EASTERN ENTERPRISES, LLC LIMITED LIABILITY COMPANY OPERATING AGREEMENT
EXHIBIT A-2
EASTERN ENTERPRISES, LLC
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
THIS
LIMITED LIABILITY COMPANY OPERATING AGREEMENT of Eastern Enterprises, LLC (the
"Company") is made as of ___________, 2002, by and between the persons
identified as the Members and Managers on Schedule A and Schedule B,
respectively, attached hereto (such persons and their respective successors in
office or in interest being hereinafter referred to individually as a "Manager"
or "Member" or collectively as the "Managers" or "Members").
WHEREAS,
the Company was formed as a limited liability company under the Massachusetts
Limited Liability Company Act (as amended from time to time, the "Act") on
__________, 2002; and
WHEREAS,
the Managers and the Members wish to set out fully their respective rights,
obligations and duties regarding the Company and its assets and
liabilities;
NOW,
THEREFORE, in consideration of the mutual covenants expressed herein, the
parties hereby agree as follows:
ARTICLE I - Organization and Powers
1.1.
Organization. The Company has been formed by the filing of its
Certificate of Organization with the Massachusetts Secretary of State pursuant
to the Act. The Certificate of Organization may be restated by the Managers as
provided in the Act or amended by the Managers to change the address of the
office of the Company in Massachusetts and the name and address of its resident
agent in Massachusetts or to make corrections required by the Act. Other
additions to or amendments of the Certificate of Organization shall be
authorized by the Members as provided in Section 2.5. The Certificate of
Organization, as so amended from time to time, is referred to herein as the
“Certificate.” The Managers shall deliver a copy of the Certificate
and any amendment thereto to any Member who so requests.
1.2.
Purposes and Powers. The principal business activity and purpose of the
Company (the “Business”) shall initially be to act as a holding
company for its subsidiaries, which provide various energy-related and
non-energy-related products and services, and to engage in any business related
thereto or useful in connection with the foregoing. However, the business and
purposes of the Company shall not be limited to its initial principal business
activity and, unless the Members otherwise determine, the Company shall have
authority to engage in any other lawful business, trade, purpose or activity
permitted by the Act, and it shall possess and may exercise all of the powers
and privileges granted by the Act and any powers incidental thereto, so far as
such powers and privileges are necessary or convenient to the conduct, promotion
or attainment of the business, purposes or activities of the Company, including
without limitation the following powers:
(a) to
conduct its business and operations in any state, territory or possession of the
United States or in any foreign country or jurisdiction;
(b) to purchase, receive, take,
lease or otherwise acquire, own, hold, improve, maintain, use or otherwise deal
in and with, sell, convey, lease, exchange, transfer or otherwise dispose of,
mortgage, pledge, encumber or create a security interest in all or any of its
real or personal property, or any interest therein, wherever situated;
(c) to borrow or lend money or obtain
or extend credit and other financial accommodations, to invest and reinvest its
funds in any type of security or obligation of or interest in any public,
private or governmental entity, and to give and receive interests in real and
personal property as security for the payment of funds so borrowed, loaned or
invested;
(d) to make contracts, including
contracts of insurance, incur liabilities and give guaranties, whether or not
such guaranties are in furtherance of the business and purposes of the Company,
including without limitation guaranties of obligations of other persons who are
interested in the Company or in whom the Company has an interest;
(e) to
appoint one or more Managers of the Company, to employ officers, employees,
agents and other persons, to fix the compensation and define the duties and
obligations of such personnel, to establish and carry out retirement, incentive
and benefit plans for such personnel and to indemnify such personnel to the
extent permitted by this Agreement and the Act;
(f) to
make donations irrespective of benefit to the Company for the public welfare or
for community, charitable, religious, educational, scientific, civic or similar
purposes; and
(g) to
institute, prosecute and defend any legal action or arbitration proceeding
involving the Company, and to pay, adjust, compromise, settle or refer to
arbitration any claim by or against the Company or any of its assets.
1.3.
Principal Place of Business. The principal office and place of business
of the Company shall initially be ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇. After giving notice to the Members, the Managers may change the principal
office or place of business of the Company at any time and may cause the Company
to establish other offices or places of business.
1.4.
Fiscal Year. The fiscal year of the Company shall end on December 31 in
each year.
1.5.
Qualification in Other Jurisdictions. The Managers shall cause the
Company to be qualified or registered under applicable laws of any jurisdiction
in which the Company transacts business and shall be authorized to execute,
deliver and file any certificates and documents necessary to effect such
qualification or registration, including without limitation the appointment of
agents for service of process in such jurisdictions.
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ARTICLE II - Members
2.1. Members. The initial Members of the Company and their addresses shall be listed on Schedule A and such Schedule shall be amended from time to time by the Managers to reflect the withdrawal of Members or the admission of new or additional Members pursuant to this Agreement. Schedule A shall set forth the percentage interest which each Member holds in the profits and losses of the Company (the “Membership Interests”). The Members shall constitute a single class or group of Members of the Company for all purposes of the Act, unless otherwise explicitly provided herein. The Managers shall notify the Members of changes in Schedule A, which shall constitute the record list of the Members for all purposes of this Agreement.2.2. Admission of New Members. Additional persons may be admitted to the Company as Members and may participate in the profits, losses, distributions, allocations and capital contributions of the Company upon such terms as are established by the Managers, which may include the establishment of classes or groups of one or more Members having different relative rights, powers and duties, or the right to vote as a separate class or group on specified matters, by amendment of this Agreement under Section 10.4. Existing Members shall have no preemptive or similar right to subscribe to the purchase of new membership interests in the Company.
