<PAGE>
File No. 70-8711
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
FORM U-1 APPLICATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
_______________________________________________
PUBLIC SERVICE COMPANY OF OKLAHOMA
212 East 6th Street
Tulsa, Oklahoma 74119-1212
(Names of company filing this statement and
address of principal executive office)
___________________________________________________
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
___________________________________________________
Shirley S. Briones, Treasurer
Public Service Company of Oklahoma
212 East 6th Street
Tulsa, Oklahoma 74119-1212
Stephen J. McDonnell, Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Name and addresses of agents for service)
<PAGE>
Public Service Company of Oklahoma (the "Company"), an Oklahoma
corporation and a wholly-owned electric utility subsidiary of Central and
South West Corporation ("CSW"), a Delaware corporation and a registered
holding company under the Public Utility Holding Company Act of 1935, as
amended (the "Act") hereby files this Amendment No. 1 to the Form U-1
Application in file No. 70-8711 for the purpose of amending the Application in
the manner described below. In all other respects, the Application as
previously filed will remain the same.
Item 6. Exhibits and Financial Statements
Item 6 is hereby amended to file the following exhibits:
Exhibit 5 -
Agreement dated as of July 17, 1995 by and among the Company, the
RIKA Companies and certain Individuals.
Exhibit 6 -
Software Application and Development Agreement dated as of July 17,
1995 by and between the Company and RIKA.
Exhibit 7 -
Form of Member Agreement by and between the Company and the RIKA
Companies.
Exhibit 8 -
Form of Articles of Organization of RIKA Management Company, L.L.C.
Exhibit 9 -
Form of Operating Agreement of RIKA Management Company, L.L.C.
Exhibit 10 -
Form of Articles of Organization of Universal Power Products
Company, L.L.C.
Exhibit 11 -
Form of Operating Agreement of Universal Power Products Company,
L.L.C.
Exhibit 12 -
Form of Articles of Organization of Automated Substation
Development Company, L.L.C.
Exhibit 13 -
Form of Operating Agreement of Automated Substation Development
Company, L.L.C.
Exhibit 14 -
Form of Articles of Organization of RC Training, L.L.C.
Exhibit 15 -
Form of Operating Agreement of RC Training, L.L.C.
<PAGE>
S I G N A T U R E
- - - - - - - - -
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, as amended, the undersigned company has duly caused this document
to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: October 25, 1995
PUBLIC SERVICE COMPANY
OF OKLAHOMA
By:/s/SHIRLEY S. BRIONES
Shirley S. Briones
Treasurer
<PAGE>
INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
- ------- -------- ------------
5 Agreement dated as of July 17, 1995 Electronic
by and among the Company, the RIKA
Companies and certain Individuals.
6 Software Application and Development Electronic
Agreement dated as of July 17, 1995
by and between the Company and RIKA.
7 Form of Member Agreement by and Electronic
between the Company and the RIKA
Companies.
8 Form of Articles of Organization of Electronic
RIKA Management Company, L.L.C.
9 Form of Operating Agreement of RIKA Electronic
Management Company, L.L.C.
10 Form of Articles of Organization of Electronic
Universal Power Products Company,
L.L.C.
11 Form of Operating Agreement of Electronic
Universal Power Products Company,
L.L.C.
12 Form of Articles of Organization of Electronic
Automated Substation Development
Company, L.L.C.
13 Form of Operating Agreement of Electronic
Automated Substation Development
Company, L.L.C.
14 Form of Articles of Organization of Electronic
RC Training, L.L.C.
15 Form of Operating Agreement of RC Electronic
Training, L.L.C.
<PAGE>
EXHIBIT 5
AGREEMENT
This Agreement (the "Agreement") entered into as of the 17th
day of July, 1995, by and among Public Service Company of Oklahoma, an
Oklahoma corporation ("PSO"); Richard H. Smith, a natural person ("Smith");
Monika Smith, a natural person ("Monika"); Dennis J. Loudermilk, a natural
person ("Loudermilk"); RIKA Management Company, L.L.C., an Oklahoma limited
liability company ("Management"); Universal Power Products Company, L.L.C., an
Oklahoma limited liability company doing business as "Relay Concepts"
("Marketing"); Automated Substation Development Company, L.L.C., an Oklahoma
limited liability company ("Development"); and RC Training, L.L.C., an
Oklahoma limited liability company ("Training").
W I T N E S S E T H:
In consideration of the mutual promises set forth herein, the
parties agree as follows:
1. Agreement to Enter into Member Agreement.
(a) PSO and Management are parties to a PSO Specific Software
Application and Development Agreement of even date herewith (the "R&D
Agreement"), pursuant to which PSO intends to pay up to $3.05 million to
Management for the purposes of funding the development of certain software for
use in substation automation (the "Software").
(b) Contemporaneously with the execution of the R&D Agreement,
PSO will make application to the Securities and Exchange Commission ("SEC")
for authority under the Public Utility Holding Company Act of 1935 to make
both an equity and debt investment in Management, to make an equity investment
in Marketing, and to acquire certain equity interests in Development and
Training, all as described in a Member Agreement in the form attached hereto
as Exhibit A (the "Member Agreement"). The Members of such companies will
include PSO, Smith, Monika and Loudermilk.
(c) The parties hereby irrevocably agree that, subject to
PSO's receipt of authority from the SEC to consummate the transactions
contemplated under the Member Agreement, they will execute and deliver the
Member Agreement, including any changes to the terms thereof required by the
SEC, unless such changes are material and objected to by any party hereto. If
such authority is not received from the SEC, PSO shall have no obligations
hereunder.
2. General.
(a) This Agreement constitutes the whole and entire agreement
between the parties pertaining to the subject matter hereof, and supersedes
all prior agreements or understandings. This Agreement may not be modified
except by an instrument in writing signed by all parties.
(b) The validity, construction and enforcement of, and the
remedies under, this Agreement shall be governed in accordance with the laws
of Oklahoma, except any choice of law provision of Oklahoma law shall not
apply if the law of a state or jurisdiction other than Oklahoma would apply
thereby.
(c) The parties to this Agreement agree that jurisdiction and
venue of any action brought to enforce, or to construe or determine the
validity of, any term or provision contained in this agreement shall properly
lie in the District Court of Tulsa County, Oklahoma, or the United States
District Court for the Northern District of Oklahoma.
(d) This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective personal representatives,
successors and permitted assigns. No party may assign its, his or her
obligations hereunder without the prior written consent of all other parties;
provided, however, without the prior consent of any other party, PSO may
assign this Agreement (including the Note) to its parent corporation, Central
and South West Corporation, or any direct or indirect subsidiary of such
parent.
(e) Each party to this Agreement shall bear its, his or her
own expenses incurred in connection with negotiation, preparation and
execution of this Agreement and the transactions contemplated herein.
(f) The terms of this Agreement shall remain confidential
between the parties, except that without the consent of any other party, PSO
may disclose such terms and furnish a copy of this Agreement to its parent
corporation and affiliates described in Section 2(d) above, and to any
governmental agency having jurisdiction over PSO or any such entity.
(g) If any action is brought to enforce, or to construe or
determine the validity of, any term or provision of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees and costs of
the action.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
Public Service Company of Oklahoma
By:
Title:
Richard H. Smith
Monika Smith
Dennis J. Loudermilk
RIKA Management Company, L.L.C.
By:
Richard H. Smith, Manager
Universal Power Products
Company,L.L.C.
d/b/a Relay Concepts
By:
Richard H. Smith, Manager
Automated Substation
Development Company, L.L.C.
By:
Richard H. Smith, Manager
RC Training, L.L.C.
By:
Richard H. Smith, Manager
<PAGE>
EXHIBIT 6
SOFTWARE APPLICATION DEVELOPMENT AGREEMENT
THIS AGREEMENT is entered effective as of July 17, 1995
between:
Public Service Company of Oklahoma (herein "PSO")
212 East 6th Street
Tulsa, OK 74119-1212
and
RIKA Management Company, LLC (herein "RMC")
11708 South Canton
Tulsa, OK 74137
WHEREAS, PSO desires that RMC assist with and perform the
development of certain software applications described herein.
NOW THEREFORE, for good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the parties agree as
follows:
1. Relationship of the Parties
1.1. RMC is engaged by PSO as an independent contractor to
assist with and perform the development of certain substation automation
software applications which are hereinafter described (the "Software").
1.2. Nothing contained in this Agreement shall be deemed to
prevent RMC from performing development or other services for other parties.
2. Development of the Software
2.1. RMC shall develop the Software for PSO in accordance
with the concepts, specifications, schedules and limitations set forth in
(the "Specifications").
2.1.1 The parties anticipate that the Specifications
will undergo change during the early development stages. Until
delivery of the Software to PSO, PSO will have the right to
change the Specifications with the express written consent of
RMC.
2.2. PSO will designate a "Project Director" who will be
authorized to provide RMC with such information as it may require from time to
time in order to perform its services under this Agreement. The designated
Project Director will also be authorized to act on behalf of PSO, to issue
instructions to RMC, and to execute on behalf of PSO any changes to the
Agreement or its schedules. RMC may rely on any action of the Project
Director as being the authorized act of PSO. PSO will name the designated
Project Director in Schedule 2, and may change the Project Director only after
first giving written notice of such change, together with the identity of the
new Project Director, to RMC.
3. Development Fee
3.1. In consideration of RMC's performance of services in
connection with the development of the Software for PSO, PSO shall compensate
RMC as set forth herein.
3.2 Payment shall be made to RMC as follows:
3.2.1 $500,000.00 will be payable upon execution of
this Agreement.
3.2.2. $300,000.00 will be available July 31, 1995.
3.2.3. $200,000.00 will be available August 31, 1995.
3.2.4. $500,000.00 will be available September 30,1995.
3.2.5 $500,000.00 will be available December 29, 1995.
3.2.6 $1,050,000.00 will be available March 31, 1996.
3.3. A payment that is made available to RMC will not be
actually paid to RMC until RMC requests in accordance with this Agreement, and
will remain available to RMC only until the end of the Availability Period.
3.3.1 Each amount that is made available to RMC is known
as the "Available Payment".
3.3.2 The date an Available Payment first becomes
available to RMC is known as the "Availability Date" with
respect to such Available Payment.
3.3.3 The period beginning with an Availability Date and
ending on the Acceptance Date is known as the "Availability Period." The
"Acceptance Date" is the date on which PSO gives its Final Acceptance for the
Software.
3.3.4 The aggregate payments actually made by PSO to RMC
at any particular date is known as the "Actual Payment".
3.4. Each RMC request for payment shall be made to PSO in
writing.
3.5. To the extent PSO is obligated to pay an amount requested
to RMC, within 10 business days after receipt of the request for payment PSO
will deliver the amount requested to RMC in immediately available funds.
3.5.1 Unless the parties have mutually agreed otherwise,
PSO will not be obligated to pay to RMC any amount which, when added to the
Actual Payment theretofore made by PSO for the applicable Availability Period,
exceeds the aggregate Available Payments for the Availability Period.
3.5.2 Unless the parties have mutually agreed otherwise,
PSO will not be obligated to pay to RMC any requested amount if an uncured
Event of Default has occurred with respect to RMC.
3.5.3 In the event any requested payment is not timely
made, and payment is not otherwise excepted, then PSO will be additionally
obligated to pay interest on the unpaid amount at the rate of 8.0% per annum
from the due date of such payment to the date of actual receipt by RMC.
3.6. To the extent RMC does not request payment of an
Available Amount to it on or before the end of the Availability Period, RMC's
right to receive payment of such Available Amount will lapse.
3.7. Each payment actually made to RMC will become subject to
the provisions of the Member Agreement when and if this Agreement terminates
by reason of the Member Agreement becoming effective.
3.8. The payments by PSO hereunder are exclusive of federal,
state and local excise, sales, use and other taxes now or hereafter levied or
imposed on the performance of this Agreement or on the Software and services
provided hereunder. PSO shall be responsible for and shall pay any use taxes
levied or imposed by the jurisdiction in which the Software is installed and
that are based upon PSO's use of the Software or on the services performed by
RMC in connection therewith. Any other taxes, including personal property
taxes and any taxes or amount due in whole or in part because of any failure
by RMC or its agents to file any return or information required by law, rule
or regulation, shall be borne by RMC. Any taxes included in an invoice
submitted to PSO by RMC shall be listed as separate line item.
4. Delivery
4.1. On or about the Delivery Date (as set forth in the
Specifications), RMC shall deliver a machine executable copy of the Software
on appropriate media along with any other deliverables required by the
Specifications set forth in Schedule 1.
5. Final Acceptance
5.1. PSO will have a period of 90 days from the Delivery Date
to give its Final Acceptance of the Software, or to reject the Software as not
complying with the specifications under this Agreement.
5.2. PSO may reject the Software only if it does not comply
with the specifications under this Agreement.
5.3. The date on which PSO renders its Final Acceptance of the
Software is known as the "Acceptance Date".
6. Maintenance
6.1. During the Warranty Period, RMC shall use its best
efforts to correct significant Software errors reported in writing to RMC by
PSO. Notification of such errors by PSO must be properly documented and
forwarded to RMC in a timely manner.
6.2. RMC shall deliver such corrections to PSO for
installation by PSO with such assistance of RMC as PSO may reasonably request.
6.3. After the end of the Warranty Period, RMC will provide
maintenance and support services to PSO upon such terms and conditions as the
parties shall agree. The maintenance and support services to be provided are
described in Schedule 3.
7. Warranty
7.1. RMC warrants that:
7.1.1 For a period of 1 year, beginning with the
Acceptance Date ("Warranty Period"), the Software will perform substantially
in with its Specifications in all material respects, the Software shall be
compatible with and capable of efficiently operating on the type CPU(s) on
which the Software is installed, that the Software shall conform to and
perform in accordance with all applicable Software descriptions and
Specifications, and that RMC shall, at no additional charge, furnish the
services described herein, to correct any defects and nonconformities and
place or maintain the Software in compliance with the standards set forth
herein. If RMC is unable to correct any defective or nonconforming Software
through the performance of Software Maintenance Services, RMC shall promptly
replace such Software without charge to PSO. All replacement Software must
comply with the requirements of this warranty provision.
7.1.2. On the Delivery Date, all documentation for the
Software shall be substantially free from defects in material and workmanship
and shall consist of the then current documentation for the corresponding
Software. In the event of any nonconformance with this warranty, RMC shall,
without charge, promptly take action to the correct any defects and bring the
documentation and Software into agreement.
7.1.3. All services furnished by RMC shall be performed by
properly qualified personnel of RMC in any orderly and professional manner
with a view toward minimizing any disruption of PSO's business operations and
optimizing PSO's use of the Software. Promptly after being informed of any
defect or nonconformity in such services, RMC shall correct or reperform the
defective or nonconforming services.
7.1.4. RMC warrants and represents that the Software is not
subject to any lien, claim or encumbrance inconsistent with the license rights
granted herein and that PSO shall be entitled to possess and use the Software
during the license term specified herein, without any interruption by RMC or
any party claiming by or through RMC, provided that PSO shall duly perform its
obligations hereunder.
7.2. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THERE ARE
NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, RESPECTING THIS
AGREEMENT OR ANY SOFTWARE, DOCUMENTATION OR SERVICES FURNISHED HEREUNDER BY
RMC.
8. Ownership Rights
8.1. Except as limited herein, PSO and RMC shall each have a
perpetual, non-exclusive and unrestricted, license to use, modify, sublicense,
sell or otherwise transfer the Software.
8.2. In the event that either PSO or RMC modifies the Software
in any way, whether for itself or for a third party, none of the rights to the
modification and the Software as modified that accrue to the modifying party
will accrue to the other party.
9. Source Code
9.1. Each of the parties will have an unrestricted right to
the Software source code, including all modifications in which the parties
have an interest.
9.2. However, each of the parties agrees that it will treat
the Software source code as confidential information of the other party and
will not disclose the contents of the source code to, or otherwise permit
access to the source code by, any third party without the express written
consent of the other party, which consent will not be unreasonably withheld.
9.2.1. This limitation will not apply to any disclosure of such
information to an employee or independent contractor engaged for the purpose
of maintaining or modifying the Software; provided that the contracting party
has required such person to execute a confidentiality agreement that
reasonably preserves and protects the confidential nature of such information.
9.2.2. This limitation will not apply to any disclosure of such
information that is required to be made by law or regulation.
10. Confidential Information and Trade Secrets
10.1. RMC, during the term of this Agreement, may have access
to, become familiar with, and be actively involved in the development of
various trade secrets and confidential information of PSO, as well as
information relating to PSO's customers and business, its plans, marketing
techniques, sales techniques, etc. (the "Proprietary Information") all of
which are recognized hereby as being immediately vested in and exclusively
owned by PSO or a RMC of PSO, unless specifically exempted or excepted from
the terms of this Agreement.
10.1.1. PSO agrees that it will identify in writing any
Proprietary Information that it wishes to protect under this
Agreement, and that any information not so identified will not
be considered Proprietary Information for purposes of this
Agreement.
10.1.2. Except as otherwise expressly provided in this
Agreement, RMC shall not directly or indirectly use, divulge, publish,
disclose, reveal, or communicate to any other person the Proprietary
Information. This prohibition will survive the termination of the Agreement.
10.1.2.1. RMC shall be entitled to disclose the
contents of any of the Proprietary Information to persons who
are then employees of PSO, and to employees of RMC, but only as
necessary to permit RMC to carry out the continued development
of the Software and its enhancements.
10.1.2.2. This limitation will not apply to any disclosure of
such information that is required to be made by law or
regulation.
10.2. PSO, during the term of this Agreement, may have access
to, become familiar with, and be actively involved in the development of
various trade secrets and confidential information of RMC, as well as
information relating to RMC's customers and business, its plans, marketing
techniques, sales techniques, etc. (the "Proprietary Information") all of
which are recognized hereby as being immediately vested in and exclusively
owned by RMC, unless specifically exempted or excepted from the terms of this
Agreement.
10.2.1. RMC agrees that it will identify in writing any
Proprietary Information that it wishes to protect under this
Agreement, and that any information not so identified will not
be considered Proprietary Information for purposes of this
Agreement.
10.2.2. Except as otherwise expressly provided in this
Agreement, RMC shall not directly or indirectly use, divulge,
publish, disclose, reveal, or communicate to any other person
the Proprietary Information. This prohibition will survive the
termination of the Agreement.
10.2.2.1. PSO shall be entitled to disclose the contents
of any of the Proprietary Information to persons who are then
employees of PSO, and to employees of RMC, but only as
necessary to permit PSO to carry out the continued development
of the Software and its enhancements.
10.2.2.2. This limitation will not apply to any
disclosure of such information that is required to be made by
law or regulation.
11. Duration and Termination
11.1. Unless earlier terminated as set forth below, the term
of this Agreement will begin on the date of its execution and will end on the
date of PSO's Final Acceptance of the Software.
11.2. This Agreement may be terminated before Final Acceptance
as set forth below:
11.2.1. PSO or RMC may terminate this Agreement without
any further obligation upon sixty (60) days prior written
notice whenever any of the following events occur:
11.2.1.1. Any material breach of this Agreement by
the other party which is not cured within the sixty (60) day
notice period;
11.2.1.2. Any failure of the other party to make
any payment as required under this Agreement, which is not
cured within the sixty (60) day notice period;
11.2.1.3 Any inability, financially or otherwise,
or failure of the other party to perform any material
obligation hereunder, which is not cured within the sixty (60)
day notice period.
11.2.2. This Agreement will automatically terminate at
such time as the Member Agreement becomes effective.
11.3. Except as otherwise specifically provided in the Member
Agreement, upon termination of this Agreement as provided above:
11.3.1. All provisions relating to confidentiality, trade
secrets, Proprietary Information, copyrights, trademarks,
patents, warranties and indemnities will remain in full force
and effect notwithstanding the termination of this Agreement.
11.3.2. If the Agreement is terminated before Final
Acceptance by PSO, PSO shall be entitled to the same non-
exclusive license to use the Software as it exists in its then
present state of completion that it would have been entitled to
receive under Section 8. However, all obligations of RMC under
Section 7 will be void and unenforceable.
11.3.3. All payments made to RMC prior to such
termination of the Agreement pursuant to Section 12.2.2. will
be treated as described in the Member Agreement.
12. Force Majeure
12.1. Neither party will be held liable for failure to fulfill
its obligations under this Agreement, if such failure is caused by any cause
beyond the reasonable control of such party, including (by way of example and
not as a limitation) flood, earthquake, extreme weather, fire, or other
natural calamity, or acts of governmental agency.
13. Limitation of Liability
13.1. NEITHER PARTY WILL BE ENTITLED TO INDIRECT, INCIDENTAL,
OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, BASED ON ANY BREACH OR
DEFAULT UNDER THIS AGREEMENT.
13.2. RMC will not be liable for any claim against PSO, and
PSO will not be liable for any claim against RMC, by a third party.
13.3. The liability of RMC for damages to PSO for any cause
whatsoever arising out of, or in any way related to this Agreement shall in no
event exceed the compensation actually paid by PSO to RMC. Similarly, the
liability of PSO for damages to RMC for any cause whatsoever arising out of,
or in any way related to this Agreement shall in no event exceed the
compensation actually paid by RMC to PSO.
13.4. A party to this Agreement will not be liable to the
other party or to any other person for any damages whatsoever which result
from
13.4.1. use of the Software by the other party;
13.4.2. the specifications or instructions given by the one to
the other with regard to the preparation of the Software;
13.4.3. the failure of the Software to be compatible with
software or hardware (except as provided in the specifications
for the Software), or to be compatible with any future software
or hardware upgrades; or
13.4.4. the negligence of the other party or any of its
employees, agents, or contractors, or of any other third party.
14. Assignment; Successors and Assigns
14.1. Except as otherwise provided herein, neither party shall
have the right to assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other. However, RMC may subcontract
with others to provide services in connection with its services hereunder.
14.2. This Agreement, subject to the prohibition against
assignment contained herein, shall inure to the benefit of and be binding upon
the parties hereto, their respective successors and assigns.
15. Waiver of Noncompliance
15.1. Failure by either of the parties to insist on strict
performance or to exercise a right when entitled, does not prevent that party
from doing so at a later time, either in relation to that default or any
subsequent one.
16. Choice of Law; Miscellaneous
16.1. This Agreement shall be interpreted and in force
pursuant to the laws of the State of Oklahoma. In the event either party
retains legal counsel to enforce any of the provisions of this Agreement, the
party against whom judgment is rendered shall pay all reasonable expenses,
costs and attorneys fees incurred by the other party.
16.2. This Agreement and the schedules attached hereto
constitute the entire Agreement between the parties and supersede any and all
agreements, whether written or oral, and this Agreement may be altered,
amended or modified only in a writing executed by the parties hereto.
16.3. All notices required or given under this Agreement shall
be in writing and shall be deemed given (i) when received, if personally
delivered; (ii) the day after it is sent, if sent by a recognized expedited
delivery service with next-day delivery requested; or (iii) five days after it
is sent, if mailed, postage prepaid, via certified mail, return receipt
requested. In each case, notice shall be sent to:
If to PSO: Public Service Company of Oklahoma
212 East 6th Street
Tulsa, OK 74119-1212
Attn: Thomas W. Reynolds
If to RMC: Richard H. Smith
11708 South Canton
Tulsa, OK 74137
or such other addresses as such party shall have specified by notice in
writing to the other party.
16.4. The headings contained herein are for the purpose of
convenience only and shall not be considered in interpreting this Agreement.
16.5. If any term, covenant, condition or provision of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provision hereof shall remain, at PSO's option,
in full force and effect and shall in no way be affected, impaired or
invalidated.
16.6. The officers who execute this Agreement on behalf of the
parties hereto hereby certify that they have been duly authorized by their
respective boards of directors to execute this Agreement by and on behalf of
the corporation.
16.7. All employees, agents or contractors of RMC will be
subject to all of PSO's occupational, safety, health and workplace rules and
procedures while at any PSO workplace or other facility.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed effective as of the date above first written.
PUBLIC SERVICE COMPANY OF OKLAHOMA
By:________________________________
Title:_____________________________
RIKA MANAGEMENT COMPANY, LLC
By:________________________________
Title:_____________________________
<PAGE>
SCHEDULES TO AGREEMENT
Schedule 1: SOFTWARE SPECIFICATIONS
Schedule 2: PROJECT DIRECTOR
Schedule 3: SUPPORT AND MAINTENANCE
<PAGE>
SCHEDULE 1
SOFTWARE SPECIFICATIONS AND SCHEDULES
DATED: ___________________, 199_.
PUBLIC SERVICE COMPANY OF OKLAHOMA
By:________________________________
Title:_____________________________
RIKA MANAGEMENT COMPANY, LLC
By:________________________________
Title:_____________________________
<PAGE>
SCHEDULE 2
PSO'S DESIGNATED PROJECT MANAGER
________________________________
Name
________________________________
Mailing Address
________________________________
City, State Zip
________________________________
Phone
________________________________
Fax
DATED: ___________________, 199_.
PUBLIC SERVICE COMPANY OF OKLAHOMA
By:________________________________
Title:_____________________________
RIKA MANAGEMENT COMPANY, LLC
By:________________________________
Title:_____________________________
<PAGE>
SCHEDULE 3
SOFTWARE MAINTENANCE
The maintenance services which RMC is to furnish for the
Software shall consist of the services listed below as well as any other
Software maintenance services which RMC furnishes to users of software similar
to the Software:
A) On-site or telephone consultation relative to the use and
trouble-shooting of the Software.
B) Notification of PSO of the existence of coding errors, bugs
and other problems in the Software promptly after the same
first become known to RMC.
C) Use of best efforts to correct any coding errors, bugs and
other problems in the Software brought to RMC's attention by
PSO or any other source.
D) Delivery to PSO's technical contacts of any and all
releases, fixes, corrections and changes, including without
limitation those relating to program code and documentation,
reflecting corrective action taken by RMC.
E) Furnishing of new releases, updates or version s developed
by RMC including any Windows, Windows NT or OS/2 versions to
improve the efficiency, reliability or function of existing
Software commands and features (such releases, updates and
versions shall be furnished by RMC to PSO as soon as they first
become available for distribution, but PSO may, at its option,
elect to accept or reject any new releases, updates or versions
which may already affect PSO's use of the Software or result in
added cost to PSO); provided however, that RMC shall only be
responsible for maintaining new releases of the Software.
F) On-site or telephone consultation relative to the
installation and use of corrected Software and new releases,
updates and versions.
Software maintenance services may be furnished by sending PSO's
technical contacts a diskette, tape or other suitable media containing each
correction, release, update or version, along with accompanying written
instructions for implementation and then current applicable documentation;
provided, however, that if the Software maintenance services require the
presence of a software specialist of RMC at the installation site, such on-
site service shall be furnished by RMC at no additional charge to PSO.
All maintenance services and other services furnished by RMC
shall be performed by properly qualified RMC personnel in an orderly and
professional manner with a view towards minimizing any interruption of PSO's
normal business operations. PSO agrees to furnish RMC with available test
runs and other data which might assist RMC in the location and correction of
coding errors, bugs and other problems in the Software reported by PSO.
RMC shall furnish PSO with a point of contact to enable PSO to
notify RMC of the need for Software maintenance services. After receipt of a
request for Software maintenance services, during the service period specified
above, RMC shall use its best efforts to commence performance of such services
within twelve (12) hours and shall work diligently to resolve problems
reported by PSO. PSO shall furnish RMC with reasonable assistance in
connection with RMC's performance of Software maintenance services hereunder.
PSO shall pay any additional Software maintenance costs caused
by the fault or negligence of PSO or by the modification of the Software by
PSO unless such modification is furnished or approved of in writing by RMC.
RMC shall not unreasonably withhold nor delay its approval for any
modification to the Software desired by PSO.
