EXHIBIT 10.30
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
NRG COMPANY, LLC
LIMITED LIABILITY COMPANY AGREEMENT of NRG COMPANY LLC, dated as of
September 8, 1996, among ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (each a
"Member" and collectively, the "Members").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, NRG Company LLC (the "Company"), a Delaware limited liability
company, was formed on July 12, 1996; and
WHEREAS, the Members desire to set forth their agreement with respect to (a)
the business of the Company, (b) the conduct of the Company's affairs, and (c)
the rights, powers, preferences, limitations and responsibilities of the Members
of the Company; and
WHEREAS, the Members of the Company desire that the Company be treated as a
partnership for federal income tax purposes.
NOW, THEREFORE, in consideration of the mutual covenants and premises hereof
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
DEFINITIONS
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For the purposes of this Agreement, the following terms shall have the
indicated meanings:
0.1 "Agreement" means this Limited Liability Company Agreement of the
Company, by and among the Members referred to herein.
0.2 "Capital Account" means, with respect to any Member, the capital
account maintained for such Member in accordance with the provisions of Section
5 hereof.
0.3 "Capital Contribution" means the total amount of capital actually
contributed to the Company by each Member pursuant to the terms of this
Agreement.
0.4 "Code" means the Internal Revenue Code of 1986, as amended from time to
time, or corresponding provisions of future law.
0.5 "Company" means NRG Company LLC, the limited liability company formed
pursuant to this Agreement and the LLC Law.
0.6 "Damages" means any and all damages, disbursements, suits, claims,
liabilities, obligations, judgments, fines, penalties, charges, amounts paid in
settlement, expenses, costs and expenses (including, without limitation,
attorneys' fees and disbursements) arising out of or related to litigation, and
interest on any of the foregoing.
0.7 "Dispose" means to make a Disposition.
0.8 "Disposition" means a transfer, gift, assignment, sale, pledge or other
disposition of all or any part of an Interest.
0.9 "Fiscal Year" means the calendar year.
0.10 "Interest" means, with respect to any Member, the Capital Account, the
Percentage Interest and all other rights with respect to the Company, of such
Member.
0.11 LLC Law" means the Delaware Limited Liability Company Act and any
successor statute, as amended from time to time.
0.12 "Loan and Option Agreement" shall refer to the agreement so titled
amongst the Company, Reno Energy LLC, ART LLC, FWC Energy LLC dated as of August
15, 1996 as amended.
0.13 "Managers" shall mean ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇
or any other person who becomes Manager in accordance with the terms of this
Agreement. If there shall be only one Manager the term "Managers" shall be
deemed to be singular.
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0.14 "Member" means each of the parties who executes a counterpart of this
Agreement as a Member and each of the parties who may hereafter become Members.
0.15 "Net Cash Flow" means all funds from whatever source which are
available for distribution (or payment of loans) to the Members, reduced by
payments of or provisions made for the debts, expenses and liabilities of the
Company, expenses incurred in connection with the collection of such proceeds,
and after reduction for allowances for reasonable reserves established by the
Managers.
0.16 "Net Profits and Net Losses" means the net taxable income or net
taxable loss of the Company, respectively, as determined for federal income tax
purposes, for each Fiscal Year of the Company, plus any income that is exempt
from federal income tax and minus expenditures that are not deductible in
computing federal taxable income and not properly chargeable to capital
accounts, in each case to the extent such items are not otherwise taken into
account in computing Net Profits or Net Losses.
0.17 "Note" shall refer to the $300,000 Note from Reno Energy LLC to the
Company dated August 9,1996 as amended.
0.18 "Option" means the option to purchase an interest in
Reno Energy LLC in accordance with Section 4 of the Loan and Option Agreement.
0.19 "Percentage Interest" means the percentage interest of a Member in the
Company at any time based upon the relative Capital Contribution of each Member.
The Percentage Interest of the Members as of the date hereof is set forth on
Schedule 1.
0.20 "Person" means any association, corporation, joint stock company,
estate, general partnership, limited association, limited liability company,
foreign limited liability company, joint venture, limited partnership, limited
liability partnership, natural person, real estate investment trust, business
trust or other trust, custodian, nominee or any other individual or entity in
its own or any representative capacity.
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1 FORMATION OF THE COMPANY
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1.1 Formation. On July 12, 1996, the Company was organized as a Delaware
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limited liability company by the filing of the Certificate of Formation with the
Delaware Department of State. This Agreement is executed and delivered pursuant
to the LLC Law.
1.2 Name. The name of the Company is NRG Company LLC, and its business
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shall be carried on in such name with such variations and changes as the
Managers deem necessary to comply with requirements of the jurisdictions in
which the Company's operations are conducted.