2.3. Meetings of Members.
(a) Annual Meetings. An annual meeting of the Members shall be held within six months after the end of the Company’s fiscal year. The date and hour of such meeting shall be fixed by the Managers. The purposes for which the annual meeting is to be held may be specified by the Managers or the President. In the event that no date for the annual meeting is established or if no annual meeting is held in accordance with the foregoing provisions, a special meeting may be held in lieu thereof, and any action taken at such meeting shall have the same effect as if taken at the annual meeting.
(b) Special Meetings. Special meetings of Members may be called for any proper purpose at any time by the Managers or by any Member owning at least 20% of the outstanding Membership Interests. The Managers or the Members calling the meeting shall determine the date, time and place of each meeting of Members, and written notice thereof shall be given by the Managers to each Member not less than seven days or more than 60 days prior to the date of the meeting. Notice shall be sent to Members of record on the date when the meeting is called. The business of each meeting of Members shall be limited to the purposes described in the notice. A written waiver of notice, executed before or after a meeting by a Member or its authorized attorney and delivered to the Managers, shall be deemed equivalent to notice of the meeting.
(c) Quorum. Persons holding a majority of the Membership Interests shall constitute a quorum for the transaction of any business at a meeting of Members. Members may attend a meeting in person or by proxy. Members may also participate in a meeting by means of conference telephone or similar communications equipment that permits all Members present to hear each other. If less than a quorum of the Members is present, the meeting may be adjourned by the chairman to a later date, time and place, and
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the meeting may be held as adjourned without further notice. When an
adjourned meeting is reconvened, any business may be transacted that might have
been transacted at the original meeting.
2.4.
Action Without a Meeting. There is no requirement that the Members hold a
meeting in order to take action on any matter. Any action required or permitted
to be taken by the Members may be taken without a meeting if one or more written
consents to such action shall be signed by Members who hold the Membership
Interests in the Company required to approve the action being taken. Such
written consents shall be delivered to the Managers at the principal office of
the Company and unless otherwise specified shall be effective on the date when
the first consent is so delivered. The Managers shall give prompt notice to all
Members who did not consent to any action taken by written consent of Members
without a meeting.
2.5.
Voting Rights. Unless otherwise required by the Act or this Agreement,
all actions, approvals and consents to be taken or given by the Members under
the Act, this Agreement or otherwise shall require the affirmative vote or
written consent of Members holding a majority of the Membership Interests.
2.6.
Limitation of Liability of Members. Except as otherwise provided in the
Act, no Member of the Company shall be obligated personally for any debt,
obligation or liability of the Company or of any other Member, whether arising
in contract, tort or otherwise, solely by reason of being a Member of the
Company. Except as otherwise provided in the Act, by law or expressly in this
Agreement, no Member shall have any fiduciary or other duty to another Member
with respect to the business and affairs of the Company, and no Member shall be
liable to the Company or any other Member for acting in good faith reliance upon
the provisions of this Agreement. No Member shall have any responsibility to
restore any negative balance in its Capital Account (as defined in
Section 6.1) or to contribute to or in respect of the liabilities or
obligations of the Company or return distributions made by the Company except as
required by the Act or other applicable law; provided, however, that Members are
responsible for their failure to make required Contributions under
Section 6.2. The failure of the Company to observe any formalities or
requirements relating to the exercise of its powers or the management of its
business or affairs under this Agreement or the Act shall not be grounds for
making its Members or Managers responsible for the liabilities of the Company.
2.7.
Authority. Unless specifically authorized by the Managers, no Member that
is not a Manager shall be an agent of the Company or have any right, power or
authority to act for or to bind the Company or to undertake or assume any
obligation or responsibility of the Company or of any other Member.
2.8.
No Right to Withdraw. No Member shall have any right to resign or
withdraw from the Company without the consent of the other Members or to receive
any distribution or the repayment of its capital contribution except as provided
in Section 7.2 and Article IX upon dissolution and liquidation of the
Company. No Member shall have
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any right to have the fair value of its Membership Interest in the Company
appraised and paid out upon the resignation or withdrawal of such Member or any
other circumstances.
2.9.
Rights to Information. The Managers shall keep or cause the Treasurer to
keep complete and accurate books and records of the Company on the income tax
method of reporting and otherwise in accordance with generally accepted
accounting principles consistently applied, which shall be maintained and be
available, in addition to any documents and information required to be furnished
to the Members under the Act, at the office of the Company for examination and
copying by any officer, Member or Manager, or his, her or its duly authorized
representative, at its reasonable request and at its expense during ordinary
business hours. A current list of the full name and last known address of each
officer, Member and Manager; a copy of this Agreement and any amendments
thereto; the Certificate, including all certificates of amendment thereto; and
copies of the Company’s financial statements and federal, state and local
income tax returns and reports, if any, for the three most recent fiscal years,
shall be maintained at the registered office of the Company.
