DELTA TOWNSHIP UTILITIES II, LLC
____________________________________________________________
LIMITED LIABILITY COMPANY AGREEMENT
____________________________________________________________
DATED AS OF MARCH 29, 2004
____________________________________________________________
TABLE OF CONTENTS
ARTICLE I ORGANIZATION ......................................................1
Section 1.1. Name................................................1
Section 1.2. Term1
Section 1.3. Registered Agent and Office.........................2
Section 1.4. Principal Places of Business........................2
Section 1.5. Qualifications in Other Jurisdictions...............2
Section 1.6. Fiscal Year.........................................2
ARTICLE II PURPOSE AND POWERS................................................2
Section 2.1. Purpose of the Company..............................2
Section 2.2. Powers of the Company...............................3
ARTICLE III MEMBERS..........................................................3
Section 3.1. Members.............................................3
Section 3.2. Powers of Members...................................3
Section 3.3. Meetings of Members.................................3
Section 3.4. Member Representations..............................4
Section 3.5. Nature of Relationship..............................5
ARTICLE IV MANAGEMENT........................................................5
Section 4.1. The Board of Managers...............................5
Section 4.2. Notice..............................................6
Section 4.3. Meetings; Electronic Communications.................6
Section 4.4. Quorum and Voting...................................7
Section 4.5. Action Without a Meeting............................7
Section 4.6. Delegation of Powers................................7
Section 4.7. Executive Committee.................................7
Section 4.8. Chairperson and Vice Chairperson....................8
Section 4.9. Officers............................................8
Section 4.10. Matters for Board Determination.....................9
ARTICLE V DISPUTE RESOLUTION..................................................9
Section 5.1. Agreement to Resolve Disputes.......................9
Section 5.2. Negotiated Resolution..............................10
Section 5.3. Arbitration........................................10
Section 5.4. Limited Court Actions..............................12
ARTICLE VI SERVICE ARRANGEMENTS, CAPITAL CONTRIBUTIONS, MATERIAL
APPROVALS, ETC.................................................12
Section 6.1. Initial Operations; Service Arrangements...........12
Section 6.2. Budget; Capitalization; Material Approvals.........13
Section 6.3. Status of Capital Contributions....................13
Section 6.4. Capital Accounts...................................14
Section 6.5. Advances...........................................14
Section 6.6. Negative Capital Accounts..........................14
ARTICLE VII ALLOCATIONS, DISTRIBUTIONS AND WITHHOLDING......................15
Section 7.1. Allocations of Net Profit and Net Loss.............15
Section 7.2. Distributions......................................16
Section 7.3. Limitations on Distribution........................16
Section 7.4. Withholding Taxes..................................16
ARTICLE VII TAX MATTERS.....................................................16
Section 8.1. Tax Matters........................................16
Section 8.2. Taxation as Partnership............................17
Section 8.3. Tax Elections......................................17
ARTICLE IX BANKING; ACCOUNTING; BOOKS AND RECORDS...........................17
Section 9.1. Banking............................................17
Section 9.2. Maintenance of Books and Records; Accounts
and Accounting Method..............................17
Section 9.3. Financial Statements...............................18
Section 9.4. Additional Information.............................18
Section 9.5. Minutes of Meetings................................18
ARTICLE X LIABILITY, EXCULPATION AND INDEMNIFICATION........................18
Section 10.1. Liability..........................................18
Section 10.2. Exculpation........................................18
Section 10.3. Indemnification....................................20
Section 10.4 Indemnification by Members.........................21
Section 10.5 Indemnification by the Company.....................23
Section 10.6. Special Indemnification of York and
Its Affiliates.....................................23
ARTICLE XI TRANSFER OF INTERESTS............................................25
Section 11.1. Personal Property; Consent for Transfers...........25
Section 11.2. Issue and Replacement of Certificates..............26
Section 11.3. Interest Certificate Legend........................26
ARTICLE XII DISSOLUTION AND TERMINATION OF THE COMPANY......................27
Section 12.1. Dissolution........................................27
Section 12.2. Liquidation........................................27
Section 12.3. Time for Liquidation, etc..........................27
Section 12.4. Claims of the Members..............................28
ARTICLE XIII INDEPENDENT MANAGER............................................28
Section 13.1 ...................................................28
Section 13.2 ...................................................28
Section 13.3 ...................................................28
Section 13.4 ...................................................28
Section 13.5 ...................................................28
Section 13.6 ...................................................29
ARTICLE XIV SINGLE PURPOSE ENTITY............................................29
Section 14.1 Single Purpose Entity..............................29
Section 14.2 Bankruptcy of a Member.............................34
Section 14.3 Creditor's Interests...............................34
Section 14.4 Waiver of Certain Actions..........................34
ARTICLE XV CERTAIN DEFINITIONS..............................................35
Section 15.1. Definitions........................................35
ARTICLE XVI MISCELLANEOUS PROVISIONS........................................37
Section 16.1. Amendments Generally...............................37
Section 16.2. Entire Agreement...................................38
Section 16.3. Notices............................................38
Section 16.4. Table of Contents and Headings.....................39
Section 16.5. Assignment.........................................39
Section 16.6. Severability.......................................39
Section 16.7. Extension; Waiver..................................40
Section 16.8. Governing Law......................................40
Section 16.9. Names and Logos....................................40
Section 16.10. Further Actions....................................40
Section 16.11. Counterparts.......................................40
Section 16.12 Press Releases; Confidentiality....................40
Section 16.13. No Third Party Beneficiary.........................42
LIST OF ATTACHMENTS
Schedule 1 - Interest Percentages, Etc.
Schedule 2 - Matters Requiring Unanimous Action of the Board of Managers of the
Company
Exhibit A - General Division of Responsibility
INDEX OF DEFINED TERMS
TERM SECTION NUMBER
---- --------------
1935 Act 6.2(d)
Adjusted Capital Account Deficit 15.1
Affiliate 15.1
Agreement Preamble
Arbitration Demand 5.3(a)
Board of Managers 3.2
Business Day 15.1
Capital Account 15.1
Capital Contribution 15.1
Certificate 1.2
Cinergy Solutions Managers 4.1(c)
Cinergy Solutions Preamble
Claims 10.3(a)
Code 15.1
Company Preamble
Covered Person 15.1
CPR 5.3(a)
Damages 10.3(a)
Delaware Act Recitals
Disabling Conduct 15.1
Dispute 5.1
Executive Committee 4.7
Fiscal Year 1.6
GM Delta Township II Project Recitals
GM Recitals
Interest 15.1
Interest Percentage 15.1
HSR Act 6.2(c)
Lender 2.2
Liquidating Trustee 12.1
Loan Agreement 2.2
Loan Documents 2.2
Manager 15.1
Material Approvals 6.2(c)
Member Recitals, 15.1
Members Recitals
Net Loss 15.1
Net Profit 15.1
Person 15.1
Proceeding 10.3(a)
Purpose 2.1
SEC 6.2(c)
Service Arrangements 6.1
Subsidiary or Subsidiaries 15.1
Tax Matters Partner 8.1
Transfer 11.1(a)
Treasury Regulations 15.1
Utility Services Agreement 15.1
Veolia Water Preamble
Veolia Water Managers 4.1(c)
York Preamble
York Manager 4.1(c)
LIMITED LIABILITY COMPANY AGREEMENT
OF
DELTA TOWNSHIP UTILITIES II, LLC
This LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") of DELTA
TOWNSHIP UTILITIES II, LLC a Delaware limited liability company (the "Company"),
dated as of March 29, 2004 is made by and among Cinergy Solutions Holding
Company, Inc., a Delaware corporation ("Cinergy Solutions"), York International
Corporation, a Delaware corporation ("York") and Veolia Water North America
Operating Services, Inc., a Delaware corporation ("Veolia Water"). Certain
capitalized terms used herein without definition shall have the meanings
specified in Section 15.1.
W I T N E S S E T H
WHEREAS, Cinergy Solutions and Veolia Water have been engaged in
discussions with General Motors Corporation ("GM") concerning the provision of
new assets and certain services to GM related to the metal fabrication, stamping
and assembly facilities of GM located in Delta Township, Michigan (the "GM Delta
Township II Project") and York has been engaged in discussions with Cinergy
Solutions and Veolia Water concerning the GM Delta Township II Project;
WHEREAS, pursuant to those discussions, and to assist in implementing and
performing the GM Delta Township II Project, the Company has been formed under
the Delaware Limited Liability Company Act (the "Delaware Act"); and
WHEREAS, as contemplated by the Delaware Act, Cinergy Solutions, York and
Veolia Water, as the sole initial members of the Company (each in such capacity,
a "Member"), are entering into this Agreement to govern the affairs of the
Company and the conduct of its business.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members hereby agree as
follows:
ARTICLE I
ORGANIZATION
Section 1.1. Name.
The name of the Company is "Delta Township Utilities II, LLC." The business
of the Company may be conducted upon compliance with all applicable laws under
any other name designated by the Company with the concurrence of the Board of
Managers by action taken pursuant to Section 4.4 or 4.5 below.
Section 1.2. Term.
The existence of the Company commenced on March 29, 2004, the date of the
filing of the Certificate of Formation (the "Certificate") with the office of
the Secretary of State of the State of Delaware, and shall continue until the
Company is dissolved in accordance with the provisions of this Agreement.
Section 1.3. Registered Agent and Office.
The registered office of the Company in Delaware shall be c/o The
Corporation Trust Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇. At any time, the Company may designate another registered agent and/or
registered office. The registered agent for service of process on the Company in
the State of Delaware shall be c/o The Corporation Trust Company, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
Section 1.4. Principal Places of Business.
The principal place of business of the Company shall be at c/o Cinergy
Corp., ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇. The Company may change the
location of the Company's principal place of business at any time upon agreement
of its Members. Until the expiration or termination of, and the satisfaction of
all obligations under the Utility Services Agreement and the Loan Documents, the
Company shall give GM and the Lender, respectively, notice of any such change in
location.
Section 1.5. Qualifications in Other Jurisdictions.
The Company shall be qualified or registered to do business in Michigan and
in such jurisdictions, if any, in which the Company transacts business and in
which such qualification or registration is required by law or deemed advisable
by the Company. The Secretary of the Company, as an authorized person within the
meaning of the Delaware Act, shall execute, deliver and file any certificates
(and any amendments and/or restatements thereof) necessary for the Company to
qualify to do business in any such jurisdiction.
Section 1.6. Fiscal Year.
The fiscal year of the Company (the "Fiscal Year") shall end on the 31st
day of December in each year. The Company shall have the same fiscal year for
income tax and for financial and accounting purposes.
ARTICLE II
PURPOSE AND POWERS
Section 2.1. Purpose of the Company.
The purpose of the Company is to develop, design, construct, own, operate
and maintain the System (as defined in the Utility Services Agreement) and
provide the Utility Services (as defined in the Utility Services Agreement); to
obtain financing for such activities in accordance with the Loan Agreement; and
to take all actions incident thereto (the "Purpose"). The Members will cooperate
and assist each other in accomplishing the Purpose. The scope of work for the
site, building and professional services to be rendered to GM is described in
the Utility Services Agreement. The general division of responsibility among
Cinergy Solutions, York and Veolia Water for the development, design,
construction, operation and maintenance of the System is set forth on Exhibit A
hereto.
Section 2.2. Powers of the Company.
Subject to the terms and conditions of this Agreement, the Company shall
have the power and authority to take any and all actions necessary, appropriate,
proper, advisable, incidental or convenient to or for the furtherance of the
Purpose; provided, however, that notwithstanding any other provision of this
Agreement, unless otherwise agreed to in writing by GMAC Commercial Holding
Capital Corp., a Colorado corporation, or its successors and assigns ("Lender"),
until all of the Company's obligations under that certain Loan and Security
Agreement dated as of April 14, 2004, by and between the Company and Lender (as
the same may be amended, modified or supplemented from time to time, the "Loan
Agreement") and all documents related thereto (collectively, with the Loan
Agreement, the "Loan Documents") are satisfied in full pursuant to the terms
thereof, none of the Members, the Managers, the officers or the Company shall
take any action in contravention of the Company's obligations and covenants
contained in the Loan Documents, including without limitation, the covenants set
forth in Sections 7.01(n), (p), (q), (r) and (t) of the Loan Agreement.
ARTICLE III
MEMBERS
Section 3.1. Members.
The name, initial Capital Contributions and initial Interest Percentage of
each Member are listed on Schedule 1 attached hereto. The Company shall be
required to update Schedule 1 from time to time as necessary to reflect
accurately the information therein. Any reference in this Agreement to Schedule
1 shall be deemed to be a reference to Schedule 1 as amended and in effect from
time to time.
Section 3.2. Powers of Members.
Except as otherwise provided herein, the Members shall have no power to
transact any business in the Company's name. Authority to sign Company checks
may be delegated to one or more individuals by the written authorization of the
Board of Managers in accordance with Section 9.1. Additional Members may only be
added to the Company upon the unanimous consent of existing Members and
otherwise in compliance with the provisions hereof. Subject to the provisions of
the Delaware Act, the Certificate and this Agreement, the Members hereby
delegate any or all powers to the Board of Managers of the Company (the "Board
of Managers") to carry out the business affairs of the Company on the Members'
behalf. Any power not reserved to the Members or delegated to the officers shall
remain with the Board of Managers. The Board of Managers shall be appointed in
accordance with the provisions of Article IV.
Section 3.3. Meetings of Members.
(a) Annual Meeting. An annual meeting of the Members shall be held once a
year on such date as the Board of Managers shall designate.