RMC shall furnish PSO with the maintenance services at the
then-standard fees after the Warranty Period for the Software. The fee for
such maintenance services is set forth hereinbelow, and RMC shall not increase
the fee for such maintenance services in any renewal term by a percentage
amount in excess of ten percent (10%) of the previous years' maintenance fee.
In no event shall the maintenance service fees exceed the then prevailing
fee(s) charged by RMC to any other PSOs for performance of similar services.
If at any time during the initial maintenance term or any
renewal term RMC is unable to correct any coding errors, bugs or other
problems in the Software which adversely affect PSO's use of the software, RMC
shall notify PSO thereof and PSO shall have the right to terminate maintenance
by giving ten (10) days written notice of termination to RMC. Promptly after
the date of such termination, RMC shall refund to PSO a prorata amount of the
maintenance charge paid by PSO for any unexpired portion of the then current
maintenance term.
Following the expiration of the specified warranty period, RMC
shall furnish PSO with the maintenance services described herein for an
initial term of one (1) year. After the initial one (1) year maintenance
term, maintenance shall renew automatically for additional one (1) year terms
unless PSO terminates maintenance by giving RMC thirty (30) days written
notice of termination prior to the end of the initial maintenance term or any
renewal term. Not more than ninety (90), nor less than sixty (60) days, prior
to the end of the initial maintenance term and any renewal term, RMC shall
notify PSO of the date on which maintenance will renew automatically. Unless
terminated by PSO and except as otherwise provided herein, RMC shall furnish
maintenance services hereunder for not less than five (5) years after the
commencement of such maintenance services and from year to year thereafter for
as long as RMC furnishes maintenance services for software substantially
similar to the Software.
<PAGE>
EXHIBIT 7
MEMBER AGREEMENT
This Member Agreement (the "Agreement") entered into as of the
____ day of ___________, 1995, by and among Public Service Company of
Oklahoma, an Oklahoma corporation ("PSO"); Richard H. Smith, a natural person
("Smith"); Monika Smith, a natural person ("Monika"); Dennis J. Loudermilk, a
natural person ("Loudermilk"); RIKA Management Company, L.L.C., an Oklahoma
limited liability company ("Management"); Universal Power Products Company,
L.L.C., an Oklahoma limited liability company doing business as "Relay
Concepts" ("Marketing"); Automated Substation Development Company, L.L.C., an
Oklahoma limited liability company ("Development"); and RC Training, L.L.C.,
an Oklahoma limited liability company ("Training").
W I T N E S S E T H:
In consideration of the mutual promises set forth herein, the
parties agree as follows:
1. Recitals.
(a) PSO and Management are parties to a PSO Specific Software
Application and Development Agreement dated as of , 1995 (the
"R&D Agreement"), pursuant to which PSO has paid an aggregate of $ to
Management for the purposes of funding the development of certain software for
use in substation automation (the "Software").
(b) Contemporaneously with the execution of the R&D Agreement,
PSO made application to the Securities and Exchange Commission ("SEC") for
permission under the Public Utility Holding Company Act of 1935 to make both
an equity and debt investment in Management, to make an equity investment in
Marketing, and to acquire certain equity interests in Development and
Training, all as hereinafter described. Such SEC approval has now been
obtained.
(c) The parties now desire to enter into this Agreement (i) to
effect the conversion by PSO of the $_____________ it has paid to Management
to fund the development of the Software, into a loan to Management under the
terms hereinafter described; (ii) to set forth the terms of PSO's commitment
to loan additional funds to Management to complete the development of the
Software; (iii) to set forth the rights of PSO and its affiliates with respect
to the Software; (iv) to pay an additional Four Hundred Fifty Thousand Dollars
($450,000) to Marketing for the purposes hereafter described; and (v) to
memorialize the parties' respective rights and obligations with respect to the
management of the businesses in which Management, Marketing, Development, and
Training (collectively, the "Companies," and individually a "Company") intend
to engage, all as described in the Companies' Business Plan (hereafter
defined).
(d) Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to them in the Operating Agreement (as
hereafter described) of the Company to which the term pertains.
2. Amendments to Charter Documents.
Contemporaneously with the execution and delivery of this
Agreement, Smith, Monika, and Loudermilk shall effect the following amendments
to the Articles of Organization and Operating Agreement of their respective
Companies:
(a) Management. Smith and Monika hereby agree to vote their
respective interests in Management to cause the execution and delivery of (i)
the Amended and Restated Articles of Organization of Management in the form
set forth as Exhibit A, and the filing of such document with the Oklahoma
Secretary of State; and (ii) the Amended and Restated Operating Agreement of
Management in the form set forth as Exhibit B.
(b) Marketing; Development; Training. Smith, Loudermilk and
Management hereby agree to vote their respective interests in Marketing,
Development and Training to cause the execution and delivery of (i) the
Amended and Restated Articles of Organization of each of Marketing,
Development, and Training, in the forms set forth as Exhibits C, E and G,
respectively, and the filing of each such document with the Oklahoma Secretary
of State; and (ii) the Amended and Restated Operating Agreement of each of
Marketing, Development, and Training in the forms set forth as Exhibits D, F
and H, respectively.
3. PSO's Investment in Development and Loan to Management.
(a) Subject to the provisions of Section 6, Seven Hundred
Fifty Thousand ($750,000) of the $ previously paid by PSO to
Management pursuant to the R & D Agreement (which Management has in turn,
loaned to Development to fund development of the Software) is hereby converted
to a contribution by PSO to the capital of Development, and the balance is
hereby deemed to constitute a loan by PSO to Management in the form of a first
advance against Management's promissory note to PSO in the form set forth as
Exhibit I (the "PSO Note").
(b) Subject to the provisions of Section 6, PSO hereby commits
to loan to Management an aggregate of Two Million Three Hundred Thousand
($2,300,000) under the terms of the PSO Note, of which amount $____________
shall be deemed to have been advanced to Management pursuant to Section 3(a),
and the balance of $__________ shall be advanced under the PSO Note pursuant
to the following schedule [to be revised at signing to delete prior payments]:
Amount Date of Advance
$ 500,000 07/17/95
300,000 07/31/95
200,000 08/31/95
500,000 09/30/95
500,000 12/29/95
1,050,000 03/31/96
(c) In consideration of PSO's loan commitment to Management,
and for other good and valuable consideration, the receipt of which is hereby
acknowledged by Management, Management shall issue to PSO Units of membership
interest in Management, which Units, upon issuance, shall comprise fifty
percent 50% of the outstanding Units. As a result of such issuance, the
outstanding units of membership interest in Management shall be held by the
following Persons in the amounts indicated:
Member %Unit Ownership
PSO 50%
Smith 25%
Monika 25%
100%
(d) As further consideration of PSO's loan Commitment to
Management, each of Management, Marketing and Development agrees to take all
action as may be necessary to allow PSO and each of its affiliated operating
companies the right to purchase a non-exclusive license to use the Software
under the same terms and conditions as the license Marketing will offer to
non-affiliated utilities except that the license granted to PSO and its
affiliates shall be (i) a perpetual, unrestricted license to use and modify
the Software, and (ii) at a fee no greater than the fee Marketing shall pay
Development for the right to market the Software to non-affiliated utilities.
(e) PSO acknowledges that Management is indebted to Smith in
the amount of $ , pursuant to a promissory note dated
(the "Smith Note"), which note is payable over a 5-year straight-line
amortization at the rate of 8% per annum simple, and may be accelerated upon
the occurrence of an Event of Default (as hereafter defined). Smith
acknowledges that upon his receipt of the payments described in Section 4(a)
below, the Smith Note will be current. The parties agree that although Smith
has waived his right to accelerate the Smith Note in this instance, his
decision will not constitute a waiver of the right to do so upon the
occurrence of an Even of Default in the future; provided, PSO and Smith agree
that upon the occurrence of an Event of Default, no payment shall be made
under either the PSO Note or the Smith Note unless payments are made under
both notes in proportion to their respective amounts of principal and accrued
interest then outstanding under the PSO Note and the Smith Note, respectively.
For example, if at the time an Event of Default occurs, the amounts of
principal and accrued interest then outstanding under the PSO Note and the
Smith Note are $2 million and $500,000, respectively, PSO would be entitled to
receive 80% of each payment made by Management under either the PSO Note or
the Smith note, and Smith would be entitled to receive the remaining 20%.
4. PSO's Investment in Marketing.
(a) Subject to the provisions of Section 6, upon the execution
and delivery of this Agreement, PSO shall make a capital contribution to
Marketing in the amount of Four Hundred Fifty Thousand Dollars ($450,000), of
which amount Three Hundred Fifty-Five Thousand Two Hundred Fifty Dollars
($355,250) shall be used by Marketing (i) to pay all such amounts Smith is
owed by all the Companies as of May 31, 1995; and (ii) to redeem a portion of
the membership interests owned by Smith and Loudermilk in Marketing.
(b) As a result of such contribution by PSO and redemption by
Marketing, the outstanding Units of membership interest in Marketing shall be
held by the following persons in the amounts indicated:
Member % Unit Ownership
PSO 48%
Smith 19%
Loudermilk 28%
Management 5%
100%
5. Allocation of Membership Interests in Development and Training.
In consideration of the valuable contributions PSO, Smith,
Loudermilk and Management will make toward implementation of the Business
Plan, such parties agree to allocate the Units of membership interest in
Development and Training in accordance with the following:
(a) Development. The outstanding Units of membership interest
in Development shall be held by the following Persons in the amounts
indicated:
% Unit Ownership
Before Payment of After Payment of
Member PSO Note in Full PSO Note in Full
PSO 71% 48%
Smith 10% 19%
Loudermilk 14% 28%
Management 5% 5%
100% 100%
(b) Training. The outstanding Units of membership interest in
Training shall be held by the following Persons in the amounts indicated:
Member % Unit Ownership
PSO 48%
Smith 19%
Loudermilk 28%
Management 5%
100%
6. Conditions Precedent to PSO's Obligations.
(a) Before PSO shall have any obligation to execute and
deliver this Agreement or make the conversion set forth in Section 3(a), each
of the following conditions shall be fulfilled to PSO's satisfaction:
(i) PSO shall have obtained the approval from the SEC for
its participation in the transactions contemplated by this Agreement;
(ii) The amendments to the Articles of Organization and
Operating Agreement of each Company, as described in Section 2 above, shall
have been effected;
(iii) Management shall have executed and delivered the PSO
Note to PSO; and
(iv) The representations and warranties contained in
Section 7 below shall be true and correct.
(b) Before PSO shall have any obligation to make any future
advance under the PSO Note, each of the following conditions shall be
fulfilled to PSO's satisfaction:
(i) All conditions set forth in Section 6(a) shall have
been fulfilled;
(ii) The representations and warranties contained in
Section 7 below shall be true and correct in all material respects on and as
of the time of such advance with the same effect as though such
representations and warranties had been repeated on and as of such time,
except to the extent that such representations and warranties expressly relate
to an earlier date; and
(iii) No Event of Default (as hereafter defined) shall
have occurred.
7. Representations and Warranties.
Smith, Monika, Loudermilk, and the Companies hereby jointly and
severally represent and warrant to PSO the following:
(a) Books and Records. Each Company will make and keep books,
records and accounts, which, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of its assets, and devise and
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles or any other criteria applicable to
such statements and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(b) Financial Information. Each Company will make available
the following reports to its Members:
(i) As soon as practicable after the end of each fiscal
year, and in any event within 120 days thereafter, a balance sheet of the
Company as of the end of such fiscal year, and a statement of income and a
statement of changes in financial position of the Company for such year,
prepared in accordance with generally accepted accounting principles and
setting forth in each case in comparative form the figures of the previous
fiscal year, all in reasonable detail including all supporting schedules and
comments.
(ii) As soon as practicable after the end of the first,
second and third quarterly accounting periods in each fiscal year of the
Company, and in any event within 45 days thereafter, a balance sheet of the
Company as of the end of each such quarterly period, and a statement of income
and a statements of changes and financial condition of the Company and its
subsidiaries (if any) for such period and for the current fiscal year to date,
prepared in accordance with generally accepted accounting principles, setting
forth in each case comparisons to the Business Plan (as hereinafter defined)
and the corresponding period to the previous fiscal year, all in reasonable
detail and signed, subject to changes resulting from year-end audit
adjustments, by the principal financial officer of the Company.
(iii) As soon as available after the end of each month,
and in any event within thirty (30) days thereafter,
(A) a balance sheet of the Company as of the end of such
month, and a statement of income and changes in financial position for the
month and for the current fiscal year to date, both prepared in accordance
with generally accepted accounting principles setting forth in each case
comparisons to the Business Plan and the corresponding periods of the previous
fiscal year;
(B) a pro forma cash flow statement of anticipated cash flow
for the next succeeding 90 day period of the Company prepared on a
consolidated basis setting forth, in each case, comparisons to the Business
Plan and the corresponding periods of the previous fiscal year, all in
reasonable detail and signed, subject to changes resulting from year-end audit
adjustments, by Smith and accompanied by a statement explaining any material
differences between budgeted and actual results; and
(C) a memorandum from Smith and Loudermilk reporting on the
Company's operations, describing significant events or circumstances affecting
operations and containing such other matters as are requested by PSO.
(iv) In addition to the above, as soon as available at the end of each
month, Management shall provide PSO with combining financial statements
reflecting all the above for all Companies.
(c) Additional Information. Each Company will furnish to its Members:
(i) As available, a certificate executed by Smith and Loudermilk stating
that neither the Company nor any of its subsidiaries is in default under its
Articles of Organization or Operating Agreement, this Agreement, any
promissory note, or any other material agreement to which it is a party or to
which it or any of its properties is subject.
(ii) Promptly following receipt thereof, any letters furnished to the
Company by its independent public accountants which comment on the accounting
practices of the Company.
(iii) Promptly (but in any event within five days) after the discovery
of any material adverse event or circumstance affecting the Company including,
but not limited to, the filing of any material litigation against the Company
or any subsidiary and the discovery that the Company is not, or with the
passage of time will not be, in compliance with any provision of this
Agreement, any promissory note, or any other material agreement of the
Company, a notice specifying the nature and period of existence thereof, and
the actions the Company has taken and/or proposes to take with respect
thereto. The Company shall furnish its Members with monthly reports updating
and describing any developments relating to matters described under this
subparagraph and will promptly notify its Members of any material developments
or changes relating thereto.
(iv) Promptly following the preparation thereof, copies of the minutes
of proceedings (or consents) of the Company's Managers and Members together
with all written materials given to the Managers in connection with any
meeting of the Managers.
(v) With reasonable promptness, such other information and data with
respect to the Company and its subsidiaries (if any) as any Member may from
time to time reasonably request.
(d) Inspection. With respect to each Company, PSO shall have the right, at
its expense, to visit and inspect any of the properties of the Company and to
discuss its affairs, finances and accounts with its Managers and employees,
all at such reasonable times and as often as may be reasonably requested.
(e) Confidentiality of Information. With respect to each Company (i) PSO
agrees that any information obtained by it pursuant to this Agreement or which
is proprietary to the Company or otherwise confidential will not be disclosed
without the prior written consent of the Company except as may be required to
be disclosed in order to comply with any applicable law, rule, regulation,
order or request of any governmental agency or authority; provided, that
without the prior written consent of the Company, PSO may disclose such
information to its parent corporation, Central and South West Corporation, any
direct or indirect subsidiary of such parent, or any governmental agency
having jurisdiction over any such entity; and (ii) similarly, the Company
agrees that any information obtained by it pursuant to this Agreement or which
is proprietary to PSO or otherwise confidential will not be disclosed without
the prior written consent of PSO except as may be required to be disclosed in
order to comply with any applicable law, rule, regulation, order or request of
any governmental agency or authority.
(f) Property and Liability Insurance. Each Company will cause to be kept
insured all of the Company's assets which are of insurable character, and
which are customarily insured by companies engaged in the same or similar
businesses by financially sound and reputable insurers against loss or damage
by fire, explosion or other hazards customarily insured against by such
comparable companies with extended coverage in amounts sufficient to prevent
the Company from becoming a co-insurer, except for normal deductibles, but
not, in any event, less than eighty percent (80%) of the insurable value of
the property. Each Company will maintain, with financially sound and
reputable insurers, such insurance against hazards and risks and liabilities
to persons and property as are customarily insured against by companies
engaged in the same or similar businesses. The amount of liability insurance
shall be at least $1,000,000 for property damage and $1,000,000 for personal
injury regardless of the number of persons injured. Each Company will
promptly notify PSO of any change in insurance coverage. The Company shall
promptly cause all policies of insurance obtained by it in accordance with its
obligations hereunder to provide that they may not be cancelled unless the
insurance carrier gives PSO (or, if the insurer requires, a designated
representative of PSO) at least 30 days prior written notice thereof.
(g) Life Insurance. Management will, within 30 days of the date hereof,
obtain and will thereafter maintain key man level term life insurance policies
on the life of Dennis Loudermilk in the face amount of at least $500,000
naming Management as beneficiary. Management will pay or cause to be paid all
premiums on such life insurance as the same from time to time become payable.
Management will request the insurers on such policy of life insurance to
provide that it may not be cancelled unless the insurance carrier gives PSO
(or, if the insurer requires, a designated representative of PSO) at least 30
days prior written notice thereof.
(h) Use of Proceeds. Each Company's use of all proceeds loaned to it shall
be in accordance with the Business Plan.
(i) Managers' Election. Each Company will use its best efforts to assure
compliance with its Operating Agreement. Each Company will cause its
Operating Agreement to be amended from time to time to reflect the current
number of Managers. Any representative of a Member who serves as a Manager of
the Company shall be paid such Managers' fees which are paid by each Company
to its other Managers. Apart from any such fees, any representatives of PSO
who serve as a Manager shall not be entitled to any compensation for
attendance at meetings of the Managers or the executive committee thereof, if
any, except that upon a representative's request the Company shall reimburse
him for all reasonable travel, food and lodging expenses incurred or paid by
him in connection with attendance at such meetings.
(j) Preservation of Corporate Existence and Business. Each Company will
preserve intact the present business organization, rights and privileges and
present goodwill and, to the best of its ability relationships existing with
other parties and will at all times cause to be done all things necessary to
maintain, preserve, and renew its existence and will observe and conform with
all valid requirements of all governmental authorities relating to the conduct
of the business of the Company, the failure of which would have a material
adverse effect on the Company. Each Company will maintain and keep in force
all material licenses, permits and agreements necessary to the conduct of its
businesses.
(k) Maintenance of Properties. Each Company will maintain and keep its
properties, real and personal, in good repair, working order, and condition,
and from time to time make all necessary or desirable repairs, renewals, and
replacements, so that its business may be properly and advantageously
conducted at all times.
(l) Taxes and Other Obligations. Each Company will pay and discharge all
taxes, assessments, interest and installments on mortgages and governmental
charges against it or against any of its properties, upon the respective dates
when due, except to the extent that (i) such taxes, assessments, interest,
installments and governmental charges are contested in good faith and by
appropriate proceedings in such manner as not to cause any materially adverse
effect on its financial condition or loss of any right of redemption from any
sale, and (ii) the Company shall have set aside on its books reserves
(segregated to the extent required by generally accepted accounting
principles) adequate with respect to such liabilities.
(m) Compliance with Obligations, Laws, Etc. Each Company shall comply with
all of the obligations which it has incurred or to which it becomes subject
pursuant to any contract or agreement, whether oral or written, express or
implied, the breach of which might have a material adverse effect upon its
business or financial condition, unless and to the extent that the same are
being contested in good faith and by appropriate proceedings and adequate
reserves have been set aside on its books with respect thereto. Each Company
shall comply with all applicable laws, rules and regulations of all
governmental authorities, the violation of which might have a material adverse
effect upon its business or financial condition.
(n) Agreements with Employees and Consultants. Each Company will cause all
employees and consultants of the Company who may become materially involved in
research, development or technological matters to execute an employment or
confidentiality agreement containing the same confidentiality provisions as
the agreement attached as Exhibit J.
(o) Business Plan. Management shall prepare on the Companies' behalf an
operating plan, including a cash flow budget, a profit and loss statement and
balance sheet (collectively the "Business Plan") in accordance with the
following:
(i) For each succeeding calendar year, Management shall
furnish a copy of the Business Plan to PSO at least 30 days prior to the
beginning of such twelve month period. The Business Plan shall become
effective if approved by the Managers of the Management. A copy of the
Companies' Business Plan existing as of the date hereof is attached hereto as
Exhibit K. A revised Business Plan will be prepared by Management in October,
1995.
(ii) Management may amend any Business Plan adopted pursuant
to this Agreement by following the procedures set forth herein. Such amended
Business Plan shall be deemed the "Business Plan" for all purposes of this
Agreement for the remainder of the twelve month period of the Business Plan so
amended.
(p) Patents, Trademarks and Copyrights. Intellectual property of the
Company shall be governed by the following provisions:
(i) Patent Maintenance. No Company will do any act or omit to
do any act whereby any Company patent or any patent licensed by the Company
may become abandoned or rendered invalid. Each Company shall take all such
actions as may be necessary to maintain the validity of all such patents.
(ii) Trademark Maintenance. No Company will do any act or
omit to do any act whereby any Company trademark or any trademark licensed by
the Company may become abandoned or rendered invalid. Each Company shall take
all such actions as may be necessary to maintain the validity of all such
trademarks. Each Company will continue to use its trademarks, together with
appropriate notice of trademark, on each and every trademark class of goods
applicable to its current and future lines of goods and to maintain its
trademarks in full force and effect and free from any claim of abandonment for
non-use. Each Company has used and will continue to use for the duration of
this Agreement standards of quality in the manufacture of products sold under
its trademarks that are at least equal to those standards in effect as of the
date of this Agreement.
(iii) Copyright Maintenance. Each Company has placed and will
continue to place appropriate notice of copyright on all copies embodying
Company copyrighted works which are publicly distributed and the Company will
not do any act or omit to do any act whereby any Company copyright may become
invalidated or dedicated to the public domain.
(iv) Application and Registration Maintenance. Each Company
will take all steps necessary in the opinion of counsel in any proceeding
before the United States Patent and Trademark Office, United States Register
of Copyrights or similar office or agency of the United States or any office
of the Secretary of State (or equivalent) of any state thereof, to maintain
and prosecute each application and registration of Company patents, trademarks
and copyrights, including, without limitation, filing of renewals, extensions,
affidavits of use and incontestability, and opposition, interference and
cancellation proceedings.
(v) Infringement. With respect to each Company, in the event
that any Company patent, trademark, or copyright is infringed, misappropriated
or diluted by a third party, the Company shall, unless the Company shall
determine in its reasonable business judgment that such trademark, patent or
copyright is of negligible economic value to the business of the Company,
promptly sue for infringement, misappropriation and/or dilution and to obtain
injunctive relief and recover damages therefor, and shall take such other
actions to protect such patent, trademark, or copyright, all as the Company
shall deem appropriate in its reasonable business judgment under the
circumstances.
(q) Investments. No Company will invest (as a shareholder, partner, lender
or otherwise) in any other corporation, partnership, joint venture or any
other entity.
(r) Merger, Consolidation, Sale of Assets, Etc. No Company shall issue or
agree to issue any additional ownership interests or cause any division or
splitting of any such ownership interests, reclassification, exchange or
substitution thereof or approve or agree to any reorganization, merger,
consolidation or combination with any corporation or other entity or sell or
lease (as lessor) more than 5 percent of the Company's total consolidated
assets in any 12-month period (other than mortgages, deeds of trust, pledges
or other hypothecations of real or personal property approved by the Managers,
and other than sales or other dispositions of inventory in the normal course
of business), or liquidate, dissolve recapitalize or reorganize in any form of
transaction. Without the prior written consent of PSO, no Company will
acquire any corporation or other entity nor purchase nor lease (as lessee) all
or a substantial portion of the assets, property, business stock or other
securities or interests of another corporation or entity.
(s) Insider Transactions. The Company shall not engage in any transaction
with any of the Company's Managers or Members except (i) as provided in this
Agreement or any related Agreement, (ii) reimbursements of reasonable expenses
incurred in the ordinary course of business, and (iii) as provided in
employment arrangements which are terminable by the Company at will without
penalty upon not more than 30 days notice.
(t) Organic Changes. No Company shall adopt any amendment, modification or
waiver of any provision of its Operating Agreement or Articles of
Organization, make any change in its capital structure by reclassification,
subdivision, reorganization or otherwise, or merge or consolidate with any
other corporation, partnership trust or entity.
(u) Priority of the PSO Notes. Management shall not issue, or enter into
any agreement providing for the issuance (contingent or otherwise) of any
interest in Management that is equal or senior to the PSO Note and the Smith
Note in terms of priority with respect to the distribution of assets upon
liquidation.
(v) Conflicting Agreements or Actions. No Company shall enter into any
agreement or make any amendment to any agreement or take any other action
which would restrict or adversely affect the Company's performance of its
obligations to PSO under its Articles of Organization, as amended, its
Operating Agreement, this Agreement or any agreement referred to herein.
(w) Capital Expenditures. No Company will make capital expenditure or
research and development expenditure nor acquire capital assets not for resale
in excess of 110% of the amount set forth in the Business Plan during any one
fiscal year.
(x) Assignment. No Company will directly or indirectly, assign or transfer,
or attempt to do so, any of its rights, powers, duties or obligations under
this Agreement or any agreement or document relating thereto.
8. Events of Default.
Each of the following events shall be an "Event of Default"
(collectively, the "Events of Default"):
(a) The Companies shall fail to meet at least 60% of the
EBITDA financial goals of the Business Plan attached hereto as Exhibit K, or
shall fail to meet at least 80% of the financial EBITDA goals of the Business
Plan Management is to prepare by October 1995 (the "October Business Plan").
(b) The Companies shall exceed 105% of the budgeted expense
for any quarter, as set forth in the October Business Plan.
(c) Any Company shall default in the payment when due of any
principal or interest on any note or shall default under or fail to perform or
observe any material term, covenant or agreement contained in, any material
agreement, document or instrument to which it is a party or to which it or its
assets is bound, including any obligation for borrowed money or for the
purchase price of property, and such default or failure to perform shall
continue and remain unwaived by the obligee for more than 60 days or any
applicable period of grace therein specified, whichever is longer, except
where the Company is in good faith and through appropriate proceedings
contesting such default or failure to perform.
(d) Any representation or warranty made herein or in
connection with the transactions contemplated in this Agreement shall prove to
have been false or incorrect on the date as of which made resulting in a
material adverse effect on the Company and such false or incorrect
representation or warranty shall not have been remedied within 10 days after
written notice thereof shall have given to the Company.
(e) Any Company shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts as they
become due, or an order for relief is entered against the Company under any
bankruptcy laws or the Company shall file any petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment, dissolution
or similar relief under any present or future statute, law or regulation, or
shall file an answer admitting the material allegations of a petition filed
against the Company in any such proceeding, or shall seek or consent to the
acquiesce in the appointment of any trustee, receiver or liquidator of the
Company of all or any substantial part of the properties of the Company, or
the Company or its Managers or majority of its Members shall take any action
looking to the dissolution or liquidation of the Company and such has not been
remedied.
(f) With respect to any Company, there occurs any event that,
under the laws of the State of Oklahoma, would result in the dissolution of
the Company.
9. Remedies on Default.
(a) Contracts. Upon the occurrence of any Event of Default,
PSO may proceed to protect and enforce its rights by a suit in equity, action
at law or other appropriate proceeding including but not limited to the
enforcement of any rights under any of the other documents executed and
delivered in connection herewith whether for the collection of amounts due on
the PSO Note (by acceleration or otherwise), for the specific performance of
any agreement contained herein or in the Operating Agreement or in the PSO
Note or in any other documents executed and delivered in connection herewith
or for an inunction against a violation of any of the terms or provisions
hereof or thereof or in aid of the exercise of any power granted hereby or
thereby or by law. In case of a default in the payment of any principal of or
interest on the PSO Note, Management will pay to the holder thereof such
further amount as shall be sufficient to cover the reasonable cost and expense
of collection, including (without limitation) reasonable attorneys' fees.