1.3 Principal Address. The principal address of the Company in the State
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of Delaware shall be c/o U.S. Energy Systems, Inc. ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. The Company shall have such other offices
as the Managers shall determine and as to which the Managers shall promptly
notify all Members.
1.4 Term. The term (the "Term") of the Company commenced upon the filing
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of the Certificate of Formation with the Delaware Department of State and shall
continue until December 31, 2045 unless earlier terminated upon the events of
dissolution set forth in Section 18-801 of the LLC Law or as otherwise provided
in this Agreement.
1.5 Title to Company Property. All of the Company's right, title and
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interest in tangible property, intangible property, real property, personal
property and other assets acquired by the Company shall be held in the name of
the Company as an entity. Upon the acquisition of any such property, the
Managers shall execute such documents as may be necessary to reflect the
Company's ownership interest in such property. No Member shall have an
ownership interest in any property of the Company in his individual name or
right and each Member's Percentage Interest shall be personal property for all
purposes.
1.6 Purposes of the Company. The purposes of the Company are as follows:
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(a) to extend one or more loans to Reno Energy, LLC, a Nevada limited
liability company ("Reno"), in accordance with the terms of the Note and in
connection therewith to receive, extend and exercise the Option.
(b) to engage in any activity that limited liability companies may engage in
under the LLC Law reasonably related to the activities described in clause (a)
above. The Company shall not engage in any other business activities without
the unanimous consent of the Members.
2 MEMBERS' CAPITAL CONTRIBUTIONS
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2.1 Capital Contribution.
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(a) First Stage Capitalization. Each Member shall initially
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contribute an amount of cash to the capital of the Company as is set forth on
Schedule 1 which in the aggregate shall total $70,000.00 (the "First Stage
Capitalization"). The First Stage Capitalization shall be used to fund an
initial loan to Reno of $50,000.00 in accordance with the Note and the remainder
shall be used to pay out of pocket expenses of the Company and for Company
working capital.
(b) Upon consummation by U.S. Energy Systems, Inc. of its secondary
public offering or upon such other date determined by a majority of the
Managers, the Company shall issue an optional capital call notice to the Members
for up to an additional $280,000.00 (the "Second Stage Capitalization"). The
Members shall have 5 business days from the receipt of the aforementioned notice
to contribute their pro-rata share to the Second Stage Capitalization on a pro
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rata basis in accordance with their Membership Interests. In the event all of
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the Members do not contribute the pro-rata share, the contributing Member may
make up the short-fall pro-rata or as they otherwise agree. In the event the
then Members do not fully fund the Second Stage Capitalization pursuant to the
two preceding sentences, the Managers shall be authorized to make up the short-
fall by issuing new Membership Interests in the Company to new Members
(including, without limitation U.S. Energy Systems, Inc.) on terms which, in
their discretion, they deem appropriate provided that such terms shall be non-
dilutive to the then Members. All Members shall cooperate with the Company in
such sale of new Membership Interests and shall execute and deliver such
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documentation as the Managers deem necessary in order to consummate such sale.
(c) Third Stage Capitalization. Upon a vote of a majority of the
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Managers to exercise and/or extend the Option, the Company shall issue an
optional call to all then Members for 105% of the sum required for such exercise
or extension as provided in the Loan and Option Agreement (the "Third Stage
Capitalization"). The then Members shall have 10 business days from the receipt
of the aforementioned notice to contribute their pro-rata share of the Third
Stage Capitalization in accordance with their then Membership Interests. If all
of the Members so contribute their pro-rata share, the Company shall proceed to
extend or exercise the Option as the case may be. In the event all of the
Members do not contribute their pro-rata share, the contributing Members shall
have the right but not the obligation to form a new entity which shall be
capitalized by the contributing members (to the "Third Stage Capitalization")
pro rata, based on their interests in the Company or as they otherwise agree,
and the Company shall assign its entire right, title and interest to the Option
to such new entity for $1.
3 MEMBERS; PERCENTAGE INTERESTS
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3.1 Members. The Members are those Persons who execute a
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counterpart of this Agreement as Members.
3.2 Initial Percentage Interests. The names and addresses of
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the Members and their initial respective Percentage Interests as of the date
hereof are set forth on Schedule 1 hereto.
3.3 The Members' Percentage Interests are subject to modification in
accordance with Section 2 above.
4 INTEREST ON CAPITAL CONTRIBUTIONS
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4.1 No Interest on Capital Contributions. Members shall not receive
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interest on Capital Contributions.
4.2 No Rights to Withdraw Capital Contributions. Members shall not have
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the right to demand the return of or otherwise withdraw their Capital
Contributions, except as specifically set forth in this Agreement.
