party shall reimburse the
Delivering Party for an amount equal to fifty percent (50%) of the costs and
expenses incurred by the Delivering Party in the preparation and submission
of such Proposal, as set forth as the "feasibility study" in the Proposal
provided that the Proposal was prepared and submitted in good faith
consistent with reasonable commercial practices. Such reimbursement shall be
paid within fifteen (15) days after the earlier to occur of the Management
Committee's failure to authorize such submission, or the passage of the
deadline for the submission of the Proposal to the Customer.
8.6 - Submission to Customer. After receiving authorization from the
Management Committee, the Delivering Party shall be responsible for
submission of the Proposal to the Customer. If the Customer requests any
material revisions to the Proposal, the Delivering Party shall resubmit such
revised Proposal to the Management Committee in accordance with, and subject
to Section 8.5 (including the right of reimbursement for the failure to
authorize the submission of such revised Proposal). After acceptance of a
Proposal by the Customer, the Delivering Party shall have full discretion and
responsibility for fulfillment of the Delivery Order, including the financing
thereof.
8.7 - Contract Amendments. The Company shall not authorize, approve or
otherwise consent to any amendment, waiver or other modification of the Prime
Contract without Unanimous Vote of the Management Committee approving such
action (it being recognized, however, that the Customer may have the right to
unilaterally change certain terms of the Prime Contract in accordance with
the terms thereof).
ARTICLE IX
ALLOCATIONS; DISTRIBUTIONS
9.1 - Allocations. Subject to Section 9.2 the net profits and net
losses of the Company, each as determined consistent with the Company's
information tax return filed for Federal income tax purposes, for each Fiscal
Year shall be allocated to Members in the manner determined by the Management
Committee to reasonably reflect each Member's Interest and in compliance with
applicable tax law.
9.2 - Special Allocation.
(a) Except as set forth in Section 8.2, for each Delivery Order assigned
to a Member pursuant to the terms of Article VIII hereof, the Delivering
Party shall pay twenty percent (20%) of the Stated Margin of the Delivery
Order to the Company which shall make a Special Allocation equal to that
amount to the Non-Delivering Party. Such payment shall be made, by wire
transfer of immediately available funds, within fifteen (15) days of receipt
of the first payment on account of the Delivery Order , irrespective of the
receipt of the full amount due to the Delivering Party on account of the
underlying Delivery Order.
(b) The Members specifically acknowledge that the payments made by the
Delivering Party to the Company and the Special Allocation set forth in
Section 9.2(a) shall be determined based on Stated Margin, without regard to
the actual profit made, or loss suffered by the Delivering Party. As the
party responsible for the fulfillment of the Delivery Order, the Delivering
Party shall bear all risks and receive all benefits (other than the payments
due to the Company for the Special Allocation to the Non-Delivering Party
pursuant to Section 9.2(a)) arising from, or otherwise related to, the
underlying Delivery Order; accordingly, after making the payment to the
Company on account of the Special Allocation under Section 9.2(a), the
Delivering Party shall be entitled to an allocation of all payments made by
the Customer on account of any Delivery Order.
(c) If the Customer cancels a Proposal or Delivery Order, but allows the
Company to recover its costs associated therewith, there shall not be any
Special Allocation applicable to such cost reimbursement for such Delivery
Order, all of which payments shall be allocated to the Delivering Party;
provided, however, that if the Customer pays any portion of the Stated Margin
with respect to such Delivery Order, the Delivering Party shall pay twenty
percent (20%) of such margin in same manner as the Special Allocation under
Section 9.2(a).
9.3 - Distributions. Except as provided in Section 9.2, all
distributions of cash or other property authorized by the Management
Committee (after the provision of adequate reserves) shall be made to Members
pro rata in proportion to their respective Economic Interests on the record
date of such distribution. Except as provided in Section 9.2, all
distributions shall be made at such time and in such manner as determined by
the Management Committee. No Member shall have the right to demand and
receive property other than cash. All amounts withheld pursuant to the Code
or any provisions of state or local tax law with respect to any payment or
distribution to Members from the Company shall be treated as amounts
distributed to the relevant Member(s) pursuant to this Section 9.3.
9.4 - Limitation Upon Distributions. No distribution shall be declared
and paid unless, after the distribution is made, the assets of the Company
are in excess of all liabilities of the Company, except liabilities to
Members on account of their Capital Contributions.
9.5 - No Right to Distribution. Notwithstanding anything to the
contrary in this Operating Agreement or under applicable law, no Member shall
be entitled to receive any distribution of money or other property in excess
of $1.00 by reason of such Person ceasing to be a Member until the
dissolution of the Company, unless approved by the Management Committee.
ARTICLE X
ACCOUNTING, REPORTS
10.1 - Accounting Period. The Company's Fiscal Year shall be the
calendar year.