(b) Reallocation of Voting Rights. Notwithstanding the
parties' respective percentages of Unit ownership in the Companies, Voting
Rights (as such term is defined in the Operating Agreement of each Company)
with respect to all matters coming before a vote of the Members of each
Company shall be apportioned as follows:
(i) Management. Prior to the occurrence of an Event of
Default, the Voting Rights of the Members of Management shall be apportioned
4% for PSO, 48% for Smith, and 48% for Monika. Upon occurrence of an Event of
Default, the Voting Rights shall be reapportioned between PSO on the one hand,
and Smith and Monika on the other hand, in proportion to the respective
amounts of principal and accrued interest then outstanding under the PSO Note
and the Smith Note. For example, if at the time an Event of Default occurs,
the amounts of principal and accrued interest outstanding under the PSO Note
and Smith Note are $2 Million and $500,000, respectively, PSO would be
entitled to 80% of the Voting Rights, Smith 10%, and Monika 10%.
(ii) Marketing; Development; Training.
Voting Rights
Before After
Member Event of Default Event of Default
PSO 4% 0%
Smith 45 1/2% 0%
Loudermilk 45 1/2% 0%
Management 5% 100%
100% 100%
(c) No Waiver. No course of dealing and no delay on the part
of PSO in exercising any right shall operate as a waiver thereof or otherwise
prejudice PSO's rights. No remedy conferred hereby or by any of the other
documents executed and delivered in connection herewith shall be exclusive of
any other remedy referred to herein or therein or now or hereafter available
at law, in equity, by statute or otherwise.
10. Notices.
All notices required or given under this Agreement shall be in
writing and shall be deemed given (i) when received, if personally delivered;
(ii) the day after it is sent, if sent by a recognized expedited delivery
service with next-day delivery requested; or (iii) five days after it is sent,
if mailed, postage prepaid, via certified mail, return receipt requested. In
each case, notice shall be sent to:
If to PSO: Public Service Company of Oklahoma
212 East 6th Street
Tulsa, OK 74119-1212
Attn: Thomas W. Reynolds
If to any other party: Richard H. Smith
11708 South Canton
Tulsa, OK 74137
or such other addresses as such party shall have specified by notice in
writing to the other party.
11. General.
(a) This Agreement constitutes the whole and entire agreement
between the parties pertaining to the subject matter hereof, and supersedes
all prior agreements or understandings. This Agreement may not be modified
except by an instrument in writing signed by all parties.
(b) The validity, construction and enforcement of, and the
remedies under, this Agreement shall be governed in accordance with the laws
of Oklahoma, except any choice of law provision of Oklahoma law shall not
apply if the law of a state or jurisdiction other than Oklahoma would apply
thereby.
(c) The parties to this Agreement agree that jurisdiction and
venue of any action brought to enforce, or to construe or determine the
validity of, any term or provision contained in this agreement shall properly
lie in the District Court of Tulsa County, Oklahoma, or the United States
District Court for the Northern District of Oklahoma.
(d) This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective personal representatives,
successors and permitted assigns. No party may assign its, his or her
obligations hereunder without the prior written consent of all other parties;
provided, however, without the prior consent of any other party, PSO may
assign this Agreement (including the PSO Note) to its parent corporation,
Central and South West Corporation, or any direct or indirect subsidiary of
such parent.
(e) The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
(f) Each party to this Agreement shall bear its, his or her
own expenses incurred in connection with negotiation, preparation and
execution of this Agreement and the transactions contemplated herein.
(g) The terms of this Agreement shall remain confidential
between the parties, except that without the consent of any other party, PSO
may disclose such terms and furnish a copy of this Agreement to its parent
corporation and affiliates described in Section 11(e) above, and to any
governmental agency having jurisdiction over PSO or any such entity.
(h) If any action is brought to enforce, or to construe or
determine the validity of, any term or provision of this agreement, the
prevailing party shall be entitled to reasonable attorney's fees and costs of
the action.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
Public Service Company of Oklahoma
By:
Title:
Richard H. Smith
Monika Smith
Dennis J. Loudermilk
RIKA Management Company, L.L.C.
By:
Richard H. Smith, Manager
Universal Power Products
Company,L.L.C. d/b/a
Relay Concepts
By:
Richard H. Smith, Manager
Automated Substation
DevelopmentCompany, L.L.C.
By:
Richard H. Smith, Manager
RC Training, L.L.C.
By:
Richard H. Smith, Manager
<PAGE>
<PAGE>
EXHIBIT 8
RIKA MANAGEMENT COMPANY, L.L.C.
AMENDED AND RESTATED
ARTICLES OF ORGANIZATION
TO: THE OKLAHOMA SECRETARY OF STATE
101 State Capitol
Oklahoma City, OK 73105
The undersigned Members of RIKA Management Company, L.L.C., an
Oklahoma limited liability company (the "Company"), for the purpose of
adopting Amended and Restated Articles of Organization pursuant to Section
2011 of the Oklahoma Limited Liability Company Act (the "Act"), hereby
certifies:
1. The name of this Company is "RIKA Management Company,
L.L.C."
2. The name under which this Company was originally organized
was "RIKA Management Company, L.L.C."
3. The Articles of Organization of this Company were
originally filed with the Oklahoma Secretary of State on , 1995.
4. The amendments to the Articles of Organization effected by
this document are to change and restate the provisions relating to the
regulation of the internal affairs of the Company.
5. These Amended and Restated Articles of Organization were
duly adopted by the Members of the Company in accordance with Section 2020 of
the Act, and restate, integrate and further amend the Articles of
Organization.
6. The Articles of Organization of the Company are hereby
restated as further amended herein, to read in full, as follows:
"ARTICLES OF ORGANIZATION
OF
RIKA MANAGEMENT COMPANY, L.L.C.
FIRST. The name of the limited liability company is RIKA
Management Company, L.L.C. (the "Company").
SECOND. The latest date on which the Company is to dissolve is
12:00 midnight, December 31, 2015.
THIRD. The purpose of the Company is to engage in any lawful
act or activity for which limited liability companies may be organized under
the Act.
FOURTH. The street address of the principal place of business
of the Company in the State of Oklahoma is 6130 South Memorial, Tulsa,
Oklahoma 74133.
FIFTH. The name and address of the registered agent of the
Company in the State of Oklahoma is Richard H. Smith, 11708 South Canton,
Tulsa, Oklahoma 74137.
SIXTH. The business of the Company shall be managed by one or
more Managers designated pursuant to the terms of the Company's Operating
Agreement. Subject to the restrictions contained herein, any third person
dealing with the Company may rely absolutely upon the act, deed and/or
signature of each Manager as being the act of the Company and no third person
shall be obliged or privileged to inquire into or otherwise ascertain whether
the act of the Manager has been duly authorized.
SEVENTH. Notwithstanding any other provision hereof, unless
and until there shall have occurred an Event of Default (as such term is
defined in the Company's Operating Agreement), no Manager shall have the
authority to cause the Company to do or commit to do any of the following
acts, without the prior unanimous written consent of the specific act by the
Members; however, upon the occurrence of an Event of Default, each Manager
shall have the authority to cause the Company to do or commit to do such acts
upon the Majority Vote of the Members (as such term is defined in the
Company's Operating Agreement):: (a) borrow money in excess of $50,000; (b)
sell any asset of the Company (or assets, in related transactions) having a
fair market value in excess of $50,000; (c) enter into any contract involving
an anticipated total expenditure of over $100,000; (d) do any act which would
make it impossible to carry on the ordinary business of the Company; (e)
compromise any claim against the Company over $50,000; (f) admit a person as a
Member; (g) knowingly perform any act that would subject a Member to personal
liability; (h) amend the Articles of Organization; or (i) approve any business
plan of the Company."
IN WITNESS WHEREOF, these Amended and Restated Articles of
Organization have been executed on the _____ day of , 199 , by the
undersigned Members.
__________________________________
Richard H. Smith
__________________________________
Monika Smith<PAGE>
<PAGE>
EXHIBIT 9
RIKA MANAGEMENT COMPANY, L.L.C.
AMENDED AND RESTATED
OPERATING AGREEMENT
THIS AMENDED AND RESTATED OPERATING AGREEMENT (the "Agreement")
is entered into as of the day of , 199 , by and among
Public Service Company of Oklahoma, an Oklahoma corporation ("PSO"), Richard
H. Smith, a natural person ("Smith"), and Monika Smith, a natural person
("Monika"), collectively referred to herein as the "Members" of RIKA
Management Company, L.L.C., an Oklahoma limited liability company (the
"Company"), and supersedes all prior operating agreements of the Company. In
consideration of the mutual covenants and conditions hereinafter set forth,
the Members hereby agree that the terms of the Operating Agreement governing
the Company shall be as follows:
ARTICLE I
Organizational Matters
1.01 Formation. The Company has been formed as a limited
liability company pursuant to the provisions of the Act (as hereinafter
defined). The rights and obligations of the Members, the Manager designated
herein, and the affairs of the Company, shall be governed first by the
mandatory provisions of the Act, second by the Company's Articles of
Organization, third by this Agreement and fourth by the optional provisions of
the Act. In the event of any conflict among the foregoing, the conflict shall
be resolved in the order of priority set forth in the preceding sentence.
1.02 Name. The name of the Company shall be "RIKA Management
Company, L.L.C."
1.03 Principal Office. The principal office of the Company in
the State of Oklahoma shall be located at 6130 South Memorial, Tulsa, Oklahoma
74137. The name and address of the resident agent of the Company is Richard
H. Smith, 11708 S. Canton, Tulsa, Oklahoma 74137. The Company may also
maintain offices at such other place or places as the Managers deem advisable.
1.04 Term. The Company commenced upon the filing for record
of the Company's Articles of Organization with the Oklahoma Secretary of State
on the day of , 199__, and shall continue until 12:00
midnight, December 31, 2015, unless sooner terminated as herein provided.
ARTICLE II
Definitions
2.01 Definitions. For purposes of this Agreement, the
following terms shall have the following meanings.
"Act" means the Oklahoma Limited Liability Company Act, 18
Okla. Stat. Sec. 2000 et seq. (Supp. 1993), as it may be amended from time to
time, and any successor to such act.
"Affiliate" means any Person that directly or indirectly
controls, is controlled by, or is under common control with, such Person. As
used in this definition of "Affiliate," the term "control" means either (i)
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise or (ii) a direct or
indirect equity interest of ten percent (10%) or more in the entity.
"Agreement" means this Operating Agreement, as it may be
amended or supplemented from time to time.
"Articles of Organization" means the articles of organization,
as amended from time to time, filed by the Company under the Act.
"Assignee" means a Person to whom one or more Units have been
transferred, by transfer or assignment or otherwise, in a manner permitted
under this Agreement, and who has agreed to be bound by the terms of this
Agreement but who has not become a Substitute Member.
"Business Day" means Monday through Friday of each week, except
legal holidays recognized as such by the Government of the United States or
the State of Oklahoma.
"Capital Account" means each capital account maintained for a
Member pursuant to Section 4.03.
"Capital Contributions" means the sum of the total amount of
cash and the total value of property contributed or services rendered, or a
promissory note or other binding obligation to contribute cash or property or
to perform services contributed to the Company by all Members, or any one
Member, as the case may be (or the predecessor holders of any Units of any
such Members).
"Capital Gain" means the Company's allocable share of gain from
the disposition by the Company of a capital asset as defined in the Code
(including any portion of such gain treated as ordinary income).
"Cash Available for Distribution" means, with respect to any
period, all cash receipts and funds received by the Company (except for
Capital Contributions) minus (i) all cash expenditures and (ii) the Company's
cash management fund representing working capital or other reserves.
"Code" means the Internal Revenue Code of 1986, as amended, as
in effect from time to time.
"Company" means the limited liability company formed by the
filing of the Company's Articles of Organization with the Oklahoma Secretary
of State.
"Company Property" means all property owned, leased or acquired
by the Company from time to time.
"Disqualified Member" has the meaning specified in Section
12.01.
"Event of Default" shall have the meaning ascribed to it in the
Member Agreement.
"Event of Dissolution" has the meaning specified in Section
12.01.
"Income" and "Loss" mean an amount equal to the Company's
taxable income or loss as determined for federal income tax purposes, with the
following adjustments:
(a) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Income or Loss
shall be added to such Income or Loss;
(b) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as expenditures described in Section
705(a)(2)(B) of the Code Treasury Regulations Section 1.704-1(b)(2)(iv)(i),
and not otherwise taken into account in computing Income or Loss, shall be
subtracted from such Income or Loss; and
(c) Upon the deemed or actual distribution of property by the
Company to a Member, gain or loss attributable to the difference between the
fair market value of the property and its basis shall be treated as having
been recognized by the Company for federal income tax purposes.
"Majority Vote of the Members" means the affirmative vote of
the holders of a majority of the Voting Rights held by the Members.
"Managers" means the Persons designated pursuant to Article VI.
"Mandatory provisions of the Act" means those provisions of the
Act which may not be waived by the Members acting unanimously or otherwise.
"Member" means any person signing this Agreement as a Member of
the Company.
"Member Agreement" means that certain agreement between PSO,
Smith, Monika, and others, of even date herewith.
"Outstanding" means the number of Units issued by the Company
as shown on the Company's books and records. The term does not include any
authorized Units not issued by the Company or any Units issued but
subsequently reacquired by the Company and held in the Company's treasury.
"Person" means a natural person, partnership, trust, estate,
association or domestic or foreign limited partnership, limited liability
company, or corporation.
"PSO Note" means that certain promissory note of Management in
favor of PSO, dated , 19 .
"R&D Agreement" means that certain PSO specific Software
Application and Development Agreement between PSO and the Company, Smith,
Monika, dated , 1995.
"Record Holder" means the Person in whose name such Unit is
registered on the books and records of the Company as of the close of business
on a particular Business Day.
"Smith Note" means that certain promissory note of Management
in favor of Smith, dated , 19 .
"Substitute Member" means a transferee of a Unit who is
admitted as a Member to the Company pursuant to Section 11.01 in place of and
with all the rights of a Member.
"Tax Matters Partner" means the Member designated pursuant to
Section 9.02.
"Unit" means a Unit representing an interest in the capital of
the Company.
"Voting Rights" has the meaning specified in Section 7.02.
ARTICLE III
Purpose
3.01 Purpose of the Company. The purpose of the Company is to
engage in any lawful act or activity for which limited liability companies may
be organized under the Act. Such acts or activities may include, but shall
not be limited to, acquiring, operating and maintaining real and personal
properties in the United States and foreign countries. In transacting such
business, the Company may:
(a) acquire an ownership, working, royalty or other interest
in stocks, real estate and other properties, either alone or in conjunction
with other parties;
(b) dispose of, rent, lease, transfer, encumber or otherwise
utilize Company assets used in connection with Company operations as the
Managers deem advisable;
(c) employ such personnel and obtain such legal, accounting,
and other professional services and advice as the Managers may deem advisable
in the course of the Company's operations under this Agreement;
(d) pay all ad valorem taxes levied or assessed against the
Company's assets, and all other taxes (other than income taxes) directly
relating to operations conducted under this Agreement;
(e) execute all contracts, agreements, documents, or
instruments of any kind as may be appropriate for carrying out the purposes of
the Company;
(f) procure and maintain in force such insurance, including
public liability, automotive liability, worker's compensation, and employer's
liability insurance, as may be prudent to protect the Company against
liability for loss and damages which may be occasioned by the activities to be
engaged in by the Company;
(g) purchase and establish inventories of equipment and
material required or expected to be required in connection with the Company's
operations;
(h) contract or enter into agreements for the performance of
services and the purchase and sale of material, equipment, supplies, and
property, both real and personal;
(i) conduct operations either alone or as a joint venturer,
co-tenant, partner, or in any other manner of participation with any Member or
third parties and to enter into agreements and contracts setting forth the
terms and provisions of such participation;
(j) borrow money from any Person, including, without
limitation, banks, other lending institutions, and Members, for Company
purposes and pledge Company Property for the repayment of such loans;
(k) sell, relinquish, release, abandon, or otherwise dispose
of Company assets, including undeveloped, productive, and condemned
properties, in accordance with other provisions herein; and
(l) perform any and all other acts or activities customary or
incident to conducting the above Company operations.
ARTICLE IV
Capital Contributions
4.01 Authorized Units. The Company shall have the authority
to issue an aggregate of one hundred (100) Units.
4.02 Capital Contributions.
(a) Smith and Monika hereby surrender their respective
membership interests in the Company in exchange for fifty (50) Units, of which
twenty-five (25) Units are hereby issued to Smith and twenty-five Units are
hereby issued to Monika. Upon the issuance of Units to PSO pursuant to
Section 4.02(b), the Units held by Smith and Monika shall in the aggregate
constitute 50% of the Outstanding Units of the Company.
(b) In consideration for its loan commitment to the Company,
and for other good and valuable consideration, the receipt of which is hereby
acknowledged by the Company, PSO is hereby issued fifty (50) Units,
constituting 50% of the Outstanding Units of the Company.
4.03 Capital Accounts.
(a) The Company shall maintain for each Member a separate
Capital Account. The term "Capital Account" shall mean as to any Member and
as to any Units held by that Member the amount of the initial Capital
Contribution attributable to the Units held by that Member, which amount shall
be (i) increased by subsequent Capital Contributions by such Member, and
Capital Gain and Income allocated to such Member pursuant to Section 5.02,
(ii) decreased by distributions to such Member pursuant to Section 5.01 and
Losses allocated to such Member pursuant to Section 5.02, and (iii) further
adjusted as required by Section 704 of the Code, the Treasury Regulations
issued thereunder, and any other applicable provisions of the Code or Treasury
Regulations. Distributions shall be debited to Capital Accounts in the year
containing the record date for such distribution.
(b) It is not currently anticipated that the Company will
receive any Capital Contributions in any form other than cash. In the event
any in-kind contributions or contributions in the form of services are ever
made, the Capital Account of the contributing Member shall be increased by the
fair market value of the property or services contributed by such Member.
(c) The foregoing definition of Capital Account and certain
other provisions of this Agreement are intended to comply with Treasury
Regulations issued under Section 704(b) of the Code, and shall be interpreted
and applied in a manner consistent with those regulations. Such regulations
contain additional rules governing maintenance of capital accounts that have
not been addressed in this Agreement.
(d) An Assignee of a Unit will succeed to the Capital Account
relating to the Unit transferred. However, if the transfer causes a
termination of the Company under Section 708(b)(1)(B) of the Code, the Company
Property shall be deemed to have been distributed immediately after such
transfer in liquidation of the Company to the Members (including the
transferee of a Unit) pursuant to Section 12.02 and recontributed by such
Members in reconstitution of the Company. The Capital Accounts of such
reconstituted Company shall be maintained in accordance with the principles of
this Section 4.03.
(e) The Capital Accounts shall be maintained to comply with
Treasury Regulations issued under Section 704 of the Code, and shall be
revalued and adjusted at such times as may be permitted or required by
Treasury Regulations issued pursuant to Section 704 of the Code to reflect the
then fair market value of Company Property. All allocations of gain resulting
from such revaluation shall be made consistently with those applicable
Treasury Regulations, and to the extent not inconsistent therewith, the Income
allocation provisions of Section 5.02 hereof.
4.04 Interest. No interest shall be paid by the Company on
Capital Contributions, on balances in a Member's Capital Account or on any
other funds distributed or distributable under this Agreement.
4.05 No Withdrawal. Except as otherwise required under any
mandatory provisions of the Act, no Member shall without the written consent
of all remaining Members of the Company have (i) any right to resign
voluntarily or otherwise to withdraw from the Company, or (ii) any right to
the withdrawal or reduction of any part of his Capital Contribution.
4.06 Loans. Loans by a Member to the Company shall not be
considered Capital Contributions. The Company may not make loans to any
Member or any Affiliate of any Member without a Majority Vote of the Members.
ARTICLE V
Allocations and Distributions
5.01 Distribution of Cash Available for Distribution.
Distributions of all Cash Available for Distribution shall be made as
determined by a Majority Vote of the Members. Any distribution of property
shall be treated as a distribution of cash in the amount of the fair market
value of such property. Distribution shall be made to the Members by the
Company pro rata, according to the number of Units held by each, with all
Outstanding Units being treated alike.
5.02 Allocation of Income and Loss.
(a) All items of income, gain, loss, deduction or credit shall
be allocated to all Members and Assignees in accordance with their respective
Units in the Company. All outstanding Units shall be treated equally.
(b) Notwithstanding anything to the contrary in this Section
5.02, if there is a net decrease in "minimum gain" (within the meaning of
Treasury Regulations Section 1.704-2(d) and (g) during a fiscal year, all
Members with a deficit balance in their Capital Accounts at the end of that
year (excluding items described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4)-(6) shall be allocated, before any other allocations
of such items for such fiscal year, items of Income and gain for such year
(and if necessary, subsequent years), in an amount and in the proportions
necessary to eliminate such deficits as quickly as possible. The foregoing
sentence is intended to be a "minimum gain charge back" provision as described
in Treasury Regulations Section 1.704-2(f), and shall be interpreted and
applied in all respects in accordance with that regulation.
(c) If during any fiscal year of the Company, any Member
unexpectedly receives an adjustment, allocation, or distribution of the type
described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4),(5), or (6),
that Member shall be allocated items of Income (consisting of a pro rata
portion of each item of partnership income, including gross income, and gain
for such year) in an amount and manner sufficient to eliminate that Member's
deficit Capital Account balance as quickly as possible.
(d) Under regulations prescribed by the Secretary of the
Treasury pursuant to Section 704(c) of the Code, items of Capital Gain, Income
and Loss with respect to property contributed to the Company by a Member shall
be shared among Members so as to take account of the variation between the
basis of the property to the Company and its fair market value at the time of
contribution. The Members shall have the power to make such elections, adopt
such conventions, and allocate Capital Gain, Income and Loss as each of them
deems appropriate to comply with Section 704(c) of the Code and any Treasury
Regulations promulgated thereunder and to preserve, to the extent possible,
uniformity of the Units. Any item allocated under this Section 5.02(d) shall
not be debited or credited to a Member's Capital Account to the extent that
such item is already taken into account (upon formation or otherwise) in
determining such Member's Capital Account.
(e) Whenever a Member's interest in the Company changes, such
Member's distributive share of income, gain, loss, deduction or credit of the
Company shall be determined in accordance with Section 706(d) of the Code and
allocated on a daily basis. The Members may revise, alter, or otherwise
modify the method of allocation as they determine necessary to comply with
Section 706(d) of the Code and regulations or rulings promulgated thereunder.
(f) If, and to the extent that, any Member is deemed to
recognize income pursuant to Sections 482, 483, 1272-1274, or 7872 of the Code
as a result of any transaction between the Member and the Company, any
corresponding resulting Loss or deduction of the Company shall be allocated to
the Member who recognizes such income.
(g) All tax credits for federal or state income tax purposes
shall be allocated in the same manner as Income.
ARTICLE VI
Management and Operation of Business
6.01. Managers. Management of the Company shall be vested in
two (2) Managers, who shall be elected by Majority Vote of the Members at any
annual or special meeting called for that purpose. Unless and until there has
occurred an Event of Default, the two Managers shall be one Person designated
by Smith and Monika, and one Person designated by PSO. Managers appointed by
PSO need not be Members. In all matters coming before a vote of the Managers,
the Manager designated by PSO shall have one (1) vote, and the Manager
designated by Smith and Monika shall have one (1) vote. Upon the occurrence
of an Event of Default, the holder of a majority of the Voting Rights shall be
entitled to designate both Managers.
6.02. Authority of Managers. Any Person serving as Manager
may exercise all the powers of the Company whether derived from law, the
Articles of Organization or this Agreement, except such powers as are by
statute, by the Articles of Organization or by this Agreement vested solely in
the Members.
6.03. Restrictions on Managers. Notwithstanding any other
provision hereof, unless and until there shall have occurred an Event of
Default, no Manager shall have the authority to cause the Company to do or
commit to do any of the following acts, without the prior unanimous written
consent of the specific act by the Members; however, upon the occurrence of an
Event of Default, each Manager shall have the authority to cause the Company
to do or commit to do such acts upon the Majority Vote of the Members:
(a) Borrow money in excess of $50,000;
(b) Sell any assets of the Company (or assets, in related
transactions) having a fair market value over $50,000;
(c) Enter into any contract involving an anticipated total
expenditure of over $100,000;
(d) Do any act which would make it impossible to carry on the
ordinary business of the Company;
(e) Compromise any claim over $50,000;
(f) Admit a Person as a Member;
(g) Knowingly perform any act that would subject a Member to
personal liability;
(h) Amend the Articles of Organization; or
(i) Approve any business plan of the Company.
6.04. Outside Activities. The Members and Managers their
respective Affiliates have business interests and engage in business
activities in addition to those relating to the Company. No provision of this
Agreement shall be deemed to prohibit the Members, the Managers or their
respective Affiliates from conducting such businesses and activities, provided
they are not in direct competition with the Company. Neither the Company nor
any Member shall have any rights by virtue of this Agreement or the
relationship contemplated herein in any non-competing business ventures of any
other Member or the Affiliates of such Member.
6.05. Limitation on Liability of Managers. No Person serving
as Manager shall be liable to the Company for monetary damages for breach of
fiduciary duty as a Manager; provided, however, that nothing contained herein
shall eliminate or limit the liability of such Person (i) for any breach of
the Manager's duty of loyalty to the Company, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of the law and, (iii) for any transaction from which the Manager derived an
improper personal benefit.
ARTICLE VII
Rights and Obligations of the Members
7.01 Limitation of Liability. Anything herein to the contrary
notwithstanding, except as otherwise expressly agreed in writing, a Member
shall not be personally liable for any debts, liabilities, or obligations of
the Company, whether to the Company, to any of the other Members, or to
creditors of the Company, beyond the Capital Account of the Member, together
with the Member's share of the assets and undistributed profits of the
Company.
7.02 Voting Rights. Action requiring a vote of the Members
may be taken by a Majority Vote of the Members. Unless and until there shall
have occurred an Event of Default, PSO shall hold 4% of all Voting Rights and
Smith shall hold 48% of all Voting Rights, and Monika shall hold 48% of all
Voting Rights. Upon the occurrence of an Event of Default. Voting Rights
shall be reapportioned so that the Voting Rights held by PSO on the one hand,
and the Voting Rights held by Smith and Monika on the other hand, shall be in
proportion to the amounts of principal and accrued interest then outstanding
under the PSO Note and Smith Note, respectively. For example, if at the time
of an occurrence of an Event of Default, the amounts of outstanding principal
and accrued interest under the PSO Note and Smith Note are $2 Million and
$500,000, respectively, PSO would be entitled to 80% of all Voting Rights,
Smith 10% and Monika 10%.
7.03 Indemnification.
(a) To the maximum extent permitted by law, the Company shall
indemnify and hold harmless the Managers, all Members, their respective
Affiliates, and the employees and agents of the Company (each, an
"Indemnitee") from and against any and all losses, claims, demands, costs,
damages, liabilities, joint and several, expenses of any nature (including
attorneys' fees and disbursements), judgments, fines, settlements, penalties
and other expenses actually and reasonably incurred by the Indemnitee in
connection with any and all claims, demands, actions, suits, or proceedings,
civil, criminal, administrative or investigative, in which the Indemnitee may
be involved, or threatened to be involved, as a party or otherwise, by reason
of the fact that the Indemnitee is or was a Manager or Member of the Company
or is or was an employee or agent of the Company, including Affiliates of the
foregoing, arising out of or incidental to the business of the Company,
provided, (i) the Indemnitee's conduct did not constitute willful misconduct
or recklessness, (ii) the action is not based on breach of this Agreement,
(iii) the Indemnitee acted in good faith and in a manner he or it reasonably
believed to be in, or not opposed to, the best interests of the Company and
within the scope of such Indemnitee's authority and (iv) with respect to a
criminal action or proceeding, the Indemnitee had no reasonable cause to
believe its conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere, or its equivalent, shall not, in and of itself, create a
presumption or otherwise constitute evidence that the Indemnitee acted in a
manner contrary to that specified above.