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5 CAPITAL ACCOUNTS
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Each Member's Capital Account shall be maintained in accor-
dance with the following provisions:
5.1 Maintenance of Capital Accounts. A separate Capital Account shall be
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maintained on the books of the Company for each Member in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv). The Capital Accounts shall be
adjusted, as described below, (i) as of December 31 of each year, (ii)
immediately prior to the acquisition of an Interest by any Person, (iii)
effective as of the date of the sale of the Company (whether by way of asset
sale, sale of Interests or merger) in which the Members immediately prior to
such transaction shall cease to own a majority of the Interests, and (iv) on the
date of dissolution of the Company.
5.2 Initial Capital Account. Each Member's Capital Account shall initially
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equal the cash such Member contributes to the capital of the Company upon his
admission to the Company.
5.3 Increases in Capital Account. Each Member's Capital Account shall
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be increased by (a) the amount of any additional cash or the fair
market value of property (net of liabilities secured by such contributed
property that the Company is considered to assume or take subject to under Code
Section 752) subsequently contributed by such Member to the capital of the
Company, and (b) the amount of any profits or items thereof allocated to such
Member pursuant to Section 5.5.
5.4 Reductions in Capital Account. Each Member's Capital Account shall be
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reduced by (a) the amount of all cash distributions made to such Member to the
extent provided in Section 6 hereof, (b) the fair market value of any property
(net of liabilities secured by such distributed property that the Member is
considered to assume or take subject to under Code Section 752) distributed by
the Company to such Member, and (c) the amount of any losses or items thereof
allocated to such Member pursuant to Section 5.5 hereof.
5.5 Net Profits and Net Losses. Net Profits earned by the Company since
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the last date on which Net Profits shall have been allocated shall be credited
to each Member's Capital Account
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and Net Losses incurred by the Company since the last date Net Losses shall have
been allocated shall be debited from each Member's Capital Account. Net Profits
and Net Losses shall be allocated to the Members in proportion to their
respective Percentage Interests subject to Section 5.7.1 below.
5.6 Special Allocations.
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5.6.1 Subject to Treasury Regulation Section 1.704-1(b)(2)(iv), no
adjustment shall be made to any Member's Capital Account as a result of the use
by the Company of property owned by such Member, notwithstanding the fact that
such Member is not compensated for the use of such property.
5.6.2 Payment by the Company to a Member for services rendered shall
be treated by the Company as an expense. If such payments are treated by the
Internal Revenue Service for Federal income tax purposes as a distribution, then
Company income, in an amount equal to such payment, shall be allocated to such
Member, for Federal income tax purposes.
5.7 Tax Allocations.
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5.7.1 Transfer or Change in Company Interest. If the respective
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Interests of the existing Members in the Company change or if an Interest is
transferred to any other person or entity, then with respect to the applicable
Fiscal Year all income, gains, losses, deductions, tax credits and other tax
incidents resulting from the operations of the Company shall be allocated, as
between transferor and transferee, by taking into account their varying
Interests in accordance with Section 706 of the Code. A transferee of an
Interest in the Company shall succeed to the Capital Account of the transferor
Member to the extent it relates to the transferred Interest. The Members hereby
agree to be bound by the provisions of this Section 5.7 in reporting their
respective shares of items of Company income, gain, loss, deduction and credit.
6 DISTRIBUTIONS OF NET CASH FLOW
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Net Cash Flow shall be distributed or paid to the Members at such time or
times as the Managers shall determine, and in accordance with the Members'
respective Percentage Interests.
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7 POWERS AND RESPONSIBILITIES OF THE MANAGERS
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7.1 Managers. The Managers as of the date of this Agreement are ▇▇▇▇▇▇▇▇
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▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇. Any Person who is not a Manager shall
not have any right to participate in the management of the Company except as
otherwise set forth in this Agreement. Other Persons may become Managers as
provided by this Agreement.
7.2 Management. The business and affairs of the Company shall be
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exclusively managed by its Managers, subject to the terms and conditions hereof.
The Managers shall direct, manage, and control the business of the Company to
the best of their ability. Except for situations in which the approval of the
Members is expressly required by this Agreement or by non-waivable provisions of
applicable law, the Managers shall have full and complete authority, power, and
discretion to manage and control the business, affairs, and properties of the
Company, to make all decisions regarding those matters and to perform any and
all other acts or activities customary or incident to the management of the
Company's business. All decisions by the Managers shall be based on a majority
vote of the Managers.
7.3 Number, Tenure and Qualifications. The Company initially shall have
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three (3) Managers, which shall be ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇, each of which shall serve as Managers until the earlier of (i) his
resignation, (ii) the sale or assignment by any Manager of his entire Interest,
or (iii) the election of other or additional Managers by a vote of the Members
holding not less than a majority Percentage Interest.