10.2 - Company Books. Members shall designate a Person to maintain and
preserve all accounts, books, and other relevant Company documents. Upon
reasonable request, each Member shall have the right, during ordinary
business hours, to inspect and copy such Company documents at the requesting
Member's expense.
10.3 - Records, Audits and Reports. The Management Committee shall
maintain (or cause the maintenance of) records and accounts of all operations
and expenditures of the Company. At a minimum, the Company shall keep at its
principal place of business the following records:
(a) A current and a past list setting forth in alphabetical order the
full name and last known business, residence, or mailing address of each
Member, both past and present;
(b) A copy of the Articles of Organization and all amendments thereto;
(c) Copies of the Company's Federal and state income tax returns and
financial statements for the three most recent years;
(d) Copies of the Company's current effective written Operating
Agreement and all amendments thereto and copies of any written Operating
Agreements no longer in effect;
(e) A writing setting forth the amount of cash, if any, and a statement
of the agreed upon fair market value of other property or services
contributed by each Member and the times at which or the events upon the
happening of which any additional Capital Contributions are to be made by
each Member; and
(f) Other writings, if any, prepared pursuant to a requirement in this
Operating Agreement.
10.4 - Returns and Other Elections. The Management Committee shall
cause the preparation and timely filing of all returns required to be filed
by the Company pursuant to the Code and all other tax returns deemed
necessary and required in each jurisdiction in which the Company does
business. All elections permitted to be made by the Company under Federal
and state laws shall be made by the Management Committee. Copies of such
returns, or pertinent information therefrom, shall be furnished to Members as
soon as practical after the end of the Fiscal Year.
10.5 - Bank Accounts.
(a) The Management Committee shall cause the Company to maintain an
operating account at a bank having a superior credit rating and adequate
capital surplus. All cash receipts of the Company shall be deposited in such
bank account. Withdrawals from such operating account shall occur at the
joint direction of the Chairman and the Vice Chairman, or their respective
designees. There shall not be deposited in the operating account any funds
other than those belonging to the Company, and no other funds will in any way
be commingled with funds of the Company.
(b) If the Customer requires that the Company (as opposed to the
Delivering Party) receive payments under any Delivery Order, the Management
Committee shall cause the Company to maintain an account at a bank designated
by the Delivering Party. All payments under such Delivery Order shall be
deposited into such account, and withdrawals from such account shall occur at
the sole direction of the Delivering Party or its designees. There shall not
be deposited in such account any funds other than those relating to such
Delivery Order (unless the Delivering Party directs the deposit thereto of
payments on account of other Delivery Order(s) undertaken by such Delivering
Party), and no other funds of the Company will in any way be commingled with
such account.
ARTICLE XI
TRANSFERABILITY
11.1 - Free Transferability.
(a) Each Member shall have the right to Transfer all (but not less than
all) of its Interest without the approval of the other Member and/or the
Management Committee.
(b) Upon and contemporaneously with any Transfer, the Transferee shall
be entitled to exercise all of the rights and powers of the Transferring
Member, including, all rights with respect to participation in, and
appointment of representatives to, the Management Committee.
(c) No transfer of an Interest shall be effective unless and until
written notice (including the name and address of the proposed Transferee and
the date of such transfer) has been provided to the Company and the non-
transferring Member. Any Transfer of an Interest shall be deemed effective
as of the date on which the Company receives such notice (unless such notice
specifies a different date).
11.2 - Assumption. As a condition to recognizing the effectiveness and
binding nature of any Transfer, the remaining Member shall require the
Transferring Member and the proposed Transferee to execute, acknowledge and
deliver to the Company such instruments of transfer, assignment and
assumption and such other certificates, representations and documents, and to
perform all such other acts which the remaining Member may reasonably deem
necessary or desirable to:
(a) constitute such Transferee as a Member;
(b) confirm that the Transferee has accepted, assumed and agreed to be
subject and bound by all of the terms, obligations and conditions of
this Operating Agreement;
(c) preserve the Company after the completion of such Transfer under the
laws of each jurisdiction in which the Company is qualified, organized
or does business;
(d) maintain the status of the Company as a limited liability company
for Federal and state tax purposes; and
(e) assure compliance with any applicable state and Federal laws
including securities laws and regulations.
11.3 - Outstanding Delivery Orders. The Transfer of an Interest shall
not relieve the Transferring Member from any obligations or other liabilities
as the Delivering Party under any pending Proposals and/or outstanding
Delivery Orders. The foregoing shall not affect any consent, assignment,
novation or other arrangement between the Transferring Member and the
Customer with respect to such Proposals and Delivery Orders; provided,
however, that, absent the approval of the Management Committee, any such
arrangement with the Customer shall not affect the obligations of the
Transferring Member under this Operating Agreement with respect to such
Proposals and Delivery Orders (including the indemnification obligation set
forth in Article 14 hereof).