(b) Special Meetings. Special meetings of the Members, for any purpose or
purposes, may be called by the Board of Managers or at the request of
any Member. Business transacted at any special meeting of Members
shall be limited to the purposes stated in the notice, unless
otherwise agreed by the Members attending the meeting.
(c) Place of Meeting. All meetings of Members shall be held at such place
within or without the State of Delaware as the Board of Managers shall
designate.
(d) Notice of Meetings. Notice of all meetings of Members, stating the
time, place and purpose of the meeting, shall be given at least two
(2) days and not more than sixty (60) days before the meeting. Any
adjourned meeting may be held as adjourned without further notice,
provided that any adjourned session or sessions are held within sixty
(60) days after the date set for the original meeting. No notice need
be given to any Member if a written waiver of notice, executed before
or after the meeting by such Member or his representative thereunto
duly authorized, is filed with the records of the meeting, or to any
Member who attends the meeting without protesting prior thereto or at
its commencement the lack of notice to it. A waiver of notice need not
specify the purposes of the meeting.
(e) Quorum and Voting. The presence of at least one duly authorized
representative of each Member shall constitute a quorum for purposes
of transacting business at any meeting of Members. Subject to Sections
4.1(c) and 4.10, any question brought before any meeting shall be
decided by the Members who, at the time in question and in the
aggregate, hold, or hold proxies with respect to, a majority of
Interest Percentages. Interests of Members may be voted in person or
by proxy. The parties agree that the requirements of Sections 4.1(c)
and 4.10 may not be waived by the Members or modified in any manner
without the unanimous consent of all of the Members.
(f) Electronic Communications. Members may participate in any meeting of
Members by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting
can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
(g) Actions of Members Without a Meeting. Any action required to be taken
at any meeting of Members or otherwise, or any action which may be
taken at any meeting of Members or otherwise, may be taken without a
meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by all of
the Members. Any such written consent may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same document.
Section 3.4. Member Representations.
(a) Investment. Each Member represents and warrants to the other Members
and the Company that (i) its Interest has been acquired for its own
account, for investment, and not with an intent or a present view to
participating, directly or indirectly, in or for the resale in
connection with any distribution (as interpreted under any applicable
law) thereof, nor with any present intention of dividing its Interest
or distributing, reselling, assigning or otherwise disposing of all or
part of such Interest, and (ii) it will not make or offer to make a
transfer of its Interest in violation of the Securities Act of 1933,
as amended, or any other applicable Federal or state securities laws.
(b) Binding Obligation. Each Member represents and warrants to the
other Members and the Company that this Agreement has been duly
authorized, executed and delivered on behalf of such Member and is the
legal, valid and binding obligation of such Member, enforceable
against it in accordance with its terms. By executing this Agreement,
each of the Members agrees that the execution of the Loan Documents by
the Company shall evidence and constitute the review and approval
thereof by the Company and each of the Members.
(c) Compliance With Anti-Terrorism, Embargo, Sanctions and Anti-Money
Laundering Laws. Each Member represents and warrants to the other
Members and the Company that such Member, as well as each Person
owning a 20% or more interest in any such Member: (i) are not
currently, and during the term hereof will not permit themselves to
be, identified on the OFAC List (as defined in the Loan Agreement),
and (ii) are not, and during the term hereof will not permit
themselves to be, Persons with whom a citizen of the United States is
prohibited to engage in transactions by any trade embargo, economic
sanction, or other prohibition of United States law, regulation, or
Executive Order of the President of the United States.
Section 3.5. Nature of Relationship.
The Members intend that the Company shall not be a partnership (including,
without limitation, a limited partnership) or joint venture, and that no Member
shall be a partner or joint venturer of any other Member, for any purposes other
than United States Federal and, if applicable, state tax purposes, and this
Agreement shall not be construed to the contrary. Each Member at any time and
from time to time may engage in and own interests in other business ventures of
any and every type and description, independently or with others (including ones
in competition with the Company), with no obligation to offer to the Company or
any other Member the right to participate therein.
ARTICLE IV
MANAGEMENT
Section 4.1. The Board of Managers.
(a) General. Except as specifically set forth herein, the business and
affairs of the Company shall be managed by or under the direction of
the Board of Managers. Other than rights and powers expressly reserved
to Members by this Agreement or the Delaware Act, and except as
otherwise specifically set forth herein, the Board of Managers shall
have full, exclusive and complete discretion to manage and control the
business and affairs of the Company, to make all decisions affecting
the business and affairs of the Company and to take all such actions
as it deems necessary or appropriate to accomplish the purposes of the
Company as set forth herein.
(b) Duties. The Board of Managers shall be obligated to devote only as
much of their time to the Company's business as shall be reasonably
required in light of the Company's business and objectives. A Manager
shall perform his or her duties in good faith, in a manner he or she
reasonably believes to be in the best interests of the Company, and
with such care as an ordinarily prudent person in a like position
would use under similar circumstances.
(c) Board Composition; Removal and Vacancies. The Board of Managers shall
consist of six Managers. Cinergy Solutions shall be entitled to
designate two Managers to the Board of Managers, York shall be
entitled to designate one Manager to the Board of Managers and Veolia
Water shall be entitled to designate the remaining half of the
Managers to the Board of Managers. Those Managers designated to the
Board of Managers by Cinergy Solutions are referred to herein as the
"Cinergy Solutions Managers," the Manager designated to the Board of
Managers by York is referred to herein as the "York Manager" and those
Managers designated to the Board of Managers by Veolia Water are
referred to herein as the "Veolia Water Managers". Each Manager shall
serve until his or her removal, resignation, death or retirement. Each
Member shall vote all of its Interest and shall take all other action
necessary or desirable within its control (including, without
limitation, attendance at meetings in person or by proxy and execution
of written consents in lieu of meetings), so that the designees of the
other Members are duly elected to the Board of Managers. Upon the
removal, resignation, death or retirement of a Manager, or vacation of
office by any Manager for any reason, his or her successor shall be
nominated and elected by the same Member as originally designated the
former Manager. Any successor so elected shall retain his or her
office during such time only as the former Manager was entitled to
retain the same. York shall have the exclusive right to remove the
York Manager at any time and for any reason whatsoever and to fill the
vacancy of the York Manager. Cinergy Solutions shall have the
exclusive right to remove any Cinergy Solutions Manager at any time
and for any reason whatsoever and to fill the vacancy of the Cinergy
Solutions Managers. Veolia Water shall have the exclusive right to
remove any Veolia Water Manager at any time and for any reason
whatsoever and to fill the vacancy of the Veolia Water Managers.
(d) Restrictions on the Board. The Board of Managers shall not: (i) do any
act in contravention of any applicable law or regulation, or provision
of this Agreement; (ii) possess Company property for other than a
Company purpose; or (iii) admit any new Members without the unanimous
consent of existing Members or without compliance with Article XI
hereof.
Section 4.2. Notice.
Meetings of the Board of Managers may be held at such places and at such
times as the Board of Managers may from time to time determine. Any Manager may
at any time call a meeting of the Board of Managers. Written notice of the time,
place, and purpose of such meeting shall be served by registered or certified,
prepaid first class, mail, or by fax or cable, upon each member of the Board of
Managers and shall be given at least twenty-four (24) hours prior to the time of
the meeting. No notice need be given to any Manager if a written waiver of
notice, executed before or after the meeting by such Manager thereunto duly
authorized, is filed with the records of the meeting, or to any Manager who
attends the meeting without protesting prior thereto or at its commencement the
lack of notice to him. A waiver of notice need not specify the purposes of the
meeting.
Section 4.3. Meetings; Electronic Communications.
Regular meetings of the Board of Managers shall be held on such dates as
the Board of Managers shall agree but not less frequently than once during each
Fiscal Year of the Company. Members of the Board of Managers, or of any
committee designated by the Board, may participate in a meeting of such Board or
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting by such means shall constitute presence in person
at such meeting.
Section 4.4. Quorum and Voting.
A majority of the Managers shall constitute a quorum for the transaction of
business at a meeting of the Board of Managers, provided, that at least one
Veolia Water Manager, one Cinergy Solutions Manager and the York Manager are
present. Except for those matters which require the unanimous consent of the
Managers pursuant to Sections 4.10 and 14.1(c), action by the Board of Managers
must be authorized by the majority vote of the Managers present at the meeting.
Section 4.5. Action Without a Meeting.
Except for those matters which require the unanimous consent of the
Managers pursuant to Sections 4.10 and 14.1(c), any action which is required to
be, or which may be, taken at any annual, regular or special meeting of the
Board of Managers or otherwise, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by at least one Veolia Water Manager, one Cinergy
Solutions Manager and the York Manager. With respect to matters which require
the unanimous consent of the Managers pursuant to Sections 4.10 and 14.1(c),
such action may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by all of the Managers. Any such written consent may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same document.
Section 4.6. Delegation of Powers.
Subject to Section 4.10 and any limitation set forth in the Delaware Act,
the Board of Managers may delegate any of its powers to committees or to
officers consisting of persons who may or may not be Managers. Every officer or
committee shall, in the exercise of the power so delegated, comply with any
restrictions that may be imposed on them by the Board of Managers.
Section 4.7. Executive Committee.
The Board of Managers shall have an Executive Committee consisting of two
(2) Managers, one Cinergy Solutions Manager and one Veolia Water Manager (the
"Executive Committee"). Actions of the Executive Committee shall require
unanimous consent of both Managers. Meetings of the Executive Committee may be
called by any member thereof upon twenty-four (24) hours' prior notice. The
Executive Committee shall only be empowered to act on such matters as may be
from time to time delegated to it by the Board of Managers and in accordance
with the terms and conditions of any such delegation.
Section 4.8. Chairperson and Vice Chairperson.
The Board of Managers shall designate one of its members as the Chairperson
and another as the Vice Chairperson. The Cinergy Solutions Managers shall have
the right to designate the Chairperson and the Veolia Water Managers shall have
the right to designate the Vice Chairperson. Neither the Chairperson nor the
Vice Chairperson shall have any additional or special voting rights and either
may be replaced at any time during his or her term by the Managers by whom
initially designated. The Chairperson shall preside over all meetings of the
Board of Managers. In the absence of the Chairperson, the Vice Chairperson shall
preside over a meeting of the Board of Managers. The Chairperson and Vice
Chairperson shall have such other authority and perform such duties as the Board
of Managers may determine in its sole discretion.
Section 4.9. Officers.
(a) Election, Term of Office, Qualifications, and Compensation. The
officers shall be appointed by the Board of Managers. Except as
provided in paragraphs (b) or (c) of this Section 4.9, each officer
shall hold office until his or her successor shall have been chosen
and qualified. Any two (2) offices, except those of the Chief
Executive Officer, the Chief Operating Officer and the Secretary, may
be held by the same Person, but no officer shall execute, acknowledge
or verify any instrument in more than one capacity if such instrument
be required by law or this Agreement to be executed, acknowledged or
verified by any two (2) or more officers.
(b) Resignations and Removals. Any officer may resign his or her office at
any time by tendering his or her resignation to the Chief Executive
Officer or the Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery. Any officer may be
removed from office with or without cause by the Board of Managers.
(c) Vacancies and Newly Created Offices. If any vacancy shall occur in any
office by reason of death, resignation, removal, disqualification or
other cause, or if any new office shall be created, such vacancies or
newly created offices may be filled by the Board of Managers.
(d) Conduct of Business. Subject to the provisions of the Certificate and
this Agreement (including without limitation Section 6.1), the
day-to-day operations of the Company shall be managed by its officers
and such officers shall have full power and authority to make all
business decisions, enter into all commitments and take such other
actions in connection with the business and operations of the Company
as they deem appropriate. Such officers shall perform their duties in
a manner consistent with the Certificate and this Agreement, and with
directions which may be given from time to time by the Board of
Managers.
(e) Chief Executive Officer. Subject to the further directive of the Board
of Managers, the Chief Executive Officer shall have general and active
management of the business of the Company subject to the supervision
of the Board of Managers, shall see that all orders and resolutions of
the Board of Managers are carried into effect and shall have such
additional powers and authority as are specified by the provisions of
this Agreement.
(f) Chief Operating Officer. The Chief Operating Officer shall have such
authority and perform such duties as the Board of Managers may
determine in its sole discretion.
(g) The Secretary. The Secretary shall attend all meetings of the Members
and the Board of Managers and record all the proceedings of the
meetings and all actions taken thereat in a book to be kept for that
purpose and shall perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of
all meetings of the Members or the Board of Managers, and shall
perform such other duties as may be prescribed by the Board of
Managers or the Chief Executive Officer, under whose supervision the
Secretary shall be. The Assistant Secretary, if there be one, shall,
in the absence of the Secretary or in the event of the Secretary's
inability to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other
powers as the Board of Managers may from time to time prescribe.
(h) Other Officers. The Board of Managers from time to time may appoint
such other officers or agents as it may deem advisable, each of whom
shall have such title, hold office for such period, have such
authority and perform such duties as the Board of Managers may
determine in its sole discretion. The Board of Managers from time to
time may delegate to one or more offices or agents the power to
appoint any such officers or agents and prescribe their respective
rights, terms of office, authorities and duties.
(i) Officers as Agents; Authority. The officers, to the extent of their
powers set forth in this Agreement, are agents of the Company for the
purpose of the Company's business, and the actions of the officers
taken in accordance with such powers shall bind the Company.
(j) Duties. The officers shall be obligated to devote only as much of
their time to the Company's business as shall be reasonably required
in light of the Company's business and objectives.