2.10.
Reports. Within 120 days after the end of each fiscal year, the Managers
shall, upon the request of any Member, cause to be prepared and sent to all
Members a financial report of the Company, including a balance sheet and a
profit and loss statement, and, if such profit and loss statement is not
prepared on a cash basis, a statement of changes in financial position. Within
90 days after the end of each fiscal year, the Managers shall furnish (or cause
to be furnished) to all Members with such information as may be needed to enable
the Members to file their federal income tax returns and any required state
income tax return. The cost of all such reporting shall be paid by the Company
as a Company expense. Any Member may, at any time, at its own expense, cause an
audit of the Company books to be made by a certified public accountant of its
own selection. All expenses incurred by such accountant shall be borne by such
Member.
2.11. Indemnification of Members. The Company shall indemnify each Member and hold
each Member wholly harmless from and against any and all debts, obligations, and
liabilities of the Company, if any, to which such Member becomes subject by
reason of being a Member, whether arising in contract, tort or otherwise;
provided, however, that the indemnification obligation of the Company under this
Section 2.11 shall be paid only from the assets of the Company, and no Member
shall have any personal obligation, or any obligation to make any Contribution,
with respect thereto.
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ARTICLE III - Management
3.1. Managers. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
shall be the initial Managers of the Company. The names and addresses of the
Managers shall be listed on Schedule B and such Schedule shall be amended
from time to time by the Managers to reflect the resignation or removal of
Managers or the appointment of new or additional Managers pursuant to this
Agreement.
3.2.
Term; Qualification. The number of Managers shall be fixed at the annual
meeting of the Members and, except as provided in this Article III, the Managers
shall be elected at such annual meeting and shall hold office until the next
annual meeting and until their successors are elected and qualified. Each
Manager shall devote such time to the business and affairs of the Company as is
reasonably necessary for the performance of such Manager’s duties, but
shall not be required to devote full time to the performance of such duties and
may delegate its responsibilities as provided in Section 3.3. A Manager
need not be a Member.
3.3.
Powers and Duties of the Managers. The business and affairs of the
Company shall be managed under the direction of the Managers, who shall have and
may exercise on behalf of the Company all of its rights, powers, duties and
responsibilities under Section 1.2 or as provided by law, including without
limitation the right and authority:
(a) to manage the business and affairs of the Company and for this purpose to
employ, retain or appoint any officers, employees, consultants, agents, brokers,
professionals or other persons in any capacity for such compensation and on such
terms as the Managers deem necessary or desirable and to delegate to such
persons such of their duties and responsibilities as the Managers shall
determine;
(b) to
enter into, execute, deliver, acknowledge, make, modify, supplement or amend any
documents or instruments in the name of the Company;
(c) to
borrow money or otherwise obtain credit and other financial accommodations on
behalf of the Company on a secured or unsecured basis as provided in
Section 1.2(c), and to perform or cause to be performed all of the
Company’s obligations in respect of its indebtedness and any mortgage, lien
or security interest securing such indebtedness; and
(d) to
make elections and prepare and file returns regarding any federal, state or
local tax obligations of the Company.
Unless otherwise provided in this Agreement, any action taken by a Manager, and the
signature of a Manager on any agreement, contract, instrument or other document
on behalf of the Company, shall be sufficient to bind the Company and shall
conclusively evidence the authority of that Manager and the Company with respect
thereto.
3.4.
Tax Matters Partner. The Member so designated by the Managers from time
to time shall serve as the “Tax Matters Partner” of the Company for
purposes of Section 6231(a)(7) of the Internal Revenue Code of 1986 as
amended (the “Code”), with power to manage and represent the Company
in any administrative proceeding of the
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Internal Revenue Service. The initial Tax Matters Partner of the Company shall
be KeySpan Corporation.
3.5.
Bank Accounts. The Managers or the Treasurer shall be responsible for
causing one or more accounts to be maintained in a bank (or banks), which
accounts shall be used for the payment of the expenditures incurred by the
Managers and the officers in connection with the business of the Company, and in
which shall be deposited any and all cash receipts of the Company. All deposits
and funds not needed for the operations of the Company may be invested in such
short-term investments as the Board of Managers may approve.
3.6.
Reliance by Third Parties. Any person dealing with the Company, the
Managers or any Member may rely upon a certificate signed by any Manager as to
(i) the identity of any Manager or Member; (ii) any factual matters
relevant to the affairs of the Company; (iii) the persons who are
authorized to execute and deliver any document on behalf of the Company; or
(iv) any action taken or omitted by the Company, the Managers or any
Member.
3.7.
Resignation and Removal. Any Manager may resign upon at least 30 days'
notice to the Members and the other Managers (unless notice is waived by them).
Any Manager may be removed at any time with or without cause by the Members.
3.8.
Vacancies. A vacancy among the Managers may be filled by the remaining
Managers by the election of a Manager to hold office until the next annual
meeting of the Members and the Manager’s successor is elected and
qualified. Any vacancy among the Managers may also be filled by the Members and
the person so chosen shall displace any successor chosen by the remaining
Managers.
3.9.