11.4 - Indemnification. Each Transferring Member hereby agrees to
indemnify the Company and the remaining Member against, and hold each of them
harmless from any and all loss, damage, cost or expense (including attorneys'
fees, tax liabilities and/or loss of tax benefits) arising directly or
indirectly as a result of any Transfer or purported Transfer in violation of
this Article.
ARTICLE XII
ADDITIONAL MEMBERS
In addition to Persons who become Members as a result of a transfer
pursuant to Section 11.1, any Person approved by Unanimous Vote of the
Members may become a Member in the Company by the issuance by the Company of
additional Interests for consideration determined by Unanimous Vote.
Notwithstanding the foregoing, no new Members shall be admitted to the
Company if such action would result in a breach of the Prime Contract. No
new Member shall be entitled to any retroactive allocation of losses, income
or expense deductions incurred by the Company. Members may, at their option,
at the time a Member is admitted, close the Company books (as though the
Company's tax year had ended) or make pro-rate 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(d) of the Code and the Treasury Regulations promulgated
thereunder.
ARTICLE XIII
DISSOLUTION AND TERMINATION
13.1 - Withdrawal. Notwithstanding anything to the contrary herein, in
the Delaware Act or under any applicable law, no Member shall have the power
to voluntarily withdraw or otherwise retire from the Company absent approval
of the Management Committee. Any such withdrawal shall not relieve such
Member of any obligation theretofore incurred hereunder.
13.2 - Dissolution.
(a) The Company shall be dissolved and its affairs shall be wound up
upon the happening of any of the first to occur of the following:
(i) at the time specified in its Article of Organization;
(ii) adoption of a resolution to such effect by Unanimous Vote of
the Members or the Management Committee (e.g., a resolution
approving the sale, exchange, involuntary conversion or other
disposition of all or substantially all of the assets of the
Company);
(iii) the expiration, cancellation or other termination of the Prime
Contract without the possibility of extension or renewal; or
(iv) entry of a decree of final dissolution under Section 18-802 of
the Delaware Act;
(b) As soon as possible following the occurrence of any of the events
specified in Section 13.2(a) effecting the dissolution of the Company, the
Members shall proceed to wind up the Company's business in accordance with
the Delaware Act.
13.3 - Winding Up, Liquidation and Distribution of Assets.
(a) Upon the occurrence of an event of dissolution pursuant to Section
13.2(a), an accounting shall be made by the Company's independent accountants
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 Management Committee shall immediately proceed to wind
up the affairs of the Company.
(b)If the Company is dissolved and its affairs are to be wound up, the
Management Committee shall:
(i) Sell or otherwise liquidate all of the Company's assets as promptly
as practicable (except to the extent the Management Committee may
determine to distribute any assets to Members in kind) and distribute
all pending Delivery Orders to the appropriate Delivering Party;
(ii) Allocate any profit or loss resulting from such sales to the
Members' Capital Accounts in accordance with this Operating Agreement;
(iii) Discharge all liabilities of the Company, including liabilities
to Members who are creditors, to the extent otherwise permitted by law,
other than liabilities to Members for distributions, and establish such
reserves as may be reasonably necessary to provide for contingent or
liabilities of the Company (for purposes of determining the Capital
Accounts of Members, the amounts of such reserves shall be deemed to be
an expense of the Company);
(iv) Distribute the remaining assets in the following order:
(1) If any assets of the Company are to be distributed in kind, the
net fair market value of such assets as of the date of dissolution
shall be determined by independent appraisal or Unanimous Vote.
Such assets shall be deemed to have been sold as of the date of
dissolution for their fair market value, and the Capital Account of
each Member shall be adjusted pursuant to the provisions of this
Operating Agreement to reflect such deemed sale; and
(2) The positive balance (if any) of each Member's Capital Account
(as determined after taking into account all Capital Account
adjustments for the Company's taxable year during which the
liquidation occurs) shall be distributed to Members, either in cash
or in kind, as determined by Members, with any assets distributed in
kind being valued for this purpose at their fair market value. Any
such distributions to Members in respect of their respective Capital
Accounts shall be made in accordance with the Code and applicable
Treasury Regulations.
(c) Upon completion of the winding up, liquidation and distribution of
the assets, the Company shall be deemed terminated.
(d) The Management Committee and Members shall comply with the
requirements of applicable law pertaining to the winding up of the affairs of
the Company and the final distribution of its assets, and the Management
Committee shall be authorized to make appropriate filings with governmental
agencies and take appropriate actions in connection therewith to effect the
dissolution of the Company.
13.4 - Return of Contribution Nonrecourse to Other Members. Except as
provided by law or as expressly provided in this Operating Agreement, upon
dissolution, each Member shall look solely to the assets of the Company for
the return of its positive Capital Account. If the Company's property
remaining after the payment or discharge of the debts and liabilities of the
Company is insufficient to return the cash contribution of any Member, such
Member shall have no recourse against any other Member.