(b) Expenses incurred by an Indemnitee in defending any claim,
demand, action, suit or proceeding subject to this Section 7.03 may, from time
to time, be advanced by the Company prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Company of an
undertaking by or on behalf of the Indemnitee to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified as
authorized in this Section 7.03.
(c) Indemnification provided by this Section 7.03 shall be in
addition to any other rights to which the Indemnitee may be entitled under any
agreement, vote of the Members, as a matter of law or equity, or otherwise,
and shall inure to the benefit of the successors, assignees, heirs, personal
representatives and administrators of the Indemnitee.
(d) The Company may purchase and maintain insurance, at the
Company's expense, on behalf of any Indemnities against any liability that may
be asserted against or expense that may be incurred by an Indemnitee in
connection with the activities of the Company regardless of whether the
Company would have the power to indemnify such Indemnitee against such
liability under the provisions of this Agreement.
ARTICLE VIII
Books, Records, and Accounting
8.01 Books and Records. Appropriate books and records with
respect to the Company's business shall at all times be kept at the principal
office of the Company or at such other places as agreed to by the Members.
Any records maintained by the Company in the regular course of its business
may be kept on, or be in the form of, magnetic tape, photographs or any other
information storage device, provided that the records so kept are convertible
into clearly legible written form within a reasonable period of time. Each
Member shall have the right upon demand and at such Member's own expense to
inspect and copy any of the Company's books and records and obtain such other
information regarding the affairs of the Company.
8.02 Accounting. The books of the Company for regulatory and
financial reporting purposes shall be maintained on cash basis of accounting.
The Company books for purposes of maintaining and determining Capital Accounts
shall be maintained in accordance with the provisions of this Agreement,
Section 704 of the Code and, to the extent not inconsistent therewith, the
principles described above for financial reporting and regulatory purposes.
Comparisons of budgeted income and expenses to actual income and expenses of
the Company shall be on the accrual basis of accounting.
8.03 Fiscal Year. The fiscal year of the Company shall be the
calendar year, unless otherwise determined by Majority Vote of the Members.
ARTICLE IX
Tax Matters
9.01 Taxable year. The taxable year of the Company shall be
the calendar year, unless otherwise determined by Majority Vote of the
Members.
9.02 Tax Controversies. The "Tax Matters Partner" (as defined
in Section 6231(a)(7) of the Code) shall be determined by a Majority Vote of
the Members, and shall be authorized and required to represent the Company, at
the Company's expense, in connection with all examinations of the Company's
affairs by tax authorities, including resulting administrative and judicial
proceedings. Each Member agrees to cooperate with the Tax Matters Partner,
and to do or refrain from doing any or all things reasonably required by the
Tax Matters Partner to conduct such proceedings.
9.03 Taxation as a Partnership. No election shall be made by
the Company or any Member for the Company to be excluded from the application
of any provision of Subchapter K, Chapter 1 of Subtitle A of the Code or from
any similar provisions of any state tax laws.
ARTICLE X
Transfer of Units
10.01. Transfer.
(a) The term "transfer," when used in this Article X with
respect to a Unit, shall be deemed to refer to a transaction by which the
Member assigns all or a portion of its Units, or any interest therein, to
another Person, or by which the holder of a Unit assigns the Unit to another
Person as Assignee, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, transfer by will or intestate
succession, exchange, or any other disposition.
(b) No Units shall be transferred, in whole or in part, except
in accordance with the terms and conditions set forth in this Article X. Any
transfer or purported transfer of any Units not made in accordance with this
Article X shall be null and void. If for any reason any such transfer is not
null and void, then the Assignee shall not be a Substitute Member, and shall
have no right to participate in Company's affairs as a Member thereof, but
instead shall be entitled to receive only the share of profits or other
compensation by way of income and the return of contributions to which the
transferring Member would otherwise be entitled at the time said transferring
Member would be entitled to receive the same.
10.02. Transfer of Units by a Member.
(a) No Units may be transferred by a Member unless the
following conditions are first satisfied:
(i) A Majority Vote of Members approving the transfer has
been obtained, such approval to be evidenced by a written instrument, dated
and signed by the Members; provided, however, no such approval shall be
required with respect to any transfer of Units by PSO to its parent
corporation, Central and South West Corporation, or any direct or indirect
subsidiary of such parent corporation;
(ii) The transferee and each Member execute and file all
documents necessary for the transferee to be a Substitute Member and be bound
by the terms hereof and such transferee is admitted as a Substitute Member;
and
(iii) The Company receives an Opinion of Counsel that such
transfer would not materially adversely affect the classification of the
Company as a partnership for federal and (as applicable) state income tax
purposes.
(b) The transfer restrictions on Company Units shall be
conspicuously noted in an appropriate legend on any Unit certificates issued.
(c) In no event shall any Unit be transferred to a minor or
any incompetent except by will or intestate succession.
(d) The Company need not recognize, for any purpose, any
transfer of all or any fraction of a Unit unless there shall have been filed
with the Company and recorded on the Company's books a duly executed and
acknowledged counterpart of the instrument of assignment and such instrument
evidences the written acceptance by the Assignee of all of the terms and
provisions of this Agreement and represents that such assignment was made in
accordance with all applicable laws and regulations.
(e) Any holder of a Unit (including a transferee thereof)
shall be deemed conclusively to have agreed to comply with and be bound by all
terms and conditions of this Agreement, with the same effect as if such holder
had executed an express acknowledgment thereof, whether or not such holder in
fact has executed such an express acknowledgment.
10.03. Restrictions on Transfer. Notwithstanding the other
provisions of this Article X, no transfer of any Unit of any Member shall be
made if the transfer (i) would violate applicable federal and state securities
laws or rules and regulations of the Securities and Exchange Commission, any
state securities commission or any other governmental authority with
jurisdiction over the transfer, (ii) would materially adversely affect the
classification of the Company as a partnership for federal or (as applicable)
state income tax purposes, or (iii) would affect the Company's qualification
as a limited liability company under the Act.
10.04. Issuance of Certificates. The Company may issue one or
more Certificates in the name of the Member evidencing the number of Units
issued. Upon the transfer of a Unit in accordance with Article X, the Company
shall, if certificates have been issued, issue replacement Certificates. All
Certificates shall contain legends required by this Agreement or otherwise
required by law.
10.05. Lost, Stolen or Destroyed Certificates. The Company
shall issue a new Certificate in place of any Certificate previously issued if
the Record Holder of the Certificate: (i) makes proof by affidavit that a
previously issued Certificate has been lost, stolen, or destroyed; (ii)
requests the issuance of a new Certificate before the Company has notice that
the Units evidenced by such Certificate have been acquired by a purchaser for
value in good faith and without notice of an adverse claim; and (iii) if
required by the Company, delivers to the Company a bond with surety or
sureties acceptable to the Company, to indemnify the Company against any claim
that may be made on account of the alleged loss, destruction or theft of the
Certificate. The Company shall be entitled to treat each Record Holder as the
Member or Assignee in fact of any Units and, accordingly, shall not be
required to recognize any equitable or other claim or interest in or with
respect to the Units on the part of any other Person, regardless of whether it
has actual or other notice thereof.
ARTICLE XI
Admission of Substitute and Additional Members
11.01. Admission of Substitute Members.
(a) Upon a transfer of a Unit by a Member in accordance with
Article X (but not otherwise), the transferor shall have the power to give,
and by transfer of any Certificate issued shall be deemed to have given, the
transferee the right to apply to become a Substitute Member with respect to
the Unit acquired, subject to the conditions of and in the manner permitted
under this Agreement. An Assignee of a Certificate representing a Unit shall
not become a Substitute Member with respect to the transferred Unit (whether
or not such transferee is then a Member or Substitute Member with respect to
other previously acquired Units) unless and until all of the following
conditions are satisfied:
(i) The instrument of assignment sets forth the intentions
of the assignor that the Assignee succeed to the assignor's interest as a
Substitute Member in his place;
(ii) The assignor and Assignee shall have fulfilled all
other requirements of this Agreement;
(iii) The Assignee shall have paid all reasonable legal fees
and filing costs incurred by the Company in connection with his substitution
as a Member; and
(iv) The Members shall have unanimously approved such
substitution in writing, which approval may be granted or withheld by each
Member in its sole and absolute discretion and may be arbitrarily withheld,
and the books and records of the Company have been modified to reflect the
admission; provided, no such approval shall be required with respect to any
transfer by PSO to its parent corporation, Central and South West Corporation,
or any direct or indirect subsidiary of such parent corporation.
(b) The admission of an Assignee as a Substitute Member with
respect to a transferred Unit shall become effective on the date the Members
give their unanimous written consent to the admission and the books and
records of the Company have been modified to reflect such admission. Any
Member who transfers all of his Units with respect to which it had been
admitted as a Member shall cease to be a Member of the Company upon a transfer
of such Units in accordance with Article X and the execution of a counterpart
of this Agreement by the transferee and shall have no further rights as a
Member in or with respect to the Company (whether or not the Assignee of such
former Member is admitted to he Company as a Substitute Member).
11.02. Admission of Additional Members. Except as otherwise
provided in Section 6.03, additional Units may be authorized and issued by the
Company upon such terms and conditions as may be approved by a Majority Vote
of the Members. Upon the proposed issuance of any such additional Units, each
existing Member shall have the preemptive right, but not the obligation, to
purchase such portion of the newly issued Units as the ratio of the number of
Units then held by such Member bears to the total number of Units held by
Members and outstanding before the issuance of the new Units, together with
such Member's proportionate share of the other newly issued Units as to which
other Members fail to exercise their preemptive rights.
ARTICLE XII
Dissolution and Liquidation
12.01 Disqualification of Member. Upon the death, incapacity,
resignation, expulsion, bankruptcy or dissolution of a Member (such Member
being hereinafter sometimes referred to as a "Disqualified Member"), or the
occurrence of any other event which terminates the continued membership of a
Member in the Company (any of such events being referred to herein as an
"Event of Dissolution"), the Company shall dissolve and its affairs shall be
wound up; provided, however, it is agreed that without the consent of all
other Members, no Member may voluntarily resign from the Company until after
the second anniversary of the date of this Agreement. The Company shall
thereafter conduct only activities necessary to wind up its affairs, unless
there is at least one (1) remaining Member and within sixty (60) days after
the occurrence of an Event of Dissolution, all the remaining Members
unanimously agree to continue the Company. If any election to continue the
Company is made, then:
(a) Subject to the provisions of Section 12.01(c), the
remaining Members may elect, within thirty (30) days of the decision to
continue the Company, to purchase the Disqualified Member's Units upon such
terms and conditions as the remaining Members and the Disqualified Member or
the legal representative of the Disqualified Member, may agree. In the event
the remaining Members and the Disqualified Member (or such legal
representative) do not agree upon terms and conditions for a purchase of the
Units of the Disqualified Member,the remaining Members shall have an option
(to be exercised within sixty (60) days after the occurrence of the Event of
Dissolution, by giving notice to the Disqualified Member, or such legal
representative) to purchase the Units for a cash purchase price determined by
the value of the Capital Account of the Disqualified Member, as of the end of
the calendar month preceding the occurrence of the Event of Dissolution,
adjusted as if all Company Property were sold at fair market value, and all
liabilities of the Company were paid and the Company was liquidated in
accordance with the provisions of Section 12.02.
(b) The Company shall continue until the expiration of the
term for which it was formed or until the occurrence of another Event of
Dissolution, in which event any remaining Members shall again elect whether to
continue the Company pursuant to this Section 12.01.
(c) The provisions of Section 12.01(a) shall not apply if (i)
at the time the Event of Dissolution occurs, both Smith and Monika are
Members, and (ii) the event that has caused the Event of Dissolution is the
death, incapacity, or resignation of either Smith or Monika. If Smith is the
Disqualified Member, the Units held by Smith shall be automatically
transferred to Monika, and vice-versa if Monika is the Disqualified Member;
provided, if the Member otherwise entitled to the Units under this Section
12.01(c) declines the transfer in writing, the Units shall become subject to
the provisions of Section 12.01(a).
12.02 Dissolution and Liquidation. The Company shall be
dissolved and its affairs shall be wound up upon the occurrence of any of the
following: (i) the term of the Company stated in Articles of Organization
expires; (ii) if, upon the occurrence of an Event of Dissolution, the
remaining Members fail to continue the Company pursuant to Section 11.01; or
(iii) all Members vote to dissolve the Company.
12.03 Method of Winding Up. Upon dissolution of the Company
pursuant to Section 12.02, the Company shall immediately commence to liquidate
and wind up its affairs. The Members shall continue to share profits and
losses during the period of liquidation and winding up in the same proportion
as before commencement of winding up and dissolution. The proceeds from the
liquidation and winding up shall be applied in the following order of
priority:
(a) To creditors, including Members who are creditors, to the
extent permitted by law, in satisfaction of liabilities of the Company other
than liabilities to Members on account of their Capital Contributions or on
account of a Member's withdrawal from the Company or pursuant to a withdrawal
of capital; and
(b) The balance, to Members in accordance with their Capital
Accounts. Unless the Members shall unanimously determine otherwise, all
distributions will be made in cash, and none of the Company Property will be
distributed in kind to the Members.
12.04 Filing Articles of Dissolution. Upon the completion of
the distribution of Company Property as provided in Section 12.02, Articles of
Dissolution shall be filed as required by the Act, and each member agrees to
take whatever action may be advisable or proper to carry out the provisions of
this Section.
12.05 Return of Capital. The return of Capital Contributions
shall be made solely from Company Property.
ARTICLE XIII
Amendment of Agreement; Meetings
13.01 Amendments. Unless and until there shall have occurred
an Event of Default, all amendments to this Agreement shall require the
unanimous consent of the Members. Upon the occurrence of an Event of Default,
all amendments to this Agreement may be effected by a Majority Vote of the
Members, subject to the provisions of Section 13.02.
13.02 Limitations on Amendments. Notwithstanding any other
provision of this Agreement, no amendment to this Agreement may without the
unanimous approval of all Members (i) enlarge the obligations of any Member
under this Agreement or (ii) amend this Section 13.02 or Section 13.01.
13.03 Meetings. Meetings may be called by any Member, by
giving at least five (5) business days prior notice of the time, place and
purpose of the meeting to all Members. Special meetings for the purpose of
approval of a transfer of a Member may be held only on the 1st or 15th day of
the month, or if either of these days falls on a Saturday, Sunday, or legal
Holiday, on the first day thereafter.
13.04. Adjournment. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting, if the time
and place thereof are announced at the meeting at which the adjournment is
taken, unless such adjournment shall be for more than forty-five days. At the
adjourned meeting, the Company may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than
forty-five days, a notice of the adjourned meeting shall be given in
accordance with this Section 13.04.
13.05. Waiver of Notice; Consent to Meeting; Approval of
Minutes. The transactions of any meeting of the Company, however called and
noticed, and whenever held, are as valid as though had at a meeting duly held
after regular call and notice, if a quorum is present either in person or by
proxy, and if, either before or after the meeting, each of the Members
entitled to vote, but not present in person or by proxy, approves by signing a
written waiver of notice or an approval to the holding of the meeting or an
approval of the minutes thereof. All waivers, consents, and approvals shall
be filed with the Company records or made a part of the minutes of the
meeting. Attendance of a Member at a meeting shall constitute a waiver of
notice of the meeting, except when such Member objects, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened; and except that attendance at a meeting is not a
waiver of any right to object to the consideration of matters required to be
included in the notice of the meeting, but not so included, if the objection
is expressly made at the meeting.
13.06 Quorum. The holders of a majority of the Voting Rights,
represented in person or by proxy, shall constitute a quorum at a meeting of
Members. The Members present at a duly called or held meeting at which a
quorum is present may continue to participate at such meeting until
adjournment, notwithstanding the withdrawal of enough Members to leave less
than a quorum, if any action taken (other than adjournment) is approved by the
requisite percentage of Voting Rights of Members specified in this Agreement.
In the absence of a quorum, any meeting of Members may be adjourned from time
to time by a Majority Vote of the Members represented either in person or by
proxy entitled to vote, but no other matters may be proposed, approved or
disapproved, except as provided in Section 13.04.
13.07 Action Without a Meeting. Any action that may be taken
by any vote of the Members may be taken without a meeting if a consent to such
action is signed by all Members.
ARTICLE XIV
General Provisions
14.01 Notices. Any notice, demand, request or report required
or permitted to be given or made to a Member under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when
sent by first class mail to the Member. Any notice, payment, or report to be
given or sent to a Member hereunder shall be deemed conclusively to have been
given or sent, upon mailing of such notice, payment, or report to the address
shown on the records of the Company, regardless of any claim of any Person who
may have an interest in the Unit by reason of an assignment or otherwise.
14.02 Captions. All article and section captions in this
Agreement are for convenience only. They shall not be deemed part of this
Agreement and in no way define, limit, extend or describe the scope or intent
of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
14.03 Pronouns and Plurals. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
14.04 Further Action. The parties to this Agreement shall
execute and deliver all documents, provide all information and take or refrain
from taking action as may be necessary or appropriate to achieve the purposes
of this Agreement.
14.04 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assignees.
14.06 Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
14.07 Waiver. No failure by any party to insist upon the
strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach or any other covenant, duty,
agreement or condition.
14.08 Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute an agreement binding on
all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become
bound by this Agreement immediately upon affixing its signature hereto,
independently of the signature of any other party.
14.09 Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Oklahoma, without
regard to its principles of conflict of laws.
14.10 Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein shall not be affected thereby.
14.11 Conveyances. All of the assets of the Company shall be
held in the name of the Company. Any deed, bill of sale, mortgage, lease,
contract of sale or other instrument purporting to convey or encumber the
interest of the Company of all or any portion of the assets of the Company
shall be sufficient when signed by a Manager.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the ______ day of ______________, 199 .
MEMBERS:
____________________________
RICHARD H. SMITH
Monika SMITH
PUBLIC SERVICE COMPANY
OF OKLAHOMA
By:___________________________
Title:________________________
<PAGE>
<PAGE>
EXHIBIT 10
UNIVERSAL POWER PRODUCTS COMPANY, L.L.C.
AMENDED AND RESTATED
ARTICLES OF ORGANIZATION
TO: THE OKLAHOMA SECRETARY OF STATE
101 State Capitol
Oklahoma City, OK 73105
The undersigned Members of Universal Power Products Company,
L.L.C., an Oklahoma limited liability company (the "Company"), for the purpose
of adopting Amended and Restated Articles of Organization pursuant to Section
2011 of the Oklahoma Limited Liability Company Act (the "Act"), hereby
certifies:
1. The name of this Company is "Universal Power Products
Company, L.L.C."
2. The name under which this Company was originally
organized was "Universal Power Products Company, L.L.C."
3. The Articles of Organization of this Company were
originally filed with the Oklahoma Secretary of State on , 1995.
4. The amendments to the Articles of Organization effected
by this document are to change and restate the provisions relating to the
regulation of the internal affairs of the Company.
5. These Amended and Restated Articles of Organization were
duly adopted by the Members of the Company in accordance with Section 2020 of
the Act, and restate, integrate and further amend the Articles of
Organization.
6. The Articles of Organization of the Company are hereby
restated as further amended herein, to read in full, as follows:
"ARTICLES OF ORGANIZATION
OF
UNIVERSAL POWER PRODUCTS COMPANY, L.L.C.
FIRST. The name of the limited liability company is Universal
Power Products Company, L.L.C. (the "Company").
SECOND. The latest date on which the Company is to dissolve is
12:00 midnight, December 31, 2015.
THIRD. The purpose of the Company is to engage in any lawful
act or activity for which limited liability companies may be organized under
the Act.
FOURTH. The street address of the principal place of business
of the Company in the State of Oklahoma is 6130 South Memorial, Tulsa,
Oklahoma 74133.
FIFTH. The name and address of the registered agent of the
Company in the State of Oklahoma is Richard H. Smith, 11708 South Canton,
Tulsa, Oklahoma
74137.
SIXTH. The business of the Company shall be managed by one or
more Managers designated pursuant to the terms of the Company's Operating
Agreement. Subject to the restrictions contained herein, any third person
dealing with the Company may rely absolutely upon the act, deed and/or
signature of each Manager as being the act of the Company and no third person
shall be obliged or privileged to inquire into or otherwise ascertain whether
the act of the Manager has been duly authorized.
SEVENTH. Notwithstanding any other provision hereof, unless
and until there shall have occurred an Event of Default (as such term is
defined in the Company's Operating Agreement), no Manager shall have the
authority to cause the Company to do or commit to do any of the following
acts, without the prior unanimous written consent of the specific act by the
Members; however, upon the occurrence of an Event of Default, each Manager
shall have the authority to cause the Company to do or commit to do such acts
upon the Majority Vote of the Members (as such term is defined in the
Company's Operating Agreement): (a) borrow money in excess of $10,000; (b)
sell any asset of the Company (or assets, in related transactions) having a
fair market value in excess of $10,000; (c) enter into any contract involving
an anticipated total expenditure of over $10,000; (d) do any act which would
make it impossible to carry on the ordinary business of the Company; (e)
compromise any claim against the Company over $10,000; (f) admit a person as a
Member; (g) knowingly perform any act that would subject a Member to personal
liability; or (h) amend the Articles of Organization; or (i) approve any
business plan of the Company."
IN WITNESS WHEREOF, these Amended and Restated Articles of
Organization have been executed on the _____ day of , 199 , by the
undersigned Members.
______________________________
Richard H. Smith
______________________________
Dennis J. Loudermilk
RIKA Management Company,
L.L.C., an Oklahoma limited
liability company
By:
Richard H. Smith, Manager
<PAGE>
EXHIBIT 11
UNIVERSAL POWER PRODUCTS COMPANY, L.L.C.
AMENDED AND RESTATED
OPERATING AGREEMENT
THIS AMENDED AND RESTATED OPERATING AGREEMENT (the "Agreement") is
entered into as of the day of , 199 , by and among Public
Service Company of Oklahoma, an Oklahoma corporation ("PSO"), Richard H.
Smith, a natural person ("Smith"), Dennis J. Loudermilk, a natural person
("Loudermilk"), and RIKA Management Company, L.L.C., and Oklahoma limited
liability company ("Management"), collectively referred to herein as the
"Members" of Universal Power Products Company, L.L.C., an Oklahoma limited
liability company (the "Company"), and supersedes all prior operating
agreements of the Company. In consideration of the mutual covenants and
conditions hereinafter set forth, the Members hereby agree that the terms of
the Operating Agreement governing the Company shall be as follows:
ARTICLE I
Organizational Matters
1.01 Formation. The Company has been formed as a limited liability
company pursuant to the provisions of the Act (as hereinafter defined). The
rights and obligations of the Members, the Manager designated herein, and the
affairs of the Company, shall be governed first by the mandatory provisions of
the Act, second by the Company's Articles of Organization, third by this
Agreement and fourth by the optional provisions of the Act. In the event of
any conflict among the foregoing, the conflict shall be resolved in the order
of priority set forth in the preceding sentence.
1.02 Name. The name of the Company shall be "Universal Power Products
Company, L.L.C." The company shall conduct its business under the tradename
"Relay Concepts."
1.03 Principal Office. The principal office of the Company in the
State of Oklahoma shall be located at 6130 South Memorial, Tulsa, Oklahoma
74137. The name and address of the resident agent of the Company is Richard
H. Smith, 11708 S. Canton, Tulsa, Oklahoma 74137. The Company may also
maintain offices at such other place or places as the Managers deem advisable.
1.04 Term. The Company commenced upon the filing for record of the
Company's Articles of Organization with the Oklahoma Secretary of State on the
day of , 199__, and shall continue until 12:00 midnight,
December 31, 2015, unless sooner terminated as herein provided.
ARTICLE II
Definitions
2.01 Definitions. For purposes of this Agreement, the following terms
shall have the following meanings.
"Act" means the Oklahoma Limited Liability Company Act, 18 Okla. Stat.
Sec. 2000 et seq. (Supp. 1993), as it may be amended from time to time, and any
successor to such act.
"Affiliate" means any Person that directly or indirectly controls, is
controlled by, or is under common control with, such Person. As used in this
definition of "Affiliate," the term "control" means either (i) the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise or (ii) a direct or indirect equity
interest of ten percent (10%) or more in the entity.
"Agreement" means this Operating Agreement, as it may be amended or
supplemented from time to time.
"Articles of Organization" means the articles of organization, as
amended from time to time, filed by the Company under the Act.
"Assignee" means a Person to whom one or more Units have been
transferred, by transfer or assignment or otherwise, in a manner permitted
under this Agreement, and who has agreed to be bound by the terms of this
Agreement but who has not become a Substitute Member.
"Business Day" means Monday through Friday of each week, except legal
holidays recognized as such by the Government of the United States or the
State of Oklahoma.
"Capital Account" means each capital account maintained for a Member
pursuant to Section 4.03.
"Capital Contributions" means the sum of the total amount of cash and
the total value of property contributed or services rendered, or a promissory
note or other binding obligation to contribute cash or property or to perform
services contributed to the Company by all Members, or any one Member, as the
case may be (or the predecessor holders of any Units of any such Members).
"Capital Gain" means the Company's allocable share of gain from the
disposition by the Company of a capital asset as defined in the Code
(including any portion of such gain treated as ordinary income).
"Cash Available for Distribution" means, with respect to any period, all
cash receipts and funds received by the Company (except for Capital
Contributions) minus (i) all cash expenditures and (ii) the Company's cash
management fund representing working capital or other reserves.
"Code" means the Internal Revenue Code of 1986, as amended, as in effect
from time to time.
"Company" means the limited liability company formed by the filing of
the Company's Articles of Organization with the Oklahoma Secretary of State.
"Company Property" means all property owned, leased or acquired by the
Company from time to time.
"Disqualified Member" has the meaning specified in Section 12.01.
"Event of Default" shall have the meaning ascribed to it in the Member
Agreement.
"Event of Dissolution" has the meaning specified in Section 12.01.
"Income" and "Loss" mean an amount equal to the Company's taxable income
or loss as determined for federal income tax purposes with the following
adjustments:
(a) Any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Income or Loss shall be
added to such Income or Loss;
(b) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as expenditures described in Section
705(a)(2)(B) of the Code pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Income
or Loss, shall be subtracted from such Income or Loss; and
(c) Upon the deemed or actual distribution of property by the
Company to a Member, gain or loss attributable to the difference between the
fair market value of the property and its basis shall be treated as having
been recognized by the Company for federal income tax purposes.
"Majority Vote of the Members" means the affirmative vote of the holders
of a majority of the Voting Rights held by the Members.
"Managers" means the Persons designated pursuant to Article VI.
"Mandatory provisions of the Act" means those provisions of the Act
which may not be waived by the Members acting unanimously or otherwise.
"Member" means any person signing this Agreement as a Member of the
Company.
"Member Agreement" means that certain agreement between PSO, Smith,
Loudermilk, and others, of even date herewith.
"Outstanding" means the number of Units issued by the Company as shown
on the Company's books and records. The term does not include any authorized
Units not issued by the Company or any Units issued but subsequently
reacquired by the Company and held in the Company's treasury.
"Person" means a natural person, partnership, trust, estate, association
or domestic or foreign limited partnership, limited liability company, or
corporation.
"R&D Agreement" means that certain PSO Specific Software Application and
Development Agreement between PSO and Management, dated , 1995.
"Record Holder" means the Person in whose name such Unit is registered
on the books and records of the Company as of the close of business on a
particular Business Day.
"Substitute Member" means a transferee of a Unit who is admitted as a
Member to the Company pursuant to Section 11.01 in place of and with all the
rights of a Member.
"Tax Matters Partner" means the Member designated pursuant to Section
9.02.
"Unit" means a Unit representing an interest in the capital of the
Company.