7.4 Resignation. Any Manager of the Company may resign
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at any time by giving written notice to the Members. The resignation of any
Manager shall take effect upon receipt of such notice.
7.5 Certain Powers of Managers. Without limiting the
generality of Section 7.2, but subject to Section 7.6 hereof the Managers, based
on a majority vote of the Managers shall have power and authority, on behalf of
the Company:
7.5.1 To purchase liability and other insurance to protect the Company's
property and business;
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7.5.2 To hold and own any Company real and/or personal properties in the
name of the Company;
7.5.3 To invest any Company funds temporarily including, without
limitation, in time deposits, short-term governmental obligations, commercial
paper, or other investments;
7.5.4 To execute on behalf of the Company all instruments and documents,
including, without limitation: checks, drafts, notes contracts and other
negotiable instruments, documents providing for the acquisition, or disposition
of the Company's property, and other instruments or documents necessary, in the
opinion of the Managers, to the business of the Company;
7.5.5 To employ employees, accountants, legal counsel, or other experts or
third parties to perform services for the Company and to compensate them from
Company funds;
7.5.6 To enter into any and all other agreements on behalf of the Company,
in such forms as the Managers may approve; and
7.5.7 Accept the Note from Reno Energy LLC and make the Loan
described thereunder; execute, deliver and perform the Loan and Option
Agreement, including any actions necessary to consummate the Option including
the negotiation and execution of any operating agreement respecting Reno Energy
LLC upon exercise of the Option.
7.5.8 To do and perform all other acts as may be necessary or appropriate
to the conduct of the Company's business.
7.6 Limitation on Managers' Authority. Notwithstanding the provisions
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of Sections 7.2 and 7.5 or any other provision of this Agreement to the
contrary, the Managers shall not take any of the following actions without the
approval of Members holding not less than 51% of the Percentage Interests:
7.6.1 Sell, transfer, convey or otherwise dispose of all or substantially
all of the assets of the Company.
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7.6.2 Dissolve the Company or wind up its affairs.
7.6.3 Incur obligations for borrowed money.
7.6.4 Admit any additional Members except as described in Section 2
hereof.
7.6.5 Take any action with respect to seeking protection under any
bankruptcy, insolvency or similar laws.
7.6.6 Give any guarantee or indemnity to secure the liabilities or
obligations of any person or entity.
7.6.7 Take any action with respect to the Company's engagement in any
merger, consolidation or similar business combination.
7.6.8 Create any charge or lien, other than a lien arising by
operation of law, or other encumbrance over the whole or any part of the
property or assets of the Company.
7.7 Liability for Certain Acts. The Managers shall perform their Managers'
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duties in good faith, in a manner they reasonably believe 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. A Manager who so
performs the duties of Manager shall not have any liability by reason of being
or having been a Manager of the Company. A Managers does not, in any way,
guarantee the return of the Members' Capital Contributions or a profit for the
Members from the operations of the Company. A Manager shall not be liable to
the Company or to any Member for any loss or damage sustained by the Company or
any Member, unless the loss or damage shall have been the result of fraud,
deceit, gross negligence, willful misconduct, or a wrongful taking by such
Manager.
7.8 Duty of Managers to Company. The Managers shall have the right to
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serve as directors, officers and shareholders of US Energy Systems, Inc. (and
they shall not be required to recuse themselves from any vote of the Managers
even if such vote would affect USE) and engage in such activities which are
unrelated to the Company as they deem appropriate and shall commit only such
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of their business time to the management and operation of the Company as may be
reasonably necessary.
7.9 Bank Accounts. The Managers may from time to time open bank accounts
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in the name of the Company, and designate the signatories thereon.
7.10 Indemnification of Managers. The Company shall, to the maximum extent
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permitted by applicable law, indemnify and hold harmless the Managers from and
against any and all Damages, including, without limitation, Damages incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from any of the foregoing by or before
any court or governmental, administrative or other regulatory agency, body or
commission, whether pending or threatened, whether or not a Managers is or may
be a party thereto, which arises out of, relates to or is in connection with
this Agreement or the management or conduct of the business or affairs of the
Company, except for any such Damages that are finally found by a court of
competent jurisdiction to have resulted primarily from the bad faith or
intentional misconduct of, or breach of this Agreement or knowing violation of
law by, the Managers seeking indemnification. The termination of any proceeding
by settlement shall not be deemed to create a presumption that the Managers
involved in such settlement acted in a manner which constituted bad faith,
intentional misconduct or a knowing violation of law. All judgments against a
Manager wherein such Manager is entitled to indemnification shall, to the extent
available, be satisfied from Company assets.