13.5 - Delivery Orders. The dissolution and liquidation of the Company
shall not affect in any manner whatsoever the obligations (including
warranties to the Customer) and rights of the Delivering Party under the
Delivery Orders, all of which shall survive the foregoing dissolution and
liquidation. To the extent not yet paid, the Special Allocation of Section
9.2 also shall survive dissolution and liquidation without modification. The
Company shall take such action as is reasonably necessary in connection with
its dissolution and liquidation to effect the foregoing.
ARTICLE XIV
INDEMNIFICATION
14.1 - Liability of Members. No Member (in its capacity as such, as
opposed to the Delivering Party) shall be liable, responsible or accountable
in damages or otherwise to any of other Members or the Company with respect
to any and all claims arising out of the performance or non-performance of
obligations by it in good faith on behalf of the Company and in a manner
reasonably believed by it to be within the scope of the authority granted to
it by this Operating Agreement and in the best interests of the Company,
whether such claim is based on contract, tort, or otherwise, except for
breach of fiduciary duty, gross negligence or willful misconduct. For
purposes of this Section 14.1, any action or inaction by any Member taken or
omitted to be taken following receipt of approval by the Management Committee
shall not constitute breach of fiduciary duty, gross negligence or willful
misconduct.
14.2 - Indemnification by Company. The Company agrees to indemnify each
Member against, and hold each of them harmless from, any loss, cost, expense
(including reasonable attorneys' fees), liability or damage suffered or
incurred by reason of any action, inaction or decision performed or made by
them in good faith in connection with the business of the Company, except for
breach of fiduciary duty, gross negligence or willful misconduct, provided
that (i) such actions, inaction or decisions could reasonably be believed to
be within the scope of its authority under this Operating Agreement and in
the best interests of the Company; or (ii) were undertaken, not undertaken,
or made following approval by the Management Committee; and provided further
that the foregoing indemnity shall not extend to the Delivering Party for any
claim or liability relating to any Delivery Order undertaken by it. This
indemnification shall include the payment of all reasonable attorneys' fees
and other expenses incurred by any Member in connection with the defense of
any such claim made against it, including any claim asserted by any Member
individually, with other Members and/or with the Company, as a class action
or as a derivative action. Any indemnity payable under this Section 14.2
shall be satisfied solely from Company assets and no Member shall have any
obligation with respect to such indemnity.
14.3 - Indemnification by Members. Each Member agrees to indemnify the
other Member and the Company against, and hold each of them harmless from,
any loss, cost, expense (including reasonable attorneys' fees), liability or
damage suffered or incurred by reason of, arising out of, or in any way
related to any breach or failure to perform by such Member of any covenant,
agreement, representations or warranties of such Member contained in this
Operating Agreement or any unauthorized act taken by such Member in the name
of the Company or any other Member.
14.4 - Defense of Claims.
(a) If any Member receives notice of the assertion of any claim with
respect to which indemnification is to be sought under this Operating
Agreement, the Member seeking indemnification (the "Indemnitee") shall notify
the party from whom the Indemnitee is seeking indemnification (the
"Indemnifying Party") within ten (10) days after the Indemnitee's receipt of
notice of such claim. Such notice shall describe the nature of the claim in
reasonable detail and shall indicate the estimated amount, if practicable, of
the potential loss that has been or may be sustained by the Indemnitee. If
the claim involves the Customer or any Person that is not a Member or an
Affiliate of a Member (a "Third Party Claim"), the Indemnifying Party will
have the right to participate in or, by giving written notice to the
Indemnitee, to elect to assume the defense of such Third Party Claim at such
Indemnifying Party's expense and by such Indemnifying Party's own counsel,
provided that the counsel for the Indemnifying Party who shall conduct the
defense of such Third Party Claim shall be reasonably satisfactory to the
Indemnitee. The Indemnitee shall cooperate in good faith in such defense of
Third Party Claims at such Indemnitee's own expense. If an Indemnifying
Party elects not to assume the defense of any Third Party Claim, the
Indemnitee may compromise or settle such Third Party Claim over the objection
of the Indemnifying Party, which settlement or compromise shall conclusively
establish the Indemnifying Party's liability pursuant to this Agreement.
(b) If, within thirty (30) days after an Indemnitee provides written
notice to the Indemnifying Party of any Third Party Claims, the Indemnitee
receives written notice from the Indemnifying Party that such Indemnifying
Party has elected to assume the defense of such Third Party Claim as provided
in Section 14.4(a), the Indemnifying Party will not be liable for any legal
expenses subsequently incurred by the Indemnitee in connection with the
defense thereof; provided, however, that if the Indemnifying Party shall fail
to take reasonable steps necessary to diligently defend such Third Party
Claim within thirty (30) days after receiving notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps,
the Indemnitee may assume its own defense and the Indemnifying Party shall be
liable for all reasonable expenses thereof.