"Voting Rights" has the meaning specified in Section 7.02.
ARTICLE III
Purpose
3.01 Purpose of the Company. The purpose of the Company is to engage
in any lawful act or activity for which limited liability companies may be
organized under the Act. Such acts or activities may include, but shall not
be limited to, acquiring, operating and maintaining real and personal
properties in the United States and foreign countries. In transacting such
business, the Company may:
(a) acquire an ownership, working, royalty or other interest in
stocks, real estate and other properties, either alone or in conjunction with
other parties;
(b) dispose of, rent, lease, transfer, encumber or otherwise
utilize Company assets used in connection with Company operations as the
Managers deem advisable;
(c) employ such personnel and obtain such legal, accounting, and
other professional services and advice as the Managers may deem advisable in
the course of the Company's operations under this Agreement;
(d) pay all ad valorem taxes levied or assessed against the
Company's assets, and all other taxes (other than income taxes) directly
relating to operations conducted under this Agreement;
(e) execute all contracts, agreements, documents, or instruments
of any kind as may be appropriate for carrying out the purposes of the
Company;
(f) procure and maintain in force such insurance, including
public liability, automotive liability, worker's compensation, and employer's
liability insurance, as may be prudent to protect the Company against
liability for loss and damages which may be occasioned by the activities to be
engaged in by the Company;
(g) purchase and establish inventories of equipment and material
required or expected to be required in connection with the Company's
operations;
(h) contract or enter into agreements for the performance of
services and the purchase and sale of material, equipment, supplies, and
property, both real and personal;
(i) conduct operations either alone or as a joint venturer,
co-tenant, partner, or in any other manner of participation with any Member or
third parties and to enter into agreements and contracts setting forth the
terms and provisions of such participation;
(j) borrow money from any Person, including, without limitation,
banks, other lending institutions, and Members, for Company purposes and
pledge Company Property for the repayment of such loans;
(k) sell, relinquish, release, abandon, or otherwise dispose of
Company assets, including undeveloped, productive, and condemned properties,
in accordance with other provisions herein; and
(l) perform any and all other acts or activities customary or
incident to conducting the above Company operations.
ARTICLE IV
Capital Contributions
4.01 Authorized Units. The Company shall have the authority to issue
an aggregate of one hundred (100) Units.
4.02 Capital Contributions.
(a) Smith, Loudermilk, and Management hereby surrender their
respective membership interests in the Company in exchange for fifty-two (52)
Units, of which nineteen (19) Units are hereby issued to Smith, twenty-eight
(28) Units are hereby issued to Loudermilk, and five (5) Units are hereby
issued to Management. Upon the issuance of Units to PSO pursuant to Section
4.02(b), the Units held by Smith, Loudermilk, and Management shall in the
aggregate constitute 52% of the Outstanding Units of the Company.
(b) For good and valuable consideration, the receipt of which is
hereby acknowledged by the Company, PSO is hereby issued forty-eight (48)
Units, constituting 48% of the Outstanding Units of the Company.
4.03 Capital Accounts.
(a) The Company shall maintain for each Member a separate Capital
Account. The term "Capital Account" shall mean as to any Member and as to any
Units held by that Member the amount of the initial Capital Contribution
attributable to the Units held by that Member, which amount shall be (i)
increased by subsequent Capital Contributions by such Member, and Capital Gain
and Income allocated to such Member pursuant to Section 5.02, (ii) decreased
by distributions to such Member pursuant to Section 5.01 and Losses allocated
to such Member pursuant to Section 5.02, and (iii) further adjusted as
required by Section 704 of the Code, the Treasury Regulations issued
hereunder, and any other applicable provisions of the Code or Treasury
Regulations. Distributions shall be debited to Capital Accounts in the year
containing the record date for such distribution.
(b) It is not currently anticipated that the Company will receive
any Capital Contributions in any form other than cash. In the event any
in-kind contributions or contributions in the form of services are ever made,
the Capital Account of the contributing Member shall be increased by the fair
market value of the property or services contributed by such Member.
(c) The foregoing definition of Capital Account and certain other
provisions of this Agreement are intended to comply with Treasury Regulations
issued under Section 704(b) of the Code, and shall be interpreted and applied
in a manner consistent with those regulations. Such regulations contain
additional rules governing maintenance of capital accounts that have not been
addressed in this Agreement.
(d) An Assignee of a Unit will succeed to the Capital Account
relating to the Unit transferred. However, if the transfer causes a
termination of the Company under Section 708(b)(1)(B) of the Code, the Company
Property shall be deemed to have been distributed immediately after such
transfer in liquidation of the Company to the Members (including the
transferee of a Unit) pursuant to Section 12.02 and recontributed by such
Members in reconstitution of the Company. The Capital Accounts of such
reconstituted Company shall be maintained in accordance with the principles of
this Section 4.03.
(e) The Capital Accounts shall be maintained to comply with
Treasury Regulations issued under Section 704 of the Code, and shall be
revalued and adjusted at such times as may be permitted or required by
Treasury Regulations issued pursuant to Section 704 of the Code. All
allocations of gain resulting from such revaluation shall be made consistently
with those applicable Treasury Regulations, and to the extent not inconsistent
therewith, the Income allocation provisions of Section 5.02 hereof.
4.04 Interest. No interest shall be paid by the Company on Capital
Contributions, on balances in a Member's Capital Account or on any other funds
distributed or distributable under this Agreement.
4.05 No Withdrawal. Except as otherwise required under any mandatory
provisions of the Act, no Member shall without the written consent of all
remaining Members of the Company have (i) any right to resign voluntarily or
otherwise to withdraw from the Company, or (ii) any right to the withdrawal or
reduction of any part of his Capital Contribution.
4.06 Loans. Loans by a Member to the Company shall not be considered
Capital Contributions. The Company may not make loans to any Member or any
Affiliate of any Member without a Majority Vote of the Members.
ARTICLE V
Allocations and Distributions
5.01 Distribution of Cash Available for Distribution. Distributions of
all Cash Available for Distribution shall be made as determined by a Majority
Vote of the Members. Any distribution of property shall be treated as a
distribution of cash in the amount of the fair market value of such property.
Distribution shall be made to the Members by the Company pro rata, according
to the number of Units held by each, with all Outstanding Units being treated
alike.
5.02 Allocation of Income and Loss.
(a) All items of income, gain, loss, deduction or credit shall be
allocated to all Members and Assignees in accordance with their respective
Units in the Company. All outstanding Units shall be treated equally.
(b) Notwithstanding anything to the contrary in this Section
5.02, if there is a net decrease in "minimum gain" (within the meaning of
Treasury Regulations Section 1.704-2(d) and (g) during a fiscal year, all
Members with a deficit balance in their Capital Accounts at the end of that
year (excluding items described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4)-(6) shall be allocated, before any other allocations
of such items for such fiscal year, items of Income and gain for such year
(and if necessary, subsequent years), in an amount and in the proportions
necessary to eliminate such deficits as quickly as possible. The foregoing
sentence is intended to be a "minimum gain charge back" provision as described
in Treasury Regulations Section 1.704-2(f), and shall be interpreted and
applied in all respects in accordance with that regulation.
(c) If during any fiscal year of the Company, any Member
unexpectedly receives an adjustment, allocation, or distribution of the type
described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4),(5), or (6),
that Member shall be allocated items of Income (consisting of a pro rata
portion of each item of partnership income, including gross income, and gain
for such year) in an amount and manner sufficient to eliminate that Member's
deficit Capital Account balance as quickly as possible.
(d) Under regulations prescribed by the Secretary of the Treasury
pursuant to Section 704(c) of the Code, items of Capital Gain, Income and Loss
with respect to property contributed to the Company by a Member shall be
shared among Members so as to take account of the variation between the basis
of the property to the Company and its fair market value at the time of
contribution. The Members shall have the power to make such elections, adopt
such conventions, and allocate Capital Gain, Income and Loss as each of them
deems appropriate to comply with Section 704(c) of the Code and any Treasury
Regulations promulgated thereunder and to preserve, to the extent possible,
uniformity of the Units. Any item allocated under this Section 5.02(d) shall
not be debited or credited to a Member's Capital Account to the extent that
such item is already taken into account (upon formation or otherwise) in
determining such Member's Capital Account.
(e) Whenever a Member's interest in the Company changes, such
Member's distributive share of income, gain, loss, deduction or credit of the
Company shall be determined in accordance with Section 706(d) of the Code and
allocated on a daily basis. The Members may revise, alter, or otherwise
modify the method of allocation as they determine necessary to comply with
Section 706(d) of the Code and regulations or rulings promulgated thereunder.
(f) If, and to the extent that, any Member is deemed to recognize
income pursuant to Sections 482, 483, 1272-1274, or 7872 of the Code as a
result of any transaction between the Member and the Company, any
corresponding resulting Loss or deduction of the Company shall be allocated to
the Member who recognizes such income.
(g) All tax credits for federal or state income tax purposes
shall be allocated in the same manner as Income.
ARTICLE VI
Management and Operation of Business
6.01. Managers. Management of the Company shall be vested in two (2)
Managers, who shall be elected by Majority Vote of the Members at any annual
or special meeting called for that purpose.
6.02. Authority of Managers. Any Person serving as Manager may
exercise all the powers of the Company whether derived from law, the Articles
of Organization or this Agreement, except such powers as are by statute, by
the Articles of Organization or by this Agreement vested solely in the
Members.
6.03. Restrictions on Managers. Notwithstanding any other provision
hereof, unless and until there shall have occurred an Event of Default, no
Manager shall have the authority to cause the Company to do or commit to do
any of the following acts, without the prior unanimous written consent of the
specific act by the Members; however, upon the occurrence of an Event of
Default, each Manager shall have the authority to cause the Company to do or
commit to do such acts upon the Majority Vote of the Members:
(a) Borrow money in excess of $10,000;
(b) Sell any assets of the Company (or assets, in related
transactions) having a fair market value over $10,000;
(c) Enter into any contract involving an anticipated total
expenditure of over $10,000;
(d) Do any act which would make it impossible to carry on the
ordinary business of the Company;
(e) Compromise any claim over $10,000;
(f) Admit a Person as a Member;
(g) Knowingly perform any act that would subject a Member to
personal liability;
(h) Amend the Articles of Organization; or
(i) Approve any business plan of the Company.
6.04. Outside Activities. The Members and Managers their respective
Affiliates have business interests and engage in business activities in
addition to those relating to the Company. No provision of this Agreement
shall be deemed to prohibit the Members, the Managers or their respective
Affiliates from conducting such businesses and activities, provided they are
not in direct competition with the Company. Neither the Company nor any
Member shall have any rights by virtue of this Agreement or the relationship
contemplated herein in any non-competing business ventures of any other Member
or the Affiliates of such Member.
6.05. Limitation on Liability of Managers. No Person serving as
Manager shall be liable to the Company for monetary damages for breach of
fiduciary duty as a Manager; provided, however, that nothing contained herein
shall eliminate or limit the liability of such Person (i) for any breach of
the Manager's duty of loyalty to the Company, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of the law and, (iii) for any transaction from which the Manager derived an
improper personal benefit.
ARTICLE VII
Rights and Obligations of the Members
7.01 Limitation of Liability. Anything herein to the contrary
notwithstanding, except as otherwise expressly agreed in writing, a Member
shall not be personally liable for any debts, liabilities, or obligations of
the Company, whether to the Company, to any of the other Members, or to
creditors of the Company, beyond the Capital Account of the Member, together
with the Member's share of the assets and undistributed profits of the
Company.
7.02 Voting Rights. Action requiring a vote of the Members may be
taken by a Majority Vote of the Members. Unless and until there shall have
occurred an Event of Default, PSO shall hold 4% of all Voting Rights, Smith
shall hold 45 1/2%, Loudermilk shall hold 45 1/2%, and Management shall hold 5%.
Upon the occurrence of an Event of Default, Management shall hold 100% of all
Voting Rights, and PSO, Smith and Loudermilk will hold no Voting Rights.
7.03 Indemnification.
(a) To the maximum extent permitted by law, the Company shall
indemnify and hold harmless the Managers, all Members, their respective
Affiliates, and the employees and agents of the Company (each, an
"Indemnitee") from and against any and all losses, claims, demands, costs,
damages, liabilities, joint and several, expenses of any nature (including
attorneys' fees and disbursements), judgments, fines, settlements, penalties
and other expenses actually and reasonably incurred by the Indemnitee in
connection with any and all claims, demands, actions, suits, or proceedings,
civil, criminal, administrative or investigative, in which the Indemnitee may
be involved, or threatened to be involved, as a party or otherwise, by reason
of the fact that the Indemnitee is or was a Manager or Member of the Company
or is or was an employee or agent of the Company, including Affiliates of the
foregoing, arising out of or incidental to the business of the Company,
provided, (i) the Indemnitee's conduct did not constitute willful misconduct
or recklessness, (ii) the action is not based on breach of this Agreement,
(iii) the Indemnitee acted in good faith and in a manner he or it reasonably
believed to be in, or not opposed to, the best interests of the Company and
within the scope of such Indemnitee's authority and (iv) with respect to a
criminal action or proceeding, the Indemnitee had no reasonable cause to
believe its conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere, or its equivalent, shall not, in and of itself, create a
presumption or otherwise constitute evidence that the Indemnitee acted in a
manner contrary to that specified above.
(b) Expenses incurred by an Indemnitee in defending any claim,
demand, action, suit or proceeding subject to this Section 7.03 may, from time
to time, be advanced by the Company prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Company of an
undertaking by or on behalf of the Indemnitee to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified as
authorized in this Section 7.03.
(c) Indemnification provided by this Section 7.03 shall be in
addition to any other rights to which the Indemnitee may be entitled under any
agreement, vote of the Members, as a matter of law or equity, or otherwise,
and shall inure to the benefit of the successors, assignees, heirs, personal
representatives and administrators of the Indemnitee.
(d) The Company may purchase and maintain insurance, at the
Company's expense, on behalf of any Indemnities against any liability that may
be asserted against or expense that may be incurred by an Indemnitee in
connection with the activities of the Company regardless of whether the
Company would have the power to indemnify such Indemnitee against such
liability under the provisions of this Agreement.
ARTICLE VIII
Books, Records, and Accounting
8.01 Books and Records. Appropriate books and records with respect to
the Company's business shall at all times be kept at the principal office of
the Company or at such other places as agreed to by the Members. Any records
maintained by the Company in the regular course of its business may be kept
on, or be in the form of, magnetic tape, photographs or any other information
storage device, provided that the records so kept are convertible into clearly
legible written form within a reasonable period of time. Each Member shall
have the right upon demand and at such Member's own expense to inspect and
copy any of the Company's books and records and obtain such other information
regarding the affairs of the Company.
8.02 Accounting. The books of the Company for regulatory and financial
reporting purposes shall be maintained on cash basis of accounting. The
Company books for purposes of maintaining and determining Capital Accounts
shall be maintained in accordance with the provisions of this Agreement,
Section 704 of the Code and, to the extent not inconsistent therewith, the
principles described above for financial reporting and regulatory purposes.
Comparisons of budgeted income and expenses to actual income and expenses of
the Company shall be on the accrual basis of accounting.
8.03 Fiscal Year. The fiscal year of the Company shall be the calendar
year, unless otherwise determined by Majority Vote of the Members.
ARTICLE IX
Tax Matters
9.01 Taxable year. The taxable year of the Company shall be the
calendar year, unless otherwise determined by Majority Vote of the Members.
9.02 Tax Controversies. The "Tax Matters Partner" (as defined in
Section 6231(a)(7) of the Code) shall be determined by a Majority Vote of the
Members, and shall be authorized and required to represent the Company, at the
Company's expense, in connection with all examinations of the Company's
affairs by tax authorities, including resulting administrative and judicial
proceedings. Each Member agrees to cooperate with the Tax Matters Partner,
and to do or refrain from doing any or all things reasonably required by the
Tax Matters Partner to conduct such proceedings.
9.03 Taxation as a Partnership. No election shall be made by the
Company or any Member for the Company to be excluded from the application of
any provision of Subchapter K, Chapter 1 of Subtitle A of the Code or from any
similar provisions of any state tax laws.
ARTICLE X
Transfer of Units
10.01. Transfer.
(a) The term "transfer," when used in this Article X with respect
to a Unit, shall be deemed to refer to a transaction by which the Member
assigns all or a portion of its Units, or any interest therein, to another
Person, or by which the holder of a Unit assigns the Unit to another Person as
Assignee, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, transfer by will or intestate succession, exchange,
or any other disposition.
(b) No Units shall be transferred, in whole or in part, except in
accordance with the terms and conditions set forth in this Article X. Any
transfer or purported transfer of any Units not made in accordance with this
Article X shall be null and void. If for any reason any such transfer is not
null and void, then the Assignee shall not be a Substitute Member, and shall
have no right to participate in Company's affairs as a Member thereof, but
instead shall be entitled to receive only the share of profits or other
compensation by way of income and the return of contributions to which the
transferring Member would otherwise be entitled at the time said transferring
Member would be entitled to receive the same.
10.02. Transfer of Units by a Member.
(a) No Units may be transferred by a Member unless the following
conditions are first satisfied:
(i) A Majority Vote of Members approving the transfer has
been obtained, such approval to be evidenced by a written instrument, dated
and signed by the Members; provided, however, no such approval shall be
required with respect to any transfer of Units by PSO to its parent
corporation, Central and South West Corporation, or any direct or indirect
subsidiary of such parent corporation;
(ii) The transferee and each Member execute and file all
documents necessary for the transferee to be a Substitute Member and be bound
by the terms hereof and such transferee is admitted as a Substitute Member;
and
(iii) The Company receives an Opinion of Counsel that such
transfer would not materially adversely affect the classification of the
Company as a partnership for federal and (as applicable) state income tax
purposes.
(b) The transfer restrictions on Company Units shall be
conspicuously noted in an appropriate legend on any Unit certificates issued.
(c) In no event shall any Unit be transferred to a minor or any
incompetent except by will or intestate succession.
(d) The Company need not recognize, for any purpose, any transfer
of all or any fraction of a Unit unless there shall have been filed with the
Company and recorded on the Company's books a duly executed and acknowledged
counterpart of the instrument of assignment and such instrument evidences the
written acceptance by the Assignee of all of the terms and provisions of this
Agreement and represents that such assignment was made in accordance with all
applicable laws and regulations.
(e) Any holder of a Unit (including a transferee thereof) shall
be deemed conclusively to have agreed to comply with and be bound by all terms
and conditions of this Agreement, with the same effect as if such holder had
executed an express acknowledgment thereof, whether or not such holder in fact
has executed such an express acknowledgment.
10.03. Restrictions on Transfer. Notwithstanding the other provisions
of this Article X, no transfer of any Unit of any Member shall be made if the
transfer (i) would violate applicable federal and state securities laws or
rules and regulations of the Securities and Exchange Commission, any state
securities commission or any other governmental authority with jurisdiction
over the transfer, (ii) would materially adversely affect the classification
of the Company as a partnership for federal or (as applicable) state income
tax purposes, or (iii) would affect the Company's qualification as a limited
liability company under the Act.
10.04. Issuance of Certificates. The Company may issue one or more
Certificates in the name of the Member evidencing the number of Units issued.
Upon the transfer of a Unit in accordance with Article X, the Company shall,
if certificates have been issued, issue replacement Certificates. All
Certificates shall contain legends required by this Agreement or otherwise
required by law.
10.05. Lost, Stolen or Destroyed Certificates. The Company shall issue
a new Certificate in place of any Certificate previously issued if the Record
Holder of the Certificate: (i) makes proof by affidavit that a previously
issued Certificate has been lost, stolen, or destroyed; (ii) requests the
issuance of a new Certificate before the Company has notice that the Units
evidenced by such Certificate have been acquired by a purchaser for value in
good faith and without notice of an adverse claim; and (iii) if required by
the Company, delivers to the Company a bond with surety or sureties acceptable
to the Company, to indemnify the Company against any claim that may be made on
account of the alleged loss, destruction or theft of the Certificate. The
Company shall be entitled to treat each Record Holder as the Member or
Assignee in fact of any Units and, accordingly, shall not be required to
recognize any equitable or other claim or interest in or with respect to the
Units on the part of any other Person, regardless of whether it has actual or
other notice thereof.
ARTICLE XI
Admission of Substitute and Additional Members
11.01. Admission of Substitute Members.
(a) Upon a transfer of a Unit by a Member in accordance with
Article X (but not otherwise), the transferor shall have the power to give,
and by transfer of any Certificate issued shall be deemed to have given, the
transferee the right to apply to become a Substitute Member with respect to
the Unit acquired, subject to the conditions of and in the manner permitted
under this Agreement. An Assignee of a Certificate representing a Unit shall
not become a Substitute Member with respect to the transferred Unit (whether
or not such transferee is then a Member or Substitute Member with respect to
other previously acquired Units) unless and until all of the following
conditions are satisfied:
(i) The instrument of assignment sets forth the intentions of the
assignor that the Assignee succeed to the assignor's interest as a Substitute
Member in his place;
(ii) The assignor and Assignee shall have fulfilled all other
requirements of this Agreement;
(iii) The Assignee shall have paid all reasonable legal fees and
filing costs incurred by the Company in connection with his substitution as a
Member; and
(iv) The Members shall have unanimously approved such
substitution in writing, which approval may be granted or withheld by each
Member in its sole and absolute discretion and may be arbitrarily withheld,
and the books and records of the Company have been modified to reflect the
admission; provided, no such approval shall be required with respect to any
transfer by PSO to its parent corporation, Central and South West Corporation,
or any direct or indirect subsidiary of such parent corporation.
(b) The admission of an Assignee as a Substitute Member with
respect to a transferred Unit shall become effective on the date the Members
give their unanimous written consent to the admission and the books and
records of the Company have been modified to reflect such admission. Any
Member who transfers all of his Units with respect to which it had been
admitted as a Member shall cease to be a Member of the Company upon a transfer
of such Units in accordance with Article X and the execution of a counterpart
of this Agreement by the transferee and shall have no further rights as a
Member in or with respect to the Company (whether or not the Assignee of such
former Member is admitted to he Company as a Substitute Member).
11.02. Admission of Additional Members. Except as otherwise provided
in Section 6.03, additional Units may be authorized and issued by the Company
upon such terms and conditions as may be approved by a Majority Vote of the
Members. Upon the proposed issuance of any such additional Units, each
existing Member shall have the preemptive right, but not the obligation, to
purchase such portion of the newly issued Units as the ratio of the number of
Units then held by such Member bears to the total number of Units held by
Members and outstanding before the issuance of the new Units, together with
such Member's proportionate share of the other newly issued Units as to which
other Members fail to exercise their preemptive rights.
ARTICLE XII
Dissolution and Liquidation
12.01 Disqualification of Member. Upon the death, incapacity,
resignation, expulsion, bankruptcy or dissolution of a Member (such Member
being hereinafter sometimes referred to as a "Disqualified Member"), or the
occurrence of any other event which terminates the continued membership of a
Member in the Company (any of such events being referred to herein as an
"Event of Dissolution"), the Company shall dissolve and its affairs shall be
wound up; provided, however, it is agreed that without the consent of all
other Members, no Member may voluntarily resign from the Company until after
the second anniversary of the date of this Agreement. The Company shall
thereafter conduct only activities necessary to wind up its affairs, unless
there is at least one (1) remaining Member and within sixty (60) days after
the occurrence of an Event of Dissolution, all the remaining Members
unanimously agree to continue the Company. If any election to continue the
Company is made, then:
(a) The remaining Members may elect, within thirty (30) days of
the decision to continue the Company, to purchase the Disqualified Member's
Units upon such terms and conditions as the remaining Members and the
Disqualified Member or the legal representative of the Disqualified Member,
may agree. In the event the remaining Members and the Disqualified Member (or
such legal representative) do not agree upon terms and conditions for a
purchase of the Units of the Disqualified Member,the remaining Members shall
have an option (to be exercised within sixty (60) days after the occurrence of
the Event of Dissolution, by giving notice to the Disqualified Member, or such
legal representative) to purchase the Units for a cash purchase price
determined by the value of the Capital Account of the Disqualified Member, as
of the end of the calendar month preceding the occurrence of the Event of
Dissolution, adjusted as if all Company Property were sold at fair market
value, and all liabilities of the Company were paid and the Company was
liquidated in accordance with the provisions of Section 12.02.
(b) The Company shall continue until the expiration of the term
for which it was formed or until the occurrence of another Event of
Dissolution, in which event any remaining Members shall again elect whether to
continue the Company pursuant to this Section 12.01.
12.02 Dissolution and Liquidation. The Company shall be dissolved and
its affairs shall be wound up upon the occurrence of any of the following:
(i) the term of the Company stated in Articles of Organization expires; (ii)
if, upon the occurrence of an Event of Dissolution, the remaining Members fail
to continue the Company pursuant to Section 11.01; or (iii) all Members vote
to dissolve the Company.
12.03 Method of Winding Up. Upon dissolution of the Company pursuant
to Section 12.02, the Company shall immediately commence to liquidate and wind
up its affairs. The Members shall continue to share profits and losses during
the period of liquidation and winding up in the same proportion as before
commencement of winding up and dissolution. The proceeds from the liquidation
and winding up shall be applied in the following order of priority:
(a) To creditors, including Members who are creditors, to the
extent permitted by law, in satisfaction of liabilities of the Company other
than liabilities to Members on account of their Capital Contributions or on
account of a Member's withdrawal from the Company or pursuant to a withdrawal
of capital; and
(b) The balance, to Members in accordance with their Capital
Accounts. Unless the Members shall unanimously determine otherwise, all
distributions will be made in cash, and none of the Company Property will be
distributed in kind to the Members.
12.04 Filing Articles of Dissolution. Upon the completion of the
distribution of Company Property as provided in Section 12.02, Articles of
Dissolution shall be filed as required by the Act, and each member agrees to
take whatever action may be advisable or proper to carry out the provisions of
this Section.
12.05 Return of Capital. The return of Capital Contributions shall be
made solely from Company Property.
ARTICLE XIII
Amendment of Agreement; Meetings
13.01 Amendments. Unless and until there shall have occurred an Event
of Default, all amendments to this Agreement shall require the unanimous
consent of the Members. Upon the occurrence of an Event of Default, all
amendments to this Agreement may be effected by a Majority Vote of the
Members, subject to the provisions of Section 13.02.
13.02 Limitations on Amendments. Notwithstanding any other provision
of this Agreement, no amendment to this Agreement may without the unanimous
approval of all Members (i) enlarge the obligations of any Member under this
Agreement or (ii) amend this Section 13.02 or Section 13.01.
13.03 Meetings. Meetings may be called by any Member, by giving at
least five (5) business days prior notice of the time, place and purpose of
the meeting to all Members. Special meetings for the purpose of approval of a
transfer of a Member may be held only on the 1st or 15th day of the month, or
if either of these days falls on a Saturday, Sunday, or legal Holiday, on the
first day thereafter.
13.04. Adjournment. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting, if the time and
place thereof are announced at the meeting at which the adjournment is taken,
unless such adjournment shall be for more than forty-five days. At the
adjourned meeting, the Company may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than
forty-five days, a notice of the adjourned meeting shall be given in
accordance with this Section 13.04.
13.05. Waiver of Notice; Consent to Meeting; Approval of Minutes. The
transactions of any meeting of the Company, however called and noticed, and
whenever held, are as valid as though had at a meeting duly held after regular
call and notice, if a quorum is present either in person or by proxy, and if,
either before or after the meeting, each of the Members entitled to vote, but
not present in person or by proxy, approves by signing a written waiver of
notice or an approval to the holding of the meeting or an approval of the
minutes thereof. All waivers, consents, and approvals shall be filed with the
Company records or made a part of the minutes of the meeting. Attendance of a
Member at a meeting shall constitute a waiver of notice of the meeting, except
when such Member objects, at the beginning of the meeting, to the transaction
of any business because the meeting is not lawfully called or convened; and
except that attendance at a meeting is not a waiver of any right to object to
the consideration of matters required to be included in the notice of the
meeting, but not so included, if the objection is expressly made at the
meeting.