Annual Meetings. Immediately after each annual meeting of Members, or the
special meeting held in lieu thereof, and at the place thereof, if a majority of
the Managers, thereby representing a quorum, are present there shall be a
meeting of the Managers without notice; but if such quorum of the Managers is
not present, or if present do not proceed immediately thereafter to hold a
meeting of the Managers, the annual meeting of the Managers shall be called in
the manner hereinafter provided with respect to the call of special meetings of
the Managers.
3.10.
Regular Meetings. Regular meetings of the Managers may be held at such
times and places as shall from time to time be fixed by the Managers and no
notice need be given of regular meetings held at times and places so fixed,
provided, however, that any resolution relating to the holding of regular
meetings shall remain in force only until the next annual meeting of Managers,
or the special meeting held in lieu thereof, and that if at any meeting of the
Managers, at which a resolution is adopted fixing the times or place or places
for any regular meetings, any Manager is absent, no meeting shall be held
pursuant to such resolution until either each such absent Manager has in writing
or by electronic mail approved the resolution or seven days have elapsed after a
copy of the resolution certified by the Secretary has been mailed, postage
prepaid, addressed to each such absent Manager at such Manager’s last known
home or business address.
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3.11.
Special Meetings and Action of Managers. Unless otherwise determined by
the Members or Managers, all action to be taken by the Managers shall be taken
by majority vote or written consent of a majority of the Managers then in
office. There is no requirement that the Managers hold a meeting in order to
take action on any matter. Meetings of the Managers may be called by the
President or by any Manager. If action is to be taken at a meeting of the
Managers, notice of the time, date and place of the meeting shall be given to
each Manager by an officer or the Manager calling the meeting by personal
delivery, telephone or facsimile sent to the business or home address of each
Manager at least 24 hours in advance of the meeting, or by written notice
mailed to each Manager at either such address at least 72 hours in advance
of the meeting; however, no notice need be given to a Manager who waives notice
before or after the meeting, or who attends the meeting without protesting at or
before its commencement the inadequacy of notice to him or her. Managers may
also attend a meeting in person or by proxy, and they may also participate in a
meeting by means of conference telephone or similar communications equipment
that permits all Managers present to hear each other. A chairman selected by the
Managers shall preside at all meetings of the Managers. The chairman shall
determine the order of business and the procedures to be followed at each
meeting of the Managers.
3.12. Officers of the Company.
(a) Enumeration. The officers of the Company shall be a President, a
Treasurer, a Secretary and such other officers as the Managers may elect or
appoint (individually, an “Officer” and collectively, the
“Officers”). An individual may serve in more than one capacity as an
officer of the Company. Individuals who serve as officers of the Company may but
need not be Members or Managers.
(b) President. The President shall be the chief executive officer of the
Company. Subject to the direction of the Managers, the President shall have
general and active charge, control and supervision over the management and
direction of the business, property and affairs of the Company and have general
responsibility for its day-to-day operations. The President shall preside, when
present, at all meetings of the Members and of the Managers. In the absence or
disability of the President, or in case of an unfilled vacancy in that office,
the Managers may designate a Vice-President or other officer of the Company to
perform the duties and exercise the powers of the President.
(c) Treasurer. The Treasurer shall have responsibility for the care and
custody of the funds and books of account of the Company and shall have and
exercise all the powers and duties commonly incident to such office. The
Treasurer may endorse for deposit or collection all checks, notes, drafts and
instruments for the payment of money, payable to the Company or to its order. He
shall cause to be kept accurate books of account of all monies received and paid
on account of the Company.
(d) Secretary.
The Secretary shall keep accurate records of all meetings and actions of the
Members and the Managers and shall perform all the duties commonly incident to
such office and shall perform such other duties and have such other powers as
the Managers shall from time to time designate or as may be otherwise provided
for in this Agreement. An Assistant Secretary, upon appointment by the Managers
or the President, shall have all the powers of the Secretary except as
specifically limited by a vote of the
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Managers or the President. In the absence of the Secretary and any Assistant
Secretary, a Secretary Pro Tempore may be elected or appointed by the Managers
or the President to perform the Secretary’s duties.
(e) Removal and Resignation. All Officers shall hold office at the pleasure
of the Managers and may be removed by a vote of the Managers with or without
cause. Any Officer may resign by delivering his written resignation to the
Company at its principal office and such resignation shall be effective upon
receipt unless it is specified to be effective at some other time or upon the
happening of some other event.
3.13.
Compensation; Reimbursement for Expenses. Each Manager and Officer shall
receive such compensation for his services and benefits as may be approved from
time to time by the Managers. In addition, the Managers and Officers shall be
entitled to reimbursement for all reasonable out-of-pocket expenses incurred by
them in connection with the performance of their duties for the Company.
3.14.
Limitation of Liability of Managers and Officers. No Manager or Officer
shall be obligated personally for any debt, obligation or liability of the
Company or of any Member, whether arising in contract, tort or otherwise, solely
by reason of being or acting as Manager or Officer of the Company. No Manager or
Officer shall be personally liable to the Company or to its Members for breach
of any fiduciary or other duty that does not involve (i) a breach of the
duty of loyalty to the Company or its Members, (ii) acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; or (iii) a transaction from which the Manager derived an improper
personal benefit.
ARTICLE IV - Indemnification
4.1.