(c) Without the prior written consent of the Indemnitee, the
Indemnifying Party shall not enter into any settlement of any Third Party
Claim which would lead to liability or create any financial, operating or
other obligation on the part of the Indemnitee for which the Indemnitee is
not entitled to indemnification hereunder. If a firm offer is made to settle
a Third Party Claim without leading to liability or the creation of a
financial, operating or other obligation on the part of the Indemnitee for
which the Indemnitee is not entitled to indemnification hereunder, and the
Indemnifying Party desires to accept and agree to such offer, then the
Indemnifying Party shall give written notice to the Indemnitee to that
effect, together with assurances reasonably satisfactory to the Indemnitee of
the Indemnifying Party's ability to pay or perform such settlement. If the
Indemnitee fails to consent to such firm offer within fifteen (15) days after
its receipt of such notice and assurance, the Indemnifying Party shall be
relieved of its obligations to defend such Third Party Claim and the
Indemnitee may contest or defend such Third Party Claim. In such event, the
maximum liability of the Indemnifying Party as to such Third Party Claim will
be the amount of such settlement offer plus reasonable costs and expenses
paid or incurred by Indemnitee up to the date of said notice.
(d) If the amount of any indemnified loss, at any time after the making
of an indemnity payment in respect thereof, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance coverage, or
pursuant to any claim, recovery, settlement or payment by, from or against
any other entity, the amount of such reduction (up to the amount of the prior
indemnity payment), less any costs, expenses or premiums incurred in
connection therewith (together with interest thereon from the date of payment
of such recovery at the publicly announced prime rate then in effect of
Citibank, N.A. or its successor) shall promptly be repaid by the Indemnitee
to the Indemnifying Party.
(e) A failure to give timely notice as provided in this Section 14.4
shall not affect the rights or obligations of any Member hereunder except if,
and only to the extent that, as a result of such failure, the Member which
was entitled to receive such notice was actually prejudiced as a result of
such failure.
14.5 - Late Charge. Without prejudice to any other rights of the
aggrieved Member hereunder or under applicable law, each Member shall pay to
the other Member a late charge equal to one and one half percent (_1.5_%) of
any payment of any payment due hereunder (including payment due under Section
9.2) which is not paid within fifteen (15) days after the due date thereof.
Such late charge shall be made on a monthly basis and for each month or part
thereof such payment is delinquent. Such late charge relates to costs and
expenses of the aggrieved Member resulting from such overdue payment.
14.6 Survival. The provisions of this Section shall survive the
withdrawal of any Member from the Company and the dissolution of the Company.
ARTICLE XV
REPRESENTATIONS, WARRANTIES AND COVENANTS
15.1 - Representations. Each Member hereby represents, warrants to, and
covenants with, the Company and to each other as follows:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation and has all
requisite power and authority to execute, deliver and perform this Operating
Agreement and to own or hold under lease its property and assets and to
transact the business in which it is engaged or presently proposes to engage.
(b) It is duly qualified, licensed or registered to transact its
business and is in good standing in each jurisdiction in which it owns or
leases real property or in which the nature of its business or any Delivery
Order requires (or will require) it to be so qualified.
(c) It has the full power and authority to execute and deliver this
Operating Agreement and to perform all its obligations hereunder.
(d) The execution, delivery and performance of this Operating Agreement
and the performance of its obligations hereunder (i) have been duly
authorized by all requisite action on its part; (ii) will not violate or
contravene (1) any provision of any law, rule or regulation or any judgment
or order of any governmental authority known to it, in effect as of the date
hereof and to which it or any of its assets may be bound and which, if
violated or contravened, would materially adversely affect its ability to
perform its obligations under this Operating Agreement, or (2) any provision
of its governing documents; and (iii) will not violate, be in conflict with,
result in a breach of or constitute a default (with or without the giving of
notice or the passage of time or both) under any instrument, indenture,
agreement or other obligation to which it is a party or by which it or any of
its assets may be bound.
(e) It has duly executed and delivered this Operating Agreement, and
this Operating Agreement constitute its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
(f) There are no actions, suits or proceedings before any governmental
authority pending (and which has been served upon it or of which it otherwise
has received written notice), or, to the best of its knowledge threatened,
against or affecting it or any of its assets, which could have a material
effect on it or its business.
(g) No consent, approval or authorization of, or registration or filing
with, any person, including any governmental authority or regulatory agency,
is required in connection with the execution and delivery of this Operating
Agreement or its performance of its obligations hereunder or any Delivery
Order undertaken by it, other than those previously obtained and those that
such Member will obtain to fulfill Delivery Orders assigned to it.