13.06 Quorum. The holders of a majority of the Voting Rights,
represented in person or by proxy, shall constitute a quorum at a meeting of
Members. The Members present at a duly called or held meeting at which a
quorum is present may continue to participate at such meeting until
adjournment, notwithstanding the withdrawal of enough Members to leave less
than a quorum, if any action taken (other than adjournment) is approved by the
requisite percentage of Voting Rights of Members specified in this Agreement.
In the absence of a quorum, any meeting of Members may be adjourned from time
to time by a Majority Vote of the Members represented either in person or by
proxy entitled to vote, but no other matters may be proposed, approved or
disapproved, except as provided in Section 13.04.
13.07 Action Without a Meeting. Any action that may be taken by any
vote of the Members may be taken without a meeting if a consent to such action
is signed by all Members.
ARTICLE XIV
General Provisions
14.01 Notices. Any notice, demand, request or report required or
permitted to be given or made to a Member under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when
sent by first class mail to the Member. Any notice, payment, or report to be
given or sent to a Member hereunder shall be deemed conclusively to have been
given or sent, upon mailing of such notice, payment, or report to the address
shown on the records of the Company, regardless of any claim of any Person who
may have an interest in the Unit by reason of an assignment or otherwise.
14.02 Captions. All article and section captions in this Agreement are
for convenience only. They shall not be deemed part of this Agreement and in
no way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles"
and "Sections" are to Articles and Sections of this Agreement.
14.03 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
14.04 Further Action. The parties to this Agreement shall execute and
deliver all documents, provide all information and take or refrain from taking
action as may be necessary or appropriate to achieve the purposes of this
Agreement.
14.04 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assignees.
14.06 Integration. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
14.07 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
14.08 Counterparts. This Agreement may be executed in counterparts,
all of which together shall constitute an agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto, independently of the
signature of any other party.
14.09 Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Oklahoma, without regard to its
principles of conflict of laws.
14.10 Invalidity of Provisions. If any provision of this Agreement is
or becomes invalid, illegal, or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions contained herein
shall not be affected thereby.
14.11 Conveyances. All of the assets of the Company shall be held in
the name of the Company. Any deed, bill of sale, mortgage, lease, contract of
sale or other instrument purporting to convey or encumber the interest of the
Company of all or any portion of the assets of the Company shall be sufficient
when signed by a Manager.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the ______ day of ______________, 199 .
MEMBERS:
______________________________
RICHARD H. SMITH
DENNIS J. LOUDERMILK
RIKA MANAGEMENT COMPANY,
L.L.C.
By:
Richard H. Smith, Manager
PUBLIC SERVICE COMPANY
OF OKLAHOMA
By:___________________________
Title:________________________
<PAGE>
EXHIBIT 12
AUTOMATED SUBSTATION DEVELOPMENT COMPANY, L.L.C.
AMENDED AND RESTATED
ARTICLES OF ORGANIZATION
TO: THE OKLAHOMA SECRETARY OF STATE
101 State Capitol
Oklahoma City, OK 73105
The undersigned Members of Automated Substation Development Company,
L.L.C., an Oklahoma limited liability company (the "Company"), for the purpose
of adopting Amended and Restated Articles of Organization pursuant to Section
2011 of the Oklahoma Limited Liability Company Act (the "Act"), hereby
certifies:
1. The name of this Company is "Automated Substation Development
Company, L.L.C."
2. The name under which this Company was originally organized was
"Automated Substation Development Company, L.L.C."
3. The Articles of Organization of this Company were originally filed
with the Oklahoma Secretary of State on , 1995.
4. The amendments to the Articles of Organization effected by this
document are to change and restate the provisions relating to the regulation
of the internal affairs of the Company.
5. These Amended and Restated Articles of Organization were duly
adopted by the Members of the Company in accordance with Section 2020 of the
Act, and restate, integrate and further amend the Articles of Organization.
6. The Articles of Organization of the Company are hereby restated as
further amended herein, to read in full, as follows:
"ARTICLES OF ORGANIZATION
OF
AUTOMATED SUBSTATION DEVELOPMENT COMPANY, L.L.C.
FIRST. The name of the limited liability company is Automated
Substation Development Company, L.L.C. (the "Company").
SECOND. The latest date on which the Company is to dissolve is 12:00
midnight, December 31, 2015.
THIRD. The purpose of the Company is to engage in any lawful act or
activity for which limited liability companies may be organized under the Act.
FOURTH. The street address of the principal place of business of the
Company in the State of Oklahoma is 6130 South Memorial, Tulsa, Oklahoma
74133.
FIFTH. The name and address of the registered agent of the Company in
the State of Oklahoma is Richard H. Smith, 11708 South Canton, Tulsa, Oklahoma
74137 .
SIXTH. The business of the Company shall be managed by one or more
Managers designated pursuant to the terms of the Company's Operating
Agreement. Subject to the restrictions contained herein, any third person
dealing with the Company may rely absolutely upon the act, deed and/or
signature of each Manager as being the act of the Company and no third person
shall be obliged or privileged to inquire into or otherwise ascertain whether
the act of the Manager has been duly authorized.
SEVENTH. Notwithstanding any other provision hereof, unless and until
there shall have occurred an Event of Default (as such term is defined in the
Company's Operating Agreement), no Manager shall have the authority to cause
the Company to do or commit to do any of the following acts, without the prior
unanimous written consent of the specific act by the Members; however, upon
the occurrence of an Event of Default, each Manager shall have the authority
to cause the Company to do or commit to do such acts upon the Majority Vote of
the Members (as such term is defined in the Company's Operating Agreement):
(a) borrow money in excess of $10,000; (b) sell any asset of the Company (or
assets, in related transactions) having a fair market value in excess of
$10,000; (c) enter into any contract involving an anticipated total
expenditure of over $10,000; (d) do any act which would make it impossible to
carry on the ordinary business of the Company; (e) compromise any claim
against the Company over $10,000; (f) admit a person as a Member; (g)
knowingly perform any act that would subject a Member to personal liability;
(h) amend the Articles of Organization; or (i) approve any business plan of
the Company."
IN WITNESS WHEREOF, these Amended and Restated Articles of Organization
have been executed on the _____ day of , 199 , by the undersigned
Members.
_____________________________
Richard H. Smith
_____________________________
Dennis J. Loudermilk
RIKA Management Company,
L.L.C., an Oklahoma limited
liability company
By:
Richard H. Smith, Manager
<PAGE>
EXHIBIT 13
AUTOMATED SUBSTATION DEVELOPMENT COMPANY, L.L.C.
AMENDED AND RESTATED
OPERATING AGREEMENT
THIS AMENDED AND RESTATED OPERATING AGREEMENT (the "Agreement") is
entered into as of the day of , 199 , by and among Public
Service Company of Oklahoma, an Oklahoma corporation ("PSO"), Richard H.
Smith, a natural person ("Smith"), Dennis J. Loudermilk, a natural person
("Loudermilk"), and RIKA Management Company, L.L.C., and Oklahoma limited
liability company ("Management"), collectively referred to herein as the
"Members" of Automated Substation Development Company, L.L.C., an Oklahoma
limited liability company (the "Company"), and supersedes all prior operating
agreements of the Company. In consideration of the mutual covenants and
conditions hereinafter set forth, the Members hereby agree that the terms of
the Operating Agreement governing the Company shall be as follows:
ARTICLE I
Organizational Matters
1.01 Formation. The Company has been formed as a limited liability
company pursuant to the provisions of the Act (as hereinafter defined). The
rights and obligations of the Members, the Manager designated herein, and the
affairs of the Company, shall be governed first by the mandatory provisions of
the Act, second by the Company's Articles of Organization, third by this
Agreement and fourth by the optional provisions of the Act. In the event of
any conflict among the foregoing, the conflict shall be resolved in the order
of priority set forth in the preceding sentence.
1.02 Name. The name of the Company shall be "Automated Substation
Development Company, L.L.C."
1.03 Principal Office. The principal office of the Company in the
State of Oklahoma shall be located at 6130 South Memorial, Tulsa, Oklahoma
74137. The name and address of the resident agent of the Company is Richard
H. Smith, 11708 S. Canton, Tulsa, Oklahoma 74137. The Company may also
maintain offices at such other place or places as the Managers deem advisable.
1.04 Term. The Company commenced upon the filing for record of the
Company's Articles of Organization with the Oklahoma Secretary of State on the
day of , 199__, and shall continue until 12:00 midnight,
December 31, 2015, unless sooner terminated as herein provided.
ARTICLE II
Definitions
2.01 Definitions. For purposes of this Agreement, the following terms
shall have the following meanings.
"Act" means the Oklahoma Limited Liability Company Act, 18 Okla. Stat.
Sec. 2000 et seq. (Supp. 1993), as it may be amended from time to time, and any
successor to such act.
"Affiliate" means any Person that directly or indirectly controls, is
controlled by, or is under common control with, such Person. As used in this
definition of "Affiliate," the term "control" means either (i) the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise or (ii) a direct or indirect equity
interest of ten percent (10%) or more in the entity.
"Agreement" means this Operating Agreement, as it may be amended or
supplemented from time to time.
"Articles of Organization" means the articles of organization, as
amended from time to time, filed by the Company under the Act.
"Assignee" means a Person to whom one or more Units have been
transferred, by transfer or assignment or otherwise, in a manner permitted
under this Agreement, and who has agreed to be bound by the terms of this
Agreement but who has not become a Substitute Member.
"Business Day" means Monday through Friday of each week, except legal
holidays recognized as such by the Government of the United States or the
State of Oklahoma.
"Capital Account" means each capital account maintained for a Member
pursuant to Section 4.03.
"Capital Contributions" means the sum of the total amount of cash and
the total value of property contributed or services rendered, or a promissory
note or other binding obligation to contribute cash or property or to perform
services contributed to the Company by all Members, or any one Member, as the
case may be (or the predecessor holders of any Units of any such Members).
"Capital Gain" means the Company's allocable share of gain from the
disposition by the Company of a capital asset as defined in the Code
(including any portion of such gain treated as ordinary income).
"Cash Available for Distribution" means, with respect to any period, all
cash receipts and funds received by the Company (except for Capital
Contributions) minus (i) all cash expenditures and (ii) the Company's cash
management fund representing working capital or other reserves.
"Code" means the Internal Revenue Code of 1986, as amended, as in effect
from time to time.
"Company" means the limited liability company formed by the filing of
the Company's Articles of Organization with the Oklahoma Secretary of State.
"Company Property" means all property owned, leased or acquired by the
Company from time to time.
"Disqualified Member" has the meaning specified in Section 12.01.
"Event of Default" shall have the meaning ascribed to it in the Member
Agreement.
"Event of Dissolution" has the meaning specified in Section 12.01.
"Income" and "Loss" mean an amount equal to the Company's taxable income
or loss (including capital loss) for each taxable year, determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss, or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss),
with the following adjustments:
(a) Any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Income or Loss shall be
added to such Income or Loss;
(b) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code
expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i),
and not otherwise taken into account in computing Income or Loss, shall be
subtracted from such Income or Loss; and
(c) Upon the distribution of property by the Company to a Member,
gain or loss attributable to the difference between the fair market value of
the property and its basis shall be treated as recognized.
"Majority Vote of the Members" means the affirmative vote of the holders
of a majority of the Voting Rights held by the Members.
"Managers" means the Persons designated pursuant to Article VI.
"Mandatory provisions of the Act" means those provisions of the Act
which may not be waived by the Members acting unanimously or otherwise.
"Member" means any person signing this Agreement as a Member of the
Company.
"Member Agreement" means that certain agreement between PSO, Smith,
Loudermilk, and others, of even date herewith.
"Outstanding" means the number of Units issued by the Company as shown
on the Company's books and records. The term does not include any authorized
Units not issued by the Company or any Units issued but subsequently
reacquired by the Company and held in the Company's treasury.
"Person" means a natural person, partnership, trust, estate, association
or domestic or foreign limited partnership, limited liability company, or
corporation.
"PSO Note" means the promissory note of Management in favor of PSO,
dated __________________, 1995.
"R&D Agreement" means that certain PSO Specific Software Application and
Development Agreement between PSO and Management, dated , 1995.
"Record Holder" means the Person in whose name such Unit is registered
on the books and records of the Company as of the close of business on a
particular Business Day.
"Substitute Member" means a transferee of a Unit who is admitted as a
Member to the Company pursuant to Section 11.01 in place of and with all the
rights of a Member.
"Tax Matters Partner" means the Member designated pursuant to Section
9.02.
"Unit" means a Unit representing an interest in the capital of the
Company.
"Voting Rights" has the meaning specified in Section 7.02.
ARTICLE III
Purpose
3.01 Purpose of the Company. The purpose of the Company is to engage
in any lawful act or activity for which limited liability companies may be
organized under the Act. Such acts or activities may include, but shall not
be limited to, acquiring, operating and maintaining real and personal
properties in the United States and foreign countries. In transacting such
business, the Company may:
(a) acquire an ownership, working, royalty or other interest in
stocks, real estate and other properties, either alone or in conjunction with
other parties;
(b) dispose of, rent, lease, transfer, encumber or otherwise
utilize Company assets used in connection with Company operations as the
Managers deem advisable;
(c) employ such personnel and obtain such legal, accounting, and
other professional services and advice as the Managers may deem advisable in
the course of the Company's operations under this Agreement;
(d) pay all ad valorem taxes levied or assessed against the
Company's assets, and all other taxes (other than income taxes) directly
relating to operations conducted under this Agreement;
(e) execute all contracts, agreements, documents, or instruments
of any kind as may be appropriate for carrying out the purposes of the
Company;
(f) procure and maintain in force such insurance, including
public liability, automotive liability, worker's compensation, and employer's
liability insurance, as may be prudent to protect the Company against
liability for loss and damages which may be occasioned by the activities to be
engaged in by the Company;
(g) purchase and establish inventories of equipment and material
required or expected to be required in connection with the Company's
operations;
(h) contract or enter into agreements for the performance of
services and the purchase and sale of material, equipment, supplies, and
property, both real and personal;
(i) conduct operations either alone or as a joint venturer,
co-tenant, partner, or in any other manner of participation with any Member or
third parties and to enter into agreements and contracts setting forth the
terms and provisions of such participation;
(j) borrow money from any Person, including, without limitation,
banks, other lending institutions, and Members, for Company purposes and
pledge Company Property for the repayment of such loans;
(k) sell, relinquish, release, abandon, or otherwise dispose of
Company assets, including undeveloped, productive, and condemned properties,
in accordance with other provisions herein; and
(l) perform any and all other acts or activities customary or
incident to conducting the above Company operations.
ARTICLE IV
Capital Contributions
4.01 Authorized Units. The Company shall have the authority to issue
an aggregate of one hundred (100) Units.
4.02 Capital Contributions.
(a) Initial Unit Ownership. Prior to payment in full of all
amounts owed by Management under the PSO Note, ownership of Units in the
Company shall be as follows:
(i) Smith, Loudermilk, and Management herebysurrender their
respective membership interests in the Company in exchange for twenty-nine
(29) Units, of which ten (10) Units are hereby issued to Smith, fourteen (14)
Units are hereby issued to Loudermilk, and five (5) Units are hereby issued to
Management. Upon the issuance of Units to PSO pursuant to Section 4.02(b),
the Units held by Smith, Loudermilk, and Management shall in the aggregate
constitute 29% of the Outstanding Units of the Company.
(ii) For good and valuable consideration, thereceipt of which
is hereby acknowledged by the Company, PSO is hereby issued seventy-one (71)
Units, constituting 71% of the Outstanding Units of the Company.
(b) After Payment of PSO Note. After the PSO Note has been paid
in full, Unit ownership shall be reappointed as follows:
Member Units % Unit Ownership
PSO 48 48%
Smith 19 19%
Loudermilk 28 28%
Management 5 5%
100 100%
4.03 Capital Accounts.
(a) The Company shall maintain for each Member a separate Capital
Account. The term "Capital Account" shall mean as to any Member and as to any
Units held by that Member the amount of the initial Capital Contribution
attributable to the Units held by that Member, which amount shall be (i)
increased by subsequent Capital Contributions by such Member, and Capital Gain
and Income allocated to such Member pursuant to Section 5.02, and (ii)
decreased by distributions to such Member pursuant to Section 5.01 and Losses
allocated to such Member pursuant to Section 5.02. Distributions shall be
debited to Capital Accounts in the year containing the record date for such
distribution.
(b) It is not currently anticipated that the Company will receive
any Capital Contributions in any form other than cash. In the event any
in-kind contributions or contributions in the form of services are ever made,
the Capital Account of the Member shall be increased by the fair market value
of the property or services contributed by such Member.
(c) The foregoing definition of Capital Account and certain other
provisions of this Agreement are intended to comply with Treasury Regulations
Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with that regulation. Such regulation contains additional rules
governing maintenance of capital accounts that have not been addressed in this
Agreement.
(d) An Assignee of a Unit will succeed to the Capital Account
relating to the Unit transferred. However, if the transfer causes a
termination of the Company under Section 708(b)(1)(B) of the Code, the Company
Property shall be deemed to have been distributed in liquidation of the
Company to the Members (including the transferee of a Unit) pursuant to
Section 12.02 and recontributed by such Members and transferees in
reconstitution of the Company. The Capital Accounts of such reconstituted
Company shall be maintained in accordance with the principles of this Section
4.03.
(e) At such times as may be permitted or required by Treasury
Regulations issued pursuant to Section 704 of the Code, the Capital Accounts
shall be revalued and adjusted to reflect the then fair market value of
Company Property and the Capital Accounts shall be maintained to comply with
Treasury Regulations Section 1.704-1(b)(2)(iv)(f). All allocations of gain
resulting from such revaluation shall be made consistently with that
regulation, and to the extent not inconsistent therewith, the Income
allocation provisions of Section 5.02 hereof.
4.04 Interest. No interest shall be paid by the Company on
Capital Contributions, on balances in a Member's Capital Account or on any
other funds distributed or distributable under this Agreement.
4.05 No Withdrawal. Except as otherwise required under any
mandatory provisions of the Act, no Member shall without the written consent
of all remaining Members of the Company have (i) any right to resign
voluntarily or otherwise to withdraw from the Company, or (ii) any right to
the withdrawal or reduction of any part of his Capital Contribution.
4.06 Loans. Loans by a Member to the Company shall not be
considered Capital Contributions. The Company may not make loans to any
Member or any Affiliate of any Member without a Majority Vote of the Members.
ARTICLE V
Allocations and Distributions
5.01 Distribution of Cash Available for Distribution.
Distributions of all Cash Available for Distribution shall be made as
determined by a Majority Vote of the Members. Any distribution of property
shall be treated as a distribution of cash in the amount of the fair market
value of such property. Distribution shall be made to the Members by the
Company pro rata, according to the number of Units held by each, with all
Outstanding Units being treated alike.
5.02 Allocation of Income and Loss.
(a) All items of income, loss, deduction or credit shall be
allocated to all Members and Assignees in accordance with their respective
Units in the Company. All outstanding Units shall be treated equally.
(b) Notwithstanding anything to the contrary in this Section
5.02, if there is a net decrease in "minimum gain" (within the meaning of
Treasury Regulations Section 1.704-2(g)(2) during a fiscal year, all Members
with a deficit balance in their Capital Accounts at the end of that year
(excluding items described in Treasury Regulations Section 1.704-2(f)) shall
be allocated, before any other allocations of Company items for such fiscal
year, items of Income and gain for such year (and if necessary, subsequent
years), in an amount and in the proportions necessary to eliminate such
deficits as quickly as possible. The foregoing sentence is intended to be a
"minimum gain charge back" provision as described in Treasury Regulations
Section 1.704-2(f), and shall be interpreted and applied in all respects in
accordance with that regulation.
(c) If during any fiscal year of the Company, any Member
unexpectedly receives an adjustment, allocation, or distribution of the type
described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4),(5), or (6),
that Member shall be allocated items of Income in an amount and manner
sufficient to eliminate that Member's deficit Capital Account balance as
quickly as possible.
(d) Under regulations prescribed by the Secretary of the
Treasury pursuant to Section 704(c) of the Code, items of Capital Gain, Income
and Loss with respect to property contributed to the Company by a Member shall
be shared among Members so as to take account of the variation between the
basis of the property to the Company and its fair market value at the time of
contribution. The Members shall have the power to make such elections, adopt
such conventions, and allocate Capital Gain, Income and Loss as each of them
deems appropriate to comply with Section 704(c) of the Code and any Treasury
Regulations promulgated thereunder and to preserve, to the extent possible,
uniformity of the Units. Any items allocated under this Section 5.02.D shall
not be debited or credited to Capital Accounts to the extent that item is
already taken into account (upon formation or otherwise) in determining a
Member's Capital Account.
(e) Upon the transfer of a Unit, Income, Capital Gain and Loss
attributable to the transferred Unit shall, for federal income tax purposes,
be allocated to the owners of such Unit on the basis of the Income or Loss for
each month that such Person was the owner of such Units. The Members may
revise, alter, or otherwise modify the method of allocation as they determine
necessary to comply with Section 706 of the Code and regulations or rulings
promulgated thereunder.
(f) If, and to the extent that, any Member is deemed to
recognize Income as a result of any transaction between the Member and the
Company pursuant to Sections 482, 483, 1272-1274, or 7872 of the Code, or any
similar provision now or hereafter in effect, any corresponding resulting Loss
or deduction of the Company shall be allocated to the Member who was charged
with that Income.
(g) All tax credits for federal or state income tax purposes
shall be allocated in the same manner as Income.
ARTICLE VI
Management and Operation of Business
6.01. Managers. Management of the Company shall be vested in two
(2) Managers, who shall be elected by Majority Vote of the Members at any
annual or special meeting called for that purpose.
6.02. Authority of Managers. Any Person serving as Manager may
exercise all the powers of the Company whether derived from law, the Articles
of Organization or this Agreement, except such powers as are by statute, by
the Articles of Organization or by this Agreement vested solely in the
Members.
6.03. Restrictions on Managers. Notwithstanding any other
provision hereof, unless and until there shall have occurred an Event of
Default, no Manager shall have the authority to cause the Company to do or
commit to do any of the following acts, without the prior unanimous written
consent of the specific act by the Members; however, upon the occurrence of an
Event of Default, each Manager shall have the authority to cause the Company
to do or commit to do such acts upon the Majority Vote of the Members:
(a) Borrow money in excess of $10,000;
(b) Sell any assets of the Company (or assets, in related
transactions) having a fair market value over $10,000;
(c) Enter into any contract involving an anticipated total
expenditure of over $10,000;
(d) Do any act which would make it impossible to carry on the
ordinary business of the Company;
(e) Compromise any claim over $10,000;
(f) Admit a Person as a Member;
(g) Knowingly perform any act that would subject a Member to
personal liability;
(h) Amend the Articles of Organization; or
(i) Approve any business plan of the Company.
6.04. Outside Activities. The Members and Managers their
respective Affiliates have business interests and engage in business
activities in addition to those relating to the Company. No provision of this
Agreement shall be deemed to prohibit the Members, the Managers or their
respective Affiliates from conducting such businesses and activities, provided
they are not in direct competition with the Company. Neither the Company nor
any Member shall have any rights by virtue of this Agreement or the
relationship contemplated herein in any non-competing business ventures of any
other Member or the Affiliates of such Member.
6.05. Limitation on Liability of Managers. No Person serving as
Manager shall be liable to the Company for monetary damages for breach of
fiduciary duty as a Manager; provided, however, that nothing contained herein
shall eliminate or limit the liability of such Person (i) for any breach of
the Manager's duty of loyalty to the Company, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of the law and, (iii) for any transaction from which the Manager derived an
improper personal benefit.
ARTICLE VII
Rights and Obligations of the Members
7.01 Limitation of Liability. Anything herein to the contrary
notwithstanding, except as otherwise expressly agreed in writing, a Member
shall not be personally liable for any debts, liabilities, or obligations of
the Company, whether to the Company, to any of the other Members, or to
creditors of the Company, beyond the Capital Account of the Member, together
with the Member's share of the assets and undistributed profits of the
Company.
7.02 Voting Rights. Action requiring a vote of the Members may
be taken by a Majority Vote of the Members. Unless and until there shall have
occurred an Event of Default, PSO shall hold 4% of all Voting Rights, Smith
shall hold 45 1/2%, Loudermilk shall hold 45 1/2%, and Management shall hold
5%. Upon the occurrence of an Event of Default, Management shall hold 100% of
all Voting Rights, and PSO, Smith and Loudermilk will hold no Voting Rights.
7.03 Indemnification.
(a) To the maximum extent permitted by law, the Company shall
indemnify and hold harmless the Managers, all Members, their respective
Affiliates, and the employees and agents of the Company (each, an
"Indemnitee") from and against any and all losses, claims, demands, costs,
damages, liabilities, joint and several, expenses of any nature (including
attorneys' fees and disbursements), judgments, fines, settlements, penalties
and other expenses actually and reasonably incurred by the Indemnitee in
connection with any and all claims, demands, actions, suits, or proceedings,
civil, criminal, administrative or investigative, in which the Indemnitee may
be involved, or threatened to be involved, as a party or otherwise, by reason
of the fact that the Indemnitee is or was a Manager or Member of the Company
or is or was an employee or agent of the Company, including Affiliates of the
foregoing, arising out of or incidental to the business of the Company,
provided, (i) the Indemnitee's conduct did not constitute willful misconduct
or recklessness, (ii) the action is not based on breach of this Agreement,
(iii) the Indemnitee acted in good faith and in a manner he or it reasonably
believed to be in, or not opposed to, the best interests of the Company and
within the scope of such Indemnitee's authority and (iv) with respect to a
criminal action or proceeding, the Indemnitee had no reasonable cause to
believe its conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere, or its equivalent, shall not, in and of itself, create a
presumption or otherwise constitute evidence that the Indemnitee acted in a
manner contrary to that specified above.
(b) Expenses incurred by an Indemnitee in defending any claim,
demand, action, suit or proceeding subject to this Section 7.03 may, from time
to time, be advanced by the Company prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Company of an
undertaking by or on behalf of the Indemnitee to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified as
authorized in this Section 7.03.
(c) Indemnification provided by this Section 7.03 shall be in
addition to any other rights to which the Indemnitee may be entitled under any
agreement, vote of the Members, as a matter of law or equity, or otherwise,
and shall inure to the benefit of the successors, assignees, heirs, personal
representatives and administrators of the Indemnitee.
(d) The Company may purchase and maintain insurance, at the
Company's expense, on behalf of any Indemnities against any liability that may
be asserted against or expense that may be incurred by an Indemnitee in
connection with the activities of the Company regardless of whether the
Company would have the power to indemnify such Indemnitee against such
liability under the provisions of this Agreement.
ARTICLE VIII
Books, Records, and Accounting
8.01 Books and Records. Appropriate books and records with
respect to the Company's business shall at all times be kept at the principal
office of the Company or at such other places as agreed to by the Members.
Any records maintained by the Company in the regular course of its business
may be kept on, or be in the form of, magnetic tape, photographs or any other
information storage device, provided that the records so kept are convertible
into clearly legible written form within a reasonable period of time. Each
Member shall have the right upon demand and at such Member's own expense to
inspect and copy any of the Company's books and records and obtain such other
information regarding the affairs of the Company.
8.02 Accounting. The books of the Company for regulatory and
financial reporting purposes shall be maintained on cash basis of accounting.
The Company books for purposes of maintaining and determining Capital Accounts
shall be maintained in accordance with the provisions of this Agreement,
Section 704 of the Code and, to the extent not inconsistent therewith, the
principles described above for financial reporting and regulatory purposes.
Comparisons of budgeted income and expenses to actual income and expenses of
the Company shall be on the accrual basis of accounting.