Definitions. For purposes of this Article IV:
“Manager”
includes (i) a person serving as a Manager or an Officer of the Company or
in a similar executive capacity appointed by the Managers and exercising rights
and duties delegated by the Managers, (ii) a person serving at the request
of the Company as a director, Manager, officer, employee or other agent of
another organization, and (iii) any person who formerly served in any of
the foregoing capacities;
“expenses”
means all expenses, including attorneys’ fees and disbursements, actually
and reasonably incurred in defense of a proceeding or in seeking indemnification
under this Article, and except for proceedings by or in the right of the Company
or alleging that a Manager received an improper personal benefit, any judgments,
awards, fines, penalties and reasonable amounts paid in settlement of a
proceeding; and
“proceeding”
means any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, and any claim which could be
the subject of a proceeding.
4.2.
Right to Indemnification. Except as limited by law and subject to the
provisions of this Article, the Company shall indemnify each of its Managers
against all expenses incurred by them in connection with any proceeding in which
a Manager is involved as a result of serving in such capacity, except that no
indemnification shall be
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provided for a Manager regarding any matter as to which it shall be finally
determined that such Manager did not act in good faith and in the reasonable
belief that its action was in the best interests of the Company. Subject to the
foregoing limitations, such indemnification may be provided by the Company with
respect to a proceeding in which it is claimed that a Manager received an
improper personal benefit by reason of its position, regardless of whether the
claim arises out of the Manager’s service in such capacity, except for
matters as to which it is finally determined that an improper personal benefit
was received by the Manager.
4.3.
Award of Indemnification. The determination of whether the Company is
authorized to indemnify a Manager hereunder and any award of indemnification
shall be made in each instance (a) by a majority of the Managers who are
not parties to the proceeding in question, (b) by independent legal counsel
appointed by the Managers or the Members or (c) by the holders of a
majority of the Membership Interests of the Members who are not parties to the
proceeding in question.. If indemnification is denied, the applicant may seek an
independent determination of its right to indemnification by a court having
jurisdiction, and in such event, the applicant shall have the burden of proving
that the applicant was eligible for indemnification under this Article.
Notwithstanding the foregoing, in the case of a proceeding by or in the right of
the Company in which a Manager is adjudged liable to the Company,
indemnification hereunder shall be provided to such Manager only upon a
determination by a court having jurisdiction that in view of all the
circumstances of the case, such Manager is fairly and reasonably entitled to
indemnification for such expenses as the court shall deem proper.
4.4.
Successful Defense. Notwithstanding any contrary provisions of this
Article, if a Manager has been wholly successful on the merits in the defense of
any proceeding in which it was involved by reason of its position as Manager or
as a result of serving in such capacity (including termination of investigative
or other proceedings without a finding of fault on the part of the Manager), the
Manager shall be indemnified by the Company against all expenses incurred by the
Manager in connection therewith.
4.5.
Advance Payments. Except as limited by law, expenses incurred by a
Manager in defending any proceeding, including a proceeding by or in the right
of the Company, shall be paid by the Company to the Manager in advance of final
disposition of the proceeding upon receipt of its written undertaking to repay
such amount if the Manager is determined pursuant to this Article or adjudicated
to be ineligible for indemnification, which undertaking shall be an unlimited
general obligation but need not be secured and may be accepted without regard to
the financial ability of the Manager to make repayment; provided, however, that
no such advance payment of expenses shall be made if it is determined pursuant
to Section 4.3 of this Article on the basis of the circumstances known at
the time (without further investigation) that the Manager is ineligible for
indemnification.
4.6.
Insurance. The Company shall have power to purchase and maintain
insurance on behalf of any Manager, officer, agent or employee against any
liability or cost incurred by such person in any such capacity or arising out of
its status as such, whether or not the Company would have power to indemnify
against such liability or cost.
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4.7.
Heirs and Personal Representatives. The indemnification provided by this
Article shall inure to the benefit of the heirs and personal representatives of each Manager.
4.8.
Non-Exclusivity. The provisions of this Article shall not be construed to
limit the power of the Company to indemnify its Managers, Members, officers,
employees or agents to the full extent permitted by law or to enter into
specific agreements, commitments or arrangements for indemnification permitted
by law. The absence of any express provision for indemnification herein shall
not limit any right of indemnification existing independently of this Article.
4.9.
Amendment. The provisions of this Article may be amended or repealed in
accordance with Section 10.4; however, no amendment or repeal of such
provisions that adversely affects the rights of a Manager under this Article
with respect to its acts or omissions at any time prior to such amendment or
repeal shall apply to such Manager without its consent.
4.10.
Limitation. The indemnification to be provided by the Company hereunder
shall be paid only from the assets of the Company, and no Member shall have any
personal obligation, or any obligation to make any Contribution, with respect
thereto.
ARTICLE V - Conflicts of Interest
5.1.