(h) It has performed its own independent investigation, with due
diligence, of the investment represented by participation in the Company and
the Prime Contract, and has formed its own independent assessments of the
risks and potential returns of the Prime Contract, and is not relying on any
representation or warranty of any other Member or any Affiliate thereof in
connection with its decision to participate in the Prime Contract, other than
the representations and warranties contained in this Article 15.
(i) It is acquiring its Interest in the Company for investment purposes
and not with a view to, or for resale in connection with, a distribution or
public offering thereof within the meaning of applicable securities laws.
(j) It has no agreement, understanding or arrangement with any person
or entity, and has no present intention of entering into any such agreement,
understanding or arrangement, to Transfer its Interest.
15.2. - General Covenants.
(a) Each Member shall furnish to the Company all information regarding
such Member or its Affiliates required for inclusion in any documents to be
prepared or filed in connection with the business of the Company, and all
such information will be true and correct in all material respects and will
not omit to state any material fact necessary to be stated therein in order
that such information not be misleading.
(b) Each Member shall comply with:
(i) all applicable governmental laws and regulations, and all required
governmental and other approvals applicable to or required for the
Prime Contract; and
(ii) all material conditions and requirements of the Prime Contract.
(c) Each Member shall forward, not later than three (3) Business Days
following the receipt thereof, to the Company and the Members a copy of any
notice received by the Company or such Member of any default under the Prime
Contract or any other adverse claim asserted by the Customer.
(d) Each Member shall use commercially reasonable efforts to prepare
Proposals and obtain Delivery Orders in accordance with the Prime Contract.
15.3. - FCPA.
(a) Each Member represents to the other that in connection with its
activities involving the Company and the Prime Contract (i) it and its Agents
have not taken any action or failed to take any action which could violate
the FCPA; and (ii) none of its Agents is an employee or official of a
government or an active member of the armed forces of any government, nor do
any of its Agents hold any official positions with a government.
(b) Each Member shall not, and cause its owners and Agents not to, take
any action or fail to take any action involving the Company and the Prime
Contract which could violate the FCPA.
(c) The Members shall cause the Company to adopt resolutions that
prohibit: (i) any action or omission by the Company or on its behalf which
violates the FCPA; (ii) any expenditure for other than lawful purposes by the
Company or by others on its behalf; and (iii) any payments to government
officials or to the Customer representatives by the Company or by any Agent
of a Delivering Party, except those required by law and made to such
officials and their representatives and not in their individual capacities.
(d) Each Delivering Party shall retain only Agents that have undertaken
the following: (i) to comply with the FCPA and the laws of the country in
which the Agent performs services; (ii) to make no expenditures for other
than lawful purposes; (iii) to make no payments to governmental officials or
to customer representatives, except those required by law and made to such
officials and their representatives and not in their individual capacities
and to furnish, if requested to do so, a written representation that such
official or representative has no interest in the business or profits of the
Agent; (iv) to certify in writing on request as to Agent's compliance with
these principles; (v) to consent to the disclosure of the Agent's agreement
at the discretion of the Company; and (vi) failure to abide by these
undertakings by an Agent shall constitute cause for termination of the Agent
under the terms of each Agent's agreement.
(e) Each Member agrees to indemnify the Company, the other Member, its
Affiliates, and their respective Agents from and hold each of them harmless
against any and any loss, cost, expense (including reasonable attorneys'
fees), liability or damage suffered or incurred by each of them in connection
with or arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in
which such indemnified Person may be involved, or threatened to be involved,
as a party or otherwise, by reason of such indemnifying Member's breach or
alleged breach of this Section 15.3. A Person shall be entitled to the
benefits of the foregoing indemnification so long as such Person would have
qualified therefor at the time of such breach or alleged breach,
notwithstanding any subsequent change in its relationship to the indemnified
Member. The right to indemnification in this Section 15.3(e) shall be in
addition to any other rights which any Person may have or hereafter acquire
under any law, agreement or otherwise.
15.4 - Confidentiality.
(a) Each Member shall treat in a confidential manner Site Assignments,
all non-public information it receives about the Company, the Prime Contract
(including any Proposal(s) and Delivery Order(s)) and the other Member, in
each case which is designated by the disclosing party as confidential and
which has not become generally known to the public other than as a result of
such Member's acts or omissions to act, and shall not disclose such
information to any Person except as provided in Section 15.4(b). The
obligations of the Members under this Section 15.4 shall terminate two (2)
years from the date of receipt of such information regardless of the earlier
termination of this Operating Agreement or the dissolution of the Company.
(b) Notwithstanding anything in Section 15.4(a) to the contrary, a
Member may disclose any such non-public information to: (i) its Affiliates,
accountants, attorneys or Agents and their respective directors, officers and
agents, and then only to the extent such disclosure, in the good faith
determination of such Member, is necessary for the performance of the duties
or responsibilities of such Persons; (ii) in connection with any action,
litigation or proceeding arising out of or in connection with this Operating
Agreement or the other documents delivered hereunder or the enforcement
hereof or thereof; (iii) as may be required by law or judicial order or
decree or as requested by a governmental agency or authority, in which case
such Member, to the extent permitted by law, shall promptly notify the other
Member of such disclosure; and (iv) any proposed Transferee in connection
with a Transfer of its Interest if such proposed Transferee agrees in writing
to maintain the confidentiality of such information.