7.11 Not liable for Return of Capital. No Member, officer, director,
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Managers , member, stockholder, partner, employee or agent of any Member shall
be personally liable for the return of the Capital Contributions of any other
Member or any portion thereof, and such return shall be made solely from
available Company's assets, if any.
8 RESPONSIBILITY OF MEMBERS
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8.1 Limitation of Liability. The Members shall have no
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personal liability with respect to the liabilities, obligations, debts or losses
of the Company. Without limiting the foregoing, each Member's liability shall
be limited as set forth in this Agreement, the LLC Law and other applicable law.
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9 MEETINGS OF MEMBERS
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9.1 Annual Meeting. There shall be no requirement that annual meetings of
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the Members be held.
9.2 Special Meetings. Special meetings of the Members, for any purpose or
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purposes, unless otherwise prescribed by statute, may be called by a Manager or
by any Member or Members.
9.3 Place of Meetings. The Members may designate any place, either within
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or outside the State of New York, as the place of meeting for any of the
Members. All meetings may be held telephonically as provided by Section 403 of
the LLC Law.
9.4 Notice of Meetings. Written notice stating the place, day and hour of
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the meeting and the purpose or purposes for with the meeting is called shall be
delivered no fewer than 10 nor more than 50 days before the date of the meeting,
either personally or by mail, by or at the direction of the Managers or Person
calling the meeting, to each Member entitled to vote at the meeting.
9.5 meeting of All Members. If all of the Members shall meet at any time
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and place, either within or outside of the State of New York, and consent to the
holding of a meeting at that time and place, the meeting shall be valid without
call or notice, and at the meeting any lawful action may be taken.
9.6 Record Date. For the purpose of determining Members
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entitled to notice of or to vote at any meeting of Members or any
adjournment of the meeting, or Members entitled to receive
payment of any distribution, or to make a determination of Members for any other
purpose, the date on which notice of the meeting is mailed or the date on which
the resolution declaring the distribution is adopted, as the case may be, shall
be the record date for the determination of Members. When a determination of
Members entitled to vote at any meeting of Members has been made as provided in
this Section, the determination shall apply to any adjournment of the meeting.
9.7 Quorum. Members holding at least 66 2/3% of all Percentage Interests
in the Company, represented in person or by proxy, shall constitute a
quorum at any meeting of Members. In
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the absence of a quorum at any meeting of Members, a majority of the Percentage
Interests in the Company so represented may adjourn the meeting from time to
time for a period not to exceed 60 days without further notice. However, if the
adjournment is for more than 60 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each Member of record entitled to vote at the meeting. At an
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. The Members present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
during the meeting of that number of Percentage Interests in the Company whose
absence would cause less than a quorum.
9.8 Manner of Acting. If a quorum is present, the affirmative
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vote of Members holding 51% of the Percentage Interests in the Company shall be
the act of the Members, unless the vote of a greater or lesser proportion or
number is otherwise required by the LLC Law, the Articles of Organization or by
this Agreement. Unless otherwise provided in this Agreement or required under
applicable law, Members who have an interest in the outcome of any particular
matter upon which the Members vote or consent may vote or consent upon any such
matter and their Percentage Interest in the Company, vote or consent, as the
case may be, shall be counted in the determination of whether the requisite
matter was approved by the Members.
9.9 Proxies. At all meetings of Members, a member may vote in person or by
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proxy executed in writing by the Member or by a duly authorized attorney-in-
fact. The proxy shall be filed with the Managers before or at the time of the
meeting. No proxy shall be valid 12 months from the date of its execution
unless otherwise provided in the proxy.
9.10 Waiver of Notice. When any notice is required to be given to any
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Member, a waiver of the notice in writing signed by the Person entitled to the
notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of the notice.
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10 DISPOSITION OF MEMBERS' INTERESTS
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10.1 Restriction on Disposition by Members. Each Member agrees that no
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part of an Interest may be Disposed of, except as permitted by this Section 10.
10.2 Permitted Disposition by Members. All or part of the Interest of any
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Member may be Disposed by will, or in the case of intestacy, by the laws of
descent and distribution, to any person.
10.3 Consent to a Disposition. Except for Dispositions described in
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Section 10.2, a Member may not Dispose of his Interest, or any portion thereof,
without the prior written consent of a majority of the Percentage Interests.
Any Disposition or attempted Disposition of any Interest in violation of this
Section 11 shall be void, and the Company shall not record such Disposition on
its books and records or any purported transferee as the owner of the Interest
for any purpose.
10.4 Effect of Disposition. At the time of the Disposition of any
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Member's Interest, all of the rights possessed as a Member in connection with
the assigned Interest (other than the right to share in cash distributions,
profits or losses and tax items), which rights otherwise would be held either by
the assignor or the assignee, shall terminate unless the assignee is admitted as
a substitute Member pursuant to the provisions of Section 10.5.