8.03 Fiscal Year. The fiscal year of the Company shall be the
calendar year, unless otherwise determined by Majority Vote of the Members.
ARTICLE IX
Tax Matters
9.01 Taxable year. The taxable year of the Company shall be the
calendar year, unless otherwise determined by Majority Vote of the Members.
9.02 Tax Controversies. The "Tax Matters Partner" (as defined in
Section 6231 of the Code) shall be determined by a Majority Vote of the
Members, and shall be authorized and required to represent the Company, at the
Company's expense, in connection with all examinations of the Company's
affairs by tax authorities, including resulting administrative and judicial
proceedings. Each Member agrees to cooperate with the Tax Matters Partner,
and to do or refrain from doing any or all things reasonably required by the
Tax Matters Partner to conduct such proceedings.
9.03 Taxation as a Partnership. No election shall be made by the
Company or any Member for the Company to be excluded from the application of
any provision of Subchapter K, Chapter 1 of Subtitle A of the Code or from any
similar provisions of any state tax laws.
ARTICLE X
Transfer of Units
10.01. Transfer.
(a) The term "transfer," when used in this Article X with respect
to a Unit, shall be deemed to refer to a transaction by which the Member
assigns all or a portion of its Units, or any interest therein, to another
Person, or by which the holder of a Unit assigns the Unit to another Person as
Assignee, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, transfer by will or intestate succession, exchange,
or any other disposition.
(b) No Units shall be transferred, in whole or in part, except in
accordance with the terms and conditions set forth in this Article X. Any
transfer or purported transfer of any Units not made in accordance with this
Article X shall be null and void. If for any reason any such transfer is not
null and void, then the Assignee shall not be a Substitute Member, and shall
have no right to participate in Company's affairs as a Member thereof, but
instead shall be entitled to receive only the share of profits or other
compensation by way of income and the return of contributions to which the
transferring Member would otherwise be entitled at the time said transferring
Member would be entitled to receive the same.
10.02. Transfer of Units by a Member.
(a) No Units may be transferred by a Member unless the following
conditions are first satisfied:
(i) A Majority Vote of Members approving the transfer has
been obtained, such approval to be evidenced by a written instrument, dated
and signed by the Members; provided, however, no such approval shall be
required with respect to any transfer of Units by PSO to its parent
corporation, Central and South West Corporation, or any direct or indirect
subsidiary of such parent corporation;
(ii) The transferee and each Member execute and file all
documents necessary for the transferee to be a Substitute Member and be bound
by the terms hereof and such transferee is admitted as a Substitute Member;
and
(iii) The Company receives an Opinion of Counsel that such
transfer would not materially adversely affect the classification of the
Company as a partnership for federal and (as applicable) state income tax
purposes.
(b) The transfer restrictions on Company Units shall be
conspicuously noted in an appropriate legend on any Unit certificates issued.
(c) In no event shall any Unit be transferred to a minor or any
incompetent except by will or intestate succession.
(d) The Company need not recognize, for any purpose, any transfer
of all or any fraction of a Unit unless there shall have been filed with the
Company and recorded on the Company's books a duly executed and acknowledged
counterpart of the instrument of assignment and such instrument evidences the
written acceptance by the Assignee of all of the terms and provisions of this
Agreement and represents that such assignment was made in accordance with all
applicable laws and regulations.
(e) Any holder of a Unit (including a transferee thereof) shall
be deemed conclusively to have agreed to comply with and be bound by all terms
and conditions of this Agreement, with the same effect as if such holder had
executed an express acknowledgment thereof, whether or not such holder in fact
has executed such an express acknowledgment.
10.03. Restrictions on Transfer. Notwithstanding the other
provisions of this Article X, no transfer of any Unit of any Member shall be
made if the transfer (i) would violate applicable federal and state securities
laws or rules and regulations of the Securities and Exchange Commission, any
state securities commission or any other governmental authority with
jurisdiction over the transfer, (ii) would materially adversely affect the
classification of the Company as a partnership for federal or (as applicable)
state income tax purposes, or (iii) would affect the Company's qualification
as a limited liability company under the Act.
10.04. Issuance of Certificates. The Company may issue one or
more Certificates in the name of the Member evidencing the number of Units
issued. Upon the transfer of a Unit in accordance with Article X, the Company
shall, if certificates have been issued, issue replacement Certificates. All
Certificates shall contain legends required by this Agreement or otherwise
required by law.
10.05. Lost, Stolen or Destroyed Certificates. The Company shall
issue a new Certificate in place of any Certificate previously issued if the
Record Holder of the Certificate: (i) makes proof by affidavit that a
previously issued Certificate has been lost, stolen, or destroyed; (ii)
requests the issuance of a new Certificate before the Company has notice that
the Units evidenced by such Certificate have been acquired by a purchaser for
value in good faith and without notice of an adverse claim; and (iii) if
required by the Company, delivers to the Company a bond with surety or
sureties acceptable to the Company, to indemnify the Company against any claim
that may be made on account of the alleged loss, destruction or theft of the
Certificate. The Company shall be entitled to treat each Record Holder as the
Member or Assignee in fact of any Units and, accordingly, shall not be
required to recognize any equitable or other claim or interest in or with
respect to the Units on the part of any other Person, regardless of whether it
has actual or other notice thereof.
ARTICLE XI
Admission of Substitute and Additional Members
11.01. Admission of Substitute Members.
(a) Upon a transfer of a Unit by a Member in accordance with
Article X (but not otherwise), the transferor shall have the power to give,
and by transfer of any Certificate issued shall be deemed to have given, the
transferee the right to apply to become a Substitute Member with respect to
the Unit acquired, subject to the conditions of and in the manner permitted
under this Agreement. An Assignee of a Certificate representing a Unit shall
not become a Substitute Member with respect to the transferred Unit (whether
or not such transferee is then a Member or Substitute Member with respect to
other previously acquired Units) unless and until all of the following
conditions are satisfied:
(i) The instrument of assignment sets forth the intentions of
the assignor that the Assignee succeed to the assignor's interest as a
Substitute Member in his place;
(ii) The assignor and Assignee shall have fulfilled all other
requirements of this Agreement;
(iii) The Assignee shall have paid all reasonable legal fees
and filing costs incurred by the Company in connection with his substitution
as a Member; and
(iv) The Members shall have unanimously approved such
substitution in writing, which approval may be granted or withheld by each
Member in its sole and absolute discretion and may be arbitrarily withheld,
and the books and records of the Company have been modified to reflect the
admission; provided, no such approval shall be required with respect to any
transfer by PSO to its parent corporation, Central and South West Corporation,
or any direct or indirect subsidiary of such parent corporation.
(b) The admission of an Assignee as a Substitute Member with
respect to a transferred Unit shall become effective on the date the Members
give their unanimous written consent to the admission and the books and
records of the Company have been modified to reflect such admission. Any
Member who transfers all of his Units with respect to which it had been
admitted as a Member shall cease to be a Member of the Company upon a transfer
of such Units in accordance with Article X and the execution of a counterpart
of this Agreement by the transferee and shall have no further rights as a
Member in or with respect to the Company (whether or not the Assignee of such
former Member is admitted to he Company as a Substitute Member).
11.02. Admission of Additional Members. Except as otherwise
provided in Section 6.03, additional Units may be authorized and issued by the
Company upon such terms and conditions as may be approved by a Majority Vote
of the Members. Upon the proposed issuance of any such additional Units, each
existing Member shall have the preemptive right, but not the obligation, to
purchase such portion of the newly issued Units as the ratio of the number of
Units then held by such Member bears to the total number of Units held by
Members and outstanding before the issuance of the new Units, together with
such Member's proportionate share of the other newly issued Units as to which
other Members fail to exercise their preemptive rights.
ARTICLE XII
Dissolution and Liquidation
12.01 Disqualification of Member. Upon the death, incapacity,
resignation, expulsion, bankruptcy or dissolution of a Member (such Member
being hereinafter sometimes referred to as a "Disqualified Member"), or the
occurrence of any other event which terminates the continued membership of a
Member in the Company (any of such events being referred to herein as an
"Event of Dissolution"), the Company shall dissolve and its affairs shall be
wound up; provided, however, it is agreed that without the consent of all
other Members, no Member may voluntarily resign from the Company until after
the second anniversary of the date of this Agreement. The Company shall
thereafter conduct only activities necessary to wind up its affairs, unless
there is at least one (1) remaining Member and within sixty (60) days after
the occurrence of an Event of Dissolution, all the remaining Members
unanimously agree to continue the Company. If any election to continue the
Company is made, then:
(a) The remaining Members may elect, within thirty (30) days of
the decision to continue the Company, to purchase the Disqualified Member's
Units upon such terms and conditions as the remaining Members and the
Disqualified Member or the legal representative of the Disqualified Member,
may agree. In the event the remaining Members and the Disqualified Member (or
such legal representative) do not agree upon terms and conditions for a
purchase of the Units of the Disqualified Member,the remaining Members shall
have an option (to be exercised within sixty (60) days after the occurrence of
the Event of Dissolution, by giving notice to the Disqualified Member, or such
legal representative) to purchase the Units for a cash purchase price
determined by the value of the Capital Account of the Disqualified Member, as
of the end of the calendar month preceding the occurrence of the Event of
Dissolution, adjusted as if all Company Property were sold at fair market
value, and all liabilities of the Company were paid and the Company was
liquidated in accordance with the provisions of Section 12.02.
(b) The Company shall continue until the expiration of the term
for which it was formed or until the occurrence of another Event of
Dissolution, in which event any remaining Members shall again elect whether to
continue the Company pursuant to this Section 12.01.
12.02 Dissolution and Liquidation. The Company shall be
dissolved and its affairs shall be wound up upon the occurrence of any of the
following: (i) the term of the Company stated in Articles of Organization
expires; (ii) if, upon the occurrence of an Event of Dissolution, the
remaining Members fail to continue the Company pursuant to Section 11.01; or
(iii) all Members vote to dissolve the Company.
12.03 Method of Winding Up. Upon dissolution of the Company
pursuant to Section 12.02, the Company shall immediately commence to liquidate
and wind up its affairs. The Members shall continue to share profits and
losses during the period of liquidation and winding up in the same proportion
as before commencement of winding up and dissolution. The proceeds from the
liquidation and winding up shall be applied in the following order of
priority:
(a) To creditors, including Members who are creditors, to the
extent permitted by law, in satisfaction of liabilities of the Company other
than liabilities to Members on account of their Capital Contributions or on
account of a Member's withdrawal from the Company or pursuant to a withdrawal
of capital; and
(b) The balance, to Members in accordance with their Capital
Accounts. Unless the Members shall unanimously determine otherwise, all
distributions will be made in cash, and none of the Company Property will be
distributed in kind to the Members.
12.04 Filing Articles of Dissolution. Upon the completion of the
distribution of Company Property as provided in Section 12.02, Articles of
Dissolution shall be filed as required by the Act, and each member agrees to
take whatever action may be advisable or proper to carry out the provisions of
this Section.
12.05 Return of Capital. The return of Capital Contributions
shall be made solely from Company Property.
ARTICLE XIII
Amendment of Agreement; Meetings
13.01 Amendments. Unless and until there shall have occurred an
Event of Default, all amendments to this Agreement shall require the unanimous
consent of the Members. Upon the occurrence of an Event of Default, all
amendments to this Agreement may be effected by a Majority Vote of the
Members, subject to the provisions of Section 13.02.
13.02 Limitations on Amendments. Notwithstanding any other
provision of this Agreement, no amendment to this Agreement may without the
unanimous approval of all Members (i) enlarge the obligations of any Member
under this Agreement or (ii) amend this Section 13.02 or Section 13.01.
13.03 Meetings. Meetings may be called by any Member, by giving
at least five (5) business days prior notice of the time, place and purpose of
the meeting to all Members. Special meetings for the purpose of approval of a
transfer of a Member may be held only on the 1st or 15th day of the month, or
if either of these days falls on a Saturday, Sunday, or legal Holiday, on the
first day thereafter.
13.04. Adjournment. When a meeting is adjourned to another time
or place, notice need not be given of the adjourned meeting, if the time and
place thereof are announced at the meeting at which the adjournment is taken,
unless such adjournment shall be for more than forty-five days. At the
adjourned meeting, the Company may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than
forty-five days, a notice of the adjourned meeting shall be given in
accordance with this Section 13.04.
13.05. Waiver of Notice; Consent to Meeting; Approval of Minutes.
The transactions of any meeting of the Company, however called and noticed,
and whenever held, are as valid as though had at a meeting duly held after
regular call and notice, if a quorum is present either in person or by proxy,
and if, either before or after the meeting, each of the Members entitled to
vote, but not present in person or by proxy, approves by signing a written
waiver of notice or an approval to the holding of the meeting or an approval
of the minutes thereof. All waivers, consents, and approvals shall be filed
with the Company records or made a part of the minutes of the meeting.
Attendance of a Member at a meeting shall constitute a waiver of notice of the
meeting, except when such Member objects, at the beginning of the meeting, to
the transaction of any business because the meeting is not lawfully called or
convened; and except that attendance at a meeting is not a waiver of any right
to object to the consideration of matters required to be included in the
notice of the meeting, but not so included, if the objection is expressly made
at the meeting.
13.06 Quorum. The holders of a majority of the Voting Rights,
represented in person or by proxy, shall constitute a quorum at a meeting of
Members. The Members present at a duly called or held meeting at which a
quorum is present may continue to participate at such meeting until
adjournment, notwithstanding the withdrawal of enough Members to leave less
than a quorum, if any action taken (other than adjournment) is approved by the
requisite percentage of Voting Rights of Members specified in this Agreement.
In the absence of a quorum, any meeting of Members may be adjourned from time
to time by a Majority Vote of the Members represented either in person or by
proxy entitled to vote, but no other matters may be proposed, approved or
disapproved, except as provided in Section 13.04.
13.07 Action Without a Meeting. Any action that may be taken by
any vote of the Members may be taken without a meeting if a consent to such
action is signed by all Members.
ARTICLE XIV
General Provisions
14.01 Notices. Any notice, demand, request or report required or
permitted to be given or made to a Member under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when
sent by first class mail to the Member. Any notice, payment, or report to be
given or sent to a Member hereunder shall be deemed conclusively to have been
given or sent, upon mailing of such notice, payment, or report to the address
shown on the records of the Company, regardless of any claim of any Person who
may have an interest in the Unit by reason of an assignment or otherwise.
14.02 Captions. All article and section captions in this
Agreement are for convenience only. They shall not be deemed part of this
Agreement and in no way define, limit, extend or describe the scope or intent
of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
14.03 Pronouns and Plurals. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
14.04 Further Action. The parties to this Agreement shall
execute and deliver all documents, provide all information and take or refrain
from taking action as may be necessary or appropriate to achieve the purposes
of this Agreement.
14.04 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assignees.
14.06 Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
14.07 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
14.08 Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute an agreement binding on
all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become
bound by this Agreement immediately upon affixing its signature hereto,
independently of the signature of any other party.
14.09 Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Oklahoma, without
regard to its principles of conflict of laws.
14.10 Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein shall not be affected thereby.
14.11 Conveyances. All of the assets of the Company shall be
held in the name of the Company. Any deed, bill of sale, mortgage, lease,
contract of sale or other instrument purporting to convey or encumber the
interest of the Company of all or any portion of the assets of the Company
shall be sufficient when signed by a Manager.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the ______ day of ______________, 199 .
MEMBERS:
______________________________
RICHARD H. SMITH
DENNIS J. LOUDERMILK
RIKA MANAGEMENT COMPANY, L.L.C.
By:
Richard H. Smith, Manager
PUBLIC SERVICE COMPANY
OF OKLAHOMA
By:___________________________
Title:________________________
<PAGE>
EXHIBIT 14
RC TRAINING, L.L.C.
AMENDED AND RESTATED
ARTICLES OF ORGANIZATION
TO: THE OKLAHOMA SECRETARY OF STATE
101 State Capitol
Oklahoma City, OK 73105
The undersigned Members of RC Training, L.L.C., an Oklahoma
limited liability company (the "Company"), for the purpose of adopting Amended
and Restated Articles of Organization pursuant to Section 2011 of the Oklahoma
Limited Liability Company Act (the "Act"), hereby certifies:
1. The name of this Company is "RC Training, L.L.C."
2. The name under which this Company was originally organized was
"RC Training, L.L.C."
3. The Articles of Organization of this Company were originally
filed with the Oklahoma Secretary of State on , 1995.
4. The amendments to the Articles of Organization effected by
this document are to change and restate the provisions relating to the
regulation of the internal affairs of the Company.
5. These Amended and Restated Articles of Organization were duly
adopted by the Members of the Company in accordance with Section 2020 of the
Act, and restate, integrate and further amend the Articles of Organization.
6. The Articles of Organization of the Company are hereby
restated as further amended herein, to read in full, as follows:
"ARTICLES OF ORGANIZATION
OF
RC TRAINING, L.L.C.
FIRST. The name of the limited liability company is RC Training,
L.L.C. (the "Company").
SECOND. The latest date on which the Company is to dissolve is
12:00 midnight, December 31, 2015.
THIRD. The purpose of the Company is to engage in any lawful act
or activity for which limited liability companies may be organized under the
Act.
FOURTH. The street address of the principal place of business of
the Company in the State of Oklahoma is 6130 South Memorial, Tulsa, Oklahoma
74133.
FIFTH. The name and address of the registered agent of the
Company in the State of Oklahoma is Richard H. Smith, 11708 South Canton,
Tulsa, Oklahoma
74137.
SIXTH. The business of the Company shall be managed by one or
more Managers designated pursuant to the terms of the Company's Operating
Agreement. Subject to the restrictions contained herein, any third person
dealing with the Company may rely absolutely upon the act, deed and/or
signature of each Manager as being the act of the Company and no third person
shall be obliged or privileged to inquire into or otherwise ascertain whether
the act of the Manager has been duly authorized.
SEVENTH. Notwithstanding any other provision hereof, unless and
until there shall have occurred an Event of Default (as such term is defined
in the Company's Operating Agreement), no Manager shall have the authority to
cause the Company to do or commit to do any of the following acts, without the
prior unanimous written consent of the specific act by the Members; however,
upon the occurrence of an Event of Default, each Manager shall have the
authority to cause the Company to do or commit to do such acts upon the
Majority Vote of the Members (as such term is defined in the Company's
Operating Agreement): (a) borrow money in excess of $10,000; (b) sell any
asset of the Company (or assets, in related transactions) having a fair market
value in excess of $10,000; (c) enter into any contract involving an
anticipated total expenditure of over $10,000; (d) do any act which would make
it impossible to carry on the ordinary business of the Company; (e) compromise
any claim against the Company over $10,000; (f) admit a person as a Member;
(g) knowingly perform any act that would subject a Member to personal
liability; (h) amend the Articles of Organization; or (i) approve any business
plan of the Company."
IN WITNESS WHEREOF, these Amended and Restated Articles of
Organization have been executed on the _____ day of , 199 , by the
undersigned Members.
__________________________________
Richard H. Smith
__________________________________
Dennis J. Loudermilk
RIKA Management Company, L.L.C., an
Oklahoma limited liability company
By:
Richard H. Smith, Manager
<PAGE>
EXHIBIT 15
RC TRAINING, L.L.C.
AMENDED AND RESTATED
OPERATING AGREEMENT
THIS AMENDED AND RESTATED OPERATING AGREEMENT (the "Agreement") is
entered into as of the day of , 199 , by and among Public
Service Company of Oklahoma, an Oklahoma corporation ("PSO"), Richard H.
Smith, a natural person ("Smith"), Dennis J. Loudermilk, a natural person
("Loudermilk"), and RIKA Management Company, L.L.C., and Oklahoma limited
liability company ("Management"), collectively referred to herein as the
"Members" of RC Training, L.L.C., an Oklahoma limited liability company (the
"Company"), and supersedes all prior operating agreements of the Company. In
consideration of the mutual covenants and conditions hereinafter set forth,
the Members hereby agree that the terms of the Operating Agreement governing
the Company shall be as follows:
ARTICLE I
Organizational Matters
1.01 Formation. The Company has been formed as a limited
liability company pursuant to the provisions of the Act (as hereinafter
defined). The rights and obligations of the Members, the Manager designated
herein, and the affairs of the Company, shall be governed first by the
mandatory provisions of the Act, second by the Company's Articles of
Organization, third by this Agreement and fourth by the optional provisions of
the Act. In the event of any conflict among the foregoing, the conflict shall
be resolved in the order of priority set forth in the preceding sentence.
1.02 Name. The name of the Company shall be "RC Training,
L.L.C."
1.03 Principal Office. The principal office of the Company in
the State of Oklahoma shall be located at 6130 South Memorial, Tulsa, Oklahoma
74137. The name and address of the resident agent of the Company is Richard
H. Smith, 11708 S. Canton, Tulsa, Oklahoma 74137. The Company may also
maintain offices at such other place or places as the Managers deem advisable.
1.04 Term. The Company commenced upon the filing for record of
the Company's Articles of Organization with the Oklahoma Secretary of State on
the day of , 199__, and shall continue until 12:00 midnight,
December 31, 2015, unless sooner terminated as herein provided.
ARTICLE II
Definitions
2.01 Definitions. For purposes of this Agreement, the following
terms shall have the following meanings.
"Act" means the Oklahoma Limited Liability Company Act, 18 Okla.
Stat. Sec. 2000 et seq. (Supp. 1993), as it may be amended from time to time,
and any successor to such act.
"Affiliate" means any Person that directly or indirectly controls,
is controlled by, or is under common control with, such Person. As used in
this definition of "Affiliate," the term "control" means either (i) the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise or (ii) a direct or
indirect equity interest of ten percent (10%) or more in the entity.
"Agreement" means this Operating Agreement, as it may be amended
or supplemented from time to time.
"Articles of Organization" means the articles of organization, as
amended from time to time, filed by the Company under the Act.
"Assignee" means a Person to whom one or more Units have been
transferred, by transfer or assignment or otherwise, in a manner permitted
under this Agreement, and who has agreed to be bound by the terms of this
Agreement but who has not become a Substitute Member.
"Business Day" means Monday through Friday of each week, except
legal holidays recognized as such by the Government of the United States or
the State of Oklahoma.
"Capital Account" means each capital account maintained for a
Member pursuant to Section 4.03.
"Capital Contributions" means the sum of the total amount of cash
and the total value of property contributed or services rendered, or a
promissory note or other binding obligation to contribute cash or property or
to perform services contributed to the Company by all Members, or any one
Member, as the case may be (or the predecessor holders of any Units of any
such Members).
"Capital Gain" means the Company's allocable share of gain from
the disposition by the Company of a capital asset as defined in the Code
(including any portion of such gain treated as ordinary income).
"Cash Available for Distribution" means, with respect to any
period, all cash receipts and funds received by the Company (except for
Capital Contributions) minus (i) all cash expenditures and (ii) the Company's
cash management fund representing working capital or other reserves.
"Code" means the Internal Revenue Code of 1986, as amended, as in
effect from time to time.
"Company" means the limited liability company formed by the filing
of the Company's Articles of Organization with the Oklahoma Secretary of
State.
"Company Property" means all property owned, leased or acquired by
the Company from time to time.
"Disqualified Member" has the meaning specified in Section 12.01.
"Event of Default" shall have the meaning ascribed to it in the
Member Agreement.
"Event of Dissolution" has the meaning specified in Section 12.01.
"Income" and "Loss" mean an amount equal to the Company's taxable
income or loss as determined for federal income tax purposes with the
following adjustments:
(a) Any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Income or Loss shall be
added to such Income or Loss;
(b) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as expenditures described in Section
705(a)(2)(B) of the Code pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Income
or Loss, shall be subtracted from such Income or Loss; and
(c) Upon the deemed or actual distribution of property by the
Company to a Member, gain or loss attributable to the difference between the
fair market value of the property and its basis shall be treated as having
been recognized by the Company for federal income tax purposes.
"Majority Vote of the Members" means the affirmative vote of the
holders of a majority of the Voting Rights held by the Members.
"Managers" means the Persons designated pursuant to Article VI.
"Mandatory provisions of the Act" means those provisions of the
Act which may not be waived by the Members acting unanimously or otherwise.
"Member" means any person signing this Agreement as a Member of
the Company.
"Member Agreement" means that certain agreement between PSO,
Smith, Loudermilk, and others, of even date herewith.
"Outstanding" means the number of Units issued by the Company as
shown on the Company's books and records. The term does not include any
authorized Units not issued by the Company or any Units issued but
subsequently reacquired by the Company and held in the Company's treasury.
"Person" means a natural person, partnership, trust, estate,
association or domestic or foreign limited partnership, limited liability
company, or corporation.
"R&D Agreement" means that certain PSO Specific Software
Application and Development Agreement between PSO and Management, dated
, 1995.
"Record Holder" means the Person in whose name such Unit is
registered on the books and records of the Company as of the close of business
on a particular Business Day.
"Substitute Member" means a transferee of a Unit who is admitted
as a Member to the Company pursuant to Section 11.01 in place of and with all
the rights of a Member.
"Tax Matters Partner" means the Member designated pursuant to
Section 9.02.
"Unit" means a Unit representing an interest in the capital of the
Company.
"Voting Rights" has the meaning specified in Section 7.02.
ARTICLE III
Purpose
3.01 Purpose of the Company. The purpose of the Company is to
engage in any lawful act or activity for which limited liability companies may
be organized under the Act. Such acts or activities may include, but shall
not be limited to, acquiring, operating and maintaining real and personal
properties in the United States and foreign countries. In transacting such
business, the Company may:
(a) acquire an ownership, working, royalty or other interest in
stocks, real estate and other properties, either alone or in conjunction with
other parties;
(b) dispose of, rent, lease, transfer, encumber or otherwise
utilize Company assets used in connection with Company operations as the
Managers deem advisable;
(c) employ such personnel and obtain such legal, accounting, and
other professional services and advice as the Managers may deem advisable in
the course of the Company's operations under this Agreement;
(d) pay all ad valorem taxes levied or assessed against the
Company's assets, and all other taxes (other than income taxes) directly
relating to operations conducted under this Agreement;
(e) execute all contracts, agreements, documents, or instruments
of any kind as may be appropriate for carrying out the purposes of the
Company;
(f) procure and maintain in force such insurance, including
public liability, automotive liability, worker's compensation, and employer's
liability insurance, as may be prudent to protect the Company against
liability for loss and damages which may be occasioned by the activities to be
engaged in by the Company;
(g) purchase and establish inventories of equipment and material
required or expected to be required in connection with the Company's
operations;
(h) contract or enter into agreements for the performance of
services and the purchase and sale of material, equipment, supplies, and
property, both real and personal;
(i) conduct operations either alone or as a joint venturer,
co-tenant, partner, or in any other manner of participation with any Member or
third parties and to enter into agreements and contracts setting forth the
terms and provisions of such participation;
(j) borrow money from any Person, including, without limitation,
banks, other lending institutions, and Members, for Company purposes and
pledge Company Property for the repayment of such loans;
(k) sell, relinquish, release, abandon, or otherwise dispose of
Company assets, including undeveloped, productive, and condemned properties,
in accordance with other provisions herein; and
(l) perform any and all other acts or activities customary or
incident to conducting the above Company operations.
ARTICLE IV
Capital Contributions
4.01 Authorized Units. The Company shall have the authority to
issue an aggregate of one hundred (100) Units.
4.02 Capital Contributions.
(a) Smith, Loudermilk, and Management hereby surrender their
respective membership interests in the Company in exchange for fifty-two (52)
Units, of which nineteen (19) Units are hereby issued to Smith, twenty-eight
(28) Units are hereby issued to Loudermilk, and five (5) Units are hereby
issued to Management. Upon the issuance of Units to PSO pursuant to Section
4.02(b), the Units held by Smith, Loudermilk, and Management shall in the
aggregate constitute 52% of the Outstanding Units of the Company.