(c) The Company and the Members shall coordinate any publicity regarding
the Prime Contract and this Operating Agreement, including relations with the
Customer.
ARTICLE XVI
ARBITRATION
16.1. Arbitration.
(a) If a dispute arises between any Members regarding any matter
arising under, or relating to, this Operating Agreement and/or the Prime
Contract (including any Proposal or Delivery Order), then the aggrieved
Member shall promptly notify the other Member of the dispute within ten (10)
days after such dispute arises. In such event, each Member shall, within
five (5) days thereafter, nominate a senior officer of its management to meet
at the principal office of the Company, or at any other mutually agreed
location, to resolve the dispute. If the Members do not resolve the dispute
within twenty (20) days after such nomination, each Member shall have the
right to submit the matter to arbitration pursuant to the procedures set
forth in this Section 16.1.
(b) If any dispute is not resolved within the time period set forth in
Section 16.1(a), such dispute shall be finally and conclusively determined by
the decision of a board of arbitration consisting of three (3) members (the
"Arbitration Panel") and selected as hereinafter provided. Each Member shall
select one (1) member, and the third member shall be selected by mutual
agreement of the other members (or, in the absence of such agreement, the
American Arbitration Association shall appoint a duly qualified third
member). Any Member may replace the member selected solely by such Member
before the first meeting of the full Arbitration Panel.
(c) The arbitration proceeding shall be governed by the commercial
arbitration rules of the American Arbitration Association, to the extent not
inconsistent with the terms hereof. The Arbitration Panel shall meet in
Hartford, Connecticut (or such other place within Connecticut as the majority
of the Arbitration Panel shall determine) and apply the substantive law set
forth in Section 17.2. The Arbitration Panel shall render a written decision
(concurred in by a majority of the members of the Arbitration Panel), to the
extent practical, within thirty (30) days after the commencement of the
proceedings.
(d) The decision of the Arbitration Panel shall be subject to review
in accordance with, and subject to, the limitations of, applicable laws, and
may be enforced in the same manner as if it was a final judicial judgment and
any monetary award shall be paid within thirty (30) days after the decision.
The arbitration set forth herein shall be to the exclusion of any other form
of settlement or judicial process, except insofar as said arbitration
proceeding or the enforcement of any award may ultimately be frustrated by
any Member or by any authority, in which case the injured Member may not be
restricted from access to any judicial or extrajudicial forum. If an action
is instituted to enforce such arbitration proceeding or decision, the Member
prevailing in such action shall be entitled to recover from the other Member
reasonable attorneys' fees and costs of such suit as part of the judgment.
(e) Each Member shall bear its own expenses in any arbitration.
Arbitration fees shall be borne by the Parties in inverse proportion to the
proportion that the arbitration award bears to the amount claimed by the
Member submitting the matter to arbitration, unless otherwise determined by
the Arbitration Panel.
16.2 - Continued Performance. Pending final resolution of any dispute,
this Operating Agreement shall continue in full force and effect, and the
Members shall continue to fulfill their respective obligations hereunder,
including with respect to the payment of any funds due and payable under
Section 9.2.
16.3 - Exceptions. Notwithstanding anything to the contrary in the
foregoing in this Article 16:
(a) any dispute seeking equitable relief for the alleged breach of the
confidentiality undertakings in Section 15.4(a) or of the non-compete
undertakings in Section 15.5 shall not be subject to mandatory
arbitration, and all of the parties' respective rights and remedies in
such event, whether established hereby, under applicable law or
elsewhere, including specific performance, shall be cumulative and
exercised singularly or concurrently. If an action is instituted as a
result of such dispute, the party prevailing in such action shall be
entitled to recover from the other party reasonable attorneys' fees and
costs of such suit as part of the judgment; and
(b) the Members may refer any dispute involving financial or accounting
matters, including any dispute under Section 9.2, to an Arbitration
Panel consisting of one (1) partner of an internationally recognized
accounting firm with offices in Connecticut and mutually acceptable to
the Members.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 - Notices. Any notice, demand, or communication required or
permitted to be given by any provision of this Operating Agreement shall be
deemed to have been sufficiently given or served for all purposes if in
writing and delivered by (a) hand against receipt, (b) certified or
registered mail, postage pre-paid, return receipt requested, (c) a courier
who guarantees next business day delivery to such party and (d) telecopy, at
its address set forth on Exhibit A or on the books and records of the
Company; provided that any Member may notify the Company and the other
Members of another address. Except as otherwise provided herein, any such
notice shall be deemed to be received when delivered.