10.5 Admission as a Substitute Member. No purchaser, assignee, donee, or
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other transferee shall become a substituted Member unless all of the following
conditions have been satisfied:
10.5.1 The Disposition complies with Section 10.2 or 10.3 of this
Agreement;
10.5.2 The prospective transferee has executed an instrument, in
form and substance satisfactory to the Managers, accepting and agreeing
to be bound by all terms and conditions of this Agreement and to pay
all expenses of the Company in effecting the Disposition; and
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10.5.3 All requirements of the LLC Law have been complied with by the
transferee and the transferring Member and the Company.
10.6 Transferor Remains Liable for Existing Obligations. A Disposition of
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an Interest by a Member, including Dispositions of all or less than all rights
hereunder, shall not relieve the Member of any obligations under this Agreement,
the LLC Law, or otherwise imposed by law, arising prior to such Disposition.
10.7 Effective Date of Disposition. A Disposition of a Member's Interest
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shall be effective as of the first day of the calendar month succeeding the
month in which the Disposition occurs. All allocations and distributions made
after such effective date on account of the Disposed Interest shall be allocated
and paid to the transferee. In the absence of notice to the Managers of the
Disposition of an Interest, whether by operation of law or otherwise,
administrators or legal representatives shall acquit the Company and the
Managers of liability, to the extent of such payment made, to any other person
and/or entity who may be interested in such payment.
11 BOOKS AND RECORDS; ACCOUNTING AND TAX ACCOUNTING
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11.1 Books and Records; Right to Inspect. The Company shall keep adequate
-----------------------------------
books and records reflecting all financial activities of the Company. The books
and records will be based on the accrual method of accounting in accordance with
(i) generally accepted accounting principles, as consistently applied, and (ii)
the Code. Such books and records may be inspected and audited by any Member or
his duly authorized representative at any time during business hours, at the
principal office of the Company.
11.2 Tax Return; Tax Matters Partner. The Managers shall cause the Company
-------------------------------
to file a Federal income tax information return and all other tax returns
required to be filed by the Company for each taxable year or part thereof.
Within three months after the end of each taxable year of the Company, the
Managers shall cause each Member to be furnished with information necessary for
preparing such Member's income tax return. In connection with any examination
of the Company's Federal income tax information returns, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ is
hereby appointed as the "tax matters partner". As such, it shall have
substantial responsibility and
16
authority in connection with any examination of the Company's Federal income tax
information returns, including, without limitation, the authority to enter into
agreement with the Internal Revenue Service on behalf of each Member to extend
the period for assessing against such Member a Federal income tax deficiency
attributable to "partnership items" as that term is defined in Section
6231(a)(3) of the Code.
11.3 Federal Income Tax Elections. The "tax matters partner" is authorized
----------------------------
to cause the Company to make such elections for Federal income tax purposes as
it deems advisable, including, in the event of a transfer of all or part of the
Percentage Interest of any Member, an election pursuant to Section 754 of the
Code to adjust the basis of the assets of the Company.
11.4 Partnership Status. It is the intention of the Members that the
------------------
Company shall be taxed as a "partnership" for federal, state and local income
tax purposes. The Members shall take all reasonable actions, including the
amendment of this Agreement and the execution of other documents, as may be
required in order for the Company to qualify as a partnership for these
purposes.
12 DISSOLUTION AND TERMINATION
---------------------------
12.1 Events Causing Dissolution. The Company shall be dissolved upon the
--------------------------
earlier to occur of the following:
12.1.1 December 31, 2045;
12.1.2 the determination of Members holding not less than 51%
of the Percentage Interests to dissolve the Company; or
12.1.3 subject to Section 13.2, the bankruptcy, death, insanity,
retirement, resignation or expulsion (an "Event of Withdrawal") of any
Member, or any other event that under the LLC Law causes the
dissolution of a limited liability company.
12.2 Withdrawal of a Member and Continuation of Company. Upon the
--------------------------------------------------
occurrence of an Event of Withdrawal of any Member, the Company will not be
dissolved if, within 90 days after such event, the remaining Members holding a
majority of Percentage
17
Interests (among such remaining Members) agree in writing to continue the
business of the Company.
12.3 Liquidation of Assets Upon Dissolution. Upon dissolution of the
--------------------------------------
Company, a Certificate of Cancellation shall be filed pursuant to Section 18-203
of the LLC Law and the Managers shall cause the Company's assets to be sold in
such manner as to obtain the highest price therefor. Pending the sale thereof,
the Managers may continue to operate and otherwise deal with the assets of the
Company.