Transactions with Interested Persons. Unless entered into in bad faith,
no contract or transaction between the Company and one or more of its Managers
or Members, or between the Company and any other corporation, partnership,
association or other organization in which one or more of its Managers or
Members have a financial interest or are directors, partners, Managers or
officers, shall be voidable solely for this reason or solely because such
Manager or Member was present or participated in the authorization of such
contract or transaction if:
(a) the material facts as to the relationship or interest of such Manager or Member
and as to the contract or transaction were disclosed or known to the other
Managers (if any) or Members and the contract or transaction was authorized by
the disinterested Managers (if any) or Members; or
(b) the
contract or transaction was fair to the Company as of the time it was
authorized, approved or ratified by the disinterested Managers (if any) or
Members;
and no Manager or Member interested in such contract or transaction, because of such
interest, shall be considered to be in breach of this Agreement or liable to the
Company, any Manager or Member, or any other person or organization for any loss
or expense incurred by reason of such contract or transaction or shall be
accountable for any gain or profit realized from such contract or transaction.
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ARTICLE VI - Capital Accounts and Contributions
6.1. Capital Accounts.
(a) There
shall be established on the books of the Company a separate capital account (a
"Capital Account") for each Member.
(b) The Capital Account of each Member (regardless of the time or manner in which
such Member’s interest was acquired) shall be maintained in accordance with
the rules of Section 704(b) of the Internal Revenue Code of 1986, as
amended, from time to time (the “Code”), and Treasury Regulation
Section 1.7041(b)(2)(iv). Adjustments shall be made to the Capital Accounts
for distributions and allocations as required by the rules of
Section 704(b) of the Code and the Treasury Regulations thereunder.
(c) If there is a transfer of all or a part of an interest in the Company by a
Member, the Capital Account of the transferor that is attributable to the
transferred interest shall carry over to the transferee of such Member.
(d) Notwithstanding any other provision contained herein to the contrary, no Member
shall be required to restore any negative balance in its Capital Account.
6.2.
Initial Contributions. Each Member shall make the initial contributions
to the capital of the Company (herein “Contributions”) specified on
Schedule A. All Contributions shall be paid in cash unless otherwise
specified on Schedule A or agreed to by the Members. The value of
all noncash Contributions made by Members shall be set forth on
Schedule A. No Member shall be entitled to any interest or
compensation with respect to its Contribution or any services rendered on behalf
of the Company except as specifically provided in this Agreement or approved by
the Managers. No Member shall have any liability for the repayment of the
Contribution of any other Member and each Member shall look only to the assets
of the Company for return of its Contribution.
6.3.
Additional Contributions. In addition to the initial Contributions, the
Managers may determine from time to time that additional Contributions are
needed to enable the Company to conduct its business. Upon making such a
determination, the Managers shall recommend to the Members that additional
Contributions be required. Upon the Members’ approval of the additional
Contributions, the Company shall give notice to all Members in writing at least
ten business days prior to the date on which such Contribution is due. Such
notice shall set forth the amount of additional Contribution needed, the purpose
for which the contributions is needed, and the date by which the Members should
contribute. Each Member shall contribute a proportionate share of such
additional Contribution.
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ARTICLE VII - Profits, Losses and Distributions
7.1. Profits, Losses and Distributions.
(a) All profits and losses arising from the normal course of business operations or
otherwise and all cash available for distribution from whatever source,
commencing with the date of this Agreement, shall be allocated or distributed to
the Members according to their Membership Interests.
(b) All profits and losses allocated to the Members shall be credited or charged, as
the case may be, to their Capital Accounts. The terms “profits” and
“losses” as used in this Agreement shall mean income and losses, and
each item of income, gain, loss, deduction or credit entering into the
computation thereof, as determined in accordance with the accounting methods
followed by the Company and computed in a manner consistent with Treasury
Regulation Section 1.7041(b)(2)(iv). Profits and losses for Federal income
tax purposes shall be allocated in the same manner as profits and losses for
purposes of this Article VII, except as provided in Section 7.3(a).
7.2. Distributions Upon Dissolution.
(a) Upon
dissolution and termination, after payment of, or adequate provision for, the
debts and obligations of the Company, the remaining assets of the Company (or
the proceeds of sales or other dispositions in liquidation of the Company
assets, as may be determined by the remaining or surviving Member(s)) shall be
distributed to the Members in accordance with the positive balances in their
Capital Accounts after taking into account all Capital Account adjustments for
the Company taxable year.
(b) With respect to assets distributed in kind to the Members in liquidation or
otherwise, (i) any unrealized appreciation or unrealized depreciation in the
values of such assets shall be deemed to be profits and losses realized by the
Company immediately prior to the liquidation or other distribution event; and
(ii) such profits and losses shall be allocated to the Members and credited or
charged to their Capital Accounts, and any property so distributed shall be
treated as a distribution of an amount in cash equal to the excess of such fair
market value over the outstanding principal balance of and accrued interest on
any debt by which the property is encumbered. For the purposes of this Section
7.2(b), “unrealized appreciation” or “unrealized
depreciation” shall mean the difference between the fair market value of
such assets, taking into account the fair market value of the associated
financing but subject to Section 7701(g) of the Code, and the Company’s
basis in such assets as determined under Treasury Regulation
Section 1.704-1(b). This Section 7.2(b) is merely intended to provide
a rule for allocating unrealized gains and losses upon liquidation or other
distribution event, and nothing contained in this Section 7.2(b) or
elsewhere in this Agreement is intended to treat or cause such distributions to
be treated as sales for value. The fair market value of such assets shall be
determined by an appraiser to be selected by the Manager with the Consent of the
Members.
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7.3.
Special Provisions.