17.2 - Governing Law. This Operating Agreement, and the application of
interpretation hereof, shall be governed exclusively by its terms and by the
laws of the State of Delaware.
17.3 - Integration; Amendments. This Operating Agreement sets forth the
entire agreement of the parties with respect to the subject matter herein and
takes precedence over all prior understandings, including the Teaming
Agreement dated April 14, 2000. This Operating Agreement may not be amended
except by the unanimous written agreement of all Members.
17.4 - Execution of Additional Instruments. Each Member hereby agrees
to execute such other and further statements of interest and holdings,
designations, powers of attorney and other instruments necessary to comply
with any laws, rules or regulations.
17.5 - Interpretation. In this Operating Agreement, the singular
includes the plural and the plural the singular; the words "including,"
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to Sections, Schedules or Exhibits are to those of
this Operating Agreement unless otherwise indicated; references to laws and
regulations, unless otherwise specified, shall be deemed to include all
corresponding provisions of subsequent or superseding laws and regulations
affecting the same; references to agreements and other contractual
instruments, unless otherwise specified, shall be deemed to include all
subsequent amendments and other modifications to such instruments in
accordance with the terms thereof; the phrase "and/or" shall be deemed to
mean the words both preceding and following such phrase, or either of them;
and "days" refers to calendar days unless otherwise indicated.
17.6 - Headings. The headings in this Operating Agreement are inserted
for convenience only and are in no way intended to describe, interpret,
define, or limit the scope, extent or intent of this Operating Agreement or
any provision hereof.
17.7 - Waivers; Remedies. The failure of any party to seek redress for
violation of or to insist upon the strict performance of any covenant or
condition of this Operating Agreement shall not prevent a subsequent act,
which would have originally constituted a violation, from having the effect
of an original violation. Other than as set forth herein, the rights and
remedies provided by this Operating Agreement are cumulative and the use of
any one right or remedy by any party shall not preclude or waive the right to
use any or all other remedies. Said rights and remedies are given in
addition to any other rights the parties may have by law, statute, ordinance
or otherwise. No party shall be liable to any other party for any
consequential, special or other indirect damages as a result of any breach
hereof.
17.8 - Severability. If any provision of this Operating Agreement or
the application thereof to any Person or circumstance shall be invalid,
illegal or unenforceable to any extent, the remainder of this Operating
Agreement and the application thereof shall not be affected and shall be
enforceable to the fullest extent permitted by law; provided, however, that
if the invalidity, illegality or unenforceability of any such provision
results in a material alteration of the terms of this Operating Agreement,
the remaining provisions of this Operating Agreement shall be adjusted
equitably so that as to effect the original intent of the parties as closely
as possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the fullest extent possible.
17.9 - Successors and Assigns. Each and all of the covenants, terms,
provisions and agreements herein contained shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
assigns.
17.10 - No Third Party Beneficiaries. None of the provisions of this
Operating Agreement shall be for the benefit of or enforceable by any
creditors of the Company or any other Person who is not a Member or a party
hereto.
17.11 - Counterparts. This Operating Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument, and in pleading or proving any
provision of this Operating Agreement, it shall not be necessary to produce
more than one complete set of such counterparts.
17.12 - No Registration. THE INTERESTS REPRESENTED BY THIS OPERATING
AGREEMENT HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR ANY AGENCY OF ANY STATE. ACCORDINGLY, THE TRANSFER OF ANY SUCH
INTEREST IS RESTRICTED AND MAY NOT BE ACCOMPLISHED EXCEPT IN ACCORDANCE WITH
THIS OPERATING AGREEMENT AND APPLICABLE LAW. IF REQUESTED BY THE COMPANY,
THE TRANSFERRING MEMBER SHALL PROVIDE AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH TRANSFER COMPLIES WITH APPLICABLE LAW.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned Members have hereunto set their
hands or caused this instrument to be executed as of the ___ day of
__________, 2000.
ERI SERVICES, INC. HEC INC.
By: ________________________ By: __________________________
Name: Xxxx Xxxxxxxx Name: Xxxxx X. Xxxxxx
Title:Senior Vice Chairman Title: Executive Vice President and
and General Manager Chief Operating Officer
EXHIBIT A
INITIAL MEMBERS
OF
ERI/HEC EFA-Med, LLC
Member Initial Capital Interest Voting
Contribution Percentage
ERI Services, Inc. $500.00 50% 50%
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX _______
HEC Inc. $500.00 50% 50%
00 Xxxxx Xxxxxxx
Xxxxxx, XX 00000
TOTAL: $1,000.00 100% 100%
Schedule 8.1
GEOGRAPHIC ALLOCATION
ERI: Spain
England
Turkey
HEC: Italy
Greece
Egypt
Bahrain