12.4 Distribution of Liquidation Proceeds. The proceeds of any sales made
------------------------------------
pursuant to Section 12.3, plus any unsold assets of the Company, shall be
distributed as follows:
12.5 First, all Company debts and liabilities to Persons other than Members
shall be paid and discharged;
12.5.1 Second, to the setting up of any funds or reserves which the
Managers may deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Company. Such funds or reserves shall be
placed in escrow by the Managers for the purpose of disbursing such amounts in
payment of any of the contingencies, liabilities or obligations of the Company
and, at the expiration of such period as the Managers shall deem advisable, the
balance remaining shall be distributed in the manner hereinafter provided;
12.5.2 Third, to the repayment of any loans or advances that may have
been made by any of the Members to the Company;
12.5.3 Fourth, to any Members with positive Capital Accounts (after
taking into account any adjustments to Capital Accounts pursuant to Section 5
hereof) in proportion to such Members' Capital Account balances until such
Capital Account balances have been reduced to zero; and
18
12.5.4 Finally, to the Members in proportion to their respective
Percentage Interest in the Company.
13 AMENDMENTS
----------
Amendments to this Agreement may be adopted by the affirmative vote of those
Members holding 51% of the Percentage Interests in the Company; provided,
however, that if any such amendment would increase the liability or required
capital contributions of any Members or change their rights and interest in cash
distributions, then the consent of such affected Members shall be required in
order for such amendment to be effective with respect to such affected Members.
14 MISCELLANEOUS
-------------
14.1 Prohibition Against Partition. Each Member hereby permanently waives
-----------------------------
and relinquishes any and all rights to cause all or any part of the property of
the Company to be partitioned, it being the intention of the Members to prohibit
any Member from bringing a suit for partition against the other Members, or any
of them.
14.2 Choice of Law. This Agreement and all matters relating to the Company
-------------
shall be governed and construed in accordance with the law of the State of
Delaware.
14.3 Notices. Notices or other communications of any kind
-------
and shall be.deemed given when sent as provided in subsection 14.3.1 to the
Members at the addresses set forth in Schedule 1 hereto.
14.3.1 All notices required or permitted under this Agreement shall
be in writing and shall be sufficiently given only if (a) mailed by registered
or certified mail, return receipt requested, in which case they shall be
effective upon the actual receipt or (b) sent by expedited or overnight delivery
service with return receipt, in which case they shall be effective when
delivered. The address for notices may be changed by any Member by written
notice to the Managers.
14.4 Execution in Counterpart; Binding Effect. This
----------------------------------------
Agreement may be executed in counterparts and shall be binding
upon each party executing this or any counterpart. This Agree-
19
ment shall be binding upon and inure to the benefit of the parties, their heirs,
devises, personal representatives, successors and permitted assigns.
14.5 Entire Agreement. This Agreement constitutes the entire contract
----------------
between the parties and supercedes all previous agreements and understandings.
14.6 Section Headings. The section and subsection headings in this
----------------
Agreement are for convenience only, and shall not be used to construe or
interpret this Agreement.
14.7 Section References. Except as otherwise indicated, all references to
------------------
Sections shall refer to sections or subsections of this Agreement.
14.8 Further Assurances. The Members agree to execute any additional
------------------
documents and/or agreements and writings and take any other actions which may be
necessary or expedient in connection with the organization of the Company and
the achievement of its purposes; including without limitation (a) any amendments
to this Agreement and such certificates and other documents as the Members deem
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, tax
returns and other documents as may be required of the Company or its Members by
the laws of the United States of America or any jurisdiction in which the
Company conducts or plans to conduct business, or any political subdivision or
agency thereof.
14.9 The Members consent to the immediate assignment of the Company's right
to a 1% Banking Fee described in Section 6 of the Loan and Option Agreement to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ for $1 in consideration of the fact that they,
rather than the Company, shall effect the financing referred to therein.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and date first above written.
NRG Company, LLC
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------
20
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Manager
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
As Member and Manager
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
As Member and Manager
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
As Member and Manager
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
As Member
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
As Member
/s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------
▇▇▇▇ ▇▇▇▇▇
As Member
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
As Member
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
As Member
21
AMENDED SCHEDULE 1
------------------
FIRST STAGE CAPITALIZATION
Amount of
Name and Address Capital Percentage
of Member Contribution Interest
----------------- ------------ ----------
U.S. ENERGY SYSTEMS, INC. $10,000 14.28%
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ $10,000 14.28%
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $10,000 14.28%
c/o Cramer ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ $10,000 14.28%
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ $10,000 14.28%
▇▇▇▇▇ Capital Management
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $10,000 14.28%
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ $10,000 14.28%
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
22
AGREEMENT OF CONSENT, AMENDMENT AND WAIVER
------------------------------------------
This Agreement of Consent, Amendment and Waiver (the "Agreement") is
entered into as of this day of October, 1996 by and among NRG Company, LLC
(the "Company") and U.S. Energy Systems, Inc. ("USE"), ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇"),
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇.