Notwithstanding
the foregoing provisions in this Article VII:
(a) Income, gain, loss and deduction with respect to Company property which has a
variation between its basis computed in accordance with Treasury Regulation
Section 1.704(b) and its basis computed for Federal income tax purposes
shall be shared among Members so as to take account of the variation in a manner
consistent with the principles of Section 704(c) of the Code and Treasury
Regulation Section 1.7043.
(b) Section 704 of the Code and the Treasury Regulations issued thereunder,
including but not limited to the provisions of such regulations addressing
qualified income offset provisions, minimum gain chargeback requirements and
allocations of deductions attributable to nonrecourse debt and partner
nonrecourse debt, are hereby incorporated by reference into this Agreement.
7.4. Distribution of Assets in Kind. No Member shall have the right to require
any distribution of any assets of the Company to be made in cash or in kind. If
the Managers determine to distribute assets of the Company in kind, such assets
shall be distributed on the basis of their fair market value as determined by
the Managers. Any Member entitled to any interest in such assets shall, unless
otherwise determined by the Managers, receive separate assets of the Company,
and not an interest as tenant-in-common with other Members so entitled in each
asset being distributed. Distributions in kind need not be made on a pro-rata
basis but may be made on any basis which the Managers determine to be reasonable
under the circumstances.
ARTICLE VIII - Transfers of Interests
8.1.
Transfer of a Member’s Membership Interest. Except as set forth in
the first sentence of Section 8.2, no Member may sell, assign, give, pledge,
hypothecate, encumber or otherwise transfer, including, without limitation, any
assignment or transfer by operation of law or by order of court, such
Member’s Membership Interest in the Company or any part thereof, or in all
or any part of the assets of the Company, without a prior written consent of a
majority of the Managers. The granting or denying of such consent shall be in
the Managers’ absolute discretion. The Company shall not be required to
recognize any such assignment until the instrument conveying such Membership
Interest has been delivered to one of the Managers for recording on
Schedule B hereto. Any attempted sale, transfer, assignment, pledge
or other disposition in contravention of the provisions of this section shall be
void and ineffectual and shall not bind, or be recognized, by the Company.
8.2.
Death or Incompetence of a Member. If a Member dies, such Member’s
executor, administrator, or trustee, or, if he or she is adjudicated
incompetent, such Member’s guardian, or, if it is a corporation, trust,
limited liability company or partnership and is dissolved, the liquidator, shall
automatically become an assignee (the “Assignee”) of the Membership
Interest of the deceased, incompetent, or dissolved Member. The Assignee may
receive distributions and shall have all the rights of a Member for the purpose
of settling or managing such deceased or incompetent Member’s estate, but
shall not be a Member and shall not have the power to vote such Member’s
Membership Interest. The
14
Assignee shall also have such power as the decedent, incompetent or dissolved
entity possessed to: (1) assign all or any part of the Member’s Membership
Interest subject to Section 8.1; and (2) to satisfy conditions precedent to the
assignment of the Membership Interest set forth in Section 8.1.
8.3. Admission of Member; Effect of Transfer.
(a) In no event may any person obtaining a Membership Interest in the Company by
assignment, transfer, pledge or other means from an existing Member be admitted
as a successor Member without the affirmative vote or written consent of all of
the existing Members, exclusive in each case of the Member whose Membership
Interest is being transferred.
(b) If the transferee is admitted as a Member or is already a Member, the Member
transferring its Membership Interest shall be relieved of liability with respect
to the transferred Membership Interest arising or accruing under this Agreement
on or after the effective date of the transfer, unless the transferor
affirmatively assumes such liability; provided, however, that the transferor
shall not be relieved of any liability for prior distributions and unpaid
contributions unless the transferee affirmatively assumes such liabilities.
(c) Any person who acquires in any manner a Membership Interest or any part thereof
in the Company, whether or not such person has accepted and assumed in writing
the terms and provisions of this Agreement or been admitted as a Member, shall
be deemed by the acquisition of such Membership Interest to have agreed to be
subject to and bound by all of the provisions of this Agreement with respect to
such Membership Interest, including without limitation, the provisions hereof
with respect to any subsequent transfer of such Membership Interest.
ARTICLE IX - Dissolution, Liquidation and Termination
9.1. Dissolution. The Company shall dissolve and its affairs shall be wound up upon the first to occur of
the following:
(a) the affirmative vote or written consent of the Members;
(b) the entry of a decree of judicial dissolution under Section 44 of the Act; or
(c) The consolidation or merger of the Company in which it is not the resulting or surviving entity.
9.2.
Liquidation. Upon dissolution of the Company, the Managers shall act as
its liquidating trustees or the Managers may appoint one or more Managers or
Members as liquidating trustee. The liquidating trustees shall proceed
diligently to liquidate the Company and wind up its affairs and shall distribute
the assets of the Company as provided in Section 7.2 hereof. Until final
distribution, the liquidating trustees may continue to operate the business and
properties of the Company with all of the power and authority of the Managers.
As promptly as possible after dissolution and again after final liquidation,
15
the liquidating trustees shall cause an accounting by the accounting firm
then serving the Company of the Company’s assets, liabilities, operations
and liquidating distributions to be given to the Members.
9.3.