Section 4.10. Matters for Board Determination.
Notwithstanding anything to the contrary contained in this Agreement, none
of the Members, Managers, officers or the Company shall take any action with
respect to matters identified on Schedule 2 hereto without first obtaining the
unanimous approval of all members of the Board of Managers; provided, however,
that any such action by the Company or the Board of Managers shall be subject to
the restrictions set forth in Section 2.2 hereof.
ARTICLE V
DISPUTE RESOLUTION
Section 5.1. Agreement to Resolve Disputes.
Except as otherwise specifically provided in this Agreement, the provisions
of this Article V shall apply to all disputes, controversies or claims that may
arise out of, or under this Agreement (a "Dispute"). The Members acknowledge and
agree that any failure, due to the objection of one Member or one or more of the
Managers, to obtain approval of any action may be considered a Dispute hereunder
by either or both of the other two Members.
Section 5.2. Negotiated Resolution.
The Members shall act in good faith and use reasonable efforts to resolve
expeditiously any Dispute that may arise from time to time on a mutually
acceptable, negotiated basis. In furtherance of the foregoing, the Members agree
to the following procedure:
(a) At the request of any Member from time to time in a written notice to
the other Members, the Members shall convene a committee comprised of
one or more executive officers designated by each Member. Such
officers will meet within ten (10) Business Days of such notice and
attempt in good faith to resolve the Dispute. If the Dispute is
between the Company and one Member, the other two Members will jointly
represent the Company.
(b) If the committee is unable to resolve the Dispute within fifteen (15)
Business Days of its initial meeting, then any Member, by giving
notice to the other Members, may request that the Dispute be referred
for resolution to the Chief Executive Officers of Cinergy Corp., York
and United States Filter Corporation. The Chief Executive Officers
shall meet within fifteen (15) Business Days thereafter and shall
attempt in good faith to resolve the Dispute. The parties agree that
these dispute resolution procedures will toll the applicable statute
of limitations during the time period consumed in complying with this
Section 5.2.
Section 5.3. Arbitration.
(a) In the event the Chief Executive Officers shall not have resolved any
Dispute within fifteen (15) Business Days after their initial meeting
pursuant to Section 5.2 above, any Member may make a written demand
that the Dispute be resolved by binding arbitration (an "Arbitration
Demand") in accordance with the Rules for Non-Administered Arbitration
of Business Disputes of the Center for Public Resources ("CPR") then
in effect. In such event, the Dispute will be decided by a sole
arbitrator in accordance with rules set forth in this Section 5.3.
(b) Within thirty (30) Business Days after an Arbitration Demand is given,
the Members shall attempt to select a sole arbitrator satisfactory to
such Members. In the event that the Members do not, within such thirty
(30) day period, agree on the selection of the sole arbitrator, any
Member may apply to CPR to select the sole arbitrator. Selection of
such sole arbitrator shall be made by the CPR within thirty (30) days
after such application. Any arbitrator selected by the Members or by
CPR shall be disinterested with respect to any of the parties and the
matter and shall be reasonably competent and experienced in the
applicable subject matter.
(c) The sole arbitrator selected pursuant to Section 5.3(b) will set a
time for the hearing of the Dispute which will commence no later than
ninety (90) days after the date of the appointment and which hearing
will be no longer than thirty (30) days (unless in the judgment of the
arbitrator the matter is unusually complex and sophisticated and
thereby requires a longer time, in which event such hearing shall be
no longer than ninety (90) days). The place of any arbitration
hereunder will be Chicago, Illinois, unless otherwise agreed by the
parties.
(d) The final award of such arbitrator will be rendered in writing to the
parties not later than ninety (90) days after the last hearing date,
unless otherwise agreed by the parties in writing. The decision of the
arbitrator will be final and binding on the parties, and judgment
thereon may be had and will be enforceable in any court having
jurisdiction over the parties. Arbitration awards will bear interest
at the Prime Rate from thirty (30) days after the date of the
arbitration award. As used in the foregoing sentence, "Prime Rate"
shall mean the prime rate as published in the "Money Rate" section of
the Wall Street Journal from time to time.
(e) Any party involved in the applicable Dispute may request document
production from the other party or parties, with the reasonable
expenses of the producing party incurred in such production paid by
the requesting party. Depositions, interrogatories or other forms of
discovery shall occur in accordance with the procedures established by
the Federal Rules of Civil Procedure. Disputes concerning the scope of
discovery and enforcement of the discovery requests will be determined
by written agreement of the parties involved in the applicable dispute
or, failing such agreement, will be referred to the arbitrator for
resolution. The arbitrator will adopt procedures to protect any
proprietary rights of the parties and to maintain the confidential
treatment of the arbitration proceedings (except as may be required by
law). The arbitrator shall have the power to issue subpoenas to compel
the production of documents relevant to the Dispute.
(f) The arbitrator shall have full power and authority to determine issues
of arbitrability but shall otherwise be limited to interpreting or
construing the applicable provisions of this Agreement and will have
no authority or power to limit, expand, alter, amend, modify, revoke,
terminate or suspend any condition or provision of this Agreement; it
being understood, however, that the arbitrator will have full
authority to implement the provisions of this Agreement and to fashion
appropriate remedies for breaches of such provisions (including
specific performance or interim or permanent injunctive relief),
provided that the arbitrator shall not have (i) any authority in
excess of the authority a court having jurisdiction over the parties
and the Dispute would have absent these arbitration provisions or (ii)
any right or power to award punitive or treble damages. It is the
intention of the parties that in rendering a decision the arbitrator
give effect to the applicable provisions of this Agreement and follow
applicable law (it being understood and agreed that this sentence
shall not give rise to a right of judicial review of the arbitrator's
award).
(g) Arbitration costs will be borne equally by each party involved in the
matter, except that each party will be responsible for its own
attorney's fees and other costs and expenses, including the costs of
witnesses selected by such party.
(h) The interpretation of the provisions of this Section 5.3 only insofar
as they relate to the agreement to arbitrate and any procedures
pursuant thereto, shall be governed by the United States Arbitration
Act, 9 U.S.C.ss.ss.1-14, as amended from time to time.
(i) To the extent that the provisions of this Agreement and the prevailing
rules of the CPR conflict, the provisions of this Agreement shall
control.
(j) The parties reserve the right to modify the provisions of this Section
5.3 by mutual written agreement.
Section 5.4. Limited Court Actions.
(a) Notwithstanding anything herein to the contrary, a party shall have
the right to initiate litigation to (i) toll any statute of
limitations, or (ii) seek injunctive relief or other equitable remedy
if, in such party's sole discretion, such action is deemed necessary
to avoid irreparable damage or preserve the status quo. The
institution of any litigation in accordance with this Section 5.4 does
not excuse the party's obligation to participate in good faith in the
other Dispute procedures in this Article V.
(b) ANY LITIGATION PERMITTED HEREUNDER SHALL BE BROUGHT IN THE COURTS OF
THE UNITED STATES OF AMERICA FOR THE STATE OF DELAWARE, AND EACH
MEMBER AND THE COMPANY HEREBY ACCEPTS FOR ITSELF, GENERALLY AND
UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION AND VENUE OF THE AFORESAID
COURTS. EACH MEMBER AND THE COMPANY HEREBY IRREVOCABLY WAIVE ANY
OBJECTION, INCLUDING WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
OF VENUE OF ANY SUCH LITIGATION, BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION. EACH MEMBER AND THE COMPANY
HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY LITIGATION PERMITTED HEREUNDER. EACH MEMBER WAIVES ALL PUNITIVE
DAMAGES IN ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR UNDER
THIS AGREEMENT.
ARTICLE VI
SERVICE ARRANGEMENTS, CAPITAL CONTRIBUTIONS, MATERIAL APPROVALS, ETC.
Section 6.1. Initial Operations; Service Arrangements.
The Members intend to operate the Company with appropriate staff and
committed overhead and for the Company to purchase operational and other support
services, technical assistance and intellectual property rights, where
available, from the Members and/or their respective Affiliates or third parties,
in each case pursuant to terms approved by the Members pursuant to Section 3.3
or the Board of Managers pursuant to Section 4.4 or 4.5 above, as applicable
("Service Arrangements"); provided that a Member or Manager shall be excluded
from any vote relating to the approval, enforcement or administration of a
Service Arrangement where (i) that Member or its Affiliates is or may become a
party to such Service Arrangement or (ii) that Manager was appointed to the
Board of Managers by a party that is or may become, or whose Affiliate is or may
become, a party to such Service Arrangement. Each Member and any Affiliate
thereof which provides services to the Company pursuant to any Service
Arrangements shall do so on an arm's length basis and shall permit the Company
reasonable access to its accounts and records pertaining to such Service
Arrangements, including the basis and computation of cost allocations.
Section 6.2. Budget; Capitalization; Material Approvals.
(a) A complete copy of the Company's first and, thereafter, every annual
budget shall be provided to each Member.
(b) Cinergy Solutions, York and Veolia Water each commit to contribute to
the Company as their initial respective Capital Contribution the
amounts set forth opposite the name of such Member on Schedule 1.
Cinergy Solutions, York and Veolia Water agree to contribute to the
Company 46%, 10% and 44% respectively, of such additional Capital
Contributions as may be approved by the Board of Managers in
accordance with Section 4.10 as may be required for the Purpose. All
capital contributions, when made, shall be in cash, unless the Members
shall otherwise mutually agree. The Members shall be liable only to
make their Capital Contributions pursuant to this Section 6.2 and no
Members shall be required to lend any funds to the Company or to make
any additional Capital Contributions to the Company.
(c) The capitalization of the Company shall be subject to the receipt by
the Members of all requisite regulatory approvals and all other
consents, licenses, approvals or other authorizations (together with
such regulatory approvals, "Material Approvals") necessary to permit
the establishment and operation of the Company as contemplated herein,
including, to the extent applicable, (i) expiration or termination of
the waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended ("HSR Act"), if applicable, (ii) the approval
of the Securities and Exchange Commission ("SEC") under the Public
Utility Holding Company Act of 1935 (the "1935 Act"), if applicable,
and (iii) any Material Approval of Michigan or any municipality,
utility commission, regulatory body or governmental or other agency or
authority thereof.
(d) With reference to paragraph (c) above, Cinergy Solutions represents
and warrants that no approval or other action of the SEC under the
1935 Act is required to be obtained by Cinergy Solutions, the Company
or any other direct or indirect subsidiary of Cinergy Corp. in
connection with the formation of the Company and the transactions
contemplated by this Agreement or the other agreements relating to the
System. With reference to paragraph (c) above, York represents and
warrants that no approval or other action of the SEC under the 1935
Act is required to be obtained by it, the Company or any other direct
or indirect subsidiary of York in connection with the formation of the
Company and the transactions contemplated by this Agreement and the
other agreements relating to the System.
Section 6.3. Status of Capital Contributions.
(a) Except as otherwise expressly provided in Articles VII and XI, no
Member shall have the right to withdraw capital from the Company or to
receive any distribution or return of such Member's Capital
Contributions.
(b) No Member shall receive any interest, salary or drawing with respect
to its Capital Contributions or its Capital Account or otherwise in
its capacity as a Member, except as otherwise specifically provided in
this Agreement.
(c) No Member shall have priority over any other Member either as to the
return of the amount of its Capital Contribution to the Company or as
to any allocation of Net Profit and Net Loss.
Section 6.4. Capital Accounts.
(a) There shall be established on the books and records of the Company a
Capital Account for each Member. The initial Capital Account balance
of each Member shall be the respective amounts of each such Member's
initial Capital Contribution as set forth on Schedule 1.
(b) Each Member's Capital Account shall be adjusted by (a) increasing such
balance by such Member's (i) allocable shares of Net Profit (allocated
in accordance with Article VII) and (ii) Capital Contributions, if
any, and (b) decreasing such balance by (i) the amount of cash or the
fair market value of distributions to such Member pursuant to Article
VII and (ii) such Member's allocable share of Net Loss (allocated in
accordance with Article VII). The provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply
with Treasury Regulation Section 1.704-1(b), and shall be interpreted
and applied in a manner consistent with such Treasury Regulation.
(c) Any Capital Contributions made in a form other than cash shall be
valued at the fair market value of such property as determined by the
unanimous consent of the Members.
Section 6.5. Advances.
If any Member, at its reasonable discretion upon reasonable advance notice
to the other Members, with the prior consent of the Board of Managers and only
to the extent necessary to meet short-term working capital requirements, shall
advance any funds to the Company in excess of its Capital Contributions, the
amount of such advance shall neither increase its Capital Account nor entitle it
to any increase in its share of the distributions of the Company. The amount of
any such advance shall be a debt obligation of the Company to such Member and
shall be repaid to it by the Company at a reasonable interest rate not to exceed
a market rate, as soon as practicable; provided, however, that such debt
obligations at all times shall be subordinate to the Company's obligations under
the Loan Agreement. Any such advance shall be payable and collectible only out
of Company assets, and the other Members shall not be personally obligated to
repay any part thereof. No Person who makes any loan to the Company shall have
or acquire, as a result of making such loan, any direct or indirect interest in
the profits, capital or property of the Company, other than as a creditor.
Section 6.6. Negative Capital Accounts.
No Member shall be required to make up a negative balance in its Capital
Account.
ARTICLE VII
ALLOCATIONS, DISTRIBUTIONS AND WITHHOLDING
Section 7.1. Allocations of Net Profit and Net Loss.
(a) The Net Profit and Net Loss of the Company, including each item of
income, gain, loss and deduction, and credit shall be allocated with
respect to each Fiscal Year (or portion thereof) among the Members in
accordance with their respective Interest Percentages.
(b) Allocations for tax purposes shall be made in the same manner as the
allocations set forth under Section 7.1(a); however the following
adjustments shall be made and applied, to the extent necessary, in a
manner consistent with Treasury Regulation Section 1.704-1(b):
(i) The allocations of income, gain, loss and deduction pursuant to
Section 7.1(a) shall be adjusted to comply with the qualified
income offset requirements of Treasury Regulation Section
1.704-1(b) and the nonrecourse deduction or minimum gain
charge-back requirements of Treasury Regulation Section 1.704-2.
(ii) The Net Losses allocated pursuant to Section 7.1(a) shall not
exceed the maximum amount of Net Losses that can be so allocated
without causing any Member to have an Adjusted Capital Account
Deficit at the end of any fiscal period. If some but not all
Members would have Adjusted Capital Account Deficits as a
consequence of an allocation of Net Losses pursuant to this
Section 7.1(b)(ii), then the limitation set forth in this Section
7.1(b)(ii) shall be applied on a Member-by-Member basis so as to
allocate the maximum permissible Net Losses to each Member under
Treasury Regulations Section 1.704-1(b)(2)(ii)(d). With respect
to each allocation period thereafter, 100% of Net Profit shall be
allocated to the Members up to the aggregate of, and in
proportion to, any Net Losses previously allocated to each Member
in accordance with this Section 7.1(b)(ii) in the reverse order
in which such Net Losses were allocated.
(iii)Any special allocations pursuant to the preceding clause (ii)
required in order to comply with the Treasury Regulations shall
be taken into account, to the extent permitted by the Treasury
Regulations, in computing subsequent allocations pursuant to this
Section 7.1(b) so that the net amount of any items so allocated
and all other items allocated to each Member shall, to the extent
possible, be equal to the amount that would have been allocated
to each Member had there been no such special allocation.
(c) If there is a change in any Member's share of the distributions or
other items of the Company during any Fiscal Year as a result of the
Transfer (as defined herein) of an Interest, allocations among the
Members shall be made in accordance with their Interests in the
Company from time to time during such Fiscal Year in accordance with
Code Section 706, using the closing-of-the-books method; however
depreciation shall be deemed to accrue ratably on a daily basis over
the entire year during which the corresponding asset is owned by the
Company.
(d) If the Internal Revenue Service successfully asserts an adjustment to
the taxable income of a Member attributable to a transaction between
the Member and the Company and, as a result of such adjustment, the
Company is entitled to a deduction or reduction in income for Federal
income tax purposes in excess of any gain recognized by the Company,
such excess deduction shall be allocated to such Member or such
reduced income shall be reflected in a reduction in income allocated
to such Member. If the Internal Revenue Service successfully asserts
an adjustment to the taxable income of the Company attributable to a
transaction between the Member and the Company and, as a result of
such adjustment, any Member is entitled to a deduction or reduction in
income for Federal income tax purposes in excess of any gain
recognized by such Member, the additional Company taxable income shall
be allocated to such Member.
Section 7.2. Distributions.
Distributions may be made to the Members in accordance with their Interest
Percentages at such times as determined in the sole discretion of the Board of
Managers, or at such other times as the Members by unanimous consent shall
determine. To the extent that funds are available for distribution, the Company
shall make quarterly and annual distributions to the Members in an amount
necessary to reimburse each Member for the federal and state income tax incurred
by such Member as a result of the Company's operations and the Company being
treated as a partnership for tax purposes.
Section 7.3. Limitations on Distribution.
Notwithstanding any provisions of this Article VII to the contrary, no
distribution shall be made (i) if such distribution would violate any contract
or agreement to which the Company is then a party or any law then applicable to
the Company, including the provisions of Section 18-607 of the Delaware Act, or
(ii) to the extent that the Board of Managers determines that any amount
otherwise distributable should be retained by the Company to pay, or to
establish a reserve for the payment of, any liability or obligation of the
Company, including obligations to pay or withhold Federal, state or local
income, franchise or other taxes or levies, whether liquidated, fixed, or
contingent.
Section 7.4. Withholding Taxes.
The Company is authorized to withhold from distributions to a Member, or
with respect to allocations to a Member, and to pay over to a Federal, state or
local government, any amounts required to be withheld pursuant to the Code or
any provisions of any other Federal, state or local law. Any amounts so withheld
shall be treated as having been distributed to such Member for all purposes of
this Agreement, and shall be offset against the current or next amounts
otherwise distributable to such Member.
ARTICLE VIII
TAX MATTERS
Section 8.1. Tax Matters.
Cinergy Solutions is hereby designated as "Tax Matters Partner" of the
Company under Section 6231 of the Code and the Treasury Regulations thereunder.
Notwithstanding the foregoing designation, the Tax Matters Partner shall not
take any action in its capacity as Tax Matters Partner in connection with any
tax audit, contest or other similar proceeding involving the Company without the
consent or approval of the other Members. The Tax Matters Partner shall keep the
other Members fully apprised of its activities in its capacity as the Tax
Matters Partner.
Section 8.2. Taxation as Partnership.
The Members intend that the Company shall be treated as a partnership for
United States Federal income tax purposes and the Members agree not to take any
action inconsistent with the Company's classification as a partnership for
United States Federal income tax purposes.
Section 8.3. Tax Elections.
The Board of Managers may make on behalf of the Company the election
referred to in Section 754 of the Code. The Board of Managers shall determine
whether to make or revoke any other election (other than an election to be
classified as an association taxable as a corporation which shall be made only
with the unanimous consent of all the Members) pursuant to the Code. Upon the
request of the Board of Managers, each Member shall supply the information
necessary to effect such election.
ARTICLE IX
BANKING; ACCOUNTING; BOOKS AND RECORDS
Section 9.1. Banking.
All funds of the Company may be deposited in such bank, brokerage or money
market accounts as shall be established by the Board of Managers. Withdrawals
from and checks drawn on any such account shall be made upon such signature or
signatures as the Board of Managers may designate.
Section 9.2. Maintenance of Books and Records; Accounts and Accounting
Method.
The Board of Managers shall keep or cause to be kept at the address of the
Company (or at such other place as the Company shall advise the Members in
writing) full and accurate accounts of the transactions of the Company in proper
books and records of account which shall set forth all information required by
the Delaware Act. Such books and records shall be maintained on the basis of
United States generally accepted accounting principles. Such books and records
shall be available, upon two (2) Business Days' notice to the Board of Managers,
for inspection and copying at reasonable times during business hours by a Member
or its duly authorized agents or representatives for any purpose reasonably
related to such Member's interest as a member in the Company. The Board of
Managers shall arrange for the preparation (by a nationally recognized
accounting firm) and timely filing of all tax returns required to be filed by
the Company.
Section 9.3. Financial Statements.
As soon as available and in any event within 45 days after the end of each
fiscal quarter, the Company shall have prepared, and delivered to each Member, a
quarterly set of primary financial statements for the Company. This set of
primary financial statements shall include: (i) a balance sheet reflecting the
assets, liabilities and capital accounts of the Company, comparative to the
prior year and the prior year-end; and (ii) quarterly and year-to-date
statements of operations, comparative to the prior year. The Board of Managers
shall cause the annual financial statements of the Company to be examined by the
Company's independent auditor and submitted for adoption at the annual meeting
of Members. Within 120 days after the end of each Fiscal Year, the Company shall
furnish to the Members the Company's tax return, the Members' respective
Schedules K-1, and such other information as may be necessary for Members to
complete their tax returns.
Section 9.4. Additional Information.
Upon the request of a Member, the Company shall prepare additional periodic
or special reports of the Company's accounts and/or business activity considered
necessary by such Member, including but not limited to, detailed reports of
sales by location, detailed expense reports, reports of capital expenditures,
details of assets and liabilities, and non-financial and ratio data.
Section 9.5. Minutes of Meetings.
The Managers shall cause minutes of all proceedings and copies of
resolutions adopted at meetings of Members or Managers to be duly entered in the
minute books which shall be kept at the executive offices of the Company. Any
such minutes must be signed by either the Chairperson or Vice Chairperson, and
one other person (such as the Secretary) who was present at the meeting at which
such resolutions were passed. Further, the Managers shall cause copies of
written actions taken without a meeting to be duly entered in the minute books.
ARTICLE X
LIABILITY, EXCULPATION AND INDEMNIFICATION
Section 10.1. Liability.
Except as otherwise provided by the Delaware Act, the debts, obligations
and liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and
without limiting this Article X, no Member or Covered Person shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Member or Covered Person.
Section 10.2. Exculpation.
(a) Generally. Except as otherwise provided in this Agreement, no Covered
Person shall be liable to the Company or any Member for any act or
omission taken or suffered by such Covered Person in good faith and in
the reasonable belief that such act or omission is in or is not
contrary to the best interests of the Company and is within the scope
of authority granted to such Covered Person by this Agreement,
provided that such act or omission is not in material violation of
this Agreement and does not constitute Disabling Conduct by the
Covered Person. No Member shall be liable to the Company or any Member
for any action taken by any other Member.
(b) Reliance Generally. A Covered Person shall incur no liability in
acting upon any signature or writing reasonably believed by it to be
genuine, and may rely on a certificate signed by an executive officer
of any Person in order to ascertain any fact with respect to such
Person or within such Person's knowledge and may rely on an opinion of
counsel selected by such Covered Person with respect to legal matters,
except to the extent that such Covered Person engaged in Disabling
Conduct. Each Member or Covered Person may act directly or through its
agents or attorneys. Each Member or Covered Person may consult with
counsel, appraisers, engineers, accountants and other skilled Persons
of its choosing, and shall not be liable for anything done, suffered
or omitted in good faith in reasonable reliance upon the advice of any
of such Persons, except to the extent that such Member or Covered
Person engaged in Disabling Conduct or to the extent Section 10.4 or
Section 10.6 applies. No Member shall be liable to the Company or any
Member for any error of judgment made in good faith by a responsible
officer or officers of the Member, except to the extent that such
Member engaged in Disabling Conduct or to the extent Section 10.4 or
Section 10.6 applies. Except as otherwise provided in this Section
10.2, Section 10.4 or Section 10.6 or to the extent that the Member or
Covered Person engaged in Disabling Conduct, no Member or Covered
Person shall be liable to the Company or any Member for any mistake of
fact or judgment by the Member or Covered Person in conducting the
affairs of the Company or otherwise acting in respect of and within
the scope of this Agreement. No Member or Covered Person shall be
liable for the return to any Member of all or any portion of any
Member's Capital Account or Capital Contributions, except to the
extent that such Member or Covered Person engaged in Disabling
Conduct.
(c) Reliance on this Agreement. To the extent that, at law or in equity, a
Covered Person has duties (including fiduciary duties) and liabilities
relating thereto to the Company or to the Members, any Covered Person
acting under this Agreement or otherwise shall not be liable to the
Company or to any Member for its good faith reliance on the provisions
of this Agreement. The provisions of this Agreement, to the extent
that they restrict the duties and liabilities of a Covered Person
otherwise existing at law or in equity, are agreed by the Members to
replace such other duties and liabilities of such Covered Person.
(d) Standard of Care. Whenever in this Agreement a Person is permitted or
required to make a decision (i) in its "sole and absolute discretion,"
"sole discretion," "discretion" or under a grant of similar authority
or latitude, the Person shall be entitled to consider such interests
and factors as it desires, including its own interests, and shall have
no duty or obligation to give any consideration to any interest of or
factors affecting the Company or any other Person, or (ii) in its
"good faith" or under another express standard, the Person shall act
under such express standard and shall not be subject to any other or
different standard imposed by this Agreement or other applicable law.
Section 10.3. Indemnification.
(a) Indemnification Generally. Except as otherwise provided in this
Agreement, the Company shall and hereby does, to the fullest extent
permitted by applicable law, indemnify, hold harmless and release each
Member and Covered Person from and against all claims, demands,
liabilities, costs, expenses, damages, losses, suits, proceedings and
actions, whether juridical, administrative, investigative or
otherwise, of whatever nature, known or unknown, liquidated or
unliquidated ("Claims"), that may accrue to or be incurred by any
Member or Covered Person, or in which any Member or Covered Person may
become involved, as a party or otherwise, or with which any Member or
Covered Person may be threatened, relating to or arising out of the
Member's or Covered Person's status as such, including, but not
limited to, amounts paid in satisfaction of judgments, in compromise
or as fines or penalties and counsel fees and expenses incurred in
connection with the preparation for or defense or disposition of any
investigation, action, suit, arbitration or other proceeding (a
"Proceeding"), whether civil or criminal (all of such Claims and
amounts covered by this Section 10.3 and all expenses referred to in
Section 10.3(c), are referred to as "Damages"), except to the extent
that it shall have been determined ultimately that such Damages arose
from Disabling Conduct of such Member or Covered Person or the
indemnification obligations in Section 10.4 or Section 10.6 apply, or
that such Member or Covered Person committed a material breach of this
Agreement. The termination of any Proceeding by settlement shall not,
of itself, create a presumption that any Damages relating to such
settlement arose from a material violation of this Agreement by, or
Disabling Conduct of, any Member or Covered Person.
(b) No Direct Member Indemnity. Members shall not be required directly to
indemnify any Covered Person.