(b) For good and valuable consideration, the receipt of which is
hereby acknowledged by the Company, PSO is hereby issued forty-eight (48)
Units, constituting 48% of the Outstanding Units of the Company.
4.03 Capital Accounts.
(a) The Company shall maintain for each Member a separate Capital
Account. The term "Capital Account" shall mean as to any Member and as to any
Units held by that Member the amount of the initial Capital Contribution
attributable to the Units held by that Member, which amount shall be (i)
increased by subsequent Capital Contributions by such Member, and Capital Gain
and Income allocated to such Member pursuant to Section 5.02, (ii) decreased
by distributions to such Member pursuant to Section 5.01 and Losses allocated
to such Member pursuant to Section 5.02, and (iii) further adjusted as
required by Section 704 of the Code, the Treasury Regulations issued
hereunder, and any other applicable provisions of the Code or Treasury
Regulations. Distributions shall be debited to Capital Accounts in the year
containing the record date for such distribution.
(b) It is not currently anticipated that the Company will receive
any Capital Contributions in any form other than cash. In the event any
in-kind contributions or contributions in the form of services are ever made,
the Capital Account of the contributing Member shall be increased by the fair
market value of the property or services contributed by such Member.
(c) The foregoing definition of Capital Account and certain other
provisions of this Agreement are intended to comply with Treasury Regulations
issued under Section 704(b) of the Code, and shall be interpreted and applied
in a manner consistent with those regulations. Such regulations contain
additional rules governing maintenance of capital accounts that have not been
addressed in this Agreement.
(d) An Assignee of a Unit will succeed to the Capital Account
relating to the Unit transferred. However, if the transfer causes a
termination of the Company under Section 708(b)(1)(B) of the Code, the Company
Property shall be deemed to have been distributed immediately after such
transfer in liquidation of the Company to the Members (including the
transferee of a Unit) pursuant to Section 12.02 and recontributed by such
Members in reconstitution of the Company. The Capital Accounts of such
reconstituted Company shall be maintained in accordance with the principles of
this Section 4.03.
(e) The Capital Accounts shall be maintained to comply with
Treasury Regulations issued under Section 704 of the Code, and shall be
revalued and adjusted at such times as may be permitted or required by
Treasury Regulations issued pursuant to Section 704 of the Code. All
allocations of gain resulting from such revaluation shall be made consistently
with those applicable Treasury Regulations, and to the extent not inconsistent
therewith, the Income allocation provisions of Section 5.02 hereof.
4.04 Interest. No interest shall be paid by the Company on
Capital Contributions, on balances in a Member's Capital Account or on any
other funds distributed or distributable under this Agreement.
4.05 No Withdrawal. Except as otherwise required under any
mandatory provisions of the Act, no Member shall without the written consent
of all remaining Members of the Company have (i) any right to resign
voluntarily or otherwise to withdraw from the Company, or (ii) any right to
the withdrawal or reduction of any part of his Capital Contribution.
4.06 Loans. Loans by a Member to the Company shall not be
considered Capital Contributions. The Company may not make loans to any
Member or any Affiliate of any Member without a Majority Vote of the Members.
ARTICLE V
Allocations and Distributions
5.01 Distribution of Cash Available for Distribution.
Distributions of all Cash Available for Distribution shall be made as
determined by a Majority Vote of the Members. Any distribution of property
shall be treated as a distribution of cash in the amount of the fair market
value of such property. Distribution shall be made to the Members by the
Company pro rata, according to the number of Units held by each, with all
Outstanding Units being treated alike.
<PAGE>
5.02 Allocation of Income and Loss.
(a) All items of income, gain, loss, deduction or credit shall be
allocated to all Members and Assignees in accordance with their respective
Units in the Company. All outstanding Units shall be treated equally.
(b) Notwithstanding anything to the contrary in this Section
5.02, if there is a net decrease in "minimum gain" (within the meaning of
Treasury Regulations Section 1.704-2(d) and (g) during a fiscal year, all
Members with a deficit balance in their Capital Accounts at the end of that
year (excluding items described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4)-(6) shall be allocated, before any other allocations
of such items for such fiscal year, items of Income and gain for such year
(and if necessary, subsequent years), in an amount and in the proportions
necessary to eliminate such deficits as quickly as possible. The foregoing
sentence is intended to be a "minimum gain charge back" provision as described
in Treasury Regulations Section 1.704-2(f), and shall be interpreted and
applied in all respects in accordance with that regulation.
(c) If during any fiscal year of the Company, any Member
unexpectedly receives an adjustment, allocation, or distribution of the type
described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4),(5), or (6),
that Member shall be allocated items of Income (consisting of a pro rata
portion of each item of partnership income, including gross income, and gain
for such year) in an amount and manner sufficient to eliminate that Member's
deficit Capital Account balance as quickly as possible.
(d) Under regulations prescribed by the Secretary of the Treasury
pursuant to Section 704(c) of the Code, items of Capital Gain, Income and Loss
with respect to property contributed to the Company by a Member shall be
shared among Members so as to take account of the variation between the basis
of the property to the Company and its fair market value at the time of
contribution. The Members shall have the power to make such elections, adopt
such conventions, and allocate Capital Gain, Income and Loss as each of them
deems appropriate to comply with Section 704(c) of the Code and any Treasury
Regulations promulgated thereunder and to preserve, to the extent possible,
uniformity of the Units. Any item allocated under this Section 5.02(d) shall
not be debited or credited to a Member's Capital Account to the extent that
such item is already taken into account (upon formation or otherwise) in
determining such Member's Capital Account.
(e) Whenever a Member's interest in the Company changes, such
Member's distributive share of income, gain, loss, deduction or credit of the
Company shall be determined in accordance with Section 706(d) of the Code and
allocated on a daily basis. The Members may revise, alter, or otherwise
modify the method of allocation as they determine necessary to comply with
Section 706(d) of the Code and regulations or rulings promulgated thereunder.
(f) If, and to the extent that, any Member is deemed to recognize
income pursuant to Sections 482, 483, 1272-1274, or 7872 of the Code as a
result of any transaction between the Member and the Company, any
corresponding resulting Loss or deduction of the Company shall be allocated to
the Member who recognizes such income.
(g) All tax credits for federal or state income tax purposes
shall be allocated in the same manner as Income.
ARTICLE VI
Management and Operation of Business
6.01. Managers. Management of the Company shall be vested in two
(2) Managers, who shall be elected by Majority Vote of the Members at any
annual or special meeting called for that purpose.
6.02. Authority of Managers. Any Person serving as Manager may
exercise all the powers of the Company whether derived from law, the Articles
of Organization or this Agreement, except such powers as are by statute, by
the Articles of Organization or by this Agreement vested solely in the
Members.
6.03. Restrictions on Managers. Notwithstanding any other
provision hereof, unless and until there shall have occurred an Event of
Default, no Manager shall have the authority to cause the Company to do or
commit to do any of the following acts, without the prior unanimous written
consent of the specific act by the Members; however, upon the occurrence of an
Event of Default, each Manager shall have the authority to cause the Company
to do or commit to do such acts upon the Majority Vote of the Members:
(a) Borrow money in excess of $10,000;
(b) Sell any assets of the Company (or assets, in related
transactions) having a fair market value over $10,000;
(c) Enter into any contract involving an anticipated total
expenditure of over $10,000;
(d) Do any act which would make it impossible to carry on the
ordinary business of the Company;
(e) Compromise any claim over $10,000;
(f) Admit a Person as a Member;
(g) Knowingly perform any act that would subject a Member to
personal liability;
(h) Amend the Articles of Organization; or
(i) Approve any business plan of the Company.
6.04. Outside Activities. The Members and Managers their
respective Affiliates have business interests and engage in business
activities in addition to those relating to the Company. No provision of this
Agreement shall be deemed to prohibit the Members, the Managers or their
respective Affiliates from conducting such businesses and activities, provided
they are not in direct competition with the Company. Neither the Company nor
any Member shall have any rights by virtue of this Agreement or the
relationship contemplated herein in any non-competing business ventures of any
other Member or the Affiliates of such Member.
6.05. Limitation on Liability of Managers. No Person serving as
Manager shall be liable to the Company for monetary damages for breach of
fiduciary duty as a Manager; provided, however, that nothing contained herein
shall eliminate or limit the liability of such Person (i) for any breach of
the Manager's duty of loyalty to the Company, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of the law and, (iii) for any transaction from which the Manager derived an
improper personal benefit.
ARTICLE VII
Rights and Obligations of the Members
7.01 Limitation of Liability. Anything herein to the contrary
notwithstanding, except as otherwise expressly agreed in writing, a Member
shall not be personally liable for any debts, liabilities, or obligations of
the Company, whether to the Company, to any of the other Members, or to
creditors of the Company, beyond the Capital Account of the Member, together
with the Member's share of the assets and undistributed profits of the
Company.
7.02 Voting Rights. Action requiring a vote of the Members may
be taken by a Majority Vote of the Members. Unless and until there shall have
occurred an Event of Default, PSO shall hold 4% of all Voting Rights, Smith
shall hold 45 1/2%, Loudermilk shall hold 45 1/2%, and Management shall hold
5%. Upon the occurrence of an Event of Default, Management shall hold 100% of
all Voting Rights, and PSO, Smith and Loudermilk will hold no Voting Rights.
7.03 Indemnification.
(a) To the maximum extent permitted by law, the Company shall
indemnify and hold harmless the Managers, all Members, their respective
Affiliates, and the employees and agents of the Company (each, an
"Indemnitee") from and against any and all losses, claims, demands, costs,
damages, liabilities, joint and several, expenses of any nature (including
attorneys' fees and disbursements), judgments, fines, settlements, penalties
and other expenses actually and reasonably incurred by the Indemnitee in
connection with any and all claims, demands, actions, suits, or proceedings,
civil, criminal, administrative or investigative, in which the Indemnitee may
be involved, or threatened to be involved, as a party or otherwise, by reason
of the fact that the Indemnitee is or was a Manager or Member of the Company
or is or was an employee or agent of the Company, including Affiliates of the
foregoing, arising out of or incidental to the business of the Company,
provided, (i) the Indemnitee's conduct did not constitute willful misconduct
or recklessness, (ii) the action is not based on breach of this Agreement,
(iii) the Indemnitee acted in good faith and in a manner he or it reasonably
believed to be in, or not opposed to, the best interests of the Company and
within the scope of such Indemnitee's authority and (iv) with respect to a
criminal action or proceeding, the Indemnitee had no reasonable cause to
believe its conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere, or its equivalent, shall not, in and of itself, create a
presumption or otherwise constitute evidence that the Indemnitee acted in a
manner contrary to that specified above.
(b) Expenses incurred by an Indemnitee in defending any claim,
demand, action, suit or proceeding subject to this Section 7.03 may, from time
to time, be advanced by the Company prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Company of an
undertaking by or on behalf of the Indemnitee to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified as
authorized in this Section 7.03.
(c) Indemnification provided by this Section 7.03 shall be in
addition to any other rights to which the Indemnitee may be entitled under any
agreement, vote of the Members, as a matter of law or equity, or otherwise,
and shall inure to the benefit of the successors, assignees, heirs, personal
representatives and administrators of the Indemnitee.
(d) The Company may purchase and maintain insurance, at the
Company's expense, on behalf of any Indemnities against any liability that may
be asserted against or expense that may be incurred by an Indemnitee in
connection with the activities of the Company regardless of whether the
Company would have the power to indemnify such Indemnitee against such
liability under the provisions of this Agreement.
ARTICLE VIII
Books, Records, and Accounting
8.01 Books and Records. Appropriate books and records with
respect to the Company's business shall at all times be kept at the principal
office of the Company or at such other places as agreed to by the Members.
Any records maintained by the Company in the regular course of its business
may be kept on, or be in the form of, magnetic tape, photographs or any other
information storage device, provided that the records so kept are convertible
into clearly legible written form within a reasonable period of time. Each
Member shall have the right upon demand and at such Member's own expense to
inspect and copy any of the Company's books and records and obtain such other
information regarding the affairs of the Company.
8.02 Accounting. The books of the Company for regulatory and
financial reporting purposes shall be maintained on cash basis of accounting.
The Company books for purposes of maintaining and determining Capital Accounts
shall be maintained in accordance with the provisions of this Agreement,
Section 704 of the Code and, to the extent not inconsistent therewith, the
principles described above for financial reporting and regulatory purposes.
Comparisons of budgeted income and expenses to actual income and expenses of
the Company shall be on the accrual basis of accounting.
8.03 Fiscal Year. The fiscal year of the Company shall be the
calendar year, unless otherwise determined by Majority Vote of the Members.
ARTICLE IX
Tax Matters
9.01 Taxable year. The taxable year of the Company shall be the
calendar year, unless otherwise determined by Majority Vote of the Members.
9.02 Tax Controversies. The "Tax Matters Partner" (as defined in
Section 6231(a)(7) of the Code) shall be determined by a Majority Vote of the
Members, and shall be authorized and required to represent the Company, at the
Company's expense, in connection with all examinations of the Company's
affairs by tax authorities, including resulting administrative and judicial
proceedings. Each Member agrees to cooperate with the Tax Matters Partner,
and to do or refrain from doing any or all things reasonably required by the
Tax Matters Partner to conduct such proceedings.
9.03 Taxation as a Partnership. No election shall be made by the
Company or any Member for the Company to be excluded from the application of
any provision of Subchapter K, Chapter 1 of Subtitle A of the Code or from any
similar provisions of any state tax laws.
ARTICLE X
Transfer of Units
10.01. Transfer.
(a) The term "transfer," when used in this Article X with respect
to a Unit, shall be deemed to refer to a transaction by which the Member
assigns all or a portion of its Units, or any interest therein, to another
Person, or by which the holder of a Unit assigns the Unit to another Person as
Assignee, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, transfer by will or intestate succession, exchange,
or any other disposition.
(b) No Units shall be transferred, in whole or in part, except in
accordance with the terms and conditions set forth in this Article X. Any
transfer or purported transfer of any Units not made in accordance with this
Article X shall be null and void. If for any reason any such transfer is not
null and void, then the Assignee shall not be a Substitute Member, and shall
have no right to participate in Company's affairs as a Member thereof, but
instead shall be entitled to receive only the share of profits or other
compensation by way of income and the return of contributions to which the
transferring Member would otherwise be entitled at the time said transferring
Member would be entitled to receive the same.
10.02. Transfer of Units by a Member.
(a) No Units may be transferred by a Member unless the following
conditions are first satisfied:
(i) A Majority Vote of Members approving the transfer has been
obtained, such approval to be evidenced by a written instrument, dated and
signed by the Members; provided, however, no such approval shall be required
with respect to any transfer of Units by PSO to its parent corporation,
Central and South West Corporation, or any direct or indirect subsidiary of
such parent corporation;
(ii) The transferee and each Member execute and file all
documents necessary for the transferee to be a Substitute Member and be bound
by the terms hereof and such transferee is admitted as a Substitute Member;
and
(iii) The Company receives an Opinion of Counsel that such
transfer would not materially adversely affect the classification of the
Company as a partnership for federal and (as applicable) state income tax
purposes.
(b) The transfer restrictions on Company Units shall be
conspicuously noted in an appropriate legend on any Unit certificates issued.
(c) In no event shall any Unit be transferred to a minor or any
incompetent except by will or intestate succession.
(d) The Company need not recognize, for any purpose, any transfer
of all or any fraction of a Unit unless there shall have been filed with the
Company and recorded on the Company's books a duly executed and acknowledged
counterpart of the instrument of assignment and such instrument evidences the
written acceptance by the Assignee of all of the terms and provisions of this
Agreement and represents that such assignment was made in accordance with all
applicable laws and regulations.
(e) Any holder of a Unit (including a transferee thereof) shall
be deemed conclusively to have agreed to comply with and be bound by all terms
and conditions of this Agreement, with the same effect as if such holder had
executed an express acknowledgment thereof, whether or not such holder in fact
has executed such an express acknowledgment.
10.03. Restrictions on Transfer. Notwithstanding the other
provisions of this Article X, no transfer of any Unit of any Member shall be
made if the transfer (i) would violate applicable federal and state securities
laws or rules and regulations of the Securities and Exchange Commission, any
state securities commission or any other governmental authority with
jurisdiction over the transfer, (ii) would materially adversely affect the
classification of the Company as a partnership for federal or (as applicable)
state income tax purposes, or (iii) would affect the Company's qualification
as a limited liability company under the Act.
10.04. Issuance of Certificates. The Company may issue one or
more Certificates in the name of the Member evidencing the number of Units
issued. Upon the transfer of a Unit in accordance with Article X, the Company
shall, if certificates have been issued, issue replacement Certificates. All
Certificates shall contain legends required by this Agreement or otherwise
required by law.
10.05. Lost, Stolen or Destroyed Certificates. The Company shall
issue a new Certificate in place of any Certificate previously issued if the
Record Holder of the Certificate: (i) makes proof by affidavit that a
previously issued Certificate has been lost, stolen, or destroyed; (ii)
requests the issuance of a new Certificate before the Company has notice that
the Units evidenced by such Certificate have been acquired by a purchaser for
value in good faith and without notice of an adverse claim; and (iii) if
required by the Company, delivers to the Company a bond with surety or
sureties acceptable to the Company, to indemnify the Company against any claim
that may be made on account of the alleged loss, destruction or theft of the
Certificate. The Company shall be entitled to treat each Record Holder as the
Member or Assignee in fact of any Units and, accordingly, shall not be
required to recognize any equitable or other claim or interest in or with
respect to the Units on the part of any other Person, regardless of whether it
has actual or other notice thereof.
ARTICLE XI
Admission of Substitute and Additional Members
11.01. Admission of Substitute Members.
(a) Upon a transfer of a Unit by a Member in accordance with
Article X (but not otherwise), the transferor shall have the power to give,
and by transfer of any Certificate issued shall be deemed to have given, the
transferee the right to apply to become a Substitute Member with respect to
the Unit acquired, subject to the conditions of and in the manner permitted
under this Agreement. An Assignee of a Certificate representing a Unit shall
not become a Substitute Member with respect to the transferred Unit (whether
or not such transferee is then a Member or Substitute Member with respect to
other previously acquired Units) unless and until all of the following
conditions are satisfied:
(i) The instrument of assignment sets forth the intentions of
the assignor that the Assignee succeed to the assignor's interest as a
Substitute Member in his place;
(ii) The assignor and Assignee shall have fulfilled all other
requirements of this Agreement;
(iii) The Assignee shall have paid all reasonable legal fees
and filing costs incurred by the Company in connection with his substitution
as a Member; and
(iv) The Members shall have unanimously approved such
substitution in writing, which approval may be granted or withheld by each
Member in its sole and absolute discretion and may be arbitrarily withheld,
and the books and records of the Company have been modified to reflect the
admission; provided, no such approval shall be required with respect to any
transfer by PSO to its parent corporation, Central and South West Corporation,
or any direct or indirect subsidiary of such parent corporation.
(b) The admission of an Assignee as a Substitute Member with
respect to a transferred Unit shall become effective on the date the Members
give their unanimous written consent to the admission and the books and
records of the Company have been modified to reflect such admission. Any
Member who transfers all of his Units with respect to which it had been
admitted as a Member shall cease to be a Member of the Company upon a transfer
of such Units in accordance with Article X and the execution of a counterpart
of this Agreement by the transferee and shall have no further rights as a
Member in or with respect to the Company (whether or not the Assignee of such
former Member is admitted to he Company as a Substitute Member).
11.02. Admission of Additional Members. Except as otherwise
provided in Section 6.03, additional Units may be authorized and issued by the
Company upon such terms and conditions as may be approved by a Majority Vote
of the Members. Upon the proposed issuance of any such additional Units, each
existing Member shall have the preemptive right, but not the obligation, to
purchase such portion of the newly issued Units as the ratio of the number of
Units then held by such Member bears to the total number of Units held by
Members and outstanding before the issuance of the new Units, together with
such Member's proportionate share of the other newly issued Units as to which
other Members fail to exercise their preemptive rights.
ARTICLE XII
Dissolution and Liquidation
12.01 Disqualification of Member. Upon the death, incapacity,
resignation, expulsion, bankruptcy or dissolution of a Member (such Member
being hereinafter sometimes referred to as a "Disqualified Member"), or the
occurrence of any other event which terminates the continued membership of a
Member in the Company (any of such events being referred to herein as an
"Event of Dissolution"), the Company shall dissolve and its affairs shall be
wound up; provided, however, it is agreed that without the consent of all
other Members, no Member may voluntarily resign from the Company until after
the second anniversary of the date of this Agreement. The Company shall
thereafter conduct only activities necessary to wind up its affairs, unless
there is at least one (1) remaining Member and within sixty (60) days after
the occurrence of an Event of Dissolution, all the remaining Members
unanimously agree to continue the Company. If any election to continue the
Company is made, then:
(a) The remaining Members may elect, within thirty (30) days of
the decision to continue the Company, to purchase the Disqualified Member's
Units upon such terms and conditions as the remaining Members and the
Disqualified Member or the legal representative of the Disqualified Member,
may agree. In the event the remaining Members and the Disqualified Member (or
such legal representative) do not agree upon terms and conditions for a
purchase of the Units of the Disqualified Member,the remaining Members shall
have an option (to be exercised within sixty (60) days after the occurrence of
the Event of Dissolution, by giving notice to the Disqualified Member, or such
legal representative) to purchase the Units for a cash purchase price
determined by the value of the Capital Account of the Disqualified Member, as
of the end of the calendar month preceding the occurrence of the Event of
Dissolution, adjusted as if all Company Property were sold at fair market
value, and all liabilities of the Company were paid and the Company was
liquidated in accordance with the provisions of Section 12.02.
(b) The Company shall continue until the expiration of the term
for which it was formed or until the occurrence of another Event of
Dissolution, in which event any remaining Members shall again elect whether to
continue the Company pursuant to this Section 12.01.
12.02 Dissolution and Liquidation. The Company shall be
dissolved and its affairs shall be wound up upon the occurrence of any of the
following: (i) the term of the Company stated in Articles of Organization
expires; (ii) if, upon the occurrence of an Event of Dissolution, the
remaining Members fail to continue the Company pursuant to Section 11.01; or
(iii) all Members vote to dissolve the Company.
12.03 Method of Winding Up. Upon dissolution of the Company
pursuant to Section 12.02, the Company shall immediately commence to liquidate
and wind up its affairs. The Members shall continue to share profits and
losses during the period of liquidation and winding up in the same proportion
as before commencement of winding up and dissolution. The proceeds from the
liquidation and winding up shall be applied in the following order of
priority:
(a) To creditors, including Members who are creditors, to the
extent permitted by law, in satisfaction of liabilities of the Company other
than liabilities to Members on account of their Capital Contributions or on
account of a Member's withdrawal from the Company or pursuant to a withdrawal
of capital; and
(b) The balance, to Members in accordance with their Capital
Accounts. Unless the Members shall unanimously determine otherwise, all
distributions will be made in cash, and none of the Company Property will be
distributed in kind to the Members.
12.04 Filing Articles of Dissolution. Upon the completion of the
distribution of Company Property as provided in Section 12.02, Articles of
Dissolution shall be filed as required by the Act, and each member agrees to
take whatever action may be advisable or proper to carry out the provisions of
this Section.
12.05 Return of Capital. The return of Capital Contributions
shall be made solely from Company Property.
ARTICLE XIII
Amendment of Agreement; Meetings
13.01 Amendments. Unless and until there shall have occurred an
Event of Default, all amendments to this Agreement shall require the unanimous
consent of the Members. Upon the occurrence of an Event of Default, all
amendments to this Agreement may be effected by a Majority Vote of the
Members, subject to the provisions of Section 13.02.
13.02 Limitations on Amendments. Notwithstanding any other
provision of this Agreement, no amendment to this Agreement may without the
unanimous approval of all Members (i) enlarge the obligations of any Member
under this Agreement or (ii) amend this Section 13.02 or Section 13.01.
13.03 Meetings. Meetings may be called by any Member, by giving
at least five (5) business days prior notice of the time, place and purpose of
the meeting to all Members. Special meetings for the purpose of approval of a
transfer of a Member may be held only on the 1st or 15th day of the month, or
if either of these days falls on a Saturday, Sunday, or legal Holiday, on the
first day thereafter.
13.04. Adjournment. When a meeting is adjourned to another time
or place, notice need not be given of the adjourned meeting, if the time and
place thereof are announced at the meeting at which the adjournment is taken,
unless such adjournment shall be for more than forty-five days. At the
adjourned meeting, the Company may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than
forty-five days, a notice of the adjourned meeting shall be given in
accordance with this Section 13.04.
13.05. Waiver of Notice; Consent to Meeting; Approval of Minutes.
The transactions of any meeting of the Company, however called and noticed,
and whenever held, are as valid as though had at a meeting duly held after
regular call and notice, if a quorum is present either in person or by proxy,
and if, either before or after the meeting, each of the Members entitled to
vote, but not present in person or by proxy, approves by signing a written
waiver of notice or an approval to the holding of the meeting or an approval
of the minutes thereof. All waivers, consents, and approvals shall be filed
with the Company records or made a part of the minutes of the meeting.
Attendance of a Member at a meeting shall constitute a waiver of notice of the
meeting, except when such Member objects, at the beginning of the meeting, to
the transaction of any business because the meeting is not lawfully called or
convened; and except that attendance at a meeting is not a waiver of any right
to object to the consideration of matters required to be included in the
notice of the meeting, but not so included, if the objection is expressly made
at the meeting.
13.06 Quorum. The holders of a majority of the Voting Rights,
represented in person or by proxy, shall constitute a quorum at a meeting of
Members. The Members present at a duly called or held meeting at which a
quorum is present may continue to participate at such meeting until
adjournment, notwithstanding the withdrawal of enough Members to leave less
than a quorum, if any action taken (other than adjournment) is approved by the
requisite percentage of Voting Rights of Members specified in this Agreement.
In the absence of a quorum, any meeting of Members may be adjourned from time
to time by a Majority Vote of the Members represented either in person or by
proxy entitled to vote, but no other matters may be proposed, approved or
disapproved, except as provided in Section 13.04.
13.07 Action Without a Meeting. Any action that may be taken by
any vote of the Members may be taken without a meeting if a consent to such
action is signed by all Members.
ARTICLE XIV
General Provisions
14.01 Notices. Any notice, demand, request or report required or
permitted to be given or made to a Member under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when
sent by first class mail to the Member. Any notice, payment, or report to be
given or sent to a Member hereunder shall be deemed conclusively to have been
given or sent, upon mailing of such notice, payment, or report to the address
shown on the records of the Company, regardless of any claim of any Person who
may have an interest in the Unit by reason of an assignment or otherwise.
14.02 Captions. All article and section captions in this
Agreement are for convenience only. They shall not be deemed part of this
Agreement and in no way define, limit, extend or describe the scope or intent
of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
14.03 Pronouns and Plurals. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
14.04 Further Action. The parties to this Agreement shall
execute and deliver all documents, provide all information and take or refrain
from taking action as may be necessary or appropriate to achieve the purposes
of this Agreement.
14.04 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assignees.
14.06 Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
14.07 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
14.08 Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute an agreement binding on
all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become
bound by this Agreement immediately upon affixing its signature hereto,
independently of the signature of any other party.
14.09 Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Oklahoma, without
regard to its principles of conflict of laws.
14.10 Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein shall not be affected thereby.
14.11 Conveyances. All of the assets of the Company shall be
held in the name of the Company. Any deed, bill of sale, mortgage, lease,
contract of sale or other instrument purporting to convey or encumber the
interest of the Company of all or any portion of the assets of the Company
shall be sufficient when signed by a Manager.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the ______ day of ______________, 199 .
MEMBERS:
______________________________
RICHARD H. SMITH
DENNIS J. LOUDERMILK
RIKA MANAGEMENT COMPANY, L.L.C.
By:
Richard H. Smith, Manager
PUBLIC SERVICE COMPANY
OF OKLAHOMA
By:___________________________
Title:________________________
<PAGE>