Preliminary Statement
---------------------
A. The parties to this Agreement except USE are parties to a Limited
Liability Company Operating Agreement of NRG Company, LLC dated as of September
8, 1996 (the "Operating Agreement").
B. The parties wish to amend the Operating Agreement in certain
respects.
C. Accordingly, the parties wish to enter into this Agreement.
NOW, THEREFORE, in consideration of the preliminary statements and the
agreements contained herein and for other good, valuable and binding
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be bound hereby agree as follows:
Statement of Agreement
----------------------
1. The parties hereto irrevocably acknowledge and consent to (i) the
assignment by ▇▇▇▇▇▇ and ▇▇▇▇▇ of their entire Membership Interests in the
Company (in
the aggregate 14.28%) to USE, (ii) the admission of USE as a Member of the
Company and (iii) any action taken by the Managers on behalf of the Company
which they deem advisable to implement the transactions described in clauses (i)
and (ii) above. Upon consummation of such transaction, Schedule 1 to the
Operating Agreement shall be deemed amended as set forth in the Amended Schedule
1 annexed hereto.
2. Section 2.1(b) of the Operating Agreement is amended to read as
follows:
"Upon consummation by U.S. Energy Systems, Inc. of its public offering
through ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc., U.S. Energy Systems, Inc. shall have the
right but not the obligation to make a capital contribution to the
Company of $280,000 (the "Second Stage Capitalization"). If U.S.
Energy Systems, Inc. fails to fund the Second Stage Capitalization by
November 1, 1996, the Company shall issue an optional capital call
notice to the Members for the Second Stage Capitalization. The Members
shall have 5 business days from the receipt of the aforementioned
notice to contribute their pro-rata share to the Second Stage
Capitalization in accordance with their Membership Interests. In the
event all of the Members do not contribute their pro-rata share, the
contributing Members shall have the right but not the obligation to
make up the short-fall pro-rata or as they otherwise agree. In the
event the then Members do not fully fund the Second Stage
Capitalization pursuant to the three preceding sentences, the Managers
shall be authorized to make up the short-fall by issuing new Membership
Interests in the Company to new Members on terms which, in their
discretion, they deem appropriate provided that such terms shall be
substantially similar to the terms and conditions upon which the then
Members invested in the Company. All Members shall cooperate with the
Company in such sale of new Membership Interests and shall execute and
deliver such documentation as the Managers deem necessary in order to
consummate such sale."
2
3. The parties hereto agree that ▇▇▇▇▇▇ and ▇▇▇▇▇ may continue to serve
as Managers of the Company notwithstanding their sale of the Membership
Interests and irrevocably waive the provisions of Section 7.3(ii) of the
Operating Agreement but only to the extent they are inconsistent with the
consent contained in this paragraph.
4. Miscellaneous.
-------------
a. Enforceability. This Agreement is for the benefit of each of the
--------------
parties hereto and is intended to be legally binding and enforceable by each of
them in accordance with its terms.
b. Limited Effect. Other than as expressly provided herein, this
--------------
Agreement does not supersede the Operating Agreement which, except as
specifically modified hereby, remains in full force and effect.
c. Amendments. This Agreement may be amended only as provided in the
----------
Operating Agreement except that the second sentence of Section 2.1(b) of the
Operating Agreement, as amended by this Agreement, cannot be amended without the
consent of USE.
d. Headings. The headings contained in this Agreement are intended
--------
solely for the convenience of the parties to this Agreement and shall not affect
their rights hereunder.
e. Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties hereto in separate
3
counterparts, and delivered by means of facsimile transmission or
otherwise, each of which when so executed and delivered shall be deemed
to be an original and all of which when taken together shall constitute
but one and the same agreement. If any party hereto elects to execute
and deliver a counterpart signature page by means of facsimile
transmission, it shall deliver an original of such counterpart to each
of the other parties within ten (10) business days of the date hereof,
but in no event will the failure to do so affect in any way the
validity of the facsimile signature or its delivery.
f. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
NRG Company, LLC
By:________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Manager
U.S. Energy Systems, Inc.
As Member
By:_________________________
-------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
As Manager
4
----------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
As Manager
----------------------
▇▇▇▇▇▇ ▇▇▇▇▇
As Member and Manager
----------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
As Member
----------------------
▇▇▇▇▇▇ ▇▇▇▇▇
As Member
----------------------
▇▇▇▇ ▇▇▇▇▇
As Member
----------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
As Member
----------------------
▇▇▇▇▇▇ ▇▇▇▇▇
As Member
5