(c) Expenses, etc. Expenses incurred by a Member or Covered Person in
defense or settlement of any Claim that may be subject to a right of
indemnification hereunder may be advanced by the Company prior to the
final disposition thereof upon receipt of an undertaking by or on
behalf of the Member or Covered Person to repay such amount if it
shall be determined ultimately that the Member or Covered Person is
not entitled to be indemnified hereunder. The right of any Member or
Covered Person to the indemnification provided herein shall be
cumulative with, and in addition to, any and all rights to which such
Member or Covered Person may otherwise be entitled by contract or as a
matter of law or equity and shall extend to the successors, assigns
and legal representatives of such Member or Covered Person.
(d) Notices of Claims, etc. Promptly after receipt by a Member or Covered
Person of notice of the commencement of any Proceeding, such Member or
Covered Person shall, if a claim for indemnification in respect
thereof is to be made against the Company, give written notice to the
Company of the commencement of such Proceeding, provided that the
failure of any Member or Covered Person to give notice as provided
herein shall not relieve the Company of its obligations under this
Section 10.3 except to the extent that the Company is actually
prejudiced by such failure to give notice. In case any such Proceeding
is brought against a Member or Covered Person (other than a derivative
suit in right of the Company), the Company will be entitled to
participate in and to assume the defense thereof to the extent that
the Board of Managers may wish, with counsel reasonably satisfactory
to such Member or Covered Person. After notice from the Board of
Managers to such Member or Covered Person of the Company's election to
assume the defense thereof, the Company will not be liable for
expenses subsequently incurred by such Member or Covered Person in
connection with the defense thereof. The Company will not consent to
entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such Member or Covered Person of a release from all
liability in respect to such Claim.
(e) No Waiver. Nothing contained in this Section 10.3 shall constitute a
waiver by any Member of any right that it may have against any party
under United States Federal or state securities laws.
(f) Authorization. Any indemnification under Section 10.3, as well as the
advance payment of expenses permitted under Section 10.3(c), unless
ordered by a court, must be made by this Company only as authorized in
the specific case upon a determination that indemnification of the
Member or Covered Person is proper under those circumstances. The
determination must be made:
(1) by the Board of Managers by a unanimous vote of a quorum
consisting of Managers who were not parties to the act or
Proceeding;
(2) if a unanimous vote of a quorum consisting of those Managers
who were not parties to the act or Proceeding so orders, by
independent legal counsel in a written opinion; or
(3) if a quorum consisting of Managers who were not parties to
the act or Proceeding cannot be obtained, by independent
legal counsel in a written opinion.
Section 10.4 Indemnification by Members.
(a) Notwithstanding anything herein to the contrary and except as set
forth in and subject to the limitations of any other written agreement
between any Member and the Company, each Member (the "Indemnifying
Party") shall indemnify, defend and hold harmless the other Members
and their respective officers, directors, employees, agents, parent
companies, subsidiaries and Affiliates (including, without limitation,
the Company) (each being an "Indemnified Party") from and against any
Losses (as defined and limited below) incurred by the Indemnified
Party resulting from or relating to:
(i) any willful misconduct by the Indemnifying Party or any of its
Affiliates (or by any contractor, subcontractor, vendor or agent
of the Indemnifying Party or any of its Affiliates);
(ii) any negligence by the Indemnifying Party or any of its Affiliates
(or by any contractor, subcontractor, vendor or agent of the
Indemnifying Party or any of its Affiliates) in the design,
construction, ownership, operation or maintenance of the System,
or any other services to be performed under or in connection with
the Utility Services Agreement; and
(iii)any act or omission by the Indemnifying Party or any of its
Affiliates (or by any contractor, subcontractor, vendor or agent
of the Indemnifying Party or any of its Affiliates) to the extent
that such act or omission causes the Company (or any other
Indemnified Party) to violate the Utility Services Agreement, the
Senior Debt, or any other contract, agreement or instrument by
which the Company or its property is bound.
"Losses" subject of the foregoing indemnity shall mean all losses, damages,
liquidated damages (including, without limitation, those arising as a result of
the failure to meet a performance guaranty), claims, causes of action,
liabilities, fines, penalties, expenses, costs and fees and shall (i) include
payments under guarantees, contributions required to be made to the Company
under this Agreement and indemnity payments due to GM and (ii) exclude punitive,
indirect, special, incidental or consequential damages (other than any of the
foregoing required to be paid by the Indemnified Party to a Person unaffiliated
with the Indemnified Party).
The following provisions and limitations shall apply to the above
indemnity. Each Member's respective indemnity obligations under this Section
10.4(a)(ii) and (iii) above shall be capped and limited with respect to each
Member, from time to time and respectively, at an amount equal to the Interest
Percentages in the Company held by it at that time multiplied by the Contract
Project Fee, as defined in the Utility Services Agreement. Any indemnification
liability under this Section 10.4(a)(ii) and (iii) in excess of such amounts
shall be borne by the Members pro rata in accordance with their respective
Interest Percentages in the Company. All claims for indemnity by the Company
against a Member may be asserted on behalf of the Company by any other Member
without approval of the Board of Managers. The preceding indemnity shall apply
regardless of whether the Indemnifying Party is acting in its capacity as a
Member or as an independent contractor of the Company.
(b) As soon as is reasonably practicable after becoming aware of a claim
for indemnification under this Agreement, the Indemnified Party shall
promptly give written notice to the Indemnifying Party of such claim.
To the extent reasonably possible, such written notice shall describe
the Loss and the amount thereof, if known, with reasonable
particularity. The failure of the Indemnified Party to give notice
shall not relieve the Indemnifying Party of its obligations under this
Section 10.4 except to the extent that the Indemnifying Party shall
have been prejudiced thereby.
(c) If any claim for indemnification hereunder is due to the assertion of
a claim, action or proceeding by any Person other than a Member or its
Affiliates (a "Third Party Claim"), the Indemnifying Party shall have
the right to participate in and, by giving written notice (a "Defense
Notice") to the Indemnified Party within 30 days after delivery of
written notice of the Third Party Claim, to assume the defense of such
Third Party Claim at its sole expense and with counsel reasonably
satisfactory to the Indemnifying Party and the Indemnified Party. From
and after delivery of a Defense Notice in accordance with the
foregoing, the Indemnifying Party shall not, so long as it diligently
conducts such defense, be liable to the Indemnified Party for any fees
of other counsel or any other expenses with respect to the defense of
such Third Party Claim, in each case subsequently incurred by the
Indemnified Party in connection with defense of such Third Party
Claim. If the Indemnifying Party assumes the defense of a Third Party
Claim, no compromise or settlement of such Third Party Claim may be
effected by the Indemnifying Party without the Indemnified Party's
consent unless (i) there is no finding or admission therein of any
liability on the part of the Indemnified Party, and (ii) the sole
relief provided under such compromise or settlement is monetary
damages that are paid in full by the Indemnifying Party. If the
Indemnified Party provides notice of a Third Party Claim pursuant to
paragraph (b) of this Section 10.4, but the Indemnifying Party does
not provide a Defense Notice in accordance with this paragraph, the
Indemnifying Party shall be bound by, and the Indemnified Party shall
have no obligation to obtain any consent of the Indemnifying Party
with respect to, (i) any determination made in the action or
proceeding with respect to such Third Party Claim or (ii) any
compromise or settlement effected by the Indemnified Party with
respect to such Third Party Claim.
(d) An Indemnifying Party shall have no obligation to pay indemnification
for any Loss to the extent that recovery for such Loss is actually
paid to the Indemnified Party under any policy of insurance. The
Indemnified Party shall use all commercially reasonable efforts to
make claims under applicable insurance policies with respect to such
Losses. To the extent that an Indemnified Party is subsequently paid
by an insurance company for any Loss with respect to which payment was
previously received by the Indemnified Party hereunder, the
Indemnified Party shall promptly, upon receipt of the insurance
proceeds, reimburse the Indemnifying Party from the insurance proceeds
in an amount up to the Indemnifying Party's prior payment to the
Indemnified Party with respect to such Loss. The Members shall obtain
waivers of subrogation from their respective insurance carriers with
respect to indemnified Losses covered by insurance.
Section 10.5. Indemnification by the Company.
The Company shall indemnify, defend and hold harmless each of the Members
and their respective officers, directors, employees, agents and Affiliates
(other than the Company) (each being a "Member Party") from and against any
losses, damages, claims, causes of action, liabilities, fines, penalties,
expenses, costs and fees to the extent incurred by a Member Party in connection
with matters where the Company is indemnified by third parties, including
without limitation those matters as to which GM indemnifies the Company under
the Utility Services Agreement. The foregoing indemnification obligation is
subject to the condition that the Member Party has acted with respect to the
indemnified matter within the scope of its authority, responsibilities or
obligations under this Agreement or any Service Arrangement, including without
limitation any contract or subcontract to provide goods and/or services to the
Company.
Section 10.6. Special Indemnification of York and Its Affiliates.
(a) For purposes of this Section 10.6, the term "Project Activities" means
the design, engineering, construction, planning, preparation, studies,
procurement, pricing, funding, specifications, testing, change orders
or analysis of the GM Delta Township II Project or the System or any
related matter. Except as provided below, all Project Activities (i)
constituting Company Approved Activities (as defined below) and (ii)
undertaken or performed after May 26, 2004 (the "Involvement Date")
are referred to in this Section 10.6 as the "Subsequent Project
Activities," and all other Project Activities are referred to herein
as the "Prior Project Activities." Cinergy Solutions and Veolia Water
hereby agree for the benefit of York not to take or suffer to be taken
any material aspect of a Project Activity without presenting such
matter to the three representatives appointed by the respective
Members pursuant to subcontracts to be entered into for the purpose of
reviewing design and construction of the GM Delta Township II Project
and the System (the "Review Body") for review and consideration, and
no such matter not so presented to the Review Body shall be considered
a Subsequent Project Activity.
(b) For purposes hereof, the term "Company Approved Activity" shall mean a
Project Activity which is (i) an immaterial matter approved by Cinergy
Solutions or Veolia Water after the Involvement Date, (ii) actually
reviewed and considered by all three members of the Review Body,
provided that the York representative on the Review Body has not
objected to the Project Activity and requested review by the Company's
Board of Managers as provided in (c) below or (iii) actually reviewed,
considered and approved by the Board of Managers of the Company after
the Involvement Date, such approval to be by majority vote of the
Managers except in the case of a Project Activity involving a matter
on Exhibit A hereto for which York has or shares responsibility, in
which event the Board of Managers vote must be unanimous and must
include the York Manager.
(c) In the event that the York representative on the Review Body objects
to any matter and requests review by the Company's Board of Managers,
such matter shall be deemed to be a Prior Project Activity unless the
Board of Managers of the Company subsequently (i) actually reviews,
considers and approves the matter as provided in clause (b)(iii) above
and (ii) the matter is undertaken or performed after the Involvement
Date.
(d) In respect of any matter involving Project Activities which have
aspects or elements relating to both the period of time prior to the
Involvement Date and the period of time after the Involvement Date, in
determining whether or not a Project Activity is a Subsequent Project
Activity or a Prior Project Activity, the following principles, as
well as all other relevant considerations, shall be applied:
(i) The consideration and approval by the Review Body or the
Company's Board of Managers of a document, agreement or other
materials after the Involvement Date does not by itself cause all
matters covered by the document, agreement or other materials to
become Subsequent Project Activities.
(ii) The review, consideration and approval by the Review Body or the
Company's Board of Managers of any construction contract or other
contract for the GM Delta Township II Project or the System or
any aspect of them after the Involvement Date causes a Project
Activity relating thereto to be a Subsequent Project Activity
only to the extent any issue or consequence in question was not
primarily caused by other Project Activities which are not
themselves Subsequent Project Activities.
(iii)A Project Activity may be deemed a Subsequent Project Activities
only to the extent the aspects or elements relating to the period
of time after the Involvement Date were, in relation to the other
aspects or elements of the Project Activities, a significant
factor in causing the Project Activity Loss in question.
(iv) The following is an example provided for interpretive guidance as
to how the Members intend the definitions of the terms
"Subsequent Project Activity" and "Prior Project Activity" to be
implemented: If it is supposed that (A) preliminary design
drawings for the System prepared prior to the Involvement Date
specify the use of a water tank of a certain capacity, (B) the
final design plans constitute a Company Approved Activity, (C)
such final design plans specify a water tank of a lesser
capacity, and (D) there is a failure of the System due to the
inadequate capacity of that water tank, then the specification of
the water tank capacity in the final design drawing would be
deemed a Subsequent Project Activity. On the other hand, on the
same supposed circumstances except that it is supposed that the
water tank capacity specified in the preliminary design drawings
was inadequate, then the specification of the water tank capacity
in the final design drawing would be deemed a Prior Project
Activity.
(e) Notwithstanding any other provisions of this Agreement, Cinergy
Solutions and Veolia Water hereby agree to indemnify, defend and hold
harmless York and all of its Affiliates and all of their respective
directors, officers, employees, representatives and agents from and
against any and all Project Activity Losses (as defined below) to the
extent caused by:
(i) the Prior Project Activities;
(ii) any failure of the GM Delta Township II Project and the System to
become fully operational in accordance with Utilities Services
Agreement as a result of Prior Project Activities; or
(iii)any failure of the GM Delta Township II Project and the System
to become fully operational in accordance with the Utilities
Services Agreement without the necessity of the expenditure of
funds in excess of the Contract Project Fee as a result of Prior
Project Activities.
Where Project Activity Losses are caused by both Prior Project Activities and
Subsequent Project Activities, York shall be indemnified against that portion of
such losses that is attributable to Prior Project Activities on a comparative
allocation basis.
(f) For purposes of this Section 10.6, the term "Project Activity Losses"
shall mean all losses, damages, liquidated damages (including, without
limitation, those arising as a result of the failure to meet a
performance guaranty), claims, causes of action, liabilities, fines,
penalties, expenses, costs (including, without limitation, payments
under guarantees, contributions required to be made to the Company
under this Agreement and indemnity payments to GM but excluding
punitive, indirect, special, incidental or consequential damages,
other than any of the foregoing required to be paid to a Person
unaffiliated with York) and fees.
ARTICLE XI
TRANSFER OF INTERESTS
Section 11.1. Personal Property; Consent for Transfers.
(a) Restrictions on Transfer. A Member shall not transfer, sell, assign,
convey, exchange, pledge, encumber or otherwise dispose of (each, a
"Transfer") any of its Interest unless: (i) the contemplated Transfer
will not adversely affect the regulatory status of the Company or the
GM Delta Township II Project; (ii) all requisite regulatory approvals
have been duly obtained and are in full force and effect; (iii) the
contemplated Transfer will not result in adverse tax treatment for the
Company, the GM Delta Township II Project or any of the Members; (iv)
the non-transferring Members have consented in writing to such
transfer (after being informed of the identity of the proposed
transferee), which consent may be withheld in such Member's sole
discretion; and (v) until the termination or expiration of the Utility
Services Agreement, the proposed transferee shall have delivered to GM
a Parental Guarantee substantially in the form of Schedule 19 to the
Utility Services Agreement.
(b) No admission (or purported admission) of a Member, and no Transfer (or
purported Transfer) of all or any part of a Member's Interest (or any
economic interest therein), whether to another Member or to a Person
who is not a Member, shall be effective, and any such admission or
Transfer (or purported admission or Transfer) shall be void ab initio
and no Person shall otherwise become a Member if after such admission
or Transfer (or purported admission or Transfer) the Company would
have more than 100 Members. For purposes of determining whether the
Company will have more than 100 Members, each Person indirectly owning
an Interest through a partnership (including any entity treated as a
partnership for Federal income tax purposes), a grantor trust or an S
corporation (each such entity, a "flow-through entity") shall be
treated as a Member unless the Board of Managers determines in its
sole discretion, after consulting with qualified tax counsel, that
less than substantially all of the value of the beneficial owner's
interest in the flow-through entity is attributable to the
flow-through entity's Interest (direct or indirect) in the Company.
(c) Any Transfer inconsistent with the terms and provisions of Sections
11.1(a) and (b) shall be null and void and of no effect.
Section 11.2. Issue and Replacement of Certificates.
Upon the request of any Member, an Interest certificate shall be delivered
to such Member for the Interest held by it. Every certificate shall be signed by
one Cinergy Solutions Manager, the York Manager and one Veolia Water Manager. In
the case of loss, mutilation, or destruction of a share certificate a new
certificate may be issued upon such terms as the Board of Managers may
prescribe.
Section 11.3. Interest Certificate Legend.
All certificates representing Interests shall bear the following legend (in
addition to any other legend required by applicable law):
"These interests have not been registered under the Securities Act of 1933,
as amended, or any state securities laws and may not be sold, offered for sale,
pledged, assigned, hypothecated or otherwise transferred in violation of any
applicable securities law. These interests are subject to the terms and
conditions, including restrictions on transfers, pledges or other dispositions,
of a Limited Liability Company Agreement, dated as of March 29, 2004, as amended
from time to time, copies of which are on file with the Secretary of the
Company."
ARTICLE XII
DISSOLUTION AND TERMINATION OF THE COMPANY
Section 12.1. Dissolution.
Subject to Article XIV, the Company shall dissolve upon and in accordance
with the mutual agreement of the Members, and only in compliance with Section
2.2 and the other provisions of this Agreement.
Section 12.2. Liquidation.
Upon dissolution of the Company, the Person or Persons approved by the
Board of Managers shall carry out the winding up of the Company (in such
capacity, the "Liquidating Trustee") and shall proceed, subject to the
provisions herein, to liquidate the Company and apply the proceeds of such
liquidation, or in its sole discretion to distribute Company assets, in the
following order of priority:
First, to creditors in satisfaction of debts and liabilities of the
Company, including without limitation, the Company's obligations under the
Loan Agreement, whether by payment or the making of reasonable provision
for payment (other than any loans or advances that may have been made by
any of the Members to the Company), and the expenses of liquidation,
whether by payment or the making of reasonable provisions for payments, any
such reasonable reserves (which may be funded by a liquidating trust) to be
established by the Liquidating Trustee, as the case may be, in amounts
deemed by it to be reasonably necessary for the payment of the Company's
expenses, liabilities and other obligations (whether fixed or contingent);
Second, to the Members in satisfaction of any loans or advances that
may have been made by any of the Members to the Company whether by payment
or the making of reasonable provision for payment; and
Third, to the Members in proportion to, and to the extent of, each
Member's Capital Account, as such Capital Account has been adjusted
pursuant to Article VI.
Section 12.3. Time for Liquidation, etc.
(a) A reasonable time period shall be allowed for the orderly winding up
and liquidation of the assets of the Company and the discharge of
liabilities to creditors as to enable the Liquidating Trustee to seek
to minimize potential losses upon such liquidation. The provisions of
this Agreement shall remain in full force and effect during the period
of winding up and until the filing of a certificate of cancellation of
the Company with the Secretary of State of the State of Delaware.
(b) Upon completion of the foregoing, the Liquidating Trustee shall
execute, acknowledge and cause to be filed a certificate of
cancellation of the Company with the Secretary of State of the State
of Delaware.
Section 12.4. Claims of the Members.
The Members and any former Members shall look solely to the Company's
assets for the return of their Capital Contributions, and if the assets of the
Company remaining after payment of or due provisions of all debts, liabilities
and obligations of the Company are insufficient to return such Capital
Contributions, the Members and former Members shall have no recourse against any
Member, any Manager or their Affiliates.
ARTICLE XIII
INDEPENDENT MANAGER
Section 13.1 Until all amounts due Lender under the Loan Documents been
paid or otherwise satisfied in full and no amounts are owed by the Company to
the Lender under any Loan Document, and for a period of 91 days thereafter,
except in the case of a temporary vacancy, which shall promptly be filled, the
Members and Managers of the Company shall cause the Company at all times to have
an Independent Manager.
Section 13.2 Except as provided in Section 13.6, the Independent Manager
shall not be deemed to be a member of the Company, shall have no interest in the
profits, losses and capital of the Company and shall have no right to receive
any distributions of Company's assets. The Independent Manager shall not be
required to make any capital contributions to the Company and, except as
provided in Section 13.6 hereof, shall not receive a limited liability company
interest in the Company. The Independent Manager, in its capacity as an
independent manager, may not bind the Company. Except as set forth in Section
14.1(c), the Independent Manager, in its capacity as independent manager, shall
have no right to vote on, approve or otherwise consent to any action by, or
matter relating to, the Company. The rights and obligations of the Independent
Manager under the Agreement shall belong solely to and be exercised solely by
the Independent Manager.
Section 13.3 The initial Independent Manager shall execute a counterpart of
this Agreement. Notwithstanding anything to the contrary provided herein, no
Independent Manager may resign, be removed as the Independent Manager or
transfer or delegate its rights or obligations as an Independent Manager with
respect to the Company unless, and no appointment of a successor Independent
Manager shall be effective until, (i) a successor Independent Manager has been
appointed by the Members, and (ii) such successor has accepted his or her
appointment as the Independent Manager by executing a counterpart of this
Agreement. Notwithstanding anything to the contrary herein, if the Independent
Manager resigns, ceases to be qualified as an Independent Manager, or such
position is otherwise vacant, no action requiring the affirmative vote of the
Independent Manager shall be taken until a successor Independent Manager is duly
appointed as provided in this Section 13.3.
Section 13.4 The Independent Manager shall not at any time serve as a
trustee in bankruptcy for any Affiliate of the Company.
Section 13.5 Except as otherwise expressly provided by the Delaware Act,
the debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be the debts, obligations and liabilities
solely of the Company, and the Independent Manager shall not be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being an Independent Manager of the Company. The Independent Manager
shall not be liable, responsible or accountable in damages or otherwise to the
Company or any Member of the Company for any act or omission performed or
omitted by such Independent Manager in good faith on behalf of the Company and
in a manner reasonably believed by such Independent Manager to be within the
scope of the authority granted to such Independent Manager by this Agreement and
in the best interests of the Company, except for acts or omissions amounting to
fraud, willful misconduct or gross negligence. For purposes of this section, any
action or omission taken on advice of qualified legal counsel for the Company or
Independent Manager shall be deemed to have been taken in good faith. Except as
may be otherwise provided by the Delaware Act, no suit or other action brought
by any Member of the Company against the Independent Manager shall cause the
termination or dissolution of the Company.
Section 13.6 Upon the occurrence of any event that causes any Member of the
Company to cease to be a Member of the Company, unless there is at least one
other Member of the Company at that time, the Independent Manager shall, without
any action of any Person and simultaneously with the last remaining Member of
the Company ceasing to be a Member of the Company, automatically be admitted to
the Company as a special member (the "Special Member") and shall continue the
Company without dissolution. The Special Member may not resign as a Member of
the Company or transfer his or her rights as Special Member unless a successor
Special Member (i) has been admitted to the Company as Special Member by
executing a counterpart to this Agreement and (ii) has accepted his or her
appointment as the Independent Manager pursuant to the terms hereof. The Special
Member shall automatically cease to be a Member of the Company (but not the
Independent Manager of the Company) upon the admission to the Company of a
substitute Member, appointed by the Independent Manager or its agent. The
Special Member shall have no interest in the profits, losses and capital of the
Company and no right to receive any distributions of Company assets, provided
that, if the Special Member is the sole Member of the Company, the Special
Member in its capacity as the sole Member of the Company shall hold all of the
limited liability interests in the Company, including, without limitation, the
interests in the profits and losses of the Company, and shall be entitled to
exercise all of the rights and shall have all of the obligations of a Member
hereunder.
ARTICLE XIV
SINGLE PURPOSE ENTITY
Section 14.1. Single Purpose Entity
Notwithstanding anything to the contrary in this Agreement or the Loan
Documents, until the later of the date that the loan evidenced by the Loan
Documents is no longer outstanding or the date that no non-contingent monetary
obligations remain outstanding under the Loan Documents, and, in either case,
for a period of 91 days thereafter, except with the prior written consent of the
Lender:
(a) the Members and Managers shall cause the Company to, and the Company
shall:
(i) do or cause to be done all things necessary to preserve and keep
in full force and effect its existence, rights (charter and
statutory) and franchises, and obtain and preserve its
qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity
and enforceability of this Agreement and the Loan Documents, and
observe all applicable procedures and provisions required by this
Agreement and the laws of the State of Delaware;
(ii) not amend, alter, change or repeal (A) its Certificate of
Formation, (1) the definitions of "Affiliate," "Control,"
"Delaware Act," "Independent Manager," "Lender," "Loan
Agreement," "Loan Documents," "Member," (except to amend Schedule
1 attached hereto in connection with the resignation, removal,
withdrawal or admission of a Member in accordance with this
Agreement) "Manager," "Person" or "Purpose" in this Agreement or
(B) Article II, Section 11.1, Article XII, Article XIII, Article
XIV or Section 16.1 of this Agreement;
(iii)maintain its own records, accounts, books of account and bank
accounts separate from those of any other Person, not commingle
its records, accounts, books of account and bank accounts with
the organizational or other records, accounts, books of account
or bank accounts of any other Person and cause such records,
accounts, books of account and bank accounts to reflect the
separate existence of the Company;
(iv) act solely in its own name and through its duly authorized
Members, Managers, officers or agents in the conduct of its
business, prepare all of its correspondence in the Company's
name, hold itself out as a separate entity from any other Person,
conduct its business so as not to mislead others as to the
identity of the entity with which they are concerned, correct any
known misunderstanding regarding its separate identity, refrain
from engaging in any activity that compromises the separate legal
identity of the Company, and strictly comply with all
organizational and statutory formalities to maintain its separate
existence;
(v) take such actions as may be necessary to authorize each of the
Company's actions as may be required by law;
(vi) file its own tax returns, if any, as may be required under
applicable law;
(vii)not commingle its assets with assets of any other Person and
maintain its assets as identifiable assets held in the name of
the Company;
(viii) maintain financial statements separate from any other Person.