Certificate of Cancellation. Upon completion of the distribution of
Company assets as provided herein, the Company shall be terminated, and the
Managers (or such other person or persons as the Act may require or permit)
shall file a Certificate of Cancellation with the Secretary of State of
Massachusetts under the Act, cancel any other filings made pursuant to
Sections 1.1, 1.3 and 1.5 and take such other actions as may be necessary
to terminate the existence of the Company.
ARTICLE X - General Provisions
10.1. Offset. Whenever the Company is obligated to make a distribution or payment to any Member, any amounts
that Member owes the Company may be deducted from said distribution or payment by the Managers.
10.2.
Notices. Except as expressly set forth to the contrary in this Agreement,
all notices, requests, or consents required or permitted to be given under this
Agreement must be in writing and shall be deemed to have been properly given if
sent by registered or certified mail, postage prepaid, by commercial overnight
courier, by facsimile, by electronic mail or if delivered in hand to Members at
their addresses on Schedule A, or such other address as a Member may
specify by notice to the Managers and to the Company or the Managers at the
address of the principal office of the Company specified in Section 1.3.
Whenever any notice is required to be given by law, the Certificate or this
Agreement, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
10.3.
Entire Agreement; Binding Effect. This Agreement constitutes the entire
agreement of the Members and the Managers relating to the Company and supersedes
all prior oral or written agreements or understandings with respect to the
Company. This Agreement is binding on and inures to the benefit of the parties
and their respective successors, permitted assigns and legal representatives.
10.4.
Amendment or Modification. Except as specifically provided herein, this
Agreement may be amended or modified from time to time only by a written
instrument signed by Members holding the percentage Membership Interests
required by Section 2.5 hereof, provided, however, that (a) an amendment or
modification reducing a Member’s Membership Interest or changing adversely
the rights of a Member with respect to distributions, allocations or voting,
(other than to reflect the admission of new Members or changes otherwise
provided by this Agreement) shall be effective only with that Member’s
consent; (b) an amendment or modification increasing any liability of a Member
to the Company or its Managers or Members, or adversely affecting the limitation
of the liability of a Member with respect to the Company, shall be effective
only with that Member’s consent; (c) an amendment or modification reducing
the required percentage of Membership Interests for any consent or vote in this
Agreement shall be effective only with the consent or vote of Members having the
percentage of Membership Interests theretofore required; and (d) an amendment of
this Section shall require the consent of all Members.
16
10.5.
Governing Law; Severability. This Agreement is governed by and shall be
construed in accordance with the law of The Commonwealth of Massachusetts,
exclusive of its conflictoflaws principles. In the event of a conflict between
the provisions of this Agreement and any provision of the Certificate or the
Act, the applicable provision of this Agreement shall control, to the extent
permitted by law. If any provision of this Agreement or the application thereof
to any person or circumstance is held invalid or unenforceable to any extent,
the remainder of this Agreement and the application of that provision shall be
enforced to the fullest extent permitted by law.
10.6.
Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions, as requested by the Managers.
10.7.
Waiver of Certain Rights. Each Member irrevocably waives any right it may
have to maintain any action for dissolution of the Company or for partition of
the property of the Company. The failure of any Member to insist upon strict
performance of a covenant hereunder or of any obligation hereunder, irrespective
of the length of time for which such failure continues, shall not be a waiver of
such Member’s right to demand strict compliance herewith in the future. No
consent or waiver, express or implied, to or of any breach or default in the
performance of any obligation hereunder shall constitute a consent or waiver to
or of any other breach or default in the performance of the same or any other
obligation hereunder.
10.8. ThirdParty Beneficiaries. The provisions of this Agreement are not
intended to be for the benefit of any creditor or other person to whom any debts
or obligations are owed by, or who may have any claim against, the Company or
any of its Members or Managers, except for Members or Managers in their
capacities as such. Notwithstanding any contrary provision of this Agreement, no
such creditor or person shall obtain any rights under this Agreement or shall,
by reason of this Agreement, be permitted to make any claim against the Company
or any Member or Manager.
10.9.
Interpretation. For the purposes of this Agreement, terms not defined in
this Agreement shall be defined as provided in the Act; and all nouns, pronouns
and verbs used in this Agreement shall be construed as masculine, feminine,
neuter, singular, or plural, whichever shall be applicable. Titles or captions
of Articles and Sections contained in this Agreement are inserted as a matter of
convenience and for reference, and in no way define, limit, extend or describe
the scope of this Agreement or the intent of any provision hereof.
10.10.
Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document, and all counterparts shall be construed together and shall constitute
the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Operating Agreement under seal as of the
date set forth above.
17
MANAGERS:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
MEMBERS:
KEYSPAN CORPORATION
By:
Name:
Title:
KEYSPAN NEW ENGLAND, LLC
By:
Name:
Title:
18
EXHIBIT A-2
EASTERN ENTERPRISES, LLC
Schedule A
MEMBERS
| Name and Address | Contribution | Membership Interest | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| KeySpan Corporation ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attn.: General Counsel |
$99.00 | 99% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| KeySpan New England, LLC ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attn.: General Counsel |
$1.00 | 1% |
EASTERN ENTERPRISES, LLC
Schedule B
MANAGERS
| Name | Address | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | One Metro Tech Center Brooklyn, New York 11201 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. | ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ |