JOINT VENTURE OPERATING AGREEMENT
EXHIBIT
10.8
THIS
AGREEMENT (this "Agreement") is made as of April
8, ,2004,
by
and between ▇▇▇▇▇▇▇ ▇▇▇▇▇, JR., INC. ("▇▇▇▇▇"), a Pennsylvania corporation,
▇▇▇▇▇▇▇ CONSULTANTS, INC. ("▇▇▇▇▇▇▇"), an Iowa corporation, HILL INTERNATIONAL,
INC. ("Hill"), a Delaware corporation and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, LLC (the
"Company"), a Delaware limited liability company. ▇▇▇▇▇, ▇▇▇▇▇▇▇ and Hill are
hereinafter sometimes collectively referred to "Members" and individually as
a
"Member".
WITNESSETH
WHEREAS,
each of the Members is in the business, inter alia, providing construction
management and service contract performance management; and
WHEREAS,
the US ARMY CORPS OF ENGINEERS TRANSATLANTIC PROGRAM CENTER ("U.S. Corps")
has
issued a Solicitation, Offer and Award ("Offer") for a third party, to be
appointed as an independent contractor by U.S. Corps, to provide various
architect-engineer services in Iraq, specifically IDIQ Contract for Construction
Management and General A/E Services for Facilities in Iraq, solicitation number
W912ER-04-R-0008 (the "Contract"); and
WHEREAS,
the Members have formed the Company for the purpose of providing services to
the
U.S. Corps under the Contract; and
WHEREAS,
the Members have entered into a Limited Liability Company Agreement, dated
as of
April
8,,
2004
(the "Limited Liability Company Agreement") with respect to the Company; and
WHEREAS,
the Members have caused to be filed with the Delaware Secretary of State an
Amended and Restated Certificate of Formation, dated February 18,2004 (the
"Certificate").
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, and in consideration of the mutual covenants
and
agreements contained herein, and intending to be legal bound Baker, Stanley,
Hill and the Company hereby agree as follows:
ARTICLE
I
ORGANIZATION
1.1
Definitions.
For purposes of this Agreement, the following terms shall have the meanings
set
forth below, except as otherwise specified or as the context may otherwise
require:
"Affiliates"
shall mean any person which directly or indirectly through one or more
intermediaries controls, is controlled by, or is under common control with
a
Member.
"Board
of
Directors" shall mean the Board of Directors of the Company as provided in
Article 7 of the Limited Liability Company Agreement;.
"Program
Manager" shall have the meaning given in Article 7 of the Limited Liability
Company Agreement.
"Project
Staff' shall mean those individuals provided by the Members that are
reimbursable through a compensated Task Order. These individuals are to be
citizens of the United States and/or a current employee of a Member.
1.2
Conflicts.
If there is any conflict between this Agreement and the terms of either the
Limited Liability Company Agreement or the Certificate of Formation, the terms
of the Limited Liability Company Agreement or the Certificate of Formation,
as
the case may be, shall govern.
ARTICLE
II
PROVISIONS
RELATING TO OPERATIONS
2.1
Personnel.
The Members and the Company agree that the personnel used by the Company to
service the Contract shall be as follows:
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(a)
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Project
Staff. The Members shall provide Project Staff to the Company in
amounts
equal to the Member's respective Membership Interest of the Company
(as
defined by the Limited Liability Company Agreement). Therefore, initially,
each of the Members shall provide approximately the same amount of
Project
Staff to the Company. Such Project Staff shall remain individual
employees
of the Members or one of their Affiliates and shall be subcontracted
to
the Company. The amount of Project Staff provided will be determined
by
the total labor based revenue (not including subcontractor or other
direct
costs) generated by the Project Staff (direct labor plus overhead)
and
invoiced by the Member to the Company. By way of example, the Members
will
have provided the same amount of Project Staff if one Member provides
three Project Staff personnel with an invoiced cost of $50,000 each,
one
Member provides two Project Staff personnel with an invoiced cost
of
$75,000 each and one Member provides one Project Staff person with
an
invoiced cost of$150,000.
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| (b) |
As-Needed
Support Staff. In addition to the Project Staff, to fulfill the
requirements of the Contract, the Members and the Company acknowledged
that the Company will need the support of certain staff personnel
of the
Members (the "As-Needed Support Staff'). The As-Needed Support Staff
shall
remain employees of the individual Members and their services will
be
subcontracted to the Company by the Members if requested by the Company
on
terms mutually acceptable to the Company and the respective Member.
The
Company shall, and the Members shall cause the Company to use As-Needed
Support Staff from each
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-2-
of
the
Members in amounts equal to the Member's respective Membership Interest of
the
Company. The amount of As-Needed Support Staff provided will be determined
by
the total labor based revenue (not including subcontractors or other direct
costs) generated by the As-Required Support Staff (direct labor plus overhead)
and invoiced by the Member to the Company.
| (c) |
All
U.S. citizens hired in connection with the performance of the Contract
will be hired by one of the Members (rather than by the Company)
and will
be either Project Staff or As-Needed Support Staff provided by such
Member. As set forth in the Limited Liability Company Agreement,
the
Managing Director of the Company shall have the responsibility to
balance
the provision of the Project Staff and the As-Needed Support Staff
to the
Company in accordance with this Joint Venture Operating Agreement.
The
Members obligations to provide overhead support to the Company are
listed
on Annex C.
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| (d) |
Attached
Annexes A &
B
detail the terms on which the Members will invoice the Company and
the
Company will invoice the U.S. Corps with respect to the provision
of
Project Staff and As-Needed Support Staff.
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| (e) |
Subcontractors.
The Company shall hire and use the services of subcontractors as
determined by the Program Manager, Managing Director or Board of
Directors, as set forth in Section 7.7 (g) of the Limited Liability
Company Agreement.
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| (t) |
Non-Iraqi
Expatriate Personnel. The Company shall use the services of non-Iraqi
expatriate personnel not currently employed by one of the Members
as
determined by the Program Manager or Managing Director in accordance
with
the terms of the Limited Liability Company Agreement. Such non-Iraqi
expatriate personnel shall be employed by the Company or a subsidiary
of
the Company as determined by the Program Manager or Managing Director.
No
U.S. citizen shall be hired by the Company as a non-Iraqi expatriate.
Rather, such persons shall be hired by one of the Members as set
forth in
subparagraph (c) above. The attached Annex B details the terms on
which
the Company will invoice the U.S. Corps with respect to the services
provided by such non-Iraqi expatriate personnel.
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| (g) |
Local
Iraqi Personnel. The Company shall use the services of local Iraqi
personnel as determined by the Program Manager. Such local Iraqi
personnel
shall be employed by the Company or a subsidiary of the Company as
determined by the Program Manager. The attached Annex B details the
terms
on which the Company will invoice the U.S. Corps with respect to
the
services provided by such local Iraqi personnel.
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2.2
Equipment.
If the Company determines that it needs to use the equipment of a Member
in
connection with the performance of the Contract, the Company and such Member
shall negotiate in good faith to determine the terms of use of such equipment.
No Member shall be required to provide equipment to the Company except on terms
mutually acceptable to the Company and such Member, each in their sole
discretion.
-3-
2.3
Insurance.
Each Member agrees that such Member will procure and maintain, during
the term of the Limited Liability Company Agreement, relevant business,
professional liability and general liability insurance covering all actions
of,
by, or on behalf of, such Member related to services provided by such Member
to
the Company. Such insurance shall be in such amounts and on such terms as are
customarily maintained by entities engaged in activities similar to the
activities of the Members in connection with or related to the Contract.
2.4
Board
Expenses. Each member shall invoice the Company for out-of-pocket expenses
incurred by such Member in connection with attendance of such Member's
designated director at meetings of the Board of Directors. The Members shall
not
invoice the Company for compensation paid to such Member's designated director
in connection with attendance at meetings of the Board of Directors.
ARTICLE
III
INDEMNIFICATION
3.1
Indemnification
of each Member by the other Members. Each Member (the "Indemnifying
Party") shall indemnify, defend, and hold harmless each of the other Members
(both individually or collectively, the "Indemnified Party") against all costs
(including reasonable legal costs) expenses or other liabilities not covered
by
insurance which the Indemnified Party may incur as a result of the gross
negligence or willful misconduct of the Indemnifying Party to the extent that
such gross negligence or willful misconduct relates to the Company or the
performance of the Contract.
3.2
Procedure
for Defense. Promptly after receipt by an Indemnified Party of notice of the
commencement of any action against the Indemnified Party, such Indemnified
Party
shall give notice to the Indemnifying Party. The Indemnifying Party shall be
entitled to participate in the defense of the action and, to the extent that
it
may elect in its discretion by written notice to the Indemnified Party, to
assume the control and defense and/or settlement of such action; provided,
however, that (i) both the Indemnifying Party and the Indemnified Party must
consent and agree to any settlement of any such action, except that if the
Indemnifying Party has reached a bona fide settlement agreement with the
plaintiff(s) in any such action that involves only the payment of cash and
the
Indemnified Party does not consent to such settlement agreement, then the dollar
amount specified in the settlement agreement shall act as an absolute maximum
limit on the indemnification obligation of the Indemnifying Party, and (ii)
if
the defendants in any such action include both the Indemnifying Party and the
Indemnified Party and if the Indemnified Party shall have reasonably concluded
that there are legal defenses available to it which are in conflict with those
available to the Indemnifying Party, then the Indemnified Party shall have
the
right to select separate counsel to assert such legal defenses and otherwise
to
participate in the defense of such action on its own behalf, and the fees and
disbursements of such separate counsel shall be included in the amount which
the
Indemnified Party is entitled to recover under the terms and subject to the
conditions of this Agreement.
-4-
ARTICLE
IV
MISCELLANEOUS
PROVISIONS
4.1
No
Inadvertent Waiver of Rights. No failure or delay on the part of any of the
parties
in the exercise of any power, right or privilege hereunder shall operate as
a
waiver thereof, nor shall any single or partial exercise of any such power,
right 0r
privilege preclude other or further exercise thereof or of any other right,
power or privilege.
4.2
Term
of
Agreement. Unless otherwise provide hereunder, this Agreement shall continue
in full force and effect until termination by the Member's mutual consent.
4.3
Assignment.
Neither this Agreement nor any rights or obligations hereunder are assignable
in whole or in part by any party without the prior written consent of all the
Members; provided, however, that any Member may assign its rights hereunder
to
an Affiliate of such Member if it assigns its interests in the Company to such
Affiliate.
4.4
Severability.
If any of the provisions of this Agreement are held invalid or unenforceable
and unless the invalidity or unenforceability thereof does substantial violence
to the underlying intent and sense of the remainder of this Agreement, such
invalidity or unenforceability shall not effect in any way the validity or
enforceability of any other provisions of this Agreement except those of which
the invalidated or unenforceable provisions comprise an integral part of or
are
otherwise clearly inseparable from. That invalidity or unenforceability
shall
not
affect any valid and enforceable application thereof, and each such provision
shall be deemed to be effective, operative, made, entered into or taken in
the
manner and to the full extent permitted by law.
4.5
Notices.
No notice or other communication hereunder shall be sufficient to affect
any
rights, remedies or obligations of any party hereto unless such notice or
communication is in writing and delivered to the person or persons whose rights,
remedies or obligations are affected, except that any such written notice or
communication which is hand delivered, delivered by prepaid overnight courier
service or mailed by prepaid certified mail, return receipt requested, addressed
to the respective and appropriate party as follows (or to such other address
as
the parties may indicate in writing in accordance with this Section 4.5):
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If
to ▇▇▇▇▇ Member to:
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▇▇▇▇
▇▇▇▇▇▇▇▇▇, Exec. Vice President
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▇▇▇▇▇▇▇
▇▇▇▇▇, Jr., Inc.
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Airside
Business Park
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▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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If
to ▇▇▇▇▇▇▇ Member to:
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▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇. Vice President
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▇▇▇▇▇▇▇
Consultants, Inc.
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▇▇▇▇▇▇▇
Building
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▇▇▇
▇▇▇▇ ▇▇▇.
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▇▇▇▇▇▇▇▇▇,▇▇
▇▇▇▇▇
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If
to Hill Member to:
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▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇. Vice President
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▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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If
to the Company to:
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▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇.
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▇▇▇▇
International, Inc.
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▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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shall
be
deemed sufficient upon hand delivery, one day after deposit with such overnight
courier service or three days after such mailing, as the case may be.
4.6
Copies
of
Notices. A copy of any notice, service of process or other document in
the
nature thereof relating to the Company, received by any Member from anyone
other
than the other Member shall be delivered by the receiving Member to the other
Member as soon as practicable.
4.7
Necessary
Measures and Good Faith; No Agency. The parties shall in a timely manner
take all measures which are necessary or. appropriate to cause the Company
and
its Board of Directors to implement the provisions of this Agreement and the
transactions contemplated hereby, and the parties shall at all times act in
good
faith with respect to the obligations incurred by them hereunder. No party
shall
be the agent, partner or legal representative of the other or of the Company,
either express or implied, nor shall any party have the right or power to enter
into any contractual obligation whatsoever on behalf of the other or the
Company.
4.8
Governing
Law. The validity, performance, and all matters relating to the interpretation
and effect of this Agreement shall be governed by the internal law in effect
in
the State of Delaware, without regard to principles of law (such as "conflicts
of law") that might make the law of some other jurisdiction applicable. The
interest of each Member in the Company shall be personal property for all
purposes.
4.9
Captions.
The captions used at the commencement of various articles, sections and
subsections of this Agreement are for purposes of ease of reference only, and
in
no event or respect shall the substance of any provision or the intent of the
parties be interpreted or controlled by any such captions.
4.10
Counterpart
Originals. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
-6-
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
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▇▇▇▇▇▇▇
▇▇▇▇▇, Jr., Inc.
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By:
/s/
▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
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▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
Executive
Vice President
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▇▇▇▇▇▇▇
Consultants, Inc.
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By:
/s/
▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
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▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
Senior
▇.▇.
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▇▇▇▇
International, Inc.
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By:
/s/
▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
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Senior
Vice President
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▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, LLC
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By:
/s/
▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
V.P.
and Corporate Secretary
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-7-
Annex
A
| PARTNER FIRM SERVICES TO SBR LLC | |||||
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Labor
|
Overhead
Value
|
Profit
|
Contract
Type to
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Invoicing
Method
|
|
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SBHLLC
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To
SBHLLC
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||||
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SERVICE
TYPE
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|||||
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Overhead
Support
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Direct
Cost
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50%
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0
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T&M
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T&M
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(As-Needed
Support Staff)
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|||||
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Fixed
Price Support
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|||||
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(Project
Staff)
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|||||
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Short-Term
Assignment
|
Exhibit
A Rate
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Monthly
%
|
|||
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(Less
than or equal to 6
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Schedule
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153.93%
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0
|
Firm
Fixed Price
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Complete
|
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months)
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|||||
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Long-Term
Assignment
|
Exhibit
A Rate
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Monthly
%
|
|||
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(Greater
than 6 months)
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Schedule
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133.15%
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0
|
Firm
Fixed Price
|
Complete
|
|
Cost
Reimbursable Support
|
|||||
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(Project
Staff)
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|||||
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Short-Term
Assignment
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▇▇▇▇▇▇▇-157.01%
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T&M,
Not to
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Monthly
Progress
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||
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(Less
than or equal to 6
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Direct
Cost
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▇▇▇▇▇-156.93%
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0
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Exceed
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Payment
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months)
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Hill-
147.85%
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||||
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Long-Term
Assignment
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▇▇▇▇▇▇▇
- 133.18%
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T&M,
Not to
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Monthly
Progress
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(Greater
than 6 months)
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Direct
Cost
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▇▇▇▇▇
- 137.09%
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0
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Exceed
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Payment
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Hill
129.19%
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-8-
Annex
B
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SBR
LLC SERVICES TO GOVERNMENT
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|||||
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Labor
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Overhead
Value
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Profit
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Contract
Type to
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Invoicing
Method
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|
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SBHLLC
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To
Government
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||||
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SERVICE
TYPE
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|||||
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Overhead
Support
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SBH
LLC OVERHEAD COST - NOT DIRECT CHARGED TO GOV/T
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||||
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Fixed
Price Support
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|||||
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Short-Term
Assignment
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Exhibit
A, C, &
D
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Monthly
%
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|||
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(Less
than or equal to 6
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Rate
Schedules
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153.93%
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Negotiated
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Firm
Fixed Price
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Complete
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months)
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%
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||||
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Long-Term
Assignment
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Exhibit
A, C, &
D
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Monthly
%
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|||
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Rate
Schedules
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133.15%
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Negotiated
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Firm
Fixed Price
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Complete
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%
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|||||
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Iraqi
Workforce
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Exhibit
B Rate
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Monthly
%
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Schedules
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104.51%
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Negotiated
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Firm
Fixed Price
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Complete
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%
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|||||
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Cost
Reimbursable Support
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|||||
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Short-Term
Assignment
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Cost
Reimbursable,
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Monthly
Progress
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|||
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(Less
than or equal to 6
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Direct
Cost
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153.93%
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Award
Fee
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Award
Fee
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Payment
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months)
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|||||
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Long-Term
Assignment
|
Cost
Reimbursable,
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Monthly
Progress
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|||
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(Greater
than 6 months)
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Direct
Cost
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133.15%
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Award
Fee
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Award
Fee
|
Payment
|
|
Iraqi
Workforce
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Direct
Cost
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104.51%
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Award
Fee
|
Cost
Reimbursable,
|
Monthly
Progress
|
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Award
Fee
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Payment
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-9-
Annex
C
Member
Overhead Support Obligations
The
following services are those that will be provided by the Members as part of
the
Company's overhead. These are services to be performed in the U.S. and will
not
be covered by an individual task order.
▇▇▇▇▇:
Accounting
and Financial Services.
Hill:
Legal
and
Subcontracting Services.
HR
and
Personnel Logistical Support. Hill will provide the Company with HR Services
and
logistical support for transit to Iraq. Hill will also provide EEO reporting
services.
▇▇▇▇▇▇▇:
Insurance
Program .
SBE/DBE
Compliance Support and Reporting
-10-