The annual financial statements of the Company shall disclose the
effects of its transactions in accordance with generally accepted
accounting principles;
(ix) cause (A) the consolidated or combined financial statements, if
any, which consolidate or combine the assets and earnings of any
Member with those of the Company to contain a footnote stating
that the assets of the Company shall not be available to
creditors of the Member or any Affiliate of the Company and (B)
the financial statements (if any) of the Company to disclose that
the assets of the Company are not available to pay creditors of
any of its Affiliates or any Member or any of its Affiliates;
(x) be directly responsible for the costs of its own outside legal,
auditing and other similar services and pay its taxes,
liabilities and operating expenses only out of its funds and not
pay from its assets any obligations or indebtedness of any other
Person;
(xi) maintain an arm's length relationship with its Affiliates, each
Member, each Manager, the Independent Manager and their
respective Affiliates; not enter into any contract or agreement
with any its Affiliates, any Member, any Manager or their
respective Affiliates except on terms that are intrinsically
fair, commercially reasonable, and on an arm's-length basis, and
transact all business with its Affiliates, each Member, each
Manager and their Affiliates pursuant to enforceable agreements
with material terms established at the inception that will not be
amendable except with consent of each of the parties to such
agreement;
(xii)to the extent that the Company leases premises from any Member,
Manger or their Affiliates, pay appropriate reasonable
compensation or rental;
(xiii) pay the salaries of its own employees, if any, and maintain a
sufficient number of employees in light of its contemplated
business operations;
(xiv)not be, become or hold itself out as being liable for the debts
of any other Person, or hold out its credit as being available to
satisfy the obligation of any other Person;
(xv) not act as the agent of any Member, Manager, the Independent
Manager or their respective Affiliates;
(xvi)not authorize any Member, Manager, the Independent Manager, any
managers or officers of the Company or their respective
Affiliates to act as the agent for the Company, except as
specifically permitted by this Agreement;
(xvii) allocate fairly and reasonably with any other Person expenses
that are shared with such Person including, without limitation,
any overhead, rent, or other compensation paid for shared or
leased office space;
(xviii) pay independent contractors performing services or incurring
expenses in connection with such services for the Company
compensation for such services rendered or expenses incurred in
an amount equal to the fair value of such services and expenses;
(xix)not enter into leases for office space, except as reasonably
appropriate to maintain a principal place of business or the
conduct of its operations;
(xx) use stationery, invoices and checks separate from any other
Person;
(xxi)not pledge any property or assets of the Company (except as
permitted by the Loan Documents with respect to Persons that are
not Affiliates of the Company), lend or advance any moneys (other
than trade receivables in connection with the ordinary course of
the Company's business), guarantee (directly or indirectly),
endorse (other than the endorsement of negotiable instruments for
collection or deposit in the ordinary course of business) or
otherwise become contingently liable (directly or indirectly) for
the obligations of, or acquire or assume any obligation or
liability of, any other Person;
(xxii) except for temporary investments of cash flow from operations
in one or more Persons that are not Affiliates of the Company,
not make an investment in or for the benefit of, or own or
purchase any stock, obligations or securities of or any other
interest in, or make any capital contribution to, any other
Person;
(xxiii) except for its obligations under the Loan Documents, debt
expressly permitted pursuant to Section 7.01(t) of the Loan
Agreement, trade payables incurred in the ordinary course of its
business which are customarily expected to be paid within 60 days
after the due date thereof and real estate taxes, not incur any
debt, secured or unsecured, direct or contingent (including,
without limitation, guaranteeing any obligation);
(xxiv) maintain adequate capital out of cash flow from operations to
the extent reasonably possible for the normal obligations
reasonably foreseeable in a business of the Company's size and
character and in light of its proposed business operations and
liabilities (provided, that this clause shall not be deemed a
commitment by any Member to make capital contributions to the
Company not otherwise expressly required by this Agreement);
(xxv)not engage, directly or indirectly, in any business or activity
except as set forth in Section 2.1 of this Agreement;
(xxvi) not acquire or own any material assets other than those
reasonably appropriate to comply with the Loan Documents and to
carry out the Purpose;
(xxvii) properly account for any transactions entered into between the
Company and each Member and Manager in the Company's books and
financial records;
(xxviii) not enter into any contract, except such contracts as
reasonably appropriate to enable the Company to achieve its
purposes as set forth in, or that are otherwise required or
expressly permitted in, the Loan Documents to carry out the
Purpose;
(xxix) not agree to, enter into or consummate any transaction which
would render it unable to confirm that (A) it is not an "employee
benefit plan" as defined in Section 3(32) of ERISA, which is
subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(32) of ERISA; (B) it is not subject to state
statutes regulating investments and fiduciary obligations with
respect to governmental plans; and (C) less than 25% of each of
its outstanding classes of equity interests are held by "benefit
plan investors" within the meaning of 29
C.F.R.ss.2510.3-101(f)(2);
(xxx)have at least one Independent Manager at all times, subject to
the requirement in Section 13.1 to fill promptly any temporary
vacancies;
(xxxi) to the fullest extent permitted by applicable law and except as
otherwise expressly provided elsewhere in this Section, not take
or refrain from taking any act which would make it impossible to
carry on the business of the Company and further the Purpose;
(xxxii) except as provided in the Loan Documents, not knowingly
perform any act that would subject (A) any Member of the Company
to liabilities of the Company in any jurisdiction or (B) the
Company to taxation as a corporation under relevant provisions of
the Internal Revenue Code; and
(xxxiii) except as expressly permitted in the Loan Documents, not
combine, consolidate or merge into or with any other Person,
convert into an entity that is not a limited liability company,
reorganize or form the Company in a jurisdiction other than
Delaware or, to the fullest extent permitted by applicable law,
dissolve, liquidate, or transfer substantially all of its assets
to any Person.
(b) Except any guaranty of the Company's obligations by an Affiliate or as
expressly anticipated by the Loan Documents, none of the Company, any
Member, any Manager, the Independent Manager, their respective
Affiliates or any Person on behalf of the Company shall, and none of
them shall have the authority to, enter into any agreements, written
or otherwise, pursuant to which any Member, Manager, the Independent
Manager or any of their respective Affiliates agrees to extend credit,
make loans or make payment or contributions to or for or assume,
guaranty or otherwise be obligated for the payment or performance of
the Company or hold itself out as being liable for the debts of the
Company, or hold out its credit as being available to satisfy the
obligations of the Company; and
(c) without the consent of all of the Members, the Board of Managers and
the Independent Manager, neither the Company, any Person on behalf of
the Company, any Member, nor any Manager, shall, or shall have the
authority to:
(i) confess a judgment against the Company;
(ii) possess the property or assets of the Company for other than the
Purpose, or, subject to paragraph (a) of this Section, assign
rights, if any, in specific property or assets of the Company for
other than the Purpose; provided that this subsection (A) shall
not permit any such possession or assignment otherwise prohibited
by the Loan Agreement and (B) shall not apply to any such
possession or assignment as to which the Lender and GM have
expressly consented in writing; and
(iii)to the fullest extent permitted by law, (A) commence any case,
proceeding or other action or file a petition under any existing
or future bankruptcy, insolvency or similar law seeking (1) to
adjudicate the Company a bankrupt or insolvent, (2) to have an
order for relief entered with respect to the Company, or (3)
reorganization, arrangement, adjustment, wind-up, liquidation,
dissolution, composition or other relief with respect to the
Company or its debts, (B) consent to the institution of
bankruptcy or insolvency proceedings against the Company, (C)
seek or consent to the appointment of a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or a substantial part of its property,
(D) except as required by law, admit the Company's inability to
pay its debts generally as they become due, (E) cause the Company
to not pay its debts as such debts become due within the meaning
of the United States Bankruptcy Code (the "Bankruptcy Code"), (F)
make a general assignment by the Company for the benefit of
creditors, or (G) authorize, take any action in furtherance of,
consenting to or acquiesce in any of the foregoing or any similar
action or other proceedings under any federal or state
bankruptcy, insolvency or similar law on behalf of, or with
respect to, the Company, or in connection with the Loan Documents
or this Agreement.
Section 14.2. Bankruptcy of a Member.
The bankruptcy (as defined in Section 18-101 of the Delaware Act),
dissolution, liquidation, termination, withdrawal or adjudication of
incompetency of any Member (other than, subject to Section 13.6 of the
Agreement, the last remaining Member) shall not cause the termination or
dissolution of the Company and the business of the Company shall continue. Upon
any such occurrence, the trustee, receiver, executor, administrator, committee,
guardian or conservator, if any, of such Member shall have all the rights of the
Member for the purpose of settling or managing the Member's estate or property,
subject to satisfying conditions precedent to the admission of such assignee or
a substitute Member. The transfer by such trustee, receiver, executor,
administrator, committee, guardian or conservator of any Interest of such Member
shall be subject to all of the restrictions to which such transfer would have
been subject if such transfer had been made by the bankrupt, dissolved,
liquidated, terminated or incompetent Member. This Section 14.2 shall apply to
the extent permitted by applicable law.
Section 14.3. Creditor's Interests.
To the fullest extent permitted by law, including, without limitation,
Section 18-1101(c) of the Delaware Act, in voting or otherwise acting on the
matters with respect to the Company (and notwithstanding that the Company may
not be insolvent), each Member, Manager and the Independent Manager shall take
into account the interests of the Lender as well as those of the Members,
Managers and the Company. Failure by the Company, any Member, Manager or the
Independent Manager to comply with this Section or any other covenant set forth
in this Agreement shall not affect the status of the Company as a separate legal
entity or the limited liability of any Member of the Company or the Independent
Manager. Neither the Company, any Member nor any Manager shall (a) maintain or
use the separate existence of the Company to perpetrate a fraud on creditors or
(b) enter into the Loan Documents with any intent to hinder, delay or defraud
creditors of the Company or of any Member or Manager of the Company.
Section 14.4. Waiver of Certain Actions.
Except as otherwise expressly provided in this Agreement, to the fullest
extent permitted by law, each of the Members and Managers hereby irrevocably
waives any right or power that such Person might have to cause the appointment
of a receiver for all or any portion of the assets of the Company, to compel any
sale of all or any portion of the assets of the Company pursuant to any
applicable law or to file a complaint or to institute any proceeding at law or
in equity to cause the dissolution, liquidation, winding up or termination of
the Company. To the fullest extent permitted by law, each of the Members and
Managers hereby irrevocably waives any right or power that such Person might
have to cause the Company or any of its assets to be partitioned. All property
and assets owned by the Company shall be owned by the Company as an entity and,
insofar as permitted by applicable law, no Member or Manager shall have any
ownership interest in any Company property or assets in its individual name or
right or capacity, and each Member's interest in the Company shall be personal
property for all purposes. ARTICLE XV CERTAIN DEFINITIONS
Section 15.1. Definitions.
Unless the context otherwise requires, the terms defined in this Section
shall, for the purposes of this Agreement, have the meanings herein specified.
"Adjusted Capital Account Deficit" means, with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
relevant Fiscal Year, after giving effect to the following adjustments: (i)
Credit to such Capital Account any amounts that such Member is obligated to
restore pursuant to any provision of this Agreement or is deemed to be obligated
to restore pursuant to the penultimate sentences of Treasury Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (ii) Debit to such Capital Account
the items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
(5) and (6). The above definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Treasury Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Affiliate" shall mean, with respect to any specified Person, a Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the Person specified.
"Business Day" shall mean any day on which banks located in New York City
are not required or authorized by law to remain closed.
"Capital Account" shall mean, with respect to any Member, the account
maintained for such Member in accordance with the provisions of Section 6.4
hereof.
"Capital Contribution" shall mean, with respect to any Member, the amount
set forth opposite the name of such Member on Schedule 1 under the column
"Capital Contribution" and any additional capital contributions made pursuant to
Section 6.2(b).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Control" and derivations of such term means the possession, whether direct
or indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Covered Person" shall mean an individual that is a Manager, Independent
Manager, officer, employee or agent of the Company or the Company's Affiliates;
or any Person who was, at the time of the act or omission in question, such a
Person.
"Disabling Conduct" shall mean conduct that constitutes fraud, a willful
violation of law, gross negligence or reckless disregard of duty in the conduct
of the duties of the Person referred to.
"Interest" shall mean a Member's limited liability company interest in the
Company which represents such Member's share of the profits and losses of the
Company and such Member's rights to receive distributions of the Company's
assets and to participate in the management of the Company in accordance with
the provisions of this Agreement and the Delaware Act.
"Independent Manager" shall mean an individual duly appointed by the
Company to serve as a manager of the Company pursuant to this Agreement who, at
the time of such appointment, is not and will not be while serving as a manager
of the Company, and has not been at any time during the preceding 5 years: (a) a
direct or indirect legal or beneficial owner of any equity interest in the
Company, any member of the Company or any of their respective Affiliates, (b) a
creditor, customer, supplier, employee, officer, director, member, manager or
contractor of, or other Person who derives any of its purchases or revenues from
its activities with, the Company, any member of the Company or any of their
respective Affiliates (except solely in the capacity of a manager of the
Company), (c) an individual directly or indirectly controlling, controlled by or
under common control with the Company, any member of the Company or any of their
respective Affiliates, or any creditors, suppliers, customers, employees,
officers, other directors, managers, or contractors of the Company, any member
of the Company or any of their respective Affiliates, or (d) a member of the
immediate family of any individual described in (a), (b) or (c) above; provided
however, that no individual shall be disqualified from serving as an Independent
Manager solely on account of his or her services as an independent director,
independent trustee or independent manager (as determined pursuant to
requirements substantially similar in all material respects to those set forth
in this definition) of another limited or special-purpose, bankruptcy-remote
entity or his or her receipt of compensation, if any, in exchange therefor from
the Company or any other limited or special-purpose bankruptcy-remote entity.
"Interest Percentage" shall mean the percentage shown on Schedule 1 hereto
under the heading "Interest Percentage".
"Manager" shall mean a "manager" within the meaning of the Delaware Act and
a member of the Board of Managers, excluding the Independent Manager.
"Member" shall mean any Person named as a member of the Company on Schedule
1 and "Members" shall mean two (2) or more of such Persons when acting in their
capacities as members of the Company, and their respective successors and
assigns.
"Net Profit" or "Net Loss" shall mean, for any Fiscal Year, the net income
or net loss of the Company for such Fiscal Year, determined in accordance with
Section 703(a) of the Code, including any items that are separately stated for
purposes of Section 702(a) of the Code, as determined in accordance with Federal
income tax accounting principles with the following adjustments:
(a) any income of the Company that is exempt from Federal income tax
shall be included as income;
(b) any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(1)
shall be treated as current expenses;
(c) no effect shall be given to any adjustments made pursuant to
Section 734 or 743 of the Code; and
(d) the basis of property contributed to the Company shall initially
be treated as equal to the agreed upon valuation of such
property, and all gain, loss, depreciation and amortization on
such property shall be determined based on such agreed upon value
in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(g).
"Person" shall mean any individual, corporation, association, partnership
(general or limited), joint venture, trust, joint-stock company, estate, limited
liability company, unincorporated organization or other legal entity or
organization.
"Senior Debt" shall have the meaning given to that term in the Utility
Services Agreement.
"Subsidiary" or "Subsidiaries" of any Person means any corporation,
partnership, joint venture or other legal entity of which such Person (either
alone or through or together with any other subsidiary), owns, directly or
indirectly, more than fifty percent (50%) of the stock or other equity interests
the holder of which is generally entitled to vote for the election of the board
of directors or other governing body of such corporation, partnership, joint
venture or other legal entity.
"Treasury Regulations" shall mean the Regulations of the Treasury
Department of the United States issued pursuant to the Code.
"Utility Services Agreement" shall mean that certain Utility Services
Agreement to be dated on or about April 14, 2004 by and between GM and the
Company relating to the GM Delta Township II Project and the System, as the same
may be modified, amended or restated.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1. Amendments Generally.
The terms and provisions of this Agreement shall not be modified or amended
at any time except by the unanimous consent of the Members and subject to the
restrictions set forth in Section 2.2 hereof; provided, that, without the
consent of any of the Members, the Board of Managers may amend Schedule 1
attached hereto to reflect changes validly made, pursuant to the terms of this
Agreement.
Section 16.2. Entire Agreement.
This Agreement (including all attachments hereto) constitutes the entire
agreement between the Members with respect to the Company and supersedes all
other prior agreements and understandings, both written and oral, between the
Members or their respective Affiliates with respect to the Company.
Section 16.3. Notices.
All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in person, by facsimile or by registered or
certified mail (postage prepaid, return receipt requested), to the other Member
as follows:
If to Cinergy Solutions:
Cinergy Solutions Holding Company, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
5 Atrium II, EA502
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Cinergy Corp.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
5 Atrium II, EA503
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel, Commercial Business Unit
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to York:
York International Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President, York Americas
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
York International Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
If to Veolia Water:
Veolia Water North America Operating Services, Inc.
Airside Business Park
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Veolia Water North America Operating Services, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Assoc. Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
Section 16.4. Table of Contents and Headings.
The table of contents and the headings and subheadings of the sections of
this Agreement are inserted for convenience and identification only and are in
no way intended to describe, interpret, define, or limit the scope, extent or
intent of this Agreement or any provision thereof.
Section 16.5. Assignment.
This Agreement and any right hereunder shall not be assigned by any Member
or by operation of law or otherwise.
Section 16.6. Severability.
The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity
and enforceability of the other provisions hereof. If any provision of this
Agreement, or the application thereof to any person or entity or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid and unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
Section 16.7. Extension; Waiver.
Any two Members may (i) extend the time for the performance of any of the
obligations or other acts of the remaining Member, (ii) waive any inaccuracies
in the representations and warranties of the remaining Member contained herein,
or (iii) waive compliance by the remaining Member with any of the agreements or
conditions contained herein. Any agreement on the part of any Member to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such Members. The failure of any Member hereto to assert any
of its rights hereunder shall not constitute a waiver of such rights.
Section 16.8. Governing Law.
This Agreement shall be governed by and construed in accordance with the
law of the State of Delaware, without regard to the principles of conflicts of
law thereof.
Section 16.9. Names and Logos.
To further the objectives of this Agreement and the Company, the Members
acknowledge and agree that the Company shall have the non-exclusive right to use
the names and logos of the Members to the extent such use is reasonable and in
connection with the implementation of this Agreement.
Section 16.10. Further Actions.
Each Member shall execute and deliver such other certificates, agreements
and documents, and take such other actions, as may reasonably be requested by
the Company in connection with the formation of the Company and the achievement
of its purposes, including, without limitation, (a) any documents that the
Company deems necessary or appropriate to form, qualify or continue the Company
as a limited liability company in all jurisdictions in which the Company
conducts or plans to conduct business and (b) all such agreements, certificates,
tax statements and other documents as may be required to be filed in respect of
the Company.
Section 16.11. Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original and all of which taken together shall constitute a
single agreement.
Section 16.12. Press Releases; Confidentiality.
No public announcement shall be made by any Member with regard to the
Company or transactions contemplated by this Agreement without the prior written
consent of the other Members; provided that any Member may make such disclosure
if required by law, legal process or rule or regulation of a national securities
exchange on which the securities of a party are listed. Each Member will discuss
any public announcements or disclosures concerning the transactions contemplated
by this Agreement with the other Members prior to making any such announcements
or disclosures.
The Members acknowledge that during the course of and in preparation for
the transactions contemplated by this Agreement (including their performance of
the design, construction, operation and maintenance of the System), they will
disclose to and receive from each other, in written form or orally, certain
proprietary or other confidential information, including without limitation,
technical, marketing and other business information. Such information shall be
disclosed and received subject to this Section 16.12.
(a) For purposes hereof, in addition to the information referred to
in the immediately preceding sentence, Confidential Information
also includes without limitation:
(i) commercial or technical knowledge, information compilation,
data, material or software products, sketches, plans, notes,
drawings, measurements, designs, specifications,
calculations, prototypes, formulas, intellectual property,
development and research programs, production reports and
process and laboratory analyses;
(ii) customer lists, pricing methods and information, policies,
strategies and activities regarding exploitation, marketing
and sales or regarding general administration and financial
matters; and
(iii)any other information that is marked "Confidential" or
otherwise designated clearly as being confidential, secret,
reserved or exclusive information including without
limitation, all information acquired during visual
disclosure, provided that said information had been
designated confidential at the time of such disclosure or by
a writing sent within thirty (30) days thereafter.
(b) The recipient of Confidential Information hereunder hereby undertakes
that the Confidential Information will be kept confidential and will
not be disclosed by the recipient, its employees, agents or
representatives, in any manner whatsoever, in whole or in part,
provided that such obligation shall terminate on the fifth anniversary
of the dissolution of the Company. Moreover, the recipient hereby
agrees not to use the Confidential Information, in any manner
whatsoever, except as contemplated hereby. The recipient will be
responsible for any breach of the undertakings contained herein by any
of its Affiliates, officers, directors or employees and will require
its agents, contractors, subcontractors and vendors to agree to
protect such Confidential Information on terms similar to those stated
in this Section 16.12. Upon request from the owner of any Confidential
Information, the recipient promptly shall (i) return to the owner all
documents or other materials furnished by the owner to the recipient
constituting Confidential Information, together with all copies and
summaries thereof in the possession or under the control of the
recipient and (ii) destroy all documents or other materials generated
by the recipient that are based upon, or otherwise include or refer
to, any part of the Confidential Information, and certify such
destruction to the owner of the Confidential Information. In any case,
however, the recipient's legal department may retain one (1) copy of
the Confidential Information solely for archive purposes.
(c) The recipient recognizes that the non-authorized use or the disclosure
of the Confidential Information will cause an irreparable damage to
the owner thereof which cannot easily be converted into a financial
loss. Accordingly, the recipient agrees that the owner shall be
entitled to seek injunctive relief to prevent breaches of this Section
16.12 and to specifically enforce the provisions of this Section
16.12, in addition to any other remedy to which the owner may be
entitled at law or in equity.
(d) The recipient recognizes that the owner of any Confidential
Information disclosed hereunder shall remain the owner thereof and of
all other intellectual property created, established or found by the
owner or on its behalf.
(e) The foregoing provisions of this Section 16.12 shall not apply to any
information which: (i) at the time of disclosure is available to the
public; or (ii) after disclosure becomes available to the public
through no fault of the recipient, provided that the obligation of the
recipient shall cease only after the date on which such information
has become available to the public; or (iii) the recipient can
demonstrate, through tangible evidence, was in its possession before
receipt from the disclosing party; or (iv) is disclosed to the
recipient without restriction on disclosure by a third party who has
the lawful right to disclose such information; or (v) is required to
be disclosed by order of a court, administrative agency or government
body, or subpoena, summons or other legal process, or by such law,
rule or regulation, provided that prior to such disclosure, the
recipient gives the other party reasonable advance notice of such
order and an opportunity to object to such disclosure. Confidential
Information shall not be deemed to be within the foregoing exceptions
merely because it is (A) specific and embraced by more general
information in the public domain or recipient's possession or (B) a
combination which can be pieced together to reconstruct the
Confidential Information from multiple sources, none of which shows
the whole combination, its principle of operation and method of use.
Section 16.13. No Third Party Beneficiary.
This Agreement shall be for the sole and exclusive benefit of the Members
and their respective successors, assignees and transferees. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon, or to give to, any other Person any right, remedy or claim under or by
reason of this Agreement or any terms hereof; provided, however, nothing herein
shall be deemed to limit the liability of the Company for a breach of Section
7.01(u) of the Loan Agreement.
[Remainder of page intentionally left blank. Signature page follows.]
IN WITNESS WHEREOF, the undersigned have duly executed this Limited
Liability Company Agreement of Delta Township Utilities II, LLC as of the 29th
day of March, 2004.
CINERGY SOLUTIONS HOLDING COMPANY, INC.
By:
Name:
Title:
YORK INTERNATIONAL CORPORATION
By:
Name:
Title:
VEOLIA WATER NORTH AMERICA OPERATING SERVICES, INC.
By:
Name:
Title:
SCHEDULE 1
Capital Interest
Members' Names Contribution Percentage
-------------- ------------ ----------
Cinergy Solutions Holding Company, Inc. $ 46.00 46%
York International Corporation $ 10.00 10%
Veolia Water North America Operating $ 44.00 44%
Services, Inc.
SCHEDULE 2
MATTERS REQUIRING UNANIMOUS ACTION OF THE BOARD OF MANAGERS OF THE COMPANY
(a) Demand for capital contributions from the Members.
(b) Borrowing money, including without limitation, the Senior Debt, or
guaranteeing the obligations of any Person not in the ordinary course of
business, or mortgaging, pledging or granting a security interest in assets
not in the ordinary course of business, in any one transaction or a series
of related transactions or any amendment or modification of any arrangement
for any of the foregoing not in the ordinary course of business.
(c) Subject to Section 6.1 of this Agreement, entering into, executing,
amending or modifying a material agreement with an Affiliate of a Member
other than as specifically set forth in this Agreement.
(d) Unbudgeted acquisitions not in the ordinary course of business.
(e) Disposition of assets not in the ordinary course of business.
(f) Entering into any contract not in the ordinary course of business which
requires unbudgeted expenditures, commitments or liabilities.
(g) Amendments to governing documents of the Company.
(h) Issuance of Interests or other securities of the Company to third parties.
(i) Engaging in a business activity other than the GM Delta Township II
Project.
(j) Commencing the process of dissolution, liquidation, insolvency or voluntary
bankruptcy.
(k) Approving any merger or consolidation of the Company.
(l) Forming any Subsidiary of the Company.
(m) Execution of any material credit agreement or any amendment or modification
thereof or implementation of any material change in capital structure,
other than as previously authorized or pursuant to authority previously
granted.
(n) Commencing or settling any material litigation or arbitration (other than
arbitration pursuant to Section 5.3 of this Agreement).
(o) Engaging or terminating principal auditors or attorneys.
(p) Any execution, amendment or modification of any material agreements with
Members or their Affiliates, except as contemplated by the terms hereof.
(q) Approval of the Company's annual budget.
(r) Entering into, terminating or modifying any material subcontract.
(s) Settling of any material dispute with GM or other party.
(t) Approving any matter set forth in Section 14.1(c) of this Agreement.
(u) Amending or modifying the Utility Services Agreement or the Loan Documents.
(v) Approving the Company's policies on delegation of authority.
(w) Approving any transactions that exceed any delegation of authority.
(x) Any proposed delegation of the authority of the Board of Managers to any
Person with respect to any of the matters listed on this Schedule 2.
(y) Such other matters as the Parties or their designated Managers shall by
mutual consent determine as being appropriate.
EXHIBIT A
GENERAL DIVISION OF RESPONSIBILITY
Subject to the terms of the Service Arrangements to be entered into by the
Company, the general division of responsibility among the Members for matters
covered by the Utility Services Agreement is as follows:
| System
|
Design/Build
|
Operation
|
| Compressed Air
|
Cinergy Solutions
|
Cinergy Solutions
|
| Deionized (R/O) Water Treatment
|
Veolia Water
|
Veolia Water
|
| Chilled Water
|
Cinergy Solutions/York
|
Cinergy Solutions
|
| Heating Water
|
Cinergy Solutions
|
Cinergy Solutions
|
| Cooling Water
|
Cinergy Solutions
|
Veolia Water
|
| Welder Water
|
Cinergy Solutions
|
Cinergy Solutions
|
| Wastewater Treatment
|
Veolia Water
|
Veolia Water
|
| Energy Management System
|
Cinergy Solutions
|
Cinergy Solutions
|
| Chilled Water Maintenance
|
N/A
|
Cinergy Solutions/York
|
| Air Handling Unit Maintenance
|
N/A
|
Cinergy Solutions/York
|